SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1995
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-11854
BIOTECHNICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2344703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4001 North War Memorial Drive, Peoria, IL 61614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 309/681-0300
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 the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
On May 10, 1995, the Registrant had 115,379,628 (net of 39,160 treasury
shares) shares of Common Stock and 6,054,751 shares of Class A non-voting
Common Stock outstanding.
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
1995 1994
------------ ------------
Assets
Current assets:
Cash & cash equivalents $ 268,000 $ 1,141,000
Accounts Receivable 8,404,000 8,114,000
Inventories 7,778,000 7,342,000
Prepaid expenses & other assets 398,000 802,000
Net assets held for sale 0 1,335,000
------------ ------------
Total Current Assets 16,848,000 18,734,000
Property, plant & equipment
At cost 13,181,000 13,598,000
Less accumulated depreciation 3,281,000 2,648,000
------------ ------------
Net property, plant & equipment 9,900,000 10,950,000
Goodwill and other assets 9,563,000 9,636,000
------------ ------------
Total Assets $ 36,311,000 $ 39,320,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit $ 7,000,000 $ 13,800,000
Notes payable 0 100,000
Current portion of long-term debt 97,000 164,000
Accounts payable 2,682,000 1,238,000
Customer Advances 1,095,000 0
Accrued liabilities 2,542,000 2,847,000
Due to affiliates 268,000 153,000
------------ ------------
Total current liabilities 13,684,000 18,302,000
Long- term debt 173,000 311,000
Due to affiliates 5,326,000 3,260,000
Other noncurrent liabilities 156,000 202,000
------------ ------------
Total Liabilities 19,339,000 22,075,000
Shareholders Equity
Preferred Stock, Class A, 2,000,000
shares authorized; 700,000 and
500,000 shares outstanding 7,000 5,000
Common Stock, 150,000,000
shares authorized;115,418,788
and 105,912,919 shares outstanding 1,154,000 1,059,000
Common Stock, Class A, 11,100,000
shares authorized;6,054,751 61,000 108,000
and 10,753,087 shares outstanding
Common Stock, Class B, 11,100,000
shares authorized; 0 and 4,807,533 0 48,000
shares outstanding
Additional paid- in capital 18,893,000 16,895,000
Retained Earnings (deficit) (3,048,000) (775,000)
Treasury stock (95,000) (95,000)
------------ ------------
Total shareholders equity 16,972,000 17,245,000
------------ ------------
Total liabilities $ 36,311,000 $ 39,320,000
and shareholders' equity ============ ============
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
Net Sales:
Customers $ 12,849,000 $ 15,751,000 $ 15,754,000 $ 15,750,000
Affiliates 1,639,000 245,000 3,618,000 1,396,000
------------ ------------ ----------- ------------
14,488,000 15,996,000 19,372,000 17,146,000
Cost and operating expenses:
Cost of goods 8,491,000 10,319,000 12,972,000 11,409,000
Marketing 2,010,000 2,163,000 4,963,000 2,750,000
Administrative 1,018,000 811,000 2,940,000 1,201,000
------------ ------------ ------------ ------------
11,519,000 13,293,000 20,875,000 15,360,000
Operating income 2,969,000 2,703,000 (1,503,000) 1,786,000
Other income (expense):
Interest expense (180,000) (128,000) (807,000) (149,000)
Other 7,000 81,000 37,000 61,000
------------ ------------ ------------ ------------
Net income 2,796,000 2,656,000 (2,273,000) 1,698,000
before taxes
Income Taxes 0 110,000 0 45,000
------------ ------------ ------------ ------------
Net income $ 2,796,000 $ 2,546,000 $ (2,273,000) $ 1,653,000
============ ============ ============ ============
Net income $ 0.02 $ 0.02 $ (0.02) $ 0.02
per share
Weighted 121,434,000 107,954,000 121,434,000 102,750,000
average shares ============ ============ ============ ============
outstanding
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1995 1994
------------- ------------
Cash flow from operating activities:
Net income $ (2,273,000) $ 1,653,000
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 1,141,000 679,000
Changes in assets and liabilities
Accounts receivable (290,000) (7,761,000)
Inventories (436,000) 2,952,000
Other current assets 1,872,000 612,000
Customer Advances 1,095,000 0
Accounts payable & accrued liabilities 1,139,000 (2,049,000)
------------ ------------
Net cash provided by (used for) 2,248,000 (3,914,000)
operating activities
Cash flow from investing activities:
Acquisition of property, (151,000) (54,000)
plant & equipment
Other 0 0
------------ ------------
Net cash provided by (used for) (151,000) (54,000)
investing activities
Cash flow from financing activities:
Net repayment under line of credit (6,800,000) 800,000
Increase in debt to affiliates 2,181,000 4,640,000
Decrease in long-term debt (351,000) (73,000)
Increase in Equity 2,000,000 0
------------ ------------
Net cash provided by (used for) (2,970,000) 5,367,000
financing activities
Net increase (decrease) in cash (873,000) 1,399,000
and cash equivalents
Cash and cash equivalents at the 1,141,000 418,000
beginning of period
Cash and cash equivalents at the
end of period $ 268,000 $ 1,817,000
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Preferred Stock
Class A Non-Voting Common Stock
Shares Par Value Shares Par Value
Balance June 30,1994 500,000 5,000 105,912,919 1,059,000
Net loss 0 0 0 0
-------- -------- ------------- ----------
September 30,1994 500,000 5,000 105,912,919 1,059,000
Issuance Preferred Stock 200,000 2,000 0 0
Conversion of Class 0 0 9,505,869 95,000
A & B Shares
Net Loss 0 0 0 0
-------- -------- ------------- ----------
December 31,1994 700,000 7,000 115,418,788 1,154,000
Net Profit 0 0 0 0
-------- -------- ------------- ----------
Balance March 31,1994 700,000 7,000 115,418,788 1,154,000
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Common Stock Common Stock
Class A Non-Voting Class B Non-Voting
Shares Par Value Shares Par Value
Balance June 30,1994 10,753,087 108,000 4,807,533 48,000
Net loss 0 0 0 0
---------- ------- ---------- -------
September 30,1994 10,753,087 108,000 4,807,533 48,000
Issuance Preferred Stock 0 0 0 0
Conversion of Class (4,698,336) (47,000) (4,807,533) (48,000)
A & B Shares
Net Loss 0 0 0 0
---------- ------- ---------- -------
December 31,1994 6,054,751 61,000 0 0
Net Profit 0 0 0 0
---------- ------- ---------- -------
Balance March 31,1994 6,054,751 61,000 0 0
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Additional Retained Treasury Total
Paid-In Earnings Stock Shareholder
Capital (Deficit) Shares Par Value Equity
Balance June 30,1994 16,895,000 (775,000) (39,160) (95,000) 7,245,000
Net loss 0 (2,725,000) 0 0 (2,725,000)
----------- ----------- ------- ------- -----------
September 30,1994 16,895,000 (3,500,000) (39,160) (95,000) 14,520,000
Issuance Preferred 1,998,000 0 0 0 2,000,000
Stock
Conversion of Class 0 0 0 0 0
A & B Shares
Net Loss 0 (2,344,000) 0 0 (2,344,000)
----------- ----------- -------- ------- ----------
December 31,1994 18,893,000 (5,844,000) (39,160) (95,000) 14,176,000
Net Profit 0 2,796,000 0 0 2,796,000
----------- ----------- ------- ------- -----------
Balance March 31,1994 18,893,000 (3,048,000) (39,160) (95,000) 16,972,000
See Notes to Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) Limagrain Transaction
On October 26, 1993, BioTechnica International, Inc. (the "Corporation"),
entered into the Credit Enhancement and Reorganization Agreement
(The "Limagrain Agreement") by and among the Corporation, Groupe Limagrain
Holding S.A. ("Limagrain") and Limagrain Genetics Corp. ("LGC"), which was
amended on December 10, 1993. As a result of this agreement, upon completion
of the Second Closing (herein defined) following the Corporation's Annual
Meeting of Shareholders on March 7, 1994, Limagrain, through LGC, obtained
voting control of the Corporation.
In the first phase of the transaction, which was consummated on October 27,
1993 (the "First Closing"), the Corporation issued 500,000 shares of the
Voting Common Stock to LGC in consideration of $5,000 and the guaranty of
Limagrain and LGC delivered to Harris Trust & Savings Bank ("Harris Bank")
for a new $15 million line of credit for the Corporation.
In the second phase of the transaction, which was completed following the
Annual Meeting of Shareholders on March 7, 1994 (the "Second Closing), the
Corporation issued 97,777,178 shares of Voting Common Stock to LGC in
consideration of the transfer by LGC to the Corporation all of the issued and
outstanding shares of capital stock of Shissler Seed Company, Inc.
("Shissler"). When added to the 500,000 shares of the Voting Common Stock
acquired at the First Closing, LGC then held 98,277,178 shares of the Voting
Common Stock of the Corporation, representing approximately 80% of the Capital
Stock and approximately 93% of the Voting Common Stock of the Corporation.
For accounting purposes, the exchange of shares related to the Second Closing
was accounted for as a purchase of the Corporation by LGC (a "reverse
acquisition") because, after the exchange, LGC owns 80% of the combined
entity. The shares of Voting Common Stock issued by the Corporation have been
recorded based upon the value assigned to the consideration received. The
prorata portion of the net assets of the Corporation acquired by LGC have
been adjusted to their estimated fair market value and the difference between
these two values has been recorded as goodwill. The assets and liabilities of
Shissler, which after the Second Closing became a wholly-owned subsidiary of
the Corporation, have been recorded in the consolidated financial statements
at their historical book values. The transaction was recorded on the books of
the Corporation as of February 1, 1994, the effective date of the transaction.
The condensed consolidated financial statements presented herein reflect the
results of the reverse acquisition as described above. Prior year
information for the three- and nine- months ended March 31, 1995, reflects
the operating results of Shissler for nine months and the former BioTechnica
International, Inc. for two months.
The following Pro Forma Condensed Consolidated Statements of Operations for
the three- and nine- months ended March 31, 1995 and 1994 reflect the
combined results of the Corporation and Shissler as if the Limagrain
Transaction had been consummated on July 1, 1993 and the sale of Scott Seed
Division (sold on April 20, 1995: see Note 4.) had also taken place July 1,
1993.
BIOTECHNICA INTERNATIONAL INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
Net Sales:
Customers $ 11,626,000 $ 14,486,000 $ 12,308,000 $ 15,642,000
Affiliates 1,639,000 245,000 3,618,000 1,396,000
------------ ------------ ------------ ------------
13,265,000 14,731,000 15,926,000 17,038,000
Cost and operating expenses:
Cost of Goods 7,544,000 10,696,000 10,233,000 12,621,000
Marketing 1,860,000 2,341,000 4,393,000 5,245,000
Administrative 986,000 1,058,000 2,805,000 3,414,000
------------ ------------ ------------ ------------
10,390,000 14,095,000 17,431,000 21,280,000
Operating income 2,875,000 636,000 (1,505,000) (4,242,000)
Other income (expense):
Interest expense (178,000) (189,000) (804,000) (662,000)
Other 48,000 (6,000) 76,000 85,000
------------ ------------ ------------ ------------
Net income 2,745,000 441,000 (2,233,000) (4,819,000)
before taxes
Income Taxes 0 0 0 0
------------ ------------ ------------ ------------
Net income $ 2,745,000 $ 441,000 $ (2,233,000) $(4,819,000)
============ ============ ============ ============
Net income $ 0.02 $ 0.00 $ (0.02) $ (0.04)
per share
Weighted 121,434,000 121,434,000 121,434,000 121,434,000
average shares ============ ============ ============ ============
outstanding
See Notes to Consolidated Financial Statements
2) Financial Statements
The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. To the extent that
information and footnotes required by generally accepted accounting principles
for complete financial statements are contained in or consistent with the
audited consolidated financial statements incorporated by reference in the
Corporation's Form 10-K for the year ended June 30, 1994, such information
and footnotes have not been duplicated herein. In the opinion of managment,
all adjustments, consisting of normal recurring accruals, considered necessary
for a fair presentation of financial statements have been reflected herein.
3) Inventories
March 31, June 30,
1995 1994
---------- ----------
Finished Seed $5,969,000 $4,886,000
Unfinished Seed 1,305,000 1,835,000
Supplies and Other 504,000 621,000
---------- ----------
$7,778,000 $7,342,000
Inventories, primarily consisting of seed products and supplies, are valued
at the lower of average cost or market.
4) Asset Sales
On March 20, 1995, the Corporation sold its unused Manilla, Iowa production
facility to Midwest Seed Genetics for $173,500. The Corporation received a
down payment of $13,000 and carried back a four-year note of $160,500, bearing
interest at 9.00%.
On April 20, 1995 the Corporation completed the sale of the assets of Scott
Seed Division of New Albany, Indiana to AgriBioTech, Inc. of Las Vegas,
Nevada, for an aggregate net purchase price of approximately $1,950,000,
payable in cash, 158,000 shares of AgriBioTech stock with a guaranteed value
of $3.00 per share, and assumption of the accounts payable of the division.
5) Financing Agreement
On October 21, 1994, the Corporation renewed its revolving credit arrangement
(the "Line of Credit") with Harris Trust & Savings Bank ("Harris Bank") for
an additional one-year term whereby the Corporation may borrow up to
$15,000,000 based on a borrowing base formula and subject to certain
limitations and availability contained in the Limagrain Agreement. Borrowings
outstanding against the Line of Credit at May 4, 1995, totaled $8,800,000.
Borrowings under the Line of Credit are secured by the inventory and accounts
receivable of the Corporation and its subsidiaries and by the guarantees of
Limagrain and LGC.
Item 2. Management's Discussion and Analysis
Liquidity and Capital Resources
Cash and Cash Equivalents declined $873,000, from $1.1 million at June 30,
1994, to $268,000 at March 31, 1995. Cash flow from operations provided
$2.2 million in cash. Accounts Payable and Accrued Expenses rose $1.1 million,
from $4.1 million at June 30, 1994, to $5.2 million at March 31, 1995. This
increase resulted from amounts due on corn and soybean growers contracts.
Customer Advances for spring sales of $1.1 million contributed the remaining
increase to cashflow from operations. Amortization and Depreciation of $1.1
million, and the disposition of $1.9 million in other current assets
(primarily $1.3 million in assets held for sale) offset the Corporation's
year to date loss of $2.3 million and the increase of $290,000 and $436,000
in receivables and inventory respectively from the production and selling
cycle. Capital improvements made in the first nine months of the year
required $151,000 in cash as the Corporation standardized computer systems
throughout its service centers and improved the capacity and quality of its
production equipment. Repayment of debt was the Corporation's largest use of
cash, reducing its line of credit $6.8 million and its long-term debt
$351,000. The bulk of this repayment was financed by an increase of
$2.2 million in long-term debt to LGC and $2 million in Equity from the
issuance of 200,000 shares of Preferred Stock to LGC.
Management believes that the Harris Bank Line of Credit should provide
adequate cash to fund the Corporation's near-term working capital needs for
the current fiscal year. There is no assurance that the amount of the
borrowing base will remain constant or that the amount of the Corporation's
outstanding borrowings will be within the limits of the borrowing base.
Results of Operations
Due to the seasonal nature of the seed business, 75-80% of the Corporation's
revenues normally occur during the third and fourth fiscal quarters of each
year. During the first six months of the year, the Corporation's production
facilities are harvesting, conditioning and bagging their seed products and
substantial marketing efforts are underway in preparation for the next sales
season which begins in December.
The Condensed Consolidated Statements of Operations for the prior year three-
and nine- months ended March 31, 1994, include nine months of the operations
of the wholly owned subsidiary, Shissler Seed Company, Inc., (which was
acquired as a result of the Limagrain Transaction effective February 1, 1994)
and two months of the former BioTechnica International, Inc. For accounting
purposes, the exchange of shares related to the Second Closing of the
Limagrain Transaction, as discussed in Note 1, was accounted for as a
purchase of the Corporation by LGC ( a "reverse acquisition") because, after
the exchange, LGC owns 80% of the combined entity.
For a meaningful comparison of the operating results of 1995 versus 1994,
pro forma operations of the combined entity are presented in Note 1 in the
Pro Forma Condensed Consolidated Statements of Operations. These pro forma
statements include the operations of the former BioTechnica, and the
operations of Shissler for the three- and nine- months ended March 31, 1994.
The following discussion is in reference to these pro forma statements, which
management feels present a more meaningful comparison of the results for 1995
versus 1994.
On a pro form basis comparing the third quarter of fiscal 1995 to a like
period from 1994, net sales have declined $1.5 million, from $14.7 million at
March 31, 1994, to $13.2 million at March 31, 1995. Sales of corn exported to
Limagrain affiliates increased $1.4 million, from $245,000 at March 31, 1994
to $1.6 million on March 31, 1995. Domestic sales to customers declined $2.9
million from $14.5 million in 1994 to $11.6 million in 1995. The decline in
sales to customers is due to the Corporation's refocusing of the sales effort
on high margin corn and bean sales and away from lower margin grasses and
small seeds, a concentration on the central corn belt eliminating the sales
effort to the east coast, Canada, and the Dakotas, a new credit policy which
has limited the customer base to creditworthy farmers, and from shipping
delays due to the cold, wet spring. Cost of Goods Sold for the third quarter
was $3.1 million lower for 1995, at $7.5 million, due to the delay in
shipments and a drop in the cost of corn of $1.1 million due to savings from
the consolidation and reorganization of production. The effect of the
restructuring continues to generate substantial savings in operating
expenses, with a reduction of $481,000 in sales and marketing expenses, from
$2.3 million in 1994 to $1.8 million in 1995, and a $72,000 reduction in
Administration expenses, from $1.1 million in 1994 to $1.0 million in 1995.
As a result, Net Income before tax for the third quarter of 1995 is $2.3
million higher at $2.7 million in 1995, compared to the $441,000 generated
in 1994.
On a pro forma basis for the nine months ended March 31, 1995, net sales for
1995 have declined $1.1 million, from $17.0 million in 1994 to $15.9 million
in 1995. Sales to Limagrain affiliates increased $2.2 million, from
$1.4 million in 1994 to $3.6 million in 1995. Domestic sales declined
$3.3 million from $15.6 million in 1994 to $12.3 million in 1994, due to the
factors of product mix, sales territory, credit policy and weather mentioned
in the preceding paragraph. Cost of Goods Sold declined $2.4 million for the
nine months from $12.6 million in 1994 to $10.2 million in 1995 due to the
decline in sales and the lowering of production costs due to the
reorganization. Sales and Marketing expenses have declined $852,000 from
$5.2 million in 1994 to $4.4 million in 1995, and Administrative Costs
decreased $609,000, from $3.4 million to $2.8 million in 1995. These cost
savings are a direct result of the reorganization and cost cutting undertaken
by management in the Fall of 1994. Interest costs are running $142,000 higher
than last year due to the higher interest rates. As a result of these cost
savings, the Corporation's Net income before tax improved $2.6 million, from
a loss of $4.8 million in the first nine months of 1994, to a loss of $2.2
million for the first nine months of 1995.
PART II
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by item 601:
Exhibit 10. Contract for the sale of Scott Seed Division by LG Seeds, Inc.
to AgriBioTech, Inc.
Exhibit 27. Financial Data Schedule
(b) Report on 8-K:
Current Report on Form 8-K filed with the Commission on April 28, 1995
File No. 0-11854, relating the sale of certain assets of Scott Seed
Division by LG Seeds to AgriBioTech, Inc. of Las Vegas, Nevada.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIOTECHNICA INTERNATIONAL, INC.
Date: J. C. Gouache
J. C. Gouache, President and
Chief Operating Officer
Date: Edward Germain
Edward Germain
Chief Financial Officer