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, 1996 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, 1996 - 15,928,111
<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, 1996 and June 30, 1996
<CAPTION>
September 30, June 30,
Assets 1996 1996
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,076,576 $ 8,889,246
Trade accounts receivable (less
allowance of $100,000) 1,853,642 1,839,809
Inventories 1,618,632 1,680,843
Current portion of long-term
notes receivable 109,170 106,552
Prepaid expenses 2,778,423 545,171
Refundable income taxes 410,259 410,259
Total current assets 7,846,702 13,471,880
Property, plant and equipment, at cost:
Land and land improvements 142,283 142,283
Ethanol plants 79,379,236 77,217,199
Other equipment 380,164 417,559
Office equipment 237,085 237,085
Leasehold improvements 48,002 48,002
80,186,770 78,062,128
Less accumulated depreciation (18,251,596) (17,573,003)
Net property, plant and equipment 61,935,174 60,489,125
Other assets:
Property and equipment held for resale 451,090 451,090
Deferred loan costs (less accumulated
amortization of $191,176 and $164,644,
respectively) 356,029 312,823
Long-term notes receivable 285,866 314,159
Other 57,018 57,018
Total other assets 1,150,003 1,135,090
$70,931,879 $75,096,095
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets Continued
(Unaudited)
September 30, 1996 and June 30, 1996
<CAPTION>
September 30, June 30,
Liabilities and Stockholders' Equity 1996 1996
(Unaudited) **
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 2,391,116 $ 4,928,618
Accounts payable 3,521,703 692,135
Estimated contract commitments 165,209 629,093
Accrued interest -0- 156,294
Accrued payroll and property taxes 600,868 492,590
Total current liabilities 6,678,896 6,898,730
Revolving line-of-credit 2,000,000 2,000,000
Long-term debt, excluding current
maturities 10,099,468 12,460,274
Other 163,770 155,748
12,263,238 14,616,022
Stockholders' equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 16,319,289
shares and 16,247,289 shares at September
30, 1996 and June 30, 1996, respectively,
of which 391,178 shares were held as
treasury stock 1,631,929 1,624,729
Additional paid-in capital 36,986,198 36,752,644
Retained earnings 14,192,098 16,030,337
52,810,225 54,407,710
Less:
Treasury stock - at cost (737,660) (737,660)
Deferred compensation (82,820) (88,707)
Total stockholders' equity 51,989,745 53,581,343
$70,931,879 $75,096,095
<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, 1996 and 1995
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1996 1995
<S> <C> <C>
Net sales and revenues $ 1,339,233 $20,061,945
Cost of products sold 2,567,568 18,715,073
Gross profit (1,228,335) 1,346,872
Selling, general and administrative
expenses 313,177 306,791
Operating income (loss) (1,541,512) 1,040,081
Other income (expense):
Interest expense (395,358) (623,638)
Loss on sale of equipment (5,906) -0-
Interest and other income 67,022 15,645
(334,242) (607,993)
Net earnings (loss) before income
taxes (1,875,754) 432,088
Income tax (expense) benefit 37,515 (8,502)
Net earnings (loss) $(1,838,239) $ 423,586
Earnings per common and common
equivalent share:
Net earnings (loss) $ (.11) $ .03
<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, 1996
<CAPTION>
Common
Stock
Additional
Number Amount Paid-in Retained Treasury Deferred Total
of Shares Capital Earnings Stock Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1996 16,247,289 $ 1,624,729 $ 36,752,644 $16,030,337 $ (737,660) $ (88,707) $53,581,343
Exercise of
Options 72,000 7,200 233,554 240,754
Amortization of
deferred compensation 5,887 5,887
Net Loss for
the Quarter (1,838,239) (1,838,239)
Balance,
September 30, 1996 16,319,289 $ 1,631,929 $ 36,986,198 $14,192,098 $ (737,660) $ (82,820) $51,989,745
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Cash Flows
(Unaudited)
Three Months Ended September 30, 1996 and 1995
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $(1,838,239) $ 423,586
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 705,125 692,465
Amortization of deferred compensation 5,887 -0-
Payments on notes receivable 25,675 17,475
Changes in operating assets and liabilities:
Trade accounts receivable (13,833) (1,436,287)
Inventories 62,211 (1,071,911)
Prepaid expenses (2,233,252) 70,304
Accounts payable 2,829,568 78,468
Estimated contract commitments (463,884) -0-
Accrued interest (156,294) 13,896
Accrued payroll, taxes, and other 108,278 222,370
Net cash provided by operating activities (968,758) (989,634)
Cash flows from investing activities:
Acquisition of property, plant and equipment (2,124,642) (1,350,657)
(Increase)decrease in other non-current assets (69,738) 29,947
Net cash used in investing activities (2,194,380) (1,320,710)
Cash flows from financing activities:
Proceeds from short-term debt -0- 1,211,052
Payment on long-term debt (4,898,308) (991,295)
Proceeds from exercise of options 240,754 1,642,251
Increase in other non-current liabilities 8,022 -0-
Net cash provided by financing activities (4,649,532) 1,862,008
Decrease in cash and cash equivalents (7,812,670) (448,336)
Cash and cash equivalents:
Beginning of quarter 8,889,246 600,381
End of quarter $ 1,076,576 $ 152,045
<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, 1996.
(2) FINANCIAL ARRANGEMENTS
Subsequent to September 30, 1996 the Company executed an amendment to
its term loan agreement, effective as of October 15, 1996. This
amendment provided the Company with rights to enter into a capital
lease obligation for the financing of certain capital expenditures.
These expenditures represent the modifications to the York plant
which will allow the Company to produce industrial grade ethanol.
Included in this amendment is a waiver of any pre-payment penalty
should the Company pay the outstanding balance of its term loan on or
before April 30, 1997. Also, beginning December 31, 1996 the Company
has agreed to make reduced principal payments on the term loan in
equal monthly installments of $236,080 through October 31, 1997.
After October 31, 1997, the Company will resume its original monthly
principal payments of $297,619 until maturity.
(3) Stock Options
On September 6, 1996, 72,000 options were exercised at $3.344 per share,
with a corresponding reload granted for 72,000 options at $3.75 per share.
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.
THREE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
Net Sales and Revenues and Operating Expenses and Results of
Operations.
Net sales and revenues for the three months ended September 30, 1996
were lower than net sales and revenues for the same period ended
September 30, 1995. During the three months ended September 30,
1996, 1,004,642 gallons of ethanol were sold at an average price of
$1.19 per gallon, compared to 12,309,160 gallons sold during the same
period ended September 30, 1995, at an average price of $1.13 per
gallon. Lower net sales and revenues were a direct result of
suspended operations at the York Plant for the entire period and
production on a very limited basis in September 1996 for the Colwich
Plant.
Cost of products sold as a percentage of net sales and revenues was
191.7% and 93.3% for the three month periods ended September 30, 1996
and 1995, respectively. The increase in cost of products sold as a
percentage of net sales and revenues was due primarily to increased
labor costs as furloughed employees were rehired for both plants, in
addition to cost incurred related to startup. Also, cost of products
sold were higher due to production inefficiency resulting from the
Colwich plant startup.
Selling, general and administrative expenses insignificantly
increased for the three months ended September 30, 1996, compared to
the same period ended September 30, 1995. In anticipation of the
startup of both production facilities, the Company's headquarters
have returned to full staff.
Net Earnings declined 533% for the three months ended September 30,
1996 from the same period in 1995. The decrease in net earnings
results primarily from suspension of operations at the York plant and
the initial startup of the Colwich Plant in mid-September 1996.
At June 30, 1996, the Company had temporarily suspended operations at
both of it production facilities. In September 1996, the Company
began rehiring furloughed employees, which allowed the Colwich,
Kansas plant to begin production in mid-September 1996. Preparation
for startup at the York, Nebraska plant began in early October with
production coming on-line by late October 1996. Production at full
capacity is anticipated to be achieved no later than November 30,
1996.
<PAGE>
Liquidity and Capital Resources
The Company's primary source of funds during the first fiscal quarter
of 1997 were from the exercise of options by an officer with proceeds
totalling $240,754 and cash from the Company's limited operations.
At September 30, 1996, the Company had a working capital surplus of
$1,167,806. Working capital decreased compared to the June 30, 1996
surplus of $6,573,150. This decrease is the net effect of the
proceeds from the exercise of options, the decrease in long-term debt
due to the pre-payment of principal totalling $4,600,000 and the
increase in trade payables.
Capital expenditures in the first three months of fiscal 1997
amounted to $2,124,642 compared to $1,350,657, for the same period in
fiscal 1996. These expenditures were primarily for modifications at
the York, Nebraska plant to enable the Company to produce industrial
grade ethanol.
In October 1996, the Company amended its loan agreement with its
primary lender. This amendment provides for the resumption of
principal payments beginning December 31, 1996. For additional
information regarding resumption of payments see Footnote (2)
Financial Arrangements. The Company believes that the resumption of
the term loan payments will not have a material negative affect on
its liquidity. With the Company's production facilities coming back
on-line during September for the Colwich plant and late October for
the York plant, it is anticipated that cash from operating activities
will be adequate to satisfy its liquidity needs including the
re-instated debt service.
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
Due to higher than normal grain prices, ethanol production declined
during the summer months of 1996. Thus, inventory levels entering
into the Federal Oxygen Program season were below typical levels.
With the lower than normal inventories and with the seasonal increase
in demand due to the Federal Oxygen Program, the Company anticipates
ethanol prices will increase during the fall and winter months.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended September
30, 1996 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 12, 1996 Raymond G. Friend
Executive Vice President
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,076,576
<SECURITIES> 0
<RECEIVABLES> 2,348,678
<ALLOWANCES> 100,000
<INVENTORY> 1,618,632
<CURRENT-ASSETS> 7,846,702
<PP&E> 80,186,770
<DEPRECIATION> 18,251,596
<TOTAL-ASSETS> 70,931,879
<CURRENT-LIABILITIES> 6,678,896
<BONDS> 14,490,584
0
0
<COMMON> 163,929
<OTHER-SE> 50,357,816
<TOTAL-LIABILITY-AND-EQUITY> 70,931,879
<SALES> 1,339,233
<TOTAL-REVENUES> 1,339,233
<CGS> 2,567,568
<TOTAL-COSTS> 2,567,568
<OTHER-EXPENSES> 319,083
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 395,358
<INCOME-PRETAX> (1,875,754)
<INCOME-TAX> (37,515)
<INCOME-CONTINUING> (1,838,239)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,838,239)
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
