The agricultural inputs market in the United States was estimated at $27.7 billion in 2003 and has grown at a compound annual growth rate of approximately 3.0% over the past ten years, as measured by total revenues, according to the most recent available survey by the USDA National Agricultural Statistics Service. Key drivers of the market include: continued population growth; the use of more effective chemicals and fertilizers; stable planted acreage; the trend towards larger and more efficient farms; and the increased use of biotechnology in the production of seeds. The three primary product areas of the agricultural inputs and non-crop market are crop protection chemicals, seeds and fertilizer.

Crop protection chemicals expenditures in the United States were approximately $8.4 billion in 2003, according to the most recent available survey by the USDA National Agricultural Statistics Service. Since 1997, the volume of crop protection chemicals sold in the United States has increased, but overall revenues have remained essentially flat as lower-priced generic products have replaced higher-priced patented products, according to the same survey.

Seed expenditures in the United States were approximately $9.3 billion in 2003, according to the most recent available survey by the USDA National Agricultural Statistics Service. The seed market in the United States has experienced significant growth since 1997, according to the same survey, driven primarily by increased pricing as a result of improvements in seed technology. In particular, biological “traits” are becoming genetically engineered into seeds, thus reducing the need for chemical treatment of crops. These traits include providing a plant with the ability to resist pests without a chemical application and the ability of a plant to selectively resist herbicides. These technological improvements, together with the availability of more productive seed hybrids, have resulted in higher crop yields.

As of August 29, 2004 the Company had an extensive distribution infrastructure of over 320 facilities, consisting of retail distribution centers, bulk storage, granulation, blending and seed treatment plants, as well as an integrated network of distribution storage terminals and warehouses.

The Company operates distribution centers serving both wholesalers and individual growers, and are one of the largest retailers of crop production inputs to growers in North America. Retail centers typically service growers within a 10 to 50 mile radius of their locations. The Company operates retail centers in each major crop producing region of the United States and Canada. The Company‘s distribution network, though centrally organized, is internally divided by region.

The Company sells a complete line of products and services to growers through its distribution facilities, with each site tailoring its product offering to the specific needs of the growers in its service area. The Company‘s product offering, coupled with the advice of its sales professionals, provides the customers with a “one-stop shop”

The Products Division consists of the Company’s marketing, registrations, sourcing, formulation and packaging operations for its proprietary and private label products. The Company‘s marketing group works closely with the Products Division to drive its portfolio management, sales activities, advertising and technical service. The Company operates three formulation facilities throughout the U.S. that produce the Company’s proprietary branded products as well as private label products from third parties.

Cost of goods sold was $1,719.7 million in the twenty-seven weeks ended August 29, 2004 compared to $1,588.3 million for the twenty-six weeks ended August 24, 2003.

Gross profit was $242.8 million in the twenty-seven weeks ended August 29, 2004 compared to $261.9 million for the twenty-six weeks ended August 24, 2003.

Gross margin (gross profit as a percentage of net sales) decreased to 12.4% in the twenty-seven weeks ended August 29, 2004 compared to 14.2% for the twenty-six weeks ended August 24, 2003.