Seminis Inc., the world's largest developer, producer and
marketer of vegetable and fruit seeds, today reported financial
results for its fiscal year ended September 30, 2004.
FINANCIAL SUMMARY ($ IN MILLIONS)
FY2003 FY2004 % Change
------ ------ ---------
SALES $477.4 $525.8 10.1%
GROSS PROFIT(a) $295.8 $290.1 (1.9)%
INCOME FROM OPERATIONS(b) $6.5 $40.5 523.1%
NET INCOME (LOSS)(b) $(31.7) $(16.3) 48.6%
(a) Negatively impacted by a $47.4 million non-cash purchase
accounting charge in FY2004.
(b) Negatively impacted by $56.5 million of merger and privatization
related charges as well as non-cash purchase accounting charges in
FY2003 and negatively impacted by $44.8 million in non-cash
purchase accounting charges and other add-back expenses as allowed
in the debt covenants in FY2004.
"In fiscal year 2004, we
delivered solid performance throughout the company. We saw
revenue growth in every region and from an operational
perspective -- excluding the effects of purchase accounting --
profitability was up significantly. Additionally, we experienced
a dramatic improvement in the operating cash flow of the
company," said Mr. Alfonso Romo, Chairman of the Board and Chief
Executive Officer.
"We are also leveraging the
capabilities of our supply chain, market intelligence systems
and research. We continue to support our efforts in Asia as
evidenced by the opening of a new operations center and a
research facility in China, while expanding and upgrading
existing infrastructure and systems in all regions. But most
importantly, we continue to lead innovation in our industry.
Every day, Seminis scientists are making technological advances
that expand the horizons of plant breeding in vegetables and
fruits. As a result, we were issued nine patents and received 44
Plant Variety Protection certificates in FY2004," said Mr. Romo.
"Given the company's strong
performance, our corporate bonds have traded at a premium
throughout the year. We take this as a vote of confidence that
Seminis is on the right path to deliver dependable, long-term
returns," he said.
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 that is expected to continue until March 2005, and
the reduction of amortization and depreciation of intangible and
fixed assets that positively impact the operating expenses.
REVIEW OF FY2004 PERFORMANCE
Total sales for fiscal year
2004 increased 10.1% to $525.8 million from $477.4 million
during the same period last year. Continued growth was seen
across all sales regions, led by EMEA (Europe, Middle East and
Africa) and West Asia which posted increases of 13.5% and 15.7%,
respectively. Product mix and pricing improvements continue to
be the main drivers of sales growth worldwide. New product sales
continue to represent a larger potion of overall sales growth.
At constant exchange rates (CER), total sales increased 5.5% to
$503.7 million from $477.4 million the previous year with
increases seen across all regions.
Gross margin percentage
decreased to 55.2% for the fiscal year ended September 30, 2004
from 62.0% for the fiscal year ended September 30, 2003. A
negative impact of 9 percentage points resulted from the
non-cash amortization of $47.4 million of inventory step-up
under purchase accounting treatment.
As a percentage of sales, total
operating expenses for fiscal year 2004 decreased to 48.3% from
61.0% of sales in the prior year. Total operating expenses was
$253.9 million, down 12.8% from $291.3 million for the same
period last year. The decrease was primarily the result of
various one-time charges related to the merger and privatization
transaction that occurred during fiscal year 2003 that did not
impact fiscal year 2004 operating expenses.
Income from operations for
fiscal year 2004 increased to $40.5 million compared with $6.5
million for the previous year. The 2004 result was negatively
impacted by the above-mentioned purchase accounting net effect
of $44.8 million, while the 2003 number was negatively impacted
by merger and privatization related charges as well as purchase
accounting effects totaling $56.5 million.
Net loss for fiscal year 2004
was $16.3 million compared with a net loss of $31.7 million the
previous year. This number was negatively impacted by the
above-mentioned purchase accounting net effect of $44.8 million
and $56.5 million, respectively.
"During 2004, we continued to
improve our product mix -- a reflection of our market-oriented
research strategy," said Dr. Bruno Ferrari, President and Chief
Operating Officer. "Combined with effective inventory
management, this has simplified the management of working
capital and contributed to the increase in company-wide
profitability," Dr. Ferrari said.
Dr. Ferrari reported that the
portfolio of products has been reduced by 42% since fiscal year
2000 while revenue-per-product has increased at a CAGR of 19.9%
over the same period. Likewise, sales of new products represent
21% of total seed sales in FY 2004.
FOURTH QUARTER 2004 FINANCIAL SUMMARY ($ IN MILLIONS)
4Q FY2003 4Q FY2004 % Change
--------- --------- --------
SALES $124.7 $131.1 5.1%
GROSS PROFIT (a) $73.5 $85.9 16.9%
INCOME OR LOSS FROM OPERATIONS(b) $(32.5) $20.3 162.5%
NET INCOME (LOSS) (b) $(40.6) $5.8 114.3%
(a) Negatively impacted by a $2.4 million non-cash purchase accounting
charge in FY2004.
(b) Negatively impacted by a $2.4 million that included non-cash
purchase accounting net benefit in FY2004.
For the quarter ended September
30, 2004, total sales increased by 5.1% reaching $131.1 million
from $124.7 million the previous year. At CER, sales were up
2.6% to $128.0 million from $124.7 million the previous year.
Fourth-quarter sales of fiscal year 2004 include $2.5 million in
seed orders that were expected in the third quarter of 2004, but
delayed due to a change in export rules to Syria regulated by
the United States Department of Commerce.
Gross margin percentage
increased to 65.6% for the three months ended September 30, 2004
from 58.9% for the three months ended September 30, 2003. The
fourth quarter margin percentage was negatively impacted by the
net non-cash amortization of $2.4 million of inventory step-up
under purchase accounting treatment, which had a negative impact
of 1.8 percentage points on the company's gross margin. Included
in the net non-cash inventory step-up amortization was a $9.1
million positive impact on gross profit due to a revision of an
estimated 16-month inventory turn to an actual 18-month
inventory turn. New products continue to represent a larger
portion of overall sales, which is driving margins higher.
As a percentage of sales,
operating expenses decreased to 50.6% of sales compared with
85.3% of sales for the previous year. Total operating expenses
for the fourth quarter were $66.3 million, down 37.7% from
$106.4 million during the same period last year. The decrease
was primarily the result of the fact that fourth quarter 2003
operating expenses were impacted by various charges related to
the privatization and merger transaction that did not impact
fourth quarter 2004 operating expense.
Income from operations for the
fourth quarter was $20.3 million compared to an operating loss
of $32.5 million for the prior year. The fourth quarter result
was negatively impacted by $2.4 million which included a
non-cash purchase accounting net benefit.
For the fourth quarter of 2004,
net income was $5.8 million compared with a $40.6 million loss
in the previous year. This fourth quarter result was also
negatively impacted by $2.4 million, which included the
above-mentioned purchase accounting benefit.
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 Statements of Operations
(In thousands, except per share data)
For the Three For the Twelve
Months Ended Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Net sales $131,054 $124,700 $525,839 $477,405
Cost of goods sold 45,145 51,204 235,730 181,558
--------- --------- --------- ---------
Gross profit 85,909 73,496 290,109 295,847
Research and development 14,340 24,071 51,141 59,013
Selling, general and
administrative expenses 49,849 77,916 194,756 215,938
Amortization of intangible
assets 2,113 4,443 7,993 16,350
--------- --------- --------- ---------
Total operating expenses 66,302 106,430 253,890 291,301
Gain on sale of fixed assets 677 453 4,298 1,910
------------------- -------------------
Income (loss) from operations 20,284 (32,481) 40,517 6,456
Other expense
Interest expense, net (12,129) (7,756) (45,738) (31,491)
Other, net 1,437 (486) 1,368 (789)
--------- --------- --------- ---------
Total non-operating expense (10,692) (8,242) (44,370) (32,280)
--------- --------- --------- ---------
Income (loss) from continuing
operations before income
taxes 9,592 (40,723) (3,853) (25,824)
Income tax benefit (provision) (3,771) 137 (12,455) (5,846)
--------- --------- --------- ---------
Net income (loss) 5,821 (40,586) (16,308) (31,670)
Preferred stock dividends -- 11,850 -- (1,994)
Contingent dividends payable (16,642) (16,642)
Discount on redempton of Class B
Redeemable Preferred Stock 1,250 1,250
Forgiveness of dividends
payable to Savia 1,035 1,035
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) available
for common stockholders $5,821 $(43,093) $(16,308) $(48,021)
========= ========= ========= =========
SEMINIS, INC.
Consolidated Balance Sheets
(In thousands)
As of As of
September 30, September 30,
2004 2003
------------- --------------
ASSETS:
Current assets
Cash and cash equivalents $116,870 $36,824
Accounts receivable, net 153,173 151,578
Inventories 328,395 351,637
Prepaid expenses and other current
assets 8,017 4,450
------------- --------------
Total current assets 606,455 544,489
Property, plant and equipment, net 78,608 69,792
Intangible assets, net 69,008 73,009
Income (loss) from operations 23,591 19,957
------------- --------------
$777,662 $707,247
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
---------------------------------------
Current liabilities
Short-term borrowings $10,965 $20,031
Current maturities of long-term debt 1,746 2,722
Accounts payable 63,339 50,280
Accrued liabilities 106,752 87,414
Income tax payable 13,582 2,002
------------- --------------
Total current liabilities 196,384 162,449
Long-term debt 448,816 398,538
Deferred income tax 16,291 21,312
Minority interest in subsidiaries 1,644 1,723
Preferred shares subject to mandatory
redemption 41,773 39,300
------------- --------------
Total liabilities 704,908 623,322
------------- --------------
Total stockholders' equity 72,754 83,925
------------- --------------
$777,662 $707,247
============= ==============
Seminis Inc.
Net Seed Sales
Amounts Stated at FY 2003 Currency Exchange Rates
(In US Million $)
Three Months Ended Twelve Months Ended
September September
------------------------- -------------------------
FY 2004 FY 2003 % Change FY 2004 FY 2003 % Change
------- ------- --------- ------- ------- ---------
North America $44.5 $46.9 -5.1% $178.1 $166.0 7.3%
Europe & Middle
East 46.4 43.0 7.9% 210.7 203.0 3.8%
Asia Pacific 16.4 15.2 7.9% 51.7 49.8 3.8%
West Asia 6.6 6.1 8.2% 13.8 12.1 14.0%
South America 8.9 9.3 -4.3% 31.1 30.1 3.3%
------- ------- --------- ------- ------- ---------
Total Seed Sales $122.8 $120.5 1.9% $485.4 $461.0 5.3%
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