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 December 31, 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 January 19, 1996, the Registrant had 115,379,628 (115,418,788 shares
less, 39,160 treasury shares) shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
December 31, June 30,
Assets 1995 1995
Current assets:
Cash & cash equivalents 0 399
Accounts receivable 1,297 7,778
Inventories 10,491 6,927
Prepaid expenses & other assets 353 105
------ ------
Total Current Assets 12,141 15,209
Property, plant & equipment
At cost 12,552 13,281
Less accumulated depreciation 3,696 3,510
------ ------
Net property, plant & equipment 8,856 9,771
Goodwill and other assets 9,232 9,522
Total Assets 30,229 34,502
====== ======
Liabilities and Shareholders' equity
Current liabilities:
Borrowings under line of credit 6,300 9,200
Current portion of long-term debt 115 115
Accounts payable 1,834 735
Customer advances 2,313 0
Accrued liabilities 391 2,051
Due to affiliates 160 0
------ ------
Total current liabilities 11,113 12,101
Long- term debt 77 129
Due to affiliates 3,261 5,326
Other noncurrent liabilities 158 156
------ ------
Total Liabilities 14,609 17,712
Shareholders' equity:
Preferred stock, Class A, 2,000,000
shares authorized; 900,000 and 700,000
shares outstanding, respectively 9 7
Common stock, 150,000,000 shares
authorized; 115,418,788 shares
outstanding 1,154 1,154
Additional paid-in capital 20,891 18,893
Accumulated deficit (6,339) (3,169)
Treasury stock (95) (95)
------ ------
Total shareholders' equity 15,620 16,790
Total liabilities and
shareholders' equity 30,229 34,502
====== ======
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 Six Months Ended
December 31, December 31,
1995 1994 1995 1994
Net Sales:
Domestic 314 1,022 870 2,905
Export-Affiliates 1,218 1,979 1,218 1,979
Export-Other 161 0 161 0
------ ------ ------ ------
1,693 3,001 2,249 4,884
Cost of Goods Sold:
Cost of goods sold 1,590 2,742 1,941 4,481
------ ------ ------ ------
Gross Margin 103 259 308 403
Operating expenses:
Sales and marketing 831 945 1,845 2,085
Warehouse and distribution 185 395 380 868
General and administrative 631 846 1,288 1,738
------ ------ ------ ------
1,647 2,186 3,513 4,691
Operating income (1,544) (1,927) (3,205) (4,288)
Other income (expense):
Interest expense (205) (306) (455) (627)
Amortization of goodwill (125) (124) (250) (238)
Gain on sale of fixed assets 395 16 406 21
Other 133 (3) 334 63
------ ------ ------ ------
Net income before taxes (1,346) (2,344) (3,170) (5,069)
Income taxes 0 0 0 0
Net income (loss) (1,346) (2,344) (3,170) (5,069)
====== ====== ====== ======
Net income (loss) per share (0.01) (0.02) (0.03) (0.04)
Weighted average
shares outstanding
(in thousands) 115,419 121,434 115,419 121,434
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Six Months Ended
December 31,
1995 1994
Cash flow from operating activities:
Net income (loss) (3,170) (5,069)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 716 815
Changes in assets and liabilities
Accounts receivable 6,481 5,851
Inventories (3,564) (4,720)
Other current assets (208) 1,091
Customer advances 2,313 0
Accounts payable and accrued liabilities (561) 3,934
------ ------
Net cash provided by (used in)
operating activities 2,007 1,902
Cash flow from investing activities:
Acquisition of property, plant & equipment (198) (137)
Other 647 0
------ ------
Net cash provided by (used in)
investing activities 449 (137)
Cash flow from financing activities:
Increase (decrease)in line of credit (2,900) (6,650)
Increase (decrease)in debt to affiliates (1,905) 3,083
(Decrease) in long-term debt and notes payable (50) (243)
Increase in equity 2,000 2,000
------ ------
Net cash provided by (used in)
financing activities (2,855) (1,810)
Net increase (decrease) in cash (399) (45)
Cash and cash equivalents at beginning of period 399 1,141
Cash and cash equivalents at end of period 0 1,096
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 Common Stock
Class A Non-Voting
Shares Par Value Shares Par Value
Balance June 30, 1995 700,000 $7 115,418,788 $1,154
Net loss First Quarter 0 $0 0 $0
Balance September 30, 1995 700,000 $7 115,418,788 $1,154
Issuance of Preferred Stock 200,000 $2 0 $0
Net loss Second Quarter 0 $0 0 $0
Balance December 31, 1995 900,000 $9 115,418,788 $1,154
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of dollars, except share data)
Additional Retained Treasury Stock Total
Paid-In Earnings Shareholders
Capital (Deficit) Shares Par Value Equity
Balance June 30, 1995 $18,893 ($3,169) (39,160) ($95) $16,790
Net loss First Quarter $0 ($1,824) 0 $0 ($1,824)
Balance September 30, 1995 $18,893 ($4,993) (39,160) ($95) $14,966
Issuance of Preferred Stock $1,998 $0 0 $0 $2,000
Net loss Second Quarter $0 ($1,346) 0 $0 ($1,346)
Balance December 31, 1995 $20,891 ($6,339) (39,160) ($95) $15,620
See notes to Condensed Consolidated Financial Statements
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) 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.
2) Inventories
(in thousand of dollars)
December 31, June 30,
1995 1995
Finished seed $ 8,777 $ 4,243
Unfinished seed 1,131 2,123
Supplies and other 583 561
-------- --------
Total Inventory $ 10,491 $ 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.
3) Financing Agreement
On November 15, 1995, the Company renewed its line of credit with its
principal bank, extending the terms of the agreement until December 1,
1996. The Company may borrow up to $12,000,000, based upon a borrowing
base formula, subject to certain limitations and availability. Borrowings
under the line of credit are secured by receivables and inventory and by
the guarantee of the majority shareholder, Limagrain Genetics Corp., and
its parent, Groupe Limagrain Holding S.A. Borrowings against the line of
credit at January 19, 1996, totaled $6,000,000.
4) Changes in Equity
On November 30, 1995, the Company retired $2,000,000 of long-term debt
with its majority shareholder in exchange for 200,000 shares of the
Company's Class A Preferred Stock. The additional 200,000 shares brought
the total Class A Preferred Stock ownership of the majority shareholder
to 900,000 shares, representing a contribution of $9,000,000 in equity to
the Company during the past two years.
Item 2. Management's Discussion and Analysis
Business
The primary business of the Company is the production, processing and
sale of agricultural seeds to a network of farmer-dealers throughout the
midwestern United States. Corn, soybeans, and alfalfa comprise the
Company's major product lines.
The Company contracts with independent farmer-growers for the production
of seed to be grown under Company supervision to meet specific quality
and marketability specifications. The Company then processes and treats
the delivered seed with appropriate fungicides and insecticides and bags
the products for sale. Because weather conditions can cause material
fluctuations in yields and seed quality, the Company's cost of goods sold
is highly dependent upon weather conditions in its growing areas.
Liquidity and Capital Resources
Cash and cash equivalents declined $399,000 during the first six months
of Fiscal 1996 from $399,000 at June 30, 1995 to $0 at December 31, 1995.
Cash flow from operations totaled $2,007,000 primarily as a result of the
$2,313,000 in customer prepayments received during the second quarter of
Fiscal 1996. In addition, Depreciation and amortization of $716,000 and
the collection of $6,481,000 in cash from receivables nearly offset the
$3,564,000 growth in inventory, the $3,170,000 loss year to date, and the
$561,000 reduction in accounts payable and accrued expenses thus far this
year.
Production projects and information system improvements used $198,000 in
cash during the six month period but this was more than offset by the
$647,000 reduction in net fixed assets for the six month period. This
reduction is due to the involuntary disposal and resulting gain on fixed
assets mentioned in the last paragraph of this section.
Repayment of both short and long term debt used $2,950,000 of the
Company's cash flow, while the conversion of $2,000,000 in affiliate debt
into Preferred Stock mentioned in Note 4 of the Notes to the Quarterly
Consolidated Financial Statements resulted in the $2,000,000 increase to
equity and the $1,905,000 decline in debt to affiliates.
On November 15, 1995, the Company renewed its line of credit with its
principal bank, extending the terms of the agreement until December 1,
1996. The Company may borrow up to $12,000,000, based upon a borrowing
base formula, subject to certain limitations and availability. Borrowings
under the line of credit are secured by receivables and inventory and by
the guarantee of the majority shareholder and its parent. Borrowings at
January 19, 1996, totaled $6,000,000 compared to an availability under
the borrowing base of $7,515,000 at December 31, 1995. Management
believes that with the renewal the Company has access to sufficient cash
to fund the Company's operational needs for Fiscal 1996.
In October the Company and its insurance carrier reached a settlement in
determining the replacement cost of a production building destroyed by
fire on August 11, 1995. The insurance carrier has paid the Company
$1,029,000 for the replacement of the building which results in a gain on
involuntary disposal of fixed assets of approximately $383,000 which is
included in the three and six month periods ending December 31, 1995.
Management has decided to replace the destroyed building with a more
efficient and higher capacity facility, resulting in a capital
improvement project for Fiscal 1996 and Fiscal 1997 totaling $1,900,000.
This project will improve the processing capability at the Elmwood
facility and integrate it into the $3,500,000 plant built in Elmwood in
1990.
Results of Operations
Due to the seasonal nature of the seed business, 80-90% 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 planting season which begins in the spring. Consequently,
companies in this industry typically have losses during the July through
December period and, as a result, the first and second quarters of the
year are not indicative of the results to be expected for the full year.
The Condensed Consolidated Statements of Operations for the three and six
months ended December 31, 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 three
and six month periods ending December 31, 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 below. Management
believes this proforma allows the reader to make a better comparison of
the three and six month periods ending December 31, 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.
BIOTECHNICA INTERNATIONAL INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands of dollars except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
Net Sales:
Domestic 314 171 870 682
Export-Affiliates 1,218 1,979 1,218 1,979
Export-Other 161 0 161 0
------ ------ ------ ------
1,693 2,150 2,249 2,661
Cost of Goods Sold:
Cost of goods sold 1,590 2,028 1,941 2,664
------ ------ ------ ------
Gross Margin 103 122 308 (3)
Operating expenses:
Sales and marketing 831 890 1,845 1,968
Warehouse and distribution 185 247 380 565
General and administrative 631 798 1,288 1,616
------ ------ ------ ------
1,647 1,935 3,513 4,149
Operating income (1,544) (1,813) (3,205) (4,152)
Other income (expense):
Interest expense (205) (305) (455) (625)
Amortization of goodwill (125) (124) (250) (238)
Gain on sale of fixed assets 395 16 406 21
Other 133 20 334 109
------ ------ ------ ------
Net income before taxes (1,346) (2,206) (3,170) (4,885)
Income taxes 0 0 0 0
Net income (loss) (1,346) (2,206) (3,170) (4,885)
====== ====== ====== ======
Net income (loss) per share (0.01) (0.02) (0.03) (0.04)
Weighted average
shares outstanding 115,419 121,434 115,419 121,434
(in thousands)
See notes to Condensed Consolidated Financial Statements
Net sales on a proforma basis are $457,000 lower in the second quarter of
Fiscal 1996, declining from $2,150,000 in Fiscal 1995 to $1,693,000
in Fiscal 1996. Fall wheat sales improved over last year increasing from
$135,000 in the second quarter of Fiscal 1995 to $317,000 in the second
quarter of Fiscal 1996, however export sales to affiliates are $761,000
lower declining from $1,979,000 in Fiscal 1995 to $1,218,000 in Fiscal
1996. Affiliate corn production contracts for Fiscal 1996 are roughly
half of Fiscal 1995 totals and on top of that, due to the poor production
year experienced by the entire industry, the Company was unable to
produce enough of the proprietary corn genetics to fill the European
affiliates orders. As a result, these sales will be significantly lower
than Fiscal 1995. Cost of goods sold is $438,000 lower than Fiscal 1995
with the reduced sales volumes, but with the poor production year, the
cost of the current years corn crop for both domestic and export markets
will be significantly higher than in a normal production year. Sales and
marketing costs are $59,000 lower in the second quarter of Fiscal 1996
declining from $890,000 in Fiscal 1995 to $831,000 in Fiscal 1996, as the
Company continues its standardization of its sales programs. Warehouse
and distribution costs are $62,000 lower, declining from $247,000 in
Fiscal 1995 to $185,000 in Fiscal 1996. Administrative costs are $167,000
lower in the second quarter of Fiscal 1996 declining from $798,000 in
Fiscal 1995 to $631,000 in Fiscal 1996. Interest costs are $100,000 lower
due to the Company's reduced borrowing needs declining from $305,000 in
Fiscal 1995 to $205,000 in Fiscal 1996. Due to the $383,000 gain on
assets disposed as a result of the Elmwood fire, the Company's gain on
the sale of fixed assets increased from $16,000 in Fiscal 1995 to
$395,000 in Fiscal 1996. Other income of $133,000 is $113,000 higher
than the $20,000 reported in Fiscal 1995. As a result, the Company
reduced its net loss for the second quarter by $860,000 from a loss of
$2,206,000 in Fiscal 1995 to a loss of $1,346,000 for the second quarter
of Fiscal 1996
On a year to date proforma basis, net sales for the first six months of
the year are $412,000 lower than Fiscal 1995, declining from $2,661,000
to $2,249,000. For the fall selling season just completed, wheat sales
increased 55% from $530,000 in Fiscal 1995 to $823,000 in Fiscal 1996.
Management attributes this increase to a strong price for commodity wheat
and the acceptance of the Company's marketing concept and products.
Export sales to affiliates are $761,000 lower due to the reduced demand
and the poor production year mentioned in the preceding paragraph. Cost
of goods is $723,000 lower in Fiscal 1996 with the reduced export volume,
declining from $2,664,000 in Fiscal 1995 to $1,941,000 in Fiscal 1996.
Sales and marketing costs are $123,000 lower in the six months ended
December 31, 1995, declining from $1,968,000 in Fiscal 1995 to $1,845,000
in Fiscal 1996. Warehouse and distribution costs are $185,000 lower
declining from $565,000 in Fiscal 1995 to $380,000 in Fiscal 1996 as the
Company tries to improve its product management. Administrative costs
declined $328,000 in the six months ending December 31, 1995 decreasing
from $1,616,000 in Fiscal 1995 to $1,288,000 in Fiscal 1996. Interest
expense declined $170,000 decreasing from $625,000 in Fiscal 1995 to
$455,000 in Fiscal 1996 due to the reduced borrowing needs of the
Company. With the $383,000 gain from the Elmwood fire, gain on the sale
of fixed assets rose from $21,000 in Fiscal 1995 to $406,000 in Fiscal
1996. Other income rose $225,000 during the first six months ending
December 31, 1995 increasing from $109,000 in Fiscal 1995 to $334,000 in
Fiscal 1996. As a result of these efforts the Company reduced its net
loss for the first six months ending December 31, 1995 from $4,885,000 in
Fiscal 1995 to $3,170,000 in Fiscal 1996, a reduction of $1,715,000.
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
The Annual Meeting of the Shareholders (the "Annual Meeting") of the
Company was held at the Signature Inn, 4112 North Brandywine Drive,
Peoria, Illinois 61614, on November 14, 1995 at 10:00 a.m. local time.
The following matters were voted on by the shareholders at the Annual
Meeting:
(1) Election of seven directors to serve until their successors shall be
elected and shall qualify. The following persons were elected directors
of the Company, as successors to the class of directors whose terms
expired with the annual election, to hold office for the term of one (1)
year.
In Favor Opposed
George R. Allbritten 113,451,310 24,890
Claude Agier 113,451,310 24,890
Jean Ferrand 113,451,310 24,890
Ralph W. F. Hardy 113,452,310 23,890
William Hittinger 113,452,310 23,890
Laurent Petoton 113,451,310 24,890
Emmanual Rougier 113,451,310 24,890
(2) Ratification of the appointment of KPMG Peat Marwick as independent
auditors of the Company for the fiscal year ending June 30, 1996:
113,456,289 votes were cast in favor of such proposal; 7,700 votes were
cast against such proposal; and 12,211 votes abstained.
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 99 Sixth Amendment to The Secured Revolving Credit
Agreement between BioTechnica International, Inc.
and Harris Bank
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: January 19, 1996 _____J.C. Gouache_______________________
J. C. Gouache, President and
Chief Operating Officer
Date: January 19, 1996 _____Edward Germain_______________________
Edward Germain
Chief Financial Officer