##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549   FORM 10-Q   (MARK ONE)  þ
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004 OR  o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  TO COMMISSION FILE NUMBER 000-26519 SEMINIS, INC.  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 þ NO o Indicate, by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of
the Exchange Act). YES o NO þ As of February 9, 2005, 64,333,205 shares of the registrants common stock, $0.01 par value, were
outstanding.   1




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SEMINIS, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004 TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of December 31, 2004 and September 30, 2004
    
    
    3Consolidated Statements of Operations for the Three Months Ended December 31, 2004 and December 26, 2003
    
    
    4Consolidated Statement of Stockholders' Equity for the Three Months Ended December 31, 2004
    
    
    5Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2004 and December 26, 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4.
    
    Controls and Procedures
    
    
    31PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    32Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3.
    
    Defaults Upon Senior Securities
    
    
    33Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    33Item 5.
    
    Other Information
    
    
    33Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    33Signatures
    
    
    36Certification of ResultsExhibit 31.1
    
    
    37Exhibit 31.2
    
    
    38Exhibit 32.1
    
    
    39Exhibit 32.2
    
    
    40EX-10.11EX-10.12EX-10.13EX-10.14EX-10.15EX-10.16EX-10.17EX-10.18EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements SEMINIS, INC. 
 Consolidated Balance Sheets
  As of
    
    
    As ofDecember 31,
    
    
    September 30,2004
    
    
    2004(Unaudited)Assets:Current assetsCash and cash equivalents
    
    $
    75,796
    
    
    $
    116,870Accounts receivable, less allowances for doubtful accounts of $11,407 and $10,072, respectively
    
    
    149,679
    
    
    
    153,173Inventories
    
    
    345,146
    
    
    
    328,395Prepaid expenses and other current assets
    
    
    11,661
    
    
    
    8,017Total current assets
    
    
    582,282
    
    
    
    606,455Property, plant and equipment, net
    
    
    86,963
    
    
    
    78,608Intangible assets, net
    
    
    70,196
    
    
    
    69,008Other assets
    
    
    24,097
    
    
    
    23,591Total Assets
    
    $
    763,538
    
    
    $
    777,662Liabilities and Stockholders Equity:Current liabilitiesShort-term borrowings
    
    $
    20,604
    
    
    $
    10,965Current maturities of long-term debt
    
    
    1,826
    
    
    
    1,746Accounts payable
    
    
    46,177
    
    
    
    63,339Accrued liabilities
    
    
    110,427
    
    
    
    120,334Total current liabilities
    
    
    179,034
    
    
    
    196,384Long-term debt
    
    
    448,064
    
    
    
    448,816Deferred income taxes
    
    
    20,804
    
    
    
    16,291Minority interest in subsidiaries
    
    
    1,455
    
    
    
    1,644Preferred shares subject to mandatory redemption
    
    
    42,016
    
    
    
    41,773Total liabilities
    
    
    691,373
    
    
    
    704,908Commitments and contingencies (see Note 12)Stockholders equityClass A Common Stock, $.01 par value; 200,000 shares authorized, and 64,333 shares issued and
outstanding as of December 31, 2004 and September 30, 2004, respectively
    
    
    644
    
    
    
    644Additional paid-in-capital
    
    
    94,149
    
    
    
    94,149Accumulated deficit
    
    
    (32,067
    )
    
    
    (23,911
    )Accumulated other comprehensive income
    
    
    9,439
    
    
    
    1,872Total stockholders equity
    
    
    72,165
    
    
    
    72,754Total Liabilities and Stockholders Equity
    
    $
    763,538
    
    
    $
    777,662
 The accompanying notes are an integral part of these consolidated financial statements. 3




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SEMINIS, INC. 
 Consolidated Statements of Operations
(In thousands) For the Three Months EndedDecember 31,
    
    
    December 26,2004
    
    
    2003(Unaudited)Net sales
    
    $
    110,704
    
    
    $
    101,892Cost of goods sold
    
    
    47,074
    
    
    
    52,475Gross profit
    
    
    63,630
    
    
    
    49,417Operating expensesResearch and development expenses
    
    
    13,022
    
    
    
    11,574Selling, general and administrative expenses
    
    
    53,374
    
    
    
    45,910Amortization of intangible assets
    
    
    2,061
    
    
    
    1,887Total operating expenses
    
    
    68,457
    
    
    
    59,371Gain (loss) on sale of fixed assets
    
    
    (173
    )
    
    
    2,525Loss from operations
    
    
    (5,000
    )
    
    
    (7,429
    )Other income (expense)Interest income
    
    
    413
    
    
    
    112Interest expense
    
    
    (10,498
    )
    
    
    (8,036
    )Interest expense from preferred shares
subject to mandatory redemption
    
    
    (1,743
    )
    
    
    (1,760
    )Foreign currency gain
    
    
    10,087
    
    
    
    8,876Minority interest benefit (provision)
    
    
    87
    
    
    
    (10
    )Other, net
    
    
    199
    
    
    
    201(1,455
    )
    
    
    (617
    )Loss before income taxes
    
    
    (6,455
    )
    
    
    (8,046
    )Income tax expense
    
    
    (1,701
    )
    
    
    (1,083
    )Net loss
    
    $
    (8,156
    )
    
    $
    (9,129
    )
 The accompanying notes are an integral part of these consolidated financial statements. 4




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SEMINIS, INC. 
 Consolidated Statement of Stockholders Equity
  Accumulated
    
    
    TotalClass A
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Stock-Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    HoldersNumber
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    EquityBalance, September 30, 2004
    
    
    64,333
    
    
    $
    644
    
    
    $
    94,149
    
    
    $
    (23,911
    )
    
    $
    1,872
    
    
    $
    72,754Comprehensive income (loss):Net loss
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,156
    )
    
    
    
    
    
    
    (8,156
    )Translation adjustment
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,429
    
    
    
    7,429Equity adjustment for
interest rate swap
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    138Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (589
    )Balance, December 31, 2004
(unaudited)
    
    
    64,333
    
    
    $
    644
    
    
    $
    94,149
    
    
    $
    (32,067
    )
    
    $
    9,439
    
    
    $
    72,165
 The accompanying notes are an integral part of these consolidated financial statements. 5




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SEMINIS, INC. 
 Consolidated Statements of Cash Flows
  For the Three Months EndedDecember 31,
    
    
    December 26,2004
    
    
    2003(Unaudited)Cash flows from operating activities:Net loss
    
    $
    (8,156
    )
    
    $
    (9,129
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    3,655
    
    
    
    3,788Loss/(Gain) on sale of fixed assets
    
    
    173
    
    
    
    (2,525
    )Deferred income taxes
    
    
    2,878
    
    
    
    2,077Inventory provision
    
    
    3,000
    
    
    
    4,000Provision (benefit) for minority interest subsidiary
    
    
    (87
    )
    
    
    10Compensation expense for restricted stock units
    
    
    344
    
    
    
    275Amortization of inventory step-up
    
    
    9,968
    
    
    
    11,526Foreign currency gain
    
    
    (10,087
    )
    
    
    (8,876
    )Other
    
    
    (2,429
    )
    
    
    255Changes in assets and liabilities:Accounts receivable
    
    
    11,226
    
    
    
    3,527Inventories
    
    
    (17,344
    )
    
    
    (11,967
    )Prepaid expenses and other assets
    
    
    (4,116
    )
    
    
    (6,267
    )Current income taxes
    
    
    (2,682
    )
    
    
    (1,901
    )Accounts payable
    
    
    (19,180
    )
    
    
    (10,725
    )Other liabilities
    
    
    (12,469
    )
    
    
    2,485Net cash used in operating activities
    
    
    (45,306
    )
    
    
    (23,447
    )Cash flows from investing activities:Purchases of fixed and intangible assets
    
    
    (3,088
    )
    
    
    (1,704
    )Proceeds from disposition of assets
    
    
    139
    
    
    
    3,651Other
    
    
    (1,361
    )
    
    
    (103
    )Net cash provided by (used in) investing activities
    
    
    (4,310
    )
    
    
    1,844Cash flows from financing activities:Proceeds from long-term debt
    
    
    37
    
    
    
    7,019Repayment of long-term debt
    
    
    (646
    )
    
    
    (285
    )Proceeds from short-term borrowings
    
    
    10,162
    
    
    
    6,060Repayment of short-term borrowings
    
    
    (1,992
    )
    
    
    Net cash provided by financing activities
    
    
    7,561
    
    
    
    12,794Effect of exchange rate changes on cash and cash equivalents
    
    
    981
    
    
    
    (197
    )Decrease in cash and cash equivalents
    
    
    (41,074
    )
    
    
    (9,006
    )Cash and cash equivalents, beginning of period
    
    
    116,870
    
    
    
    36,824Cash and cash equivalents, end of period
    
    $
    75,796
    
    
    $
    27,818
 The accompanying notes are an integral part of these consolidated financial statements. 6




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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. 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 Three Months EndedDecember 31,
    
    
    
    December 26,2004
    
    
    
    2003(Unaudited)Cash paid for interest
    
    $
    20,121
    
    
    
    $
    1,041Cash paid for income taxes
    
    
    1,505
    
    
    
    
    907
 7




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Recent Accounting Pronouncements In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes
standards for transactions in which an entity exchanges its equity instruments for goods or
services. This standard requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value of
the award. SFAS No. 123(R) eliminates the exception to account for such awards using the
intrinsic method previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be
effective for interim or annual reporting periods beginning on or after June 15, 2005. The
Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1,
2003; see Note 9 Benefit Plan (Stock Based Compensation) for related disclosure under this
provision. Accordingly, management believes SFAS No. 123(R) will not have a material impact on
the Companys balance sheet or income statements. Management continues to assess the potential
impact that the adoption of SFAS No. 123(R) could have on the Companys statements of cash
flows. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, which
eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have commercial
substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company does not believe the adoption of SFAS No.
153 will have a material impact on its financial statements. In November 2004, FASB Statement No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4
(SFAS No. 151), was issued. The amendments made by SFAS No. 151 clarify that abnormal amounts
of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be
recognized as current-period charges and require the allocation of fixed production overheads to
inventory based on the normal capacity of the production facilities. SFAS No. 151 will become
effective for the Company beginning in fiscal 2006. Management is in the process of assessing
the impact SFAS No. 151 will have on the Companys financial position and results of
operations. Recent Tax Legislation The United States Congress passed the American Jobs Creation Act of 2004 (the Act), which the
President signed into law on October 22, 2004. Key provisions of the Act include a temporary
incentive for U.S. multinational corporations to repatriate foreign earnings, a domestic
manufacturing deduction, and international tax reforms designed to improve the global
competitiveness of U.S. businesses. In accordance with SFAS No. 109, Accounting for Income
Taxes, we will reflect the effects of the Act, if any, in the first half of fiscal 2005 as part
of income tax expense for the period. We are still evaluating the impact of the Act on the
Company. Accordingly, we have not yet determined its impact on our effective tax rate and on our
deferred tax assets and liabilities. Note 2  Acquisition Transactions / Liquidity Under the acquisition transactions, in September 2003, the Company became a privately held

company by acquiring all of its publicly held shares of Class A common stock, shares of Class B
common stock and shares of Class B and Class C Redeemable Preferred Stocks. The Company also
repaid the $216.6 million of principal outstanding under its senior credit facility, and the
$11.6 million 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, and 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 the revolving loan was outstanding at September
30, 2003), borrowed $17.0 million under a new mortgage note, and issued PIK Preferred Stock
along with warrants to purchase 3.9 million shares of common stock for combined proceeds of
$50.0 million (see Note 11  PIK Preferred Stock). 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 an 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. 8




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Concurrently with the offering of the additional notes, the Company amended the senior secured
credit facility. The amended senior secured credit 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 (none of the revolving credit facility was outstanding at December 31, 2004 and September 30, 2004), 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 December 31, 2004 was $470.5 million, of which $88.6
million were borrowings under Companys term loan, $341.4 million were borrowings under the
senior 10 1/4% subordinated notes (including $11.4 million of remaining premium balance, which
will be amortized over the life of the notes and reduces interest expense), and $17.0 million,
$6.2 million, $1.5 million and $15.8 million were borrowings by its United States, Spanish,
Italian and South Korean subsidiaries, respectively. The Company also has $42.0 million of
preferred shares subject to mandatory redemption (see Note 11 PIK Preferred Stock). As of
December 31, 2004, the Company has cash and cash equivalents of $75.8 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. 9




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Note 3  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
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 financial statement presentation of the results of operations and cash flows, in a
predecessor entity and a successor entity. Carrying Value Adjustments 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 the historical bases were carried over, however, these values
were in excess of the proportionate 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 market values, subsequent adjustments
and the adjusted carrying values of the net assets acquired as of September 29, 2003: FMV
    
    
    24.9%
    
    
    Negative
    
    
    Adjusted BasisHistorical
    
    
    Of 75.1%
    
    
    Carryover
    
    
    Goodwill
    
    
    As ofBasis
    
    
    Acquired
    
    
    Basis
    
    
    Allocation
    
    
    September 29, 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
    
    
    
    (106,589
    )
    
    
    60,354Goodwill
    
    
    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
    
    
    
    (7,338
    )
    
    
    11,126Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 Inventories The increase in inventory value of $73.2 million, reflecting the fair market value adjustment,
is being expensed as the inventory is sold, which was expected to be over a 16-month period from
September 29, 2003, the date of acquisition, based on an estimated inventory turn. The
amortization period was subsequently changed to 18 months based on the actual inventory turn of
fiscal year 2004. Depreciation and Amortization The effect of the negative goodwill allocation to the non-current assets resulted from the
acquisition transactions was the write-down of the non-current assets. Therefore, the related
depreciation and amortization expense was lowered. Other Intangible assets are 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. 10




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Note 4  Inventories Inventories consist of the following: As of
    
    
    As ofDecember 31,
    
    
    September 30,2004
    
    
    2004(Unaudited)Seeds
    
    $
    316,591
    
    
    $
    296,662Unharvested crop growing costs
    
    
    18,140
    
    
    
    22,577Supplies
    
    
    10,415
    
    
    
    9,156Total net inventories
    
    $
    345,146
    
    
    $
    328,395
 Inventories are presented net of reserves of $79,818 and $72,409 at December 31, 2004 and
September 30, 2004, respectively. As described in Note 3, as part of the acquisition
transactions, inventories were stepped-up by $73.2 million. In
the quarter ended December 31, 2004, $10.0
million of the inventory step-up was amortized and charged to cost of sales. This non-cash
adjustment will continue as the remaining inventory of approximately $16.0 million is expected
to be sold over the next 3 months. Note 5  Intangible Assets Intangible assets at December 31, 2004 and September 30, 2004 consist of the following: As of December 31, 2004(Unaudited)
    
    
    As of September 30, 2004Gross
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Gross
    
    
    AccumulatedCarrying Amount
    
    
    Amortization
    
    
    Amount
    
    
    Carrying Amount
    
    
    Amortization
    
    
    Adjusted AmountAmortizable intangible assets:Germplasm
    
    $
    26,378
    
    
    $
    (2,110
    )
    
    $
    24,268
    
    
    $
    25,882
    
    
    $
    (1,684
    )
    
    $
    24,198Software
    
    
    14,410
    
    
    
    (3,365
    )
    
    
    11,045
    
    
    
    13,331
    
    
    
    (2,552
    )
    
    
    10,779Trademarks
    
    
    8,896
    
    
    
    (796
    )
    
    
    8,100
    
    
    
    8,741
    
    
    
    (637
    )
    
    
    8,104Existing product
technology
    
    
    25,680
    
    
    
    (3,374
    )
    
    
    22,306
    
    
    
    24,162
    
    
    
    (2,793
    )
    
    
    21,369Customer relationships
    
    
    4,885
    
    
    
    (408
    )
    
    
    4,477
    
    
    
    4,885
    
    
    
    (327
    )
    
    
    4,558$
    80,249
    
    
    $
    (10,053
    )
    
    $
    70,196
    
    
    $
    77,001
    
    
    $
    (7,993
    )
    
    $
    69,008
 Aggregate amortization expense was $2.1 million and $1.9 million for the three months ended
December 31, 2004 and December 26, 2003, respectively. Amortization periods for Germplasm and
Software are 40 years and 5 years, respectively, and Trademarks, Existing Product Technology,
and Customer Relationships are 15 years. The weighted average of the amortization period for
intangible assets is approximately 14.5 years. Estimated amortization expense for the next five
years is as follows: Year Ending September 302005
    
    $
    7,3962006
    
    
    7,3962007
    
    
    7,3962008
    
    
    6,2372009
    
    
    4,599
 The Company had no goodwill recorded in the three months ended December 31, 2004 and the
year ended September 30, 2004. In accordance with SFAS No. 142, impairment for goodwill was analyzed resulting in no impairment
in fiscal year 2002. As a result of the acquisition transactions described in Note 3, all
goodwill was written off at September 30, 2003. Furthermore, research and development assets
totaling $10.6 million, which were determined by an independent appraisal service (after negative
goodwill adjustments), were written off as part of research and development expenses during the
one-day period ended September 30, 2003. 11




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Note 6  Accrued Liabilities Accrued liabilities consist of the following at December 31, 2004 and September 30, 2004: As of
    
    
    As ofDecember 31,
    
    
    September 30,2004
    
    
    2004(Unaudited)Employee salaries and related benefits
    
    $
    63,413
    
    
    $
    58,572Severance
    
    
    498
    
    
    
    454Seedmens errors and omissions
    
    
    8,621
    
    
    
    8,823Interest
    
    
    9,277
    
    
    
    17,914Income taxes payable
    
    
    11,247
    
    
    
    13,582Other
    
    
    17,371
    
    
    
    20,989$
    110,427
    
    
    $
    120,334
 Note 7  Long-Term Debt Long-term debt consists of the following at December 31, 2004 and September 30, 2004: As of
    
    
    As ofDecember 31,
    
    
    September 30,2004
    
    
    2004(Unaudited)Senior secured credit facility borrowings
    
    $
    88,625
    
    
    $
    88,850Senior subordinated notes
    
    
    330,000
    
    
    
    330,000Mortgage notes
    
    

    16,659
    
    
    
    16,735South Korean borrowings due in annual
installments through 2013
    
    
    1,496
    
    
    
    1,612Bond premium related to additional senior subordinated note
    
    
    11,368
    
    
    
    11,699Other borrowings
    
    
    1,742
    
    
    
    1,666449,890
    
    
    
    450,562Less current portion
    
    
    (1,826
    )
    
    
    (1,746
    )$
    448,064
    
    
    $
    448,816
 As of December 31, 2004, long-term debt maturities are as follows: Period Ending December 31
    
    

    (Unaudited)2005
    
    $
    1,8262006
    
    
    1,8912007
    
    
    1,7152008
    
    
    1,6992009
    
    
    85,845Thereafter
    
    
    356,914$
    449,890
 Senior Secured Credit Facility On September 29, 2003, the Companys principal domestic operating subsidiary, Seminis Vegetable
Seeds, Inc., entered into a senior secured credit facility with a group of lenders. The Company
and its other wholly owned domestic subsidiaries guaranteed the obligations under the senior
secured credit facility. The senior secured credit facility originally provided 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 such that it now 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 amortizes in quarterly
installments equal to 1.0% per annum for the first five and 1/2 years, and with the balance of the
term loan due in a single payment at the end of the sixth year. The first quarterly payment was
paid on March 31, 2004. 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 December 31, 2004 and $3.5 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, at
the Companys option, on either a London inter-bank offered rate (LIBOR) or an alternate base
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 or LIBOR plus 3.00% per annum in the case of a LIBOR loan. The applicable
rate for the revolving credit facility under 12




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the amended senior secured credit facility is based upon the Companys leverage ratio and ranges
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
the leverage ratio at the time. Subsequent to an event of default under the 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 December 31, 2004, the outstanding balance of the term loan under the senior secured credit
facility was $88.6 million with a variable interest rate of 4.46%, and the Company is in
compliance with its financial covenants. 10 1/4% Senior Subordinated Notes On September 29, 2003, the Companys principal domestic operating subsidiary, Seminis Vegetable
Seeds, Inc., issued $190.0 million of senior subordinated notes. The senior subordinated notes
mature on October 1, 2013; interest is payable semi-annually on April 1 and October 1 of each
year. 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, 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. On December 31, 2004, the outstanding balance of the 101/4% senior subordinated notes was $330.0
million and a remaining premium balance of $11.4 million. 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 December 31, 2004, the outstanding balance of the mortgage note was $16.7 million with a fixed
interest rate of 6.3%, and the market value of the interest rate swap was a liability to Seminis
of $0.3 million. South Korean Borrowings The Companys South Korean subsidiary has a number of loan facilities maturing until 2013.
Borrowings under these facilities carry interest rates of between 4.0% and 6.0%. 13




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##### Table of Contents



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 9.82% through 2013
as of December 31, 2004 and September 30, 2004. For the three months ended December 31, 2004 and fiscal year ended September 30, 2004, the
Company incurred interest at a weighted-average rate of 8.66% and 8.68% 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 EndedDecember 31,
    
    
    
    December 26,2004
    
    
    
    2003(Unaudited)Service cost
    
    $
    718
    
    
    
    $
    546Interest cost
    
    
    1,205
    
    
    
    
    916Expected return on plan assets
    
    
    (1,429
    )
    
    
    
    (1,087
    )Amortization of prior service cost
    
    
    (59
    )
    
    
    
    (44
    )Amortization of net (gain) loss
    
    
    288
    
    
    
    
    219$
    723
    
    
    
    $
    550
 Note 9  Stock-Based Compensation The Company has a policy whereby all stock option grants are priced at fair market value on the
date of grant. Prior to October 1, 2003, the Company used the intrinsic value method of
accounting for stock-based compensation in accordance with Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees. Under the intrinsic value method,
compensation cost is the excess, if any, of the quoted market price of the stock at the grant
date or other measurement date over the amount an employee must pay to acquire the stock. 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. 14




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##### Table of Contents



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 December 31, 2004, there are approximately 1.7 million options
outstanding. Restricted Stock Units Upon completion of the acquisition transactions, the Company granted restricted stock units to a
group of Companys 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 the 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 the
Company 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. In the event that Fox Paine achieves a designated internal rate of return on its initial
investment in the 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 three months ended December 31, 2004 and December 26, 2003, the Company recorded $0.3
million of compensation expense in each period 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 15




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##### Table of Contents



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, the 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 at liquidation value on October 1,
2014. Holders of shares of the PIK Preferred Stock are entitled to receive paid-in-kind dividends (or
at the sole discretion of the 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 the 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 the 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 the 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 the
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 the Company, the 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, the Company may not approve a change of control unless, in connection with the change of
control, the 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 the 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 the 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 the 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 the Companys
repurchase 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 the 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 Seeds, a subsidiary of the
Company, to dividend funds to the Company, which ability is limited by the terms of the Companys
senior secured facility and the notes. The preferred shares subject to mandatory redemption were stated at $42.0 million and $41.8
million as of December 31, 2004 and September 30, 2004, respectively. The accretion of the
preferred shares subject to mandatory redemption and their paid-in-kind dividends are recognized
as interest expense through the term of the agreement. For the three months ended December 31,
2004 and December 26, 2003, this interest expense totaled $1.7 million and $1.8 million,
respectively. 16




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##### Table of Contents



Note 12  Commitments and Contingencies Contingencies In mid-October 2003, Seminis was notified by the University of California at Davis (UCD) that 20
grams of tomato seed donated to the university in 1996 by Petoseed (acquired by Seminis) for
research purposes was believed to be bioengineered seed. UCD had grown a seed crop from this seed
and distributed 30 samples (each including about 25 seeds) to researchers and horticulturists in
the United States and abroad over the past seven years. UCD, Seminis and the recipients of this
seed were unaware that these seeds carried a biotech trait. Seminis and UCD have investigated
this matter, and it is unclear when or where the seeds were mislabeled. The biotech trait involved here, known as the PG-gene, had been cleared for human consumption by
the Food and Drug Administration in 1994, and a different seed variety with this trait was
planted commercially until 1999. Federal regulators indicate there is no evidence that the seed
in this instance was used for anything other than research. Seminis and UCD worked with the U.S. Department of Agriculture, as well as similar local agencies
in the countries where seed was sent to determine what happened and what actions, if any, needed
to be taken. The USDA has now closed its investigation with a minor fine paid by Seminis, and an
update to Seminis seed handling training. 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 appealed this ruling, but its appeal was denied by a panel of the Ninth Circuit Court of
Appeals on August 11, 2004. The U.S. Department of Justice filed a Petition for Panel Rehearing
and Suggestion for Rehearing En Bank on September 23, 2004, requesting that the panels decision
be vacated, and the district courts order reversed (U.S. v. LSL Biotechnologies,9th Cir., No.
02-16472, 8/11/04). On October 20, 2004, the governments petition was denied, and the mandate
was issued on November 3, 2004. During the last months of fiscal year 2002, Seminis subsidiary in Spain sold Boludo tomato seed
to growers in the Canary Islands, Almeria, Murcia and Granada areas of Spain. Subsequently, some
plantings 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 plantings 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 officially sealed samples of batches of Boludo seed, a single seed batch 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
plantings from prior seasons; the practice of grafting, which can magnify the effects of minor
outbreaks; failure to properly rotate crops from season to season; and third-party sources
(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
obtained from testing officially sealed batches samples of Seminis seed. 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. As part of its customer relations initiatives, Seminis has entered into a $2.9
million settlement of this matter with growers in Almeria, and continues to work with its
insurance carriers and counsel to investigate and close out this matter in other locations in
Spain. The Company is involved from time to time as a defendant in various other lawsuits arising in the
normal course of business. Management believes that no current claims, individually or in the
aggregate, will have a material adverse effect on the Companys business, results of operations
or financial condition. An accrual for managements estimate of exposure related to such claims has been recorded in the
financial statements and is disclosed in Note 8. It is the opinion of management that the
ultimate resolution of these matters will not have a 17




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##### Table of Contents



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 $2.6 million each to Fox Paine and Desarrollo Consolidado De Negocios, S.A. De
C.V. in October and December 2004, respectively, for services to be rendered during fiscal year
2005. 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. Note 14  Subsequent Events On January 24, 2005, Seminis Inc. (Seminis) and Fox Paine & Company, LLC (Fox Paine)
announced that Seminis entered into an Agreement and Plan of Merger (the Merger Agreement), by
and among Monsanto Company (Monsanto), Monsanto Sub, Inc. (Merger Sub), a wholly owned
subsidiary of Monsanto, and Seminis, dated as of January 22, 2005, pursuant to which Monsanto
would acquire Seminis for approximately $1.4 billion in cash and assumed debt, subject to the
contingent value right payment described below. As of the effective time of the merger, outstanding shares of common stock of Seminis will be
converted into the right to receive $10.52 per share. Outstanding options, restricted stock
units, co-investment rights and warrants will be converted into the right to receive an amount in
cash equal to the common stock cash price per share for the number of shares into which they are
convertible, less their conversion price, if any. Marinet Investments, LLC (Marinet), a current holder of co-investment rights in Seminis which
are being terminated upon the consummation of the merger, may elect prior to closing to reduce
the merger consideration it would otherwise be entitled to receive by $50 million in exchange for
a performance-based contingent value right to receive up to $125 million based on the achievement
of certain cumulative net sales targets over the thirty-six-month period ending September 30,
2007. As contemplated by the Merger Agreement, each holder of Seminis common stock and warrants entered
into a support agreement agreeing, among other things, to vote in favor of approval of the Merger
Agreement and the merger. The holders of Seminis common stock approved the Merger Agreement by
written consent on January 22, 2005. The Merger Agreement is subject to customary terms and conditions, including regulatory
approvals. The transaction is expected to be completed during the first half of 2005. There can
be no assurance that the transactions contemplated by the Merger Agreement will be consummated. Note 15  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 the Company, a
guarantor of the notes and the parent of Seminis Vegetable Seeds, Inc. (Seminis Vegetable),
Seminis Vegetable, the issuer of the notes, 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. 18




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##### Table of Contents



Condensed Consolidating Balance Sheets
As of December 31, 2004
(Unaudited) Seminis
    
    
    
    
    
    
    SubsidiarySeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Non-(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    56,509
    
    
    $
    750
    
    
    $
    18,537
    
    
    $
    
    
    
    $
    75,796Accounts receivable
    
    
    
    
    
    
    36,933
    
    
    
    3,538
    
    
    
    109,208
    
    
    
    
    
    
    
    149,679Inventories
    
    
    
    
    
    
    167,409
    
    
    
    6,380
    
    
    
    171,357
    
    
    
    
    
    
    
    345,146Prepaid expenses and other current
assets
    
    
    
    
    
    
    7,704
    
    
    
    23
    
    
    
    3,934
    
    
    
    
    
    
    
    11,661Total current assets
    
    
    
    
    
    
    268,555
    
    
    
    10,691
    
    
    
    303,036
    
    
    
    
    
    
    
    582,282Property, plant and equipment, net
    
    
    
    
    
    
    35,304
    
    
    
    70
    
    
    
    51,589
    
    
    
    
    
    
    
    86,963Investment in subsidiaries
    
    
    247,408
    
    
    
    240,284
    
    
    
    
    
    
    
    
    
    
    
    (487,692
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    45,027
    
    
    
    
    
    
    
    25,169
    
    
    
    
    
    
    
    70,196Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,290
    
    
    
    (1,290
    )
    
    
    Other assets
    
    
    132
    
    
    
    13,772
    
    
    
    
    
    
    
    10,193
    
    
    
    
    
    
    
    24,097$
    247,540
    
    
    $
    602,942
    
    
    $
    10,761
    
    
    $
    391,277
    
    
    $
    (488,982
    )
    
    $
    763,538Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,604
    
    
    $
    
    
    
    $
    20,604Current maturities of long-term debt
    
    
    
    
    
    
    1,211
    
    
    
    189
    
    
    
    426
    
    
    
    
    
    
    
    1,826Accounts payable
    
    
    
    
    
    
    22,574
    
    
    
    446
    
    
    
    23,157
    
    
    
    
    
    
    
    46,177Accrued liabilities
    
    
    453
    
    
    
    47,293
    
    
    
    517
    
    
    
    62,164
    
    
    
    
    
    
    
    110,427Intercompany payables
    
    
    132,906
    
    
    
    (183,079
    )
    
    
    13,802
    
    
    
    36,371
    
    
    
    
    
    
    
    Total current liabilities
    
    
    133,359
    
    
    
    (112,001
    )
    
    
    14,954
    
    
    
    142,722
    
    
    
    
    
    
    
    179,034Long-term debt
    
    
    
    
    
    
    445,441
    
    
    
    158
    
    
    
    2,465
    
    
    
    
    
    
    
    448,064Deferred income taxes
    
    
    
    
    
    
    22,094
    
    
    
    
    
    
    
    
    
    
    
    (1,290
    )
    
    
    20,804Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,455
    
    
    
    
    
    
    
    1,455Preferred shares subject to
mandatory redemption
    
    
    42,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,016Total liabilities
    
    
    175,375
    
    
    
    355,534
    
    
    
    15,112
    
    
    
    146,642
    
    
    
    (1,290
    )
    
    
    691,373Total stockholders equity
    
    
    72,165
    
    
    
    247,408
    
    
    
    (4,351
    )
    
    
    244,635
    
    
    
    (487,692
    )
    
    
    72,165$
    247,540
    
    
    $
    602,942
    
    
    $
    10,761
    
    
    $
    391,277
    
    
    $
    (488,982
    )
    
    $
    763,538
 19




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##### Table of Contents



Condensed Consolidating Balance Sheets
As of September 30, 2004 Seminis
    
    
    
    
    
    
    SubsidiarySeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Non-(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    101,022
    
    
    $
    635
    
    
    $
    15,213
    
    
    $
    
    
    
    $
    116,870Accounts receivable
    
    
    
    
    
    
    36,684
    
    
    
    4,269
    
    
    
    112,220
    
    
    
    
    
    
    
    153,173Inventories
    
    
    
    
    
    
    168,225
    
    
    
    7,201
    
    
    
    152,969
    
    
    
    
    
    
    
    328,395Prepaid expenses and other current assets
    
    
    
    
    
    
    5,180
    
    
    
    23
    
    
    
    2,814
    
    
    
    
    
    
    
    8,017Total current assets
    
    
    
    
    
    
    311,111
    
    
    
    12,128
    
    
    
    283,216
    
    
    
    
    
    
    
    606,455Property, plant and equipment, net
    
    
    
    
    
    
    35,187
    
    
    
    76
    
    
    
    43,345
    
    
    
    
    
    
    
    78,608Investment in subsidiaries
    
    
    253,597
    
    
    
    233,740
    
    
    
    
    
    
    
    
    
    
    
    (487,337
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    44,710
    
    
    
    
    
    
    
    24,298
    
    
    
    
    
    
    
    69,008Other assets
    
    
    137
    
    
    
    13,886
    
    
    
    
    
    
    
    9,568
    
    
    
    
    
    
    
    23,591$
    253,734
    
    
    $
    638,634
    
    
    $
    12,204
    
    
    $
    360,427
    
    
    $
    (487,337
    )
    
    $
    777,662Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,965
    
    
    $
    
    
    
    $
    10,965Current maturities of long-term debt
    
    
    
    
    
    
    1,206
    
    
    
    183
    
    
    
    357
    
    
    
    
    
    
    
    1,746Accounts payable
    
    
    
    
    
    
    34,448
    
    
    
    917
    
    
    
    27,974
    
    
    
    
    
    
    
    63,339Accrued liabilities
    
    
    452
    
    
    
    54,018
    
    
    
    124
    
    
    
    65,740
    
    
    
    
    
    
    
    120,334Intercompany payables
    
    
    138,755
    
    
    
    (167,004
    )
    
    
    14,245
    
    
    
    14,004
    
    
    
    
    
    
    
    Total current liabilities
    
    
    139,207
    
    
    
    (77,332
    )
    
    
    15,469
    
    
    
    119,040
    
    
    
    
    
    
    
    196,384Long-term debt
    
    
    
    
    
    
    446,077
    
    
    
    208
    
    
    
    2,531
    
    
    
    
    
    
    
    448,816Deferred income taxes
    
    
    
    
    
    
    16,291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,291Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,644
    
    
    
    
    
    
    
    1,644Preferred shares subject to mandatory
redemption
    
    
    41,773
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,773Total liabilities
    
    
    180,980
    
    
    
    385,036
    
    
    
    15,677
    
    
    
    123,215
    
    
    
    
    
    
    
    704,908Total stockholders equity
    
    
    72,754
    
    
    
    253,598
    
    
    
    (3,473
    )
    
    
    237,212
    
    
    
    (487,337
    )
    
    
    72,754$
    253,734
    
    
    $
    638,634
    
    
    $
    12,204
    
    

    $
    360,427
    
    
    $
    (487,337
    )
    
    $
    777,662
 20




---



##### Table of Contents



Condensed Consolidating Statements of Operations
For the Three Months Ended December 31, 2004
(Unaudited) Seminis
    
    
    
    
    
    
    SubsidiarySeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Non-(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    68,199
    
    
    $
    1,801
    
    
    $
    77,815
    
    
    $
    (37,111
    )
    
    $
    110,704Cost of goods sold
    
    
    
    
    
    
    37,153
    
    
    
    1,934
    
    
    
    45,098
    
    
    
    (37,111
    )
    
    
    47,074Gross profit
    
    
    
    
    
    
    31,046
    
    
    
    (133
    )
    
    
    32,717
    
    
    
    
    
    
    
    63,630Operating expensesResearch and development expenses
    
    
    
    
    
    
    6,137
    
    
    
    
    
    
    
    6,885
    
    
    
    
    
    
    
    13,022Selling, general and
administrative expenses
    
    
    
    
    
    
    22,269
    
    
    
    458
    
    
    
    30,647
    
    
    
    
    
    
    
    53,374Amortization of intangible assets
    
    
    
    
    
    
    1,461
    
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    2,061Total operating expenses
    
    
    
    
    
    
    29,867
    
    
    
    458
    
    
    
    38,132
    
    
    
    
    
    
    
    68,457Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    (275
    )
    
    
    102
    
    
    
    
    
    
    
    (173
    )Income (loss) from operations
    
    
    
    
    
    
    1,179
    
    
    
    (866
    )
    
    
    (5,313
    )
    
    
    
    
    
    
    (5,000
    )Other income (expense)Interest income
    
    
    
    
    
    
    328
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    413Interest expense
    
    
    (6
    )
    
    
    (9,979
    )
    
    
    (11
    )
    
    
    (502
    )
    
    
    
    
    
    
    (10,498
    )Interest expense from preferred
shares subject to mandatory
redemption
    
    
    (1,743
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,743
    )Foreign currency gain (loss)
    
    
    (83
    )
    
    
    1,271
    
    
    
    
    
    
    
    8,899
    
    
    
    
    
    
    
    10,087Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    87Other, net
    
    
    
    
    
    
    443
    
    
    
    (1
    )
    
    
    (243
    )
    
    
    
    
    
    
    199Equity from subsidiary
    
    
    (6,324
    )
    
    
    612
    
    
    
    
    
    
    
    
    
    
    
    5,712
    
    
    
    (8,156
    )
    
    
    (7,325
    )
    
    
    (12
    )
    
    
    8,326
    
    
    
    5,712
    
    
    
    (1,455
    )Income (loss) before income taxes
    
    
    (8,156
    )
    
    
    (6,146
    )
    
    
    (878
    )
    
    
    3,013
    
    
    
    5,712
    
    
    
    (6,455
    )Income tax expense
    
    
    
    
    
    
    (178
    )
    
    
    
    
    
    
    (1,523
    )
    
    
    
    
    
    
    (1,701
    )Net income (loss)
    
    $
    (8,156
    )
    
    $
    (6,324
    )
    
    $
    (878
    )
    
    $
    1,490
    
    
    $
    5,712
    
    
    $
    (8,156
    )
 21




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##### Table of Contents



Condensed Consolidating Statements Of Operations
For the Three Months Ended December 26, 2003
(Unaudited) Seminis
    
    
    
    
    
    
    SubsidiarySeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Non-(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    56,508
    
    
    $
    2,108
    
    
    $
    71,006
    
    
    $
    (27,730
    )
    
    $
    101,892Cost of goods sold
    
    
    
    
    
    
    36,103
    
    
    
    2,114
    
    
    
    41,988
    
    
    
    (27,730
    )
    
    
    52,475Gross profit
    
    
    
    
    
    
    20,405
    
    
    
    (6
    )
    
    
    29,018
    
    
    
    
    
    
    
    49,417Operating expensesResearch and development
expenses
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    5,574
    
    
    
    
    
    
    
    11,574Selling, general and
administrative expenses
    
    
    
    
    
    
    19,966
    
    
    
    420
    
    
    
    25,524
    
    
    
    
    
    
    
    45,910Amortization of intangible assets
    
    
    
    
    
    
    1,331
    
    
    
    
    
    
    
    556
    
    
    
    
    
    
    
    1,887Total operating expenses
    
    
    
    
    
    
    27,297
    
    
    
    420
    
    
    
    31,654
    
    
    
    
    
    
    
    59,371Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,525
    
    
    
    
    
    
    
    2,525Loss from operations
    
    
    
    
    
    
    (6,892
    )
    
    
    (426
    )
    
    
    (111
    )
    
    
    
    
    
    
    (7,429
    )Other income (expense)Interest Income
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    112Interest expense
    
    
    (6
    )
    
    
    (7,565
    )
    
    
    (16
    )
    
    
    (449
    )
    
    
    
    
    
    
    (8,036
    )Interest expense from preferred
shares subject to mandatory
redemption
    
    
    (1,760
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,760
    )Foreign currency gain (loss)
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    8,564
    
    
    
    
    
    
    
    8,876Other, net
    
    
    
    
    
    
    2
    
    
    
    5
    
    
    
    184
    
    
    
    
    
    
    
    191Equity from subsidiary
    
    
    (7,363
    )
    
    
    6,769
    
    
    
    
    
    
    
    
    
    
    
    594
    
    
    
    (9,129
    )
    
    
    (471
    )
    
    
    (11
    )
    
    
    8,400
    
    
    
    594
    
    
    
    (617
    )Income (loss) before income
taxes
    
    
    (9,129
    )
    
    
    (7,363
    )
    
    
    (437
    )
    
    
    8,289
    
    
    
    594
    
    
    
    (8,046
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,083
    )
    
    
    
    
    
    
    (1,083
    )Net income (loss)
    
    
    (9,129
    )
    
    
    (7,363
    )
    
    
    (437
    )
    
    
    7,206
    
    
    
    594
    
    
    
    (9,129
    )
 22




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##### Table of Contents



Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 31, 2004
(Unaudited) SeminisSeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Subsidiary(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    (23,191
    )
    
    $
    603
    
    
    $
    (22,718
    )
    
    $
    
    
    
    $
    (45,306
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (782
    )
    
    
    (2
    )
    
    
    (2,304
    )
    
    
    
    
    
    
    (3,088
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    139Other
    
    
    
    
    
    
    (1,103
    )
    
    
    
    
    
    
    (258
    )
    
    
    
    
    
    
    (1,361
    )Net cash used in investing activities
    
    
    
    
    
    
    (1,885
    )
    
    
    (2
    )
    
    
    (2,423
    )
    
    
    
    
    
    
    (4,310
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Repayment of long-term debt
    
    
    
    
    
    
    (301
    )
    
    
    (43
    )
    
    
    (302
    )
    
    
    
    
    
    
    (646
    )Proceeds from short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,162
    
    
    
    
    
    
    
    10,162Repayment of short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,992
    )
    
    
    
    
    
    
    (1,992
    )Net change in intercompany
account
    
    
    
    
    
    
    (19,136
    )
    
    
    (443
    )
    
    
    19,579
    
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    (19,437
    )
    
    
    (486
    )
    
    
    27,484
    
    
    
    
    
    
    
    7,561Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981
    
    
    
    
    
    
    
    981Increase (decrease) in cash and
cash equivalents
    
    
    
    
    
    
    (44,513
    )
    
    
    115
    
    
    
    3,324
    
    
    
    
    
    
    
    (41,074
    )Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    101,022
    
    
    
    635
    
    
    
    15,213
    
    
    
    
    
    
    
    116,870Cash and cash equivalents,
end of period
    
    $
    
    
    
    $
    56,509
    
    
    $
    750
    
    
    $
    18,537
    
    
    $
    
    
    
    $
    75,796
 23




---



##### Table of Contents



Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 26, 2003
(Unaudited) SeminisSeminis
    
    
    Vegetable
    
    
    Subsidiary
    
    
    Subsidiary(Parent)
    
    
    (Issuer)
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    (15,190
    )
    
    $
    922
    
    
    $
    (9,179
    )
    
    $
    
    
    
    $
    (23,447
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (532
    )
    
    
    
    
    
    
    (1,172
    )
    
    
    
    
    
    
    (1,704
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    1,060
    
    
    
    
    
    
    
    2,591
    
    
    
    
    
    
    
    3,651Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    (103
    )Net cash provided by investing
activities
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    1,316
    
    
    
    
    
    
    
    1,844Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    7,019Repayment of long-term debt
    
    
    
    
    
    
    (48
    )
    
    
    (38
    )
    
    
    (199
    )
    
    
    
    
    
    
    (285
    )Proceeds from short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,060
    
    
    
    
    
    
    
    6,060Net change in intercompany
account
    
    
    
    
    
    
    53
    
    
    
    (987
    )
    
    
    934
    
    
    
    
    
    
    
    Capital contributions/ dividends
received (paid) / other
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    (102
    )
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    7,107
    
    
    
    (1,025
    )
    
    
    6,712
    
    
    
    
    
    
    
    12,794Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (197
    )
    
    
    
    
    
    
    (197
    )Decrease in cash and
cash equivalents
    
    
    
    
    
    
    (7,555
    )
    
    
    (103
    )
    
    
    (1,348
    )
    
    
    
    
    
    
    (9,006
    )Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    18,669
    
    
    
    906
    
    
    
    17,249
    
    
    
    
    
    
    
    36,824Cash and cash equivalents,
end of period
    
    $
    
    
    
    $
    11,114
    
    
    $
    803
    
    
    $
    15,901
    
    
    $
    
    
    
    $
    27,818
 24




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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 2004, our investment in research and development represented 9.7% 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. 25




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##### Table of Contents



OVERVIEW 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 to our consolidated
financial statements). 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 the historical bases were carried over, however, these values
were in excess of the proportionate purchase price paid by Fox Paine for 75.1% of Seminis
common stock. 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
market values, subsequent adjustments and the adjusted carrying values of the net assets
acquired as of September 29, 2003: FMV
    
    
    24.9%
    
    
    Negative
    
    
    Adjusted BasisHistorical
    
    
    Of 75.1%
    
    
    Carryover
    
    
    Goodwill
    
    
    As ofBasis
    
    
    Acquired
    
    
    Basis
    
    
    Allocation
    
    
    September 29, 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
    
    
    
    (106,589
    )
    
    
    60,354Goodwill
    
    
    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
    
    
    
    (7,338
    )
    
    
    11,126Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 The $73.2 million increase in inventory value was expected to be expensed as the inventory
is sold over a 16-month period from the date of acquisition, based on an estimated inventory
turn. The amortization period of the inventory step-up was subsequently changed to 18 months based on the actual inventory turn of fiscal
year 2004. Intangible assets are amortized on a straight-line basis over periods between five
and forty years. At the consummation date of the acquisition transactions, existing in-process research and
development projects were assessed. Projects were analyzed by stage of development and assigned
success rates based on our historical experience of the probability that such projects would
yield viable products. The weighted average stage of completion for our in-process research and
development projects was 65%. The time and capital required for the development of new products represent significant industry
complexities in the vegetable and fruit seed industry. Development cycles can last five to 12
years for a proprietary variety to reach commercial viability. In our forecasting model for each project, cash flows from revenues forecasted in each period
were reduced by related expected expenses, capital expenditures and the cost of working capital.
The discount rates applied to a projects cash flows were
approximately 22% to 24%, based on the
level of risk associated with a particular project and the current return on investment
requirements of the market. 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. 26




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OUTLOOK The change in the basis of assets and liabilities, resulting from the acquisition transactions,
will continue to impact the operating results of the Company. During the first six months of
fiscal year 2005, gross margins will be lower, resulting from the amortization 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, is
reflected in the statement of operation through decreased margins as the related inventory is
sold. This non-cash adjustment will continue as the remaining inventory of approximately $16.0 million is expected to be sold by March 2005. Approximately
over the next eight years, operating expenses will benefit from an annual reduction in
depreciation expense of approximately $7.6 million, which will reduce research and development,
selling, general and administrative expenses. Our future results are 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 will continue to execute its Value Capture Strategy and will focus on opportunities,
such as potential acquisitions, to achieve long term growth targets. 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. We recorded 33.5% of our fiscal year 2004 net sales during our second fiscal quarter.
We have historically operated at a loss during the first and third fiscal quarters due to lower
sales during these quarters. Our results in any particular quarter should not be considered
indicative of the results for a full year. For these reasons, a sequential quarter to quarter
comparison is not a good indication of our historical performance or of how we will perform in
the future. Results of Operations The table below sets forth Seminis results of operations data expressed as a percentage of net
sales. Three Months EndedDecember 31,
    
    
    
    December 26,2004
    
    
    
    2003(Unaudited)Net sales
    
    
    100.0
    %
    
    
    
    100.0
    %Gross margin
    
    
    57.5
    
    
    
    
    48.5Research and development expenses
    
    
    11.8
    
    
    
    
    11.4Selling, general and administrative expenses
    
    
    48.2
    
    
    
    
    45.1Amortization of intangible assets
    
    
    1.9
    
    
    
    
    1.8Total operating expenses
    
    
    61.9
    
    
    
    
    58.3Gain (loss) on sale of fixed assets
    
    
    (0.2
    )
    
    
    
    2.5Loss from operations
    
    
    (4.6
    )
    
    
    
    (7.3
    )Interest expense, net
    
    
    (10.7
    )
    
    
    
    (9.6
    )Other non-operating income (expense), net
    
    
    9.4
    
    
    
    
    8.9Loss before income taxes
    
    
    (5.9
    )
    
    
    
    (8.0
    )Income tax expense
    

    
    (1.5
    )
    
    
    
    (1.0
    )Net loss
    
    
    (7.4
    )%
    
    
    
    (9.0
    )%
 Three Months Ended December 31, 2004 Compared with Three Months Ended December 26, 2003 Net Sales Net sales increased 8.6% to $110.7 million for the three months ended December 31, 2004 compared
to $101.9 million for the three months ended December 26, 2003. The result was partially due to
$3.8 million of positive impact of currency fluctuations primarily relating to the strengthening
of the Euro and South Korean Won versus the U.S. Dollar during the first quarter of fiscal year
2005 compared to the same period in the prior year. In constant dollars stated at average
monthly exchange rate of the first quarter of fiscal year 2004 and excluding non-seed sales, net
seed sales would have increased 4.1% for the first quarter of fiscal year 2005. The increase
was primarily a result of price increases implemented in October 2004 and the availability of
high-demand seed. Geographically, the sales increases were primarily in the Americas, Asia
Pacific and West Asia with gains in sales in tomato and melon, which was partially offset by
sales decrease in Europe. Gross Profit Gross profit increased 28.8% to $63.6 million for the three months ended December 31, 2004 from
$49.4 million for the three months ended December 26, 2003. Gross margin percentage increased
to 57.5% for the three months ended December 31, 2004 from 48.5% for the three months ended
December 26, 2003. The increase was primarily due to 27




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##### Table of Contents



improved margin and mix impact of $2.3 million, volume impact of $4.2 million, lower seedmens claims
and inventory reserve provision  of $5.0 million, and currency fluctuation
impact of $2.7 million. Research and Development Expenses Research and development expenses increased 12.5% to $13.0 million for the three months ended
December 31, 2004 from $11.6 million for the three months ended December 26, 2003. This
increase was primarily the result of cost of living adjustments, and $0.5 million of currency
fluctuations from research and development expenses in Europe and South Korea in the first three
months of fiscal year 2005. As a percentage to sales, research and development expenses for the
three months ended December 31, 2004 increased to 11.8% from 11.4% in the same period last year. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 16.3% to $53.4 million for the three
months ended December 31, 2004 from $45.9 million for the three months ended December 26, 2003.
The increase was primarily due to cost of living adjustments, variable expenses associated with
sales, $2.1 million of currency exchange impact on European and South Korean expenses, $0.5
million of management fee and related expenses, and $1.0 million of severance expense. As a
percentage to net sales, selling, general and administrative expenses for the three months ended
December 31, 2004 was 48.2%, compared to 45.1% in the same period last
year. Amortization of Intangible Assets Amortization of intangible assets increased 9.2% to $2.1 million for the three months ended
December 31, 2004 from $1.9 million for the three months ended December 26, 2003. Gain (Loss) on Sale of Fixed Assets The gain (loss) on sale of assets was a loss of $0.2 million for the three months ended December
31, 2004 compared to a gain of $2.5 million for the three months ended December 26, 2003. The
gain for the three months ended December 26, 2003, resulted primarily from fixed asset sales by our South Korean subsidiary. Interest Expense, Net Interest expense, net, increased 22.1% to $11.8 million for the three months ended December 31,
2004 from $9.7 million for the three months ended December 26, 2003. The increase was primarily
due to higher debt levels and interest rates from the issuance of
additional 10 1/4% senior
subordinated notes on January 23, 2004. Other Non-Operating Income, Net We had other non-operating income, including foreign currency gain (loss) and minority interest,
net, of $10.4 million and $9.1 million for the three months ended December 31, 2004 and the
three months ended December 26, 2003, respectively. Other non-operating income, net, for the
three months ended December 31, 2004 primarily consisted of foreign currency gain of $10.1
million, minority interest benefit of $0.1 million and other income of $0.2 million. Other
non-operating income, net, for the three months ended December 26, 2003, primarily consisted of
foreign currency gains of $8.9 million and other income of $0.2 million. The foreign currency
gain in both the first quarter of fiscal years 2005 and 2004 primarily related to a U.S.
dollar-denominated intercompany loan in the Netherlands. Income Tax Expense Income tax expense was $1.7 million or a 26.4% effective tax rate, and $1.1 million or a 13.5%
effective tax rate for the three months ended December 31, 2004 and December 26, 2003, with
pre-tax losses of $6.5 million and $8.0 million, respectively. The variation in income tax rate
was primarily due to the amount and mix of worldwide income at Seminis subsidiaries. 28




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##### Table of Contents



Liquidity and Capital Resources Background 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, shares of 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 $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 the revolving loan was outstanding at December 31, 2004 and September 30, 2004,
respectively), borrowed $17.0 million under a new mortgage note, and issued paid-in-kind
mandatory redeemable preferred stock (see Note 11 to our consolidated financial statements 
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 $45.3 million and $23.4 million in cash flow during the three
months ended December 31, 2004 and December 26, 2003, respectively. The increase in cash
utilization in operating activities was primarily due to an incremental interest payment of
$19.1 million based on the interest due dates during the first quarters of fiscal year 2005 and
2004, and $1.5 million of dividend for preferred C shares. Cash flows from investments Capital expenditures increased to $3.1 million for the three months ended December 31, 2004,
from $1.7 million in the same period of the prior fiscal year. Other investing activities for
the three months ended December 31, 2004 included $0.1 million from proceeds from the sale of
assets compared to $3.7 million in the prior fiscal year. The decrease in proceeds during the
three months ended December 31, 2004 was primarily due to higher asset sales in our South Korean
subsidiary in the prior fiscal period. Cash flows from financings On January 23, 2004, the Company issued an 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 credit 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 December 31, 2004 was $470.5 million, of which $88.6
million were borrowings under Companys term loan, $341.4 million were borrowings under our
senior 10 1/4% subordinated notes (including $11.4 million of remaining premium balance, which
will be amortized over the life of the notes and reduces interest expense), and $17.0 million,
$6.2 million, $1.5 million and $15.8 million were borrowings by its United States, Spanish,
Italian and South Korean subsidiaries, respectively. The Company also has $42.0 million of
preferred shares subject to mandatory redemption (see Note 11 PIK Preferred Stock). As of
December 31, 2004, the Company has cash and cash equivalents of $75.8 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 29




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##### Table of Contents



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 $16.8 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. Recent Accounting Pronouncements In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes
standards for transactions in which an entity exchanges its equity instruments for goods or
services. This standard requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value of
the award. SFAS No. 123(R) eliminates the exception to account for such awards using the
intrinsic method previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be
effective for interim or annual reporting periods beginning on or after June 15, 2005. The
Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1,
2003; see Note 9 Benefit Plan (Stock Based Compensation) for related disclosure under this
provision. Accordingly we believe SFAS No. 123(R) will not have a material impact on our
balance sheet or income statements. We continue to assess the potential impact that the
adoption of SFAS No. 123(R) could have on our statements of cash flows. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, which
eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have commercial
substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. We do not believe the adoption of SFAS No. 153 will have
a material impact on our financial statements. In November 2004, FASB Statement No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4
(SFAS No. 151), was issued. The amendments made by SFAS No. 151 clarify that abnormal amounts
of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be
recognized as current-period charges and require the allocation of fixed production overheads to
inventory based on the normal capacity of the production facilities. SFAS No. 151 will become
effective for us beginning in fiscal 2006. We are in the process of assessing the impact SFAS
No. 151 will have on our financial position and results of operations. Recent Tax Legislation The United States Congress passed the American Jobs Creation Act of 2004 (the Act), which the
President signed into law on October 22, 2004. Key provisions of the Act include a temporary
incentive for U.S. multinational corporations to repatriate foreign earnings, a domestic
manufacturing deduction, and international tax reforms designed to improve the global
competitiveness of U.S. businesses. In accordance with SFAS 109, Accounting for Income Taxes,
we will reflect the effects of the Act, if any, in the first half of fiscal 2005 as part of
income tax expense for the period. We are still evaluating the impact of the Act on the Company.
Accordingly, we have not yet determined its impact on our effective tax rate and on our deferred
tax assets and liabilities. 30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk Our market risk disclosures set forth in the Form 10-K, as filed with the SEC on September
30, 2004 have not changed significantly through the three months ended December 31, 2004. 
 Item 4. Controls and Procedures The Companys chief executive officer and chief accounting officer have concluded, based on
their evaluation as of the end of the period covered by this report, that the Companys
disclosure controls and procedures are effective to ensure that information required to be
disclosed in reports that the Company files or submits under the Securities Exchange Act of 1934
is recorded, process, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. There have been no significant changes in
the Companys internal controls over financial reporting during the first quarter of fiscal year
2005 that have materially affected, or are reasonably likely to materially effect, the
registrants internal control over financial reporting. 31




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##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings In mid-October 2003, Seminis was notified by the University of California at Davis (UCD)
that 20 grams of tomato seed donated to the university in 1996 by Petoseed (acquired by Seminis)
for research purposes was believed to be bioengineered seed. UCD had grown a seed crop from
this seed and distributed 30 samples (each including about 25 seeds) to researchers and
horticulturists in the United States and abroad over the past seven years. UCD, Seminis and the
recipients of this seed were unaware that these seeds carried a biotech trait. Seminis and UCD
have investigated this matter, and it is unclear when or where the seeds were mislabeled. The biotech trait involved here, known as the PG-gene, had been cleared for human consumption by
the Food and Drug Administration in 1994, and a different seed variety with this trait was
planted commercially until 1999. Federal regulators indicated there was no evidence that the
seed in this instance was used for anything other than research. Seminis and UCD worked with the U.S. Department of Agriculture, as well as similar local
agencies in the countries where seed was sent to determine what happened and what actions, if
any, needed to be taken. The USDA has now closed its investigation with a minor fine paid by
Seminis, and an update to Seminis seed handling training. 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 appealed this ruling, but their appeal was denied by a
panel of the Ninth Circuit Court of Appeals on August 11, 2004. The U.S. Department of Justice
filed a Petition for Panel Rehearing and Suggestion for Rehearing En Bank on September 23, 2004,
requesting that the panels decision be vacated, and the district courts order reversed (U.S.
v. LSL Biotechnologies,9th Cir., No. 02-16472, 8/11/04). On October 20, 2004, the governments
petition was denied, and the mandate was issued on November 3, 2004. During the last months of fiscal year 2002, Seminis subsidiary in Spain sold Boludo tomato seed
to growers in the Canary Islands, Almeria, Murcia and Granada areas of Spain. Subsequently,
some plantings 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 plantings 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 officially sealed samples of batches of Boludo seed, a single seed batch
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 plantings from prior seasons; the practice of grafting, which can magnify the effects of
minor outbreaks; failure to properly rotate crops from season to season; and third-party sources
(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
obtained from testing officially sealed batches samples of Seminis seed. 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. As part of its customer relations initiatives, Seminis has entered into a
$2.9 million settlement of this matter with growers in Almeria, and continues to work with its
insurance carriers and counsel to investigate and close out this matter in other locations in
Spain. 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. 32




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds See Note 14 to our consolidated financial statements. 
 Item 3. Defaults Upon Senior Securities None. 
 Item 4. Submission of Matters to a Vote of Security Holders See Note 14 to our consolidated financial statements. 
 Item 5. Other Information None. 
 Item 6. Exhibits 33




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Exhibit Index ExhibitNumber
    
    Description2.1
    
    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.*2.2
    
    Stock Purchase Agreement by and among Fox Paine Seminis Holdings., LLC Banca Afirme, SA., Instiucion 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.*2.3
    
    Amended and Restated Exchange Agreement by and between Seminis, Inc. and Savia, S.A. de C.V. dated as of May 30, 2003.*2.4
    
    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.*2.5
    
    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.*3.1
    
    Articles of Incorporation of Seminis Vegetable Seeds, Inc.*3.2
    
    By-laws of Seminis Vegetable Seeds, Inc.*3.3
    
    Amended and Restated Certificate of Incorporation of Seminis, Inc.*3.4
    
    By-laws of Seminis, Inc.*3.5
    
    Certificate of Designation of Preferences and Rights of Class C Redeemable Preferred Stock of Seminis, Inc.*3.6
    
    Articles of Incorporation of Petoseed International, Inc.*3.7
    
    By-laws of Petoseed International, Inc.*3.8
    
    Articles of Incorporation of PGI Alfalfa, Inc.*3.9
    
    By-laws of PGI Alfalfa, Inc.*3.10
    
    Articles of Incorporation of Baxter Seed Co., Inc.*3.11
    
    By-laws of Baxter Seed Co., Inc.*4.1
    
    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.*4.2
    
    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.*4.3
    
    Form of Global Note for 10 1/4% Senior Subordinated Notes due 2013 of Seminis Vegetable Seeds, Inc. (contained as an
exhibit to Exhibit 4.1 hereto).*4.4
    
    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.*4.5
    
    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.*
 34




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ExhibitNumber
    
    Description10.1
    
    Amended and Restated Stockholders Agreement, dated as of September 29, 2003, by and among SEMINIS, INC., a Delaware
corporation, Fox Paine Capital Fund II, L.P., a Delaware limited partnership, Fox Paine Capital Fund II Co-Investors,
L.P., a Delaware limited partnership, E and A `J Trust, FPC Investment GP, FPSH Coinvestment Fund I, LLC, a Delaware
limited liability company, FPSH Coinvestment Fund II, LLC, a Delaware limited liability company, FPSH Coinvestment Fund
III, LLC, a Delaware limited liability company, FPSH Coinvestment Fund IV, LLC, a Delaware limited liability company,
FPSH Coinvestment Fund V, LLC, a Delaware limited liability company, Alfonso Romo Garza, Gaspar Alvarez, Franco
Campana, Bruno Ferrari, Charles Edward Green, Luis Maiz, Mateo Mazal, Bernardo Jimenez Barrera, Adrian Rodriguez
Macedo, Jose Manuel Madero, Jean Pierre Posa, 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), a trust organized under the United Mexican States, Conjunto Administrativo
Integral, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States,
Emprima, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States,
Park Financial Group, Ltd, (BVI), a British Virgin Islands Company, Desarrollo Consolidado De Negocios, S.A. De C.V., a
corporation (sociedad anonima de capital variable) organized under the United Mexican States, Savia, S.A. De C.V., a
corporation (sociedad anonima de capital variable) organized under the United Mexican States, Banca Afirme, S.A.
Institucion De Banca Multiple, Afirme Grupo Financiero, As trustee, under the Administration Trust Number 243-4
(Fideicomiso De Administracion), a trust organized under the United Mexican States, The Irrevocable Administration and
Payment Trust Number 131-4 Entered into by Banca Afirme, S.A., Institucion De Banca Multiple, Afirme Grupo Financiero,
in its capacity as Trustee and Pulsar Internacional, S.A. De C.V., executed on July 23, 2001, as amended, a trust
organized under the United Mexican States, Marcela Gonzalez, The Northwestern Mutual Life Insurance Company, Stichting
Pensioenfonds ABP and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke en Maatschappelijke Belangen.*10.2
    
    Employment Agreement, dated as of
 May 30, 2003, between Seminis, Inc. and Alfonso Romo Garza.*10.3
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bruno Ferrari.*10.4
    
    Amendment, dated August 7, 2003, to the Employment Agreement, made May 30, 2003, between Seminis, Inc. and Bruno
Ferrari.*10.5
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Mateo Mazal Beja.*10.6
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bernardo Jimenez.*10.7
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Gaspar Alvarez.*10.8
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Jose Manuel Madero Garza.*10.9
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Charles Edward Green.*10.10
    
    New Senior Secured Credit Facility by and among Seminis Vegetable Seeds 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 $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.*10.11
    
    Amended and Restated Employment Agreement,
dated as of January 22, 2005, between Seminis, Inc. and Bruno
Ferrari Garcia de Alla.10.12
    
    Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Charles Edward Green.10.13
    
    Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Gaspar Alvarez.10.14
    
    Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Jose Manuel Madero Garza.10.15
    
    Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Gerard Renou.10.16
    
    Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Alfonso Romo Garza.10.17
    
    Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Bernardo Jimenez.10.18
    
    Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Mateo Mazal Beja.14.
    
    Code of Ethics.21.1
    
    Subsidiaries of Registrants.*31.1
    
    Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Vice President, Finance and Worldwide Corporate Comptroller under Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Vice President, Finance and Worldwide Corporate Comptroller under Section 906 of the Sarbanes-Oxley
Act of 2002.
   *
    
    Previously filed as exhibits to the Registration Statement declared effective on
March 19, 2004 (SEC No. 333-11050604). 35




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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: February 14, 2005
    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) 36