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Oxnard, California
May 2, 2001
Seminis, Inc. (Nasdaq: SMNS), the world's leading developer,
producer and marketer of vegetable and fruit seeds, today announced results for the three-month period ended March 31,
2001.
NET SALES
Net sales for the quarter declined $35.1 million or 18.8 percent to $151.5 million from $186.6 million for the previous year's
quarter. This decline stems from a $10.3 million loss of sales from businesses discontinued under the Global Optimization
Plan, $8.3 million as a result of a negative currency impact vs. the U.S. dollar, $8 million from a reduction of sales in NAFTA,
mainly due to the Company's new market strategy, and $7 million in Europe as a consequence of a reduction in processing
tomato acreage in Italy and the mentioned new strategy.
The Company reached its sales goal for the first six months of fiscal year 2001, and believes that it is correctly executing its
business plan and meeting internal forecasts. As a consequence, the Company expects sales for fiscal year 2001 to be no
less than the results reported in fiscal year 2000, as adjusted.
Gross margins for the quarter increased to 60.8 percent in comparison to 59.9 percent the same period last year.
OPERATING INCOME
During the quarter, the Company continued to focus on streamlining its cost structure through the implementation of its
Global Optimization Plan. Total operating expenses for the period reached $66.8 million, a decline of $6.3 million, or 8.6
percent, from the same quarter last year. This decline mainly reflected the Company's initiative to eliminate duplications of
selling and operating activities worldwide, leading to a 13 percent reduction in headcount since August 2000.
For the quarter, the Company posted operating income of $25.4 million, compared with $38.8 million for the same period in
fiscal year 2000. Excluding $2.2 million in non-recurring costs, Seminis' operating income for the second quarter was $27.6
million.
Operating income plus depreciation and amortization (EBITDA) for the quarter was $36.4 million, compared with $51.1 million
for the same quarter last year. The decline mainly resulted from the change in market strategy that negatively affected sales,
partially offset by an improvement in operating expenses.
NET INCOME
Financial expenses for the quarter increased to $11.9 million from $7.6 million for the second quarter of 2000, mainly due to
higher interest rates and the acceleration of amortization on loan fees.
The Company posted a net income of $4.9 million for the quarter, compared to $19.4 million for the same period last year. Net
income available to common shareholders was $0.2 million, compared with $17.8 million for the second quarter of fiscal 2000.
Eugenio Najera, President and COO, commented, "Compared to the same period last year, sales for the second quarter
reflected our new market strategy. During the same quarter last year, the Company had in place a strategy that aggressively
pursued market share to consolidate its current worldwide leadership. Today, our objective is to reduce costs and ultimately
increase the Company's cash flow and profitability. Although accumulated sales for the year are down $35 million, for fiscal
year 2001 the Company expects to generate at least the same level reported in fiscal year 2000 before the impact of currency
fluctuations and sales from discontinued operations."
During the quarter, the Company continued to focus on the implementation of its Global Optimization Plan, improving working
capital and cash controls, and reducing operating cost. Excluding discontinued operations, the Company's efforts to improve
working capital, resulted in a reduction of accounts receivable of almost $10 million.
Mr. Najera added, "We are aware that the Company continues to carry high levels of inventory as a result of overproduction
during the past years. Nevertheless, the inventory control initiatives implemented after September 2000 will allow Seminis to
reduce its seed purchases by $59 million, a drop of 35 percent. This will positively impact the Company's inventory levels in
the near future."
BANK DEBT NEGOTIATION
On December 29, 2000, the Company obtained a modification and interim waiver agreement with respect to the compliance of
certain financial covenants and deferral of principal payments under its $350 million loan agreement that extends through April
30, 2001.
Mr. Najera said, "We have presented a business plan to our lending banks which focuses on an amortization schedule
financed through operating cash flows and the sale of non-strategic assets. Since November 2000, the Company has proven
its capacity to generate cash and to meet its interest obligations. The Company has been brought to a point in which it can
stand on its own."
During the past six weeks, the Company has been negotiating the new agreement with its lenders. All of its lenders have
approved an extension of the December 29, 2000 modifications and interim waiver agreement until May 22, 2001. The
Company remains confident that a final agreement with the senior debt holders and its corresponding documentation can be
executed on or before May 22, 2001.
About Seminis
Seminis (Nasdaq: SMNS) 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, and create better tasting foods and foods
with better nutritional content. Seminis has established a worldwide presence and global distribution network that spans 120
countries. Seminis is a majority owned subsidiary of Savia (NYSE: VAI).
All statements in this press release other than statements of historical facts are "forward looking" statements, including
without limitation, statements regarding the Company's financial position, business strategy, plans, and objectives of
management and industry conditions. Although the Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will prove to be correct. The following factors,
among others, may affect the Company's actual results and could cause such results to differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company: competitive factors, agribusiness risks,
governmental and economic risks associated with foreign operations, commercial success of new products, proprietary
protection of and advances in technology, need for additional financing as well as the ability of the Company to restructure its
debt. Further information on the factors that could affect the Company's financial results is contained in the Company's S-1
registration statement dated June 29, 1999, and filed with the Securities and Exchange Commission.
Company news release
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