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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q



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|           |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|(MARK ONE) |  |                                                                                        
|          
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 27, 2002

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____________ TO _______________

COMMISSION FILE NUMBER 000-26519

SEMINIS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


|                                                                                 |  |                                                
|-------------------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(STATE OF INCORPORATION)                                                |  | 36-0769130
(I.R.S. EMPLOYER IDENTIFICATION NO.)
|                                                                                 |  |                                                
|2700 CAMINO DEL SOL, OXNARD, CALIFORNIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |  | 93030-7967
(ZIP CODE)                          

(805) 647-1572
(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)

NOT APPLICABLE
(FORMER NAME, ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT)

Indicate, by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES x NO o

As of February 4, 2003, the Registrant had 18,950,106 registered shares of
Class A Common Stock, $0.01 par value per share, issued and outstanding and
45,142,508 unregistered shares of Class B Common Stock, $0.01 par value per
share, issued and outstanding.



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TABLE OF CONTENTS



|                               |                                                                    |                                                |  |  |  |  |  | 
|------------------------------ | ------------------------------------------------------------------ | ---------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                      
|                               |                                                                    | Consolidated Balance Sheets                   
|                               |                                                                    | Consolidated Statements of Operations         
|                               |                                                                    | Consolidated Statement of Stockholders Equity
|                               |                                                                    | Consolidated Statements of Cash Flows         
|                               |                                                                    | Notes to Consolidated Financial Statements    
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk
|                               | Item 4. Controls and Procedures                                   
|PART II  OTHER INFORMATION   
|                               | Item 1. Legal Proceedings                                         
|                               | Item 6. Exhibits and Reports on Form 8-K                          
|Signatures                    
|CERTIFICATION                 
|EXHIBIT 99.5                  
|EXHIBIT 99.6                  



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##### Table of Contents



SEMINIS, INC.

FORM 10-QFOR THE QUARTERLY PERIOD ENDED DECEMBER 27, 2002

TABLE OF CONTENTS

|        |  |                                                                                                           |  |     
|------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                                           |  | Page
|        |  |                                                                                                           |  |     
|        |  | PART I  FINANCIAL INFORMATION                                                                            |  |     
|Item 1. |  | Financial Statements                                                                                      |  |     
|        |  | Consolidated Balance Sheets as of December 27, 2002 and September 30, 2002.                               |  | 3   
|        |  | Consolidated Statements of Operations for the Three Months Ended December 27, 2002 and December 28, 2001  |  | 4   
|        |  | Consolidated Statement of Stockholders Equity for the Three Months Ended December 27, 2002               |  | 5   
|        |  | Consolidated Statements of Cash Flows for the Three Months Ended December 27, 2002 and
December 28, 2001. |  | 6   
|        |  | Notes to Consolidated Financial Statements                                                                |  | 7   
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  |     
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                |  | 17  
|Item 4. |  | Controls and Procedures                                                                                   |  | 17  
|        |  | PART II - OTHER INFORMATION                                                                              |  |     
|Item 1. |  | Legal Proceedings                                                                                         |  | 17  
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                          |  | 18  
|        |  | Signatures                                                                                                |  | 20  
|        |  | Certification of Results                                                                                  |  | 21  

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




SEMINIS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |         | 
|------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------- | ------------ | ------- | ------------- | ------- | -------- | ------- | 
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         | AS OF        |         | AS OF        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         | DECEMBER 27, |         | SEPTEMBER 30,
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         | 2002         |         | 2002         
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |              
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         | (Unaudited)  |         |               |         |         
|Assets:                                                             |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|Current assets                                                      |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|                                                                    | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                          |                                    | $       | 31,957       |         |               | $       | 36,805   |        
|                                                                    | Accounts receivable, less allowances for doubtful accounts of $12,948 and $12,344, respectively                                                                                                                                                                                                                                                    |                                    |         | 131,773      |         |               |         | 140,315  |        
|                                                                    | Inventories                                                                                                                                                                                                                                                                                                                                        |                                    |         | 287,393      |         |               |         | 272,527  |        
|                                                                    | Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                                          |                                    |         | 5,370        |         |               |         | 2,427    |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | Total current assets               |         |              | 456,493 |               |         |          | 452,074 | 
|Property, plant and equipment, net                                  |                                                                                                                                                                                                                                                                                                                                                    |                                    | 167,279 |              |         |               | 168,729 |         
|Goodwill, net                                                       |                                                                                                                                                                                                                                                                                                                                                    |                                    | 101,083 |              |         |               | 98,931  |         
|Intangible assets, net                                              |                                                                                                                                                                                                                                                                                                                                                    |                                    | 58,885  |              |         |               | 61,872  |         
|Other assets                                                        |                                                                                                                                                                                                                                                                                                                                                    |                                    | 19,151  |              |         |               | 18,391  |         
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | $                                  | 802,891 |              |         | $             | 799,997 |         
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|Liabilities, Mandatorily Redeemable Stock and Stockholders Equity: |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|Current liabilities                                                 |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|                                                                    | Short-term borrowings                                                                                                                                                                                                                                                                                                                              |                                    | $       | 39,716       |         |               | $       | 28,532   |        
|                                                                    | Current maturities of long-term debt                                                                                                                                                                                                                                                                                                               |                                    |         | 229,126      |         |               |         | 21,709   |        
|                                                                    | Accounts payable                                                                                                                                                                                                                                                                                                                                   |                                    |         | 38,143       |         |               |         | 38,179   |        
|                                                                    | Accrued liabilities                                                                                                                                                                                                                                                                                                                                |                                    |         | 100,586      |         |               |         | 98,624   |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | Total current liabilities          |         |              | 407,571 |               |         |          | 187,044 | 
|Long-term debt                                                      |                                                                                                                                                                                                                                                                                                                                                    |                                    | 15,808  |              |         |               | 228,293 |         
|Deferred income taxes                                               |                                                                                                                                                                                                                                                                                                                                                    |                                    | 13,289  |              |         |               | 15,753  |         
|Minority interest in subsidiaries                                   |                                                                                                                                                                                                                                                                                                                                                    |                                    | 1,797   |              |         |               | 1,902   |         
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | Total liabilities                  |         |              | 438,465 |               |         |          | 432,992 | 
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|Commitments and contingencies                                       |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|Mandatorily redeemable stock                                        |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|                                                                    | Class B Redeemable Preferred Stock, $.01 par value; 25 shares authorized as of December 27, 2002 and
September 30, 2002; 25 shares issued and outstanding as of December 27, 2002 and September 30, 2002                                                                                                                                           |                                    |         | 30,000       |         |               |         | 29,500   |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | Total mandatorily redeemable stock |         |              | 30,000  |               |         |          | 29,500  | 
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|Stockholders equity                                                |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |         
|                                                                    | Class C Preferred Stock, $.01 par value; 17 and 14 shares authorized as of December 27, 2002
and September 30, 2002, respectively; 17 and 12 shares issued and outstanding as of December 27, 2002
and September 30, 2002, respectively (Liquidation Value of $191.9 and $138.2 million at December 27,
2002 and September 30, 2002, respectively) |                                    |         | 1            |         |               |         | 1        |        
|                                                                    | Class A Common Stock, $.01 par value; 211,000 shares authorized as of December 27, 2002
and September 30, 2002; 18,942 and 18,940 shares issued and outstanding as of
December 27, 2002 and September 30, 2002, respectively                                                                                                                       |                                    |         | 190          |         |               |         | 190      |        
|                                                                    | Class B Common Stock, $.01 par value; 67,000 shares
authorized as of December 27, 2002 and September 30, 2002;
45,142 shares issued and outstanding as of December 27,
2002 and September 30, 2002                                                                                                                                                 |                                    |         | 452          |         |               |         | 452      |        
|                                                                    | Additional paid-in-capital                                                                                                                                                                                                                                                                                                                         |                                    |         | 698,760      |         |               |         | 699,255  |        
|                                                                    | Accumulated deficit                                                                                                                                                                                                                                                                                                                                |                                    |         | (336,338     | )       |               |         | (324,558 | )      
|                                                                    | Accumulated other comprehensive loss                                                                                                                                                                                                                                                                                                               |                                    |         | (28,639      | )       |               |         | (37,835  | )      
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | Total stockholders equity         |         |              | 334,426 |               |         |          | 337,505 | 
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    | $                                  | 802,891 |              |         | $             | 799,997 |         
|                                                                    |                                                                                                                                                                                                                                                                                                                                                    |                                    |         |              |         |               |         |          |        

The accompanying notes are an integral part of these consolidated financial statements.

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SEMINIS, INC.Consolidated Statements of Operations
(In thousands, except per share data)

|                                                                               |                                              |                          |         |                            |        |              |         |        |        |  
|------------------------------------------------------------------------------ | -------------------------------------------- | ------------------------ | ------- | -------------------------- | ------ | ------------ | ------- | ------ | ------ | -
|                                                                               |                                              |                          |         | For the Three Months Ended
|                                                                               |                                              |                          |         |                           
|                                                                               |                                              |                          |         | December 27,               |        | December 28,
|                                                                               |                                              |                          |         | 2002                       |        | 2001        
|                                                                               |                                              |                          |         |                            |        |             
|                                                                               |                                              |                          |         | (Unaudited)               
|Net sales                                                                      |                                              | $                        | 80,616  |                            |        | $            | 80,079  |       
|Cost of goods sold                                                             |                                              |                          | 30,233  |                            |        |              | 30,286  |       
|                                                                               |                                              |                          |         |                            |        |              |         |       
|                                                                               | Gross profit                                 |                          |         | 50,383                     |        |              |         | 49,793 |       
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Operating expenses                                                             |                                              |                          |         |                            |        |              |         |       
|                                                                               | Research and development expenses            |                          |         | 11,425                     |        |              |         | 11,899 |       
|                                                                               | Selling, general and administrative expenses |                          |         | 42,700                     |        |              |         | 43,907 |       
|                                                                               | Amortization of intangible assets            |                          |         | 3,927                      |        |              |         | 4,158  |       
|                                                                               |                                              |                          |         |                            |        |              |         |       
|                                                                               |                                              | Total operating expenses |         |                            | 58,052 |              |         |        | 59,964 |  
|                                                                               | Gain (loss) on sale of fixed assets          |                          |         | (446                       | )      |              |         | 916    |       
|                                                                               |                                              |                          |         |                            |        |              |         |        |        |  
|                                                                               |                                              | Loss from operations     |         |                            | (8,115 | )            |         |        | (9,255 | )
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Other income (expense)                                                         |                                              |                          |         |                            |        |              |         |       
|                                                                               | Interest income                              |                          |         | 247                        |        |              |         | 120    |       
|                                                                               | Interest expense                             |                          |         | (6,737                     | )      |              |         | (7,290 | )     
|                                                                               | Foreign currency loss                        |                          |         | (184                       | )      |              |         | (1,064 | )     
|                                                                               | Minority interest                            |                          |         | 171                        |        |              |         | (6     | )     
|                                                                               | Other, net                                   |                          |         | (40                        | )      |              |         | (516   | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       
|                                                                               |                                              |                          | (6,543  | )                          |        |              | (8,756  | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Loss before income taxes                                                       |                                              |                          | (14,658 | )                          |        |              | (18,011 | )     
|Income tax benefit (expense)                                                   |                                              |                          | 2,878   |                            |        |              | (1,300  | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Net loss                                                                       |                                              |                          | (11,780 | )                          |        |              | (19,311 | )     
|Preferred stock dividends                                                      |                                              |                          | (4,523  | )                          |        |              | (3,430  | )     
|Additional capital contribution dividends                                      |                                              |                          |        |                            |        |              | (1,139  | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Net loss available for common stockholders                                     |                                              | $                        | (16,303 | )                          |        | $            | (23,880 | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       
|Net loss available for common stockholders per
common share, basic and diluted |                                              | $                        | (0.25   | )                          |        | $            | (0.40   | )     
|                                                                               |                                              |                          |         |                            |        |              |         |       

The accompanying notes are an integral part of these consolidated financial statements.

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SEMINIS, INC.

Consolidated Statement of Stockholders Equity
(In thousands)

|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |         |  
|------------------------------------------------------------------------------------- | -------------------------------------- |  | --------------- | -- | ------------ | - | ------------ | - | ---------- |  | ----------- | ------ | ------------- | - | ------------- | --- | ------- |  | ------ | ------ | ------ | - | --- | --- |  | - | ------- | ------- | - | - | -------- | -------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                      |                                        |  | Class C         |    | Class A      |   | Class B      |   |            |  |             |        |               |   | Accumulated   |     |         |  |       
|                                                                                      |                                        |  | Preferred
Stock |    | Common
Stock |   | Common
Stock |   | Additional |  |             |        |               |   | Other         |     | Total  
|                                                                                      |                                        |  |                 |    |              |   |              |   | Paid-In    |  | Accumulated |        | Comprehensive |   | Stockholders'
|                                                                                      |                                        |  | Number          |    | Amount       |   | Number       |   | Amount     |  | Number      |        | Amount        |   | Capital       |     | Deficit |  | Loss   |        | Equity
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |       
|Balance,
September 30, 2002                                                           |                                        |  | 12              |    |              | $ | 1            |   |            |  | 18,940      |        |               | $ | 190           |     |         |  | 45,142 |        |        | $ | 452 |     |  | $ | 699,255 |         |   | $ | (324,558 | )        |   | $ | (37,835 | )       |   | $ | 337,505 |        
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |        
|Comprehensive loss
Net loss (Unaudited)                                               |                                        |  |                |    |              |   |             |   |            |  |            |        |               |   |              |     |         |  |       |        |        |   |    |     |  |   |        |         |   |   | (11,780  | )        |   |   |        |         |   |   | (11,780 | )      
|Translation adjustment
(Unaudited)                                                    |                                        |  |                |    |              |   |             |   |            |  |            |        |               |   |              |     |         |  |       |        |        |   |    |     |  |   |        |         |   |   |         |          |   |   | 9,196   |         |   |   | 9,196   |        
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |        
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   | (2,584  | )      
|Conversions of additional
Capital contribution to
Class C Preferred Stock
(Unaudited) |                                        |  | 5               |    |              |   |             |   |            |  |            |        |               |   |              |     |         |  |       |        |        |   |    |     |  |   |        |         |   |   | -       |          |   |   |        |         |   |   | -      |        
|Options Exercised (Unaudited)                                                         |                                        |  |                |    |              |   |             |   |            |  | 3           |        |               |   |              |     |         |  |       |        |        |   |    |     |  |   | 5       |         |   |   |         |          |   |   |        |         |   |   | 5       |        
|                                                                                      | Dividends on Redeemable                |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |         |  
|                                                                                      | Preferred Stock
(Unaudited)            |  |                 |   |              |   |              |  |            |  |             |       |               |   |               |    |         |  |        |       |        |   |     |    |  |   |         | (500    | ) |   |          | -       |   |   |         |        |   |   |         | (500    | )
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |        
|                                                                                      | Balance,
December 27, 2002
(Unaudited) |  |                 | 17 |              |   | $            | 1 |            |  |             | 18,943 |               |   | $             | 190 |         |  |        | 45,142 |        |   | $   | 452 |  |   | $       | 698,760 |   |   | $        | (336,338 | ) |   | $       | (28,639 | ) |   | $       | 334,426 |  
|                                                                                      |                                        |  |                 |    |              |   |              |   |            |  |             |        |               |   |               |     |         |  |        |        |        |   |     |     |  |   |         |         |   |   |          |          |   |   |         |         |   |   |         |        

The accompanying notes are an integral part of these consolidated financial statements.

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SEMINIS, INC.Consolidated Statements of Cash Flows
(In thousands)

|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |         |         |  
|------------------------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------- | ------- | -------------------------- | ------- | ------------ | ------- | ------- | ------- | -
|                                                             |                                                                             |                                                      |                                   |         | For the Three Months Ended
|                                                             |                                                                             |                                                      |                                   |         |                           
|                                                             |                                                                             |                                                      |                                   |         | December 27,               |         | December 28,
|                                                             |                                                                             |                                                      |                                   |         | 2002                       |         | 2001        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |             
|                                                             |                                                                             |                                                      |                                   |         | (Unaudited)               
|Cash flows from operating activities:                        |                                                                             |                                                      |                                   |         |                            |         |              |        
|                                                             | Net loss                                                                    |                                                      | $                                 | (11,780 | )                          |         | $            | (19,311 | )      
|                                                             | Adjustments to reconcile net loss to net cash used in operating activities: |                                                      |                                   |         |                            |         |              |         |        
|                                                             |                                                                             | Depreciation and amortization                        |                                   |         | 7,821                      |         |              |         | 8,050   |        
|                                                             |                                                                             | (Gain)
loss on sale of fixed assets                  |                                   |         | 446                        |         |              |         | (916    | )      
|                                                             |                                                                             | Deferred income taxes                                |                                   |         | (2,891                     | )       |              |         | 157     |        
|                                                             |                                                                             | Provision
(benefit) for minority interest subsidiary |                                   |         | (171                       | )       |              |         | 6       |        
|                                                             |                                                                             | Inventory write-down                                 |                                   |         | 5,500                      |         |              |         | 4,000   |        
|                                                             |                                                                             | Compensation expense for restricted stock            |                                   |         |                           |         |              |         | 1,806   |        
|                                                             |                                                                             | Other                                                |                                   |         | (426                       | )       |              |         | 926     |        
|                                                             |                                                                             | Changes in assets and liabilities:                   |                                   |         |                            |         |              |         |         |        
|                                                             |                                                                             |                                                      | Accounts receivable               |         |                            | 11,164  |              |         |         | 14,577  |  
|                                                             |                                                                             |                                                      | Inventories                       |         |                            | (14,432 | )            |         |         | (15,009 | )
|                                                             |                                                                             |                                                      | Prepaid expenses and other assets |         |                            | (4,704  | )            |         |         | (2,276  | )
|                                                             |                                                                             |                                                      | Current income taxes              |         |                            | (536    | )            |         |         | 202     |  
|                                                             |                                                                             |                                                      | Accounts payable                  |         |                            | (879    | )            |         |         | 2,646   |  
|                                                             |                                                                             |                                                      | Other liabilities                 |         |                            | 685     |              |         |         | (1,774  | )
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|                                                             |                                                                             | Net cash used in operating activities                |                                   |         | (10,203                    | )       |              |         | (6,916  | )      
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|Cash flows from investing activities:                        |                                                                             |                                                      |                                   |         |                            |         |              |        
|                                                             | Purchases of fixed and intangible assets                                    |                                                      |                                   | (1,636  | )                          |         |              | (4,428  | )      
|                                                             | Proceeds from disposition of assets                                         |                                                      |                                   | 1,587   |                            |         |              | 22,232  |        
|                                                             | Other                                                                       |                                                      |                                   |        |                            |         |              | (298    | )      
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|                                                             |                                                                             | Net cash provided by (used in) investing activities  |                                   |         | (49                        | )       |              |         | 17,506  |        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|Cash flows from financing activities:                        |                                                                             |                                                      |                                   |         |                            |         |              |        
|                                                             | Proceeds from long-term debt                                                |                                                      |                                   | 371     |                            |         |              | 119     |        
|                                                             | Repayment of long-term debt                                                 |                                                      |                                   | (5,722  | )                          |         |              | (20,129 | )      
|                                                             | Net short-term borrowings                                                   |                                                      |                                   | 9,858   |                            |         |              | 9,164   |        
|                                                             | Other                                                                       |                                                      |                                   | 5       |                            |         |              |        |        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|                                                             |                                                                             | Net cash provided by (used in) financing activities  |                                   |         | 4,512                      |         |              |         | (10,846 | )      
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                             |                                                      | 892                               |         |                            |         | 226          |        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|Decrease in cash and cash equivalents                        |                                                                             |                                                      | (4,848                            | )       |                            |         | (30          | )      
|Cash and cash equivalents, beginning of period               |                                                                             |                                                      | 36,805                            |         |                            |         | 22,323       |        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        
|Cash and cash equivalents, end of period                     |                                                                             | $                                                    | 31,957                            |         |                            | $       | 22,293       |        
|                                                             |                                                                             |                                                      |                                   |         |                            |         |              |         |        

The accompanying notes are an integral part of these consolidated financial statements.

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SEMINIS, INC.
Notes to Consolidated Financial Statements
(In Thousands, Except Per Share Data)

Note 1  Summary of Significant Accounting Policies

Description of Business

Seminis, Inc. (Seminis,
We or the Company) is the leading worldwide
developer, producer and marketer of vegetable and fruit seeds. The Company is
a majority-owned subsidiary of Savia, S.A. de C.V. (Savia) and effectively
began operations when it purchased Asgrow Seed Company in December 1994.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and
its majority controlled and owned subsidiaries. Investments in unconsolidated
entities, representing ownership interests between 20% and 50%, are accounted
for using the equity method of accounting. All material intercompany
transactions and balances have been eliminated in consolidation. Certain
reclassifications have been made to prior periods to conform to the current
quarter presentation.

Seminis generally operates on a thirteen week calendar closing on the Friday
closest to the natural calendar quarter, except for the fiscal year end, which
closes on September 30.

The unaudited consolidated financial statements included herein reflect all
adjustments, (consisting only of normal recurring adjustments), that the
Company considers necessary for a fair presentation of the results of
operations for the interim periods covered and of the financial condition of
the Company at the date of the interim balance sheet. The Companys business
is subject to seasonal fluctuation and, therefore, the results of operations
for periods less than one year are not necessarily indicative of results, which
may be expected for any other interim period or for the fiscal year as a whole.

Supplementary Cash Flow Information

|                                    |                                              |   |                    |     |              |   |       |       | 
|----------------------------------- | -------------------------------------------- | - | ------------------ | --- | ------------ | - | ----- | ----- | 
|                                    |                                              |   | THREE MONTHS ENDED
|                                    |                                              |   |                   
|                                    |                                              |   | DECEMBER 27,       |     | DECEMBER 28,
|                                    |                                              |   | 2002               |     | 2001        
|                                    |                                              |   |                    |     |             
|                                    |                                              |   | (Unaudited)       
|Cash paid for interest              |                                              | $ | 3,637              |     |              | $ | 5,909 |      
|Cash paid for income taxes          |                                              |   | 549                |     |              |   | 941   |      
|Supplemental non-cash transactions: |                                              |   |                    |     |              |   |       |      
|                                    | Class C Preferred Stock dividends            |   |                    |    |              |   |       | 2,930 | 
|                                    | Class B Redeemable Preferred Stock dividends |   |                    | 500 |              |   |       | 500   | 
|                                    | Additional capital contribution dividends    |   |                    |    |              |   |       | 1,139 | 

Effective January 2001, Class C Preferred Stock and additional capital
contribution accrue cash dividends at 10% per annum. The syndicated bank
agreement, however, precludes the payment of cash dividends. These dividends
have not been accrued effective July 1, 2002 in accordance with the Exchange
Agreement with Savia as further described in Note 2. As part of this agreement, Savia agreed to forego
dividends on Class C Preferred Stock and additional paid-in capital
contributions effective July 1, 2002; however, such dividends would be payable
if the exchange transaction is not completed and the agreement terminated.

Loss per Common Share

Net loss per common share has been computed pursuant to the provisions of
Statement of Financial Accounting Standards No. 128, Earnings per Share.
Basic loss per common share is computed by dividing net loss available to
common stockholders by the average number of common shares outstanding during
each period. Net loss available to common stockholders represents reported net
loss less preferred and additional capital contribution dividends. Diluted net
loss per common share reflects the potential dilution that could occur if
dilutive securities and other contracts were exercised or converted into common
stock or resulted in the issuance of common stock. The following table
provides a reconciliation of net loss and sets forth the computation for basic
and diluted net loss per share available for common stockholders.

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|                                                             |                                            |   |                    |         |              |   |         |         |  
|------------------------------------------------------------ | ------------------------------------------ | - | ------------------ | ------- | ------------ | - | ------- | ------- | -
|                                                             |                                            |   | Three Months Ended
|                                                             |                                            |   |                   
|                                                             |                                            |   | December 27,       |         | December 28,
|                                                             |                                            |   | 2002               |         | 2001        
|                                                             |                                            |   |                    |         |             
|                                                             |                                            |   | (Unaudited)       
|Numerator for basic and diluted:                             |                                            |   |                    |         |              |   |         |        
|Net loss                                                     |                                            | $ | (11,780            | )       |              | $ | (19,311 | )      
|Preferred stock dividends                                    |                                            |   | (500               | )       |              |   | (3,430  | )      
|Additional capital contribution dividends                    |                                            |   |                   |         |              |   | (1,139  | )      
|Contingent dividends payable                                 |                                            |   | (4,023             | )       |              |   |        |        
|                                                             |                                            |   |                    |         |              |   |         |        
|                                                             | Net loss available for common stockholders |   | $                  | (16,303 | )            |   | $       | (23,880 | )
|                                                             |                                            |   |                    |         |              |   |         |        
|Denominator  shares:                                        |                                            |   |                    |         |              |   |         |        
|Weighted average common shares outstanding basic and diluted |                                            |   | 64,085             |         |              |   | 60,051  |        
|Net loss available for common stockholders per common share: |                                            |   |                    |         |              |   |         |        
|                                                             | Basic and diluted                          |   | $                  | (0.25   | )            |   | $       | (0.40   | )
|                                                             |                                            |   |                    |         |              |   |         |        

A total of 4.3 and 2.0 million potential shares from options were excluded from
the computation of diluted earnings per share for the three months ended
December 27, 2002 and December 28, 2001, respectively, due to their
antidilutive effect.

Contingently payable dividends represent dividends that may potentially be
payable to Savia if the Exchange Agreement described in Note 2 is not
consummated. As part of this agreement, Savia agreed to forego dividends on
Class C Preferred Stock and additional paid-in capital contributions effective
July 1, 2002; however, such dividends would be payable if the exchange
transaction is not completed and the agreement terminated. These dividends
have not been accrued but are included in the calculation of earnings per share
in order to present the most dilutive result. On a pro forma basis, had the
exchange transaction been completed as of July 1, 2002, loss available for
common stockholders for the three months ended December 27, 2002 would have
been $12,280 and the weighted average common shares outstanding would have been
increased by 37,669 shares, resulting in a loss per common share available for
common stockholders of $0.12.

Recent Accounting Pronouncements

In August 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121 but
retains many of its fundamental provisions. In addition, SFAS No. 144 expands
the scope of discontinued operations to include more disposal transactions. We
have adopted SFAS No. 144 as of October 1, 2002. Such
adoption did not have a material effect on our consolidated financial position, results of
operations or cash flows.

In May 2002, the Financial Accounting Standards Board issued SFAS No. 145,
Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13 and Technical
Corrections. Among other things, SFAS No. 145 rescinds various pronouncements
regarding extinguishment of debt and allows extraordinary accounting treatment
for early extinguishment only when the provisions of Accounting Principles
Board Opinion No. 30, Reporting the Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and
Infrequent Occurring Events and Transactions are met. SFAS No. 145 provisions
regarding early extinguishment of debt are generally effective for fiscal years
beginning after May 15, 2002. Accordingly, SFAS No. 145 was
adopted by the Company on October 1, 2002. Such adoption did not
have an impact on our business, consolidated financial position, results of
operations or cash flow.

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In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. SFAS No.
146 supersedes previous accounting guidance, principally Emerging Issues Task
Force Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred
in a Restructuring).

SFAS No. 146 requires that the liability for costs associated with an exit or
disposal activity be initially measured at fair market value and recognized
when the liability is incurred. In periods subsequent to initial measurement,
changes to the liability are measured using the credit-adjusted risk-free rate
that was used in the initial measurement of the liability recorded. The
cumulative effect of a change resulting from revisions either to the timing or
the amount of estimated cash flow is recognized as an adjustment to the
liability in the period of the change and charged to the same line items in the
statement of operations used when the related costs were initially recognized.
Under EITF No. 94-3, a liability for an exit cost was recognized at the date of
the Companys commitment to an exit plan.

The provisions of SFAS No. 146 are required to be applied prospectively to exit
or disposal activities initiated after December 31, 2002. The Company believes
SFAS No. 146 may affect the timing of recognizing future restructuring costs,
as well as the amounts recognized, depending on the nature of the exit or
disposal activity and the timing of the related estimated cash flows.

On November 25, 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees of Indebtedness of Others, Including Indirect Guarantees of
Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107
and Rescission of FASB Interpretation No. 34. FIN 45 clarifies the
requirements of FASB Statement No. 5, Accounting for Contingencies, relating to
the guarantors accounting for and disclosure of, the issuance of certain types
of guarantees. The disclosure provisions of the Interpretation are effective
for financial statements of interim or annual periods that end after
December 15, 2002. Accordingly, the Company adopted FIN 45
during the quarter ended December 27, 2002. The Company has no
guarantees which would require disclosure under FIN 45.

In January 2003, the FASB issued SFAS
No. 148,   Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB
Statement No. 123. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. It also
requires disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. SFAS
No. 148 is effective for annual and interim periods beginning
after December 15, 2002. As we have elected not to change to the
fair value based method of accounting for stock-based employee
compensation, the adoption of SFAS No. 148 will not have an
impact upon our financial condition or results of operations.

Note 2  Liquidity

As of September 30, 2000, we were not in compliance with certain covenants of
our existing credit facility, which gave the lenders the right to accelerate
payment of all amounts outstanding under the facility. In December 2000, the
lenders granted a waiver with respect to these covenants that extended through
April 30, 2001, at which time any defaults would once again arise. As we did
not expect to be in compliance with our covenants once the waiver expired, all
outstanding borrowings under the credit facility were classified as a current
liability as of September 30, 2000. In connection with granting the waivers,
the lenders agreed to reschedule principal payments within fiscal year 2001.
The lenders also accelerated the final maturity of the term loan and the
termination date for the revolving credit commitments to June 30, 2002 from
June 30, 2004. We were obligated to deliver a financial plan through September
30, 2002, which detailed cash flow projections on a monthly basis as well as
proposed alternatives for the refinancing of the credit facility or
recapitalization of the company.

On May 31, 2001, our lenders agreed with the financial plan that we submitted
and agreed to restructure our existing credit facility. Upon receipt of the
amended credit agreement, long-term portions of borrowings were reclassified
from current liabilities to long-term debt. Among other things, the amendment
extended the final maturity of the credit facility from the previously agreed
on date of June 30, 2002 to December 31, 2002, revised principal payment dates
under the term loan, instituted a new grid pricing formula to determine
interest on borrowings and revised covenant obligations. Interim principal
obligations under the amendment included $16.0 million due in the fourth
quarter of fiscal year 2001, $19.0 million, $4.0 million, $31.0 million and
$9.0 million due in the first, second, third and fourth quarters of fiscal year
2002, respectively. All remaining amounts were due in the first quarter of
fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South
Korea, which generated net proceeds of approximately $20.0 million. We used
$19.5 million of the proceeds to make the scheduled $19.0 million payment on
the credit facility in October 2001. We also sold one of our non-core
businesses in January 2002, which generated additional proceeds of
approximately $17.6 million. We used $13.0 million of the proceeds to prepay
our existing credit facility in January 2002 and utilized our operating cash
flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002
and 2001 and were in compliance with all of our financial covenants under the
amended credit agreement at September 30, 2002. In October 2002, we paid an
additional $5.0 million of principal as required by the amended credit
agreement; however, as of December 31, 2002, we had not completed a refinancing
transaction in order to pay the remaining balance of $224.7 million. The
lenders agreed to temporarily extend the term of the credit facility and in
January 2003, a formal amendment was executed. Among other things, the
amendment extended the final maturity of the credit facility from the
previously agreed on date of December 31, 2002 to December 31, 2003, revised
principal payment dates under the term loan, instituted a new grid pricing
formula to determine interest on borrowings and revised covenant obligations.

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Interim principal obligations under the amendment included $3.0 million and
$9.5 million due in the third and fourth quarters of fiscal year 2003,
respectively. The remaining outstanding amount totaling $212.2 million will be
due in the first quarter of fiscal year 2004. We met all required principal
and interest payments during the first quarter of fiscal year 2003 and were in
compliance with all of our financial covenants at December 27, 2002 under the
newly extended amendment. As all remaining amounts under the amended credit
facility are due within one year, the $224.7 million of outstanding borrowings
under the credit facility have been classified as a current liability as of
December 27, 2002.

Although not impacting current liquidity, the Company entered into an exchange
agreement with its majority shareholder, Savia S.A. de C.V. as of July 1, 2002
to exchange all of its outstanding Seminis Class C Preferred Stock (including
accrued PIK dividends) having a principal value of $120.2 million, additional
paid-in capital (including accrued PIK dividends) of $46.7 million and accrued
and unpaid cash dividends of $10.0 million into 37.7 million shares of Seminis
Class A common stock. The remaining accrued and unpaid cash dividends on the
Class C Preferred Stock of $15.0 million will remain due and payable and will
be paid in cash by the Company in accordance with the terms of the exchange
agreement. On July 3, 2002, the Company received an opinion from UBS Warburg
that, as of such date, the number of shares of Class A common stock to be
received by Savia in the exchange was fair from a financial point of view to
the holders of the Companys Class A common stock and Class B common stock (in
each case other than Savia and its affiliates and other than holders of the
Companys Class B common stock that also hold shares of the Companys Class B
Redeemable preferred stock). The exchange agreement was approved by the
Companys Board of Directors on July 3, 2002 and was approved by our
stockholders on September 26, 2002. Although the exchange agreement was
approved by the Stockholders at the Annual Meeting, it is subject to customary
closing conditions and approvals by creditors of Savia and the Company. At
this time, all of the closing conditions and approvals have not been satisfied
and therefore, the exchange has not been consummated. The Company may not
complete all of the transactions contemplated under the exchange agreement
until the conditions and approvals are obtained or waived, including the
payment by the Company of the accrued and unpaid dividends on the Class B
preferred stock and the consent of the lenders under the Companys Syndicated
Credit Facility.

In December 2002, Savia, Seminis majority stockholder announced that it signed
a letter of intent with acquisition company under which acquisition
company and
certain Savia related parties will form the acquisition company and acquire all the outstanding shares of
Seminis, Inc. The proposed transaction is subject to numerous conditions;
however, if completed, such a change in control would require the credit
facility to be paid in full. It is anticipated that such a transaction would be
funded by financing arranged by acquisition company.

Whereas we have met our obligations as well as covenant requirements under the
amended credit facility through December 27, 2002, we must successfully execute
a refinancing plan prior to December 31, 2003 in order to meet the final
maturity of the facility. We will continue to pursue a refinancing plan, which
may include negotiation of a new credit facility and/or placement of new debt
securities; however, there can be no assurances that we will be able to
successfully complete the refinancing. Additionally, there can be no
assurances that the Fox Paine transaction will be consummated. Failure to
comply with existing covenants, which would make the Syndicated debt callable
or our inability to obtain adequate financing with reasonable terms prior to
December 31, 2003 could have a material adverse impact on our business, results
of operations or financial condition.

Note 3  Inventories

Inventories consist of the following:

|                               |  |              |         |               |  |   |         | 
|------------------------------ |  | ------------ | ------- | ------------- |  | - | ------- | 
|                               |  | December 27, |         | September 30,
|                               |  | 2002         |         | 2002         
|                               |  |              |         |              
|                               |  | (Unaudited)  |         |               |  |  
|Seed                           |  | $            | 252,520 |               |  | $ | 238,448 | 
|Unharvested crop growing costs |  |              | 26,918  |               |  |   | 27,199  | 
|Supplies                       |  |              | 7,955   |               |  |   | 6,880   | 
|                               |  |              |         |               |  |   |         | 
|                               |  | $            | 287,393 |               |  | $ | 272,527 | 
|                               |  |              |         |               |  |   |         | 

Note 4  Goodwill

Changes in the net carrying amount of
goodwill for the quarter ended December 27, 2002, are as follows:

|                                 |                                     |   |         |       | 
|-------------------------------- | ----------------------------------- | - | ------- | ----- | 
|                                 |                                     |   | Amount 
|Balance
as of September 30, 2002 |                                     | $ | 98,931  |      
|                                 | Goodwill
acquired during the period |   |         |      | 
|                                 | Impairment
losses                   |   |         |      | 
|                                 | Translation
adjustments and other   |   |         | 2,152 | 
|                                 |                                     |   |         |       | 
|Balance
as of December 27, 2002  |                                     | $ | 101,083 |      
|                                 |                                     |   |         |       | 

Note 5  Accrued Liabilities

Accrued liabilities consist of the
following at December 27, 2002 and September 30, 2002:

|                                       |  |              |         |               |  |   |        | 
|-------------------------------------- |  | ------------ | ------- | ------------- |  | - | ------ | 
|                                       |  | December 27, |         | September 30,
|                                       |  | 2002         |         | 2002         
|                                       |  |              |         |              
|Employee
salaries and related benefits |  | $            | 46,964  |               |  | $ | 44,754 | 
|Severance                              |  |              | 2,223   |               |  |   | 3,269  | 
|Seedmens
errors and omissions         |  |              | 5,414   |               |  |   | 4,072  | 
|Interest                               |  |              | 2,352   |               |  |   | 412    | 
|Savia
dividends                        |  |              | 25,008  |               |  |   | 25,008 | 
|Income
taxes payable                   |  |              | 3,375   |               |  |   | 3,236  | 
|Other                                  |  |              | 15,250  |               |  |   | 17,873 | 
|                                       |  |              |         |               |  |   |        | 
|                                       |  | $            | 100,586 |               |  | $ | 98,624 | 
|                                       |  |              |         |               |  |   |        | 

Note 6  Contingencies

We are involved from time to time as a defendant in various lawsuits arising in
the normal course of business. We believe that no current claims, individually
or in the aggregate, will have a material adverse effect on our business,
results of operations or financial condition.

In January 2002, melon growers in Costa Rica notified us that our Dorado melon
seeds were infected with Watermelon Fruit Blotch. Growers who purchased the
infected Seminis seeds and growers whose crops were infected by the bacteria
that spread from crops grown with the infected Seminis seeds have claimed
damages against us. The claims related to those growers who purchased Seminis

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seeds have been settled for approximately $5.8 million, of which, approximately
$2.6 million was recovered under our errors and omissions insurance policy and
the remainder of the settlement was paid by the Company by July 2002. The
claims related to the growers with infected crops total approximately $5.2
million and we believe these claims are covered under our general liability
insurance policy. We have tentatively settled all of these claims and we have
advanced approximately $2.1 million to the growers; however, we are unable to
finalize the settlement because our general liability insurance carrier has
denied coverage. We continue to believe the policy covers these
claims and are pursuing enforcement of our rights under the policy
to provide coverage of the claims. In the event we cannot finalize
the settlement, claims could increase above $5.2 million.

In early 2000, we filed a suit against Dietrich Schmidt, the former president
of Seminis and the current president of United Genetics, a competitor of ours,
United Genetics and two former Seminis breeders, Ken Owen and Wei Ouyang, for
trade secret misappropriation and breach of contract. Schmidt filed a
counterclaim for defamation against us. We were unsuccessful on our claims for
trade secret misappropriation and breach of contract and Schmidt was successful
on his counterclaim with the court awarding him $1 in nominal damages. The
court subsequently awarded Schmidt, Owen, Ouyang their attorneys fees. We
have appealed certain aspects of the judgement, including the fee award. The
appeal is still pending and is not expected to be decided until 2003.

On December 17, 2002 and January 4, 2003, four purported class action lawsuits
were filed relating to the proposed transaction under which Fox Paine &
Company, LLC, a San Francisco based private equity firm and certain Savia
related parties will acquire all of the outstanding shares of Seminis, Inc.
Three of these actions  Garry Firth v. Alfonso Romo Garza, et al., Civil
Action No. 20085, Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No.
20097 and Pablo Herranz v. Seminis, Inc., et al., Civil Action No. 20105  were
filed in the Delaware Court of Chancery (New Castle County), while the fourth,
Mark Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California
Superior Court (Ventura County). The Firth, Pozniak and Herranz complaints
name as defendants Savia S.A. de C.V. (Savia) and Seminis, Inc. (Seminis),
along with Seminis directors. The Rosales complaint names as a defendant
Seminis and its directors. All four complaints purport to be brought on behalf
of Seminis common stockholders or their successors. All four complaints allege
that the above-described transaction, if consummated, would provide
insufficient consideration to Seminis common stockholders and allege that the
defendants breached their fiduciary duties in connection with the transaction.
The complaints seek a preliminary and permanent injunction to enjoin the
transaction and, in the event the transaction is consummated, rescission and
damages. The defendants will vigorously defend these actions.

Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion and analysis should be read in conjunction with the
consolidated financial statements,
including the notes thereto, appearing elsewhere herein. The following
discussion and analysis contains certain forward-looking statements, which
are subject to certain risks, uncertainties and contingencies, including,
without limitation, those set forth below, which could cause Seminis actual
business, results of operations or financial condition to differ materially
from those expressed in or implied by, such statements.

RISK FACTORS

Readers should be aware that there are various risk factors including, but not
limited to, those set forth below:



| |  |  | As of December 31, 2002, we had not completed a refinancing
transaction in order to pay the remaining balance of our Syndicated
Credit Facility totaling $224.7 million. The lenders agreed to
temporarily extend the term of the credit facility and in January 2003,
a formal amendment was executed. Among other things, the amendment
extended the final maturity of the credit facility from the previously
agreed on date of December 31, 2002 to December 31, 2003, revised
principal payment dates under the term loan, instituted a new grid
pricing formula to determine interest on borrowings and revised covenant
obligations. Interim principal obligations under the amendment included
$3.0 million and $9.5 million due in the third and fourth quarters of
fiscal year 2003, respectively. The remaining outstanding amount
totaling $212.2 million will be due in the first quarter of fiscal year
2004. Whereas we have met our obligations as well as covenant
requirements under the amended credit facility through December 27,
2002, we must successfully execute a refinancing plan prior to December
31, 2003 in order to meet the final maturity of the facility. We will
continue to pursue a refinancing plan, which may include negotiation of
a new credit facility and/or placement of new debt securities; however,
there can be no assurances that we will be able to successfully complete
the refinancing. Additionally, there can be no assurances that the Fox
Paine transaction will be consummated. Failure to comply with existing
covenants, which would make the Syndicated debt callable or our
inability to obtain adequate financing with reasonable terms prior to
December 31, 2003 could have a material adverse impact on our business,
results of operations or financial condition.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Company is currently restricted from any additional borrowings
under the Syndicated Credit Facility. As of November                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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| |   |  | 2000, Seminis parent company suspended advancing funds to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Savia owns approximately 63.4% of the Companys outstanding common
stock and controls 78.9% of the vote of its common stock. Accordingly,
Savia controls the Company and has the power to approve all actions
requiring the approval of our stockholders, including the power to elect
all of its directors. Therefore, Savia effectively controls our
management.                                                                                                                               
|
| |  |  | A new management team has been in place as of August 2000. The
Companys ability to generate operating profits and cash flows will be
dependent on their successful implementation of the Companys strategic
initiatives including, but not limited to, the Global Restructuring and
Optimization Plan.                                                                                                                                                                                         
|
| |  |  | The Company continues to invest in research and development in order
to enable us to identify and develop new products to meet consumer
demands. In fiscal year 2002, our investment in research and
development represented 9.8% of net sales. Despite investments in this
area, our research and development may not result in the discovery or
successful development of new products, which will be accepted by our
customers.                                                               
|
| |  |  | The Company may have the inability to protect its intellectual
property due to the uncertainty of litigation and the ineffectiveness of
the laws in some of the countries that the Company currently has
operations, which could have a material adverse effect on our business,
results of operations or financial condition.                                                                                                                                                                   
|
| |  |  | A change in United States law protecting plant patents could take
away patent protection for the Companys patented seeds, which could
have a material adverse effect on our business, results of operations or
financial condition.                                                                                                                                                                                                                                                             
|
| |  |  | The Company faces substantial competition due to technological
advances by competitors such as other seed companies, pharmaceutical and
chemical companies and biotechnology companies. Many of these companies
have substantially greater resources than we. If a competitor
introduces a competitively successful product, it could take years to
develop a competitive seed variety, which could have a material adverse
effect on our business, results of operations or financial condition.
|
| |  |  | The Companys failure to accurately forecast and manage
inventory could result in an unexpected shortfall or surplus of seeds,
which could have a material adverse effect on our business, results of
operations or financial condition.                                                                                                                                                                                                                                                         
|
| |  |  | Extreme weather conditions, disease and pests can materially and
adversely affect the quality and quantity of seeds produced. There can
be no assurance that these factors will not affect a substantial portion
of the Companys production in any year and have a material adverse
effect on our business, results of operations or financial condition.                                                                                                                                       
|
| |  |  | Defective seeds could result in warranty claims and negative
publicity and the insurance covering warranty claims may become
unavailable or be inadequate, which could have a material adverse effect
on our business, results of operations or financial condition.                                                                                                                                                                                                                             

OVERVIEW

Seminis, Inc. is the leading worldwide developer, producer and marketer of
vegetable and fruit seeds. We produce more than 60 species and 4,000 vegetable
and fruit seed products (which do not include tree and citrus fruits). We
market our seeds through four full-line brands  Seminis, Asgrow, Petoseed and
Royal Sluis  and five specialty and regional brands. We have established a
worldwide presence and global distribution system. We market seeds in over 150
countries, have 48 research and development facilities in 17 countries and
territories and production sites in over 25 countries. This allows us to
remain close to local markets around the world, adapt our products to any
microclimate and meet the preferences of local consumers.

Seminis was formed in 1994 to consolidate various industry-leading vegetable
and fruit seed brands into one consumer-oriented producer and marketer of
vegetable and fruit seeds. Our core business was created through the
acquisition of the Asgrow seed business in December 1994 and the subsequent
combination of the Asgrow business with the Petoseed and Royal Sluis seed
businesses in October 1995. Since our formation, we have been at the forefront
of the consolidation of the vegetable and fruit seed industry and have
completed ten acquisitions.

Our rapid growth through acquisitions created a highly complex operation that
impacted our results. An increasing level of inventory as well as production
and quality assurance difficulties were the primary operating problems that
resulted in us experiencing severe financial difficulties over the past several
years.

12



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##### Table of Contents



Global Restructuring and Optimization Plan

In February 2000, we announced a cost-saving initiative designed to streamline
operations, increase utilization of facilities and improve efficiencies. The
first phase of the initiative, which commenced in fiscal year 2000 and focused
on North American operations, was completed by the end of fiscal year 2001. In
June 2001, we commenced the second phase, which was targeted at our global
operations and expanded the phase to cover additional headcount reductions and
to consolidate our facilities in Holland. The key elements to the Global
Restructuring and Optimization Plan involve:



| |  | reorganizing our ten legacy seed companies into four geographical regions;              
|- |  | ----------------------------------------------------------------------------------------
| 
| |  | selling or consolidating certain operation and production facilities;                   
| 
| |  | reducing headcount that results from the reorganization and from facility consolidation;
| 
| |  | rationalizing our product portfolio;                                                    
| 
| |  | implementing an advanced logistics management information system; and                   
| 
| |  | divesting non-strategic assets.                                                         

In connection with phase one of the Global Restructuring and Optimization Plan,
we recorded pre-tax charges to operations of approximately $34.4 million for
restructuring costs during fiscal year 2000 that included severance and other
exit costs, inventory write-downs and costs associated with streamlining our
products portfolio. Of this amount, $18.4 million was included in cost of
goods sold for inventory write-downs. The remaining $16.0 million was included
in selling, general and administrative expenses and consisted primarily of
severance costs. The total phase one and initial phase two severance charges
related to a planned 600-employee reduction worldwide in both operational and
administrative groups.

As part of the implementation of the expanded second phase of our Global
Optimization Plan, we recorded a pre-tax charge of $12.0 million in selling,
general and administrative expenses in the third quarter of fiscal year 2001.
This charge was primarily related to severance and related costs resulting from
an additional planned 250-employee reduction worldwide in both operational and
administrative groups. In fiscal year 2001, we also recorded non-cash inventory
write-downs of $58.2 million in cost of goods sold in order to comply with more
stringent seed quality standards and to further rationalize our product
portfolio from 6,000 to 4,000 varieties. We believe we have established
adequate reserves for all of the remaining costs and expenses related to our
Global Restructuring and Optimization Plan.

The remaining components of the restructuring accruals are as follows:

|                               |       |   |         |      |          |   |           |       |            |   |            |      |           |   |            |      |            |   |           |       |            |   |          |      |            |   |   |   |  |   |      |      |   |   |      |     |  |   |      |      |   |   |     |     | 
|------------------------------ | ----- | - | ------- | ---- | -------- | - | --------- | ----- | ---------- | - | ---------- | ---- | --------- | - | ---------- | ---- | ---------- | - | --------- | ----- | ---------- | - | -------- | ---- | ---------- | - | - | - |  | - | ---- | ---- | - | - | ---- | --- |  | - | ---- | ---- | - | - | --- | --- | 
|                               |       |   |         |      |          |   | Amounts   |       | Balance at |   | Additional |      | Amounts   |   | Balance at |      | Additional |   | Amounts   |       | Balance at |   | Amounts  |      | Balance at
|                               |       |   | Charges |      | Incurred |   | Sept. 30, |       | Charges    |   | Incurred   |      | Sept. 30, |   | Charges    |      | Incurred   |   | Sept. 30, |       | Incurred   |   | Dec. 27,
|                               |       |   | 2000    |      | 2000     |   | 2000      |       | 2001       |   | 2001       |      | 2001      |   | 2002       |      | 2002       |   | 2002      |       | 2003       |   | 2002    
|                               |       |   |         |      |          |   |           |       |            |   |            |      |           |   |            |      |            |   |           |       |            |   |         
|Severance and related
expenses |       | $ | 14.0    |      |          | $ | (1.8      | )     |            | $ | 12.2       |      |           | $ | 12.0       |      |            | $ | (12.3     | )     |            | $ | 11.9     |      |            | $ |  |   |  | $ | (8.6 | )    |   | $ | (3.3 | )   |  | $ | (1.1 | )    |   | $ | 2.2 |    
|Inventory write-downs          |       |   | 18.4    |      |          |   | (18.4     | )     |            |   |           |      |           |   | 58.2       |      |            |   | (58.2     | )     |            |   |         |      |            |   |  |   |  |   |     |      |   |   |     |     |  |   |     |      |   |   |    |    
|Other                          |       |   | 2.0     |      |          |   | (2.0      | )     |            |   |           |      |           |   |           |      |            |   |          |       |            |   |         |      |            |   |  |   |  |   |     |      |   |   |     |     |  |   |     |      |   |   |    |    
|                               |       |   |         |      |          |   |           |       |            |   |            |      |           |   |            |      |            |   |           |       |            |   |          |      |            |   |   |   |  |   |      |      |   |   |      |     |  |   |      |      |   |   |     |    
|                               | Total |   | $       | 34.4 |          |   | $         | (22.2 | )          |   | $          | 12.2 |           |   | $          | 70.2 |            |   | $         | (70.5 | )          |   | $        | 11.9 |            |   | $ |  |  |   | $    | (8.6 | ) |   | $    | 3.3 |  |   | $    | (1.1 | ) |   | $   | 2.2 | 
|                               |       |   |         |      |          |   |           |       |            |   |            |      |           |   |            |      |            |   |           |       |            |   |          |      |            |   |   |   |  |   |      |      |   |   |      |     |  |   |      |      |   |   |     |    

To date, there have been no material adjustments to amounts accrued under the
plan. The remaining $2.2 million reserve balance is expected to
be utilized in fiscal year 2003.

Improved Financial Performance

As a result of the implementation of the global restructuring and optimization
plan, we have significantly improved our cash flows and established the basis
for future profitable operations through:



| |  |  | decreased operating expenses primarily through a reduction in global
headcount and the consolidation of production and operations facilities;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | improved collections of accounts receivable;                                                                                                 
|
| |  |  | reduced inventory purchases resulting from improved forecasting and inventory controls; and                                                  

13



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##### Table of Contents





| |  |  | the sale of non-core assets.
| | - |  | ----------------------------

Results of Operations

The table below sets forth Seminis results of operations data expressed as a
percentage of net sales.

|                                             |  |                    |       |              |  |  |       |   
|-------------------------------------------- |  | ------------------ | ----- | ------------ |  |  | ----- | --
|                                             |  | Three Months Ended
|                                             |  |                   
|                                             |  | December 27,       |       | December 28,
|                                             |  | 2002               |       | 2001        
|                                             |  |                    |       |             
|                                             |  | (Unaudited)       
|Net sales                                    |  |                    | 100.0 | %            |  |  | 100.0 | % 
|                                             |  |                    |       |              |  |  |       |   
|Gross margin                                 |  |                    | 62.5  |              |  |  | 62.2  |   
|Research and development expenses            |  |                    | 14.2  |              |  |  | 14.9  |   
|Selling, general and administrative expenses |  |                    | 52.9  |              |  |  | 54.8  |   
|Amortization of intangible assets            |  |                    | 4.9   |              |  |  | 5.2   |   
|                                             |  |                    |       |              |  |  |       |   
|Total
operating expense                      |  |                    | 72.0  |              |  |  | 74.9  |   
|Gain (loss) on sale of fixed assets          |  |                    | (0.6  | )            |  |  | 1.2   |   
|                                             |  |                    |       |              |  |  |       |   
|Loss from operations                         |  |                    | (10.1 | )            |  |  | (11.5 | ) 
|Interest expense, net                        |  |                    | (8.1  | )            |  |  | (9.0  | ) 
|Other
non-operating expense, net             |  |                    |      |              |  |  | (2.0  | ) 
|                                             |  |                    |       |              |  |  |       |   
|Loss before income taxes                     |  |                    | (18.2 | )            |  |  | (22.5 | ) 
|Income tax benefit (expense)                 |  |                    | 3.6   |              |  |  | (1.6  | ) 
|                                             |  |                    |       |              |  |  |       |   
|Net loss                                     |  |                    | (14.6 | )%           |  |  | (24.1 | )%
|                                             |  |                    |       |              |  |  |       |   

Three Months Ended December 27, 2002 Compared with Three Months Ended December
28, 2001

Net Sales

Net sales increased 0.7% to $80.6 million for the three months ended December
27, 2002 compared to $80.1 million for the three months ended December 28,
2001. The result was partially due to $0.8 million of positive
impact of currency fluctuations relating to the strengthening of the Euro and
South Korean Won versus the U.S. Dollar during the first quarter of fiscal year
2003 compared to the same period in the prior year. In constant dollars stated at monthly average exchange rates of fiscal
year 2002 and excluding $2.0 million of sales from a divested non-core business
in fiscal year 2002, sales would have increased 2.1% to $79.8 million for the
first quarter of fiscal year 2003 from $78.1 million for the first quarter of
fiscal year 2002. The increase was primarily a result of price
increases. Geographically, the sales
increases were primarily in Europe and the Middle East. The Companys business
is subject to seasonal fluctuations and, therefore, the sales for the first
quarter of a fiscal year are not necessarily indicative of those to be expected
in any other interim period or for a fiscal year as a whole.

Gross Profit

Gross profit increased 1.2% to $50.4 million for the three months ended
December 27, 2002 from $49.8 million for the three months ended December 28,
2001. Gross margin increased to 62.5% for the three months ended December 27,
2002 from 62.2% for the three months ended December 28, 2001. The improvement
was primarily due to general price increases in all regions.

Research and Development Expenses

Research and development expenses decreased 4.0% to $11.4 million for the three
months ended December 27, 2002 from $11.9 million for the three months ended
December 28, 2001. This decrease was primarily the result of the divestiture
of a non-core business in fiscal year 2002. Despite the impact of higher
expenses due to currency fluctuations from research and development operations
in Europe and South Korea in the first quarter of fiscal year 2003, the overall
expenses in the current year are lower than the same period in the prior year.

14



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Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 2.7% to $42.7 million
for the three months ended December 27, 2002 from $43.9 million for the three
months ended December 28, 2001. The decrease was primarily due to expenses
related to the divestiture of a non-core business in the amount of $2.9
million, an employee restricted stock award charge of $1.3 million and fees
related to restructuring of $0.3 million recorded during the first quarter of
fiscal year 2002. Excluding the aforementioned expenses in fiscal year 2002,
expenses would have increased $3.3 million. The increase was primarily due to
higher insurance costs, other costs impacted by inflation and the currency exchange impact
on European and Korean expenses.

Gain (Loss) on Sales of Fixed Assets

Both the loss of $0.4 million in
the three months ended December 27, 2002 and the gain of
$0.9 million in the three months ended December 28, 2001
were primarily from fixed asset sales of our Korean subsidiary.

Amortization of Intangible Assets

Amortization of intangible assets decreased 5.6% to $3.9 million for the three
months ended December 27, 2002 from $4.2 million for the three months December
28, 2001. The decrease was primarily related to the effect of latter stages of
accelerated amortization of intangible assets related to purchase accounting.
The decrease was partially offset by the currency impact from the fluctuation
of the South Korean Won on South Korean based intangible assets.

Interest Expense, Net

Interest expense, net, decreased 9.5% to $6.5 million for the three months
ended December 27, 2002 from $7.2 million for the three months ended December
28, 2001. The decrease was primarily due to lower average debt balances during
the first quarter of fiscal year 2003 compared to the same period during the
prior fiscal year. During the 12 months ended December 27, 2002, our bank debt
balance decreased by approximately $39.9 million.

Other Non-Operating Income (Expense), Net

We had other non-operating expense, including foreign currency gain (loss),
net, of $0.1 million for the three months ended December 27, 2002 as compared
to other non-operating expense, net, of $1.6 million for the three months ended
December 28, 2001. Other non-operation expense, net, for the three months
ended December 27, 2002 primarily consists of foreign currency losses of $0.2
million, offset by a minority interest benefit of $0.2 million. Other
non-operating expense, net, for the three months ended December 28, 2001,
primarily consists of foreign currency losses of $1.1 million resulting from
currency fluctuations in a United States Dollar denominated loan in the
Netherlands.

Income Tax Benefit (Expense)

Income tax benefit was $2.9 million for the three months ended December 27,
2002 compared to an income tax expense of $1.3 million for the three months
ended December 28, 2001. The change in the effective tax rate during the first
quarter of fiscal year 2003 compared to the same period in the prior year was
primarily due to the mix of worldwide income and losses at Seminis
subsidiaries.

Seasonality

The seed business is highly seasonal. Generally, net sales are highest in the
second fiscal quarter due to increased demand from Northern Hemisphere growers
who plant seed in the early spring. Seminis recorded 33.7% of its fiscal year
2002 net sales during its second fiscal quarter. Seminis has historically
operated at a loss during the first and third fiscal quarters due to lower
sales during such quarters. Seminis results in any particular quarter should
not be considered indicative of those to be expected for a full year.

Liquidity and Capital Resources

Cash flows from operations

Operating activities utilized $10.2 million in cash flow during the first
quarter of fiscal year 2003 compared to $6.9 million utilized during the same
period in the prior fiscal year. The increase in cash utilization was
primarily due to a reduction in the level of accounts payable when
compared to the corresponding period in the prior year, but partially offset
by the positive impacts of a decrease in both production overhead and operating
expenses resulting from the successful implementation of the Global
Restructuring and Optimization Plan.

Cash flows from investments

Capital expenditures decreased to $1.6 million for the first quarter of fiscal
year 2002, from $4.4 million in the same period of the

15



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##### Table of Contents



prior fiscal year. The decrease was partly due to investments in the prior
year that related to a production facility, which is being utilized to
consolidate our South Korean operations and to enhance our growth strategy in
the Far East market. As this investment in the South Korean operations
facility was completed in fiscal year 2002, capital expenditures decreased
during the first quarter of fiscal year 2003. Other investing activities for
the first quarter of fiscal year 2003 included $1.6 million from proceeds from
the sale of assets compared to $22.2 million in the prior fiscal year, which
primarily related to the sale of an office building in Seoul.

Cash flows from financings

Our total indebtedness as of December 27, 2002 was $284.7 million, of which
$224.7 million were borrowings under our existing credit facility and we had
$14.4 million, $8.6 million, $6.3 million and $26.6 million of borrowings by
our United States, Italian, Spanish and South Korean subsidiaries, respectively
and $4.1 million of borrowings by other foreign subsidiaries.

As of September 30, 2000, we were not in compliance with certain covenants of
our existing credit facility, which gave the lenders the right to accelerate
payment of all amounts outstanding under the facility. In December 2000, the
lenders granted a waiver with respect to these covenants that extended through
April 30, 2001, at which time any defaults would once again arise. As we did
not expect to be in compliance with our covenants once the waiver expired, all
outstanding borrowings under the credit facility were classified as a current
liability as of September 30, 2000. In connection with granting the waivers,
the lenders agreed to reschedule principal payments within fiscal year 2001.
The lenders also accelerated the final maturity of the term loan and the
termination date for the revolving credit commitments to June 30, 2002 from
June 30, 2004. We were obligated to deliver a financial plan through September
30, 2002, which detailed cash flow projections on a monthly basis as well as
proposed alternatives for the refinancing of the credit facility or
recapitalization of the company.

On May 31, 2001, our lenders agreed with the financial plan that we submitted
and agreed to restructure our existing credit facility. Upon receipt of the
amended credit agreement, long-term portions of borrowings were reclassified
from current liabilities to long-term debt. Among other things, the amendment
extended the final maturity of the credit facility from the previously agreed
on date of June 30, 2002 to December 31, 2002, revised principal payment dates
under the term loan, instituted a new grid pricing formula to determine
interest on borrowings and revised covenant obligations. Interim principal
obligations under the amendment included $16.0 million due in the fourth
quarter of fiscal year 2001, $19.0 million, $4.0 million, $31.0 million and
$9.0 million due in the first, second, third and fourth quarters of fiscal year
2002, respectively. All remaining amounts were due in the first quarter of fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South
Korea, which generated net proceeds of approximately $20.0 million. We used
$19.5 million of the proceeds to make the scheduled $19.0 million payment on
the credit facility in October 2001. We also sold one of our non-core
businesses in January 2002, which generated additional proceeds of
approximately $17.6 million. We used $13.0 million of the proceeds to prepay
our existing credit facility in January 2002 and utilized our operating cash
flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002
and 2001 and were in compliance with all of our financial covenants under the
amended credit agreement at September 30, 2002. In October 2002, we paid an
additional $5.0 million of principal as required by the amended credit
agreement; however, as of December 31, 2002, we had not completed a refinancing

16



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##### Table of Contents



transaction in order to pay the remaining balance of $224.7 million. The
lenders agreed to temporarily extend the term of the credit facility and in
January 2003, a formal amendment was executed. Among other things, the
amendment extended the final maturity of the credit facility from the
previously agreed on date of December 31, 2002 to December 31, 2003, revised
principal payment dates under the term loan, instituted a new grid pricing
formula to determine interest on borrowings and revised covenant obligations.
Interim principal obligations under the amendment included $3.0 million and
$9.5 million due in the third and fourth quarters of fiscal year 2003,
respectively. The remaining outstanding amount totaling $212.2 million will be
due in the first quarter of fiscal year 2004. We met all required principal and
interest payments during the first quarter of fiscal year 2003 and were in
compliance with all of our financial covenants at December 27, 2002 under the
newly extended amendment. As all remaining amounts under the amended credit
facility are due within one year, the $224.7 million of outstanding borrowings
under the credit facility have been classified as a current liability as of
December 27, 2002.

Although not impacting current liquidity, the Company entered into an exchange
agreement with its majority shareholder, Savia S.A. de C.V. as of July 1, 2002
to exchange all of its outstanding Seminis Class C Preferred Stock (including
accrued PIK dividends) having a principal value of $120.2 million, additional
paid-in capital (including accrued PIK dividends) of $46.7 million and accrued
and unpaid cash dividends of $10.0 million into 37.7 million shares of Seminis
Class A common stock. The remaining accrued and unpaid cash dividends on the
Class C Preferred Stock of $15.0 million will remain due and payable and will
be paid in cash by the Company in accordance with the terms of the exchange
agreement. On July 3, 2002, the Company received an opinion from UBS Warburg
that, as of such date, the number of shares of Class A common stock to be
received by Savia in the exchange was fair from a financial point of view to
the holders of the Companys Class A common stock and Class B common stock (in
each case other than Savia and its affiliates and other than holders of the
Companys Class B common stock that also hold shares of the Companys Class B
Redeemable preferred stock). The exchange agreement was approved by the
Companys Board of Directors on July 3, 2002 and was approved by our
stockholders on September 26, 2002. Although the exchange agreement was
approved by the Stockholders at the Annual Meeting, it is subject to customary
closing conditions and approvals by creditors of Savia and the Company. At
this time, all of the closing conditions and approvals have not been satisfied
and therefore, the exchange has not been consummated. The Company may not
complete all of the transactions contemplated under the exchange agreement
until the conditions and approvals are obtained or waived, including the
payment by the Company of the accrued and unpaid dividends on the Class B
preferred stock and the consent of the lenders under the Companys Syndicated
Credit Facility.

In December 2002, Savia, Seminis majority stockholder announced that it signed
a letter of intent with acquisition company under which acquisition company and
certain Savia related parties will form the acquisition company and acquire all the outstanding shares of
Seminis, Inc. The proposed transaction is subject to numerous conditions;
however, if completed, such a change in control would require the credit
facility to be paid in full. It is anticipated that such a transaction would
be funded by financing arranged by acquisition company.

Whereas we have met our obligations as well as covenant requirements under the
amended credit facility through December 27, 2002, we must successfully execute
a refinancing plan prior to December 31, 2003 in order to meet the final
maturity of the facility. We will continue to pursue a refinancing plan, which
may include negotiation of a new credit facility and/or placement of new debt
securities; however, there can be no assurances that we will be able to
successfully complete the refinancing. Additionally, there can be no
assurances that the Fox Paine transaction will be consummated. Failure to
comply with existing covenants, which would make the Syndicated debt callable
or our inability to obtain adequate financing with reasonable terms prior to
December 31, 2003 could have a material adverse impact on our business, results
of operations or financial condition.

Seminis exposure to foreign currency fluctuations is primarily due to foreign
currency gains or losses that occur from intercompany receivables and payables
between Seminis and its foreign subsidiaries and from the U.S. dollar
denominated loan, originated by SVS Holland, B.V., a foreign subsidiary of
Seminis. Seminis does not have any material outstanding hedging contracts as
of December 27, 2002.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk disclosures set forth in the 2002 Form 10-K have not changed
significantly through the first quarter ended December 27, 2002.




Item 4. Controls and Procedures

| |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) |  | Evaluation of disclosure controls and
procedures. The Companys chief executive officer and chief
financial officer have evaluated the effectiveness of the
Companys disclosure controls and procedures
[as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange
Act of 1934 (the Exchange Act)] as of a date (the
Evaluation Date) within 90 days before the filing date of
this quarterly report. Based on such evaluation, they have concluded
that, as of the Evaluation Date, the Companys disclosure
controls and procedures were effective to ensure that information
required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission.
| |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) |  | Changes in internal controls. There were
no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls during
the period covered by this quarterly report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        




PART II  OTHER INFORMATION




Item 1. Legal Proceedings

We are involved from time to time as a defendant in various lawsuits arising in
the normal course of business. We believe that no current claims, individually
or in the aggregate, will have a material adverse effect on our business,
results of operations or financial condition.

17



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##### Table of Contents



In January 2002, melon growers in Costa Rica notified us that our Dorado melon
seeds were infected with Watermelon Fruit Blotch. Growers who purchased the
infected Seminis seeds and growers whose crops were infected by the bacteria
that spread from crops grown with the infected Seminis seeds have claimed
damages against us. The claims related to those growers who purchased Seminis
seeds have been settled for approximately $5.8 million, of which, approximately
$2.6 million was recovered under our errors and omissions insurance policy and
the remainder of the settlement was paid by the Company by July 2002. The
claims related to the growers with infected crops total approximately $5.2
million and we believe these claims are covered under our general liability
insurance policy. We have tentatively settled all of these claims and we have
advanced approximately $2.1 million to the growers; however, we are unable to
finalize the settlement because our general liability insurance carrier has
denied coverage. We continue to believe the policy covers these
claims and are pursuing enforcement of our rights under the policy to
provide coverage of the claims. In the event we cannot finalize
the settlement, claims could increase above $5.2 million.

In early 2000, we filed a suit against Dietrich Schmidt, the former president
of Seminis and the current president of United Genetics, a competitor of ours,
United Genetics and two former Seminis breeders, Ken Owen and Wei Ouyang, for
trade secret misappropriation and breach of contract. Schmidt filed a
counterclaim for defamation against us. We were unsuccessful on our claims for
trade secret misappropriation and breach of contract and Schmidt was successful
on his counterclaim with the court awarding him $1 in nominal damages. The
court subsequently awarded Schmidt, Owen, Ouyang their attorneys fees. We
have appealed certain aspects of the judgement, including the fee award. The
appeal is still pending and is not expected to be decided until 2003.

On December 17, 2002 and January 4, 2003, four purported class action lawsuits
were filed relating to the proposed transaction under which Fox Paine &
Company, LLC, a San Francisco based private equity firm and certain Savia
related parties will acquire all of the outstanding shares of Seminis, Inc.
Three of these actions  Garry Firth v. Alfonso Romo Garza, et al., Civil
Action No. 20085, Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No.
20097 and Pablo Herranz v. Seminis, Inc., et al., Civil Action No. 20105  were
filed in the Delaware Court of Chancery (New Castle County), while the fourth,
Mark Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California
Superior Court (Ventura County). The Firth, Pozniak and Herranz complaints
name as defendants Savia S.A. de C.V. (Savia) and Seminis, Inc. (Seminis),
along with Seminis directors. The Rosales complaint names as a defendant
Seminis and its directors. All four complaints purport to be brought on behalf
of Seminis common stockholders or their successors. All four complaints allege
that the above-described transaction, if consummated, would provide
insufficient consideration to Seminis common stockholders and allege that the
defendants breached their fiduciary duties in connection with the transaction.
The complaints seek a preliminary and permanent injunction to enjoin the
transaction and, in the event the transaction is consummated, rescission and
damages. The defendants will vigorously defend these actions.




Item 6. Exhibits and Reports on Form 8-K

The Company did not file any reports on Form 8-K for the quarter ended December
27, 2002.

18



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##### Table of Contents



Exhibit Index

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Number        |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(a) 1         |  | Form of Underwriting Agreement                                                                                                                                                                                                                                                                                                                                                                                                        
|(c) 2         |  | Merger Agreement by and between Seminis, Inc., an Illinois corporation and Seminis, Inc., a Delaware corporation                                                                                                                                                                                                                                                                                                                      
|(c) 3.1       |  | Certificate of Incorporation                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) 3.2       |  | Certificate of Designations of Class A Mandatorily Redeemable Preferred Stock and Class B Mandatorily Redeemable
Preferred Stock of Seminis, Inc.                                                                                                                                                                                                                                                                                     
|(c) 3.3       |  | Certificate of Designations of Class C Redeemable Preferred Stock of Seminis, Inc.                                                                                                                                                                                                                                                                                                                                                    
|(c) 3.4       |  | By-Laws                                                                                                                                                                                                                                                                                                                                                                                                                               
|(c) 4.1       |  | Form of Class A Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                                              
|(a) 4.2       |  | Registration Rights Agreement by and among Seminis, Inc. and certain shareholders of Seminis, dated October 1, 1995                                                                                                                                                                                                                                                                                                                   
|(c) 5         |  | Opinion of Milbank, Tweed, Hadley & McCloy LLP                                                                                                                                                                                                                                                                                                                                                                                        
|(a) 10.1      |  | Seminis, Inc. 1998 Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                  
|(b) 10.2      |  | Amended and Restated Seminis, Inc. 1998 Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                             
|(a) 10.3      |  | Share Subscription Agreement by and between Seminis, Inc. and Hungnong Seed Co., Ltd., dated June 12, 1998                                                                                                                                                                                                                                                                                                                            
|(c) 10.4      |  | Form of New Credit Facility among Seminis, Inc, Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers,
Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as
Syndication Agent and the Lenders from time to time parties thereto, as lenders, dated as of June 28, 1999                                                                                              
|(c) 10.5      |  | Form of Letter Agreement between Savia, S.A. de C.V. and Seminis, Inc. dated as of June 21, 1999                                                                                                                                                                                                                                                                                                                                      
|(d) 10.6      |  | Second Amendment and Waiver to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable
Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative
Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time parties thereto,
as Lenders, Dated as of June 29, 2000, effective March 31, 2000                     
|(d) 10.7      |  | Security Agreement Re: Accounts, Inventory and General Intangibles among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent,
Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time parties thereto, as
Lenders, dated as of June 29, 2000                                                      
|(e) 10.8      |  | Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable
Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative
Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time parties thereto,
as Lenders, dated as of September 30, 2000, effective September 30, 2000.              
|(d) 10.9      |  | Extension of Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis
Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of December 30, 2000, effective December 30, 2000.   
|(f) 10.10     |  | Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc.,
Seminis Vegetable Seeds, Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of December 29, 2000, effective December 29, 2000.
|(g) 10.11     |  | Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc.,
Seminis Vegetable Seeds, Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of April 30, 2001, effective April 30, 2001.      
|(h) 10.12     |  | Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc.,
Seminis Vegetable Seeds, Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of May 31, 2001, effective May 31, 2001.          
|(i) 10.13     |  | Revision to (h) 10.12                                                                                                                                                                                                                                                                                                                                                                                                                 
|(b) 21        |  | Subsidiaries of Registrant                                                                                                                                                                                                                                                                                                                                                                                                            
|27.1          |  | Financial Data Schedule                                                                                                                                                                                                                                                                                                                                                                                                               
|(j) 99.1/99.2 |  | Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              
|(k) 99.3/99.4 |  | Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              
|(k) 10.14     |  | Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc.,
Seminis Vegetable Seeds, Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of December 31, 2002, effective December 31, 2002.
|(k) 10.15     |  | Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc.,
Seminis Vegetable Seeds, Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as
Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from time to time
parties thereto, as Lenders, dated as of December 31, 2002, effective December 31, 2002.
|(l) 99.5/99.6 |  | Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              



|(a) |  | Incorporated by reference to Seminis Form S-1 filed on February 11, 1999.               
|--- |  | -----------------------------------------------------------------------------------------
|   
|(b) |  | Incorporated by reference to Seminis Amendment No. 2 to Form S-1 filed on May 27, 1999. 
|   
|(c) |  | Incorporated by reference to Seminis Amendment No. 3 to Form S-1 filed on June 21, 1999.
|   
|(d) |  | Filed with the June 30, 2000 Form 10Q.                                                   
|   
|(e) |  | Filed with the September 30, 2000 Form 10K.                                              
|   
|(f) |  | Filed with the December 30, 2000 Form 10Q.                                               
|   
|(g) |  | Filed with the March 30, 2001 Form 10Q.                                                  
|   
|(h) |  | Filed with the June 29, 2001 Form 10Q.                                                   
|   
|(i) |  | Filed with the September 30, 2001 Form 10K.                                              
|   
|(j) |  | Filed with the June 28, 2002 Form 10Q.                                                   
|   
|(k) |  | Filed with the September 30, 2002 Form 10K.                                              
|   
|(l) |  | Filed with the December 27, 2002 Form 10Q.                                               

19



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##### Table of Contents






Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                                                                                                         
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Date: February 10, 2003 |  | SEMINIS, INC                                                                                                                            
|                        |  |                                                                                                                                         
|                        |  | /s/ Eugenio Najera Solorzano
Eugenio Najera Solorzano
President
(Principal Executive Officer)                                           
|                        |  |                                                                                                                                         
|                        |  | /s/ Gaspar Alvarez Martinez

Gaspar Alvarez Martinez
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)

20



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##### Table of Contents






CERTIFICATION

I, Alfonso Romo Garza, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Seminis, Inc.;                                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                    
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                        
|----------------------- |  | -----------------------
|Date: February 10, 2003 |  |                        
|                        |  |                        
|                        |  | /s/ Alfonso Romo Garza 
|                        |  |                        
|                        |  | Alfonso Romo Garza     
|                        |  | Chief Executive Officer

21



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##### Table of Contents



CERTIFICATION

I, Gaspar Alvarez Martinez, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Seminis, Inc.;                                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                    
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                            
|----------------------- |  | -------------------------------------------
|Date: February 10, 2003 |  |                                            
|                        |  |                                            
|                        |  | /s/ Gaspar Alvarez Martinez                
|                        |  |                                            
|                        |  | Gaspar Alvarez Martinez                    
|                        |  | Vice President and WW Corporate Comptroller

22