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, 1995 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 September 30, 1995 - 15,996,289
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Balance Sheets 3 - 4
Statements of Operations 5
Statements of Stockholders' Equity 6
Statements of Cash Flows 7
Selected Notes to Financial Statements 8 - 9
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9 - 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
September 30, 1995 and June 30, 1995
<CAPTION>
September 30, June 30,
Assets 1995 1995
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash $ 152,045 $ 600,381
Trade accounts receivable (less
allowance of $100,000 and $110,000
respectively) 5,385,048 3,948,761
Inventories 3,717,188 2,645,277
Current portion of long-term
notes receivable 104,992 96,691
Prepaid expenses 314,555 384,859
----------- -----------
Total current assets 9,673,828 7,675,969
----------- -----------
Property, plant and equipment, at cost:
Land and land improvements 142,283 142,283
Ethanol plant 73,733,991 72,387,277
Other facilities and equipment 303,105 300,210
Office equipment 232,332 231,284
Leasehold improvements 48,002 48,002
----------- -----------
74,459,713 73,109,056
Less accumulated depreciation 15,498,882 14,806,417
----------- -----------
Net property, plant and equipment 58,960,831 58,302,639
----------- -----------
Other assets:
Property and equipment held for resale 798,763 798,763
Deferred loan costs (less accumulated
amortization of $98,786 and $65,857
respectively) 386,913 411,610
Long-term notes receivable 239,935 265,711
Other 57,359 62,609
----------- -----------
Total other assets 1,482,970 1,538,693
----------- -----------
$70,117,629 $67,517,301
=========== ===========
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets Continued
(Unaudited)
September 30, 1995 and June 30, 1995
<CAPTION>
September 30, June 30,
Liabilities and Stockholders' Equity 1995 1995
(Unaudited) **
<S> <C> <C>
Current liabilities:
Current maturities of short-term debt $ 1,211,052 $ -0-
Current maturities of long-term debt 3,778 534 3,876,972
Accounts payable 3,874,516 3,796,048
Accrued interest 199,059 185,163
Accrued payroll and property taxes 578,478 356,108
----------- -----------
Total current liabilities 9,641,639 8,214,291
----------- -----------
Long-term debt, excluding current
maturities 18,159,415 19,052,272
----------- -----------
Stockholders' equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 15,470,947
shares and 15,996,299 shares at September 30,
1995 and June 30, 1995, respectively, of
which 289,770 shares were held as
treasury stock 1,599,629 1,547,095
Additional paid-in capital 36,328,477 34,738,760
Retained earnings 4,632,846 4,209,260
----------- -----------
42,560,952 40,495,115
Less:
Treasury stock - at cost (244,377) (244,377)
----------- -----------
Total stockholders' equity 42,316,575 40,250,738
----------- -----------
$70,117,629 $67,517,301
=========== ===========
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended September 30, 1995 and 1994
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1995 1994
<S> <C> <C>
Net Sales $20,061,945 $ 8,070,925
Cost of sales 18,715,073 7,059,988
----------- -----------
Gross profit 1,346,872 1,010,937
Selling, general and administrative
expenses 306,791 341,995
----------- -----------
Operating income 1,040,081 668,942
Other income (deductions):
Interest expense (623,638) -0-
Gain (loss) on sale of equipment -0- 73,592
Interest and other income 15,645 1,363
----------- -----------
(607,993) 74,955
----------- -----------
Net earnings before income
taxes 432,088 743,897
Income taxes 8,502 14,878
----------- -----------
Net earnings $ 423,586 $ 729,019
=========== ===========
Earnings per common and common
equivalent share:
Net Earnings (loss) $ .03 $ .05*
=========== ===========
<FN>
See accompanying notes to financial statements.
* Restated for comparative purposes.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Stockholders' Equity
(Unaudited)
Three Months Ended September 30, 1995
<CAPTION>
Common
Stock
- ------------------------------------------------------------------------------------------------------
Additional
Number Amount Paid-in Retained Treasury Total
of Shares Capital Earnings Stock
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1995 15,470,947 $ 1,547,095 $ 34,738,760 $ 4,209,260 $ (244,377) $40,250,738
Exercise of
Options 525,342 52,534 1,589,717 1,642,251
Net Income for
the Quarter 423,586 423,586
- ------------------------------------------------------------------------------------------------------
Balance,
September 30, 1995 15,996,289 $ 1,599,629 $ 36,328,477 $ 4,632,846 $ (244,377) $42,316,575
======================================================================================================
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Cash Flows
(Unaudited)
Three Months Ended September 30, 1995 and 1994
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 423,586 $ 729,019
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and Amortization 692,465 330,528
Changes in operating assets and liabilities:
Trade accounts receivable (1,436,287) (746,544)
Inventories (1,071,911) 176,401
Prepaid expenses 70,304 273,391
Accounts payable 78,468 (332,242)
Accrued interest 13,896 64,693
Accrued payroll, taxes, and other 222,370 (38,508)
Current Maturities of long-term debt (98,438) -0-
- -----------------------------------------------------------------------------
Net cash provided by operating activities (1,105,547) 456,738
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (1,350,657) (6,050,484)
(Increase) Decrease in other non-current assets 29,947 (12,674)
- -----------------------------------------------------------------------------
Net cash used in investing activities (1,320,710) (6,063,158)
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from short-term debt 1,211,052 -0-
Proceeds from long-term debt -0- 5,825,068
Payment on long-term debt (892,857) -0-
Proceeds from exercise of options 1,642,251 -0-
Payments on notes receivable 17,475 -0-
- -----------------------------------------------------------------------------
Net cash provided by financing activities 1,977,921 5,825,068
- -----------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (448,336) 218,648
Beginning of quarter 600,381 131,105
- -----------------------------------------------------------------------------
End of quarter $ 152,045 $ 349,753
=============================================================================
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
HIGH PLAINS CORPORATION
Selected Notes to 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
September 30, 1995 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 September 30, 1995.
(2) FINANCIAL ARRANGEMENTS
On July 14, 1995, the Company entered into a third amendment to the Credit
Agreement with Bank One, Indianapolis, N.A. which amended the December 30, 1993,
agreement and restated certain provisions allowing for a revolving loan to fund
working capital requirements and the issuance of standby letters of credit as
needed by the Company in its normal course of business.
Advances in amounts not to exceed in the aggregate three million dollars or
twenty-five million dollars minus the outstanding principal balance of the term
loan, may be requested by the Company. The revolving loan interest rate is 1.5%
over Bank One prime rate. The revolving loan matures on June 30, 1996, however,
Bank One, may at its discretion extend the maturity date from time to time.
During the three months ended September 30, 1995, the Company made advances
totaling $1,211,052 on its revolving loan. The interest rate at September 30,
1995, was 9.7%. In addition, on July 17, 1995, Bank One issued on behalf of
the Company a $1,000,000 standby letter of credit for the benefit of Farmland,
Industries, Inc., pursuant to the Company's exclusive grain supply agreement.
<PAGE>
(3) Stock Options
On July 7, 1995, 72,000 options were exercised at $8.344 per share and were
not subject to reload provisions. In August of 1995 the following options were
exercised and granted corresponding reloads.
Date Exercised Reload Options
------- ------------------- ------------------
8/14/95 14,400 $ .6076 14,400 $6.125
8/14/95 28,800 1.8889 28,800 6.125
8/14/95 28,800 1.4653 28,800 6.125
8/30/95 50,000 3.3438 50,000 5.50
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.
THREE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
Net Sales and Operating Expenses and Results of Operations.
Net sales for the three months ended September 30, 1995 were higher than net
sales for the same period ended September 30, 1994. During the three months
ended September 30, 1995, 12,309,160 gallons of ethanol were sold at an average
price of $1.13 per gallon, compared to 4,572,748 gallons sold during the same
period ended September 30, 1994, at an average price of $1.29 per gallon. Lower
ethanol prices are a result of a slower than normal seasonal upward movement in
prices, which generally occurs in August and September, that did not begin to
affect pricing until October.
Cost of sales as a percentage of net sales was 93.3% and 87.5% for the three
month periods ended September 30, 1995 and 1994, respectively. The increase in
cost of sales as a percentage of sales was due primarily to an increase in grain
feedstock costs. For the three months ended September 30, 1995 average grain
costs increased 11.2% to $2.69 per bushel compared to $2.42 per bushel for the
same period ended September 30, 1994.
Selling, general and administrative expenses decreased 10.3% for the three
months ended September 30, 1995, compared to the same period ended September 30,
1994. The decrease results from the reduction in selling expenses related to
the elimination of the Company's in-house marketing of its by-products.
Net Earnings declined 41.9% for the three months ended September 30, 1995
over the same period in 1994. The decrease in net earnings results primarily
from lower ethanol prices and higher grain feedstock prices.
<PAGE>
Liquidity and Capital Resources
The Company's primary source of funds during the first fiscal quarter of 1996
were from the exercise of options by officers and a former employee, with
proceeds totalling $1,642,251 and from advances on short-term borrowing
totalling $1,211,052. At September 30, 1995, the Company had a working capital
surplus of $32,189. The increase in working capital resulted from the net
effect of the proceeds from the exercise of options, an increase in trade
accounts receivable and inventories offset by an increase in short-term
borrowings.
Capital expenditures in the first three months of fiscal 1996 amounted to
$1,350,657 compared to $6,050,484, for the same period in fiscal 1995. These
expenditures were primarily for improvements and modifications at the York,
Nebraska facility.
In the opinion of management, funds expected to be generated from future
operations, 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.
Seasonality
Ethanol prices on products sold into oxygen markets, mandated under the
Federal Oxygen Program did not begin their seasonal increase until early
October. This was due to increased competition and larger inventories carried
through the summer months.
Beginning in March, 1996, the Company anticipates demand for ETBE, a low vapor
pressure oxygenate, to increase in response to Federal and State air quality
programs requiring gasoline fuels to have a low vapor pressure. Consequently,
it is anticipated that ethanol, a major component of ETBE will experience a
similar increase in demand. This increase in demand, especially through the
summer months should reduce the high inventory levels experienced in previous
summers.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended September
30, 1995 which would be considered other than in the ordinary course of the
Company's business.
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
Not applicable.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a). Exhibit 27-1 Financial Data Schedule
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.
HIGH PLAINS CORPORATION
Date November 13, 1995 Raymond G. Friend
Executive Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 152,045
<SECURITIES> 0
<RECEIVABLES> 5,485,048
<ALLOWANCES> 100,000
<INVENTORY> 3,717,188
<CURRENT-ASSETS> 9,673,828
<PP&E> 74,459,713
<DEPRECIATION> 15,498,882
<TOTAL-ASSETS> 70,117,629
<CURRENT-LIABILITIES> 9,641,639
<BONDS> 18,159,415
<COMMON> 1,599,629
0
0
<OTHER-SE> 40,716,946
<TOTAL-LIABILITY-AND-EQUITY> 70,117,629
<SALES> 20,061,945
<TOTAL-REVENUES> 20,061,945
<CGS> 18,715,073
<TOTAL-COSTS> 18,715,073
<OTHER-EXPENSES> 291,146
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 623,638
<INCOME-PRETAX> 432,088
<INCOME-TAX> 8,502
<INCOME-CONTINUING> 423,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 423,586
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
