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AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 2003

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SECURITIES AND EXCHANGE COMMISSION



WASHINGTON, D.C. 20549



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FORM 10-Q



(Mark One)



xQUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE

THE SECURITIES ACT OF 1934



For the quarterly period ended March 31, 2003



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 333-81235



ROYSTER-CLARK, INC.

(Exact name of registrant
as specified in its charter)



|DELAWARE                                                      |  | 76-0329525                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdictionof incorporation or organization) |  | (I.R.S. EmployerIdentification No.)



1251
AVENUE OF THE AMERICASSUITE 900

NEW YORK, NEW YORK 10020

(212) 332-2965

(Address, including zip code, and telephone number, including

area code, of registrants
principal executive offices)



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 ̈



APPLICABLE ONLY TO CORPORATE
ISSUERS: Indicate the number of shares outstanding of each of the issuers classes of common stock as of the last practical date: Not Applicable



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ROYSTER-CLARK, INC.



FORM 10-Q



TABLE OF CONTENTS



|                                |  |                                                                                       |  | Page
|------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART 1.  FINANCIAL INFORMATION: |  |                                                                                      
|                               
|Item 1.                         |  | Financial Statements                                                                  |  |     
|                                |  | Condensed Consolidated Balance Sheets                                                 |  | 2   
|                                |  | Condensed Consolidated Statements of Operations                                       |  | 3   
|                                |  | Condensed Consolidated Statements of Cash Flows                                       |  | 4   
|                                |  | Notes to Condensed Consolidated Financial Statements                                  |  | 5   
|                               
|Item 2.                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12  
|                               
|Item 3.                         |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 17  
|                               
|Item 4.                         |  | Controls and Procedures                                                               |  | 18  
|                               
|PART 2.  OTHER INFORMATION:     |  |                                                                                      
|                               
|Item 6.                         |  | Exhibits and Reports on Form 8-K                                                      |  | 19  
|                               
|Signatures                      |  | 21                                                                                   
|                               
|Certifications                  |  | 22                                                                                   



FORWARD-LOOKING STATEMENTS



This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this
Report, the words estimate, project, anticipate, expect, intend, believe, hope, may and similar expressions, as well as will,
shall and other indications of future tense, are intended to identify forward-looking statements. Similarly, statements that describe the Companys future plans, objectives, targets or goals are also forward-looking statements. The
forward-looking statements are based on our current expectations and speak only as of the date made. These forward-looking statements involve known and unknown risks, uncertainties and other factors that in some cases have affected our historical
results and could cause actual results in the future to differ significantly from the results anticipated in forward-looking statements made in this Report. Important factors that could cause a material effect include, but are not limited to, (i)
changes in matters which affect the global supply and demand of fertilizer products, (ii) the volatility of the natural gas markets, (iii) a variety of conditions in the agricultural industry such as grain prices, planted acreage, projected grain
stocks, U.S. government policies, weather and changes in agricultural production methods, (iv) possible unscheduled plant outages and other operating difficulties, (v) price competition and capacity expansions and reductions from both domestic and
international producers, (vi) the relative unpredictability of national and local economic conditions within the markets we serve, specifically in light of the September 11, 2001 terrorist attacks and their related aftermath, (viii) environmental
regulations, (ix) other important factors affecting the fertilizer industry, (x) fluctuations in interest rates and (xi) other factors referenced in the Companys Reports and registration statements filed with the Securities and Exchange
Commission. You are cautioned not to place undue reliance on the forward-looking statements.



Few of the forward-looking statements in this Report deal with matters that are within our unilateral control. Acquisition, financing and other agreements and arrangements must be negotiated with
independent third parties and, in some cases, must be approved by governmental agencies. These third parties generally have interests that do not coincide with ours and may conflict with our interests. Unless the third parties and we are able to
compromise their various objectives in a mutually acceptable manner, agreements and arrangements will not be consummated.





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##### Table of Contents



PART
1.    FINANCIAL INFORMATION



ITEM
1.Financial Statements



ROYSTER-CLARK, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2003 AND DECEMBER 31, 2002

(Dollars in thousands)



|Assets                                                                                                                                       |  | March 31, 2003 |         |   | December 31, 2002 |        
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ----------------- | -------
|Current assets:                                                                                                                              |  |                |         |   |                   |        
|Cash                                                                                                                                         |  | $              | 526     |   |                   | 982    
|Trade accounts receivable, net of allowance for doubtful accounts of $6,158 and $6,118
at March 31, 2003 and December 31, 2002, respectively |  |                | 88,718  |   |                   | 96,177 
|Other receivables                                                                                                                            |  |                | 7,449   |   |                   | 36,653 
|Inventories                                                                                                                                  |  |                | 366,520 |   |                   | 252,435
|Prepaid expenses and other current assets                                                                                                    |  |                | 1,955   |   |                   | 2,326  
|Deferred income taxes                                                                                                                        |  |                | 7,623   |   |                   | 9,206  
|                                                                                                                                             |  |                |         |   |                   |        
|Total current assets                                                                                                                         |  |                | 472,791 |   |                   | 397,779
|Property, plant and equipment, net                                                                                                           |  |                | 178,761 |   |                   | 182,267
|Goodwill                                                                                                                                     |  |                | 16,540  |   |                   | 16,540 
|Deferred income taxes                                                                                                                        |  |                | 18,156  |   |                   | 7,373  
|Deferred financing costs, net                                                                                                                |  |                | 8,150   |   |                   | 8,400  
|Other assets, net                                                                                                                            |  |                | 5,518   |   |                   | 5,653  
|                                                                                                                                             |  |                |         |   |                   |        
|                                                                                                                                             |  | $              | 699,916 |   |                   | 618,012
|                                                                                                                                             |  |                |         |   |                   |        
|Liabilities and Stockholders Equity                                                                                                         |  |                |         |   |                   |        
|Current liabilities:                                                                                                                         |  |                |         |   |                   |        
|Current installments of long-term debt                                                                                                       |  | $              | 172     |   |                   | 172    
|Note payable                                                                                                                                 |  |                | 21,983  |   |                   | 21,740 
|Customer deposits                                                                                                                            |  |                | 139,971 |   |                   | 57,200 
|Accounts payable                                                                                                                             |  |                | 134,842 |   |                   | 82,303 
|Accrued expenses and other current liabilities                                                                                               |  |                | 29,502  |   |                   | 27,535 
|                                                                                                                                             |  |                |         |   |                   |        
|Total current liabilities                                                                                                                    |  |                | 326,470 |   |                   | 188,950
|Senior secured credit facility                                                                                                               |  |                | 102,518 |   |                   | 143,121
|10-1/4% First Mortgage Notes due 2009                                                                                                        |  |                | 200,000 |   |                   | 200,000
|Long-term debt, excluding current installments                                                                                               |  |                | 196     |   |                   | 201    
|Other long-term liabilities                                                                                                                  |  |                | 9,273   |   |                   | 9,463  
|                                                                                                                                             |  |                |         |   |                   |        
|Total liabilities                                                                                                                            |  |                | 638,457 |   |                   | 541,735
|                                                                                                                                             |  |                |         |   |                   |        
|Stockholders equity:                                                                                                                        |  |                |         |   |                   |        
|Common stock, no par value. Authorized 350,000 shares; 1 share issued and
outstanding                                                        |  |                |        |   |                   |       
|Additional paid-in capital                                                                                                                   |  |                | 88,599  |   |                   | 88,599 
|Accumulated deficit                                                                                                                          |  |                | (26,496 | ) |                   | (11,678
|Accumulated other comprehensive loss                                                                                                         |  |                | (644    | ) |                   | (644   
|                                                                                                                                             |  |                |         |   |                   |        
|Total stockholders equity                                                                                                                   |  |                | 61,459  |   |                   | 76,277 
|                                                                                                                                             |  |                |         |   |                   |        
|                                                                                                                                             |  | $              | 699,916 |   |                   | 618,012
|                                                                                                                                             |  |                |         |   |                   |        



See
accompanying notes to condensed consolidated financial statements.





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ROYSTER-CLARK, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003 AND 2002

(Dollars in thousands)



|                                                       |  | Three Months ended March 31, |        
|------------------------------------------------------ |  | ---------------------------- | -------
|                                                       |  | 2003                         |        
|Net sales                                              |  | $                            | 150,308
|Cost of sales                                          |  |                              | 127,413
|                                                       |  |                              |        
|Gross profit                                           |  |                              | 22,895 
|Selling, general and administrative expenses           |  |                              | 39,442 
|Loss on disposal of property, plant and equipment, net |  |                              | 326    
|                                                       |  |                              |        
|Operating loss                                         |  |                              | (16,873
|Interest expense                                       |  |                              | (7,043 
|                                                       |  |                              |        
|Loss before income taxes                               |  |                              | (23,916
|Income tax benefit                                     |  |                              | (9,198 
|                                                       |  |                              |        
|Net loss                                               |  | $                            | (14,718
|                                                       |  |                              |        







See accompanying notes to condensed consolidated financial
statements.



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2003 AND 2002

(Dollars in thousands)



|                                                                            |  | Three Months ended March 31, |         
|--------------------------------------------------------------------------- |  | ---------------------------- | --------
|                                                                            |  | 2003                         |         
|Cash flows from operating activities:                                       |  |                              |         
|Net loss                                                                    |  | $                            | (14,718 
|                                                                            |  |                              |         
|Adjustments to reconcile net loss to net cash used in operating
activities: |  |                              |         
|Provision for doubtful accounts                                             |  |                              | 432     
|Depreciation and amortization                                               |  |                              | 6,816   
|Loss on disposal of property, plant and equipment                           |  |                              | 326     
|Write-off of deferred financing costs                                       |  |                              | 227     
|Amortization of imputed interest                                            |  |                              | 243     
|Deferred income tax benefit                                                 |  |                              | (9,200  
|Changes in operating assets and liabilities increasing (decreasing)
cash:   |  |                              |         
|Trade accounts receivable                                                   |  |                              | 7,027   
|Other receivables                                                           |  |                              | 29,204  
|Inventories                                                                 |  |                              | (114,085
|Prepaid expenses and other current assets                                   |  |                              | 371     
|Other assets                                                                |  |                              | (159    
|Accounts payable                                                            |  |                              | 52,539  
|Accrued expenses and other current liabilities                              |  |                              | 1,967   
|Other long-term liabilities                                                 |  |                              | (190    
|                                                                            |  |                              |         
|Total adjustments                                                           |  |                              | (24,482 
|                                                                            |  |                              |         
|Net cash used in operating activities                                       |  |                              | (39,200 
|                                                                            |  |                              |         
|Cash flows from investing activities:                                       |  |                              |         
|Proceeds from sale of property, plant and equipment                         |  |                              | 736     
|Purchases of property, plant and equipment                                  |  |                              | (3,542  
|                                                                            |  |                              |         
|Net cash used in investing activities                                       |  |                              | (2,806  
|                                                                            |  |                              |         
|Cash flows from financing activities:                                       |  |                              |         
|Proceeds from senior secured credit facility                                |  |                              | 85,497  
|Payments on senior secured credit facility                                  |  |                              | (126,100
|Principal payments on long-term debt                                        |  |                              | (5      
|Dividend to Royster-Clark Group, Inc.                                       |  |                              | (100    
|Net increase in customer deposits                                           |  |                              | 82,771  
|Payment of deferred financing costs                                         |  |                              | (513    
|                                                                            |  |                              |         
|Net cash provided by financing activities                                   |  |                              | 41,550  
|                                                                            |  |                              |         
|Net decrease in cash                                                        |  |                              | (456    
|Cash at beginning of period                                                 |  |                              | 982     
|                                                                            |  |                              |         
|Cash at end of period                                                       |  | $                            | 526     
|                                                                            |  |                              |         
|Supplemental disclosure of cash flow information:                           |  |                              |         
|Cash paid during the period for interest                                    |  | $                            | 1,657   
|                                                                            |  |                              |         
|Cash paid during the period for income taxes                                |  | $                            | 315     
|                                                                            |  |                              |         



See
accompanying notes to condensed consolidated financial statements.



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(Dollars in thousands)



(1)    Description of Business and Basis of Presentation



Royster-Clark, Inc. (herein referred to as Royster-Clark or
the Company) is a retail and wholesale distributor of mixed fertilizer, fertilizer materials, seed, crop protection products and agronomic services to farmers, primarily in the East, South and Midwest regions of the United States. The Companys
operations consist of retail farm centers (Farmarkets), granulation, blending and seed processing plants, and a network of storage and distribution terminals and warehouses. In addition, the Company operates two nitrogen-manufacturing
plants that supply our distribution business with nitrogen fertilizer products.



The information presented as of March 31, 2003 and for the three month periods ended March 31, 2003 and 2002 is unaudited, and reflects all adjustments (consisting only of normal recurring adjustments)
which the Company considers necessary for the fair presentation of the Companys financial position as of March 31, 2003 and the results of its operations and its cash flows for the three month periods ended March 31, 2003 and 2002. The
December 31, 2002 balance sheet information was derived from the audited Consolidated Financial Statements for the year ended December 31, 2002.



The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally
accepted in the United States of America and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements for the
year ended December 31, 2002, which are included as part of the Companys Annual Report on Form 10-K.



The Companys business is highly seasonal with approximately 70% of sales generated between March and July. Results for the interim
periods presented are not necessarily indicative of results that may be expected for the entire year.



(2)    Inventories



Inventories at March 31, 2003 and December 31, 2002 consist of the following:



|                         |  | March 31, 2003 |         | December 31, 2002
|------------------------ |  | -------------- | ------- | -----------------
|Crop protection products |  | $              | 149,349 |                  
|Fertilizers              |  |                | 42,192  |                  
|Raw materials            |  |                | 118,823 |                  
|Seeds                    |  |                | 40,910  |                  
|Sundries and other       |  |                | 15,246  |                  
|                         |  |                |         |                  
|                         |  | $              | 366,520 |                  
|                         |  |                |         |                  



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





(3)    Goodwill and Other Assets



There were no changes in the carrying amount of goodwill for the three months ended March 31, 2003.



The gross carrying value and accumulated amortization of major classes of intangible assets for March 31, 2003 and December 31, 2002 are
as follows:



|                              |  | March 31, 2003       
|----------------------------- |  | ---------------------
|                              |  | Gross carrying amount
|Amortizing intangible assets: |  |                      
|Technology and patent license |  | $                    
|Noncompete agreements         |  |                      
|Other                         |  |                      
|                              |  |                      
|Total                         |  | $                    
|                              |  |                      
|                             
|                              |  | December 31, 2002    
|                              |  | Gross carrying amount
|Amortizing intangible assets: |  |                      
|Technology and patent license |  | $                    
|Noncompete agreements         |  |                      
|Other                         |  |                      
|                              |  |                      
|Total                         |  | $                    
|                              |  |                      



Amortization expense of intangible assets amounted to $295 and $106 for the three months ended March 31, 2003 and 2002, respectively. During the first quarter, fully amortized intangible assets were written off.



These intangible assets are included in other
assets in the accompanying condensed consolidated balance sheets. Estimated annual amortization expense for the next five years follows: 2003$1.2 million; 2004$0.9 million; 2005$0.7 million; 2006$0.6 million,
2007$0.6 million and $0.7 million thereafter.



(4)    Environmental Matters



The Company is subject to a wide variety of federal, state and local environmental laws and regulations. The Company has been identified as a potentially responsible party concerning the release of certain hazardous
substances at five locations. While the current law potentially imposes joint and several liability upon each party named as a potentially responsible party, the Companys contribution to clean up these sites is expected to be limited, given
the number of other companies which have also been named as potentially responsible parties and the nature and amount of cleanup involved. A number of the Companys facilities have been evaluated as having excess nitrates, phosphorous or
pesticides in the surrounding soil or groundwater. In addition, several underground storage tanks have been removed or closed at some facilities and these sites have been evaluated for possible contamination. Actions performed with respect to these
situations followed the guidance provided by the responsible environmental authorities. In total, environmental cleanup activities have been planned or are being performed at approximately 44 sites.



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





In
connection with the acquisitions of AgriBusiness and Royster-Clark (Predecessor Company), the Company obtained indemnities for certain claims related to environmental matters that existed or arose prior to the acquisitions. The indemnities related
to AgriBusiness are subject to a $4,500 deductible, an overall cap on all indemnities of approximately $27,000, and certain time limitations. The indemnities related to Royster-Clark, Inc. (Predecessor Company) are subject to a deductible of $2,000,
certain time limitations and an overall cap of $5,000 on all indemnities. In addition, Royster-Clark, Inc. (Predecessor Company) had obtained indemnities from Lebanon Chemical Corporation (LCC) for certain claims related to environmental matters
that existed at sites acquired from LCC in December 1998. The Company also obtained indemnities from the former stockholder of Alliance for environmental conditions identified as of the date of acquisition.



The Company has recorded environmental liabilities at March
31, 2003 and December 31, 2002 for the estimated cost of cleanup efforts of identified contamination or site characterization, which total $3,205 and $3,260, respectively, and are included in other long-term liabilities in the accompanying condensed
consolidated balance sheets. Actual cash expenditures during the three months ended March 31, 2003 and 2002 were $55 and $40, respectively. These liabilities do not take into account any claims for recoveries from insurance or third parties and are
not discounted. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainty in evaluating environmental exposures.



(5)    Senior Secured Credit Facility



The Company maintains a senior secured credit facility
(credit facility) that is subject to certain borrowing base limitations and to certain covenants, including maintenance of certain required financial ratios. Effective with the amendment to the credit facility agreement approved in March
2003, the available borrowing capacity under the credit facility was lowered from the $245,000 to $205,000 reflecting the Companys reduced borrowing requirements. As a result of the lower credit facility, $227 of deferred financing cost was
written off. In consideration for the approval of the amendment, $513 was paid to the consortium of lenders. This cost, combined with remaining deferred financing costs related to the credit facility, will be amortized over the remaining term of the
credit facility agreement.



(6)    Condensed Financial Data of Guarantor Subsidiaries



The Company issued $200,000 of 10-1/4% First Mortgage Notes due April 2009 (herein referred to as the First Mortgage Notes) on April 22,
1999 to partially finance an acquisition. The First Mortgage Notes mature on April 22, 2009 and bear interest at 10-1/4% payable semi-annually in arrears. The First Mortgage Notes are secured by 17 principal properties, related fixtures and
equipment and other related assets and a pledge of equity of certain subsidiaries. The First Mortgage Notes are guaranteed on a full, unconditional and joint and several basis, by each of the following subsidiaries of Royster-Clark:



Royster-Clark Realty LLC

Royster-Clark AgriBusiness Realty LLCRoyster-Clark Resources LLC

Royster-Clark Nitrogen, Inc.Royster-Clark AgriBusiness, Inc.

Alliance Fertilizer of Suffolk, Inc.Seaboard Liquid Plant Food, Inc.




There are currently no restrictions on the ability of Royster-Clark to obtain funds from its guarantor subsidiaries through dividends or loans.



The following tables present the condensed financial data of Royster-Clark and its guarantor subsidiaries as of March 31, 2003 and
December 31, 2002 and for the three month periods ended March 31, 2003 and 2002.



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





Balance
Sheet Data as of March 31, 2003:



|                                               |  | Royster-Clark, Inc. |         |   | Guarantor Subsidiaries |         |   | Eliminations |          |   | Consolidated |        
|---------------------------------------------- |  | ------------------- | ------- | - | ---------------------- | ------- | - | ------------ | -------- | - | ------------ | -------
|Current assets:                                |  |                     |         |   |                        |         |   |              |          |   |              |        
|Cash                                           |  | $                   | 42      |   |                        | 484     |   |              |         |   |              | 526    
|Trade accounts receivable, net                 |  |                     |        |   |                        | 90,696  |   |              | (1,978   | ) |              | 88,718 
|Other receivables                              |  |                     | 894     |   |                        | 11,163  |   |              | (4,608   | ) |              | 7,449  
|Inventories                                    |  |                     |        |   |                        | 366,520 |   |              |         |   |              | 366,520
|Prepaid expenses and other current assets      |  |                     |        |   |                        | 1,955   |   |              |         |   |              | 1,955  
|Deferred income taxes                          |  |                     | 7,623   |   |                        |        |   |              |         |   |              | 7,623  
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total current assets                           |  |                     | 8,559   |   |                        | 470,818 |   |              | (6,586   | ) |              | 472,791
|Property, plant and equipment, net             |  |                     | 10,584  |   |                        | 168,177 |   |              |         |   |              | 178,761
|Goodwill                                       |  |                     | 12,012  |   |                        | 4,528   |   |              |         |   |              | 16,540 
|Deferred income taxes                          |  |                     | 18,156  |   |                        |        |   |              |         |   |              | 18,156 
|Deferred financing costs, net                  |  |                     | 8,150   |   |                        |        |   |              |         |   |              | 8,150  
|Other assets, net                              |  |                     | 28      |   |                        | 5,490   |   |              |         |   |              | 5,518  
|Investment in subsidiaries                     |  |                     | 336,910 |   |                        |        |   |              | (336,910 | ) |              |       
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total assets                                   |  | $                   | 394,399 |   |                        | 649,013 |   |              | (343,496 | ) |              | 699,916
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Current liabilities:                           |  |                     |         |   |                        |         |   |              |          |   |              |        
|Current installments of long-term debt         |  | $                   |        |   |                        | 172     |   |              |         |   |              | 172    
|Note payable                                   |  |                     |        |   |                        | 21,983  |   |              |         |   |              | 21,983 
|Customer deposits                              |  |                     |        |   |                        | 139,971 |   |              |         |   |              | 139,971
|Accounts payable                               |  |                     |        |   |                        | 141,428 |   |              | (6,586   | ) |              | 134,842
|Accrued expenses and other current liabilities |  |                     | 12,885  |   |                        | 16,617  |   |              |         |   |              | 29,502 
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total current liabilities                      |  |                     | 12,885  |   |                        | 320,171 |   |              | (6,586   | ) |              | 326,470
|Senior secured credit facility                 |  |                     | 102,518 |   |                        |        |   |              |         |   |              | 102,518
|10-1/4% First Mortgage Notes                   |  |                     | 200,000 |   |                        |        |   |              |         |   |              | 200,000
|Long-term debt, excluding current installments |  |                     |        |   |                        | 196     |   |              |         |   |              | 196    
|Other long-term liabilities                    |  |                     | 444     |   |                        | 8,829   |   |              |         |   |              | 9,273  
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total liabilities                              |  |                     | 315,847 |   |                        | 329,196 |   |              | (6,586   | ) |              | 638,457
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Stockholders equity:                          |  |                     |         |   |                        |         |   |              |          |   |              |        
|Common stock                                   |  |                     |        |   |                        |        |   |              |         |   |              |       
|Additional paid-in capital                     |  |                     | 78,599  |   |                        | 346,910 |   |              | (336,910 | ) |              | 88,599 
|Accumulated deficit                            |  |                     | (47     | ) |                        | (26,449 | ) |              |         |   |              | (26,496
|Accumulated other comprehensive loss           |  |                     |        |   |                        | (644    | ) |              |         |   |              | (644   
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total stockholders equity                     |  |                     | 78,552  |   |                        | 319,817 |   |              | (336,910 | ) |              | 61,459 
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        
|Total liabilities and stockholders equity     |  | $                   | 394,399 |   |                        | 649,013 |   |              | (343,496 | ) |              | 699,916
|                                               |  |                     |         |   |                        |         |   |              |          |   |              |        



8



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





Balance
Sheet Data as of December 31, 2002:



|                                               |  | Royster-Clark, Inc. |         | Guarantor Subsidiaries |         |   | Eliminations |          |   | Consolidated |        
|---------------------------------------------- |  | ------------------- | ------- | ---------------------- | ------- | - | ------------ | -------- | - | ------------ | -------
|Current assets:                                |  |                     |         |                        |         |   |              |          |   |              |        
|Cash                                           |  | $                   | 42      |                        | 940     |   |              |         |   |              | 982    
|Trade accounts receivable, net                 |  |                     |        |                        | 98,575  |   |              | (2,398   | ) |              | 96,177 
|Other receivables                              |  |                     | 4,369   |                        | 51,545  |   |              | (19,261  | ) |              | 36,653 
|Inventories                                    |  |                     |        |                        | 252,435 |   |              |         |   |              | 252,435
|Prepaid expenses and other current assets      |  |                     |        |                        | 2,326   |   |              |         |   |              | 2,326  
|Deferred income taxes                          |  |                     | 9,206   |                        |        |   |              |         |   |              | 9,206  
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total current assets                           |  |                     | 13,617  |                        | 405,821 |   |              | (21,659  | ) |              | 397,779
|Property, plant and equipment, net             |  |                     | 11,028  |                        | 171,239 |   |              |         |   |              | 182,267
|Goodwill                                       |  |                     | 12,012  |                        | 4,528   |   |              |         |   |              | 16,540 
|Deferred income taxes                          |  |                     | 7,373   |                        |        |   |              |         |   |              | 7,373  
|Deferred financing costs, net                  |  |                     | 8,400   |                        |        |   |              |         |   |              | 8,400  
|Other assets, net                              |  |                     | 35      |                        | 5,618   |   |              |         |   |              | 5,653  
|Investment in subsidiaries                     |  |                     | 377,754 |                        |        |   |              | (377,754 | ) |              |       
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total assets                                   |  | $                   | 430,219 |                        | 587,206 |   |              | (399,413 | ) |              | 618,012
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Current liabilities:                           |  |                     |         |                        |         |   |              |          |   |              |        
|Current installments of long-term debt         |  | $                   |        |                        | 172     |   |              |         |   |              | 172    
|Note payable                                   |  |                     |        |                        | 21,740  |   |              |          |   |              | 21,740 
|Customer deposits                              |  |                     |        |                        | 57,200  |   |              |         |   |              | 57,200 
|Accounts payable                               |  |                     |        |                        | 103,962 |   |              | (21,659  | ) |              | 82,303 
|Accrued expenses and other current liabilities |  |                     | 7,983   |                        | 19,552  |   |              |         |   |              | 27,535 
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total current liabilities                      |  |                     | 7,983   |                        | 202,626 |   |              | (21,659  | ) |              | 188,950
|Senior secured credit facility                 |  |                     | 143,121 |                        |        |   |              |         |   |              | 143,121
|10-1/4% First Mortgage Notes                   |  |                     | 200,000 |                        |        |   |              |         |   |              | 200,000
|Long-term debt, excluding current installments |  |                     |        |                        | 201     |   |              |         |   |              | 201    
|Other long-term liabilities                    |  |                     | 465     |                        | 8,998   |   |              |         |   |              | 9,463  
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total liabilities                              |  |                     | 351,569 |                        | 211,825 |   |              | (21,659  | ) |              | 541,735
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Stockholders equity:                          |  |                     |         |                        |         |   |              |          |   |              |        
|Common stock                                   |  |                     |        |                        |        |   |              |         |   |              |       
|Additional paid-in capital                     |  |                     | 78,599  |                        | 387,754 |   |              | (377,754 | ) |              | 88,599 
|Retained earnings (accumulated deficit)        |  |                     | 51      |                        | (11,729 | ) |              |         |   |              | (11,678
|Accumulated other comprehensive loss           |  |                     |        |                        | (644    | ) |              |         |   |              | (644   
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total stockholders equity                     |  |                     | 78,650  |                        | 375,381 |   |              | (377,754 | ) |              | 76,277 
|                                               |  |                     |         |                        |         |   |              |          |   |              |        
|Total liabilities and stockholders equity     |  | $                   | 430,219 |                        | 587,206 |   |              | (399,413 | ) |              | 618,012
|                                               |  |                     |         |                        |         |   |              |          |   |              |        



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





Statement
of Operations Data for the three months ended March 31, 2003 and 2002:



|Three Months Ended March 31, 2003                      |  | Royster-Clark, Inc. |      |   | Guarantor Subsidiaries |         |   | Eliminations |         |   | Consolidated |        
|------------------------------------------------------ |  | ------------------- | ---- | - | ---------------------- | ------- | - | ------------ | ------- | - | ------------ | -------
|Net sales                                              |  | $                   | 894  |   |                        | 158,582 |   |              | (9,168  | ) |              | 150,308
|Cost of sales                                          |  |                     | 104  |   |                        | 131,869 |   |              | (4,560  | ) |              | 127,413
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Gross profit                                           |  |                     | 790  |   |                        | 26,713  |   |              | (4,608  | ) |              | 22,895 
|Selling, general and administrative expenses           |  |                     | 265  |   |                        | 43,785  |   |              | (4,608  | ) |              | 39,442 
|Loss on disposal of property, plant and equipment, net |  |                     | 39   |   |                        | 287     |   |              |        |   |              | 326    
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Operating income (loss)                                |  |                     | 486  |   |                        | (17,359 | ) |              |        |   |              | (16,873
|Interest expense                                       |  |                     | (484 | ) |                        | (6,559  | ) |              |        |   |              | (7,043 
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Income (loss) before income taxes                      |  |                     | 2    |   |                        | (23,918 | ) |              |        |   |              | (23,916
|Income tax expense (benefit)                           |  |                     | 1    |   |                        | (9,199  | ) |              |        |   |              | (9,198 
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Net income (loss)                                      |  | $                   | 1    |   |                        | (14,719 | ) |              |        |   |              | (14,718
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Three Months Ended March 31, 2002                      |  |                     |      |   |                        |         |   |              |         |   |              |        
|Net sales                                              |  | $                   | 898  |   |                        | 170,377 |   |              | (13,328 | ) |              | 157,947
|Cost of sales                                          |  |                     | 106  |   |                        | 143,430 |   |              | (8,415  | ) |              | 135,121
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Gross profit                                           |  |                     | 792  |   |                        | 26,947  |   |              | (4,913  | ) |              | 22,826 
|Selling, general and administrative expenses           |  |                     | 292  |   |                        | 44,370  |   |              | (4,952  | ) |              | 39,710 
|Loss on disposal of property, plant and equipment, net |  |                     | 16   |   |                        | 44      |   |              |        |   |              | 60     
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Operating income (loss)                                |  |                     | 484  |   |                        | (17,467 | ) |              | 39      |   |              | (16,944
|Interest expense                                       |  |                     | (482 | ) |                        | (6,636  | ) |              |        |   |              | (7,118 
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Income (loss) before income taxes                      |  |                     | 2    |   |                        | (24,103 | ) |              | 39      |   |              | (24,062
|Income tax expense (benefit)                           |  |                     | 1    |   |                        | (9,116  | ) |              |        |   |              | (9,115 
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        
|Net income (loss)                                      |  | $                   | 1    |   |                        | (14,987 | ) |              | 39      |   |              | (14,947
|                                                       |  |                     |      |   |                        |         |   |              |         |   |              |        



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ROYSTER-CLARK, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

MARCH 31, 2003

(Dollars in thousands)





Statement
of Cash Flow Data for the three months ended March 31, 2003 and 2002:



|Three Months Ended March 31, 2003                   |  | Royster-Clark, Inc. |          |   | Guarantor Subsidiaries |         |   | Eliminations |   | Consolidated |         
|--------------------------------------------------- |  | ------------------- | -------- | - | ---------------------- | ------- | - | ------------ | - | ------------ | --------
|Net cash provided by (used in) operating activities |  | $                   | 41,178   |   |                        | (80,378 | ) |              |  |              | (39,200 
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash flows from investing activities:               |  |                     |          |   |                        |         |   |              |   |              |         
|Proceeds from sale of property, plant and equipment |  |                     | 38       |   |                        | 698     |   |              |  |              | 736     
|Purchases of property, plant and equipment          |  |                     |         |   |                        | (3,542  | ) |              |  |              | (3,542  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net cash provided by (used in) investing activities |  |                     | 38       |   |                        | (2,844  | ) |              |  |              | (2,806  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash flows from financing activities:               |  |                     |          |   |                        |         |   |              |   |              |         
|Proceeds from senior secured credit facility        |  |                     | 85,497   |   |                        |        |   |              |  |              | 85,497  
|Payments on senior secured credit facility          |  |                     | (126,100 | ) |                        |        |   |              |  |              | (126,100
|Principal payments on long-term debt                |  |                     |         |   |                        | (5      | ) |              |  |              | (5      
|Dividend to Royster-Clark Group, Inc.               |  |                     | (100     | ) |                        |        |   |              |  |              | (100    
|Net increase in customer deposits                   |  |                     |         |   |                        | 82,771  |   |              |  |              | 82,771  
|Payment of deferred financing costs                 |  |                     | (513     | ) |                        |        |   |              |  |              | (513    
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net cash provided by (used in) financing activities |  |                     | (41,216  | ) |                        | 82,766  |   |              |  |              | 41,550  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net decrease in cash                                |  |                     |         |   |                        | (456    | ) |              |  |              | (456    
|Cash at beginning of period                         |  |                     | 42       |   |                        | 940     |   |              |  |              | 982     
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash at end of period                               |  | $                   | 42       |   |                        | 484     |   |              |  |              | 526     
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Three Months Ended March 31, 2002                   |  |                     |          |   |                        |         |   |              |   |              |         
|Net cash used in operating activities               |  | $                   | (19,615  | ) |                        | (56,228 | ) |              |  |              | (75,843 
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash flows from investing activities:               |  |                     |          |   |                        |         |   |              |   |              |         
|Proceeds from sale of property, plant and equipment |  |                     | 13       |   |                        | 222     |   |              |  |              | 235     
|Purchases of property, plant and equipment          |  |                     |         |   |                        | (2,020  | ) |              |  |              | (2,020  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net cash provided by (used in) investing activities |  |                     | 13       |   |                        | (1,798  | ) |              |  |              | (1,785  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash flows from financing activities:               |  |                     |          |   |                        |         |   |              |   |              |         
|Proceeds from senior secured credit facility        |  |                     | 94,805   |   |                        |        |   |              |  |              | 94,805  
|Payments on senior secured credit facility          |  |                     | (75,199  | ) |                        |        |   |              |  |              | (75,199 
|Principal payments on long-term debt                |  |                     | (4       | ) |                        | (5,026  | ) |              |  |              | (5,030  
|Net increase in customer deposits                   |  |                     |         |   |                        | 62,277  |   |              |  |              | 62,277  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net cash provided by financing activities           |  |                     | 19,602   |   |                        | 57,251  |   |              |  |              | 76,853  
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Net decrease in cash                                |  |                     |         |   |                        | (775    | ) |              |  |              | (775    
|Cash at beginning of period                         |  |                     | 42       |   |                        | 955     |   |              |  |              | 997     
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         
|Cash at end of period                               |  | $                   | 42       |   |                        | 180     |   |              |  |              | 222     
|                                                    |  |                     |          |   |                        |         |   |              |   |              |         





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



THE FOLLOWING INFORMATION CONTAINS FORWARD-LOOKING STATEMENTS. SEE FORWARD-LOOKING
STATEMENTS ABOVE.



General



Royster-Clark, Inc. together with its subsidiaries, (the
Company or Royster-Clark) is a retail and wholesale distributor of mixed fertilizer, fertilizer materials, seed, crop protection products and agronomic services to farmers, primarily in the East, South and Midwest regions of
the United States. The Companys operations include retail farm centers (Farmarkets), granulation, blending and seed processing plants, and a network of storage and distribution terminals and warehouses. In addition, the Company
operates two nitrogen-manufacturing plants that supply our distribution business with nitrogen fertilizer products. Our business is affected by a number of factors, including weather conditions and the availability and prevailing prices for
fertilizer, natural gas used in the production of various fertilizers and other crop production inputs.



Weather conditions can significantly affect our results of operations, both for quarterly reporting and on an annual basis. Adverse
weather conditions during the planting season may force farmers to either delay or abandon their planting, or change to another crop, which may lead to lower use of fertilizer, seed and crop protection products. During the quarter, several of the
Companys market areas in the southeast region have experienced late season snowstorms and increased rainfall compared to the first quarter of 2002. This increased rainfall has effectively reversed the drought conditions that affected farmers
in recent years. Ground water levels have been replenished and brought soil moisture to more favorable levels, however, it has curtailed the farmers ability to enter the fields for preparation and planting during the first quarter.



The crop production inputs distribution business
is seasonal, with approximately 70% of our sales occurring between March and July based upon planting, growing and harvesting cycles. This seasonality results from the planting, growing and harvesting cycles of our customers. Inventories are
accumulated to be available for seasonal sales, requiring significant storage capacity. The accumulation of inventory is financed by suppliers or by the Company through its credit facility. Depending on weather and field conditions in the
Companys widely diverse geographic marketing areas, the period of heavy product shipments to customers can vary by several weeks, which may have a material impact on which quarter sales are recorded.



Another factor affecting our business is the price for
fertilizers. We purchase nitrogen materials, phosphates, and potash and resell these nutrients in either their original form or in the form of multi-nutrient fertilizers. Prices for phosphates have recently experienced some volatility while potash
has been relatively stable over the past several years. During the first quarter of 2003, nitrogen pricing rose steadily during the quarter as indicated by Mid Cornbelt per ton price quotes for ammonia published by Green Markets (a publication
reporting on fertilizer industry developments) increasing from $245 per ton at the beginning of the quarter to $333 per ton as of the end of the quarter. Ammonia prices remained essentially flat during the comparable quarter in 2002 at approximately
$175 per ton.



The major raw material in the
manufacture of nitrogen-based products is natural gas. We purchase natural gas on the open market for use in our nitrogen-production plant in East Dubuque, IL. Natural gas pricing quoted at the Henry Hub was $4.75 per MMBTU at December 31, 2002.
Since December 31, 2002, natural gas prices have increased sharply to a peak of $19.07 per MMBTU before dropping to $5.00 per MMBTU as of March 31, 2003. The average and median prices for the quarter ended March 31, 2003 were approximately $6.27 and
$5.70 per MMBTU, respectively. As a result of the sharp rise in natural gas prices, we elected to take down our nitrogen-production plant at East Dubuque, IL at the beginning of March 2003 for an early maintenance turnaround originally scheduled for
later in the year. We completed the turnaround and resumed production at the plant by the end of March 2003. We expect natural gas prices to moderate further as spring approaches, although we can not be assured that such pricing movement will be
achieved. The level of natural gas prices directly affects profitability of our nitrogen-based products.



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Results of Operations



Three months ended March 31, 2003
compared to three months ended March 31, 2002



The following table and discussion provides information regarding Royster-Clarks statement of operations as a percentage of net sales.



|                                                       |  | Three Months ended March 31, |   
|------------------------------------------------------ |  | ---------------------------- | --
|                                                       |  | 2003                         |   
|Net sales                                              |  | 100.0                        | % 
|Cost of sales                                          |  | 84.8                         |   
|                                                       |  |                              |   
|Gross profit                                           |  | 15.2                         |   
|Selling, general and administrative expenses           |  | 26.2                         |   
|Loss on disposal of property, plant and equipment, net |  | 0.2                          |   
|                                                       |  |                              |   
|Operating loss                                         |  | (11.2                        | ) 
|Interest expense                                       |  | (4.7                         | ) 
|                                                       |  |                              |   
|Loss before taxes                                      |  | (15.9                        | ) 
|Income tax benefit                                     |  | (6.1                         | ) 
|                                                       |  |                              |   
|Net loss                                               |  | (9.8                         | )%
|                                                       |  |                              |   



Net
sales.    Royster-Clarks net sales were $150.3 million for the first quarter of 2003 compared to $157.9 million for the same period in 2002, a decrease of $7.6 million, or 4.8%. The decrease in sales resulted
predominantly from approximately $17.3 million in decreased volume of granulated and blended fertilizer, but also in decreased volume of various fertilizer materials, lime, crop protection, seed products and application and service revenues. This
decrease in sales was partially offset by price appreciation of approximately $9.7 million. Increased natural gas prices was the prime driver in this price appreciation. The change in sales resulted from the following factors:



| |  |  | Sales volume decreases were a net of $17.3 million resulting from wet field conditions through much of the southeast market areas. Decreased sales were encountered
over most product groups and application and service revenues in these market areas. Last year in March, our southeast market areas experienced very favorable weather conditions allowing earlier planting and fieldwork, contrasted with this
years rains of 8-10 inches above normal in portions of this region. This rain slowed preparation and planting in many of the Companys market areas described above.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Market related sales price appreciation of nitrogen products accounted for approximately $6.4 million of the $9.7 million total price appreciation. Nitrogen products
are used in both liquid and dry blended fertilizers. Sales prices also increased in granulated and blended fertilizers and various fertilizer materials.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross profit.    Gross profit was $22.9 million for the first quarter of 2003
compared to $22.8 million for the same period in 2002, an increase of $0.1 million, or 0.4%. The increase in gross profit resulted predominantly from pricing factors and the various sales volume changes discussed above. Higher costs were incurred
due to the earlier than planned maintenance turnaround during the month of March at the East Dubuque manufacturing plant, however, improved operating efficiencies resulted in lower cost at the Companys Rainbow granulation facilities to offset
the higher costs at the East Dubuque facility. Gross margin was 15.2% for the first quarter of 2003 compared to 14.5% for the same period in 2002. The increase in gross margin of 0.7% was predominantly due to the sales price appreciation discussed
above.



Selling, general and administrative
expenses.    Selling, general and administrative expenses were $39.4 million for the first quarter of 2003 compared to $39.7 million for the same period in 2002, a decrease of $0.3



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##### Table of Contents

million, or 0.8%. The decrease in selling, general and administrative expenses resulted from the following major factors:



| |  |  | Expenses were approximately $1.6 million lower compared to 2002 due to cost savings measures initiated in 2002 and volume related expenses including repairs,
supplies, services, telephone, seasonal labor and overtime and increased capitalization of production and logistic costs to inventory.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The decrease in selling, general and administrative expenses was partially offset by the following major factors:



| |  |  | General liability, property and workers compensation insurance expenses were approximately $0.5 million higher in 2003 compared to 2002 due to rising costs of
insurance coverage in the market place.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Medical health insurance expense and other benefits and taxes were $0.4 million higher than last year due to increases in medical insurance costs and other benefits
and tax costs.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Amortization expense was approximately $0.4 million higher due to amortization of patent and technology licenses of approximately $0.1 million and the write-off of
deferred financing costs associated with the amendment to the senior secured credit facility of approximately $0.2 million and other amortization increases of $0.1 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Quarterly selling, general and administrative expense as a percent of net sales fluctuates widely within the
fiscal year due to the seasonal nature of sales volumes with selling, general and administrative expense exhibiting less seasonal fluctuations.



Operating loss.    Operating loss was $16.9 million for the first quarter of 2003 compared to $16.9 million for
the same period in 2002, for no change. Operating loss as a percentage of net sales was 11.2% for the first quarter in 2003 compared to 10.7% for the same period in 2002 due to the Companys success in controlling costs and realizing improved
margins in spite of reduced revenues.



Interest expense.    Interest expense was $7.0 million for the first quarter in 2003 compared to $7.1 million for the same period in 2002, a decrease of $0.1 million, or 1.4%. The decrease in interest
expense was due predominantly to lower interest rates. Lower interest rates on the senior secured credit facility of approximately 0.36% and interest bearing customer deposits resulted in approximately $0.2 million less expense in 2003 as compared
to 2002. Average daily borrowings for the quarter against our senior secured credit facility were $76.8 million compared to $76.5 million for the comparable period in 2002.



Income tax benefit.    Income tax benefit was $9.2 million for the first quarter
of 2003 compared to $9.1 million for the same period in 2002, an increase of $0.1 million. The effective tax rate was 38.5% for the first quarter of 2003 compared to 37.9% for the same period in 2002.



Net loss.    Net loss was $14.7
million for the first quarter of 2003 compared to $14.9 million for the same period in 2002, a decrease of $0.2 million, resulting from the fluctuations noted above.



Liquidity and Capital Resources



Our primary capital requirements are for working capital, debt service, capital expenditures and possible
acquisitions. For day-to-day liquidity requirements, we operate with a $205 million senior secured credit facility (credit facility) with a consortium of banks. The credit facility expires in April 2004. At March 31, 2003, the borrowing
base provisions under the facility supported a borrowing availability of $172.5 million, from which we had drawn $102.5 million. This facility includes up to $10.0 million for letters of credit. This facility contains financial and operational
covenants and other restrictions with which we must comply, including a requirement to maintain certain financial ratios and limitations on our ability to incur additional indebtedness. As of March 31, 2003, we met our covenants and we continue to
be in compliance with the requirements of this credit facility.



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Net cash used
in operating activities for the three months ended March 31, 2003 was $39.2 million compared to $75.8 million for the comparable period in 2002, a decrease of $36.6 million. The most significant component of lower cash flows used in operating
activities was movement in operating assets and liabilities of $36.0 million with trade accounts receivable and other receivables being the largest components. Higher cash used in inventory of $25.2 million was offset by higher cash provided by
accounts payable of $23.6 million due to vendor incentives for early purchases for the spring season. Cash used in other working capital items was $1.8 million lower than in 2002.



Net cash used in investing activities amounted to $2.8 million in 2003 compared to $1.8 million in 2002, an
increase of $1.0 million. The increase in net cash used in investing activities resulted from:



| |  |  | Increased capital expenditures of $1.5 million in 2003; and
| | - |  | -----------------------------------------------------------

| |  |  | Increased proceeds from the sale of property, plant and equipment of $0.5 million in 2003 compared to 2002.
| | - |  | -----------------------------------------------------------------------------------------------------------



Capital expenditures were $3.5 million for the three months
ended March 31, 2003 compared with $2.0 million for the three months ended March 31, 2002. These capital expenditures were primarily for facility improvements and machinery and equipment replacement projects. We estimate total capital expenditures,
excluding potential acquisitions, for 2003 will range from $10.0 to $13.0 million.



Net cash provided by financing activities totaled $41.6 million compared to $76.9 million in 2002, a decrease of $35.3 million. Decreased cash provided by financing activities in 2003 compared to 2002
resulted primarily from higher payments to the credit facility of $50.9 million and lower proceeds of $9.3 million from the credit facility compared to 2002 due to increased cash provided by trade and other receivables. These decreases in cash
provided were partially offset by an increase in cash provided by customer deposits of $20.5 million and lower principal payments on long-term debt of $5.0 million in 2003 compared to 2002. The increase in cash provided by customer deposits was due
primarily to price appreciation of nitrogen products and to increased numbers of customers making deposits with the Company.



Net working capital, excluding current installments of long-term debt at March 31, 2003 totaled $146.5 million versus $209.0 million at
December 31, 2002, a decrease of $62.5 million, or 29.9%. This decrease resulted primarily from the typical seasonal activity of increases in customer deposits and accounts payable, inventory and accounts payable and decreases in trade accounts and
other receivables from normal seasonal movement of operating assets and liabilities. Working capital changes are summarized in the table below.



|Working capital decreases:      |  |   |      
|------------------------------- |  | - | -----
|Customer deposits               |  | $ | 82.8 
|Accounts payable                |  |   | 52.5 
|Other receivables               |  |   | 29.2 
|Trade account receivable        |  |   | 7.5  
|Other working capital decreases |  |   | 4.6  
|                                |  |   |      
|Total decreases                 |  |   | 176.6
|                                |  |   |      
|Working capital increases:      |  |   |      
|Inventory                       |  |   | 114.1
|                                |  |   |      
|Net decrease                    |  | $ | 62.5 
|                                |  |   |      



Recently Issued
Accounting Standards



Statement of
Financial Accounting Standards No. 149



On
April 30, 2003, the Financial Accounting Standards Board issued SFAS No. 149, Amendment of



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Statement 133 on Derivative Instruments and Hedging Activities. This statement amends SFAS No. 133 for decisions made: (1) as
part of the Derivatives Implementation Group process that effectively required amendments to Statement 133, (2) in connection with other Board projects dealing with financial instruments, and (3) in connection with implementation issues raised in
relation to the application of the definition of a derivative. Management does not believe that the adoption of SFAS No. 149 will have any impact on its financial position or results of operations.



Emerging Issues Task Force Issue No. 02-16



In January 2003, the Emerging Issues Task
Force (EITF) reached a consensus on EITF Issue 02-16, Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor. This EITF provides guidance on the income statement classification of amounts
received by a customer, including a reseller and limited guidance regarding timing of recognition for volume rebates. This consensus is effective and should be applied to fiscal periods beginning after December 15, 2002 for binding arrangements
entered into after November 21, 2002. Based upon current arrangements with vendors and evaluations of those arrangements, management does not believe that implementing the guidance from EITF Issue 02-16 will have a material effect on the
Companys financial condition or quarterly or annual results of operations for this year; however, we can not determine how future arrangements may affect the Company in subsequent years. Changes to vendor programs in the future could
materially affect quarterly results of operations, although we believe such changes would be less likely to affect annual results of operations.



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ITEM 3.Quantitative and Qualitative Disclosures about Market Risk



The Company is exposed to market risk due to changes in natural gas prices. Natural gas is a raw material used in the production of
various nitrogen-based products that the Company either manufactures at its East Dubuque plant or purchases from vendors. Market prices of nitrogen-based products are affected by changes in natural gas prices as well as supply and demand and other
factors. As a normal course of business, the Company purchases nitrogen-based products during the winter and early spring to supply its needs during the high sales volume spring season. Nitrogen-based inventory remaining at the end of the spring
season will be subject to market risk due to changes in natural gas prices and supply and demand. Changes in levels of natural gas prices and market prices of nitrogen-based products can materially affect the Companys financial position and
results of operations. The Company has experienced no difficulties in securing supplies of natural gas, however, natural gas is purchased at market prices and such purchases are subject to price volatility.



The Company is also exposed to changes in interest rates. The
interest rates that we pay for borrowings under our credit facility are based primarily on the LIBOR rate of interest charged by the agent bank under our credit facility. Our operating results will be impacted by changes in interest rates. We
estimate that based on an estimated annual average balance on our credit facility that each 1% change in market interest rate will impact before tax earnings by approximately $1.1 million. Our First Mortgage Notes bear interest at a fixed rate of
10-1/4%. Some of our customer deposits also bear interest at a fixed rate, which is established on an annual basis at the beginning of each farming season based on prevailing market rates for similar programs in each of the regions in which we
operate.



The Company engages in limited
commodity hedging activities with respect to its grain and seed purchases. Given the current economic climate, we believe that the rates in force approximate market rates. We do not hold or issue derivative financial instruments for trading
purposes.



At March 31, 2003, the Companys
exposure to market risk factors had not materially changed from December 31, 2002.



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ITEM 4.Controls and Procedures



|(a) |  | Evaluation of disclosure controls and procedures.
|--- |  | -------------------------------------------------



We maintain a system of controls and procedures designed to provide reasonable assurance on the reliability of our financial statements and other
disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The system is supported by formal policies and procedures. Appropriate actions are taken to address significant control deficiencies and other
opportunities for improving the system as they are identified. However, no cost-effective internal control system will preclude all errors and irregularities, and management is necessarily required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.



Within the 90-day period prior to the date of this report, the Company, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial
Officer, carried out an evaluation of the effectiveness of the design and operation of the Companys disclosure controls and procedures (the Evaluation). Based upon the Evaluation, the Companys Chief Executive Officer and
Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in ensuring that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within
those entities, particularly during the period in which this quarterly report was being prepared.



|(b) |  | Changes in internal controls.
|--- |  | -----------------------------



There were no significant changes in the Companys internal controls or in other factors that could significantly affect these controls subsequent to
the date of the Evaluation.



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##### Table of Contents

PART 2.    OTHER INFORMATION



ITEM 6.Exhibits and Reports on Form 8-K



(a)(1)    Financial Statements:



The following condensed consolidated financial statements are included in Part 1, Item 1, of this Form 10-Q:



Condensed Consolidated Balance Sheet as of March 31, 2003 and December 31, 2002

Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2003 and 2002

Condensed Consolidated Statements of Cash Flow for the Three Months ended March 31, 2003 and 2002



(2)    Financial Statement
Schedules: None.

(3)    Exhibits:



|3.01  |  | Restated Certificate of Incorporation of the Company.                                                                                                                                                                                                                         
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.02  |  | Certificate of Amendment of Restated Certificate of Incorporation of the Company.                                                                                                                                                                                             
|3.03  |  | Amended and Restated Bylaws of the Company.                                                                                                                                                                                                                                   
|4.01  |  | Indenture dated as of April 22, 1999 by and among the Company, the Guarantors, and the United States Trust Company of
New York, as Trustee.                                                                                                                                   
|4.02  |  | Form of 101/4% First Mortgage Note Due 2009 (Included in Exhibit 4.01)                                                                                                                                                                                                        
|10.01 |  | Credit Agreement dated as of April 22, 1999 by and among the Company, the Guarantors, various lenders, DLJ Capital
Funding, as arranger and syndication agent, J.P. Morgan Securities Inc., as documentation agent and U.S. Bancorp Ag Credit, Inc., as administrative agent. 
|10.03 |  | Supply Agreement dated as of April 22, 1999 among IMC Kalium Ltd., IMC-Agrico Company and the Company. Portions of
this exhibit have been omitted pursuant to a request for confidential treatment.                                                                           
|10.04 |  | Company Employee Savings and Investment Plan.                                                                                                                                                                                                                                 
|10.05 |  | Royster-Clark Group, Inc. 1999 Restricted Stock Purchase and Option Plan.                                                                                                                                                                                                     
|10.06 |  | Employment Agreement dated as of April 22, 1999 by and among Francis P. Jenkins, Jr., Royster-Clark Group, Inc. and
Royster-Clark, Inc.                                                                                                                                       
|10.14 |  | Amendment Agreement dated August 18, 2000 amending Credit Agreement.                                                                                                                                                                                                         
|10.15 |  | Second Amendment to Revolving Credit Agreement among Royster-Clark, Inc., various financial institutions, DLJ Capital
Funding, J.P. Morgan Securities, Inc., and U.S. Bancorp, Ag Credit, Inc.                                                                              
|10.16 |  | Employment Agreement dated as of December 1, 1999 between Royster-Clark, Inc. and G. Kenneth Moshenek.
                                                                                                                                                                    
|10.17 |  | Employment Agreement dated as of December 1, 1999 between Royster-Clark, Inc. and Walter
Vance.                                                                                                                                                                            
|10.18 |  | Form of Waiver and Consent dated May 6, 2002 under the Revolving Credit Agreement by and among Royster-Clark, Inc. and
various financial institutions                                                                                                                         
|10.19 |  | Third Amendment to Revolving Credit Agreement among Royster-Clark, Inc., various financial institutions, DLJ Capital
Funding., J.P. Morgan Securities, Inc., and U.S. Bancorp, Ag Credit, Inc dated March 25, 2003.                                                          
|10.20 |  | Employment Agreement dated as of December 1, 1999 between Royster-Clark, Inc. and Paul M. Murphy.
                                                                                                                                                                           

---

| |  | Incorporated by reference to Registration Statement on Form S-4 (Reg. No.: 333-81235) where it has been filed as an Exhibit.
|- |  | ----------------------------------------------------------------------------------------------------------------------------

| |  | Incorporated by reference to Exhibit No. 10.14 to Form 10Q for the quarterly period ended June 30, 2000 (Reg. No.: 333-81235) filed on August 21, 2000.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Incorporated by reference to Exhibit No 10.15 to Form 10Q for the quarterly period ended September 30, 2000 (Reg. No.: 333-81235) filed on November 14, 2000.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Incorporated by reference to identically numbered exhibit to Form 10K for the annual period ended December 31, 2000 (Reg. No.: 333-81235) filed on April 2, 2001.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Incorporated by reference to Exhibit No 10.18 to Form 10Q for the quarterly period ended March 31, 2002 (Reg. No.: 333-81235) filed on May 14, 2002.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Incorporated by reference to identically numbered exhibit to Form 10K for the annual period ended December 31, 2002 (Reg. No.: 333-81235) filed on March 28, 2003.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Additional
Exhibits. In accordance with SEC Release No. 33-8212, Exhibits 99.01 and 99.02 are to be treated as accompanying this report rather than filed as part of the report.



|99.01 |  | Certification of Periodic Financial Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section
1350
|----- |  | -------------------------------------------------------------------------------------------------------------------------
|99.02 |  | Certification of Periodic Financial Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section
1350



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



On April 7, 2003 we filed a report on Form 8-K which reported under Item 9, the issuance of a press release which reported operating and
financial results for the year ended December 31, 2002.



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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.



ROYSTER-CLARK, INC./s/    PAUL M. MURPHYPaul M. MurphyChief Financial Officer




DATE:    May 13, 2003



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ROYSTER-CLARK, INC.

CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Francis P. Jenkins, Jr., Chief Executive Officer of Royster-Clark, Inc. certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Royster-Clark, Inc.;
|-- |  | --------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dated: May 13, 2003



By:

/s/    FRANCIS P. JENKINS,
JR.Francis P. Jenkins, Jr. Chief Executive Officer










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ROYSTER-CLARK, INC.

CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT OF
1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Paul M. Murphy, Chief Financial Officer of Royster-Clark, Inc. certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Royster-Clark, Inc.;
|-- |  | --------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | (a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dated: May 13, 2003



By:

/s/    PAUL M. MURPHYPaul M. Murphy Chief Financial Officer








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