Seminis, Inc. today reported results for the three months ended December 31, 1999. Net sales for the three months ended December 31, 1999 were $81.2 million representing a 4.3% decrease over the $84.9 million reported during the same period in fiscal 1999. The company reported a net loss available for common stockholders of $20.7 million for this quarter, or $0.35 per share compared to a net loss available for common stockholders $19.7 million in the same period of 1999, or $0.53 per share. Diluted weighted average shares outstanding were 59,824 and 37,386 thousand during the 2000 and 1999 periods respectively.

"In 2000, Seminis is taking bold steps to take further advantage of our market position and global
resources. One of our notable accomplishments for this quarter is the launch of our supply chain
management system, which will allow us to reduce inventory levels,'' said Chairman and Chief Executive Officer Alfonso Romo Garza. "The other important step is that we have retained the services of a management consulting firm to develop a product introduction management system that will improve the efficiency of our research, production, and marketing activities associated with all of our acquisitions, nine in total since 1994, which has not been fully achieved. Within the first half of the year, we expect to have more details to share with the public on these plans to gain further efficiencies across our company.''

"Our first quarter sales, traditionally the lowest for the fiscal year, were impacted by severe weather in Southern Europe and Asia that hurt both our grower customers and our production areas. The effect of weather resulted in a shift of plantings of vegetable and fruit seed during the latter half of this period which in turn produced lower than expected sales for the quarter. We expect to pick up these lost sales during the remainder of the fiscal year and meet our sales growth target of 8% growth over fiscal 1999,'' said President and Chief Operating Officer Alejandro Rodriguez-Graue.

Alejandro Rodriguez-Graue added, "We saw good sales in Northern Europe, Southern Europe and South America across our product lines, in particularly, our tomato and cucumber seed sales, during this quarter. This was balanced by the slight decrease in Far East and flat North American sales as well as a weaker Euro, when compared to the same quarter last year.''

"Net sales tend to be highest in the second fiscal quarter due to increased demand from growers in the Northern Hemisphere who plant seed in the early spring. Seminis has historically operated at a loss in the first and third fiscal quarters due to lower sales in these quarters. Seminis' results in any particular quarter should not be considered indicative of those to be expected for a full year,'' said, Alejandro Rodriguez-Graue. 

Regional Breakdown of Net Seed Sales

   
North America operations recorded net seed sales of $29.2 million during the first quarter, a 1.2% increase from $28.9 million for the same period in 1999. Sales of solanum (tomato and pepper) increased during the first quarter when compared to the same quarter last year. Sales of cauliflower were lower due to high frozen cauliflower stocks at processors. Acreage for fresh market tomatoes in West Mexico decreased due to poor fresh tomato market conditions.

South America operations benefited from improving economic conditions and increased demand for Seminis products. Net seed sales for the quarter were $5.4 million, an increase of 5.1% compared with the same period last year. Sales increases were due largely to market expansion in Argentina through the Seminis subsidiary formed in 1999. Sales growth in Brazil improved due to increased sales at Horticeres, acquired in 1998 and continued improvement in agricultural practices in the region.

Europe reported the largest net gain for Seminis compared to other regions. Net seed sales grew 3.9% to $26.8 million from the first quarter of 1999. This quarter's performance was positively affected by higher prices in Spain, new products introduced throughout Europe for cabbage, leafy (spinach and lettuce), squash, tomato and seedless watermelon varieties as well as by expansion into new markets in Central Asia. Sales were negatively impacted by poor weather in Southern Europe.

Far East net seed sales decreased 14.2% from $15.6 million for the same quarter last year to $13.4 million. Sales were reduced due to weather problems impacting grower customers in Korea and continued economic and political uncertainties in Southeast Asia, specifically Indonesia. 

Operations

Gross profit decreased 5.0% to $50.3 million for the three months ended December 31, 1999 from $53.0 million for the three months ended December 31, 1998. Gross margin decreased to 62.0% for the three months ended December 31, 1999 from 62.5 % for the three months ended December 31, 1998 reflecting effects of currency fluctuations and inventory reserve provisions.

For the three months ended December 31, 1999, research and development expenses increased 11.0% to $15.8 million from $14.2 million for same period last year. This increase was due primarily to a $1.1 million charge related to Seminis' research incentive program to attract and retain industry leading breeders and research personnel. The final payment associated with the program of approximately $1.0 million will be made in the second quarter of fiscal year 2000.

Selling, general, and administrative expenses decreased 1.1% to $49.4 million for the three months ended December 31, 1999 from $50.0 million for the three months ended December 31, 1998.

Amortization of intangible assets increased 10.3% to $7.4 million for the three months ended December 31, 1999 from $6.7 million for the three months ended December 31, 1998 reflecting the effects of acquisitions.

Net interest expense decreased 37.2% to $6.7 million for the three months ended December 31, 1999 from $10.7 million for the three months ended December 31, 1998. Both the refinancing of Seminis' credit agreement during fiscal year 1999 at lower effective interest rates and the repayment of debt using the proceeds from the Company's initial public offering to repay indebtedness, resulted in a lower average debt balance for the three months ended December 31, 1999 compared to the same period in fiscal year 1999.

Seminis' total indebtedness as of December 31, 1999 was $368.2 million, of which $332.8 million was borrowings under the current credit agreement, $10.7 million was borrowings by the South Korean subsidiaries and $24.7 million was borrowings primarily by other foreign subsidiaries.

Seminis had other non-operating income, net, of $0.9 million for the three months ended December 31, 1999 as compared to other non-operating income, net, of $2.1 million for the three months ended December 31, 1998 as a result of currency fluctuations.

Income tax benefit increased 11.8% to $9.0 million for the three months ended December 31, 1999 from $8.1 million for the three months ended December 31, 1998 due to the mix of income worldwide.

Product Portfolio Update

The Company expects to set a new standard for tomatoes this year when it launches a tomato variety, through plant breeding without genetic modification, that is resistant to the Gemini virus complex, a common virus in the tropical and subtropical regions of the world that severely affects tomato fruit yields.

To date, Seminis has filed patent applications covering a wide variety of inventions including, among others, inventions directed to positive selection methods, disease resistance, virus resistance and plant varieties. During the three months ended December 31, 1999, Seminis was issued five (5) new US patents and five (5) new Australian patents for herbicide and insect-resistant fruits and vegetables, one of the largest number of patents Seminis has received in one quarter. This brings the total number of utility patents issued to the company to 75. Seminis has also received notices of allowance on four (4) additional US utility patent applications during this first quarter. This brings the total number of issued and allowed utility patent applications to 79.

Alejandro Rodriguez-Graue said, "Our most notable patent awarded during this quarter is for a lettuce variety that is resistant to downy mildew and corky root rot. These are two diseases that cost farmers globally millions of dollars in lost lettuce crops every year. Our new lettuce sets the standard by exhibiting vigorous growth and increased weight and yield. These patents further solidify Seminis as a technology leader and serve as another indication of the strength of our product portfolio that gives the Company downside protection.''

Seminis is the largest developer, producer and marketer of vegetable seeds in the world. Seminis produces more than 60 species and 8,000 distinct varieties of vegetable and fruit seeds. 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 120 countries with 70 research stations in 19 countries and production sites in 32 countries. Seminis is a majority owned subsidiary of Savia,  a Mexico-based conglomerate with leadership positions in financial services, packaging and fresh foods.

Company news release
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