UNITED STATES
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 quarterly period ended September 30, 1995
Commission File Number 0-11854
BIOTECHNICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2344703
(State of incorporation) (I.R.S. Employer
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 October 27, 1995, the Registrant had 115,379,628 (net of 39,160
treasury shares) shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
September 30, June 30,
1995 1995
------------ ------------
Assets
Current assets:
Cash & cash equivalents $ 28 $ 399
Accounts Receivable 2,208 7,778
Inventories 9,831 6,927
Prepaid expenses & other assets 181 105
------------ ------------
Total Current Assets 12,248 15,209
Property, plant & equipment
At cost 13,295 13,281
Less accumulated depreciation 3,717 3,510
------------ ------------
Net property, plant & equipment 9,578 9,771
Goodwill and other assets 9,386 9,522
------------ ------------
Total Assets $ 31,212 $ 34,502
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit $ 4,100 $ 9,200
Current portion of long-term debt 115 115
Accounts payable 1,635 735
Accrued liabilities 704 2,051
Due to affiliates 4,152 0
------------ ------------
Total current liabilities 10,706 12,101
Long- term debt 103 129
Due to affiliates 5,326 5,326
Other noncurrent liabilities 111 156
------------ ------------
Total Liabilities 16,246 17,712
Shareholders' Equity
Preferred Stock, Class A, 2,000,000
shares authorized; 700,000 and 700,000
shares outstanding 7 7
Common Stock, 150,000,000
shares authorized; 115,418,788
and 115,418,788 shares outstanding 1,154 1,154
Additional paid- in capital 18,893 18,893
Retained Earnings (deficit) (4,993) (3,169)
Treasury stock (95) (95)
------------ ------------
Total shareholders' equity 14,966 16,790
------------ ------------
Total liabilities $ 31,212 $ 34,502
and shareholders' equity ============ ============
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands of dollars except per share amounts)
Three Months Ended
September 30,
1995 1994
Net Sales:
Domestic $ 556 $ 1,883
Export-Affiliates 0 0
Export-Other 0 0
------------ ------------
556 1,883
Cost of Goods Sold:
Cost of Goods Sold 351 1,739
------------ ------------
Gross Margin 205 144
Operating expenses:
Sales & Mkting 1,014 1,140
Administrative 943 1,431
------------ ------------
1,957 2,571
Operating income(loss) (1,752) (2,427)
Other income (expense):
Interest expense (250) (321)
Other 178 23
------------ ------------
Net income (1,824) (2,725)
before taxes
Income Taxes 0 0
------------ ------------
Net income(loss) $ (1,824) $ (2,725)
============ ============
Net income $ (0.02) $ (0.02)
per share
Weighted 115,419,000 121,434,000
average shares ============ ============
outstanding
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Three Months Ended
September 30,
1995 1994
Cash flow from operating activities:
Net income (loss) $ (1,824) $ (2,725)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 363 419
Changes in assets and liabilities
Accounts receivable 5,570 4,551
Inventories (2,904) (5,561)
Other current assets (63) 295
Accounts payable & accrued liabilities (447) 2,865
------------ ------------
Net cash provided by (used for) 695 (156)
operating activities
Cash flow from investing activities:
Acquisition of property, (47) (88)
plant & equipment
------------ ------------
Net cash provided by (used for) (47) (88)
investing activities
Cash flow from financing activities:
Net repayment under line of credit (5,100) (4,500)
Increase in debt to affiliates 4,152 4,017
Decrease in long-term debt (71) (220)
------------ ------------
Net cash provided by (used for) (1,019) (703)
financing activities
Net increase (decrease) in cash (371) (947)
and cash equivalents
Cash and cash equivalents at the 399 1,141
beginning of period
Cash and cash equivalents at the
end of period $ 28 $ 194
============ ============
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(in thousands of dollars, except share data)
Preferred Stock
Class A Non-Voting Common Stock
Shares Par Value Shares Par Value
Balance June 30,1995 700,000 $ 7 115,418,788 $ 1,154
Net loss 0 0 0 0
-------- -------- ------------- ----------
September 30, 1995 700,000 $ 7 115,418,788 $ 1,154
======== ======== ============= ==========
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(in thousands of dollars, except share data)
Additional Retained Treasury Total
Paid-In Earnings Stock Shareholder
Capital (Deficit) Shares Par Value Equity
Balance June 30,1995 $ 18,893 $ (3,169) (39,160) $(95) $ 16,790
Net loss 0 (1,824) 0 0 (1,824)
----------- ---------- ------- ----- ----------
September 30,1995 $ 18,893 $ (4,993) (39,160) $(95) $ 14,966
=========== ========== ======= ===== ==========
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) Limagrain Transaction
As a result of a series of transactions culminating on March 7, 1994 (the
"Limagrain Transaction"), at the 1993 Annual Meeting of Shareholders of
BioTechnica International, Inc. (the "Company"), voting and management
control of the Company was obtained by Limagrain Genetics Corporation
("LG Corp."). LG Corp. is a subsidiary of Groupe Limagrain Holding
("Limagrain") of Chappes, France. As part of the Limagrain Transaction,
Shissler Seed Company, Inc. ("Shissler"), a subsidiary of LG Corp.,
became a subsidiary of the Company.
The Condensed Consolidated Statements of Operations for the prior year
three months ended September 30, 1994, include the operations of the
Scott Seed division of the Company ("Scott Seed"), and severance costs
for a number of former Company employees. For a more meaningful
comparison of the operational results of the first quarter of Fiscal 1996
versus the first quarter of Fiscal 1995, the severance costs and the
operations of Scott Seed have been excluded in the proforma statement of
operations shown below. Management believes this proforma allows the
reader to make a true comparison of the respective first quarter of
Fiscal 1995 to Fiscal 1996 as the Company exists today and shows the
Company's continuing efforts to reduce expenses and improve
profitability.
BIOTECHNICA INTERNATIONAL INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
1995 1994
Net Sales:
Domestic $ 556 $ 511
Export-Affiliates 0 0
Export-Other 0 0
------------ ------------
556 511
Cost of Goods Sold:
Cost of Goods Sold 351 636
------------ ------------
Gross Margin 205 (125)
Operating expenses:
Sales and Mkting 1,014 1,078
Administrative 943 1,207
------------ ------------
1,957 2,285
Operating income(loss) (1,752) (2,410)
Other income (expense):
Interest expense (250) (320)
Other 178 51
------------ ------------
Net income (1,824) (2,679)
before taxes
Income Taxes 0 0
------------ ------------
Net income(loss) $ (1,824) $ (2,679)
============ ============
Net income $ (0.02) $ (0.02)
per share
Weighted 115,419,000 121,434,000
average shares ============ ============
outstanding
See notes to Condensed 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 in the Company's Form 10-K for the year ended June 30, 1995,
such information and footnotes have not been duplicated herein. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of financial
statements have been reflected herein.
3) Inventories
(in thousand of dollars)
September 30, June 30,
1995 1995
Finished seed $ 4,573 $ 4,243
Unfinished seed 4,332 2,123
Supplies and other 926 561
-------- --------
Total Inventory $ 9,831 $ 6,927
"Finished seed" consists of bagged product, ready for sale, net of
reserves for obsolescence. "Unfinished seed" consists of bulk product not
yet bagged and the costs associated with the seed crop planted in the
spring of 1995, net of reserves for obsolescence. "Supplies and other"
consists of foundation seed, unused bags, pallets, and other supply
items. Seed product inventory is valued at the lower of average cost by
crop year or market. Supply inventory is valued at the lower of cost
using the first-in, first-out method or market.
Item 2. Management's Discussion and Analysis
Liquidity and Capital Resources
Cash and cash equivalents declined $371,000 during the first quarter of
Fiscal 1996 from $399,000 at June 30, 1995, to $28,000 at September 30,
1995. Cash flow from operations generated $695,000. Collection of
$5,570,000 in receivables from last year's sales and $363,000 in
depreciation and amortization more than offset the three month loss of
$1,824,000, the $447,000 decline in payables and accrued liabilities, and
the $2,904,000 increase in inventory from harvest. Inventory rose from
$6,927,000 at June 30, 1995 to $9,831,000 at September 30, 1995.
Improvements in production facilities used $47,000 in cash and debt
repayment reduced cash an additional $1,019,000 as the Company used
short-term borrowings from related Limagrain companies to help reduce the
borrowings under the line of credit with its bank from $9,200,000 at June
30, 1995 to $4,100,000 at September 30, 1995. Management expects to
repay the short-term debt from the related Limagrain companies during the
second quarter.
The Company is in the process of renewing its line of credit with Harris
Trust & Savings Bank, which management believes will be completed in mid-
November before the line of credit expires on November 30, 1995.
Management believes that the terms of the new agreement will be
substantially the same as previous agreements, with the Company having
access to the line of credit based upon a borrowing base formula
determined by receivables and inventory. The line of credit will
continue to be guaranteed by Limagrain and LG Corp. Management believes
that once the renewal is completed, the Company will have access to
sufficient cash to fund the Company's operational needs for Fiscal 1996.
The Company and its insurance carrier are working to determine the
replacement cost of a production building destroyed by fire on August 11,
1995. For accounting purposes, the difference between the insurance
proceeds received and the basis of the building destroyed will be treated
as a gain or loss during Fiscal 1996. The cost of replacing the building
will be a capital expenditure at the time the building is replaced. As
of October 27, 1995, the insurance carrier has advanced the Company
$1,000,000 for the replacement of the building. This will result in a
gain of approximately $350,000 to be reported in the second quarter of
Fiscal 1996. At this time management is still considering whether to
spend an additional amount in excess of the insurance proceeds to improve
the processing capability of the replacement building and to integrate it
into the $3,500,000 plant built at the Elmwood Facility in 1990 after
Shissler was purchased by Limagrain.
On November 30, 1995, the Company will retire $2,000,000 of long-term
debt with LG Corp. in exchange for 200,000 shares of the Company's Class
A Preferred Stock. The additional 200,000 shares will bring LG Corp.'s
total Class A Preferred Stock ownership to 900,000 shares, representing a
contribution of $9,000,000 in equity to the Company during the past two
years.
Results of Operations
Due to the seasonal nature of the seed business, 70-80% of the Company's
revenues normally occur during the third and fourth fiscal quarters of
each year. During the first six months of the year, the Company'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 three months
ended September 30, 1994, include the operations of Scott Seed and
severance costs for a number of former Company employees. For a more
meaningful comparison of the operating results of the respective first
quarters of Fiscal 1996 versus Fiscal 1995, the severance costs and the
operations of Scott Seed have been excluded in the proforma statement of
operations shown in Note 1 of the Notes to Quarterly Consolidated
Financial Statements. Management believes this proforma allows the reader
to make a true comparison of the first quarters of Fiscal 1995 to Fiscal
1996 as the Company exists today and shows the Company's continuing
efforts to reduce expenses and improve profitability. The following
discussion is in reference to these proforma statements.
Net sales for the first quarter of Fiscal 1996 increased $45,000 over
Fiscal 1995, increasing from $511,000 in Fiscal 1995 to $556,000 for
Fiscal 1996. This improvement is a result of increased fall wheat sales
compared to the first quarter of 1995. Cost of goods declined $285,000
compared to last year, declining from $636,000 in Fiscal 1995 to $351,000
in Fiscal 1996. The drop in Cost of goods is a result of better inventory
management and a lower cost in disposing of soybeans left over from the
prior year. Differences in timing in the analysis of inventory shrinkage
reserves accounts for $90,000 of the improvement. As a result of the
Sales and Cost of goods improvements, Gross margin has improved $330,000
over the first quarter of last year.
Sales and marketing expenses have declined $64,000 from $1,078,000 in
Fiscal 1995 to $1,014,000 for the first quarter of Fiscal 1996. Savings
in travel costs and sales literature were the principle reasons for the
improvement over last year as the Company continued its efforts to
eliminate duplication of effort and create a unified image of the Company
throughout its seven service centers.
General and Administrative costs declined $264,000 from $1,207,000 for
the first quarter of Fiscal 1995 to $943,000 for the first quarter of
Fiscal 1996. The elimination of residual reorganization costs, the
Company's efforts to reduce over-all administrative expenses, and the
reduction in expense associated with a closed warehouse in southern
Illinois resulted in this improvement over Fiscal 1995.
Interest cost declined $70,000 compared to the first quarter of Fiscal
1995 decreasing from $320,000 to $250,000 in Fiscal 1996. A lower
average amount outstanding on the line of credit due to the Preferred
equity contributions by LG Corp. accounted for most of this decrease.
Other income increased $127,000 over the first quarter of last year from
$51,000 to $178,000. Gains from the sale of the stock received in the
Fiscal 1995 sale of the Scott Seed division resulted in most of the
increase.
As a result of these efforts, the Company's loss of $1,824,000 for the
first quarter of Fiscal 1996 is $855,000 less than the $2,679,000 loss
incurred in the first quarter of Fiscal 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 of Regulation S-K:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
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: November 1, 1995 /s/ J. C. Gouache
J. C. Gouache, President and
Chief Operating Officer
Date: November 1, 1995 /s/ Edward Germain
Edward Germain
Chief Financial Officer