Securities and Exchange Commission
Washington D.C. 20549
Form 10-KSB/A
Amendment 1
Dated January 20, 1997
Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission file number 0-7320
FARM FISH, INC.
(Name of small business issuer in its charter)
MISSISSIPPI 64-0474591
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Post Office Box 23109
Jackson, MS 39225-3109
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (601) 354-3801
Securities Registered under Section 12(g) of the Exchange Act:
No-Par Common Stock
(Title of Class)
Check whether issuer (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or 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 _____.
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [x]
Revenues for the year ended December 31, 1995 were $3,847,173.
Aggregate market value of voting stock held by non-affiliates of the Registrant
as of March 15, 1996 Indeterminate. *
(2,688,605 shares issued and outstanding as of March 15, 1996)
__________________________
* For purposes of the response to this item only, Delta Industries, Inc.
and all directors of the Registrant have been deemed affiliates of the
Registrant.
* The Registrant has been advised by two broker sources who have heretofore
traded in the stock of the Registrant that there is insufficient basis
for establishing a market value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be mailed to the shareholders
of Registrant in connection with the Annual Meeting of Shareholders to be
held on May 22, 1996 are incorporated by reference into Part III of this
Form 10-KSB.
Farm Fish, Inc.
Form 10-KSB
Table of Contents
ITEM Page(s)
Part I
1. Description of Business 5-6
2. Description of Property 7
3. Legal Proceedings 7
4. Submission of Matters to
a vote of Security Holders 7
Part II
5. Market for Registrant's
Common Stock and Related
Stockholder Matters 8
6. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9-10
7. Financial Statements 11-21
8. Changes In and Disagreements with
Accountants and Accounting and
Financial Disclosure 7
Part III
9. Directors, Executive Officers, Incorporate by Reference
Promoters and Control Persons; Compliance Pursuant to General
With Section 16(a) of the Exchange Act Instruction E
10. Executive Compensation Incorporate by Reference
Pursuant to General
Instruction E
11. Security Ownership of Incorporate by Reference
Certain Beneficial Pursuant to General
Owners and Management Instruction E
12. Certain Relationships Incorporate by Reference
and Related Transactions Pursuant to General
Instruction E
13. Exhibits and Reports on Form 8-K 22
The Officers of Farm Fish, Inc.
NAME OFFICE
Leland R. Speed Chairman of the Board of Directors
Thomas R. Slough, Jr. President
David Robison Vice-President
Charles E. Horne Secretary-Treasurer
All officers are elected by the Board of Directors. The term of office is
not fixed.
Members of the Board of Directors
W. D. Mounger President of Delta Royalty Company, Inc.,
(engaged generally in the oil and gas business)
T. L. Reed, III Owner of Silver Creek Plantation (engaged
in agri-business operations)
Thomas R. Slough, Jr. Vice-Chairman of Delta Industries, Inc.
(engaged in marketing ready-mix concrete)
Leland R. Speed Engaged as an officer and/or director in
various corporations, including EastGroup
Properties and The Parkway Company, which
are engaged in various commercial activities
including general financial matters and
real estate development.
The term of office for all directors will expire at the Annual Meeting
scheduled for May 22, 1996.
Description of Business
General
Farm Fish, Inc., "Farm Fish" engages in the hatching and growing of catfish
(generally referred to as "producing" catfish). Farm Fish was organized in
1972 as a Subchapter C corporation. The principal executive offices of Farm
Fish are located at 100 W. Woodrow Wilson Drive, Jackson, Mississippi 39213,
and its telephone number is (601) 354-3801.
The Catfish Industry
The catfish farming industry has grown rapidly since its inception in the
late 1960's. In 1969, approximately 3.2 million pounds of catfish were sold
to processing plants at an average price of approximately $0.37 per pound.
In 1995, the number of pounds sold to catfish processors had increased to
approximately 447 million pounds, at average prices of approximately $0.78
per pound to $0.79 per pound during the year.
Catfish farming is conducted primarily in Alabama, Arkansas, Louisiana and
Mississippi, with Mississippi dominating the industry.
Farm Fish's Operations
Farm Fish's primary production assets are brood ponds, a hatchery, fingerling
ponds and production ponds. The life cycle of a farm-raised catfish begins
in a brood pond, where the eggs ("spawn") are laid and fertilized. The spawn
is then retrieved and taken to the hatchery, where it is placed in
water-filled troughs which are continuously monitored to ensure the water is
aerated and kept at the proper temperature. The hatchery operates for
approximately two months each year, usually from mid-May to mid-July.
The newly hatched catfish, called "fry", are kept in the hatchery briefly and
are then transported to a fingerling pond where they remain until they are one
to two inches in length, at this stage the catfish are referred to as
"fingerlings". Some of the fingerlings may be sold to other catfish farmers,
but typically most are kept and used to stock the farm's production ponds.
The catfish are fed until they reach marketable size (usually one to one-and-
a-half pounds) and harvested with seines.
The catfish are fed a commercially prepared feed consisting of soybeans, corn,
wheat and fishmeal. The catfish are fed from approximately mid-March through
the end of October each year. Little food is supplied to the catfish during
the winter months.
Farm Fish conducts its business at its catfish farm in Humphreys County,
Mississippi. The farm consists of approximately 1,750 acres of land, of which
approximately 1,375 acres are devoted to mostly 20 acre ponds. The farm is a
complete facility for producing "farm-raised" catfish, with brood ponds, a
hatchery, fingerling ponds and production ponds.
Processing and Marketing
Farm Fish sold its processing operations in March 1986 and no longer engages
in processing live fish or marketing processed products.
Significant Customers
During 1995, approximately 56% of Farm Fish's live fish production was sold
to one catfish processor Delta Pride Catfish, Inc. ("Delta Pride"). Delta
Pride is a cooperative. Farm Fish had the option through June 30, 1993, but
not the obligation, to purchase 1,100 shares of stock in Delta Pride at a
price of $600 per share. Pursuant to an agreement entered into in 1993
between the Company and Delta Pride, the option period was extended through
January 1, 1995. During 1994, the Company applied retained patronage dividends
of $86,400 to the purchase of 144 shares of Delta Pride Stock. Options on the
remaining 956 shares expired unused.
Competition
There are a substantial number of independent catfish producers in the general
market area. Farm Fish is one of the larger producers of live fish according
to reports published by the USDA's National Agricultural statistical service.
Competition among catfish farmers who produce live fish for sale to catfish
processors is based primarily on price. Production techniques are becoming
more sophisticated as the industry matures, and farmers who take advantage of
the emerging technology in areas such as the maintenance of high water quality
may develop a competitive advantage in terms of cost efficiency. The Company
continually monitors water quality of each pond to ensure optimum conditions
for fish growth. The Company has replaced some of its gas and diesel powered
aeration equipment with more efficient and cost effective electrical aeration
equipment.
Farm Fish Personnel
On December 31, 1995, Farm Fish employed approximately 22 employees, all of
whom were engaged in duties related to its catfish farming operations.
Industry Segments
Since the sale of its processing operations in 1986, Farm Fish has operated
in only one industry segment, ("catfish production").
Regulatory Matters
Farm Fish's facilities and operations are subject to regulation by various
federal and state agencies, including, but not limited to, the United States
Department of Agriculture, The Environmental Protection Agency, The
Occupational Safety and Health Administration and corresponding state agencies.
Compliance with existing regulations has not had a material adverse effect on
Farm Fish's earnings or competitive position in the past and is not anticipated
to have a materially adverse effect in the future. Management believes that
Farm Fish is in substantial compliance with existing laws and regulations
relating to the operation of its facilities and does not know of any major
capitol expenditures necessary to comply with such regulations.
Description of Property
Farm Fish owns nearly 1,750 acres of farmland in Humphreys County,
Mississippi, near the town of Louise. Most of this land is devoted to the
ponds, to the banks and levees, which surround and separate the ponds, and to
various service and storage areas. Farm Fish has long-term borrowings from a
bank totaling $670,000 at December 31, 1995, secured by substantially all of
Farm Fish's assets and the guaranty of Delta Industries, Inc. ("Delta
Industries"). See Note 4 to the Consolidated Financial Statements.
Inventory
Farm Fish owns a substantial inventory of harvestable and growing fingerlings,
and during the spring of the year owns a substantial inventory of spawn and
fry. These catfish are located at the hatchery and in the fingerling and
production ponds on the catfish farm in Humphreys County, Mississippi. The
book value of the live fish inventory as of December 31, 1995 was $3,694,843.
Brood Fish
Farm Fish also owns "brood" fish which are located in the brood fish ponds on
the catfish farm in Humphreys County, Mississippi. The book value of the
brood fish as of December 31, 1995 was $44,987.
Legal Proceedings
As of March 15, 1996, there were no material legal proceedings pending or
threatened against Farm Fish.
Submission of Matters to a Vote of Security Holders
None.
Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The authorized capital stock of Farm Fish consists of 5,000,000 shares of
common stock. The 2,688,605 issued and outstanding shares of Farm Fish's
stock are held of record by approximately 1,866 stockholders. Although Farm
Fish common stock is registered under the Securities Exchange Act of 1934,
there is no readily ascertainable market value for the stock, since the stock
is not traded on any exchange, is traded infrequently over the counter, and
is not quoted in any newspaper. The stock is listed in the "pink sheets" under
the symbol "FFIH". Farm Fish has been advised by broker sources who have
heretofore traded in the stock of Farm Fish that there is insufficient basis
for establishing a market value.
Holders of Farm Fish common stock have one vote for each share held and are
entitled to accumulate their votes for the election of directors. Shares of
common stock are not subject to redemption and the holders of such shares do
not have preemptive rights. Holders of shares of common stock are entitled
to share ratably in the assets of Farm Fish legally available for
distribution to holders of common stock in the event of the liquidation,
dissolution or winding up of Farm Fish. The holders of common stock are
equally entitled to dividends when, as and if declared by the Board of
Directors.
Dividends
No cash dividend has been paid to Farm Fish since May 1, 1982. Any payment
of dividends in the future will depend upon Farm Fish's growth, profitability,
available cash, financial condition and other factors that the Board of
Directors deems relevant.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison of 1995 to 1994 Results of Operations
Net sales increased by $380,618 or 11% over 1994. The increase resulted from
a 3.7% increase in the average selling price of catfish, and a 298,880 or 7%
increase in pounds of catfish sold. The increase in net sales is attributable
to increased demand from the Company's largest customer, Delta Pride Catfish,
Inc., and to increased fingerling sales as the result of decreased industry-
wide fingerling production.
Cost of product sold for 1995 increased $499,807, or 22 %, as compared to 1994.
Of the increase, $269,000 is attributable to a change in estimated live fish
growout in 1995 (see note 1 to the financial statements). The remaining
increase is attributable to a 7% increase in pounds of catfish sold, increased
fingerling sales as a percentage of total sales in 1995 which are at a higher
cost per pound and a small increase in mortality due to more adverse summer
weather conditions in 1995. Catfish feed represents the single most significant
component of Farm Fish's cost of product. The market-price for catfish feed
may fluctuate substantially and exhibit cyclical characteristics typically
associated with commodity markets. The average market price paid for grain
was substantially unchanged in 1995 from 1994.
Selling, general, and administrative expenses decreased $13,653 or 10% from
1994. The decrease was principally due to a decrease in certain professional
fees.
Interest expense decreased $40,880 or 35.7% due to a decrease in average
borrowings.
The effective income tax rate was 36.7% in 1995 compared to 37.7% in 1994.
As the result of the above, net income decreased by $79,309 to $483,124 in
1995.
Net income before income taxes decreased from $1,017,900 for the nine months
ended September to $763,747 for the year ended December 31, 1996. Net income
decreased from $637,249 to $483,124 for the same periods. Farm Fish changed
it estimate of fish growout in the fourth quarter of 1995 resulting in a
$269,000 increase in cost of product sold and a $170,000 decrease in net income.
Seasonality of Operating Results
In prior years, the revenues of Farm Fish have been seasonal and cyclical.
Prices for live fish have tended to rise during the first part of the year and
drift downward during the summer, only to rise again in September and October
and fall in November and December before beginning the annual price cycle
again. However, in 1994 prices continued to rise during the year, and in 1995
prices were consistent throughout the year.
Liquidity and Capital Resources
In June 1993, Farm Fish refinanced its outstanding debt with long-term
borrowings and a line of credit from a bank. The principal balance with
respect to the long-term debt was $670,000 at December 31, 1995. The Company
had $600,000 available under the line of credit at December 31, 1995. The
long-term borrowings and borrowings under the line of credit bear interest at
prime plus 1.5% and prime plus 1%, respectively, and are collateralized by
substantially all the assets of Farm Fish and the guaranty of Delta Industries,
Inc. ("Delta Industries").
Notwithstanding Farm Fish's improved financial position, additional borrowings
may be necessary to meet cash flow needs during the 1996 feeding season.
Although there is no binding commitment from Delta Industries, Farm Fish
expects Delta Industries to continue its prior policy with respect to
assisting Farm Fish in financing its operations, in light of Delta Industries'
ownership of eighty percent (80%) of Farm Fish stock. Delta Industries also
has represented that it plans to seek repayment of the $2,115,389 owed to it by
Farm Fish as of December 31, 1995 only as cash becomes available from
operations.
During 1995, Farm Fish used net cash provided by operating activities of
$853,373 and available cash principally to purchase $149,592 of property,
buildings and equipment, to reduce borrowings under the line of credit and
long-term borrowing by $350,729, and to reduce the payable to shareholder by
$434,916.
At year-end 1994, Farm Fish's ratio of current assets to current liabilities
was 1.30 to 1 and its ratio of stockholders' equity to total liabilities was
.78 to 1. At year-end 1995, Farm Fish's ratio of current assets to current
liabilities was 1.69 to 1 and its ratio of stockholders' equity to total
liabilities was 1.15 to 1.
Inflation
Farm Fish's operations are sensitive to changes in the cost of feed and the
market price of live fish. As with other agricultural enterprises, these
prices are responsive to the wide range of conditions generally affecting
crop prices and food prices, and are not within Farm Fish's control.
Farm Fish, Inc.
Consolidated Financial Statements
Years ended December 31, 1995 and 1994
CONTENTS
Reports of Independent Auditors............................................12
Audited Consolidated Financial Statements
Consolidated Balance Sheets................................................13
Consolidated Statements of Income..........................................14
Consolidated Statements of Shareholders' Equity............................15
Consolidated Statements of Cash Flows......................................16
Notes to Consolidated Financial Statements.................................17
Report of Independent Auditors
The Board of Directors and Shareholders
Farm Fish, Inc.
We have audited the accompanying consolidated balance sheets of Farm Fish,
Inc. and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Farm Fish, Inc.
and subsidiary at December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Jackson, Mississippi
February 9, 1996
Farm Fish, Inc.
Consolidated Balance Sheets
December 31
1995 1994
Assets -----------------------
Current Assets:
Cash $ 22,231 $ 96,864
Accounts receivable 202,873 165,830
Advances to employees 7,626 12,034
Inventories, principally live fish (Note 4) 3,721,339 3,688,944
--------- ---------
Total current assets 3,954,069 3,963,672
Property, buildings and equipment (Note 4)
Land 716,839 716,839
Ponds and improvements 1,982,895 1,963,621
Brood fish 44,987 44,987
Buildings 316,040 298,738
Machinery and equipment 1,897,539 1,793,536
--------- ---------
4,958,300 4,817,721
Accumulated depreciation 2,779,909 2,548,262
--------- ---------
2,178,391 2,269,459
Other assets:
Investments in cooperative (Notes 3 and 4) 375,723 586,424
Other noncurrent assets 1,632 3,441
--------- ---------
377,355 589,865
--------- ---------
Total assets $6,509,815 $6,822,996
========= =========
Liabilities and shareholders' equity
Current liabilities:
Note payable (Note 4) $ 0 $ 250,729
Accounts payable 10,801 25,248
Accrued expenses 112,368 117,581
Payable to shareholder (Note 2) 2,115,389 2,550,305
Current maturities of long-term debt 100,000 100,000
--------- ---------
Total current liabilities 2,338,558 3,043,863
Long-term debt, less current maturities (Note 4) 570,000 670,000
Deferred income taxes (Note 5) 123,000 114,000
Shareholders' equity (Note 2):
Common stock, no par value:
Authorized shares 5,000,000
Issued and outstanding shares - 2,688,605 4,424,336 4,424,336
Additional paid-in capital 475,776 475,776
Retained earnings (deficit) (1,421,855) (1,904,979)
--------- ---------
Total shareholders' equity 3,478,257 2,995,133
--------- ---------
Total liabilities and shareholders' equity $6,509,815 $6,822,996
========= =========
See accompanying notes.
Farm Fish, Inc.
Consolidated Statements of Income
Year Ended December 31
1995 1994
-----------------------
Net Sales (Note 3) $3,847,173 $3,466,555
Cost and expenses:
Cost of products sold 2,786,361 2,286,554
Selling, general and administrative 119,673 133,326
Interest 73,589 114,477
Other, net (Note 3) 103,803 28,720
--------- ---------
3,083,426 2,563,077
--------- ---------
Income before income taxes 763,747 903,478
Income taxes (Note 5) 280,623 341,045
--------- ---------
Net income $ 483,124 $ 562,433
========= =========
Net income per share $ .18 $ .21
========= =========
Weight average share outstanding 2,688,605 2,688,605
========= =========
See accompanying notes.
Farm Fish, Inc.
Consolidated Statements of Shareholders' Equity
Commonstock Additional Retained Total
------------------- Paid-in Earnings Shareholders'
Shares Amount Capital (Deficit) Equity
--------- -------------------------------------------
Balance at Dec. 31, 1993 2,688,605 $4,424,336 $475,776 $(2,467,412) $2,432,700
Net income for 1994 - - - 562,433 562,433
--------- --------- ------- ---------- ---------
Balance at Dec. 31, 1994 2,688,605 $4,424,336 $475,776 $(1,904,979) $2,995,133
Net income for 1995 - - - 483,124 483,124
--------- --------- ------- ---------- ---------
Balance at Dec. 31, 1995 2,688,605 $4,424,336 $475,776 $(1,421,855) $3,478,257
========= ========= ======= ========== =========
See accompanying notes.
Farm Fish, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31
1995 1994
-----------------------
Operating Activities
Net Income $483,124 $562,433
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 234,043 222,589
Gain on sale of equipment (614) (5,643)
Deferred income taxes 9,000 5,000
Changes in operating assets and liabilities:
Increase in accounts receivable and advances
to employees (32,635) (55,032)
Increase in inventories (32,395) (447,955)
Net decrease in investments in cooperatives 210,701 194,673
Decrease in other assets 1,809 624
Increase (decrease) in trade accounts payable
and accrued expenses (19,660) 3,118
-------- --------
Net cash provided by operating activities 853,373 479,807
Investing activities
Purchases of property, buildings and equipment (149,592) (192,519)
Proceeds from sale of equipment 7,231 7,000
Purchases of stock in cooperatives 0 (466,125)
-------- --------
Net cash used in investing activities (142,361) (651,644)
Financing activities
Proceeds from borrowings 0 450,000
Principal payments on borrowings (350,729) (699,271)
Net change in payable to shareholder (434,916) 435,299
-------- --------
Net cash provided by (used in) financing activities (785,645) 186,028
-------- --------
Increase (decrease) in cash (74,633) 14,191
Cash at beginning of year 96,864 82,673
-------- --------
Cash at end of year $ 22,231 $ 96,864
======== ========
See accompanying notes.
Farm Fish, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
1. Accounting Policies
Business
Farm Fish, Inc. ("the Company") is engaged in catfish farming on approximately
1,375 water acres within the State of Mississippi. Catfish farming is
conducted in a few southern states, principally Mississippi, Louisiana,
Alabama and Arkansas. The Company's sales are to a limited number of
processors. In 1995, three processors represented 56%, 22%, and 13% of the
Company's net sales. In 1994, three processors represented 40%, 24% and 16%
of the Company's net sales. Delta Pride Catfish, Inc. ("Delta Pride") is the
Company's most significant customer. The Company's significant customers are
located within the state of Mississippi. Processed catfish are sold
principally to retail grocery stores, food brokers and restaurants.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, DAT, Inc. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Inventories
Inventories are stated at the lower of average cost or market. Live fish
inventories generally require a growing period of one to one and one-half years
from the time the fingerlings are hatched until they reach a weight that fish
are typically harvested. Cost associated with live fish are accumulated during
the growing period and consist principally of feed, labor and overhead costs,
required to grow the live fish to a marketable size. Because the Company's
production cycle for fish generally exceeds one year, management anticipates
certain live fish inventories on hand at December 31, 1995 may not be sold in
1996. Live fish inventories are classified as a current asset in the
accompanying balance sheets which is consistent with the industry practice.
The quantities of live fish inventories are determined based upon estimated
growth from feed fed to each pond and are reduced for the actual quantities
sold and estimated mortality. Each pond is closed periodically and the
estimated pounds are adjusted to the actual harvest. Live catfish are highly
susceptible to disease, oxygen depletion and extreme temperatures which could
result in high mortality. Management continually monitors each pond and takes
appropriate actions to minimize the risk of loss from mortality. Given the
nature of the live fish inventories, it is reasonably possible that the
Farm Fish, Inc.
Notes to Consolidated Financial Statements
1. Accounting Policies (continued)
Inventories (continued)
Company's actual live fish mortality will vary significantly from estimates.
The Company changed its estimate of fish grow-out in 1995 from 2.35 pounds of
feed per one pound of live fish growth to 2.5 pounds of feed fed per one pound
of live fish growth resulting in a $269,000 increase in cost of products sold
and a $170,000 decrease in net income or $.06 per share during the year ended
December 31, 1995.
Inventories consist of the following:
December 31
1995 1994
------------------------
Live Fish $3,694,843 $3,661,358
Feed and Supplies 26,496 27,586
---------- ----------
$3,721,339 $3,688,944
========== ==========
Property, Buildings and Equipment
Property, buildings, and equipment are stated at cost. Depreciation is
provided by the straight-line method over the assets' estimated useful lives.
Investment in cooperatives
Investments in cooperatives consist of common stock at cost and the Company's
share of the cooperatives' allocated earnings and losses.
Income Taxes
Income taxes have been provided using the liability method in accordance with
FASB No. 109, "Accounting for Income Taxes".
Revenue Recognition
Revenue is recognized when product is shipped to customers.
Farm Fish, Inc.
Notes to Consolidated Financial Statements
1. Accounting Policies (continued)
Net Income Per Share
Net income per share is based on the average number of shares of common stock
outstanding during each year. There are no common stock equivalents.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
Impact of Recently Issued Accounting Standards
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement 121
in the first quarter of 1996, and based on current circumstances, does not
believe the effect of adoption will be material.
2. Shareholders' Equity and Related Party Transactions
In September 1984, the Company issued in a private offering 1,903,104 shares
of common stock to Delta Industries, Inc. ("Delta") at $1.25 per share. In
consideration for the stock issued, Delta canceled $2,378,880 of notes and
other amounts receivable from the Company. As a result of this transaction,
the Company became an 80% owned subsidiary of Delta.
At December 31, 1995 and 1994, the Company had non-interest bearing advances
payable to Delta totaling $2,115,389 and $2,550,305, respectively. Delta has
not charged the Company any allocation of Delta's corporate expenses.
Farm Fish, Inc.
Notes to Consolidated Financial Statements
3. Investment in Cooperatives
Investment on cooperatives consists of the following:
Delta Pride is a cooperative in which the Company had an option to purchase
1,100 shares of stock at a price of $600 per share through June 1993.
Pursuant to an agreement entered into in 1993 between the Company and Delta
Pride, the option period was extended through January 1, 1995. During 1994,
the Company applied retained patronage dividends of $86,400 to the purchases
of 144 shares of Delta Pride stock. In addition, the Company purchased 1280
shares of Delta Pride stock in 1994 for $466,125. Options on the remaining 956
shares expired unused. The Company owned 1,424 shares of Delta Pride stock at
December 31, 1995 and 1994. The ownership of Delta Pride stock provides the
Company the right to sell live catfish to Delta Pride. Substantially all of
the Company's catfish feed purchases were from Producers Feed Corporation
("Producers") in 1995 and 1994.
In 1995 and 1994, the Company recorded $188,009 and $139,051, respectively,
of operating losses from Delta Pride which are included in other cost and
expenses in the accompanying consolidated statements of income. In 1995 and
1994, Producers allocated patronage dividends of $53,351, and $88,865,
respectively, to the Company, which are included in other cost and expense,
net. The Company received patronage dividend payments from Producers of
$76,043 and $100,465 in 1995 and 1994, respectively.
4. Notes Payable and Long-Term Debt
Long-term debt consists of a note payable to a bank, due in annual
installments of $100,000 plus quarterly payments of interest at prime plus
1.5% (8.42% at December 31, 1995), maturing in 1999.
Farm Fish, Inc.
Notes to Consolidated Financial Statements (continued)
4. Notes Payable and Long-Term Debt (continued)
Maturities of long-term debt are as follows:
1996 $100,000
1997 100,000
1998 100,000
1999 370,000
--------
$670,000
========
Note payable at December 31, 1994 consisted of borrowings under a line of
credit with interest of prime plus 1% (9.5% at December 31, 1994). The
Company had $600,000 available to borrow under the line at December 31, 1995.
Substantially all property, buildings and equipment, inventories and
investments in cooperatives is pledged as collateral to the note payable and
long-term debt.
Interest paid by the Company totaled $74,167 and $103,518 in 1995 and 1994,
respectively.
5. Income Taxes
The Company and its subsidiary are included in Delta's consolidated federal
and state income tax returns. The Company's income tax expense for financial
reporting purposes is determined on a separate company basis. The Company's
income taxes paid to Delta totaled $607,668 in 1995. There were no payments
in 1994.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of
deferred tax assets and liabilities are as follows:
December 31
1995 1994
---------------------
Deferred tax liabilities - Property,
buildings and equipment $129,000 $119,000
Deferred tax assets - Other (6,000) (5,000)
-------- --------
Net deferred tax liabilities $123,000 $114,000
======== =========
Farm Fish, Inc.
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
Income tax expense consists of the following:
Year Ended December 31
1995 1994
-----------------------
Current:
Federal $235,212 $291,075
State 36,411 44,970
-------- --------
271,623 336,045
Deferred:
Federal $ 8,000 4,600
State 1,000 400
-------- --------
9,000 5,000
======== =======
The reconciliation of income tax computed at the federal statutory rate to
income tax expense is as follows:
Year Ended December 31
1995 1994
-----------------------
Statutory federal income tax rate $259,674 $307,183
State income taxes, net 24,691 29,950
Other - net (3,742) 3,912
-------- --------
$280,623 $341,045
======== ========
6. Operating Leases
The Company leases five tractors under operating leases which expire in
August 1999. The leases require the Company to pay maintenance, insurance,
and a fee for usage in excess of specified limits in addition to the minimum
annual rentals. Annual rentals applicable to the leases are $18,259 through
August 1999. Rent expense applicable to operating leases totaled $31,080 in
1995 and $0 in 1994.
Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-B:
3(a) Articles of Incorporation Incorporated by reference from
Form 10-K for year ending
April 30, 1981
3(b) Bylaws Incorporated by reference from
Form 10-K for year ending
April 30, 1981
3(c) Amendment to Bylaws Incorporated by reference from
Form 10-K for year ending
December 31, 1984
3(d) Amendment to Articles of Incorporated by reference from
Incorporation Form 10-K for year ending
December 31, 1984
(10) Material Contracts None
10(a) Asset Purchase Agreement, dated Incorporated by reference from
February 28, 1986 Form 10-K for year ending
December 31, 1985
10(b) Note Agreements Loans from Incorporated by reference from
Deposit Guaranty National Bank, Form 10-K for year ending
dated June 28, 1993 December 31, 1993
27 Financial Data Schedule 29
(b) Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FARM FISH, INC., REGISTRANT
By: /s/ Thomas R. Slough, Jr.
Thomas R. Slough, Jr.,
President
DATE: January 20, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
By: /s/ Thomas R. Slough, Jr.
Thomas R. Slough, Jr.,
Director
DATE: January 20, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
FARM FISH, INC., REGISTRANT
By: /s/ David Robison
David Robison,
Vice President
DATE: January 20, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
FARM FISH, INC., REGISTRANT
By: /s/ Charles E. Horne
Charles E. Horne,
Secretary,
Principal Financial Officer
and Principal Accounting
Officer
DATE: January 20, 1997
DIRECTOR'S SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
By: /s/ W. D. Mounger
W. D. Mounger, Director
DATE: January 20, 1997
DIRECTOR'S SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
By: /s/ Leland R. Speed
Leland R. Speed, Director
DATE: January 20, 1997
DIRECTOR'S SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
By: /s/ T. L. Reed, III
T. L. Reed, III, Director
DATE: January 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 22,231
<SECURITIES> 0
<RECEIVABLES> 202,873
<ALLOWANCES> 0
<INVENTORY> 3,721,339
<CURRENT-ASSETS> 3,954,069
<PP&E> 4,958,300
<DEPRECIATION> 2,779,909
<TOTAL-ASSETS> 6,509,815
<CURRENT-LIABILITIES> 2,338,558
<BONDS> 0
0
0
<COMMON> 4,424,336
<OTHER-SE> (946,079)
<TOTAL-LIABILITY-AND-EQUITY> 6,509,815
<SALES> 3,847,173
<TOTAL-REVENUES> 3,847,173
<CGS> 2,786,361
<TOTAL-COSTS> 2,786,361
<OTHER-EXPENSES> 223,746
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,589
<INCOME-PRETAX> 763,747
<INCOME-TAX> 280,623
<INCOME-CONTINUING> 483,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 483,124
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
