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 March 31, 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. Douglas67202
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 March 31, 1995 - 15,124,722
<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 Flow 7
Selected Notes to Consolidated Financial Statements 8-9
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 10-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Exhibit 1 14
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Balance Sheets
(Unaudited)
March 31, 1995 and June 30, 1994
<CAPTION>
March 31, June 30,
Assets 1995 1994
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash $ 95,051 $ 131,105
Trade accounts receivable (less
allowance of $100,000) 6,805,002 2,067,572
Inventories 3,048,440 941,862
Land and building held for resale 320,378 -0-
Equipment held for resale 310,842 310,842
Refundable income taxes -0- 107,825
Prepaid expenses 385,721 461,939
Total current assets 10,965,434 4,021,145
Property, plant and equipment, at cost:
Land and land improvements 177,783 177,783
Ethanol plants 70,848,838 37,502,487
Other facilities and equipment 269,446 249,662
Office equipment 212,470 248,983
Leasehold improvements 47,771 43,798
Construction in progress -0- 19,105,781
71,556,308 57,328,494
Less accumulated depreciation 14,223,240 12,949,388
Net property, plant and equipment 57,333,068 44,379,106
Other assets:
Deferred loan costs, (less amortization
of $41,146) 436,312 446,819
Start up costs, (less amortization
of $13,050) 247,949 -0-
Long-term note receivable 224,242 -0-
Investments and other assets 17,258 68,413
Total other assets 925,761 515,232
$69,224,263 $48,915,483
<FN>
** From audited financial statements.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Balance Sheets, Continued
(Unaudited)
March 31, 1995 and June 30, 1994
<CAPTION>
March 31, June 30,
Liabilities and Stockholders' Equity 1995 1994
(Unaudited) **
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt 3,571,429 2,083,333
Short-term borrowings 1,000,000 -0-
Accounts payable 4,004,995 3,858,686
Accrued interest 194,584 79,464
Accrued payroll and taxes 493,061 233,136
Income taxes payable 181,826 -0-
Total current liabilities 9,445,895 6,254,619
Long-term debt, excluding current
maturities 19,940,476 10,248,339
Stockholders' equity:
Cumulative preferred stock -0- 150,000
Common stock, $.10 par value, authorized
50,000,000 shares; issued 15,414,162 shares
and 11,031,988 shares at March 31, 1995, and
June 30, 1994, respectively, of which
289,440 shares and 217,080 shares were held
as treasury stock at March 31, 1995, and
June 30, 1994, respectively 1,541,416 1,103,199
Additional paid-in capital 34,439,957 33,266,850
Retained earnings (deficit) 4,100,896 (1,863,147)
40,082,269 32,656,902
Less:
Treasury stock - at cost (244,377) (244,377)
Total stockholders' equity 39,837,892 32,412,525
$69,224,263 $48,915,483
<FN>
** From audited financial statements.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31, 1995 and 1994
and Nine Months Ended March 31, 1995 and 1994
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $17,710,570 9,553,942 $34,810,011 26,889,550
Cost of sales 13,941,450 9,660,017 27,219,878 24,310,786
Gross profit (loss) 3,769,120 (106,075) 7,590,133 2,578,764
Selling, general and
administrative expenses 418,455 305,989 1,076,755 1,072,929
Operating income (loss) 3,350,665 (412,064) 6,513,378 1,505,835
Other income (deductions):
Interest income-and other 14,789 273 33,765 753
Interest expense (592,847) -0- (592,927) -0-
Gain on sale of
equipment 18,900 -0- 92,492 10,000
Other miscellaneous
income 221,746 -0- 223,122 -0-
(337,412) 273 (243,548) 10,753
Net earnings (loss)
before income taxes 3,013,253 (411,791) 6,269,830 1,516,588
Income tax (expense)benefit (232,542) 16,303 (305,787) (28,785)
Net earnings (loss) $ 2,780,711 (395,488) $ 5,964,043 1,487,803
Earnings (loss) per common
and dilutive common
equivalent share $ .18 (.03)* $ .38 .10*
Weighted average
shares outstanding 15,869,137 15,819,520* 15,763,167 15,661,084*
<FN>
* Restated for comparative purposes.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
(Unaudited)
Nine Months Ended March 31, 1995
<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, 1 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 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 s(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, -0- -0- 14,816,989 $1,481,699 $33,073,828 $ 1,320,185 $(244,377) $35,631,335
Exercise of options 499,961 49,996 1,375,850 1,425,846
Adjustment on
stock split 97,212 9,721 (9,721)
Net earnings for quarter 2,780,711 2,780,711
Balance,
March 31, 1995 15,414,162 $1,541,416 $34,439,957 $ 4,100,896 $(244,377) $39,837,892
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Consolidated Statements of Cash Flow
(Unaudited)
Nine Months Ended March 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 5,964,043 $ 1,487,803
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,273,852 1,607,020
Amortization of deferred compensation -0- 458,449
Changes in operating assets and liabilities:
Trade accounts receivable (4,737,430) (1,095,721)
Inventories (2,106,578) (625,051)
Prepaid expenses 76,218 (428,420)
Refundable income taxes 107,825 -0-
Accounts payable 146,309 2,872,048
Accrued liabilities 556,871 (5,825)
Net cash provided by operating activities 1,281,110 4,270,303
Investing activities:
Proceeds from sale of assets 171,780 -0-
Acquisition of property, plant and equipment (14,719,972) (12,058,572)
Increase in other non-current assets (410,529) (75,811)
Net cash used in investing activities (14,958,721) (12,134,383)
Financing activities:
Advances from short-term borrowings 1,000,000 -0-
Advances from construction financing 12,668,328 7,934,881
Payments on long-term debt (1,488,095) -0-
Funds received by exercise of stock options 1,461,324 -0-
Net cash provided by financing activities 13,641,557 7,934,881
(Decrease) increase in cash and cash
equivalents (36,054) 70,801
Cash and cash equivalents at beginning of period 131,105 230,773
Cash and cash equivalents at end of quarter $ 95,051 $ 301,574
<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 normal 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 March 31, 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 March 31, 1995, and $496,971 or $.03 per
share for the nine months ended March 31, 1995.
(2) FINANCIAL ARRANGEMENTS
On February 10, 1995, the Company entered into a Second Amendment
to Credit Agreement with Bank One, Indianapolis, N.A. which amended
the original agreement dated December 31, 1994, to provide a waiver
to loan provisions thus allowing the proposed sale of certain fixed
assets of the Engineering Division and Grains Commodities
Department to a former officer.
Additionally, the amendment provides for a temporary overline loan
for the purpose of funding short-term working capital needs. On
February 13, 1995, the Company advanced $1,000,000 against this
overline loan provision, and is due to mature on June 13, 1995.
(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 was a 4:3 split, increasing common stock
issued by an estimated 3,704,283 shares. The consolidated balance
sheets at
<PAGE>
STOCK SPLIT CONTINUED
December 31, 1994, consolidated statements of stockholders' equity
for the six months ended December 31, 1994, and all earnings per
share calculations were restated to reflect this forward stock
split.
On February 22, 1995, common stock issued to effect the split
totalled 3,801,495, requiring an adjustment to outstanding shares
of common stock of 97,212 shares. This adjustment is the result of
options exercised prior to the stock split payment date, requiring
additional shares to be issued than originally estimated to effect
the split.
(3) STOCK OPTIONS
During the quarter ended March 31, 1995, options to purchase shares
of common stock were exercised at option prices as set forth below:
Number Shares Option Price
183,600 $ .810
57,586 1.466
28,793 1.889
71,982 3.342
54,000 4.458
50,000 5.382
54,000 7.176
499,961
As a result of the exercise of these stock options, the Company
received funds totalling $1,461,324.
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended March 31, 1995 and 1994
Net Sales and Operating Expenses.
Net sales for the nine months ended March 31, 1995, were 29.5%
higher than net sales for the same period in 1994 due to an
increase in ethanol production of 57.6% and a 6.3% increase in
ethanol prices. During the nine months ended March 31, 1995,
19,583,060 gallons of ethanol were sold at an average price of
$1.36 per gallon compared to 14,540,661 gallons from production
sold during the nine months ended March 31, 1994, at an average
price of $1.28 per gallon. Additionally, distillers grains sales
during the nine months ended March 31, 1995, increased 52.6%
compared to the same period in 1994. However, this increase in
sales was offset by a 17.7% decline in sales price per ton.
Ethanol and distillers grains were significantly higher for the
nine months ended March 31, 1995, compared to the same period in
1994 due to the production contribution of the York, Nebraska plant
which began operations in November, 1994.
Cost of sales as a percentage of net sales was 78.2% and 90.4% for
the nine month periods ended March 31, 1995, and 1994,
respectively.
The decrease in cost of sales as a percent of sales was due
primarily to lower grain costs and the 26% reduction in
depreciation expense. The Company's average cost of grain
decreased to $2.21 per bushel for the nine months ended March 31,
1995, down from $2.47 per bushel for the same period in 1994,
primarily due to lower cash grain prices.
Selling, general and administrative expenses for the nine months
ended March 31, 1995, increased slightly compared to the same
period ended March 31, 1994. This increase is a net effect of a
reduction in deferred compensation expense and an increase in
administrative costs related to operations at the new production
facility at York, Nebraska.
Net Earnings.
Net earnings increased 300.9% for the nine months ended March 31,
1995, from the same period in 1994. Net earnings increased from
5.5% to 17.1% of net sales due to the increase in gross profit in
the 1995 period compared to the same period in 1994. Earnings per
share at March 31, 1995, were 280% higher than earnings per share
for the same period in 1994 due to the increase in net earnings.
<PAGE>
MATERIAL CHANGES IN RESULTS AND OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Net Sales and Operating Expenses and Results of Operations.
Net sales for the three months ended March 31, 1995, increased
85.4% over the same period in 1994 due to an increase in ethanol
production of 146.9% and a 16% increase in ethanol prices. During
the quarter ended March 31, 1995, 10,380,288 gallons of ethanol
were sold at an average price of $1.38, compared to 5,028,593
gallons sold during the same period in 1994 at an average price of
$1.19 per gallon. The average sale price increase for the three
months ended March 31, 1995, compared to the same period in 1994
results from increases in market prices for ethanol and increases
in freight ranging from
$.01 - $.04 per gallon due to increased shipping distances from the
York, Nebraska plant.
For the three months ended March 31, 1995 distillers grain sales
increased 123.9% from the prior period in 1994, due to increased
production, however, this was offset by the average sale price per
ton decreasing by 29.9%.
For the quarter ended March 31, 1994, the Company brokered ethanol
for several producers. Sales from brokering activities amounted to
$1,323,207 on 1,048,461 gallons, with net profits from sales of
$52,453 or $.05 per gallon. During the quarter ended March 31,
1994, the Company did not broker any alcohol.
Cost of sales as a percentage of net sales was 78.7% and 101.1% for
the three month periods ended March 31, 1995, and 1994,
respectively. The decrease in cost of sales as a percentage of net
sales was due primarily to the average cost of grain per bushel
decreasing 29.9% to $2.06 per bushel for the three months ended
March 31, 1995, from $2.94 per bushel for the same period ended
March 31, 1994. Grain costs were lower as a result of higher cash
grain prices and losses experienced in the Company's grain trading
account during the three months ended March 31, 1994.
Selling, general and administrative expenses increased 36.8% for
the three months ended March 31, 1995, compared to the period ended
March 31, 1994. This increase results from increased
administrative expenses associated with the management of the new
plant at York, Nebraska.
Net Earnings.
Net earnings increased 803.1% for the three months ended March 31,
1995, from the prior period in 1994. Net earnings increased to
15.7% from (4.1%) of net sales. The increase in net earnings
results from an increase in gross profit for the 1995 period from
1994. Earnings per share for the period ended March 31, 1995,
increased from the same period in 1994 due to an increase in net
earnings.
<PAGE>
Liquidity and Capital Resources
The Company's primary sources of funds during the third fiscal
quarter were cash flow from operations, exercise of options, and a
temporary short-term loan from Bank One, Indianapolis, N.A. for
$1,000,000 for working capital needs. At March 31, 1995, the
Company had a working capital surplus of $1,519,539 compared to a
working capital deficit of $2,233,374 at June 30, 1994. Cash flow
from operating activities amounted to $1,281,110 for the first nine
months of fiscal 1995 compared to $4,270,303 for the same period in
fiscal 1994. The decrease in cash flow from operations in fiscal
1995 was attributable to increases in inventory levels as the York,
Nebraska plant production achieved its rated capacity and an
increase in trade receivables created by sales of inventory from
the new plant.
Capital expenditures in the first nine months of fiscal 1995
amounted to $14,719,972 compared to $12,058,572 for the same period
in fiscal 1994. These expenditures were primarily made on the
construction of the 30 million gallon per year facility in York,
Nebraska. The cost of plant construction to date has been funded
by long-term debt and by cash generated from operations. The York
facility is completed and operational, any additional expenditures
on the facility are expected to be funded by cash flow from
operations.
The Company, in anticipation of an additional loan payment based on
75% of cash flow and due during the first quarter of fiscal 1996,
to Bank One, Indianapolis, N.A., is currently pursuing several
alternatives to build sufficient cash reserves to meet this
obligation. These alternatives include the segregation of funds
from operations, seeking the exercise of options held by directors
and officers, establishment of an open line-of-credit, or issuance
of debt or equity securities. In the opinion of management
adequate liquidity will be provided by operations or a combination
of the alternatives noted above, for the foreseeable future.
Seasonality
Ethanol prices on product sold in mandated oxygen markets increased
during the months of September through April, due to the Federal
Oxygen Program. With the end of the Federal Oxygen Program for
this wintertime period in March and April, the Company's ethanol
prices were once again negatively affected with sales orders
declining as customers work off current inventories. Wholesale
gasoline prices remained soft for the entire quarter and continue
to negatively affect, in all markets, ethanol sales which are based
off of spot wholesale gasoline prices.
However, as ETBE manufacturing increases in response to summertime
use as an oxygenate, it is anticipated that ethanol demand will
increase and prices will not be as negatively impacted as seen in
prior summer seasons.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No legal proceedings were instigated during the quarter ended March 31, 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. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit:
1). Financial Data Schedule
b). Reports on Form 8-K. During the quarter for which this report is
filed, one Form 8-K was filed on February 2, 1995, concerning the
sale of certain assets, and contractual commitments between the
Company and ICM, Inc. a newly formed corporation owned by a fomer
vice-president of the Company.
<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
By Date
Raymond G. Friend
Chief Financial Officer
POWER OF ATTORNEY
I, Raymond G. Friend, Vice President Finance of High Plains Corporation
hereby authorize Mary Lou Mulkeen of Washington Service Bureau to sign on
behalf of High Plains Corporation in filing our Form 10-Q for the quarter
ending March 31, 1994.
Raymond G. Friend Date
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 95,051
<SECURITIES> 0
<RECEIVABLES> 6,905,002
<ALLOWANCES> 100,000
<INVENTORY> 3,048,440
<CURRENT-ASSETS> 10,965,434
<PP&E> 71,556,308
<DEPRECIATION> 14,223,240
<TOTAL-ASSETS> 69,224,263
<CURRENT-LIABILITIES> 9,445,895
<BONDS> 19,940,476
<COMMON> 1,541,416
0
0
<OTHER-SE> 38,296,476
<TOTAL-LIABILITY-AND-EQUITY> 69,224,263
<SALES> 17,710,570
<TOTAL-REVENUES> 17,710,570
<CGS> 0
<TOTAL-COSTS> 13,941,450
<OTHER-EXPENSES> 418,455
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 592,847
<INCOME-PRETAX> 3,013,253
<INCOME-TAX> 232,542
<INCOME-CONTINUING> 2,780,711
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,780,711
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
