UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004


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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 000-26519

SEMINIS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


DELAWARE		36-0769130
(STATE OF INCORPORATION)		(I.R.S. EMPLOYER IDENTIFICATION NO.)

2700 CAMINO DEL SOL, OXNARD, CALIFORNIA		93030-7967
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)		(ZIP CODE)

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

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

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

Indicate, by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). YES o NO þ

As of February 9, 2005, 64,333,205 shares of the registrant’s common stock, $0.01 par value, were outstanding.

SEMINIS, INC.

FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

TABLE OF CONTENTS


		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of December 31, 2004 and September 30, 2004		3

	Consolidated Statements of Operations for the Three Months Ended December 31, 2004 and December 26, 2003		4

	Consolidated Statement of Stockholders' Equity for the Three Months Ended December 31, 2004		5

	Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2004 and December 26, 2003		6

	Notes to Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31

Item 4.	Controls and Procedures		31

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings		32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33

Item 3.	Defaults Upon Senior Securities		33

Item 4.	Submission of Matters to a Vote of Security Holders		33

Item 5.	Other Information		33

Item 6.	Exhibits and Reports on Form 8-K		33

	Signatures		36

	Certification of Results

	Exhibit 31.1		37

	Exhibit 31.2		38

	Exhibit 32.1		39

	Exhibit 32.2		40
EX-10.11
EX-10.12
EX-10.13
EX-10.14
EX-10.15
EX-10.16
EX-10.17
EX-10.18
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SEMINIS, INC.

Consolidated Balance Sheets

(In thousands, except per share data)


	As of			As of
	December 31,			September 30,
	2004			2004
	(Unaudited)
Assets:
Current assets
Cash and cash equivalents	$	75,796		$	116,870
Accounts receivable, less allowances for doubtful accounts of $11,407 and $10,072, respectively		149,679			153,173
Inventories		345,146			328,395
Prepaid expenses and other current assets		11,661			8,017

Total current assets		582,282			606,455

Property, plant and equipment, net		86,963			78,608
Intangible assets, net		70,196			69,008
Other assets		24,097			23,591

Total Assets	$	763,538		$	777,662


Liabilities and Stockholders’ Equity:
Current liabilities
Short-term borrowings	$	20,604		$	10,965
Current maturities of long-term debt		1,826			1,746
Accounts payable		46,177			63,339
Accrued liabilities		110,427			120,334

Total current liabilities		179,034			196,384
Long-term debt		448,064			448,816
Deferred income taxes		20,804			16,291
Minority interest in subsidiaries		1,455			1,644
Preferred shares subject to mandatory redemption		42,016			41,773

Total liabilities		691,373			704,908


Commitments and contingencies (see Note 12)

Stockholders’ equity

Class A Common Stock, $.01 par value; 200,000 shares authorized, and 64,333 shares issued and outstanding as of December 31, 2004 and September 30, 2004, respectively		644			644
Additional paid-in-capital		94,149			94,149
Accumulated deficit		(32,067	)		(23,911	)
Accumulated other comprehensive income		9,439			1,872

Total stockholders’ equity		72,165			72,754

Total Liabilities and Stockholders’ Equity	$	763,538		$	777,662

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

SEMINIS, INC.

Consolidated Statements of Operations
(In thousands)


	For the Three Months Ended
	December 31,			December 26,
	2004			2003
	(Unaudited)
Net sales	$	110,704		$	101,892
Cost of goods sold		47,074			52,475

Gross profit		63,630			49,417


Operating expenses
Research and development expenses		13,022			11,574
Selling, general and administrative expenses		53,374			45,910
Amortization of intangible assets		2,061			1,887

Total operating expenses		68,457			59,371

Gain (loss) on sale of fixed assets		(173	)		2,525


Loss from operations		(5,000	)		(7,429	)


Other income (expense)
Interest income		413			112
Interest expense		(10,498	)		(8,036	)
Interest expense from preferred shares subject to mandatory redemption		(1,743	)		(1,760	)
Foreign currency gain		10,087			8,876
Minority interest benefit (provision)		87			(10	)
Other, net		199			201

		(1,455	)		(617	)


Loss before income taxes		(6,455	)		(8,046	)
Income tax expense		(1,701	)		(1,083	)

Net loss	$	(8,156	)	$	(9,129	)

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

SEMINIS, INC.

Consolidated Statement of Stockholders’ Equity

(In thousands)


										Accumulated		Total
	Class A				Additional					Other		Stock-
	Common Stock				Paid-in		Accumulated			Comprehensive		Holders’
	Number		Amount		Capital		Deficit			Income		Equity
Balance, September 30, 2004		64,333	$	644	$	94,149	$	(23,911	)	$	1,872	$	72,754

Comprehensive income (loss):
Net loss (unaudited)		—		—		—		(8,156	)		—		(8,156	)

Translation adjustment (unaudited)		—		—		—		—			7,429		7,429

Equity adjustment for interest rate swap (unaudited)		—		—		—		—			138		138

Comprehensive loss													(589	)


Balance, December 31, 2004 (unaudited)		64,333	$	644	$	94,149	$	(32,067	)	$	9,439	$	72,165

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

SEMINIS, INC.

Consolidated Statements of Cash Flows

(In thousands)


	For the Three Months Ended
	December 31,			December 26,
	2004			2003
	(Unaudited)
Cash flows from operating activities:
Net loss	$	(8,156	)	$	(9,129	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,655			3,788
Loss/(Gain) on sale of fixed assets		173			(2,525	)
Deferred income taxes		2,878			2,077
Inventory provision		3,000			4,000
Provision (benefit) for minority interest subsidiary		(87	)		10
Compensation expense for restricted stock units		344			275
Amortization of inventory step-up		9,968			11,526
Foreign currency gain		(10,087	)		(8,876	)
Other		(2,429	)		255
Changes in assets and liabilities:
Accounts receivable		11,226			3,527
Inventories		(17,344	)		(11,967	)
Prepaid expenses and other assets		(4,116	)		(6,267	)
Current income taxes		(2,682	)		(1,901	)
Accounts payable		(19,180	)		(10,725	)
Other liabilities		(12,469	)		2,485

Net cash used in operating activities		(45,306	)		(23,447	)


Cash flows from investing activities:
Purchases of fixed and intangible assets		(3,088	)		(1,704	)
Proceeds from disposition of assets		139			3,651
Other		(1,361	)		(103	)

Net cash provided by (used in) investing activities		(4,310	)		1,844


Cash flows from financing activities:
Proceeds from long-term debt		37			7,019
Repayment of long-term debt		(646	)		(285	)
Proceeds from short-term borrowings		10,162			6,060
Repayment of short-term borrowings		(1,992	)		—

Net cash provided by financing activities		7,561			12,794


Effect of exchange rate changes on cash and cash equivalents		981			(197	)


Decrease in cash and cash equivalents		(41,074	)		(9,006	)

Cash and cash equivalents, beginning of period		116,870			36,824


Cash and cash equivalents, end of period	$	75,796		$	27,818

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

SEMINIS, INC.

Notes to Consolidated Financial Statements

(In Thousands, Except Per Share Data)

Note 1 — Summary of Significant Accounting Policies

Description of Business

Seminis, Inc. (the “Company”, “we”) is the leading worldwide developer, producer and marketer of vegetable and fruit seeds. As a result of the acquisition transactions described in Note 2, which were completed on September 29, 2003, Fox Paine & Company, LLC, together with its affiliates and co-investors (collectively, “Fox Paine”), became the Company’s majority shareholder.

Principles of Consolidation and Basis of Presentation

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

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the fiscal period, including estimates and assumptions related to customer discounts and allowances. Actual results could differ from those estimates.

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

Supplementary Cash Flow Information


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

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods or services. This standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. SFAS No. 123(R) eliminates the exception to account for such awards using the intrinsic method previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be effective for interim or annual reporting periods beginning on or after June 15, 2005. The Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1, 2003; see Note 9 Benefit Plan (Stock Based Compensation) for related disclosure under this provision. Accordingly, management believes SFAS No. 123(R) will not have a material impact on the Company’s balance sheet or income statements. Management continues to assess the potential impact that the adoption of SFAS No. 123(R) could have on the Company’s statements of cash flows.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, which eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe the adoption of SFAS No. 153 will have a material impact on its financial statements.

In November 2004, FASB Statement No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4 (“SFAS No. 151”), was issued. The amendments made by SFAS No. 151 clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. SFAS No. 151 will become effective for the Company beginning in fiscal 2006. Management is in the process of assessing the impact SFAS No. 151 will have on the Company’s financial position and results of operations.

Recent Tax Legislation

The United States Congress passed the American Jobs Creation Act of 2004 (the “Act”), which the President signed into law on October 22, 2004. Key provisions of the Act include a temporary incentive for U.S. multinational corporations to repatriate foreign earnings, a domestic manufacturing deduction, and international tax reforms designed to improve the global competitiveness of U.S. businesses. In accordance with SFAS No. 109, “Accounting for Income Taxes,” we will reflect the effects of the Act, if any, in the first half of fiscal 2005 as part of income tax expense for the period. We are still evaluating the impact of the Act on the Company. Accordingly, we have not yet determined its impact on our effective tax rate and on our deferred tax assets and liabilities.

Note 2 — Acquisition Transactions / Liquidity

Under the acquisition transactions, in September 2003, the Company became a privately held company by acquiring all of its publicly held shares of Class A common stock, shares of Class B common stock and shares of Class B and Class C Redeemable Preferred Stocks. The Company also repaid the $216.6 million of principal outstanding under its senior credit facility, and the $11.6 million mortgage on its Oxnard real property. In order to fund these transactions and other related expenses, Fox Paine purchased shares of the Company’s common stock for a purchase price of $163.2 million, and the Company issued $190.0 million of ten year, 10 ¹/4% senior subordinated notes, established a senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan (none of the revolving loan was outstanding at September 30, 2003), borrowed $17.0 million under a new mortgage note, and issued PIK Preferred Stock along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million (see Note 11 — PIK Preferred Stock).

Upon completion of the acquisition transactions, the Company had total indebtedness of $421.3 million as of September 30, 2003 compared to $252.5 million before the transactions.

On January 23, 2004, the Company issued an additional $140.0 million of its 10 ¹/4% senior subordinated notes, at a premium of $12.6 million. These notes have identical terms and conditions as the $190.0 million of senior subordinated notes issued as part of the acquisition transactions on September 29, 2003. The net proceeds from the additional notes, after deducting underwriting discounts and other expenses, were approximately $145.6 million. These net proceeds from the offering were used to repay $100.0 million and $15.0 million of the borrowings under the term loan portion and revolver portion, respectively, of Company’s senior secured credit facility and for general corporate purposes.

Concurrently with the offering of the additional notes, the Company amended the senior secured credit facility. The amended senior secured credit facility decreased the term loan from $190.0 million to $90.0 million, increased the revolving credit facility from $60.0 million to $75.0 million (none of the revolving credit facility was outstanding at December 31, 2004 and September 30, 2004), amended pricing terms on both the term loan and revolver portion of the credit facility, and amended certain financial covenants.

The Company’s total indebtedness as of December 31, 2004 was $470.5 million, of which $88.6 million were borrowings under Company’s term loan, $341.4 million were borrowings under the senior 10 ¹/4% subordinated notes (including $11.4 million of remaining premium balance, which will be amortized over the life of the notes and reduces interest expense), and $17.0 million, $6.2 million, $1.5 million and $15.8 million were borrowings by its United States, Spanish, Italian and South Korean subsidiaries, respectively. The Company also has $42.0 million of preferred shares subject to mandatory redemption (see Note 11— PIK Preferred Stock). As of December 31, 2004, the Company has cash and cash equivalents of $75.8 million.

Going forward, the Company’s principal source of liquidity will be cash flow generated from operations, borrowings under its senior secured credit facility and additional capital infusion. The Company’s principal uses of cash will be to meet debt service requirements, finance capital expenditures and provide working capital. Based on the current level of operations, management believes that remaining cash on hand, cash flow from operations and available borrowings under its revolving credit portion of the senior secured credit facility will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.

Note 3 — Accounting Effects of the Acquisition Transactions

Overview

On May 30, 2003, the Company and certain other parties entered into a number of agreements pursuant to which a newly incorporated entity was formed to effect the acquisition transactions whereby the Company became a privately held company and Fox Paine acquired 75.1% of the outstanding common stock of the Company. On September 29, 2003, the acquisition transactions were completed.

The acquisition transactions are accounted for under the purchase method of accounting. In accordance with applicable accounting guidelines, the purchase price paid by Fox Paine for Seminis’ common stock plus related purchase accounting adjustments are “pushed down” and recorded in Seminis’ financial statements. The acquisition transactions resulted, for purposes of financial statement presentation of the results of operations and cash flows, in a predecessor entity and a successor entity.

Carrying Value Adjustments

The 75.1% of deemed assets acquired and liabilities assumed in connection with the acquisition transactions were originally recorded at their estimated fair market values based on an independent appraisal and 24.9% of the historical bases were carried over, however, these values were in excess of the proportionate purchase price paid by Fox Paine. Accordingly, the negative goodwill totaling $433.4 million was allocated against the value of non-current assets on a proportionate basis. The following summarizes the fair market values, subsequent adjustments and the adjusted carrying values of the net assets acquired as of September 29, 2003:


				FMV			24.9%			Negative			Adjusted Basis
	Historical			Of 75.1%			Carryover			Goodwill			As of
	Basis			Acquired			Basis			Allocation			September 29, 2003
Current assets, excluding inventory	$	185,206		$	139,017		$	46,190		$	—		$	185,207
Inventory		279,680			283,107			69,751			—			352,858
Property, plant & equipment		166,943			125,308			41,635			(106,589	)		60,354
Goodwill		106,056			—			—			—			—
Intangibles		51,533			331,693			12,852			(271,536	)		73,009
In-process R&D		—			58,547			—			(47,929	)		10,618
Other long-term assets		18,463			13,859			4,605			(7,338	)		11,126
Current liabilities		(466,697	)		(354,905	)		(116,392	)		—			(471,297	)

	$	341,184		$	596,626		$	58,641		$	(433,392	)	$	221,875

Inventories

The increase in inventory value of $73.2 million, reflecting the fair market value adjustment, is being expensed as the inventory is sold, which was expected to be over a 16-month period from September 29, 2003, the date of acquisition, based on an estimated inventory turn. The amortization period was subsequently changed to 18 months based on the actual inventory turn of fiscal year 2004.

Depreciation and Amortization

The effect of the negative goodwill allocation to the non-current assets resulted from the acquisition transactions was the write-down of the non-current assets. Therefore, the related depreciation and amortization expense was lowered.

Other

Intangible assets are being amortized on a straight-line basis over periods between five and forty years, and in-process research and development was immediately expensed in the results of the successor entity for the one-day period ended September 30, 2003.

Note 4 — Inventories

Inventories consist of the following:


	As of		As of
	December 31,		September 30,
	2004		2004
	(Unaudited)
Seeds	$	316,591	$	296,662
Unharvested crop growing costs		18,140		22,577
Supplies		10,415		9,156

Total net inventories	$	345,146	$	328,395

Inventories are presented net of reserves of $79,818 and $72,409 at December 31, 2004 and September 30, 2004, respectively. As described in Note 3, as part of the acquisition transactions, inventories were stepped-up by $73.2 million. In the quarter ended December 31, 2004, $10.0 million of the inventory step-up was amortized and charged to cost of sales. This non-cash adjustment will continue as the remaining inventory of approximately $16.0 million is expected to be sold over the next 3 months.

Note 5 — Intangible Assets

Intangible assets at December 31, 2004 and September 30, 2004 consist of the following:


	As of December 31, 2004
	(Unaudited)							As of September 30, 2004
	Gross		Accumulated			Net Carrying		Gross		Accumulated
	Carrying Amount		Amortization			Amount		Carrying Amount		Amortization			Adjusted Amount

Amortizable intangible assets:
Germplasm	$	26,378	$	(2,110	)	$	24,268	$	25,882	$	(1,684	)	$	24,198
Software		14,410		(3,365	)		11,045		13,331		(2,552	)		10,779
Trademarks		8,896		(796	)		8,100		8,741		(637	)		8,104
Existing product technology		25,680		(3,374	)		22,306		24,162		(2,793	)		21,369
Customer relationships		4,885		(408	)		4,477		4,885		(327	)		4,558

	$	80,249	$	(10,053	)	$	70,196	$	77,001	$	(7,993	)	$	69,008

Aggregate amortization expense was $2.1 million and $1.9 million for the three months ended December 31, 2004 and December 26, 2003, respectively. Amortization periods for Germplasm and Software are 40 years and 5 years, respectively, and Trademarks, Existing Product Technology, and Customer Relationships are 15 years. The weighted average of the amortization period for intangible assets is approximately 14.5 years. Estimated amortization expense for the next five years is as follows:


Year Ending September 30
2005	$	7,396
2006		7,396
2007		7,396
2008		6,237
2009		4,599

The Company had no goodwill recorded in the three months ended December 31, 2004 and the year ended September 30, 2004.

In accordance with SFAS No. 142, impairment for goodwill was analyzed resulting in no impairment in fiscal year 2002. As a result of the acquisition transactions described in Note 3, all goodwill was written off at September 30, 2003. Furthermore, research and development assets totaling $10.6 million, which were determined by an independent appraisal service (after negative goodwill adjustments), were written off as part of research and development expenses during the one-day period ended September 30, 2003.

Note 6 — Accrued Liabilities

Accrued liabilities consist of the following at December 31, 2004 and September 30, 2004:


	As of		As of
	December 31,		September 30,
	2004		2004
	(Unaudited)
Employee salaries and related benefits	$	63,413	$	58,572
Severance		498		454
Seedmen’s errors and omissions		8,621		8,823
Interest		9,277		17,914
Income taxes payable		11,247		13,582
Other		17,371		20,989

	$	110,427	$	120,334

Note 7 — Long-Term Debt

Long-term debt consists of the following at December 31, 2004 and September 30, 2004:


	As of			As of
	December 31,			September 30,
	2004			2004
	(Unaudited)
Senior secured credit facility borrowings	$	88,625		$	88,850
Senior subordinated notes		330,000			330,000
Mortgage notes		16,659			16,735
South Korean borrowings due in annual installments through 2013		1,496			1,612
Bond premium related to additional senior subordinated note		11,368			11,699
Other borrowings		1,742			1,666

		449,890			450,562
Less current portion		(1,826	)		(1,746	)

	$	448,064		$	448,816

As of December 31, 2004, long-term debt maturities are as follows:


Period Ending December 31		(Unaudited)
2005	$	1,826
2006		1,891
2007		1,715
2008		1,699
2009		85,845
Thereafter		356,914

	$	449,890

Senior Secured Credit Facility

On September 29, 2003, the Company’s principal domestic operating subsidiary, Seminis Vegetable Seeds, Inc., entered into a senior secured credit facility with a group of lenders. The Company and its other wholly owned domestic subsidiaries guaranteed the obligations under the senior secured credit facility. The senior secured credit facility originally provided for a $190.0 million term loan and a revolving line of credit for borrowings up to an aggregate principal amount of $60.0 million. The Company amended the senior secured credit facility on January 15, 2004 such that it now provides a $90.0 million term loan and a revolving line of credit for borrowings up to an aggregate principal amount of $75.0 million, and amortizes in quarterly installments equal to 1.0% per annum for the first five and 1/2 years, and with the balance of the term loan due in a single payment at the end of the sixth year. The first quarterly payment was paid on March 31, 2004. The $75.0 million revolving credit facility will mature in five years from the closing date of the acquisition transactions and does not amortize (none of which was drawn as of December 31, 2004 and $3.5 million of which was committed under letters of credit). Both facilities may be voluntarily prepaid in whole or in part without premium or penalty. Additionally, based upon formulas stated in the amended senior secured credit facility and subject to certain exceptions, all or a portion of the proceeds from the issuance of equity interests or equity rights, debt issuances, asset sales, proceeds from insurance recoveries and excess cash flow must be used to pay down the outstanding balance under the term loan facility.

In general, borrowings under the amended senior secured credit facility will bear interest, at the Company’s option, on either a London inter-bank offered rate (LIBOR) or an alternate base rate, in each case plus an applicable rate. The alternate base rate is equal to the highest of Citicorp North America, Inc.’s base rate, the three month certificate of deposit rate plus 0.5% and the federal funds effective rate plus 0.5%. The applicable rate for the term loan is based upon the Company’s leverage ratio that ranges from 1.25% to 2.00% per annum in the case of an alternate rate loan or LIBOR plus 3.00% per annum in the case of a LIBOR loan. The applicable rate for the revolving credit facility under

the amended senior secured credit facility is based upon the Company’s leverage ratio and ranges from 1.00% to 1.75% per annum in the case of alternate rate loans and LIBOR plus 2.00% to LIBOR plus 2.75% per annum in the case of LIBOR loans, subject, in each case, to adjustments based on the leverage ratio at the time. Subsequent to an event of default under the amended senior secured credit facility, borrowings will bear interest at 2.0% over the rate of interest otherwise applicable and the LIBOR rate will not be available.

Obligations under the senior secured credit facility are guaranteed by the Company and its domestic subsidiaries. Additionally, borrowings are secured by a perfected lien on all of the capital stock, intercompany notes and all of the tangible and intangible properties and assets, including intellectual property subject to exceptions relating to foreign subsidiaries, of the Company. The Company is subject to certain commitment fees under the facility as well as the maintenance of certain financial ratios and other restrictive covenants, including the payment of dividends in cash.

On December 31, 2004, the outstanding balance of the term loan under the senior secured credit facility was $88.6 million with a variable interest rate of 4.46%, and the Company is in compliance with its financial covenants.

10 1/4% Senior Subordinated Notes

On September 29, 2003, the Company’s principal domestic operating subsidiary, Seminis Vegetable Seeds, Inc., issued $190.0 million of senior subordinated notes. The senior subordinated notes mature on October 1, 2013; interest is payable semi-annually on April 1 and October 1 of each year. The senior subordinated notes are unsecured general obligations of the Company and are subordinated in right of payment to substantially all existing and future senior indebtedness of the Company, including senior credit facility indebtedness. Prior to maturity, the Company may redeem all or some of the senior subordinated notes at defined redemption prices, which may include a premium. In the event of a change in control, the holders may require the Company to repurchase the senior subordinated notes for a redemption price that may also include a premium. The majority of the Company’s domestic subsidiaries have guaranteed the senior subordinating notes.

On January 23, 2004, the Company issued an additional $140.0 million of senior subordinated notes, at a premium of $12.6 million. These notes have identical terms and conditions as the $190.0 million of senior subordinated notes issued as part of the acquisition transactions on September 29, 2003.

On December 31, 2004, the outstanding balance of the 10¹/4% senior subordinated notes was $330.0 million and a remaining premium balance of $11.4 million.

Mortgage Notes

In March 2000, the Company issued a $17.2 million promissory note, which was secured by the Company’s global headquarters facility. The variable rate of interest on the original note was based on LIBOR plus 2.5% (4.2% as of September 30, 2002). As of September 29, 2003, principal outstanding on this note totaling $11.6 million was repaid with proceeds from a new $17.0 million mortgage. Interest on the new note is based on LIBOR plus 2.0% (3.1% as of September 30, 2003), adjustable on the first day of each month. Simultaneous with entering into the new mortgage, the Company entered into an interest rate swap agreement (extending for a seven year term) to swap the floating interest rate for a 6.3% fixed interest rate. The loan amortizes in scheduled annual payments of approximately $0.2 million to $0.4 million, with a payment of the final remaining balance due on October 1, 2010.

On December 31, 2004, the outstanding balance of the mortgage note was $16.7 million with a fixed interest rate of 6.3%, and the market value of the interest rate swap was a liability to Seminis of $0.3 million.

South Korean Borrowings

The Company’s South Korean subsidiary has a number of loan facilities maturing until 2013. Borrowings under these facilities carry interest rates of between 4.0% and 6.0%.

Other Borrowings

Other borrowings consisted of various domestic and foreign, government and non-government loans of less than $1.5 million each, bearing interest annually at average rates of 9.82% through 2013 as of December 31, 2004 and September 30, 2004.

For the three months ended December 31, 2004 and fiscal year ended September 30, 2004, the Company incurred interest at a weighted-average rate of 8.66% and 8.68% per annum, respectively.

Note 8 — Pensions and Other Postretirement Benefits

The Company provides a defined-benefit plan in the Netherlands (the “Netherlands Plan”) as required by statute. The components of net pension expense of the Netherlands Plan are as follows:


	Three Months Ended
	December 31,			December 26,
	2004			2003
	(Unaudited)
Service cost	$	718		$	546
Interest cost		1,205			916
Expected return on plan assets		(1,429	)		(1,087	)
Amortization of prior service cost		(59	)		(44	)
Amortization of net (gain) loss		288			219

	$	723		$	550

Note 9 — Stock-Based Compensation

The Company has a policy whereby all stock option grants are priced at fair market value on the date of grant. Prior to October 1, 2003, the Company used the intrinsic value method of accounting for stock-based compensation in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”. Under the intrinsic value method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock.

Effective October 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation. Under the modified prospective method of adoption selected by the Company under the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, stock-based employee compensation expense recognized in fiscal year 2004 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to all awards from its original effective date.

Note 10 — Equity Interests of Certain Beneficial Owners and Management

Options

Certain executives of the Company have “rolled over” their option rights from pre-acquisition stock option grants, and as of December 31, 2004, there are approximately 1.7 million options outstanding.

Restricted Stock Units

Upon completion of the acquisition transactions, the Company granted restricted stock units to a group of Company’s senior executives. The restricted stock units will, upon the events described below, be paid in shares of Company common stock on a one-for-one basis and will vest over a five year period depending on the continued employment of the executive and on Company’s performance and the performance of the executives relative to specified goals and objectives.

Upon completion of the acquisition transactions, each of the senior executives was granted an aggregate number of restricted stock units calculated as 2.25 times the initial base salary of the applicable senior executive divided by $3.40. Each of the other key executives was granted an aggregate number of restricted stock units calculated as 1.0 times the initial base salary of the applicable executive divided by $3.40.

If the specified goals and objectives are achieved and the executive is actively employed by the Company at each applicable vesting date, the restricted stock units will vest with respect to 10.0% of the aggregate award in each of the first two years, 20.0% of the aggregate award in the third year and 30.0% of the aggregate award in each of the fourth and fifth years following the time of grant. To the extent that conditions to vesting are not met and some of the restricted stock units do not vest, the portion of restricted stock units that do not vest will be permanently forfeited and will not be reallocated.

In the event that Fox Paine achieves a designated internal rate of return on its initial investment in the Company prior to the fifth anniversary of the completion of the acquisition transactions, all restricted stock units, other than those permanently forfeited due to a failure to meet specified goals and objectives, will vest.

For the three months ended December 31, 2004 and December 26, 2003, the Company recorded $0.3 million of compensation expense in each period for restricted stock units.

Co-Investment Rights to Purchase Additional Shares of Company’s Common Stock

In connection with the acquisition transactions, Desarrollo Consolidado de Negocios, S.A. de C.V. received immediately exercisable rights to acquire 13.8% of the outstanding shares of the Company’s common stock on a fully diluted basis. In addition, Desarrollo Consolidado de Negocios, S.A. de C.V. and Fox Paine received a second tranche of co-investment rights to acquire up to 15.8% and 1.57%, respectively, of the outstanding shares of the Company’s common stock on a fully diluted basis. The Fox Paine co-investment rights and the second tranche of co-investment rights owned by Desarrollo Consolidado de Negocios, S.A. de C.V. will become exercisable only if Fox Paine achieves a 26.0% internal rate of return on its investment in the Company. Each co-investment right entitles the recipient to acquire one share of Company’s common stock at an exercise price of $3.40 per share. All of the co-investment rights expire on the tenth anniversary of the date of the consummation of the acquisition transactions.

Warrants

See Note 11 — PIK Preferred Stock

Note 11 — PIK Preferred Stock

The Company issued shares of PIK Preferred Stock with an aggregate liquidation preference of $50.0 million as part of the acquisition transactions. In connection with the sale of PIK Preferred Stock, the Company issued warrants to purchase shares of Company common stock representing approximately 3.7% of the shares of Company common stock on a fully diluted basis. The shares of PIK Preferred Stock are mandatorily redeemable at liquidation value on October 1, 2014.

Holders of shares of the PIK Preferred Stock are entitled to receive paid-in-kind dividends (or at the sole discretion of the Company, cash dividends) at the annual rate of 12.0% of liquidation preference per share, compounded quarterly, provided that after the occurrence of, and during the continuance of, specified events of default, holders of shares of the PIK Preferred Stock are entitled to receive paid-in-kind dividends (or in the sole discretion of the Company, cash dividends) at the annual rate of 14.0% of liquidation preference per share, compounded quarterly.

In general, the PIK Preferred Stock is not redeemable at the option of the Company prior to October 1, 2006. For the period from October 1, 2006 to and including October 1, 2008, the PIK Preferred Stock is redeemable by the Company at a per share redemption price payable in cash equal to 102% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends. After October 1, 2008, the shares of PIK Preferred Stock are redeemable by the Company at a per share redemption price payable in cash equal to 100% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends.

At any time prior to October 1, 2014, following a change of control or an initial public offering of the Company, the Company has the right to redeem the shares of PIK Preferred Stock at a per share redemption price payable in cash equal to 102% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends.

Unless the holders of a majority of the then outstanding shares of PIK Preferred Stock otherwise consent, the Company may not approve a change of control unless, in connection with the change of control, the Company is permitted to make and consummate a change of control offer. Upon the occurrence of a change of control, holders of shares of PIK Preferred Stock would have the right to require the Company to repurchase their shares of PIK Preferred Stock at a purchase price equal to 101% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends.

Upon the occurrence of certain events of bankruptcy relating to the Company (or the principal borrower of the material indebtedness of Seminis) and, the acceleration and satisfaction of certain material indebtedness of Seminis, holders of shares of the PIK Preferred Stock have the right to require the Company to repurchase their shares of PIK Preferred Stock at a purchase price equal to 102% (if the applicable event occurred prior to October 1, 2008) or 100% (if the applicable event occurred following October 1, 2008) of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends, provided, however, that the Company’s repurchase obligation would be subject to the prior satisfaction of any and all obligations pursuant to Seminis’ senior secured credit facility (and any replacement financing) and the notes (and any replacement financing).

The ability of the Company to pay cash dividends on the PIK Preferred Stock or to redeem the PIK Preferred Stock is dependent on the ability of Seminis Vegetable Seeds, a subsidiary of the Company, to dividend funds to the Company, which ability is limited by the terms of the Company’s senior secured facility and the notes.

The preferred shares subject to mandatory redemption were stated at $42.0 million and $41.8 million as of December 31, 2004 and September 30, 2004, respectively. The accretion of the preferred shares subject to mandatory redemption and their paid-in-kind dividends are recognized as interest expense through the term of the agreement. For the three months ended December 31, 2004 and December 26, 2003, this interest expense totaled $1.7 million and $1.8 million, respectively.

Note 12 — Commitments and Contingencies

Contingencies

In mid-October 2003, Seminis was notified by the University of California at Davis (UCD) that 20 grams of tomato seed donated to the university in 1996 by Petoseed (acquired by Seminis) for research purposes was believed to be bioengineered seed. UCD had grown a seed crop from this seed and distributed 30 samples (each including about 25 seeds) to researchers and horticulturists in the United States and abroad over the past seven years. UCD, Seminis and the recipients of this seed were unaware that these seeds carried a biotech trait. Seminis and UCD have investigated this matter, and it is unclear when or where the seeds were mislabeled.

The biotech trait involved here, known as the PG-gene, had been cleared for human consumption by the Food and Drug Administration in 1994, and a different seed variety with this trait was planted commercially until 1999. Federal regulators indicate there is no evidence that the seed in this instance was used for anything other than research.

Seminis and UCD worked with the U.S. Department of Agriculture, as well as similar local agencies in the countries where seed was sent to determine what happened and what actions, if any, needed to be taken. The USDA has now closed its investigation with a minor fine paid by Seminis, and an update to Seminis’ seed handling training.

As part of the formation of LSL PlantScience, a joint venture between Seminis and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements between LSL Biotechnologies and a third party. These agreements contain provisions that permanently restrict the third party from engaging in the development or marketing of open field tomato seeds having long-shelf-life characteristics in certain areas in the world, including North America. In September 2000, the Antitrust Division of the U.S. Department of Justice filed suit in the U.S. District Court for the District of Arizona against LSL PlantScience, LSL Biotechnologies and Seminis to delete these restrictive provisions. On March 29, 2002, the U.S. District Court dismissed without prejudice the action against LSL PlantScience, LSL Biotechnologies and Seminis. The U.S. Department of Justice appealed this ruling, but its appeal was denied by a panel of the Ninth Circuit Court of Appeals on August 11, 2004. The U.S. Department of Justice filed a Petition for Panel Rehearing and Suggestion for Rehearing En Bank on September 23, 2004, requesting that the panel’s decision be vacated, and the district court’s order reversed (U.S. v. LSL Biotechnologies, 9th Cir., No. 02-16472, 8/11/04). On October 20, 2004, the government’s petition was denied, and the mandate was issued on November 3, 2004.

During the last months of fiscal year 2002, Seminis’ subsidiary in Spain sold Boludo tomato seed to growers in the Canary Islands, Almeria, Murcia and Granada areas of Spain. Subsequently, some plantings with this seed showed symptoms of the bacteria, Clavibacter michiganses, which can be seed borne, among other possible sources. Seminis has been conducting an investigation of the seeds and until July 31, 2003, all Seminis seed used in these plantings that had been tested, tested negative for the presence of the bacteria. Spanish authorities requested an analysis of all seed lots sold in the Canary Islands. On July 31, 2003, Seminis was notified that after analyzing 89 officially sealed samples of batches of Boludo seed, a single seed batch tested positive for the presence of the bacteria. Seminis believes that other factors that may cause the disease were present at the time of the infection, and could be responsible for, or contributing factors to, the presence of the bacteria and damage to the crops. These factors include, but are not limited to: poor sanitary practices in the growers’ fields (failure to remove debris from prior harvests); bacteria from sources other than Seminis that remained in the plantings from prior seasons; the practice of grafting, which can magnify the effects of minor outbreaks; failure to properly rotate crops from season to season; and third-party sources (different strains) of the disease that may have been present. Seminis continues to investigate this matter vigorously, in particular investigating the single positive test result, which is inconsistent with the findings of all of the other independent laboratories’ test results obtained from testing officially sealed batches samples of Seminis seed. Tomato growers may initiate legal claims against Seminis alleging that Seminis seeds were the source of the bacteria and claiming significant damages and Seminis cannot predict the outcome of any such claim, if initiated. As part of its customer relations initiatives, Seminis has entered into a $2.9 million settlement of this matter with growers in Almeria, and continues to work with its insurance carriers and counsel to investigate and close out this matter in other locations in Spain.

The Company is involved from time to time as a defendant in various other lawsuits arising in the normal course of business. Management believes that no current claims, individually or in the aggregate, will have a material adverse effect on the Company’s business, results of operations or financial condition.

An accrual for management’s estimate of exposure related to such claims has been recorded in the financial statements and is disclosed in Note 8. It is the opinion of management that the ultimate resolution of these matters will not have a

material adverse effect on the Company’s consolidated financial position or results of operations. Historically, resolution of asserted claims has been in line with management’s expectations.

Note 13 — Related Party Transactions

In accordance with the agreement entered in as part of acquisition transactions, the Company paid management fees of $2.6 million each to Fox Paine and Desarrollo Consolidado De Negocios, S.A. De C.V. in October and December 2004, respectively, for services to be rendered during fiscal year 2005. The annual management fee is equal to 1% of previous fiscal year’s net sales and is amortized as services are rendered during the fiscal year.

Note 14 — Subsequent Events

On January 24, 2005, Seminis Inc. (“Seminis”) and Fox Paine & Company, LLC (“Fox Paine”) announced that Seminis entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Monsanto Company (“Monsanto”), Monsanto Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Monsanto, and Seminis, dated as of January 22, 2005, pursuant to which Monsanto would acquire Seminis for approximately $1.4 billion in cash and assumed debt, subject to the contingent value right payment described below.

As of the effective time of the merger, outstanding shares of common stock of Seminis will be converted into the right to receive $10.52 per share. Outstanding options, restricted stock units, co-investment rights and warrants will be converted into the right to receive an amount in cash equal to the common stock cash price per share for the number of shares into which they are convertible, less their conversion price, if any.

Marinet Investments, LLC (“Marinet”), a current holder of co-investment rights in Seminis which are being terminated upon the consummation of the merger, may elect prior to closing to reduce the merger consideration it would otherwise be entitled to receive by $50 million in exchange for a performance-based contingent value right to receive up to $125 million based on the achievement of certain cumulative net sales targets over the thirty-six-month period ending September 30, 2007.

As contemplated by the Merger Agreement, each holder of Seminis common stock and warrants entered into a support agreement agreeing, among other things, to vote in favor of approval of the Merger Agreement and the merger. The holders of Seminis common stock approved the Merger Agreement by written consent on January 22, 2005.

The Merger Agreement is subject to customary terms and conditions, including regulatory approvals. The transaction is expected to be completed during the first half of 2005. There can be no assurance that the transactions contemplated by the Merger Agreement will be consummated.

Note 15 — Supplemental Guarantor/Non-Guarantor Financial Information

In conjunction with the 10 1/4% senior subordinated notes, the following summarized condensed consolidating financial information is presented for the Company, segregating the Company, a guarantor of the notes and the parent of Seminis Vegetable Seeds, Inc. (“Seminis Vegetable”), Seminis Vegetable, the issuer of the notes, guarantor subsidiaries and non-guarantor subsidiaries. The accompanying financial information in the “Guarantor Subsidiaries” column reflects the financial position, results of operations and cash flows for those subsidiaries which guarantee the notes. The guarantor subsidiaries are wholly owned subsidiaries of the Company and the guarantees are full, unconditional, and joint and several. Separate financial statements of the guarantor subsidiaries are not presented because management believes that such financial statements would not be material to investors.

Investments in subsidiaries in the following condensed consolidating financial information are accounted for under the equity method of accounting. Consolidating adjustments include the following:

	(1)	elimination of investments in subsidiaries;

	(2)	elimination of intercompany accounts;

	(3)	elimination of intercompany sales between guarantor and non-guarantor subsidiaries; and

	(4)	elimination of equity in earnings of subsidiaries.

Condensed Consolidating Balance Sheets
As of December 31, 2004
(Unaudited)



			Seminis						Subsidiary
	Seminis		Vegetable			Subsidiary			Non-
	(Parent)		(Issuer)			Guarantors			Guarantors		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—	$	56,509		$	750		$	18,537	$	—		$	75,796
Accounts receivable		—		36,933			3,538			109,208		—			149,679
Inventories		—		167,409			6,380			171,357		—			345,146
Prepaid expenses and other current assets		—		7,704			23			3,934		—			11,661

Total current assets		—		268,555			10,691			303,036		—			582,282
Property, plant and equipment, net		—		35,304			70			51,589		—			86,963
Investment in subsidiaries		247,408		240,284			—			—		(487,692	)		—
Intangible assets, net		—		45,027			—			25,169		—			70,196
Deferred tax asset		—		—			—			1,290		(1,290	)		—
Other assets		132		13,772			—			10,193		—			24,097

	$	247,540	$	602,942		$	10,761		$	391,277	$	(488,982	)	$	763,538

Current liabilities
Short-term borrowings	$	—	$	—		$	—		$	20,604	$	—		$	20,604
Current maturities of long-term debt		—		1,211			189			426		—			1,826
Accounts payable		—		22,574			446			23,157		—			46,177
Accrued liabilities		453		47,293			517			62,164		—			110,427
Intercompany payables		132,906		(183,079	)		13,802			36,371		—			—

Total current liabilities		133,359		(112,001	)		14,954			142,722		—			179,034
Long-term debt		—		445,441			158			2,465		—			448,064
Deferred income taxes		—		22,094			—			—		(1,290	)		20,804
Minority interest in subsidiaries		—		—			—			1,455		—			1,455
Preferred shares subject to mandatory redemption		42,016		—			—			—		—			42,016

Total liabilities		175,375		355,534			15,112			146,642		(1,290	)		691,373

Total stockholders’ equity		72,165		247,408			(4,351	)		244,635		(487,692	)		72,165

	$	247,540	$	602,942		$	10,761		$	391,277	$	(488,982	)	$	763,538

Condensed Consolidating Balance Sheets
As of September 30, 2004



			Seminis						Subsidiary
	Seminis		Vegetable			Subsidiary			Non-
	(Parent)		(Issuer)			Guarantors			Guarantors		Eliminations			Consolidated
Current assets
Cash and cash equivalents	$	—	$	101,022		$	635		$	15,213	$	—		$	116,870
Accounts receivable		—		36,684			4,269			112,220		—			153,173
Inventories		—		168,225			7,201			152,969		—			328,395
Prepaid expenses and other current assets		—		5,180			23			2,814		—			8,017

Total current assets		—		311,111			12,128			283,216		—			606,455
Property, plant and equipment, net		—		35,187			76			43,345		—			78,608
Investment in subsidiaries		253,597		233,740			—			—		(487,337	)		—
Intangible assets, net		—		44,710			—			24,298		—			69,008
Other assets		137		13,886			—			9,568		—			23,591

	$	253,734	$	638,634		$	12,204		$	360,427	$	(487,337	)	$	777,662

Current liabilities
Short-term borrowings	$	—	$	—		$	—		$	10,965	$	—		$	10,965
Current maturities of long-term debt		—		1,206			183			357		—			1,746
Accounts payable		—		34,448			917			27,974		—			63,339
Accrued liabilities		452		54,018			124			65,740		—			120,334
Intercompany payables		138,755		(167,004	)		14,245			14,004		—			—

Total current liabilities		139,207		(77,332	)		15,469			119,040		—			196,384
Long-term debt		—		446,077			208			2,531		—			448,816
Deferred income taxes		—		16,291			—			—		—			16,291
Minority interest in subsidiaries		—		—			—			1,644		—			1,644
Preferred shares subject to mandatory redemption		41,773		—			—			—		—			41,773

Total liabilities		180,980		385,036			15,677			123,215		—			704,908

Total stockholders’ equity		72,754		253,598			(3,473	)		237,212		(487,337	)		72,754

	$	253,734	$	638,634		$	12,204		$	360,427	$	(487,337	)	$	777,662

Condensed Consolidating Statements of Operations
For the Three Months Ended December 31, 2004
(Unaudited)



				Seminis						Subsidiary
	Seminis			Vegetable			Subsidiary			Non-
	(Parent)			(Issuer)			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—		$	68,199		$	1,801		$	77,815		$	(37,111	)	$	110,704
Cost of goods sold		—			37,153			1,934			45,098			(37,111	)		47,074

Gross profit		—			31,046			(133	)		32,717			—			63,630

Operating expenses
Research and development expenses		—			6,137			—			6,885			—			13,022
Selling, general and administrative expenses		—			22,269			458			30,647			—			53,374
Amortization of intangible assets		—			1,461			—			600			—			2,061

Total operating expenses		—			29,867			458			38,132			—			68,457

Gain on sale of assets		—			—			(275	)		102			—			(173	)

Income (loss) from operations		—			1,179			(866	)		(5,313	)		—			(5,000	)

Other income (expense)
Interest income		—			328			—			85			—			413
Interest expense		(6	)		(9,979	)		(11	)		(502	)		—			(10,498	)
Interest expense from preferred shares subject to mandatory redemption		(1,743	)		—			—			—			—			(1,743	)
Foreign currency gain (loss)		(83	)		1,271			—			8,899			—			10,087
Minority interest		—			—			—			87			—			87
Other, net		—			443			(1	)		(243	)		—			199
Equity from subsidiary		(6,324	)		612			—			—			5,712			—

		(8,156	)		(7,325	)		(12	)		8,326			5,712			(1,455	)

Income (loss) before income taxes		(8,156	)		(6,146	)		(878	)		3,013			5,712			(6,455	)
Income tax expense		—			(178	)		—			(1,523	)		—			(1,701	)

Net income (loss)	$	(8,156	)	$	(6,324	)	$	(878	)	$	1,490		$	5,712		$	(8,156	)

Condensed Consolidating Statements Of Operations
For the Three Months Ended December 26, 2003
(Unaudited)



				Seminis						Subsidiary
	Seminis			Vegetable			Subsidiary			Non-
	(Parent)			(Issuer)			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	—		$	56,508		$	2,108		$	71,006		$	(27,730	)	$	101,892
Cost of goods sold		—			36,103			2,114			41,988			(27,730	)		52,475

Gross profit		—			20,405			(6	)		29,018			—			49,417

Operating expenses
Research and development expenses		—			6,000			—			5,574			—			11,574
Selling, general and administrative expenses		—			19,966			420			25,524			—			45,910
Amortization of intangible assets		—			1,331			—			556			—			1,887

Total operating expenses		—			27,297			420			31,654			—			59,371

Gain on sale of assets		—			—			—			2,525			—			2,525

Loss from operations		—			(6,892	)		(426	)		(111	)		—			(7,429	)

Other income (expense)
Interest Income		—			11			—			101			—			112
Interest expense		(6	)		(7,565	)		(16	)		(449	)		—			(8,036	)
Interest expense from preferred shares subject to mandatory redemption		(1,760	)		—			—			—			—			(1,760	)
Foreign currency gain (loss)		—			312			—			8,564			—			8,876
Other, net		—			2			5			184			—			191
Equity from subsidiary		(7,363	)		6,769			—			—			594			—

		(9,129	)		(471	)		(11	)		8,400			594			(617	)

Income (loss) before income taxes		(9,129	)		(7,363	)		(437	)		8,289			594			(8,046	)
Income tax expense		—			—			—			(1,083	)		—			(1,083	)

Net income (loss)		(9,129	)		(7,363	)		(437	)		7,206			594			(9,129	)

Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 31, 2004
(Unaudited)


			Seminis
	Seminis		Vegetable			Subsidiary			Subsidiary
	(Parent)		(Issuer)			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	(23,191	)	$	603		$	(22,718	)	$	—	$	(45,306	)

Cash flows from investing activities:
Purchases of fixed and intangible assets		—		(782	)		(2	)		(2,304	)		—		(3,088	)
Proceeds from disposition of assets		—		—			—			139			—		139
Other		—		(1,103	)		—			(258	)		—		(1,361	)

Net cash used in investing activities		—		(1,885	)		(2	)		(2,423	)		—		(4,310	)

Cash flows from financing activities:
Proceeds from long-term debt		—		—			—			37			—		37
Repayment of long-term debt		—		(301	)		(43	)		(302	)		—		(646	)
Proceeds from short-term borrowings		—		—			—			10,162			—		10,162
Repayment of short-term borrowings		—		—			—			(1,992	)		—		(1,992	)
Net change in intercompany account		—		(19,136	)		(443	)		19,579			—		—

Net cash provided by (used in) financing activities		—		(19,437	)		(486	)		27,484			—		7,561

Effect of exchange rate changes on cash and cash equivalents		—		—			—			981			—		981

Increase (decrease) in cash and cash equivalents		—		(44,513	)		115			3,324			—		(41,074	)
Cash and cash equivalents, beginning of period		—		101,022			635			15,213			—		116,870

Cash and cash equivalents, end of period	$	—	$	56,509		$	750		$	18,537		$	—	$	75,796

Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 26, 2003
(Unaudited)


			Seminis
	Seminis		Vegetable			Subsidiary			Subsidiary
	(Parent)		(Issuer)			Guarantors			Non-Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	(15,190	)	$	922		$	(9,179	)	$	—	$	(23,447	)

Cash flows from investing activities:
Purchases of fixed and intangible assets		—		(532	)		—			(1,172	)		—		(1,704	)
Proceeds from disposition of assets		—		1,060			—			2,591			—		3,651
Other		—		—			—			(103	)		—		(103	)

Net cash provided by investing activities		—		528			—			1,316			—		1,844

Cash flows from financing activities:
Proceeds from long-term debt		—		7,000			—			19			—		7,019
Repayment of long-term debt		—		(48	)		(38	)		(199	)		—		(285	)
Proceeds from short-term borrowings		—		—			—			6,060			—		6,060
Net change in intercompany account		—		53			(987	)		934			—		—
Capital contributions/ dividends received (paid) / other		—		102			—			(102	)		—		—

Net cash provided by (used in) financing activities		—		7,107			(1,025	)		6,712			—		12,794

Effect of exchange rate changes on cash and cash equivalents		—		—			—			(197	)		—		(197	)

Decrease in cash and cash equivalents		—		(7,555	)		(103	)		(1,348	)		—		(9,006	)
Cash and cash equivalents, beginning of period		—		18,669			906			17,249			—		36,824

Cash and cash equivalents, end of period	$	—	$	11,114		$	803		$	15,901		$	—	$	27,818

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

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

RISK FACTORS

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

	•	We have experienced losses in the past and we may experience losses in the future.

	•	Following the acquisition transactions, the Company has incurred substantially higher levels of debt.

	•	The Company’s failure to accurately forecast and manage inventory could result in an unexpected shortfall or surplus of seeds, which could have a material adverse effect on our business, results of operations or financial condition.

	•	The Company owns production and processing facilities in numerous countries throughout the world and markets its products worldwide. Accordingly, fluctuations in currency rates may affect the Company’s operating results and net income.

	•	The Company’s business is seasonal.

	•	The Company continues to invest in research and development in order to enable us to identify and develop new products to meet consumer demands. In fiscal year 2004, our investment in research and development represented 9.7% of net sales. Despite investments in this area, our research and development may not result in the discovery or successful development of new products, which will be accepted by our customers.

	•	The Company may not have the ability to protect its intellectual property due to the uncertainty of litigation and the ineffectiveness of the laws in some of the countries that the Company currently has operations, which could have a material adverse effect on our business, results of operations or financial condition.

	•	A change in U.S. law protecting plant patents could limit or take away patent protection for the Company’s patented seeds, which could have a material adverse effect on our business, results of operations or financial condition.

	•	The Company faces substantial competition due to technological advances by competitors such as other seed companies, pharmaceutical and chemical companies and biotechnology companies. Many of these companies have substantially greater resources than the Company. If a competitor introduces a competitively successful product, it could take years to develop a competitive seed variety, which could have a material adverse effect on our business, results of operations or financial condition.

	•	Extreme weather conditions, disease and pests can materially and adversely affect the quality and quantity of seeds produced. There can be no assurance that these factors will not affect a substantial portion of the Company’s production in any year and have a material adverse effect on our business, results of operations or financial condition.

	•	Defective seeds could result in claims and negative publicity, and the insurance covering claims may become unavailable or be inadequate, which could have a material adverse effect on our business, results of operations or financial condition.

	•	The Company’s worldwide operation and products are highly regulated in the areas of safety and protection of human health and the environment. Compliance with these health and safety regulations can be costly.

OVERVIEW

Acquisition Transactions

On September 29, 2003, the Company completed the acquisition transactions, which have a significant effect on the Company’s financial statements (see Notes 2 and 3 to our consolidated financial statements).

The 75.1% of deemed assets acquired and liabilities assumed in connection with the acquisition transactions were originally recorded at their estimated fair market values based on an independent appraisal and 24.9% of the historical bases were carried over, however, these values were in excess of the proportionate purchase price paid by Fox Paine for 75.1% of Seminis’ common stock. Accordingly, the negative goodwill totaling $433.4 million was allocated against the value of non-current assets on a proportionate basis. The following summarizes the fair market values, subsequent adjustments and the adjusted carrying values of the net assets acquired as of September 29, 2003:


				FMV			24.9%			Negative			Adjusted Basis
	Historical			Of 75.1%			Carryover			Goodwill			As of
	Basis			Acquired			Basis			Allocation			September 29, 2003
Current assets, excluding inventory	$	185,206		$	139,017		$	46,190		$	—		$	185,207
Inventory		279,680			283,107			69,751			—			352,858
Property, plant & equipment		166,943			125,308			41,635			(106,589	)		60,354
Goodwill		106,056			—			—			—			—
Intangibles		51,533			331,693			12,852			(271,536	)		73,009
In-process R&D		—			58,547			—			(47,929	)		10,618
Other long-term assets		18,463			13,859			4,605			(7,338	)		11,126
Current liabilities		(466,697	)		(354,905	)		(116,392	)		—			(471,297	)

	$	341,184		$	596,626		$	58,641		$	(433,392	)	$	221,875

The $73.2 million increase in inventory value was expected to be expensed as the inventory is sold over a 16-month period from the date of acquisition, based on an estimated inventory turn. The amortization period of the inventory step-up was subsequently changed to 18 months based on the actual inventory turn of fiscal year 2004. Intangible assets are amortized on a straight-line basis over periods between five and forty years.

At the consummation date of the acquisition transactions, existing in-process research and development projects were assessed. Projects were analyzed by stage of development and assigned success rates based on our historical experience of the probability that such projects would yield viable products. The weighted average stage of completion for our in-process research and development projects was 65%.

The time and capital required for the development of new products represent significant industry complexities in the vegetable and fruit seed industry. Development cycles can last five to 12 years for a proprietary variety to reach commercial viability.

In our forecasting model for each project, cash flows from revenues forecasted in each period were reduced by related expected expenses, capital expenditures and the cost of working capital. The discount rates applied to a project’s cash flows were approximately 22% to 24%, based on the level of risk associated with a particular project and the current return on investment requirements of the market.

In-process research and development was immediately expensed in the results of the successor entity for the one-day period ended September 30, 2003.

The acquisition transactions resulted in the incurrence of additional operating expenses in both the predecessor and successor companies. The main components of these operating expenses were related to transaction fees for obtaining an exchange and fairness opinion, and expenses for the buyout of existing options, severance and restricted stock.

OUTLOOK

The change in the basis of assets and liabilities, resulting from the acquisition transactions, will continue to impact the operating results of the Company. During the first six months of fiscal year 2005, gross margins will be lower, resulting from the amortization of the increased basis in inventory. The increase in inventory basis of $73.2 million, resulting from the purchase accounting adjustments made in connection with the acquisition transactions, is reflected in the statement of operation through decreased margins as the related inventory is sold. This non-cash adjustment will continue as the remaining inventory of approximately $16.0 million is expected to be sold by March 2005. Approximately over the next eight years, operating expenses will benefit from an annual reduction in depreciation expense of approximately $7.6 million, which will reduce research and development, selling, general and administrative expenses. Our future results are expected to be adversely impacted by increased interest expense as a result of higher average debt levels outstanding coupled with higher interest rates.

The Company will continue to execute its Value Capture Strategy and will focus on opportunities, such as potential acquisitions, to achieve long term growth targets.

Seasonality

The seed business is highly seasonal. Generally, net sales are highest in the second fiscal quarter due to increased demand from Northern Hemisphere growers who plant seed in the early spring. We recorded 33.5% of our fiscal year 2004 net sales during our second fiscal quarter. We have historically operated at a loss during the first and third fiscal quarters due to lower sales during these quarters. Our results in any particular quarter should not be considered indicative of the results for a full year. For these reasons, a sequential quarter to quarter comparison is not a good indication of our historical performance or of how we will perform in the future.

Results of Operations

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


	Three Months Ended
	December 31,			December 26,
	2004			2003
	(Unaudited)
Net sales		100.0	%		100.0	%

Gross margin		57.5			48.5
Research and development expenses		11.8			11.4
Selling, general and administrative expenses		48.2			45.1
Amortization of intangible assets		1.9			1.8

Total operating expenses		61.9			58.3
Gain (loss) on sale of fixed assets		(0.2	)		2.5

Loss from operations		(4.6	)		(7.3	)
Interest expense, net		(10.7	)		(9.6	)
Other non-operating income (expense), net		9.4			8.9

Loss before income taxes		(5.9	)		(8.0	)
Income tax expense		(1.5	)		(1.0	)

Net loss		(7.4	)%		(9.0	)%

Three Months Ended December 31, 2004 Compared with Three Months Ended December 26, 2003

Net Sales

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

Gross Profit

Gross profit increased 28.8% to $63.6 million for the three months ended December 31, 2004 from $49.4 million for the three months ended December 26, 2003. Gross margin percentage increased to 57.5% for the three months ended December 31, 2004 from 48.5% for the three months ended December 26, 2003. The increase was primarily due to

improved margin and mix impact of $2.3 million, volume impact of $4.2 million, lower seedmen’s claims and inventory reserve provision of $5.0 million, and currency fluctuation impact of $2.7 million.

Research and Development Expenses

Research and development expenses increased 12.5% to $13.0 million for the three months ended December 31, 2004 from $11.6 million for the three months ended December 26, 2003. This increase was primarily the result of cost of living adjustments, and $0.5 million of currency fluctuations from research and development expenses in Europe and South Korea in the first three months of fiscal year 2005. As a percentage to sales, research and development expenses for the three months ended December 31, 2004 increased to 11.8% from 11.4% in the same period last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 16.3% to $53.4 million for the three months ended December 31, 2004 from $45.9 million for the three months ended December 26, 2003. The increase was primarily due to cost of living adjustments, variable expenses associated with sales, $2.1 million of currency exchange impact on European and South Korean expenses, $0.5 million of management fee and related expenses, and $1.0 million of severance expense. As a percentage to net sales, selling, general and administrative expenses for the three months ended December 31, 2004 was 48.2%, compared to 45.1% in the same period last year.

Amortization of Intangible Assets

Amortization of intangible assets increased 9.2% to $2.1 million for the three months ended December 31, 2004 from $1.9 million for the three months ended December 26, 2003.

Gain (Loss) on Sale of Fixed Assets

The gain (loss) on sale of assets was a loss of $0.2 million for the three months ended December 31, 2004 compared to a gain of $2.5 million for the three months ended December 26, 2003. The gain for the three months ended December 26, 2003, resulted primarily from fixed asset sales by our South Korean subsidiary.

Interest Expense, Net

Interest expense, net, increased 22.1% to $11.8 million for the three months ended December 31, 2004 from $9.7 million for the three months ended December 26, 2003. The increase was primarily due to higher debt levels and interest rates from the issuance of additional 10 1/4% senior subordinated notes on January 23, 2004.

Other Non-Operating Income, Net

We had other non-operating income, including foreign currency gain (loss) and minority interest, net, of $10.4 million and $9.1 million for the three months ended December 31, 2004 and the three months ended December 26, 2003, respectively. Other non-operating income, net, for the three months ended December 31, 2004 primarily consisted of foreign currency gain of $10.1 million, minority interest benefit of $0.1 million and other income of $0.2 million. Other non-operating income, net, for the three months ended December 26, 2003, primarily consisted of foreign currency gains of $8.9 million and other income of $0.2 million. The foreign currency gain in both the first quarter of fiscal years 2005 and 2004 primarily related to a U.S. dollar-denominated intercompany loan in the Netherlands.

Income Tax Expense

Income tax expense was $1.7 million or a 26.4% effective tax rate, and $1.1 million or a 13.5% effective tax rate for the three months ended December 31, 2004 and December 26, 2003, with pre-tax losses of $6.5 million and $8.0 million, respectively. The variation in income tax rate was primarily due to the amount and mix of worldwide income at Seminis’ subsidiaries.

Liquidity and Capital Resources

Background

In connection with the acquisition transactions, the Company became a privately held company, acquired all of its publicly held shares of Class A common stock, shares of Class B common stock, and shares of Class B and Class C Redeemable Preferred Stocks, repaid the $216.6 million of principal outstanding under its senior credit facility, and $11.6 million of a mortgage on its Oxnard real property. In order to fund these transactions and other related expenses, Fox Paine purchased shares of the Company’s common stock for a purchase price of $163.2 million, the Company issued $190.0 million of ten year, 10 ¹/4% senior subordinated notes, established a senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan (none of the revolving loan was outstanding at December 31, 2004 and September 30, 2004, respectively), borrowed $17.0 million under a new mortgage note, and issued paid-in-kind mandatory redeemable preferred stock (see Note 11 to our consolidated financial statements — PIK Preferred Stock) along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million.

Upon completion of the acquisition transactions, the Company had total indebtedness of $421.3 million as of September 30, 2003 compared to $252.5 million before the transactions.

Cash flows from operations

Operating activities utilized $45.3 million and $23.4 million in cash flow during the three months ended December 31, 2004 and December 26, 2003, respectively. The increase in cash utilization in operating activities was primarily due to an incremental interest payment of $19.1 million based on the interest due dates during the first quarters of fiscal year 2005 and 2004, and $1.5 million of dividend for preferred C shares.

Cash flows from investments

Capital expenditures increased to $3.1 million for the three months ended December 31, 2004, from $1.7 million in the same period of the prior fiscal year. Other investing activities for the three months ended December 31, 2004 included $0.1 million from proceeds from the sale of assets compared to $3.7 million in the prior fiscal year. The decrease in proceeds during the three months ended December 31, 2004 was primarily due to higher asset sales in our South Korean subsidiary in the prior fiscal period.

Cash flows from financings

Concurrently with the offering of the additional notes, the Company amended the senior secured credit facility. The amended senior secured credit facility decreased the term loan from $190.0 million to $90.0 million, increased the revolving credit facility from $60.0 million to $75.0 million, amended pricing terms on both the term loan and revolver portion of the credit facility, and amended certain financial covenants.

The Company’s total indebtedness as of December 31, 2004 was $470.5 million, of which $88.6 million were borrowings under Company’s term loan, $341.4 million were borrowings under our senior 10 ¹/4% subordinated notes (including $11.4 million of remaining premium balance, which will be amortized over the life of the notes and reduces interest expense), and $17.0 million, $6.2 million, $1.5 million and $15.8 million were borrowings by its United States, Spanish, Italian and South Korean subsidiaries, respectively. The Company also has $42.0 million of preferred shares subject to mandatory redemption (see Note 11— PIK Preferred Stock). As of December 31, 2004, the Company has cash and cash equivalents of $75.8 million.

under its revolving credit portion of the senior secured credit facility will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.

Our exposure to foreign currency fluctuations is primarily due to foreign currency gains or losses that occur from intercompany receivables and payables between Seminis Vegetable Seeds Inc. and its foreign subsidiaries.

The Company entered into an interest rate swap agreement in September 2003. The purpose of the swap agreement is to hedge approximately $16.8 million of variable rate debt associated with the Company’s mortgage on its worldwide headquarter facility in Oxnard, CA. Changes in the fair value of the hedge instrument are reflected in other comprehensive income (loss) and the associated interest is reflected in the statement of operations over the term of the mortgage.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods or services. This standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. SFAS No. 123(R) eliminates the exception to account for such awards using the intrinsic method previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be effective for interim or annual reporting periods beginning on or after June 15, 2005. The Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1, 2003; see Note 9 Benefit Plan (Stock Based Compensation) for related disclosure under this provision. Accordingly we believe SFAS No. 123(R) will not have a material impact on our balance sheet or income statements. We continue to assess the potential impact that the adoption of SFAS No. 123(R) could have on our statements of cash flows.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, which eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not believe the adoption of SFAS No. 153 will have a material impact on our financial statements.

In November 2004, FASB Statement No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4 (“SFAS No. 151”), was issued. The amendments made by SFAS No. 151 clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. SFAS No. 151 will become effective for us beginning in fiscal 2006. We are in the process of assessing the impact SFAS No. 151 will have on our financial position and results of operations.

Recent Tax Legislation

The United States Congress passed the American Jobs Creation Act of 2004 (the “Act”), which the President signed into law on October 22, 2004. Key provisions of the Act include a temporary incentive for U.S. multinational corporations to repatriate foreign earnings, a domestic manufacturing deduction, and international tax reforms designed to improve the global competitiveness of U.S. businesses. In accordance with SFAS 109, “Accounting for Income Taxes,” we will reflect the effects of the Act, if any, in the first half of fiscal 2005 as part of income tax expense for the period. We are still evaluating the impact of the Act on the Company. Accordingly, we have not yet determined its impact on our effective tax rate and on our deferred tax assets and liabilities.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risk disclosures set forth in the Form 10-K, as filed with the SEC on September 30, 2004 have not changed significantly through the three months ended December 31, 2004.

Item 4. Controls and Procedures

The Company’s chief executive officer and chief accounting officer have concluded, based on their evaluation as of the end of the period covered by this report, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, process, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. There have been no significant changes in the Company’s internal controls over financial reporting during the first quarter of fiscal year 2005 that have materially affected, or are reasonably likely to materially effect, the registrant’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The biotech trait involved here, known as the PG-gene, had been cleared for human consumption by the Food and Drug Administration in 1994, and a different seed variety with this trait was planted commercially until 1999. Federal regulators indicated there was no evidence that the seed in this instance was used for anything other than research.

As part of the formation of LSL PlantScience, a joint venture between Seminis and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements between LSL Biotechnologies and a third party. These agreements contain provisions that permanently restrict the third party from engaging in the development or marketing of open field tomato seeds having long-shelf-life characteristics in certain areas in the world, including North America. In September 2000, the Antitrust Division of the U.S. Department of Justice filed suit in the U.S. District Court for the District of Arizona against LSL PlantScience, LSL Biotechnologies and Seminis to delete these restrictive provisions. On March 29, 2002, the U.S. District Court dismissed without prejudice the action against LSL PlantScience, LSL Biotechnologies and Seminis. The U.S. Department of Justice appealed this ruling, but their appeal was denied by a panel of the Ninth Circuit Court of Appeals on August 11, 2004. The U.S. Department of Justice filed a Petition for Panel Rehearing and Suggestion for Rehearing En Bank on September 23, 2004, requesting that the panel’s decision be vacated, and the district court’s order reversed (U.S. v. LSL Biotechnologies, 9th Cir., No. 02-16472, 8/11/04). On October 20, 2004, the government’s petition was denied, and the mandate was issued on November 3, 2004.

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

See Note 14 to our consolidated financial statements.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

See Note 14 to our consolidated financial statements.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Index


Exhibit
Number		Description
2.1		Agreement and Plan of Merger by and among Seminis, Inc., Seminis Acquisition LLC, Seminis Merger Corp., and Fox Paine & Co., LLC, dated as of May 30, 2003.*

2.2		Stock Purchase Agreement by and among Fox Paine Seminis Holdings., LLC Banca Afirme, SA., Instiucion de Banca Multiple, Afirme Grupo Financiero, as Trustee, Under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de Administracion y Pago Numero 167-5), Seminis Acquisition LLC and Seminis Merger Corp., dated as of May 30, 2003.*

2.3		Amended and Restated Exchange Agreement by and between Seminis, Inc. and Savia, S.A. de C.V. dated as of May 30, 2003.*

2.4		Contribution Agreement by and among Seminis Acquisition LLC, Savia, S.A. de C.V., Banca Afirme, S.A., Institucion de Banca Multiple, Afirme Grupo Financiero, as Trustee, under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de Administracion y Pago Numero 167-5), Conjunto Administrativo Integral, S.A. de C.V., Desarrollo Consolidado de Negocios, S.A. de C.V., Emprima, S.A. de C.V., Park Financial Group, Ltd (BVI), Alfonso Romo Garza and Certain Members of Seminis and Savia Management, dated as of May 30, 2003.*

2.5		Amendment to Contribution Agreement, dated as of September 29, 2003, by and among Seminis Acquisition LLC, Savia, S.A. de C.V., Banca Afirme, S.A., Institucion de Banca Multiple, Afirme Grupo Financiero, as Trustee, Under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de Administracion y Pago Numero 167-5), Conjunto Administrativo Integral, S.A. de C.V., Desarrollo Consolidado de Negocios, S.A. de C.V., Emprima, S.A. de C.V., Park Financial Group, Ltd (BVI), Alfonso Romo Garza and Certain Members of Seminis and Savia Management.*

3.1		Articles of Incorporation of Seminis Vegetable Seeds, Inc.*

3.2		By-laws of Seminis Vegetable Seeds, Inc.*

3.3		Amended and Restated Certificate of Incorporation of Seminis, Inc.*

3.4		By-laws of Seminis, Inc.*

3.5		Certificate of Designation of Preferences and Rights of Class C Redeemable Preferred Stock of Seminis, Inc.*

3.6		Articles of Incorporation of Petoseed International, Inc.*

3.7		By-laws of Petoseed International, Inc.*

3.8		Articles of Incorporation of PGI Alfalfa, Inc.*

3.9		By-laws of PGI Alfalfa, Inc.*

3.10		Articles of Incorporation of Baxter Seed Co., Inc.*

3.11		By-laws of Baxter Seed Co., Inc.*

4.1		Indenture, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc., and Baxter Seed Co., Inc. and Wells Fargo Bank, National Association for the 10 1/4% Senior Subordinated Notes due 2013.*

4.2		Registration Rights Agreement, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc. and Citigroup Global Markets Inc., CIBC World Markets Corp., Harris Nesbitt Corp., and Rabo Securities USA, Inc.*

4.3		Form of Global Note for 10 1/4% Senior Subordinated Notes due 2013 of Seminis Vegetable Seeds, Inc. (contained as an exhibit to Exhibit 4.1 hereto).*

4.4		Form of Exchange Agent Agreement by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc. and Wells Fargo Bank, National Association.*

4.5		Registration Rights Agreement, dated as of January 23, 2004, by and among Seminis Vegetable Seeds, Inc., Seminis, Inc., Petoseed International, Inc., PGI Alfalfa, Inc., Baxter Seed Co., Inc. and Citigroup Global Markets Inc.*


Exhibit
Number		Description
10.1		Amended and Restated Stockholders’ Agreement, dated as of September 29, 2003, by and among SEMINIS, INC., a Delaware corporation, Fox Paine Capital Fund II, L.P., a Delaware limited partnership, Fox Paine Capital Fund II Co-Investors, L.P., a Delaware limited partnership, E and A `J’ Trust, FPC Investment GP, FPSH Coinvestment Fund I, LLC, a Delaware limited liability company, FPSH Coinvestment Fund II, LLC, a Delaware limited liability company, FPSH Coinvestment Fund III, LLC, a Delaware limited liability company, FPSH Coinvestment Fund IV, LLC, a Delaware limited liability company, FPSH Coinvestment Fund V, LLC, a Delaware limited liability company, Alfonso Romo Garza, Gaspar Alvarez, Franco Campana, Bruno Ferrari, Charles Edward Green, Luis Maiz, Mateo Mazal, Bernardo Jimenez Barrera, Adrian Rodriguez Macedo, Jose Manuel Madero, Jean Pierre Posa, Banca Afirme, S.A., Institucion De Banca Multiple, Afirme Grupo Financiero, as Trustee, under the irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable De Administracion Y Pago Numero 167-5), a trust organized under the United Mexican States, Conjunto Administrativo Integral, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States, Emprima, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States, Park Financial Group, Ltd, (BVI), a British Virgin Islands Company, Desarrollo Consolidado De Negocios, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States, Savia, S.A. De C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States, Banca Afirme, S.A. Institucion De Banca Multiple, Afirme Grupo Financiero, As trustee, under the Administration Trust Number 243-4 (Fideicomiso De Administracion), a trust organized under the United Mexican States, The Irrevocable Administration and Payment Trust Number 131-4 Entered into by Banca Afirme, S.A., Institucion De Banca Multiple, Afirme Grupo Financiero, in its capacity as Trustee and Pulsar Internacional, S.A. De C.V., executed on July 23, 2001, as amended, a trust organized under the United Mexican States, Marcela Gonzalez, The Northwestern Mutual Life Insurance Company, Stichting Pensioenfonds ABP and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke en Maatschappelijke Belangen.*

10.2		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Alfonso Romo Garza.*

10.3		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bruno Ferrari.*

10.4		Amendment, dated August 7, 2003, to the Employment Agreement, made May 30, 2003, between Seminis, Inc. and Bruno Ferrari.*

10.5		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Mateo Mazal Beja.*

10.6		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Bernardo Jimenez.*

10.7		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Gaspar Alvarez.*

10.8		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Jose Manuel Madero Garza.*

10.9		Employment Agreement, dated as of May 30, 2003, between Seminis, Inc. and Charles Edward Green.*

10.10		New Senior Secured Credit Facility by and among Seminis Vegetable Seeds Inc. as the borrower, Seminis, Inc. as the parent guarantor, Citicorp North America, Inc. as administrative agent, CIBC World Markets Corp. and Rabobank International as co-documentation agents, Harris Trust and Savings Bank as syndication agent and Citigroup Global Markets Inc. together with Harris Trust and Savings Bank as joint lead arrangers and joint bookrunners consisting of a $75.0 million revolving loan and a $90.0 million term loan, dated as of September 29, 2003, as amended by Amendment No. 1 thereto dated as of January 15, 2004.*

10.11		Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Bruno Ferrari Garcia de Alla.

10.12		Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Charles Edward Green.

10.13		Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Gaspar Alvarez.

10.14		Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Jose Manuel Madero Garza.

10.15		Amended and Restated Employment Agreement, dated as of January 22, 2005, between Seminis, Inc. and Gerard Renou.

10.16		Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Alfonso Romo Garza.

10.17		Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Bernardo Jimenez.

10.18		Separation Agreement, dated as of January 22, 2005, between Seminis, Inc. and Mateo Mazal Beja.

14.		Code of Ethics.

21.1		Subsidiaries of Registrants.*

31.1		Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Vice President, Finance and Worldwide Corporate Comptroller under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Vice President, Finance and Worldwide Corporate Comptroller under Section 906 of the Sarbanes-Oxley Act of 2002.

Previously filed as exhibits to the Registration Statement declared effective on March 19, 2004 (SEC No. 333-11050604).

Signatures

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


Date: February 14, 2005	SEMINIS, INC.
	/s/ Alfonso Romo Garza
	Alfonso Romo Garza
	Chief Executive Officer (Principal Executive Officer)


	/s/ Gaspar Alvarez Martinez
	Gaspar Alvarez Martinez
	VP Finance & Worldwide Corporate Comptroller (Principal Accounting Officer)

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SEMINIS INC 10-Q