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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO

SECTIONS 13 OR 15D OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2004

or

For the Transition period from                      to                     

Commission File Number: 333-81235

ROYSTER-CLARK, INC.

(Exact name of registrant as specified in its charter)

1251 AVENUE OF THE AMERICAS – SUITE 900

NEW YORK, NEW YORK 10020

(212) 332-2965

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

SEE TABLE OF ADDITIONAL REGISTRANTS BELOW

FRANCIS P. JENKINS, JR.

CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

ROYSTER-CLARK, INC.

1251 AVENUE OF THE AMERICAS – SUITE 900

NEW YORK, NEW YORK 10020

(212) 332-2965

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:

PETER A. BASILEVSKY, ESQ.

SATERLEE STEPHENS BURKE & BURKE LLP

230 PARK AVENUE, SUITE 1130

NEW YORK, NEW YORK 10169-0079

(212) 818-9200

TITLE OF EACH CLASS

10 ¹/4% First Mortgage Notes Due 2009

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

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  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  ¨:  Not applicable

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes  ¨  No  x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant. The aggregate market value shall be computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days prior to the date of filing (see definition of affiliate in Rule 12b-2 of the Exchange Act.):  Not applicable

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:   Not applicable

DOCUMENTS INCORPORATED BY REFERENCE:  NONE

ROYSTER-CLARK, INC.

TABLE OF ADDITIONAL REGISTRANTS

The address, including zip code, and telephone number, including area code, of the principal offices of the additional registrants listed above is: 1251 Avenue of the Americas – Suite 900, New York, New York 10020; the telephone number at that address is (212) 332-2965.

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ROYSTER-CLARK, INC.

FORM 10-K

TABLE OF CONTENTS

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FORWARD-LOOKING STATEMENTS

This Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this Report, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” “hope,” “may” and similar expressions, as well as “will,” “shall” and other indications of future tense, are intended to identify forward-looking statements. Similarly, statements that describe the Company’s future plans, objectives, targets or goals are also forward-looking statements. The forward-looking statements are based on our current expectations and speak only as of the date made. These forward-looking statements involve known and unknown risks, uncertainties and other factors that in some cases have affected our historical results and could cause actual results in the future to differ significantly from the results anticipated in forward-looking statements made in this Report. Important factors that could cause a material difference include, but are not limited to, (i) changes in matters which affect the global supply and demand of fertilizer products, (ii) the volatility of the natural gas markets, (iii) a variety of conditions in the agricultural industry such as grain prices, planted acreage, projected grain stocks, U.S. government policies, weather and changes in agricultural production methods, (iv) possible unscheduled plant outages and other operating difficulties, (v) price competition and capacity expansions and reductions from both domestic and international producers, (vi) the relative unpredictability of national and local economic conditions within the markets we serve, (vii) environmental regulations, (viii) other important factors affecting the fertilizer industry, (ix) fluctuations in interest rates and (x) volatility in the bond markets, (xi)other factors referenced in the Company’s Reports and registration statements filed with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements.

Few of the forward-looking statements in this Report deal with matters that are within our unilateral control. Acquisition, financing and other agreements and arrangements must be negotiated with independent third parties and, in some cases, must be approved by governmental agencies. These third parties generally have interests that do not coincide with ours and may conflict with our interests. Unless the third parties and we are able to compromise their various objectives in a mutually acceptable manner, agreements and arrangements will not be consummated.

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PART I

ITEM 1.    BUSINESS.

General

We believe that we are one of the largest retail distributors of crop production inputs, and providers of agronomic services, such as product application and technical consulting services, to farmers in the United States. We also distribute crop production inputs, principally fertilizer, on a wholesale level. We primarily focus on major farming regions in the Southeastern and Midwestern United States. Our distribution business supplies a full range of products and services to over 43,000 retail and wholesale customers through 364 facilities, including 254 retail farm centers (“Farmarkets^®”) and a network of 74 storage and distribution terminals and warehouses. We operate a total of 29 fertilizer granulation, fertilizer blending and seed processing facilities that produce premium branded and blended products sold through our retail and wholesale distribution channels. In addition, we operate two nitrogen-manufacturing plants that supply our distribution business with nitrogen fertilizer products. We are a “one-stop supplier” for farmers, providing a complete line of products and services to help farmers become more profitable, efficient and environmentally sound. In 2004, we generated revenues in excess of $1,071.0 million and EBITDA of approximately $56.7 million. (See definition in Item 6, Selected Financial Data).

Royster-Clark, Inc. has a long history. W.S. Clark & Sons, Inc. began operations in 1872 as a general mercantile company. The corporate antecedents of Royster Company Inc. were formed in 1881 to utilize natural fertilizer resources from South America. Royster-Clark, Inc. was formed in 1992 through the merger of these two companies. The current management team assumed active control at Royster-Clark in the summer of 1995.

On April 22, 1999, 399 Venture Partners, Inc., an affiliate of Citicorp Venture Capital Ltd., through its newly formed company Royster-Clark Group, Inc. (“Royster-Clark Group” or “RCG”), acquired all of the outstanding shares of Royster-Clark, Inc. (predecessor) from some members of its management. Royster-Clark, Inc. (successor) then acquired all of the outstanding shares of three operating subsidiaries, IMC Agribusiness, Inc., IMC Nitrogen Company and Hutson’s AG Service, Inc. from IMC Global, Inc. These three IMC entities are referred to as “Agribusiness.”

In order to finance the acquisition of Agribusiness and re-structure the Company’s debt, the Company used proceeds from equity contributions by 399 Venture Partners, Inc. of $59.0 million, management rollover equity of $19.6 million; issuance of $10.0 million of Royster-Clark Group junior subordinated notes payable maturing in 2010, owned by IMC Global, Inc.; the issuance of $200.0 million principal amount of 10.25% First Mortgage Notes due 2009 held by various financial institutions (“Noteholders”); and proceeds from the Senior Secured Credit Facility (“credit facility”) created on April 22, 1999. As a result of these transactions and subsequent issuances and redemption of stock, 399 Ventures and affiliates owns approximately 38.0% of the outstanding voting stock and 70.7% of the total outstanding stock of Royster-Clark Group, members of management own approximately 48.6% of the outstanding voting stock and 22.3% of the total outstanding stock of Royster-Clark Group and have the right to acquire an additional 10% of the voting stock through a stock purchase plan. Royster-Clark Group owns all of the outstanding stock of Royster-Clark, Inc.

Agribusiness was initially formed in the mid-1980s as Vigoro Industries, Inc. through the leveraged buy-out of Kaiser Agricultural Chemicals, Inc. and Estech Branded Fertilizer, Inc., both retailers of crop production inputs. Agribusiness acquired the East Dubuque nitrogen facility in 1987. Vigoro merged with IMC Global in 1996 and then Agribusiness was formed, combining the Farmarket^® retail and nitrogen businesses of Vigoro and the Rainbow business of IMC Global. Agribusiness expanded its retail and wholesale distribution system with the 1997 acquisition of Hutson’s Ag Service, Inc., a Kentucky-based crop production input distributor with approximately 25 retail stores.

Risk Factors

Risk factors to our business include, but are not limited to, the following:

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Business Operations

Agricultural Infrastructure

We have an extensive crop production inputs infrastructure of 364 facilities, including Farmarkets^®, fertilizer granulation, fertilizer blending and seed processing facilities, a network of storage and distribution terminals and warehouses, two nitrogen manufacturing plants and supporting offices that provide a reliable local supply of nitrogen fertilizer products to our distribution business and industrial nitrogen products to our non-agricultural customers. This infrastructure allows us to efficiently process, distribute and store product close to the end-user and to supply our customers on a timely basis during the planting seasons. In particular, our network of terminals and storage facilities which serves customers in Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, New York, Ohio, Pennsylvania, West Virginia and Wisconsin lowers freight costs and assists us in meeting the needs of our customers in a timely manner. In addition, we use port facilities on the Atlantic seaboard and the Mississippi River system to provide flexibility in raw material purchasing, including the ability to access overseas markets when they offer lower prices than domestic markets. Our widespread geographical presence in some of the United States’ most important farming regions provides diversity that helps to insulate our overall business from difficult farming conditions in any one particular area as a result of poor weather or adverse market conditions for specific crops. Our facilities cover the major farming markets in the Southeastern and Midwestern United States.

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We believe that this market presence provides a number of competitive advantages as described below:

Approximately 89% of our revenues are derived from products that we purchase and re-sell while only about 11% are generated from nitrogen products that we manufacture. Accordingly, we are only partially exposed to fluctuations in the relationship between natural gas and nitrogen fertilizer prices.

We have central management controls and utilize our logistical expertise and enterprise information technology systems to manage our facilities network. We understand the importance of flexibility at the local level to adapt to local conditions. We aim to achieve the proper balance of central control and direction with local flexibility by utilizing team management and appropriate incentive programs.

Retail Distribution

We operate approximately 254 Farmarkets^®, making us one of the largest retailers of crop production inputs to farmers in North America. Farmarkets^® market their products and services primarily to end users, the farmers. Farmarkets^® typically service farmers within a 15 to 25 mile radius of their locations. We operate centers predominantly in the Midwest to service corn and soybean farmers and in the Southeast to service farmers focused on higher management crops, including cotton, peanuts, tobacco and vegetables.

Through these retail locations, we sell a complete line of crop production inputs to farmers. Each Farmarket^® tailors its product offering to the specific needs of farmers within its service area. While we provide a complete line of products and services, fertilizer represents the majority of the typical Farmarket’s business. We offer both blended fertilizer and our own premium branded granulated fertilizer products at most of our Farmarkets^®. We also distribute a full range of crop protection products at our Farmarkets^®. For the convenience of our customers, Farmarkets^® carry inventories of herbicides, insecticides, fungicides and other products, which target problems affecting crops. We have also placed an emphasis on seed products and on new seed technology and provide a complete range of seed to farmers through our Farmarkets^®. This capability allows our retail centers to be a “one-stop supplier” for farmers who need a complete package of crop enhancement and protection services, including technical advice, delivery services and field application. The Farmarket^® receives crop protection products from our network of strategically located distribution centers as well as direct from suppliers, depending on the most economical pricing and logistics method. We receive distributor and dealer cash rebates based on the volume and type of crop protection products that we sell. Cash rebates are typically paid near the end of the calendar year but may also be advanced monthly, as sales are made.

We operate point-of-sale computer systems at each of our Farmarkets^® that provide data daily for accounts receivable, inventory control, budgeting, forecasting, working capital management, material requirements planning and internal controls.

Wholesale Distribution

We distribute products on a wholesale level, primarily focusing on major farming regions in the Southeastern and Midwestern United States. Our primary wholesale business includes the purchase of nitrogen, phosphate and potassium, three essential nutrients for plant growth, for processing and/or resale to wholesale customers. Approximately 26% of these crop nutrients are blended or granulated and distributed as mixed fertilizer products.

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In the Southeastern United States, we distribute our wholesale products through a network of over 900 independent dealers. We have supplied granulated fertilizer products to some customers for more than 50 years. These long-term customer relationships provide a competitive advantage today.

In the Midwestern United States, we distribute to established customer bases in both the agricultural and industrial markets. Our wholesale business services over 1,500 customers in the region. The wholesale business’ agricultural customer base is diverse and is composed of small family-owned distributors, larger regional dealers and several national chains. The industrial customer base is smaller and less seasonal.

Processing Operations

The Company operates a total of 29 fertilizer granulation, fertilizer blending and seed processing facilities. The company also owns two nitrogen-manufacturing facilities.

Fertilizer Granulation is a process whereby various dry fertilizer materials such as nitrogen, phosphate, potassium, secondary plant foods and micronutrient sources are mixed and placed in a rotary drum ammoniator. In the ammoniator, steam, water, anhydrous ammonia or nitrogen solution, sulphuric acid and phosphoric acid are added. The reactions that take place under these conditions are known as ammoniation. This product is then dried in a large rotary dryer and screened for uniformity in size and shape. The result is a mixed fertilizer of granules homogeneous in size, shape, density and containing a uniform proportion of each nutrient. Fertilizer granulation is a highly skilled process. We granulate fertilizer at six facilities under the supervision of our experienced facility managers. We believe that we have a cost-effective production process to manufacture granulated fertilizer products with excellent agronomic traits. Most of the granulated fertilizer that we produce is sold under the Super Rainbow^®, Rainbow^® and International^® brand names. Our Rainbow^® products, in particular, have developed a reputation for high quality during the 80 years they have been sold throughout the Southeastern and Midwestern U.S.

Fertilizer Blending is a process of physically mixing together two or more fertilizer materials to create a mixed fertilizer. Typically, particles of nitrogen, phosphate, potassium, limestone filler, and occasionally secondary plant foods and micronutrients are mixed together in a large revolving drum, much like a cement mixer. Alternatively, liquid fertilizer may be mixed in a suspension form. The Company produces dry or liquid fertilizers at 12 centralized facilities and at almost all our Farmarkets^®.

Seed Processing is the process of converting raw bushels of grain into finished units of seed. Typically, the Company contracts with local growers to produce the seed. The grower is provided with foundation seed to plant its crop and the crop is grown, harvested and stored under strict guidelines in return for a premium paid by the Company. The final process consists of cleaning and grading the seed and then bagging the finished product. The entire process involves numerous quality control checks and tests.

Some of our seed product is processed for leading seed companies, and sold under their private labels. For example, we believe we were one of the first outside companies to grow, process, bag and distribute Roundup Ready^® soybeans for the Monsanto Company. “Roundup Ready” is a term used to describe seeds that are biotechnologically engineered to allow plants to tolerate Roundup (Glyphosate), a widely used crop protection product. In addition, the Company produces and markets its own proprietary brands of seed, (mainly corn, soybean and wheat seed), including the Tribute brand, and under exclusive license, the Vigoro^® brand seed.

Nitrogen Manufacturing is performed at the Company’s facilities at East Dubuque, Illinois and Cincinnati, Ohio (physically located in North Bend, Ohio). The East Dubuque facility is a fully integrated nitrogen manufacturing plant which produces nitrogen products for both the agricultural and industrial markets. This plant is designed to produce anhydrous ammonia, nitric acid, ammonium nitrate solution, liquid and granular urea, nitrogen solutions and carbon dioxide using natural gas as a feedstock. This plant can optimize the product mix

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according to swings in demand and pricing for its various products. In the year 2004, this plant produced approximately 1,043.3 thousand tons of these products compared to 825.7 thousand tons in 2003. Some were sold as produced and others consumed in the production of upgraded nitrogen products. Final products shipped from the plant during 2004 totaled approximately 498.3 thousand tons of ammonia and upgraded nitrogen products compared to 376.4 thousand tons in 2003.

Product availability at the East Dubuque plant also allows us the ability to use product-exchange agreements with other nitrogen producers in the Midwest. These agreements allow reductions in transportation costs by limiting the East Dubuque service area to customers within a 100-mile radius of the plant. We often source products from competitors’ facilities on a cost-efficient basis for Farmarkets^® outside the East Dubuque service area. Such product exchange (“swap”) arrangements, coupled with the extensive fertilizer storage capacity in our overall system, have enabled us to optimize production on a year-round basis and minimize transportation costs and provide us with a competitive advantage over nitrogen products manufactured outside of the region.

We also operate a smaller nitrogen manufacturing facility near Cincinnati, OH. This plant purchases anhydrous ammonia and manufactures nitric acid and ammonium nitrate liquor for industrial use and nitrogen solutions for the agricultural market. In the year 2004, this plant produced approximately 151.6 thousand tons of these products compared to 180.2 thousand tons in 2003. Some were sold as produced and others consumed in the production of upgraded nitrogen products. Final products shipped from the plant during 2004 totaled approximately 146.1 thousand tons of ammonia and upgraded nitrogen products compared to 200.6 thousand tons in 2003. The industrial market represents approximately 20% of sales of Royster-Clark manufactured nitrogen products. These industrial sales provide a year-round revenue source.

Terminal and Warehouse Facilities

A key element supporting our wholesale and retail businesses are networks of terminal and warehouse facilities located throughout the markets in which the Company operates. These networks service wholesale customers in Iowa, Missouri, Wisconsin, Minnesota, Illinois, Indiana, Michigan, Ohio, Pennsylvania, New York, West Virginia and Kentucky. We distribute product through over 70 terminal and warehouses facilities which handle crop input products for efficient distribution through either the Farmarket^® or the wholesale distribution system. We operate over 40 of these facilities and own most of the facilities. The balance of the terminal and warehouse facilities operates under generally short-term contracts with other facilities to provide the Company with storage capacity. These contracts are typically of a short-term nature and may be only for a six month or less period of time. These owned and leased facilities provides a network which allows the Company to acquire products during off-season periods when pricing is typically lower than in-season pricing. This storage capability helps assure product availability for the spring season product movement.

Seasonality

Our business is highly seasonal. Since 1999, sales occurring between March and July have varied from approximately 68% to 73% of annual sales. In 2004, approximately 71% of sales occurred between March and July. This seasonality results from the planting, growing and harvesting cycles. Inventories must be accumulated to be available for seasonal sales, requiring significant storage capacity. The accumulation of inventory is financed by the Company through its senior secured credit facility and by customer prepayments and by suppliers.

As a result of the inherent seasonality of our business, we experience significant fluctuations in our revenues, income and net working capital levels. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This seasonality also generally results in higher fertilizer prices during the peak periods, with prices typically reaching their highest point in the spring, decreasing in the summer, increasing in the fall through the spring.

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Products and Services

The following table shows our revenues by product line for the years ended December 31, 2004, 2003 and 2002.

Some of our key proprietary branded products are listed in the table below.

Products

Fertilizer.    We believe that we are one of the largest North American producers of agricultural granulated fertilizer. We operate six fertilizer granulation plants (of 14 such plants currently operating in the U.S., according to the International Fertilizer Development Center) that produce homogenized NPK (nitrogen, phosphate and potassium) products. In terms of number of plants, we believe that we have been a leading manufacturer and distributor of premium, branded agricultural granulated fertilizer with our primary market focus in the Southeastern U.S. farming regions.

We believe that we are among the most efficient, low-cost producers of granulated fertilizer in the U.S. market. We have a cost-effective production process that uses nitrogen, phosphate and potassium to manufacture granulated fertilizer products with excellent agronomic traits. These products are marketed under the Super Rainbow^®, Rainbow^® and International^® brand names. Granulated fertilizer products are primarily used by farmers who produce specialty crops, such as citrus fruits, vegetables, tobacco, peanuts and cotton. We believe farmers growing these crops are willing to invest more in premium crop nutrients, such as granulated fertilizer.

We also offer a range of products with slightly different nutrient contents within each branded, blended product category. The ability to offer a range of fertilizer blends helps us accommodate the needs of farmers growing a variety of specialty crops under different soil conditions. We also produce custom products to meet the specific needs of large customers.

Our nitrogen-manufacturing facilities produce for the agricultural and industrial markets. Products for the agricultural market include anhydrous ammonia, granular urea and nitrogen solutions for agricultural markets which are primarily sold through our wholesale distribution network. Products for the industrial markets include nitric acid, ammonium nitrate solution and carbon dioxide and are sold by a small number of company personnel or agents and are included in the Other sales category.

Crop Protection Products.    We believe are one of the largest retail distributors of crop protection products in the U.S. We distribute a full range of crop protection products at our Farmarkets^®, including our own proprietary

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Amaze Gold^® brand. For the convenience of our customers, Farmarkets^® carry inventories of herbicides, insecticides, fungicides and other products which target problems affecting crops. This allows our Farmarkets^® to be “one-stop suppliers” for the farmers who need a complete package of crop protection services, including technical advice, delivery services and field application.

Seed.    We believe we are one of the largest retail distributors of seed to farmers in the U.S. Typically, we contract with local growers to produce the seed. We carry on seed processing at three Company–owned facilities and eight outsourced facilities. We provide a complete range of seed to farmers. We produce and market our own proprietary brands of seed, including the Tribute brand, and under exclusive license, the Vigoro^® brand. In addition, we process seed for leading seed companies to be sold under their private labels. We believe that seed enhanced through genetic engineering will be an important growth area for agriculture.

Other.    This category includes revenues from application services, agronomic services, industrial products, grain, feed, animal health supplies and a variety of supplies and consumables used in farming operations. In addition, Other includes the impact of discounts and allowances which, in the aggregate, amount to 1.0% of gross revenue in 2004 and 1.1% in 2003. Also included in Other is a new product, GLOTELL. We have an exclusive marketing and distribution rights to GLOTELL, a theft deterrent, marking agent and leak detector for anhydrous ammonia. GLOTELL can be used to deter the theft of anhydrous ammonia for use in the clandestine production of methamphetamine. We believe that GLOTELL is the only such product in North America. GLOTELL was recently named one of the top 10 new technologies in the December 2004 issue of Communicator published by the Canadian Association of Agri-Retailers.

Services

In addition to selling crop production inputs, Farmarket^® personnel provide physical and non-physical agronomic services to farmers. Physical services include the custom blending and application of crop nutrients to meet the agronomic needs of individual farmers’ fields based on soil sampling. Non-physical services include more sophisticated and technologically advanced services on a fee basis, such as advanced soil analysis, field scouting, pest level monitoring, global positioning satellite (“GPS”) field mapping and satellite-linked variable rate spreading and application. Other non-physical services include agronomic advice and crop production planning and consulting services which allow us to maintain hands-on and personal relationships with the growers and use available knowledge and techniques to increase the growers’ opportunities for successful crops.

Competition

The market for the distribution of crop production inputs and agronomic services is competitive. We compete in the retail business by providing a comprehensive line of products and what we believe to be superior services at competitive prices. We believe that there are approximately 5,000 full-service farm retail centers in the United States serving growers. These retail farm centers are operated by agricultural co-operatives (which have the largest market share in a majority of the markets we serve), national for profit companies, and local and regional independent distributors.

Our major competitors are United AgriProducts, Growmark Inc., Southern States Cooperative, Helena Chemical Company and Agriliance LLC. Some of the reasons why our customers choose us over our competitors are that: (i) we are able to provide a comprehensive product and service solution package helping farmers to maximize crop yields, (ii) we have approximately 300 certified crop specialists on staff, and (iii) our staff has formed long-term relationships with our customers.

Raw Materials and Supplies

We purchase our crop production inputs primarily from the major North American producers. We also frequently import products from foreign suppliers in ship-load quantities. Final purchasing decisions are based on several factors including availability, price, quality and customer requirements. As a result of these factors, the quantity of imported materials purchased for later resale or consumption will vary.

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The three key components of fertilizer that we purchase are nitrogen, phosphate and potassium, which are global commodities that can be purchased from multiple suppliers. Price volatility varies for nitrogen, phosphate and potassium. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

In connection with the acquisition of three subsidiaries (referred to as “Agribusiness”) of IMC Global, Inc. (“IMC Global”) in 1999, we entered into a ten-year supply agreement with IMC Global to purchase phosphates and potassium (in the form of potash). On October 25, 2004, IMC Global merged with Cargill Crop Nutrition to form The Mosaic Company (“Mosaic”). The purchase prices and quantities of the products covered by this supply agreement are determined by market forces. The agreement automatically renews for additional 5-year periods unless it is cancelled by either party. The agreement also specifies remedies available to the parties in the event of non-compliance, which include compensatory damages in the event of a failure to purchase or supply the required quantities of covered products. Purchases under this contract were well in excess of minimum requirements and exceeded $100 million during 2004. Based on our existing contractual relationship and the significant volume of purchases that we make, we expect to maintain a positive relationship with Mosaic; however, should adverse changes occur we would expect to be able to procure the materials required from other suppliers. In addition to the merger of Cargill and IMC Global which concentrated ownership of phosphate production, we believe that new phosphate production in China adds another variable to the future supply of phosphate and its pricing on the world market.

Approximately 32% of the Company’s nitrogen solution, ammonia and urea products were sourced from the East Dubuque facility during 2004 compared to 24% in 2003 when production was reduced during the natural gas run-up in the early spring of 2003. Products produced at East Dubuque are sold primarily in wholesale channels rather than through our Farmarkets^® whose nitrogen requirements are primarily met through purchases from a number of domestic and international suppliers.

The major raw material in the manufacture of nitrogen products is natural gas. We purchase natural gas monthly through a combination of spot market purchases and firm-supply, fixed-priced contracts. We are able to purchase natural gas at competitive prices due to our connection to the Northern Illinois Gas (Nicor) distribution system and its proximity to the Northern Natural Gas pipeline. Natural gas purchases were approximately 10.4 billion cubic feet in 2004 compared to approximately 9.1 billion and 10.4 billion cubic feet in 2003 and 2002, respectively.

While management believes that sufficient natural gas supplies exist for the Company to operate the East Dubuque facility for the foreseeable future, increases in the price of natural gas could affect the profitability of our sales of manufactured nitrogen products.

The Cincinnati, Ohio plant purchases anhydrous ammonia for use in the production of nitric acid and other upgraded nitrogen products. Anhydrous ammonia is purchased from a variety of suppliers on the open market. The anhydrous ammonia is delivered to the plant by barge and rail. The Company has had no problems in securing a supply of anhydrous ammonia for the plant and expects no problems for the foreseeable future.

Employees and Labor Relations

We employ approximately 1,800 non-unionized and salaried employees, approximately 220 unionized employees and approximately 800 temporary employees during seasonal periods. We believe we have good relations with our employees. Currently we have eight labor contracts in place covering the 200 unionized employees. Two of these contracts, covering fewer than 50 employees in total, are up for renewal in 2005. We have not experienced work stoppages in the past and expect to be able to renew these contracts without work stoppages in 2005.

Environmental Matters

Our facilities and operations must comply with a variety of federal, state and local environmental laws, regulations and ordinances, including those related to air emissions, water discharges and chemical and

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hazardous waste management. Laws relating to workplace safety and worker health and safety also govern our operations, primarily the rules of the Occupational Safety and Health Administration and the United States Department of Transportation. We believe that our operations are in compliance in all material respects with current requirements under environmental laws and employee safety laws.

Environmental laws may hold current owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances, materials or wastes, pollutants or contaminants, including petroleum and petroleum products. Because of our operations, the history of industrial or commercial uses at some of our facilities, the operations of predecessor owners or operators of some of the businesses, and the use, production and release of hazardous substances at these sites, the liability provisions of environmental laws may affect us. Many of our facilities have experienced some level of regulatory scrutiny in the past and may be subject to further regulatory inspections, future requests for investigation or liability for regulated materials management practices.

Since the end of 2002, we have sold nine locations for which we have been responding to the presence of hazardous substances, including nitrates, phosphorus and pesticides in soils and/or groundwater. We believe that we have performed sufficient remediation work and that language within the sales document allows us to anticipate no additional remediation work at the respective sites. While from a practical standpoint we would not anticipate further remediation work at these sites, we can not be assured that there will not be further liabilities arising out of conditions for which the Company may be held responsible.

We are still in the process of responding to the presence of hazardous substances, including nitrates, phosphorus and pesticides in soils and/or groundwater at a number of sites. In total, both voluntary and government ordered cleanups of releases of hazardous substances has occurred, is being performed, or is being planned at 40 sites. In addition, we have also removed or filled in place underground storage tanks from some of our facilities and, in some instances are responding to historic petroleum releases at these locations. Indemnity may be available for some locations for which response actions are planned or required. The cost of these on-going and potential response actions is not expected to have a material adverse effect on our business, financial condition or results of operations; however, there can be no assurance that discovery of new environmental conditions or more stringent application of cleanup standards will not have a material adverse effect. At 17 locations, where past releases of fertilizer or other hazardous substances have been documented and corrective actions taken; our environmental consultants or regulatory authorities have concluded that no further action is currently required. The Company would expect no further cleanup activity at these locations. However, the Company can not be assured that future notices from the applicable regulatory authority will not be received or that future cleanup activities may be required of the Company due to the discovery of new environmental conditions or more stringent application of cleanup standards.

The U.S. federal Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA”) provides for responses to, and, in some instances, joint and several liability for releases of, hazardous substances into the environment. We have been identified as a potentially responsible party under CERCLA for five off-site locations to date. We have resolved these matters as de minimis parties and believe we have no further liability in respect of those sites.

In connection with the 1999 acquisitions of Agribusiness and Royster-Clark, the Company obtained indemnities for certain claims related to environmental matters that existed or arose prior to the acquisitions. The indemnities related to Agribusiness are subject to a $4,500 deductible, may not exceed 10% of the purchase price, or a total of $30,000 and certain time limitations. Indemnities related to claims arising out of environmental representations and warranties and claims associated with, arising from or relating to conditions existing prior to April 1999 associated with the real estate owned by Agribusiness and transferred to the Company at closing expired in April 2004. Indemnities covering other environmental claims associated with, arising from or relating to conditions existing prior to April 1999 on real estate (other than real estate subject to the April 2004 indemnity expiration) formerly owned, leased or operated by Agribusiness or offsite disposition of contaminants survive indefinitely. The environmental indemnities related to Royster-Clark, Inc. (predecessor

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company) are subject to a deductible of $2,000 and an overall cap of $5,000 on all indemnities which expired in April 2004. In addition, Royster-Clark, Inc. (predecessor company) had obtained indemnities from Lebanon Chemical Corporation (LCC) for certain claims related to environmental matters that existed at sites acquired from LCC in December 1998. The Company has a claim pending under the indemnities from LCC. Other than that claim, the indemnity has expired. The Company also obtained indemnities from the former stockholder of Alliance Agronomics. Inc. for environmental conditions identified as of the date of acquisition. The indemnification remains in effect until notice is received requiring no further actions are received or after a two-year period of testing with no reportable results in deterioration of water quality.

Based on our experience to date, we believe that the future cost of compliance with existing environmental laws, including liability for known environmental claims, will not have a material adverse effect on our business, financial condition or results of operations. However, future events, such as changes in existing laws and regulations or their interpretation, may give rise to additional compliance costs or liabilities that could have a material adverse effect on our business, financial condition or results of operations. Compliance with more stringent laws or regulations, as well as stricter or different interpretations of existing laws, may require additional expenditures by us that could be material.

Available Information

Our Internet web site address is http://www.roysterclark.com. We make copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports available free of charge through our web site, as soon as reasonably practicable after they have been filed with or furnished to the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (1934 Act). All of these materials can be accessed through selection of the “Our Promise” tab, then under “Financials” by depressing the button for “View SEC Filings”. These reports are also available at the SEC’s website http://www.sec.gov.

Information on our web site does not constitute part of this report.

Regulatory Approvals

As a seller and distributor of crop production inputs, we are subject to registration requirements under the U.S. Federal Insecticide, Fungicide, and Rodenticide Act and related state statutes, which require us to provide information to regulatory authorities regarding the benefits and risks of the products we sell and distribute, and to periodically update that information. Risk information supplied to governmental authorities by us or others could result in the cancellation of products or in limitations on their use. Non-compliance with these environmental, health and safety laws can result in significant fines or penalties. Based on our experience to date, these requirements are not expected to have a material adverse effect on our business, financial condition, results of operations or liquidity.

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ITEM 2.    PROPERTIES.

We have an extensive infrastructure of approximately 366 facilities, consisting of retail farm centers (“Farmarkets^®”), a total of 31 fertilizer granulation, fertilizer blending, nitrogen manufacturing and seed processing facilities and an integrated network of warehouses and terminals. Our facilities cover the major farming markets in the Southeastern and Midwestern United States.

Our principal production and storage facilities, listed below, are owned. In addition, we own approximately 210 Farmarkets^® and various other production, storage and distribution facilities. We have three principal leased properties, which are used as office space and located in New York, Virginia, and Illinois. These leased properties range in lease length from six to fifteen years and contain renewal options. We also lease warehouses and terminals from third parties. These facilities enhance our ability to source products to Farmarket^® and wholesale customers throughout the year, especially during the high-volume spring season. We believe that our facilities are adequate for our current operations and that our facility leases are all in good standing.

The following table provides information regarding our principal production and storage facilities.

All of the properties in the above table (with the exception of the Union City, Tennessee and Petersburg, Virginia facilities) are subject to liens under the First Mortgage Notes discussed in note 10 to the consolidated financial statements included in this report. Petersburg, Virginia and sixteen Farmarkets^® acquired since 2000 are subject to liens in connection with the amended and restated senior secured credit facility agreement executed on December 22, 2003.

A typical Farmarket^® is located in or near a small farming community. The main building would normally include office space for two or three people, an area to receive customers and indoor warehousing of 5,000 to 10,000 square feet for crop protection products and seeds. Typically, there is a second building for the storage of

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bulk fertilizers and materials. A majority of Farmarkets^® would also have a fertilizer blending facility, where fertilizer materials are mixed together to produce bulk fertilizer products.

In addition to the properties noted above, our two real estate subsidiaries own the real estate and machinery and equipment of our Farmarket^® network and our other production, storage and distribution facilities with our operating subsidiary owning the assets purchased subsequent to April 22, 1999. The stock of the two real estate subsidiaries is subject to liens by holders of the First Mortgage Notes.

ITEM 3.    LEGAL PROCEEDINGS.

Except as set forth below, we do not believe that there are any current, pending or threatened legal proceedings, including ordinary litigation incidental to the conduct of our business and the ownership of our properties that, if adversely determined, would materially affect us.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Not applicable.

ITEM 6.    SELECTED FINANCIAL DATA (DOLLARS IN THOUSANDS).

The following table provides selected financial and other data of Royster-Clark, Inc. and subsidiaries, as of and for each of the years ended December 31, 2004, 2003, 2002, 2001 and 2000. This information should be read with the consolidated financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information found elsewhere in this report.

Financial exhibits and related commentary include presentation of and reference to a non-GAAP financial measure. This non-GAAP financial measure is Earnings Before Interest, Taxes, Depreciation, Amortization and Losses on disposal or write-down of fixed and other non-current assets (“EBITDA”). The Company’s management believes that the inclusion of EBITDA provides useful information to investors regarding the Company’s financial condition and results of its operations for several reasons. Two of the financial ratio covenants and a minimum twelve month EBITDA covenant included in the Company’s current senior secured credit facility agreement are driven by the Company’s EBITDA as defined above. The Company’s success in maintaining or improving EBITDA is an indication of the Company’s ability to maintain the liquidity provided by the senior secured credit facility. Secondly, in today’s capital markets, the ability of the Company to attract new investment and working capital finance to support its growth is largely a function of its ability to generate cash to pay interest, maintain its physical capital, satisfy its tax obligations and reward investments. It is useful for investors to know whether this ability is being enhanced or degraded and EBITDA is widely accepted as a bellwether indicator of that ability. Finally, Company management uses a close analog of EBITDA internally as the primary profitability measurement to make informed decisions and reward the performance of decision-making employees. EBITDA presented below should not be construed as a substitute for operating income or as a better indicator of liquidity than cash flow from operating activities, which are determined in accordance with GAAP, nor is EBITDA necessarily a measure of our ability to fund our cash needs. EBITDA may not be comparable to similarly titled measures reported by other companies.

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EBITDA as defined above is reconciled to GAAP measurements in the following table for the years ended December 31 as presented in this document.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

THE FOLLOWING INFORMATION CONTAINS FORWARD-LOOKING STATEMENTS. SEE ‘FORWARD-LOOKING STATEMENTS’ ABOVE. YOU SHOULD NOT PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS AS SUCH STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE, CIRCUMSTANCES AND RESULTS MAY CHANGE AND WE MIGHT NOT UPDATE THEM TO REFLECT CHANGES THAT OCCUR AFTER THE DATE THEY ARE MADE.

General

Royster-Clark, Inc. (together with its subsidiaries, the “Company” or “Royster-Clark”) is a retail and wholesale distributor of crop production inputs, and providers of agronomic services, such as product application and technical consulting services, to farmers in the United States. We also distribute crop production inputs, principally fertilizer, on a wholesale level. We primarily focus on major farming regions in the Southeastern and Midwestern United States. The Company’s operations include retail farm centers (“Farmarkets^®”), granulation, blending and seed processing plants, and a network of storage and distribution terminals and warehouses. In addition, the Company operates two nitrogen-manufacturing plants that supply the wholesale and industrial customers with nitrogen products. Our business is affected by a number of factors, including weather conditions, prevailing prices for fertilizer, natural gas used in the production of various fertilizers and other crop production inputs. The Company is a wholly owned subsidiary of Royster-Clark Group, Inc., a closely held private company.

Weather conditions can significantly affect our results of operations, both for quarterly reporting and on an annual basis. Adverse weather conditions during the planting season may force farmers to either delay or abandon their planting, or change to another crop, which may lead to lower use of crop production inputs. Favorable weather conditions, especially early in the planting season, may not lead to increased plantings with a potential increased use of various crop production inputs. Favorable weather, however, will allow farmers to plant to the full extent of their planting intentions.

The crop production inputs distribution business is seasonal. Since 1999, sales occurring between March and July have varied from approximately 68% to 73% of annual sales based upon planting, growing and harvesting cycles of our customers. In 2004, approximately 71% of sales occurred between March and July. The Company is not aware of any factors that currently exist that would make this sales concentration either more or less than historical percentages. Inventories must be accumulated to be available for seasonal sales, requiring significant storage capacity. The accumulation of inventory is financed by the Company through its credit facility, by customer prepayments and by suppliers. Depending on weather and field conditions in the Company’s widely diverse geographic marketing areas, the period of heavy product shipments to customers can vary by several weeks, which may impact in which quarter sales are recorded.

As a result of the inherent seasonality of our business, we experience significant fluctuations in our revenues, income and net working capital levels. This seasonality also generally results in higher fertilizer prices during the peak periods, with prices typically reaching their highest point in the spring, decreasing in the summer, and increasing in the fall through the spring.

Another factor affecting our business is the price for fertilizers. We purchase nitrogen materials, phosphates, and potassium and resell these nutrients in either their original form or in the form of multi-nutrient fertilizers. Price volatility varies for major nitrogen, phosphate and potassium products. The table below provides quarter end prices for the products indicated by Mid-Cornbelt or Midwest per ton price quote listing published by Green Markets^© (a publication reporting on fertilizer industry developments). Ammonia (anhydrous ammonia) is being illustrated as a proxy for nitrogen products, while DAP (diammonium phosphate) and potassium (“potash”) (coarse muriate potash) are being used as proxies for phosphate and potash products.

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Source: Green Markets ^© , Mid Corn Belt or Midwestern U.S. price quote reported

While the level of nitrogen prices affects the profitability of our entire business, the level of nitrogen prices affects the profitability of our nitrogen-manufacturing plants more directly. The level of phosphate and potash prices affects the profitability of our business since gross profit generated by our processing and distribution activities with these materials is typically a function of the underlying cost.

The major raw material in the manufacture of nitrogen-based products is natural gas. During 2004, we purchased natural gas on the open market and through the use of short-term, fixed supply, fixed price purchase contracts for use in our nitrogen-production plant in East Dubuque, IL. The use of purchase contracts permits the Company to elect to lock in our gas costs for quantities of million British Thermal Units (“MMBTU”) for a portion of its natural gas requirements through the winter months which have demonstrated the highest degree of volatility.

The table below illustrates some of the degree of volatility of natural gas pricing quoted at the Henry Hub.

^{Source: Energy Intelligence Group, Inc. website, www.energyintel.com}

Since December 31, 2004 through early March 2005, natural gas prices have fluctuated between over $5.50 per MMBTU to close to $7.00 per MMBTU with pricing ranging from $6.50’s-$6.90’s in early March. The level of natural gas prices directly affects profitability of our company-manufactured nitrogen-based products.

The Company is primarily a distribution company dealing in agricultural crop inputs. The Company derives revenues primarily from the distribution and sale of various crop inputs and services to agricultural customer for their crop input needs. These goods and services are sold directly to the customer farmers or wholesale customers who will resell to customer farmers or other wholesalers. Crop inputs include nutrient elements required for balanced plant development and growth. These nutrient elements include various dry and liquid materials and have varying nutritional content of nitrogen-based, phosphate-based and potash-based fertilizers as well as various types of micronutrients. Various weeds, insects and diseases can diminish our customers’ crop yield. Therefore, the Company offers a variety of herbicides, insecticides and fungicides, (collectively referred to as “crop protection products”) to enhance the success of our customer’s crop. The Company also markets various seed products to our customer base. Through the availability of genetically enhanced seed products, we view the market for seed products to be increasingly important. While the dollar sales of seed may not become a dominant

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product line compared to other product lines offered, we believe that providing seed to our farmer customers has been and will be critical to future tie-in of other products being sold. In addition to products purchased and re-marketed in their purchased form, through the Company’s various production facilities and Farmarkets^®, we take various crop inputs and produce upgraded, value added products for sale to our customers. In the case of our Farmarkets^®, services are offered to the customer not only for delivery and application for products to the farmer’s fields creating a service link, differentiating our Company from merely a commodity distributor, but also crop management services in aiding the customer both before the sale and after the crops are in the farmer’s fields. In the case of our East Dubuque, IL facility, natural gas is used in the production of anhydrous ammonia and other upgraded nitrogen-based products. Our East Dubuque, Illinois and Cincinnati, Ohio facilities also manufacture and distribute products to industrial customers as well as products to agriculturally based customers.

During the first six months of 2004, the Company’s market areas in the Southeast and Midwest regions of the United States experienced favorable weather conditions for planting most crops compared to the comparable period in 2003. This weather allowed farmers to complete plantings for the spring planting season in many market areas of the Company without significant interruptions. During the second quarter, dry conditions in portions of the Company’s Southeast markets during the first quarter of 2004 were reversed, as affected areas received needed rain. During the later stage of the second quarter and then in the third quarter, three major hurricanes made landfall along the Gulf shore and eastern shore of Florida, which affected both crops in the field and field work. The individual storm tracks affected areas from southern Alabama and central Florida moving north up along the Appalachian Mountains and East Coast up through the northern Atlantic states, but also affected portions of the middle Ohio Valley. The hurricanes, and as they downgraded to tropical storms, produced storm surge, high winds, and heavy rains producing widespread flooding in many of the affected areas described above. Some areas in the Midwest received moderate amounts of rain in June, which was followed by warm temperatures that spurred the growth of corn. During the fourth quarter, rain curtailed opportunities for the Company’s Farmarket^® operations to sell and apply fertilizer materials that are often applied during the fall season, weather permitting. In response to increasing fertilizer material prices in the wholesale market, sales from the Company’s wholesale sales force increased, although at lower gross margin than what would be achieved from similar sales from the Company’s Farmarkets^®. We believe, based on these factors, that some opportunities for additional fertilizer material sales and associated application revenues have been lost with unfavorable impacts on 2004 operating results.

Subsequent Event

During 2004, the Company entered into negotiations with Rentech Development Corporation (“Rentech”) for the sale of the Company’s East Dubuque, Illinois nitrogen manufacturing facility. On December 10, 2004, a stock purchase agreement for the sale of all issued and outstanding shares of common stock of Royster-Clark Nitrogen, Inc. to Rentech was signed. Rentech was to pay $50 million for the outstanding shares of common stock plus an estimated $13 million for net working capital that would have been subject to adjustment at closing. The closing of the stock purchase agreement was contingent upon the completion of both debt and equity financing and certain administrative requirements being achieved by a prescribed date in addition to customary closing conditions. The Stock Purchase Agreement by and between Rentech Development Corporation and Royster-Clark, Inc., dated as of December 10, 2004 (as amended January 31, 2005, February 17, 2005 and February 28, 2005), has expired and is no longer in effect. Royster-Clark, Inc. and Rentech Development Corporation both intend to jointly pursue the conversion of Royster-Clark Nitrogen, Inc.’s natural gas-fed nitrogen fertilizer plant in East Dubuque, Illinois. The parties plan to continue the study regarding conversion of the plant from the use of natural gas feedstock to coal gasification, an advanced clean coal technology, using Illinois coal.

Recent Developments – Evaluation of an Initial Public Offering

The parent of the Company (RCG) is evaluating an initial public offering of Income Deposit Securities (“IDS”) in Canada to be effected during the second quarter of 2005. Such an offering would require significant changes in the Company’s capital and ownership structure, changes in the senior secured credit facility and the

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retirement of the Company’s current $200 million First Mortgage Notes. Final decision to initiate such an offering has not been made and if such an offering is made there can be no assurance that it will be successful.

Results of Operations

The following table and discussion provide information regarding Royster-Clark, Inc.’s consolidated statement of operations as a percentage of net sales.

Year ended December 31, 2004 compared to year ended December 31, 2003

Net sales.    Royster-Clark’s net sales were $1,071.0 million for 2004 compared to $959.9 million for 2003, an increase of $111.1 million, or 11.6%. The increase in sales primarily resulted from approximately $32.1 million in sales volume increases and $78.5 million in sales price increases in the crop production inputs market. Favorable weather conditions during the spring planting season in most market areas permitted planting to the full extent of farmers’ intentions that allowed increased sales volume through most of the Company’s market areas. However, extensive rain and flooding resulting from three hurricane systems that made land fall on the Florida and Gulf Coast shores during the third quarter in the Company’s Southeastern market areas resulted in sales decreases for the third and fourth quarters which partially offset sales increases discussed above. During the fourth quarter, wet weather restricted access to farmer fields which further decreased sales from the Company’s Farmarket^® network. However, increased sales volumes from the Company’s wholesale channel substantially offset the sales decrease for the fourth quarter. The shift in sales from the Farmarket^® network to the wholesale channel resulted in decreased gross profits from the sales of fertilizer and fertilizer materials as well as service and application revenues. Sales volume increases for the year ended December 31, 2004 were experienced across most product groups except crop protection products which were affected by some market areas shifting to lower cost generic products. The drivers in the price appreciation were higher natural gas cost experienced over the year along with market demand pressure due to increased scheduled exports of phosphates and short supplies of potash during the third and fourth quarters. Sales price appreciation of fertilizer and nitrogen-based products (defined as anhydrous ammonia, nitrogen solution, urea, ammonium nitrate, nitric acid and industrial ammonium nitrate solutions) accounted for approximately $63.6 million of the $78.5 million total price appreciation. Sales prices also increased in various other fertilizer materials. Such price appreciation is highly variable from year to year. Crop protection products experienced decreased sales due to sales price pressure from generic products in the market place.

Gross profit.    Gross profit was $186.8 million for 2004 compared to $182.1 million for 2003, an increase of $4.7 million, or 2.6%. The increase in gross profit was the net of $6.8 million to be expected from the sales volume increases described above which were partially offset by the impact of gross margin reduction from 19.0% last year to 17.4% this year. We believe that this decrease in the gross margin of 1.6% in 2004 was the

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result of a combination of many negative factors including higher fertilizer price levels, rising fertilizer material costs through the planting season, losses incurred in hedging soybean seed acquisition costs of about $1.7 million and, finally, significantly reduced gross profits on crop protection products because of increased movement by growers towards generic products and associated reductions in vendor rebates of about $4.3 million.

Selling, general and administrative expenses.    Selling, general and administrative expenses were $156.7 million for 2004 compared to $157.1 million for 2003, a decrease of $0.4 million, or 0.3%. The decrease in selling, general and administrative expenses consisted of the following major factors:

These decreases were partially offset by the following:

Operating income.    Operating income was $29.2 million for 2004 compared to $23.6 million for 2003, an increase of $5.6 million, or 23.7%, due to the factors described above. Operating income as a percentage of net sales was 2.7% for 2004 compared to 2.5% for 2003, an increase of 0.2%.

Interest expense.    Interest expense was $27.8 million for 2004 compared to $29.5 million for 2003, a decrease of $1.7 million, or 5.8%. The decrease in interest expense was due to lower average levels of borrowings and lower interest rates under the senior secured credit facility (“credit facility”). Average daily borrowings on the senior secured credit facility of $120.8 million in 2004 compared to $126.1 million in 2003 and lower average daily borrowings on a vendor financing note payable of $9.3 million in 2004 compared to 2003 resulted in approximately $0.8 million lower interest expense. Interest expense decreased by approximately $0.9 million due to a lower weighted average rate for borrowings under the credit facility during 2004 of 4.97% compared to 5.60% during 2003, a decrease of 0.63% and lower interest rates paid on interest bearing customer deposits. The lower interest rates paid resulted from the Company’s performance under the various financial ratios and covenants governing the interest rates charged under the current credit facility when compared to the previous credit facility. The weighted average rate for borrowings under the credit facility at December 31, 2004 was 5.27% compared to 4.69% at December 31, 2003, an increase of 0.58%. This increase resulted from increases in market prime rate due to actions by the Federal Reserve Bank.

Income tax expense.    The Company recognized income tax expense of $0.3 million resulting from state income taxes during 2004. This compares to an income tax expense of $15.4 million for the year in 2003, a decrease of $15.1 million. The effective tax rate for 2004 was 23.3% compared to 262.0% for 2003. The

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Company has not recorded income tax expense or benefit for other than these state income taxes subsequent to the second quarter of 2003 when the Company recorded a valuation allowance for the full amount of net deferred tax assets. The Company continues to maintain a valuation allowance for the full amount of net deferred tax assets in accordance with provisions of SFAS No. 109, “Accounting for Income Taxes” as of December 31, 2004. The Company will record no other federal income tax expense or benefit until GAAP requirements for unrestricted recognition of deferred tax assets have been satisfied.

Net income (loss).    Net income was $1.0 million for 2004 compared to a net loss of ($21.3) million for 2003, an increase in net income of $22.3 million, due to the factors described above.

Year ended December 31, 2003 compared to year ended December 31, 2002

Net sales.    Royster-Clark’s net sales were $959.9 million for 2003 compared to $898.1 million for 2002, an increase of $61.8 million, or 6.9%. The increase in sales resulted predominantly from approximately $83.4 million in price appreciation of fertilizer materials, particularly nitrogen-based products, and to a lesser extent, blended and granulated fertilizer, phosphates, potash, seed and other products, during the year. For the most part, this price appreciation is driven by higher costs of input materials, with increased natural gas costs being the primary driver. Such price appreciation is highly variable from year to year.

The eastern third of the country experienced persistent cool, cloudy and wet weather in the spring of 2003 (March through May) which adversely affected the volume of product shipments in several of the Company’s market areas in the Midwest and Southeast and Mid-Atlantic regions. The graphic below illustrates the unusual amounts of precipitation that affected the Company’s markets.

Significant flooding struck Indiana and Ohio in July. In September, Hurricane Isabel struck the North Carolina coast and tracked up through the interior sections of North Carolina, Virginia and Pennsylvania. The result of this level of precipitation was that some farmers switched from planting corn to soybeans, which require less fertilizer and crop protection inputs while other farmers elected not to plant and to file for crop insurance compensation instead. During the fourth quarter, some recovery of sales volumes lost earlier in the year were achieved as weather was more moderate and allowed for field work. A summary of the net increase in sales is shown below:

The impact of sales price appreciation of all products was approximately $83.4 million for the year. Higher sales from price appreciation of ammonia, nitrogen solution and other nitrogen-based products (collectively referred to as “nitrogen products”) was approximately $57.6 million of the $83.4 million. Nitrogen products are

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used in both liquid and dry blended fertilizers and these were also affected by nitrogen price appreciation resulting in approximately $17.8 million in increased revenues. Price appreciation related to other fertilizer materials was approximately $8.0 million.

Sales volume and other decreases of $21.9 million resulted from the following factors:

Gross profit.    Gross profit was $182.1 million for 2003 compared to $181.6 million for 2002, an increase of $0.5 million, or 0.3%. The increase in gross profit resulted predominantly from the various sales volume and pricing factors discussed above. Gross margin was 19.0% for 2003 compared to 20.2% for 2002. Lower gross margin ratio resulted primarily from decreased high gross margin specialty seed sales and related technology licensing revenue that did not recur in 2003.

Selling, general and administrative expenses.    Selling, general and administrative expenses were $157.1 million for 2003 compared to $160.2 million for 2002, a decrease of $3.1 million, or 1.9%. Expense reductions resulted from efforts by management to increase returns. The decrease in selling, general and administrative expenses consisted of the following:

These decreases were partially offset by the following:

Loss on disposal of property, plant and equipment, net.    Loss on sales of fixed assets was $1.4 million in 2003 compared to $1.2 million in 2002. This increase was the result of $0.2 million higher losses of asset sales related to closed or poorly performing Farmarket^® locations.

Operating income.    Operating income was $23.6 million for 2003 compared to $20.2 million 2002, an increase of $3.4 million, or 16.8%, due to the factors described above. Operating income as a percentage of net sales was 2.5% for 2003 compared to 2.3% for 2002, an increase of 0.2%.

Interest expense.    Interest expense was $29.5 million for 2003 compared to $29.3 million for 2002, an increase of $0.2 million, or 0.7%. The increase in interest expense was due to higher average levels of borrowings partially offset by lower interest rates under the senior secured credit facility (credit facility). Average daily borrowings on the senior secured credit facility of $126.1 million in 2003 compared to $116.0 million in 2002 and higher average daily borrowings on a vendor financing note payable of $10.5 million in 2003 compared to 2002 resulted in approximately $1.3 million higher interest expense. The higher average daily borrowings were used primarily to finance higher cost inventory resulting predominantly from higher natural gas prices. Interest expense decreased by approximately $1.1 million due to market rate reductions. Weighted average rate for borrowings under the credit facility during 2003 was 4.69% compared to 4.94% during 2002, a decline of 0.25%.

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Gain on sale of natural gas contracts.    The Company did not experience any gains in 2003 on sales of natural gas contracts compared to a $1.9 million gain in 2002.

Income tax expense.    Income tax expense was $15.4 million for 2003 compared to an income tax benefit of $2.6 million for 2002. The effective tax rate was 262.0% for 2003 compared to 36.5% for 2002. The increase in income tax expense and the effective tax rate was due to establishing a valuation allowance against net deferred tax assets as required by SFAS No. 109, “Accounting for Income Taxes” at the end of the second quarter of 2003. Beginning July 1, 2003 and for future quarters, the Company will not record a federal income tax expense or benefit until GAAP requirements for unrestricted recognition of deferred tax assets have been satisfied.

Net loss.    Net loss was $21.3 million for 2003 compared to $4.6 million for 2002, an increased loss of $16.7 million, due to the factors described above.

Environmental Matters

Our facilities and operations must comply with a variety of federal, state and local environmental laws, regulations and ordinances, including those related to air emissions, water discharges and chemical and hazardous waste management. Laws relating to workplace safety and worker health and safety also govern our operations, primarily the rules of the Occupational Safety and Health Administration and the United States Department of Transportation. We believe that our operations are in compliance in all material respects with current requirements under environmental laws and employee safety laws.

The Company has been identified as a potentially responsible party concerning the release of certain hazardous substances at five locations. While the current law potentially imposes joint and several liability upon each party named as a potentially responsible party, the Company’s contribution to clean up these sites is expected to be limited, given the number of other companies which have also been named as potentially responsible parties and the nature and amount of cleanup involved. A number of the Company’s facilities have been evaluated as having excess nitrates, phosphorous, and pesticides in the surrounding soil or groundwater. In addition, several underground storage tanks have been removed or closed at some facilities and these sites have been evaluated for possible contamination. In total, cleanup of hazardous or potentially hazardous substances has occurred, is being performed or has been planned at approximately 40 sites. At 17 locations, where past releases of fertilizer or other hazardous substances have been documented and corrective actions taken; our environmental consultants or regulatory authorities have concluded that no further action is currently required. The Company would expect no further cleanup activity at these locations. However, the Company can not be assured that further notices from the applicable regulatory authority will not be received or that future cleanup activities may be required of the Company due to the discovery of new environmental conditions or more stringent application of cleanup standards.

In connection with the 1999 acquisitions of Agribusiness and Royster-Clark, the Company obtained indemnities for certain claims related to environmental matters that existed or arose prior to the acquisitions. The indemnities related to Agribusiness are subject to a $4,500 deductible in the aggregate, may not exceed 10% of the purchase price, or a total of $30,000 and certain time limitations. Indemnities related to claims arising out of environmental representations and warranties and claims associated with, arising from or relating to conditions existing prior to April 1999 associated with the real estate purchased expired in April 2004. Indemnities covering other environmental claims associated with, arising from or relating to conditions existing prior to April 1999 on real estate (other than real estate subject to the April 2004 indemnity expiration) formerly owned, leased or operated by the Agribusiness or offsite disposition of contaminants survive indefinitely. The environmental indemnities related to Royster-Clark, Inc. (predecessor company) are subject to a deductible of $2,000, an overall cap of $5,000 on all indemnities expired in April 2004. In addition, Royster-Clark, Inc. (predecessor company) had obtained indemnities from Lebanon Chemical Corporation (LCC) for certain claims related to environmental matters that existed at sites acquired from LCC in December 1998. The Company has a claim pending under the indemnities from LCC. Other than that claim, the indemnity has expired. The Company also obtained indemnities from the former stockholder of Alliance Agronomic, Inc. for environmental conditions identified as

22

of the date of acquisition. The indemnification remains in effect until notice is received requiring no further actions are received or after a two-year period of testing with no reportable results in deterioration of water quality.

The Company has recorded environmental liabilities at December 31, 2004 and 2003 for the estimated cost of cleanup efforts of identified contamination or site characterization, which total $2,807 and $3,105, respectively, and are included in other long-term liabilities in the accompanying consolidated balance sheets. Actual cash expenditures during the years ended December 31, 2004, 2003 and 2002 were $298, $232 and $222, respectively. These liabilities do not take into account any claims for recoveries from insurance or third parties and are not discounted. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainty in evaluating environmental exposures.

Liquidity and Capital Resources

The Company maintains a senior secured credit facility (“credit facility”) with a consortium of banks that was negotiated in December 2003. The credit facility provides for borrowings up to $225,000, subject to certain borrowing base limitations. This facility includes up to $20,000 for letters of credit of which there were letters of credit totaling $11,042 outstanding as of December 31, 2004. Borrowings under the credit facility bear interest at LIBOR or prime interest rate plus a spread based on the Company’s leverage ratios. The weighted average interest rate on the credit facilities was 5.27% at December 31, 2004 and 4.69% at December 31, 2003. The credit facility expires in December 2006. The credit facility is secured by (1) a lien on all accounts receivable, inventory and certain other assets of the Company and its subsidiaries (except for the collateral securing the First Mortgage Notes), (2) all of the common stock of the Company, and (3) all of the common stock of the Company’s subsidiaries, except for the equity interests of certain subsidiaries pledged to secure the First Mortgage Notes. At December 31, 2004, the borrowing base provisions under the credit facility supported a gross borrowing availability of $182,679. Amounts outstanding under the credit facilities totaled $125,224 and $142,979 at December 31, 2004 and 2003, respectively.

The credit facility is subject to certain covenants, including limitations on additional indebtedness, limitations on liens, limitations on capital expenditures and maintenance of certain required financial ratios. The credit facility also restricts the payment of dividends by the Company to RCG. Dividends are restricted to (1) amounts necessary to enable RCG to pay overhead expenses in an amount not to exceed $2,000; (2) amounts necessary to enable RCG to pay income and other taxes; and (3) $1,000 over the life of the agreement for the purpose of repurchasing, redeeming or otherwise acquiring and retiring any capital stock, stock warrants, stock options or other rights to acquire capital stock of RCG. Dividends made under the third provision are further restricted in that such dividends may not be made if a default has occurred (or would occur if the dividend payments were made), or such dividend payments would result in noncompliance with any financial covenants. The Company paid a dividend to RCG of $100, $142 and $62 for the years ended December 31, 2004, 2003 and 2002, respectively to fund its operating expenses.

As of December 31, 2004, the Company was in violation of the minimum earnings before interest, taxes, depreciation, amortization and losses on the disposal or write-down of fixed and other non-current assets (“EBITDA”) covenant of $58,000. In March 2005, the consortium of lenders formally waived this violation and amended the minimum EBITDA and Tangible Net Worth covenants for the remaining term of the credit facility. The Company expects to meet the revised covenants and continue to meet the other covenants of the credit facility; however, there can be no guarantee that it will be successful.

While there are various covenants and other restrictions with which we must comply, the Company believes that this replacement facility provides adequate operating effectiveness and flexibility for the Company in the future. We believe that cash generated from operations and borrowings available under the credit facility will be sufficient to meet our operating and capital needs in the foreseeable future.

During 2004, the Company incurred an additional $144 of deferred financing costs in connection with the credit facility that was established in December 2003. These costs were combined with $3,605 of deferred financing costs incurred during 2003 in connection with the establishment of the credit facility and unamortized deferred financing costs of $419 associated with the former credit facility for a total of $4,168 and are being amortized on a straight-line basis over the life of the credit facility.

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Net cash provided by operating activities for the year ended December 31, 2004 was $3.3 million compared to $28.4 million for the same period in 2003, a decrease in net cash provided of $25.1 million. The most significant component of decreased cash provided by operating activities was movement in operating assets and liabilities of $28.3 million reflecting mainly higher price levels of fertilizer materials in the fertilizer industry. Non-cash adjustments to reconcile net income (loss) to cash provided by operating activities provided $19.2 million less cash in 2004 compared to 2003, principally because of $16.5 million in deferred tax adjustments in the first six months of 2003. These decreases in cash provided were partially offset by cash provided by increased net income of $22.4 million. Inventories, trade accounts receivable and other receivables were the largest components of increases in operating assets and liabilities which used $38.7 million more cash in 2004 compared to 2003. Changes in accrued expenses, other assets, accounts payable and other operating assets and liabilities made up the balance of the change in operating assets and liabilities. At December 31 of any given year there is a large degree of variability in cash flows from operations over which the Company may not have a great deal of control. The overall trend of nitrogen prices, resulting in large part to changes in natural gas costs, will influence customers whether or not they elect to take advantage to Company programs for prepayment. While changes in customer prepayment is not classified as cash provided by or used in operating activity, generally, before there is a customer deposit, the customer first pays off their trade account receivable leading to cash provided by operating activities. Changes in nitrogen prices will also affect the inventory investments the Company must make even though the physical volume may be roughly constant from year to year. At December 31, changes in other receivables are primarily driven by the timing of vendor rebate receipts. Most vendor rebate programs settle up near the end of the year. As a result, historically, receipts have straddled very closely around December 31, sometimes shortly before and sometimes shortly after. During 2004, the Company continued its concerted effort to collect the vendor rebates prior to December 31, although we can not assure that such attempts will be effective each year.

Net cash used in investing activities amounted to $8.2 million in 2004 compared to $9.7 million in 2003, a decrease of $1.5 million. The decrease in net cash used in investing activities resulted primarily from decreased capital expenditures of $1.4 million in 2004. Capital expenditures were $9.7 million for the year ended December 31, 2004 compared with $11.1 million for the year ended December 31, 2003. These capital expenditures were primarily for facility improvements, machinery and equipment replacement, and environmental improvement projects. We estimate total capital expenditures, excluding acquisitions, for 2005 of approximately $10.0 million.

Net cash provided by financing activities was $4.4 million in 2004 compared to net cash used in financing activities of $18.8 million in 2003, an increase of $23.2 million. The increased in net cash provided by financing activities resulted from $22.2 million less cash used for payments on vendor financing notes, $15.1 million more cash from customer deposits and $3.6 million less cash used for payment of deferred financing costs. These increases in cash provided were partially offset primarily by net higher payments to the credit facility of $17.6 million in 2004 when compared to the same period in 2003.

Net working capital at December 31, 2004 totaled $206.3 million versus $204.7 million at December 31, 2003, an increase of $1.6 million, or 0.8%. Working capital changes are summarized in the table below.

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This increase in working capital resulted primarily from increased inventory and decreased accounts payable. Increased inventory was due to increased costs of inventory on hand resulting from higher natural gas costs as well as increased tons of inventories on hand to assure availability for the spring planting season for various products. The Company has increased its inventory levels in the belief that it will experience shortages or difficulty in obtaining appropriate staging for the spring planting season. Vendors have been reducing the use of extended terms and this has resulted in a decrease in the amount of accounts payable. These increases in working capital have been partially offset by decreased other receivables and increased customer deposits. The decrease in other receivables resulted from the earlier cash collection of vendor rebates in other receivables in 2004 when compared to 2003. We believe that the increased customer deposits reflect both the improved liquidity of the Company’s customers and their continuing confidence in the Company as a supplier. Indications from Green Markets^© (a publication reporting on fertilizer industry developments) suggest that prices of various products will continue to rise and potentially be in restricted supply in some markets due to production or transportation issues. This assessment appears to being believed by some of our customers. Accordingly, such customers are taking advantage of locking in supplies and prices and tax benefits in making these deposits by December 31. While some margin may be lost in accepting customer deposits for prepay contracts, we believe competitive market conditions require the continuing participation in such programs.

Obligations and Commitments

The following tables summarize our material contractual obligations and commitments, including both on- and off-balance sheet arrangements (in millions) at December 31, 2004:

Long-term debt obligations.    Long-term debt obligations include the Company’s 10 ¹/4% First Mortgage Notes, the senior secured credit facility and a note payable.

First Mortgage Notes.    The Company issued $200 million of 10 ¹/4% First Mortgage Notes due April 2009 to partially finance the acquisition of Agribusiness in 1999. The First Mortgage Notes bear interest at 10.25% payable semi-annually in arrears. The First Mortgage Notes are secured by 17 principal properties, related fixtures and equipment and other related assets and a pledge of equity of certain subsidiaries. RCG and certain subsidiaries also unconditionally guarantee the First Mortgage Notes. The First Mortgage Notes were not redeemable prior to April 1, 2004 except in the case of a change of control. Thereafter, the First Mortgage Notes are redeemable in whole or in part, at the Company’s option, at a 5.125% premium, declining ratably to par on April 1, 2007, plus accrued and unpaid interest, if any, to the date of redemption.

The First Mortgage Notes are subject to certain covenants, including restrictions on dividend payments and retirement of equity interests, issuance of new indebtedness or preferred stock and certain transactions with affiliates. Dividends may not be made if default has occurred (or would occur if the dividend payment were made), or such dividend payments would result in noncompliance with any financial covenants. Dividend payments are further restricted in amount to at most 50% of consolidated net income of the Company from the date of origination of the First Mortgage Notes to the end of the most recently completed fiscal quarter. Subject to certain limitations, dividends or other payments may be permitted for certain equity interest transactions, reimbursement of expenses incurred by RCG in its capacity as a holding company that are attributed to the operations of the Company and other limited transactions.

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Senior secured credit facility.    The Company maintains a senior secured credit facility (credit facility) that provides for borrowings up to $225.0 million, subject to certain borrowing base limitations as of December 31, 2004. This facility includes up to $20,000 for letters of credit. Borrowings under the credit facility bear interest at LIBOR or prime interest rate plus a spread based on the Company’s leverage ratios. The credit facility expires in December 2006. The credit facility is secured by (1) a lien on all accounts receivable, inventory and certain other assets of the Company and its subsidiaries (except for the collateral securing the First Mortgage Notes), (2) all of the common stock of the Company, and (3) all of the common stock of the Company’s subsidiaries, except for the equity interests of certain subsidiaries pledged to secure the First Mortgage Notes.

The credit facility is subject to certain covenants, including limitations on additional indebtedness, limitations on liens, limitations on capital expenditures, maintenance of certain required financial ratios and minimums of EBITDA generation. The credit facility also restricts the payment of dividends by the Company to RCG. Dividends are restricted to (1) amounts necessary to enable RCG to pay overhead expenses in an amount not to exceed $2.0 million annually; (2) amounts necessary to enable RCG to pay income and other taxes; and (3) $1.0 million over the life of the agreement for the purpose of repurchasing, redeeming or otherwise acquiring and retiring any capital stock, stock warrants, stock options or other rights to acquire capital stock of RCG. Dividends made under the third provision are further restricted in that such dividends may not be made if a default has occurred (or would occur if the dividend payment were made), or such dividend payments would result in noncompliance with any financial covenants.

Note payable.    The note payable was incurred for the purchase of various property, plant and equipment. The remaining principal balance is $0.1 million with an interest rate of 10.3%. The note does not allow for prepayment.

Operating leases.    The Company leases various types of equipment, office and other facilities and rail cars under non-cancelable operating leases whose term’s range from less than one year to less than six years. The expiration of current lease terms do not occur later than 2010, however, the leases provide for lease extensions. The most significant portion of the operating leases relate to equipment used in the application of crop inputs to farmer’s fields and equipment used by support staff at our Farmarket^® locations.

Purchase obligations for materials.    The Company has commitments to purchase various other fertilizer materials for resale or for use in the manufacture of other blended or mixed fertilizers. The Company also has purchase commitments for natural gas for use in the manufacture of anhydrous ammonia at our East Dubuque, IL facility. These commitments only comprise a portion of the facility’s natural gas requirements which are fulfilled through open market purchases each month. We believe that sufficient natural gas supplies can be economically obtained through open market purchases at the current time. We monitor the natural gas markets and should our perceptions alter, we may enter into purchase commitments at that time. The amount presented in the table above for purchase obligations is for company-wide purchases of selected materials. We do not aggregate open purchase orders executed in the normal course of business by each of our operating locations and such purchase orders are therefore not included in the table.

The Company also has commitments in connection with the acquisition of Agribusiness in 1999, which the Company entered into a ten-year supply agreement with IMC Kalium Ltd. (Kalium) and IMC-Agrico Company (Agrico), both of which are subsidiaries of IMC Global. Under the terms of the supply agreement, the Company is required to purchase (and Agrico and Kalium are required to supply) certain products in an amount equal to its estimated normal business requirements of the former Agribusiness locations. The purchase prices and quantities of the products covered by the agreement are determined by market forces. The agreement automatically renews for subsequent periods of five years unless otherwise canceled by either party. In addition, the agreement specifies remedies available to the parties in the event of noncompliance, which include compensatory damages in the event of a failure to purchase (or supply) the required quantities of the covered products. Purchases under this contract were well in excess of minimum requirements and exceeded $100 million during 2004. We expect to purchase quantities of materials above the prescribed minimums under this agreement during 2005.

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In January 2004, IMC Global announced plans for a merger with Cargill Crop Nutrition. The merger was completed in October 2004. Based on our existing contractual relationship and the significant volume of purchases that we make, we expect to maintain a positive relationship with the surviving company; however, should adverse changes occur in the relationship we would expect to be able to procure the required materials from other suppliers.

Customer deposits.    The Company accepts both interest bearing and non-interest bearing customer deposits. Customer deposits are refundable upon demand either in cash or product. Interest rates paid on customer accounts vary based on economic conditions and are posted at the locations where the Company accepts customer deposits. Deposits accepted in anticipation of repayment with product are typically repaid within a year.

Other long-term liabilities.    Amounts shown consist primarily of certain contractual liabilities incurred in connection with a patent and technology license and a terminated employee contract which have been recorded on our December 31, 2004 balance sheet. The Company signed contracts in 2002, which provided an exclusive license for use of certain patents and intellectual property from the owners over a period of time, subject to extensions. The contracts prescribed payments over a four-year period. The Company has an agreement to pay less than $0.1 million to one former employee severance benefits under a separation agreement within the next year. The table does not include our environmental liabilities, long-term disability accruals, and accruals for self-insurance losses and defined benefit pension and other post-retirement plans because it is not certain when these liabilities will become due. Future contributions to the defined benefit pension plan will be dependant upon pending legislation, future changes in discount rates and the earnings performance of the plan assets. We have made no contributions nor were we required to make contributions to the defined benefit pension plan in 2004 or 2003.

We expect that all of our cash sources from operations and our credit facility will be sufficient while our current credit facility is in place, to meet our obligations and commitments described above. We are not aware of any material trend, uncertainty related to cash flow, capital resources, capital requirements or liquidity that would prevent us having sufficient cash resources to operate our current business.

Contingent Obligations

Employment contracts.    The Company has employment contracts with certain members of management. These employment agreements are terminable by the Company with or without cause. In the event that the employment agreements are terminated without cause and provided that executives comply with the confidentiality and non-competition covenants, they will be entitled to receive all payments as defined in the respective agreements. The contracts extended through April 2004 with an automatic one-year extension thereafter unless notice of intent not to renew is given, either by the Company or by the executive. If termination without cause had occurred as of December 31, 2004, the Company would have been required to pay approximately $1.9 million to satisfy its obligations.

Letters of credit.    The Company maintains letters of credit for various types of insurance coverage, leases and other needs. The letters of credit generally have a one-year maturity and are on an evergreen renewing basis. As of December 31, 2004, the Company has $11.0 million of letters of credit outstanding.

Pension Obligations

As of December 31, 2004, our defined pension obligations exceed the fair value of plan assets by $1.1 million, up from $0.7 million as of December 31, 2003. The increase in under-funded status was due primarily to actual returns on plan assets not exceeding actuarial losses and interest and service costs. In 2004, we recorded an increase to the minimum pension liability and other comprehensive loss of $0.4 million.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition, results of operations and cash flows are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted

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accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate the judgments and estimates underlying all of our accounting policies, including those related to inventories, allowance for doubtful accounts, rebate receivables, impairment of long-lived assets, goodwill, deferred tax valuation allowances, restructuring reserves and contingencies and litigation. We base our estimates on historical experience and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Materially different results in the amount and timing of our actual results for any period could occur if our management made different judgments or utilized different estimates.

The U.S. Securities and Exchange Commission has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and which require our most difficult, complex or subjective judgments or estimates. Based on this definition, we believe our critical accounting policies include the policies of inventory valuation, allowance for doubtful accounts, rebate receivables, impairment of long-lived assets, goodwill and deferred taxes. For all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies

Inventory Valuation

We value our inventories at the lower of cost or market using the average cost method. To properly reflect our inventories at the lower of cost or market, we perform an analysis quarterly to determine whether an allowance for obsolescence or market declines is required. Our analysis considers current market selling prices for our products, historical quantities sold and quantities on hand. Historically, our allowances for obsolescence and market declines have not been significant.

We perform a full physical count of our inventory each year on September 30. For periods before and after the physical count we estimate and accrue for inventory shrinkage. Our accrual for shrink is based on the actual historical shrink results of our most recent physical inventory, adjusted as necessary for economic and market conditions. We have not experienced significant fluctuations in historical shrink rates at our facilities.

Allowance for Doubtful Accounts

Our estimate of the allowance for uncollectible receivables is based on a risk-based analysis of historical write-offs, current sales levels and sales terms and the age of our receivables. Substantially all of our customers are involved in the agricultural industry, which is influenced by a variety of factors which are out of our control, including weather conditions, government policy and regulation and world economic conditions, among others. As a result, we continuously evaluate our aged receivables for collection risk. We have not experienced significant changes in the estimate of our allowance for uncollectible receivables in the past.

Rebate Receivables

Rebates are received from crop protection products, seed and raw material vendors, based on programs sponsored by the vendors. The programs vary based on product type and specific vendor practice. More than 75% of the rebates earned are from crop protection product vendors. The majority of the rebate programs run on a crop year basis, typically from October 1^st to September 30^th, although other annual periods are sometimes utilized. The majority of the rebates are earned based on the sales a dealer generates of a vendor’s product in a given crop year. The rebate accrual booked monthly is based on actual sales and the use of a reasonably estimable rebate percentage derived from binding arrangements so long as the receipt of such payment is deemed probable. Most rebates are settled and received during our fourth quarter, although some programs settle and payments not are received until our first quarter. To the extent that programs can not meet the conditions of: 1) resulting from a binding arrangement, 2) payments under the arrangement are probable and 3) the amount is reasonably estimable, earnings will be recorded when payment is received, which will typically be during our

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fourth quarter. Most of our rebate programs meet the conditions set forth in EITF Issue 02-16, “Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor.” However, we expect higher income during the fourth quarter for rebate programs that do not meet the requirements of EITF Issue 02-16 resulting from lower income being recorded during the first three fiscal quarters.

Impairment of Long-Lived Assets

We assess the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based upon an estimate of future undiscounted cash flows. Our evaluation is performed by location. Factors we consider that could trigger an impairment review include the following:

When we determine that the carrying value of a long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure impairment based on the difference between an asset’s carrying value and an estimate of fair value, which may be determined based upon quotes or projected discounted cash flows.

Goodwill

Goodwill is reviewed annually or sooner if changes in circumstances indicate the carrying value may not be recoverable under the provisions of SFAS No. 142 “Goodwill and Other Intangible Assets.” Fair values are estimated based upon future discounted cash flows and (or) other market valuation techniques. If actual cash flows or cost of capital estimates change, we may have to record impairment charges. The key variables that we must estimate include assumptions regarding future sales volume, prices and other economic factors. Significant management judgment is involved in estimating these variables, and they include inherent uncertainties since they are forecasting future events. If such assets were considered impaired, they would be written down to fair value as appropriate and could be material to the Company’s results of operations.

Deferred Income Tax Assets

Deferred tax assets are reviewed annually for recoverability using the same forecasts used for the evaluation of the fair value of goodwill described above. Projections of future revenues use key variables that we must estimate and include assumptions regarding future sales volume, prices and other economic factors. Significant management judgment is involved in estimating these variables, and they include inherent uncertainties since we are forecasting future events. We have had unprofitable operations for four of the last five years. These losses have generated a federal tax net operating loss, or NOL, carryforwards of approximately $48.9 million as of December 31, 2004. Generally accepted accounting principles require that we record a valuation allowance against the deferred tax assets if it is “more likely than not” that we will not be able to utilize it to offset future taxes. In June 2003, as a result of the Company’s cumulative losses incurred in recent years and the lower than expected income for the second quarter, the Company could not satisfy the requirement under generally accepted accounting principles that it was “more likely than not” that we will be able to utilize it to offset future taxes. As a result, the Company recorded a valuation allowance for the full amount of the net deferred tax assets at June 30, 2003. Beginning July 1, 2003 and for future quarters, the Company will not record a federal income tax expense or benefit until GAAP requirements for unrestricted recognition of deferred tax assets have been satisfied.

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151 “Inventory Costs – an amendment of ARB No. 43, Chapter 4”. Statement No. 151 requires that certain abnormal costs

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associated with the manufacturing, freight, and handling costs associated with inventory be charged to current operations in the period in which they are incurred. Our adoption of SFAS No. 151 is not expected to have a material impact on our financial position or results of operations.

In December 2004 the FASB issued Statement No. 123 (revised 2004), “Share Based Payment” (“SFAS No. 123R”), which is a revision of Statement of Financial Accounting Standard (“SFAS”) No. 123. SFAS No. 123R supersedes APB No. 25 and amends SFAS No. 95, “Statement of Cash Flows.” Under SFAS No. 123R, companies must calculate and record in the income statement the cost of equity instruments, such as stock options, awarded to employees for services received; pro forma disclosure is no longer permitted. The cost of the equity instruments is to be measured based on fair value of the instruments on the date they are granted (with certain exceptions) and is required to be recognized over the period during which the employees are required to provide services in exchange for the equity instruments. SFAS No. 123R provides two alternatives for adoption: (1) a “modified prospective” method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards outstanding as of the effective date; or (2) a “modified retrospective” method which follows the approach in the “modified prospective” method, but also permits entities to restate prior periods to record compensation cost calculated under SFAS No. 123 for the pro forma disclosure. The statement is effective in the first interim or annual reporting period beginning after June 15, 2005. Adoption of SFAS 123R is not expected to have a material effect on our financial position and results of operations.

In December 2004 the FASB issued SFAS No. 153 “Exchanges of Nonmonetary Assets – An Amendment of APB Opinion No. 29.” SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 is to be applied prospectively for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. Our adoption of SFAS No. 153 is not expected to have a material impact on our financial position or results of operations.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to various market risks, including commodity price risk and interest rate risk. The Company has entered into limited commodity hedging activities with respect to its grain and seed purchases. The majority of these contracts settle in cash. Such settlements have not had a significant effect on liquidity in the past, nor are they expected to be significant in the future. While, we do not anticipate initiating any significant hedging activities, our credit facility provides the Company with flexibility with which to consider hedging activities in natural gas, interest rates or expanded use in seed and grain. We continue to evaluate the possibilities for hedging to manage the volatility associated with various aspects of our business. We do not use derivatives for speculative or trading purposes.

Commodity Price Risk

The Company is exposed to market risk due to changes in natural gas prices. Natural gas is a raw material used in the production of various nitrogen-based products that the Company either manufactures at its East Dubuque facility or purchases from vendors. Market prices of nitrogen-based products are affected by changes in natural gas prices as well as supply and demand and other factors. As a normal course of business, the Company purchases nitrogen-based products during the winter and early spring to supply its needs during the high sales volume spring season. Nitrogen-based inventory remaining at the end of the spring season will be subject to market risk due to changes in natural gas prices and supply and demand. Currently, the Company purchases natural gas for use in its East Dubuque facility on the spot market, but has also used short-term, fixed supply, fixed price purchase contracts which will lock in pricing for a portion of its natural gas requirements through the winter months which have demonstrated the highest degree of volatility. Notwithstanding these purchase contracts, the Company is exposed to significant, although not excessive market risk. There has been a generally increasing trend in natural gas prices in the last three years due to various supply factors, including the increasing

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overall demand for natural gas from industrial users, which is affected, in part, by the general conditions of the United States economy, and other factors. Seasonal fluctuations exist within each year resulting from various supply and demand factors, such as the severity of winters affecting consumer consumption for heating, summers affecting industrial demand by utilities for electrical generation, among other factors. Changes in levels of natural gas prices and market prices of nitrogen-based products can materially affect the Company’s financial position and results of operations. The Company has experienced no difficulties in securing supplies of natural gas, however, natural gas is purchased at market prices and such purchases are subject to price volatility.

The Company engages in limited commodity hedging activities with respect to its grain and seed purchases. Grain and seed hedging activities are marked to market every month and price fluctuations are reflected in the consolidated statements of operations.

Interest Rate Risk

The Company is also exposed to changes in interest rates. The interest rates that we pay for borrowings under our credit facility are based primarily on the LIBOR rate of interest charged by the agent bank under our credit facility. Our operating results will be impacted by changes in interest rates. We estimate that based on an annual average balance on our credit facility that each 1% change in market interest rate will impact before tax earnings by approximately $1.2 million. Our First Mortgage Notes bear interest at a fixed rate of 10 ¹/4%. Some of our customer deposits also bear interest at a fixed rate, which is established on an annual basis at the beginning of each farming season based on prevailing market rates for similar programs in each of the regions in which we operate.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See Index to Consolidated Financial Statements which appears on page F-1 herein.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.    CONTROLS AND PROCEDURES.

(a)    Evaluation of disclosure controls and procedures.

We maintain a system of controls and procedures designed to provide reasonable assurance on the reliability of our financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The system is supported by formal policies and procedures. Appropriate actions are taken to address significant control deficiencies and other opportunities for improving the system as they are identified. However, no cost-effective internal control system will preclude all errors and irregularities, and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

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(b)    Changes in internal controls.

There were no significant changes in the Company’s internal controls or in other factors over financial reporting or in other factors during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION.

The Company has no information required to be disclosed in a report on Form 8-K during the fourth quarter of the year covered by this report on Form 10-K that has not otherwise been reported on a Form 8-K other than what is included as Exhibit 10.23 of Item 15, Exhibits and Financial Statement Schedules.

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PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table provides information about our executive officers and directors.

We have no separate audit, nominating or compensation committees, all of the functions which are performed by the Board of Directors as a whole.

Pursuant to the provisions of the Sarbanes-Oxley Act of 2002, which was enacted into law on July 30, 2002, the SEC promulgated rules requiring companies to disclose whether or not at least one member of the audit committee of the Board of Directors is a “financial expert” as defined in such rules, and, if not, why. For unlisted companies such as Royster-Clark, which are not required to have audit committees, the obligatory disclosure applies to the entire Board of Directors.

The Company, which is a closely-held concern and which, pursuant to the terms of the Indenture for its 10 ¹/4% First Mortgage Notes Due 2009, files its periodic reports with the SEC voluntarily, does not have separately-designated standing nominating or audit committees. Instead, the entire Board performs those functions normally undertaken by such committees, including those functions required to be performed by audit committees by the Sarbanes-Oxley Act and SEC rules promulgated thereunder.

Under rules adopted by the SEC, none of the Company’s current Board members meets the criteria set forth in such rules qualifying them as a “financial expert”, which is basically limited to those who have prepared or audited comparable public company financial statements. While it might be possible to recruit a person who meets these qualifications, the Board has determined that in order to fulfill all the functions of our Board, each member of our Board should meet all the criteria that have been established by our Board for Board membership, and it is not in the best interests of our Company to nominate as a director someone who does not have all the experience, attributes and qualifications we seek. Our Board consists of three non-employee directors, each of whom has been nominated and elected based on the Board’s and our shareholders’ determination that they are fully qualified to monitor the performance of management, the public disclosures by the Company of its financial condition and performance, performance of management, our internal accounting operations and our independent auditors. In addition, our non-executive directors have the ability on their own to retain independent accountants or other consultants whenever they deem it appropriate.

FRANCIS P. JENKINS, JR. has served as the Chairman of the Board and Chief Executive Officer of Royster-Clark, and has been Chairman and Chief Executive Officer of Royster-Clark Group since January 1999. From 1994 to 1999, Mr. Jenkins served as Chairman of the Board and Chief Executive Officer of Royster-Clark. From 1988 until 1994, Mr. Jenkins served in various capacities on the board of directors for Royster-Clark. From 1988 to 1992, he served as Chairman of the Board of Royster-Clark. From 1979 to 1988, Mr. Jenkins was employed by The First Boston Corporation where he was one of the four members of the Executive Committee, co-managed First Boston’s Equity Capital Investments and was the Principal Financial Officer. Prior to that position, he had responsibility for all security sales, trading and research, as well as holding positions as a Managing Director and a member of the Management Committee. Mr. Jenkins currently serves on the Board of

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Trustees of Babson College, as the Chairman of its Alumni and Development Committee and as a member of the Executive Committee of the Board.

G. KENNETH MOSHENEK is the President and Chief Operating Officer of Royster-Clark. Mr. Moshenek has served as President of Royster-Clark since December 1997, has served as Chief Operating Officer since 1995 and was a director from August 1997 until April 1999. From August 1997 until April 1999 he served as Chief Investment Officer of Royster-Clark. Prior to that he held several positions during his tenure with Royster-Clark including Senior Vice President of Sales and Marketing, from September 1994 until July 1995, Vice President and Divisional Sales Manager from 1992 until September 1994 and a Division Manager from 1990 to 1992. Mr. Moshenek joined W.S. Clark & Sons, Inc. in 1981. Mr. Moshenek has been involved in the fertilizer industry since 1976. Mr. Moshenek currently serves on the Board of Directors of The Fertilizer Institute, is a member of the Board’s Executive Committee and serves as chairman of the Distribution Council. He also serves as a member of the Board of Directors of the Foundation for Agronomic Research.

PAUL M. MURPHY is the Chief Financial Officer of Royster-Clark. He was appointed to that position in August 2002. Mr. Murphy has served in several capacities with increasing responsibilities with Royster-Clark since 1992 including Managing Director - Financial Planning (1999-2002), Vice President - - Planning and Analysis and Secretary (1996-1999) and earlier as a Divisional Controller and in other administrative capacities. Mr. Murphy is a Phi Beta Kappa graduate of Dartmouth College and holds advanced degrees from Harvard University and from the University of Madrid, Spain. He began his business career in 1969 at General Electric where, after graduation from the Financial Management Program and service on the corporate audit staff, he rose to become the lead finance and accounting manager for GE’s Information Services business in Europe. In 1975 Mr. Murphy was awarded the Certificate in Management Accounting (CMA) by the Institute of Management Accounting. From 1981 until 1983, Mr. Murphy served as European Controller for Mohawk Data Sciences based in Brussels and from 1983 through 1987 he was CFO at XTEC Computer Systems based at Eindhoven in the Netherlands. From 1987 until he joined Royster-Clark in 1992, Mr. Murphy worked as a free-lance consultant and software developer and served as the CFO at a start-up specialty food company.

JOEL F. DUNBAR is the Managing Director, Controller. In December 2003, Mr. Dunbar was appointed to the position of Vice President and Assistant Secretary for the Company. Mr. Dunbar continues to serve as Managing Director, Controller since his promotion to that position in December 2002. From 1999 to 2002 Mr. Dunbar served as controller for Royster-Clark. Prior to joining Royster-Clark, Mr. Dunbar served as Controller for Agribusiness from 1992 to 1999. Prior to 1992, he has held various management and accounting positions with Agribusiness and its predecessors. Mr. Dunbar began his career in public accounting with Arthur Andersen.

RANDOLPH G. ABOOD is a Director of Royster-Clark and has been a Director of Royster-Clark Group since January 1999. Mr. Abood is a self-employed attorney, and from 1994 until 1998, Mr. Abood served as General Counsel for Royster-Clark. From 1976 until 1996, Mr. Abood practiced tax law with the firm of Satterlee Stephens Burke & Burke LLC and its predecessor firm. Mr. Abood is also the manager and owner of The Ninigret Group, L.C., a Utah limited liability company that develops, constructs and co-owns real estate, including Ninigret Park, a business park in Salt Lake City. Mr. Abood also serves on the Board of Directors of Equity Oil Company, which stock is traded through NASDAQ, and is President and Director of the Cliff Club Owners Corporation of Snowbird, Utah.

CHARLES E. CORPENING is a Director of Royster-Clark and has been a Director of Royster-Clark Group since March 2000. Mr. Corpening is a Partner with CitiGroup Venture Capital Equity Partners, L. P. since 2001. He has also serves as vice president of Citicorp Venture Capital Ltd. (“CVC”) since 1994. Prior to joining CVC, Mr. Corpening was with Roundtree Capital Corporation, a private investment firm, the Rockefeller Group and the investment-banking department of Paine Webber, Inc. Mr. Corpening serves on the board of directors of ERICO Holding Company, Fasten Tech Inc. and MSX International, Inc.

THOMAS F. McWILLIAMS is a Director of Royster-Clark and has been a Director of Royster-Clark Group since January 1999. Mr. McWilliams is a Managing Director of Citicorp Venture Capital Ltd. and has served on

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its Investment Committee since 1984. He serves on the Boards of Euramax International, Inc., WCI Communities, Inc. and MMI Products, Inc., along with various other companies which have no public securities outstanding.

Other key employees include:

MAX BAER is the Senior Managing Director- International. From July 2001 to the summer of 2002 Mr. Baer served as Senior Managing Director-Materials Purchasing. From 1999 to July 2001 he was served as Managing Director-Materials Purchasing. From 1995 until 1999, Mr. Baer served as Vice President of Materials Purchasing for Royster-Clark and as a director of Royster-Clark from 1995 to 1999. From 1992 until 1995, he served as Chief Purchasing Officer where he assumed leadership of Royster-Clark’s fertilizer materials procurement and conducted its international trading activities. Mr. Baer has worked in the fertilizer industry for over 45 years.

KENNETH W. CARTER is the Managing Director of Human Resources. From 1997 to 1999, Mr. Carter served as the Vice President of Human Resources for Agribusiness. Prior to joining Agribusiness, he served as Vice President of Human Resources from 1994 until 1997 for Sunbeam Outdoor Products and from 1990 to 1994 served as the Vice President of Human Resources for Material Handling Systems, Inc. (a division of Litton Industries, Inc.).

JOHN DIESCH is the Managing Director, Nitrogen Division. From 1998 to 1999, Mr. Diesch served as the Vice President and General Manager of Nitrogen Production and Distribution for Agribusiness. He also served as the Manager for the Cincinnati, Ohio Nitrogen Plant and Nitrogen Terminals from 1996 until 1998 and joined Vigoro Industries, Inc. in 1991 as the Cincinnati, Ohio Plant Manager. Prior to joining Vigoro Industries, Inc., Mr. Diesch held several positions in the chemical industry, including Plant Manager, Production Manager and Process Engineer. Mr. Diesch currently as vice chairman of the board of directors of the Dubuque Area Labor Management Council and is also a board member of the Dubuque Area Chamber of Commerce.

GARY L. FLOYD is the Managing Director of Crop Protection and Branded Seed. Mr. Floyd has been a Managing Director since 1999. From 1992 to 1999, Mr. Floyd managed Royster-Clark’s Crop Protection business and served as the Vice President of Crop Protection and Seed from 1997 to 1999. He also served as a District Manager from 1990 to 1992 and Manager of Planning and Development, Crop Protection from 1987 until 1990. Mr. Floyd began his career in the fertilizer and crop protection products industry in 1980. Mr. Floyd is Past President of the North Carolina Crop Protection Association and a member of the Southern Crop Production Association and the Midwest Crop Life Association.

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MICHAEL J. GALVIN has served as the Managing Director of Credit and Farm Financing since 1999. From 1996 until 1999, Mr. Galvin served as Vice President and General Credit Manager of Royster-Clark. Prior to 1996, Mr. Galvin was a Vice President and Regional Market Manager for Centura Bank. Mr. Galvin began his career in 1985 as a national bank examiner with the Comptroller of the Currency’s office. He is currently a member of the National Association of Credit Managers Atlantic Agricultural Conference.

LARRY D. GRAHAM has the Managing Director of Rainbow Production since 1999. From 1996 until 1999, Mr. Graham was employed by Agribusiness first serving as Senior Vice President with the Rainbow Division and then Senior Vice President—Sales. From 1994 until 1996, he served as General Manager—Rainbow. Prior to 1994, he has served in various sales and sales management positions of increasing responsibilities with IMC Global, including Vice-President and General Manager, Area Manager, Area Sales Manager and Sales Supervisor. Currently Mr. Graham is a director of the Fertilizer Industry Round Table.

GREG HUTCHISON has served as the Managing Director of Logistics since January 2000 when he joined Royster-Clark. From 1994 to 1999, Mr. Hutchison served as the Manager of Logistics with Hydro-Agri North America (now Yara North America) in Tampa, Florida. From 1981 to 1994 Mr. Hutchison worked for Shipyard River Terminal (a subsidiary of Shell Oil Company) in various positions of increasing operations, management and sales responsibility in Charleston, South Carolina.

ROBERT L. PAARLBERG has served as the Managing Director of Information Technology since 1999. From 1997 to 1999, Mr. Paarlberg served as Director of Information Systems for Agribusiness. From 1979 to 1997, he held various management and technical positions with Agribusiness and its predecessors, including Infrastructure Architect, Manager of Financial Systems, Manager of Microcomputer and Telecommunication Development and Senior Analyst. He has served on advisory boards to a number of technology publications, contributes to various industry publications concerning emerging technologies and has spoken at various technology and agricultural events.

R. MACON PARKER III has served the Managing Director of Asset Allocation since 2000 when he was promoted to the newly created position of Managing Director of Asset Allocation. Mr. Parker joined the Company in 1997 as a vice-president of marketing and has served in various roles in marketing, sales and administrative duties from 1999 to 2000. From 1985 to 1997 he held a position of sales representative for Western-Ag Minerals Company. Prior to 1985 he held several positions of increasing responsibility in several fertilizer industry related companies.

J. BILLY PIRKLE has served as the Managing Director of Environmental, Health and Safety since 1999. Prior to Royster-Clark Mr. Pirkle served in various Environmental Health and Safety roles with IMC Global from 1990—1999. Prior to joining IMC Global, Mr. Pirkle served as Plant Manager for Simplex Nails from 1987 until 1990 and as the Quality Control Manager for Interface Flooring from 1985 until 1987. Mr. Pirkle also serves as a member of the Board of Directors of Agricultural Retailers Association and as a director for the National Agronomic Environmental Health and Safety School. Mr. Pirkle has recently been named to the board of directors of The Asmark Institute which is a private, non-profit organization that provides a forum for state and national organizations to collaborate on regulatory issues affecting the nation’s agricultural retailers. The Asmark Institute supports agricultural industry responses to pending regulation from a common sense standpoint, develops solutions to new regulatory requirements and monitors enforcement activity for uniformity.

BRAD RIVERS has served as the Managing Director of Sales and Marketing for the Midwest Division since September 2000. From April 1999 to August 2000, he served as Director of Sales for the Southern Ohio Region. He served as Marketing Manager for Agribusiness from 1994 to 1999. Mr. Rivers began his career in 1982 working in various positions of increasing sales responsibility with Mid Ohio Chemical Company until acquired by Agribusiness in 1994.

RANDY SPRINGS has served as the Managing Director Sales and Marketing, Eastern Division since 2000. In 2000, Mr. Springs was promoted from Director of Sales for the state of South Carolina and the southeastern

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region of North Carolina, to his current position. From 1997 until 1999, he served as Sales Director for South Carolina. Mr. Springs joined Royster Company (previous to the merger of Royster Company and W.S. Clark, Inc.) in the early 1980’s serving as a retail location manager in Hemingway, South Carolina, until his promotion in 1997 to Sales Director.

GREG ST. CLAIR has served as the Managing Director of Vigoro Seed since 2003. Prior to his promotion to Managing Director in September 2003, Mr. St. Clair served as Director of Vigoro Seed. Mr. St. Clair has headed the Vigoro Seed division in his tenure with Royster-Clark, IMC AgriBusiness and Vigoro Industries, Inc. since 1996. From 1998 to 1996, Mr. St. Clair served in various capacities within the area of seed research with Madison Seed Company. From 1984 to 1988 Mr. St. Clair served as Regional Agronomist for Dekalb-Pfizer Genetics. Mr. St. Clair’s agricultural career began in 1979 as District Sales Manager for an Ohio based Seed Company. Mr. St. Clair has served on the Board of Directors for the Independent Professional Seedsman Association (IPSA), the Independent Corn Breeders Association. (ICBA) the Board of The Ohio Wheat Growers Association (OWGA) as well as the Southern Ohio Advisory Board for The Ohio Seed Improvement Association (OSIA).

MICHELLE J. WEATHERS has served as the Managing Director of Materials Purchasing since 2001 when she was promoted to Managing director. Prior to her promotion, Ms. Weathers served as Buyer – Materials from January of 2000 until July of 2001. Ms. Weathers served as Account Manager for Indiana for Agribusiness from 1997 until January 2000. In 1997 when Agribusiness purchased Hutson Co., Inc. she had served as Sales Supervisor of Northern Region since 1987.

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ITEM 11.    EXECUTIVE COMPENSATION.

The directors do not receive any compensation for their services as directors or for expenses incurred attending meetings. Directors are elected annually to serve until the next annual meeting or until their successors have been elected and qualified. The stockholders have entered into stockholders’ agreement governing the election of directors. The following table summarizes the compensation paid or accrued for the fiscal year ended December 31 to our executive officers.

SUMMARY COMPENSATION TABLE

Employment Agreements

In 1999 Mr. Jenkins entered into a five year employment agreement with the Company’s parent, Royster-Clark Group, Inc. (“RCG”), and with the Company, to serve as Chief Executive Officer (“CEO”). The agreement

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provides for an annual base salary of $499,990, subject to annual merit increases as determined by the RCG Board of Directors. Mr. Jenkins’ base salary for 2004 was $499,990. In addition to the annual base salary, Mr. Jenkins will be entitled to participate in an annual performance bonus plan based on individual criteria and/or executive incentive programs to be determined from time to time by the RCG Board of Directors and receive standard company benefits provided to executive officers from time to time. In addition to standard company benefits, the Company is to provide up to $50,000 per year to Mr. Jenkins to obtain a life insurance policy for the benefit of his wife and family. The initial term of Mr. Jenkins’s agreement expired in April 2004, but is subject to automatic renewal for successive one-year terms unless, in each case, either the executive or RCG gives 180 day prior notice of non-renewal. The employment agreement is terminable by the RCG board of directors with or without cause. In the event that the employment agreement is terminated without cause and provided that Mr. Jenkins complies with the confidentiality and non-competition covenants, he will be entitled to receive all payments due as base salary during the remainder of the one year employment term. Mr. Jenkins is subject to a non-competition covenant during the term of his agreement and continues for two years after his cessation of employment with RCG.

Mr. Moshenek signed an employment agreement with the Company in December 1999. Mr. Moshenek is to serve as President and Chief Operating Officer. The agreement for Mr. Moshenek provides for an annual base salary of $350,000, subject to annual merit increases as determined by the CEO of the Company. Mr. Moshenek’s base salary for 2004 was $385,000. In addition to the annual base salary, Mr. Moshenek will be entitled to participate in an annual performance bonus plan based on individual criteria and/or executive incentive programs to be determined from time to time by the Company, its Board of Directors or RCG and receive standard company benefits provided to executive officers from time to time. The initial term of Mr. Moshenek’s agreement expired in April of 2004, but was subject to automatic renewal for successive one-year terms unless, in each case, either the executive or the Company gives 180 day prior notice of non-renewal. Mr. Moshenek has provided the Company the required 180 day notice to exercise his right to not renew the contract which expires in April 2005.

Mr. Murphy signed an employment agreement with the Company in December 1999. Mr. Murphy is to serve as Chief Financial Officer. The agreement for Mr. Murphy initially provided for an annual base salary of $115,000, subject to annual merit increases as determined by the CEO of the Company. Mr. Murphy’s base salary for 2004 was $250,000. In addition to the annual base salary, Mr. Murphy will be entitled to participate in an annual performance bonus plan based on individual criteria and/or executive incentive programs to be determined from time to time by the Company, its Board of Directors or RCG and receive standard company benefits provided to executive officers from time to time. The initial term of Mr. Murphy’s agreement expired in April of 2004, but is subject to automatic renewal for successive one-year terms unless, in each case, either the executive or the Company gives 180 day prior notice of non-renewal. The employment agreement is terminable by the Board of Directors with or without cause. In the event that the employment agreement is terminated without cause and provided that Mr. Murphy complies with the confidentiality and non-competition covenants, he will be entitled to receive all payments due as base salary during the remainder of the one year employment term. He is subject to a non-competition covenant during the term of the agreement and continues for one year after his cessation of employment with the Company. RCG and the Company expect to enter into employment agreements with other key employees in the future as needed.

RCG and the Company expect to enter into employment agreements with other key employees in the future as needed.

Employee Benefits

Retirement Plans

The Company maintains a defined contribution Employee Savings and Investment Plan (ESIP) covering substantially all full-time employees of the Company. Participants are allowed to contribute to the ESIP up to 70% of their salary on a pre-tax basis, up to the maximum allowed under Internal Revenue Service regulations.

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The Company makes contributions to the ESIP at the discretion of the Board of Directors. The Company also maintains three other defined contribution plans for union employees under collective bargaining agreements at six locations covering approximately 220 employees. Company contributions are based on the applicable provisions of each plan.

As a result of the 1999 acquisition of Agribusiness, the Company maintains a defined benefit plan covering certain employees of the acquired entity. In accordance with SFAS No. 87, Employers’ Accounting for Pensions, the Company recorded an additional minimum liability of $375 and $105 in 2004 and 2003, respectively. The defined benefit plan does not have a material impact on the accompanying consolidated balance sheets and statements of operations.

1999 Restricted Stock Purchase and Option Plan

Upon the acquisition of the Company by RCG, RCG created the 1999 Restricted Stock Purchase and Option Plan (herein referred to as the 1999 Plan). Under the terms of the 1999 Plan, 200,000 shares of RCG common stock have been reserved for issuance in the form of restricted share grants to current and future employees of RCG or Royster-Clark. Shares issued under the 1999 Plan are subject to certain restrictions on transfer of shares including the right of Royster-Clark Group to repurchase shares upon termination of a stockholder’s employment prior to the fifth anniversary of the closing, at a formula price. During the year ended December 31, 2000, 180,000 common stock shares were issued under this plan at a price equal to the fair value at date of grant. No common shares were issued under this plan during the years ended December 31, 2004, 2003 and 2002. During the year ended December 31, 2002, 17,500 shares were redeemed in connection to the resignation of Mr. Walter R. Vance, former chief accounting officer. No other share redemptions under this plan have occurred in 2003 or 2004.

In addition, 39,551 shares of common stock, 14,637 shares of Senior Preferred Stock and 8,229 shares of Junior Preferred Stock have been reserved for issuance pursuant to the exercise of stock options rolled over from the 1992 Stock Option Plan (herein referred to as the 1992 Plan) previously maintained by Royster-Clark. All options granted under the 1992 Plan were either cashed out at the merger consideration of $285 per share less the exercise price under the 1992 Plan or exchanged for an option to purchase 5.5 shares of common stock, 2.0 shares of Senior Preferred Stock and 1.1 shares of Junior Preferred Stock at the same exercise price as under the 1992 Plan. During 2003, stock options for 1,372 shares of common stock, 508 shares of Senior Preferred Stock and 285 shares of Junior Preferred Stock were redeemed. At December 31, 2004, options for 38,179 shares of common stock, 14,129 shares of Senior Preferred Stock and 7,944 shares of Junior Preferred Stock remain vested and outstanding under the 1999 Plan. No options were issued or exercised during the years ended December 31, 2004, 2003, and 2002.

Stock Options

The following table lists as of December 31, 2004, the number of shares of common and preferred stock underlying options held by the named executive officers and the value of unexercised in-the-money options:

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Board of Directors Interlocks and Insider Participation

No director has any direct or indirect material interest in or relationship with the Company other than stockholdings as set forth below in “Item 12, Security Ownership of Beneficial Owners and Management” and as related to their position a director. No officer or other employee of the Company served on the board of directors of any other entity, where any officer or director of such entity also served on Company’s Board.

Report on Executive Compensation

The Company has no Compensation Committee. The Board of Directors (“Board”) performs the functions of the Compensation Committee as a whole. The following Executive Officers participated in the Board’s deliberations on Executive Officer Compensation: Francis P. Jenkins Jr.

Management presented a proposal for the Board to evaluate concerning executive compensation, but the Board has not made a decision concerning this issue during 2004. In the absence of a governing policy, the Board determined compensation for the chief executive officer by taking into consideration Mr. Jenkins’ contribution to the management of the Company and to persons with comparable experience and responsibilities.

The Company has not adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A comprehensive code of ethics which would cover these individuals is currently in draft form awaiting approval from senior management.

ITEM 12.    SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Principal Shareholders

All of the outstanding capital stock of the Company is owned by Royster-Clark Group. The following table provides information about the beneficial ownership of the Royster-Clark Group common and preferred stock as of the December 31, 2004 by (1) each person or entity who owns five percent or more of the common or preferred stock, (2) each of our directors who is a stockholder, (3) our Chief Executive Officer and the other executive officers named in “ITEM 11 Executive Compensation” above who are stockholders, and (4) all of our directors and executive officers as a group.

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