FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 1-6244
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AMERICAN MAIZE-PRODUCTS COMPANY
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(Exact name of registrant as specified in its charter)
Maine 13-0432720
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
250 Harbor Drive, Stamford, CT 06902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 356-9000
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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
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Number of shares outstanding of each of issuer's classes of common stock at
September 30, 1994.
Class A Class B
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Outstanding 8,515,509 1,742,057
INDEX
Page #
Part I
Financial Statements:
Condensed Consolidated Balance Sheets
at September 30, 1994 and December 31, 1993 1
Condensed Consolidated Statements of Operations and Retained Earnings
for the nine and three months ended September 30, 1994 and 1993 2
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1994 and 1993 3
Notes to Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-6
Part II
Item 1. Legal Proceedings 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1994 1993
Current assets:
Cash and cash equivalents $ 450,000 $ 2,862,000
Accounts receivable, trade, less allowance
for doubtful accounts of $4,639,000 at
September 30, 1994 and $3,609,000 at December 31, 1993 60,943,000 53,529,000
Inventories
Finished goods 22,518,000 25,074,000
Work-in-process 4,008,000 4,344,000
Raw materials 37,501,000 38,882,000
Stores and supplies 17,710,000 17,833,000
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81,737,000 86,133,000
Other current assets 12,223,000 11,117,000
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Total current assets 155,353,000 153,641,000
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Property, plant and equipment, at cost 498,705,000 468,017,000
Less, Accumulated depreciation 200,368,000 180,593,000
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298,337,000 287,424,000
Excess of cost over net assets of
acquired companies, less accumulated
amortization of $4,047,000 at September 30, 1994,
and $3,504,000 at December 31, 1993 22,741,000 23,284,000
Prepaid pension costs 14,732,000 14,732,000
Other assets 12,647,000 12,977,000
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$503,810,000 $492,058,000
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Current liabilities:
Bank overdrafts $ 3,849,000 $ -
Short-term debt - 5,000,000
Long-term debt, current installments 929,000 885,000
Accounts payable, trade 19,748,000 16,278,000
Accrued expenses 23,338,000 24,395,000
Accrued income taxes 3,258,000 4,837,000
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Total current liabilities 51,122,000 51,395,000
Long-term debt, less current installments 133,991,000 139,294,000
Deferred income taxes 33,196,000 30,775,000
Accrued postretirement and postemployment benefits 52,605,000 50,027,000
Other liabilities 5,309,000 4,901,000
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276,223,000 276,392,000
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Stockholders' equity:
Capital stock:
Common, Class A, $.80 par value; authorized 15,000,000 shares
at September 30, 1994 and at December 31, 1993; issued 8,868,053
shares at September 30, 1994 and 8,848,903 shares at
December 31, 1993 7,094,000 7,079,000
Common, Class B, $.80 par value; authorized
2,500,000 shares; issued 1,809,282 shares
at September 30, 1994 and December 31, 1993 1,447,000 1,447,000
Capital in excess of par value of common stock 124,266,000 123,836,000
Retained earnings 101,567,000 90,221,000
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234,374,000 222,583,000
Less, Common Stock in treasury, at cost;
Class A, 352,544 shares at September 30, 1994 and 366,990
shares at December 31, 1993; Class B, 67,225 shares at
September 30, 1994 and December 31, 1993 6,787,000 6,917,000
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Total stockholders' equity 227,587,000 215,666,000
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$503,810,000 $492,058,000
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See accompanying notes to condensed consolidated financial statements.
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
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1994 1993 1994 1993
Net sales $462,189,000 $402,678,000 $163,409,000 $151,825,000
Cost of sales 348,773,000 313,174,000 123,412,000 115,784,000
------------ ------------ ------------ ------------
Gross profit 113,416,000 89,504,000 39,997,000 36,041,000
Selling, administrative and general expenses 67,256,000 70,009,000 21,405,000 22,582,000
Restructuring charges 5,400,000 12,323,000 - -
Provision for patent litigation 4,000,000 - - -
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Operating profit 36,760,000 7,172,000 18,592,000 13,459,000
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Other income (expense):
Interest expense (8,462,000) (11,259,000) (2,496,000) (3,403,000)
Interest income 194,000 1,061,000 54,000 194,000
Other, net (1,519,000) (1,146,000) (669,000) (220,000)
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(9,787,000) (11,344,000) (3,111,000) (3,429,000)
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Income (loss) before income taxes, minority
interest, extraordinary loss and
cumulative effect of accounting changes 26,973,000 (4,172,000) 15,481,000 10,030,000
Income taxes:
Current (7,666,000) 523,000 (5,112,000) (3,013,000)
Deferred (3,046,000) 161,000 (891,000) (1,589,000)
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(10,712,000) 684,000 (6,003,000) (4,602,000)
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Income (loss) before minority interest,
extraordinary loss and cumulative effect of
accounting changes 16,261,000 (3,488,000) 9,478,000 5,428,000
Minority interest in loss of subsidiary - 329,000 - -
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Income (loss) before extraordinary loss and
cumulative effect of accounting changes 16,261,000 (3,159,000) 9,478,000 5,428,000
Extraordinary loss from early extinguishment of
debt - (2,862,000) - -
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Income (loss) before cumulative effect of
accounting changes 16,261,000 (6,021,000) 9,478,000 5,428,000
Cumulative effect of accounting changes - (27,200,000) - -
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Net income (loss) 16,261,000 (33,221,000) 9,478,000 5,428,000
Retained earnings at beginning of period 90,221,000 127,324,000 93,729,000 86,009,000
Less: cash dividends paid 4,915,000 4,299,000 1,640,000 1,633,000
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Retained earnings at end of period $101,567,000 $ 89,804,000 $101,567,000 $ 89,804,000
============ ============ ============ ============
Earnings per share of common stock:
Income (loss) before extraordinary loss and
cumulative effect of accounting changes $1.59 $ (.33) $ .92 $ .53
Extraordinary loss from early extinguishment of
debt - (.30) - -
Cumulative effect of accounting changes - (2.88) - -
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Net income (loss) $1.59 $(3.51) $ .92 $ .53
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Dividends per share of common stock $ .48 $ .48 $ .16 $ .16
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Weighted average number of common shares
outstanding 10,239,182 9,437,663 10,251,325 10,210,919
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See accompanying notes to condensed consolidated financial statements.
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(Unaudited)
Nine Months Ended
September 30,
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1994 1993
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Cash flows from operating activities:
Net income (loss) $ 16,261,000 $(33,221,000)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 23,602,000 23,629,000
Amortization of original issue discount on
subordinated debentures - 196,000
Deferred income taxes 3,046,000 (161,000)
Extraordinary loss from early extinguishment of debt - 2,862,000
Cumulative effect of accounting changes - 27,200,000
Restructuring charges 5,400,000 12,323,000
Provision for patent litigation 4,000,000 -
Minority interest in loss of subsidiary, net of dividends - (941,000)
Changes in operating assets and liabilities:
Accounts receivable, trade (7,414,000) (11,566,000)
Inventories 4,396,000 (814,000)
Other current assets (1,106,000) 410,000
Accounts payable and accrued expenses (5,971,000) (3,272,000)
Other, net 4,750,000 (6,224,000)
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Net cash provided by operating activities 46,964,000 10,421,000
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Cash flows from investing activities:
Additions to property, plant and equipment (38,051,000) (31,655,000)
Purchase of minority interest in subsidiary - (32,992,000)
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Net cash used in investing activities (38,051,000) (64,647,000)
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Cash flows from financing activities:
Cash dividends (4,915,000) (4,299,000)
Increase in bank overdrafts 3,849,000 -
Net reduction of short-term debt (5,000,000) (9,200,000)
Borrowings on long-term debt 21,400,000 125,000,000
Payments of long-term debt (26,659,000) (111,171,000)
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Net cash provided by (used in) financing activities (11,325,000) 330,000
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Net decrease in cash and cash equivalents (2,412,000) (53,896,000)
Cash and cash equivalents, beginning of year 2,862,000 69,180,000
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Cash and cash equivalents, end of period $ 450,000 $ 15,284,000
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Supplemental Cash Flow Information
Cash paid during the period for:
Interest (net of amount capitalized) $ 10,476,000 $ 8,091,000
Income taxes (net of refunds) $ 8,973,000 $ 1,315,000
See accompanying notes to condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
Unaudited
(A) Basis of Presentation
The accompanying condensed consolidated financial statements of American
Maize-Products Company and its Subsidiaries ("Company") for the nine and
three month periods ended September 30, 1994 and 1993 are unaudited.
However, in the opinion of the Company, all adjustments (of a normal
recurring nature) considered necessary for a fair presentation have been
reflected therein.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes, has
been omitted. The accompanying condensed consolidated financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1993. Certain reclassifications
have been made in the prior period financial statements to conform with
the current year's presentation.
(B) Supplementary Information
Interest costs incurred during the nine and three months ended September
30, 1994 and 1993 were $9,221,000, $11,987,000, $2,953,000 and
$3,575,000, respectively. Interest capitalized during these periods was
$759,000, $728,000, $457,000 and $172,000, respectively.
For cash flow reporting purposes all highly liquid short-term investments
(as denoted on the balance sheet), with maturities of three months or
less, are considered cash equivalents.
Deposits made for hedging transactions to cover open positions on corn
purchases are included in inventory for cash flow reporting purposes.
The Company periodically enters into corn futures contracts to hedge
against sales commitments of corn-derived products. The Company utilizes
the corn futures market to minimize the inherent risk potential resulting
from significant fluctuations in cost of corn. In accordance with its
hedging policy, the Company only enters into corn futures contracts to
cover the corn requirements to manufacture products covered by fixed
price, fixed quantity contracts with customers and near term production
commitments. Futures contract quantities are matched with approximate
requirements under customer contracts by using the futures contract dates
closest to expected shipment dates to customers. The corn futures
contracts outstanding at September 30, 1994 and December 31, 1993 expire
at various dates and various prices through September, 1995. At September
30, 1994 and December 31, 1993, the Company had corn futures contracts of
$32,979,000 (12,660,000 bushels) and $33,173,000 (11,765,000 bushels),
respectively. Unrealized gains and losses associated with these contracts
are deferred and are accounted for as part of the hedged transaction.
Based upon market rates, these contracts had a deferred contract loss of
$5,111,000 at September 30, 1994, and a deferred contract gain of
$1,634,000 at December 31, 1993. Settlement gains and losses on corn
futures contracts are matched to specific inventory purchases and
credited or charged to cost of sales at the time such inventory is sold.
Based upon daily margin account activity, including contract purchases,
contract sales and market fluctuations in the value of open contracts,
cash settlement is made on a daily basis to maintain margin accounts at
specified levels.
(C) Short-term Debt
Short-term debt comprises borrowings on lines of credit from banks.
(D) Legal Proceedings
The current status of litigation is described in Part II, herein. See
also MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS "Results of Operations (Nine Months ended September
30, 1994 compared with the Nine Months ended September 30, 1993)".
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition (September 30, 1994
compared to December 31, 1993)
The Company currently has available $125,000,000 under a bank revolving credit
agreement which expires on December 31, 1998 and open lines of credit with banks
of $10,000,000. At September 30, 1994, borrowings under the bank revolving
credit agreement were $8,000,000.
Significant uses of cash during the period included capital expenditures of
$38,051,000, increased receivable levels of $7,414,000 and debt payments of
$6,410,000. The increase in receivable levels was primarily attributable to
higher selling prices for corn sweeteners. The Company anticipates approximately
$22,000,000 of additional capital spending for the remainder of the year which
will be financed through operating cash flow and available credit facilities, as
needed.
Results of Operations (Nine Months
ended September 30, 1994 compared with the
Nine Months ended September 30, 1993)
Net sales increased 14.8% in 1994 to $462,189,000 compared to $402,678,000 in
1993. The higher sales reflect an increase in unit sales volumes and pricing of
high fructose corn syrup and specialty food starches and higher net sales in the
tobacco business.
Operating profits were $36,760,000 in 1994 compared to $7,172,000 in 1993.
Operating profits in the Company's corn processing business were significantly
higher than last year due primarily to higher sweetener prices. Higher volumes
and prices for cigars and cost savings realized as a result of the consolidation
in the tobacco business completed during the second quarter also contributed to
the year to year improvement. Operating results include restructuring charges of
$5,400,000 in 1994 and $12,323,000 in 1993. The charge in 1994 represents the
costs associated with consolidations in the Company's tobacco business. The 1994
operating results also include a charge of $4,000,000 for the establishment of a
reserve for ongoing patent infringement litigation. The reserve was established
on the assumption that the ultimate damage award will be based on a reasonable
royalty. The potential exists, however, for the final judgment to be
significantly higher than the recorded reserve. Due to the complexity of the
litigation, management is unable to reasonably estimate the extent to which a
final judgment may exceed the reserve. Management believes that the ultimate
judgment could have a material adverse effect on the results of operations in a
future period but would not have a material adverse effect on the Company's
financial condition. See Part II Item 1. "Legal Proceedings" in the Form 10-Q
Quarterly Report for the period ended June 30, 1994.
Interest expense decreased to $8,462,000 in 1994 compared to $11,259,000 in
1993. The primary reasons for the decrease were lower average interest rates and
debt levels.
Net income in 1994 was $16,261,000, or $1.59 per share, compared to a net loss
of $33,221,000, or $3.51 per share, in 1993. Results for 1993 include an after
tax charge of $27,200,000, or $2.88 per share, to reflect the cumulative effect
of the adoption of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" and No.
112, "Employers' Accounting for Postemployment Benefits". Also included in the
1993 results was an extraordinary loss of $2,862,000, or $.30 per share,
relating to the early extinguishment of the Company's 12% senior subordinated
debentures.
Results of Operations (Three Months ended
September 30, 1994 compared with the
Three Months ended September 30, 1993)
Net sales increased 7.6% in 1994 to $163,409,000 compared to $151,825,000 in
1993. The higher sales reflect improved pricing for corn sweeteners and higher
sales volumes and pricing for cigars.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Three Months
ended September 30, 1994 compared with the
Three Months ended September 30, 1993) (continued)
Operating profits were $18,592,000 in 1994 compared to $13,459,000 in 1993.
Operating profits in the Company's corn processing business were higher than
last year due primarily to higher sweetener prices; operating results in the
tobacco business increased due to higher volumes and prices for cigars and
merger related cost reductions.
Interest expense decreased to $2,496,000 in 1994 compared to $3,403,000 in 1993.
The primary reasons for the decrease were lower average interest rates and debt
levels.
The net income in 1994 was $9,478,000, or $.92 per share, compared to
$5,428,000, or $.53 per share, in 1993.
PART II
Item 1. Legal Proceedings
No reportable events have occurred which would require
modification of the discussion under Legal Proceedings set forth in the
Company's Form 10-K Annual Report for the fiscal year ended December 31, 1993,
and in its Form 10-Q Quarterly Reports for the periods ended March 31, 1994 and
June 30, 1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (exhibit reference numbers refer to Item 601 of
Regulation S-K)
11 (a) Calculation of Primary Earnings Per Share
11 (b) Calculation of Fully-Diluted Earnings Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
SIGNATURES
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.
AMERICAN MAIZE-PRODUCTS COMPANY
DATE: November 11, 1994 By /s/ Patric J. McLaughlin
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Patric J. McLaughlin
President and
Chief Executive Officer
DATE: November 11, 1994 By /s/ Edward P. Norris
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Edward P. Norris
Vice President and
Chief Financial Officer