UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~November~~May 2829, ~~2004~~2005

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

For the transition period from to .

Commission File Number 333-111710

United Agri Products, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		47-0621017
(State or Other Jurisdiction ofIncorporation or Organization)		(I.R.S. Employer Identification No.)
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
7251 W. 4th Street, Greeley, Colorado		80634
(Address of Principal Executive Offices)		(Zip Code)


7251 W. 4^th Street, Greeley, Colorado		80634
(Address of Principal Executive Offices)		(Zip Code)

(970) 356-4400

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the company (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 company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ¨ x No x¨

Indicate by check mark whether the company is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Class		Outstanding at ~~January~~July 106, 2005
Common Stock, par value $1.00 per share		1,000 shares

TABLE OF CONTENTS

		Page
Part I. Financial Information	3
Report of Independent Registered Public Accounting Firm		3
ITEM 1. FINANCIAL STATEMENTS	3
PART I.	FINANCIAL INFORMATION	4
Report of Independent Registered Public Accounting Firm	3
ITEM 1.	FINANCIAL STATEMENTS	4
Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Balance Sheets as of November 28, 2004 (Successor) and February 22, 2004 (Successor) and Unaudited Condensed Combined Balance Sheet as of November 23, 2003 (Predecessor)	4
Condensed Consolidated Statements of Earnings	5
	Unaudited Condensed Consolidated Statements of Earnings for the Thirteen and Forty Week Periods ended November 28, 2004 (Successor) and Unaudited Condensed Combined Statements of Earnings for the Thirteen and Thirty-Nine Week Periods ended November 23, 2003 (Predecessor)	5
Condensed Consolidated Statements of Cash Flows	6
	Unaudited Condensed Consolidated Statement of Cash Flows for the Forty Week Period ended November 28, 2004 (Successor) and Unaudited Condensed Combined Statement of Cash Flows for the Thirty-Nine Week Period ended November 23, 2003 (Predecessor)	6
Condensed Consolidated Statement of Stockholder’s Equity	7
	Unaudited Condensed Consolidated Statement of Stockholder’s Equity for the Forty Week Period ended November 28, 2004 (Successor)	7
Notes to Condensed Consolidated Financial Statements	8
	Notes to Condensed Consolidated and Combined Financial Statements	8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4. CONTROLS AND PROCEDURES	29
ITEM 4.	CONTROLS AND PROCEDURES	36
Part II. Other Information	30
PART II.	OTHER INFORMATION	38
ITEM 6. EXHIBITS	30
ITEM 1.	LEGAL PROCEEDINGS	38
SIGNATURES	31
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	38
SIGNATURES		39

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To ~~Stockholder~~the ~~and~~ Board of Directors and Stockholder of United Agri Products, Inc.

~~United Agri Products~~Greeley, ~~Inc.~~Colorado

We have reviewed the accompanying condensed consolidated balance ~~sheet~~sheets of United Agri Products, Inc. ~~(“Successor”)~~ and subsidiaries (the “Company”) as of ~~November~~May 2829, ~~2004~~2005 and May 30, 2004, the related condensed consolidated statements of earnings ~~for the thirteen-week~~ and ~~forty-week periods ended November 28, 2004, and~~ of ~~stockholder’s equity and of~~ cash flows for the ~~forty~~13-week period ended ~~November~~May 2829, ~~2004.~~2005 Weand ~~have also reviewed~~ the ~~accompanying~~14-week ~~combined~~period ~~balance~~ended ~~sheet~~May ~~of ConAgra Agricultural Products Business (a division of ConAgra Foods~~30, ~~Inc.) (“Predecessor”) as of November 23~~ 2004, ~~2003~~ and the ~~related~~ ~~combined~~condensed ~~statements~~consolidated ofstatement ~~earnings for the thirteen-week and thirty-nine week periods ended November 23, 2003, and~~ of ~~cash~~stockholder’s ~~flows~~equity for the ~~thirty-nine~~thirteen week period ended ~~November~~May 2329, ~~2003~~2005. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making ~~inquires~~inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the ~~auditing~~ standards of the Public Company Accounting Oversight Board (~~Unites~~United States), the consolidated balance sheet of United Agri Products, Inc. and subsidiaries as of February 2227, ~~2004~~2005, and the related consolidated statements of earnings, stockholder’s equity, and cash flows for the ~~thirteen~~ ~~weeks~~year then ended ~~February 22, 2004~~ (not presented herein); and in our report dated May 1327, ~~2004 (November 17~~2005, ~~2004 as to Note 12),~~ we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 2227, ~~2004~~2005 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

~~/s/~~DELOITTE ~~Deloitte~~ & ~~Touche~~TOUCHE LLP

~~Omaha~~Denver, ~~Nebraska~~Colorado

~~January~~July 105, 2005

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATED ~~AND COMBINED~~ BALANCE SHEETS

(dollars in thousands, except share data)

~~(unaudited)~~UNAUDITED

	ConsolidatedUnited Agri Products, Inc.						CombinedPredecessorEntity - ConAgraAgriculturalProducts Business
	May 29,2005			February 27,2005			May 30,2004
	November 28,2004			February 22,2004			November 23,2003
	(Successor)			(Successor)			(Predecessor)
ASSETS
Current assets:
Cash and cash equivalents	$	—15,730		$	~~171~~48,~~985~~201		$	—26,593
Receivables, less allowance for doubtful accounts of $20,003, $27,328 and $45,918		531,171			170,769			487,095
Receivables, less allowance for doubtful accounts of $15,524, $13,749 and $27,881		1,008,861			235,175			896,057
Inventories		~~490~~681,~~649~~913			~~641~~697,~~009~~134			~~475~~594,~~049~~079
Deferred income taxes		2721,~~228~~223			217,~~681~~263			213,~~912~~103
Other current assets		43,672			80,653			16,389
Vendor prepay		33,360			149,010			32,243
Current assets from discontinued operations		—			—			5,456
Other current assets		5,016			7,310			10,489
Total current assets		1,~~092~~766,~~720~~103			1,~~067~~154,~~097~~093			1,~~005~~562,~~901~~564
Property, plant and equipment		~~100~~107,~~681~~414			~~100~~104,~~207~~745			~~220~~102,~~095~~607
Less accumulated depreciation		(1217,~~209~~876	)		(315,~~093~~080	)		(~~122~~5,~~676~~442	)
Property, plant and equipment, net		8889,~~472~~538			9789,~~114~~665			97,~~419~~165
Goodwill		2734,~~873~~645			4334,~~465~~645			543,~~074~~465
Intangible assets, net		2925,~~527~~561			725,~~077~~894			56,~~116~~705
Deferred income taxes		—1,196			181,~~293~~563			26,~~323~~605
Debt issue costs, net		1916,~~198~~767			2017,~~074~~107			—19,247
Investment in nonconsolidated affiliates		4,301			3,958			2,204
Investment in unconsolidated affiliates		3,360			4,071			3,050
Other assets		~~653~~643			~~1,968~~506			3(1,~~573~~039	)
Long lived assets from discontinued operations		—			—			2,628
Total assets	$	1,937,813		$	1,327,544		$	1,737,762
Total assets	$	1,262,744		$	1,259,046		$	1,124,238
LIABILITIES AND STOCKHOLDER’S EQUITY
LIABILITIES AND STOCKHOLDER’S NET INVESTMENT AND ADVANCES/STOCKHOLDER’S EQUITY
Current liabilities:
Checks not yet presented	$	10,078		$	—		$	11,632
Short-term debt	$	—		$	55		$	42,123
Short-term debt		211,556			—			—
Intercompany borrowings		31,039			25,287			(133	)
Due to parent		3,810			—			—
Accounts payable		1,217,686			822,864			996,143
Accounts payable		529,602			689,455			355,935
Other accrued liabilities		205,269			72,686			235,396
Other accrued liabilities		99,976			144,509			103,119
Income taxes payable		35,379			3,252			6,517
Income taxes payable		4,146			—			—
Deferred income taxes		108			108			8,709
Deferred income taxes		46			9,117			—
Total current liabilities		1,489,481			924,252			1,288,755
Current liabilities from discontinued operations		—			—			1,367
Long-term debt		203,500			203,500			225,000
Total current liabilities		859,214			843,081			472,053
Other non-current liabilities		3,645			2,871			5,646
Long-term debt		225,000			225,000			—
Deferred income taxes		23,156			23,590			264
Other non-current liabilities		250			96			186
Commitments and contingencies (note 8)
Deferred income taxes		17,602			83			—
Stockholder’s equity:
Commitments and Contingencies (note 7)
Common stock, $1.00 par value, 100,000 shares authorized, 1,000, issued and outstanding for each date presented		1			1			1
Stockholder’s net investments and advances/stockholder’s equity:
Additional paid-in capital		175,842			175,842			179,999
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 shares issued and outstanding, respectively		1			1			—
Retained (deficit) earnings		39,310			(5,802	)		38,699
Additional paid-in capital		175,842			179,999			—
Accumulated other comprehensive income (loss)		2,878			3,290			(602	)
Retained earnings (deficit)		(19,836	)		10,791			—
Stockholder’s equity		218,031			173,331			218,097
Accumulated other comprehensive income (loss)		4,671			(5	)		—
Total liabilities and stockholder’s equity	$	1,937,813		$	1,327,544		$	1,737,762
Stockholder’s net investment and advances		—			—			651,999
Total stockholder’s net investment and advances/stockholder’s equity		160,678			190,786			651,999
Total liabilities and stockholder’s net investment and advances/stockholder’s equity	$	1,262,744		$	1,259,046		$	1,124,238

The accompanying notes are an integral part of the condensed ~~and~~consolidated ~~combined~~ financial statements.

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATED ~~AND~~STATEMENTS ~~COMBINED STATEMENT~~ OF EARNINGS

(dollars in thousands, except earnings per share amounts)

~~(unaudited)~~UNAUDITED

	ConsolidatedUnited AgriProducts, Inc.			CombinedPredecessorEntity - ConAgraAgriculturalProducts Business			ConsolidatedUnited AgriProducts,Inc.			CombinedPredecessorEntity - ConAgraAgriculturalProducts Business
	Thirteen Weeks Ended May 29, 2005			Fourteen Weeks Ended May 30, 2004
	Thirteen WeeksEndedNovember 28,2004			Thirteen WeeksEnded November 23,2003			Forty WeeksEndedNovember 28,2004			Thirty-Nine WeeksEndedNovember 23,2003
Net sales	$	1,356,910		$	1,258,489
Net sales	$	267,157		$	293,822		$	2,229,627		$	2,224,107
Costs and expenses:
Costs and expenses:
Cost of goods sold		1,188,158			1,122,755
Cost of goods sold		250,669			269,612			1,970,383			1,938,010
Gross profit		168,752			135,734
Gross profit		16,488			24,210			259,244			286,097
Selling, general and administrative expenses		85,623			82,811
Selling, general and administrative expenses		53,917			54,587			207,036			208,670
Gain on sale of assets		(18	)		(572	)
Third party interest expense		7,674			403			18,127			704
Royalties, service charges and other income and expenses		(7,784	)		(2,673	)
(Gain) loss on sale of assets		642			(10,522	)		(623	)		(10,522	)
Operating income		90,931			56,168
Other income, net		(1,282	)		—			(6,406	)		—
Third party interest expense		5,725			8,428
Corporate allocations:
Finance related and other charges		—			1,875
Selling, general and administrative expenses		—			2,864			—			8,983
Income before income taxes		85,206			45,865
Finance charges		—			3,948			—			12,209
Income tax expense		33,789			17,957
Income (loss) from continuing operations before income taxes		(44,463	)		(27,070	)		41,110			66,053
Net income	$	51,417		$	27,908
Income tax expense		(17,311	)		(10,273	)		15,894			25,068
Earnings per share:
Income (loss) from continuing operations		(27,152	)		(16,797	)		25,216			40,985
Basic	$	51,417.39		$	27,908.00
Loss from discontinued operations, net of tax		—			(1,681	)		—			(4,708	)
Diluted	$	51,417.39		$	27,908.00
Net income	$	(27,152	)	$	(18,478	)	$	25,216		$	36,277
Weighted average shares outstanding:
Basic		1,000			1,000
Diluted		1,000			1,000

The accompanying notes are an integral part of the condensed ~~and~~consolidated ~~combined~~ financial statements.

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF CASH FLOWS

(dollars in thousands)

~~(unaudited)~~ UNAUDITED

	ConsolidatedUnited Agri Products,Inc.			CombinedPredecessorEntity - ConAgraAgriculturalProducts Business
	Thirteen Weeks Ended May 29, 2005			Fourteen Weeks Ended May 30, 2004
	FortyWeeks EndedNovember 28, 2004			Thirty-NineWeeks EndedNovember 23, 2003
Operations
Net income	$	2551,~~216~~417		$	3627,~~277~~908
Loss from discontinued operations		—			(4,708	)
Adjustments to reconcile net income to net cash used for operating activities:
Income from continuing operations		25,216			40,985
Depreciation		2,845			3,501
Depreciation		9,541			9,845
Amortization of intangibles		332			365
Amortization		1,785			1,540
Amortization of debt issuance costs		991			827
Gain on sale of fixed assets		(623	)		(10,522	)
Gain on sales of fixed assets		(18	)		(572	)
Other non-cash items		—			8,645
Deferred tax provision (benefit)		(4,025	)		11,039
Change in operating assets and liabilities		(309,519	)		(155,067	)
Stock compensation		173			—
Net cash from operations		(273,600	)		(104,574	)
Change in operating assets and liabilities:		(110,606	)		(247,824	)
Net cash used in operations		(58,891	)		(204,756	)
Investing
Post-closing settlement to ConAgra Foods, Inc.		(58,236	)		—
Additions to property, plant and equipment		(3,215	)		(3,890	)
Additions to property, plant and equipment		(9,362	)		(8,350	)
Proceeds from sales of assets		381			857
Proceeds from sales of assets		3,246			15,057
Investment in unconsolidated affiliates		711			908
Investment in affiliates		(343	)		(154	)
Net cash used in investing activities		(2,123	)		(2,125	)
Other investing activity		—			(41	)
Net cash from investing		(64,695	)		6,512
Financing
Checks not yet presented		10,078			11,632
Check float on zero balance accounts		23,621			19,437
Net borrowings of short-term debt		~~211,556~~(55	)		—42,204
Common stock dividend		(60,000	)		—
Debt issuance costs		(650	)		—
Net investment and advances		—			57,871
Due to (from) UAP Holding Corp.		5,752			(133	)
Net cash from financing		161,634			69,503
Net cash provided by financing activities		28,668			61,508
Net change in cash and equivalents		(176,661	)		(28,559	)
Net change in cash and cash equivalents		(32,346	)		(145,373	)
Net effect of exchange rates on cash and equivalents		4,676			—
Net effect of exchange rates on cash and cash equivalents		(125	)		(19	)
Cash and cash equivalents at beginning of period (February 22, 2004 and February 23, 2003)		171,985			28,559
Net change in cash and cash equivalents		(32,471	)		(145,392	)
Cash and cash equivalents at end of period	$	—		$	—
Cash and cash equivalents at beginning of period		48,201			171,985
Cash and cash equivalents at end of period	$	15,730		$	26,593
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	797		$	800
Net cash (refunded) paid during the period for income taxes	$	(5,291	)	$	631
Dividend declared and payable to parent	$	6,305		$	—

The accompanying notes are an integral part of the condensed ~~and~~consolidated ~~combined~~ financial statements.

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY

(dollars in thousands)

~~(unaudited)~~UNAUDITED

Forty weeks ended November 28, 2004	Class ACommonStock		AdditionalPaid inCapital				RetainedEarnings				AccumulatedOtherComprehensiveIncome				TotalStockholder’sEquity
	Common Stock		AdditionalPaid inCapital			RetainedEarnings				AccumulatedOtherComprehensiveIncome				TotalStockholder’sEquity
Balance at February 22, 2004	$	1	$	179,999			$	10,791			$	(5	)		$	190,786
Thirteen Weeks Ended May 29, 2005
Comprehensive income
Balance at February 27, 2005	$	1	$	175,842		$	(5,802	)		$	3,290			$	173,331
Net Income		—		—				25,216				—				25,216
Dividends to stockholder		—		—			(6,305	)			—				(6,305	)
Foreign Currency translation adjustment		—		—				—				4,676				4,676
Comprehensive income:
Dividends		—		(4,157	)			(55,843	)			—				(60,000	)
Net income		—		—			51,417				—				51,417
Balance at November 28, 2004	$	1	$	175,842			$	(19,836	)		$	4,671			$	160,678
Foreign currency translation adjustment		—		—			—				(412	)			(412	)
Total comprehensive income		—		—			51,417				(412	)			51,005
Balance at May 29, 2005	$	1	$	175,842		$	39,310			$	2,878			$	218,031

The accompanying notes are an integral part of the condensed ~~and~~consolidated ~~combined~~ financial statements.

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

For the Thirteen ~~and Forty~~ -Week ~~Periods~~Period Ended ~~November 28~~May 29, ~~2004~~2005 and the ~~Thirteen and Thirty~~Fourteen-~~Nine~~ Week ~~Periods~~Period Ended ~~November 23~~May 30, ~~2003~~2004

~~columnar~~UNAUDITED ~~dollar amounts in thousands~~

~~unaudited~~1. Description of the Business and Basis of Presentation

1Interim Financial Statements. ~~Basis~~The accompanying unaudited condensed consolidated financial statements of ~~Presentation~~United Agri Products, Inc. (a wholly-owned subsidiary of UAP Holding Corp.) and ~~Accounting~~its ~~Policies~~subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and reflect all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. These financial statements should be read in conjunction with the consolidated and combined financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 27, 2005.

~~Basis~~Business. ofWe ~~presentation—The~~are ~~Acquisition~~the ~~(as~~largest ~~defined~~distributor ~~below) has been accounted for as a purchase business combination in accordance with Statement~~ of ~~Financial~~ ~~Accounting~~agricultural ~~Standards~~and ~~(“SFAS”)~~non-crop ~~No.~~inputs ~~141, “Business Combinations.” Accounting principles generally accepted~~ in the United States ofand ~~America require United Agri Products, Inc~~Canada.’s ~~(the~~We ~~“Company”) operating~~market ~~results~~a ~~prior~~comprehensive toline ~~the Acquisition to be reported as the results~~ of ~~the~~products ~~“Predecessor”~~including ~~for periods prior to November 24~~chemicals, ~~2003~~seed inand ~~the~~fertilizer ~~historical financial statements. The Company’s operating results subsequent~~ to ~~the~~growers ~~Acquisition~~and ~~are presented~~regional ~~as the “Successor” in the historical financial statements~~dealers. ~~The~~We ~~Successor’s~~have ~~financial~~approximately ~~results~~330 ~~are~~general ~~presented~~distribution ascenters of and ~~for~~sales ~~the~~locations. ~~thirteen~~We ~~and~~also ~~forty~~have ~~week~~three ~~periods~~formulation ~~ended~~facilities ~~November~~where ~~28,~~we ~~2004~~blend ~~and as of February 22, 2004. The~~products ~~Predecessor’s~~primarily ~~financial results are presented as of and~~ for ~~the~~sale ~~thirteen~~by ~~and~~our ~~thirty-nine~~distribution ~~week periods ended November 23, 2003~~facilities.

~~The~~On ~~unaudited~~November ~~condensed consolidated financial statements include the accounts of all the Company’s wholly-owned subsidiaries and reflect all adjustments (all of which are normal recurring accruals) which are~~24, ~~in the opinion of management~~2003, Apollo ~~necessary for a fair presentation of the financial position~~Management, ~~operating~~L.P. ~~results~~(“Apollo”), ~~and~~UAP ~~cash~~Holding ~~flows for the interim periods~~Corp. ~~The~~and ~~unaudited~~ConAgra ~~condensed~~Foods ~~consolidated~~consummated ~~financial statements~~a ~~should~~transaction ~~be read~~ in ~~conjunction~~which ~~with~~UAP ~~the~~Holding ~~consolidated financial statements and notes thereto, contained in Amendment No~~Corp. 1acquired toConAgra ~~the Company~~Foods’s ~~Registration~~United ~~Statement~~States onand ~~Form~~Canadian ~~S-4,~~Agricultural asProducts ~~the~~Businesses, ~~same~~excluding ~~may~~its bewholesale fertilizer ~~amended~~and ~~from~~other ~~time~~international tocrop ~~time~~distribution ~~(File No. 333-111710) (the “Registration Statement”)~~businesses, ~~filed~~which ~~with~~we ~~the~~refer ~~Securities~~to ~~and~~as ~~Exchange Commission (~~the “~~SEC~~Acquisition.”) onOn ~~December~~November 2329, 2004., ~~The Company is a wholly-owned subsidiary of~~ UAP Holding Corp. ~~(“UAP~~consummated ~~Holdings”). All intercompany balances and transactions have been eliminated. The Company’s results for~~ the ~~thirteen~~initial ~~weeks~~public ~~and~~offering ~~forty~~of ~~weeks~~its ~~ended~~common ~~November 28~~stock, ~~2004~~(the ~~are~~“Common ~~not~~Stock Offering”) ~~necessarily~~which ~~indicative~~is oftraded ~~what~~under the ~~Company’s~~symbol ~~results~~“UAPH” ~~will~~on ~~be for other interim periods or for~~ the ~~full~~NASDAQ ~~fiscal~~National ~~year~~Market. ~~Certain amounts in prior fiscal periods have been reclassified for comparative purposes.~~

~~Seasonality—The~~Principles ~~Company’s~~of ~~and~~Consolidation. ~~the~~The ~~Company’s~~consolidated ~~customers’~~financial ~~businesses~~statements ~~are~~include ~~seasonal,~~our ~~based~~accounts ~~upon~~and the ~~planting, growing~~accounts ~~and~~of ~~harvesting~~all ~~cycles~~our wholly-owned subsidiaries. ~~During~~Significant ~~fiscal~~intercompany ~~2003~~balances and ~~2004,~~transactions have atbeen ~~least~~eliminated. ~~75%~~Investments ofin ~~the~~50% ~~Company’s~~or ~~net~~less ~~sales~~owned ~~occurred~~affiliates ~~during~~over ~~the~~which ~~first~~we ~~and~~do ~~second~~not ~~fiscal~~have ~~quarters~~the ofability ~~each~~to ~~year~~exercise ~~because~~significant ofcontrol ~~the~~are ~~condensed~~accounted ~~nature~~for ofusing the ~~planting~~equity ~~season~~method. AsDuring ~~a result of~~ the ~~seasonality~~ ofreported ~~sales~~periods, ~~the~~we ~~Company~~did ~~experiences~~not ~~significant~~have ~~fluctuations~~any in“less ~~its~~than ~~revenues,~~20% owned” ~~income~~investments ~~and net working capital levels and~~ in ~~the~~affiliates ~~amount~~accounted offor ~~borrowings~~ under ~~its~~the ~~revolving~~equity ~~credit facility~~method.

~~Use~~Fiscal ofYear. ~~Estimates—Preparation~~Our offiscal ~~financial~~year ~~statements~~operates inon ~~conformity~~a ~~with accounting~~52- ~~principles~~or ~~generally~~53-week ~~accepted~~period inending on the ~~United~~last ~~States~~Sunday ofin ~~America~~February. ~~requires~~Our ~~management~~fiscal toyear ~~make~~2006 ~~estimates~~contains ~~and~~52 ~~assumptions.~~weeks ~~These~~while ~~estimates~~our orfiscal ~~assumptions~~year ~~affect~~2005 ~~reported~~contained ~~amounts~~53 ofweeks. ~~assets,~~The ~~liabilities,~~additional ~~revenue~~week ~~and expenses as reflected~~ in ~~the~~fiscal ~~financial~~year ~~statements.~~2005 ~~Actual~~was ~~results~~included ~~could~~in ~~differ~~the ~~from~~first ~~estimates~~quarter.

~~Inventories—Inventories~~Seasonality. Our ~~consist~~and ~~primarily~~our ofcustomers’ ~~chemicals,~~businesses ~~fertilizers~~are ~~and~~seasonal, ~~seed.~~based ~~The~~upon ~~Company uses~~ the ~~lower~~planting, ~~of cost~~growing, ~~determined~~and ~~using~~harvesting ~~the~~cycles. ~~first-in,~~During ~~first-out~~fiscal ~~(FIFO)~~2005 and ~~average~~2004, ~~cost~~at ~~methods,~~least or75% ~~market,~~of toour ~~value~~net ~~its inventory.~~sales Asoccurred ofduring ~~November~~the ~~28,~~first ~~2004,~~and ~~approximately~~second ~~11.6%~~fiscal quarters of ~~the~~each ~~inventory~~year isbecause ~~reported~~of the oncondensed annature ~~average~~of ~~cost~~the ~~basis~~planting season. ~~Inventory~~As ~~produced~~a ~~through~~result ~~our~~of ~~formulation~~the ~~facility~~seasonality isof ~~valued~~sales, inwe ~~accordance~~experience ~~with~~significant ~~the~~fluctuations ~~standard~~in ~~cost~~our ~~method~~revenues, ofincome ~~inventory~~and ~~valuation~~net working capital levels. ~~Transfers~~ ~~between~~In ~~operating~~addition, ~~units~~weather ~~are~~conditions atcan ~~cost~~significantly vary quarterly results.

~~Vendor Rebates—Receivables~~Since ~~include~~our ~~vendor~~suppliers ~~rebates~~typically operate on a crop year, which ~~represent~~is ~~amounts~~a different ~~due~~year ~~from~~than ~~suppliers~~our onfiscal ~~crop protection~~year, ~~seed~~our ~~and~~rebate ~~fertilizer~~agreements ~~products~~with ~~and~~our suppliers are ~~accrued~~estimated ~~when~~throughout ~~earned~~the year and adjusted, ~~which~~as isnecessary, ~~typically~~in atour ~~the~~fourth ~~time~~fiscal ofquarter. ~~the~~These ~~sale~~estimates ofcan ~~the~~impact ~~related~~our ~~product~~margin percentages by quarter. ~~Periodically~~ Also, ~~the~~our receivables ~~Company~~are ~~revisits~~seasonal since customers operate on a crop year and payments are cyclical throughout the ~~methodology~~year. toAccordingly, ~~estimate~~our ~~monthly~~results ~~rebates~~of tooperations ~~incorporate~~over any one quarter are not necessarily indicative of the ~~most~~results ~~detailed~~to ~~information~~be ~~available.~~expected over the full fiscal year.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates or assumptions affect reported amounts of assets, liabilities, revenue and expenses as reflected in the financial statements. Actual results could differ from those estimates and the differences could be material.

Earnings Per Share. Earnings per share are based on the weighted average number of shares of common stock outstanding during the period. For the thirteen weeks ended May 29, 2005, and the fourteen weeks ended May 30,

~~UNITED~~ 2004, ~~AGRI~~the ~~PRODUCTS,~~weighted ~~INC~~average number of shares outstanding for both the basic and diluted earnings per share calculation was 1,000.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)


	Thirteen Weeks Ended May 29, 2005		Fourteen Weeks Ended May 30, 2004
	(dollars in thousands, except earnings per share amounts)
Earnings per share
Net income	$	51,417	$	27,908

Weighted average shares of common stock outstanding used in computing basic earnings per share		1,000		1,000

Weighted average shares of common stock used in computing diluted earnings per share		1,000		1,000

Basic and diluted earnings per share	$	51,417.39	$	27,908.00

~~For~~Stock ~~the~~Based Compensation. ~~Thirteen~~We ~~and~~account ~~Forty~~for ~~Week~~employee ~~Periods~~stock ~~Ended~~option ~~November~~plans 28in accordance with Accounting Principles Board Opinion No 25, ~~2004~~“Accounting ~~and~~for ~~the~~Stock ~~Thirteen~~Issued ~~and~~to ~~Thirty-Nine~~Employees.” ~~Week~~Accordingly, ~~Periods~~no ~~Ended~~stock ~~November~~based 23compensation expense is reflected in net income, ~~2003~~as options granted under these plans have an exercise price equal to the market value of the underlying common stock on the date of the grant.

~~columnar~~The ~~dollar~~impact ~~amounts~~on inour ~~thousands~~net income if we complied with SFAS No. 123R, “Share-Based Payment” would be as follows:

unaudited


	Thirteen Weeks Ended May 29, 2005		Fourteen Weeks Ended May 30, 2004
	(dollars in thousands, except earnings per share amounts)
Stock-Based Compensation
Net income as reported	$	51,417	$	27,908
Less: Total stock-based employee compensation expense determined under fair-value-based method for all awards, net of tax		12		36

Pro forma net income	$	51,405	$	27,872

Basic and diluted earnings per share:
As reported	$	51,417.39	$	27,908.00
Pro forma	$	51,405.51	$	27,872.00

~~Long~~Reclassifications. Certain ~~Lived~~prior ~~Assets~~period ~~and~~amounts ~~Intangible~~in ~~Assets—Property,~~the ~~plant~~consolidated ~~and~~financial ~~equipment~~statements ~~are~~have ~~carried~~been atreclassified ~~cost~~to conform to current period presentation. These reclassifications had no net impact on previously reported results of operations. We reclassed ~~Depreciation~~royalties, ~~has~~service ~~been~~charges, ~~calculated~~other ~~using~~income ~~primarily~~and ~~the~~expenses ~~straight-line~~and ~~method~~finance ~~over~~related ~~the~~and ~~estimated~~other ~~useful~~charges ~~lives~~which ofwere ~~the~~previously ~~respective~~included ~~classes~~in ofother ~~assets~~income asand ~~follows:~~selling, general and administrative expenses.

Land improvements		1 – 40 years
Buildings		15 – 40 years
Machinery and equipment		3 – 20 years
Furniture, fixtures, office equipment and other		5 – 15 years

2.	Royalties, Service Charges and Other Income and Expenses

The ~~Company~~table ~~reviews~~below ~~long-lived~~details ~~assets for~~thirteen ~~impairment~~weeks ~~whenever~~ended ~~events~~May or29, changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Recoverability of an asset “held-for-use” is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset2005, ~~the~~and ~~asset’s carrying amount is reduced to its fair market value. An asset “held-for-sale” is reported at~~ the ~~lower~~fourteen ofweeks ~~the~~ended ~~carrying~~May ~~amount or fair market value~~30, ~~less~~2004: ~~cost to sell.~~

Income Taxes—The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities at each balance sheet date using enacted tax rates expected to be in effect in the year the differences are expected to reverse. Prior to the Acquisition, income taxes were paid by ConAgra Foods, Inc. (“ConAgra Foods”) on a consolidated level, because the Company was included in the consolidated tax returns of ConAgra Foods. The Company files a consolidated tax return with UAP Holdings for United States federal income taxes and certain state income taxes. As of February 22, 2004, UAP Holdings had a net operating loss of $37.7 million, which will be utilized on a consolidated basis through fiscal 2006. The amount attributable to the Company is $36.6 million.


	Thirteen Weeks Ended May 29, 2005			Fourteen Weeks Ended May 30, 2004
	(dollars in thousands)
Royalties, service charges and other income and expenses
Royalty income	$	(4,625	)	$	(2,097	)
Service charge income		(1,396	)		(971	)
Other (income) expenses		(1,763	)		395

Royalties, service charges and other income and expenses	$	(7,784	)	$	(2,673	)

Fair Values of Financial Instruments—Unless otherwise specified, the Company believes the carrying amount of financial instruments approximates their fair value.

Revenue Recognition—Revenue is recognized when title and risk of loss are transferred to customers upon delivery based on terms of sale. Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts, trade allowances and product returns.

Stock Split—On November 17, 2004, UAP Holdings’ board of directors approved a stock split of approximately 39.085-for-1 of UAP Holdings’ common stock in connection with UAP Holdings’ initial public offering of its common stock. All share, per share and conversion amounts related to UAP Holdings’ common stock and stock options included in the accompanying consolidated financial statements and footnotes have been restated to reflect the stock split for all periods presented.

Dividends—On October 4, 2004, the Company paid a special dividend to UAP Holdings of $60.0 million. On such date, the Company had available retained earnings of $55.8 million.

Stock-Based Compensation—Predecessor Stock Plan—ConAgra Foods accounted for employee stock option plans in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees.

Accordingly, no stock-based compensation expense is reflected in net income, as options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

In December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which became effective for fiscal years ending after

~~UNITED~~3. ~~AGRI~~Finance ~~PRODUCTS,~~Related ~~INC.~~and Other Charges

~~NOTES~~Finance TOrelated ~~CONDENSED~~and ~~CONSOLIDATED~~other ~~AND~~charges ~~COMBINED~~are ~~FINANCIAL~~composed ~~STATEMENTS—(Cont’d)~~of costs and fees related to the Acquisition, the Common Stock Offering, and related financing activities. For the fourteen weeks ended May 30, 2004, these charges consisted of $1.9 million relating to the non-accountable charges paid to ConAgra Foods relating to the Acquisition.

~~For~~4. ~~the~~Certain ~~Thirteen~~Asset ~~and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003~~ Accounts

~~columnar~~Receivables ~~dollar~~and ~~amounts~~Allowance infor ~~thousands~~Doubtful Accounts. Our receivables include receivables from customers net of allowances for doubtful accounts, vendor rebates receivable, and miscellaneous receivables. As of May 29, 2005, February 27, 2005, and May 30, 2004, the net receivables from customers were $872.2 million, $192.5 million, and $772.7 million, respectively, vendor rebates receivable were $121.8 million, $23.2 million, and $102.9 million, respectively, and miscellaneous receivables were $14.9 million, $19.5 million, and $20.5 million, respectively. As of May 29, 2005, February 27, 2005, and May 30, 2004, the allowance for doubtful accounts totaled, $15.5 million, $13.7 million, and $27.9 million, respectively.

~~unaudited~~Inventories. Inventories consist primarily of chemicals, fertilizers and seed, and are carried at the lower of cost or market. As of May 29, 2005, February 27, 2005, and May 30, 2004, we had $15.8 million, $25.8 million, and $16.1 million, respectively, of allowances against inventory.

December 15, 2002. SFAS No. 148 requires certain pro forma information regarding net income and earnings per share to be calculated based on the assumption that UAP Holdings recognized expenses for its employee stock options using the fair value method. The ~~fair~~cost ~~value~~ of inventory ~~options was estimated~~ at ~~the~~distribution ~~date~~locations ofis ~~the~~carried ~~grant~~either ~~using~~at ~~the~~average ~~Black-Scholes~~cost ~~option~~or ~~pricing~~first ~~model~~in, ~~with~~first ~~the~~out ~~following~~(FIFO). ~~weighted~~As ~~average assumptions~~of ~~for~~May ~~the~~29, ~~thirty-nine~~2005, ~~weeks~~February ~~ended~~27, ~~November 23~~2005, ~~2003:~~and ~~risk-free~~May ~~interest rate of 4.~~30%;, a2004, ~~dividend~~approximately ~~yield of 3~~32.94%;, ~~expected volatility of 30~~23.05%;, and ~~an expected option life of six years~~9.9%, ~~The~~respectively, ~~weighted average fair value~~ of ~~options~~inventory ~~granted for the thirty-nine weeks ended November 23, 2003~~ was ~~$5.88~~reported ~~for~~on ~~ConAgra stock. Pro forma net income for~~ the average ~~thirty-nine~~cost ~~weeks~~basis. ~~ended November 23, 2003 after deducting stock-based employee compensation expense was as follows:~~

	Thirty-Nine Weeks EndedNovember 23, 2003
Net income, as reported	$	36,277
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects		(434	)
Pro forma net income	$	35,843

Inventories are comprised of the following:

Stock-Based Compensation—Successor Stock Plan—Certain of the Company’s employees participate in UAP Holdings’ stock option plans. UAP Holdings accounted for employee stock option plans in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. No stock-based compensation expense is reflected in net income, as options granted under these plans have an exercise price equal to the market value of the underlying common stock on the date of grant.


	May 29, 2005		February 27, 2005		May 30, 2004
	(dollars in thousands)
Product inventories
Raw materials and work in process	$	9,697	$	12,827	$	10,189
Finished goods		672,216		684,307		583,890

Total	$	681,913	$	697,134	$	594,079

~~Stock-Based Compensation—Deferred~~Goodwill. ~~Compensation~~At ~~Plan—Certain~~May 29, ~~members~~2005, ofFebruary ~~management~~27, ~~participate~~2005, inand ~~UAP~~May ~~Holdings’~~30, ~~2003 and~~ 2004, ~~Deferred~~goodwill ~~Compensation~~totaled ~~Plans. Such plans have allowed the participants to purchase shares of UAP Holdings’ common stock at a price equal to approximately~~ $234.566 ~~per share~~million, ~~which is the fair value of the stock on the date of the Acquisition~~$34.6 ~~Each~~million ~~participant’s equity is held in a rabbi trust~~ and is$43.5 ~~accounted~~million, ~~for~~respectively, ~~in accordance~~ with ~~EITF 97-14~~no ~~“Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested~~amortization.” InDuring ~~accordance with~~ the ~~provisions~~third quarter of ~~the~~fiscal ~~rabbi trust~~2005, ~~the~~we ~~rabbi~~finalized ~~trust~~the ~~can~~Acquisition ~~only~~purchase ~~hold~~price ~~investments~~allocation ~~in UAP Holdings’~~with ~~common stock and all participants’ accounts must be settled in UAP Holdings’ common stock; accordingly, UAP Holdings’ common stock held in~~ the ~~rabbi~~assistance ~~trust~~of ~~is accounted for as~~ a ~~component~~third ofparty ~~equity.~~valuation ~~Changes in the fair value in UAP Holdings’ common stock are not accounted for. After giving affect to the initial public offering~~ of ~~UAP~~certain ~~Holdings’~~intangible ~~common~~assets ~~stock,~~that ~~the~~had ~~rabbi~~been ~~trust~~categorized ~~held 1,883,466 and 2,169,229 shares of UAP Holdings’ common stock~~ as ~~of November 28, 2004 and February 22, 2004, respectively~~goodwill.

~~Comprehensive Income—Comprehensive~~Debt ~~income~~Issuance ~~consists~~Costs. ofOur ~~net~~debt ~~income~~issuance ~~and~~costs ~~foreign~~net ~~currency translation adjustments. The translation~~ of ~~foreign~~amortization ~~currency~~were ~~into U~~$16.S.8 ~~dollars~~million, is$17.1 ~~performed~~million, ~~for~~and ~~balance~~$19.2 ~~sheet~~million ~~accounts~~as ~~using~~of ~~the~~May ~~current~~29, ~~exchange~~2005, ~~rate~~February in27, ~~effect~~2005, ~~at the balance sheet date~~ and ~~for~~May ~~revenue~~30, ~~and~~2004, ~~expense accounts using the average exchange rate during the period~~respectively. ~~The~~Our ~~gains~~debt issuance orcosts ~~losses~~consisted ~~resulting~~of ~~from~~costs ~~translation~~associated ~~are~~with ~~included~~our inrevolving ~~stockholders’~~credit ~~equity.~~facility ~~Exchange~~and ~~adjustments~~the ~~resulting~~8¼% ~~from~~Senior ~~foreign currency~~Notes ~~transactions~~due ~~are~~2011 ~~generally~~(the ~~recognized~~“8¼% inSenior ~~earnings~~Notes”). ~~For~~Debt ~~the~~issuance ~~forty~~costs ~~weeks~~of ~~ended November 28, 2004, the gain on foreign currency was~~ $40.76 million. ~~The~~were ~~Company~~recognized ~~deems its foreign investments to be permanent~~ in ~~nature~~the ~~and~~thirteen ~~does~~week ~~not~~period ~~provide~~ended ~~for~~May ~~taxes~~29, on2005, ~~currency~~for ~~translation~~the ~~adjustments~~exchange ~~arising~~offer ~~from~~relating ~~converting~~to the ~~investment~~8¼% inSenior ~~a foreign currency to U~~Notes.S. ~~dollars.~~

5.	Costs Associated with Asset Retirement Obligations

We had Asset Retirement Obligations related to SFAS No. 143, “Accounting for Asset Retirement Obligations.”


	As of the thirteen weeks ended May 29, 2005			As of the year ended February 27, 2005			As of the fourteen weeks ended May 30, 2004
	(dollars in thousands)
Asset Retirement Obligations
Beginning balance	$	2,411		$	2,343		$	2,343
Obligations incurred		—			—			—
Obligations settled		—			(74	)		—
Accretion expense		22			115			91
Cash flow revision		(4	)		27			(22	)

Ending Balance	$	2,429		$	2,411		$	2,412

~~UNITED AGRI PRODUCTS, INC~~6. Income Taxes

~~NOTES~~We TOfile ~~CONDENSED~~a ~~CONSOLIDATED~~consolidated ~~AND~~return ~~COMBINED~~with ~~FINANCIAL~~UAP ~~STATEMENTS—(Cont’d)~~Holding Corp. If we were to have filed as a stand alone company, our income tax provision for the thirteen weeks ended May 29, 2005, and the fourteen weeks ended May 30, 2004 would have been as follows:

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003


	Thirteen Weeks Ended May 29, 2005		Fourteen Weeks Ended May 30, 2004
	(dollars in thousands)
U.S. federal statutory rate	$	29,822	$	16,053
State income taxes		3,775		2,032
Foreign credits and other		192		(128	)

Total	$	33,789	$	17,957

~~columnar~~7. ~~dollar amounts in thousands~~ Debt

~~unaudited~~Total long-term debt as of May 29, 2005, February 27, 2005, and May 30, 2004, consisted of the following:

There are no reclassification adjustments to be reported in the periods presented. Total comprehensive income for the forty weeks ended November 28, 2004 and the thirty-nine weeks ended November 23, 2003 was as follows:


	May 29, 2005		February 27, 2005		May 30, 2004
	(dollars in thousands)
Total debt
Revolving credit facility	$	—	$	55	$	42,123
8¼% Senior Notes		203,500		203,500		225,000

Total		203,500		203,555		267,123
Less: current portion
Revolving credit facility		—		55		42,123

Total long term	$	203,500	$	203,500	$	225,000

	United Agri Products,Inc. Forty Weeks EndedNovember 28, 2004		ConAgra AgriculturalProducts Business Thirty-Nine WeeksEnded November 23,2003
Net income	$	25,216	$	36,277
Currency translation adjustment		4,676		—
Total comprehensive income	$	29,892	$	36,277

Our $500.0 million asset based revolving credit facility has a five-year term and will mature in 2008. At May 29, 2005, there was $500.0 million of borrowing availability under the revolving credit facility and we had borrowing capacity thereunder of $475.8 million (after giving effect to $24.2 million of letters of credit under the sub-facility).

~~Recently Issued Accounting~~On ~~Pronouncements—In~~December ~~November~~29, 2004, ~~the FASB issued SFAS No~~$21.5 ~~151,~~million ~~“Inventory~~of ~~Costs” (SFAS 151). This Statement amends~~ the ~~guidance~~8¼% inSenior ~~ARB~~Notes ~~No.~~were ~~43,~~redeemed ~~Chapter~~with 4,proceeds ~~“Inventory~~from ~~Pricing,” to clarify~~ the ~~accounting~~Common ~~for~~Stock ~~abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage)~~Offering. ~~SFAS 151 requires that those items be recognized as current-period charges.~~ In addition, ~~this~~we ~~Statement~~may ~~requires~~redeem ~~that~~some ~~allocation~~or ofall ~~fixed production overheads to the costs~~ of ~~conversion be based on~~ the ~~normal~~remaining ~~capacity~~8¼% ofSenior ~~the~~Notes ~~production~~at ~~facilities.~~a ~~The~~redemption ~~provisions~~price ofthat ~~SFAS~~may ~~151~~include ~~are effective for inventory costs incurred in fiscal years beginning after June 15, 2005. As such, the Company is required to adopt~~a ~~these~~redemption ~~provisions~~premium atand ~~the~~a ~~beginning~~make-whole ~~of fiscal 2007~~premium. ~~The Company is currently evaluating the impact of SFAS 151 on its consolidated financial statements.~~

~~In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No~~8. ~~123R,~~Commitments ~~“Share-Based Payment” (SFAS 123R), which requires companies to measure~~ and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim periods beginning after June 15, 2005 and, thus, will be effective for the Company beginning with the third quarter of fiscal 2006. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the fiscal year that includes the effective date is permitted, but not required. The Company is currently evaluating the impact of SFAS 123R on its financial statements. Contingencies

2.We ~~Description~~are a party to a number of ~~Business~~lawsuits and ~~Transactions~~claims arising out of the operation of our businesses. After taking into account liabilities recorded, management believes the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations or liquidity.

On9. ~~November~~Employee ~~24,~~Benefit 2003, pursuant to a stock purchase agreement among the Company, UAP Holdings and ConAgra Foods, UAP Holdings acquired the Company and certain of its subsidiaries from ConAgra Foods in a merger and related transactions (the “Acquisition”). Plans

Management Incentive Program. We have a management incentive plan for key officers and employees, based on growth, profitability, individual performance of each operating center and key performance metrics. Amounts charged to expense totaled $19.3 million and $19.2 million for the thirteen weeks ended May 29, 2005, and the fourteen weeks ended May 30, 2004, respectively.

Retirement Program for Canadian Employees. United Agri Products Canada, Inc., (UAP Canada) one of our subsidiaries, currently has two retirement plans for employees of UAP Canada. They are eligible to participate in these plans after completing one year of service. One plan is an optional RRSP/DPSD Defined Contribution plan. UAP Canada matches 50% of an employee’s first 6% of contributions to the plan.

The second plan is a Defined Benefit plan. UAP Canada is responsible for funding this plan and is currently contributing at a rate of 5.95% of payroll. Benefits are based on years of credited service and average compensation

~~UNITED~~ in ~~AGRI~~the ~~PRODUCTS,~~last ~~INC~~5 years of service. We assumed the plan assets and obligations of the UAP Canada pension plan as reported under the Predecessor. Components of the UAP Canada pension plan are reported below.

~~NOTES~~The TOchange ~~CONDENSED~~in ~~CONSOLIDATED~~pension ~~AND~~benefit costs ~~COMBINED~~is ~~FINANCIAL~~as ~~STATEMENTS—(Cont’d)~~follows:

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003


	Thirteen Weeks Ended May 29, 2005			Fourteen Weeks Ended May 30, 2004
	(dollars in thousands)
Pension benefit costs
Service cost for benefits earned during the period	$	69		$	107
Interest cost on benefit obligations		35			51
Assumed return on plan assets		(28	)		(47	)
Recognized net actuarial loss		—			—

Total pension benefit costs	$	76		$	111

~~columnar~~10. ~~dollar amounts in thousands~~ Equity

~~unaudited~~Stock Options. Certain of our management, directors, and employees participate in UAP Holding Corp.’s stock option plans. The changes in the outstanding stock options under the two stock option plans during the thirteen weeks ended May 29, 2005, and the fourteen weeks ended May 30, 2004, are summarized below:

During the third quarter of fiscal 2005, the Company finalized the Acquisition purchase price allocation with the assistance of a third-party valuation of certain intangible assets. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at November 24, 2003:


	Shares subject to option	Weighted-average Exercise price per share
Stock options
Balance at February 27, 2005	3,359,535	$	2.56
Granted	—
Exercised	—
Forfeited / lapsed	—

Balance at May 29, 2005	3,359,535	$	2.56

Vested at May 29, 2005	2,541,827	$	2.56

Balance at February 22, 2004	2,789,115	$	2.56
Granted	629,047	$	2.56
Exercised	—
Forfeited / lapsed	—

Balance at May 30, 2004	3,418,162	$	2.56

Vested at May 30, 2004	351,762	$	2.56

	November 23,2003
Accounts receivable, net	$	487,095
Inventory		483,418
Property and equipment		91,337
Current and other assets		19,483
Deferred tax asset		14,272
Goodwill		13,291
Other intangibles		30,466
Total assets acquired		1,139,362
Current liabilities		467,051
Total liabilities assumed		467,051
Net assets acquired	$	672,311

Deferred Compensation Plans. UAP Holding Corp. maintains two deferred compensation plans for the benefit of certain members of our management, the 2003 Deferred Compensation Plan (the “2003 DCP”), which was adopted in connection with the Acquisition and the 2004 Deferred Compensation Plan (the “2004 DCP”), which was adopted on April 2, 2004. The 2003 DCP provides for the crediting of deferred shares for each executive who entered into a retention agreement at the time of the Acquisition. The 2004 DCP provides for the crediting of deferred shares for each member of management who waived the right to receive a portion of their cash bonus for the 2004 fiscal year. Each deferred share represents the right to receive one share of common stock on the applicable payment date, subject to adjustment in the event of a stock split or similar event affecting UAP Holding Corp.’s common stock. Deferred shares become payable upon a termination of the executive’s employment, certain changes in control of UAP Holding Corp. and certain offerings of UAP Holding Corp.’s common stock (based upon certain piggyback rights contained in the Management Incentive Agreement). The plans prohibit the assignment of the deferred shares except upon an executive’s death. UAP Holding Corp. established a trust (the “Rabbi Trust”) to hold the assets of the 2003 DCP and the 2004 DCP. The assets of the Rabbi Trust are subject to the claims of UAP Holding Corp.’s creditors in the event of UAP Holding Corp.’s insolvency. As of May 29, 2005, there were 1,883,466 shares of UAP Holding Corp. common stock remaining in the Rabbi Trust.

~~The~~Dividends ~~Company~~Declared. ~~has~~On ~~allocated~~April ~~the~~29, ~~excess of the Acquisition cost over the fair value of the assets acquired and liabilities assumed to goodwill~~2005, ~~trade~~UAP ~~names~~Holding ~~and other finite lived intangible assets~~Corp.’s ~~The~~board ~~amount~~ of ~~other~~directors ~~finite~~declared ~~and~~a ~~indefinite~~quarterly ~~lived~~dividend ~~intangible~~on ~~assets~~its common ~~recognized~~stock in the ~~Acquisition~~ ~~were~~amount of $300.5125 ~~million.~~per ~~The~~share ~~finite lived intangible assets, including trade names and customer lists, are being amortized over three to ten years based on the estimated remaining useful lives~~ of ~~the~~common ~~intangible assets~~stock. ~~Amortization~~The ~~expense associated~~record ~~with~~date ~~intangibles~~ for the ~~Company~~dividend payment was ~~$1.1~~May ~~million~~13, ~~for~~2005, and the ~~forty~~payment ~~weeks~~date ~~ended~~was ~~November~~June 281, ~~2004~~2005. AnAlso ~~additional~~on ~~$14.6~~April ~~million~~29, in2005, ~~costs~~our ~~associated~~board ~~with~~declared ~~the~~a ~~Acquisition~~dividend ~~were allocated to goodwill.~~

3. Identifiable Intangible Assets

Identifiable intangible assets are as follows:

	November 28, 2004				February 22, 2004				November 23, 2003
	Gross CarryingAmount		AccumulatedAmortization		Gross CarryingAmount		AccumulatedAmortization		Gross CarryingAmount		AccumulatedAmortization
Intangible Assets:
Non-amortizing intangible assets	$	16,607	$	—	$	4,845	$	—	$	420	$	—
Amortizing intangible assets		14,410		1,490		2,350		118		11,647		6,951
Total	$	31,017	$	1,490	$	7,195	$	118	$	12,067	$	6,951

Non-amortizing assets consist primarily of trademarks, trade names, patents and relationships. Amortizing intangible assets, carrying a weighted average life of approximately three to ten years, are comprised primarily of product marketing agreement, registrations and non-compete agreements. Amortization expense associated with intangibles was $1.1 million and $1.7 million for the forty week period ended November 28, 2004 and the thirty-nine week period ended November 23, 2003, respectively. Amortization expense associated with intangibles is estimated to be approximately $1.5 to $1.8 million for each of the next five years.

~~UNITED~~ on ~~AGRI~~our ~~PRODUCTS~~common stock of $6.3 million to provide UAP Holding Corp. with the funds necessary to pay the dividend on June 1, ~~INC~~2005.

~~NOTES~~Long-Term TOIncentive ~~CONDENSED~~Plan. ~~CONSOLIDATED~~On ~~AND~~April ~~COMBINED~~8, ~~FINANCIAL~~2005, ~~STATEMENTS—(Cont~~246,975 UAP Holding Corp. restricted stock units were granted to certain employees and management pursuant to UAP Holding Corp.’d)s 2004 Long-Term Incentive Plan. The restricted stock units vest ratably over four years, 25% on each of the four anniversaries of the grant date. We recorded $0.2 million as compensation expense for the period ended May 29, 2005. On April 29, 2005, our board granted 2,500 restricted stock units to one of our directors. These restricted stock units vested immediately and were converted to common stock of UAP Holding Corp.

~~For~~On April 29, 2005, UAP Holding Corp.’s board of directors adopted a directors deferred compensation plan (the ~~Thirteen~~“Director DCP”). The Director DCP allows non-employee directors to elect to defer payment of all or a portion of their fees and ~~Forty~~have ~~Week~~such ~~Periods~~amounts ~~Ended~~credited under ~~November~~the 28plan in the form of deferred shares. UAP Holding Corp.’s board of directors (or its compensation committee) may also grant its non-employee directors deferred shares under the Director DCP. Each deferred share represents the right to receive one share of common stock on the applicable payment date, subject to adjustment in the event of a stock split or similar event affecting UAP Holding Corp.’s common stock. Deferred shares become payable immediately upon a termination of the director’s service. Shares delivered under the Director DCP in respect of an award of deferred shares are charged against the share limits of the 2004 ~~and~~Plan. The Director DCP prohibits the ~~Thirteen~~assignment ~~and~~of ~~Thirty-Nine~~the ~~Week~~deferred ~~Periods~~shares ~~Ended~~except ~~November~~upon 23a director’s death. There were no restricted stock units outstanding under the director plan as of May 29, ~~2003~~2005.

~~columnar~~11. ~~dollar~~Business ~~amounts~~Segment inand ~~thousands~~Related Information

~~unaudited~~We operate in one segment. Net sales by geographical area are based on the location of the facility producing the sales. Net sales and long-lived assets by geographical area are as follows:

4. Inventories


	Thirteen Weeks Ended May 29, 2005		Fourteen Weeks Ended May 30, 2004
	(dollars in thousands)
Net sales
United States	$	1,322,500	$	1,226,589
Canada		34,410		31,900

Total	$	1,356,910	$	1,258,489

Inventories are comprised of the following:


	May 29, 2005		February 27, 2005		May 30, 2004
	(dollars in thousands)
Long-lived assets
United States	$	167,884	$	169,353	$	171,325
Canada		3,826		4,098		3,873

Total	$	171,710	$	173,451	$	175,198

	November 28,2004		February 22, 2004		November 23,2003
Raw materials and work in process	$	9,655	$	14,922	$	8,791
Finished goods		480,994		625,513		463,651
Supplies		—		574		2,607
Total	$	490,649	$	641,009	$	475,049

Net sales by product category are as follows:

5. Related Party Transactions


	Thirteen Weeks Ended May 29, 2005		Fourteen Weeks Ended May 30, 2004
	(dollars in thousands)
Net sales by product category
Chemicals	$	723,540	$	724,095
Fertilizer		336,427		280,733
Seed		276,298		233,611
Other		20,645		20,050

Total	$	1,356,910	$	1,258,489

AsLong-lived ~~part~~assets consist of ~~the Acquisition~~property, plant ~~UAP Holdings, the Company~~ and ~~certain~~equipment net of ~~its~~depreciation, ~~subsidiaries~~goodwill, ~~entered~~intangible ~~into~~assets anet ~~seller~~of ~~transition~~amortization, ~~services~~deferred ~~agreement~~income ~~with~~taxes, ~~ConAgra~~debt ~~Foods~~issuance ~~pursuant~~costs ~~to which~~net ~~the~~of ~~Company~~amortization, ~~would~~investment ~~perform~~in ~~certain~~unconsolidated ~~information technology~~affiliates, ~~accounting, office support~~ and other ~~services for ConAgra Foods~~assets. ~~In addition, the Company granted to ConAgra Foods and its international subsidiaries an exclusive two~~Long-~~year~~lived ~~license~~assets toby geographical ~~use~~area ~~certain~~are ofbased ~~the~~on ~~Company’s trademarks and trade names outside~~ the ~~United~~location ~~States and Canada. ConAgra Foods paid the Company an aggregate fee~~ of ~~$1.3~~our ~~million for the license and the services provided under the seller transition services agreement~~facilities. ~~The seller transition services agreement was terminated by ConAgra Foods on September 30, 2004.~~

As part of the Acquisition, ConAgra Foods, UAP Holdings, the Company and certain of its subsidiaries entered into a buyer transition services agreement pursuant to which ConAgra Foods would provide certain information technology and other administrative services to the Company and its subsidiaries for a period of one year. As consideration for these services, the Company paid ConAgra Foods $7.5 million. For the thirteen and forty week periods ended November 28, 2004, $1.9 million and $5.6 million, respectively, in expense was recognized by the Company for services performed pursuant to this agreement. This transition services agreement expired on November 23, 2004, in accordance with its terms.

Expenses incurred by ConAgra Foods and allocated to the Company were historically determined based on the specific services that were provided or were allocated based on ConAgra Foods’ investment in the Company in proportion to ConAgra Foods’ total investment in its subsidiaries. In addition, ConAgra Foods charged the Company finance charges on ConAgra Foods’ investment in and advances to the Company. Management believes that such expense allocations were reasonable. It is not practical to estimate the expenses that would have been incurred by the Company if it had been operated on a stand-alone basis. Corporate allocations included allocated selling, general and administrative expenses of $2.9 and $9.0 million respectively for the thirteen and thirty nine weeks ending November 23, 2003. Allocated finance charges, presented net of third party finance fee income, are $3.9 million and $12.2 million for the thirteen and thirty nine weeks ending November 23, 2003, respectively.

The Company is party to a management consulting agreement (the “Management Agreement”) dated as of November 21, 2003 with Apollo Management V, L.P. (“Apollo”). Under the terms of the Management Agreement, the Company retained Apollo to provide certain management consulting and financial advisory services, for which the Company paid Apollo an annual management fee of $1.0 million in quarterly payments of $250,000. In particular, the Management Agreement required Apollo to advise the Company concerning such management matters that relate to proposed financial transactions, acquisitions and other senior management

~~UNITED~~12. ~~AGRI~~Guarantor/Non-Guarantor ~~PRODUCTS,~~Financial ~~INC.~~ Information

~~NOTES~~The TO8¼% ~~CONDENSED~~Senior ~~CONSOLIDATED~~Notes ~~AND~~issued ~~COMBINED~~by ~~FINANCIAL~~the ~~STATEMENTS—(Cont~~Company are fully and unconditionally guaranteed on a joint and several basis pursuant to guarantees by all of the Company’ds domestic subsidiaries (the “Guarantors”), except as noted below. Each of the Company’s direct and indirect subsidiaries is 100% owned by the Company. The 8¼% Senior Notes are not guaranteed by UAP Holding Corp., and the Canadian distribution businesses. Condensed consolidating financial information for the Guarantors and the Non-Guarantors, excluding UAP Holding Corp., is as follows:

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

matters related to the business, administration and policies of the Company and its affiliates, in each case as the Company reasonably and specifically requested in writing. In addition, as consideration for arranging the Acquisition, certain related financing transactions and the preparation of a registration statement with respect to an exchange offer for the Company’s 8¼% Senior Notes due 2011, the Company paid Apollo a fee of $5.0 million in January 2004. Upon consummation of UAP Holdings’ initial public offering of its common stock, Apollo was also paid a transaction fee of $3.5 million. The Management Agreement had, by its terms, an initial term of seven years, which commenced on November 21, 2003. Concurrently with the closing of UAP Holdings’ initial public offering of its common stock and payment of the aforementioned transaction fee and all other amounts payable to Apollo under the Management Agreement, the Management Agreement was terminated in its entirety.

6. Debt

Long-term debt is comprised of the following at November 28, 2004 and February 22, 2004:

	November 28,2004		February 22,2004
Long Term Debt:
8¼% Senior Notes	$	225,000	$	225,000

There was no long-term debt as of November 23, 2003.

In connection with the Acquisition, the Company entered into a five-year $500.0 million asset-based revolving credit facility. The revolving credit facility also provides for a $20.0 million revolving credit sub-facility for United Agri Products Canada Inc. (“UAP Canada”), a $50.0 million letter of credit sub-facility, a $25.0 million swingline loan sub-facility and a $25.0 million in-season over-advance sub-facility. The interest rates with respect to revolving loans under the existing revolving credit facility are based, at the Company’s option, on either the agent’s index rate plus an applicable index margin of 1.50% or upon LIBOR plus an applicable LIBOR margin of 2.75%. The interest rates with respect to in-season overadvances under the existing revolving credit facility are based, at the Company’s’ option, on either the agent’s index rate plus an applicable index margin of 2.75% or upon LIBOR plus an applicable LIBOR margin of 4.00%. The Company also pays an unused line fee margin of 0.50% multiplied by the difference between (x) the maximum amount of the revolving credit facility (as it may be reduced from time to time) and (y) the average daily balance of revolving loans for the preceding months. These applicable margins are in each case subject to prospective reduction on a quarterly basis (other than the margins on in-season over advances) if the Company reduces its ratio of funded debt to EBITDA (on a consolidated basis). Overdue principal, interest and other amounts will bear interest at a rate per annum equal to the rate otherwise applicable thereto plus an additional 2.0%. The obligations under the existing revolving credit facility are (or, in the case of future subsidiaries, will be) guaranteed by UAP Holdings and each of its existing and future direct and indirect U.S. subsidiaries. The obligations under the existing revolving credit facility are secured by a first priority lien on, or security interest in, subject to certain exceptions, substantially all of UAP Holdings’, the Company’s and UAP Canada’s properties and assets and the properties and assets of each of the guarantors. The existing revolving credit facility contains customary representations, warranties and covenants and events of default. As of November 28, 2004, the Company had drawn on its revolving credit facility in the amount of $211.6 million.

The Company’s credit agreement includes a minimum EBITDA requirement of $70.0 million as measured on a twelve month rolling period. The Company is also required to maintain a Fixed Charge Coverage Ratio of not less

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

than 1.1 to 1.0, measured on the last day of each month for the trailing twelve months then ended. The credit agreements also contain certain negative covenants which may restrict the Company’s ability to, among other items, incur new indebtedness, engage in new business ventures, or complete significant acquisitions or divestitures.

The Company issued $225.0 million aggregate principal amount of 8¼% Senior Notes due 2011 (the “8¼% Senior Notes”) on December 16, 2003. Interest on the 8¼% Senior Notes is payable semiannually in arrears on June 15 and December 15. The first interest payment was made on June 15, 2004. Because an exchange offer registration statement had not yet been declared effective as of July 13, 2004, then as of and including July 14, 2004, the Company is required to pay penalty interest at an annual rate of 0.25% per annum. From and including October 12, 2004, the penalty interest rate increased to 0.50% per annum and will increase by an additional 0.25% per annum each 90 days thereafter up to a maximum of 1.00% per annum on the outstanding principal amount until the registration statement is declared effective and the exchange offer is consummated. The amount of liquidated damages that accrued for the forty weeks ended November 28, 2004 is $0.3 million.

Cash interest paid was $17.2 million and $0.3 million for the forty week period ended November 28, 2004 and the thirty-nine week period ended November 23, 2003, respectively. Finance charge income was $2.9 million and $6.8 million for the thirteen and forty week periods ended November 28, 2004, respectively, and $3.2 million and $7.3 million for the thirteen and thirty-nine week periods ended November 23, 2003, respectively.

Based on current market rates primarily provided by outside investment bankers, the fair value of the 8¼% Senior Notes was estimated at $240.7 million.

7. Commitments and Contingencies

The Company uses off-balance sheet arrangement (e.g. operating leases) where the economics and sound business principles warrant their use. The Company periodically enters into guarantees and other similar arrangements as part of transactions in the ordinary course of business. The Company leases certain facilities and transportation equipment under agreements that expire at various dates. Management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases. Substantially all leases require payment of property taxes, insurance and maintenance costs in addition to rental payments. Rent expense under all operating leases was $29.5 million and $28.8 million in the forty weeks ended November 28, 2004 and the thirty-nine weeks ended November 23, 2003, respectively.

A summary of noncancelable operating lease commitments for the years following November 28, 2004 is as follows:

	November 28,2004
Non-cancelable operating lease commitments:
2005	$	8,329
2006		6,182
2007		2,690
2008		1,427
2009		788
Later years		2,515
Total	$	21,931

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

The Company had letters of credit outstanding at November 28, 2004 of $21.7 million, and purchase order commitments of $3.0 million.

As of November 28, 2004, the Company also had cancelable lease commitments for vehicles and equipment totaling $46.5 million.

The Company is a party to a number of lawsuits and claims arising out of the operation of its businesses. After taking into account liabilities recorded, management believes the ultimate resolution of such matters should not have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

8. Employee Benefit Plans

Successor Plans

The Company assumed the plan assets and obligations of the UAP Canadian pension plan as reported under the Predecessor entity. As part of the Acquisition, benefits due to employees who participated in the ConAgra Foods Pension Plan have been frozen as of the date of the Acquisition. The Company pays $0.0595 per payroll dollar. For the thirteen week and forty week periods ended November 28, 2004, $0.0 million and $0.3 million, respectively, have been expensed.

In addition, the Company has a defined contribution plan for all domestic employees. The Company will match 67% of each employee’s first 6% contribution to the plan. In addition, the Company will make a contribution to the plan for each employee equal to 2% of their calendar year pay. At the Company’s option, an additional 1% contribution may be made equally as a percentage of calendar-year payroll to each participant of the plan based on established Company profitability objectives. As part of the Acquisition, a transition contribution will be made on an annual basis for five years to all employees over the age of 50 as of the Acquisition date. Total contribution expense for the plan for the thirteen and forty week periods ended November 28, 2004 was $(0.5) million and $6.0 million, respectively.

Predecessor Retirement Pension Plans

The Predecessor entity had defined benefit retirement plans for eligible salaried and hourly employees. Benefits were based on years of credited service and average compensation or stated amounts for each year of service. The Predecessor entity funded these plans in accordance with the minimum and maximum limits established by law. Employees of the Company also participated in defined benefit and defined contribution plans sponsored by ConAgra Foods.

9. Successor Stock Plans

Certain of the Company’s employees participate in UAP Holdings’ 2003 stock option plan. The 2003 stock option plan provides for the grant of options to purchase shares of UAP Holdings’ common stock at prices equal to the fair market value of UAP Holdings’ common stock at the time of the grant. As of November 28, 2004, 3,283,165 options have been approved for the 2003 stock option plan. Of these, 3,066,400 options were granted with an exercise price of approximately $2.56 per share, of which 162,375 were granted during the forty weeks ended November 28, 2004. As of November 28, 2004, after giving effect to UAP Holdings’ initial public offering, 2,237,865 options were vested. The remaining 828,535 options will vest over the next five years. There are 216,765 options remaining to be granted.

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

An additional 586,279 options were reserved for UAP Holdings’ 2004 non-executive director stock option plan. Of these, 351,762 options were granted during the forty weeks ended November 28, 2004 with an exercise price of approximately $2.56 per share. All of the granted options were immediately vested.

10. Business Segment and Related Information

The Company operates in one segment. Net sales and long-lived assets by geographical area are as follows:

	ThirteenWeeks EndedNovember 28,2004		ThirteenWeeks EndedNovember 23,2003		Forty WeeksEndedNovember 28,2004		Thirty-NineWeeks EndedNovember 23,2003
Net sales:
United States	$	261,036	$	280,053	$	2,164,069	$	2,128,545
Canada		6,121		13,769		65,558		95,562
Total	$	267,157	$	293,822	$	2,229,627	$	2,224,107
	November 28,2004		February 22,2004		November 23,2003
Long-lived assets:
United States	$	165,532	$	187,147	$	111,648
Canada		4,492		4,802		6,689
Total	$	170,024	$	191,949	$	118,337

Net sales by product category are as follows:

	ThirteenWeeks EndedNovember 28,2004		ThirteenWeeks EndedNovember 23,2003		Forty WeeksEndedNovember 28,2004		Thirty-NineWeeks EndedNovember 23,2003
Net sales by product category:
Crop protection chemicals	$	158,869	$	176,874	$	1,416,590	$	1,443,600
Fertilizer		85,149		84,490		494,418		460,336
Seeds		14,482		15,255		274,453		242,123
Other		8,657		17,203		44,166		78,048
Total	$	267,157	$	293,822	$	2,229,627	$	2,224,107

The thirteen weeks ended November 28, 2004 comprised 12.0% of total sales for the forty weeks ended November 28, 2004. The thirteen weeks ended November 23, 2003 accounted for 13.2% of the total net sales for the thirty-nine weeks ended November 23, 2003. No single customer accounted for more than 10% of net sales for the thirteen or forty weeks ended November 28, 2004 or the thirteen or thirty-nine weeks ended November 23, 2003. Net sales by geographical area are based on the location of the facility producing the sales.

Long-lived assets consist of property, plant and equipment, net of depreciation, goodwill, intangibles, non-current deferred tax assets and other assets. Long-lived assets by geographical area are based on location of facilities.

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

11. Subsequent Events

On November 29, 2004, UAP Holdings consummated the initial public offering of its common stock, which consisted of a primary offering of 3,125,000 shares of UAP Holdings’ common stock by UAP Holdings and a secondary offering of 28,428,125 shares of UAP Holdings’ common stock by UAP Holdings’ equity sponsor and certain members of its management. The primary offering resulted in net proceeds to UAP Holdings of approximately $46.9 million (after deducting underwriting discounts and commissions of approximately $3.1 million). UAP Holdings used such proceeds as follows:

• to repurchase all UAP Holdings’ outstanding Series A Redeemable Preferred Stock from ConAgra Foods on November 29, 2004 for approximately $16.5 million plus accrued dividends of approximately $0.3 million;

• to make a capital contribution to the Company of approximately $23.3 million on November 29, 2004, which the Company in turn used to redeem approximately $21.5 million principal amount of its 8¼% Senior Notes (together with accrued interest and liquidated damages of approximately $0.1 million and redemption premiums of approximately $1.8 million) on December 29, 2004;

• to pay a $3.5 million fee to Apollo on November 29, 2004 as consideration for services rendered by Apollo in connection with arranging the initial public offering; and

• to pay approximately $3.2 million of offering fees and expenses on November 29, 2004, with any balance to be used for general corporate purposes.

UAP Holdings did not receive any of the proceeds from the secondary offering. In the aggregate, the selling stockholders received approximately $427.0 million of net proceeds from the secondary offering.

In connection with the initial public offering, the Company amended and restated its revolving credit facility. The amendment provided, among other things, that the portion of the proceeds from the initial public offering that were contributed to the Company in order to enable it to redeem a portion of its 8¼% Senior Notes will increase the amount of dividends the Company is permitted to pay under the amended and restated revolving credit agreement. As a result of the amendment, the interest rates with respect to revolving loans under the revolving credit facility are based, at the Company’s option, on either the agent’s index rate plus an applicable index margin of between 0.50% and 1.00% or upon LIBOR plus an applicable LIBOR margin of between 1.75% and 2.25%. As of the date of this Report, the applicable index margin is 0.75% and the applicable LIBOR margin is 2.00%. The interest rates with respect to in-season over advances under the revolving credit facility are based, at the Company’s option, on either the agent’s index rate plus an applicable index margin of 2.25% or upon LIBOR plus an applicable LIBOR margin of 3.50%. The Company also pays an unused line fee of between 0.25% and 0.375% multiplied by the difference between (x) the maximum amount of the revolving credit facility (as it may be reduced from time to time) and (y) the average daily balance of revolving loans for the preceding months. These applicable margins (other than the margin on in-season over advances) are in each case subject to prospective adjustment on a quarterly basis (with respect to any reduction from current levels, beginning with the third quarter after consummation of UAP Holdings’ initial public offering) if United Agri Products reduces its ratio of funded debt to EBITDA (on a consolidated basis).

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

12. Guarantor/Non-Guarantor Financial Information

The 8¼% Senior Notes issued by the Company are fully and unconditionally guaranteed on a joint and several basis pursuant to guarantees by all of the Company’s domestic subsidiaries (the “Guarantors”), except as noted below. Each of the Company’s direct and indirect subsidiaries is 100% owned by the Company. The 8¼% Senior Notes are not guaranteed by UAP Holdings, the Canadian distribution business and the Businesses Not Acquired (collectively, the “Non-Guarantors”).

Condensed consolidating and combining financial information for the Guarantors and the Non-Guarantors is as follows:

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

~~November~~May 2829, ~~2004~~2005

(dollars in thousands)

~~(unaudited)~~ UNAUDITED

	UnitedAgriProducts,Inc.				Guarantors				CanadianDistributionBusinessNon-Guarantors				Eliminations/Adjustments				Total
	United AgriProducts,Inc.			Guarantors				CanadianDistributionBusinessNon-Guarantors				Other Non-Guarantor /Eliminations /Adjustments				Total
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	$13,848	—		$	$1,882	~~2,356~~		$	$—	~~(2,356~~	)	$	$15,730	—
Receivables, net		—			976,308	~~517,669~~			32,553	~~13,502~~			—	—			1,008,861	~~531,171~~
Inventories		—			654,909	~~470,659~~			27,004	~~19,990~~			—	—			681,913	~~490,649~~
Deferred income taxes		—			20,861	~~27,228~~			362	—			—	—			21,223	~~27,228~~
Other current assets		—				43,195				477				—				43,672
Vendor prepay		—			33,360				—				—				33,360
Total current assets		—				1,058,751				36,325				(2,356	)			1,092,720
Other current assets		—			4,200				816				—				5,016
Property, plant and equipment		—				95,788				4,893				—				100,681
Total current assets		—			1,703,486				62,617				—				1,766,103
Less accumulated depreciation		—				(11,808	)			(401	)			—				(12,209	)
Property, plant and equipment		—			103,320				4,094				—				107,414
Property, plant and equipment, net		—				83,980				4,492				—				88,472
Less accumulated depreciation		—			(17,376	)			(500	)			—				(17,876	)
Goodwill		—				27,873				—				—				27,873
Property, plant and equipment, net		—			85,944				3,594				—				89,538
Intangible assets, net		—				29,527				—				—				29,527
Goodwill		—			34,645				—				—				34,645
Debt issue costs, net		8,996				10,202				—				—				19,198
Intangible assets, net		—			25,561				—				—				25,561
Investment in nonconsolidated affiliates		428,166				4,301				—				(428,166	)			4,301
Deferred income taxes		—			964				232				—				1,196
Other assets		—				653				—				—				653
Debt issue costs, net		16,767			—				—				—				16,767
Total assets	$	437,162			$	1,215,287			$	40,817			$	(430,522	)		$	1,262,744
Investment in unconsolidated affiliates		—			3,360				—				—				3,360
LIABILITIES AND STOCKHOLDER’S NET INVESTMENT AND ADVANCES/STOCKHOLDER’S EQUITY
Investment in affiliates		425,151			—				—				(425,151	)			—
Current liabilities:
Other assets		—			643				—				—				643
Checks not yet presented	$	—			$	12,434			$	—			$	(2,356	)		$	10,078
Total assets	$	441,918		$	1,854,603			$	66,443			$	(425,151	)		$	1,937,813
Short-term debt		—				211,556				—				—				211,556
LIABILITIES AND STOCKHOLDER’S EQUITY
Intercompany borrowings		42,635				(42,794	)			3,969				—				3,810
Current liabilities:
Accounts payable		—				524,208				5,394				—				529,602
Intercompany borrowings	$	14,082		$	14,454			$	2,503			$	—			$	31,039
Other accrued liabilities		8,849				88,245				2,882				—				99,976
Accounts payable		—			1,193,687				23,999				—				1,217,686
Income taxes payable		—				—				4,146				—				4,146
Other accrued liabilities		6,305			195,828				3,136				—				205,269
Deferred income taxes		—				46				—				—				46
Income taxes payable		—			30,418				4,961				—				35,379
Total current liabilities		51,484				793,695				16,391				(2,356	)			859,214
Deferred income taxes		—			108				—				—				108
Long-term debt		225,000				—				—				—				225,000
Total current liabilities		20,387			1,434,495				34,599				—				1,489,481
Other non-current liabilities		—				250				—				—				250
Long-term debt		203,500			—				—				—				203,500
Deferred income taxes		—				17,602				—				—				17,602
Other non-current liabilities		—			3,645				—				—				3,645
Commitments and Contingencies
Deferred income taxes		—			23,156				—				—				23,156
Stockholder’s net investments and advances/stockholder’s equity:
Commitments and contingencies (note 8)
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 shares issued and outstanding, respectively		1				—				—				—				1
Stockholder’s equity:
Additional paid-in capital		175,842				358,494				16,773				(375,267	)			175,842
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 issued and outstanding		1			—				—				—				1
Retained earnings (deficit)		(19,836	)			45,246				2,982				(48,228	)			(19,836	)
Additional paid-in capital		175,842			289,574				22,834				(312,408	)			175,842
Accumulated other comprehensive income (loss)		4,671				—				4,671				(4,671	)			4,671
Retained (deficit) earnings		39,310			103,733				6,125				(109,858	)			39,310
Total stockholder’s net investment and advances/stockholder’s equity		160,678				403,740				24,426				(428,166	)			160,678
Accumulated other comprehensive income (loss)		2,878			—				2,885				(2,885	)			2,878
Total liabilities and stockholder’s net investment and advances/stockholder’s equity	$	437,162			$	1,215,287			$	40,817			$	(430,522	)		$	1,262,744
Stockholder’s equity		218,031			393,307				31,844				(425,151	)			218,031
Total liabilities and stockholder’s equity	$	441,918		$	1,854,603			$	66,443			$	(425,151	)		$	1,937,813

~~The~~15 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

February 2227, ~~2004~~2005

(dollars in thousands)

~~(unaudited)~~ UNAUDITED

	United AgriProducts, Inc.			Guarantors			CanadianDistributionBusinessNon-Guarantors			Eliminations/Adjustments			Total
	United AgriProducts,Inc.			Guarantors			CanadianDistributionBusinessNon-Guarantors			Other Non-Guarantor /Eliminations /Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	~~166~~37,~~304~~430		$	510,~~681~~771		$	—		$	~~171~~48,~~985~~201
Receivables, net		—			~~163~~228,~~656~~158			7,~~113~~017			—			~~170~~235,~~769~~175
Inventories		—			~~621~~668,~~777~~973			1928,~~232~~161			—			~~641~~697,~~009~~134
Deferred income taxes		—			216,~~681~~896			—367			—			217,~~681~~263
Other current assets		1,487			77,432			1,734			—			80,653
Vendor prepay		—			149,010			—			—			149,010
Total current assets		1,487			1,031,850			33,760			—			1,067,097
Other current assets		3,282			2,059			1,969			—			7,310
Property, plant and equipment		—			96,071			4,136			—			100,207
Total current assets		3,282			1,102,526			48,285			—			1,154,093
Less accumulated depreciation		—			(2,972	)		(121	)		—			(3,093	)
Property, plant and equipment		—			100,434			4,311			—			104,745
Property, plant and equipment, net		—			93,099			4,015			—			97,114
Less accumulated depreciation		—			(14,632	)		(448	)		—			(15,080	)
Goodwill		—			43,465			—			—			43,465
Property, plant and equipment, net		—			85,802			3,863			—			89,665
Intangible assets, net		—			7,077			—			—			7,077
Goodwill		—			34,645			—			—			34,645
Deferred income taxes		—			18,293			—			—			18,293
Intangible assets, net		—			25,894			—			—			25,894
Debt issue costs, net		9,952			10,122			—			—			20,074
Deferred income taxes		—			1,328			235			—			1,563
Investment in nonconsolidated affiliates		399,151			3,958			—			(399,151	)		3,958
Debt issue costs, net		17,107			—			—			—			17,107
Other assets		8,331			(7,150	)		787			—			1,968
Investment in unconsolidated affiliates		—			4,071			—			—			4,071
Total assets	$	418,921		$	1,200,714		$	38,562		$	(399,151	)	$	1,259,046
Investment in affiliates		373,549			—			—			(373,549	)		—
LIABILITIES AND STOCKHOLDER’S NET INVESTMENT AND ADVANCES/STOCKHOLDER’S EQUITY
Other assets		—			506			—			—			506
Total assets	$	393,938		$	1,254,772		$	52,383		$	(373,549	)	$	1,327,544
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	—		$	679,593		$	9,862		$	—		$	689,455
Short-term debt	$	—		$	55		$	—		$	—		$	55
Other accrued liabilities		3,135			139,869			1,505			—			144,509
Intercompany borrowings		17,107			1,585			6,595			—			25,287
Deferred income taxes		—			9,117			—			—			9,117
Accounts payable		—			812,148			10,716			—			822,864
Total current liabilities		3,135			828,579			11,367			—			843,081
Other accrued liabilities		—			70,652			2,034			—			72,686
Long-term debt		225,000			—			—			—			225,000
Income taxes payable		—			—			3,252			—			3,252
Other non-current liabilities		—			96			—			—			96
Deferred income taxes		—			108			—			—			108
Deferred income taxes		—			83			—			—			83
Total current liabilities		17,107			884,548			22,597			—			924,252
Commitments and Contingencies
Long-term debt		203,500			—			—			—			203,500
Stockholder’s net investments and advances/stockholder’s equity:
Other non-current liabilities		—			2,871			—			—			2,871
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 shares issued and outstanding, respectively		1			—			—			—			1
Deferred income taxes		—			23,590			—			—			23,590
Additional paid-in capital		179,999			358,494			27,445			(385,939	)		179,999
Commitments and contingencies (note 8)
Retained earnings (deficit)		10,791			13,462			(245	)		(13,217	)		10,791
Stockholder’s equity:
Accumulated other comprehensive loss		(5	)		—			(5	)		5			(5	)
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 issued and outstanding		1			—			—			—			1
Total stockholder’s net investment and advances/stockholder’s equity		190,786			371,956			27,195			(399,151	)		190,786
Additional paid-in capital		175,842			289,574			22,834			(312,408	)		175,842
Total liabilities and stockholder’s net investment and advances/stockholder’s equity	$	418,921		$	1,200,714		$	38,562		$	(399,151	)	$	1,259,046
Retained (deficit) earnings		(5,802	)		54,189			3,654			(57,843	)		(5,802	)
Accumulated other comprehensive income (loss)		3,290			—			3,298			(3,298	)		3,290
Stockholder’s equity		173,331			343,763			29,786			(373,549	)		173,331
Total liabilities and stockholder’s equity	$	393,938		$	1,254,772		$	52,383		$	(373,549	)	$	1,327,544

~~The~~16 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

Combined Predecessor Entity - ConAgra Agricultural Products Business

CONDENSED CONSOLIDATING BALANCE SHEETS

~~November~~May 2330, ~~2003~~2004

(dollars in thousands)

~~(unaudited)~~ UNAUDITED

	United AgriProducts, Inc.			Guarantors				CanadianDistributionBusinessNon-Guarantors				Eliminations /Adjustments			Total
	United AgriProducts,Inc.				Guarantors				CanadianDistributionBusinessNon-Guarantors				Other Non-Guarantor /Eliminations /Adjustments				Total
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—$	21,732		$	—$	4,861		$	—$	—	$	—	$	26,593
Receivables, net		—			~~471,030~~	865,837			~~16,065~~	30,220			—	—		~~487,095~~		896,057
Inventories		—			~~455,036~~	569,988			~~20,013~~	24,091			—	—		~~475,049~~		594,079
Deferred income taxes		—2,670			~~21,912~~	433			—	—			—	—		~~21,912~~		3,103
Other current assets		—			15,693				696				—			16,389
Vendor prepay		—				32,243				—				—				32,243
Current assets from discontinued operations		—			5,456				—				—			5,456
Other current assets		—				9,100				1,389				—				10,489
Total current assets		—2,670			~~969,127~~	1,499,333			~~36,774~~	60,561			—	—		~~1,005,901~~		1,562,564
Property, plant and equipment		—			~~211,689~~	98,531			~~8,406~~	4,076			—	—		~~220,095~~		102,607
Less accumulated depreciation		—			~~(118,300~~	)(5,236	)		~~(4,376~~	)(206	)		—	—		~~(122,676~~	)	(5,442	)
Property, plant and equipment, net		—			~~93,389~~	93,295			~~4,030~~	3,870			—	—		~~97,419~~		97,165
Goodwill		—			~~2,515~~	43,465			~~2,559~~	—			—	—		~~5,074~~		43,465
Intangible assets, net		—			~~5,116~~	6,705			—	—			—	—		~~5,116~~		6,705
Deferred income taxes		—			~~2,323~~	6,605			—	—			—	—		~~2,323~~		6,605
Investment in nonconsolidated affiliates		—			2,204				—				—			2,204
Debt issue costs, net		9,658				9,589				—				—				19,247
Other assets		—			2,984				589				—			3,573
Investment in unconsolidated affiliates		—				3,050				—				—				3,050
Long lived assets from discontinued operations		—			2,628				—				—			2,628
Investment in affiliates		448,078				—				—				(448,078	)			—
Total assets	$	—		$	1,080,286			$	43,952			$	—		$	1,124,238
Other assets		—				(1,042	)			3				—				(1,039	)
LIABILITIES AND STOCKHOLDER’S NET INVESTMENT AND ADVANCES/STOCKHOLDER’S EQUITY
Total assets	$	460,406			$	1,661,000			$	64,434			$	(448,078	)		$	1,737,762
Current liabilities:
LIABILITIES AND STOCKHOLDER’S EQUITY
Checks not yet presented	$	—		$	11,632			$	—			$	—		$	11,632
Current liabilities:
Accounts payable		—			347,433				8,502				—			355,935
Short-term debt	$	—			$	39,172			$	2,951			$	—			$	42,123
Other accrued liabilities		—			98,746				4,373				—			103,119
Intercompany borrowings		—				(133	)			—				—				(133	)
Current liabilities from discontinued operations		—			1,367				—				—			1,367
Accounts payable		—				972,319				23,824				—				996,143
Total current liabilities		—			459,178				12,875				—			472,053
Other accrued liabilities		17,309				212,511				5,576				—				235,396
Other non-current liabilities		—			186				—				—			186
Income taxes payable		—				6,517				—				—				6,517
Commitments and Contingencies		—			—				—				—			—
Deferred income taxes		—				8,709				—				—				8,709
Stockholder’s net investment and advances/stockholder’s equity		—			620,922				31,077				—			651,999
Total current liabilities		17,309				1,239,095				32,351				—				1,288,755
Total liabilities and stockholder’s net investment and advances/stockholder’s equity	$	—		$	1,080,286			$	43,952			$	—		$	1,124,238
Long-term debt		225,000				—				—				—				225,000
Other non-current liabilities		—				5,646				—				—				5,646
Deferred income taxes		—				264				—				—				264
Commitments and contingencies (note 8)
Stockholder’s equity:
Common stock, $1.00 par value, 100,000 shares authorized, 1,000 issued and outstanding		1				—				—				—				1
Additional paid-in capital		179,999				372,839				33,316				(406,155	)			179,999
Retained (deficit) earnings		38,699				43,156				(1,231	)			(41,925	)			38,699
Accumulated other comprehensive income (loss)		(602	)			—				(2	)			2				(602	)
Stockholder’s equity		218,097				415,995				32,083				(448,078	)			218,097
Total liabilities and stockholder’s equity	$	460,406			$	1,661,000			$	64,434			$	(448,078	)		$	1,737,762

~~The~~17 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

~~Forty~~Thirteen Weeks Ended ~~November~~May 2829, ~~2004~~2005

(dollars in thousands ~~except earnings per share amounts~~)

~~(unaudited)~~UNAUDITED

	United AgriProducts, Inc.			Guarantors			CanadianDistributionBusinessNon-Guarantors				Eliminations /Adjustments				Total
	United AgriProducts,Inc.			Guarantors			CanadianDistributionBusinessNon-Guarantors			Other Non-Guarantor /Eliminations /Adjustments				Total
Net sales	$	—		$	21,~~164~~322,~~069~~500		$	6534,~~558~~410		$	$—	—		$	$1,356,910	~~2,229,627~~
Costs and expenses:
Cost of goods sold		—			1,~~919~~160,~~491~~803			5027,~~892~~355			—	—			1,188,158	~~1,970,383~~
Gross profit		—			~~244~~161,~~578~~697			147,~~666~~055			—	—			168,752	~~259,244~~
Selling, general and administrative expenses		~~956~~309			~~199~~83,~~392~~108			62,~~688~~206			—	—			85,623	~~207,036~~
Third party interest expense		15,102			2,134			891				—				18,127
(Gain) on sale of assets		—			(18	)		—			—				(18	)
(Gain) loss on sale of assets		—			(607	)		(16	)			—				(623	)
Royalties, service charges and other income and expenses		—			(7,999	)		215			—				(7,784	)
Other income, net		—			(6,473	)		67				—				(6,406	)
Operating income		(309	)		86,606			4,634			—				90,931
Income (loss) from continuing operations before income taxes		(16,058	)		50,132			7,036				—				41,110
Third party interest expense		682			4,674			369			—				5,725
Income tax expense		(6,263	)		18,348			3,809				—				15,894
Income before income taxes		(991	)		81,932			4,265			—				85,206
Income (loss) from continuing operations		(9,795	)		31,784			3,227				—				25,216
Income tax expense		(393	)		32,388			1,794			—				33,789
Equity in earnings (loss) of affiliates		35,011			—			—				(35,011	)			—
Net income		(598	)		49,544			2,471			—				51,417
Net income (loss)	$	25,216		$	31,784		$	3,227			$	(35,011	)		$	25,216
Equity in earnings of consolidated affiliates		52,015			—			—			(52,015	)			—
Net Income	$	51,417		$	49,544		$	2,471		$	(52,015	)		$	51,417

~~The~~18 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

Combined Predecessor Entity - ConAgra Agricultural Products Business

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

~~Thirty-Nine~~Fourteen Weeks Ended ~~November~~May 2330, 2004 ~~2003~~

(dollars in thousands ~~except earnings per share amounts~~)

~~(unaudited)~~UNAUDITED

	United AgriProducts, Inc.			Guarantors				CanadianDistributionBusinessNon-Guarantors			Eliminations /Adjustments			Total
	United AgriProducts,Inc.				Guarantors				CanadianDistributionBusinessNon-Guarantors			Other Non-Guarantor /Eliminations /Adjustments				Total
Net sales	$	—		$	~~2,128,545~~$	1,226,589		$	~~95,562~~$	31,900	$	—$	—	$	~~2,224,107~~	$	1,258,489
Costs and expenses:
Cost of goods sold		—			~~1,855,723~~	1,098,245			~~82,287~~	24,510		—	—		~~1,938,010~~		1,122,755
Gross profit		—			~~272,822~~	128,344			~~13,275~~	7,390		—	—		~~286,097~~		135,734
Selling, general and administrative expenses		—			~~203,075~~	80,723			~~5,595~~	2,088		—	—		~~208,670~~		82,811
Third party interest expense		—			704				—			—			704
(Gain) on sale of assets		—				(572	)			—			—				(572	)
(Gain) loss on sale of assets		—			(10,522	)			—			—			(10,522	)
Royalties, service charges and other income and expenses		—				(2,953	)			280			—				(2,673	)
Corporate allocations:
Operating income		—				51,146				5,022			—				56,168
Selling, general and administrative expenses		—			8,705				278			—			8,983
Third party interest expense		5,152				3,195				81			—				8,428
Finance charges		—			11,832				377			—			12,209
Finance related and other charges		1,875				—				—			—				1,875
Income (loss) from continuing operations before income taxes		—			59,028				7,025			—			66,053
Income before income taxes		(7,027	)			47,951				4,941			—				45,865
Income tax expense		—(2,670	)		~~22,610~~	18,256			~~2,458~~	2,371		—	—		~~25,068~~		17,957
Income (loss) from continuing operations		—			36,418				4,567			—			40,985
Net income		(4,357	)			29,695				2,570			—				27,908
Loss from discontinued operations, net of tax		—			(4,708	)			—			—			(4,708	)
Equity in earnings of consolidated affiliates		32,265				—				—			(32,265	)			—
Net income (loss)	$	—		$	31,710			$	4,567		$	—		$	36,277
Net Income	$	27,908			$	29,695			$	2,570		$	(32,265	)		$	27,908

~~The~~19 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

UNITED AGRI PRODUCTS, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

~~Forty~~Thirteen Weeks Ended ~~November 28~~May 29, 2005 ~~2004~~

(dollars in thousands)

~~(unaudited)~~UNAUDITED

	United AgriProducts, Inc.			Guarantors			CanadianDistributionBusinessNon-Guarantors			Other Non-Guarantor /Eliminations /Adjustments			Total	~~Total~~
Operations
Net income	$	25,216		$	31,784		$	3,227		$	(35,011	)		$	25,216
Net income (loss)	$	(598	)	$	49,544		$	2,471		$	—		$	51,417
Loss from discontinued operations		—			—			—			—				—
Adjustments to reconcile net income to net cash provided by operating activities:
Income from continuing operations		25,216			31,784			3,227			(35,011	)			25,216
Depreciation		—			2,781			64			—			2,845
Depreciation		—			9,297			244			—				9,541
Amortization of intangibles		—			332			—			—			332
Amortization		1,440			345			—			—				1,785
Amortization of debt issuance costs		991			—			—			—			991
Gain on sale of fixed assets		—			(623	)		—			—				(623	)
Gain on sales of fixed assets		—			(78	)		60			—			(18	)
Change in operating assets and liabilities		66,014			(375,520	)		(10,685	)		10,672				(309,519	)
Stock compensation		—			173			—			—			173
Net cash from operations		92,670			(334,717	)		(7,214	)		(24,339	)			(273,600	)
Deferred tax provision (benefit)		—			(4,025	)		—			—			(4,025	)
Investing
Change in operating assets and liabilities:		3,282			(106,487	)		(7,401	)		—			(110,606	)
Post-closing settlement to ConAgra Foods, Inc.		—			(58,236	)		—			—				(58,236	)
Net cash provided by (used in) operations		3,675			(57,760	)		(4,806	)		—			(58,891	)
Additions to property, plant and equipment		—			(9,362	)		—			—				(9,362	)
Investing
Proceeds from sales of assets		—			3,246			—			—				3,246
Additions to property, plant and equipment		—			(3,155	)		(60	)		—			(3,215	)
Investment in affiliates		(29,015	)		(343	)		—			29,015				(343	)
Proceeds from sales of assets		—			187			194			—			381
Other investing activity		(8,331	)		9,118			(787	)		—				—
Investment in unconsolidated affiliates		—			711			—			—			711
Net cash from investing		(37,346	)		(55,577	)		(787	)		29,015				(64,695	)
Net cash provided by (used in) investing activities		—			(2,257	)		134			—			(2,123	)
Financing
Checks not yet presented		—			12,434			—			(2,356	)			10,078
Checks written in excess of bank balances		—			23,621			—			—			23,621
Net borrowings of short-term debt		—			~~211,556~~(55	)		—			—			(55	~~211,556~~)
Common stock dividend		(60,000	)		—			—			—				(60,000	)
Debt issuance costs		(650	)		—			—			—			(650	)
Net cash from financing		(60,000	)		223,990			—			(2,356	)			161,634
Due to (from) affiliates		(3,025	)		12,869			(4,092	)		—			5,752
Net change in cash and equivalents		(4,676	)		(166,304	)		(8,001	)		2,320				(176,661	)
Net cash provided by (used in) financing activities		(3,675	)		36,435			(4,092	)		—			28,668
Net effect of exchange rates on cash and equivalents		4,676			—			4,676			(4,676	)			4,676
Net change in cash and cash equivalents		—			(23,582	)		(8,764	)		—			(32,346	)
Cash and cash equivalents at beginning of period, February 22, 2004 and February 23, 2003		—			166,304			5,681			—				171,985
Net effect of exchange rates on cash and cash equivalents		—			—			(125	)		—			(125	)
Cash and cash equivalents at end of period	$	—		$	—		$	2,356		$	(2,356	)		$	—
Net change in cash and cash equivalents		—			(23,582	)		(8,889	)		—			(32,471	)
Cash and cash equivalents at beginning of period		—			37,430			10,771			—			48,201
Cash and cash equivalents at end of period	$	—		$	13,848		$	1,882		$	—		$	15,730

~~The~~20 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

UNITED AGRI PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(Cont’d)

For the Thirteen and Forty Week Periods Ended November 28, 2004 and the Thirteen and Thirty-Nine Week Periods Ended November 23, 2003

columnar dollar amounts in thousands

unaudited

Combined Predecessor Entity - ConAgra Agricultural Products Business

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

~~Thirty-Nine~~Fourteen Weeks Ended ~~November~~May 2330, 2004 ~~2003~~

(dollars in thousands)

~~(unaudited)~~UNAUDITED

	United AgriProducts, Inc.			~~Guarantors~~	Guarantors			~~CanadianDistributionBusinessNon-Guarantors~~	CanadianDistributionBusinessNon-Guarantors			~~Eliminations /Adjustments~~	Other Non-Guarantor /Eliminations /Adjustments		~~Total~~	Total
Operations
Net income	$	—		$	31,710			$	4,567			$	—		$	36,277
Net income (loss)	$	(4,357	)		$	29,695			$	2,570			$	—		$	27,908
Loss from discontinued operations		—			(4,708	)			—				—			(4,708	)
Adjustments to reconcile net income to net cash provided by operating activities:
Income from continuing operations		—			36,418				4,567				—			40,985
Depreciation		—				3,402				99				—			3,501
Depreciation		—			9,491				354				—			9,845
Amortization of intangibles		—				365				—				—			365
Amortization		—			1,540				—				—			1,540
Amortization of debt issuance costs		827				—				—				—			827
Gain on sale of fixed assets		—			(10,522	)			—				—			(10,522	)
Gain on sales of fixed assets		—				(573	)			1				—			(572	)
Other non-cash items		—			8,645				—				—			8,645
Deferred tax provision (benefit)		(2,308	)			13,347				—				—			11,039
Change in operating assets and liabilities		—			(153,445	)			(1,622	)			—			(155,067	)
Change in operating assets and liabilities:		5,838				(241,156	)			(12,506	)			—			(247,824	)
Net cash from operations		—			(107,873	)			3,299				—			(104,574	)
Net cash used in operations		—				(194,920	)			(9,836	)			—			(204,756	)
Investing
Additions to property, plant and equipment		—			~~(8,025~~	)(3,862	)		~~(325~~	)(28	)		—	—		~~(8,350~~	)(3,890	)
Proceeds from sales of assets		—			~~15,057~~	845			—	12			—	—		~~15,057~~	857
Investment in affiliates		—			(154	)			—				—			(154	)
Investment in unconsolidated affiliates		—				908				—				—			908
Other investing activity		—			—				(41	)			—			(41	)
Net cash used in investing activities		—				(2,109	)			(16	)			—			(2,125	)
Net cash from investing		—			6,878				(366	)			—			6,512
Financing
Financing
Checks written in excess of bank balances		—				19,437				—				—			19,437
Checks not yet presented		—			10,935				697				—			11,632
Net borrowings of short-term debt		—				39,253				2,951				—			42,204
Net investment and advances		—			69,274				(11,403	)			—			57,871
Due to (from) affiliates		—				(6,233	)			6,100				—			(133	)
Net cash from financing		—			80,209				(10,706	)			—			69,503
Net cash provided by financing		—				52,457				9,051				—			61,508
Net change in cash and equivalents		—			~~(20,786~~	)(144,572	)		~~(7,773~~	)(801	)		—	—		~~(28,559~~	)(145,373	)
Cash and cash equivalents at beginning of period, February 22, 2004 and February 23, 2003		—			20,786				7,773				—			28,559
Net effect of exchange rates on cash and equivalents		—				—				(19	)			—			(19	)
Cash and cash equivalents at end of period	$	—		$	—			$	—			$	—		$	—
Net change in cash and cash equivalents		—				(144,572	)			(820	)			—			(145,392	)
Cash and cash equivalents at beginning of period		—				166,304				5,681				—			171,985
Cash and cash equivalents at end of period	$	—			$	21,732			$	4,861			$	—		$	26,593

~~The~~21 ~~accompanying notes are an integral part of the condensed and combined financial statements.~~

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~This~~On ~~Management’s~~November ~~Discussion~~29, ~~and~~2004, ~~Analysis~~UAP ofHolding ~~Financial~~Corp. ~~Conditions~~consummated ~~and~~the ~~Results~~initial ofpublic ~~Operations~~offering ~~should~~of beits ~~read~~common instock ~~conjunction~~(the ~~with~~“Common ~~the~~Stock ~~Management’s~~Offering”), ~~Discussion~~which ~~and~~consisted ~~Analysis~~ of ~~Financial~~a ~~Condition~~primary ~~and~~offering ~~Results~~ of ~~Operations~~3,125,000 ~~including~~shares ~~a discussion~~ of ~~our~~common ~~critical~~stock ~~accounting~~by ~~policies,~~UAP ~~included~~Holding ~~in Amendment No~~Corp. 1and toa ~~our~~secondary ~~Registration~~offering ~~Statement~~of ~~on Form S-4~~28,428,125 asshares ~~the~~of ~~same~~UAP ~~may~~Holding beCorp.’s ~~amended from~~common ~~time~~stock toby ~~time~~UAP ~~(File~~Holding NoCorp.’s ~~333-111710)~~equity ~~(the~~sponsor ~~“Registration~~and certain ~~Statement”),~~members ~~filed~~of ~~with~~its ~~the~~management ~~SEC~~(collectively, onthe ~~December~~“selling ~~23, 2004~~stockholders”).

OnUnless ~~November~~the ~~24,~~context ~~2003~~requires otherwise, ~~UAP~~all ~~Holding~~references ~~Corp.~~to (“~~UAP Holdings~~Company,”) “we, ~~which~~“us,” ~~owns~~and ~~100%~~“our”, ofrefer ~~the~~specifically ~~outstanding~~to ~~capital stock of~~ United Agri Products, Inc. ~~(“United Agri Products”), acquired the United States~~ and ~~Canadian~~its ~~agricultural~~consolidated ~~inputs~~subsidiaries. Additionally, ~~businesses~~all ofreferences ~~ConAgra~~to ~~Foods, Inc. (~~“~~ConAgra~~UAP ~~Foods~~Holding Corp.”) inrefer aspecifically ~~series~~only ~~of transactions referred~~ to inUAP ~~this~~Holding ~~Report as the “Acquisition~~Corp.~~” In this Report~~, the ~~term~~ ~~“ConAgra~~parent ~~Agricultural~~of ~~Products~~United ~~Business”~~Agri ~~means~~Products, ~~the~~Inc., ~~entities~~excluding ~~that~~its ~~were historically operated by ConAgra Foods as an integrated business~~subsidiaries, ~~which included a wholesale fertilizer~~ and ~~other~~all ~~international~~references ~~crop~~to ~~distribution~~“United ~~businesses~~Agri ~~that~~Products, ~~we did not acquire in the Acquisition~~Inc.” ~~The~~refer specifically ~~businesses~~to ~~not~~United ~~acquired~~Agri ~~are reflected as discontinued operations within the ConAgra Agricultural~~ Products, ~~Business~~Inc., ~~financial~~excluding ~~statements~~its subsidiaries.

OnThe ~~November~~purpose ~~29,~~of ~~2004,~~this ~~UAP~~section ~~Holdings~~is ~~consummated~~to ~~the~~discuss ~~initial~~and ~~public~~analyze ~~offering~~our ofconsolidated ~~its~~financial ~~common~~condition, ~~stock~~liquidity ~~(the~~and ~~“Common~~capital ~~Stock~~resources ~~Offering”), which~~and ~~consisted~~results of aoperations ~~primary~~for ~~offering~~the ofperiods ~~3,125,000~~presented. ~~shares~~You ofshould ~~common~~read ~~stock~~this byanalysis ~~UAP~~in ~~Holdings~~conjunction with our consolidated financial statements and anotes ~~secondary~~thereto ~~offering~~appearing elsewhere in this report. The results of 28operations for the thirteen weeks ended May 29,~~428,125~~ ~~shares~~2005 are not necessarily indicative of ~~UAP~~the ~~Holdings’~~results ~~common~~to ~~stock~~be byexpected ~~UAP~~for ~~Holdings’~~other ~~equity~~interim ~~sponsor~~periods or for the full fiscal year. This discussion and ~~certain~~analysis ~~members~~should ofalso ~~its~~be ~~management (collectively,~~read in conjunction with our Annual Report on Form 10-K for the ~~“selling~~fiscal ~~stockholders”)~~year ended February 27, 2005.

~~The~~Overview following discussion and analysis of our financial condition and results of operations covers, in part, periods prior to the Acquisition. Accordingly, the discussion and analysis of historical periods prior to November 24, 2003 do not reflect the significant impact that the Acquisition had on us. In addition, the statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business, our liquidity and capital resources and the other non-historical statements in the discussion and analysis are forward-looking statements.

~~Unless~~We operate in the ~~context~~highly ~~requires~~competitive ~~otherwise,~~agricultural ~~all~~inputs ~~references~~distribution toindustry. ~~“we,~~Our ~~“us,”~~principal ~~“ours”,~~competitors ~~and~~in ~~“UAP”~~the ~~refer~~distribution ~~specifically~~of tocrop ~~United~~production ~~Agri~~inputs ~~Products~~include agricultural cooperatives, ~~Inc.~~national ~~and~~fertilizer ~~its~~producers, ~~consolidated~~major ~~subsidiaries~~grain ~~after~~companies ~~the Acquisition,~~and independent distributors and ~~its~~brokers. ~~predecessor~~We, ~~the~~along ~~ConAgra~~with ~~Agricultural~~other ~~Products~~agricultural ~~Business~~input distributors, ~~before~~represent the ~~Acquisition.~~main ~~All~~route-to-market ~~references~~for toagricultural ~~“UAP~~input ~~Holdings”~~manufacturers, and ~~refer~~fill ~~specifically~~a ~~only~~critical toneed ~~UAP~~in ~~Holding~~the ~~Corp~~U.,S. ~~excluding~~and ~~its~~Canadian ~~subsidiaries,~~agricultural ~~and~~input ~~all~~markets ~~references~~by allowing suppliers to ~~“United~~ ~~Agri~~economically ~~Products”~~access ~~refer~~a ~~specifically~~highly ~~only~~fragmented tocustomer ~~United~~base ~~Agri~~of ~~Products~~growers, ~~Inc.,~~dealers ~~excluding~~and ~~its~~non-crop ~~subsidiaries~~customers.

The three primary product areas of the agricultural and non-crop input markets are chemicals, seed and fertilizer. Our industry in general is affected by a number of factors including but not limited to, cost to distribute products, customer financial condition, local and national laws and regulations, economic conditions, employment, inflation, political climate, interest rates, fuel prices and weather patterns.

Our business depends on farm expenditures for crop inputs, which in turn is dependent upon planted acreage in the United States and Canada. Over the last ten years, agricultural inputs have grown 3% per year, and planted acreage has been virtually flat, leading to a relatively stable but very competitive industry for crop inputs. Our opportunities within the industry will include the use of our national distribution network to further participate in the growing seed market, grow fertilizer volumes as we extend that product offering to existing customers, continue to expand our private label lines of seed and chemicals and continue to look for more efficiencies in expenses and working capital.

Background

~~Founded in 1978, we are the largest independent distributor of agricultural and non-crop inputs in the United States and Canada.~~ We market a comprehensive line of products including ~~crop protection~~ chemicals, ~~seeds~~ seed and ~~fertilizers~~fertilizer to growers and regional dealers. AsIn ~~part~~addition ofto our product offering, we provide a broad array of value-added services including crop management, biotechnology advisory services, custom blending, inventory management and custom applications of crop inputs. The products and services we offer are critical to growers because they lower the overall cost of crop production and improve crop quality and yield. As a result of our broad scale and scope, we provide leading agricultural input companies with an efficient means to access a highly fragmented customer base of farmers and growers.

AtWe ~~the~~will ~~end~~continue ~~of fiscal 2002, our new management team began~~ to ~~implement~~seek ~~several strategic initiatives~~ to grow ~~increase~~ our ~~operational efficiency. As part of that strategy~~business, ~~we enhanced~~improve ~~our~~margins ~~credit policies~~ and ~~information~~reduce ~~systems,~~working ~~improved~~capital ~~inventory~~through ~~management,~~the ~~rationalized~~following ~~headcount~~principal ~~and~~strategies: ~~closed unprofitable distribution centers.~~

Our implementation of new credit policies has reduced average trade accounts receivables and overall selling, general and administrative costs by lowering bad debt expense. Improved inventory management, including central purchasing, product mix enhancement, SKU rationalization, and enhanced sharing of existing stocks, have resulted in lower average inventory levels and higher margins. Our financial and operational improvement

has been driven by providing customers with high quality products at competitive prices, supported by consistent and reliable service and expertise. We will continue to seek to grow our business, improve margins and reduce working capital through the following principal strategies:

•

Leveraging our scale;

•22 ~~Expanding our presence in seeds, branded and non-crop products; and~~

•

Expanding our presence in seed, fertilizer, branded and non-crop products; and

•

Targeting continued margin enhancement and working capital management.

~~Financial~~Recent ~~Information~~Initiatives

~~Accounting~~Improving ~~principles~~our ~~generally~~Nationwide ~~accepted~~Network. inOne ~~the~~of ~~United~~our ~~States~~key ofinitiatives ~~America~~is ~~require~~to grow our ~~operating~~business ~~results~~by ~~for~~leveraging ~~periods~~our ~~prior~~size toand ~~the~~leading ~~Acquisition,~~market ~~the~~share ~~periods~~across ~~prior~~North toAmerica. ~~November~~We 24study our market share by state, ~~2003~~county, and customer, and develop sales initiatives at a local and regional level to beaddress ~~reported~~any asgaps ~~the~~and ~~results~~opportunities ofwe ~~the “Predecessor”~~have in our ~~financial~~network ~~statements~~on chemical, seed, and fertilizer. ~~These~~Where ~~results~~our ~~include~~data indicates an opportunity, we have the ~~thirteen~~potential to add sales personnel and/or ~~thirty-nine~~locations ~~week~~and ~~periods~~assets ~~ended~~to ~~November~~fill ~~23,~~in ~~2003~~gaps in our coverage. ~~Our~~We ~~operating~~have ~~results~~also ~~subsequent~~begun to address the ~~Acquisition~~non-crop ~~are~~markets ~~presented~~with asa ~~the~~focused ~~“Successor’s” results~~management inteam, ~~the~~and ~~historical~~have ~~financial~~made ~~statements~~modifications ~~and~~to ~~include~~our ~~the~~sales ~~thirteen~~coverage and ~~forty~~asset ~~week~~base ~~periods~~in ~~ended~~that ~~November 28, 2004~~market.

~~The~~Proprietary ~~results~~and ofPrivate ~~operations~~Label ~~for~~Business. Our proprietary and private label products offer significantly higher margins than the ~~thirteen,~~branded ~~thirty-nine~~products orthat ~~forty~~we ~~week~~sell. ~~periods~~We ~~are~~currently ~~not~~market ~~necessarily~~over ~~indicative~~220 proprietary branded products and have a broad proprietary product offering in each of ~~the~~our ~~results~~core product areas, including non-crop. We continue to bework ~~expected~~with ~~for~~nearly ~~other~~all ~~periods~~of orour ~~the~~suppliers ~~full fiscal~~on ~~year~~additional private label opportunities.

~~Thirteen~~Seed ~~Weeks~~and ~~Ended~~Fertilizer ~~November~~Revenue ~~28,~~Growth. ~~2004~~We ~~Compared~~have experienced revenue growth in both of these product areas and believe there are significant growth opportunities going forward. As seed varieties continue to be ~~Thirteen~~enhanced through biotechnology we believe they will serve as a growth platform due to the increased value-added nature of their sale to the customer. We intend to leverage our growth in the seed business through: advanced technical training of ~~Weeks~~our ~~Ended~~sales-force, ~~November~~hiring 23and strategically placing experienced salespeople, ~~2003~~using incentive compensation plans incorporating seed-specific performance goals, nurturing our relationships with our seed suppliers and targeting new retail and wholesale opportunities to enhance our sales presence in regions where gaps exist. We will also leverage our growth in the fertilizer business by nurturing relationships with fertilizer suppliers and by making modest investments in storage and blending facilities in regions where gaps exist.

~~Net~~Working ~~Sales.~~Capital ~~Because of the~~and ~~seasonality~~Administrative ofExpense ~~our business, the thirteen weeks ended November 28, 2004 comprised 12~~Reduction.0% ofWe ~~total~~believe ~~sales~~we ~~for~~are ~~the~~well ~~forty~~positioned ~~weeks ended November 28, 2004. Sales decreased~~ to ~~$267.2~~continue ~~million in the thirteen weeks ended November 28, 2004, compared~~ to ~~$293.8 million~~improve ~~for~~ the ~~thirteen~~financial ~~weeks~~performance ~~ended November 23, 2003. Sales~~ of ~~crop~~our ~~protection chemicals decreased to $158~~business.9 ~~million~~We inmonitor ~~the~~performance ~~thirteen~~regularly ~~weeks~~on ~~ended~~key ~~November~~operating ~~28,~~statistics ~~2004~~such ~~from~~as ~~$176.9 million in the thirteen weeks ended November 23~~credit, ~~2003.~~inventory ~~The decrease was~~efficiency, ~~due~~operating ~~to lower sales of cotton defoliation products across the mid-south~~expenses, asgross ~~fewer~~profit ~~applications~~generation ofand ~~chemical~~overall ~~defoliant~~return ~~were~~on ~~needed~~invested ~~due~~capital. toThis ~~the~~information ~~ideal~~will ~~weather~~continue ~~conditions that led~~ to ~~natural~~enable ~~defoliation~~us ~~of cotton crops in some areas. Sales of insecticides were also lower due~~ to ~~lower~~reduce ~~pest~~administrative ~~pressure~~expense ~~particularly in soybeans. Lower sales in our non-crop business, which we have recently restructured under a focused management team,~~ and ~~the~~average ~~divestiture~~levels of ~~several~~working ~~non-strategic~~capital ~~formulation~~by ~~facilities~~concentrating ~~that provided~~on ~~toll manufacturing services, also contributed to~~ the ~~decline.~~following: ~~Sales~~earlier collection of ~~fertilizer~~supplier ~~increased~~rebates, ~~slightly~~extending topayable ~~$85.1~~terms ~~million~~with inkey ~~the thirteen weeks ended November 28~~suppliers, ~~2004~~continuing ~~from~~inventory ~~$84.5~~efficiencies ~~million~~through ~~for~~SKU ~~the~~reduction ~~thirteen~~efforts ~~weeks~~and ~~ended~~centralized ~~November 23~~purchasing, ~~2003,~~evaluating asour ~~higher pricing~~suppliers ~~offset~~on ~~lower~~a ~~volumes.~~total ~~Lower~~return ~~volumes~~basis ~~were~~including ~~due~~working tocapital reductions, ~~the~~continuing ~~later seasonal application of fall fertilizer in the current period when compared~~ to ~~last~~focus ~~year.~~on ~~Sales~~credit ofpolicies ~~seed~~and ~~declined~~procedures ~~slightly~~ to ~~$14.5~~maximize ~~million~~profitability inand ~~the~~using ~~thirteen~~competition ~~weeks~~and ~~ended~~best ~~November~~practices ~~28, 2004~~among ~~from~~our ~~$15.3~~operating ~~million~~divisions ~~for the thirteen weeks ended November 23, 2003. Sales of other products decreased~~ to ~~$8.7~~drive ~~million~~overall infocus ~~the~~on ~~thirteen~~working ~~weeks~~capital ~~ended~~and ~~November~~expense ~~28,~~reduction ~~2004~~that ~~from~~are ~~$17.2~~tied ~~million for the thirteen weeks ended November 23, 2003, due~~ to ~~lower~~ ~~animal~~variable ~~feed~~compensation ~~sales resulting from the divestment of our Montana feed division and lower fertilizer application income~~plans.

~~Cost of Goods Sold. Cost of goods sold was $250.7 million in the thirteen weeks ended November 28, 2004 compared to $269.6 million for the thirteen weeks ended November~~ 23, 2003. Gross profit (net sales less cost of goods sold) was $16.5 million in the thirteen weeks ended November 28, 2004 compared to $24.2 million for the thirteen weeks ended November 23, 2003. Gross margin (gross profit as a percentage of net sales) was 6.2% in the thirteen weeks ended November 28, 2004 compared to 8.2% for the thirteen weeks ended November 23, 2003. Gross profits and margin declined due to lower chemical and fertilizer volumes, higher fertilizer prices, and higher delivery costs due to the increased price of fuel. Lower sales of insecticides also contributed to lower margins. Rebates are accrued monthly based on actual sales at historical rates by supplier. Rebates earned are finalized in our fourth quarter and the accrual is adjusted as necessary.

Selling, General and Administrative Expenses. Direct selling, general and administrative (“SG&A”) expenses decreased to $53.9 million in the thirteen weeks ended November 28, 2004 from $54.6 million for the thirteen

~~weeks~~RESULTS ~~ended~~OF ~~November~~OPERATIONS 23, 2003. SG&A expenses were 20.2% of sales during the thirteen weeks ended November 28, 2004, and 18.6% of sales during the thirteen weeks ended November 23, 2003. SG&A expenses for the current period included, among other items, $1.9 million of expenses incurred under the ConAgra Transition Services Agreement and $0.3 million in management fees to Apollo Management V, L.P. (“Apollo”). These expenses were offset slightly by lower location expenses and increased recoveries of bad debts.

~~Interest~~Thirteen ~~Expense.~~Weeks ~~Interest~~Ended ~~expense~~May ~~was $7.7 million in the thirteen weeks ended November 28~~29, ~~2004~~2005, ~~which~~Compared ~~related~~ to ~~the~~Fourteen ~~8¼%~~Weeks ~~Senior~~Ended ~~Notes~~May ~~and our revolving credit facility. This expense is net of finance charge income of $2.9 million. Interest expense included interest and liquidated damages on the 8¼% Senior Notes~~30, ~~interest~~2004 on the revolving credit facility, and amortization of initial revolving credit facility fees and costs relating to the issuance of the 8¼% Senior Notes. Third party interest expense was $0.4 million for the thirteen weeks ended November 23, 2003, which related to a vendor finance program.

~~Corporate~~Analysis ~~Allocations—Selling,~~of ~~General~~Condensed ~~and~~Consolidated ~~Administrative.~~Statement ~~Corporate~~of ~~allocations include~~Earnings charges that have been allocated by ConAgra Foods and recorded as an expense for corporate services, including executive, finance and tax. Expenses incurred by ConAgra Foods and allocated to the ConAgra Agricultural Products Business were determined based on the specific services being provided or were allocated based on ConAgra Foods’ investment in the ConAgra Agricultural Products Business in proportion to ConAgra Foods’ total investment in its subsidiaries. Such expenses are included in allocated selling, general and administrative expenses and were $2.9 million in the thirteen weeks ended November 23, 2003.

Corporate Allocations—Finance Charges. Corporate allocations also include finance charges that have been allocated by ConAgra Foods based on ConAgra Foods’ investment in the ConAgra Agricultural Products Business in proportion to ConAgra Foods’ total investment in its subsidiaries. ConAgra Foods allocated finance costs of $3.9 million in the thirteen weeks ended November 23, 2003.


(dollars in thousands, except earnings per share amounts)	Thirteen Weeks Ended May 29, 2005			Fourteen Weeks Ended May 30, 2004			Percent Change
Net Sales	$	1,356,910		$	1,258,489		7.8	%
Cost of goods sold		1,188,158			1,122,755		5.8	%

Gross profit		168,752			135,734		24.3	%
Selling, general and administrative expenses		85,623			82,811		3.4	%
Gain on sale of assets		(18	)		(572	)	-96.9	%
Royalties, service charges and other income and expenses		(7,784	)		(2,673	)	191.2	%

Operating income		90,931			56,168		61.9	%
Third party interest expense		5,725			8,428		-32.1	%
Finance related and other charges		—			1,875		NM

Income before income taxes		85,206			45,865		85.8	%
Income tax expense		33,789			17,957		88.2	%

Net income	$	51,417		$	27,908		84.2	%

Basic and diluted earnings per share	$	51,417.39		$	27,908.00		84.2	%

NM = Not Meaningful

Effective tax rate		39.7	%		39.2	%

Comparison as a Percent of Net Sales:
Gross profit		12.4	%		10.8	%
Selling, general and administrative expenses		6.3	%		6.6	%
Operating income		6.7	%		4.5	%
Income before income taxes		6.3	%		3.6	%
Net income		3.8	%		2.2	%

~~Income~~Net ~~Taxes~~Sales. ~~The~~Sales increased ~~effective~~to ~~income~~$1,356.9 ~~tax~~million ~~rate~~in ~~was~~the 38thirteen weeks ended May 29, 2005, compared to $1,258.9%5 million for the ~~thirteen~~ fourteen weeks ended ~~November~~May 2830, 2004. ~~compared~~Sales ~~with~~of 37proprietary chemical and seed products were 14.95% ~~for~~of ~~the~~total chemical and seed sales in the thirteen weeks ended ~~November~~May 2329, ~~2003~~2005, relatively flat compared to the fourteen weeks ended May 30, 2004.

~~Forty~~Sales ~~Weeks~~of ~~Ended~~chemicals ~~November~~were 28relatively flat at $723.5 million in the thirteen weeks ended May 29, 2005, from $724.1 million in the fourteen weeks ended May 30, 2004. ~~Compared~~Share gains in the Midwest and Northern Plains and a change in the way Monsanto bills its bulk herbicide business were offset by lower non-crop sales and slightly lower chemical tolling revenue due to ~~Thirty~~the rationalization of two non-~~Nine~~strategic ~~Weeks~~formulation ~~Ended~~facilities ~~November~~that 23had provided toll manufacturing services. Higher volumes of glyphosate herbicides offset lower end user unit prices for glyphosate products. Sales of fertilizer increased to $336.4 million in the thirteen weeks ended May 29, ~~2003~~2005, from $280.7 million in the fourteen weeks ended May 30, 2004. The increase was due to higher pricing and higher volumes from fertilizer applications that normally occur in the fall and winter but were delayed into the spring due to wet weather. Sales of seed increased to $276.3 million in the thirteen weeks ended May 29, 2005, from $233.6 million in the fourteen weeks ended May 30, 2004. The increase was due to volume growth on both third party and proprietary brands and higher prices due to increased sales of seed with enhanced traits. Sales of other products were relatively flat at $20.6 million in the thirteen weeks ended May 29, 2005, from $20.1 million in the fourteen weeks ended May 30, 2004.

~~Net~~Cost ~~Sales.~~of ~~Sales~~Goods ~~increased to $2,229~~Sold.6 ~~million~~Cost ~~in the forty weeks ended November 28, 2004, compared to $2,224.1 million for the thirty-nine weeks ended November 23, 2003. Sales~~ of ~~crop~~goods ~~protection~~sold ~~chemicals~~was ~~decreased to~~ $1,~~416~~188.62 million in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004~~2005, ~~from~~compared to $1,~~443~~122.6 8 million in the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003~~2004. ~~The~~Gross ~~decrease~~profit was primarily due to lower sales in our non-crop business, which we have recently restructured under a focused management team, the divestiture of several non-strategic formulation facilities that provided toll manufacturing services, the transition of our Canadian business to focus more on higher margin proprietary products and lower prices on glyphosate. Lower insecticide sales and cotton defoliation sales also impacted (net sales. ~~Offsetting~~less ~~these~~cost ~~were higher chemical volumes in our core crop businesses, primarily across the mid-south and southwest. Sales~~ of ~~fertilizer~~goods ~~rose~~sold) towas $~~494~~168.48 million in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004~~2005, ~~from~~compared to $~~460~~135.37 million ~~for~~in the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003,~~2004. ~~due~~Gross tomargin ~~higher pricing, offsetting slightly lower volumes due to the~~(gross ~~late~~profit ~~timing~~as ofa ~~the~~percentage ~~fall fertilizer market. Sales~~ of ~~seed~~net ~~rose~~sales) towas ~~$274~~12.54% ~~million~~ in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004 from $242.1 million for the thirty-nine weeks ended November 23~~2005, ~~2003,~~compared ~~due~~ to ~~volume growth and higher prices due to increased sales of seed with enhanced traits~~10.8% ~~Sales of other products decreased to $44.2 million~~ in the ~~forty~~fourteen weeks ended ~~November~~May 2830, 2004 ~~from $78~~.0 ~~million~~The ~~for~~increase ~~the~~in ~~thirty-nine~~gross ~~weeks~~profit ~~ended~~and ~~November~~gross ~~23, 2003, due to the divestment of our Montana feed~~ ~~division.~~

~~Cost~~24 of Goods Sold. Cost of goods sold was $1,970.4 million in the forty weeks ended November 28, 2004 compared to $1,938.0 million for the thirty-nine weeks ended November 23, 2003. Gross profit was $259.2

~~million~~margin inwas ~~the~~partially ~~forty~~due ~~weeks~~to ~~ended~~increased ~~November~~cost ~~28,~~of ~~2004~~sales ~~compared~~of to $~~286~~17.14 million ~~for~~in the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003. Gross margin was 11.6% in the forty weeks ended November 28~~2004, ~~2004~~arising ~~compared~~from topurchase ~~12.9%~~accounting for the Acquisition. ~~thirty-nine~~At ~~weeks~~the ~~ended November 23~~Acquisition, ~~2003.~~the ~~Gross~~inventory ~~profits~~on ~~declined~~our ~~for~~books ~~the~~was ~~following~~written ~~reasons:~~up a $1721.41 million to fair market value. ~~adjustment~~As tothis ~~the~~ inventory ~~on hand on the date of the Acquisition that~~ was sold ~~during the forty week period ended November 28~~, ~~2004,~~it ~~higher delivery costs due to the~~ increased ~~price~~cost of ~~fuel, and lower upfront pricing for our~~ sales ofby ~~glyphosate~~$17.4 ~~herbicides~~million ~~due~~in tothe afourteen ~~product~~weeks ~~mix~~ended ~~shift~~May to30, ~~lower-priced products~~2004. ~~These~~The ~~items~~remaining ~~were~~$15.6 million ~~slightly offset by an~~ increase in ~~chemical~~gross ~~and~~profit ~~seed~~was ~~rebates~~primarily due to alower ~~change~~supply inchain ~~our~~costs ~~monthly~~and ~~rebate~~growth ~~estimation~~in ~~process~~seed and ~~higher~~fertilizer ~~sales~~volumes. ofGross ~~proprietary~~profit ~~products.~~includes ~~Rebates~~rebates, which are accrued monthly based on actual sales at ~~historical rates~~the bymost ~~suppliers.~~likely ~~Rebates~~estimated ~~earned~~rates ~~are~~by supplier, then finalized in our fourth quarter and the accrual adjusted as necessary.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses ~~decreased~~increased to $~~207~~85.06 million in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004~~2005 from $~~208~~82.78 million ~~for~~in the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003.~~ 2004. SG&A expenses were 96.3% of sales during the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004~~2005, and 96.46% of sales during ~~for~~ the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003~~2004. ~~SG&A~~The increase in expenses ~~for~~was ~~the~~due ~~current~~to ~~period~~higher ~~included,~~personnel ~~among~~costs ~~other~~and ~~items,~~professional ~~$5.6~~expenses ~~million~~ associated with ~~our~~becoming ~~transition~~an ~~services~~independent ~~agreement~~public ~~with ConAgra Foods~~company, ~~$0.8~~and ~~million~~slightly inhigher ~~management~~insurance ~~fees to Apollo~~expenses, ~~and~~offset by one ~~extra~~less week in the ~~current~~thirteen ~~period.~~weeks ~~Partially~~ended ~~offsetting~~May ~~these~~29, 2005. SG&A expenses ~~were~~for ~~lower~~the ~~location~~fourteen ~~expenses~~weeks ~~and~~ended ~~recoveries~~May of30, ~~bad~~2004 ~~debt~~include $0.3 million of management fees paid to Apollo Management.

~~Interest~~Royalties, ~~Expense.~~Service ~~Interest~~Charges ~~expense~~and ~~was~~Other Income ~~$18~~and Expenses.1 ~~million~~These initems ~~the~~include ~~forty~~royalty ~~weeks ended~~income ~~November~~generated ~~28,~~by ~~2004,~~our ~~which~~proprietary ~~related~~products ~~primarily~~group, toservice ~~the~~charge ~~8¼%~~income ~~Senior~~paid ~~Notes~~by ~~and~~customers ~~our~~who ~~revolving~~do ~~credit~~business ~~facility.~~with ~~Interest~~us ~~expense~~ on ~~the~~terms, ~~final~~and ~~settlement~~equity ~~payment~~earnings toin ~~ConAgra~~an ~~Foods~~unconsolidated ~~was~~subsidiary, ~~$1.9~~as ~~million.~~well ~~The~~as other ~~interest~~items. ~~expense~~Other ~~is net of finance charge~~ income ofincreased to $67.8 million. ~~Interest~~in ~~included~~the ~~interest~~thirteen ~~and~~weeks ~~liquidated~~ended ~~damages~~May ~~on the 8¼% Senior Notes~~29, ~~interest on the revolving credit facility~~2005, ~~and~~from ~~amortization~~$2.7 ofmillion ~~initial~~in ~~revolving~~the ~~credit~~fourteen ~~facility~~weeks ~~fees~~ended ~~and~~May ~~costs~~30, ~~relating~~2004. toOf the ~~issuance~~total of$5.1 ~~the 8¼%~~million ~~Senior~~increase, ~~Notes~~$2.5 ~~Third~~million ~~party~~was ~~interest~~due ~~expense~~to ~~was~~higher ~~$0.7~~royalty ~~million~~income ~~for~~during the thirteen ~~thirty-nine~~ weeks ended ~~November~~May 2329, ~~2003, which related to a vendor finance program~~2005.

~~Corporate~~Third ~~Allocations—Selling,~~Party ~~General~~Interest ~~and~~Expense. Interest ~~Administrative~~expense was $5.7 ~~Corporate~~million ~~allocations~~in ~~include~~the ~~charges~~thirteen ~~that~~weeks ~~have~~ended ~~been~~May ~~allocated~~29, ~~by ConAgra~~2005, ~~Foods~~which related primarily to the 8¼% Senior Notes and ~~recorded~~our asrevolving ancredit facility. Interest expense ~~for~~includes ~~corporate~~interest ~~services,~~on ~~including~~the ~~executive~~8¼% Senior Notes, ~~finance~~interest and fees ~~tax.~~on ~~Expenses~~the ~~incurred~~revolving bycredit ~~ConAgra~~facility, ~~Foods~~and amortization of initial revolving credit facility fees and ~~allocated~~costs relating to the ~~ConAgra~~issuance ~~Agricultural~~of ~~Products~~the ~~Business~~8¼% ~~were~~Senior ~~determined~~Notes. ~~based~~For on the ~~specific~~fourteen ~~services being~~weeks ~~provided~~ended orMay ~~were~~30, ~~allocated~~2004, ~~based~~third onparty ~~ConAgra~~interest ~~Foods’~~expense ~~investment~~was in$8.4 million, related to interest on the ~~ConAgra~~8¼% ~~Agricultural~~Senior ~~Products~~Notes, ~~Business~~our inrevolving ~~proportion~~credit facility, and interest paid on the final settlement payment to ConAgra Foods’ ~~total~~of ~~investment~~$1.9 inmillion. ~~its~~The ~~subsidiaries.~~fourteen ~~Such~~weeks ~~expenses~~ended ~~are~~May 30, 2004 included ininterest ~~allocated~~expense ~~selling,~~of $2.7 ~~general~~million ~~and~~on ~~administrative~~obligations ~~expenses~~that ~~and~~ were ~~$9.0~~no ~~million~~longer inoutstanding during the ~~thirty-nine~~thirteen weeks ended ~~November~~May 2329, ~~2003~~2005. This includes interest to ConAgra Foods relating to the Acquisition, and interest relating to $21.5 million of our 8¼% Senior Notes which were redeemed December 2004.

~~Corporate Allocations—~~Finance ~~Charges.~~Related ~~Corporate~~and ~~allocations~~Other ~~also~~Charges. Finance ~~include~~related ~~finance~~and other charges ~~that~~for ~~have~~the ~~been~~fourteen ~~allocated~~weeks byended ~~ConAgra~~May ~~Foods~~30, ~~based~~2004, onconsist ~~ConAgra~~of ~~Foods’~~$1.9 ~~investment~~million intransition ~~the~~services ~~ConAgra~~agreement ~~Agricultural Products~~expenses ~~Business~~with ~~in proportion to~~ ConAgra Foods’ ~~total~~related ~~investment~~to ~~in its subsidiaries. ConAgra Foods allocated finance costs of $12.2 million in~~ the ~~thirty-nine weeks ended November 23, 2003~~Acquisition.

Income Taxes. The effective income tax rate was 38comparable quarter over quarter at 39.7% for the ~~forty~~thirteen weeks ended ~~November~~ 28May 29, 2005 ~~2004~~versus ~~compared with 38~~39.02% for the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003~~2004.

~~Liquidity~~LIQUIDITY ~~and~~AND ~~Capital~~CAPITAL ~~Resources~~RESOURCES

Overview

Our principal liquidity requirements are for working capital, consisting primarily of receivables, inventories, pre-paid expenses, reduced by accounts payable and accrued expenses; capital expenditures; debt service; and ~~distributions~~dividends on our common stock. We will fund our liquidity needs, including dividend payments, with cash generated from operations and, to the extent necessary, through borrowings under our ~~parent~~revolving credit facility. In addition, ~~UAP~~we ~~Holdings~~expect to fund any growth capital expenditures with cash generated from operations, reductions in working capital and incremental debt.

At May 29, 2005, we had no short-term debt outstanding under our revolving credit facility compared to an outstanding balance of $42.1 million at May 30, 2004. The revolving credit facility is included in our financial statements as short-term debt. We believe that our cash flows from operating activities and borrowing capabilities under our revolving credit facility will ~~fund~~be sufficient to meet our liquidity ~~needs~~requirements in the foreseeable future, including ~~distributions~~funding toof ~~UAP~~capital ~~Holdings~~expenditures, ~~with~~debt ~~cash~~service payments, and our intended dividend payments on our ~~generated~~common stock. If our cash flows from ~~operations~~operating ~~and~~activities are insufficient to fund dividend payments at intended levels, we will need to reduce or eliminate dividends or, to the extent ~~necessary,~~we ~~through~~are ~~borrowings~~permitted to do so under our ~~revolving~~debt ~~credit~~agreements, ~~facility~~fund dividends with borrowings or from other sources. InIf ~~addition~~we use working capital or permanent borrowings to fund dividends, we ~~expect~~will tohave less cash available for future dividends and other purposes, which could

3025

~~fund~~negatively ~~any~~impact ~~growth~~our ~~capital~~financial ~~expenditures~~condition, ~~with~~our ~~cash~~results ~~generated~~of ~~from~~ operations and our ability to maintain or expand our business. Additionally, ~~reductions~~our inrevolving ~~working~~credit facility ~~capital~~will ~~and~~mature ~~incremental~~in ~~debt~~2008. AsIf ofwe ~~November~~are ~~28,~~unable ~~2004~~to ~~and February~~refinance ~~22,~~such ~~2004~~indebtedness prior to its stated maturity, we ~~had~~will ~~$211.6~~be ~~million~~required ~~and~~to ~~$0.0~~use ~~million,~~cash ~~respectively~~to repay such indebtedness, ~~outstanding~~and ~~under~~we ~~our~~may ~~revolving~~not ~~credit~~have ~~facility~~sufficient cash available to us at that time. ~~The~~Even ~~revolving~~if ~~credit~~we ~~facility~~have sufficient iscash, ~~included~~such ina ~~our~~repayment ~~financial~~would ~~statements~~sufficiently asdecrease ~~short-term~~the ~~debt~~amount of cash, if any, that is available to pay dividends.

WeCash ~~believe~~Flows that our cash flows from operating activities and borrowing capabilities under our revolving credit facility will be sufficient to meet our liquidity requirements in the foreseeable future, including funding of capital expenditures and payment obligations under our debt service.

IfOur ~~our~~ongoing ~~cash~~operations ~~flows~~require ~~from~~availability ~~operating~~of ~~activities~~funds ~~are insufficient~~ to ~~fund~~service ~~distributions to UAP Holdings in order to enable it to fund dividend payments at intended levels~~debt, ~~we may need to~~ fund ~~such distributions with borrowings (to the extent we are permitted to do so under our debt agreements) or from other sources. If we use~~ working capital or ~~permanent borrowings to fund distributions, we will have less cash available to make principal~~ and ~~interest~~meet ~~payments~~capital ~~with~~expenditure ~~respect to the 8¼% Senior Notes~~requirements. ~~Additionally,~~We ~~our~~currently ~~revolving~~finance ~~credit~~and ~~facility~~expect ~~will mature in 2008. If we are unable~~ to ~~refinance~~ ~~such~~continue ~~indebtedness prior~~ to ~~its~~finance ~~stated~~these ~~maturity,~~activities ~~we will be required to use~~ through cash toflows ~~repay~~from ~~such~~operations ~~indebtedness,~~ and wefrom ~~may~~amounts ~~not have sufficient cash~~ available tounder usour atrevolving ~~that~~credit ~~time~~facility. ~~Even if we do have sufficient cash, such repayment would sufficiently decrease the amount of cash, if any, available to make principal and interest payments with respect to the 8¼% Senior Notes.~~

~~Historical~~ Cash ~~Flow~~flows used in operating activities totaled $58.9 million in the thirteen weeks ended May 29, 2005, compared to $204.8 million in the fourteen weeks ended May 30, 2004. The improvement in net cash used in operating activities in the current period versus the prior period is primarily due to better overall payment terms from ~~Operating~~suppliers ~~Activities~~and a change in the timing of prepayments to chemical and seed suppliers. We made larger prepayments to chemical and seed suppliers in the fourth quarter of fiscal 2005, significantly reducing payment obligations to suppliers in the thirteen weeks ended May 29, 2005. However, in the fourth quarter of fiscal 2004, we decided not to make significant prepayments to suppliers. Instead, we primarily paid on regular trade terms during the fourteen weeks ended May 30, 2004, resulting in more payments to suppliers. This was partially offset by higher trade receivables from increased sales and higher inventories. Inventories were up due to higher levels of fungicide products and higher fertilizer inventory levels resulting from increased fertilizer cost and slightly delayed markets in the mid-south due to weather.

~~Historically,~~Cash ~~the~~flows ~~ConAgra~~used ~~Agricultural~~in ~~Products~~investing ~~Business’~~activities ~~sources~~totaled of$2.1 ~~cash~~million ~~were~~for ~~primarily~~both ~~cash~~the ~~flows~~thirteen ~~from~~weeks ended ~~operations~~May 29, 2005, and ~~advances~~the ~~received~~fourteen ~~from~~weeks ~~ConAgra~~ended ~~Foods~~May 30, 2004. ~~The information~~Additions ~~for~~to property, plant and equipment were $3.2 million in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004~~2005, ~~represents~~compared to $3.9 million in the ~~cash~~fourteen ~~flow~~weeks ~~activity~~ended ofMay ~~the~~30, ~~Successor~~2004. ~~The~~Capital ~~information~~spending during ~~for~~ the ~~thirty-nine~~thirteen ~~week~~weeks ~~period~~ ended ~~November~~May 2229, ~~2003,~~2005 ~~represents~~was ~~the~~for ~~cash~~a ~~flow~~variety ~~activity~~ of projects; the ~~Predecessor~~largest was related to a fertilizer terminal expansion project.

Cash flows provided by ~~(used~~financing ~~in) operating~~ activities ~~totaled~~were $~~(273.6) million in the forty weeks ended November~~ 28~~, 2004 and $(104~~.6)7 million ~~for the thirty-nine weeks ended November 23, 2003. The usage~~ in the ~~forty~~thirteen weeks ended ~~November~~May 2829, ~~2004 was due to higher accounts receivable due to increased sales~~2005, ~~offset~~compared ~~by lower inventories and higher payables due~~ to ~~better inventory payable management~~$61.5 ~~The~~million ~~usage~~ in the ~~thirty-nine~~fourteen weeks ended ~~November~~May 2330, ~~2003 was primarily due to higher accounts receivable and inventories, offset by higher payables. The decrease in net cash in the~~ ~~current period versus the prior period is primarily due to a change in the timing of prepayments to suppliers~~2004. WeCash ~~made~~flows ~~large~~provided ~~prepayments~~by tofinancing ~~chemical~~activities ~~and seed suppliers in the fourth quarter of fiscal 2003~~ for ~~products~~May ~~sold in fiscal 2004~~30, ~~significantly~~ ~~reducing payment obligations to suppliers in fiscal~~ 2004~~. However~~, inreflect ~~the~~borrowings ~~fourth~~under ~~quarter~~our ofrevolving ~~fiscal~~credit ~~2004,~~facility weused ~~decided not~~ to ~~make~~accommodate ~~significant prepayments to suppliers because of~~ the ~~higher~~seasonal ~~cost~~working of capital ~~resulting~~needs ~~from~~of ~~the~~our ~~Acquisition~~business. ~~Instead,~~ weWe ~~primarily~~actively ~~paid~~manage onour ~~regular~~cash ~~trade~~balances ~~terms~~which ~~during~~results ~~fiscal 2005, resulting~~ in check ~~more~~float ~~payments~~on tozero ~~suppliers~~balance ~~during fiscal 2005 than during fiscal 2004~~accounts. ~~This~~The ~~was~~cash ~~slightly~~flows ~~offset~~provided by ~~better~~our ~~overall~~check ~~payment~~float ~~terms~~was ~~from suppliers~~$23.6 ~~The~~million ~~remainder of the decrease in net cash from operations was due to slightly higher trade receivables from increased sales~~ and ~~smaller reductions in inventories~~$19.4 ~~While~~million wefor ~~continued~~the toperiods ~~reduce~~ending ~~inventory~~May ~~levels~~29, ~~the reductions gained during fiscal~~ 2005, ~~were~~and ~~not~~May as30, ~~great as the reductions in fiscal~~ 2004., respectively.

~~Cash~~Credit ~~flows provided by (used in) investing activities totaled $(64~~Facility.7) ~~million~~At inMay ~~the~~29, ~~forty weeks ended November 28~~2005, ~~2004~~there ~~and~~was $6500.50 million ~~for~~of ~~the~~borrowing availability ~~thirty-nine~~under ~~weeks~~the ~~ended~~revolving ~~November~~credit ~~23,~~facility ~~2003.~~and ~~The~~we ~~post-closing~~had ~~settlement~~borrowing tocapacity ~~ConAgra~~thereunder ~~Foods~~of ~~in June 2004 accounted for~~ $58475.28 million ofafter ~~the~~giving ~~investing activity.~~effect ~~Additions~~ to ~~property plant and equipment were~~ $924.42 million inof ~~the~~letters ~~forty~~of ~~weeks~~credit ~~ended~~under ~~November 28, 2004, versus $8.4 million in~~ the ~~thirty~~sub-~~nine weeks ended November 23, 2003~~facility. ~~The increase was due to investments in corporate infrastructure projects, including payroll and general ledger systems, in connection with our transition to a stand-alone company.~~

~~Cash~~Since ~~flows~~inception ~~provided~~of bythe ~~financing~~credit ~~activities~~facility, ~~were~~we ~~$161.6~~have ~~million~~been in ~~the~~compliance ~~forty~~with ~~weeks~~the ~~ended November 28, 2004 and $69~~financial covenants.5 ~~million~~During in the ~~thirty~~fifty-~~nine~~two weeks ended ~~November~~May 2329, ~~2003.~~ ~~Cash~~2005, ~~flows~~outstanding ~~provided~~borrowings by(net ~~financing~~of ~~activities~~cash inon ~~the~~hand) ~~forty~~reached ~~week~~a period ~~ended~~end ~~November~~peak 28of $275.2 million on October 24, 2004, ~~reflect~~while ~~net~~cash ~~borrowings~~on ~~under~~hand ~~the~~reached ~~revolving~~a ~~credit~~period ~~facility~~end ~~used~~peak toof ~~accommodate~~$48.2 ~~the~~million ~~seasonal~~on ~~working~~February ~~capital~~27, 2005. ~~needs~~Our ofaverage ~~our~~period ~~business,~~end aborrowings ~~$60.0~~(net ~~million special~~of ~~dividend~~cash ~~to our~~on ~~parent,~~hand) ~~UAP~~for ~~Holdings,~~the ~~which~~fifty-two inweek ~~turn~~period ~~used~~ended ~~such~~May ~~funds~~29, ~~for~~2005, awere approximately $20100.01 million. ~~redemption of UAP Holdings’~~

preferred stock from ConAgra Foods, and a $40.0 million special dividend to UAP Holdings’ common stockholders paid on October 4, 2004. Financing activities in the prior period were primarily limited to net investments by ConAgra Foods and bank overdrafts.

Credit Facility and Other Long-Term Debt

In connection with the Acquisition, United Agri Products entered into a five-year $500.0 million asset-based revolving credit facility. The revolving credit facility also provides for a $20.0 million revolving credit sub-facility for United Agri Products Canada Inc. (“UAP Canada”), a $50.0 million letter of credit sub-facility, a $25.0 million swingline loan sub-facility and a $25.0 million in-season over-advance sub-facility. At November 28, 2004, there was $413.4 million of borrowing availability under the revolving credit facility and United Agri Products had additional borrowing capacity thereunder of $180.6 million (after giving effect to $21.3 million of letters of credit under the sub-facility). On November 29, 2004, the revolving credit facility was amended and restated in connection with the consummation of the Common Stock Offering. The interest rates with respect to revolving loans under the revolving credit facility, as amended and restated, are based, at United Agri Products’ option, on either the agent’s index rate plus an applicable index margin of between 0.50% and 1.00% or upon LIBOR plus an applicable LIBOR margin of between 1.75% and 2.25%. As of the date of this Report, the applicable index margin is 0.75% and the applicable LIBOR margin is 2.00%. The interest rates with respect to in-season over advances under the revolving credit facility are based, at United Agri Products’ option, on either the agent’s index rate plus an applicable index margin of 2.25% or upon LIBOR plus an applicable LIBOR margin of 3.50%. United Agri Products also pays an unused line fee margin of between 0.25% and 0.375% multiplied by the difference between (x) the maximum amount of the revolving credit facility (as it may be reduced from time to time) and (y) the average daily balance of revolving loans for the preceding months. These applicable margins (other than the margin on in-season over advances) are in each case subject to prospective adjustment on a quarterly basis (with respect to any reduction from current levels, beginning with the third quarter after consummation of the Common Stock Offering) if United Agri Products reduces its ratio of funded debt to EBITDA (on a consolidated basis). Following an event of default, all amounts owing under the revolving credit facility will bear interest at a rate per annum equal to the rate otherwise applicable thereto plus an additional 2.0%. The obligations under the revolving credit facility are (or, in the case of future subsidiaries, will be) guaranteed by UAP Holdings and each of its existing and future direct and indirect U.S. subsidiaries. The obligations under the revolving credit facility are secured by a first priority lien on, or security interest in, subject to certain exceptions, substantially all of UAP Holdings’, United Agri Products’ and UAP Canada’s properties and assets and the properties and assets of each of the other guarantors. The revolving credit facility contains customary representations, warranties and covenants and events of default.

On December 16, 2003, United Agri Products issued $225.0 million aggregate principal amount of 8¼% Senior Notes which mature on December 15, 2011. On December 29, 2004, United Agri Products redeemed $21.5 million principal amount of its 8¼% Senior Notes (together with accrued interest and liquidated damages of $0.1 million and redemption premiums of $1.8 million).

Due to the seasonal nature of our business, the amount of borrowings outstanding under the revolving credit facility varies significantly throughout the fiscal year. During the period from the Acquisition through November 28, 2004, outstanding borrowings (net of cash on hand) reached a period end peak of $275.2 million as of November 28, 2004. During the same period, utilization of the revolving credit facility was at its lowest when we had $172.6 million of cash on hand as of February 22, 2004. Our average period end borrowings (net of cash on hand) on a historical basis for the twelve-month period ended November 28, 2004 were approximately $73.9 million.

UAP Holdings’ Dependence on Us to Service its Obligations

As a holding company with no significant assets other than the ownership of 100% of our common stock, UAP Holdings depends on our cash flows to service its debt and to pay dividends (if any) on its common stock. UAP Holdings intends to pay quarterly cash dividends on its common stock at an annual rate of $0.50 per share. The

declaration of such dividends is at the complete discretion of UAP Holdings’ board of directors, and depends upon many factors, including its financial condition, earnings, legal requirements, restrictions in its debt agreement, and other factors that its board of directors deems relevant. Because our parent, UAP Holdings, is a holding company, its primary source of funds to fund its dividend payments will be cash distributions received from us. To the extent we make such distributions to UAP Holdings, the amount of cash available to us to pay principal of, and interest on, our outstanding debt, including the 8¼% Senior Notes, will be reduced, and we would have less cash available for other purposes, which could negatively impact our financial condition, our results of operations and our ability to maintain or expand our business. A failure to pay principal of, or interest on, our debt, including the 8¼% Senior Notes, would constitute an event of default under the applicable debt agreements, giving the holders of that debt the right to accelerate its maturity. If any of our debt is accelerated, we may not have sufficient cash available to repay it in full and we may be unable to refinance it on satisfactory terms or at all.

UAP Holdings is substantially more leveraged than us. As of November 28, 2004, UAP Holdings had $526.8 million of total indebtedness. As described above, UAP Holdings will rely on distributions from us in order to pay amounts due in respect of its 10¾% Senior Discount Notes due 2012 (which will require cash interest payments at the rate of 10 3/4% per annum, commencing on July 15, 2008) and to pay dividends, if any, on its outstanding common stock. However, our ability to make distributions to UAP Holdings is restricted by the covenants contained in our revolving credit facility and the indenture governing the 8¼% Senior Notes. While the restrictions in the indenture governing the 8¼% Senior Notes cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the indenture governing the 8¼% Senior Notes may not afford the holders of the 8¼% Senior Notes protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction. While UAP Holdings has no current intention to engage in these types of transactions, there can be no assurance that it will not do so in the future if permitted under the terms of the revolving credit facility and the indenture governing the 8¼% Senior Notes.

Obligations and Commitments

As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as lease agreements, debt agreements and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as “take-or-pay” contracts). We enter into unconditional purchase obligation arrangements in the normal course of business to ensure that adequate levels of sourced product are available to us. There were no material changes outside of the ordinary course of business during the thirteen weeks ended May 29, 2005.

As26 of November 28, 2004, the aggregate principal amount at maturity of our long-term indebtedness was $225.0 million, excluding lease obligations, and we had $3.0 million of outstanding commercial commitment arrangements such as guarantees. We have cancelable lease commitments for vehicles and equipment totaling $46.5 million.

There have been no material changes in our obligations and commitments as of November 28, 2004. For additional information, see the section under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Obligations and Commitments” in the Registration Statement.

Trading Activities

As of November 28, 2004 and November 23, 2003, we had no outstanding derivative contracts. However, subject to limitations set forth in our debt agreements, we may, in the future, enter into derivative contracts to limit our exposure to changes in interest rates, foreign currency exchange rates and commodity prices.

Critical Accounting Policies

The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on our historical experiences combined with management’s

~~understanding~~UAP ofHolding ~~current facts and circumstances~~Corp.’s ~~Certain~~Dependence ofon ~~our~~Us ~~accounting policies are considered critical as they are both important~~ to ~~the~~Service ~~portrayal~~it’s ~~of our~~Obligations financial condition and results of operations and require significant or complex judgment on the part of management. The following is a summary of certain accounting policies considered critical by our management.

~~Allowance~~As ~~for~~a ~~Doubtful~~holding ~~Accounts.~~company ~~Our~~with ~~allowance~~no ~~for~~significant ~~doubtful~~assets ~~accounts~~other ~~reflects~~than ~~reserves~~the ownership of 100% of our ~~for~~common ~~customer~~stock, ~~receivables~~UAP Holding Corp. depends on our cash flows to ~~reduce~~service ~~receivables~~its debt and to ~~amounts~~pay ~~expected~~dividends (if any) on its common stock. UAP Holding Corp. intends to bepay ~~collected~~quarterly cash dividends on its common stock at an annual rate of $0.50 ~~Management~~per ~~uses~~share. ~~significant~~The declaration ~~judgment~~of insuch ~~estimating~~dividends ~~uncollectible~~is ~~amounts~~at the complete discretion of UAP Holding Corp.’s Inboard ~~estimating~~of ~~uncollectible~~directors, ~~amounts~~and depends upon many factors, ~~management~~including ~~considers~~its financial condition, earnings, legal requirements, restrictions in its debt agreement, and other factors ~~such~~that asits ~~current~~board ~~overall~~of directors deems relevant. Because our parent, UAP Holding Corp., is a holding company, its primary source of funds to fund its dividend payments will be cash distributions received from us. To the extent we make such ~~economic~~distributions ~~conditions~~to UAP Holding Corp., ~~industry-specific~~the ~~economic~~amount ~~conditions~~of cash available to us to pay principal of, ~~historical~~and ~~customer~~interest ~~performance~~on, our outstanding debt, including the 8¼% Senior Notes, will be reduced, and ~~anticipated~~we ~~customer~~would ~~performance.~~have ~~While~~less ~~management~~cash ~~believes~~available for other purposes, which could negatively impact our ~~processes~~financial ~~effectively~~condition, ~~address~~our results of operations and our ~~exposure~~ability ~~for~~to ~~doubtful~~maintain ~~accounts~~or expand our business. A failure to pay principal of, ~~changes~~or ininterest on, our debt, including the ~~economy~~8¼% Senior Notes, would constitute an event of ~~industry~~default under the applicable debt agreements, orgiving ~~specific~~the ~~customer~~holders ~~conditions~~of that debt the right to accelerate its maturity. If any of our debt is accelerated, we may ~~require~~not ~~adjustment~~have sufficient cash available to ~~the~~repay ~~allowance~~it ~~for~~in ~~doubtful~~full ~~accounts~~and ~~recorded~~we bymay usbe unable to refinance it on satisfactory terms or at all.

~~Inventory~~UAP ~~Valuation~~Holding Corp. ~~Management~~is ~~reviews~~substantially ~~inventory~~more leveraged ~~balances~~than tous. ~~determine~~As ifof ~~inventories~~May ~~can~~29, be2005, ~~sold~~UAP atHolding ~~amounts~~Corp. ~~equal~~had to$298.5 ormillion ~~greater~~of ~~than~~total ~~their~~indebtedness. ~~carrying~~As ~~amounts~~described above, UAP Holding Corp. ~~The review~~will ~~includes~~rely ~~identification~~on distributions from us in order to pay amounts due in respect of ~~slow~~its ~~moving~~10¾% ~~inventories~~Senior Discount Notes due 2012, ~~obsolete~~(which ~~inventories~~will ~~and~~require ~~discontinued~~cash ~~products~~interest orpayments ~~lines~~at the rate of ~~products.~~10¾% ~~The~~per ~~identification~~annum, ~~process~~commencing ~~includes~~on ~~historical~~July ~~performance~~15, of2008) ~~the~~and ~~inventory~~to pay dividends, ~~current~~if ~~operational~~any, ~~plans~~on ~~for~~its ~~the~~outstanding ~~inventory~~common stock. However, our ability to make distributions to UAP Holding Corp. is asrestricted ~~well~~by ascovenants ~~industry~~contained in our revolving credit facility and ~~customer~~the ~~specific~~indenture ~~trends~~governing the 8¼% Senior Notes. IfWhile ~~our~~the ~~actual~~restrictions ~~results~~in ~~differ~~the ~~from~~indenture ~~management~~governing ~~expectations~~the ~~with~~8¼% ~~respect~~Senior Notes cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the ~~selling~~indenture governing the 8¼% Senior Notes may not afford the holders of ~~our~~the ~~inventories~~8¼% atSenior ~~amounts~~Notes ~~equal~~protection toin all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or ~~greater~~similar ~~than~~transaction. ~~their~~While ~~carrying~~UAP ~~amounts~~Holding Corp. has no current intention to engage in these types of transactions, wethere ~~would~~can be ~~required~~no toassurance ~~adjust~~that ~~our~~it will not do so in the future if permitted under ~~inventory~~the ~~balances~~terms ~~accordingly~~of the revolving credit facility and the indenture governing the 8¼% Senior Notes.

~~Impairment~~Dividend ofPolicy Long-Lived Assets (Including Property, Plant and Equipment), Goodwill and Identifiable Intangible Assets. We reduce the carrying amounts of long-lived assets, goodwill and identifiable intangible assets to their fair values when the fair value of such assets is determined to be less than their carrying amounts (i.e., assets are deemed to be impaired). Fair value is typically estimated using a discounted cash flow analysis, which requires us to estimate the future cash flows anticipated to be generated by the particular asset(s) being tested for impairment as well as select a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we consider historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by us in such areas as future economic conditions, industry-specific conditions, product pricing and necessary capital expenditures. The use of different assumptions or estimates for future cash flows could produce different impairment amounts (or none at all) for long-lived assets, goodwill and identifiable intangible assets.

~~Rebate~~We ~~Receivables.~~intend ~~Rebates~~to ~~are received from crop protection and seed products, based on programs offered by our vendors. The~~pay ~~programs~~quarterly ~~vary~~cash ~~based~~dividends on ~~the product type and specific vendor practice. Historically, more than 85% of the rebates earned were from~~ our ~~chemical~~common ~~suppliers.~~stock ~~The~~sufficient ~~majority of the rebate programs run on a crop year basis, typically from October 1st~~ to ~~September~~ ~~30th,~~provide ~~although~~UAP ~~other~~Holding ~~periods are sometimes used~~Corp. ~~We also negotiate individually~~ with ~~our vendors for additional rebates after~~ the ~~conclusion~~funds ofnecessary ~~the~~to ~~crop~~pay ~~year~~dividends ~~and~~they ~~often~~may ~~several~~declare. ~~months~~On ~~after~~April we29, ~~have purchased and sold the products for which we are negotiating rebates. Historically~~2005, ~~the~~our ~~majority~~board ofdeclared ~~the~~a ~~rebates~~quarterly ~~have~~dividend ~~been earned based~~ on our ~~sales~~common ofstock ~~the suppliers’ products~~ in athe ~~given~~amount ~~crop~~of ~~year~~$6. ~~The rebate receivable recorded monthly is based on actual sales and the historical rebate~~3 ~~percentage received~~million. The ~~actual~~record ~~rebates~~date ~~earned~~ for ~~most programs are finalized in our fourth fiscal quarter and adjustments are made to~~ the ~~accrual~~dividend aspayment ~~necessary.~~was ~~The~~May ~~majority~~13, of2005, ~~our rebate receivables are collected during our fourth quarter. Because the nature of the programs~~ and the ~~amount~~payment ofdate ~~rebates~~was ~~available~~June ~~are determined by our vendors~~1, ~~there can be no assurance that historical rebate trends will continue~~2005.

~~Off~~There ~~Balance~~are ~~Sheet~~no ~~Arrangements~~assurances that we will declare or pay any cash dividends in the future. The declaration and payment of future dividends to holders of our common stock is at the discretion of our board of directors and depends upon many factors, including our financial condition, earnings, legal requirements, restrictions in our debt agreements and other factors our board of directors deems relevant. The terms of our indebtedness, including the revolving credit facility and the indentures governing the 8¼% Senior Notes, may also restrict us from paying cash dividends on our common stock under some circumstances.

WeIn ~~use~~the ~~off-balance~~past, ~~sheet~~cash ~~arrangements~~flow (eprovided by our operating activities has been highly variable, resulting in negative cash flow during certain periods.g. Because of the variability, if our cash flows from operating ~~leases)~~activities ~~where~~are insufficient to fund dividend payments at intended levels, we may need to reduce or eliminate dividends or, to the ~~economics~~extent permitted by our debt agreements fund all or part of the dividends with additional debt or other sources of cash. To the extent we pay dividends, the amount of cash available to us to pay principal of, and ~~sound~~interest ~~business~~on, ~~principles~~our ~~warrant~~outstanding ~~their~~debt ~~use~~will be reduced. WeA ~~periodically~~failure ~~enter~~to ~~into~~pay ~~guarantees~~principal of, or interest on, our debt ~~and~~would ~~other~~constitute ~~similar~~an ~~arrangements~~event asof ~~part~~default under the applicable debt agreements, giving the holders of ~~transactions~~the debt the right to accelerate its maturity. If any of our debt is accelerated, we may not have sufficient cash available to repay it in full and we may be unable to refinance it on satisfactory terms or at all. An event of default under debt agreements, or an acceleration of the ~~ordinary~~debt ~~course~~hereunder, could also trigger an event of default under other debt agreements. Furthermore, if we fund dividends with additional debt, our ~~business~~interest expense will increase, which may cause a further reduction in the amount of cash available to us. ~~For~~Subject ~~more~~to ~~information~~certain restrictions in the indenture governing the 8¼% Senior Notes, ~~see~~additional ~~“—Obligations~~debt could be secured and ~~Commitments”~~therefore ~~above~~effectively senior to the 8¼% Senior Notes.

3427

~~Related~~Critical ~~Party~~Accounting ~~Transactions~~Policies

AsThe ~~part~~process of ~~the~~preparing ~~Acquisition,~~financial ~~UAP~~statements ~~Holdings,~~requires ~~United~~the ~~Agri~~use ~~Products and certain~~ of ~~its~~estimates ~~subsidiaries~~on ~~entered~~the ~~into~~part aof ~~seller~~management. ~~transition~~The ~~services agreement~~estimates ~~with~~used ~~ConAgra~~by ~~Foods~~management ~~pursuant~~are based toon ~~which~~our wehistorical ~~would~~experiences ~~perform~~combined ~~certain~~with ~~information~~management’s ~~technology,~~understanding ~~accounting,~~of ~~office~~current ~~support~~facts and ~~other services for ConAgra Foods~~circumstances. InCertain ~~addition,~~of weour ~~granted~~accounting topolicies ~~ConAgra~~are ~~Foods~~considered ~~and~~critical ~~its~~as ~~international~~they ~~subsidiaries~~are anboth ~~exclusive two-year~~important ~~license~~ to ~~use~~the ~~certain~~portrayal of our ~~trademarks~~financial condition and ~~trade~~results ~~names~~of ~~outside~~operations ~~the United States~~ and ~~Canada.~~require ~~ConAgra~~significant ~~Foods~~or ~~paid~~complex usjudgment anon ~~aggregate~~the ~~fee~~part of $1management.3 ~~million~~There ~~for~~has ~~the~~been ~~license~~no ~~and~~material ~~the~~change ~~services~~in ~~provided~~accounting ~~under~~policies ~~the~~considered ~~seller~~critical ~~transition~~by ~~services~~our ~~agreement~~management. ~~The~~ ~~seller~~However, ~~transition~~we ~~services~~have ~~agreement~~refined ~~was~~our ~~terminated~~methodology byfor ~~ConAgra~~estimating chemical ~~Foods~~rebates ~~on September 30, 2004~~receivable.

AsForward-Looking ~~part~~Statements of the Acquisition, ConAgra Foods, UAP Holdings, United Agri Products and certain of its subsidiaries entered into a buyer transition services agreement pursuant to which ConAgra Foods would provide certain information technology and other administrative services to us for a period of one year. As consideration for these services, we paid ConAgra Foods $7.5 million. For the thirteen and forty week periods ended November 28, 2004, $1.9 million and $5.6 million, respectively, in expense was recognized by us for services performed pursuant to this agreement. This transition services agreement expired on November 23, 2004, in accordance with its terms.

Expenses incurred by ConAgra Foods and allocated to us were historically determined based on the specific services that were provided or were allocated based on ConAgra Foods’ investment in us in proportion to ConAgra Foods’ total investment in its subsidiaries. In addition, ConAgra Foods charged us finance charges on ConAgra Foods’ investment in and advances to us. Management believes that such expense allocations were reasonable. It is not practical to estimate the expenses that would have been incurred by us if we had been operated on a stand-alone basis. Corporate allocations included allocated selling, general and administrative expenses of $2.9 and $9.0 million respectively for the thirteen and thirty nine weeks ending November 23, 2003. Allocated finance charges, presented net of third party finance fee income, are $3.9 million and $12.2 million for the thirteen and thirty nine weeks ending November 23, 2003, respectively.

Under the terms of a management consulting agreement (the “Management Agreement”) dated as of November 21, 2003 with Apollo, we retained Apollo to provide certain management consulting and financial advisory services, for which United Agri Products paid Apollo an annual management fee of $1.0 million in quarterly payments of $250,000. In addition, as consideration for arranging the Acquisition and services pertaining to certain related financing transactions, United Agri Products paid Apollo a fee of $5.0 million in January 2004, which was accounted for as part of the Acquisition. In connection with the Common Stock Offering, the Management Agreement was terminated and Apollo was paid a $3.5 million transaction fee on November 29, 2004.

Cautionary Statements for Forward-Looking Information

This Report includes “forward-looking statements” that involve risks and uncertainties. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When used in this Report, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “foresees,” “likely,” “may,” “should,” “goal,” “target,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this Report.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements including, among other things, the matters discussed in this Report under this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such risks, uncertainties and other factors may include, among others:

•

general economic and business conditions;

•

industry trends;

•

restrictions contained in our debt agreements;

•

our substantial leverage, including the inability to generate the necessary amount of cash to service our existing debt and the incurrence of substantial indebtedness in the future;

•

the seasonality of our business and weather conditions;

•

the possibility of liability for pollution and other damage that is not covered by insurance or that exceeds our insurance coverage;

•

increased competition in the markets in which we operate;

•

our dependence on rebate programs to attain profitability;

•

our dependence on a limited number of key executives who we may not be able to adequately replace if they leave our company;

•

changes in government regulations, agricultural policy and environmental, health and safety laws and regulations;

• the cost of developing our own stand-alone systems and infrastructure;

•

changes in business strategy, development plans or cost savings plans;

•

the loss of any of our major suppliers or the bankruptcy or financial distress of our customers;

•

the ability to attain and maintain any price increases for our products;

•

availability, terms and deployment of capital; and

•

other factors over which we have little or no control.

~~These~~28 ~~risks and certain other uncertainties are discussed in more detail under the caption “Risk Factors” in the Registration Statement.~~

These risks and certain other uncertainties are discussed in more detail in our Annual Report on Form 10-K for the fiscal year ended February 27, 2005 under the caption “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors.”

There may be other factors, including those discussed elsewhere in this Report, which could cause our actual results to differ materially from the results referred to in the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Report and are expressly qualified in their entirety by the cautionary statements included in this Report. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~The~~Market ~~principal~~risks ~~market risk~~ affecting our business ~~has~~are ~~been~~ exposure to changes in energy prices ~~and, to a lesser extent,~~ foreign currency risks. Weand ~~are currently exposed to market risks including exposure to changes in energy prices, with respect to which we currently pay market rates. As a result of the Acquisition, we are also subject to~~ interest rate ~~risk~~risks. Based upon the amounts outstanding under our revolving credit facility, as of November 28, 2004, a one percentage point change in the assumed weighted average interest rate on such credit facility would change our annual interest expense by $2.1 million.

Our average period end borrowings under the revolving credit agreement (net of cash on hand) for the fifty-two week period ended May 29, 2005, were approximately $100.1 million. The revolving credit facility is affected by changes in interest rates. Based upon the amount of our average period end borrowings (net of cash on hand) for the fifty-two week period ended May 29, 2005, a one percentage point change in the assumed weighted average interest rate on such credit facility would change our annual interest expense by $1.0 million.

ITEM 4.

CONTROLS AND PROCEDURES.

As of the end of the period covered by this Report, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” as they related to our business (“Disclosure Controls”). This evaluation (“Controls Evaluation”) was done under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

36Our management, including the CEO and CFO, does not expect that our Disclosure Controls or our “internal controls over financial reporting” (“Internal Controls”) will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Based upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure Controls are effective as of the end of the period covered by this Report. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation. In addition, there have been no changes in our internal control over financial reporting that have occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including the CEO and CFO, does not expect that our Disclosure Controls or our “internal controls over financial reporting” (“Internal Controls”) will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Based upon the Controls Evaluation, the CEO and CFO have concluded that, to the best of their knowledge and subject to the limitations noted above, the Disclosure Controls are effective as of the end of the period covered by this Report. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation. In addition, there have been no changes in our internal control over financial reporting that have occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM~~Items 1., ~~LEGAL~~2, ~~PROCEEDINGS~~3, 4 and 5 are not applicable and have been omitted.

~~None~~ITEM 6. EXHIBITS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



31.1		Certification of Chief Executive Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~None.~~30

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

No.		Item
10.1		Letter Agreement, dated December 23, 2004, amending and restating the Letter Agreement, dated as of November 29, 2004, regarding termination of Management Consulting Agreement between United Agri Products, Inc. and Apollo Management V, L.P. (incorporated by reference to Exhibit 10.21 to Amendment No. 1 to United Agri Products, Inc.’s Registration Statement on Form S-4 dated December 23, 2004 (File No. 333-111710)).
31.1		Certification of Chief Executive Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	UNITED AGRI PRODUCTS, INC.
Date: January 12, 2005	By:	/S/ DAVID W. BULLOCK
		David W. Bullock, Executive Vice Presidentand Chief Financial Officer
		(Principal Financial and Accounting Officer)

Date: July 12, 2005

39UNITED AGRI PRODUCTS, INC. (Registrant) By: /s/ David W. Bullock David W. Bullock Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory on behalf of Registrant)

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