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 December 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. 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, 1995 - 15,780,519
<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
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
December 31, 1995 and June 30, 1995
<CAPTION>
December 31, June 30,
Assets 1995 1995
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash
$ 1,478,020 $ 600,381
Trade accounts receivable (less
allowance of $100,000 and $110,000
respectively) 5,941,363 3,948,761
Inventories 3,240,345 2,645,277
Current portion of long-term
notes receivable 101,502 96,691
Prepaid expenses 406,070 384,859
Total current assets 11,167,300 7,675,969
Property, plant and equipment, at cost:
Land and land improvements 142,283 142,283
Ethanol plant 74,968,469 72,387,277
Other facilities and equipment 312,846 300,210
Office equipment 232,333 231,284
Leasehold improvements 48,002 48,002
75,703,933 73,109,056
Less accumulated depreciation 16,197,536 14,806,417
Net property, plant and equipment 59,506,397 58,302,639
Other assets:
Property and equipment held for resale 792,263 798,763
Deferred loan costs (less accumulated
amortization of $115,251 and $65,857
respectively) 362,216 411,610
Long-term notes receivable 213,680 265,711
Other 57,360 62,609
Total other assets 1,425,519 1,538,693
$72,099,216 $67,517,301
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets, Continued
(Unaudited)
December 31, 1995 and June 30, 1995
<CAPTION>
December 31, June 30,
Liabilities and Stockholders' Equity 1995 1995
(Unaudited) **
<S> <C> <C>
Current liabilities:
Current maturities of short-term debt $ 1,261,052 $ -0-
Current maturities of long-term debt 3,572,444 3,876,972
Accounts payable 5,231,236 3,796,048
Accrued interest 185,191 185,163
Accrued payroll and property taxes 612,902 356,108
Total current liabilities 10,862,825 8,214,291
Long-term debt, excluding current
maturities 17,266,807 19,052,272
Stockholders' equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 16,140,289 shares
and 15,470,947 shares at December 31, 1995,
and June 30, 1995, respectively, of which
359,770 and 289,770 shares were held as
treasury stock at December 31, 1995 and
June 30, 1995, respectively 1,614,029 1,547,095
Additional paid-in capital 36,486,564 34,738,760
Retained earnings 6,489,618 4,209,260
44,590,211 40,495,115
Less:
Treasury stock - at cost (620,627) (244,377)
Total stockholders' equity 43,969,584 40,250,738
$72,099,216 $67,517,301
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE)
<PAGE>
</TABLE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended December 31, 1995 and 1994
and Six Months Ended December 31, 1995 and 1994
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales and revenues $23,594,686 $9,028,515 $43,656,631 $17,099,441
Cost of sales 20,776,632 6,195,835 39,491,705 13,208,945
Gross profit 2,818,054 2,832,680 4,164,926 3,890,496
Selling, general and
administrative expenses 408,490 338,908 715,281 727,783
Operating income 2,409,564 2,493,772 3,449,645 3,162,713
Other income (deductions):
Interest expense (540,593) -0- (1,164,231) -0-
Gain on sale of
equipment -0- -0- -0- 73,592
Interest and other
income 25,558 18,908 41,204 20,273
(515,035) 18,908 (1,123,027) 93,865
Net earnings before
income taxes 1,894,529 2,512,680 2,326,618 3,256,578
Income tax expense 37,757 58,367 46,260 73,246
Net earnings $ 1,856,772 $2,454,313 $ 2,280,358 $ 3,183,332
Earnings per common
and dilutive common
equivalent share $ .12 $ .16 $ .15 $ .21
Weighted average
shares outstanding 16,022,106 15,884,127 15,715,761 15,489,338
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Stockholders' Equity
(Unaudited)
Six Months Ended December 31, 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 earnings
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
Exercise of
options 144,000 14,400 158,087 172,487
Common stock
surrender (376,250) (376,250)
Net earnings
for the
quarter 1,856,772 1,856,772
Balance,
December 31,
1995 16,140,289 $1,614,029 $36,486,564 $6,489,618 $(620,627) $43,969,584
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Cash Flows
(Unaudited)
Six Months Ended December 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,280,358 $ 3,183,332
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,440,513 657,156
Provision for bad debt (10,000) 0
(Gain) on sale of equipment 0 (73,592)
Payments received on notes receivables 47,220 0
Changes in operating assets and liabilities:
Trade accounts receivable (1,982,602) (3,692,432)
Short-term investments 0 (240,434)
Inventories (595,068) (532,343)
Refundable income taxes 0 107,825
Prepaid expenses (21,211) 174,507
Accounts payable 1,435,188 1,405,340
Accrued liabilities (119,428) 200,160
Net cash provided by operating activities 2,474,970 1,189,519
Cash flows from investing activities:
Proceeds from sale of equipment 56,500 144,685
Acquisition of property, plant and equipment (2,644,877) (12,988,057)
(Increase) decrease in other non-current
assets 5,249 (227,312)
Net cash used in investing activities (2,583,128) (13,070,684)
Cash flows from financing activities:
Proceeds from short-term debt 2,261,052 0
Payments on short-term debt (1,000,000) 0
Proceeds from long-term debt 0 12,668,328
Payments on long-term debt (2,089,993) (595,238)
Proceeds from exercise of stock options 1,814,738 35,478
Net cash provided by financing activities 985,797 12,108,568
Increase in cash and cash equivalents 877,639 227,403
Cash and cash equivalents:
Beginning of period 600,381 131,105
End of period $ 1,478,020 $ 358,508
<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 six months ended December 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 December 31, 1995 and 1994.
(2) STOCK OPTIONS
On October 11, 1995, 86,400 options were exercised at $.6076 per
share, with corresponding reloads granted for 86,400 options at
$5.625 per share. Additionally, on October 19, 1995, 57,600
options were exercised at $2.083 per share and were not subject to
reload provisions.
(3) STOCK SURRENDER
On December 1, 1995, 70,000 shares of Common Stock were surrendered
to the Company at the then fair market value of $5.375 per share,
by several employees. These shares were accepted in lieu of cash,
in satisfaction of certain employee withholding tax obligations the
Company was required to collect as a result of compensation arising
from the exercise of stock options in calendar 1995.
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.
Six Months Ended December 31, 1995 and 1994
Net Sales and Operating Expenses.
Net sales and revenues for the six months ended December 31, 1995,
were higher than net sales for the same period ended December 31, 1994.
During the six months ended December 31, 1995, 26,754,314 gallons of
ethanol were sold at an average price of $1.18 per gallon compared to
9,415,324 gallons sold at an average price of $1.34, for the same
period ending December 31, 1994. Gallons sold increased 184% due to
the increase in production resulting from the York plant operating at
near capacity for the entire period ending December 31, 1995 compared
to production of 1,813,339 gallons from trial production runs during
the final construction phase in late November and December of 1994.
Cost of sales as a percentage of net sales was 90.5% and 77.2% for the
six month periods ended December 31, 1995, and 1994, respectively.
The increase in the cost of sales as a percentage of net sales was
primarily due to the increase in average grain prices and the decline
in the average sale price for ethanol. Average cost of grain
increased to $2.73 per bushel for the six months ended December 31,
1995, up from $2.24 per bushel for the same period in 1994.
Selling, general and administrative expenses decreased 1.7% for the six
months ended December 31, 1995, compared to the same period ended
December 31, 1994. This decrease is the result of the elimination of
selling expenses related to the Company's in-house marketing of its
by-products in fiscal 1994.
Net Earnings.
Net earnings decreased 28% for the six months ended December 31, 1995,
compared to the same period in 1994. Net earnings decreased from
18.6% to 5.2% of net sales and revenues, due to the increase in cost
of sales, combined with a decrease in revenues in the 1995 period
compared to the same period in 1994. Earnings per share at December
31, 1995, were 28.5% lower than earnings per share for the same
period in 1994 due to the decline in net earnings.
<PAGE>
MATERIAL CHANGES IN RESULTS AND OPERATIONS
Three Months Ended December 31, 1995 and 1994
Net Sales and Operating Expenses and Results of Operations.
Net sales and revenues for the three months ended December 31, 1995,
decreased slightly compared to the same period in 1994. During the
quarter ended December 31, 1995, 17,520,259 gallons of ethanol were
sold at average price of $1.21 per gallon compared to 4,842,576
gallons sold during the same period in 1994 at an average price of
$1.38 per gallon. Gallons sold increased 262% due to the increase in
production from the York plant operating at near capacity for the
three months ended December 31, 1995 compared to production of
1,813,339 gallons from trial production runs during the final
construction phase in late November and December of 1994.
Cost of sales as a percentage of net sales and revenues was 88.1% and
68.6% for the three month periods ended December 31, 1995 and 1994,
respectively. The increase in cost of sales as a percentage of sales
is primarily due to an increase in the cost of grain and the decline
in the average sale price for ethanol. The average cost of grain
increased 34.1% to $2.79 per bushel for the three months ended
December 31, 1995, up from $2.08 per bushel for the same period ended
December 31, 1994.
Selling, general and administrative expenses increased 20.5% for the
three months ended December 31, 1995, compared to the period ended
December 31, 1994. The increase was primarily the net effect of a
decrease in selling expenses related to the elimination of the
Company's in-house marketing of its DDG's and solubles in fiscal 1994
and increases in administrative overhead related to the York plant
operations.
Net Earnings.
Net earnings declined 24.3% for the three months ended December 31, 1995
from the prior period in 1994. Net earnings decreased from 27.2% to
7.9% of net sales, due to the decline in gross profit in the 1995
period compared to the 1994 level. Earnings per share for the three
months ended December 31, 1995 decreased 25% compared to earnings per
share for the three months ending December 31, 1994, as a result of
the decrease in net earnings.
<PAGE>
Liquidity and Capital Resources
The Company's primary sources of funds during the last fiscal quarter
were advances totaling $2,261,052 on it's revolving loan with Bank
One, Indianapolis, N.A. and cash flow from operations. At December
31, 1995, the Company had a working capital of $304,475 compared to a
working capital deficit of $(538,322) at June 30, 1995. The increase
in the working capital was primarily as a result of an increase in
trade accounts receivables.
Cash flow from operating activities amounted to $2,474,970 in the first
six months of fiscal 1995 compared to $1,189,519 for the same period
in fiscal 1994. The increase 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
$2,644,877 compared with $12,988,057 for the same period in fiscal
1994. These expenditures were made for minor modifications and
completion of the facility in York, Nebraska. This facility was
virtually complete and operational at December 31, 1994.
In the opinion of management, funds expected to be generated from future
operations 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.
Seasonality
Ethanol prices on products sold into oxygen markets, mandated under the
Federal Oxygen Program did not begin their seasonal increase until
early October due to increased competition and larger inventories
carried through the summer months. However, upward price movements
leveled off below price levels experienced for the same period in
fiscal 1994 due to these same factors.
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 program 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.
Additionally, the Company believes that the upcoming summer months will
experience stronger ethanol prices compared to previous summers due
to indications from competitors of plans for reduced ethanol
production and from the anticipated stronger ethanol demand discussed
above.
<PAGE>
Future Operating Results
The Company has continued to forward contract for its anticipated feedstock
requirements to minimize the effect of rising grain prices. At this time,
the Company has forward contracted for approximately 80% of its expected
grain requirements through May, 1997, at price levels which should allow
the Company to operate profitably. The Company's DDG prices historically
have moved in the same direction as grain prices, and accordingly are now
providing the Company with additiional revenue. Higher DDG prices have
made it possible for the Company to cover approximately 40% of the grain
cost increases.
As grain prices continue to rise, the Company is evaluating on an ongoing
basis, profit margins at 100% of plant production capacities versus reduced
production levels which would not exceed the forward contracted grain
supplies. Due to uncertainties in the price movement of grain feedstock
and ethanol, future trends for revenues and profitability are difficult to
predict. Should the Company determine that gross profitability would be
positively impacted by avoiding cash grains prices on the remaining grain
requirements not covered under forward contracts, the Company may option
to temporarily produce below plant capacities.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended December
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
The Company held its Annual Meeting of Stockholders on November 17, 1995.
The meeting involved the election of two directors, Daniel O. Skolness, and
H.T. Ritchie.
<TABLE>
Voting results:
<CAPTION>
BROKER
FOR AGAINST ABSTENTIONS NONVOTES
<S> <C> <C> <C> <C>
D.O. Skolness 11,489,770 126,424 -0- -0-
H.T. Ritchie 11,488,378 127,816 -0- -0-
</TABLE>
The following details the issues which were presented to stockholders for
vote and the results of that vote at the aforementioned annual meeting:
(1) Approve the adoption of an Employee Stock Purchase Plan for key
managment employees.
(2) Ratify the appointment of Allen, Gibbs & Houlik, LC as the Company's
independent public accountants.
<TABLE>
<CAPTION>
BROKER
RESULTS FOR AGAINST ABSTENTIONS NONVOTES
<S> <C> <C> <C> <C>
(1) 10,553,655 931,689 130,850 2,497,292
(2) 11,485,928 72,732 57,534 2,497,382
</TABLE>
<PAGE>
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, the Company filed a Form 8-K on November 10, 1995.
<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 February 9, 1996 /s/Raymond G. Friend
Executive Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 1,478,020
<SECURITIES> 0
<RECEIVABLES> 6,142,865
<ALLOWANCES> 100,000
<INVENTORY> 3,240,345
<CURRENT-ASSETS> 11,167,300
<PP&E> 75,703,933
<DEPRECIATION> 16,197,536
<TOTAL-ASSETS> 72,099,216
<CURRENT-LIABILITIES> 10,862,825
<BONDS> 17,266,807
0
0
<COMMON> 1,614,029
<OTHER-SE> 42,355,555
<TOTAL-LIABILITY-AND-EQUITY> 72,099,216
<SALES> 23,594,686
<TOTAL-REVENUES> 23,594,686
<CGS> 20,776,632
<TOTAL-COSTS> 20,776,632
<OTHER-EXPENSES> 408,490
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 540,593
<INCOME-PRETAX> 1,894,529
<INCOME-TAX> 37,757
<INCOME-CONTINUING> 1,856,772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,856,772
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
