-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HiYLsk/tYuCEh897imn2ukGsSViLkZhqC+RJOvbJe8kPqkhja/th+m2jQbVw/How hw3yj1Q/ufqjVm1aK/FZBw== 0000950148-01-500702.txt : 20010515 0000950148-01-500702.hdr.sgml : 20010515 ACCESSION NUMBER: 0000950148-01-500702 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010330 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEMINIS INC CENTRAL INDEX KEY: 0001078259 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 360769130 STATE OF INCORPORATION: IL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26519 FILM NUMBER: 1634166 BUSINESS ADDRESS: STREET 1: 1905 LIRIO AVENUE CITY: SATICOY STATE: CA ZIP: 93004-4206 MAIL ADDRESS: STREET 1: 1905 LIRIO AVENUE CITY: SATICOY STATE: CA ZIP: 93004-4206 10-Q 1 v72444e10-q.txt 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 10-Q ------------- (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _______________ COMMISSION FILE NUMBER 000-26519 SEMINIS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 36-0769130 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 2700 CAMINO DEL SOL, OXNARD, CALIFORNIA 93030-7967 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (805) 918-2740 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME, ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Indicate, by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of May 9, 2001, the Registrant had 13,975,764 registered shares of Class A Common Stock, $0.01 par value per share, issued and outstanding, and 45,848,622 unregistered shares of Class B Common Stock, $0.01 par value per share, issued and outstanding. 2 SEMINIS, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2001 TABLE OF CONTENTS PART I -- FINANCIAL INFORMATION
Page ---- Item 1. Financial Statements Consolidated Balance Sheets as of March 30, 2001 and September 30, 2000.............................................. 3 Consolidated Statements of Operations for the Three and Six Months Ended March 30, 2001 and March 31, 2000 ................. 4 Consolidated Statement of Stockholders' Equity for the Six Months Ended March 30, 2001......................... 5 Consolidated Statements of Cash Flows for the Six Months Ended March 30, 2001 and March 31, 2000......................... 6 Notes to Consolidated Financial Statements...................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 17 Item 4. Submission of Matters to a Vote of Security Holders............. 17 PART II -- OTHER INFORMATION Item 1. Legal Proceedings............................................... 18 Item 6. Exhibits and Reports on Form 8-K................................ 18 Signatures...................................................... 21
3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SEMINIS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
AS OF AS OF MARCH 30, SEPTEMBER 30, 2001 2000 ----------- ------------- (Unaudited) ASSETS: Current assets Cash and cash equivalents $ 29,735 22,479 Accounts receivable, net 172,672 162,929 Inventories 319,475 333,287 Prepaid expenses and other current assets 5,045 3,105 --------- ------- Total current assets 526,927 521,800 Deferred income taxes 15,253 5,699 Property, plant and equipment, net 210,843 226,505 Intangible assets, net 191,128 227,839 Other assets 14,221 16,194 --------- ------- $ 958,372 $ 998,037 ========= ========= LIABILITIES, MANDATORILY REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY: Current liabilities Short-term borrowings $ 31,114 $ 20,178 Current maturities of long-term debt 318,948 325,658 Accounts payable 27,834 54,955 Accrued liabilities 86,475 96,453 --------- ------- Total current liabilities 464,371 497,244 Long-term debt 21,207 23,468 Minority interest in subsidiaries 1,562 1,445 --------- ------- Total liabilities 487,140 522,157 Commitments and contingencies Mandatorily redeemable stock Class B Redeemable Preferred Stock, $0.01 par value; 25 shares authorized as of March 30, 2001 and September 30, 2000; 25 shares issued and outstanding as of March 30, 2001 and September 30, 2000 25,000 25,000 --------- ------- Total mandatorily redeemable stock 25,000 25,000 --------- ------- Stockholders' equity Class C Preferred Stock, $0.01 par value; 14 and 12 shares authorized as of March 30, 2001 and September 30, 2000 respectively; 12 shares issued and outstanding as of March 30, 2001 and September 30, 2000 1 1 Class A Common Stock, $0.01 par value; 211,000 and 91,000 shares authorized as of March 30, 2001 and September 30, 2000 respectively; 13,976 shares issued and outstanding as of March 30, 2001 and September 30, 2000 140 140 Class B Common Stock, $0.01 par value; 67,000 shares authorized as of March 30, 2001 and September 30, 2000; 45,848 shares issued and outstanding as of March 30, 2001 and September 30, 2000 459 459 Additional paid-in capital 762,673 712,981 Accumulated deficit (265,576) (244,706) Accumulated other comprehensive loss (51,465) (17,995) --------- ------- Total stockholders' equity 446,232 450,880 --------- ------- $ 958,372 $ 998,037 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 4 SEMINIS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED MARCH 30, MARCH 31, MARCH 30, MARCH 31, 2001 2000 2001 2000 ----------- ----------- ----------- ---------- (Unaudited) (Unaudited) Net sales $ 151,514 $ 186,604 $ 232,747 $ 267,790 Cost of goods sold 59,359 74,741 92,321 105,591 --------- --------- --------- --------- Gross profit 92,155 111,863 140,426 162,199 --------- --------- --------- --------- Operating expenses Research and development expenses 13,076 13,468 26,632 29,222 Selling, general and administrative expenses 46,681 52,010 91,814 101,422 Amortization of intangible assets 7,002 7,565 14,302 14,991 --------- --------- --------- --------- Total operating expenses 66,759 73,043 132,748 145,635 --------- --------- --------- --------- Income from operations 25,396 38,820 7,678 16,564 --------- --------- --------- --------- Other income (expense) Interest income 450 558 1,004 1,282 Interest expense (11,955) (7,633) (20,620) (15,056) Foreign currency loss (2,997) (3,308) (555) (2,725) Other, net 263 473 162 763 --------- --------- --------- --------- (14,239) (9,910) (20,009) (15,736) --------- --------- --------- --------- Income (loss) before income taxes 11,157 28,910 (12,331) 828 Income tax benefit (expense) (6,278) (9,502) 373 (487) --------- --------- --------- --------- Net income (loss) 4,879 19,408 (11,958) 341 Preferred stock dividends (3,483) (1,655) (6,913) (3,294) Additional capital contribution dividends (1,180) -- (1,999) -- --------- --------- --------- --------- Net income (loss) available for common stockholders $ 216 $ 17,753 $ (20,870) $ (2,953) ========= ========= ========= ========= Net income (loss) available for common stockholders per common share, basic and diluted $ -- $ .30 $ (0.35) $ (.05) ========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 SEMINIS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In thousands)
ACCUMULATED CLASS C CLASS A CLASS B ADDITIONAL OTHER TOTAL PREFERRED STOCK COMMON STOCK COMMON STOCK PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS' NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT CAPITAL DEFICIT LOSS EQUITY ------ ------ -------- ------ -------- ------ ---------- ----------- ------------ ------------- BALANCE, SEPTEMBER 30, 2000 12 $ 1 13,976 $140 45,848 $459 $712,981 $(244,706) $(17,995) $450,880 Comprehensive loss Net loss (Unaudited) -- -- -- -- -- -- -- $ (11,958) -- $(11,958) Translation adjustment (Unaudited) -- -- -- -- -- -- -- -- $(33,470) $(33,470) -------- $(45,428) Additional capital contribution (Unaudited) -- -- -- -- -- -- $ 45,850 -- -- $ 45,850 Dividends on additional capital contribution (Unaudited) -- -- -- -- -- -- $ 845 $ (1,999) -- $ (1,154) Dividends on Class B Redeemable Preferred Stock (Unaudited) -- -- -- -- -- -- -- $ (1,000) -- $ (1,000) Dividends on Class C Preferred Stock (Unaudited) -- -- -- -- -- -- $ 2,997 $ (5,913) -- $ (2,916) -- --- ------ ---- ------ ---- -------- --------- -------- -------- BALANCE, MARCH 30, 2001 (UNAUDITED) 12 $ 1 13,976 $140 45,848 $459 $762,673 $(265,576) $(51,465) $446,232 == === ====== ==== ====== ==== ======== ========= ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 6 SEMINIS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
FOR THE SIX MONTHS ENDED MARCH 30, MARCH 31, 2001 2000 ---------- ------------ (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(11,958) $ 341 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 22,532 24,376 Deferred income tax (6,611) (9,453) Other 1,594 572 Changes in assets and liabilities: Accounts receivable (14,252) (59,855) Inventories 9,254 (25,704) Prepaid expenses and other assets (1,992) 6,162 Current income taxes 2,161 6,780 Accounts payable (26,483) 25,510 Other liabilities (14,737) (3,005) -------- -------- Net cash used in operating activities (40,492) (34,276) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of fixed and intangible assets (4,468) (23,885) Proceeds from disposition of assets 3,022 1,979 Other (304) (175) -------- -------- Net cash used in investing activities (1,750) (22,081) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 1,294 33,433 Repayment of long-term debt (9,459) (7,222) Net short-term borrowings 11,787 21,463 Class B Redeemable Preferred Stock dividends -- (1,000) Additional capital contribution 45,850 -- -------- -------- Net cash provided by financing activities 49,472 46,674 -------- -------- Effect of exchange rate changes on cash and cash equivalents 26 (696) -------- -------- Increase (decrease) in cash and cash equivalents 7,256 (10,379) Cash and cash equivalents, beginning of period 22,479 19,068 -------- -------- Cash and cash equivalents, end of period $ 29,735 $ 8,689 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 7 SEMINIS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Seminis, Inc. ("Seminis" or the "Company") is the largest developer, producer and marketer of vegetable and fruit seeds in the world. The Company is a majority-owned subsidiary of Savia, S.A. de C.V. ("Savia") and effectively began operations when it purchased Asgrow Seed Company in December 1994. Basis of Presentation The consolidated financial statements include the accounts of the Company and its majority controlled and owned subsidiaries. Investments in unconsolidated entities, representing ownership interests between 20% and 50%, are accounted for using the equity method of accounting. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior periods to conform to the current quarter presentation. Seminis generally operates on a thirteen week calendar closing on the Friday closest to the natural calendar quarter, except for the fiscal year end which closes on September 30. The unaudited consolidated financial statements included herein reflect all adjustments, (consisting only of normal recurring adjustments), that the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The Company's business is subject to seasonal fluctuation and, therefore, the results of operations for periods less than one year are not necessarily indicative of results which may be expected for any other interim period or for the fiscal year as a whole. Supplementary Cash Flow Information
SIX MONTHS ENDED MARCH 30, MARCH 31, 2001 2000 ----------- ---------- (Unaudited) Cash paid for interest $20,985 $14,766 Cash paid for income taxes 4,077 3,160 Supplemental non-cash transactions: Issuance of preferred stock in payment of: Class C Preferred Stock dividends 2,997 2,294 Class B Redeemable Preferred Stock dividends -- -- Dividends on additional capital contribution 845 --
Effective January 2001, Class C Preferred Stock earns cash dividends at 10% per annum. The bank agreement, however, precludes the payment of cash dividends until certain conditions are met. 8 SEMINIS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Income (Loss) per Common Share Net income (loss) per common share has been computed pursuant to the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share." Basic net income (loss) per common share is computed by dividing net income (loss) available for common stockholders by the average number of common shares outstanding during each period. Net income (loss) available for common stockholders represents net income (loss) less preferred and additional capital contribution dividends. Diluted net income (loss) per common share reflects the potential dilution that could occur if dilutive securities and other contracts were exercised or converted into common stock or resulted in the issuance of common stock. The following table provides a reconciliation of net income (loss) available and sets forth the computation for basic and diluted net income (loss) per share available for common stockholders.
THREE MONTHS ENDED SIX MONTHS ENDED MARCH 30, MARCH 31, MARCH 30, MARCH 31, 2001 2000 2001 2000 ---------- ----------- ----------- ---------- (Unaudited) (Unaudited) NUMERATOR FOR BASIC AND DILUTED: Net Income (Loss) $ 4,879 $ 19,408 $(11,958) $ 341 Preferred stock dividends (3,483) (1,655) (6,913) (3,294) Additional capital contribution dividends (1,180) -- (1,999) -- -------- -------- -------- -------- Net loss available for common stockholders $ 216 $ 17,753 $(20,870) $ (2,953) ======== ======== ======== ======== DENOMINATOR -- SHARES: Weighted average common shares outstanding 59,824 59,824 59,824 59,824 (basic) Add potential common shares: Exercisable stock options -- -- -- -- Less antidilutive effect of potential common shares -- -- -- -- -------- -------- -------- -------- Weighted average common shares outstanding (diluted) 59,824 59,824 59,824 59,824 ======== ======== ======== ======== NET LOSS PER COMMON SHARE: Basic and diluted $ -- $ .30 $ (.35) $ (.05) ======== ======== ======== ========
Recent Accounting Pronouncement As of October 1, 2000, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS No. 137 and No. 138. SFAS No. 133 requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair market value. It also requires that gains or losses resulting from changes in the values of those derivatives be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company does not currently have any derivative instruments and therefore adoption of SFAS No. 133 did not have a material impact on the Company's consolidated financial position or results of operations for the three and six-month periods ended March 30, 2001. 9 SEMINIS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 2 - Liquidity In April 2001, the Company submitted its financial plan to its lenders under its syndicated credit facility, detailing operating initiatives that reduce existing infrastructure and working capital requirements. Additionally, the plan identified alternative sources of capital to repay the bank debt within newly defined terms, which may include the sale of assets, debt refinancing and additional equity infusions. In May 2001, each of the lenders have indicated its support of a restructuring of the Company's existing credit facility on general terms set forth in a term sheet negotiated between the Company and its lenders, subject to completion of documentation and formal approvals. Under the proposed terms of the amended credit agreement, the Company believes it will be able to satisfy all covenants during the remaining term of the agreement. Upon execution of the amended agreement, the Company expects to reclassify the long-term portion of borrowings from current liabilities to long-term debt in accordance with a revised maturity schedule. The proposed terms of the amendment will extend the final maturity of the credit facility from the previously agreed on date of June 30, 2002 to December 31, 2002. The Company anticipates entering into the amended credit agreement by the end of May 2001. The Company is continuing to pursue its effort of evaluating its capital structure, finding alternative sources of capital to refinance its indebtedness, and identifying assets for sale in order to meet its obligations under the expected amended credit agreement. The Company's existing credit facility includes, among other things, quarterly financial covenants, which, if not met, allow the lenders to demand repayment of all amounts outstanding. Based on the business plan and performance, the Company expects to achieve its financial objectives, together with management initiatives, which include an expense reduction program. The Company was not in compliance with minimum interest coverage and maximum debt ratio covenants at September 30, 2000, December 29, 2000 and March 30, 2001 and therefore, outstanding borrowings under this facility continued to be classified as a current liability as of March 30, 2001. As disclosed in the past, these factors have raised doubt about the Company's ability to continue as a going concern; however, management believes the current operating initiatives and the expected amended credit agreement have mitigated this uncertainty. Since September 2000, the lenders have granted the Company various waivers with respect to its covenants that currently extend through May 22, 2001, and the Company expects to receive a waiver through May 31, 2001. In conjunction with granting these waivers, the lenders accelerated the final maturity of the term loan and the termination date for revolving credit commitments from 2004 to 2002 and required the Company to submit a financial plan through fiscal year 2002 which includes a proposal for the recapitalization of the Company. As of March 30, 2001, the Company was current on all principal and interest payments due under the credit facility. In A waiver signed on December 29, 2000, the lenders agreed to divide and defer a $12.5 million term loan maturity originally due December 31, 2000 into two equal payments of $6.25 million due March 31, 2001 and April 30, 2001. The Company made its March 31, 2001 principal and interest payments. The April 30, 2001 principal payment has been deferred with the approval of its lenders, and the Company expects that payment will be part of the revised maturity schedule under the proposed credit agreement. 10 SEMINIS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 3 -- GLOBAL RESTRUCTURING AND OPTIMIZATION PLAN In February 2000, the Company announced a global cost saving initiative designed to streamline operations, increase utilization of facilities and improve efficiencies. The first phase of the initiative focused on North American operations. In June 2000, the Company announced the second phase, which was targeted at its global operations. The key elements to Seminis' global restructuring and optimization plan involve: o Reorganizing its 10 legacy seed companies into four geographical regions; o Reducing operation and production facilities; o Reducing headcount that results from the reorganization and facility consolidation; o Rationalizing the product portfolio; o Implementing an advanced global logistics management information system; and o Divesting non-strategic assets. In connection with the restructuring and optimization plan, the Company recorded nonrecurring pre-tax charges to operations of approximately $34.4 million for restructuring cost during fiscal year 2000 that included severance and other exit costs, inventory write-downs and cost associated with streamlining the products portfolio. Of this amount, $18.4 million was included in cost of goods sold for inventory write-downs. The remaining $16.0 million was included in selling, general and administrative expenses, and consisted primarily of severance costs. The total severance charge related to a planned 600-employee reduction worldwide in both operation and administrative groups. There were 456 employees and 144 employees severed in the first half of fiscal year 2001 and fiscal year 2000, respectively, as part of the Global Restructuring and Optimization Plan. The Company commenced the restructuring during fiscal year 2000, and expects to complete the plan during fiscal year 2001. Further elements of the plan will be initiated in the future and should be completed by fiscal year 2002. There have been no material changes in the aforementioned plan. Remaining components of the restructuring accruals are as follows:
BALANCE AT BALANCE AT SEPTEMBER 30, AMOUNTS MARCH 30, 2000 INCURRED 2001 ------------- ---------- ---------- Severance and related expenses $12.2 $(5.9) $6.3
11 SEMINIS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4 -- INVENTORIES Inventories consist of the following:
MARCH 30, SEPTEMBER 30, 2001 2000 ----------- ----------- (Unaudited) Seed $285,239 $290,629 Unharvested crop growing costs 24,718 31,663 Supplies 9,518 10,995 -------- -------- $319,475 $333,287 ======== ========
NOTE 5 -- ADDITIONAL CAPITAL CONTRIBUTIONS In October and November 2000, the Company received additional capital contributions of $31.9 million and $14.0 million, respectively, from Savia to finance additional working capital requirements. NOTE 6 -- SHARES OF COMMON STOCK The number of authorized shares of Common Stock was increased from 158.0 million to 278.0 million and an equivalent increase in the number of authorized shares of Class A Common Stock from 91.0 million to 211.0 million at the annual meeting of stockholders of Seminis on March 14, 2001. 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto of the Company included elsewhere herein. The following discussion and analysis contains certain "forward-looking statements" which are subject to certain risks, uncertainties and contingencies which could cause Seminis' actual business, results of operations or financial condition to differ materially from those expressed in, or implied by, such statements. OVERVIEW Seminis is the largest developer, producer and marketer of vegetable and fruit seeds in the world. Seminis produces more than 60 species and 6,000 distinct varieties of vegetable and fruit seeds. Seminis has established a worldwide presence and global distribution network that spans 120 countries with 34 research and development facilities and 29 screening farms in 19 countries and production sites in over 30 countries. Seminis is a majority owned subsidiary of Savia, S.A. de C. V. ("Savia"). In order to achieve its position as the premier vegetable and fruit seed company, Seminis has completed nine acquisitions since its formation in 1994 and has incurred significant expenses related to the development of its infrastructure. Seminis expenses its investments in research and development and in the creation of its worldwide sales capability. The comparability of Seminis' results of operations from period to period has also been affected by the impact of acquisition accounting under purchase accounting principles, interest expense attributable to acquisition financing and exposure to foreign currency fluctuations. RESULTS OF OPERATIONS The table below sets forth Seminis' results of operations data expressed as a percentage of net sales.
THREE MONTHS ENDED SIX MONTHS ENDED MARCH 30, MARCH 31, MARCH 30, MARCH 31, 2001 2000 2001 2000 --------- --------- -------- --------- (Unaudited) (Unaudited) Net sales 100.0% 100.0% 100.0% 100.0% ----- ----- ----- ----- Gross profit 60.8 59.9 60.3 60.6 Research and development expenses 8.6 7.2 11.4 10.9 Selling, general and administrative expenses 30.8 27.9 39.4 37.9 Amortization of intangible assets 4.7 4.0 6.2 5.6 ----- ----- ----- ----- Income from operations 16.7 20.8 3.3 6.2 Interest expense, net (7.6) (3.8) (8.4) (5.2) Other non-operating expense, net (1.8) (1.5) (0.2) (0.7) ----- ----- ----- ----- Income (loss) from continuing operations before 7.3 15.5 (5.3) 0.3 income taxes Income tax benefit (expense) (4.1) (5.1) 0.2 (0.2) ----- ----- ----- ----- Net income (loss) 3.2% 10.4% (5.1)% 0.1% ===== ===== ===== =====
13 SIX MONTHS ENDED MARCH 30, 2001 COMPARED WITH SIX MONTHS ENDED MARCH 31, 2000 Net Sales Net sales decreased 13.1% to $232.7 million for the six months ended March 30, 2001 from $267.8 million for the same period ended March 31, 2000. The decrease primarily reflects a change in the company strategy of actively pursuing market share, in order to consolidate its current worldwide leadership in fiscal year 2000, to reducing costs and improving cash flow and profitability in this fiscal year. Other factors include loss of sales due to the divestiture of non-core businesses, climatic problems and the effect of currency fluctuation. The Euro and the South Korean Won weakened during the first half of fiscal year 2001 and were weaker overall compared to the same period of fiscal year 2000. In constant dollars, and excluding the effect of businesses discontinued, sales decreased 4.4% to $244.4 million for the first half of fiscal year 2001 from $255.6 million in the first half of fiscal year 2000. Geographically, sales decreased the sharpest in Europe and North America while South America/Australia/New Zealand and the Far East sales improved slightly. The Company's business is subject to seasonal fluctuations and, therefore, the sales for the first half of a fiscal year are not necessarily indicative of those to be expected in any other interim period or for an entire fiscal year. Gross Profit Gross profit decreased 13.4% to $140.4 million for the six months ended March 30, 2001 from $162.2 million for the six months ended March 31, 2000. Gross margin decreased to 60.3% for the six months ended March 30, 2001 from 60.6% for the six months ended March 31, 2000. The decrease was primarily due to the Company's initiative to sell off low value seeds to improve working capital conditions. Research and Development Expenses Research and development expenses decreased 8.9% to $26.6 million for the six months ended March 30, 2001 from $29.2 million for the six months ended March 31, 2000. The decrease was due to an approximate $2.0 million charge related to Seminis' research incentive program recorded in the first half of fiscal year 2000. The final installment of this program was made in the second quarter of fiscal year 2000. The decrease was also a result of personnel reduction from the Global Restructuring and Optimization Plan and currency fluctuations from research and development operations in Europe in the first half of fiscal year 2001. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased 9.5% to $91.8 million for the six months ended March 30, 2001 from $101.4 million for the six months ended March 31, 2000. The decrease was primarily the result of headcount reduction following the implementation of the Global Restructuring and Optimization Plan and, in part, the impact of currency fluctuations. Furthermore, the divestiture of certain non-core businesses accounted for $4.2 million of the decrease. The decrease was, however, partially offset by $2.6 million of facility moving costs and $1.9 million of consulting fees due to restructuring initiatives. Amortization of Intangible Assets Amortization of intangible assets decreased 4.6% to $14.3 million for the six months ended March 30, 2001 from $15.0 million for the six months ended March 31, 2000. The decrease was primarily due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting. Furthermore, the decrease was attributable to the currency impact from the devaluation of the South Korean Won on Korean based intangible assets. The decrease was partially offset by the increase in intangible asset amortization in the U.S. 14 Interest Expense, Net Interest expense, net, increased 42.4% to $19.6 million for the six months ended March 30, 2001 from $13.8 million for the six months ended March 31, 2000. The increase was primarily due to higher effective interest rates in the current period compared to the same period last fiscal year. Furthermore, the increase was due to the acceleration of deferred financing cost amortization related to the Company's credit facility. The acceleration was a result of the advancement of the maturity date of the term loan. Other Non-Operating Expense, Net Seminis had other non-operating expense, net, of $0.4 million for the six months ended March 30, 2001 as compared to $2.0 million for the six months ended March 31, 2000. Other non-operating expense, net, for the six months ended March 30, 2001 primarily consists of a foreign currency loss of $0.6 million resulting from a U.S. dollar denominated loan in Holland and other income resulting from the sale of fixed assets. Other non-operating expense, net, for the six months ended March 31, 2000 included a foreign currency loss of $2.7 million and other income of $0.7 million primarily relating to the sale of fixed assets. Income Tax Benefit (Expense) Income tax benefit was $0.4 million for the six months ended March 30, 2001 compared to income tax expense of $0.5 million for the six months ended March 31, 2000. The decrease in income tax expense was the result of lower consolidated pretax income and the mix of worldwide income tax rates. THREE MONTHS ENDED MARCH 30, 2001 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2000 Net Sales Net sales decreased 18.8% to $151.5 million for the three months ended March 30, 2001 from $186.6 million for the same period ended March 31, 2000. The decrease primarily reflects a change in the company strategy of actively pursuing market share, in order to consolidate its current worldwide leadership in fiscal year 2000, to reducing costs and improving cash flow and profitability in this fiscal year. Other factors include loss of sales due to the divestiture of non-core businesses, climatic problems and the effect of currency fluctuation. The Euro and the South Korean Won weakened during the second quarter of fiscal year 2001 and were weaker overall compared to the same period of fiscal year 2000. In constant dollars, and excluding the effect of businesses discontinued, sales decreased 9.3% to $159.9 million for the second quarter of fiscal year 2001 from $176.3 million in the same period of fiscal year 2000. Geographically, sales decreased the sharpest in North America and Europe while the Far East sales posted a modest increase. The Company's business is subject to seasonal fluctuations and, therefore, the sales for the second quarter of a fiscal year are not necessarily indicative of those to be expected in any other interim period or for an entire fiscal year. Gross Profit Gross profit decreased 17.6% to $92.2 million for the three months ended March 30, 2001 from $111.9 million for the three months ended March 31, 2000. Gross margin increased to 60.8% for the three months ended March 31, 2001 from 59.9% for the three months ended March 31, 2000. The increase was primarily due to product mix, partially offset by the Company's initiative to sell off lower value seeds to improve working capital conditions. Research and Development Expenses Research and development expenses decreased 2.9% to $13.1 million for the three months ended March 30, 2001 from $13.5 million for the three months ended March 31, 2000. The decrease was primarily due to a charge from the incentive program taken in the prior year. 15 Selling, General and Administrative Expenses Selling, general and administrative expenses decreased 10.2% to $46.7 million for the three months ended March 30, 2001 from $52.0 million for the three months ended March 31, 2000. The decrease was primarily due to the impact of headcount reduction following the implementation of the Global Restructuring and Optimization Plan and, in part, due to currency fluctuations. Furthermore, the divestiture of certain non-core businesses accounted for $2.4 million of the decrease. The decrease was partially offset by $1.1 million of facility moving costs and $1.1 million of consulting fees due to restructuring initiatives. Amortization of Intangible Assets Amortization of intangible assets decreased 7.4% to $7.0 million for the three months ended March 30, 2001 from $7.6 million for the three months ended March 31, 2000. The decrease was primarily due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting. Furthermore, the decrease was attributable to the currency impact from the devaluation of the South Korean Won on Korean based intangible assets. The decrease was partially offset by the increase in intangible asset amortization in the U.S. Interest Expense, Net Interest expense, net, increased 62.6% to $11.5 million for the three months ended March 30, 2001 from $7.1 million for the three months ended March 31, 2000. The increase was primarily due to higher effective interest rates in the current period compared to the same period last fiscal year. Moreover, the increase was also due to the acceleration of deferred financing cost amortization related to the Company's credit facility. The acceleration was a result of the advancement of the maturity date of the term loan. Other Non-Operating Expense, Net Seminis had other non-operating expense, net, of $2.7 million for the three months ended March 30, 2001 as compared to other non-operating expense, net, of $2.8 million for the three months ended March 31, 2000. Other non-operating expense, net, for the three months ended March 30, 2001 includes a foreign currency loss of $3.0 million and other income of $0.3 million primarily related to the sale of fixed assets. The foreign currency loss is primarily due to a loss recorded by SVS Holland on its U.S. dollar denominated loan. Other non-operating expense, net, for the three months ended March 31, 2000 includes a foreign currency loss of $3.3 million and other income of $0.5 million primarily relating to the sale of fixed assets. Income Tax Expense Income tax expense decreased 33.9% to $6.3 million for the three months ended March 30, 2001 from $9.5 million for the three months ended March 31, 2000. The decrease in income tax expense was a result of lower pre-tax income related to the aforementioned factors and the mix of worldwide income tax rates. Seasonality The seed business is highly seasonal. Generally, net sales are highest in the second fiscal quarter due to increased demand from Northern Hemisphere growers who plant seed in the early spring. Seminis recorded 39.3% of its fiscal year 2000 net sales during its second fiscal quarter. Seminis has historically operated at a loss during the first and third fiscal quarters due to lower sales during such quarters. Seminis' results in any particular quarter should not be considered indicative of those to be expected for a full year. 16 Liquidity and Capital Resources In April 2001, the Company submitted its financial plan to its lenders under its syndicated credit facility detailing operating initiatives that reduce existing infrastructure and working capital requirements. Additionally, the plan identified alternative sources of capital to repay the bank debt within newly defined terms, which may include the sale of assets, debt refinancing and additional equity infusions. In May 2001, each of the lenders have indicated its support of a restructuring of the Company's existing credit facility on general terms set forth in a term sheet negotiated between the Company and its lenders, subject to completion of documentation and formal approvals. Under the proposed terms of the amended credit, agreement, the Company believes it will be able to satisfy all covenants during the remaining term of the agreement. Upon execution of the amended agreement, the Company expects to reclassify the long-term portion of borrowings from current liabilities to long-term debt in accordance with a revised maturity schedule. The proposed terms of the amendment will extend the final maturity of the credit facility from the previously agreed on date of June 30, 2002 to December 31, 2002. The Company anticipates entering into the amended credit agreement by the end of May 2001. The Company is continuing to pursue its effort of evaluating its capital structure, finding alternative sources of capital to refinance its indebtedness and identifying assets for sale in order to meet its obligations under the expected amended credit agreement. The Company's existing credit facility includes, among other things, quarterly financial covenants, which, if not met, allow the lenders to demand repayment of all amounts outstanding. Based on the business plan and performance, the Company expects to achieve its financial objectives, together with management initiatives, which include an expense reduction program. The Company was not in compliance with minimum interest coverage and maximum debt ratio covenants at September 30, 2000, December 29, 2000 and March 30, 2001 and therefore, outstanding borrowings under this facility continued to be classified as a current liability as of March 30, 2001. As disclosed in the past, these factors have raised doubt about the Company's ability to continue as a going concern; however, management believes the current operating initiatives and the expected amended credit agreement have mitigated this uncertainty. Since September 2000, the lenders have granted the Company various waivers with respect to its covenants that currently extend through May 22, 2001, and the Company expects to receive a waiver through May 31, 2001. In conjunction with granting these waivers, the lenders accelerated the final maturity of the term loan and the termination date for revolving credit commitments from 2004 to 2002 and required the Company to submit a financial plan through fiscal year 2002 which includes a proposal for the recapitalization of the Company. As of March 30, 2001, the Company was current on all principal and interest payments due under the credit facility. In a waiver signed on December 29, 2000, the lenders agreed to divide and defer a $12.5 million term loan maturity originally due December 31, 2000 into two equal payments of $6.25 million due March 31, 2001 and April 30, 2001. The Company made its March 31, 2001 principal and interest payments. The April 30, 2001 principal payment has been deferred with the approval of its lenders, and the Company expects that payment will be part of the revised maturity schedule under the proposed credit agreement. The Company has made significant strides in the enhancement of its cash flow. As a result of the Global Restructuring and Optimization Plan, headcount has been reduced by 13% since August 2000, products portfolio has been streamlined, facilities have been consolidated and certain non-strategic assets were sold. The reduction of operating expenses and the improved second quarter cash flow performance attest to the positive strides the Company has made as a result of the initiatives. Further savings are expected at the completion of the aforementioned plan that will strengthen the cash position of the Company. Net cash used in operating activities increased to $40.5 million for the six months ended March 30, 2001 compared to $34.3 million for the six months ended March 31, 2000 mainly due to support costs related to restructuring and non-recurring expenses related to the Global Restructuring and Optimization Plan, decreases in accounts payable, and lower overall sales from a change in selling strategy. The increase was partially offset by a smaller increase in accounts receivable and a decrease in inventory. Capital expenditures decreased to $4.5 million for the six months ended March 30, 2001 from $23.9 million for the six months ended March 31, 2000. The decrease was primarily due to a substantial portion of the investment in Seminis' new headquarters and production facility being incurred in fiscal year 2000, resulting in a significant decrease in overall capital expenditures in the first half of fiscal year 2001. Other investing activities for the six months ended March 30, 2001 also included approximately $3.0 million in proceeds from the sale of non-operating assets. In October and November 2000, Seminis received $31.9 million and $14.0 million respectively, of additional capital contribution from Savia. Through the first half of fiscal year 2001, $2.0 million of accrued dividends pertaining to this transaction have been recorded. Seminis' total indebtedness as of March 30, 2001 was $371.3 million, of which $315.3 million were borrowings under the current credit agreement. Additionally, $17.1 million, $9.7 million, $6.0 million, $4.1 million, and $2.3 million were borrowings by the United States, Chilean, Italian, Spanish, and Korean subsidiaries, respectively, and $16.8 million were borrowings primarily by other foreign subsidiaries. Seminis' exposure to foreign currency fluctuations is primarily foreign currency gains or losses that occur from intercompany loans between Seminis and its foreign subsidiaries and the U.S. dollar denominated loan, originated by SVS Holland, B.V., a foreign subsidiary of Seminis. Seminis does not have any material outstanding hedging contracts as of March 30, 2001. 17 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our market risk disclosures set forth in the 2000 Form 10-K has not changed significantly through the second quarter ended March 30, 2001. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders of the Company was held on March 14, 2001. At the Annual Meeting, Adrian Rodriguez Macedo, George C. Ball, Jr., Frank J. Pipp, and Christopher J. Steffen were elected as directors of the Company. Over 90% of the voting shares voted in favor of the election of the above mentioned directors. At the Annual Meeting, Stockholders approved an amendment of the Certificate of Incorporation of Seminis to increase the number of shares of Common Stock from 158,000,000 to 278,000,000, and an equivalent increase in the number of authorized shares of Class A Common Stock from 91,000,000 to 211,000,000. This proposal received 140,397,069 votes for approval and 1,800,136 votes against approval, with 26,220 votes abstaining. 18 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved, from time to time, as a defendant in various lawsuits arising in the normal course of business. Seminis believes that no current claims, individually or in the aggregate, will have a material adverse effect on Seminis' business, results of operations, or financial condition. Since our 2000 Form 10-K filed December 29, 2000 there have been no material changes in legal proceedings discussed in such Form 10-K. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K for the quarter ended March 30, 2001. 19
EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- (a)1 Form of Underwriting Agreement (c)2 Merger Agreement by and between Seminis, Inc., an Illinois corporation and Seminis, Inc., a Delaware corporation (c)3.1 Certificate of Incorporation (c)3.2 Certificate of Designations of Class A Mandatorily Redeemable Preferred Stock and Class B Mandatorily Redeemable Preferred Stock of Seminis, Inc. (c)3.3 Certificate of Designations of Class C Redeemable Preferred Stock of Seminis, Inc. (c)3.4 By-Laws (c)4.1 Form of Class A Common Stock Certificate (a)4.2 Registration Rights Agreement by and among Seminis, Inc. and certain shareholders of Seminis, dated October 1, 1995 (c)5 Opinion of Milbank, Tweed, Hadley & McCloy LLP (a)10.1 Seminis, Inc. 1998 Stock Option Plan (b)10.2 Amended and Restated Seminis, Inc. 1998 Stock Option Plan (a)10.3 Share Subscription Agreement by and between Seminis, Inc. and Hungnong Seed Co., Ltd., dated June 12, 1998 (c)10.4 Form of New Credit Facility among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of June 28, 1999 (c)10.5 Form of Letter Agreement between Savia, S.A. de C.V. and Seminis, Inc. dated as of June 21, 1999 (d)10.6 Second Amendment and Waiver to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of June 29, 2000, effective March 31, 2000 (d)10.7 Security Agreement Re: Accounts, Inventory and General Intangibles among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of June 29, 2000 (e)10.8 Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of September 30, 2000, effective September 30, 2000 (d)10.9 Extension of Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of December 30, 2000, effective December 30, 2000 (f)10.10 Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of December 29, 2000, effective December 29, 2000 (g)10.11 Modification and Interim Waiver Agreement to Credit Agreement dated as of June 28, 1999 among Seminis, Inc., Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, Harris Trust and Savings Bank, individually and as Administrative Agent, Bank of Montreal, individually and as Syndication Agent, and the Lenders from time to time parties thereto, as Lenders, dated as of April 30, 2001, effective April 30, 2001
20
EXHIBIT INDEX - (CONTINUED) EXHIBIT NUMBER DESCRIPTION - ------- ----------- (b)21 Subsidiaries of Registrant 27.1 Financial Data Schedule
(a) Incorporated by reference to Seminis' Form S-1 filed on February 11, 1999. (b) Incorporated by reference to Seminis' Amendment No. 2 to Form S-1 filed on May 27, 1999. (c) Incorporated by reference to Seminis' Amendment No. 3 to Form S-1 filed on June 21, 1999. (d) Filed with the June 30, 2000 Form 10Q. (e) Filed with the September 30, 2000 Form 10K. (f) Filed with the December 29, 2000 Form 10Q. (g) Filed with this Form 10Q. 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 2001 SEMINIS, INC. /s/ Eugenio Najera Solorzano ---------------------------- Eugenio Najera Solorzano President (Principal Executive Officer) /s/ Gaspar Alvarez Martinez ---------------------------- Gaspar Alvarez Martinez Chief Financial and Accounting Officer (Principal Financial and Accounting Officer) EX-10.11 2 v72444ex10-11.txt EXHIBIT 10.11 1 EXHIBIT 10.11 SEMINIS, INC. SEMINIS VEGETABLE SEEDS, INC. EXTENSION AND AMENDMENT OF MODIFICATION AND INTERIM WAIVER AGREEMENT To the Lender Parties to the Credit Agreement Identified Below Ladies and Gentlemen: We refer to the Modification and Interim Waiver Agreement dated as of December 29, 2000 (the "Modification Agreement") among the undersigned, SEMINIS, INC., an Illinois corporation ("Seminis"), SEMINIS VEGETABLE SEEDS, INC., a California corporation ("SVS" ) and SVS HOLLAND B.V., a private company with limited liability incorporated under the laws of The Netherlands ("SVS Holland" and, together with Seminis and SVS, individually a "Borrower" and collectively the "Borrowers"), the Banks from time to time party thereto and Harris Trust and Savings Bank, as administrative agent for the Banks (the "Administrative Agent"), as heretofore or hereafter amended, capitalized terms used without definition below to have the meanings ascribed to them in the Modification Agreement. Pursuant to the Modification Agreement the Required Banks waived compliance by the Borrowers with Sections 7.20 and 7.22 of the Credit Agreement for the period ending on the Expiry Date. The Borrowers have requested that the Required Banks extend the Expiry Date (and therefore the Waiver Period) from April 30, 2001 to May 22, 2001, that the Banks extend the date on which the Borrowers are required to pay the second installment of the principal payment on the Term Loans that was originally payable on December 31, 2000, from April 30, 2001 to May 22, 2002, and that the Banks extend the date on which the Borrowers are required to pay the first installment of Additional Margin pursuant to Section 14 of the Modification Agreement from April 30, 2001 to May 22, 2001, and the Banks are willing to do so on the terms and conditions contained herein. Accordingly, upon satisfaction of the conditions precedent to effectiveness set forth below, the Borrowers and the Banks agree as follows: 1. Extension of Interim Waivers with Respect to Certain Financial Covenants. Section 1 of the Modification Agreement shall be amended by replacing the date "April 30, 2001" appearing therein with the date "May 22, 2001". 2. Extension of Time for Principal Payment. The first sentence of Section 2 of the Modification Agreement shall be amended by replacing the date "April 30, 2001" appearing therein with the date "May 22, 2001". 3. Extension of Additional Interest Payment Date.. Section 14 of the Modification Agreement is hereby amended by replacing the date "April 30, 2001" everywhere it appears therein with the date "May 22, 2001". 2 4. Representations and Releases. Each Borrower hereby represents, warrants, acknowledges and agrees that (i) there are no set offs, counterclaims or defenses against the Notes, the Credit Agreement (as amended or otherwise modified hereby) or any other Loan Documents (as amended or otherwise modified hereby or by the security agreement amendments) and (ii) there are no claims (absolute or contingent or matured or unmatured) or causes of action by any Borrower against any Bank or any Agent in connection with the Credit Agreement, the Notes and the other Loan Documents. Notwithstanding the immediately preceding sentence and as further consideration for the agreements and understandings contained herein, each Borrower hereby releases the Agents and the Banks, their respective predecessors, officers, directors, employees, agents, attorneys, affiliates, subsidiaries, successors and assigns, from any liability, claim, right or cause of action which now exists or hereafter arises as a result of acts, omissions or events occurring on or prior to the date hereof, whether known or unknown, in connection with the Credit Agreement, the Notes and the other Loan Documents. 5. Miscellaneous. Except as specifically modified hereby, all of the terms, conditions and provisions of the Credit Agreement shall stand and remain unchanged and in full force and effect. The Borrowers' obligations under Section 12.8 of the Credit Agreement shall be unaffected by the waiver contained herein. No reference to this Extension and Amendment of Modification and Interim Waiver Agreement (the "Extension") need be made in any instrument or document at any time referring to the Modification Agreement, a reference to the Modification Agreement in any of such to be deemed to be a reference to the same as modified hereby. This Extension may be executed in counterparts and by separate parties hereto on separate counterparts, each to constitute an original but all of which shall constitute one and the same instrument. The Borrowers hereby confirm that all representations and warranties made by them in the Loan Documents (as defined in the Credit Agreement) are true and correct as of the date hereof except to the extent that any of same expressly relate to any earlier date and acknowledge that their obligations under the Loan Documents are justly and truly owing without defense, offset or counterclaim. The waivers provided for herein shall be strictly construed and limited as hereinafter provided. This Extension shall become effective upon receipt by the Administrative Agent of counterparts hereof which, taken together, bear the signatures of the Borrowers and the Banks. This Extension shall be deemed to be a "Loan Document" for purposes of the Credit Agreement and the other Loan Documents. This Extension shall be construed in accordance with and governed by the laws of the state of Illinois. -2- 3 Dated and effective as of April 30, 2001. SEMINIS, INC. By Its______________________________________ SEMINIS VEGETABLE SEEDS, INC. By Its______________________________________ SVS HOLLAND B.V. By Its______________________________________ HARRIS TRUST AND SAVINGS BANK, individually and as Administrative Agent By Its Vice President CREDIT AGRICOLE INDOSUEZ By Its______________________________________ BANK OF AMERICA, N.A. By Its______________________________________ -3- 4 THE BANK OF NOVA SCOTIA By Its______________________________________ COMERICA BANK By Its______________________________________ BANK ONE By Its______________________________________ BNP PARIBAS By Its______________________________________ By Its______________________________________ -4- 5 UNION BANK OF CALIFORNIA, N.A. By Its______________________________________ FLEET NATIONAL BANK By Its______________________________________ FORTIS CAPITAL CORP. By Its______________________________________ COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By Its______________________________________ SANWA BANK CALIFORNIA By Its______________________________________ THE FUJI BANK, LIMITED By Its______________________________________ -5- 6 THE MITSUBISHI TRUST AND BANKING CORPORATION By Its_____________________________________ US BANCORP AG CREDIT, INC. By Its_____________________________________ THE DAI-ICHI KANGYO BANK, LTD. By Its______________________________________ -6- -----END PRIVACY-ENHANCED MESSAGE-----