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, 1996
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 31, 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 1996 1996
Current assets:
Cash & cash equivalents $ 484 $ 194
Accounts receivable 1,231 7,964
Inventories 13,451 5,976
Prepaid expenses & other assets 379 153
Total Current Assets 15,545 14,287
Property, plant & equipment
At cost 14,274 13,808
Less: accumulated depreciation (4,516) (4,086)
Net property, plant & equipment 9,758 9,722
Goodwill, net of amortization 8,541 8,791
Other assets 133 157
Total Assets $33,977 $32,957
Liabilities and Shareholders' Equity
Borrowings under line of credit $ 8,400 $ 8,500
Current portion of long-term debt 80 107
Customer advances 4,349 1,013
Accrued liabilities 3,054 1,595
Due to affiliates 246 2,175
Total current liabilities 16,129 13,390
Long-term debt -- 31
Due to affiliates 5,261 3,261
Other noncurrent liabilities 170 170
Total Liabilities $21,560 $16,852
Shareholders' Equity
Preferred stock, Class A, 900,000
outstanding 9 9
Common stock, 150,000,000 shares
authorized; 115,418,788 shares
outstanding 1,154 1,154
Additional paid-in capital 20,891 20,891
Treasury stock (95) (95)
Accumulated deficit (9,542) (5,854)
Total equity $12,417 $16,105
Total Liabilities and
Shareholders' Equity $33,977 $32,957
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,
1996 1995 1996 1995
Net Sales:
Domestic $ 542 $ 314 $ 1,297 $ 870
Export-Affiliates 1,288 1,218 1,288 1,218
Export-Other -- 161 -- 161
1,830 1,693 2,585 2,249
Cost of Goods Sold:
Cost of goods sold 1,459 1,590 2,078 1,941
Gross Margin 371 103 507 308
Operating expenses:
Sales and marketing 864 831 1,803 1,845
Warehouse and distribution 207 185 470 380
Administration 655 631 1,380 1,288
Amortization of goodwill 126 125 252 250
1,852 1,772 3,905 3,763
Operating income (loss) (1,481) (1,669) (3,398) (3,455)
Other income (expense):
Interest (232) (205) (454) (455)
Other 55 528 164 740
Net income before taxes (1,658) (1,346) (3,688) (3,170)
Income taxes -- -- -- --
Net income (loss) $(1,658) $(1,346) $(3,688) $(3,170)
Net income (loss) per share (0.02) (0.01) (0.03) (0.03)
Weighted average
shares outstanding 115,418,788 115,418,788 115,418,788 115,418,788
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,
1996 1995
Cash flow from operating activities:
Net income (loss) $(3,688) $(3,170)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 680 716
Changes in assets and liabilities:
Accounts receivable 6,733 6,481
Inventories (7,475) (3,564)
Other current assets (202) (208)
Accounts payable and accrued liabilities 4,795 1,752
Net cash provided by (used in)
operating activities 843 2,007
Cash flow from investing activities:
Acquisition of property, plant & equipment (466) (198)
Other -- 647
Net cash provided by (used in)
investing activities (466) 449
Cash flow from financing activities:
Net repayment under line of credit (100) (2,900)
Increase (decrease)in debt to affiliates 71 (1,905)
Increase (decrease) in long-term debt (58) (50)
Increase in equity -- 2,000
Net cash provided by (used in)
financing activities (87) (2,855)
Net increase (decrease) in cash
and cash equivalents 290 (399)
Cash and cash equivalents at beginning
of period 194 399
Cash and cash equivalents at end of
period $ 484 $ --
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 Additional
Class A Non-Voting Paid-In
Shares Par Value Shares Par Value Capital
June 30, 1996 900,000 $9 115,418,788 $1,154 $20,891
Net loss
First Quarter -- $- -- -- --
Balance
September 30,
1996 900,000 $9 115,418,788 1,154 20,891
Net loss Second
Quarter -- -- -- -- --
900,000 $9 115,418,788 $1,154 $20,891
Retained Treasury Stock Total
Earnings Shareholders'
(Deficit) Shares Par Value Equity
June 30, 1996 ($5,854) (39,160) ($95) $16,105
Net loss
First Quarter ( 2,030) -- -- ( 2,030)
Balance
September 30,
1996 ( 7,884) (39,160) ( 95) 14,075
Net loss Second
Quarter ( 1,658) -- -- (1,658)
($9,542) (39,160) ($95) $12,417
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, 1996, 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,
1996 1996
Finished seed $ 9,884 $ 3,599
Unfinished seed 2,415 1,630
Supplies and other 1,152 747
Total Inventory $ 13,451 $ 5,976
"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 1996,
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
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 increased $290,000 during the first six months of
Fiscal 1997 from $194,000 at June 30, 1996 to $484,000 at December 31, 1996.
Cash flow from operations generated $843,000, with the collection of
$6,733,000 in accounts receivable (primarily from last year's sales), an
increase in accounts payable and accrued liabilities of $4,795,000 (primarily
for payables to growers for seed delivered to the Company, but not yet paid
for), and $680,000 in depreciation and amortization. Offsetting these items
were the $3,688,000 net loss for the six months ended December 31, 1996,
the $202,000 increase in other current assets, and the $7,475,000 increase
in inventory from seed production in the fall of 1996.
Net capital expenditures, primarily for a new grading and bagging facility
at the Company's Elmwood facility, used $466,000 in cash. In addition, net
debt repayment consumed cash of $87,000.
Since October 1993, the Company has had a revolving credit arrangement,
renewable annually (the "Line of Credit"), whereby the Company may borrow up
to $12,000,000, subject to the limitations of a borrowing base formula and
other limitations contained in the Credit Enhancement and Reorganization
Agreement, dated as of October 26, 1993, by and among the Company, Groupe
Limagrain Holding, S.A. ("Limagrain") and Limagrain Genetics Corp., a
majority-owned subsidiary of Limagrain ("LG Corp."), which was amended as of
December 10, 1993. Borrowings under the Line of Credit are secured by the
inventory and accounts receivable of the Company and its subsidiary, and by
the guarantees of Limagrain, LG Corp., and the Company's subsidiary.
Borrowings under the Line of Credit at June 30, 1996 and December 31, 1996
totaled $8,500,000 and $8,400,000, respectively. The maximum amounts
available under the Line of Credit, pursuant to the borrowing base formula,
at June 30, 1996 and December 31, 1996 were $8,725,000 and $9,219,000,
respectively. In addition to the Letter of Credit, the Company also borrows
funds from affiliates of Limagrain from time to time in order to fund the
interim working capital needs of the Company, including the reduction of the
Letter of Credit.
During Fiscal 1996, the Company received a long-term cash advance from an
affiliate of Limagrain in order to help fund operations of the Company,
including the reduction of the Line of Credit. On August 30, 1996, this
long-term cash advance was renegotiated and increased to a $2,000,000
note with LG Corp. bearing interest at 7% and due July 1, 1998.
Management believes this loan bears interest at or below a rate which the
Company would be able to obtain from an unaffiliated lender for an
unsecured loan.
Effective December 1, 1996, the Line of Credit was extended until
December 31, 1997 under substantially the same conditions. Management
expects that the Company will have access to sufficient cash resources to
meet the reasonably foreseeable obligations of its continuing business
operations. Management believes there is a strong commitment by
Limagrain to enable the Company to obtain sufficient working capital to
support the business. Management's belief that Limagrain's support will
continue is based on Limagrain's commitment under the Line of Credit
guarantee (which it has not had the obligation to continue since November
1994), its past contributions of $9,000,000 for Preferred Stock and its
past advances of $5,261,000 in long-term borrowings. Limagrain has no
legal obligation to provide additional funding for the Company.
There is no assurance that Limagrain, LG Corp., or any other affiliate of
the Company, will continue to (i) guarantee the Line of Credit, (ii) loan
funds to the Company, or (iii) convert such loans to Preferred Stock. In
addition, there is no assurance that, without such guarantees, loans and
conversions, the Company would not be out of compliance with (a) the Line
of Credit or (b) the Nasdaq Stock Market quantitative maintenance
criteria, during seasonal fluctuations in the Company's borrowing base
and net tangible assets, respectively, or otherwise.
Results of Operations - Quarter Ended December 31, 1996
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 seed
products, and substantial marketing efforts are underway in preparation
for the next sales season which begins in the third quarter.
Net sales for the second quarter of Fiscal 1997 increased $137,000 over
Fiscal 1996, increasing from $1,693,000 in Fiscal 1996 to $1,830,000 for
Fiscal 1997. This improvement is a result of increased export sales and
a few early shipments of domestic seed compared to the second quarter of
Fiscal 1996. Cost of goods decreased $131,000 compared to last year,
decreasing from $1,590,000 in Fiscal 1996 to $1,459,000 in Fiscal 1997.
This was primarily a result of lower costs of production this year on
export seed corn. Gross margin is higher by $268,000 compared to the
second quarter of last year. This improvement resulted primarily from
lower cost of corn in Fiscal 1997.
Sales and marketing expenses have increased $33,000 from $831,000 in the
second quarter of Fiscal 1996 to $864,000 for the second quarter of
Fiscal 1997. Most of the increase relates to timing differences and
increases in payroll and employee benefit costs.
Warehouse and distribution costs were higher by $22,000, increasing from
$185,000 in the second quarter of Fiscal 1996 to $207,000 in the second
quarter of Fiscal 1997. Most of this increase resulted from product
movements to get ready for the upcoming sales season.
General and administrative costs increased $24,000 from $631,000 for the
second quarter of Fiscal 1996 to $655,000 for the second quarter of
Fiscal 1997. Most of the increase relates to timing differences and
increases in payroll and employee benefit costs.
Interest costs increased $27,000 from $205,000 in the second quarter of
Fiscal 1996 to $232,000 in the second quarter of Fiscal 1997, due primarily
to higher borrowing levels.
Other income decreased $473,000 from the second quarter of Fiscal 1996
compared to the second quarter of Fiscal 1997 from $528,000 to $55,000.
Gains in Fiscal 1996 from the fire at the Elmwood Facility in August, 1995
accounted for $383,000 of the year-to-year change.
Results of Operations - Six Months Ended December 31, 1996
Net sales for the first six months of Fiscal 1997 increased $336,000 over
Fiscal 1996, increasing from $2,249,000 in Fiscal 1996 to $2,585,000 for
Fiscal 1997. This improvement is a result of increased fall wheat sales
and higher export sales, compared to the first six months of Fiscal 1996.
Cost of goods increased $137,000 compared to last year, increasing from
$1,941,000 in Fiscal 1996 to $2,078,000 in Fiscal 1997. Gross margin is
higher by $199,000 compared to the first six months of last year. This
improvement resulted primarily from higher sales volume and lower cost of
corn offset by the higher cost of wheat in Fiscal 1997.
Sales and marketing expenses have declined $42,000 from $1,845,000 in
Fiscal 1996 to $1,805,000 for the first six months of Fiscal 1997.
Savings in various expenses and timing differences account for most of
the lower costs.
Warehouse and distribution costs were higher by $90,000, increasing from
$380,000 in Fiscal 1996 to $470,000 in Fiscal 1997. Most of this
increase resulted because of later plantings and product movements from
the prior sales season.
General and administrative costs increased $92,000 from $1,288,000 for
the first six months of Fiscal 1996 to $1,380,000 for the first six
months of Fiscal 1997. In Fiscal 1996, there were favorable impacts of
$45,000 from the expiration of stock options.
Interest costs declined $1,000 compared to the first six months of Fiscal
1996, decreasing from $455,000 to $454,000 in Fiscal 1997.
Other income decreased $576,000 over the first six months of last year from
$740,000 to $164,000. Gains from the sale of the AgriBioTech stock
in Fiscal 1996 of $100,000 and the gain from the fire at the Elmwood
Facility in August, 1996 of $383,000 accounted for most of the
year-to-year change.
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 12, 1996 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 Withheld
George R. Allbritten 114,226,233 35,440
Claude Agier 114,226,233 35,440
Jean Ferrand 114,226,233 35,440
Ralph W. F. Hardy 114,226,983 34,690
William Hittinger 114,226,983 34,690
Laurent Petoton 114,226,033 35,640
Emmanual Rougier 114,225,983 35,690
(2) Ratification of the appointment of KPMG Peat Marwick as independent
auditors of the Company for the fiscal year ending June 30, 1997:
114,239,667 votes were cast in favor of such proposal; 6,866 votes were
cast against such proposal; and 15,140 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 27 Financial Data Schedule
Exhibit 99 Eighth Amendment to The Secured Revolving
Credit Agreement and Fifth Amendment to Secured
Revolving Credit Note
(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: February 3, 1997 /s/ Bruno Carette
Bruno Carette, President
and Chief Operating Officer
Date: February 3, 1997 /s/ Edward M. Germain
Edward M. Germain
Chief Financial Officer