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 March 31, 1997
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 April 30, 1997, 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)
March 31, June 30,
Assets 1997 1996
Current assets:
Cash & cash equivalents $ -- $ 194
Accounts receivable 7,981 7,964
Inventories 8,625 5,976
Prepaid expenses & other assets 434 153
Total Current Assets 17,040 14,287
Property, plant & equipment
At cost 14,241 13,808
Less: accumulated depreciation (4,751) (4,086)
Net property, plant & equipment 9,490 9,722
Goodwill, net of amortization 8,417 8,791
Other assets 120 157
Total Assets $35,067 $32,957
Liabilities and Shareholders' Equity
Current liabilities:
Cash overdrawn $ 464 $ --
Borrowings under line of credit 9,800 8,500
Current portion of long-term debt 51 107
Customer advances 773 1,013
Accrued liabilities 3,093 1,595
Due to affiliates 367 2,175
Total current liabilities 14,548 13,390
Long-term debt -- 31
Due to affiliates 5,261 3,261
Other noncurrent liabilities 232 170
Total Liabilities $20,041 $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 (6,933) (5,854)
Total equity $15,026 $16,105
Total Liabilities and
Shareholders' Equity $35,067 $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 Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
Net Sales:
Domestic $11,902 $12,687 $13,199 $13,557
Export-Affiliates 1,232 288 2,520 1,506
Export-Other 93 (73) 93 88
13,227 12,902 15,812 15,151
Cost of Goods Sold:
Cost of goods sold 7,850 8,108 9,928 10,049
Gross Margin 5,377 4,794 5,884 5,102
Operating expenses:
Sales and marketing 1,299 1,421 3,102 3,266
Warehouse and distribution 445 500 915 880
Administration 693 747 2,073 2,035
Amortization of goodwill 124 124 376 374
2,561 2,792 6,466 6,555
Operating income (loss) 2,816 2,002 (582) (1,453)
Other income (expense):
Interest (229) (166) (683) (621)
Other 22 17 186 757
Net income before taxes 2,609 1,853 (1,079) (1,317)
Income taxes -- -- -- --
Net income (loss) $2,609 $1,853 $(1,079) $(1,317)
Net income (loss)
per share $ 0.02 $0.02 (0.01) (0.01)
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)
Nine Months Ended
March 31,
1997 1996
Cash flow from operating activities:
Net income (loss) $(1,079) $(1,317)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,039 1,062
Changes in assets and liabilities:
Accounts receivable (17) 99
Inventories (2,649) 125
Other current assets (244) (282)
Accounts payable and accrued liabilities 1,320 1,819
Net cash provided by (used in)
operating activities (1,630) 1,506
Cash flow from investing activities:
Acquisition of property, plant & equipment (433) (1,120)
Other -- 649
Net cash provided by (used in)
investing activities (433) (471)
Cash flow from financing activities:
Increase (decrease) in borrowings under
line of credit 1,300 (1,800)
Increase (decrease)in debt to affiliates 192 (1,345)
Increase (decrease) in long-term debt (87) (54)
Increase in equity -- 2,000
Net cash provided by (used in)
financing activities 1,405 (1,199)
Net increase (decrease) in cash
and cash equivalents (658) (164)
Cash and cash equivalents at beginning
of period 194 399
Cash and cash equivalents at end of
period $ (464) $ 235
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 -- -- -- -- --
Balance
December 31, 1996 900,000 $9 115,418,788 $1,154 $20,891
Net income
Third Quarter -- -- -- -- --
Balance
March 31, 1997 900,000 $9 115,418,788 $1,154 $20,891
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)
Retained Treasury Stock Total
Earnings Shareholders'
(Deficit) Shares 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)
Balance
December 31, 1996 ($9,542) (39,160) ($95) $12,417
Net income
Third Quarter 2,609 -- -- 2,609
Balance
March 31, 1997 ($6,933) (39,160) ($95) $15,026
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 consis-
tent with the audited consolidated financial statements incorporated in
the Company's Form 10-K for the year ended June 30, 1996, such informa-
tion 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)
March 31, June 30,
1997 1996
Finished seed $ 6,685 $ 3,599
Unfinished seed 873 1,630
Supplies and other 1,067 747
Total Inventory $ 8,625 $ 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 each year, 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 decreased $658,000 during the first nine months
of Fiscal 1997 from $194,000 at June 30, 1996 to a negative $464,000 at
March 31, 1997. This negative cash balance represented checks written by
the Company at the end of March, but which had not been covered through
borrowings on the Line of Credit. Cash flow from operations consumed
$1,630,000. Major items impacting cash flow from operations for the nine
months ended March 31, 1997 were: (i) net loss for the period of
$1,079,000, offset by depreciation and amortization of $1,039,000; (ii)
an increase in inventory of $2,649,000 resulting from inventory produced
this year but not shipped to customers as of March 31, 1997; (iii) an
increase in accrued liabilities and payables of $1,320,000 resulting
primarily from an accrual of $1,190,000 for product shipped to customers,
but expected to be returned, and (iv) $261,000 consumed by other changes
in working capital.
Cash flow from investing activities consumed $433,000, primarily related
to the completion of the new grading and bagging building at the
Company's Elmwood, IL facility.
Cash flow from financing activities generated $1,405,000. Of this
amount, $1,300,000 came from additional borrowings on the line of credit
from the Company's bank.
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, Group 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 March 31, 1997 totaled $8,500,000 and $9,800,000,
respectively. The maximum amounts available under the Line of Credit,
pursuant to the borrowing base formula, at June 30, 1996 and March 31,
1997 were $8,725,000 and $12,000,000, respectively. In addition to the
Line 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 Line 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 the Line of
Credit during seasonal fluctuations in the Company's borrowing base and
net tangible assets, respectively, or otherwise.
Results of Operations - Quarter Ended March 31, 1997
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 each fiscal 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 fiscal
quarter.
Net sales for the third quarter of Fiscal 1997 increased $325,000 over
Fiscal 1996, increasing from $12,902,000 in Fiscal 1996 to $13,227,000
for Fiscal 1997. For this quarter, export sales (primarily to affiliated
companies) increased by $1,110,000. Domestic seed sales are behind the
amount for the prior year by $785,000. At least a portion of this is
related to shipping delays at some of the Company's seven locations due
to weather conditions. Cost of goods decreased $258,000 compared to last
year, decreasing from $8,108,000 in Fiscal 1996 to $7,850,000 in Fiscal
1997. This was primarily a result of lower costs of production this year
on seed corn. Gross margin is higher by $583,000 compared to the third
quarter of last year. This improvement resulted primarily from higher
volumes and lower cost of corn in Fiscal 1997.
Sales and marketing expenses have decreased $122,000 from $1,421,000 in
the third quarter of Fiscal 1996 to $1,299,000 for the third quarter of
Fiscal 1997. Most of the decrease relates to cost saving programs
instituted by the Company and differences in when expenses were incurred
from year-to-year, offset by increases in payroll and employee benefit
costs.
Warehouse and distribution costs were lower by $55,000, decreasing from
$500,000 in the third quarter of Fiscal 1996 to $445,000 in the third
quarter of Fiscal 1997. Most of this decrease is attributed to delays in
shipping product to our customers due to weather conditions.
General and administrative costs decreased $54,000 from $747,000 for the
third quarter of Fiscal 1996 to $693,000 for the third quarter of Fiscal
1997. Most of the decrease relates to differences in when expenses were
incurred from year-to-year.
Interest costs increased $63,000 from $166,000 in the third quarter of
Fiscal 1996 to $229,000 in the third quarter of Fiscal 1997, due
primarily to higher borrowing levels and increased borrowing rates.
Results of Operations - Nine Months Ended March 31, 1997
Net sales for the first nine months of Fiscal 1997 increased $661,000
over Fiscal 1996, increasing from $15,151,000 in Fiscal 1996 to
$15,812,000 for Fiscal 1997. Most of this improvement is a result of
increased higher export sales of $1,019,000, compared to the first nine
months of Fiscal 1996, which was $1,594,000. Cost of goods decreased
$121,000 compared to last year, decreasing from $10,049,000 in Fiscal
1996 to $9,928,000 in Fiscal 1997. Reduced cost of corn, offset by
higher volumes, accounted for this difference. Gross margin is higher by
$782,000 compared to the first nine months of last year. This
improvement resulted primarily from higher sales volume and lower cost of
corn.
Sales and marketing expenses have declined $164,000 from $3,266,000 in
Fiscal 1996 to $3,102,000 for the first nine months of Fiscal 1997.
Savings in various expenses and differences in when expenses were
incurred from year-to-year account for most of the lower costs.
Warehouse and distribution costs were higher by $35,000, increasing from
$880,000 in Fiscal 1996 to $915,000 in Fiscal 1997. Most of this
increase resulted because of later plantings and the costs of staging
products for shipment to customers.
General and administrative costs increased $38,000 from $2,035,000 for
the first nine months of Fiscal 1996 to $2,073,000 for the first nine
months of Fiscal 1997. In Fiscal 1996, there were favorable impacts of
$45,000 from the expiration of stock options.
Interest costs increased $62,000 compared to the first nine months of
Fiscal 1996, increasing from $621,000 to $683,000 in Fiscal 1997, due
primarily to higher borrowing levels and increased borrowing rates.
Other income decreased by $571,000 for the nine-month period, decreasing
from $757,000 for Fiscal 1996, to $186,000 for Fiscal 1997. 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
None.
Item 5. Other Information.
Effective April 17, 1997, the Company's common stock was delisted by the
NASDAQ-National Market System for failure to meet its quantitative
maintenance requirements as of December 31, 1996. At this time, the
Company's common stock is trading on the Over-the-Counter Bulletin Board
under the symbol "BIOT.".
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:
Current Report on Form 8-K filed with the Commission on March 18,
1997, File No. 0-11854, announcing that the Company's Common Stock
will be delisted from NASDAQ-NMS.
Current Report on Form 8-K filed with the Commission on April 17,
1997, File No. 0-11854, announcing that the Company's Common Stock
has been delisted from NASDAQ-NMS.
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: May 14, 1997 /s/ Bruno Carette
Bruno Carette, President and
Chief Operating Officer
Date: May 14, 1997 /s/ Edward M. Germain
Edward Germain
Chief Financial Officer and
Chief Accounting Officer