Seminis Inc., the world's largest developer, producer and
marketer of vegetable and fruit seeds, today reported financial
results for the first nine months and third quarter ended June 25,
2004.
NINE-MONTH FINANCIAL SUMMARY ($ IN MILLIONS)
Nine Months Nine Months
FY2003 FY2004 % Change
----------------------------------------------------------------------
SALES $352.7 $394.8 11.9%
----------------------------------------------------------------------
GROSS PROFIT(a) $222.4 $204.2 (8.2)%
----------------------------------------------------------------------
INCOME FROM OPERATIONS(b) $38.9 $20.2 (48.0)%
----------------------------------------------------------------------
NET INCOME (LOSS)(c) $8.9 $(22.1) (348.2)%
----------------------------------------------------------------------
(a) Negatively impacted by $44.9 million non-cash purchase accounting charge in FY2004
(b) Negatively impacted by $34.8 million non-cash purchase accounting charge in FY2004
(c) Negatively impacted by $34.7 million non-cash purchase accounting charge in FY2004
"While our reported results
continue to be affected by non-cash accounting entries related to
the merger transaction, I am pleased to report that from an
operational perspective, we have continued to grow and consolidate
our leadership position during the first nine months of our fiscal
year," said Mr. Alfonso Romo, Chairman of the Board and Chief
Executive Officer. "Year-to-date seed sales have increased in every
region, and nearly 12% overall while profitability has increased
when excluding purchase accounting effects.
"Internally, our proprietary
information systems are providing greater visibility for forecasting
seed crops and predicting demand. This has allowed us to increase
our sales and enhance our profitability, while simultaneously
reducing seed inventories by 7.7% (net of reserves) as of June 2004,
when compared to fiscal year 2003 year-end levels," said Mr. Romo.
He indicated that within the next 12 months, the company will
complete the expansion of its core SAP information system to nearly
all of the markets in which it operates.
In addition, Mr. Romo indicated
that Seminis has expedited infrastructure upgrades -- including new
research facilities in The Netherlands, China and India as well as a
new operations center in China, now under construction.
In September 2003, in connection
with the acquisition transactions, Seminis became a privately held
company. As a result, its financial statements have been materially
impacted by non-cash charges due to the application of the purchase
accounting method, which includes amortization of inventory write-up
that negatively impacts the gross profit for a period of
approximately 16 months, and amortization and depreciation of
intangible and fixed assets that positively impact the operating
expenses. Net loss of the company at June 2004 is affected as well
by the purchase accounting method.
FIRST NINE MONTHS OF FY2004
PERFORMANCE
Total sales for the first nine
months of fiscal year 2004 increased 11.9% to $394.8 million from
$352.7 million during the same period last year, driven primarily by
continued increases in our more mature markets of NAFTA and EMEA
(Europe, Middle East, Africa) where we saw increases of 12.1% and
13.3%, respectively. At constant exchange rates (CER), total sales
increased 6.5% to $375.6 million from $352.7 million the previous
year. At CER, NAFTA sales increased 12.2% and EMEA sales were up
2.7% for the period.
Gross margin percentage decreased
to 51.7% for the nine months ended June 25, 2004 from 63.0% for the
nine months ended June 27, 2003. The decrease was mainly due to the
non-cash amortization of $44.9 million of inventory step-up under
purchase accounting treatment, which had a negative impact of 11.4
percentage points on the company's gross margin.
As a percentage of sales, total
operating expenses for the first nine months of 2004 decreased to
47.5% from 52.4% of sales in the prior year. Total operating
expenses increased 1.5% to $187.6 million from $184.9 million for
the same period last year. The increase was primarily the result of
cost of living adjustments, variable expenses associated with sales
and management fee expense, but offset by $10.1 million of lower
depreciation and amortization expenses, a result of purchase
accounting application.
Income from operations for the
first nine months of 2004 decreased to $20.2 million compared with
$38.9 million for the previous year. This number was negatively
impacted by the above-mentioned purchase accounting net effect of
$34.8 million.
Net loss for the first nine months
of 2004 was $22.1 million compared with a net income of $8.9 million
the previous year. This number was negatively impacted by the
above-mentioned purchase accounting net effect of $34.7 million.
THIRD QUARTER 2004 FINANCIAL SUMMARY ($ IN MILLIONS)
3Q FY2003 3Q FY2004 % Change
----------------------------------------------------------------------
SALES $113.1 $116.5 3.0%
----------------------------------------------------------------------
GROSS PROFIT(a) $71.0 $59.1 (16.7)%
----------------------------------------------------------------------
INCOME OR LOSS FROM OPERATIONS(b) $8.1 $(3.1) (137.9)%
----------------------------------------------------------------------
NET LOSS(b) $(3.3) $(17.8) (433.0)%
----------------------------------------------------------------------
(a) Negatively impacted by $16.5 million non-cash purchase accounting charge in FY2004
(b) Negatively impacted by $13.0 million non-cash purchase accounting charge in FY2004
For the quarter ended June 25,
2004, total sales increased by 3.0% reaching $116.5 million from
$113.1 million the previous year. At CER, sales were up 0.5 % to
$113.7 million from $113.1 million the previous year. Third-quarter
sales excluded $2.5 million in seed orders that would have been
expected, if not for an unforeseen change in export rules to Syria
regulated by the United States Department of Commerce.
Gross margin percentage decreased
to 50.8% for the three months ended June 25, 2004 from 62.8% for the
three months ended June 27, 2003. The decrease was due to the
non-cash amortization of $16.5 million of inventory step-up under
purchase accounting treatment, which had a negative impact of 14.1
percentage points on the company's gross margin. The cancelled
Syrian sale had a negative impact of $1.6 million on gross margin.
As a percentage of sales, operating
expenses decreased to 54.2% of sales compared with 55.9% of sales
for the previous year. Total operating expenses for the third
quarter decreased by 0.1% to $63.2 million from $63.3 million during
the same period last year. The decrease was primarily the result of
$3.4 million of lower depreciation and amortization expenses related
to purchase accounting, but was offset by cost of living adjustments
and variable expenses associated with sales and management fee
expense.
Loss from operations for the third
quarter was $3.1 million compared to $8.1 million of operating
income for the prior year. This number was negatively impacted by
the above-mentioned purchase accounting net effect of $13.0 million
as well as the $1.6 million of gross margin on cancelled sales to
Syria.
For the third quarter of 2004, net
loss was $17.8 million compared with a $3.3 million loss the
previous year. This number was also negatively impacted by the
above-mentioned purchase accounting net effect of $13.0 million.
Seminis Inc. is the largest
developer, producer and marketer of vegetable seeds in the world.
The company uses seeds as the delivery vehicle for innovative
agricultural technology. Its products are designed to reduce the
need for agricultural chemicals, increase crop yield, reduce
spoilage, offer longer shelf life, create better tasting foods and
foods with better nutritional content. Seminis has established a
worldwide presence and global distribution network that spans 150
countries and territories.
SEMINIS, INC.
Consolidated Balance Sheets
(In thousands)
As of As of
June 25, September 30,
2004 2003
-------------------------
ASSETS:
Current assets
Cash and cash equivalents $74,605 $36,824
Accounts receivable, net 178,647 151,578
Inventories 289,266 351,637
Prepaid expenses and other current assets 7,152 4,450
-------------------------
Total current assets 549,670 544,489
Property, plant and equipment, net 74,021 69,792
Intangible assets, net 69,478 73,009
Other assets 20,545 19,957
-------------------------
$713,714 $707,247
=========================
LIABILITIES, MANDATORILY REDEEMABLE STOCK AND
STOCKHOLDERS' EQUITY:
---------------------------------------------
Current liabilities
Short-term borrowings $18,262 $20,031
Current maturities of long-term debt 1,796 2,722
Accounts payable 22,724 50,280
Accrued liabilities 91,642 89,416
-------------------------
Total liabilities 134,424 162,449
Long-term debt 450,247 398,538
Deferred income tax 21,710 21,312
Minority interest in subsidiaries 1,467 1,723
Preferred shares subject to mandatory
redemption 41,483 39,300
-------------------------
Total liabilities 649,331 623,322
Total stockholders' equity 64,383 83,925
-------------------------
$713,714 $707,247
=========================
SEMINIS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
June 25, June 27, June 25, June 27,
2004 2003 2004 2003
-------------------------------------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $116,516 $113,088 $394,785 $352,705
Cost of goods sold 57,375 42,113 190,585 130,354
-------------------------------------- -----------
Gross profit 59,141 70,975 204,200 222,351
Research and
development 13,166 12,564 36,801 34,942
Selling, general
and administrative
expenses 48,012 46,685 144,907 138,022
Amortization of
intangible assets 2,029 4,014 5,880 11,907
-------------------------------------- -----------
Total operating
expenses 63,207 63,263 187,588 184,871
Gain on sale of
fixed assets 1,006 366 3,621 1,457
---------------------------------------------------
Income from
operations (3,060) 8,078 20,233 38,937
Other expense
Interest expense, net (12,056) (8,800) (33,609) (23,735)
Other, net (922) (779) (69) (303)
-------------------------------------- -----------
Total non-operating
expense (12,978) (9,579) (33,678) (24,038)
-------------------------------------- -----------
Income from
continuing operations
before income taxes (16,038) (1,501) (13,445) 14,899
Income tax expense (1,787) (1,843) (8,684) (5,983)
-------------------------------------- -----------
Net income (loss) (17,825) (3,344) (22,129) 8,916
Preferred stock dividends -- (4,660) -- (13,844)
-------------------------------------- -----------
Net income (loss)
available for
common stockholders $(17,825) $(8,004) $(22,129) $(4,928)
====================================== ===========
Seminis Inc.
Net Seed Sales
Currency stated at FY 2003 Exchange rates
(In US Million $)
Three Months Ended June Nine Months Ended June
------------------------- -------------------------
FY 2004 FY 2003 % Change FY 2004 FY 2003 % Change
------- ------- --------- ------- ------- ---------
North America $37.2 $34.2 8.6% $133.6 $119.1 12.2%
Europe & Middle
East 49.9 53.5 -6.7% 164.4 160.0 2.7%
Asia Pacific 11.1 10.3 8.1% 35.1 34.6 1.6%
West Asia 3.8 3.5 9.6% 7.1 6.0 17.5%
South America 8.3 8.3 0.1% 22.2 20.9 6.5%
------- ------- --------- ------- ------- ---------
Total Seed Sales $110.3 $109.8 0.5% $362.4 $340.6 6.4%
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