##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
    FORM 10-Q
   (MARK ONE) [X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 25, 2004 OR [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO COMMISSION FILE NUMBER 000-26519 SEMINIS, INC.  DELAWARE
    
    36-0769130(STATE OF INCORPORATION)
    
    (I.R.S. EMPLOYER IDENTIFICATION NO.)2700 CAMINO DEL SOL, OXNARD, CALIFORNIA
    
    93030-7967(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
    
    (ZIP CODE)
 (805) 647-1572
(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE
(FORMER NAME, ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Indicate, by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [   ] Indicate, by check mark whether the Registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act). YES [   ] NO [X]    1




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##### Table of Contents



SEMINIS, INC. FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 25, 2004 TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of June 25, 2004 and September 30, 2003
    
    
    3Consolidated Statements of Operations for the Three and Nine Months Ended June 25,
2004 and June 27, 2003
    
    
    4Consolidated Statement of Stockholders Equity for the Nine Months Ended June 25, 2004
    
    
    5Consolidated Statements of Cash Flows for the Nine Months Ended June 25, 2004 and
June 27, 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4.
    
    Controls and Procedures
    
    
    34PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    35Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    36Signatures
    
    
    39Certification of ResultsExhibit 31.1
    
    
    40Exhibit 31.2
    
    
    41Exhibit 32.1
    
    
    42Exhibit 32.2
    
    
    43Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements SEMINIS, INC. 
 Consolidated Balance Sheets
  As of
    
    As ofJune 25,
    
    September 30,2004
    
    2003(Unaudited)Assets:Current assetsCash and cash equivalents
    
    $
    74,605
    
    
    $
    36,824Accounts receivable, less allowances for doubtful accounts of $10,505 and $10,439, respectively
    
    
    178,647
    
    
    
    151,578Inventories
    
    
    289,266
    
    
    
    351,637Prepaid expenses and other current assets
    
    
    7,152
    
    
    
    4,450Total current assets
    
    
    549,670
    
    
    
    544,489Property, plant and equipment, net
    
    
    74,021
    
    
    
    69,792Intangible assets, net
    
    
    69,478
    
    
    
    73,009Other assets
    
    
    20,545
    
    
    
    19,957Total Assets
    
    $
    713,714
    
    
    $
    707,247Liabilities and Stockholders Equity:Current liabilitiesShort-term borrowings
    
    $
    18,262
    
    
    $
    20,031Current maturities of long-term debt
    
    
    1,796
    
    
    
    2,722Accounts payable
    
    
    22,724
    
    
    
    50,280Accrued liabilities
    
    
    91,642
    
    
    
    89,416Total current liabilities
    
    
    134,424
    
    
    
    162,449Long-term debt
    
    
    450,247
    
    
    
    398,538Deferred income taxes
    
    
    21,710
    
    
    
    21,312Minority interest in subsidiaries
    
    
    1,467
    
    
    
    1,723Preferred shares subject to mandatory redemption
    
    
    41,483
    
    
    
    39,300Total liabilities
    
    
    649,331
    
    
    
    623,322Commitments and contingencies (see Note 12)Stockholders equityClass A Common Stock, $.01 par value; 200,000 shares authorized as of June 25, 2004 and
September 30, 2003; 64,333 and 63,260 shares issued and outstanding as of June 25, 2004 and
September 30, 2003, respectively
    
    
    644
    
    
    
    633Additional paid-in-capital
    
    
    94,149
    
    
    
    91,034Accumulated deficit
    
    
    (29,732
    )
    
    
    (7,603
    )Accumulated other comprehensive loss
    
    
    (678
    )
    
    
    (139
    )Total stockholders equity
    
    
    64,383
    
    
    
    83,925Total Liabilities and Stockholders Equity
    
    $
    713,714
    
    
    $
    707,247
 The accompanying notes are an integral part of these consolidated financial statements. 3




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##### Table of Contents



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

    
    For the Nine Months EndedSuccessor
    

    Predecessor
    
    Successor
    

    PredecessorJune 25,
    

    June 27,
    
    June 25,
    

    June 27,2004
    

    2003
    
    2004
    

    2003(Unaudited)
    
    (Unaudited)Net sales
    
    $
    116,516
    
    

    $
    113,088
    
    
    $
    394,785
    
    

    $
    352,705Cost of goods sold
    
    
    57,375
    
    

    
    42,113
    
    
    
    190,585
    
    

    
    130,354Gross profit
    
    
    59,141
    
    

    
    70,975
    
    
    
    204,200
    
    

    
    222,351Operating expensesResearch and development expenses
    
    
    13,166
    
    

    
    12,564
    
    
    
    36,801
    
    

    
    34,942Selling, general and administrative expenses
    
    
    48,012
    
    

    
    46,685
    
    
    
    144,907
    
    

    
    138,022Amortization of intangible assets
    
    
    2,029
    
    

    
    4,014
    
    
    
    5,880
    
    

    
    11,907Total operating expenses
    
    
    63,207
    
    

    
    63,263
    
    
    
    187,588
    
    

    
    184,871Gain on sale of fixed assets
    
    
    1,006
    
    

    
    366
    
    
    
    3,621
    
    

    
    1,457Income (loss) from operations
    
    
    (3,060
    )
    

    
    8,078
    
    
    
    20,233
    
    

    
    38,937Other income (expense)Interest income
    
    
    215
    
    

    
    120
    
    
    
    642
    
    

    
    626Interest expense
    
    
    (10,574
    )
    

    
    (8,920
    )
    
    
    (29,005
    )
    

    
    (24,361
    )Interest expense from preferred shares
subject to mandatory redemption
    
    
    (1,697
    )
    

    
    
    
    
    
    (5,246
    )
    

    
    Foreign currency gain (loss)
    
    
    (252
    )
    

    
    151
    
    
    
    4,412
    
    

    
    180Minority interest provision
    
    
    (465
    )
    

    
    (423
    )
    
    
    (636
    )
    

    
    (153
    )Other, net
    
    
    (205
    )
    

    
    (507
    )
    
    
    (3,845
    )
    

    
    (330
    )(12,978
    )
    

    
    (9,579
    )
    
    
    (33,678
    )
    

    
    (24,038
    )Income (loss) before income taxes
    
    
    (16,038
    )
    

    
    (1,501
    )
    
    
    (13,445
    )
    

    
    14,899Income tax expense
    
    
    (1,787
    )
    

    
    (1,843
    )
    
    
    (8,684
    )
    

    
    (5,983
    )Net income (loss)
    
    
    (17,825
    )
    

    
    (3,344
    )
    
    
    (22,129
    )
    

    
    8,916Preferred stock dividends
    
    
    
    
    

    
    (4,660
    )
    
    
    
    
    

    
    (13,844
    )Net loss available for common stockholders
    
    $
    (17,825
    )
    

    $
    (8,004
    )
    
    $
    (22,129
    )
    

    $
    (4,928
    )
 The accompanying notes are an integral part of these consolidated financial statements. 4




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SEMINIS, INC. 
 Consolidated Statement
of Stockholders Equity
  Class A
    
    
    
    
    
    
    
    Accumulated
    
    TotalCommon Stock
    
    AdditionalPaid-in
    
    Accumulated
    
    OtherComprehensive
    
    Stock-HoldersNumber
    
    Amount
    
    Capital
    
    Deficit
    
    Income (Loss)
    
    EquityBalance, September 30, 2003
    
    
    63,260
    
    
    $
    633
    
    
    $
    91,034
    
    
    $
    (7,603
    )
    
    $
    (139
    )
    
    $
    83,925Comprehensive income (loss):Net loss
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,129
    )
    
    
    
    
    
    
    (22,129
    )Translation adjustment
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,279
    )
    
    
    (1,279
    )Equity adjustment for
interest rate swap
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740
    
    
    
    740(22,668
    )Stock based compensation
(unaudited)
    
    
    1,073
    
    
    
    11
    
    
    
    3,115
    
    
    
    
    
    
    
    
    
    
    
    3,126Balance, June 25, 2004
(unaudited)
    
    
    64,333
    
    
    $
    644
    
    
    $
    94,149
    
    
    $
    (29,732
    )
    
    $
    (678
    )
    
    $
    64,383
 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 Nine Months EndedSuccessor
    
    
    PredecessorJune 25,
    
    
    June 27,2004
    
    
    2003(Unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    (22,129
    )
    
    
    $
    8,916Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization
    
    
    11,557
    
    
    
    
    22,875Gain on sale of fixed assets
    
    
    (3,621
    )
    
    
    
    (1,457
    )Deferred income taxes
    
    
    1,072
    
    
    
    
    2,156Inventory provision
    
    
    10,500
    
    
    
    
    11,104Provision for minority interest subsidiary
    
    
    636
    
    
    
    
    153Compensation expense for restricted stock units
    
    
    825
    
    
    
    
    Amortization of inventory step-up
    
    
    44,944
    
    
    
    
    Foreign currency gain
    
    
    (4,412
    )
    
    
    
    (180
    )Other
    
    
    (1,021
    )
    
    
    
    1,095Changes in assets and liabilities:Accounts receivable
    
    
    (24,386
    )
    
    
    
    (24,830
    )Inventories
    
    
    7,582
    
    
    
    
    8,766Prepaid expenses and other assets
    
    
    (9,774
    )
    
    
    
    (8,591
    )Current income taxes
    
    
    2,021
    
    
    
    
    (63
    )Accounts payable
    
    
    (28,237
    )
    
    
    
    (17,376
    )Other liabilities
    
    
    5,373
    
    
    
    
    (6,158
    )Net cash used in operating activities
    
    
    (9,070
    )
    
    
    
    (3,590
    )Cash flows from investing activities:Purchases of fixed and intangible assets
    
    
    (7,028
    )
    
    
    
    (9,546
    )Proceeds from disposition of assets
    
    
    5,118
    
    
    
    
    8,969Other
    
    
    (766
    )
    
    
    
    (36
    )Net cash used in investing activities
    
    
    (2,676
    )
    
    
    
    (613
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    167,679
    
    
    
    
    686Repayment of long-term debt
    
    
    (116,418
    )
    
    
    
    (16,754
    )Proceeds from short-term borrowings
    
    
    8,127
    
    
    
    
    20,974Repayment of short-term borrowings
    
    
    (9,779
    )
    
    
    
    (12,804
    )Other
    
    
    (624
    )
    
    
    
    100Net cash provided by (used in) financing activities
    
    
    48,985
    
    
    
    
    (7,798
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    542
    
    
    
    
    3,326Increase (decrease) in cash and cash equivalents
    
    
    37,781
    
    
    
    
    (8,675
    )Cash and cash equivalents, beginning of period
    
    
    36,824
    
    
    
    
    36,805Cash and cash equivalents, end of period
    
    $
    74,605
    
    
    
    $
    28,130
 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. As a result of the acquisition transactions described in Note 2, which were
completed on September 29, 2003, the Company has presented its results of
operations, and cash flows on a predecessor/successor basis. Periods prior
to September 29, 2003 are predecessor periods, while others are successor
periods. The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the fiscal period, including estimates and assumptions related to customer
discounts and allowances. Actual results could differ from those estimates. The unaudited consolidated financial statements included herein reflect all
adjustments (consisting only of normal recurring adjustments) that the
Company considers necessary for a fair presentation of the results of
operations for the interim periods covered and the financial condition of the
Company at the date of the interim balance sheet. The Companys business is
subject to seasonal fluctuation and, therefore, the results of operations for
periods less than one year are not necessarily indicative of results that may
be expected for any other interim period or for the fiscal year as a whole. Supplementary Cash Flow Information Nine Months EndedSuccessor
    
    
    PredecessorJune 25,
    
    
    June 27,2004
    
    
    2003(Unaudited)Cash paid for interest
    
    $
    21,337
    
    
    
    $
    18,288Cash paid for income taxes
    
    
    5,591
    
    
    
    
    3,890Supplemental non-cash transactions:Class B Redeemable Preferred Stock dividends
    
    
    
    
    
    
    
    1,500
 7




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Recent Accounting Pronouncements In December 2003, the FASB reissued SFAS No. 132, Employers Disclosures
about Pensions and Other Postretirement Benefits, an amendment of FASB
Statements No. 87, 88, and 106. This Statement revises employers
disclosures about pension plans and other postretirement benefit plans. It
does not change the measurement or recognition of those plans required by
SFAS No. 87, Employers Accounting for Pensions, SFAS No. 88, Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits, and SFAS No. 106, Employers Accounting for
Postretirement Benefits Other Than Pensions. This Statement retains the
disclosure requirements contained in the original SFAS No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits. The revised
Statement also requires additional disclosures about the assets, obligations,
cash flows, and net periodic benefit cost of defined benefit pension plans
and other defined benefit postretirement plans. The provisions of the
original SFAS No. 132 will remain in effect until the provisions of this
Statement are adopted. Certain new provisions are effective for financial
statements with fiscal years ending after December 15, 2003, while other
provisions are effective for fiscal years ending after June 15, 2004. The
interim period disclosures are effective for interim periods beginning after
December 15, 2003. See Note 8 Pensions and Other Postretirement Benefits,
for disclosures required under the revised SFAS No. 132. In December 2003, the Financial Accounting Standards Board (FASB) reissued
Interpretation No. 46, Consolidation of Variable Interest Entities  an
Interpretation of ARB No. 51. The Interpretation clarifies the application
of Accounting Research Bulletin No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity risk for
the entity to finance its activities without additional subordinated
financial support. The provisions of this Interpretation are effective for
the Company for interim periods ending after March 15, 2004. The adoption of
this Interpretation has not had a significant impact on the Companys
financial results of operations and financial position. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This Statement requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). The provisions of this Statement are effective for financial
instruments entered into or modified after May 31, 2003, and otherwise are
effective at the beginning of the first interim period beginning after June
15, 2003. The Company adopted this Statement as of June 27, 2003 and
accordingly classified its newly issued paid-in-kind mandatory redeemable
preferred stock (PIK Preferred Stock) as a liability. In April 2003, the FASB issued SFAS No. 149, Amendment to Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) used for hedging activities under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
The provisions of this Statement are effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of this Statement did not have a significant
impact on the Companys financial condition or results of operations. In January 2003, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No.
123. SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. It also requires disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS No.
148 is effective for annual and interim periods beginning after December 15,
2002. The Company has adopted FASB Statement No. 123 under the provisions of
SFAS No. 148 on October 1, 2003. 8




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Note 2  Acquisition Transactions / Liquidity Under the acquisition transactions, described in Note 3, in September 2003,
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 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 which
was outstanding at June 25, 2004 and September 30, 2003, respectively),
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. 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 June 25, 2004 was $470.3 million, of
which $89.3 million were borrowings under Companys term loan, $342.0 million
were borrowings under our senior 10 1/4% subordinated notes ( including
$12.0 million of remaining premium balance, which will be amortized over the
life of the notes and reduces interest expense), $17.4 million, $1.3 million,
$0.5 million and $19.8 million were borrowings by its United States, Spanish,
French and South Korean subsidiaries, respectively. The Company also has
$41.5 million of preferred shares subject to mandatory redemption (see Note
11 PIK Preferred Stock). As of June 25, 2004, the Company has cash and
cash equivalents of $74.6 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, described
in Note 2, were completed. The acquisition transactions are accounted for under the purchase method of
accounting. In accordance with applicable accounting guidelines, the purchase
price paid by Fox Paine for Seminis common stock plus related purchase
accounting adjustments are pushed down and recorded in Seminis financial
statements. The acquisition transactions resulted, for purposes of 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
on-going carrying values of the net assets acquired: 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
    
    
    
    (102,582
    )
    
    
    64,361Goodwill
    
    
    106,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    51,533
    
    
    
    331,693
    
    
    
    12,852
    
    
    
    (271,536
    )
    
    
    73,009In-process R&D
    
    
    
    
    
    
    58,547
    
    
    
    
    
    
    
    (47,929
    )
    
    
    10,618Other long-term assets
    
    
    18,463
    
    
    
    13,859
    
    
    
    4,605
    
    
    
    (11,345
    )
    
    
    7,119Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 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 is
expected to be over a 16 month period from September 29, 2003, the date of
acquisition. Depreciation and Amortization The effect of the negative goodwill allocation to the non current assets
resulted from the acquisition transactions is being amortized or depreciated
based on the remaining lives of the assets. This results in lower
depreciation and amortization expense. Other Finally, the 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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##### Table of Contents



Note 4  Inventories Inventories consist of the following: As of
    
    As ofJune 25,
    
    September 30,2004
    
    2003(Unaudited)Seeds
    
    $
    256,001
    
    
    $
    324,006Unharvested crop growing costs
    
    
    24,577
    
    
    
    19,488Supplies
    
    
    8,688
    
    
    
    8,143Total net inventories
    
    $
    289,266
    
    
    $
    351,637
 Inventories are presented net of reserves of $70,338 and $79,531 at June 25,
2004 and September 30, 2003, respectively. As described in Note 3, as part
of the acquisition transactions, inventories were stepped-up by $73.2
million. In the current period, $44.9 million of the step-up was amortized
and charged to cost of sales. This non-cash adjustment will continue as the
inventory is expected to be sold over the next 7 months. Note 5  Intangible Assets Intangible assets at June 25, 2004 and September 30, 2003 consist of the
following: As of June 25, 2004(Unaudited)
    
    As of September 30, 2003PurchaseGross
    
    Accumulated
    
    Net Carrying
    
    
    
    
    
    AccountingCarrying Amount
    
    Amortization
    
    Amount
    
    Revalued Amount
    
    Adjustment
    
    Adjusted AmountAmortizable intangible assets:Germplasm
    
    $
    25,815
    
    
    $
    (1,255
    )
    
    $
    24,560
    
    
    $
    115,544
    
    
    $
    (89,713
    )
    
    $
    25,831Software
    
    
    11,563
    
    
    
    (2,154
    )
    
    
    9,409
    
    
    
    9,984
    
    
    
    (553
    )
    
    
    9,431Trademarks
    
    
    8,736
    
    
    
    (476
    )
    
    
    8,260
    
    
    
    30,232
    
    
    
    (21,507
    )
    
    
    8,725Existing product
technology
    
    
    24,353
    
    
    
    (1,751
    )
    
    
    22,602
    
    
    
    138,431
    
    
    
    (114,292
    )
    
    
    24,139Customer relationships
    
    
    4,891
    
    
    
    (244
    )
    
    
    4,647
    
    
    
    50,354
    
    
    
    (45,471
    )
    
    
    4,883$
    75,358
    
    
    $
    (5,880
    )
    
    $
    69,478
    
    
    $
    344,545
    
    
    $
    (271,536
    )
    
    $
    73,009
 Aggregate amortization expense was $5.9 million and $11.9 million for the
nine months ended June 25, 2004 and June 27, 2003, respectively. Estimated
amortization expense for the next five years is estimated at $7.7 million
each year. Note 6  Accrued Liabilities Accrued liabilities consist of the following at June 25, 2004 and September
30, 2003: As of
    
    As ofJune 25,
    
    September 30,2004
    
    2003(Unaudited)Employee salaries and related benefits
    
    $
    52,901
    
    
    $
    51,632Severance
    
    
    694
    
    
    
    672Seedmens errors and omissions
    
    
    8,710
    
    
    
    7,181Interest
    
    
    9,605
    
    
    
    368Income taxes payable
    
    
    3,994
    
    
    
    2,002Merger & refinancing transactions
    
    
    
    
    
    
    9,115Other
    
    
    15,738
    
    
    
    18,446$
    91,642
    
    
    $
    89,416
 11




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##### Table of Contents



Note 7  Long-Term Debt Long-term debt consists of the following at June 25, 2004 and September 30,
2003: As of
    
    As ofJune 25,
    
    September 30,2004
    
    2003(Unaudited)Senior secured credit facility borrowings
    
    $
    89,300
    
    
    $
    190,000Senior subordinated notes
    
    
    330,000
    
    
    
    190,000Mortgage notes
    
    
    16,807
    
    
    
    17,000South Korean borrowings due in annual
installments through 2013
    
    
    1,662
    
    
    
    1,858Bond premium related to additional
senior subordinated note
    
    
    12,044
    
    
    
    Other borrowings
    
    
    2,230
    
    
    
    2,402452,043
    
    
    
    401,260Less current portion
    
    
    (1,796
    )
    
    
    (2,722
    )$
    450,247
    
    
    $
    398,538
 As of June 25, 2004, long-term debt maturities are as follows: Period Ending June 252005
    
    $
    1,7962006
    
    
    1,8382007
    
    
    1,7452008
    
    
    1,6982009
    
    
    1,517Thereafter
    
    
    443,449$
    452,043
 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 guarantee 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 June 25, 2004 and $2.6 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 and LIBOR plus
3.00% per annum in the case of a LIBOR loan. The applicable rate for the
revolving credit facility under the amended 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. 12




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##### Table of Contents



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 June 25, 2004, the outstanding balance of the term loan under the senior
secured credit facility was $89.3 million with a variable interest rate of
3.49%, 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 June 25, 2004, the
outstanding balance of the 10 1/4% senior subordinated
notes was $330.0 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 June 25, 2004, the outstanding balance of the mortgage note was $16.8
million with a fixed interest rate of 6.3%. South Korean Borrowings The Companys South Korean subsidiary has a number of loan facilities
maturing from fiscal year 2004 to 2013. Borrowings under these facilities
carry interest rates of approximately 4.0%. Other Borrowings Other borrowings consisted of various domestic and foreign, government and
non-government loans of less than $1.5 million each, bearing interest
annually at average rates of 7.35% through 2013 for fiscal years 2003, and
8.79% through 2007 for fiscal year 2002. For the nine months ended June 25, 2004 and fiscal year ended September 30,
2003, the Company incurred interest at a weighted-average rate of 8.66% and
7.26% per annum, respectively. 13




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##### Table of Contents



Note 8  Pensions and Other Postretirement Benefits The Company provides a defined-benefit plan in the Netherlands (the
Netherlands Plan) as required by statute. The components of net pension
expense of the Netherlands Plan are as follows: Three Months Ended

    
    Nine Months EndedSuccessor
    

    Predecessor
    
    Successor
    

    PredecessorJune 25,
    

    June 27,
    
    June 25,
    

    June 27,2004
    

    2003
    
    2004
    

    2003(Unaudited)

    
    (Unaudited)Service cost
    
    $
    614
    
    

    $
    594
    
    
    $
    1,321
    
    

    $
    1,742Interest cost
    
    
    1,507
    
    

    
    1,458
    
    
    
    3,244
    
    

    
    4,278Actual gain on plan assets
    
    
    (1,647
    )
    

    
    (1,594
    )
    
    
    (3,546
    )
    

    
    (4,676
    )Net amortization and deferral
    
    
    382
    
    

    
    370
    
    
    
    823
    
    

    
    1,085$
    856
    
    

    $
    828
    
    
    $
    1,842
    
    

    $
    2,429
 Note 9  Stock-Based Compensation Effective October 1, 2003, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation (SFAS No. 123), for
stock-based employee compensation. Under the modified prospective method of
adoption selected by the Company under the provisions of SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure,
stock-based employee compensation expense recognized in fiscal year 2004 is
the same as that which would have been recognized had the fair value
recognition provisions of SFAS No. 123 been applied to all awards from its
original effective date. Results of prior years have not been restated. The
following table illustrates the effect on net income (loss) if the fair value
method had been applied in each period (in thousands) with the approach of
SFAS No. 123: Three Months Ended

    
    Nine Months EndedSuccessor
    

    Predecessor
    
    Successor
    

    PredecessorJune 25,
    

    June 27,
    
    June 25,
    

    June 27,2004
    

    2003
    
    2004
    

    2003(Unaudited)

    
    (Unaudited)Net loss available for common stockholders, as reported
    
    $
    (17,825
    )
    

    $
    (8,004
    )
    
    $
    (22,129
    )
    

    $
    (4,928
    )Add: Employee stock option expense included in reported net
loss, net of related tax effects
    
    
    39
    
    

    
    
    
    
    
    39
    
    

    
    Deduct: Total employee stock option expense determined under
fair value method for awards, net of related tax effects
    
    
    (39
    )
    

    
    (182
    )
    
    
    (39
    )
    

    
    (547
    )Pro forma net loss
    
    $
    (17,825
    )
    

    $
    (8,186
    )
    
    $
    (22,129
    )
    

    $
    (5,475
    )
 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 June 25, 2004, there are
approximately 1.7 million options outstanding. Restricted Stock Units Upon completion of the acquisition transactions, we granted restricted stock
units to a group of Company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 our executives relative to specified goals and objectives. Upon completion of the acquisition transactions, each of the senior
executives was granted an aggregate number of restricted stock units
calculated as 2.25 times the initial base salary of the applicable senior
executive divided by $3.40. Each of the other key executives was granted an
aggregate number of restricted stock units calculated as 1.0 times the
initial base salary of the applicable executive divided by $3.40. If the specified goals and objectives are achieved and the executive is
actively employed by us at each applicable vesting date, the restricted stock
units will vest with respect to 10.0% of the aggregate award in each of the
first two years, 20.0% of the aggregate award in the third year and 30.0% of
the aggregate award in each of the fourth and fifth years following the time
of grant. To the extent that conditions to vesting are not met and some of
the restricted stock units do not vest, the portion of restricted stock units
that do not vest will be permanently forfeited and will not be reallocated. 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 nine months ended June 25, 2004, the Company recorded $0.8 million of
compensation expense for restricted stock units. Co-Investment Rights to Purchase Additional Shares of Companys Common Stock In connection with the acquisition transactions, Desarrollo Consolidado de
Negocios, S.A. de C.V. received immediately exercisable rights to acquire
13.8% of the outstanding shares of the Companys common stock on a
fully-diluted basis. In addition, Desarrollo Consolidado de Negocios, S.A.
de C.V. and Fox Paine received a second tranche of co-investment rights to
acquire up to 15.8% and 1.57%, respectively, of the outstanding shares of the
Companys common stock on a fully-diluted basis. The Fox Paine co-investment
rights and the second tranche of co-investment rights owned by Desarrollo
Consolidado de Negocios, S.A. de C.V. will become exercisable only if Fox
Paine achieves a 26.0% internal rate of return on its investment in the
Company. Each co-investment right entitles the recipient to acquire one share
of Companys common stock at an exercise price of $3.40 per share. All of the
co-investment rights expire on the tenth anniversary of the date of the
consummation of the acquisition transactions. Warrants See Note 11  PIK Preferred Stock 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 mandatory
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 our senior secured facility
and the notes. The preferred shares subject to mandatory redemption were stated at $41.5
million and $39.3 million as of June 25, 2004 and September 30, 2003,
respectively. The accretion of the preferred shares subject to mandatorily
redemption and their paid-in-kind dividends are recognized as interest
expense through the term of the agreement. For the nine months ended June
25, 2004, this interest expense totaled $5.2 million. 16




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##### Table of Contents



Note 12  Commitments and Contingencies As part of the formation of LSL PlantScience, a joint venture between Seminis
and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements
between LSL Biotechnologies and a third party. These agreements contain
provisions that permanently restrict the third party from engaging in the
development or marketing of open field tomato seeds having long-shelf-life
characteristics in certain areas in the world, including North America. In
September 2000, the Antitrust Division of the U.S. Department of Justice
filed suit in the U.S. District Court for the District of Arizona against LSL
PlantScience, LSL Biotechnologies and Seminis to delete these restrictive
provisions. On March 29, 2002, the U.S. District Court dismissed without
prejudice the action against LSL PlantScience, LSL Biotechnologies and
Seminis. The U.S. Department of Justice has appealed this ruling and the
appeal is pending in the Ninth Circuit Court of Appeals. In January 2002, melon growers in Costa Rica notified us that our Dorado
melon seeds were infected with Watermelon Fruit Blotch. Growers who purchased
the infected Seminis seeds and growers whose crops were infected by the
bacteria that spread from crops grown with the infected Seminis seeds have
claimed damages against us. The claims related to those growers who purchased
Seminis seeds have been settled for approximately $5.8 million, of which
approximately $2.6 million was recovered under our errors and omissions
insurance policy and the remainder of the settlement was paid by us by July
2002. The claims related to the growers with infected crops total
approximately $4.7 million and we believe these claims are covered under our
general liability insurance policy. We have finalized settlement of all of
these claims. We have settled the coverage issue with our general liability
insurance carrier to our satisfaction, and proceedings against them have been
dismissed. We are now pursuing coverage with our excess general liability
insurer, who has informally denied coverage, and we are in the midst of
settlement negotiations with them. In early 2000, we filed suit against Dietrich Schmidt, the former president
of Seminis and the current president of United Genetics, a competitor of
ours, United Genetics, and two former Seminis breeders, Ken Owen and Wei
Ouyang, for trade secret misappropriation and breach of contract. Mr.
Schmidt filed a counterclaim for defamation against us. We were unsuccessful
on our claims for trade secret misappropriation and breach of contract, and
Mr. Schmidt was successful on his counterclaim with the court awarding him $1
in nominal damages. The count subsequently awarded Messrs. Schmidt, Owen and
Ouyang their attorneys fees. We have appealed certain aspects of the
judgment, including the fee award. A decision on the appeal was handed down
in December, 2003. The California Court of Appeal partially affirmed the
lower courts ruling, and has partially reversed and remanded the case to the
lower court for a re-determination of costs and fees, specifying that certain
attorneys fees and costs previously awarded to Messrs. Schmidt, Owens and
Ouyang should not be payable by Seminis. Seminis recently settled this
matter and all litigation, appeals, and motions have been dismissed. On December 17, 2002 and January 4, 2003, four purported class action
lawsuits were filed relating to the acquisition transactions. Three of these
actions  Garry Firth v. Alfonso Romo Garza, et al., Civil Action No. 20085,
Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No. 20097 and Pablo
Herranz v. Seminis, Inc., et al., Civil Action No. 20105  were filed in the
Delaware Court of Chancery (New Castle County), while the fourth, Mark
Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California
Superior Court (Ventura County). Since that time, a fifth case, Haven Capital
Management v. Alfonso Romo Garza, et al., Civil Action No. 20140 has also
been filed in Delaware. In February 2003, the Firth, Pozniak, Herranzand
Haven Capitalcases were consolidated into one proceeding entitled In re
Seminis, Inc. Shareholders Litigation, Consolidated C.A. No. 20140-NC, and
the Haven Capitalcomplaint was designated as the operative complaint in the
consolidated lawsuit. That complaint names as defendants Savia, Company and
its Directors. The Rosales(California) complaint names as defendants Company
and its Directors. Both the Delaware consolidated action and the Rosales
action purport to be brought on behalf of Company common stockholders or
their successors. Both of these actions  which were brought prior to the
public announcement of Company entering into the acquisition transactions
agreements  allege that the acquisition transactions, when consummated,
would provide insufficient consideration to Company common stockholders and
allege that the defendants breached their fiduciary duties in connection with
the acquisition transactions. The complaints sought a preliminary and
permanent injunction to enjoin the acquisition transactions and, since the
acquisition transactions have been consummated, rescission and damages. On
September 24, 2003, the parties reached a memorandum of understanding that
settled all of the alleged claims. The parties have finalized the settlement
agreement and the California court preliminarily approved the terms of the
settlement in April 2004. A hearing for final approval of the settlement was
held by the California court in July, 2004, 17




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##### Table of Contents



and approval of the settlement was granted, and we expect to have all actions
in California and Delaware dismissed in the very near future. The proposed
settlement does not affect the terms of the acquisition transactions set
forth herein. 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 batch
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. Seminis is currently involved in investigating
each of the growers complaints, and will work diligently to resolve these
issues in a commercially reasonable manner. 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. An accrual for managements estimate of exposure related to such claims has
been recorded in the financial statements and is disclosed in Note 6. It is
the opinion of management that the ultimate resolution of these matters will
not have a material adverse effect on the Companys consolidated financial
position or results of operations. Historically, resolution of asserted
claims has been in line with managements expectations. Note 13  Related Party Transactions In accordance with the agreement entered in as part of acquisition
transactions, the Company paid management fees of $2.4 million each to Fox
Paine and Desarrollo Consolidado De Negocios, S.A. De C.V. in October 2003
for services to be rendered during fiscal year 2004. The annual management
fee is equal to 1% of previous fiscal years net sales and is amortized as
services are rendered during the fiscal year. The Company sold residential property to Bernardo Jimenez, Executive Senior
Vice President and Chief Financial Officer. The sales price of $1.1 million
was based upon a real estate appraisal of the market value of the property. In June 2000, a subsidiary of the Company sold residential property,
originally acquired in December 1999 for $862,000, to Mr. Bruno Ferrari,
Executive Senior Vice President, World Wide Commercial, at the appraised
value of $875,000. The purchase price was evidenced by a promissory note
secured by a deed of trust on the property. The note had an interest rate of
7.75% per annum and was payable in ten equal annual installments of
principal, including interest accrued thereon, commencing December 15, 2000,
and annually thereafter. The loan was repaid in December 2003. Under a
separate agreement, the Company paid bonuses to Mr. Ferrari that covered the
interest payable on the loan and paid Mr. Ferrari the present value of the
interest payments that would have been payable to Mr. Ferrari had the loan
remained outstanding until its scheduled final maturity. The bonus payments
were recognized as compensation expense at the time of the payments. In connection with the additional senior subordinated notes, the Company paid
$1.8 million and $1.5 million for advisory fees to Fox Paine and Geotel S.A.
De C.V., a subsidiary of Desarrollo Consolidado De Negocios, S.A. De C.V, in
January and July 2004, respectively. 18




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##### Table of Contents



Note 14  Supplemental Guarantor/Non-Guarantor Financial Information In conjunction with the
10 1/4% senior subordinated notes, the following
summarized condensed consolidating financial information is presented for the
Company, segregating 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. 19




---



##### Table of Contents



Successor
Condensed Consolidating Balance Sheets
As of June 25, 2004(Unaudited) Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    59,152
    
    
    $
    435
    
    
    $
    15,018
    
    
    $
    
    
    
    $
    74,605Accounts receivable
    
    
    
    
    
    
    51,518
    
    
    
    1,622
    
    
    
    125,507
    
    
    
    
    
    
    
    178,647Inventories
    
    
    
    
    
    
    132,761
    
    
    
    7,369
    
    
    
    149,136
    
    
    
    
    
    
    
    289,266Prepaid expenses and other
current assets
    
    
    
    
    
    
    4,124
    
    
    
    63
    
    
    
    2,965
    
    
    
    
    
    
    
    7,152Total current assets
    
    
    
    
    
    
    247,555
    
    
    
    9,489
    
    
    
    292,626
    
    
    
    
    
    
    
    549,670Property, plant and equipment, net
    
    
    
    
    
    
    33,218
    
    
    
    82
    
    
    
    40,721
    
    
    
    
    
    
    
    74,021Investment in consolidated
subsidiaries
    
    
    250,512
    
    
    
    213,047
    
    
    
    
    
    
    
    
    
    
    
    (463,559
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    45,148
    
    
    
    
    
    
    
    24,330
    
    
    
    
    
    
    
    69,478Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,043
    
    
    
    (2,043
    )
    
    
    Other assets
    
    
    142
    
    
    
    14,105
    
    
    
    
    
    
    
    6,298
    
    
    
    
    
    
    
    20,545$
    250,654
    
    
    $
    553,073
    
    
    $
    9,571
    
    
    $
    366,018
    
    
    $
    (465,602
    )
    
    $
    713,714Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,262
    
    
    $
    
    
    
    $
    18,262Current maturities of
long-term debt
    
    
    
    
    
    
    1,202
    
    
    
    177
    
    
    
    417
    
    
    
    
    
    
    
    1,796Accounts payable
    
    
    
    
    
    
    2,811
    
    
    
    3
    
    
    
    19,910
    
    
    
    
    
    
    
    22,724Accrued liabilities
    
    
    453
    
    
    
    34,138
    
    
    
    68
    
    
    
    56,983
    
    
    
    
    
    
    
    91,642Intercompany payables
    
    
    144,336
    
    
    
    (206,293
    )
    
    
    12,380
    
    
    
    49,577
    
    
    
    
    
    
    
    Total current liabilities
    
    
    144,789
    
    
    
    (168,142
    )
    
    
    12,628
    
    
    
    145,149
    
    
    
    
    
    
    
    134,424Long-term debt
    
    
    
    
    
    
    446,950
    
    
    
    255
    
    
    
    3,042
    
    
    
    
    
    
    
    450,247Deferred income taxes
    
    
    
    
    
    
    23,753
    
    
    
    
    
    
    
    
    
    
    
    (2,043
    )
    
    
    21,710Minority interest in subsidiaries.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,467
    
    
    
    
    
    
    
    1,467Preferred shares subject to
mandatory redemption
    
    
    41,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,483Total liabilities
    
    
    186,272
    
    
    
    302,561
    
    
    
    12,883
    
    
    
    149,658
    
    
    
    (2,043
    )
    
    
    649,331Total stockholders equity
    
    
    64,382
    
    
    
    250,512
    
    
    
    (3,312
    )
    
    
    216,360
    
    
    
    (463,559
    )
    
    
    64,383$
    250,654
    
    
    $
    553,073
    
    
    $
    9,571
    
    
    $
    366,018
    
    
    $
    (465,602
    )
    
    $
    713,714
 20




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##### Table of Contents



Successor
Condensed Consolidating Balance Sheets
As of September 30, 2003 Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    18,669
    
    
    $
    906
    
    
    $
    17,249
    
    
    $
    
    
    
    $
    36,824Accounts receivable
    
    
    
    
    
    
    42,190
    
    
    
    3,430
    
    
    
    105,958
    
    
    
    
    
    
    
    151,578Inventories
    
    
    
    
    
    
    177,627
    
    
    
    8,042
    
    
    
    165,968
    
    
    
    
    
    
    
    351,637Prepaid expenses and other
current assets
    
    
    
    
    
    
    1,997
    
    
    
    
    
    
    
    2,453
    
    
    
    
    
    
    
    4,450Total current assets
    
    
    
    
    
    
    240,483
    
    
    
    12,378
    
    
    
    291,628
    
    
    
    
    
    
    
    544,489Property, plant and equipment, net
    
    
    
    
    
    
    33,307
    
    
    
    88
    
    
    
    36,397
    
    
    
    
    
    
    
    69,792Investment in consolidated
subsidiaries
    
    
    268,653
    
    
    
    193,083
    
    
    
    
    
    
    
    
    
    
    
    (461,736
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    47,372
    
    
    
    
    
    
    
    25,637
    
    
    
    
    
    
    
    73,009Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,006
    
    
    
    (2,006
    )
    
    
    Other assets
    
    
    159
    
    
    
    13,468
    
    
    
    
    
    
    
    6,330
    
    
    
    
    
    
    
    19,957$
    268,812
    
    
    $
    527,713
    
    
    $
    12,466
    
    
    $
    361,998
    
    
    $
    (463,742
    )
    
    $
    707,247Current liabilitiesShort-term borrowings
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,031
    
    
    $
    
    
    
    $
    20,031Current maturities of
long-term debt
    
    
    
    
    
    
    2,141
    
    
    
    161
    
    
    
    420
    
    
    
    
    
    
    
    2,722Accounts payable
    
    
    
    
    
    
    26,457
    
    
    
    92
    
    
    
    23,731
    
    
    
    
    
    
    
    50,280Accrued liabilities
    
    
    8,581
    
    
    
    12,842
    
    
    
    89
    
    
    
    67,904
    
    
    
    
    
    
    
    89,416Intercompany payables
    
    
    137,006
    
    
    
    (200,558
    )
    
    
    13,490
    
    
    
    50,062
    
    
    
    
    
    
    
    Total current liabilities
    
    
    145,587
    
    
    
    (159,118
    )
    
    
    13,832
    
    
    
    162,148
    
    
    
    
    
    
    
    162,449Long-term debt
    
    
    
    
    
    
    394,859
    
    
    
    390
    
    
    
    3,289
    
    
    
    
    
    
    
    398,538Deferred income taxes
    
    
    
    
    
    
    23,318
    
    
    
    
    
    
    
    
    
    
    
    (2,006
    )
    
    
    21,312Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,723
    
    
    
    
    
    
    
    1,723Preferred shares subject to
mandatory redemption
    
    
    39,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,300Total liabilities
    
    
    184,887
    
    
    
    259,059
    
    
    
    14,222
    
    
    
    167,160
    
    
    
    (2,006
    )
    
    
    623,322Total stockholders equity
    
    
    83,925
    
    
    
    268,654
    
    
    
    (1,756
    )
    
    
    194,838
    
    
    
    (461,736
    )
    
    
    83,925$
    268,812
    
    
    $
    527,713
    
    
    $
    12,466
    
    
    $
    361,998
    
    
    $
    (463,742
    )
    
    $
    707,247
 21




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##### Table of Contents



Successor
Condensed Consolidating Statements of Operations
For the Nine Months Ended June 25, 2004
(Unaudited) Seminis
    
    
    
    
    
    SubsidiarySeminis
    
    Vegetable
    
    Subsidiary
    
    Non-(Parent)
    
    (Issuer)
    
    Guarantors
    
    Guarantors
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    203,351
    
    
    $
    5,440
    
    
    $
    276,571
    
    
    $
    (90,577
    )
    
    $
    394,785Cost of goods sold
    
    
    
    
    
    
    107,905
    
    
    
    5,745
    
    
    
    167,512
    
    
    
    (90,577
    )
    
    
    190,585Gross profit
    
    
    
    
    
    
    95,446
    
    
    
    (305
    )
    
    
    109,059
    
    
    
    
    
    
    
    204,200Operating expensesResearch and development
expenses
    
    
    
    
    
    
    18,952
    
    
    
    (2
    )
    
    
    17,851
    
    
    
    
    
    
    
    36,801Selling, general and
administrative expenses
    
    
    5
    
    
    
    63,740
    
    
    
    1,205
    
    
    
    79,957
    
    
    
    
    
    
    
    144,907Amortization of intangible assets
    
    
    
    
    
    
    4,134
    
    
    
    
    
    
    
    1,746
    
    
    
    
    
    
    
    5,880Total operating expenses
    
    
    5
    
    
    
    86,826
    
    
    
    1,203
    
    
    
    99,554
    
    
    
    
    
    
    
    187,588Gain on sale of assets
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3,620
    
    
    
    
    
    
    
    3,621Income (loss) from operations
    
    
    (5
    )
    
    
    8,621
    
    
    
    (1,508
    )
    
    
    13,125
    
    
    
    
    
    
    
    20,233Other income (expense)Interest Income
    
    
    
    
    
    
    294
    
    
    
    
    
    
    
    348
    
    
    
    
    
    
    
    642Interest expense
    
    
    (16
    )
    
    
    (26,880
    )
    
    
    (52
    )
    
    
    (2,057
    )
    
    
    
    
    
    
    (29,005
    )Interest expense from preferred
shares subject to mandatory
redemption
    
    
    (5,246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,246
    )Foreign currency gain (loss)
    
    
    (7
    )
    
    
    (67
    )
    
    
    
    
    
    
    4,486
    
    
    
    
    
    
    
    4,412Other, net
    
    
    
    
    
    
    (3,886
    )
    
    
    2
    
    
    
    (597
    )
    
    
    
    
    
    
    (4,481
    )Equity from subsidiary
    
    
    (16,855
    )
    
    
    6,771
    
    
    
    
    
    
    
    
    
    
    
    10,084
    
    
    
    (22,124
    )
    
    
    (23,768
    )
    
    
    (50
    )
    
    
    2,180
    
    
    
    10,084
    
    
    
    (33,678
    )Income (loss) before income
taxes
    
    
    (22,129
    )
    
    
    (15,147
    )
    
    
    (1,558
    )
    
    
    15,305
    
    
    
    10,084
    
    
    
    (13,445
    )Income tax expense
    
    
    
    
    
    
    (1,708
    )
    
    
    
    
    
    
    (6,976
    )
    
    
    
    
    
    
    (8,684
    )Net income (loss)
    
    
    (22,129
    )
    
    
    (16,855
    )
    
    
    (1,558
    )
    
    
    8,329
    
    
    
    10,084
    
    
    
    (22,129
    )Net income (loss) available for
common stockholders
    
    $
    (22,129
    )
    
    $
    (16,855
    )
    
    $
    (1,558
    )
    
    $
    8,329
    
    
    $
    10,084
    
    
    $
    (22,129
    )
 22




---



##### Table of Contents



Successor
Condensed Consolidating Statements of Operations
For the Nine Months Ended June 27, 2003
(Unaudited) SeminisSeminis
    
    Vegetable
    
    Subsidiary
    
    Subsidiary(Parent)
    
    (Issuer)
    
    Guarantors
    
    Non-Guarantors
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    197,050
    
    
    $
    4,674
    
    
    $
    250,846
    
    
    $
    (99,865
    )
    
    $
    352,705Cost of goods sold
    
    
    
    
    
    
    90,361
    
    
    
    3,679
    
    
    
    136,179
    
    
    
    (99,865
    )
    
    
    130,354Gross profit
    
    
    
    
    
    
    106,689
    
    
    
    995
    
    
    
    114,667
    
    
    
    
    
    
    
    222,351Operating expensesResearch and development
expenses
    
    
    
    
    
    
    18,580
    
    
    
    
    
    
    
    16,362
    
    
    
    
    
    
    
    34,942Selling, general and
administrative expenses
    
    
    
    
    
    
    61,266
    
    
    
    1,242
    
    
    
    75,514
    
    
    
    
    
    
    
    138,022Amortization of intangible assets
    
    
    
    
    
    
    8,619
    
    
    
    
    
    
    
    3,288
    
    
    
    
    
    
    
    11,907Total operating expenses
    
    
    
    
    
    
    88,465
    
    
    
    1,242
    
    
    
    95,164
    
    
    
    
    
    
    
    184,871Gain (loss) on sale of assets
    
    
    
    
    
    
    (580
    )
    
    
    712
    
    
    
    1,325
    
    
    
    
    
    
    
    1,457Income from operations
    
    
    
    
    
    
    17,644
    
    
    
    465
    
    
    
    20,828
    
    
    
    
    
    
    
    38,937Other income (expense)Interest Income
    
    
    
    
    
    
    232
    
    
    
    7
    
    
    
    387
    
    
    
    
    
    
    
    626Interest expense
    
    
    
    
    
    
    (20,073
    )
    
    
    (61
    )
    
    
    (4,227
    )
    
    
    
    
    
    
    (24,361
    )Foreign currency gain (loss)
    
    
    
    
    
    
    (1,286
    )
    
    
    
    
    
    
    1,466
    
    
    
    
    
    
    
    180Other, net
    
    
    
    
    
    
    144
    
    
    
    17
    
    
    
    (644
    )
    
    
    
    
    
    
    (483
    )Equity from subsidiary
    
    
    8,916
    
    
    
    16,538
    
    
    
    
    
    
    
    
    
    
    
    (25,454
    )
    
    
    Total other income (expense)
    
    
    8,916
    
    
    
    (4,445
    )
    
    
    (37
    )
    
    
    (3,018
    )
    
    
    (25,454
    )
    
    
    (24,038
    )Income (loss) before income
taxes
    
    
    8,916
    
    
    
    13,199
    
    
    
    428
    
    
    
    17,810
    
    
    
    (25,454
    )
    
    
    14,899Income tax expense
    
    
    
    
    
    
    (4,283
    )
    
    
    (80
    )
    
    
    (1,620
    )
    
    
    
    
    
    
    (5,983
    )Net income (loss)
    
    
    8,916
    
    
    
    8,916
    
    
    
    348
    
    
    
    16,190
    
    
    
    (25,454
    )
    
    
    8,916Preferred stock dividends
    
    
    (13,844
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,844
    )Net income (loss) available for
common stockholders
    
    $
    (4,928
    )
    
    $
    8,916
    
    
    $
    348
    
    
    $
    16,190
    
    
    $
    (25,454
    )
    
    $
    (4,928
    )
 23




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##### Table of Contents



Successor
Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended June 25, 2004
(Unaudited) SeminisSeminis
    
    Vegetable
    
    Subsidiary
    
    Subsidiary(Parent)
    
    (Issuer)
    
    Guarantors
    
    Non-Guarantors
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    149
    
    
    $
    766
    
    
    $
    (9,985
    )
    
    $
    
    
    
    $
    (9,070
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (2,950
    )
    
    
    (8
    )
    
    
    (4,070
    )
    
    
    
    
    
    
    (7,028
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    1,062
    
    
    
    
    
    
    
    4,056
    
    
    
    
    
    
    
    5,118Intercompany investment
    
    
    
    
    
    
    (120
    )
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (364
    )
    
    
    
    
    
    
    (402
    )
    
    
    
    
    
    
    (766
    )Net cash provided by investing
activities
    
    
    
    
    
    
    (2,372
    )
    
    
    (8
    )
    
    
    (296
    )
    
    
    
    
    
    
    (2,676
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    167,600
    
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    167,679Repayment of long-term debt
    
    
    
    
    
    
    (115,892
    )
    
    
    (119
    )
    
    
    (407
    )
    
    
    
    
    
    
    (116,418
    )Proceeds
from short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,127
    
    
    
    
    
    
    
    8,127Repayment of short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,779
    )
    
    
    
    
    
    
    (9,779
    )Net change in intercompany
account
    
    
    
    
    
    
    (8,377
    )
    
    
    (1,110
    )
    
    
    9,487
    
    
    
    
    
    
    
    Capital contributions/ dividends
received (paid) / other
    
    
    
    
    
    
    (625
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (624
    )Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    42,706
    
    
    
    (1,229
    )
    
    
    7,508
    
    
    
    
    
    
    
    48,985Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    542
    
    
    
    
    
    
    
    542Increase (decrease) in cash and
cash equivalents
    
    
    
    
    
    
    40,483
    
    
    
    (471
    )
    
    
    (2,231
    )
    
    
    
    
    
    
    37,781Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    18,669
    
    
    
    906
    
    
    
    17,249
    
    
    
    
    
    
    
    36,824Cash and cash equivalents,
end of period
    
    $
    
    
    
    $
    59,152
    
    
    $
    435
    
    
    $
    15,018
    
    
    $
    
    
    
    $
    74,605
 24




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##### Table of Contents



Successor
Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended June 27, 2003
(Unaudited) SeminisSeminis
    
    Vegetable
    
    Subsidiary
    
    Subsidiary(Parent)
    
    (Issuer)
    
    Guarantors
    
    Non-Guarantors
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    
    
    
    $
    (7,712
    )
    
    $
    152
    
    
    $
    3,970
    
    
    $
    
    
    
    $
    (3,590
    )Cash flows from investing activities:Purchases of fixed and intangible
assets
    
    
    
    
    
    
    (4,211
    )
    
    
    (45
    )
    
    
    (5,290
    )
    
    
    
    
    
    
    (9,546
    )Proceeds from disposition of
assets
    
    
    
    
    
    
    1,161
    
    
    
    1,851
    
    
    
    5,957
    
    
    
    
    
    
    
    8,969Other
    
    
    
    
    
    
    750
    
    
    
    
    
    
    
    (786
    )
    
    
    
    
    
    
    (36
    )Net cash provided by (used in)
investing activities
    
    
    
    
    
    
    (2,300
    )
    
    
    1,806
    
    
    
    (119
    )
    
    
    
    
    
    
    (613
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    686
    
    
    
    
    
    
    
    686Repayment of long-term debt
    
    
    
    
    
    
    (12,771
    )
    
    
    (104
    )
    
    
    (3,879
    )
    
    
    
    
    
    
    (16,754
    )Proceeds
from short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,974
    
    
    
    
    
    
    
    20,974Repayment of short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,804
    )
    
    
    
    
    
    
    (12,804
    )Net change in intercompany
account
    
    
    (100
    )
    
    
    10,992
    
    
    
    (1,823
    )
    
    
    (9,069
    )
    
    
    
    
    
    
    Capital contributions/ dividends
received (paid) / other
    
    
    
    
    
    
    7,539
    
    
    
    
    
    
    
    (7,539
    )
    
    
    
    
    
    
    Other
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Net cash provided by (used in)
financing activities
    
    
    
    
    
    
    5,760
    
    
    
    (1,927
    )
    
    
    (11,631
    )
    
    
    
    
    
    
    (7,798
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,326
    
    
    
    
    
    
    
    3,326Increase (decrease) in cash and
cash equivalents
    
    
    
    
    
    
    (4,252
    )
    
    
    31
    
    
    
    (4,454
    )
    
    
    
    
    
    
    (8,675
    )Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    24,063
    
    
    
    518
    
    
    
    12,224
    
    
    
    
    
    
    
    36,805Cash and cash equivalents,
end of period
    
    $
    
    
    
    $
    19,811
    
    
    $
    549
    
    
    $
    7,770
    
    
    $
    
    
    
    $
    28,130
 25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the
consolidated financial statements, including the notes thereto, appearing
elsewhere herein. The following discussion and analysis contains certain
forward-looking statements which are subject to certain risks,
uncertainties and contingencies, including, without limitation, those set
forth below, which could cause Seminis actual business, results of
operations or financial condition to differ materially from those expressed
in or implied by, such statements. RISK FACTORS Readers should be aware that there are various risk factors including, but
not limited to, those set forth below:  
    
    We have experienced losses in the past and we may experience losses in the future.
    
    Following the acquisition transactions, the Company has incurred substantially higher levels of debt.
    
    The Companys failure to accurately forecast and manage
inventory could result in an unexpected shortfall or surplus of
seeds, which could have a material adverse effect on our business,
results of operations or financial condition.
    
    The Company owns production and processing facilities in
numerous countries throughout the world and markets its products
worldwide. Accordingly, fluctuations in currency rates may affect
the Companys operating results and net income.
    
    The Companys business is seasonal.
    
    The Company continues to invest in research and development in
order to enable us to identify and develop new products to meet
consumer demands. In fiscal year 2003, our investment in research and
development represented 10.1% of net sales. Despite investments in
this area, our research and development may not result in the
discovery or successful development of new products, which will be
accepted by our customers.
    
    The Company may not have the ability to protect its
intellectual property due to the uncertainty of litigation and the
ineffectiveness of the laws in some of the countries that the Company
currently has operations, which could have a material adverse effect
on our business, results of operations or financial condition.
    
    A change in U.S. law protecting plant patents could limit or
take away patent protection for the Companys patented seeds, which
could have a material adverse effect on our business, results of
operations or financial condition.
    
    The Company faces substantial competition due to technological
advances by competitors such as other seed companies, pharmaceutical
and chemical companies and biotechnology companies. Many of these
companies have substantially greater resources than the Company. If a
competitor introduces a competitively successful product, it could
take years to develop a competitive seed variety, which could have a
material adverse effect on our business, results of operations or
financial condition.
    
    Extreme weather conditions, disease and pests can materially
and adversely affect the quality and quantity of seeds produced.
There can be no assurance that these factors will not affect a
substantial portion of the Companys production in any year and have
a material adverse effect on our business, results of operations or
financial condition.
    
    Defective seeds could result in claims and negative publicity,
and the insurance covering claims may become unavailable or be
inadequate, which could have a material adverse effect on our
business, results of operations or financial condition.
    
    The Companys worldwide operation and products are highly
regulated in the areas of safety and protection of human health and
the environment. Compliance with these health and safety regulations
can be costly.
    
    The United States imposes trade restrictions and economic
embargoes that prohibit, unless an exemption applies, United States
entities from engaging in commercial, financial or trade transactions
with certain foreign countries in which we have sales,
including Syria, Iran, Iraq, Sudan and Libya. While less than 2% of
our net seed sales result from sales in such countries, in the event
that certain exemptions from these embargoes for food and seeds that
we have relied on in the past are no longer available, our net seed
sales would be negatively impacted. 26




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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 Companys results for the three and nine months ended June 25, 2004
reflect the effects of the acquisition transactions and are presented on a
successor basis, whereas the results for the three and nine months ended June
27, 2003 are presented on a predecessor basis. The acquisition transactions
are accounted for under the purchase method of accounting. In accordance with
applicable accounting guidelines, the purchase price paid by Fox Paine for
Seminis common stock plus related purchase accounting adjustments are
pushed down and recorded in Seminis financial statements. The 75.1% of deemed assets acquired and liabilities assumed in connection
with the acquisition transactions were originally recorded at their estimated
fair market values based on an independent appraisal and 24.9% of 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
on-going carrying values of the net assets acquired: 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
    
    
    
    (102,582
    )
    
    
    64,361Goodwill
    
    
    106,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangibles
    
    
    51,533
    
    
    
    331,693
    
    
    
    12,852
    
    
    
    (271,536
    )
    
    
    73,009In-process R&D
    
    
    
    
    
    
    58,547
    
    
    
    
    
    
    
    (47,929
    )
    
    
    10,618Other long-term assets
    
    
    18,463
    
    
    
    13,859
    
    
    
    4,605
    
    
    
    (11,345
    )
    
    
    7,119Current liabilities
    
    
    (466,697
    )
    
    
    (354,905
    )
    
    
    (116,392
    )
    
    
    
    
    
    
    (471,297
    )$
    341,184
    
    
    $
    596,626
    
    
    $
    58,641
    
    
    $
    (433,392
    )
    
    $
    221,875
 The increase in inventory value will be expensed as the inventory is sold.
We expect that the inventories will be sold over a 16 month period from the
date of acquisition. The intangible assets will be amortized on a
straight-line basis over periods between five and forty years. In-process
research and development was immediately expensed in the results of the
successor entity for the one-day period ended September 30, 2003. The acquisition transactions resulted in the incurrence of additional
operating expenses in both the predecessor and successor companies. The main
components of these operating expenses were related to transaction fees for
obtaining an exchange and fairness opinion, and expenses for the buyout of
existing options, severance and restricted stock. OUTLOOK The change in the basis of assets and liabilities as a result of the
acquisition transactions will impact the future operating results of the
Company. During fiscal year 2004 and the first four months of 2005 gross
margins will be lower than historical levels because of the increased basis
in inventory. The increase in inventory basis of $73.2 million, resulting
from the purchase accounting adjustments made in connection with the
acquisition transactions, are reflected in the statement of operations
through decreased margins as the related inventory is sold. The Company
expects that the related inventory will be sold over the next seven months.
During fiscal year 2004 and over approximately eight additional years,
operating expenses will benefit from a reduction in depreciation expense of
approximately $7.3 million, which will reduce selling, general and
administrative expenses. These results are also expected to be adversely
impacted by increased interest expense as a result of higher average debt
levels outstanding coupled with higher interest rates. The Company expects continued growth in fiscal year 2004. The Company will
continue to execute its Value Capture Strategy and will focus on
opportunities, such as potential acquisitions, to achieve long term growth
targets. 27




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##### Table of Contents



Seasonality The seed business is highly seasonal. Generally, net sales are highest in
the second fiscal quarter due to increased demand from Northern Hemisphere
growers who plant seed in the early spring. Seminis recorded 33.3% of its
fiscal year 2003 net sales during its second fiscal quarter. Seminis
results in any particular quarter should not be considered indicative of
those to be expected for a full year. Results of Operations The table below sets forth Seminis results of operations data expressed as a
percentage of net sales. Three Months Ended

    
    Nine Months EndedSuccessor
    

    Predecessor
    
    Successor
    

    PredecessorJune 25,
    

    June 27,
    
    June 25,
    

    June 27,2004
    

    2003
    
    2004
    

    2003(Unaudited)

    
    (Unaudited)Net Sales
    
    
    100.0
    %
    

    
    100.0
    %
    
    
    100.0
    %
    

    
    100.0
    %Gross margin
    
    
    50.8
    
    

    
    62.8
    
    
    
    51.7
    
    

    
    63.0Research and development expenses
    
    
    11.3
    
    

    
    11.1
    
    
    
    9.3
    
    

    
    9.9Selling, general and administrative expenses
    
    
    41.2
    
    

    
    41.3
    
    
    
    36.7
    
    

    
    39.1Amortization of intangible assets
    
    
    1.7
    
    

    
    3.6
    
    
    
    1.5
    
    

    
    3.4Total operating expenses
    
    
    54.2
    
    

    
    56.0
    
    
    
    47.5
    
    

    
    52.4Gain on sale of fixed assets
    
    
    0.8
    
    

    
    0.3
    
    
    
    0.9
    
    

    
    0.4Income (loss) from operations
    
    
    (2.6
    )
    

    
    7.1
    
    
    
    5.1
    
    

    
    11.0Interest expense, net
    
    
    (10.4
    )
    

    
    (7.8
    )
    
    
    (8.5
    )
    

    
    (6.7
    )Other non-operating expense, net
    
    
    (0.8
    )
    

    
    (0.7
    )
    
    
    
    
    

    
    (0.1
    )Income (loss) before income taxes
    
    
    (13.8
    )
    

    
    (1.4
    )
    
    
    (3.4
    )
    

    
    4.2Income tax expense
    
    
    (1.5
    )
    

    
    (1.6
    )
    
    
    (2.2
    )
    

    
    (1.7
    )Net income (loss)
    
    
    (15.3
    )%
    

    
    (3.0
    )%
    
    
    (5.6
    )%
    

    
    2.5
    %
 Three Months Ended June 25, 2004 Compared with Three Months Ended June 27,
2003 Net Sales Net sales increased 3.0% to $116.5 million for the three months ended June
25, 2004 compared to $113.1 million for the three months ended June 27, 2003.
The result was partially due to $2.8 million of positive impact of currency
fluctuations relating to the strengthening of the Euro and South Korean Won
versus the U.S. Dollar during the third quarter of fiscal year 2004 compared
to the same period in the prior year. In constant dollars stated at monthly
average exchange rates for the third quarter of fiscal year 2003 and
excluding sales from non-core businesses, seed sales would have increased
0.5% to $110.3 million for the third quarter of fiscal year 2004 from $109.8
million in third quarter of fiscal year 2003. The increase was primarily a
result of price increases implemented around October 2003 and the
availability of high-demand seed. Geographically, the sales increases were
primarily in the Americas, Asia Pacific and West Asia with gains in broccoli,
pepper, spinach and onion which was partially offset by sales decrease in
South American and Europe. Gross Profit Gross profit decreased 16.7% to $59.1 million for the three months ended June
25, 2004 from $71.0 million for the three months ended June 27, 2003. Gross
margin percentage decreased to 50.8% for the three months ended June 25, 2004
from 62.8% for the three months ended June 27, 2003. The decrease was
primarily due to amortization expense of $16.5 million of inventory step-up
under purchase accounting treatment for the acquisition transactions, which
had a negative impact of 14.1% to the Companys gross margin. This non-cash
charge will continue to have a negative impact on the gross profit for
approximately the next seven months. Research and Development Expenses Research and development expenses increased 4.8% to $13.2 million for the
three months ended June 25, 2004 from $12.6 million for the three months
ended June 27, 2003. This increase was primarily the result of cost of
living adjustments, $0.3 million of currency fluctuations from research and
development expenses in Europe and South Korea in the three months of fiscal
year 2004, offset by $0.6 million of lower depreciation expense related to
the impact of the negative goodwill allocation as part of the acquisition
transaction. As a percentage to sales, research and development expenses
for the three months ended June 25, 2004 increased to 11.3% from 11.1% in the
same period last year. 28




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##### Table of Contents



Selling, General and Administrative Expenses Selling, general and administrative expenses increased 2.8% to $48.0 million
for the three months ended June 25, 2004 from $46.7 million for the three
months ended June 27, 2003. The increase was primarily due to cost of living
adjustments, variable expenses associated with sales, $1.1 million of
currency exchange impact on European and South Korean expenses, $1.1 million of management fee expense, and $0.3 million of non-cash stock based
compensation expense, offset by $1.2 million of lower depreciation expense
related to the impact of the negative goodwill allocation as part of the
acquisition transaction, $1.2 million of expenses related to the fairness
opinion of the merger transaction and an additional $2.8 million of severance
expense in the prior year. As a percentage to net sales, selling, general
and administrative expenses for the three months ended June 25, 2004 was
41.2%, which was consistent with 41.3% in the same period last year. Amortization of Intangible Assets Amortization of intangible assets decreased 49.5% to $2.0 million for the
three months ended June 25, 2004 from $4.0 million for the three months June
27, 2003. The decrease was due to the purchase accounting impact to the
intangible assets basis and amortization period, resulting in a lower
amortization in the current period. Gain on Sale of Fixed Assets Both the gain of $1.0 million for the three months ended June 25, 2004 and
$0.4 million for the three months ended June 27, 2003, respectively,
resulted primarily from fixed asset sales of our South Korean subsidiary. Interest Expense, Net Interest expense, net, increased 37.0% to $12.1 million for the three months
ended June 25, 2004 from $8.8 million for the three months ended June 27,
2003. The increase was primarily due to higher debt levels and interest of
PIK Preferred Stock. Other Non-Operating Expense, Net We had other non-operating expense, including foreign currency gain (loss)
and minority interest, net, of $0.9 million for the three months ended June
25, 2004 as compared to other non-operating expense, net, of $0.8 million for
the three months ended June 27, 2003. Other non-operating expense, net, for
the three months ended June 25, 2004 primarily consisted of foreign currency
loss of $0.3 million, minority interest provision of $0.5 million and other
expense of $0.2 million. The foreign currency loss was primarily due to the
effect of the weakening of the Indian Rupee and Brazilian Real during the
quarter on U.S. dollar based intercompany payables at subsidiaries in India
and Brazil. Other non-operating expense, net, for the three months ended June
27, 2003, primarily consisted of $0.5 million of non-operating losses from
several subsidiaries, $0.4 million of minority interest provision, offset by
$0.2 million of foreign currency gain resulting from currency fluctuation of
a U.S. dollar denominated loan held in the Netherlands. Income Tax Expense Income tax expense was $1.8 million for the three months ended June 25, 2004
and June 27, 2003, with pre-tax loss of $16.0 million and $1.5 million,
respectively. The variation in income tax rate was primarily due to the
amount and mix of worldwide income at Seminis subsidiaries. 29




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Nine Months Ended June 25, 2004 Compared with Nine Months Ended June 27, 2003 Net Sales Net sales increased 11.9% to $394.8 million for the nine months ended June
25, 2004 compared to $352.7 million for the nine months ended June 27, 2003.
The result was partially due to $19.2 million of positive impact of currency
fluctuations relating to the strengthening of the Euro and South Korean Won
versus the U.S. Dollar during the nine months of fiscal year 2004 compared to
the same period in the prior year. In constant dollars stated at monthly
average exchange rates for the nine months of fiscal year 2003 and excluding
sales from non-core businesses, seed sales would have increased 6.4% to
$362.4 million for the nine months of fiscal year 2004 from $340.6 million in
the nine months of fiscal year 2003. The increase was primarily a result of
price increases implemented around October 2003 and the availability of
high-demand seed. Geographically, sales in all regions increased, which
included gains in broccoli, carrot, pepper, bean, spinach, onion and hybrid
tomato sales. The Companys business is subject to seasonal fluctuations
and, therefore, the sales for the nine months of a fiscal year are not
necessarily indicative of those to be expected in any other interim period or
for a fiscal year as a whole. Gross Profit Gross profit decreased 8.2% to $204.2 million for the nine months ended June
25, 2004 from $222.4 million for the nine months ended June 27, 2003. Gross
margin percentage decreased to 51.7% for the nine months ended June 25, 2004
from 63.0% for the nine months ended June 27, 2003. The decrease was
primarily due to the amortization of $44.9 million of inventory step-up,
under purchase accounting treatment related to the acquisition transactions,
which had a negative impact of 11.4% on the Companys gross margin. This
non-cash charge will continue to have a negative impact on the gross profit
for approximately the next seven months. Research and Development Expenses Research and development expenses increased 5.3% to $36.8 million for the
first nine months ended June 25, 2004 from $34.9 million for the nine months
ended June 27, 2003. This increase was primarily the result of cost of
living adjustments, $1.8 million of currency fluctuations from research and
development expenses in Europe and South Korea in the nine months of fiscal
year 2004, offset by $1.8 million of lower depreciation expense related to
the impact of the negative goodwill allocation as part of the acquisition
transactions. As a percentage to sales, research and development expenses
for the nine months ended June 25, 2004 decreased to 9.3% from 9.9% in the
same period last year. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 5.0% to $144.9 million
for the nine months ended June 25, 2004 from $138.0 million for the nine
months ended June 27, 2003. The increase was primarily due to cost of living
adjustments, variable expenses associated with sales, $6.6 million of
currency exchange impact on European and South Korean expenses, $3.5 million of
management fee expense, and $0.8 million of non-cash stock based
compensation expense, offset by $3.7 million of lower depreciation expense
related to the impact of the negative goodwill allocation as part of the
acquisition transactions, $2.4 million of expenses related to a fairness
opinion given in connection with the acquisition transactions and an
additional $6.2 million of severance expense in the prior year. As a
percentage to sales, selling, general and administrative expenses for the
nine months ended June 25, 2004 decreased to 36.7% from 39.1% in the same
period last year. Amortization of Intangible Assets Amortization of intangible assets decreased 50.6% to $5.9 million for the
nine months ended June 25, 2004 from $11.9 million for the nine months June
27, 2003. The decrease was due to the purchase accounting impact to the
intangible assets basis and amortization period, resulting in a lower
amortization in the current period. Gain on Sale of Fixed Assets Both the gain of $3.6 million and $1.5 million for the nine months ended June
25, 2004 and June 27, 2003, respectively, resulted primarily from fixed asset
sales of our South Korean subsidiary. 30




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Interest Expense, Net Interest expense, net, increased 41.6% to $33.6 million for the nine months
ended June 25, 2004 from $23.7 million for the nine months ended June 27,
2003. The increase was primarily due to higher debt levels and interest on
the PIK Preferred Stock. Other Non-Operating Expense, Net We had other non-operating expense, including foreign currency gain and
minority interest, net, of $0.1 million and $0.3 million for the nine months
ended June 25, 2004 and June 27, 2003, respectively. Other non-operating
expense, net, for the nine months ended June 25, 2004 primarily consisted of
$3.8 million write-down of deferred loan fees resulting from the refinancing
of the Companys term loan in January 2004, $0.6 million of minority interest
provision, offset by $4.4 million of foreign currency gain. The foreign
currency gain was primarily due to the effect of the strengthening of the
Euro on a U.S. dollar based intercompany loan at a European subsidiary. Other
non-operating expense of $0.3 million, net, for the nine months ended June
27, 2003, primarily consisted of non-operating losses from subsidiaries in
the United States, Guatemala, Chile, Brazil, and Italy. Income Tax Expense Income tax expense was $8.7 million for the nine months ended June 25, 2004
compared to an income tax expense of $6.0 million for the nine months ended
June 27, 2003. The increase in income tax expense was primarily due to the
amount and mix of worldwide income at Seminis subsidiaries. Liquidity and Capital Resources In connection with the acquisition transactions, the Company became a
privately held company, acquired all of its publicly held shares of Class A
common stock, 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 which was outstanding at June 25, 2004 and
September 30, 2003, 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 $9.1 million in cash flow during the nine
months ended June 25, 2004 compared to $3.6 million utilized during the same
period in the prior fiscal year. The increase in cash utilization was
primarily due to approximately $11.8 million of acquisition transaction
related costs that were accrued at September 30, 2003 but subsequently
paid during the nine months ended June 25, 2004. Cash flow was also impacted
in the nine months ended June 25, 2004 by a $4.8 million prepayment of a
management fee to be amortized over fiscal year 2004, which was paid in
accordance with the acquisition transactions purchase agreement.
Additionally, the increase in cash utilization was due to approximately $6.7
million in transaction fees that were paid in association with the January
2004 senior subordinated note issuance. Cash flows from investments Capital expenditures decreased to $7.0 million for the nine months ended June
25, 2004, from $9.5 million in the same period of the prior fiscal year.
Other investing activities for the nine months ended June 25, 2004 included
$5.1 million from proceeds from the sale of assets compared to $9.0 million
in the prior fiscal year. The decrease in proceeds during the nine months
ended June 25, 2004 was primarily due to higher asset sales in our South
Korean subsidiary in the prior year. 31




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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 June 25, 2004 was $470.3 million, of
which $89.3 million were borrowings under the Companys term loan, $342.0
million were borrowings under our senior 10 1/4% subordinated notes (amount
including $12.0 million of remaining premium balance, which will be amortized
over the life of the loan and reduces interest expense), $17.4 million, $1.3
million, $0.5 million and $19.8 million were borrowings by its United States,
Spanish, French and South Korean subsidiaries, respectively. The Company
also has $41.5 million of preferred shares subject to mandatory redemption
(see Note 11 to our consolidated financial statements for further description of the preferred shares). As of June 25,
2004, the Company has cash and cash equivalents of $74.6 million. Going forward, the Companys principal source of liquidity will be cash flow
generated from operations, borrowings under its senior secured credit
facility and additional capital infusion. The Companys principal uses of
cash will be to meet debt service requirements, finance capital expenditures
and provide working capital. Based on the current level of operations,
management believes that remaining cash on hand, cash flow from operations
and available borrowings under its revolving credit portion of the senior
secured credit facility will enable the Company to meet its working capital,
capital expenditure, debt service and other funding requirements for at least
the next 12 months. Our exposure to foreign currency fluctuations is primarily due to foreign
currency gains or losses that occur from intercompany receivables and
payables between Seminis Vegetable Seeds Inc. and its foreign subsidiaries. The Company entered into an interest rate swap agreement in September 2003.
The purpose of the swap agreement is to hedge approximately $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. 32




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Recent Accounting Pronouncements In December 2003, the FASB reissued SFAS No. 132, Employers Disclosures
about Pensions and Other Postretirement Benefits, an amendment of FASB
Statements No. 87, 88, and 106. This Statement revises employers
disclosures about pension plans and other postretirement benefit plans. It
does not change the measurement or recognition of those plans required by
SFAS No. 87, Employers Accounting for Pensions, SFAS No. 88, Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits, and SFAS No. 106, Employers Accounting for
Postretirement Benefits Other Than Pensions. This Statement retains the
disclosure requirements contained in the original SFAS No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits. The revised
Statement also requires additional disclosures about the assets, obligations,
cash flows, and net periodic benefit cost of defined benefit pension plans
and other defined benefit postretirement plans. The provisions of the
original SFAS No. 132 will remain in effect until the provisions of this
Statement are adopted. Certain new provisions are effective for financial
statements with fiscal years ending after December 15, 2003, while other
provisions are effective for fiscal years ending after June 15, 2004. The
interim period disclosures are effective for interim periods beginning after
December 15, 2003. See Note 8 to our consolidated financial
statements Pensions and Other Postretirement Benefits,
for disclosures required under the revised SFAS No. 132. In December 2003, the Financial Accounting Standards Board (FASB) reissued
Interpretation No. 46, Consolidation of Variable Interest Entities  an
Interpretation of ARB No. 51. The Interpretation clarifies the application
of Accounting Research Bulletin No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not have the characteristics
of a controlling financial interest or do not have sufficient equity risk for
the entity to finance its activities without additional subordinated
financial support. The provisions of this Interpretation are effective for
the Company for interim periods ending after March 15, 2004. The adoption of
this Interpretation has not had a significant impact on the Companys
financial results of operations and financial position. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This Statement requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). The provisions of this Statement are effective for financial
instruments entered into or modified after May 31, 2003, and otherwise are
effective at the beginning of the first interim period beginning after June
15, 2003. The Company adopted this Statement as of June 28, 2003 and has
classified its newly issued paid in kind preferred stock (PIK Preferred
Stock) as a liability. In April 2003, the FASB issued SFAS No. 149, Amendment to Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) used for hedging activities under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
The provisions of this Statement are effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The adoption of this Statement did not have a significant
impact on the Companys financial condition or results of operations. In January 2003, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No.
123. SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. It also requires disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS No.
148 is effective for annual and interim periods beginning after December 15,
2002. The Company has adopted FASB Statement No. 123 under the provisions of
SFAS No. 148 on October 1, 2003. 33




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Item 3. Quantitative and Qualitative Disclosures about Market Risk Our market risk disclosures set forth in the Form S-4, as filed with the SEC
on March 11, 2004 have not changed significantly through the nine months ended
June 25, 2004. 
 Item 4. Controls and Procedures  (a)
    
    Evaluation of disclosure controls and procedures.The Companys
chief executive officer and chief financial officer have evaluated the
effectiveness of the Companys disclosure controls and procedures as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934 (the Exchange Act) as of the end of the period covered by
this quarterly report (the Evaluation Date). Based on such
evaluation, they have concluded that, as of the Evaluation Date, the
Companys disclosure controls and procedures were effective to ensure
that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules
and forms of the Securities and Exchange Commission.(b)
    
    Changes in internal controls.There was no change in the Companys
internal controls over financial reporting during the period covered by
this quarterly report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting. 34




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PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings As part of the formation of LSL PlantScience, a joint venture between Seminis
and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements
between LSL Biotechnologies and a third party. These agreements contain
provisions that permanently restrict the third party from engaging in the
development or marketing of open field tomato seeds having long-shelf-life
characteristics in certain areas in the world, including North America. In
September 2000, the Antitrust Division of the U.S. Department of Justice
filed suit in the U.S. District Court for the District of Arizona against LSL
PlantScience, LSL Biotechnologies and Seminis to delete these restrictive
provisions. On March 29, 2002, the U.S. District Court dismissed without
prejudice the action against LSL PlantScience, LSL Biotechnologies and
Seminis. The U.S. Department of Justice has appealed this ruling and the
appeal is pending in the Ninth Circuit Court of Appeals. In January 2002, melon growers in Costa Rica notified us that our Dorado
melon seeds were infected with Watermelon Fruit Blotch. Growers who purchased
the infected Seminis seeds and growers whose crops were infected by the
bacteria that spread from crops grown with the infected Seminis seeds have
claimed damages against us. The claims related to those growers who purchased
Seminis seeds have been settled for approximately $5.8 million, of which
approximately $2.6 million was recovered under our errors and omissions
insurance policy and the remainder of the settlement was paid by us by July
2002. The claims related to the growers with infected crops total
approximately $4.7 million and we believe these claims are covered under our
general liability insurance policy. We have finalized settlement of all of
these claims. We have settled the coverage issue with our general liability
insurance carrier to our satisfaction, and proceedings against them have been
dismissed. We are now pursuing coverage with our excess general liability
insurer, who has informally denied coverage, and we are in the midst of
settlement negotiations with them. In early 2000, we filed suit against Dietrich Schmidt, the former president
of Seminis and the current president of United Genetics, a competitor of
ours, United Genetics, and two former Seminis breeders, Ken Owen and Wei
Ouyang, for trade secret misappropriation and breach of contract. Mr.
Schmidt filed a counterclaim for defamation against us. We were unsuccessful
on our claims for trade secret misappropriation and breach of contract, and
Mr. Schmidt was successful on his counterclaim with the court awarding him $1
in nominal damages. The count subsequently awarded Messrs. Schmidt, Owen and
Ouyang their attorneys fees. We have appealed certain aspects of the
judgment, including the fee award. A decision on the appeal was handed down
in December, 2003. The California Court of Appeal partially affirmed the
lower courts ruling, and has partially reversed and remanded the case to the
lower court for a re-determination of costs and fees, specifying that certain
attorneys fees and costs previously awarded to Messrs. Schmidt, Owens and
Ouyang should not be payable by Seminis. Seminis recently settled this
matter and all litigation, appeals, and motions have been dismissed. 35




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On December 17, 2002 and January 4, 2003, four purported class action
lawsuits were filed relating to the acquisition transactions. Three of these
actions  Garry Firth v. Alfonso Romo Garza, et al., Civil Action No. 20085,
Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No. 20097 and Pablo
Herranz v. Seminis, Inc., et al., Civil Action No. 20105  were filed in the
Delaware Court of Chancery (New Castle County), while the fourth, Mark
Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California
Superior Court (Ventura County). Since that time, a fifth case, Haven Capital
Management v. Alfonso Romo Garza, et al., Civil Action No. 20140 has also
been filed in Delaware. In February 2003, the Firth, Pozniak, Herranzand
Haven Capitalcases were consolidated into one proceeding entitled In re
Seminis, Inc. Shareholders Litigation, Consolidated C.A. No. 20140-NC, and
the Haven Capitalcomplaint was designated as the operative complaint in the
consolidated lawsuit. That complaint names as defendants Savia, the Company
and its Directors. The Rosales(California) complaint names as defendants the
Company and its Directors. Both the Delaware consolidated action and the
Rosalesaction purport to be brought on behalf of Company common stockholders
or their successors. Both of these actions  which were brought prior to the
public announcement of the Company entering into the acquisition transactions
agreements  allege that the acquisition transactions, when consummated,
would provide insufficient consideration to the Companys common stockholders
and allege that the defendants breached their fiduciary duties in connection
with the acquisition transactions. The complaints sought a preliminary and
permanent injunction to enjoin the acquisition transactions and, since the
acquisition transactions have been consummated, rescission and damages. On
September 24, 2003, the parties reached a memorandum of understanding that
settled all of the alleged claims. The parties have finalized the settlement
agreement and the California court preliminarily approved the terms of the
settlement in April 2004. A hearing for final approval of the settlement was
held by the California court in July, 2004, and approval of the settlement
was granted, and we expect to have all actions in California and Delaware
dismissed in the very near future. The proposed settlement does not affect
the terms of the acquisition transactions set forth herein. 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 batch
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. Seminis is currently involved in investigating
each of the growers complaints, and will work diligently to resolve these
issues in a commercially reasonable manner. We are involved from time to time as a defendant in various other lawsuits
arising in the normal course of business. We believe that no current claims,
individually or in the aggregate, will have a material adverse effect on our
business, results of operations or financial condition. 
 Item 6. Exhibits and Reports on Form 8-K The Company did not file any reports on Form 8-K for the quarter ended June
25, 2004. 36




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Exhibit Index ExhibitNumber
    
    Description(a) 1
    
    Form of Underwriting Agreement(c) 2.1
    
    Merger Agreement by and between Seminis, Inc., an Illinois corporation and Seminis, Inc., a Delaware corporation(k) 2.2
    
    Agreement and Plan of Merger by and among Seminis, Inc., Seminis Acquisition LLC, Seminis Merger Corp., and Fox Paine & Co., LLC,
dated as of May 30, 2003.(k) 2.3
    
    Stock Purchase Agreement by and among Fox Paine Seminis Holdings, LLC, Banca Afirme, S.A., 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.(k) 2.4
    
    Amended and Restated Exchange Agreement by and between Seminis, Inc. and Savia, S.A. de C.V. dated as of May 30, 2003.(k) 2.5
    
    Contribution Agreement by and among Seminis Acquisition LLC, Savia, S.A. de C.V., Banca Afirme, S.A., Institucion de Banca Multiple,
Afirme Grupo Financiero, as Trustee, under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de
Administracion y Pago Numero 167-5), Conjunto Administrativo Integral, S.A. de C.V., Desarrollo Consolidado de Negocios, S.A. de C.V.,
Emprima, S.A. de C.V., Park Financial Group, Ltd (BVI), Alfonso Romo Garza and Certain Members of Seminis and Savia Management, dated
as of May 30, 2003.(l) 2.6
    
    Amendment to Contribution Agreement, dated as of September 29, 2003, by and among Seminis Acquisition LLC, Savia, S.A. de C.V., Banca
Afirme, S.A., Institucion de Banca Multiple, Afirme Grupo Financiero, as Trustee, Under the Irrevocable Administration and Payment
Trust Number 167-5 (Fideicomiso Irrevocable de Administracion y Pago Numero 167-5), Conjunto Administrativo Integral, S.A. de C.V.,
Desarrollo Consolidado de Negocios, S.A. de C.V., Emprima, S.A. de C.V., Park Financial Group, Ltd (BVI), Alfonso Romo Garza and
Certain Members of Seminis and Savia Management.(l) 3.1
    
    Amended and Restated Certificate of Incorporation(c) 3.2
    
    Certificate of Designations of Class A Mandatorily Redeemable Preferred Stock and Class B Mandatorily Redeemable Preferred Stock of
Seminis, Inc.(c) 3.3
    
    Certificate of Designations of Class C Redeemable Preferred Stock of Seminis, Inc.(l) 3.4
    
    By-Laws(l) 3.5
    
    Certificate of Designation of Preferences and Rights of Class C Redeemable Preferred Stock of Seminis, Inc.(c) 4.1
    
    Form of Class A Common Stock Certificate(a) 4.2
    
    Registration Rights Agreement by and among Seminis, Inc. and certain shareholders of Seminis, dated October 1, 1995(k) 4.3
    
    Indenture, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc.,
PGI Alfalfa, Inc., and Baxter Seed Co., Inc. and Wells Fargo Bank, National Association for the 10 1/4% Senior Subordinated Notes due
2013.(k) 4.4
    
    Registration Rights Agreement, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis Inc., Petoseed
International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc. and Citigroup Global Markets Inc., CIBC World Markets Corp., Harris
Nesbitt Corp., and Rabo Securities USA, Inc.(k) 4.5
    
    Form of Global Note for 10 1/4% Senior Subordinated Notes due 2013 of Seminis Vegetable Seeds, Inc. (contained as an exhibit to
Exhibit 4.3 hereto).(l) 4.6
    
    Form of Exchange Agent Agreement by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc., PGI Alfalfa,
Inc., Baxter Seed Co., Inc. and Wells Fargo Bank, National Association.(l) 4.7
    
    Registration Rights Agreement, dated as of January 23, 2004, by and among Seminis Vegetable Seeds, Inc., Seminis Inc., Petoseed
International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc. and Citigroup Global Markets Inc.(c) 5
    
    Opinion of Milbank, Tweed, Hadley & McCloy LLP(a) 10.1
    
    Seminis, Inc. 1998 Stock Option Plan(b) 10.2
    
    Amended and Restated Seminis, Inc. 1998 Stock Option Plan(a) 10.3
    
    Share Subscription Agreement by and between Seminis, Inc. and Hungnong Seed Co., Ltd., dated June 12, 1998(c) 10.4
    
    Form of New Credit Facility among Seminis, Inc, Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and
Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent and the Lenders from
time to time parties thereto, as lenders, dated as of June 28, 1999(c) 10.5
    
    Form of Letter Agreement between Savia, S.A. de C.V. and Seminis, Inc. dated as of June 21, 1999(d) 10.6
    
    Second Amendment and Waiver to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS
Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually
and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, Dated as of June 29, 2000, effective March 31,
2000(d) 10.7
    
    Security Agreement Re: Accounts, Inventory and General Intangibles among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland
B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as
Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of June 29, 2000(e) 10.8
    
    Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland
B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as
Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of September 30, 2000, effective September
30, 2000.(d) 10.9
    
    Extension of Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal,
individually and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of December 30, 2000,
effective December 30, 2000.(f) 10.10
    
    Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal,
individually and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of December 29, 2000,
effective December 29, 2000.(g) 10.11
    
    Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal,
individually and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of April 30, 2001,
effective April 30, 2001.(h) 10.12
    
    Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal,
individually and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of May 31, 2001,
effective May 31, 2001.
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ExhibitNumber
    
    Description(i) 10.13
    
    Revision to (h) 10.12(j) 10.14
    
    Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds,
Inc., SVS Holland B.V. as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal,
individually and as Syndication Agent and the Lenders from time to time parties thereto, as Lenders, dated as of December 31, 2002,
effective December 31, 2002.(k) 10.15
    
    New Senior Secured Credit Facility by and among Seminis, Vegetables Inc. as the borrower, Seminis, Inc. as the parent guarantor,
Citicorp North America, Inc. as administrative agent, CIBC World Markets Corp. and Rabobank International as co-documentation agents,
Harris Trust and Savings Bank as syndication agent and Citigroup Global Markets Inc. together with Harris Trust and Savings Bank as
joint lead arrangers and joint bookrunners consisting of a $60.0 million revolving loan and a $190.0 million term loan, dated as of
September 29, 2003.(l) 10.16
    
    Amended and Restated Stockholders Agreement, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis
Inc., Petoseed International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc., Citigroup Global Markets Inc., CIBC World Markets Corp.,
Harris Nesbitt Corp., and Rabo Securities USA, Inc.(k) 10.17
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Alfonso Romo.(k) 10.18
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bruno Ferrari.(k) 10.19
    
    Amendment, dated August 7, 2003, to the Employment Agreement, made May 30, 2003, between Seminis, Inc. and Bruno Ferrari.(k) 10.20
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Mateo Mazal.(k) 10.21
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bernardo Jimenez.(k) 10.22
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Gaspar Alvarez.(k) 10.23
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Jose Manuel Madero.(k) 10.24
    
    Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Charles Edward Green.(l) 10.25
    
    New Senior Secured Credit Facility by and among Seminis, Vegetables Inc. as the borrower, Seminis, Inc. as the parent guarantor,
Citicorp North America, Inc. as administrative agent, CIBC World Markets Corp. and 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, 2004.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Vice President, Finance and Worldwide Corporate Comptroller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Vice President, Finance and Worldwide Corporate Comptroller to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 (a)
    
    Incorporated by reference to Seminis Form S-1 filed on February 11, 1999.(b)
    
    Incorporated by reference to Seminis Amendment No. 2 to Form S-1 filed on
May 27, 1999.(c)
    
    Incorporated by reference to Seminis Amendment No. 3 to Form S-1 filed on
June 21, 1999.(d)
    
    Filed with the June 30, 2000 Form 10Q.(e)
    
    Filed with the September 30, 2000 Form 10K.(f)
    
    Filed with the December 30, 2000 Form 10Q.(g)
    
    Filed with the March 30, 2001 Form 10Q.(h)
    
    Filed with the June 29, 2001 Form 10Q.(i)
    
    Filed with the September 30, 2001 Form 10K.(j)
    
    Filed with the September 30, 2002 Form 10K.(k)
    
    Incorporated by reference to Seminis Form S-4 filed on November 14,
2003.(l)
    
    Incorporated by reference to Seminis Amendment No. 1 to Form S-4 filed
on March 11, 2004.
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Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. Date: August 9, 2004
    
    SEMINIS, INC./s/ Alfonso Romo GarzaAlfonso Romo GarzaChief Executive Officer(Principal Executive Officer)/s/ Gaspar Alvarez MartinezGaspar Alvarez MartinezVP Finance & Worldwide Corporate Comptroller(Principal Accounting Officer)
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