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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MAY 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934
Commission file: No. 33-94644
MINN-DAK FARMERS COOPERATIVE
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(Exact named of registrant as specified in its charter)
North Dakota 23-7222188
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
7525 Red River Road
Wahpeton, North Dakota 58075
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(Address of principal (Zip Code)
executive offices)
(701) 642-8411
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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, 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.
Outstanding at
Class of Common Stock July 12, 2002
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$250 Par Value 488
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MINN-DAK FARMERS COOPERATIVE
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements for the nine month periods
ended May 31, 2002 and May 31, 2001 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim period. The
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report to Stockholders
previously submitted in the Company's Annual 10-K for the fiscal year ended
August 31, 2001. The results of operations for the nine months ended May
31, 2002 are not necessarily indicative of the results for the entire
fiscal year ending August 31, 2002.
2. In August 2001, the company declared a revolvement of the remaining 30% of
the unit retains and allocated patronage for the 1991 crop and 35% of the
unit retains and allocated patronage for the 1992 crop totaling $1,475,742
and $2,647,922, respectively, for a total of $4,123,664. That amount was
paid to the stockholders on September 28, 2001.
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(IN THOUSANDS)
MAY 31, 2002 AUGUST 31, 2001
ASSETS (UNAUDITED) (AUDITED)
- ------ -------------- --------------
CURRENT ASSETS:
Cash $ 42 $ 459
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Current portion of long-term note receivable 29 3
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Receivables:
Trade accounts 13,925 15,267
Growers 3,964 3,796
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17,890 19,063
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Advances to affiliate 778 414
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Inventories:
Refined sugar, pulp and molasses to be sold
on a pooled basis 52,912 18,649
Nonmember refined sugar 1,884 4
Yeast 88 121
Materials and supplies 4,653 5,886
Beet and Juice Inventory 0 --
Other 1,283 --
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60,820 24,659
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Deferred charges 631 1,085
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Prepaid expenses 437 617
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Property and equipment available for sale 200 200
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Total current assets 80,827 46,500
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PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 21,187 21,187
Buildings 35,970 35,970
Factory equipment 112,591 112,348
Other equipment 3,283 3,416
Construction in progress 1,791 26
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174,822 172,946
Less accumulated depreciation (74,849) (70,059)
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99,973 102,887
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LONG-TERM NOTES RECEIVABLE, NET OF
CURRENT PORTION 224 26
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OTHER ASSETS:
Investments restricted for capital lease projects 13,036 --
Investment in stock of other corporations, unconsolidated
marketing subsidiaries and other cooperatives 12,626 11,184
Deferred income taxes 89 89
Other 1,490 1,052
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27,241 12,325
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See Notes to Consolidated Financial Statements $ 208,265 $ 161,737
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MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(IN THOUSANDS)
MAY 31, 2002 AUGUST 31, 2001
(UNAUDITED) (AUDITED)
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LIABILITIES AND MEMBERS' INVESTMENT
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CURRENT LIABILITIES:
Short-term notes payable $ 30,830 $ 10,965
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Current portion of long-term debt 3,601 3,610
Current portion of long-term lease 860 815
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4,461 4,425
Accounts payable:
Trade 2,890 1,843
Growers 16,195 14,817
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19,084 16,659
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Accrued liabilities 2,176 2,476
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Total current liabilities 56,548 34,526
LONG-TERM DEBT, NET OF CURRENT PORTION 35,500 39,100
OBLIGATION UNDER CAPITAL LEASE 22,820 9,680
OTHER 1,547 965
COMMITTMENTS AND CONTINGENCIES -- 0
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Total liabilities 116,415 84,270
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MINORITY INTEREST IN EQUITY OF SUBSIDIARY 1,439 1,264
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MEMBERS' INVESTMENT:
Preferred stock:
Class A - 100,000 shares authorized, $105 par value;
72,200 shares issued and outstanding 7,581 7,581
Class B - 100,000 shares authorized, $75 par value;
72,200 shares issued and outstanding 5,415 5,415
Class C - 100,000 shares authorized, $76 par value;
72,200 shares issued and outstanding 5,487 5,487
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18,483 18,483
Common stock, 600 shares authorized, $250 par value;
issued and outstanding, 488 shares at May 31,
2002 and 497 shares at August 31, 2001 122 124
Paid in capital in excess of par value 32,094 32,094
Unit retention capital 6,476 6,476
Qualified allocated patronage 3,416 3,416
Nonqualified allocated patronage 27,734 14,467
Retained earnings (deficit) 2,086 1,143
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90,412 76,203
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See Notes to Consolidated Financial Statements $ 208,265 $ 161,737
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
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2002 2001 2002 2001
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REVENUE:
From sales of sugar, co-products, and
yeast, net of discounts $ 25,019 $ 35,170 $ 147,046 $ 166,945
Other income 1,415 872 1,735 905
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26,433 36,042 148,781 167,850
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EXPENSES:
Production costs of sugar, co-products,
and yeast sold 7,507 9,637 34,309 37,571
Marketing (includes freight and storage) 4,233 7,394 16,029 21,191
General and administrative 1,589 1,611 4,324 4,495
Interest 1,070 1,434 3,028 4,136
(Gain) loss on disposition of property and equipment 24 32 35 35
------------ ------------ ------------ ------------
14,423 20,108 57,724 67,427
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NET PROCEEDS RESULTING FROM MEMBER AND
NONMEMBER BUSINESS $ 12,010 $ 15,934 $ 91,057 $ 100,423
============ ============ ============ ============
DISTRIBUTION OF NET PROCEEDS:
Credited to members' investment:
Components of net income:
Income (loss) from non-member business $ 384 $ 323 $ 943 $ 799
Patronage income (7,201) 325 13,267 23,785
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Net income (6,817) 648 14,210 24,585
Unit retention capital 0 0 0 0
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Net credit to members' investment (6,817) 648 14,210 24,585
Payments to members for sugarbeets, net of unit
retention capital 18,826 15,286 76,846 75,838
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NET PROCEEDS RESULTING FROM MEMBER AND
NONMEMBER BUSINESS $ 12,010 $ 15,934 $ 91,057 $ 100,423
============ ============ ============ ============
See Notes to Consolidated Financial Statements.
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
MAY 31,
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income allocated to members' investment $ 14,210 $ 24,585
Add (deduct) noncash items:
Depreciation and amortization 5,148 5,101
Equipment disposals - loss 35 35
Net income allocated from unconsolidated marketing subsidiaries (245) (207)
Noncash portion of patronage capital credits (1,304) (778)
Retention of nonqualified unit retains 0 0
Changes in operating assets and liabilities:
Accounts receivable and advances 810 (2,198)
Inventory, prepaid expenses, and equipment held for resale (35,981) (30,107)
Deferred charges and other assets 454 1,007
Accounts payable, advances, and accrued liabilities 2,749 (2,314)
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NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (14,123) (4,878)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property, plant and equipment 4 0
Capital expenditures (2,106) (1,504)
Investment in stock of other corporations, unconsolidated
marketing subsidiaries and other cooperatives 0 0
Net proceeds from patronage refunds and equity revolvements 106 101
Issuance of notes receivable (261) 0
Proceeds on notes receivable 35 0
Restricted bond/lease fund investment (13,036) 0
Minority interest in equity of subsidiaries 175 148
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NET CASH USED IN INVESTING ACTIVITIES (15,082) (1,255)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of short-term debt 19,865 6,366
Payment of long-term debt (4,424) (2,784)
Payment of financing fees (605) (135)
Payment of unit retains and allocated patronage 0 1
Issuance of long-term lease 13,955 0
Provision for long-term tax 0 0
Sale and repurchase of common stock, net (2) 4
Issuance of stock 0 0
Issuance of long term tax-exempt bonds 0 0
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NET CASH PROVIDED BY FINANCING ACTIVITIES 28,789 3,451
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NET INCREASE (DECREASE) IN CASH (417) (2,682)
CASH, BEGINNING OF YEAR 459 2,505
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CASH, END OF QUARTER $ 42 $ (178)
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for:
Interest $ 2,809 $ 3,251
============ ============
Income taxes, net of refunds $ 8 $ 9
============ ============
See Notes to Consolidated Financial Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THREE MONTHS ENDED AND NINE MONTHS ENDED MAY 31, 2002 AND MAY 31, 2001
The following discussion and analysis relates to the financial condition and
results of operations of Minn-Dak Farmers Cooperative ("the Company") for the
three months ended May 31, 2002 (the third quarter of the Company's 2001-2002
fiscal year) and May 31, 2001 (the third quarter of the Company's 2000-2001
fiscal year). The Company's fiscal year runs from September 1 to August 31.
Any statements regarding future market prices, anticipated costs, agricultural
results, operating results and other statements that are not historical facts
contained in this Quarterly Report on Form 10-Q are forward-looking statements.
The words "expect", "project", "estimate", "believe", "anticipate", "plan",
"intend", "could", "may", "predict" and similar expressions are also intended to
identify forward-looking statements. Such statements involve risks,
uncertainties and assumptions, including, without limitation, market factors,
the effect of weather and economic conditions, farm and trade policy, the
available supply of sugar, available quantity and quality of sugarbeets and
other factors detailed elsewhere in this and other Company filings with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.
The Farm Security and Rural Investment Act of 2002 ("Farm Bill") has been passed
and signed. Contained within the sugar title of the Farm Bill are provisions,
such as Marketing Allotments for sugar, which may have a material impact on the
operations of the Company. The USDA has not provided the Company with the final
regulations associated with the sugar title of the 2002 Farm Bill as of the date
of this report. Until regulations are promulgated, the Company is not able to
fully analyze the future impacts of the sugar title of the 2002 Farm Bill.
Regulations are required to be issued prior to the start of the federal
government's next fiscal year, which begins October 1, 2002.
RESULTS FROM OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MAY 31, 2002 AND MAY 31, 2001
Revenue for the three months ended May 31, 2002 decreased $10.2 million from the
2001 period, a decrease of 28.9%. Revenue from the sale of finished goods
decreased $5.7 million, while finished goods inventory decreased $4.5 million.
Other income increased $0.5 million.
It should be noted that the sugar slicing campaign ended March 5, 2002 versus
April 9, 2001 for the prior year. This difference was the result of a smaller
crop to be processed; therefore changes in comparative information for revenues
and expenses for the three months ended May 31, 2002 are primarily the result of
the crop size and not the result of adverse general business conditions.
Revenue from the sales of sugar decreased $5.5 million, or 13%, reflecting a 21%
decrease in volume and an 8% increase in the price for sugar.
Revenue from pulp and molasses sales decreased $0.1 million or 3%, reflecting a
10% decrease in sales volume and a 7% increase in the average gross selling
price.
Revenues from yeast sales were within $0.1 million or 3%, reflecting an 8%
decrease in sales volume and a 5% increase in the average selling price. Selling
prices have increased somewhat after a period of severe price pressure in the
yeast marketplace.
The other contributing factor to the change in revenues results from the
increase or decrease in finished goods inventories. The decrease in the value of
finished goods inventories for the three months ended May 31, 2002 amounted to
$15.4 million or $4.5 million more than the decrease in the value of finished
goods inventories for May 31, 2001. For May 31, 2002 the decrease in the value
of sugar inventories was $4.1 million less than the decrease of that of the
prior year, and for pulp $0.3 million more. The decrease in sugar inventory
values is primarily the result of a lower volume of sugar on hand versus the
prior period.
In the consolidated statements of operations, Expenses section, production costs
of sugar, by-products and yeast totaled $7.5 million, $2.1 million or 28% less
than the prior year. Marketing costs totaled $4.2 million, $3.2 million or 43%
less than the prior year. General and administrative costs totaled $1.6 million,
very slightly less than the prior year. Interest expense totaled $1.1 million,
$.4 million or 28% less than the prior year. In the section Distribution of Net
Proceeds, payments to members for sugarbeets, net of unit retention capital and
unprocessed sugarbeet inventory, increased $3.5 million or 23% from the fiscal
year 2001 period. For fiscal year 2002 the Company is projecting a payment to
growers for sugarbeets net of unit retention capital totaling $70.0 million,
which is $7.5 million or 12% more than the February 28, 2002 estimate. $3.6
million of the $7.5 million projected increase was due to higher than
anticipated sugar production from the 2001 sugarbeet crop while $2.5 million was
due to higher sugar prices. The payment is based upon (i) an average delivered
sugar content of 17.46%, (ii) a total sugarbeet crop to process of 1.7 million
tons and (iii) the Company's projected selling price for its sugar, which is
currently estimated to be higher than the previous year. In addition to payments
for sugarbeets, growers were paid $6.8 million as a result of the Sugar PIK
program destroyed acres in December 2001 and January 2002.
COMPARISON OF THE NINE MONTHS ENDED MAY 31, 2002 AND MAY 31, 2001
Revenue for the nine months ended May 31, 2002 decreased $19.9 million from the
2001 period, a decrease of 11.95%. Revenue from the sale of finished goods
decreased $25.4 million, while the change in the value of finished goods
inventory increased $5.5 million.
Revenue from the sales of sugar decreased $25.7 million or 21%, reflecting a 26%
decrease in volume and a 5% increase in the price for sugar. The decrease in
volume and revenue is the result of forfeiture of sugar to the USDA from the FY
2000 inventory as of 10-1-00 in addition the decrease in volume is due to a
smaller beet crop to process, and therefore less sugar available for sale.
Revenue from pulp and molasses sales increased $.6 million or 6%, reflecting an
8% decrease in sales volume and a 14% increase in the average gross selling
price. Revenues from yeast sales from the Company's subsidiary yeast production
facility, Minn-Dak Yeast Company ("MDYC") decreased $0.3 million or 7%,
reflecting a 16% decrease in sales volume and a 9% increase in the average
selling price.
The other contributing factor to the change in revenues results from the
increase or decrease in finished goods inventories. The increase in the value of
finished goods inventories for the nine months ended May 31, 2002 amounted to
$34.3 million or $5.5 million more than the value of finished goods inventories
for May 31, 2001.
In the consolidated statements of operations, Expenses section, production costs
of sugar, by-products and yeast totaled $34.3 million, $3.3 million or 10% less
than the prior year. This 10% reduction reflects lower operating and maintenance
costs resulting from producing 17% less sugar. Marketing costs totaled $16.0
million, $5.2 million or 24% less than the prior year while sales volume is 25%
less than the prior year. General and administrative costs totaled $4.3 million,
$.2 million or 5% less than the prior year. Interest expense totaled $3.0
million, $1.1 million or 27% less than the prior year, primarily a result of
lower interest rates.
In the section Distribution of Net Proceeds, payments to members for sugarbeets
(net of unit retention capital and unprocessed sugarbeet inventory) increased
$1.0 million or 1% from the prior period. For fiscal year 2002 the Company is
projecting a payment to growers for sugarbeets net of unit retention capital
totaling $70.0 million, which is $7.5 million or 12% more than the February 28,
2002 estimate. $3.6 million of the $7.5 million projected increase was due to
higher than anticipated sugar production from the 2001 sugarbeet crop while $2.5
million was due to higher sugar prices. The payment is based upon (i) an average
delivered sugar content of 17.46%, (ii) a total sugarbeet crop to process of 1.7
million tons and (iii) the Company's projected selling price for its sugar,
which is currently estimated to be higher than the previous year. In addition to
payments for sugarbeets, growers were paid $6.8 million as a result of the Sugar
PIK program destroyed acres in December 2001 and January 2002.
ESTIMATED FISCAL YEAR 2002 INFORMATION
The agreements between the Company and its members regarding the delivery of
sugarbeets to the Company require payment for members' sugarbeets in several
installments throughout the year. As only the final payment is made after the
close of the fiscal year, the first payments to members for their sugarbeets are
based upon the Company's then-current estimates of the financial results to be
obtained from processing the crop and the sale of finished products. This
discussion contains a summary of the Company's current estimates of the
financial results to be obtained from the Company's processing of the 2001
sugarbeet crop. Given the nature of the estimates required in connection with
the payments to members for their sugarbeets, this discussion includes
forward-looking statements. These forward-looking statements are based largely
upon the Company's expectations and estimates of future events; as a result,
they are subject to a variety of risks and uncertainties. Some of those
estimates, such as the selling price for the Company's products and the quantity
of sugar produced from the sugarbeet crop are beyond the Company's control. The
actual results experienced by the Company may differ materially from the
forward-looking statements contained herein.
The harvest of the sugarbeet crop grown during 2001 produced a total of 1.7
million tons of sugarbeets, falling behind the prior crop tons per acre. Also,
due to the Sugar PIK program that was implemented by United States Department of
Agriculture, there were less harvested acres. The sugar content and purity from
the 2001 crop were slightly below long-term averages. During the months of
November through March, unseasonably warm weather patterns did not cause any
unusual damage to the beets under storage, and may have proven beneficial.
The Company expected to produce less volume of sugar from the 2001 sugarbeet
crop because of the sugar PIK program and associated reduction of tons delivered
and quality of the beets. Sugar production from the 2001 crop was 4,665,000 cwt
based on current inventory measurements. The 2001-2002 sugarbeet slicing
campaign ended March 4th with an average slice rate of 9,276 tons per day. Sugar
production was originally projected to be 4,290,000 cwt. The increased sugar
production was the result of favorable weather for storage and an improved
method of managing beets for prolonged storage that had previously been
deep-frozen.
Based upon marketing information developed by United Sugars Corporation, the
Company's marketing subsidiary organization, the Company currently estimates the
average net selling price of the Company's sugar will be more than that of the
prior year because of the volume available for sale (domestic production &
foreign imports) relative to the estimated domestic consumption.
From the revenues generated from the sale of products produced from each ton of
sugarbeets, the Company's operating and fixed costs must be deducted. The
deduction of those operating costs results in a revised estimated gross beet
payment of $42.00 per ton of sugarbeets versus the February estimate of $40.36
per ton, and versus the original estimate of $33.15 per ton. The Company
believes the production estimates for finished products from the 2001 crop are
now substantially correct as the production has been completed and the primary
remaining variances will be from minor storage measurement adjustments. The
Company believes the market price for the 2001 crop estimate is within a 2%
tolerance of the final audited returns. The final quarter of the fiscal year is
a time when the Company makes its facility ready for the processing of the
coming crop. It is during this time that major unanticipated repair costs could
be uncovered, although currently the Company knows of no such major
unanticipated repairs.
2002 CROP PROGRESS REPORT
113,500 acres have been planted with 11,500 acres having to be replanted as a
result of frost and wind damage. Most of the area has sufficient topsoil
moisture at this time for the crop to continue development. Weed control up to
this point has been good. No major problems with insects or diseases have been
noticed. The Company rates this crop as near average as of this filing.
LIQUIDITY AND CAPITAL RESOURCES
Because the Company operates as a cooperative, payment for member-delivered
sugarbeets, the principal raw material used in producing the sugar and
agri-products it sells, are subordinated to all member business expenses. In
addition, actual cash payments to members are spread over a period of
approximately one year following delivery of sugarbeet crops to the Company and
are net of unit retains and patronage allocated to them, all three of which
remain available to meet the Company's capital requirements. This member
financing arrangement may result in an additional source of liquidity and
reduced outside financing requirements in comparison to a similar business
operated on a non-cooperative basis. However, because sugar is sold throughout
the year (while sugarbeets are processed primarily between September and April)
and because substantial amounts of equipment are required for its operations,
the Company has utilized substantial outside financing on both a seasonal and
long-term basis to fund such operations. The financing has been provided by
Co-Bank (the "Bank"). The Company has a short-term line of credit with the Bank
for the period 6-1-02 through 5-31-03 of $45.0 million. The financing
arrangement with Co-Bank went through its annual renewal in March 2002 with only
minor modifications. The Company anticipates using the USDA Sugar Loan
Provisions contained in the 2002 Farm Bill to provide an additional source of
seasonal financing for the 2002 and future crops.
The loan agreements between the Bank and the Company obligate the company to
maintain the following financial covenants, and in accordance with GAAP:
* Maintain working capital of not less than $9.0 million as of August 31,
2002.
* Maintain a long-term debt and capitalized leases to equity ratio of not
greater than .8:1.
* Maintain a current ratio of not less than 1.2:1.0 based on monthly
financial statements and attain a current ratio of not less than 1.2:1.0
based on fiscal year end audits.
* Maintain available cash to current long-term debt ratio as defined in the
agreement of not less than 1.25:1.
As of May 31, 2002 the Company was in compliance with its loan agreement
covenants with the Bank.
Working Capital as of May 31, 2002 totals $24.3 million compared to $12.0
million at August 31, 2001, an increase of $12.3 million for the period.
Increased working capital is a result of normal financing, operational and
capital expenditure activities of the Company.
The targeted working capital for August 31, 2002 is approximately $11.0 million
dollars and, in the Company's opinion, will be attained.
The primary factor for the changes in the Company's financial condition for the
nine months ended May 31, 2002 was due to the seasonal needs of the 2001/2002
sugarbeet-processing season. The cash used to provide for operations of $14.1
million and for investing activities of $15.1 million was funded through cash
flow financing activities, and a reduction in cash. The net cash provided
through financing activities of $28.8 million was primarily provided through
proceeds from the issuance of short-term debt of $19.9 million; issuance of
long-term lease of $14.0 million; offset by $5.0 million of long-term debt
payments and financing fees.
Capital expenditures for the nine months ended May 31, 2002 totaled $2.1
million. Capital expenditures for fiscal year 2002 are currently estimated at
$3.4 million excluding the steam dryer plant improvement.
The Company has elected to install a steam dryer at a cost of approximately $9.0
MM and a construction completion date of September 2003. The funding for this
investment will be in the form of a capital lease supported by tax-exempt bonds.
On February 28, 2002, the Company completed a transaction where $14.0 MM of
tax-exempt bonds was secured. Of the $14.0 MM in bonds, $9.0 MM was estimated
for the steam dryer project, $1.5 MM for solid waste projects currently in
process and $3.5 MM for anticipated future solid waste project needs. The
Company anticipates approximately $2.0 MM of the Bond Proceeds will be used for
the steam dryer project for the fiscal year ended August 31, 2002.
The Bond Proceeds of $14.0 MM were required to be sold in a single transaction.
The proceeds from these bonds are held in trust until the funds are spent on
approved projects. The bond transaction and restricted bond investments
associated with the transaction are subject to arbitrage compliance rules for
solid waste tax-exempt bond projects.
The Bonds are secured by a letter of Credit from Wells Fargo Bank. The letter of
credit is ultimately secured by the plant and property of the Company facility
at Wahpeton, ND.
The Steam Dryer Purchase agreement was entered into in April 2002.
As part of the Steam Dryer purchase, the Company has used $1 million of its $45
million seasonal line of credit for the required Commercial Letter of Credit
contained in the Steam Dryer Purchase Contract. In addition, because portions of
the contract are in Euro, the Company has entered into forward purchase Euro
contracts to hedge against currency fluctuations during this contract period.
The Company is not aware of any known trends, demands, commitments, events or
uncertainties that will likely result in the Company's liquidity increasing or
decreasing in any material way.
The Company is not aware of any known material trends, either favorable or
unfavorable, that would cause the mix of equity to debt or the cost of debt to
materially change.
The Company is not aware of any off-balance sheet activity that could have a
material impact on the Company's revenues, expenses, liquidity, or balance
sheet.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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SIGNATURES
Pursuant to the requirement 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.
MINN-DAK FARMERS COOPERATIVE
----------------------------
(Registrant)
Date: July 12, 2002 /s/ DAVID H. ROCHE
-------------------- -------------------------------------
David H. Roche
President and Chief Executive Officer
Date: July 12, 2002 /s/ STEVEN M. CASPERS
--------------------- -------------------------------------
Steven M. Caspers
Chief Financial Officer