FORM 10-Q/A
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 December 31, 1994 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-8680
HIGH PLAINS CORPORATION
(Exact name of registrant as specified in its charter)
Kansas #48-0901658
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 W. Douglas 67202
Suite #820 (Zip Code)
Wichita, Kansas
(Address of principal
executive offices)
(316)269-4310
(Registrant's telephone number)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
YES NO
Common Stock, Par Value $.10 per share,
Outstanding at December 31, 1994 - 14,527,549
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 3-4
Consolidated Statements of Operations 5
Consolidated Statements of Stockholders' Equity 6
Consolidated Statements of Cash Flows 7
Selected Notes to Consolidated Financial Statements 8-10
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 11-14
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Balance Sheets
(Unaudited)
December 31, 1994 and June 30, 1994
<CAPTION>
December 31, June 30,
Assets 1994 1994
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash $ 358,508 $ 131,105
Trade Accounts Receivable (less
allowance of $106,000 and $100,000) 5,760,004 2,067,572
Short-term investments 240,434 -0-
Inventories
Raw materials 867,884 584,950
Work in process 321,408 155,696
Finished goods 284,913 201,216
Total inventories 1,474,205 941,862
Equipment held for resale 310,842 310,842
Refundable income taxes -0- 107,825
Prepaid expenses 287,432 461,939
Total current assets 8,431,425 4,021,145
Property, plant and equipment, at cost:
Land and land improvements 177,783 177,783
Ethanol plant 37,633,861 37,502,487
Other facilities and equipment 271,250 249,662
Office equipment 309,335 248,983
Leasehold improvements 44,606 43,798
Construction-in-progress 31,808,623 19,105,781
70,245,458 57,328,494
Less accumulated depreciation 13,606,544 12,949,388
Net property, plant and equipment 56,638,914 44,379,106
Other assets:
Deferred loan costs (less amortization
of $8,069) 463,869 446,819
Start up costs 217,081 -0-
Cash surrender value of life insurance 44,599 44,599
Investments and other assets 16,995 23,814
Total other assets 742,544 515,232
$65,812,883 $48,915,483
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Balance Sheets, Continued
(Unaudited)
December 31, 1994 and June 30, 1994
<CAPTION>
December 31, June 30,
Liabilities and Stockholders' Equity 1994 1994
(Unaudited) **
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 3,571,429 $ 2,083,333
Accounts payable 5,264,026 3,858,686
Accrued interest 173,054 79,464
Accrued payroll and property taxes 289,192 233,136
Income taxes 50,514 -0-
Total current liabilities 9,348,215 6,254,619
Long-term debt, excluding current
maturities 20,833,333 10,248,339
Stockholders' equity:
Cumulative preferred stock -0- 150,000
Common stock, $.10 par value, authorized
50,000,000 shares; issued 14,816,989 shares
and 11,031,988 shares at December 30, 1994,
and June 30, 1994, respectively, of which
289,440 shares and 217,080 shares were held
as treasury stock at December 31, 1994, and
June 30, 1994, respectively 1,481,699 1,103,199
Additional paid-in capital 33,073,828 33,266,850
Retained earnings (Accumulated deficit) 1,320,185 (1,863,147)
35,875,712 32,656,902
Less:
Treasury stock - at cost (244,377) (244,377)
Total stockholders' equity 35,631,335 32,412,525
$65,812,883 $48,915,483
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three Months Ended December 31, 1994 and 1993
and Six Months Ended December 31, 1994 and 1993
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $9,028,515 $9,125,378 $17,099,441 $17,335,608
Cost of sales 6,195,835 7,343,515 13,208,945 14,650,769
Gross profit 2,832,680 1,781,863 3,890,496 2,684,839
Selling, general and
administrative expenses 338,908 418,895 727,783 766,940
Operating income 2,493,772 1,362,968 3,162,713 1,917,899
Other income (deductions):
Gain (loss) on sale of
equipment -0- -0- 73,592 -0-
Interest and other income 18,908 144 20,273 10,480
18,908 144 93,865 10,480
Net earnings before
income taxes 2,512,680 1,363,112 3,256,578 1,928,379
Income tax expense 58,367 33,784 73,246 45,088
Net earnings $2,454,313 $1,329,328 $ 3,183,332 $ 1,883,291
Earnings per common
and dilutive common
equivalent share $ .16 $ .09* $ .21 $ .13*
Weighted average
shares outstanding 15,884,127 14,770,311* 15,489,338 14,486,853*
<FN>
See accompanying notes to financial statements.
* Restated for comparative purposes.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
(Unaudited)
Six Months Ended December 31, 1994
<CAPTION>
Preferred Common
Stock Stock
Additional Retained
Number Amount Number Amount Paid -in Earnings Treasury Total
of Shares of Shares Capital (Deficit) Stock
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1994 25,000 $ 150,000 11,031,988 $1,103,199 $ 33,266,850 $ (1,863,147) $ (244,377) $ 32,412,525
Net earnings for quarter 729,019 729,019
Balance,
September 30, 1994 25,000 $ 150,000 11,031,988 $1,103,199 $ 33,266,850 $ (1,134,128) $ (244,377) $ 33,141,544
Exchange of preferred stock
for common stock (25,000) (150,000) 36,918 3,692 146,308
Exercise of options 43,800 4,380 31,098 35,478
Four for three split 3,704,283 370,428 (370,428)
Net earnings for quarter 2,454,313 2,454,313
Balance,
December 31, 1994 -0- -0- 14,816,989 $1,481,699 $ 33,073,828 $ 1,320,185 $ (244,377) $ 35,631,335
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended December 31, 1994 and 1993
<CAPTION>
1994 1993
<S> <C> <C>
Operating activities:
Net income $ 3,183,332 $ 1,883,291
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and Amortization 657,156 1,270,254
Gain on sale of equipment (73,592) (10,000)
Amortization of deferred compensation -0- 243,750
Changes in operating assets and liabilities:
Trade accounts receivable (3,692,432) (1,078,438)
Short-term investments (240,434) -0-
Inventories (532,343) (1,333,453)
Refundable income taxes 107,825 -0-
Prepaid expenses 174,507 (664,974)
Accounts payable 1,405,340 3,291,995
Accrued liabilities 200,160 1,835
Net cash provided by operating activities 1,189,519 3,604,260
Investing activities:
Proceeds from sale of equipment 144,685 10,000
Acquisition of property, plant and equipment (12,988,057) (8,510,016)
(Increase) decrease in other non-current
assets (227,312) 31,908
Net cash used in investing activities (13,070,684) (8,468,108)
Financing activities:
Payments on long-term debt (595,238) -0-
Increase in long-term debt 12,668,328 5,510,010
Funds received by exercise of stock options 35,478 -0-
Net cash provided by financing activities 12,108,568 5,510,010
Increase in cash and cash equivalents 227,403 646,162
Cash and cash equivalents at beginning
of period 131,105 230,773
Cash and cash equivalents at end of quarter $ 358,508 $ 876,935
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
HIGH PLAINS CORPORATION
Selected Notes to Consolidated Financial Statements
(1) BASIS OF PRESENTATION
The accompanying financial statements have been prepared by High
Plains Corporation ("Company") without audit. In the opinion of
management, all adjustments (which include only normally
recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in financial position
for the periods presented, have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principals have been condensed or omitted.
The results of operations for the period ended December 31, 1994
are not necessarily indicative of the operating results for the
entire year.
CHANGE IN ACCOUNTING ESTIMATE
Effective July 1, 1994, the Company revised its estimate of the
useful lives of certain production facilities, machinery and
equipment. Previously, these assets were in one class and
depreciated over 20 years. These assets have now been
componentized and assigned estimated useful lives of 5 to 40
years. These revisions were made to more properly reflect the
true economic lives of the assets and to better align the
Company's depreciable lives with the predominant practice in the
industry. The effect of this change was to reduce depreciation
and thus increase net income by approximately $165,657 or $.01
per share for the three months ended December 31, 1994, and
$331,314 or $.02 per share for the six months ended December 31,
1994.
(2) FINANCIAL ARRANGEMENTS
On December 30, 1993, the Company entered into a credit agreement
with Bank One, Indianapolis, N.A. ("Bank") for a construction
loan to pay costs of constructing and equipping an ethanol
production facility in York, Nebraska. On August 31, 1994, the
Company entered into a First Amendment to Credit Agreement with
Bank One, Indianapolis, N.A. which amended the December 30, 1993,
agreement and restated certain provisions including the extension
of the construction period to no later than October 31, 1994, or
such later date to which the Bank may extend the construction
period. During the three months ended December 31, 1994, the
Company made monthly draws totaling $6,843,260, bringing the
construction loan advances to a total of $25 million.
The Company converted the construction loan into a term loan on
October 31, 1994, with the Bank. The term loan provides for
principal payments of $297,619 for a period of 57 months
beginning on the last banking day of November, 1994 through
August 31, 1999, at which time the balance of the note is due.
Interest accrues and is payable monthly at a fixed rate of 9.7%
for the initial two year period of the term loan. For the three
months ended December 31, 1994, the Company capitalized $535,439
of interest expense.
<PAGE>
(3) STOCK SPLIT
On December 21, 1994, the Company's Board of Directors announced
a forward stock split effected as a dividend payable February 22,
1995. The stock split is a 4:3 split, increasing common stock
issued by 3,704,283 shares. The consolidated balance sheets at
December 31, 1994, consolidated statements of stockholders'
equity for the six months ended December 31, 1994, and all
earnings per share calculations contained herein, have been
restated to reflect this forward stock split.
The stock split effected as a dividend is accounted for as a
reduction to additional paid in capital for an amount equal to
the total par value of the newly issued stock, and capitalization
of a like amount in the common stock account thus avoiding any
decrease in the par value per share.
(4) STOCK OPTIONS
On December 9, 1994, options to purchase 432,000 shares of the
Company's common stock were granted to directors and officers at
the exercise price of $11.125 per share, a price equal to the
fair market value on the date of grant. These options were
granted pursuant to the 1992 Stock Option plan which was approved
by shareholders at the 1992 Annual Meeting. Due to the fact that
these options are priced at market, no compensation expense is
recorded.
Options to purchase common stock at December 31, 1994, restated
for the antidilutive treatment and effecting the stock split
announced December 21, 1994, are set forth below:
DATE OF SHARES EXERCISE
ISSUE UNDER OPTION PRICE
July 1990 71,200 $ .608
February 1992 86,400 1.889
May 1992 86,400 .608
May 1992 115,200 1.465
May 1992 43,200 .608
July 1992 115,200 2.083
December 1992 302,400 .608
December 1992 504,000 5.382
December 1993 36,000 5.382
December 1993 576,000 3.342
September 1994 66,667 5.348
December 1994 576,000 8.344
2,578,667
At December 31, 1994, 2,002,667 of the above options were
exercisable. During the quarter ended December 31, 1994, options
to purchase 43,800 shares of common stock were exercised at an
option price of $.81 per share.
<PAGE>
(5) PREFERRED STOCK
On October 18, 1994, the Company entered into an agreement to
allow holders of the Company's 25,000 shares of outstanding 11
1/2% Cumulative Preferred Stock to exchange those shares for
36,918 shares of Common Stock. The Preferred Stock was
surrendered on October 31, 1994, and the appropriate number of
shares of Common Stock were issued.
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six Months Ended December 31, 1994 and 1993
Net Sales and Operating Expenses.
Net sales for the six months ended December 31, 1994, were slightly lower
than net sales for the same period ended December 31, 1993. During the six
months ended December 31, 1994, 9,415,324 gallons of ethanol were sold at
an average price of $1.34 per gallon compared to 9,512,068 gallons sold at
an average price of $1.33, for the same period ending December 31, 1993.
Cost of sales as a percentage of net sales was 77.2% and 84.5% for the six
month periods ended December 31, 1994, and 1993, respectively. The decline
in the cost of sales as a percentage of net sales was a result of several
factors including a 34% decrease in the average cost of natural gas
consumed per gallon produced, and a reduction of 44% in depreciation
expense offset by a 5% increase in the cost of grain. The Company's
average cost of grain increased to $2.24 per bushel for the six months
ended December 31, 1994, up from $2.13 per bushel for the same period in
1993, primarily due to effective grain trading activities utilized during
fiscal 1993 to reduce the impact of fluctuating grain prices.
Selling, general and administrative expenses decreased 5% for the six
months ended December 31, 1994, compared to the same period ended December
31, 1993. This decrease is a net effect of reduction in deferred
compensation expense and an increase in selling expenses related to the
Company's in-house marketing of its by-products.
Net Earnings.
Net earnings increased 69% for the six months ended December 31, 1994,
compared to the same period in 1993. Net earnings increased from 10.9% to
18.6% of net sales, due to the increase in gross profit in the 1994 period
compared to the same period in 1993. Earnings per share at December 31,
1994, were 62% higher than earnings per share for the same period in 1993
due to the increase in net earnings.
<PAGE>
MATERIAL CHANGES IN RESULTS AND OPERATIONS
Three Months Ended December 31, 1994 and 1993
Net Sales and Operating Expenses and Results of Operations.
Net sales for the three months ended December 31, 1994, decreased slightly
compared to the same period in 1993. During the quarter ended December 31,
1994, 4,842,576 gallons of ethanol were sold at average price of $1.38 per
gallon compared to 4,891,096 gallons sold during the same period in 1993 at
an average price of $1.36 per gallon.
During the three months ended December 31, 1994, the York facility produced
1,813,339 gallons of ethanol from trial production runs, as part of the
final construction phase. Revenues generated by the sale of these gallons
of ethanol have been recorded as an offset to expenses incurred during the
trial runs. To the extent that expenses exceeded revenues during this
start-up phase, the Company capitalized those expenditures as Start-up
costs. For the three months ended December 31, 1994, Start-up costs
capitalized totaled $217,081.
Cost of sales as a percentage of net sales was 68.6% and 80.4% for the
three month periods ended December 31, 1994 and 1993, respectively. The
decrease in cost of sales as a percentage of sales is due to several
factors including a decrease in the cost of natural gas per gallon produced
and a reduction in depreciation expense. The average cost of grain
increased 4% to $2.08 per bushel for the three months ended December 31,
1994, up from $1.99 per bushel for the same period ended December 31, 1993,
as a result of effective grain trading activities during fiscal 1993, to
reduce the impact of fluctuating grain prices.
Selling, general and administrative expenses decreased 19% for the three
months ended December 31, 1994, compared to the period ended December 31,
1993. The decrease was primarily the result of a decrease in employee
compensation from the vesting of stock options, offset by increased selling
expenses related to the Company's in-house marketing of its DDG's and
solubles.
Net Earnings.
Net earnings increased 84.6% for the three months ended December 31, 1994
from the prior period in 1993. Net earnings increased from 14.6% to 27.2%
of net sales, due to the gross profit increase in the 1994 period from 1993
levels. Earnings per share for the three months ended December 31, 1994
increased 77.8% compared to earnings per share for the three months ending
December 31, 1993, as a result of the increase in net earnings.
<PAGE>
Liquidity and Capital Resources
The Company's primary sources of funds during the last fiscal quarter were
$12,668,328 of long-term debt advanced on a construction loan with Bank
One, Indianapolis, N.A. and cash flow from operations. At December 31,
1994, the Company had a working capital deficit of $(916,790) compared to a
working capital deficit of $(2,233,474) at June 30, 1994. The decrease in
the working capital deficit was primarily as a result of an increase in
trade accounts receivables.
Cash flow from operating activities amounted to $1,189,519 in the first six
months of fiscal 1995 compared to $3,604,260 for the same period in fiscal
1994. The decrease in cash flow was a result of the increase in trade
accounts receivables.
Capital expenditures in the first six months of fiscal 1995 amounted to
$12,988,057 compared with $8,510,016 for the same period in fiscal 1994.
These expenditures were primarily made for the construction of the facility
in York, Nebraska. This facility was virtually complete and operational at
December 31, 1994. The cost of the plant construction to date has been
funded by long-term debt and by cash generated from operations.
In the opinion of management, funds expected to be generated from future
operations including the recently completed York facility, and the
Company's ability to rely upon future secured borrowings will provide
adequate liquidity for the foreseeable future. The Company may, however,
issue debt and equity securities as additional sources of financing as
needed.
Significant Changes in Account Balances
Trade accounts receivables at December 31, 1994, increased 178.6% compared
to June 30, 1994, as a result of sales of ethanol and DDG from the York
facility's trial production runs.
At December 31, 1994, trade accounts payable increased 36.4% compared to
June 30, 1994, as a result of expenditures incurred in preparation for full
production at the York Plant.
Seasonality
The recurring wintertime Federal Oxygen Program, maintained higher ethanol
prices on products sold into mandated oxygen markets for the six months
ended December 31, 1994. Additionally, demand has increased due to the
January 1, 1995 start up date of the Reformulated Gasoline (RFG) Program.
The Company believes this year-round program will also result in more year-
round demand resulting in less seasonality and higher ethanol prices.
<PAGE>
Seasonality Continued
In the summertime periods, vapor pressure limits are reduced. Gasoline
refiners normally include all the butanes and other inexpensive volatiles
that they are allowed to, bringing the gasoline's vapor pressure up to the
legal limit. Since the addition of ethanol increases the gasoline blend's
vapor pressure to a small degree and would therefore cause the vapor
pressure to exceed the legal limit, ethanol blending is not expected to
occur as much during summer months within the RFG program areas. Outside
of RFG areas, ethanol blending occurs regularly due to a volatility waiver.
ETBE is an ether fuel additive. As ETBE production increases, the demand
for and use of ethanol within the RFG areas will increase, since ETBE
actually lowers the vapor pressure of the ETBE blended fuel.
The Renewable Oxygenate Requirement (ROR), which has been temporarily
halted by Court injunction, would reduce seasonality by creating an
increased year-round and summertime demand for ethanol, immediately upon
its implementation. This is due to the fact that ethanol is the most
effective and competitive renewable oxygenate, and the requirement for a
renewable would force refiners to either lower the vapor pressure of their
base gasoline to allow ethanol blending or force them to use ETBE. Oral
arguments on the ROR are to be heard on
February 16, 1995.
<PAGE>
PART II
OTHER INFORMATION
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 Company held its Annual Meeting of Stockholders on November 18,
1994. The meeting involved the election of two directors, Stanley E.
Larson, and Roger D. Skaer.
Voting results:
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
S.E. Larson 9,407,324 191,066 -0- -0-
R.D. Skaer 9,407,324 191,066 -0- -0-
The following details the issues which were presented to stockholders
for vote and the results of that vote at the aforementioned annual
meeting:
(1) Proposed amendment to increase the number of authorized shares of
the Company's Common Stock, and establish a new class of Preferred
Stock.
(2) Proposed amendments to the 1990 and 1992 Stock Option Plans.
(3) Selection of Allen, Gibbs & Houlik, LLC as the Company's independent
auditors.
BROKER
RESULTS FOR AGAINST ABSTENTIONS NONVOTES
(1) 6,020,151 1,027,784 52,947 2,497,292
(2) 5,824,813 1,186,584 89,611 2,497,382
(3) 9,529,825 34,459 34,106 -0-
<PAGE>
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: No new exhibits filed herein.
b) Reports on Form 8-K. During the quarter for which
this report is filed, no reports of the Company on Form 8-K have
been filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
Date May 15, 1995 HIGH PLAINS CORPORATION
Raymond G. Friend
Raymond G. Friend
Vice President Finance/Marketing
(Principal Financial Accounting
Officer)
