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, 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 September 30, 1997 - 15,985,444
<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 - 9
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9 - 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 13
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
September 30, 1997 and June 30, 1997
<CAPTION>
September 30, June 30,
Assets 1997 1997
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,585,654 $ 2,389,758
Accounts Receivable
Trade (less allowance of $75,000) 5,561,024 4,102,173
Production credits and incentives 751,297 1,536,541
Inventories 3,211,336 4,246,783
Current portion of long-term
notes receivable 120,303 117,417
Prepaid expenses 600,195 309,350
Refundable income tax -0- 145,328
Total current assets 11,829,809 12,847,350
Property, plant and equipment, at cost:
Land and land improvements 323,496 323,496
Ethanol plants 86,431,195 85,055,215
Other equipment 451,742 393,683
Office equipment 210,608 202,135
Leasehold improvements 48,002 48,002
87,465,043 86,022,531
Less accumulated depreciation (21,289,526) (20,444,381)
Net property, plant and equipment 66,175,517 65,578,150
Other assets:
Equipment held for resale 422,753 427,432
Deferred loan costs (less accumulated
amortization of $16,581 and $10,857,
respectively) 97,900 103,623
Long-term notes receivable, less current
portion 10,562 41,742
Other 76,235 76,235
Total other assets 607,450 649,032
$78,612,776 $79,074,532
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets Continued
(Unaudited)
September 30, 1997 and June 30, 1997
<CAPTION>
September 30, June 30,
Liabilities and Stockholders' Equity 1997 1997
(Unaudited) **
<S> <C> <C>
Current liabilities:
Revolving lines-of-credit $ 6,200,000 $ 6,200,000
Current maturities of capital lease
obligations 515,644 519,384
Accounts payable 3,993,098 5,114,452
Accrued interest 287,401 298,551
Accrued payroll and property taxes 558,408 644,846
Total current liabilities 11,554,551 12,777,233
Revolving line-of-credit 7,150,000 7,700,000
Long-term debt, excluding current
maturities 2,376,136 2,500,014
Other 448,188 441,109
9,974,324 10,641,123
Stockholders' equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 16,396,622
shares at September 30, 1997 and June
30, 1997, of which 411,178 shares were
held as treasury stock at September 30,
1997 and June 30, 1997 1,639,662 1,639,662
Additional paid-in capital 37,387,203 37,348,072
Retained earnings 19,134,508 17,763,627
58,161,373 56,751,361
Less:
Treasury stock - at cost (863,911) (863,911)
Deferred compensation (213,561) (231,274)
Total Stockholders' equity 57,083,901 55,656,176
$78,612,776 $79,074,532
<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, 1997 and 1996
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1997 1996
<S> <C> <C>
Net sales and revenues $22,570,837 $ 1,339,233
Cost of products sold 20,506,099 2,567,568
Gross profit 2,064,738 (1,228,335)
Selling, general and administrative
expenses 450,128 313,177
Operating income (loss) 1,614,610 (1,541,512)
Other income (expense):
Interest and other income 30,937 67,022
Interest expense (342,588) (395,358)
Loss on sale of equipment -0- (5,906)
(311,651) (334,242)
Net earnings (loss) before income
taxes 1,302,959 (1,875,754)
Income tax benefit 67,922 37,515
Net earnings (loss) $ 1,370,881 $(1,838,239)
Earnings per common and dilutive common
equivalent share:
Net earnings (loss) $ .09 $ (.11)
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statement of Stockholders' Equity
(Unaudited)
Three Months Ended September 30, 1997
<CAPTION>
Common Stock
Additional
Number Paid-in Retained Treasury Deferred
of Shares Amount Capital Earnings Stock Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1997 16,396,622 $ 1,639,662 $ 37,348,072 $ 17,763,627 $ (863,911) $ (231,274) $ 55,656,176
Amortization of
deferred
compensation 17,713 17,713
Compensation
expense on stock
options granted 39,131 39,131
Net Earnings for
the Quarter $ 1,370,881 1,370,881
Balance,
September 30, 1997 16,396,622 $ 1,639,662 $ 37,387,203 $ 19,134,508 $ (863,911) $ (213,561) $ 57,083,901
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statements of Cash Flows
(Unaudited)
Three Months Ended September 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 1,370,881 $(1,838,239)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 850,868 705,125
Amortization of deferred compensation 17,713 5,887
Compensation expense on stock options
granted 39,131 -0-
Payments received on notes receivable 28,294 25,675
Changes in operating assets and liabilities:
Accounts receivable (673,607) (13,833)
Inventories 1,035,447 62,211
Refundable income tax 145,328 -0-
Prepaid expenses (290,845) (2,233,252)
Accounts payable (1,121,354) 2,829,568
Estimated contract commitments -0- (463,884)
Accrued liabilities (97,589) (48,016)
Net cash provided by operating activities 1,304,267 (968,758)
Cash flows from investing activities:
Proceeds from sale of equipment 4,679 -0-
Acquisition of property, plant and equipment (1,442,512) (2,124,642)
Increase in other non-current assets -0- (69,738)
Net cash used in investing activities (1,437,833) (2,194,380)
Cash flows from financing activities:
Payment on revolving line-of-credit (550,000) -0-
Payments on capital lease obligations (127,619) -0-
Payment on long-term debt -0- (4,898,308)
Proceeds from exercise of options -0- 240,754
Increase in other non-current liabilities 7,079 8,022
Net cash provided by financing activities (670,540) (4,649,532)
Decrease in cash and cash equivalents (804,104) (7,812,670)
Cash and cash equivalents:
Beginning of quarter 2,389,758 8,889,246
End of quarter $ 1,585,654 $ 1,076,576
<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, 1997 are not
necessarily indicative of the operating results for the entire year.
(2) Stock Options
The Company granted the following stock options during the quarter
ended September 30, 1997:
<TABLE>
<CAPTION>
Exercise
Date Options Price
<C> <C> <C>
08/01/97 14,000 $1.50
09/25/97 25,000 $3.8125
09/26/97 15,000 $3.8750
</TABLE>
(3) Stock-Based Compensation
As part of a retirement benefit package for the former President and
Chairman of the Board, the company agreed to a one time grant, on
August 1, 1997, of 14,000 non-qualified stock options at an exercise
price equal to one-half of the lowest closing price achieved by the
Company's stock between May 1, 1997 and August 1, 1997. As noted
above, these options were granted at the exercise price of $1.50 per
share. These options were accounted for under FAS 123, resulting in
$39,131 in compensation expense for the quarter ended September 30,
1997. The Company continues to account for stock-based compensation
for employees using the intrinsic value method prescribed in APB No.
25. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock
at the date of grant over the amount an employee must pay to acquire
the stock.
Had compensation cost for all the stock-based compensation been determined
based on the fair value grant date, consistent with the provisions of
FAS 123, the Company's net earnings and earnings per share above would
have been reduced to the proforma amounts below:
<PAGE>
<TABLE>
<CAPTION>
For the quarters ending
September 30, 1997 1996
<S> <C> <C>
Net earnings (loss)
As reported $1,370,881 $(1,838,239)
Pro forma 1,240,957 (1,989,945)
Earnings (loss) per share:
As reported $ .09 $ (.11)
Pro forma .08 (.12)
</TABLE>
(4) Net Income Per Share
The net income per share for the three months ended September 30, 1997 and
1996 has been calculated based on 16,051,411 and 15,988,379 weighted
average shares outstanding, respectively. The Company does not present
a fully diluted earnings per share amount as options outstanding at
September 30, 1997 do not dilute per share amounts by 3% or more.
Part I
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.
Forward-looking Statements
Forward-looking statements in this Form 10-Q, future filings including but
not limited to, the Company's annual 10K, Proxy Statement, and 8K
filings by the Company with the Securities and Exchange Commission, the
Company's press releases and oral statements by authorized officers of
the Company are intended to be subject to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are
cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the risk of a significant
natural disaster, the inability of the Company to ensure against
certain risks, the adequacy of its loss reserves, fluctuations in
commodity prices, change in market prices or demand for motor fuels and
ethanol, legislative changes regarding air quality, fuel specifications
or incentive programs, as well as general market conditions,
competition and pricing. The Company believes that forward-looking
statements made by it are based upon reasonable expectations. However,
no assurances can be given that actual results will not differ
materially from those contained in such forward-looking statements.
The words "estimate", "anticipate", "expect", "predict", "believe" and
similar expressions are intended to identify forward-looking
statements.
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
Net Sales and Revenues and Operating Expenses and Results of
Operations.
Net sales and revenues for the three months ended September 30, 1997 were
higher than net sales and revenues for the same period ended September
30, 1996. During the three months ended September 30, 1997, 12.6
million gallons of fuel grade ethanol were sold at an average price of
$1.13 per gallon, compared to 1.0 million gallons sold during the same
period ended September 30, 1996, at an average price of $1.19 per
gallon. Industrial grade ethanol sold during the three months ended
September 30, 1997 totaled .84 million gallons at an average price of
$1.31 per gallon. The York facility had not been retrofitted for the
production of industrial grade ethanol as of the quarter ended
September 30, 1996. Higher net sales and revenues were a direct result
of the prior year's temporary shutdown of the Company's production
facilities. At the York Plant there was no production for the entire
period ended September 30, 1996 and on a very limited basis in the
month of September 1996 for the Colwich Plant.
Cost of products sold as a percentage of net sales and revenues was 90.9%
and 191.7% for the three month periods ended September 30, 1997 and
1996, respectively. The decrease in cost of products sold as a
percentage of net sales and revenues was due to the Company operating
its production facilities at normal capacity during the period ended
September 30, 1997 compared to the limited production noted above for
the same period ended September 30, 1996.
Selling, general and administrative expenses increased 43.7% for the three
months ended September 30, 1997, compared to the same period ended
September 30, 1996. This increase is a result of a return to normal
staffing during the period ended September 30, 1997 compared to minimal
staffing during the temporary shutdown of the plants for the period
ended September 30, 1996.
Net earnings increased from (137.3%) as a percentage of sales for the
three months ended September 30, 1996 to net earnings of 6.1% as a
percentage of sales for the same period ended September 30, 1997. The
increase in net earnings as a percentage of sales results primarily
from normal operations at both production facilities during the period
ending September 30, 1997 compared to the temporary suspension of
operations at the York Plant and the re-opening of the Colwich Plant in
mid-September 1996.
<PAGE>
Liquidity and Capital Resources
The Company's primary source of funds during the first fiscal quarter of
1998 was cash flow from operations. At September 30, 1997, the Company
had a working capital surplus of $275,258. Working capital increased
compared to the June 30, 1997 surplus of $70,117. This increase is the
net effect of a decrease in inventories, increase in accounts
receivables and the decrease in trade payables.
Capital expenditures in the first three months of fiscal 1998 amounted to
$1.4 million compared to $2.1 million, for the same period in fiscal
1997. these expenditures were primarily for modifications at the York,
Nebraska plant.
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
Currently, concerns over possible increases in grain export levels have
allowed exchange-traded grain futures to remain stronger than normal in
spite of the anticipation of a large corn crop. However, cash grain
prices have decreased with the onset of the autumn harvest compared to
the high price levels that occurred for most of last fiscal year. As
autumn harvest continues and the actual grain production is determined,
the Company believes that grain prices will trend lower in response to
the anticipated near record corn crop.
The Company believes on hand inventory levels of finished ethanol are at
historically typical levels. Most plants have been operating for
approximately a year since the high grain prices of 1996 curtailed
production.
A seasonal increase in demand for ethanol resulting from the Federal
Wintertime Oxygen Program is once again occurring. Along with the
September startup of the program, the industry has experienced both a
significant increase in fuel ethanol demand and a price increase of
about $.10 per gallon. There have been no material changes in the
scope of the Federal Oxygen Program, so production volume and demand
are expected to be similar to last year's program.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended September
30, 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. SUBSEQUENT EVENTS.
Subsequent to September 30, 1997 the Company resolved all on-going lawsuits
between itself and Commodity Specialist Company. In addition, the Company
reached a compromised settlement with Summit Resource Management, Inc. The
Company believes that the resolution of these suits does not have a material
adverse effect on the Company's financial condition.
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 the following Form 8-K's:
July 31, 1997 Announcement of material improvement to
quality of industrial grade ethanol
produced
September 10, 1997 Company announced fiscal year end earnings
and earnings per share at June 30, 1997
<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, 1997 s/Raymond G. Friend
President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 1,585,654
<SECURITIES> 0
<RECEIVABLES> 6,507,624
<ALLOWANCES> 75,000
<INVENTORY> 3,211,336
<CURRENT-ASSETS> 11,829,809
<PP&E> 87,465,043
<DEPRECIATION> 21,289,526
<TOTAL-ASSETS> 78,612,776
<CURRENT-LIABILITIES> 11,554,551
<BONDS> 9,526,136
0
0
<COMMON> 1,639,662
<OTHER-SE> 55,444,239
<TOTAL-LIABILITY-AND-EQUITY> 78,612,776
<SALES> 22,570,837
<TOTAL-REVENUES> 22,570,837
<CGS> 20,506,099
<TOTAL-COSTS> 20,506,099
<OTHER-EXPENSES> 450,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 342,588
<INCOME-PRETAX> 1,302,959
<INCOME-TAX> (67,922)
<INCOME-CONTINUING> 1,370,881
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,370,881
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
