Form 10-Q
Securities and Exchange Commission
Washington, D.C. 20549
[ X ] Quarterly report pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended September 30, 2000 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 PROCEEDING
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 plan
confirmed by a court.
Yes No
Common Stock, Par Value $.10 per share,
Outstanding at September 30, 2000 - 16,207,344
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Balance Sheet 3 - 4
Statements of Operations 5
Statements of Comprehensive Income/(Loss) 5
Statement of Stockholders' Equity 6
Statement of Cash Flows 7
Selected Notes to Financial Statements 8 - 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10 - 12
PART II OTHER INFORMATION
Item 3. Legal Proceedings 12
Item 4. Other Information 12 - 13
Item 5. Exhibits and Reports on Form 8-K 14
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
September 30, 2000 and June 30, 2000
<CAPTION>
Assets September 30, 2000 June 30, 2000
(Unaudited) **
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,327,049 $ 4,886,011
Accounts receivable
Trade (less allowance of $75,000) 9,259,915 10,026,422
Production credits and incentives
(less allowance of $124,222) 271,154 329,829
Inventories 5,019,701 4,283,561
Notes receivable 50,000 50,000
Prepaid expenses 720,927 487,428
Refundable income tax 30,000 30,000
Total current assets 20,678,746 20,093,251
Property, plant and equipment, at cost:
Land and land improvements 450,403 450,403
Ethanol plants 93,479,168 93,366,635
Other equipment 573,911 573,911
Office equipment 411,333 389,446
Leasehold improvements 48,002 48,002
Construction in progress 1,668,227 914,586
Sub-total 96,631,044 95,742,983
Less accumulated depreciation (32,223,871) (31,295,936)
Net property, plant and equipment 64,407,173 64,447,047
Other assets:
Deferred loan costs (less accumulated 795,514 849,244
amortization of $179,103 and $125,372,
respectively)
Other 2,904 13,054
Total other assets 798,418 862,298
$ 85,884,337 $ 85,402,596
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Balance Sheets
(Unaudited)
September 30, 2000 and June 30, 2000
<CAPTION>
Liabilities and Stockholders Equity September 30, 2000 June 30, 2000
(Unaudited) **
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt $ 2,569,637 $ 2,507,138
Current maturities of capital leases 573,767 561,518
Accounts payable 7,326,920 8,695,216
Accrued interest 305,610 295,772
Accrued payroll and property taxes 983,623 779,199
Total current liabilities 11,759,557 12,838,843
Long-term debt 15,930,360 16,492,860
Capital lease obligations, less
current maturities 801,110 940,376
Deferred income tax payable 2,167,558 1,389,000
Other 276,806 273,253
Total non-current liabilities 19,175,834 19,095,489
Stockholders' Equity:
Common stock, $.10 par value, authorized
50,000,000 shares; issued 16,484,191 and
16,453,798 shares at September 30, 2000 and
June 30, 2000, respectively, of which 276,847
and 276,847 were held as treasury stock at
September 30, 2000 and June 30, 2000,
respectively. 1,648,419 1,645,380
Additional paid-in capital 37,734,250 37,695,277
Retained earnings 16,163,529 14,865,932
Accumulated other comprehensive income:
Grain derivatives 136,865 0
55,683,063 54,206,589
Less:
Treasury stock-at cost (710,849) (710,849)
Deferred compensation (23,268) (27,476)
Total stockholders' equity 54,948,946 53,468,264
$ 85,884,337 $ 85,402,596
<FN>
See accompanying notes to financial statements.
** From audited financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statement of Operations
(Unaudited)
Three Months Ended September 30, 2000 and 1999
<CAPTION>
Three Months Ended
September 30,
2000 1999
<S> <C> <C>
Net sales and revenues $ 29,181,796 $ 22,703,652
Cost of goods sold 25,814,985 22,051,469
Gross profit 3,366,811 652,183
Selling, general and
administrative expenses 899,170 902,788
Operating income/(loss) 2,467,641 (250,605)
Other income/(expense):
Interest expense (489,302) (389,646)
Interest and other income 97,816 14,630
Gain on sale of assets 0 22,000
(391,486) (353,016)
Net income/(loss) before
income taxes 2,076,155 (603,621)
Income tax expense (778,558) (10,000)
Net earnings/(loss) $ 1,297,597 $ (613,621)
Basic and diluted earnings/(loss)
per share $ .08 $ (.04)
</TABLE>
<TABLE>
Statement of Comprehensive Income/(Loss)
Three Months Ended September 30, 2000 and 1999
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
2000 1999
<S> <C> <C>
Net earnings/(loss) $ 1,297,597 $ (613,621)
Other comprehensive income:
Grain derivatives 136,865 0
Comprehensive income/(loss) $ 1,434,462 $ (613,621)
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statement of Stockholders' Equity
(Unaudited)
Three Months Ended September 30, 2000
<CAPTION>
Common Stock
(Issued)
Additional Accumulated
Number of Paid-In Retained Other Comprehensive Treasury Deferred
Shares Amount Capital Earnings Income Stock Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 2000 16,453,798 $1,645,380 $37,695,277 $14,865,932 $ 0 $ (710,849) $ (27,476) $53,468,264
Exercise of
options under
espp 393 39 722 761
Exercise of
stock options 30,000 3,000 38,251 41,251
Amortization of
deferred
compensation 4,208 4,208
Grain
derivatives 136,865 136,865
Net earnings
for quarter 1,297,597 1,297,597
Balance,
September 30,
2000 16,484,191 $1,648,419 $37,734,250 $16,163,529 $ 136,865 $ (710,849) $ (23,268) $54,948,946
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HIGH PLAINS CORPORATION
Statement of Cash Flows
(Unaudited)
Three Months Ended September 30, 2000 and 1999
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,297,597 $ (613,621)
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 981,664 955,990
Amortization of deferred compensation 4,208 22,744
Compensation expense on treasury stock grants 0 222,802
Gain on sale of equipment 0 (22,000)
Deferred income taxes 778,558 0
Change in operating assets and liabilities:
Accounts receivable 982,198 (136,654)
Notes receivable 0 1,000,000
Inventories (736,140) (291,105)
Income tax payable/receivable 0 0
Prepaid expenses (233,499) (670,707)
Accounts payable (1,150,432) 853,992
Accrued liabilities (13,602) (212,752)
Net cash provided by operating activities 1,910,552 1,108,689
Cash flows from investing activities:
Proceeds from sale of equipment 0 22,000
Acquisition of property, plant and equipment (878,217) (490,395)
Decrease (increase) in other non-current assets 0 0
Net cash used in investing activities (878,217) (468,395)
Cash flows from financing activities:
Payments on long-term debt (500,001) 0
Payments on revolving lines-of-credit 0 (500,000)
Payments on capital lease obligations (136,861) (126,512)
Proceeds from exercise of stock options 41,251 0
Increase (decrease) in other
non-current liabilities 4,314 10,200
Net cash provided (used) by financing activities (591,297) (616,312)
Increase (decrease) in cash and cash equivalents 441,038 23,982
Cash and cash equivalents:
Beginning of period 4,886,011 330,672
End of period $ 5,327,049 $ 354,654
<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, unless otherwise noted. In the
opinion of management, all adjustments (which include only normally
occurring 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, 2000 are not necessarily indicative of the
operating results for the entire year.
2) Financial Arrangements
On December 3, 1999, the Company was able to obtain a $28 million credit
facility through Bank of America. The credit facility consisted of a $20
million term loan and a $8 million revolving line-of-credit. The credit
facility is for a five-year period, which may be extended for a series of
one-year renewals. As of September 30, 2000, the revolving line-of-credit
had $8 million of credit available and undrawn.
3) Stock Options
On May 8, 2000, 5,000 options were granted at $2.50 per share to key
management personnel in lieu of signing bonus. On September 19, 2000,
15,000 options were granted at $3.063 to the president as a result of the
reload provision on 15,000 options that were exercised on the same date.
The option grants were made at the fair market value of the stock on the
date of grant. An additional 15,393 options were exercised during the
quarter by former employees and directors.
4) Stock-Based Compensation
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 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 diluted earnings per share above would
have been reduced to pro forma amounts below:
<TABLE>
<CAPTION>
For the three months ending
September 30, 2000 1999
<S> <C> <C>
Net earnings/(loss)
As reported $ 1,297,597 $ (613,621)
Pro forma 1,257,908 (740,957)
Diluted earnings/(loss) per share
As reported $ .08 $ (.04)
Pro forma .08 (.05)
</TABLE>
The Company's basic earnings per share for the pro forma information noted
above is the same as the Company's diluted earnings per share for all the
periods disclosed.
5) Earnings Per Share
The Company, as required under FASB Statement No. 128 Earnings Per Share
(FAS 128) has replaced the presentation of primary earnings per share
(EPS) with Basic EPS and Diluted EPS. Under FAS 128 both the basic and
diluted must be presented in the financial statements. Also, under the
FAS 128 all prior period EPS data presented in the financial statements
must be restated for comparative purposes.
<PAGE>
The diluted earnings per share for the three months ended September 30,
2000 and 1999 have been calculated based on 16,347,207 and 16,104,340
diluted shares outstanding, respectively.
6) Inventories
<TABLE>
<CAPTION>
September 30, 2000 June 30, 2000
<S> <C> <C>
Inventories consisted of the
following components:
Raw Materials $ 1,622,717 $ 1,276,938
Work in progress 433,823 493,064
Finished goods 1,892,359 1,469,053
Spare parts 1,070,802 1,044,506
Total $ 5,019,701 $ 4,283,561
</TABLE>
7) Other comprehensive income
Under FASB Statement No. 130, Reporting Comprehensive Income, the Company
is required to report the total of other comprehensive income as a
component of equity that is displayed separately from retained earnings
and additional paid-in capital whenever such items exist at the end of the
accounting period. In addition, the Company must also present a Statement
of Comprehensive Income that presents other comprehensive income items as
adjustments to the Company's net income after tax results, net of tax.
<TABLE>
<CAPTION>
Pre-tax Tax Expense Net-of-Tax
Amount (Benefit) Amount
<S> <C> <C> <C>
Other comprehensive income
consisted of the following
components:
Grain derivatives $ 136,865 $ 0 $ 136,865
Grain Derivatives
Balance, beginning $ 0
Current period change 136,865
Balance, ending $ 136,865
</TABLE>
8) Derivatives and hedging activities
During the first quarter of fiscal 2000, the Company adopted the provisions
of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS 133). The adoption of this pronouncement did not have a
material effect on the financial statements at September 30, 2000. SFAS 133
requires the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivatives qualify as hedges of recognized
assets, liabilities or firm commitments under SFAS 133, changes in the fair
value of derivatives are offset against the changes in fair value of assets,
liabilities, or firm commitments through earnings. If the derivatives qualify
as cash flow hedges of forecasted transactions, then changes in the fair value
of the derivatives are recognized in other comprehensive income until the
hedged item is recognized in earnings. The ineffective portion of the
derivative's change in fair value, if any, will be immediately recognized in
earnings.
The Company also routinely enters into forward contracts for grain purchase
requirements. Some of these forward contracts are unpriced, subject to market
fluctuations, and some of them are priced. The Company's fixed priced forward
contracts for purchases of normal grain requirements are not considered
derivatives and, accordingly, changes in the market value of such contracts are
not recognized; instead, the fixed price cost of the grain is included in cost
of goods sold at the time the grain is consumed in the conversion process.
As of and during the quarter ended September 30, 2000, the Company held
derivative positions accounted for as cash flow hedges of its forecasted grain
purchase requirements, under SFAS 133. The resulting net gain or loss from
such derivatives is reported in cost of goods sold when the related grain
purchase transaction occurs. The grain derivative gains or losses reflected in
other comprehensive income at September 30, 2000, will be recognized in
earnings during the subsequent time period when the related forecasted grain
transaction occurs, generally during the subsequent quarter. The Company does
not hedge all of its forecasted grain transactions. Currently, the maximum
length of time over which the Company is hedging forecasted grain purchase
transactions with derivative positions is one quarter.
<PAGE>
Part I MANAGEMENT'S 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.
Three Months Ended September 30, 2000 and 1999
Net Sales and Operating Expenses.
Net sales and revenues for the three months ended September 30, 2000,
increased 29% compared to the same period ended September 30, 1999.
During the quarter ended September 30, 2000, approximately 18.1 million
gallons of fuel grade ethanol were sold at an average price of $1.25 per
gallon compared to approximately 16.3 million gallons sold at an average
price of $.97 per gallon, for the same period ending September 30, 1999.
Fuel grade ethanol sales included 2.7 million gallons of brokered fuel
grade ethanol (marketed on behalf of other producers) for the quarter
ended September 30, 2000 compared to .6 million gallons of brokered fuel
grade ethanol for the same period ending September 30, 1999. In addition,
approximately 1.4 million gallons of industrial/beverage grade ethanol
were sold at an average price of $1.47 per gallon during the quarter ended
September 30, 2000 compared to approximately .8 million gallons sold at
$1.48 per gallon for the same period ending September 30, 1999.
Industrial/beverage grade ethanol sales included .4 million gallons of
brokered industrial/beverage grade ethanol for the quarter ended September
30, 2000 compared to .3 million gallons of brokered fuel grade ethanol for
the same period ending September 30, 1999. Fuel grade gallons sold during
the quarter ended September 30, 2000 increased approximately 11% compared
to the same period in 1999. Industrial/beverage grade gallons sold during
the quarter ended September 30, 2000 increased approximately 78% compared
to the same period in 1999. The fuel grade ethanol market demand was very
strong for the quarter ended September 30, 2000, due to favorable blending
economics. The Company's fuel grade ethanol sales volume increases were
primarily driven by the increased brokered volume for the comparable
periods. Industrial/beverage grade gallons increased primarily in
response to increased marketing efforts in that segment of the Company's
business. The higher net sales were the result of increased volumes in
both grades of ethanol and a 29% increased in the average delivered price
of fuel grade ethanol. The Company's Portales, New Mexico facility
contributed $5,226,195 and $3,733,459 of net sales and revenues for the
periods ended September 30, 2000 and 1999, respectively.
Cost of products sold as a percentage of net sales and revenues was 88.5%
and 97.1% for the three months ended September 30, 2000 and 1999,
respectively. The cost of products sold as a percentage of net sales and
revenues for the quarter ended September 30, 2000 decreased dramatically
compared to the same period in 1999. The decrease was due to a
combination of a decrease in the average grain prices and the previously
noted increase in the average delivered price of fuel grade ethanol for
comparable periods. The average cost of grain declined to $1.83 per
bushel for the quarter ended September 30, 2000, down from $2.03 per
bushel for the same quarter in 1999. These favorable price moves were
somewhat offset by much higher natural gas costs for the comparable
periods. Natural gas spot market prices have approximately double
compared to the same quarter in 1999. The Company's Portales, New Mexico
facility contributed $4,581,493 and $4,418,552 of cost of goods sold for
the periods ended September 30, 2000 and 1999, respectively.
<PAGE>
Selling, general and administrative (SG&A) expenses remained flat for the
quarter ended September 30, 2000, compared to the same period ended
September 30, 1999. However, if the stock grants to key management
personnel of $.4 million were factored out of the quarter ended September
30, 1999, SG&A would show approximately an 80% increase from the
comparable quarter in 1999. This increase is the result of an increase in
administrative salary and benefit expenses resulting from an increase in
staff and increased research and development expenses resulting from the
glycerol side-stream project. The increased staffing is the result of new
initiatives, such as in house grain procurement, being under taken by
management and reclassification of staff into SG&A cost centers from
operations cost centers.
Net Earnings.
Net earnings increased 311% for the three months ended September 30, 2000,
compared to net earnings for the same period ended September 30, 1999.
Net earnings as a percentage of net sales and revenues increased from
(2.7%) to 4.4% for the comparable periods. The increase is the result of
increased gross profit percentages from 2.9% to 11.5% due to higher
average fuel grade ethanol prices coupled with lower average grain prices,
and increased sales resulting primarily from brokering activities for
comparable periods. Diluted earnings per share at September 30, 2000,
were 300% higher than diluted earnings per share for the same period in
1999 due to the increased earnings. The Company's Portales, New Mexico
facility contributed $644,702 and ($685,093) of operating margin before
taxes, allocated overhead and interest for the periods ended September 30,
2000 and 1999, respectively.
Liquidity and Capital Resources
The Company's primary source of funds during the quarter ended September
30, 2000 was cash flow from operating activities. At September 30, 2000,
the Company had working capital of approximately $8.9 million compared to
working capital of approximately $7.3 million for the period ended June
30, 2000. The increase in working capital was primarily due to increases
in cash and cash equivalents and inventories netted against decrease in
trade accounts payable. The Company's inventory increase is due to stock
piling grain at its Colwich, Kansas facility to take advantage of
favorable grain prices experienced at harvest time and increased fuel
grade ethanol inventory at its York, Nebraska facility.
Capital expenditures for the first three months of fiscal 2001 amounted to
approximately $.9 million for modifications to the Company's three plants
compared to approximately $.5 million for the same period in fiscal 2000.
The majority of the expenditures relate to modifications to the Company's
Colwich, Kansas facility, which is in the process of receiving
modification to its dryers for increased output and more reliable
operations.
The Company was able to refinance its revolving-lines-of credit into term
debt December 3, 1999. The Company obtained a $28 million credit
facility, which consisted of $20 million term loan and $ 8 million
revolving line-of-credit. The $8 million revolving line-of-credit was
available and undrawn, as of September 30, 2000. The Company believes it
has adequate short-term working capital and borrowing availability under
its new financing arrangement to meet its operating cash needs. However,
in the event the Company encounters unforeseen changes in market
conditions that adversely affect its ability to generate cash flow from
operations, the Company could seek to raise additional funds through the
sale of stock, or issuance of debt and/or equity securities.
The Company received its last production incentive payment under its
original agreement with the state of Nebraska in the second quarter of
fiscal 2000. The impact of the loss of the Nebraska incentive on the
Company's liquidity was mitigated by increased profitability and continued
emphasis on diversifying the Company's York, Nebraska facility's products.
However, in the future the lack of the incentive could substantially and
negatively impact the Company's liquidity position. The Company continues
to improve efficiencies, to implement cost controls, and focus efforts on
expanding its presence in the higher margin industrial/beverage grade
markets to assist in improving the Company's liquidity and earnings.
<PAGE>
Seasonality
Fuel grade ethanol prices are historically soft during the non-oxygenate
period, which coincides with the Company's first and fourth fiscal
quarters. Typically fuel grade ethanol prices firm up during the winter
months, which coincide with the Company's second and third fiscal
quarters, due to the mandated markets of the Federal Oxygen Program.
Prices generally increase in the weeks before September, and decrease by
March due to shipping schedules. Additionally, fuel grade ethanol prices
historically have been influenced by the price of unleaded gasoline, which
remained strong during the first quarter of fiscal 2001. Due to the
continued strength of the unleaded gasoline market, fuel grade ethanol
remained uncharacteristically high through the first quarter of fiscal
2001. Now with the Company entering into the oxygenate season and with
many analysts projecting continued strength in the oil markets, management
believes fuel ethanol pricing will remain at the current levels throughout
the oxygenate season. Furthermore, the Company has contracted
approximately three quarters of its fuel grade ethanol production through
the March 2001 (end of oxygenate season) at fixed prices, thus minimizing
the Company's exposure in the event of an unforeseen downturn in the
market, but conversely limiting the Company's ability to gain from
additional market increases. Currently, there is legislation pending
which could significantly affect the demand for fuel grade ethanol either
positively or negatively. Current legislation is attempting to deal with
the perceived problems surrounding the MTBE environmental contamination
issues by phasing out MTBE over the next several years, eliminating the
oxygenate requirement, and implementing a minimum renewable fuels content
for all fuel consumed, excluding diesel. As of September 30, 2000, no
such legislation had been enacted.
Grain prices also continue to be favorable for the ethanol industry.
Although corn and milo feedstock prices have increased somewhat from
harvest lows, market fundamentals (projected crop size, carryouts, export
and demand numbers) appear to favor continued low grain prices through the
next crop year. As always, grain prices are subject to significant
changes due to weather patterns, or in the event of changes in the
fundamental market factors described above. The Company has currently
contracted approximately 10 million bushels under either fixed priced
forward contracts, or unpriced basis differential forward contracts which
will be priced at a later date. The Company continues to utilize grain
futures contracts to hedge against price fluctuations related to its grain
feedstock requirements. Market indicators have led management to believe
that grain prices will remain favorable compared to historic prices
through second quarter of fiscal 2001.
Prices for the Company's distillers grain by-products, as known as
distillers grain solubles (DGS), historically fluctuate with the price of
corn, and provide the Company with some hedge against the possibility of
higher grain prices. Although grain prices remained low, DGS prices (also
at historically low levels overall) strengthened in the first quarter of
fiscal 2001. The Company has emphasized production of a wet distillers
grain product at its Nebraska and New Mexico facilities in an effort to
strengthen and stabilize its feed markets. However, anticipated softness
in grain prices should also result in some decline in prices for the
Company's DGS products.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No new legal proceedings were instigated during the quarter ended
September 30, 2000, 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 SECURITES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
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, 2000 Company announced adoption of corporate governance.
<PAGE>
August 31, 2000 Company announced Fiscal 2000 earnings and Fiscal
2000 fourth quarter results.
October 17, 2000 Company announced Fiscal 2001 first quarter results.
