UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1996
Commission File Number 0-11854
BIOTECHNICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2344703
(State of incorporation) (I.R.S. Employer
Identification No.)
4001 North War Memorial Drive, Peoria, IL 61614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 309/681-0300
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 _______
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
On October 30, 1996, the Registrant had 115,379,628 (net of 39,160
treasury shares) shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
September 30, June 30,
1996 1996
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash & cash equivalents $ -- $ 194
Accounts receivable 2,329 7,964
Inventories 9,153 5,976
Prepaid expenses & other assets 179 153
------------ ------------
Total Current Assets 11,661 14,287
Property, plant & equipment 14,313 13,808
Less accumulated depreciation (4,267) (4,086)
------------ -----------
Net property, plant & equipment 10,046 9,722
Goodwill and other assets 8,810 8,948
------------ ----------
Total Assets $ 30,517 $ 32,957
============ ============
Liabilities and Shareholders' Equity
Cash Overdraw $ 98 $ --
Borrowings under line of credit 7,000 8,500
Current portion of long-term debt 109 107
Accounts payable 1,575 1,013
Accrued liabilities 899 1,595
Due to affiliates 1,330 2,175
------------ ------------
Total current liabilities 11,011 13,390
Long-term debt -- 31
Due to affiliates 5,261 3,261
Other noncurrent liabilities 170 170
----------- -----------
Total Liabilities $ 16,442 $ 16,852
----------- -----------
Shareholders' Equity
Preferred Stock, Class A, 900,000
shares outstanding 9 9
Common Stock, 150,000,000
shares authorized; 115,418,788
shares outstanding 1,059 1,059
Additional paid-in capital 20,891 20,891
Accumulated deficit (7,884) (5,854)
----------- -----------
Total Equity $ 14,075 $ 16,105
----------- -----------
Total Liabilities
and Shareholders' Equity $ 30,517 $ 32,957
=========== ===========
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands of dollars except per share amounts)
Three Months Ended
September 30,
1996 1995
<CAPTION>
Net Sales:
<S> <C> <C>
Domestic $ 755 $ 556
Export-Affiliates -- --
Export-Other -- --
---------- -----------
755 556
Cost of Goods Sold:
Cost of Goods Sold 619 351
---------- ----------
Gross Margin 136 205
Operating expenses:
Sales & Marketing 939 1,014
Warehouse & Distribution 263 195
Administration 725 657
Amortization of goodwill 126 123
---------- ----------
2,053 1,989
Operating income (loss) (1,917) (1,784)
Other income (expense)
Interest expense (222) (250)
Other 109 210
----------- ----------
Net income before taxes (2,030) (1,824)
Income Taxes -- --
---------- -----------
Net income(loss) $ (2,030) $ (1,824)
========== ===========
Net income per share $ (0.02) $ (0.02)
----------- -----------
Weighted average
shares outstanding 115,379,628 115,379,628
=========== ============
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Three Months Ended
September 30,
1996 1995
<CAPTION>
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ (2,030) $ (1,824)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 306 363
Changes in assets and liabilities
Accounts receivable 5,634 5,570
Inventories (3,176) (2,904)
Other current assets (13) (63)
Accounts payable & accrued liabilities (135) (447)
--------- ---------
Net cash provided by (used for)
operating activities 586 695
Cash flow from investing activities:
Acquisition of property,
plant & equipment (505) (47)
--------- ---------
Net cash provided by (used for)
investing activities (505) (47)
Cash flow from financing activities:
Net repayment under line of credit (1,500) (5,100)
Increase in debt to affiliates 1,155 4,152
Decrease in long-term debt (28) (71)
--------- ---------
Net cash provided by (used for)
financing activities (373) (1,019)
Net increase (decrease) in cash
and cash equivalents (292) (371)
Cash and cash equivalents at the
beginning of period 194 399
Cash and cash equivalents at the
end of period $ (98) $ 28
========= =========
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of dollars, except share data)
<CAPTION>
<S> <C> <C> <C> <C>
Preferred Stock Common Stock
Class A Non-Voting
Shares Par Value Shares Par Value
Balance 6/30/96 900,000 $9 115,418,788 $1,154
Net Loss 0 0 0 0
------- -- ----------- -----
Balance 9/30/96 900,000 $9 115,418,788 $1,154
======= == =========== ======
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Retained Total
Paid-In Earnings Treasury Stock Shareholders'
Capital (Deficit) Shares Par Value Equity
Balance 6/30/96 $20,891 ($5,854) (39,160) ($95) $16,105
Net Loss 0 (2,030) 0 0 (2,030)
------- ------- ------- ---- -------
Balance 9/30/96 $20,891 ($7,884) (39,160) ($95) ($14,075)
======= ====== ====== === =======
See notes to Condensed Consolidated Financial Statements
</TABLE>
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
1) Financial Statements
The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. To the extent
that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or consis-
tent with the audited consolidated financial statements incorporated in
the Company's Form 10-K for the year ended June 30, 1996, such
information and footnotes have not been duplicated herein. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of financial
statements have been reflected herein.
2) Inventories
(in thousand of dollars)
September 30, June 30,
1996 1996
Finished seed $ 3,329 $ 3,599
Unfinished seed 4,660 1,630
Supplies and other 1,164 747
-------- --------
Total Inventory $ 9,153 $ 5,977
"Finished seed" consists of bagged product, ready for sale, net of
reserves for obsolescence. "Unfinished seed" consists of bulk product
not yet bagged and the costs associated with the seed crop planted in the
spring of 1996, net of reserves for obsolescence. "Supplies and other"
consists of foundation seed, unused bags, pallets, and other supply
items. Seed product inventory is valued at the lower of average cost by
crop year or market. Supply inventory is valued at the lower of cost
using the first-in, first-out method or market.
Item 2. Management's Discussion and Analysis
Business
The primary business of the Company is the production, processing and
sale of agricultural seeds to a network of farmer-dealers throughout the
Midwestern United States. Hybrid corn seed, varietal soybean seed and
alfalfa seed comprise the Company's major product lines.
The Company contracts with independent farmer-growers for the production
of seed to be grown under Company supervision to meet specific quality
and marketability specifications. The Company then processes and treats
the delivered seed with appropriate fungicides and insecticides and bags
the product for sale. Because weather conditions can cause material
fluctuations in yields and seed quality, the Company's cost of goods sold
is highly dependent upon weather conditions in its growing areas.
Liquidity and Capital Resources
Cash and cash equivalents declined $292,000 during the first quarter of
Fiscal 1997 from $194,000 at June 30, 1996 to a negative $98,000 at
September 30, 1996. Cash flow from operations generated $586,000, with
the collection of $5,634,000 in accounts receivable (primarily from last
year's sales) and $306,000 in depreciation and amortization offsetting
the $2,030,000 net loss for the three months ended September 30, 1996,
the $134,000 decline in accounts payable and accrued liabilities and the
$3,177,000 increase in inventory from current production.
Capital expenditures, primarily for a new grading and bagging facility at
the Company's Elmwood facility used $505,000 in cash. In addition, net
debt repayment consumed cash of $373,000.
Since October 1993 the Company has had a revolving credit arrangement,
renewable annually (the "Line of Credit"), whereby the Company may
borrow up to $12,000,000, subject to the limitations of a borrowing base
formula and other limitations contained in the Credit Enhancement and
Reorganization Agreement, dated as of October 26, 1993, by and among the
Company, Group Limagrain Holding, S.A. ("Limagrain") and Limagrain
Genetics Corp., a majority-owned subsidiary of Limagrain ("LG Corp."),
which was amended as of December 10, 1993. Borrowings under the Line of
Credit are secured by the inventory and accounts receivable of the
Company and its subsidiary, and by the guarantees of Limagrain, LG Corp
and the Company's subsidiary. Borrowings under the Line of Credit at
June 30, 1996 and September 30, 1996 totaled $8,500,000 and $7,000,000
respectively. The maximum amounts available under the Line of Credit,
pursuant to the borrowing base formula, at June 30, 1996 and September
30, 1996 were $8,725,000 and $7,785,000, respectively. In addition to
the Letter of Credit, the Company also borrows funds from affiliates of
Limagrain from time to time in order to fund the interim working capital
needs of the Company, including the reduction of the Letter of Credit.
During Fiscal 1996, the Company received a long-term cash advance from an
affiliate of Limagrain in order to help fund operations of the Company,
including the reduction of the Line of Credit. On August 30, 1996, this
long-term cash advance was renegotiated and increased to a $2,000,000
note with LG Corp. bearing interest at 7% and due July 1, 1998.
Management believes this loan bears interest at or below a rate which the
Company would be able to obtain from an unaffiliated lender for an
unsecured loan.
Effective November 30, 1995, the Line of Credit was extended until
December 1, 1996. Management expects that the Line of Credit will be
renewed under substantially the same conditions for one year at that time
and that the Company will have access to sufficient cash resources to
meet the reasonably foreseeable obligations of its continuing business
operations. Management believes there is a strong commitment by
Limagrain to enable the Company to obtain sufficient working capital to
support the business. Management's belief that Limagrain's support will
continue is based on Limagrain's commitment under the Line of Credit
guarantee (which it has not had the obligation to continue since November
1994, its past contributions of $9,000,000 for Preferred Stock and its
past advances of $5,261,000 in long-term borrowings. Limagrain has no
legal obligation to provide additional funding for the Company.
There is no assurance that Limagrain, LG Corp., or any other affiliate of
the Company, will continue to (i) guarantee the Line of Credit, (ii) loan
funds to the Company, or (iii) convert such loans to Preferred Stock. In
addition, there is no assurance that, without such guarantees, loans and
conversions, the Company would not be out of compliant with (a) the Line
of Credit or (b) the NASDAQ Stock Market quantitative maintenance
criteria, during seasonal fluctuations in the Company's borrowing base
and net tangible assets, respectively, or otherwise.
Results of Operations
Due to the seasonal nature of the seed business, 70-80% of the Company's
revenues normally occur during the third and fourth fiscal quarters of
each year. During the first six months of the fiscal year, the Company's
production facilities are harvesting, conditioning and bagging seed
products and substantial marketing efforts are underway in preparation
for the next sales season which begins in December.
Net sales for the first quarter of Fiscal 1997 increased $199,000 over
Fiscal 1996, increasing from $556,000 in Fiscal 1999 to $755,000 for
Fiscal 1997. This improvement is a result of increased fall wheat sales
compared to the first quarter of Fiscal 1996. Cost of goods increased
$268,000 compared to last year, increasing from $351,000 in Fiscal 1996
to $619,000 in Fiscal 1997. Gross margin is lower by $69,000 compared to
the first quarter of last year. This deterioration resulted primarily
from higher cost of wheat in Fiscal 1997.
Sales and marketing expenses have declined $75,000 from $1,014,000 in
Fiscal 1996 to $939,000 for the first quarter of Fiscal 1997. Savings in
various expenses and timing differences resulting from the late harvest
in 1996 account for most of the lower costs.
Warehouse and Distribution costs were higher by $68,000, increasing from
$195,000 in Fiscal 1996 to $263,000 in Fiscal 1997. Most of this
increase resulted because of later plantings and product movements from
the prior sales season.
General and Administrative costs increased $68,000 from $657,000 for the
first quarter of Fiscal 1996 to $725,000 for the first quarter of Fiscal
1997. In Fiscal 1996, there were favorable impacts of $45,000 from the
expiration of stock options.
Interest cost declined $28,000 compared to the first quarter of Fiscal
1996 decreasing from $250,000 to $222,000 in Fiscal 1997. A lower
average amount outstanding on the line of credit due to the Preferred
equity contributions by LG Corp. accounted for most of this decrease.
Other income decreased $101,000 over the first quarter of last year from
$210,000 to $109,000. Gains from the sale of the AgriBioTech stock in
Fiscal 1996 accounted for most of the year-to-year change.
PART II
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
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.
BIOTECHNICA INTERNATIONAL, INC.
Date: November 12, 1996 /s/ Bruno Carette
Bruno Carette, President and
Chief Operating Officer
Date: November 12, 1996 /s/ Edward Germain
Edward Germain
Chief Financial Officer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> (98)
<SECURITIES> 0
<RECEIVABLES> 2509
<ALLOWANCES> 180
<INVENTORY> 9153
<CURRENT-ASSETS> 11661
<PP&E> 14313
<DEPRECIATION> 4267
<TOTAL-ASSETS> 30517
<CURRENT-LIABILITIES> 11011
<BONDS> 5261
0
9
<COMMON> 1154
<OTHER-SE> 13007
<TOTAL-LIABILITY-AND-EQUITY> 30517
<SALES> 755
<TOTAL-REVENUES> 755
<CGS> 619
<TOTAL-COSTS> 619
<OTHER-EXPENSES> 1944
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 222
<INCOME-PRETAX> (2030)
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<NET-INCOME> (2030)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
