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, 1997 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 March 31, 1997 - 15,960,444
<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
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. . . . . . . . . . 9 - 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 12
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
March 31, 1997 and June 30, 1996
<CAPTION>
March 31, June 30,
Assets 1997 1996
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 876,490 $ 8,889,246
Trade accounts receivable (less
allowance of $100,000) 7,818,313 1,839,809
Inventories 3,843,722 1,680,843
Current portion of long-term
notes receivable 124,663 106,552
Prepaid expenses 817,063 545,171
Refundable income taxes 410,259 410,259
Total current assets 13,890,510 13,471,880
Property, plant and equipment, at cost:
Land and land improvements 142,283 142,283
Ethanol plants 83,787,754 77,217,199
Other equipment 364,038 417,559
Office equipment 199,022 237,085
Leasehold improvements 48,002 48,002
84,541,099 78,062,128
Less accumulated depreciation (19,583,587) (17,573,003)
Net property, plant and equipment 64,957,512 60,489,125
Other assets:
Property and equipment held for resale 363,528 451,090
Deferred loan costs (less accumulated
amortization of $193,311 and $164,644
respectively) 221,493 312,823
Long-term notes receivable 162,112 314,159
Other 55,352 57,018
Total other assets 802,485 1,135,090
$ 79,650,507 $ 75,096,095
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets Continued
(Unaudited)
March 31, 1997 and June 30, 1996
<CAPTION>
March 31, June 30,
Liabilities and Stockholders' Equity 1997 1996
(Unaudited) **
<S> <C> <C>
Current liabilities:
Revolving line of credit $ 4,000,000 $ -0-
Current maturities of long-term debt 2,200,000 4,928,618
Current maturities of capital lease
obligations 433,056 -0-
Accounts payable 5,279,960 692,135
Estimated contract commitments -0- 629,093
Accrued interest 245,041 156,294
Accrued payroll and property taxes 945,027 492,590
Total current liabilities 13,103,084 6,898,730
Revolving line-of-credit -0- 2,000,000
Long-term debt, less current maturities 8,250,000 12,460,274
Capital lease obligations, less
current maturities 2,614,362 -0-
Other 447,879 155,748
11,312,241 14,616,022
Stockholders' equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 16,371,622
shares and 16,247,289 shares at March
31, 1997 and June 30, 1996, respectively,
of which 411,178 shares and 391,178 shares
were held as treasury stock at March
31, 1997 and June 30, 1996, respectively 1,637,162 1,624,729
Additional paid-in capital 37,159,080 36,752,644
Retained earnings 17,632,731 16,030,337
56,428,973 54,407,710
Less:
Treasury stock - at cost (863,910) (737,660)
Deferred Compensation (329,881) (88,707)
Total stockholders' equity 55,235,182 53,581,343
$ 79,650,507 $ 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 March 31, 1997 and 1996
and Nine Months Ended March 31, 1997 and 1996
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $20,570,905 $22,398,551 $38,699,005 $66,055,183
Cost of sales 19,608,559 20,787,081 35,135,099 60,278,787
Gross Profit 962,346 1,611,470 3,563,906 5,776,396
Selling, general and
administrative expenses 340,815 407,641 1,068,360 1,122,922
Operating income 621,531 1,203,829 2,495,546 4,653,474
Other income (expense):
Interest and other
income 24,054 13,898 115,667 41,570
Interest expense (348,910) (549,267) (1,116,547) (1,713,498)
Gain on sale of
equipment and property 139,488 250,000 140,063 250,150
Other miscellaneous
income -0- 32,500 266 45,882
184,918 (252,869) (860,551) (1,375,896)
Net earnings before
income taxes 436,613 950,960 1,634,995 3,277,578
Income tax expense 8,691 601 32,601 46,861
Net earnings $ 427,922 $ 950,359 $ 1,602,394 $ 3,230,717
Earnings per common and
dilutive common
equivalent share $ .03 $ .06 $ .10 $ .21
Weighted average shares
outstanding 15,996,347 15,816,709 15,953,591 15,683,221
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Stockholders' Equity
(Unaudited)
Nine Months Ended March 31, 1997
<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
Exercise of
options 22,000 2,200 71,363 73,563
Common stock
surrender (126,250) (126,250)
Amortization of
deferred compensation 12,314 12,314
Net earnings for
the quarter 3,012,711 3,012,711
Balance
December 31, 1996 16,341,289 $ 1,634,129 $ 37,057,561 $17,204,809 $ (863,910) $ (70,506) $54,962,083
Exercise of
options 30,333 3,033 101,519 104,552
Employee stock
purchase plan (273,438) (273,438)
Amortization of
deferred compensation 14,063 14,063
Net earnings for
the quarter 427,922 427,922
Balance
March 31, 1997 16,371,622 $ 1,637,162 $ 37,159,080 $17,632,731 $ (863,910) $ (329,881) $55,235,182
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Cash Flows
(Unaudited)
Nine Months Ended March 31, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
Cash Flows from operating activities:
Net earnings $ 1,602,394 $ 3,230,717
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 2,308,844 2,255,592
Amortization of deferred compensation 32,264 -0-
Provision for bad debt -0- (10,000)
Gain on sale of equipment (140,063) (250,150)
Payments on notes receivable 133,936 71,631
Changes in operating assets and liabilities
Trade accounts receivable (5,978,504) (2,398,209)
Inventories (2,162,879) (530,311)
Prepaid expenses (271,892) (12,592)
Accounts payable 4,587,825 (115,920)
Accrued liabilities 414,934 261,640
Estimated contract commitments (629,093) -0-
Net cash provided by operating activities (102,234) 2,502,398
Cash flows from investing activities:
Proceeds from sale of equipment 3,318,345 71,098
Acquisition of property, plant and equipment (6,553,264) (3,788,191)
(Increase) decrease in other non-current assets (43,115) 5,249
Net cash used in investing activities (3,278,034) (3,711,844)
Cash flows from financing activities:
Proceeds from short-term debt 4,000,000 3,000,000
Proceeds from long-term debt 11,000,000 -0-
Payments on short-term debt -0- (1,000,000)
Payment on long-term debt (19,895,238) (2,983,646)
Payment on capital lease obligations (174,812) -0-
Proceeds from exercise of options 418,869 1,814,738
Increase in other non-current liabilities 18,693 -0-
Net cash provided by financing activities (4,632,488) 831,092
(Decrease) in cash and cash
equivalents (8,012,756) (378,354)
Cash and cash equivalents:
Beginning of period 8,889,246 600,381
End of period $ 876,490 $ 222,027
<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 nine months
ended March 31, 1997 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 $165,567 or $.01 per share for the
three months ended March 31, 1997 and 1996, and $496,971 or $.03 per share for
the nine months ended March 31, 1997 and 1996.
(2) STOCK OPTIONS
On January 13, 1997, 20,000 options were exercised at $3.50 per share, with a
corresponding reload granted for 20,000 options at $4.8125 per share.
Additionally, on January 20, 1997, 10,333 options were exercised at $3.344 per
share, with a corresponding reload granted for 10,333 options at $5.3125.
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended March 31, 1997 and 1996
Net Sales and Operating Expenses.
Net sales for the nine months ended March 31, 1997, were 41.4% below net sales
for the same period in 1996. During the nine months ended March 31, 1997,
20,795,392 gallons of ethanol were sold at an average price of $1.29 per
gallon compared to 38,978,478 gallons from production sold during the nine
months ended March 31, 1996, at an average price of $1.19 per gallon.
Additionally, distiller's grain sales during the nine months ended
March 31, 1997, decreased 43.4% compared to the same period in 1996. Sales of
ethanol and distiller's grains were significantly lower for the nine months
ended March 31, 1997 compared to the same period in 1996 due to the decrease in
production resulting from the temporary shutdown of the Company's plants for
the first fiscal quarter at the Colwich facility and through late October at
the York facility.
Cost of sales as a percentage of net sales was 90.8% and 91.3% for the nine
month periods ended March 31, 1997, and 1996, respectively. The Company's
average cost of grain decreased to $2.59 per bushel for the nine months ended
March 31, 1997, down from $3.14 per bushel for the same period in 1996, due to
lower cash grain prices. In conjunction with lower grain costs, the Company
experienced higher costs of production due to inefficiencies resulting from the
start-up of the Company's two production facilities.
Selling, general and administrative expenses for the nine months ended March 31,
1997, decreased slightly compared to the same period ended March 31, 1996. This
decrease is a result of lower salaries and other administrative costs related to
the temporary shutdown of operations earlier in the fiscal year.
Net Earnings.
Net earnings decreased 50.4% for the nine months ended March 31, 1997, from the
same period in 1996. Net earnings decreased from 4.9% to 4.1% of net sales due
to the decrease in gross profit in the 1997 period compared to the same period
in 1996. Earnings per share at March 31, 1997, were 52.4% lower than earnings
per share for the same period in 1996 due to the decrease in net earnings.
<PAGE>
Three Months Ended March 31, 1997 and 1996
Net Sales and Operating Expenses and Results of Operations.
Net sales for the three months ended March 31, 1997, decreased 8.2% over the
same period in 1996. During the quarter ended March 31, 1997, 11,883,016
gallons of ethanol were sold at an average price of $1.22, compared to
12,224,164 gallons sold during the same period in 1996 at the same average
price of $1.22 per gallon.
For the three months ended March 31, 1997, distiller's grain sales decreased
21.8% from the prior period in 1996, primarily due to a decline in the average
sales price from $139 per ton (dry) for the three months ended March 31, 1996
down to $133 per ton (dry) for the three months ended March 31, 1997.
Cost of sales as a percentage of net sales was 95.3% and 92.8% for the three
month periods ended March 31, 1997, and 1996, respectively. The increase in
cost of sales as a percentage of net sales was due primarily to lower sales
revenues.
Selling, general and administrative expenses declined slightly for the three
months ended March 31, 1997, compared to the period ended March 31, 1996.
Net Earnings.
Net earnings decreased 54.9% for the three months ended March 31, 1997, from
the prior period in 1996. Net earnings declined to 2.1% of net sales compared
to 4.2% in the prior period in 1996. The decrease in net earnings results from
a decrease in gross profit for the 1997 period from 1996. Earnings per share
for the period ended March 31, 1997, decreased from the same period in 1996 due
to a decrease in net earnings.
Liquidity and Capital Resources
The Company's primary sources of funds during the third fiscal quarter were cash
flow from operations, and advances on a revolving line of credit from the
Company's primary lender for $2,000,000, for working capital needs. At
March 31, 1997, the Company had a working capital surplus of $787,426 compared
to a working capital surplus of $6,573,150 at June 30, 1996. Cash flow from
operating activities amounted to $(102,234) for the first nine months of fiscal
1997 compared to $2,502,398 for the same period in fiscal 1996. The decrease
in cash flow from operations in fiscal 1997 was attributable to the temporary
shutdown of the Company's production facilities.
Capital expenditures in the first nine months of fiscal 1997 amounted to
$6,553,264 compared to $3,788,191 for the same period in fiscal 1996. These
expenditures were primarily made on the facility in York, Nebraska.
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.
<PAGE>
Seasonality
Ethanol prices on product sold in mandated oxygen markets generally increase
during the months of September through March, due to the Federal Oxygen Program.
However, during the latter part of the Program season ethanol prices temporarily
softened as a result of increased supplies from production facilities re-opening
and operating at full capacity. The Company believes ethanol prices have now
rebounded and stabilized at typical summer season prices. Additionally, grain
prices are lower compared to the high costs experienced in the spring and summer
of 1996. The Company believes grain prices will continue to soften to typical
springtime prices and will be significantly below last year's record high
prices.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended March 31, 1997
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, the Company filed one Form 8-K on January
21, 1997 concerning the refinancing of its long term debt.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
Date May 13, 1997 HIGH PLAINS CORPORATION
Raymond G. Friend
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 876,490
<SECURITIES> 0
<RECEIVABLES> 7,942,976
<ALLOWANCES> 100,000
<INVENTORY> 3,843,722
<CURRENT-ASSETS> 13,890,510
<PP&E> 84,541,099
<DEPRECIATION> 19,583,587
<TOTAL-ASSETS> 79,650,507
<CURRENT-LIABILITIES> 13,103,084
<BONDS> 11,312,241
0
0
<COMMON> 1,637,162
<OTHER-SE> 53,598,020
<TOTAL-LIABILITY-AND-EQUITY> 79,650,507
<SALES> 20,570,905
<TOTAL-REVENUES> 20,570,905
<CGS> 19,608,559
<TOTAL-COSTS> 19,608,559
<OTHER-EXPENSES> 340,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 348,910
<INCOME-PRETAX> 436,613
<INCOME-TAX> 8,691
<INCOME-CONTINUING> 427,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 427,922
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
