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, 1995
--------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 1-6244
------
AMERICAN MAIZE-PRODUCTS COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maine 13-0432720
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
250 Harbor Drive, Stamford, CT 06902
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 356-9000
------------------
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
------ ------
Number of shares outstanding of each of issuer's classes of common stock at
March 31, 1995.
Class A Class B
---------- ----------
Outstanding 8,728,074 1,742,057
<PAGE>
INDEX
Page #
Part I
Financial Statements:
Condensed Consolidated Balance Sheets
at March 31, 1995 and December 31, 1994 1
Condensed Consolidated Statements of Income and Retained Earnings
for the three months ended March 31, 1995 and 1994 2
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1995 and 1994 3
Notes to Condensed Consolidated Financial Statements 4 - 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II
Item 1. Legal Proceedings 7
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8 - 9
Signatures 10
<PAGE>
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,925 $ 9,957
Accounts receivable, trade, less allowance
for doubtful accounts of $4,078 at
March 31, 1995 and $3,834 at December 31, 1994 60,398 52,549
Inventories
Finished goods 27,063 28,904
Work-in-process 4,510 4,154
Raw materials 32,804 37,625
Stores and supplies 18,702 16,172
-------- --------
83,079 86,855
Other current assets 12,738 11,901
-------- --------
Total current assets 162,140 161,262
-------- --------
Restricted cash 22,854 26,325
Property, plant and equipment, at cost 539,323 514,644
Less, Accumulated depreciation 211,041 202,821
-------- --------
328,282 311,823
Excess of cost over net assets of
acquired companies, less accumulated
amortization of $4,682 at March 31, 1995,
and $4,245 at December 31, 1994 22,106 22,543
Prepaid pension costs 16,600 16,600
Other assets 13,890 13,419
-------- --------
$565,872 $551,972
======== ========
Current liabilities:
Bank overdrafts $ 6,335 $ -
Long-term debt, current installments 960 944
Accounts payable, trade 26,980 29,268
Accrued expenses 27,033 29,593
Accrued income taxes 2,705 1,259
-------- --------
Total current liabilities 64,013 61,064
Long-term debt, less current installments 164,503 164,749
Deferred income taxes 33,366 31,663
Accrued postretirement and postemployment benefits 53,141 52,562
Other liabilities 4,777 5,251
-------- --------
319,800 315,289
-------- --------
Stockholders' equity:
Capital stock:
Common, Class A, $.80 par value; authorized
15,000,000 shares at March 31, 1995 and
December 31, 1994; issued 9,073,503 shares
at March 31, 1995 and 8,872,653 shares
at December 31, 1994 7,259 7,098
Common, Class B, $.80 par value; authorized
2,500,000 shares; issued 1,809,282 shares
at March 31, 1995 and December 31, 1994 1,447 1,447
Capital in excess of par value of common stock 128,078 124,380
Retained earnings 116,011 110,506
-------- --------
252,795 243,431
Less, Common Stock in treasury, at cost;
Class A, 345,429 shares at March 31, 1995
and 348,148 shares at December 31, 1994;
Class B, 67,225 shares at March 31, 1995
and December 31, 1994 6,723 6,748
-------- --------
Total stockholders' equity 246,072 236,683
-------- --------
$565,872 $551,972
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Net sales $141,075 $137,839
Cost of sales 105,653 104,601
-------- --------
Gross profit 35,422 33,238
Selling, administrative and general expenses 22,283 23,480
Restructuring charges - 5,400
-------- --------
Operating profit 13,139 4,358
-------- --------
Other income (expenses):
Interest expense (1,925) (2,931)
Interest income 491 69
Other, net (25) (314)
-------- --------
(1,459) (3,176)
-------- --------
Income before income taxes 11,680 1,182
Income taxes:
Current (2,725) (341)
Deferred (1,698) (158)
-------- --------
(4,423) (499)
-------- --------
Net income 7,257 683
Retained earnings at beginning of period 110,506 90,221
Less: cash dividends paid 1,752 1,636
-------- --------
Retained earnings at end of period $116,011 $ 89,268
======== ========
Earnings per share of common stock $.70 $.07
==== ====
Dividends per share of common stock $.17 $.16
==== ====
Weighted average number of common shares
outstanding 10,332,892 10,226,758
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,257 $ 683
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,826 8,117
Deferred income taxes 1,698 158
Restructuring charges - 5,400
Changes in assets and liabilities:
Accounts receivable, trade (7,849) (6,550)
Inventories 3,776 (11,622)
Other current assets (837) (1,814)
Accounts payable and accrued expenses (3,402) (5,670)
Other, net (341) 1,968
-------- --------
Net cash provided by (used in) operating activities 9,128 (9,330)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (24,843) (10,468)
-------- --------
Net cash used in investing activities (24,843) (10,468)
-------- --------
Cash flows from financing activities:
Cash dividends (1,752) (1,636)
Increase in bank overdrafts 6,335 2,654
Change in short-term debt - (3,000)
Borrowings on long-term debt - 21,050
Payments of long-term debt (230) (216)
Decrease in restricted cash 3,471 -
Proceeds from the issuance of common stock 3,859 131
-------- --------
Net cash provided by financing activities 11,683 18,983
-------- --------
Net decrease in cash and cash equivalents (4,032) (815)
Cash and cash equivalents, beginning of year 9,957 2,862
-------- --------
Cash and cash equivalents, end of period $ 5,925 $ 2,047
======== ========
- -------------------------------------------------------------------------------
Supplemental Cash Flow Information
Cash paid during the period for:
Interest (net of amount capitalized) $ 4,983 $ 4,460
Income taxes (net of refunds) $ 1,059 $ 43
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of
American Maize-Products Company and its Subsidiaries ("Company")
for the three month periods ended March 31, 1995 and 1994 are
unaudited. However, in the opinion of the Company, all
adjustments (of a normal recurring nature) considered necessary
for a fair presentation have been reflected therein.
Certain financial information which is normally included in
financial statements prepared in accordance with generally
accepted accounting principles, but which is not required for
interim reporting purposes, has been omitted. The accompanying
condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1994. Certain reclassifications
have been made in the prior period financial statements to
conform with the current year's presentation.
SUPPLEMENTARY INFORMATION
Interest costs incurred during the three months ended March 31,
1995 and 1994 were $3,031 and $3,014, respectively. Interest
capitalized during these periods was $1,106 and $83,
respectively.
For cash flow reporting purposes all highly liquid short-term
investments (as denoted on the balance sheet), with maturities of
three months or less, are considered cash equivalents.
Deposits made for hedging transactions to cover open positions on
corn purchases are included in inventory for cash flow reporting
purposes.
The Company periodically enters into corn futures contracts to
hedge against sales commitments of corn-derived products. The
Company utilizes the corn futures market to minimize the inherent
risk potential resulting from significant fluctuations in the
cost of corn. The Company does not enter into corn futures
contracts for trading or speculative purposes. In accordance
with its hedging policy, the Company only enters into corn
futures contracts to cover the corn requirements to manufacture
products covered by fixed price, fixed quantity contracts with
customers and near term production commitments. Futures contract
quantities are matched with approximate requirements under
customer contracts by using the futures contract dates closest to
expected shipment dates to customers. The corn futures contracts
outstanding at March 31, 1995 and December 31, 1994 expire at
various dates and various prices through December, 1996. At
March 31, 1995 and December 31, 1994, the Company had corn
futures contracts of $96,769 (39,215,000 bushels) and $24,841
(10,350,000 bushels), respectively. Unrealized gains and losses
associated with these contracts are deferred and are accounted
for as part of the hedged transaction. Based upon market rates,
these contracts had a deferred contract gain of $4,275 at March
31, 1995, and a deferred contract loss of $20 at December 31,
1994. Settlement gains and losses on corn futures contracts are
matched to specific inventory purchases and credited or charged
to cost of sales at the time such inventory is sold. Based upon
daily margin account activity, including contract purchases,
contract sales and market fluctuations in the value of open
contracts, cash settlement is made on a daily basis to maintain
margin accounts at specified levels.
SHORT-TERM DEBT
Short-term debt comprises borrowings on lines of credit from
banks.
<PAGE>
CONTINGENT LIABILITIES
The Company has certain contingent liabilities regarding existing
or potential claims, lawsuits and other proceedings, including
those involving a certain patent infringement claim and an
environmental civil action. There have been no material changes
in either of these actions from the information set forth in Note
14 of Notes to Consolidated Financial Statements and under ITEM 3
- - LEGAL PROCEEDINGS in the Company's annual report on Form 10-K
for the fiscal year ended December 31, 1994.
RECENTLY ISSUED ACCOUNTING STANDARD
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of". This statement establishes accounting
standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to
be held and used for long-lived assets and certain identifiable
intangibles to be disposed of. Implementation of the statement
is required for fiscal years beginning after December 15, 1995.
The Company anticipates that the adoption of this statement will
not have a material impact on the Company's financial statements.
The Company has not determined whether it will adopt the
statement prior to the required date.
LEGAL PROCEEDINGS
The current status of litigation is described in Part II, herein.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
FINANCIAL CONDITION (MARCH 31, 1995
COMPARED TO DECEMBER 31, 1994)
The Company currently has available $125,000 under a bank
revolving credit agreement which expires on December 31, 1998 and
open lines of credit with banks of $10,000. At March 31, 1995,
there were no borrowings outstanding under these facilities.
Significant uses of cash during the period included capital
expenditures of $24,843, increased accounts receivable of $7,849
and reductions in accounts payable and accrued expenses of
$3,402. The Company anticipates approximately $87,200 of
additional capital spending for the remainder of the year which
will be financed through internal cash flow and available credit
facilities, as needed.
RESULTS OF OPERATIONS (THREE MONTHS
ENDED MARCH 31, 1995 COMPARED WITH THE
THREE MONTHS ENDED MARCH 31, 1994)
Net sales increased 2.3% in 1995 to $141,075 compared to $137,839
in 1994. The higher sales were attributable to higher selling
prices and volumes in the tobacco business for cigars and moist
snuff products. Sales in the corn processing business were off
slightly due to lower sweetener prices.
Operating profits were $13,139 in 1995 compared to $4,358 in
1994. The improved results were attributable to higher selling
prices and volumes in the tobacco business for cigars and moist
snuff products. Cost savings resulting from the consolidation of
its cigar and smokeless tobacco business during the second
quarter of 1994 also added to the increase in the Company's
operating profit. Operating profits declined slightly in the
corn processing business due to lower margins for corn
sweeteners. Operating results in the tobacco business include
restructuring charges of $5,400 in 1994.
Interest expense decreased to $1,925 in 1995 compared to $2,931
in 1994. The primary reason for the decrease were higher levels
of capitalized interest, most of which is related to the Hammond
plant expansion and modernization.
Net income in 1995 was $7,257 or $.70 per share, compared to
$683, or $.07 per share, in 1994.
<PAGE>
PART II
Item 1. Legal Proceedings
GIH Corp. and William Ziegler, III v. American Maize-
Products Company et al.
On March 24, 1995 the Superior Court denied Plaintiffs' request
for a preliminary injunction against the issuance of authorized
but unissued shares of American Maize Class B Common Stock to EBS.
On March 29, 1995 First Fidelity Bank, co-trustee with William
Ziegler, III over certain Ziegler family trusts, moved in
Superior Court to intervene as a plaintiff in Mr. Ziegler's
lawsuit against American Maize and its other directors. On April
10, 1995 the Supreme Judicial Court of Maine, on appeal from the
Superior Court's order denying the plaintiff's request for
preliminary injunction, issued an order enjoining American Maize
from enforcing the deadline for Class B shareholders to exercise
their preemptive rights to acquire additional Class B voting
shares of American Maize and also enjoined American Maize from
issuing any additional Class B voting shares pending issuance of
the final opinion of the court. On April 12, 1995 the Supreme
Judicial Court issued an order of clarification stating
that the April 10, 1995 order "reports a final decision on the
merits with an opinion to follow". On May 11, 1995, the Supreme
Judicial Court issued an opinion in connection with the April 10,
1995 order. The opinion vacates the judgment of the Superior Court
and permanently enjoins American Maize from (i) issuing stock
pursuant to the stock purchase agreement entered into by American
Maize and EBS and (ii) enforcing the April 10, 1995 deadline for
Class B shareholders to exercise their preemptive rights to
acquire additional Class B voting shares.
Steiner, Steiner, Sarnoff, Katz and Saltzman v. William
Ziegler, III.
At a hearing on March 8, 1995, the Maine Superior Court granted
the shareholder plaintiffs' motion to consolidate for the limited
purpose of submitting a brief in opposition to the preliminary
injunction requested by GIH Corp. and William Ziegler, III and
presenting oral argument at the conclusion of the hearing.
Agreements Affecting Board Membership
Control over GIH Corp. is the subject of litigation initiated in
New York Surrogate's Court by the children of Mrs. Helen
Steinkraus challenging the prior distribution of the controlling
share of GIH Corp. common stock to a trust for the benefit of
William Ziegler, III, Chairman of the Board of the Company. On
April 4, 1994, the New York Surrogate's Court issued a decision
in favor of Mr. Ziegler, and Mrs. Steinkraus' children appealed.
On March 22, 1995, the Appellate Division of the New York State
Supreme Court rendered a decision in favor of Mr. Ziegler, and
the Steinkraus family has appealed such decision.
Except as described above, no reportable events have occurred
which would require modification of the discussions of legal
proceedings set forth in the Company's Form 10-K Annual Report
for the fiscal year ended December 31, 1994. Certain developments
set forth above were reported in the Company's Form 8-K Current
Reports listed in Item 6(b) below.
<PAGE>
Item 5. Other Information
On May 12, 1995, EBS announced the termination of its
offer to purchase all the outstanding shares of American Maize
common stock at a price of $40 per share, due to the non-
satisfaction of the conditions to the offer. EBS also
announced on such date the termination of the Merger Agreement
between American Maize and EBS, pursuant to which the tender
offer was commenced.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (exhibit reference numbers refer to Item 601
of Regulation S-K)
11 (a) Calculation of Primary Earnings Per Share
11 (b) Calculation of Fully-Diluted Earnings Per Share
(b) The Company filed the following reports on Form 8-K:
1) Form 8-K report dated January 17, 1995, which included
the following items:
Items 5 and 7: Press release dated January 6, 1995.
2) Form 8-K report dated March 27, 1995, which included
the following items:
Items 5 and 7: Press releases dated March 24, 1995.
3) Form 8-K report dated March 29, 1995, which included
the following items:
Items 5 and 7: Press release dated March 29, 1995.
4) Form 8-K report dated March 30, 1995, which included
the following items:
Items 5 and 7: Press release dated March 30, 1995.
5) Form 8-K report dated April 3, 1995, which included
the following items:
Items 5 and 7: Press release dated March 31, 1995.
6) Form 8-K report dated April 11, 1995, which included
the following items:
Items 5 and 7: Press release dated April 10, 1995.
7) Form 8-K dated April 13, 1995, which included the
following items:
Items 5 and 7: Press release dated April 12, 1995.
8) Form 8-K report dated April 25, 1995, which included
the following items:
Items 5 and 7: Press release dated April 19, 1995.
<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.
AMERICAN MAIZE-PRODUCTS COMPANY
DATE: May 15, 1995 By /s/ Patric J. McLaughlin
---------------- ------------------------------
Patric J. McLaughlin
President and
Chief Executive Officer
DATE: May 15, 1995 By /s/ Edward P. Norris
---------------- ------------------------------
Edward P. Norris
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 11 (a)
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CALCULATION OF PRIMARY EARNINGS PER SHARE
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Weighted average number of common shares
outstanding 10,332,892 10,226,758
========== ==========
Net income $7,257 $683
====== ====
Primary earnings per common share $.70 $.07
==== ====
</TABLE>
<PAGE>
EXHIBIT 11 (b)
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CALCULATION OF FULLY-DILUTED EARNINGS PER SHARE
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Weighted average number of common shares
outstanding 10,332,892 10,226,758
Assumed exercise of certain options 266,995 65,877
---------- ----------
10,599,887 10,292,635
========== ==========
Net income $7,257 $683
====== ====
Fully-diluted earnings per common share $.68 $.07
==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,925
<SECURITIES> 0
<RECEIVABLES> 60,398
<ALLOWANCES> 4,078
<INVENTORY> 83,079
<CURRENT-ASSETS> 162,140
<PP&E> 539,323
<DEPRECIATION> 211,041
<TOTAL-ASSETS> 565,872
<CURRENT-LIABILITIES> 64,013
<BONDS> 164,503
<COMMON> 8,706
0
0
<OTHER-SE> 237,366
<TOTAL-LIABILITY-AND-EQUITY> 565,872
<SALES> 141,075
<TOTAL-REVENUES> 141,075
<CGS> 105,653
<TOTAL-COSTS> 105,653
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 244
<INTEREST-EXPENSE> 1,925
<INCOME-PRETAX> 11,680
<INCOME-TAX> 4,423
<INCOME-CONTINUING> 7,257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,257
<EPS-PRIMARY> .70
<EPS-DILUTED> .68
</TABLE>
