##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION     
 (MARK ONE)  [X]
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2004 OR  [  ]
    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.  DELAWARE
    
    36-0769130(STATE OF INCORPORATION)
    
    (I.R.S. EMPLOYER IDENTIFICATION NO.)2700 CAMINO DEL SOL, OXNARD, CALIFORNIA
    
    93030-7967(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
    
    (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 [  ] NO [X] Indicate, by check mark whether the Registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act). YES [  ] NO [X]




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SEMINIS, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2004 TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 26, 2004 and September 30, 2003
    
    
    
    3Consolidated Statements of Operations for the Three and Six Months Ended March 26,
2004 and March 28, 2003
    
    
    
    4Consolidated Statement of Stockholders Equity for the Six Months Ended March 26, 2004
    
    
    
    5Consolidated Statements of Cash Flows for the Six Months Ended March 26, 2004 and
March 28, 2003
    
    
    
    6Notes to Consolidated Financial Statements
    
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    
    28Item 4. Controls and Procedures
    
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    
    29Item 6. Exhibits and Reports on Form 8-K
    
    
    
    30Signatures
    
    
    
    32Certification of Results
    
    
    
    33Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements SEMINIS, INC. 
 Consolidated Balance Sheets
  As of
    
    As ofMarch 26,
    
    September 30,2004
    
    2003(Unaudited)Assets:Current assetsCash and cash equivalents
    
    $
    78,228
    
    
    $
    36,824Accounts receivable, less allowances for doubtful accounts of $11,225 and $10,439, respectively
    
    
    196,795
    
    
    
    151,578Inventories
    
    
    310,207
    
    
    
    351,637Prepaid expenses and other current assets
    
    
    8,803
    
    
    
    4,450Total current assets
    
    
    594,033
    
    
    
    544,489Property, plant and equipment, net
    
    
    73,591
    
    
    
    69,792Intangible assets, net
    
    
    70,683
    
    
    
    73,009Other assets
    
    
    22,294
    
    
    
    19,957Total Assets
    
    $
    760,601
    
    
    $
    707,247Liabilities and Stockholders Equity:Current liabilitiesShort-term borrowings
    
    $
    25,203
    
    
    $
    20,031Current maturities of long-term debt
    
    
    1,784
    
    
    
    2,722Accounts payable
    
    
    28,495
    
    
    
    50,280Accrued liabilities
    
    
    105,019
    
    
    
    89,416Total current liabilities
    
    
    160,501
    
    
    
    162,449Long-term debt
    
    
    450,913
    
    
    
    398,538Deferred income taxes
    
    
    22,527
    
    
    
    21,312Minority interest in subsidiaries
    
    
    980
    
    
    
    1,723Preferred shares subject to mandatory redemption
    
    
    42,849
    
    
    
    39,300Total liabilities
    
    
    677,770
    
    
    
    623,322Commitments
and contingencies (see Note 12)Stockholders equityClass A Common Stock, $.01 par value; 200,000 shares authorized as of March 26, 2004 and
September 30, 2003; 64,333 and 63,260 shares issued and outstanding as of March 26, 2004 and
September 30, 2003, respectively
    
    
    644
    
    
    
    633Additional paid-in-capital
    
    
    94,149
    
    
    
    91,034Accumulated deficit
    
    
    (11,907
    )
    
    
    (7,603
    )Accumulated other comprehensive loss
    
    
    (55
    )
    
    
    (139
    )Total stockholders equity
    
    
    82,831
    
    
    
    83,925Total Liabilities and Stockholders Equity
    
    $
    760,601
    
    
    $
    707,247
 The accompanying notes are an integral part of these consolidated financial statements. 3




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##### Table of Contents



SEMINIS, INC. 
 Consolidated Statements of Operations  For the Three Months Ended
    
    For the Six Months EndedSuccessor
    

    Predecessor
    
    Successor
    
    PredecessorMarch 26,
    March 28,
    
    March 26,
    March 28,2004
    2003
    
    2004
    2003(Unaudited)
    
    (Unaudited)Net sales
    
    $
    176,377
    
    
    $
    159,001
    
    
    $
    278,269
    
    
    $
    239,617Cost of goods sold
    
    
    80,735
    
    
    58,008
    
    
    
    133,210
    
    
    88,241Gross profit
    
    
    95,642
    
    
    100,993
    
    
    
    145,059
    
    
    151,376Operating expensesResearch and development expenses
    
    
    12,061
    
    
    10,953
    
    
    
    23,635
    
    
    22,378Selling, general and administrative expenses
    
    
    50,985
    
    
    48,637
    
    
    
    96,895
    
    
    91,337Amortization of intangible assets
    
    
    1,964
    
    
    3,966
    
    
    
    3,851
    
    
    7,893Total operating expenses
    
    
    65,010
    
    
    63,556
    
    
    
    124,381
    
    
    121,608Gain on sale of fixed assets
    
    
    90
    
    
    1,537
    
    
    
    2,615
    
    
    1,091Income from operations
    
    
    30,722
    
    
    38,974
    
    
    
    23,293
    
    
    30,859Other income (expense)Interest income
    
    
    315
    
    
    259
    
    
    
    427
    
    
    506Interest expense
    
    
    (10,395
    )
    
    (8,704
    )
    
    
    (18,431
    )
    
    (15,441
    )Interest expense from preferred shares subject
to mandatory redemption
    
    
    (1,789
    )
    
    
    
    
    
    (3,549
    )
    
    Foreign currency gain (loss)
    
    
    (4,212
    )
    
    213
    
    
    
    4,664
    
    
    29Minority interest benefit (provision)
    
    
    (161
    )
    
    280
    
    
    
    (171
    )
    
    270Other, net
    
    
    (3,841
    )
    
    36
    
    
    
    (3,640
    )
    
    177(20,083
    )
    
    (7,916
    )
    
    
    (20,700
    )
    
    (14,459
    )Income before income taxes
    
    
    10,639
    
    
    31,058
    
    
    
    2,593
    
    
    16,400Income tax expense
    
    
    (5,814
    )
    
    (7,018
    )
    
    
    (6,897
    )
    
    (4,140
    )Net income (loss)
    
    
    4,825
    
    
    24,040
    
    
    
    (4,304
    )
    
    12,260Preferred stock dividends
    
    
    
    
    
    (4,661
    )
    
    
    
    
    
    (9,184
    )Net income
(loss) available for common stockholders
    
    $
    4,825
    
    $
    19,379
    
    
    $
    (4,304
    )
    $
    3,076
 The accompanying notes are an integral part of these consolidated financial statements. 4




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##### Table of Contents



SEMINIS, INC. 
 Consolidated Statement of Stockholders Equity
  Class ACommon Stock
    
    AdditionalPaid-in
    
    Accumulated
    
    AccumulatedOtherComprehensive
    
    TotalStock-HoldersNumber
    
    Amount
    
    Capital
    
    Deficit
    
    Income (Loss)
    
    EquityBalance, September 30, 2003
    
    
    63,260
    
    
    $
    633
    
    
    $
    91,034
    
    
    $
    (7,603
    )
    
    $
    (139
    )
    
    $
    83,925Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,304
    )
    
    
    
    
    
    
    (4,304
    )Comprehensive income (loss):Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290
    
    
    
    290Equity adjustment for
interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (206
    )
    
    
    (206
    )(4,220
    )Stock based compensation
    
    
    1,073
    
    
    
    11
    
    
    
    3,115
    
    
    
    
    
    
    
    
    
    
    
    3,126Balance, March 26, 2004
    
    
    64,333
    
    
    $
    644
    
    
    $
    94,149
    
    
    $
    (11,907
    )
    
    $
    (55
    )
    
    $
    82,831
 The accompanying notes are an integral part of these consolidated financial statements. 5




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##### Table of Contents



SEMINIS, INC. 
 Consolidated
Statements of Cash Flows
  For the Six Months EndedSuccessor



    
    PredecessorMarch 26,
    
    March 28,2004
    
    2003(Unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    (4,304
    )
    
    $
    12,260Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization
    
    
    7,595
    
    
    
    15,343Gain on sale of fixed assets
    
    
    (2,615
    )
    
    
    (1,091
    )Deferred income taxes
    
    
    1,935
    
    
    
    802Provision (benefit) for minority interest subsidiary
    
    
    171
    
    
    
    (270
    )Inventory provision
    
    
    8,000
    
    
    
    8,352Compensation expense for restricted stock units
    
    
    550
    
    
    
    Amortization of inventory step-up
    
    
    28,489
    
    
    
    Foreign currency gain
    
    
    (4,664
    )
    
    
    (29
    )Other
    
    
    146
    
    
    
    1,417Changes in assets and liabilities:Accounts receivable
    
    
    (42,328
    )
    
    
    (34,168
    )Inventories
    
    
    6,927
    
    
    
    (279
    )Prepaid expenses and other assets
    
    
    (12,622
    )
    
    
    (5,640
    )Current income taxes
    
    
    2,600
    
    
    
    1,091Accounts payable
    
    
    (22,457
    )
    
    
    (7,937
    )Other liabilities
    
    
    18,653
    
    
    
    1,746Net cash used in operating activities
    
    
    (13,924
    )
    
    
    (8,403
    )Cash flows from investing activities:Purchases of fixed and intangible assets
    
    
    (4,555
    )
    
    
    (5,826
    )Proceeds from disposition of assets
    
    
    3,833
    
    
    
    7,613Other
    
    
    (767
    )
    
    
    179Net cash provided by (used in) investing activities
    
    
    (1,489
    )
    
    
    1,966Cash flows from financing activities:Proceeds from long-term debt
    
    
    167,651
    
    
    
    596Repayment of long-term debt
    
    
    (116,052
    )
    
    
    (8,763
    )Net short-term borrowings
    
    
    5,318
    
    
    
    11,590Other
    
    
    (624
    )
    
    
    53Net cash provided by financing activities
    
    
    56,293
    
    
    
    3,476Effect of exchange rate changes on cash and cash equivalents
    
    
    524
    
    
    
    1,057Increase (decrease) in cash and cash equivalents
    
    
    41,404
    
    
    
    (1,904
    )Cash and cash equivalents, beginning of period
    
    
    36,824
    
    
    
    36,805Cash and cash equivalents, end of period
    
    $
    78,228
    
    
    $
    34,901
 The accompanying notes are an integral part of these consolidated financial statements. 6




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##### Table of Contents



SEMINIS, INC. 
 Notes to Consolidated Financial Statements
  Note 1  Summary of Significant Accounting Policies Description of Business Seminis, Inc. (the Company, we) is the leading worldwide developer,
producer and marketer of vegetable and fruit seeds. As a result of the
acquisition transactions described in Note 2, which were completed on September
29, 2003, Fox Paine & Company, LLC, together with its affiliates and
co-investors (collectively, Fox Paine), became the Companys majority
shareholder. Principles of Consolidation and 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 years financial statements to
conform to the current presentation. As a result of the acquisition transactions described in Note 3, which were
completed on September 29, 2003, the Company has presented its results of
operations, changes in stockholders equity and cash flows on a
predecessor/successor basis. Periods prior to September 29, 2003 are
predecessor periods, while others are successor periods. The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the fiscal period, including estimates and assumptions related to customer
discounts and allowances. Actual results could differ from those estimates. 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 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 that may be expected
for any other interim period or for the fiscal year as a whole. Supplementary Cash Flow Information Six Months EndedSuccessor



    

    PredecessorMarch 26,
    
    March 28,2004
    
    2003(Unaudited)Cash paid for interest
    
    $
    4,738
    



    
    
    $9,329Cash paid for income taxes
    
    
    2,362
    
    
    
    2,247Supplemental non-cash transactions:Class B Redeemable Preferred Stock dividends
    
    
    
    
    
    
    1,000
 Recent Accounting Pronouncements In March 2004, the consensus of Emerging Issues Task Force (EITF) Issue No.
03-06, Participating Securities and the Two-Class Method under FASB Statement
128, was published. EITF Issue No. 03-06 addresses the computations of
earnings per share by companies that have issued securities other than common
stock that contractually entitle the holder to participate in dividends and
earnings of the company. Further guidance on the application and allocations of
the two-class method of calculating earnings per share is also included. The
provisions of EITF Issue No. 03-06 will be effective for reporting periods
beginning after March 31, 2004. The adoption of this guidance will not impact
the Companys financial results of operations and financial position. In December 2003, the FASB reissued SFAS No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No.
87, 88, and 106. This Statement revises employers disclosures about pension
plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by SFAS No. 87, Employers
Accounting for Pensions, SFAS No. 88, Employers Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits, and SFAS No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions. This Statement retains the disclosure requirements
contained in the original SFAS No. 132, Employers Disclosures about Pensions
and Other Postretirement Benefits. The revised Statement also requires
additional disclosures about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The provisions of the 7




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##### Table of Contents



original SFAS No. 132 will remain in effect until the provisions of this
Statement are adopted. Certain new provisions are effective for financial
statements with fiscal years ending after December 15, 2003, while other
provisions are effective for fiscal years ending after June 15, 2004. The
interim period disclosures are effective for interim periods beginning after
December 15, 2003. See Note 8 Pensions and Other Postretirement Benefits, for
disclosures required under the revised SFAS No. 132. In December 2003, the Financial Accounting Standards Board (FASB) reissued
Interpretation No. 46, Consolidation of Variable Interest Entities  an
Interpretation of ARB No. 51. The Interpretation clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements, to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity risk for the
entity to finance its activities without additional subordinated financial
support. The provisions of this Interpretation are effective for the Company
for interim periods ending after March 15, 2004. The adoption of this
Interpretation has not had a significant impact on the Companys financial
results of operations and financial position. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This Statement requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
The provisions of this Statement are effective for financial instruments
entered into or modified after May 31, 2003, and otherwise are effective at the
beginning of the first interim period beginning after June 15, 2003. The
Company adopted this Statement as of June 28, 2003 and has classified its newly
issued paid in kind preferred stock (PIK Preferred Stock) as a liability. In April 2003, the FASB issued SFAS No. 149, Amendment to Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) used for hedging activities under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
The provisions of this Statement are effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of this Statement did not have a significant impact
on the Companys financial condition or results of operations. 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. The
Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148
on October 1, 2003. Note 2  Liquidity In connection with the acquisition transactions, the Company became a privately
held company, acquired all of its publicly held shares of
Class A common stock, Class B
common stock, and shares of Class B and Class C Redeemable Preferred Stocks,
repaid the $216.6 million of principal outstanding under its senior credit
facility, and the $11.6 million of a mortgage on its Oxnard real property. In
order to fund these transactions and other related expenses,
Fox Paine purchased shares of the Companys common stock for a
 purchase price of $163.2 million, the Company issued
$190.0 million of ten year, 10 1/4% senior subordinated notes, established a
senior secured credit facility that consisted of a $190.0 million term loan
and a $60.0 million revolving loan (none of which was outstanding at March 26,
2004 and September 30, 2003, respectively), borrowed $17.0 million under a new
mortgage note, and issued paid-in-kind mandatorily redeemable preferred stock
(see Note 11-PIK Preferred Stock) along with warrants
to purchase 3.9 million shares of common stock for combined proceeds of $50.0
million. Upon completion of the
acquisition transactions, the Company had total
indebtedness of $421.3 million as of September 30, 2003 compared to $252.5
million before the transactions. On January 23, 2004, the Company issued additional $140.0 million of its 10
1/4% senior subordinated notes, at a premium of $12.6 million. These notes
have identical terms and conditions as the $190.0 million of senior
subordinated notes issued as part of the acquisition transactions on September
29, 2003. The net proceeds from the additional notes, after deducting
underwriting discounts and other expenses, were approximately $145.6 million.
These net proceeds from the offering were used to repay $100.0 million and
$15.0 million of the borrowings under the term loan portion and revolver
portion, respectively, of Companys senior secured credit facility and for
general corporate purposes. Concurrently with the offering of the additional notes, the Company amended the
senior secured credit facility. The amended senior secured facility decreased
the term loan from $190.0 million to $90.0 million, increased the revolving
credit facility from $60.0 million to $75.0 million, amended pricing terms on
both the term loan and revolver portion of the credit facility, and amended
certain financial covenants. 8




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The Companys total indebtedness as of March 26, 2004 was $477.9 million, of
which $89.5 million were borrowings under Companys term loan, $342.4 million
were borrowings under our senior 10 1/4% subordinated notes (amount
including
$12.4 million of remaining premium balance, which will be amortized over the
life of the loan and reduces interest expense), $17.4 million, $4.6 million,
$1.2 million, $0.5 million and $22.3 million were borrowings by its United
States, Italian, Spanish, French and South Korean subsidiaries, respectively.
The Company also has $42.8 million of preferred shares subject to mandatory
redemption, see Note 11 for further description of the preferred
shares. In addition, as of March 26, 2004, the Company has cash
and cash equivalents of $78.2 million Going forward, the Companys principal source of liquidity will be cash flow
generated from operations, borrowings under its senior secured credit facility
and additional capital infusion. The Companys principal uses of cash will be
to meet debt service requirements, finance capital expenditures and provide
working capital. Based on the current level of operations, management believes
that remaining cash on hand, cash flow from operations and available borrowings
under its revolving credit portion of the senior secured credit facility will
enable the Company to meet its working capital, capital expenditure, debt
service and other funding requirements for at least the next 12 months. Note 3  Description
of the Accounting Effects of the Acquisition Transactions Overview On May 30, 2003, the Company and certain other parties entered into a number of
agreements pursuant to which a newly incorporated entity was formed to effect
the acquisition transactions whereby the Company became a privately
held company and
Fox Paine acquired 75.1% of the outstanding common stock of the Company. On September 29, 2003, the acquisition
transactions, described in Note 2, were completed. The acquisition transactions are accounted for under the purchase method of
accounting. In accordance with applicable accounting guidelines, the purchase
price paid by Fox Paine for Seminis common stock plus related purchase
accounting adjustments are pushed down and recorded in Seminis financial
statements. The acquisition transactions resulted, for purposes of reporting the results of
operations and cash flows in our financial statements, in a predecessor entity
and a successor entity. The 75.1% of deemed assets acquired and liabilities
assumed in connection with the acquisition transactions were originally
recorded at their estimated fair market values based on an independent
appraisal and 24.9% of its historical basis was carried over, however, these
values were in excess of the purchase price paid by Fox Paine. Accordingly,
the negative goodwill totaling $433.4 million was allocated against the value
of non-current assets on a proportionate basis. The following summarizes the
fair values, subsequent adjustments and on-going carrying values of the net
assets acquired: AdjustedBasisFMV
    
    24.9%
    
    Negative
    
    As ofHistorical
    
    Of 75.1%
    
    Carryover
    
    Goodwill
    
    September 29,Basis
    
    Acquired
    
    Basis
    
    Allocation
    
    2003Current assets, excluding inventory
    
    $
    185,206
    
    
    $
    139,017
    
    
    $
    46,190
    
    
    $
    
    
    
    $
    185,207Inventory
    
    
    279,680
    
    
    
    283,107
    
    
    
    69,751
    
    
    
    
    
    
    
    352,858Property, plant & equipment
    
    
    166,943
    
    
    
    125,308
    
    
    
    41,635
    
    
    
    (102,582
    )
    
    
    64,361Goodwill
    
    
    106,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    51,533
    
    
    
    331,693
    
    
    
    12,852
    
    
    
    (271,536
    )
    
    
    73,009In-process R&D
    
    
    
    
    
    
    58,547
    
    
    
    
    
    
    
    (47,929
    )
    
    
    10,618Other long-term assets
    
    
    18,463
    
    
    
    13,859
    
    
    
    4,605
    
    
    
    (11,345
    )
    
    
    7,119Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 The increase in inventory value of $73.2 million, reflecting the fair market
value adjustment, is being expensed as the inventory is sold, which is expected
to be over a 16 month period from September 29, 2003, the date of acquisition.
Finally, the intangible assets is being amortized on a straight-line basis over
periods between five and forty years, and in-process research and development
was immediately expensed in the results of the successor entity for the one-day
period ended September 30, 2003. Note 4  Inventories Inventories consist of the following: March 26,
    
    September 30,2004
    
    2003(Unaudited)Seeds
    
    $
    280,593
    
    
    $
    324,006Unharvested crop growing costs
    
    
    21,433
    
    
    
    19,488Supplies
    
    
    8,181
    
    
    
    8,143Total net inventories
    
    $
    310,207
    
    
    $
    351,637
 9




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##### Table of Contents



Inventories are presented net of reserves of $82,047 and $79,531 at March 26,
2004 and September 30, 2003, respectively. As described in Note 3, as part of
the acquisition transactions, inventories were stepped-up by $73.2 million. In
the current period, $28.5 million of the step-up was amortized and charged to
cost of sales. This non-cash adjustment will continue as the inventory is
expected to be sold over the next 10 months. Note 5  Intangible Assets Intangible assets at March 26, 2004 and September 30, 2003 consist of the
following: As of March 26, 2004(Unaudited)
    
    As of September 30, 2003Gross
    
    
    
    
    
    
    
    
    
    
    
    
    
    PurchaseCarrying
    
    Accumulated
    
    Net Carrying
    
    Revalued
    
    Accounting
    
    AdjustedAmount
    
    Amortization
    
    Amount
    
    Amount ( 1 )
    
    Adjustment
    
    AmountAmortizable
intangible assets:Germplasm
    
    $
    25,804
    
    
    $
    (804
    )
    
    $
    25,000
    
    
    $
    115,544
    
    
    $
    (89,713
    )
    
    $
    25,831Software
    
    
    10,859
    
    
    
    (1,309
    )
    
    
    9,550
    
    
    
    9,984
    
    
    
    (553
    )
    
    
    9,431Trademarks
    
    
    8,724
    
    
    
    (305
    )
    
    
    8,419
    
    
    
    30,232
    
    
    
    (21,507
    )
    
    
    8,725Existing product
technology
    
    
    24,264
    
    
    
    (1,277
    )
    
    
    22,987
    
    
    
    138,431
    
    
    
    (114,292
    )
    
    
    24,139Customer relationships
    
    
    4,883
    
    
    
    (156
    )
    
    
    4,727
    
    
    
    50,354
    
    
    
    (45,471
    )
    
    
    4,883$
    74,534
    
    
    $
    (3,851
    )
    
    $
    70,683
    
    
    $
    344,545
    
    
    $
    (271,536
    )
    
    $
    73,009
 Aggregate amortization expense was $3.9 million and $7.9 million for the six
months ended March 26, 2004 and March 28, 2003, respectively. Estimated
amortization expense for the next five years is estimated at $7.7 million each
year. Note 6  Accrued Liabilities Accrued liabilities consist
of the following at March 26, 2004 and September 30, 2003: March 26,
    
    September 30,2004
    
    2003(Unaudited)Employee salaries and related benefits
    
    $
    52,630
    
    
    $
    51,632Severance
    
    
    694
    
    
    
    672Seedmens errors and omissions
    
    
    8,264
    
    
    
    7,181Interest
    
    
    17,627
    
    
    
    368Income taxes payable
    
    
    4,590
    
    
    
    2,002Merger & refinancing transactions
    
    
    3,171
    
    
    
    9,115Other
    
    
    18,043
    
    
    
    18,446$
    105,019
    
    
    $
    89,416
 Note 7  Long-Term Debt Long-term debt consists of the following at March 26, 2004 and September 30,
2003: As of
    
    As ofMarch 26,
    
    September 30,2004
    
    2003Senior secured credit facility borrowings
    
    $
    89,525
    
    
    $
    190,000Senior subordinated notes
    
    
    330,000
    
    
    
    190,000Mortgage notes
    
    
    16,879
    
    
    
    17,000South Korean borrowings due in annual
installments through 2013
    
    
    1,640
    
    
    
    1,858Bond premium related to 10 1/4% note
    
    
    12,370
    
    
    
    Other borrowings
    
    
    2,283
    
    
    
    2,402452,697
    
    
    
    401,260Less current portion
    
    
    (1,784
    )
    
    
    (2,722
    )$
    450,913
    
    
    $
    398,538
 10




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##### Table of Contents



As of March 26, 2004, long-term debt maturities are as follows: Period Ending March 262005
    
    $
    1,7842006
    
    
    1,8252007
    
    
    1,7882008
    
    
    1,7222009
    
    
    1,512Thereafter
    
    
    444,066$
    452,697
 Senior Secured Credit Facility On September 29, 2003, the Company entered into a senior secured credit
facility with a group of lenders. The senior secured credit facility provides
for a $190.0 million term loan and a revolving line of credit for borrowings up
to an aggregate principal amount of $60.0 million. The Company amended the
senior secured credit facility on January 15, 2004 that provides a $90.0
million term loan and a revolving line of credit for borrowings up to an
aggregate principal amount of $75.0 million, and will amortize in quarterly
installments equal to 1.0% per annum for the first five and 1/2 years. The
first quarterly payment was paid on March 31, 2004, and the balance of the term
loan will be due in a single payment at the end of the sixth year. The $75.0
million revolving credit facility will mature in five years from the closing
date of the acquisition transactions and does not amortize (None of which was
drawn as of March 26, 2004 and $2.5 million of which was committed under
letters of credit). Both facilities may be voluntarily prepaid in whole or in
part without premium or penalty. Additionally, based upon formulas stated in
the amended senior secured credit facility and subject to certain exceptions,
all or a portion of the proceeds from the issuance of equity interests or
equity rights, debt issuances, asset sales, proceeds from insurance recoveries
and excess cash flow must be used to pay down the outstanding balance under the
term loan facility. In general, borrowings under the amended senior secured credit facility will
bear interest, based on the Companys option, on either a London inter-bank
offered rate (LIBOR) or an alternate rate, in each case plus an applicable
rate. The alternate base rate is equal to the highest of Citicorp North
America, Inc.s base rate, the three month certificate of deposit rate plus
0.5% and the federal funds effective rate plus 0.5%. The applicable rate for
the term loan is based upon the Companys leverage ratio that ranges from 1.25%
to 2.00% per annum in the case of an alternate rate loan and LIBOR plus 3.00%
per annum in the case of a LIBOR loan. The applicable rate for the revolving
credit facility under the amended new senior secured credit facility is based
upon our leverage ratio and will range from 1.00% to 1.75% per annum in the
case of alternate rate loans and LIBOR plus 2.00% to LIBOR plus 2.75% per annum
in the case of LIBOR loans, subject, in each case, to adjustments based on our
leverage ratio at the time. Subsequent to an event of default under our
amended senior secured credit facility, borrowings will bear interest at
2.0% over the rate of interest otherwise applicable and the LIBOR rate will not
be available. Obligations under the senior secured credit facility are guaranteed by the
Company and its domestic subsidiaries. Additionally, borrowings are secured by
a perfected lien on all of the capital stock, intercompany notes and all of the
tangible and intangible properties and assets, including intellectual property
subject to exceptions relating to foreign subsidiaries, of the Company. The
Company is subject to certain commitment fees under the facility as well as the
maintenance of certain financial ratios and other restrictive covenants,
including the payment of dividends in cash. On March 26, 2004, the outstanding balance of the term loan under the senior
secured credit facility was $89.5 million with a variable interest rate of
4.49%. 101⁄4% Senior Subordinated Notes On September 29, 2003, the Company issued $190.0 million of senior subordinated notes. The senior
subordinated notes will mature on October 1, 2013; interest is payable
semi-annually on April 1 and October 1 of each year, commencing on April 1,
2004. The senior subordinated notes are unsecured general obligations of the
Company and are subordinated in right of payment to substantially all existing
and future senior indebtedness of the Company, including senior credit facility
indebtedness. Prior to maturity, the Company may redeem all or some of the
senior subordinated notes at defined redemption prices, which may include a
premium. In the event of a change in control, the holders may require the
Company to repurchase the senior subordinated notes for a redemption price that
may also include a premium. The majority of the Companys domestic
subsidiaries have guaranteed the senior subordinating notes. On January 23, 2004, the Company issued an additional $140.0 million of senior
subordinated notes. These notes have identical terms and conditions as the
$190.0 million of senior subordinated notes issued as part of the acquisition
transactions on September 29, 2003. On March 26, 2004, the outstanding balance of the 101⁄4% senior subordinated
notes was $330.0 million. 11




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##### Table of Contents



Mortgage Notes In March 2000, the Company issued a $17.2 million promissory note, which was
secured by the Companys global headquarters facility. The variable rate of
interest on the original note was based on LIBOR plus 2.5% (4.2% as of
September 30, 2002). As of September 29, 2003, principal outstanding on this
note totaling $11.6 million was repaid with proceeds from a new $17.0 million
mortgage. Interest on the new note is based on LIBOR plus 2.0% (3.1% as of
September 30, 2003), adjustable on the first day of each month. Simultaneous
with entering into the new mortgage, the Company entered into an interest rate
swap agreement (extending for a seven year term) to swap the floating interest
rate for a 6.3% fixed interest rate. The loan amortizes in scheduled annual
payments of approximately $0.2 million to $0.4 million, with a payment of the
final remaining balance due on October 1, 2010. On March 26, 2004, the
outstanding balance of the mortgage note was $16.9 million with
a fixed interest rate of 6.3%. South Korean Borrowings The Companys South Korean subsidiary has a number of loan facilities maturing
from fiscal year 2004 to 2013. Borrowings under these facilities carry
interest rates of approximately 4.0%. Other Borrowings Other borrowings consisted of various domestic and foreign, government and
non-government loans of less than $1.5 million each, bearing interest annually
at average rates of 7.35% through 2013 for fiscal years 2003, and 8.79% through
2007 for fiscal year 2002. For the fiscal period ended March 26, 2004 and fiscal year ended September 30,
2003, the Company incurred interest at a weighted-average rate of 7.22% and
7.26% per annum, respectively. Note 8  Pensions and Other Postretirement Benefits The Company provides a defined-benefit plan in the Netherlands (the
Netherlands Plan) as required by statute. The components of net pension
expense of the Netherlands Plan are as follows: Three Months Ended
    
    Six Months EndedSuccessor

    

    

    Predecessor
    
    Successor

    

    
    PredecessorMarch 26,
    
    March 28,
    
    March 26,
    
    March 28,2004
    
    2003
    
    2004
    
    2003(Unaudited)
    
    (Unaudited)Service cost
    
    $
    327
    
    
    
    $
    564
    
    
    $
    707
    
    
    
    $
    1,148Interest cost
    
    
    802
    
    
    
    1,385
    
    
    
    1,737
    
    
    
    2,820Actual gain on plan assets
    
    
    (876
    )
    
    
    (1,514
    )
    
    
    (1,898
    )
    
    
    (3,082
    )Net amortization and deferral
    
    
    203
    
    
    
    351
    
    
    
    440
    
    
    
    715$
    456
    
    
    $
    786
    
    
    $
    986
    
    
    $
    1,601
 12




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##### Table of Contents



Note 9  Stock-Based Compensation Effective October 1, 2003, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation (SFAS No. 123), for
stock-based employee compensation. Under the modified prospective method of
adoption selected by the Company under the provisions of SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure,
stock-based employee compensation expense recognized in fiscal year 2004 is the
same as that which would have been recognized had the fair value recognition
provisions of SFAS No. 123 been applied to all awards from its original
effective date. Results of prior years have not been restated. The following
table illustrates the effect on net income (loss) if the fair
value method had been applied in each period (in thousands) with the approach of SFAS No. 123: Three Months Ended
    
    Six Months EndedSuccessor

    

    

    Predecessor
    
    Successor

    

    
    PredecessorMarch 26,
    
    March 28,
    
    March 26,
    
    March 28,2004
    
    2003
    
    2004
    
    2003(Unaudited)
    
    (Unaudited)Net income (loss)
available for common
stockholders, as reported
    
    $
    4,825
    
    
    
    $
    19,379
    
    
    $
    (4,304
    )
    
    
    $
    3,076Add: Employee stock
option expense included in
reported net income
(loss), net of related tax
effects
    
    
    39
    
    
    
    
    
    
    
    39
    
    
    
    Deduct: Total employee
stock option expense
determined under fair
value method for awards,
net of related tax effects
    
    
    (39
    )
    
    
    (187
    )
    
    
    (39
    )
    
    
    (375
    )Pro forma net income (loss)
    
    $
    4,825
    
    
    $
    19,192
    
    
    $
    (4,304
    )
    
    $
    2,701
 Note 10  Equity
Interests of Certain Beneficial Owners and Management Options Certain executives of the
Company have rolled over their option rights from pre-acquisition
stock option grants, and as of March 26, 2004, there are
approximately 1.7 million options outstanding. Restricted Stock Units Upon completion of the acquisition transactions, we granted restricted stock
units to a group of Company senior executives. The restricted stock units will, upon the events
described below, be paid in shares of Company common stock on a one-for-one
basis and will vest over a five year period depending on the continued
employment of the executive and on Companys performance and the performance of
our executives relative to specified goals and objectives. Upon completion of the acquisition transactions, each of the senior executives
was granted an aggregate number of restricted stock units calculated as 2.25
times the initial base salary of the applicable senior executive divided by
$3.40. Each of the other key executives was granted an aggregate number of
restricted stock units calculated as 1.0 times the initial base salary of the
applicable executive divided by $3.40. If the specified goals and objectives are achieved and the executive is
actively employed by us at each applicable vesting date, the restricted stock
units will vest with respect to 10.0% of the aggregate award in each of the
first two years, 20.0% of the aggregate award in the third year and 30.0% of
the aggregate award in each of the fourth and fifth years following the time of
grant. To the extent that conditions to vesting are not met and some of the
restricted stock units do not vest, the portion of restricted stock units that
do not vest will be permanently forfeited and will not be reallocated. 13




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##### Table of Contents



In the event that Fox Paine
achieves a designated internal rate of return on its
initial investment in Company prior to the fifth anniversary of the completion
of the acquisition transactions, all restricted stock units, other than those
permanently forfeited due to a failure to meet specified goals and objectives,
will vest. For the six months ended
March 26, 2004, the Company recorded $0.6 million of
compensation expense for restricted stock units. Co-Investment Rights to Purchase Additional Shares of Companys Common Stock In connection with the acquisition transactions, Desarrollo Consolidado de
Negocios, S.A. de C.V. received immediately exercisable rights to acquire 13.8%
of the outstanding shares of the Companys common stock on a fully-diluted
basis. In addition, Desarrollo Consolidado de Negocios, S.A. de C.V. and Fox
Paine received a second tranche of co-investment rights to acquire up to 15.8%
and 1.57%, respectively, of the outstanding shares of the Companys common
stock on a fully-diluted basis. The Fox Paine co-investment rights and the
second tranche of co-investment rights owned by Desarrollo Consolidado de
Negocios, S.A. de C.V. will become exercisable only if Fox Paine achieves a
26.0% internal rate of return on its investment in the Company. Each
co-investment right entitles the recipient to acquire one share of Companys
common stock at an exercise price of $3.40 per share. All of the co-investment
rights expire on the tenth anniversary of the date of the consummation of the
acquisition transactions. Warrants See Note
11  PIK Preferred Stock. Note 11  PIK Preferred Stock The Company issued shares of PIK Preferred Stock with an aggregate liquidation
preference of $50.0 million as part of the acquisition
transactions. In connection with the sale of PIK Preferred Stock, Company issued
warrants to purchase shares of Company common stock representing approximately
3.7% of the shares of Company common stock on a fully diluted basis. The shares
of PIK Preferred Stock are mandatorily redeemable on October 1, 2014. Holders of shares of the PIK Preferred Stock are entitled to receive paid in
kind dividends (or in the sole discretion of Company, cash dividends) at the
annual rate of 12.0% of liquidation preference per share, compounded quarterly,
provided that after the occurrence of, and during the continuance of, specified
events of default, holders of shares of the PIK Preferred Stock are entitled to
receive paid in kind dividends (or in the sole discretion of Company, cash
dividends) at the annual rate of 14.0% of liquidation preference per share,
compounded quarterly. In general, the PIK Preferred Stock is not redeemable at the option of Company
prior to October 1, 2006. For the period from October 1, 2006 to and including
October 1, 2008, the PIK Preferred Stock is redeemable by Company at a per
share redemption price payable in cash equal to 102% of the liquidation
preference, plus an amount in cash equal to accrued and unpaid dividends. After
October 1, 2008, the shares of PIK Preferred Stock are redeemable by Company at
a per share redemption price payable in cash equal to 100% of the liquidation
preference, plus an amount in cash equal to accrued and unpaid dividends. At any time prior to October 1, 2014, following a change of control or an
initial public offering of Company, Company has the right to redeem the shares
of PIK Preferred Stock at a per share redemption price payable in cash equal to
102% of the liquidation preference, plus an amount in cash equal to accrued and
unpaid dividends. Unless the holders of a majority of the then outstanding shares of PIK
Preferred Stock otherwise consent, Company may not approve a change of control
unless, in connection with the change of control, Company is permitted to make
and consummate a change of control offer. Upon the occurrence of a change of
control, holders of shares of PIK Preferred Stock would have the right to
require Company to repurchase their shares of PIK Preferred Stock at a purchase
price equal to 101% of the liquidation preference, plus an amount in cash equal
to accrued and unpaid dividends. Upon the occurrence of, certain events of bankruptcy relating to Company (or
the principal borrower of the material indebtedness of Seminis); and, the
acceleration and satisfaction of certain material indebtedness of Seminis,
holders of shares of the PIK Preferred Stock have the right to require Company
to repurchase their shares of PIK Preferred Stock at a purchase price equal to
102% (if the applicable event occurred prior to October 1, 2008) or 100% (if
the applicable event occurred following October 1, 2008) of the liquidation
preference, plus an amount in cash equal to accrued and unpaid dividends,
provided, however, that Companys repurchase 14




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##### Table of Contents



obligation would be subject to the prior satisfaction of any and all
obligations pursuant to Seminis senior secured credit facility (and any
replacement financing) and the notes (and any replacement financing). The ability of Company to pay cash dividends on the PIK Preferred Stock or to
redeem the PIK Preferred Stock is dependent on the ability of Seminis
Vegetable, a subsidiary of the Company
to dividend funds to Company, which ability is limited by the terms of our
senior secured facility and the notes. The preferred shares subject to mandatorily redemption were stated at $42.8
million and $39.3 million as of March 26, 2004 and September 30, 2003,
respectively. The accretion of the preferred shares subject to mandatorily
redemption and their paid-in-kind dividends are recognized as interest expense
through the term of the agreement. For the six months ended March 26, 2004,
this interest expense totaled $3.5 million. Note 12  Commitments and Contingencies The Company has been named as a defendant in various lawsuits arising out of
alleged seedmens errors and omissions. The Company maintains third-party
seedmens errors and omissions insurance covering these types of claims. These
policies are subject to annual renewal, revisions, deductibles and coverage
limits. An accrual for managements estimate of exposure related to such
claims has been recorded in the financial statements and is disclosed in Note
6. It is the opinion of management that the ultimate resolution of these
matters will not have a material adverse effect on the Companys consolidated
financial position or results of operations. Historically, resolution of asserted claims has been in line with managements
expectations. Note 13  Related Party Transactions In accordance with the agreement entered in as part of acquisition
transactions, the Company paid management fees of $2.4 million each to Fox
Paine and Desarrollo Consolidado De Negocios, S.A. De C.V. in October 2003 for
services to be rendered during fiscal year 2004. The annual management fee is
equal to 1% of previous fiscal years net sales and is amortized as services
are rendered during the fiscal year. The Company sold a
residential property to Bernardo Jimenez, Executive Senior Vice President and Chief Financial
Officer. The sales price of $1.1 million was based upon a real
estate appraisal of the market value of the property. In June 2000, a subsidiary of the Company sold residential property,
originally acquired in December 1999 for $862,000, to Mr. Bruno Ferrari,
Executive Senior Vice President, World Wide Commercial, at the appraised value
of $875,000. The purchase price was evidenced by a promissory note secured by a
deed of trust on the property. The note had an interest rate of 7.75% per annum
and was payable in ten equal annual installments of principal, including
interest accrued thereon, commencing December 15, 2000, and annually
thereafter. The loan was repaid in December 2003. Under a separate
agreement, the Company paid bonuses to Mr. Ferrari
that covered the interest payable on the loan and paid Mr. Ferrari the present value of the interest
payments that would have been payable to Mr. Ferrari had the loan remained
outstanding until its scheduled final maturity. The bonus payments
were recognized as
compensation expenses at the time of the payments. Note 14  Supplemental Guarantor/Non-Guarantor Financial Information In conjunction with the
10 1/4% senior subordinated notes, the following
summarized condensed consolidating financial information is presented for the
Company, segregating guarantor subsidiaries and non-guarantor subsidiaries. The
accompanying financial information in the Guarantor Subsidiaries column
reflects the financial position, results of operations and cash flows for those
subsidiaries, which guarantee the Notes. The guarantor subsidiaries are wholly
owned subsidiaries of the Company and the guarantees are full, unconditional,
and joint and several. Separate financial statements of the guarantor
subsidiaries are not presented because management believes that such financial
statements would not be material to investors. Investments in subsidiaries in the following condensed consolidating financial
information are accounted for under the equity method of accounting.
Consolidating adjustments include the following:  (1)
    
    elimination of investments in subsidiaries;(2)
    
    elimination of intercompany accounts;(3)
    
    elimination of intercompany sales between guarantor and non-guarantor
subsidiaries; and(4)
    
    elimination of equity in earnings of subsidiaries. 15




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##### Table of Contents



Condensed Consolidating Balance Sheets
As of March 26, 2004 Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    64,976
    
    
    $
    134
    
    
    $
    13,118
    
    
    $
    
    
    
    $
    78,228Accounts receivable
    
    
    
    
    
    
    55,735
    
    
    
    2,694
    
    
    
    138,366
    
    
    
    
    
    
    
    196,795Inventories
    
    
    
    
    
    
    147,553
    
    
    
    7,901
    
    
    
    154,753
    
    
    
    
    
    
    
    310,207Prepaid expenses and other
current assets
    
    
    
    
    
    
    5,555
    
    
    
    63
    
    
    
    3,185
    
    
    
    
    
    
    
    8,803Total current assets
    
    
    
    
    
    
    273,819
    
    
    
    10,792
    
    
    
    309,422
    
    
    
    
    
    
    
    594,033Property, plant and equipment, net
    
    
    
    
    
    
    33,399
    
    
    
    88
    
    
    
    40,104
    
    
    
    
    
    
    
    73,591Investment in consolidated subsidiaries
    
    
    265,377
    
    
    
    220,013
    
    
    
    
    
    
    
    
    
    
    
    (485,390
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    45,907
    
    
    
    
    
    
    
    24,776
    
    
    
    
    
    
    
    70,683Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,120
    
    
    
    (2,120
    )
    
    
    Other assets
    
    
    148
    
    
    
    15,387
    
    
    
    
    
    
    
    6,759
    
    
    
    
    
    
    
    22,294$
    265,525
    
    
    $
    588,525
    
    
    $
    10,880
    
    
    $
    383,181
    
    
    $
    (487,510
    )
    
    $
    760,601Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    25,203
    
    
    $
    
    
    
    $
    25,203Current maturities of
long-term debt
    
    
    
    
    
    
    1,197
    
    
    
    171
    
    
    
    416
    
    
    
    
    
    
    
    1,784Accounts payable
    
    
    
    
    
    
    5,239
    
    
    
    129
    
    
    
    23,127
    
    
    
    
    
    
    
    28,495Accrued liabilities
    
    
    1,173
    
    
    
    43,208
    
    
    
    34
    
    
    
    60,604
    
    
    
    
    
    
    
    105,019Intercompany payables
    
    
    138,672
    
    
    
    (198,720
    )
    
    
    12,911
    
    
    
    47,137
    
    
    
    
    
    
    
    Total current liabilities
    
    
    139,845
    
    
    
    (149,076
    )
    
    
    13,245
    
    
    
    156,487
    
    
    
    
    
    
    
    160,501Long-term debt
    
    
    
    
    
    
    447,577
    
    
    
    302
    
    
    
    3,034
    
    
    
    
    
    
    
    450,913Deferred income taxes
    
    
    
    
    
    
    24,647
    
    
    
    
    
    
    
    
    
    
    
    (2,120
    )
    
    
    22,527Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    980
    
    
    
    
    
    
    
    980Preferred shares subject to
mandatory redemption
    
    
    42,849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,849Total liabilities
    
    
    182,694
    
    
    
    323,148
    
    
    
    13,547
    
    
    
    160,501
    
    
    
    (2,120
    )
    
    
    677,770Total stockholders equity
    
    
    82,831
    
    
    
    265,377
    
    
    
    (2,667
    )
    
    
    222,680
    
    
    
    (485,390
    )
    
    
    82,831$
    265,525
    
    
    $
    588,525
    
    
    $
    10,880
    
    
    $
    383,181
    
    
    $
    (487,510
    )
    
    $
    760,601
 16




---



##### Table of Contents



Condensed Consolidating Balance Sheets
As of September 30, 2003 Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    18,669
    
    
    $
    906
    
    
    $
    17,249
    
    
    $
    
    
    
    $
    36,824Accounts receivable
    
    
    
    
    
    
    42,190
    
    
    
    3,430
    
    
    
    105,958
    
    
    
    
    
    
    
    151,578Inventories
    
    
    
    
    
    
    177,627
    
    
    
    8,042
    
    
    
    165,968
    
    
    
    
    
    
    
    351,637Prepaid expenses and other
current assets
    
    
    
    
    
    
    1,997
    
    
    
    
    
    
    
    2,453
    
    
    
    
    
    
    
    4,450Total current assets
    
    
    
    
    
    
    240,483
    
    
    
    12,378
    
    
    
    291,628
    
    
    
    
    
    
    
    544,489Property, plant and equipment, net
    
    
    
    
    
    
    33,307
    
    
    
    88
    
    
    
    36,397
    
    
    
    
    
    
    
    69,792Investment in consolidated
subsidiaries
    
    
    268,653
    
    
    
    193,083
    
    
    
    
    
    
    
    
    
    
    
    (461,736
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    47,372
    
    
    
    
    
    
    
    25,637
    
    
    
    
    
    
    
    73,009Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,006
    
    
    
    (2,006
    )
    
    
    Other assets
    
    
    159
    
    
    
    13,468
    
    
    
    
    
    
    
    6,330
    
    
    
    
    
    
    
    19,957$
    268,812
    
    
    $
    527,713
    
    
    $
    12,466
    
    
    $
    361,998
    
    
    $
    (463,742
    )
    
    $
    707,247Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,031
    
    
    $
    
    
    
    $
    20,031Current maturities of
long-term debt
    
    
    
    
    
    
    2,141
    
    
    
    161
    
    
    
    420
    
    
    
    
    
    
    
    2,722Accounts payable
    
    
    
    
    
    
    26,457
    
    
    
    92
    
    
    
    23,731
    
    
    
    
    
    
    
    50,280Accrued liabilities
    
    
    8,581
    
    
    
    12,842
    
    
    
    89
    
    
    
    67,904
    
    
    
    
    
    
    
    89,416Intercompany payables
    
    
    137,006
    
    
    
    (200,557
    )
    
    
    13,490
    
    
    
    50,062
    
    
    
    
    
    
    
    Total current liabilities
    
    
    145,587
    
    
    
    (159,117
    )
    
    
    13,832
    
    
    
    162,148
    
    
    
    
    
    
    
    162,449Long-term debt
    
    
    
    
    
    
    394,859
    
    
    
    390
    
    
    
    3,289
    
    
    
    
    
    
    
    398,538Deferred income taxes
    
    
    
    
    
    
    23,318
    
    
    
    
    
    
    
    
    
    
    
    (2,006
    )
    
    
    21,312Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,723
    
    
    
    
    
    
    
    1,723Preferred shares subject to
mandatory redemption
    
    
    39,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,300Total liabilities
    
    
    184,887
    
    
    
    259,060
    
    
    
    14,222
    
    
    
    167,160
    
    
    
    (2,006
    )
    
    
    623,322Total stockholders equity
    
    
    83,925
    
    
    
    268,653
    
    
    
    (1,756
    )
    
    
    194,838
    
    
    
    (461,736
    )
    
    
    83,925$
    268,812
    
    
    $
    527,713
    
    
    $
    12,466
    
    
    $
    361,998
    
    
    $
    (463,742
    )
    
    $
    707,247
 17




---



##### Table of Contents



Successor
Condensed Consolidating Statements Of Operations
For the Six Months Ended March 26, 2004 Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    146,325
    
    
    $
    4,193
    
    
    $
    189,252
    
    
    $
    (61,501
    )
    
    $
    278,269Cost of goods sold
    
    
    
    
    
    
    80,676
    
    
    
    4,294
    
    
    
    109,741
    
    
    
    (61,501
    )
    
    
    133,210Gross profit
    
    
    
    
    
    
    65,649
    
    
    
    (101
    )
    
    
    79,511
    
    
    
    
    
    
    
    145,059Operating expensesResearch and development
expenses
    
    
    
    
    
    
    12,041
    
    
    
    (2
    )
    
    
    11,596
    
    
    
    
    
    
    
    23,635Selling, general and
administrative expenses
    
    
    
    
    
    
    42,941
    
    
    
    799
    
    
    
    53,155
    
    
    
    
    
    
    
    96,895Amortization of intangible assets
    
    
    
    
    
    
    2,699
    
    
    
    
    
    
    
    1,152
    
    
    
    
    
    
    
    3,851Total operating expenses
    
    
    
    
    
    
    57,681
    
    
    
    797
    
    
    
    65,903
    
    
    
    
    
    
    
    124,381Gain on sale of assets
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2,614
    
    
    
    
    
    
    
    2,615Income from operations
    
    
    
    
    
    
    7,969
    
    
    
    (898
    )
    
    
    16,222
    
    
    
    
    
    
    
    23,293Other income (expense)Interest Income
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    263
    
    
    
    
    
    
    
    427Interest expense
    
    
    (3,560
    )
    
    
    (16,962
    )
    
    
    (32
    )
    
    
    (1,426
    )
    
    
    
    
    
    
    (21,980
    )Interest expense from preferred
shares subject to mandatory
redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency gain (loss)
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    4,622
    
    
    
    
    
    
    
    4,664Other, net
    
    
    
    
    
    
    (3,876
    )
    
    
    19
    
    
    
    46
    
    
    
    
    
    
    
    (3,811
    )Equity from subsidiary
    
    
    (744
    )
    
    
    12,288
    
    
    
    
    
    
    
    
    
    
    
    (11,544
    )
    
    
    (4,304
    )
    
    
    (8,344
    )
    
    
    (13
    )
    
    
    3,505
    
    
    
    (11,544
    )
    
    
    (20,700
    )Income (loss) before income
taxes
    
    
    (4,304
    )
    
    
    (375
    )
    
    
    (911
    )
    
    
    19,727
    
    
    
    (11,544
    )
    
    
    2,593Income tax expense
    
    
    
    
    
    
    (369
    )
    
    
    
    
    
    
    (6,528
    )
    
    
    
    
    
    
    (6,897
    )Net income (loss)
    
    
    (4,304
    )
    
    
    (744
    )
    
    
    (911
    )
    
    
    13,199
    
    
    
    (11,544
    )
    
    
    (4,304
    )Net income (loss) available for
common stockholders
    
    $
    (4,304
    )
    
    $
    (744
    )
    
    $
    (911
    )
    
    $
    13,199
    
    
    $
    (11,544
    )
    
    $
    (4,304
    )
 18




---



##### Table of Contents



Predecessor
Condensed Consolidating Statements Of Operations
For the Six Months Ended March 28, 2003 Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    139,668
    
    
    $
    3,525
    
    
    $
    166,013
    
    
    $
    (69,589
    )
    
    $
    239,617Cost of goods sold
    
    
    
    
    
    
    64,241
    
    
    
    2,745
    
    
    
    90,844
    
    
    
    (69,589
    )
    
    
    88,241Gross profit
    
    
    
    
    
    
    75,427
    
    
    
    780
    
    
    
    75,169
    
    
    
    
    
    
    
    151,376Operating expensesResearch and development
expenses
    
    
    
    
    
    
    12,049
    
    
    
    
    
    
    
    10,329
    
    
    
    
    
    
    
    22,378Selling, general and
administrative expenses
    
    
    
    
    
    
    39,104
    
    
    
    955
    
    
    
    51,278
    
    
    
    
    
    
    
    91,337Amortization of intangible assets
    
    
    
    
    
    
    5,737
    
    
    
    
    
    
    
    2,156
    
    
    
    
    
    
    
    7,893Total operating expenses
    
    
    
    
    
    
    56,890
    
    
    
    955
    
    
    
    63,763
    
    
    
    
    
    
    
    121,608Gain on sale of assets
    
    
    
    
    
    
    319
    
    
    
    
    
    
    
    772
    
    
    
    
    
    
    
    1,091Income from operations
    
    
    
    
    
    
    18,856
    
    
    
    (175
    )
    
    
    12,178
    
    
    
    
    
    
    
    30,859Other income (expenses)Interest
income
    
    
    
    
    
    
    161
    
    
    
    6
    
    
    
    339
    
    
    
    
    
    
    
    506Interest expense
    
    
    
    
    
    
    (12,803
    )
    
    
    (42
    )
    
    
    (2,596
    )
    
    
    
    
    
    
    (15,441
    )Foreign currency gain (loss)
    
    
    
    
    
    
    (661
    )
    
    
    
    
    
    
    690
    
    
    
    
    
    
    
    29Other, net
    
    
    
    
    
    
    (649
    )
    
    
    723
    
    
    
    373
    
    
    
    
    
    
    
    447Equity from subsidiary
    
    
    12,260
    
    
    
    7,356
    
    
    
    
    
    
    
    
    
    
    
    (19,616
    )
    
    
    12,260
    
    
    
    (6,596
    )
    
    
    687
    
    
    
    (1,194
    )
    
    
    (19,616
    )
    
    
    (14,459
    )Income (loss) before income
taxes
    
    
    12,260
    
    
    
    12,260
    
    
    
    512
    
    
    
    10,984
    
    
    
    (19,616
    )
    
    
    16,400Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,140
    )
    
    
    
    
    
    
    (4,140
    )Net income (loss)
    
    
    12,260
    
    
    
    12,260
    
    
    
    512
    
    
    
    6,844
    
    
    
    (19,616
    )
    
    
    12,260Preferred stock dividends
    
    
    (9,184
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,184
    )Net income (loss) available for
common stockholders
    
    $
    3,076
    
    
    $
    12,260
    
    
    $
    512
    
    
    $
    6,844
    
    
    $
    (19,616
    )
    
    $
    3,076
 19




---



##### Table of Contents



Successor
Condensed Consolidating Statements Of Cash Flows
For the Six Months Ended March 26, 2004 SeminisSeminis
    
    Vegetable
    
    Subsidiary
    
    Subsidiary(Parent)
    
    (Issuer)
    
    Guarantors
    
    Non-Guarantors
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    12,696
    
    
    $
    (105
    )
    
    $
    (26,515
    )
    
    $
    
    
    
    $
    (13,924
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (2,067
    )
    
    
    (8
    )
    
    
    (2,480
    )
    
    
    
    
    
    
    (4,555
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    1,060
    
    
    
    
    
    
    
    2,773
    
    
    
    
    
    
    
    3,833Other
    
    
    
    
    
    
    (403
    )
    
    
    
    
    
    
    (364
    )
    
    
    
    
    
    
    (767
    )Net cash provided by
investing activities
    
    
    
    
    
    
    (1,410
    )
    
    
    (8
    )
    
    
    (71
    )
    
    
    
    
    
    
    (1,489
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    167,611
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    167,651Repayment of long-term debt
    
    
    
    
    
    
    (115,607
    )
    
    
    (78
    )
    
    
    (367
    )
    
    
    
    
    
    
    (116,052
    )Net short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,318
    
    
    
    
    
    
    
    5,318Net change in intercompany
account
    
    
    
    
    
    
    (16,361
    )
    
    
    (579
    )
    
    
    16,940
    
    
    
    
    
    
    
    Capital contributions/ dividends
received (paid) / other
    
    
    
    
    
    
    (625
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (624
    )Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    35,018
    
    
    
    (657
    )
    
    
    21,932
    
    
    
    
    
    
    
    56,293Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    524
    
    
    
    
    
    
    
    524Increase (decrease) in cash and
cash equivalents
    
    
    
    
    
    
    46,304
    
    
    
    (770
    )
    
    
    (4,130
    )
    
    
    
    
    
    
    41,404Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    18,669
    
    
    
    906
    
    
    
    17,249
    
    
    
    
    
    
    
    36,824Cash and cash equivalents,
end of
period
    
    $
    
    
    
    $
    64,973
    
    
    $
    136
    
    
    $
    13,119
    
    
    $
    
    
    
    $
    78,228
 20




---



##### Table of Contents



Predecessor
Condensed Consolidating Statements Of Cash Flows
For the Six Months Ended March 28, 2003 SeminisSeminis
    
    Vegetable
    
    Subsidiary
    
    Subsidiary(Parent)
    
    (Issuer)
    
    Guarantors
    
    Non-Guarantors
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    4,061
    
    
    $
    367
    
    
    $
    (12,831
    )
    
    $
    
    
    
    $
    (8,403
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (2,649
    )
    
    
    
    
    
    
    (3,177
    )
    
    
    
    
    
    
    (5,826
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    641
    
    
    
    1,851
    
    
    
    5,121
    
    
    
    
    
    
    
    7,613Other
    
    
    
    
    
    
    750
    
    
    
    
    
    
    
    (571
    )
    
    
    
    
    
    
    179Net cash provided by (used in)
investing activities
    
    
    
    
    
    
    (1,258
    )
    
    
    1,851
    
    
    
    1,373
    
    
    
    
    
    
    
    1,966Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    596
    
    
    
    
    
    
    
    596Repayment of long-term debt
    
    
    
    
    
    
    (7,116
    )
    
    
    (69
    )
    
    
    (1,578
    )
    
    
    
    
    
    
    (8,763
    )Net short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,590
    
    
    
    
    
    
    
    11,590Net change in intercompany
account
    
    
    
    
    
    
    2,375
    
    
    
    (2,207
    )
    
    
    (168
    )
    
    
    
    
    
    
    Capital
contributions/dividends received (paid) / other
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    (4,688
    )
    
    
    (2,276
    )
    
    
    10,440
    
    
    
    
    
    
    
    3,476Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,057
    
    
    
    
    
    
    
    1,057Increase (decrease) in cash and
cash equivalents
    
    
    
    
    
    
    (1,885
    )
    
    
    (58
    )
    
    
    39
    
    
    
    
    
    
    
    (1,904
    )Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    24,062
    
    
    
    518
    
    
    
    12,225
    
    
    
    
    
    
    
    36,805Cash and cash equivalents, end of
period
    
    $
    
    
    
    $
    22,177
    
    
    $
    460
    
    
    $
    12,264
    
    
    $
    
    
    
    $
    34,901
 21




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##### Table of Contents



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:  
    
    We have experienced losses in the past and we may experience losses in the future.
    
    Following the acquisition transactions, the Company has incurred substantially higher levels of debt.
    
    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.
    
    The Company owns production and processing facilities in numerous
countries throughout the world and markets its products worldwide.
Accordingly, fluctuations in currency rates may affect the Companys
operating results and net income.
    
    The Companys business is seasonal.
    
    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 2003, our investment in research and development represented 10.1% 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 not have the ability 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 U.S. law protecting plant patents could limit or 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 the Company. 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.
    
    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 claims and negative publicity, and
the insurance covering claims may become unavailable or be inadequate,
which could have a material adverse effect on our business, results of
operations or financial condition.
    
    The Companys worldwide operation and products are highly regulated
in the areas of safety and protection of human health and the
environment. Compliance with these health and safety regulations can be
costly. 22




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##### Table of Contents



OVERVIEW 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 1994, the subsequent combination of
the Asgrow business with the Petoseed and Royal Sluis seed businesses in 1995,
and acquisitions during late 1996 to 1999. Since our formation, we have been at
the forefront of the consolidation of the vegetable and fruit seed industry and
have completed ten acquisitions. Acquisition Transactions On September 29, 2003, the Company completed the acquisition transactions,
which have a significant effect on the Companys financial statements, see
Notes 2 and 3. The Companys results for the three and six months ended March 26, 2004 reflect
the effects of the acquisition transactions and are presented on a successor
basis, whereas the results for the three and six months ended March 28, 2003
are presented on a predecessor basis. The acquisition transactions are
accounted for under the purchase method of accounting. In accordance with
applicable accounting guidelines, the purchase price paid by Fox Paine for
Seminis common stock plus related purchase accounting adjustments are pushed
down and recorded in Seminis financial statements. The 75.1% of deemed assets acquired and liabilities assumed in connection with
the acquisition transactions were originally recorded at their estimated fair
market values based on an independent appraisal and 24.9% of its historical
basis was carried over, however, these values were in excess of the purchase
price paid by Fox Paine. Accordingly, the negative goodwill totaling $433.4
million was allocated against the value of non-current assets on a
proportionate basis. The following summarizes the fair values, subsequent
adjustments and on-going carrying values of the net assets acquired: Adjusted BasisFMV
    
    24.9%
    
    Negative
    
    As ofHistorical
    
    Of 75.1%
    
    Carryover
    
    Goodwill
    
    September 29,Basis
    
    Acquired
    
    Basis
    
    Allocation
    
    2003Current assets, excluding inventory
    
    $
    185,206
    
    
    $
    139,017
    
    
    $
    46,190
    
    
    $
    
    
    
    $
    185,207Inventory
    
    
    279,680
    
    
    
    283,107
    
    
    
    69,751
    
    
    
    
    
    
    
    352,858Property, plant & equipment
    
    
    166,943
    
    
    
    125,308
    
    
    
    41,635
    
    
    
    (102,582
    )
    
    
    64,361Goodwill
    
    
    106,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    51,533
    
    
    
    331,693
    
    
    
    12,852
    
    
    
    (271,536
    )
    
    
    73,009In-process R&D
    
    
    
    
    
    
    58,547
    
    
    
    
    
    
    
    (47,929
    )
    
    
    10,618Other long-term assets
    
    
    18,463
    
    
    
    13,859
    
    
    
    4,605
    
    
    
    (11,345
    )
    
    
    7,119Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 The increase in inventory value will be expensed as the inventory is sold. We
expect that the inventories will be sold over a 16 month period from the date
of acquisition. The intangible assets will be amortized on a straight-line
basis over periods between five and forty years. In-process research and
development was immediately expensed in the results of the successor entity for
the one-day period ended September 30, 2003. The acquisition transactions resulted in the incurrence of additional operating
expenses in both the predecessor and successor companies. The main components
of these operating expenses were related to transaction fees for obtaining an
exchange and fairness opinion, and expenses for the buyout of existing options,
severance and restricted stock. OUTLOOK The change in the basis of assets and liabilities as a result of the
acquisition transactions will impact the future operating results of the
Company. Fiscal year 2004 and approximately 8 additional
years operating expenses will benefit from a reduction in
depreciation expense of approximately $7.3 million, which will reduce selling,
general and administrative expenses. Fiscal year 2004 and part of 2005 gross margins
will be lower than historical levels because of the increased basis in
inventory. The increase in inventory basis of $73.2 million, resulting from
the purchase accounting adjustments made in connection with the acquisition
transactions, will be reflected in the statement of operations through
decreased margins as the related inventory is sold. The Company expects that
the related inventory will be sold over the next 10 months. Future results are
also expected to be adversely impacted by increased interest expense as a
result of higher average debt levels outstanding coupled with higher interest
rates. The Company expects continued growth in fiscal year 2004. The Company will
continue to execute its Value Capture Strategy and will focus on opportunities,
such as potential acquisitions, to achieve long term growth targets. 23




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##### Table of Contents



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 33.3% of its fiscal year
2003 net sales during its second fiscal quarter. Seminis results in any
particular quarter should not be considered indicative of those to be expected
for a full year. Results of Operations The table below sets forth Seminis results of operations data expressed as a
percentage of net sales. Three Months Ended
    
    Six Months EndedSuccessor
    

    

    Predecessor
    
    
    Successor

    
    

    PredecessorMarch 26,
    
    March 28,
    
    
    March 26,
    
    March 28,2004
    
    2003
    
    
    2004
    
    2003(Unaudited)
    
    (Unaudited)Net sales
    
    
    100.0
    %
    
    

    
    100.0
    %
    
    
    
    100.0
    %
    
    
    
    100.0
    %Gross margin
    
    
    54.2
    
    
    
    63.5
    
    
    
    
    52.1
    
    
    
    63.2Research and development expenses
    
    
    6.9
    
    
    
    6.9
    
    
    
    
    8.5
    
    
    
    9.3Selling, general and administrative expenses
    
    
    28.9
    
    
    
    30.6
    
    
    
    
    34.8
    
    
    
    38.1Amortization of intangible assets
    
    
    1.1
    
    
    
    2.5
    
    
    
    
    1.4
    
    
    
    3.3Total operating expenses
    
    
    36.9
    
    
    
    40.0
    
    
    
    
    44.7
    
    
    
    50.7Gain on sale of fixed assets
    
    
    0.1
    
    
    
    1.0
    
    
    
    
    1.0
    
    
    
    0.4Income from operations
    
    
    17.4
    
    
    
    24.5
    
    
    
    
    8.4
    
    
    
    12.9Interest expense, net
    
    
    (6.7
    )
    
    
    (5.3
    )
    
    
    
    (7.7
    )
    
    
    (6.3
    )Other non-operating income (expense), net
    
    
    (4.7
    )
    
    
    0.3
    
    
    
    
    0.3
    
    
    
    0.2Income before income taxes
    
    
    6.0
    
    
    
    19.5
    
    
    
    
    1.0
    
    
    
    6.8Income tax expense
    
    
    (3.3
    )
    
    
    (4.4
    )
    
    
    
    (2.5
    )
    
    
    (1.7
    )Net income (loss)
    
    
    2.7
    %
    
    
    15.1
    %
    
    
    
    (1.5
    )%
    
    
    5.1
    %
 Three Months Ended March 26, 2004 Compared with Three Months Ended March 28,
2003 Net Sales Net sales increased 10.9% to $176.4 million for the three months ended March
26, 2004 compared to $159.0 million for the three months ended March 28, 2003.
The result was partially due to $10.5 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 second quarter of fiscal year 2004 compared
to the same period in the prior year. In constant dollars stated at monthly
average exchange rates for the second quarter of fiscal year 2003 and excluding
sales from non-core businesses, sales would have increased 4.2% to $159.6
million for the second quarter of fiscal year 2004 from $153.3 million in
second quarter of fiscal year 2003. The increase was primarily a result of
price increases implemented around October 2003 and the availability of
high-demand seed. Geographically, the sales increases were primarily in the
Americas, Europe and the Middle East with gains in carrot, sweet pepper, bean,
spinach, onion, watermelon and hybrid tomato sales. The Companys business is subject to seasonal
fluctuations and, therefore, the sales for the second 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 decreased 5.3% to $95.6 million for the three months ended March
26, 2004 from $101.0 million for the three months ended March 28, 2003. Gross
margin percentage decreased to 54.2% for the three months ended March 26, 2004
from 63.5% for the three months ended March 28, 2003. The decrease was
primarily due to amortization of $17.0 million of inventory step-up under
purchase accounting treatment for the acquisition transactions, which had a
negative impact of 9.6% to the Companys gross margin. This non-cash charge
will continue to have a negative impact on the gross profit for approximately
the next 10 months. Research and Development Expenses Research and development expenses increased 10.1% to $12.1 million for the
three months ended March 26, 2004 from $11.0 million for the three months ended
March 28, 2003. This increase was primarily the result of cost of living
adjustments. Selling, General and Administrative Expenses 24




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##### Table of Contents



Selling, general and administrative expenses increased 4.8% to $51.0 million
for the three months ended March 26, 2004 from $48.6 million for the three
months ended March 28, 2003. The increase was primarily due to cost of living
adjustments and variable expenses associated with sales. As a
percentage to sales, selling, general and administrative expenses for
the three months ended March 26, 2004 decreased to 28.9% from
30.6% in the same period last year. Amortization of Intangible Assets Amortization of intangible assets decreased 50.5% to $2.0 million for the three
months ended March 26, 2004 from $4.0 million for the three months March 28,
2003. The decrease was due to the purchase accounting impact to the intangible
assets basis and amortization period, resulting in a lower amortization in the
current period. Gain on Sale of Fixed Assets Both the gain of $0.1 million for the three months ended March 26, 2004 and
$1.5 million for the three months ended March 28, 2003 were primarily from
fixed asset sales of our South Korean subsidiary. Interest Expense, Net Interest expense, net, increased 40.5% to $11.9 million for the three months
ended March 26, 2004 from $8.4 million for the three months ended March 28,
2003. The increase was primarily due to higher debt levels and the
impact of Preferred PIK interest. Other Non-Operating Income (Expense), Net We had other non-operating expense, including foreign currency gain (loss),
net, of $8.2 million for the three months ended March 26, 2004 as compared to
other non-operating income, net, of $0.5 million for the three months ended
March 28, 2003. Other non-operating expense, net, for the three months ended
March 26, 2004 primarily consists of foreign currency loss of $4.2 million and
other expense of $4.0 million. The foreign currency loss was primarily due to the
effect of the weakening of the Euro during the quarter on a U.S. dollar based
intercompany loan at a European subsidiary. The other expense was related to a
$3.8 million write-down of deferred loan fees due to the refinancing of the
Companys term loan in January 2004. Other non-operating
income, net, for the
three months ended March 28, 2003, primarily consists of foreign currency gains
of $0.2 million, and other income of $0.3 million. Income Tax Expense Income tax expense was $5.8 million for the three months ended March 26, 2004
compared to an income tax expense of $7.0 million for the three months ended
March 28, 2003. The increase in income tax expense was primarily due to the
amount and mix of worldwide income at Seminis subsidiaries. Six Months Ended March 26, 2004 Compared with Six Months Ended March 28, 2003 Net Sales Net sales increased 16.1% to $278.3 million for the six months ended March 26,
2004 compared to $239.6 million for the six months ended March 28, 2003. The
result was partially due to $16.4 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 half of fiscal year 2004 compared to
the same period in the prior year. In constant dollars stated at monthly
average exchange rates for the first half of fiscal year 2003 and excluding
sales from non-core businesses, sales would have increased 9.2% to $252.0
million for the first half of fiscal year 2004 from $230.8 million in the first
half of fiscal year 2003. The increase was primarily a result of price
increases implemented around October 2003 and the availability of high-demand
seed. Geographically, the sales increases were primarily in the Americas,
Europe and the Middle East that included gains in carrot, sweet pepper, bean,
spinach, onion and hybrid tomato sales. The Companys business is subject to seasonal
fluctuations and, therefore, the sales for the first half 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 decreased 4.2% to $145.1 million for the six months ended March
26, 2004 from $151.4 million for the six months ended March 28, 2003. Gross
margin percentage decreased to 52.1% for the six months ended March 26, 2004
from 63.2% for the six months ended March 28, 2003. The decrease was primarily
due to the amortization of $28.5 million of inventory step-up, under purchase
accounting treatment, which had a negative impact of 10.2% on the Companys
gross margin. This non-cash charge will
continue to have a negative impact on the gross profit for approximately the
next 10 months. Another principal factor was an additional provision for
seedmens claim related to certain product liability claims in Europe that
accounted for 0.3% of net sales. 25




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##### Table of Contents



Research and Development Expenses Research and development expenses increased 5.6% to $23.6 million for the six
months ended March 26, 2004 from $22.4 million for the six months ended March
28, 2003. This increase was primarily the result of cost of living
adjustments, $1.5 million of currency fluctuations from research and
development expenses in Europe and South Korea in the first half of fiscal year
2004, offset by $1.3 million of lower depreciation expense related to the
impact of the negative goodwill allocation as part of the acquisition
transaction. As a percentage to sales, research and development
expenses for the six months ended March 26, 2004 decreased to 8.5%
from 9.3% in the same period last year. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 6.1% to $96.9 million
for the six months ended March 26, 2004 from $91.3 million for the six months
ended March 28, 2003. The increase was primarily due to cost of living
adjustments, variable expenses associated with sales, $5.4 million of currency
exchange impact on European and South Korean expenses, $2.4 of million
management fee expense, and $0.6 million of non-cash stock based compensation
expense, offset by $2.5 million of lower depreciation expense related to the
impact of the negative goodwill allocation as part of the acquisition
transaction and $3.4 million of severance expense. As a
percentage to sales, selling, general and administrative expenses for
the six months ended March 26, 2004 decreased to 34.8%
from 38.1% in the same period last year. Amortization of Intangible Assets Amortization of intangible assets decreased 51.2% to $3.9 million for the six
months ended March 26, 2004 from $7.9 million for the six months March 28,
2003. The decrease was due to the purchase accounting impact to the intangible
assets basis and amortization period, resulting in a lower amortization in the
current period. Gain on Sale of Fixed Assets Both the gain of $2.6 million for the six months ended March 26, 2004 and the
gain of $1.1 million for the six months ended March 28, 2003 were primarily
from fixed asset sales of our South Korean subsidiary. Interest Expense, Net Interest expense, net, increased 44.3% to $21.6 million for the six months
ended March 26, 2004 from $14.9 million for the six months ended March 28,
2003. The increase was primarily due to higher debt levels and the
impact of Preferred PIK interest. Other Non-Operating Income (Expense), Net We had other non-operating income, including foreign currency gain (loss), net,
of $0.9 million and $0.5 million for the six months ended March 26, 2004 and
March 28, 2003, respectively. Other non-operating income, net, for the six
months ended March 26, 2004 primarily consists of foreign currency gains of
$4.7 million and other expense of $3.8 million. The foreign currency gain was
primarily due to the effect of the strengthening of the Euro on a U.S. dollar
based intercompany loan at a European subsidiary. The other expense was related to
a $3.8 million write-down of deferred loan fees write-down due to the
refinancing of the Companys term loan in January 2004. Other non-operating
income, net, for the six months ended March 28, 2003, primarily consists of
minority interest benefit of $0.2 million. Income Tax Expense Income tax expense was $6.9 million for the six months ended March 26, 2004
compared to an income tax expense of $4.1 million for the six months ended
March 28, 2003. The increase in income tax expense was primarily due to the
amount and mix of worldwide income at Seminis subsidiaries. Liquidity and Capital Resources In connection with the acquisition transactions, the Company became a privately
held company, acquired all of its publicly held shares of
Class A common stock, Class B
common stock, and shares of Class B and Class C Redeemable Preferred Stocks,
repaid the $216.6 million of principal outstanding under its senior credit
facility, and the $11.6 million of a mortgage on its Oxnard real property. In
order to fund these transactions and other related expenses,
Fox Paine purchased shares of the Companys common stock for a purchase price of $163.2 million, the Company issued
$190.0 million of ten year, 10 1/4% senior
subordinated notes, established a senior secured credit facility that
consisted of a $190.0 million term loan and a $60.0 million revolving loan
(none of which was outstanding at March 26, 2004 and September 30, 2003,
respectively), borrowed $17.0 million 26




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##### Table of Contents



under a new mortgage note, and issued
paid-in-kind mandatorily redeemable preferred stock (see Note 11
 PIK Preferred
Stock) along with warrants to purchase 3.9 million
shares of common stock for combined proceeds of $50.0 million. Upon completion of the
acquisition transactions, the Company had total
indebtedness of $421.3 million as of September 30, 2003 compared to $252.5
million before the transactions. Cash flows from operations Operating activities utilized $13.9 million in cash flow during the first half
of fiscal year 2004 compared to $8.4 million utilized during the same period in
the prior fiscal year. The increase in cash utilization was primarily due to
approximately $11.8 million of acquisition transaction related costs which were
accrued for at September 30, 2003 but subsequently paid during the first half
of fiscal year 2004. Cash flow was also impacted in the first half of fiscal
year 2004 by a $4.8 million prepayment of a management fee to be amortized over
fiscal year 2004, which was paid in accordance with the acquisition
transactions purchase agreement. Additionally, the increase in cash
utilization was due to approximately $5.2 million in transaction fees that were
paid in association with the January 2004 senior subordinated note issuance,
offset by $4.5 million of accrued interest that was received by the
Company but will need to be paid back to the bondholders in
April 2004, and $4.6 million of higher interest paid in the
prior fiscal period. Cash flows from investments Capital expenditures decreased to $4.6 million for the first half of fiscal
year 2004, from $5.8 million in the same period of the prior fiscal year.
Other investing activities for the first half of fiscal year 2004 included $3.8
million from proceeds from the sale of assets compared to $7.6 million in the
prior fiscal year. The decrease in proceeds during the first half of fiscal
year 2004 was primarily due to higher asset sales in our South Korean
subsidiary in the prior year and also due to the sale of a Company owned
property in Salinas, CA in the prior year. Cash flows from financings On January 23, 2004, the Company issued additional $140.0 million of its 10
1/4% senior subordinated notes, at a premium of $12.6 million. These notes
have identical terms and conditions as the $190.0 million of senior
subordinated notes issued as part of the acquisition transactions on September
29, 2003. The net proceeds from the additional notes, after deducting
underwriting discounts and other expenses, were approximately $145.6 million.
These net proceeds from the offering were used to repay $100.0 million and
$15.0 million of the borrowings under the term loan portion and revolver
portion, respectively, of Companys senior secured credit facility and for
general corporate purposes. Concurrently with the offering of the additional notes, the Company amended the
senior secured credit facility. The amended senior secured facility decreased
the term loan from $190.0 million to $90.0 million, increased the revolving
credit facility from $60.0 million to $75.0 million, amended pricing terms on
both the term loan and revolver portion of the credit facility, and amended
certain financial covenants. The Companys total indebtedness as of March 26, 2004 was $477.9 million, of
which $89.5 million were borrowings under Companys senior credit facility,
$342.4 million were borrowings under our senior 10 1/4% subordinated notes
(which includes $12.4 million of a remaining premium balance, which is
amortized over the life of the loan and reduces interest expense), $17.4
million, $4.6 million, $1.2 million, $0.5 million and $22.3 million were
borrowings by its United States, Italian, Spanish, French and South Korean
subsidiaries, respectively. The Company also has $42.8 million of preferred
shares subject to mandatory redemption, see Note 11 with respects to the
preferred shares. The cash balance as of March 26, 2004 was $78.2 million Going forward, the Companys principal source of liquidity will be cash flow
generated from operations, borrowings under its senior secured credit facility
and additional capital infusion. The Companys principal uses of cash will be
to meet debt service requirements, finance capital expenditures and provide
working capital. Based on the current level of operations, management believes
that remaining cash on hand, cash flow from operations and available borrowings
under its revolving credit portion of the senior secured credit facility will
enable the Company to meet its working capital, capital expenditure, debt
service and other funding requirements for at least the next 12 months. Our exposure to foreign currency fluctuations is primarily due to foreign
currency gains or losses that occur from intercompany receivables and payables
between Seminis Vegetable Seeds Inc. and its foreign subsidiaries. The Company entered into an interest rate swap agreement in September 2003.
The purpose of the swap agreement is to hedge approximately $17.0 million of
variable rate debt associated with the Companys mortgage on its worldwide
headquarter facility in
Oxnard, CA. Changes in the fair value of the hedge instrument are reflected in
other comprehensive income (loss) and the associated interest is reflected in
the statement of operations over the term of the mortgage. 27




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Recent Accounting Pronouncements In March 2004, the consensus of Emerging Issues Task Force (EITF) Issue No.
03-06, Participating Securities and the Two-Class Method under FASB Statement
128, was published. EITF Issue No. 03-06 addresses the computations of
earnings per share by companies that have issued securities other than common
stock that contractually entitle the holder to participate in dividends and
earnings of the company. Further guidance on the application and allocations of
the two-class method of calculating earnings per share is also included. The
provisions of EITF Issue No. 03-06 will be effective for reporting periods
beginning after March 31, 2004. The adoption of this guidance will not impact
the Companys financial results of operations and financial position. In December 2003, the FASB reissued SFAS No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No.
87, 88, and 106. This Statement revises employers disclosures about pension
plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by SFAS No. 87, Employers
Accounting for Pensions, SFAS No. 88, Employers Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits, and SFAS No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions. This Statement retains the disclosure requirements
contained in the original SFAS No. 132, Employers Disclosures about Pensions
and Other Postretirement Benefits. The revised Statement also requires
additional disclosures about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The provisions of the original SFAS No. 132 will
remain in effect until the provisions of this Statement are adopted. Certain
new provisions are effective for financial statements with fiscal years ending
after December 15, 2003, while other provisions are effective for fiscal years
ending after June 15, 2004. The interim period disclosures are effective for
interim periods beginning after December 15, 2003. See Note 8 Pensions and
Other Postretirement Benefits, for disclosures required under the revised SFAS
No. 132. In December 2003, the Financial Accounting Standards Board (FASB) reissued
Interpretation No. 46, Consolidation of Variable Interest Entities  an
Interpretation of ARB No. 51. The Interpretation clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements, to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity risk for the
entity to finance its activities without additional subordinated financial
support. The provisions of this Interpretation are effective for the Company
for interim periods ending after March 15, 2004. The adoption of this
Interpretation has not had a significant impact on the Companys financial
results of operations and financial position.
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. The
Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148
on October 1, 2003. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This Statement requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
The provisions of this Statement are effective for financial instruments
entered into or modified after May 31, 2003, and otherwise are effective at the
beginning of the first interim period beginning after June 15, 2003. The
Company adopted this Statement as of June 28, 2003 and has classified its newly
issued paid in kind preferred stock (PIK Preferred Stock) as a liability. In April 2003, the FASB issued SFAS No. 149, Amendment to Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) used for hedging activities under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
The provisions of this Statement are effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of this Statement did not have a significant impact
on the Companys financial condition or results of operations. 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. The
Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148
on October 1, 2003. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk Our market risk disclosures set forth in the Form S-4, as filed with the SEC on
March 11, 2004 has not changed significantly through the six
months ended March 26, 2004. 
 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-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934 (the Exchange Act) as of the end of the
period covered by this quarterly report (the Evaluation
Date). 28




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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 was no change in the
Companys internal controls over financial reporting during the
period covered by this quarterly report that has materially affected,
or is reasonably likely to materially affect, our internal control
over financial reporting. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings As part of the formation of LSL PlantScience, a joint venture between Seminis
and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements
between LSL Biotechnologies and a third party. These agreements contain
provisions that permanently restrict the third party from engaging in the
development or marketing of open field tomato seeds having long-shelf-life
characteristics in certain areas in the world, including North America. In
September 2000, the Antitrust Division of the U.S. Department of Justice filed
suit in the U.S. District Court for the District of Arizona against LSL
PlantScience, LSL Biotechnologies and Seminis to delete these restrictive
provisions. On March 29, 2002, the U.S. District Court dismissed without
prejudice the action against LSL PlantScience, LSL Biotechnologies and Seminis.
The U.S. Department of Justice has appealed this ruling and the appeal is
pending in the Ninth Circuit Court of Appeals. 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 us by July 2002. The claims related
to the growers with infected crops total approximately $4.7 million and we
believe these claims are covered under our general liability insurance policy.
We have finalized settlement of all of these claims. Our general liability
insurance carrier continues to deny coverage, and we have instituted
proceedings against them. In early 2000, we filed 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. Mr. Schmidt filed a
counterclaim for defamation against us. We were unsuccessful on our claims for
trade secret misappropriation and breach of contract, and Mr. Schmidt was
successful on his counterclaim with the court awarding him $1 in nominal
damages. The count subsequently awarded Messrs. Schmidt, Owen and Ouyang their
attorneys fees. We have appealed certain aspects of the judgment, including
the fee award. A decision on the appeal was handed down in December, 2003.
The California Court of Appeal partially affirmed the lower courts ruling, and
has partially reversed and remanded the case to the lower court for a
re-determination of costs and fees, specifying that certain attorneys fees and
costs previously awarded to Messrs. Schmidt, Owens and Ouyang should not be
payable by Seminis. On December 17, 2002 and January 4, 2003, four purported class action lawsuits
were filed relating to the acquisition transactions. 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). Since that time, a fifth case, Haven Capital Management v.
Alfonso Romo Garza, et al., Civil Action No. 20140 has also been filed in
Delaware. In February 2003, the Firth, Pozniak, Herranzand Haven Capitalcases
were consolidated into one proceeding entitled In re Seminis, Inc.
Shareholders Litigation, Consolidated C.A. No. 20140-NC, and the Haven Capital
complaint was designated as the operative complaint in the consolidated
lawsuit. That complaint names as defendants Savia, Company and its Directors.
The Rosales(California) complaint names as defendants Company and its
Directors. Both the Delaware consolidated action and the Rosalesaction purport
to be brought on behalf of Company common stockholders or their successors.
Both of these actions  which were brought prior to the public announcement of
Company entering into the acquisition transactions agreements  allege that the
acquisition transactions, when consummated, would provide insufficient
consideration to Company common stockholders and allege that the defendants
breached their fiduciary duties in connection with the acquisition
transactions. The complaints sought a preliminary and permanent injunction to
enjoin the acquisition transactions and, since the acquisition transactions
have been consummated, rescission and damages. On September 24, 2003, the
parties reached a memorandum of understanding that settled all of the alleged
claims.
The parties have finalized the settlement agreement and the California court
preliminarily approved the terms of the settlement in April 2004. A hearing for
final approval of the settlement is expected to be scheduled by the California
court for July or August 2004. The California court has also ordered that
Delaware counsel may intervene
in the California action and participate in the final settle hearing. The
proposed settlement does not affect the terms of the acquisition transactions
set forth herein. 29




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During the last months of fiscal year 2002, Seminis subsidiary in Spain sold
Boludo tomato seed to growers in the Canary Islands of Spain. Subsequently,
some fields planted with this seed showed symptoms of the bacteria, Clavibacter
michiganses,which can be seed borne, among other possible sources. Seminis has
been conducting an investigation of the seeds and until July 31, 2003, all
Seminis seed used in these fields that had been tested, tested negative for the
presence of the bacteria. Spanish authorities requested an analysis of all seed
lots sold in the Canary Islands. On July 31, 2003, Seminis was notified that
after analyzing 89 lots of Boludo seed, a single seed lot tested positive for
the presence of the bacteria. Seminis believes that other factors that may
cause the disease were present at the time of the infection, and could be
responsible for, or contributing factors to, the presence of the bacteria and
damage to the crops. These factors include, but are not limited to: poor
sanitary practices in the growers fields (failure to remove debris from prior
harvests); bacteria from sources other than Seminis that remained in the fields
from prior seasons; the practice of grafting, which can magnify the effects of
small outbreaks and weaken the crops; failure to properly rotate crops from
season to season; and third-party isolates (different strains) of the disease
that may have been present. Seminis continues to investigate this matter
vigorously, in particular investigating the single positive test result, which
is inconsistent with the findings of all of the other independent laboratories
test results for Seminis seed lots. Seminis does not believe that its Boludo
tomato seeds sold in the Canary Islands caused any bacterial damage.
Notwithstanding the foregoing, tomato growers may initiate legal claims against
Seminis alleging that Seminis seeds were the source of the bacteria and
claiming significant damages and Seminis cannot predict the outcome of any such
claim, if initiated. We are involved from time to time as a defendant in various other 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. 
 Item 6. Exhibits and Reports on Form 8-K The Company did not file any reports on Form 8-K for the quarter ended March
26, 2004. 30




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Exhibit Index

ExhibitNumber
    
    Description(a) 1
    
    Form of Underwriting Agreement(c) 2.1
    
    Merger Agreement by and between Seminis, Inc., an Illinois corporation and Seminis, Inc., a Delaware corporation(k) 2.2
    
    Agreement and Plan of Merger by and
among Seminis, Inc., Seminis Acquisition LLC, Seminis Merger Corp.,
and Fox Paine & Co., LLC, dated as of May 30, 2003.(k) 2.3
    
    Stock Purchase Agreement by and
among Fox Paine Seminis Holdings, LLC, Banca Afirme, S.A., Institucion
de Banca Multiple, Afirme Grupo Financiero, as Trustee, Under the
Irrevocable Administration and Payment Trust Number 167-5
(Fideicomiso Irrevocable de Administracion y Pago Numero 167-5),
Seminis Acquisition LLC and Seminis Merger Corp., dated as of
May 30, 2003.(k) 2.4
    
    Amended and Restated Exchange
Agreement by and between Seminis, Inc. and Savia, S.A. de C.V. dated
as of May 30, 2003.(k) 2.5
    
    Contribution Agreement by and among
Seminis Acquisition LLC, Savia, S.A. de C.V., Banca Afirme, S.A.,
Institucion de Banca Multiple, Afirme Grupo Financiero, as Trustee,
under the Irrevocable Administration and Payment Trust Number 167-5
(Fideicomiso Irrevocable de Administracion y Pago Numero 167-5),
Conjunto Administrativo Integral, S.A. de C.V., Desarrollo
Consolidado de Negocios, S.A. de C.V., Emprima, S.A. de C.V., Park
Financial Group, Ltd (BVI), Alfonso Romo Garza and Certain Members of
Seminis and Savia Management, dated as of May 30, 2003.(l) 2.6
    
    Amendment to Contribution
Agreement, dated as of September 29, 2003, by and among Seminis
Acquisition LLC, Savia, S.A. de C.V., Banca Afirme, S.A., Institucion
de Banca Multiple, Afirme Grupo Financiero, as Trustee, Under the
Irrevocable Administration and Payment Trust Number 167-5
(Fideicomiso Irrevocable de Administracion y Pago
Numero 167-5), Conjunto Administrativo Integral, S.A. de C.V.,
Desarrollo Consolidado de Negocios, S.A. de C.V., Emprima, S.A. de
C.V., Park Financial Group, Ltd (BVI), Alfonso Romo Garza and Certain
Members of Seminis and   Savia Management.(l) 3.1
    
    Amended and Restated 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.(l) 3.4
    
    By-Laws(l) 3.5
    
    Certificate of Designation of
Preferences and Rights of Class C Redeemable Preferred Stock of
Seminis, Inc.(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(k) 4.3
    
    Indenture, dated as of
September 29, 2003, by and among Seminis Vegetable Seeds, Inc.,
Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc., and
Baxter Seed Co., Inc. and Wells Fargo Bank, National Association for
the 10 1/4% Senior Subordinated Notes due 2013.(k) 4.4
    
    Registration Rights Agreement, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc.,
Seminis, Inc., Petoseed International, Inc. PGI Alfalfa, Inc., Baxter
Seed Co., Inc. and Citigroup Global Markets Inc., CIBC World Markets
Corp., Harris Nesbitt Corp., and Rabo Securities USA, Inc.(k) 4.5
    
    Form of Global Note for 10 1/4%
Senior Subordinated Notes due 2013 of Seminis Vegetable Seeds, Inc.
(contained as an exhibit to Exhibit 4.3 hereto).(l) 4.6
    
    Form of
Exchange Agent Agreement by and among Seminis Vegetable Seeds, Inc.,
Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc.,
Baxter Seed Co., Inc. and Wells Fargo Bank, National Association.(l) 4.7
    
    Registration Rights Agreement,
dated as of January 23, 2004, by and among Seminis Vegetable
Seeds, Inc., Seminis Inc., Petoseed International, Inc., PGI Alfalfa,
Inc., Baxter Seed Co., Inc. and Citigroup Global Markets Inc.(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(j) 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
    
    New Senior Secured Credit Facility
by and among Seminis, Vegetables Inc. as the borrower, Seminis, Inc.
as the parent guarantor, Citicorp North America, Inc. as
administrative agent, CIBC World Markets Corp. and Rabobank
International as co-documentation agents, Harris Trust and Savings
Bank as syndication agent and Citigroup Global Markets Inc. together
with Harris Trust and Savings Bank as joint lead arrangers and joint
bookrunners consisting of a $60.0 million revolving loan and a
$190.0 million term loan, dated as of September 29, 2003.(l) 10.16
    
    Amended and Restated
Stockholderss Agreement, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis Inc., Petoseed International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc., Citigroup Global Markets Inc., CIBC World Markets Corp., Harris Nesbitt Corp., and Rabo Securities USA, Inc.(k) 10.17
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Alfonso Romo.(k) 10.18
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Bruno Ferrari.(k) 10.19
    
    Amendment, dated August 7,
2003, to the Employment Agreement, made May 30, 2003, between Seminis, Inc. and Bruno Ferrari.(k)
10.20
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Mateo Mazal.(k) 10.21
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Bernardo Jimenez.(k) 10.22
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Gaspar Alvarez.(k) 10.23
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Jose Manuel Madero.(k) 10.24
    
    Employment Agreement, dated as of
May 30, 2003, between Seminis, Inc. and Charles Edward Green.(l) 10.25
    
    New Senior Secured Credit Facility
by and among Seminis, Vegetables Inc. as the borrower, Seminis, Inc.
as the parent guarantor, Citicorp North America, Inc. as
administrative agent, CIBC World Markets Corp. and Rabbobank
International as co-documentation agents, Harris Trust and Savings
Bank as syndication agent and Citigroup Global Markets Inc. together
with Harris Trust and Savings Bank as joint lead arrangers and joint
bookrunners consisting of $75.0 million revolving loan and a
$90.0 million term loan, dated as of September 29, 2003, as
amended by Amendment No. 1 thereto dated as of January 15, 2004.


31



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31.1
    
    Certification of Chief Executive
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification of Vice President,
Finance and Worldwide Corporate Comptroller pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Vice President,
Finance and Worldwide Corporate Comptroller pursuant to 18 U.S.C. Section 1350, as adopted 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 September 30, 2002 Form 10K.                                               
|   
|(k) |  | Incorporated by reference to Seminis Form S-4
filed on November 14, 2003.                
|   
|(l) |  | Incorporated by reference to Seminis Amendment
No. 1 to Form S-4
filed on March 11, 2004.



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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: May 10, 2004
    
    SEMINIS, INC./s/ Alfonso Romo GarzaAlfonso Romo GarzaChief Executive Officer(Principal Executive Officer)/s/ Gaspar Alvarez MartinezGaspar Alvarez MartinezVP Finance & Worldwide Corporate Comptroller(Principal Accounting Officer)
 32