SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
AMENDMENT NO. 3
TO
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934 and
Rule 13e-3 thereunder)
______________________________
BIOTECHNICA INTERNATIONAL, INC.
(Name of Issuer)
LIMAGRAIN GENETICS CORP.
BTI MERGER CORP.
(Name of Persons Filing Statement)
______________________________
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
______________________________
090915109
(CUSIP Number of Class of Securities)
______________________________
Bruno Carette
4001 North War Memorial Drive
Peoria, Illinois 61614
(309) 681-0300
with copies to:
Kevin R. Sweeney, Esq.
Shook, Hardy & Bacon L.L.P.
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of Persons Filing Statement)
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR
UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c)
under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act
of 1933.
c. [ ] A tender offer.
d. [x] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Calculation of Filing Fee
- ------------------------------------------------------------------------
Transaction valuation* Amount of filing fee**
$238,920 $48
- ------------------------------------------------------------------------
* Calculated, for purposes of determining the filing fee only, and in
accordance with Rule 0-11(b)(2) under the Securities Exchange Act
of 1934, as amended, by multiplying 4,778,399 (the number of shares
of Common Stock held by stockholders other than Limagrain Genetics
Corp., BTI Merger Corp. or the issuer) by $.05, the price to be paid
per share.
** Calculated as 1/50 of 1% of the transaction value (minimum filing fee).
[ ] Check box if any part of the fee is offset as provided by Rule 0-11
(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
INTRODUCTION
This Introduction is qualified in its entirety by the more detailed
information appearing elsewhere in this Transaction Statement. Stockholders
should carefully consider the information set forth under the caption "Special
Factors."
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the
"Transaction Statement") is being filed jointly by Limagrain Genetics Corp., a
Delaware corporation ("LG Corp.") and BTI Merger Corp., a Delaware corporation
and wholly-owned subsidiary of LG Corp. ("Mergerco"). LG Corp. is a majority-
owned subsidiary of Groupe Limagrain Holding S.A., a societe anonyme organized
in the Republic of France ("Limagrain"). All of the shares of Limagrain are
held by Societe Cooperative Agricole Limagrain, a cooperative organized in the
Republic of France (the "Cooperative"). Limagrain and its affiliates are
referred to herein collectively as the "Limagrain Group". LG Corp. is a
holding company for the operations of the Limagrain Group in North America.
Mergerco is a newly incorporated corporation organized to effect the Merger
(as defined herein).
Mergerco owns approximately 95% of the common stock of
BioTechnica International, Inc., a Delaware corporation (the "Company"). The
Company will be merged with and into Mergerco pursuant to Section 253 of the
General Corporation Law of the State of Delaware (the "DGCL") via a "short form
merger" (the "Merger"). Under the DGCL, because Mergerco owns more than 90%
of the Company, no action will be required of the stockholders of the Company,
other than Mergerco (through its board of directors), for the Merger to become
effective. The effective date of the Merger will be [date] (the "Effective
Date"). Prior to the consummation of the merger, LG Corp. and Mergerco
reserve the right to cancel the merger for any reason, including without
limitation if (i) any stockholder of the Company seeks to enjoin the merger
or (ii) in their judgment, the anticipated cost of the merger would be
materially increased by the number of stockholders of the Company seeking
their appraisal remedy.
Mergerco will be the surviving corporation in the Merger and, as a
result of the Merger, the separate corporate existence of the Company will
cease to exist. Upon consummation of the Merger, each of the outstanding
shares of common stock of the Company (other than shares held by Mergerco,
the Company and holders who properly exercise dissenters' rights under the
DGCL) will be automatically converted into the right to receive $.05 in cash,
without interest, upon surrender of the certificate for such share to Harris
Trust Company of New York (the "Paying Agent"). Both the redemption
procedure and the statutory appraisal rights are described in fuller detail
in the Notice of Merger and Appraisal Rights and the accompanying Letter of
Transmittal, which documents accompany this Transaction Statement and should
be studied with care.
SPECIAL FACTORS
THE INFORMATION CONTAINED IN THE FOLLOWING ITEMS
CONSTITUTE SPECIAL FACTORS, AND SPECIAL CONSIDERATION SHOULD
BE GIVEN THERETO.
Purpose(s), Alternatives, Reasons and Effects
Reasons
Since LG Corp. acquired a controlling interest in the Company in
March 1994, the Company has incurred net losses from operations as follows:
Fiscal year 1995 Loss of $2,394,000
Fiscal year 1996 Loss of $2,685,000
Fiscal year 1997 Loss of $1,449,000
Fiscal year 1998 Loss of $2,994,000
During these years, LG Corp. attempted to stabilize the Company and return it
to profitability through infusions of cash ($10,361,000 loaned to the Company,
$9,000,000 contributed in the form of preferred stock), management expertise
and new products, as well as guaranteeing the Company's line of credit.
Despite such investments, the Company has continued to suffer net losses. LG
Corp. has determined that it can no longer support the Company and subsidize
its losses and guarantee the line of credit, unless LG Corp. owns 100% of the
securities of the Company. Without the support and guarantee of LG Corp., it
is unlikely that the Company could continue as a going concern
LG Corp. has determined that the most effective method of returning
the Company to profitability is to increase its volume of sales and to decrease
operating expenses and production costs. The various methods considered to
achieve this objective have been (i) internal growth, (ii) combining the
operations of the Company with the other operations of LG Corp. in North
America, (iii) acquiring other seed companies and (iv) a strategic alliance
with the Company and/or other Limagrain affiliates and a third party.
Attempts at internal growth have been insufficient, as evidenced by the
Company's history of losses. The transaction costs involved in combining
LG Corp.'s other privately held operations with the publicly held operations
of the Company are prohibitive, as compared to the relatively immaterial
incremental benefit to LG Corp. in such a combination. Because the
Company cannot access the equity and debt markets to raise capital (due to the
history of losses, the low share price and the small public float), the Company
is not in a financial position to acquire other seed companies. Since March
1994, no third party has approached the Company expressing an interest in a
strategic alliance with the Company (although, as described below under
Item 5, Limagrain has been approached regarding a strategic alliance with
its North American field seed operations, which include the Company).
LG Corp. has also determined that terminating the Company's
publicly held status, and thereby terminating the Company's obligation to
file reports with the Securities and Exchange Commission, would result in an
annual cost savings of approximately $260,000 in reduced accounting ($34,000),
legal ($45,000), management ($27,000), board of directors ($47,000), insurance
($48,000), transfer agent and annual meeting ($30,000), franchise tax ($15,000)
and other ($14,000) costs (all of the foregoing dollar amounts are estimates).
For the above stated reasons, LG Corp. has decided to undertake the
Merger at this time.
Purposes
The purposes of the Merger are (i) to enhance operating flexibility,
simplify the control structure and improve management decision making by
consolidating ownership and terminating all minority stockholder interest in
the Company; (ii) to provide the minority stockholders of the Company with an
opportunity to receive, in exchange for their Common Stock (as defined below
under Item 1), a cash amount; and (iii) to reduce the number of stockholders
of record of the Company to less than 300 so that the Company may terminate its
registration under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thereby relieve itself of the burdens and costs
associated with the regulatory and reporting requirements of the Exchange Act
and the rules and regulations of the Securities and Exchange Commission
issued thereunder.
Alternatives
LG Corp. considered means other than a short-form merger for
terminating the minority stockholder interest from the Company, including a
tender offer, reverse stock split and "long-form" merger. The tender offer
was rejected because it did not meet LG Corp.'s objective of terminating the
entire minority stockholder interest from the Company. The reverse stock split
and long-form merger were rejected because they would entail a vote of the
stockholders of the Company and the related expense of preparation of a proxy
statement and/or information statement. Other than as stated herein and under
the caption "Reasons" above, no alternative means were considered to accomplish
the purposes stated above.
Reasons for the Structure of the Merger
LG Corp. and Mergerco are structuring the transaction as a "short-form"
merger under Section 253 of the DGCL to minimize the costs associated with
effecting the Merger.
Certain Effects
General.
Upon consummation of the Merger, (i) the minority stockholders of the
Company (other than persons who have properly exercised dissenters' rights
under the DGCL) will have the right to receive $.05 per share of Common Stock
in cash, without interest, upon surrender of the certificate for such share of
Common Stock, (ii) the Company will be merged into Mergerco, which will be a
wholly owned subsidiary of LG Corp. and (iii) the corporate existence of the
Company will cease. In addition, LG Corp. intends to de-register the Common
Stock under the Exchange Act, thereby relieving the Company of its obligation
to file reports with the Securities and Exchange Commission.
Certain Federal Income Tax Consequences
The following discussion summarizes the material United States
federal income tax consequences of the Merger, based on the Internal Revenue
Code of 1986, as amended (the "Code"), currently applicable Treasury
regulations, and judicial and administrative decisions and rulings. Future
legislative, judicial or administrative changes or interpretations could alter
or modify the statements and conclusions set forth herein, and any such
changes or interpretations could be retroactive and could affect the tax
consequences to holders of Common Stock.
The discussion below does not purport to deal with all aspects of
United States federal income taxation that may affect particular stockholders
in light of their individual circumstances, and does not deal with stockholders
subject to special treatment under the federal income tax law (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign persons, stockholders who hold their shares of Common
Stock as part of a hedge, appreciated financial position, straddle or
conversion transaction, stockholders who do not hold their stock as capital
assets and stockholders who have acquired their shares of Common Stock upon
the exercise of employee options or otherwise as compensation).
A stockholder whose shares of Common Stock are converted,
pursuant to the Merger, into a right to receive cash will recognize gain or
loss equal to the difference between (i) the amount of cash that such
stockholder receives in the Merger and (ii) such stockholder's adjusted tax
basis in such shares, assuming that such stockholder redeems all of the
shares that such stockholder actually owns or constructively owns under
Section 318 of the Code. Such gain or loss will be capital gain or loss, and
generally will be long-term capital gain or loss if at the effective date of
the Merger the stockholder's holding period for the shares of Common Stock is
more than one year. Holders of shares of Common Stock should be aware that
the Paying Agent will be required in certain cases to withhold and remit to
the United States Treasury 31% of amounts payable in the Merger to any
stockholder that (i) has provided either an incorrect taxpayer identification
number or no number at all, (ii) is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of interest or
dividend income properly, or (iii) has failed to certify to the Paying Agent
that such stockholder is not subject to backup withholding or that such
stockholder is an "Exempt Recipient." Backup withholding is not an
additional tax, but rather may be credited against the taxpayer's tax
liability for the year.
Neither the Cooperative, Limagrain, LG Corp., Mergerco nor the
Company expects to recognize any gain, loss or income by reason of the Merger.
EACH HOLDER OF SHARES OF COMMON STOCK IS STRONGLY
URGED TO CONSULT WITH SUCH HOLDER'S TAX ADVISER TO
DETERMINE THE PARTICULAR UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER IN LIGHT
OF SUCH HOLDER'S SPECIFIC CIRCUMSTANCES, AS WELL AS THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
Fairness of the Transaction
Both LG Corp. and Mergerco believe that the Merger is fair to the
minority stockholders of the Company. No director of LG Corp. or Mergerco
dissented to or abstained from voting on the Merger. To assist LG Corp. and
Mergerco in their fairness determinations, the board of directors of LG Corp.
engaged Stern Brothers Valuation Advisers, Inc. ("Stern Brothers") to advise
LG Corp. and Mergerco with respect to a fair price to be paid to the minority
stockholders of the Company in the Merger. Stern Brothers provided an oral
presentation to LG Corp. and Mergerco on August 15, 1998 (the "Stern Brothers
Presentation"), at which time they summarized various valuation approaches and
indicated a preliminary fair value range of between $.03 and $.05 per share.
LG Corp. and Mergerco relied upon the following material factors in
making their determinations that the merger consideration of $.05 per share is
fair to the minority stockholders of the Company:
1. The Stern Brothers Presentation, as described above, which
indicated a preliminary fair value range for the Company's Common Stock
of between $.03 and $.05 per share;
2. The Opinion of Stern Brothers, as discussed below under the
caption "Reports, Opinions, Appraisals and Certain Negotiations," pursuant
to which Stern Brothers opined that the merger consideration of $.05 per
share is fair, from a financial point of view, to the minority stockholders
of the Company, as of September 21, 1998;
3. LG Corp.'s and Mergerco's consideration of the market
comparison valuation approach, as discussed below under the caption
"Reports, Opinions, Appraisals and Certain Negotiations", which indicated a
value range for the Company's Common Stock of $.03 to $.05 per share;
4. LG Corp.'s and Mergerco's consideration of the discounted
future returns valuation approach, as discussed below under the caption
"Reports, Opinions, Appraisals and Certain Negotiations," which indicated a
value for the Company's Common Stock of $.05 per share;
5. LG Corp.'s and Mergerco's consideration of the underlying
assets valuation approach, as discussed below under the caption "Reports,
Opinions, Appraisals and Certain Negotiations," which indicated a value for
the Company's Common Stock of negative $.09;
6. The fact that the net book value of the Company as of June 30,
1998 was $.0004 (as calculated as described in Item 14 hereof), which is
substantially below the merger consideration of $.05 per share; and
7. The fact that, since June 6, 1997, the Company has
repurchased significant blocks of stock from sophisticated investors for prices
substantially below the merger consideration of $.05 per share.
Although the directors of LG Corp. and Mergerco were unable to weigh each of
the above factors separately, they did note that the merger consideration of
$.05 per share is the upper limit under all factors considered. The directors
of LG Corp. and Mergerco also considered the current and historical trading
prices of the Common Stock, but accorded no weight to these factors because of
(i) the weight accorded to the above approaches, (ii) the consistent downward
trend of these trading prices and (iii) the thin trading volume of the Common
Stock.
The Merger will be effected pursuant to Section 253 of the DGCL, the
Delaware "short-form" merger statute, since Mergerco currently owns more than
90% of the Common Stock. Therefore, the approval of the stockholders or the
board of directors of the Company is not required, nor was any such approval
obtained. Because no approval of the board of directors of the Company is
required, the outside directors of the Company (i.e., those who are neither
employees of the Company nor affiliated with LG Corp.) did not retain an
unaffiliated representative to act solely on behalf of unaffiliated
stockholders for the purposes of negotiating the terms of the Merger or
preparing a report concerning the fairness of the Merger. Nevertheless,
even in the absence of stockholder and/or board of director approval, LG
Corp. and Mergerco believe that the Merger and the merger consideration are
fair to the minority stockholders of the Company, based upon the above-
described factors.
No firm offer has been made by any unaffiliated person during the
preceding eighteen months for (A) the merger or consolidation of the Company
into or with such person or of such person into or with the Company, (B) the
sale or other transfer of all or any substantial part of the assets of the
Company or (C) securities of the Company which would enable the holder thereof
to exercise control of the issuer.
Reports, Opinions, Appraisals and Certain Negotiations
The board of directors of LG Corp. (i) engaged Stern Brothers to
advise LG Corp. and Mergerco with respect to a fair price to be paid to the
minority stockholders of the Company in the Merger and (ii) requested the
opinion of Stern Brothers as to the fairness, from a financial point of view,
to the minority stockholders of the Company of the merger consideration of
$.05 per share to be received in connection with the Merger. Stern Brothers
delivered a written opinion (the "Opinion") to the boards of directors of LG
Corp. and Mergerco dated as of September 21, 1998, a copy of which is
attached hereto as Exhibit (B), pursuant to which Stern Brothers opined that
the merger consideration of $.05 per share is fair, from a financial point of
view, to the minority stockholders of the Company, as of September 21, 1998.
At the August 15, 1998 Stern Brothers Presentation, Stern Brothers reviewed
with LG Corp. and Mergerco a preliminary draft of the Opinion (which was
substantially identical to the Opinion) and summarized various valuation
approaches that indicated a preliminary fair value range of between $.03 and
$.05 per share. Accompanying the Opinion and the preliminary draft were
various spreadsheets prepared by Stern Brothers that summarized certain of
their financial analyses, each of which is attached hereto as Exhibits (B)(1)
through (B)(5) and described below.
Stern Brothers is a national business valuation and financial advisory
firm engaged in, among other things, corporate finance, business valuation,
financial advisory and litigation support services for a wide variety of public
and private businesses throughout the United States, representing virtually
every industry. Since 1985, it has performed over 1,200 valuation assignments.
Stern Brothers was selected for this assignment, after LG Corp. considered
other valuation experts, based upon its expertise, its past experience and an
interview with representatives of LG Corp.
In the course of Stern Brothers' analysis for purposes of rendering the
Opinion, Stern Brothers (i) visited the Company's headquarters; (ii)
interviewed key management employees concerning the background, operations,
financial performance and prospects of the Company; (iii) reviewed and
considered the following information regarding the Company: (a) audited
financial statements (Forms 10-K) of the Company for the periods ended December
31, 1986 through 1991, July 31, 1992 through 1993, June 30, 1994 through 1997
and a draft of the June 30, 1998 audited financial statements (the previous
five fiscal years of which were summarized by Stern Brothers in the form of
Exhibit (B)(1) attached hereto); (b) Form 10-Q quarterly financial statements
of the Company as of September 30, 1997, December 31, 1997 and March 31,
1998; (c) proxy information as of March 7, 1994, November 15, 1995, November
12, 1996 and November 12, 1997; (d) recent press releases; (e) income tax
returns filed by the Company for 1996 and 1997; (f) the Company's financial
forecasts for the years ended June 30, 1999 through June 30, 2008 (which are
summarized below under the caption "Discounted Future Returns Approach") and
its Short Term Financial Plan; (g) minutes from the Company's board of
directors meetings; (h) an asset list and valuation worksheet; (i) a list of
stockholders and number of shares owned by each stockholder; (j) stock
purchases and trades over the previous five years; (k) the articles of
incorporation and bylaws of the Company; and (l) such other information Stern
Brothers deemed relevant; (iv) reviewed and considered the following information
provided to Stern Brothers by others: (a) annual reports, interim reports,
Forms 10-K, Forms 10-Q and other published information on publicly traded
companies as nearly comparable to the Company as Stern Brothers could find;
(b) publications by Standard & Poor's and Bloomberg Financial Services, The
Value Line Investment Survey, the Federal Reserve Bulletin, the Wall Street
Journal, Directory of Companies Required to File Annual Reports with the
Securities and Exchange Commission, Stock Bonds, Bills and Inflation 1997
Yearbook by Ibbotson Associates and Mergerstat Review 1997 by Houlihan Lokey
Howard & Zukin; and (c) interviews with the Company's outside accountant,
banker and attorney; (v) conducted an analysis of the value of the
Common Stock using the market comparison approach and the discounted future
returns approach; and (vi) conducted such other studies, analyses, inquiries
and investigations as Stern Brothers deemed appropriate. The foregoing is
only a summary of the information reviewed and factors considered by Stern
Brothers which have influenced their Opinion and does not recite in detail all
of such information and factors that they have taken into consideration in
connection with the Opinion.
In rendering the Opinion, the Company and its representatives
warranted to Stern Brothers that the information they provided was complete and
accurate to the best of their knowledge and that the financial statement
information reflects the Company's results of operations and financial
condition in accordance with generally accepted accounting principles,
unless otherwise noted. Stern Brothers has assumed no responsibility for
independent verification of information and financial forecasts supplied by
the Company and its representatives (and Stern Brothers expresses no opinion
on that information). Stern Brothers has not obtained any independent
appraisal of the assets of the Company, nor have they attempted to verify
the information furnished to Stern Brothers by the Company. Stern Brothers
used public information and industry and statistical data from sources which
they deem to be reliable; however, they make no representation as
to the accuracy or completeness of such information and have accepted such
information without further verification. Stern Brothers was not authorized to
solicit, and did not solicit, interest from any party with respect to a merger
or other business combination transaction involving the Company or any of
its assets, nor did they have any discussion or negotiation with any
parties, other than the Company, in connection with the purchase of the
Company's shares. The Opinion is valid only for the purposes and standard
of value specified therein. The Opinion is based on a going concern value.
The Opinion contemplates facts and conditions existing as of the opinion
date. Events, conditions and circumstances occurring after that date
have not been considered, and Stern Brothers has no obligation to update their
opinion for such events and conditions.
Stern Brothers performed certain financial analyses which it
considered relevant in determining the fair value of the Company's Common
Stock, each of which are described in the Opinion.
THE FULL TEXT OF THE OPINION AS OF SEPTEMBER 21, 1998,
WHICH SETS FORTH THE DESCRIPTION OF THE ASSIGNMENT, THE SCOPE
OF THE WORK, THE ASSUMPTIONS AND LIMITING CONDITIONS, THE
CERTIFICATIONS AND THE CONCLUSION, IS ATTACHED HERETO AS EXHIBIT
(B) AND IS INCORPORATED HEREIN BY REFERENCE. THE MINORITY
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE OPINION,
TOGETHER WITH THE ASSUMPTIONS AND LIMITING CONDITIONS SET
FORTH THEREIN, IN ITS ENTIRETY. THE OPINION, AS EXPRESSED HEREIN
AND THEREIN, IN ANY EVENT, IS LIMITED TO THE FAIRNESS OF THE
MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO THE
MINORITY STOCKHOLDERS OF THE COMPANY AND DOES NOT CONSTITUTE
A RECOMMENDATION TO ANY SUCH MINORITY STOCKHOLDER AS TO HOW
SUCH STOCKHOLDER SHOULD VIEW THE MERGER. THE SUMMARY OF THE
OPINION SET FORTH IN THIS TRANSACTION STATEMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION
ATTACHED HERETO AS EXHIBIT (B).
The following is a summary of certain of the financial analyses used
by Stern Brothers in connection with providing its oral Stern Brothers
Presentation. Stern Brothers used substantially identical financial analyses
in connection with providing the written Opinion attached hereto as
Exhibit (B).
Market Comparison Approach
Stern Brothers analyzed and compared certain financial information
relating to the Company with publicly-available financial and operating
information of the following ten publicly traded companies engaged in the
agricultural industry (collectively, the "Selected Companies"): AG Services
of America, Inc.; AgriBiotech, Inc.; The Andersons, Inc.; Consep, Inc.;
Dekalb Genetics Corporation; Delta and Pine Land Company; Ecogen, Inc.;
Mycogen Corporation; Pioneer Hi-Bred International, Inc.; and The Scotts
Company. Certain selected balance sheet items, income statement items,
liquidity, coverage and leverage ratios, profitability ratios,
earnings and pricing ratios and growth rate calculations of the Company and
the Selected Companies, as prepared by Stern Brothers, are attached hereto as
Exhibit (B)(2). None of the Selected Companies used in Stern Brothers'
analysis is identical to the Company. Stern Brothers' analysis involves
complex considerations and judgments concerning differences in the potential
financial and operating characteristics of the Selected Companies and other
factors regarding the trading values of the Selected Companies.
In conducting its analyses, Stern Brothers reviewed and considered
a variety of multiples and ratios, summaries of which are attached hereto as
Exhibit (B)(3). However, because of the Company's history of losses, Stern
Brothers' analyses indicated that the only relevant measures of value are (i)
the range and median of the Selected Companies stock price per share as a
multiple of the most recent four fiscal quarters (i.e., last twelve months or
"LTM") sales per share (the "LTM Sales Per Share Multiple"), (ii) the range
and median of the Selected Companies invested capital per share as a multiple
of LTM sales per share (the "Invested Capital Per Share Multiple") and (iii)
the similarity of the Selected Companies to the Company.
Stern Brothers analyses indicated that the Selected Companies' LTM
Sales Per Share Multiple ranged from .08x to 8.96x, with an average multiple
(excluding the high and low) of 2.02x and a median of 1.27x, compared with an
LTM Sales Per Share Multiple for the Company ranging from a low of .15x to a
high of.24x. The Company's LTM sales per share for the year ended June 30,
1998 was $.21. Accordingly, the results of this analysis indicated a value
range for the Company's Common Stock of $.03 ($.21 multiplied by .15) to $.05
($.21 multiplied by .24) per share.
Stern Brothers analyses indicated that the Selected Companies'
Invested Capital Per Share Multiple ranged from .22x to 9.38x, with an average
multiple (excluding the high and low) of 2.61x and a median of 2.18x, compared
with an Invested Capital Per Share Multiple for the Company ranging from a
low of 1.13x to a high of 1.63x. The Company's invested capital per share
ranged from a low of $.23 ($.21 LTM sales per share multiplied by 1.13) to a
high of $.34 ($.21 LTM sales per share multiplied by 1.63). The Company's
weighted average number of shares outstanding for 1998 was 103,650,098.
Therefore, the Company's invested capital ranged from a low of $23,839,523 to
a high of $35,241,033. To determine stock price per share from invested
capital, Stern Brothers subtracted from invested capital (i) the debt
($18,061,000), (ii) preferred stock ($9,000,000) and (iii) cumulative
preferred stock dividends ($2,425,000) of the Company as of June 30, 1998,
and divided that result (low of $0.00, high of $5,755,033) by the number of
shares outstanding as of June 30, 1998 (103,055,577). Accordingly, the
results of this analysis indicated a value range for the Company's Common
Stock of $.00 to $.05 per share.
Stern Brothers determined that the cumulative results of the market
comparison approach indicated a value range for the Company's Common Stock
of $.03 to $.05 per share.
Discounted Future Returns Approach
Stern Brothers performed a discounted future returns analysis of the
projected future returns of the Company to calculate the present value per
share of the Company's Common Stock using (i) the financial projections
prepared by management of the Company for the fiscal years 1999 through 2003,
(ii) a discount rate of 14% (calculated by assuming a United States Treasury
risk free rate of 5.75%, a large cap stock risk premium of 7.80% and a risk
premium for the Company of .45%) and (iii) a terminal value of the Company as
of August 12, 2003 of $8,979,300 (calculated by a market comparison analysis
of .3x multiplied by projected fiscal year 2003 net sales). The results of
this discounted future returns approach indicated a value for the Company's
Common Stock of $.05 per share, as summarized by Stern Brothers on Exhibit
(B)(4) attached hereto.
Management of the Company prepared financial projections for the
years ending June 30, 1999 through June 30, 2008 (the "Financial Projections")
and furnished the Financial Projections to Stern Brothers. The Financial
Projections were identical to those used by the Company to justify its asset
valuation for purposes of satisfying the requirements of FAS 121. FAS 121,
an accounting pronouncement of the Financial Accounting Standards Board,
requires that the valuation of long lived assets be not more than the
undiscounted cash flows that are anticipated to be generated by such long
lived assets. The Financial Projections were prepared based upon the
following assumptions: (i) net sales increasing at a compounded annual
growth rate of 7% per year, using Fiscal 1998 net sales as
a base; (ii) gross margin equaling 37% of net sales (37% is the prior four year
average plus an improvement of 2%); (iii) selling and marketing expenses
increasing at a compounded annual growth rate of 3.5% per year, using Fiscal
1998 as a base; (iv) warehouse and distribution expenses increasing at a
compounded annual growth rate of 7% per year, using Fiscal 1998 as a base;
(v) administrative expenses remaining constant; (vi) other income and expense
items remaining constant; (vii) capital expenditures of $400,000 per year; and
(viii) no inflation (i.e., all years in constant dollars). A summary of the
Financial Projections is a follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Base Year
1998 1999 2000 2001 2002 2003
Net Sales $21,341,000 $22,835,000 $24,433,000 $26,143,000 $27,973,000 $29,931,000
Gross Profit 7,034,000 8,449,000 9,040,000 9,673,000 10,350,000 11,074,000
Operating income
(loss) (2,180,000) (1,023,000) (702,000) (352,000) 28,000 441,000
Net loss (2,996,000) (1,623,000) (1,302,000) (952,000) (572,000) (159,000)
EBITDA (581,000) 676,000 997,000 1,347,000 1,727,000 2,140,000
Common equity
excluding preferred
dividends 2,469,000 846,000 (456,000) (1,408,000) (1,980,000) (2,139,000)
Net book value 44,000 (2,254,000) (4,231,000) (5,858,000) (7,105,000) (7,939,000)
</TABLE>
The forecasted income statement, other forecasted data and estimated net book
value of the Company for the fiscal years ending June 30, 1999 through 2003,
as summarized by Stern Brothers, are set forth on Exhibit (B)(4) attached
hereto.
Underlying Assets Approach
Stern Brothers performed an analysis of the fair market value of the
underlying assets of the Company to calculate the implied value per share of the
common stockholders equity. Stern Brothers examined the balance sheet of the
Company as of June 30, 1998 and made the following adjustments to fair market
value: (i) decreased net property, plant and equipment by $1,719,917 to
reflect management of the Company's estimate of the orderly sale value of the
property, plant and equipment; (ii) increased other assets by $478,535 to
reflect the Company's investment in Illinois Foundation Seeds, Inc., which was
valued at book value; (iii) decreased goodwill, which is an unidentifiable
intangible asset with no fair market value, by $7,793,000; and (iv) increased
other liabilities by $2,425,000 to reflect the cumulative undeclared preferred
dividends. The net effect of these adjustments was to decrease total common
stockholders' equity by $11,459,382 from $2,469,000 to a negative $8,990,382.
The results of this underlying assets approach indicated a value for the
Company's Common Stock of negative $.09 per share, as summarized by Stern
Brothers on Exhibit (B)(5) attached hereto.
General
The summary of the Opinion set forth above does not purport to be a
complete description of the analyses performed, or the matters considered, by
Stern Brothers in rendering the Opinion. Stern Brothers believes that its
analyses and the summary set forth above must be considered as a whole and that
selecting portions of such analyses, without considering all of the analyses, or
of the above summary, would create an incomplete view of the processes
underlying the analyses set forth in the Opinion. The fact that any specific
analyses has been referred to in the summary above is not meant to indicate
that such analysis was given greater weight by Stern Brothers than any of the
other analyses.
The preparation of the Opinion is not necessarily susceptible to partial
analyses or summary. In rendering the Opinion, Stern Brothers applied its
judgment to a variety of complex analyses and assumptions. Stern Brothers may
have given various analyses more or less weight than other analyses, and may
have deemed various assumptions more or less probable than other assumptions.
The assumptions made, and the judgments applied, by Stern Brothers in
rendering the Opinion are not readily susceptible to description beyond that set
forth in the written text of the Opinion itself.
In performing its analyses, Stern Brothers made numerous
assumptions with respect to industry performance and general business and
economic considerations, which are beyond the control of the Company. The
analyses performed by Stern Brothers are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely
as part of Stern Brothers' analysis of the merger consideration, from a
financial point of view, to the minority stockholders of the Company, and were
provided to LG Corp. and Mergerco in connection with the Stern Brothers
Presentation and the delivery of the Opinion. In addition, as described
above, the Opinion and the Stern Brothers Presentation were factors taken into
consideration by the boards of directors of LG Corp. and Mergerco in making
the determination to approve the Merger.
The terms of engagement of Stern Brothers by LG Corp. are set forth
in a letter agreement between Stern Brothers and LG Corp. (the "Engagement
Letter"). Pursuant to the terms of the Engagement Letter, as compensation for
rendering its financial advisory services and its Opinion to the boards of
directors of LG Corp. and Mergerco, LG Corp. agreed to pay Stern Brothers $150
per hour, plus out-of-pocket expenses. In addition, LG Corp. has agreed to
indemnify Stern Brothers against certain liabilities and expenses in connection
with the engagement of Stern Brothers. The Opinion is subject to the
understanding that the obligations of Stern Brothers in the Opinion are
solely corporate obligations, and no officer, director, employee, agent,
shareholder or controlling person of Stern Brothers shall be subjected to
any personal liability whatsoever to any person, nor will any such
claim be asserted by or on behalf of LG Corp. or its affiliates.
THE TRANSACTION STATEMENT
Item 1. Issuer and Class of Security Subject to the Transaction
The name of the issuer is BioTechnica International, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 4001 North War Memorial Drive, Peoria, Illinois 61614. The
exact title of the class of security which is the subject of the Rule 13e-3
transaction is common stock, par value $.01 per share (the "Common Stock").
The number of shares of Common Stock outstanding as of September 1, 1998 was
103,055,577 and the approximate number of holders of record as of
September 1, 1998 was 516.
Prior to April 17, 1997, the Common Stock was traded on the National
Association of Securities Dealers National Market System (the "NMS") under the
symbol BIOT. On that date the Common Stock was de-listed due to the failure of
the Company to maintain the NMS's Tangible Net Worth requirement of $4,000,000
as of December 31, 1996 and the failure to meet the minimum bid price or
alternative minimum bid price requirements. This action was taken after
appeals by the Company to remain listed on the NMS. These appeals were
denied by the NMS. Since April 17, 1997, the Common Stock has been traded on
the Over-the-Counter Electronic Bulletin Board sponsored by the National
Association of Securities Dealers. The Common Stock has retained the BIOT
trading symbol.
The following table sets forth, for the fiscal quarters indicated, the high
and low sale prices per share of Common Stock during the past two years.
Period Covered High Close Low Close
- -------------- ----------- ------------
Fiscal 1999
First Quarter through September 18, 1998 $0.1000 $0.0210
Fiscal 1998
Fourth Quarter Ended June 30, 1998 $0.1300 $0.0800
Third Quarter Ended March 31, 1998 0.1875 0.0625
Second Quarter Ended December 31, 1997 0.5000 0.0625
First Quarter Ended September 30, 1997 0.1875 0.0625
Fiscal 1997
Fourth Quarter Ended June 30, 1997 0.2500 0.0700
Third Quarter Ended March 31, 1997 0.3750 0.1250
Second Quarter Ended December 31, 1996 0.5000 0.1250
First Quarter Ended September 30, 1996 0.7500 0.3750
The source of these prices is from the NMS for the period prior to April 17,
1997 and from America Online stock quotation data for the period subsequent to
that date. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE COMMON STOCK.
The Company has never declared or paid dividends. The Company's
debt agreements prohibit the payment of dividends in excess of current income.
Neither the Company nor any affiliate filing this Transaction Statement
has made an underwritten public offering of the Common Stock for cash during
the past 3 years which was registered under the Securities Act of 1933 or
exempt from registration thereunder pursuant to Regulation A.
Since June 30, 1996, the Company has engaged in the following
repurchase transactions with respect its Common Stock: (i) on June 6, 1997,
the Company repurchased 11,324,051 shares of Common Stock for an aggregate
purchase price of $181,184.81 ($0.016 per share) and (ii) on February 2, 1998,
the Company repurchased 1,000,000 shares of Common Stock for an aggregate
purchase price of $10,000 ($0.01 per share). Since June 30, 1996, no affiliate
of the Company has purchased any Common Stock.
Item 2. Identity and Background
This Transaction Statement is being filed jointly by LG Corp. and
Mergerco, each of which are Delaware corporations. The address of the principal
executive offices of LG Corp. and Mergerco is 4001 North War Memorial Drive,
Peoria, Illinois 61614.
LG Corp. is a majority-owned subsidiary of Limagrain. All of the shares
of Limagrain are held by the Cooperative. The Limagrain Group engages in seed
research, seed production and seed marketing, as well as biotechnology research
and applications. LG Corp. is a holding company for the operations of the
Limagrain Group in North America. Mergerco is a newly incorporated corporation
organized to effect the Merger. Upon consummation of the Merger, Mergerco will
be a wholly-owned subsidiary of LG Corp.
The executive officers and directors of the Cooperative are set forth in
Appendix I attached hereto. The executive officers and directors of Limagrain
are set forth in Appendix II attached hereto. The executive officers and
directors of LG Corp. are set forth in Appendix III attached hereto. The
executive officers and directors of Mergerco are set forth in Appendix IV
attached hereto.
During the last five years, neither the Cooperative, Limagrain, LG
Corp., Mergerco nor any of their executive officers or directors, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations
Past Transactions
The Company has contractual relationships with a number of other
Limagrain affiliated companies. The terms of these contracts are negotiated
annually between the Company and each individual affiliated company. The
Company's management believes that such contracts (i) are reasonable, necessary
and in the best interests of all of the stockholders of the Company, and (ii)
are on terms no less favorable to the Company than the Company could obtain
from non-affiliated third parties or on which the Company could internally
perform the services provided in such contracts. The Audit Committee of the
board of directors of the Company has independently reviewed the basis for
these contracts and has recommended that the board of directors of the
Company approve and ratify such contracts as are in effect. The board of
directors of the Company, including all of the Directors unaffiliated with
Limagrain, has unanimously voted to approve and ratify such contracts as
are in effect for the current fiscal year. Since June 30, 1996, the only
material transactions between the Company, on the one hand, and
Limagrain, LG Corp., Mergerco, or their respective executive officers,
directors, controlling persons or subsidiaries, on the other hand, have been
the following:
- - The Company produces and sells seed corn grown in the United
States to affiliates of Limagrain in Europe. These agreements are
renegotiated each year, based on product conditions at the time,
availability of extra capacity at the Company's production and
processing facilities, and the needs of the European affiliates of
Limagrain. Such negotiations are conducted on an arms-length basis
by management of the Company and a representative of the
respective affiliate. These agreements specifically identify the product
to be produced by the Company, the quantity to be purchased, and the
quality and specifications for that product. The Company's
management believes that these contracts are a benefit to the
Company in that they cover the variable costs involved, contribute to
absorbing fixed operating costs and augment the profits of the
Company. The total sales made under these contracts amounted to
$2,984,000 during fiscal year 1998 and $2,977,000 during fiscal year
1997.
- - The Company has entered into an agreement with LG Corp. to allow
the Company to market various proprietary hybrid corn genetics
developed through the LG Corp. research program. In exchange for
the right to sell these proprietary genetics, the Company has agreed to
pay royalties to LG Corp. The amount of these royalties was
approximately $87,000 for fiscal year 1998 and approximately $71,000
for fiscal year 1997. The Company's management believes the
royalties paid under this agreement are as or more favorable to the
Company as compared to the royalties paid in the seed corn industry
generally for the use of proprietary genetic material.
- - The Company has entered into an agreement with LG Corp. to allow
the Company to market various proprietary soybean products
developed through LG Corp.'s soybean research program. In
exchange for the right to sell these products, the Company has agreed
to pay royalties to LG Corp. The amount of these royalties for fiscal
year 1998 was approximately $31,000 and approximately $44,000 for
fiscal year 1997. LG Corp. makes the same type of products available
to non-affiliated competitor companies in the seed industry. The
Company's management believes the royalty rates charged to the
Company are as favorable to the Company as compared to the royalty
rates charged to non-affiliated customers of LG Corp. and as
compared to royalty rates that the Company pays to non-affiliated
suppliers.
- - The Company has entered into an agreement with BIOCEM S.A.
("BIOCEM") (an affiliate of Limagrain) to provide access to the
biotechnology research conducted by Limagrain around the world.
Through this agreement, the Company not only has access to the
results of the research but also has the right to propose topics for
future study. The Corporation paid $50,000 to BIOCEM under the
terms of this agreement for each of fiscal year 1998 and fiscal year
1997. The Company's management believes that the fees paid
pursuant to this agreement are as or more favorable to the Company
as compared to (i) the fees that the Company would have to pay to a
non-affiliated party for substantially similar services and (ii) the costs
required to perform such services internally.
- - The Company has entered into an agreement with Limagrain whereby
Limagrain will provide various administrative, financial and accounting
services to the Company that the Company does not otherwise provide
for itself. Significant items covered under this agreement are:
Guarantee of Debt
Limagrain and LG Corp. each guarantee the Company's line of credit
with its principal bank. Without this guarantee, the Company's
management believe that the Company would be unable to borrow
operating funds at the at the rates available to it, if at all.
Strategic planning and control
Limagrain monitors the economic environment of the Company, and
the seed industry in general, and provides advice and guidance to
management in developing long-term plans and objectives. In
addition, Limagrain assists in the preparation and review of the annual
long-term planning documents of the Company.
Human resources and benefits
Limagrain provides assistance to the Company in the form of
recruitment services, career evaluation, training opportunities, and
compensation evaluation. In addition, Limagrain coordinates and
evaluates the benefit programs offered by Limagrain companies in
North America.
Financing/treasury activities
Limagrain provides technical support for the Company's negotiations
with its bankers. In addition, Limagrain provides short-term financing
to the Company to meet cash flow requirements. Limagrain has been
critical in negotiating favorable interest rates and financing terms.
Auditing services
Limagrain assists the Company in negotiations with its outside
auditors regarding the cost of services. Limagrain also provides
internal audit services to the Company.
The Corporation paid $150,000 to Limagrain under this service agreement
for each of fiscal year 1998 and fiscal year 1997. The Company's
management believes that the fees paid pursuant to this agreement are
as or more favorable to the Company as compared to (i) the fees that the
Company would have to pay to a non-affiliated party for substantially
similar services and (ii) the costs required to perform such services
internally.
- - The Company has entered into an agreement with Limagrain Genetics
International ("LGI") (an affiliate of Limagrain) whereby LGI will provide
various administrative, technical and marketing services to the Company.
LGI is the "division" of Limagrain responsible for the operations of the
Company.
Board of Directors
In their capacity as Board members of LGI, five directors of LGI are
representatives of Limagrain on the board of directors of the
Company. No fees or costs are paid by the Company for the services
of these directors.
Research
LGI coordinates the traditional plant breeding programs of the
Company for the crops the Company markets. The Company
receives information on the results of these activities and has the
opportunity to provide suggestions on potential avenues of future
research.
Product Development
LGI (through LG Corp.) conducts extensive product testing and field
trial analysis throughout the Midwest. The results of these tests are
provided to the Company at no charge. This information is used by
the Company to decide on future and current product offerings.
Marketing planning
LGI provides advice and planning services to the Company in regard
to the development of business and marketing plans and strategies.
Export Sales Contacts
LGI, through its contacts with the Limagrain Group, assists the
Company in obtaining export sales contracts.
Administrative/accounting support
LGI provides expertise to the Company in monitoring short-term
planning and month-to-month financial analysis and control.
Brand name
LGI allows the Company to use the "LG" brand name and logo in its
marketing efforts.
The Company paid $200,000 to LGI under this service agreement for
fiscal year 1998 and $100,000 for fiscal year 1997. The Company's
management believes that the fees paid pursuant to this agreement are
as or more favorable to the Company as compared to (i) the fees that the
Company would have to pay to a non-affiliated party for substantially
similar services and (ii) the costs required to perform such services
internally.
- - LGI pays retirement and certain other benefits provided for under French
law on behalf of French citizens employed by the Company. The
Company reimburses these benefit costs to LGI. For fiscal year 1998,
these costs amounted to $61,000 and provided benefits for two
employees of the Company, and $62,000 for fiscal year 1997 and
provided benefits for two employees.
- - The Company has entered into an agreement with Nickerson SA
("Nickerson") (an affiliate of Limagrain) whereby the Company will provide
office space and one employee to Nickerson for use in monitoring its
business in the United States. The agreement also calls for the Company
to pay invoices on behalf of Nickerson, which Nickerson reimburses to the
Company on a monthly basis. Under the terms of this agreement, in
addition to the reimbursement of direct expenses as described above,
Nickerson was invoiced $43,000 and $47,000 by the Corporation for fiscal
year 1998 and fiscal year 1997, respectively.
- - The Company has provided various accounting, administrative and human
resource services to LG Corp. beginning in November 1997. LG Corp.
reimbursed the Company for actual amounts spent on its behalf.
- - At June 30, 1998, LG Corp. had five outstanding loans to the Company:
(i) a two-year note in the amount of $3,260,846. The note is subordinated
to all debt outstanding to the Company's principal bank. The note bears
interest at five percent (5%) per annum and is due July 1, 2000; (ii) a
two-year note in the amount of $1,000,000. The note is subordinated to
all debt outstanding to the Company's principal bank. The note bears
interest at five percent (5%) per annum and is due July 1, 2000; (iii) a
two-year note in the amount of $1,000,000. The note bears interest at
five percent (5%) per annum and is due July 1, 2000; (iv) a two-year note
in the amount of $1,500,000. The note is subordinated to all outstanding
debt to the Company's principal bank. The note bears interest at
Canadian prime plus .18%, or 6.5%, whichever is lower, and is due July
1, 2000; and (v) a demand note in the amount of $3,000,000. The note
bears interest at Canadian prime plus .18% or 6.5%, whichever is lower,
and is due at any time within 10 days notice. In addition, from time to time
during fiscal year 1998, LG Corp. and other Limagrain affiliates advanced
cash to the Company to allow the Company to meet covenants under the
revolving credit arrangement with its principal bank. The Company
reimbursed LG Corp. and other Limagrain affiliates for actual interest
costs and fees incurred to borrow these funds or paid interest at the same
rate at which LG Corp. or such Limagrain affiliate could have invested
these funds in short-term investments. As of June 30, 1998, LG Corp. had
advanced $600,000 to the Company, repayable on demand, bearing
interest at 5%, the rate at which LG Corp. could have invested this amount
with its bank on a short-term basis. The Company's management believe
these loans bear interest at or below a rate which the Company would be
able to obtain from an unaffiliated lender for an unsecured loan.
- - The Company, LG Corp., and each of LG Corp.'s other subsidiaries
entered into a Tax Sharing Agreement as of November 30, 1994. The
purpose of this Tax Sharing Agreement is to provide for an annual system of
allocating federal tax liabilities and certain state and local tax liabilities
of LG Corp., the Company, and each of LG Corp.'s other subsidiaries for
purposes of computing each member's annual earnings and profits and
making cash payments between the members to reflect the allocation of
such tax liabilities. Generally, the parties to the Tax Sharing Agreement
have agreed to allocate their consolidated income tax liabilities in
accordance with the method provided in Section 1552 (a) (1) of the
Internal Revenue Code, as amended, and the regulations promulgated
thereunder.
Past Contacts
On September 24, 1997, the Company issued a press release noting that
(i) because LG Corp. held 94% of the Company's Common Stock, under the DGCL
it could effect a cash-out merger of the minority stockholders of the Company
without a stockholder vote and (ii) at that time, the Company and LG Corp.
had had no discussions regarding such a merger.
On October 7, 1997, Bruno Carette (President and CEO of LG Corp. and
the Company) and Edward Germain (Vice President and CFO of the Company) met
to discuss the results of a meeting between Mr. Carette and representatives of
Limagrain, in France. At that meeting, Mr. Carette informed Mr. Germain of the
possibility of LG Corp.'s interest in taking the Company private via a cash-out
merger of the minority stockholders.
On October 24, 1997, Mr. Carette, Mr. Germain and Claude Lescoffit (an
executive officer of Limagrain and a member of the board of directors of LG
Corp. and the Company) met with the Company's outside legal counsel to discuss
the legal standards applicable to a cash-out merger and the various
methodologies that LG Corp. would likely employ in effecting a cash-out
merger, and the advantages and disadvantages of and the length of time
required for each of the various methodologies.
On November 10, 1997, the Company was notified by LG Corp. that LG
Corp. had begun preliminary internal discussions, including consultations with
Limagrain, regarding the possibility of a cash-out merger. On November 13,
1997, the Company issued a press release reiterating its prior statements
that, from time to time, LG Corp. evaluates its strategic alternatives
with respect to its investment in the Company and stating that (i) such
alternatives include, among other things, a possible cash-out merger
of the minority stockholders of the Company, (ii) although the Company
and LG Corp. have had no substantive discussions regarding such a merger,
LG Corp. has informed the Company that its has begun preliminary internal
discussions regarding the possibility of such a merger and that it may
consider such a merger in the future, (iii) the Company and its board of
directors have discussed the possible legal structure of such a transaction
among themselves and with representatives of LG Corp. and (iv) as a part of
these discussions, the Company's Board was informed that such a merger could be
effected by LG Corp. without any action or approval by the Company's board of
directors or its stockholders.
On July 6, 1998, Mr. Carette was informed by Mr. Lescoffit that, after
internal discussions and following a review of the preliminary results of
fiscal year 1998 of the Company, a special committee of the board of
directors of LG Corp. (the "Special Committee") would be established to
formally consider a cash-out merger of the minority stockholders of the Company.
On August 17, 1998, the Special Committee met with its legal counsel and
investment banker to discuss, among other things, the possible structure of a
cash-out merger and the various methodologies to be considered in determining
a fair price to be paid to the minority stockholders of the Company in such a
cash-out merger. The Special Committee resolved to deliberate regarding such
matters and to report to the board of directors of LG Corp.
On September 21, 1998, the Special Committee recommended to the
board of directors of LG Corp. that LG Corp., through its wholly owned
subsidiary Mergerco, cash out the minority stockholders of the Company via a
short form merger pursuant to Section 253 of the DGCL. The Special Committee
determined that a cash-out price of $.05 per share would be fair to the
minority stockholders of the Company. The board of directors of LG Corp. and
Mergerco unanimously approved the short-form merger and ratified the Special
Committee's determination that a cash-out price of $.05 per share would be
fair to the minority stockholders of the Company.
Item 4. Terms of the Transaction
On September 21, 1998, LG Corp., which had been the 95% owner of the
Common Stock of the Company, contributed 100% of its holdings of Common Stock
to Mergerco, its newly incorporated and wholly owned Delaware subsidiary. The
Company will be merged with and into Mergerco pursuant to Section 253 of the
DGCL via a "short form" merger. Under the DGCL, because Mergerco owns more
than 90% of the Company, no action will be required by the stockholders of the
Company, other than Mergerco (through its board of directors), for the Merger to
become effective. The effective date of the Merger will be [date]. Prior to
the consummation of the merger, LG Corp. and Mergerco reserve the right to
cancel the merger for any reason, including without limitation if (i) any
stockholder of the Company seeks to enjoin the merger or (ii) in their
judgment, the anticipated cost of the merger would be materially increased by
the number of stockholders of the Company seeking their appraisal remedy.
Mergerco will be the surviving corporation in the Merger and, as a result of
the Merger, the separate corporate existence of the Company will cease. Upon
consummation of the Merger, each of the outstanding shares of Common Stock of
the Company (other than shares held by Mergerco, the Company and holders who
properly exercise dissenters' rights under the DGCL) will be automatically
converted into the right to receive $.05 in cash, without interest, upon
surrender of the certificate for such Share to the Paying Agent. Both the
redemption procedure and the statutory appraisal rights are described in
fuller detail in the Notice of Merger and Appraisal Rights and the
accompanying Letter of Transmittal, which documents accompany this
Transaction Statement and should be studied with care.
Item 5. Plans or Proposals of the Issuer or Affiliate
As a result of the Merger, the Company will be merged into Mergerco and
the Company will cease to exist as a separate entity. As soon as practicable
after the Merger, Mergerco will be merged into LG Seeds, Inc., a Delaware
corporation and a wholly owned subsidiary of the Company ("LG Seeds"). As a
result of these transactions, LG Seeds will be a wholly owned subsidiary of LG
Corp., containing all of the rights, obligations, assets and liabilities of
the Company and Mergerco.
Limagrain has informed LG Corp. that, after the consummation of the
transactions described above, Limagrain will consider a restructuring of its
entire North American operations. These North American operations consist of
LG Corp. and all of its affiliates in the United States and Canada, which
include the Company and LG Seeds. Limagrain has informed LG Corp. that it
will not include the Company or LG Seeds in any of these restructuring plans
unless it controls 100% of the Company. In connection with any such
restructuring, Limagrain may pursue a variety of transactions, including but
not limited to (i) a merger of LG Seeds with LG Corp., (ii) a merger of
LG Seeds with other affiliates of LG Corp. and (iii) the formation of a
strategic alliance between LG Corp. and its affiliates and a third party.
At this time, Limagrain has not finalized its plans with respect to its North
American operations, but it is conducting discussions internally and
negotiations with third parties regarding such plans. Some of these
negotiations have progressed to the stage of understandings and outlines on
how synergies and opportunities could be developed though the formation of
such alliances. However, at this time, there can be no assurance as to the
timing of any such alliance or whether any such alliance will occur at all.
Other than as described above, neither LG Corp. nor any of its affiliates
has any definitive plan or proposal regarding a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries subsequent to the
Merger.
As a result of the transactions described above, there will be no directors
or executive officers of the Company or Mergerco, because such entities will
cease to exist. LG Corp. has not determined at this time which individuals
will serve as directors or executive officers of LG Seeds. However, it is
anticipated that such directors and executive officers will be limited to
those individuals who are currently affiliated with LG Seeds and/or LG
Corp. The current independent directors of the Company (i.e., those that
are not affiliated with Limagrain) will not be directors of LG Seeds or
LG Corp. after the Merger. No current executive officer of the Company
is a party to an employment contract with the Company.
As a result of the transactions described above, the equity capitalization
of the Company will be changed, although the debt capitalization will be
unaffected by the Merger. Immediately following such transactions, the equity
of Mergerco will consist of 1,000 shares of common stock, $.01 par value per
share, all of which will be owned by LG Corp. It is also anticipated that
following such transactions the preferred stock of the Company (all of which
is owned by LG Corp.) will be retired in return for additional shares of common
stock of Mergerco. Neither the Company, LG Corp. nor any of their affiliates
has any current plan or proposal to make any material change in the present
dividend rate or policy of the Company.
After the completion of the Merger, the Common Stock would become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act, because the Company would cease to exist and the common stock of
its ultimate successor, LG Seeds, would be held of record by less than three
hundred persons. LG Corp. currently intends to cause LG Seeds to terminate
such registration. Upon such termination, the Company's obligation to file
reports with the Securities and Exchange Commission pursuant to Section 15(d)
of the Exchange Act would be suspended.
Item 6. Source and Amounts of Funds or Other Consideration
The total amount of funds required to consummate the Merger and to pay
related fees and expenses is estimated to be approximately $500,000. The
Merger will be funded through LG Corp.'s available liquid assets.
The estimated fees and expenses incurred and to be incurred by LG
Corp., Mergerco and the Company in connection with the Merger will be paid by
LG Corp. and are as follows:
Legal fees $150,000
Filing fees 100
Accounting fees 5,000
Appraisal fees 50,000
Printing and mailing costs 25,000
Miscellaneous 20,000
No part of the funds or other consideration to be used in the Merger (i) will
be paid by or be an obligation of the Company or (ii) is expected to be
directly or indirectly borrowed from another person or entity (including a bank
as defined by Section 3(a)(6) of the Exchange Act).
Note: Items 7, 8 and 9 are set forth above under the caption "Special
Factors."
Item 10. Interest in Securities of the Issuer
As of September 21, 1998, the following affiliates of Limagrain, LG Corp.
and/or the Company owned the following amounts and percentages of Common
Stock:
Mergerco beneficially owned 98,277,178 shares of Common Stock, which
represented approximately 95.36% of the outstanding shares of Common
Stock (Mergerco is a wholly owned subsidiary of LG Corp., which is a
majority owned subsidiary of Limagrain);
Ralph W. F. Hardy, a member of the board of directors of the Company,
beneficially owned 4,850 shares of Common Stock, which represented
0.0047% of the outstanding shares of Common Stock;
Edward M. Germain, Vice President and CFO of the Company, beneficially
owned 5,000 shares of Common Stock, which represented 0.0049% of the
outstanding shares of Common Stock; and
Larry D. Rieffel, Vice President - Production and Logistics of the Company,
beneficially owned 1,250 shares of Common Stock, which represented
0.0012% of the outstanding shares of Common Stock.
Except as described above, no other affiliate of Limagrain, LG Corp. or the
Company owned any Common Stock. With the exception of the contribution of the
shares of Common Stock from LG Corp. to Mergerco on September 21, 1998, none
of the shares of Common Stock described above was acquired in the past 60 days.
Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities
Neither Limagrain, LG Corp., nor Mergerco, nor any of their affiliates, is a
party to any contract, arrangement, understanding or relationship in connection
with the Merger with respect to any securities of the Company (including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies, consents or
authorizations).
Item 12. Present Intention and Recommendation of Certain Persons with
Regard to the Transaction
Edward M. Germain, Vice President and CFO of the Company, and Larry
D. Rieffel, Vice President - Production and Logistics of the Company, intend
to tender their shares of Common Stock to Mergerco pursuant to the terms of the
Merger. Ralph W.F. Hardy, a member of the board of directors of the Company,
will not make a decision regarding whether to tender his shares of Common
Stock to Mergerco until after he has had an opportunity to review the
Transaction Statement and related materials as distributed to the minority
stockholders of the Company.
As a "short form" merger pursuant to Section 253 of the DGCL, the Merger
will not require approval by the board of directors of the Company or by any
of the Company"s stockholders other than Mergerco (by action of its board of
directors). None of the individuals named above has made a recommendation
in support of or opposed to the Merger.
Item 13. Other Provisions of the Transaction
Holders of shares of Common Stock are entitled to appraisal rights under
Section 262 of the DGCL. A person having a beneficial interest in shares of
Common Stock held of record in the name of another person, such as a broker or
nominee, must act promptly to cause the record holder to follow the steps
summarized below properly and in a timely manner to perfect whatever appraisal
rights the beneficial owner may have. Prior to the consummation of the merger,
LG Corp. and Mergerco reserve the right to cancel the merger for any reason,
including without limitation if (i) any stockholder of the Company seeks to
enjoin the merger or (ii) in their judgment, the anticipated cost of the merger
would be materially increased by the number of stockholders of the Company
seeking their appraisal remedy.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT
OF THE LAW PERTAINING TO APPRAISAL RIGHTS UNDER THE DGCL AND IS
QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF SECTION 262, WHICH IS
REPRINTED IN ITS ENTIRETY AS APPENDIX A TO THE NOTICE OF MERGER
AND APPRAISAL RIGHTS ATTACHED TO THIS TRANSACTION STATEMENT AS
EXHIBIT (D) .
All references in Section 262 and in this summary to a "stockholder" are
to the record holder of the shares of Common Stock as to which appraisal rights
are asserted. As used herein, "Surviving Corporation" means Mergerco as the
corporation surviving the Merger.
Under the DGCL, holders of shares of Common Stock who do not wish to accept
pursuant to the Merger the consideration of $.05 per share and who follow
the procedures set forth in Section 262 will be entitled to have their shares
of Common Stock appraised by the Delaware Court of Chancery and to receive
payment in cash of the "fair value" of such shares of Common Stock, exclusive
of any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest, if any, as determined by such
court. Any holder of shares of Common Stock who wishes to exercise such
appraisal rights, or who wishes to preserve his right to do so, should review
carefully the following discussion, the Notice of Merger and Appraisal Rights
and the Appendix A thereto, because failure to timely and properly comply
with the procedures specified will result in the loss of appraisal rights
under the DGCL.
A holder of Shares wishing to exercise his appraisal rights must deliver to
the Secretary of the Company, ON OR BEFORE January 5, 1999, a written
demand for appraisal of his shares of Common Stock. A demand for appraisal
should be delivered to the Company at the following address:
BioTechnica International, Inc.
4001 North War Memorial Drive
Peoria, Illinois 61614
Attention: Secretary
As provided under Section 262, failure of a holder of shares of Common
Stock to make a written demand for appraisal (or a beneficial owner of shares
of Common Stock who fails to cause the record holder of such shares of Common
Stock to demand an appraisal of such shares of Common Stock) within such time
limit will result in the loss of such holder's appraisal rights.
Only a holder of record of the shares of Common Stock is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal must be executed by or on behalf of the holder of
record, fully and correctly, as his or her name appears on the stock
certificates for the shares of Common Stock. If the shares of Common Stock
are owned of record in a fiduciary or representative capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the shares of Common Stock are owned of record by more than
one person, as in a joint tenancy and tenancy in common, the demand should
be executed by or on behalf of all joint owners. An authorized agent,
including one or more joint owners, may execute a demand for appraisal on
behalf of a holder of record; however, the agent must identify the record
owner or owners and expressly disclose the fact that, in executing the
demand, the agent is agent for such owner or owners. A record holder such
as a broker who holds shares of Common Stock as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares
of Common Stock held for one or more beneficial owners while not exercising
such rights with respect to the shares of Common Stock held for other
beneficial owners; in such case, the written demand should set forth the
number of shares of Common Stock as to which appraisal is sought and when no
number of shares of Common Stock is expressly mentioned the demand will be
presumed to cover all shares of Common Stock held in the name of the record
owner. Stockholders who hold their shares of Common Stock in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights
are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such a nominee.
Within 120 calendar days after the effective date of the Merger, but not
thereafter, the Surviving Corporation, or any stockholder who is entitled to
appraisal rights under Section 262 and has complied with the requirements of
Section 262, may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of Common Stock. The Surviving
Corporation is under no obligation to and has no present intention to file a
petition in respect to the appraisal of the fair value of the shares of
Common Stock. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their appraisal rights within the
time prescribed in Section 262. At any time within 60 calendar days after
the effective date of the Merger, any stockholder who has demanded appraisal
has the right to withdraw the demand and accept the consideration offered
pursuant to the Merger.
Within 120 days after the Effective Date of the Merger, any stockholder
who has complied with the requirements under Section 262 for exercise of
appraisal rights will be entitled, upon written request, to receive from the
Surviving Corporation a statement setting forth the aggregate number of shares
of Common Stock with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares of Common Stock. Such
statement must be mailed (a) within 10 calendar days after a written request
therefor has been received by the Surviving Corporation, or (b) by January 15,
1999 (i.e., within 10 calendar days after the expiration of the period of
delivery of demands for appraisal), whichever is later.
If a petition for an appraisal is duly filed by a holder of shares of Common
Stock, and a copy thereof is delivered to the Surviving Corporation, the
Surviving Corporation will then be obligated within 20 calendar days to provide
the Register in Chancery with a duly verified list containing the names and
addresses of all holders of shares of Common Stock who have demanded an
appraisal of their shares of Common Stock and with whom agreements as to the
value of their shares of Common Stock have not been reached by the Company.
After notice to holders of shares of Common Stock, the Delaware Court of
Chancery is empowered to conduct a hearing on such petition to determine
thoseholders of shares of Common Stock who have complied with Section 262
and who have become entitled to appraisal rights. The Delaware Court of
Chancery may require the holders of shares of Common Stock who have demanded
an appraisal for their shares of Common Stock to submit their stock
certificates to the Register in Chancery for notation thereon of the
pendency of the appraisal proceeding; and if any holder of shares of
Common Stock fails to comply with such direction, the Delaware Court
of Chancery may dismiss the proceedings as to such stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares of Common
Stock, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. The Delaware Supreme
Court has stated that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings. In
addition, Delaware courts have held that the Section 262 appraisal remedy,
depending on factual circumstances, may or may not be a dissenter's
exclusive remedy. The Court will also determine the amount of interest, if
any, to be paid upon the amounts to be received by persons whose shares of
Common Stock have been appraised.
The costs of the appraisal proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the circumstances.
The Court may also order that all or a portion of the expenses incurred by any
stockholder in connection with an appraisal, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts utilized in the
appraisal proceeding, be charged pro rata against the value of all the shares
of Common Stock entitled to be appraised.
No stockholder, whether or not he has duly demanded an appraisal in compliance
with Section 262, will, from and after the effective date of the Merger, be
entitled to vote any shares of Common Stock for any purpose or be entitled to
the payment of dividends or other distributions on any shares of Common Stock
(except dividends or other distributions payable to stockholders of record at a
date prior to the effective date of the Merger).
If any stockholder who demands appraisal of his shares of Common Stock under
Section 262 fails to perfect, or effectively withdraws or loses, his or her
right to appraisal, as provided in the DGCL, the shares of Common Stock of such
stockholder will be converted into the right to receive $.05 in cash per share
of Common Stock, without interest. Such stockholders must follow the procedures
set forth in the Letter of Transmittal and accompanying instructions.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL
FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH
RIGHTS.
No provision has been made by the Cooperative, Limagrain, LG Corp.,
Mergerco or the Company in connection with the Merger to allow the minority
stockholders of the Company to obtain access to the corporate files of such
companies or to obtain counsel or appraisal services at the expense of the
issuer or affiliate.
Item 14. Financial Information
The audited financial statements of the Company for the fiscal years ended
June 30, 1997 and 1998, which were required to be filed with the Company's most
recent annual report on Form 10-K, are attached hereto as Exhibit (G)(1) and
are incorporated herein by reference. The Company's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1998 is attached hereto as
Exhibit (G)(2).
For fiscal year 1998 and fiscal year 1997, the ratio of earnings to fixed
charges was -1.00 and -4.63, respectively. Book value per common share of the
Company as of June 30, 1998 was $.0004 (calculated by subtracting the
$9,000,000 of preferred stock and $2,425,000 of cumulative preferred stock
dividends in arrears from the total equity of $11,469,000, and dividing that
result by the 103,055,577 common shares outstanding).
Completion of the Merger is not expected to have a material effect on the
Company's balance sheet, earnings or book value per share (other than, with
respect to book value per share, as discussed in Item 5 hereof).
Item 15. Persons and Assets Employed, Retained or Utilized
The officers and employees of the Company will perform tasks which would be
expected to arise in connection with the Merger (e.g., in assisting to prepare
this Transaction Statement). Other than retaining legal counsel and Stern
Brothers, neither the Cooperative, Limagrain, LG Corp. nor Mergerco, nor any
person acting on their behalf, has employed, retained or compensated any person
or class of persons to make solicitations or recommendations in connection
with the Merger.
Item 16. Additional Information
No additional material information is necessary to make the statements
required herein, in light of the circumstances in which they are made, not
materially misleading.
Item 17. Material to Be Filed as Exhibits
The following Exhibits are attached hereto and incorporated herein by
reference:
Exhibit (A) Not applicable
Exhibit (B) Fairness Opinion of Stern Brothers
Exhibit (B)(1) Summaries prepared by Stern Brothers of the
financial statements of the Company for the
previous five fiscal years
Exhibit (B)(2) Summaries prepared by Stern Brothers of certain
financial statement items and ratios of the
Company and the Selected Companies
Exhibit (B)(3) Summaries prepared by Stern Brothers of certain
multiples and ratios of the Company and the
Selected Companies
Exhibit (B)(4) Summaries prepared by Stern Brothers of the
Company's forecasts and the discounted future
returns valuation approach
Exhibit (B)(5) Summary prepared by Stern Brothers of the
underlying assets valuation approach
Exhibit (C) Not applicable
Exhibit (D) Form of Notice of Merger and Appraisal Rights
Exhibit (E) Included in Exhibit (D)
Exhibit (F) Not applicable.
Exhibit (G)(1) Audited financial statements for the fiscal year
ended June 30, 1997 and 1998
Exhibit (G)(2) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: December 16, 1998 LIMAGRAIN GENETICS CORP.
By: /s/ Bruno Carette
Name: Bruno Carette
Title: President and
Chief Executive Officer
Dated: December 16. 1998 BTI MERGER CORP.
By: /s/ Bruno Carette
Name: Bruno Carette
Title: President
Appendix I
Executive Officers and Directors of the Cooperative
Directors
Name Principal Occupation
Claude Agier Farmer
Joel Arnaud Farmer
Philippe Aymard Farmer
Francois Deloche Farmer
Jean-Paul Deschamps Farmer
Raoul Faure Farmer
Christian Gothon Farmer
Francois Heyraud Farmer
Serge Lebreton Farmer
Pierre Pagesse Farmer
Laurent Petoton Farmer
Jean Poulet Farmer
Christian Puissauve Farmer
Andre Quinty Farmer
Gerard Renard Farmer
Executive Officers
Claude Lescoffit 1989 - 1996 Vice President
Engineering Michelin
(Clermont, France)
1996 - 1997 Vice President
Groupe Limagrain Holding
1997 to date General Manager
Limagrain Agro Genetics
Daniel Cheron 1988 - 1994 General
Manager Force Limagrain
Germany
1994 to date CEO Limagrain Agro
Industrie
1998 to date Deputy CEO Groupe
Limagrain
Pierre Lefebvre 1990 to date Deputy CEO
Groupe Limagrain
Emmanuel Rougier 1993 - 1997 CEO Limagrain Field
Seeds
1997 to date CEO Limagrain
Vegetables and Flowers
Jean Marc Salabay 1993 to date General Manager
Production de Limagne
Alain Catala Prior to 1997 Deputy CEO Group
Limagrain Holding
1997 to date CEO Groupe
Limagrain Holding
Francois Fontaine 1993 - 1995 General Manager of
Dolisos SA (Paris, France)
1995 to date General Manager of
Pains Jacqet
The business address of each of the above directors and executive officers
is BP1, 63720 Chappes, France.
Each of the above directors and executive officers is a citizen of France.
Appendix II
Executive Officers and Directors of Limagrain
Directors
Name Principal Occupation
Claude Agier Farmer
Joel Arnaud Farmer
Philippe Aymard Farmer
Francois Deloche Farmer
Jean-Paul Deschamps Farmer
Raoul Faure Farmer
Christian Gothon Farmer
Francois Heyraud Farmer
Serge Lebreton Farmer
Pierre Pagesse Farmer
Laurent Petoton Farmer
Jean Poulet Farmer
Christian Puissauve Farmer
Andre Quinty Farmer
Gerard Renard Farmer
Executive Officers
Claude Lescoffit 1989 - 1996 Vice President
Engineering Michelin
(Clermont, France)
1996 - 1997 Vice President
Groupe Limagrain Holding
1997 to date General Manager
Limagrain Agro Genetics
Daniel Cheron 1988 - 1994 General
Manager Force Limagrain
Germany
1994 to date CEO Limagrain Agro
Industrie
1998 to date Deputy CEO Groupe
Limagrain
Pierre Lefebvre 1990 to date Deputy CEO
Groupe Limagrain
Emmanuel Rougier 1993 - 1997 CEO Limagrain Field
Seeds
1997 to date CEO Limagrain
Vegetables and Flowers
Jean Marc Salabay 1993 to date General Manager
Production de Limagne
Alain Catala Prior to 1997 Deputy CEO Group
Limagrain Holding
1997 to date CEO Groupe
Limagrain Holding
Francois Fontaine 1993 - 1995 General Manager of
Dolisos SA (Paris, France)
1995 to date General Manager of
Pains Jacqet
The business address of each of the above directors and executive officers
is BP1, 63720 Chappes, France.
Each of the above directors and executive officers is a citizen of France.
Appendix III
Executive Officers and Directors of LG Corp.
Directors
Name Principal Occupation
Claude Agier Farmer
Francois Heyraud Farmer
Serge Lebreton Farmer
Laurent Petoton Farmer
Claude Lescoffit 1989 - 1996 Vice President
Engineering Michelin
(Clermont, France)
1996 - 1997 Vice President
Groupe Limagrain
Holding
1997 to date General Manager
Limagrain Agro Genetics
Executive Officers
Bruno Carette, President and CEO
1993 - 1996 VP Sales
and Marketing LG Seeds, Inc.
1996 - 1997 President of LG
Seeds, Inc.
1996 to date President of
BioTechnica International, Inc.
1998 to date President and CEO
of Limagrain Genetics Corp.
Craig Newman, Executive VicePresident for Akin Callahan
1994 - 1997 General Manager of Akin Seed Company
(St. Francisville, Illinois)
1997 to date General Manager of Akin Callahan
(Westfield, Indiana)
1998 to date Executive VP of Limagrain Genetics Corp.
James Simon, Executive Vice President for Canada
1994 to date General Manager of King Agro
(Chatham, Ontario)
1998 to date Executive VP of Limagrain Genetics Corp.
Jean-Paul Zink, Executive VicePresident for LG Seeds
1993 - 1997 General Manager of Limagrain Canada Seeds
1997 to date President of LG Seeds, Inc.
1998 to date Executive VP of Limagrain Genetics Corp.
The business address of each of the above directors is BP1, 63720 Chappes,
France, and the business address of each of the above executive officers is
4001 North War Memorial Drive, Peoria, Illinois 61614.
Each of the above directors and executive officers is a citizen of France,
except for Mr. Newman who is a United States citizen and Mr. Simon who is
a Canadian citizen.
Appendix IV
Executive Officers and Directors of Mergerco
Directors
Name Principal Occupation
Claude Agier Farmer
Francois Heyraud Farmer
Serge Lebreton Farmer
Laurent Petoton Farmer
Claude Lescoffit 1989 - 1996 Vice President Engineering Michelin
(Clermont, France)
1996 - 1997 Vice President Groupe Limagrain Holding
1997 to date General Manager Limagrain Agro Genetics
1998 to date Vice President of BTI Merger Corp.
Executive Officers
Bruno Carette, President
1993 - 1996 VP Sales and
Marketing LG Seeds, Inc.
1996 - 1997 President of LG Seeds, Inc.
1996 to date President of BioTechnica
International, Inc.
1998 to date President and CEO
of Limagrain Genetics Corp.
1998 to date President of BTI Merger Corp.
Claude Lescoffit, Vice President
See above
The business address of each of the above directors and executive officers is
BP1, 63720 Chappes, France, except for Mr. Carette whose business address is
4001 North War Memorial Drive, Peoria, Illinois 61614.
Each of the above directors and executive officers is a citizen of France.
Exhibit B
Fairness Opinion of Stern Brothers
[Stern Brothers Valuation Advisors Letterhead]
September 21, 1998
Mr. Bruno Carette
Limagrain Genetics Corp.
BTI Merger Corp.
4001 N. War Memorial Drive
Peoria, Illinois 61614
Gentlemen:
Description of the Assignment
Limagrain Genetics Corp. ("LG" or the "Company") has engaged Stern
Brothers Valuation Advisors ("Stern Brothers") for the purpose of rendering our
opinion, as of September 21, 1998, as to the fairness, from a financial point of
view, of the merger consideration to be paid to the public stockholders of
BioTechnica International, Inc. ("BioTechnica") (4,778,399 shares of the
103,055,577 outstanding shares) in connection with the cashing out of such
public stockholders in the merger of BioTechnica into an affiliate of LG.
Scope of Work
In the course of our analysis for purposes of rendering our opinion, we have,
among other things, done the following:
1) Visited BioTechnica's headquarters.
2) Interviewed key management employees concerning the background,
operations, financial performance and prospects of BioTechnica.
3) Reviewed and considered the following information regarding BioTechnica:
* Audited financial statements (Form 10-K) for BioTechnica for the periods
ended December 31, 1986 through 1991, July 31, 1992 through 1993,
June 30, 1994 through 1997 and a draft of the June 30, 1998 audited
financial statement. Form 10-Q quarterly financial statements as of
September 30, 1997, December 31, 1997 and March 31, 1998.
* Proxy information as of March 7, 1994, November 15, 1995, November
12, 1996 and November 12, 1997.
* Recent press releases.
* Income tax returns filed by BioTechnica for 1996 and 1997.
* BioTechnica's financial forecasts for the years ended June 30, 1999
through June 30, 2008 and Short Term Financial Plan.
* Minutes from Board of Directors meetings.
* Asset list and valuation worksheet.
* List of shareholders and number of shares owned by each shareholder.
* Stock purchases or trades over the last five years.
* Articles of Incorporation and Bylaws for BioTechnica.
* LG Seeds newsletters.
* LG Seeds Yield Results.
4) Reviewed and considered the following information provided to us by others:
* Annual reports, interim reports, 10-K's, 10-Q's, and other published
information on publicly traded companies as nearly comparable to
BioTechnica as we could find.
* Publications by Standard & Poor's and Bloomberg Financial Services;
The Value Line Investment Survey; Federal Reserve Bulletin; The Wall
Street Journal; Directory of Companies Required to File Annual Reports
with the Securities and Exchange Commission; Stocks, Bonds, Bills and
Inflation 1997 Yearbook by Ibbotson Associates; and Mergerstat Review
1997 by Houlihan Lokey Howard & Zukin.
* Interviews with BioTechnica's outside accountant, banker and attorney.
5) Conducted an analysis of the value of BioTechnica's common stock using
the market comparison approach and the discounted future returns
approach.
6) Conducted such other studies, analyses, inquiries and investigations as we
deemed appropriate.
The foregoing is, of course, only a summary of the information reviewed and
factors considered by us which have influenced our opinion and does not recite
in detail all of such information and factors that we have taken into
consideration in connection with our opinion.
Assumptions and Limiting Conditions
The Company and its representatives warranted to us that the information
they supplied was complete and accurate to the best of their knowledge and that
the financial statement information reflects BioTechnica's results of
operations and financial condition in accordance with generally accepted
accounting principles, unless otherwise noted. We have not assumed any
responsibility for independent verification of information and financial
forecasts supplied by BioTechnica and their representatives (and we express
no opinion on that information). We have not obtained any independent
appraisal of the assets of BioTechnica, nor have we attempted to verify the
information furnished to us by them.
We have used public information and industry and statistical data from
sources which we deem to be reliable; however, we make no representation as to
the accuracy or completeness of such information and have accepted such
information without further verification.
We were not authorized to solicit, and did not solicit, interest from any party
with respect to a merger with or other business combination transaction
involving the BioTechnica or any of its assets, nor did we have any discussions
or negotiations with any parties, other than BioTechnica, in connection with
the purchase of BioTechnica shares.
Possession of this report, or a copy thereof, does not carry with it the right
of publication of all or part of it, nor may it be used for any purpose by
anyone but the client without the previous written consent of the client or us
and, in any event, only with proper attribution.
We are not required to give testimony in court, or be in attendance during
any hearings or depositions, with reference to BioTechnica, unless previous
arrangements have been made.
This opinion is valid only for the purpose(s) and standard of value specified
herein.
This opinion is based on a going concern value.
The opinion contemplates facts and conditions existing as of the opinion date.
Events, conditions, and circumstances occurring after that date, have not been
considered, and we have no obligation to update our opinion for such events
and conditions (except as requested at closing).
This opinion is subject to the understanding that the obligations of Stern
Brothers Valuation Advisors in the opinion are solely corporate obligations,
and no officer, director, employee, agent, shareholder or controlling person of
Stern Brothers Valuation Advisors shall be subjected to any personal liability
whatsoever to any person, nor will any such claim be asserted by or on behalf
of you or your affiliates.
Certifications
We certify that, to the best of our knowledge and belief:
The statements of fact in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal, unbiased
professional analyses, opinions, and conclusions.
Neither Stern Brothers Valuation Advisors nor the individuals involved with
this opinion have any present or contemplated future interest of any nature
whatsoever which might prevent the rendering of an unbiased opinion.
Our fee for this engagement is not contingent on an action or event resulting
from the analyses, opinions, or conclusions, in, or the use of this report.
No one provided significant professional assistance to the persons signing
this report.
The American Society of Appraisers has a mandatory recertification program
for all of its Senior members. We are in compliance with that program.
Conclusion
Based upon the foregoing, other matters we consider relevant and our general
knowledge of such matters as independent business appraisers, we are of
the opinion that the merger consideration of $0.05 per share to be paid by an
affiliate of Limagrain Genetics Corp. for the 4,778,399 shares (owned by the
public) of the 103,055,577 outstanding shares of BioTechnica, is fair, from a
financial point of view, to such public stockholders, as of September 21, 1998.
Sincerely,
STERN BROTHERS VALUATION ADVISORS
John C. Korschot, CFA, ASA, CBA Teresa (Terry) A. Fry, ASA, CBA
President Vice President
Exhibit (B)(1)
Summaries Prepared by Stern Brothers
of the Financial Statements of the Company for the Previous Five Fiscal Years
Exhibit (B)(2)
Summaries Prepared by Stern Brothers
of Certain Financial Statement Items and Ratios of the Company and the
Selected Companies
Exhibit (B)(3)
Summaries Prepared by Stern Brothers
of Certain Multiples and Ratios of the Company and the Selected Companies
Exhibit (B)(4)
Summaries Prepared by Stern Brothers
of the Company's Forecasts and the Discounted Future Returns Valuation
Approach
Exhibit (B)(5)
Summary Prepared by Stern Brothers
of the Underlying Assets Valuation Approach
<TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
As of June 30,
1994 % 1995 % 1996 % 1997 % 1998 %
-------------------- -------------------- -------------------- -------------------- --------------------
ASSETS (Preliminary)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash & cash equivs $1,141,000 2.90% $399,000 1.16% $194,000 0.59% $207,000 0.62% $353,000 1.05%
Accounts receivable 8,114,000 20.64% 7,778,000 22.54% 7,964,000 24.16% 7,068,000 21.14% 9,458,000 28.12%
Inventories 7,342,000 18.67% 6,927,000 20.08% 5,976,000 18.13% 8,330,000 24.91% 7,761,000 23.08%
Prepaid expenses 802,000 2.04% 105,000 0.30% 153,000 0.46% 130,000 0.39% 139,000 0.41%
N assts for sale 1,335,000 3.40% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
------------ ------------ ------------ ------------ ------------
Tot current assets 18,734,000 47.64% 15,209,000 44.08% 14,287,000 43.35% 15,735,000 47.06% 17,711,000 52.66%
Net prop,plant,& equi 10,950,000 27.85% 9,771,000 28.32% 9,722,000 29.50% 9,316,000 27.86% 8,040,000 23.91%
Goodwill and other,net 9,636,000 24.51% 9,522,000 27.60% 8,948,000 27.15% 8,385,000 25.08% 7,879,000 23.43%
------------ ------------ ------------ ------------ ------------
$39,320,000 100.00% $34,502,000 100.00% $32,957,000 100.00% $33,436,000 100.00% $33,630,000 100.00%
------------ ------------ ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings LOC $13,800,000 35.10% $9,200,000 26.67% $8,500,000 25.79% $10,900,000 32.60% $7,700,000 22.90%
Borrowings frm affil 0 0.00% 0 0.00% 0 0.00% 0 0.00% 3,600,000 10.70%
Notes payable 100,000 0.25% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Curr Ptn of LT Debt 164,000 0.42% 115,000 0.33% 107,000 0.32% 31,000 0.09% 0 0.00%
Accounts payable 1,238,000 3.15% 735,000 2.13% 1,013,000 3.07% 690,000 2.06% 489,000 1.45%
Accrued liabilities 2,847,000 7.24% 2,051,000 5.94% 1,595,000 4.84% 1,669,000 4.99% 2,936,000 8.73%
Due to affiliates 153,000 0.39% 0 0.00% 2,175,000 6.60% 115,000 0.34% 244,000 0.73%
------------ ------------ ------------ ------------ ------------
Tot curr liabil 18,302,000 46.55% 12,101,000 35.07% 13,390,000 40.63% 13,405,000 40.09% 14,969,000 44.51%
------------ ------------ ------------ ------------ ------------
Long-term debt 311,000 0.79% 129,000 0.37% 31,000 0.09% 0 0.00% 0 0.00%
Borrowings from affil 3,260,000 8.29% 5,326,000 15.44% 3,261,000 9.89% 5,261,000 15.73% 6,761,000 20.10%
Other noncurrent liab 202,000 0.51% 156,000 0.45% 170,000 0.52% 295,000 0.88% 431,000 1.28%
------------ ------------ ------------ ------------ ------------
Total liabilities22,075,000 56.14% 17,712,000 51.34% 16,852,000 51.13% 18,961,000 56.71% 22,161,000 65.90%
------------ ------------ ------------ ------------ ------------
Shareholders' equity
Pref stock, Class A 5,000 0.01% 7,000 0.02% 9,000 0.03% 9,000 0.03% 9,000 0.03%
Common stock 1,059,000 2.69% 1,154,000 3.34% 1,154,000 3.50% 1,041,000 3.11% 1,031,000 3.07%
Com stock, Class A 108,000 0.27% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Com stock, Class B 48,000 0.12% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Additional PIC 16,895,000 42.97% 18,893,000 54.76% 20,891,000 63.39% 20,823,000 62.28% 20,823,000 61.92%
Accumulated deficit (775,000) -1.97% (3,169,000) -9.18% (5,854,000) -17.76% (7,303,000) -21.84% (10,299,000) -30.62%
Treasury stock (95,000) -0.24% (95,000) -0.28% (95,000) -0.29% (95,000) -0.28% (95,000) -0.28%
------------ ------------ ------------ ------------ ------------
Tot shrhldrs' eq 17,245,000 43.86% 16,790,000 48.66% 16,105,000 48.87% 14,475,000 43.29% 11,469,000 34.10%
------------ ------------ ------------ ------------ ------------
$39,320,000 100.00% $34,502,000 100.00% $32,957,000 100.00% $33,436,000 100.00% $33,630,000 100.00%
------------ ------------ ------------ ------------ ------------
</TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended June 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 % 1995 % 1996 % 1997 % 1998 %
Net sales: (Preliminary)
Domestic $23,005,000 93.57% $20,434,000 85.28% $17,151,000 91.39% $17,004,000 84.66% $18,047,000 84.57%
Export - affiliates 1,582,000 6.43% 3,089,000 12.89% 1,489,000 7.93% 2,977,000 14.82% 2,984,000 13.98%
Export - other 2,123,954 0.00% 438,000 1.83% 127,000 0.68% 104,000 0.52% 309,000 1.45%
24,587,000 100.00% 23,961,000 100.00% 18,767,000 100.00% 20,085,000 100.00% 21,340,000 100.00%
Cost of goods sold 17,831,000 72.52% 15,432,000 64.40% 12,990,000 69.22% 12,319,000 61.33% 14,158,000 66.34%
Gross profit 6,756,000 27.48% 8,529,000 35.60% 5,777,000 30.78% 7,766,000 38.67% 7,182,000 33.66%
Operating expenses:
Sales/marketing 3,418,000 13.90% 4,293,000 17.92% 4,203,000 22.40% 4,163,000 20.73% 4,710,000 22.07%
Warehouse/distribution 1,255,000 5.10% 2,043,000 8.53% 1,196,000 6.37% 1,316,000 6.55% 1,331,000 6.24%
General/administrative 2,371,000 9.64% 3,245,000 13.54% 2,473,000 13.18% 2,569,000 12.79% 2,677,000 12.54%
Amort goodwill 189,000 0.77% 479,000 2.00% 499,000 2.66% 499,000 2.48% 499,000 2.34%
7,233,000 29.42% 10,060,000 41.98% 8,371,000 44.60% 8,547,000 42.55% 9,217,000 43.19%
Operating loss (477,000) -1.94% (1,531,000) -6.39% (2,594,000) -13.82% (781,000) -3.89% (2,035,000) -9.54%
Other income (expense):
Interest expense (405,000) -1.65% (1,068,000) -4.46% (832,000) -4.43% (880,000) -4.38% (966,000) -4.53%
G/L on dispo of assets 0 0.00% 0 0.00% 405,000 2.16% 13,000 0.06% (225,000) -1.05%
Other 50,000 0.20% 272,000 1.14% 321,000 1.71% 208,000 1.04% 231,000 1.08%
(355,000) -1.44% (796,000) -3.32% (106,000) -0.56% (659,000) -3.28% (960,000) -4.50%
Net loss bef income tax (832,000) -3.38% (2,327,000) -9.71% (2,700,000)-14.39% (1,440,000) -7.17% (2,995,000) -14.03%
Income tax exp (benefit) 0 0.00% 67,000 0.28% (15,000) -0.08% 9,000 0.04% 1,000 0.00%
Net loss ($832,000) -3.38% ($2,394,000) -9.99% ($2,685,000)-14.31% ($1,449,000)-7.21% ($2,996,000) -14.04%
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
BIOTECHNICA INTERNATIONAL, INC. For the Years Ended June 30,
1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------
SELECTED BALANCE SHEET ITEMS (Preliminary)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Accounts Receivable $1,454 $8,114 $7,778 $7,964 $7,068 $9,458
Inventory 2,222 7,342 6,927 5,976 8,330 7,761
Current Assets 4,154 18,734 15,209 14,287 15,735 17,711
Current Liabilities 1,007 18,302 12,101 13,390 13,405 14,969
Working Capital 3,147 432 3,108 897 2,330 2,742
Short Term Debt 0 13,900 9,200 8,500 10,900 7,700
Current Maturities LTD 20 164 115 107 31 3,600
Long Term Debt and Preferred Stock 2,261 8,571 12,455 12,292 14,261 15,761
Common Stockholders' Equity 6,657 12,245 9,790 7,105 5,475 2,469
Total Capitalization (LT Debt + Equity) 8,918 20,816 22,245 19,397 19,736 18,230
Total Assets 9,925 39,320 345,002 32,957 33,436 33,630
SELECTED INCOME STATEMENT ITEMS
Sales 8,239 24,587 23,961 18,767 20,085 21,340
Cost of Goods Sold 5,589 17,831 15,432 12,990 12,319 14,158
Gross Profit 2,650 6,756 8,529 5,777 7,766 7,182
Other Income 10 50 272 726 221 231
Interest Expense 55 405 1,068 832 880 966
Depreciation and Amortization Expense 610 1,140 1,553 1,402 1,453 1,439
Selling, General & Administrative Expenses 2,239 5,789 7,538 6,676 6,732 7,387
Other Operating Expenses 0 1,444 2,522 1,695 1,815 1,830
Other Expenses 0 0 0 0 0 225
Pre-Tax Income 366 (832) (2,327) (2,700) (1,440) (2,995)
Taxes 148 0 67 (15) 9 1
Net Income From Continuing Operations 218 (832) (2,394) (2,685) (1,449) (2,996)
Discontinued Operations and/or Extraordinary 84 0 0 0 0 0
Net Income 302 (832) (2,394) (2,685) (1,449) (2,996)
Preferred Stock Dividends 0 0 463 613 675 675
Net Inc. From Cont. Ops. Avail. for Common S 218 (832) (2,857) (3,298) (2,124) (3,671)
Net Income Available for Common Shares 302 (832) (2,857) (3,298) (2,124) (3,671)
EBITDA 1,031 713 294 (466) 893 (590)
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 4.13 1.02 1.26 1.07 1.17 1.18
Collection Period (Days) 64.41 71.02 121.04 153.08 136.59 141.33
Inventory Turnover 2.52 3.73 2.16 2.01 1.72 1.76
Sales/Assets (Avg.) 0.83 1.00 0.12 0.10 0.61 0.64
EBIT/Interest + Preferred Dividends 7.65 -1.05 -0.82 -1.29 -0.36 -1.24
EBITDA/CMLTD+Interest + Preferred Dividends 13.75 1.25 0.18 -0.30 0.56 -0.11
Equity/Assets (Avg.) 0.67 0.38 0.06 0.04 0.19 0.12
Equity/Ttl.Capitalization (Avg.) 0.75 0.64 0.51 0.41 0.32 0.21
SELECTED PROFITABILITY RATIOS
Net Income Cont. Ops. Avail. Com./Sales 2.65% -3.38% -11.92% -17.57% -10.58% -17.20%
Net Income Cont. Ops. Avail. Com./Avg. Equit 3.27% -8.80% -25.93% -39.04% -33.77% -92.42%
Net Income Cont. Ops. Avail. Com./Avg. Asset 2.20% -3.38% -1.49% -1.74% -6.40% -10.95%
Gross Profit/Sales 32.16% 27.48% 35.60% 30.78% 38.67% 33.66%
Operating Expenses/Sales 27.18% 29.42% 41.98% 44.60% 42.55% 43.19%
Taxes/Pre-Tax Income 40.44% 0.00% -2.88% 0.56% -0.63% -0.03%
Selectd Value
SELECTED EARNINGS AND PRICING RATIOS Preliminary Sept 21, 1998
LTM EPS From Continuing Operations $0.00 ($0.01) ($0.02) ($0.03) ($0.02) ($0.04) ($0.04)*
Weighted Average EPS Cont. Ops. (5 Yr.) $0.00 $0.00 *
Forecasted Next Year EPS (6/99) ($0.02)
Fully Diluted EPS (As Reported) $0.00 ($0.01) ($0.02) ($0.03) ($0.02) ($0.04)
Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 *
Dividend Yield 0.00%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Last Twelve Months Sales Per Share $0.08 $0.23 $0.20 $0.16 $0.18 $0.21 $0.21 *
Last Twelve Months EBITDA Per Share $0.01 $0.01 $0.00 ($0.00) $0.01 ($0.01) ($0.01)*
Book Value Per Share $1,331.40 $0.10 $0.08 $0.05 $0.04 $0.00 $0.00 *
Price Per Share $0.05
Invested Capital Per Share $0.34
Price Per Share / LTM EPS - Continuing Operations nmf
Price Per Share / Wt. Avg. EPS Cont. Ops. (5 years) nmf
Price Per Share / Forecasted EPS nmf
Price Per Share / Book Value Per Share nmf
Price Per Share / Sales Per Share (LTM) 0.24 x
Price Per Share / EBITDA Per Share (LTM) nmf
Invested Capital Per Share / Sales Per Share (LTM) 1.63 x
Invested Capital Per Share / EBITDA Per Share (LTM) nmf
End of Period Shares Outstanding 5,000 121,434,379 115,379,628 115,379,628 104,055,577 103,055,577
Weighted Average Shares Outstanding 97,777,000 107,435,000 121,385,000 115,379,628 114,635,033 103,650,098
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) 296.17% 489.58% 49.19% 35.48% 27.64%
CAGR in Sales (1,2,3,4,5 Yrs.) 198.42% 70.54% 31.58% 24.95% 20.97%
CAGR in F.D. EPS Cont. Ops. (1,2,3,4,5 Yrs.) nmf nmf nmf nmf nmf
EPS Cont. Ops. (5 Year Average) ($0.02)
EPS Cont. Ops. (5 Year Standard Deviation) $0.01
CAGR in F.D. EPS (1,2,3,4,5 Yrs.) nmf nmf nmf nmf nmf
EPS (5 Year Average) ($0.02)
EPS (5 Year Standard Deviation) $0.01
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* As of 6/30/98
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
AG SERVICES OF AMERICA, INC.
----------------For the Years Ended February 28,---------------- For 3 Months ended May 31 Sep 21
1993 1994 1995 1996 1997 1998 1997 1998 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET ITEMS (Unaudited)
Accounts Receivable $15,580 $17,677 $22,316 $31,821 $43,454 $71,801 $176,418
Inventory 1,691 2,345 2,436 3,075 2,841 2,972 1,331
Current Assets 17,755 23,822 29,362 44,577 49,932 77,383 180,211
Current Liabilities 9,224 788 7,816 20,965 22,557 43,577 146,359
Working Capital 8,531 23,034 21,546 23,611 27,375 33,806 33,852
Short Term Debt 19,850 21,000 39,328 121,820
Current Maturities LTD 0 0 0 0 0 0 0
Long Term Debt 0 13,800 13,800 13,800 0 5,915 6,650
Stockholders' Equity 11,760 14,198 16,660 20,421 38,216 43,756 46,372
Total Capitalization 11,760 27,998 30,460 34,221 38,216 49,671 53,022
Total Assets 20,983 28,786 38,277 55,186 60,773 93,248 199,381
SELECTED INCOME STATEMENT ITEMS
Sales 51,088 61,644 81,936 106,869 137,443 172,717 78,339 97,720
Cost of Goods Sold 46,447 56,296 75,247 98,281 127,698 162,197 73,953 92,362
Gross Profit 4,641 5,348 6,689 8,589 9,745 10,520 4,386 5,358
Other Income 3,474 3,910 5,530 7,817 10,204 13,356 2,436 3,809
Interest Expense 1,308 1,720 2,784 4,258 4,580 5,536 810 1,504
Deprec and Amort Exp 90 188 248 290 257 422 84 110
Sell, Gen & Admin Exp 2,604 3,404 4,263 5,422 6,404 7,316 1,811 2,044
Other Operating Exp 812 1,050 1,409 1,863 2,290 2,963 1,257 1,827
Other Expenses 490 0 0 0 0 0 0 0
Pre-Tax Income 2,901 3,084 3,763 4,863 6,675 8,061 2,944 3,792
Taxes 1,045 1,117 1,361 1,730 2,329 2,880 1,022 1,363
Net Inc Contin Ops 1,856 1,967 2,402 3,133 4,346 5,181 1,922 2,429
Discon Ops and/or Extrao 0 0 0 0 0 0 0 0
Net Income 1,856 1,967 2,402 3,133 4,346 5,181 1,922 2,429
EBITDA 4,299 4,992 6,795 9,410 11,512 14,019 3,838 5,406
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 1.92 30.23 3.76 2.13 2.21 1.78 1.23
Collection Period (Days) 91.50 98.46 89.08 92.45 99.95 121.78 * 235.82 *
Inventory Turnover 33.31 27.90 31.48 35.67 43.17 55.80 * 83.94 *
Sales/Assets (Avg.) 2.92 2.48 2.44 2.29 2.37 2.24 * 1.31 *
EBIT/Interest 3.22 2.79 2.35 2.14 2.46 2.46 * 2.43 *
EBITDA/CMLTD+Interest 3.29 2.90 2.44 2.21 2.51 2.53 * 2.50 *
Equity/Assets (Avg.) 0.62 0.52 0.46 0.40 0.51 0.53 0.31
Equity/Ttl.Capital (Avg.) 1.00 0.65 0.53 0.57 0.81 0.93 0.88
SELECTED PROFITABILITY RATIOS
N I Cont Ops/Sales 3.63% 3.19% 2.93% 2.93% 3.16% 3.00% * 2.96%*
N I Cont Ops/Avg Equity 17.19% 15.16% 15.57% 16.90% 14.82% 12.64% * 12.62%*
N I Cont Ops/Avg Assets 10.62% 7.90% 7.16% 6.70% 7.50% 6.73% * 3.89%*
Gross Profit/Sales 9.08% 8.68% 8.16% 8.04% 7.09% 6.09% 5.60% 5.48%
Operating Expenses/Sale 6.69% 7.23% 6.92% 6.82% 6.33% 5.95% 3.92% 3.96%
Taxes/Pre-Tax Income 36.02% 36.22% 36.16% 35.57% 34.89% 35.73% 34.71% 35.94%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Cont Ops $0.53 $0.52 $0.60 $0.73 $0.84 $0.96 $1.05 $1.05 **
Wtd Avg EPS Cont Ops 5Yr $0.80 $0.80 ***
For Next Year EPS (2/99) $1.08
Fully Diluted EPS $0.53 $0.52 $0.60 $0.73 $0.84 $0.96 $0.36 $0.45
Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 ****
Dividend Yield 0.00% 0.00%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Last 12 Mo Sales / Share 14.50 $12.60 $15.91 $20.55 $25.68 $31.84 $35.21 $35.21 **
Last 12 Mo EBITDA / Share$1.22 $1.02 $1.32 $1.81 $2.15 $2.58 $2.86 $2.86 **
Book Value Per Share $3.49 $4.09 $4.78 $5.65 $7.44 $8.45 $8.91 $8.91 **
Price Per Share $17.38 $13.88
Invested Capital Per Share $26.11 $38.57
Price Per Share / LTM EPS - Continuing Operations 18.10 x 13.21 x
Price Per Share / Wt. Avg. EPS Cont. Ops. (5 years) 21.59 x 17.24 x
Price Per Share / Forecasted EPS 12.85 x
Price Per Share / Book Value Per Share 2.06 x 1.56 x
Price Per Share / Sales Per Share (LTM) 0.55 x 0.39 x
Price Per Share / EBITDA Per Share (LTM) 6.72 x 4.86 x
Invested Capital Per Share / Sales Per Share (LTM) 0.82 x 1.10 x
Invested Capital Per Share / EBITDA Per Share (LTM) 10.11 x 13.50 x
End of Period Shares Outstanding 3,611,350 5,135,719 5,177,154 5,203,004
Wtd Avg Shares Outs 3,524,278 4,893,838 5,150,556 5,201,231 5,352,257 5,424,977 5,413,000 5,456,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) 37.19% 35.06% 38.03% 30.45% 34.76%
CAGR in Sales (1,2,3,4,5 Yrs.) 20.66% 26.64% 27.89% 28.07% 27.59%
CAGR in F.D. EPS Cont. Ops. (1,2,3,4,5 Yrs.) -1.89% 6.40% 11.26% 12.20% 12.62%
EPS Cont. Ops. (5 Year Average) $0.73
EPS Cont. Ops. (5 Year Standard Deviation) $0.16
CAGR in F.D. EPS (1,2,3,4,5 Yrs.) -1.89% 6.40% 11.26% 12.20% 12.62%
EPS (5 Year Average) $0.73
EPS (5 Year Standard Deviation) $0.16
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
* Annualized
** As of 5/31/98
*** As of 2/28/98
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
9 Months For the Years For the 9 Months
AGRIBIOTECH INC. Ended June30 Ended June 30, Ended March 31, Sept. 21
1993 1994 1995 1996 1997 1997 1998 1998
---------------------------------------------------- ----------- ----------- ---------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $953 $7,502 $17,475 $51,681
Inventory 1,819 7,258 23,329 66,845
Current Assets 5,325 17,568 53,994 123,709
Current Liabilities 1,533 11,107 46,439 99,446
Working Capital 3,792 6,461 7,555 24,263
Short Term Debt 564 5,089 24,203 48,589
Current Maturities LTD 123 567 1,057 1,705
Long Term Debt and Preferred Stock 148 1,055 2,668 8,433
Common Stockholders' Equity 6,333 14,022 44,988 150,891
Total Capitalization (LT Debt + Equity) 6,481 15,077 47,656 159,324
Total Assets 8,014 26,184 95,113 258,770
SELECTED INCOME STATEMENT ITEMS
Sales 4,754 25,962 65,904 41,165 139,695
Cost of Goods Sold 3,398 19,236 49,527 31,006 109,209
Gross Profit 1,356 6,726 16,377 10,159 30,486
Other Income 52 87 572 469 1,271
Interest Expense 36 465 1,691 1,003 2,904
Depreciation and Amortization Expense 139 579 1,156 775 2,812
Selling, General & Administrative Expenses 2,779 9,637 17,972 10,814 27,442
Other Operating Expenses 0 0 0 0 0
Other Expenses 0 36 0 0 0
Pre-Tax Income (1,407) (3,324) (2,714) (1,189) 1,410
Taxes 0 0 0 0 (2,908)
Net Income From Continuing Operations (1,407) (3,324) (2,714) (1,189) 4,318
Discontinued Operations and/or Extraordinary Items 0 0 0 0 0
Net Income (1,407) (3,324) (2,714) (1,189) 4,318
EBITDA (1,232) (2,281) 134 589 7,127
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 3.47 1.58 1.16 1.24
Collection Period (Days) 73.19 59.44 69.16 * 76.75 *
Inventory Turnover 1.87 4.24 3.24 * 2.83 *
Sales/Assets (Avg.) 0.59 1.52 1.09 * 0.93 *
EBIT/Interest -38.49 -6.16 -0.60 * 0.97 *
EBITDA/CMLTD+Interest -7.76 -2.21 0.05 * 1.26 *
Equity/Assets (Avg.) 0.79 0.60 0.49 0.55
Equity/Ttl.Capitalization (Avg.) 0.98 0.94 0.94 0.95
SELECTED PROFITABILITY RATIOS
Net Income Cont. Ops./Sales -29.59% -12.80% -4.12% * 1.70%*
Net Income Cont. Ops./Avg. Equity -22.21% -32.66% -9.20% * 2.85%*
Net Income Cont. Ops./Avg. Assets -17.55% -19.44% -4.47% * 1.58%*
Gross Profit/Sales 28.52% 25.91% 24.85% 24.68% 21.82%
Operating Expenses/Sales 58.46% 37.12% 27.27% 26.27% 19.64%
Taxes/Pre-Tax Income 0.00% 0.00% 0.00% 0.00% -206.19%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Continuing Operations ($0.26) ($0.45) ($0.17) $0.29 $0.29 **
Weighted Average EPS Cont. Ops. (5 Yr.) n/a n/a***
Forecasted Next Year EPS (6/99) $0.33
Fully Diluted EPS (As Reported) ($0.26) ($0.45) ($0.17) ($0.33) $0.13
Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 ****
Dividend Yield 0.00% 0.00%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Last Twelve Months Sales Per Share $0.87 $3.48 $4.24 $5.08 $5.08 **
Last Twelve Months EBITDA Per Share ($0.22) ($0.31) $0.01 $0.21 $0.21 **
Book Value Per Share $0.89 $0.86 $1.84 $4.44 $4.44 **
Price Per Share $6.88 $12.75
Invested Capital Per Share $8.05 $14.49
Price Per Share / LTM EPS - Continuing Operations nmf 43.97 x
Price Per Share / Wt. Avg. EPS Cont. Ops. (5 years) n/a n/a
Price Per Share / Forecasted EPS 38.64 x
Price Per Share / Book Value Per Share 3.73 x 2.87 x
Price Per Share / Sales Per Share (LTM) 1.62 x 2.51 x
Price Per Share / EBITDA Per Share (LTM) 799.97 x 61.87 x
Invested Capital Per Share / Sales Per Share (LTM) 1.90 x 2.85 x
Invested Capital Per Share / EBITDA Per Share (LTM) 936.84 x 70.33 x
End of Period Shares Outstanding 7,145,200 8,543,757 23,743,385 33,680,768
Weighted Average Shares Outstanding 5,484,527 7,458,594 15,549,184 13,301,201 32,373,638
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) n/a n/a n/a n/a n/a
CAGR in Sales (1,2,3,4,5 Yrs.) n/a n/a n/a n/a n/a
CAGR in FD EPSContOps1,2,3,4,5Yrs n/a n/a n/a n/a n/a
EPS Cont. Ops. (5 Year Average) n/a
EPS Cont. Ops. (5 Year Standard Deviation) n/a
CAGR in F.D. EPS (1,2,3,4,5 Yrs.) n/a n/a n/a n/a n/a
EPS (5 Year Average) n/a
EPS (5 Year Standard Deviation) n/a
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 3/31/98
*** As of 6/30/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Six Months
THE ANDERSONS, INC. ------------For the Years Ended December 31,-------------------------- Ended June 30, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ ------------ ----------- -------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $68,362 $73,694 $68,643 $64,035
Inventory 269,930 150,297 191,467 121,221
Current Assets 368,411 257,635 275,088 197,901
Current Liabilities 309,514 195,986 221,493 138,760
Working Capital 40,940 47,795 57,623 58,897 61,649 53,595 59,141
Short Term Debt 120,267 0 15,572 9,500
Current Maturities LTD 8,029 6,360 8,406 7,136
Long Term Debt 46,077 52,259 71,217 74,139 68,568 65,709 66,647
Stockholders' Equity 51,970 56,256 64,870 67,260 73,249 72,201 77,178
Total Capitalization 98,047 108,515 136,087 141,399 141,817 137,910 143,825
Total Assets 259,294 360,586 344,809 455,518 346,591 368,244 291,988
SELECTED INCOME STATEMENT ITEMS
Sales 771,380 800,345 971,638 1,097,730 1,154,956 998,845 436,955 506,028
Cost of Goods Sold 822,274 944,176 995,725 851,157 366,755 423,406
Gross Profit 149,364 153,554 159,231 147,688 70,200 82,622
Other Income 0 0 0 0 0 0
Interest Expense 8,395 14,019 13,703 8,494 4,412 4,344
Deprec & Amort Exp 8,105 9,318 9,730 10,065 4,927 5,184
Sell, Gen, Admin Exp 125,472 129,210 133,637 131,818 65,505 69,938
Other Operating Exp 0 0 0 0 0 0
Other Expenses 0 0 0 1,121 0 0
Pre-Tax Income 15,497 10,325 11,891 6,255 283 8,340
Taxes 6,212 4,052 5,485 2,181 106 2,794
N I From Cont Ops 6,284 6,986 9,285 6,273 6,406 4,074 177 5,546
Disc Ops / Extrao Items 0 0 0 0 0 0
Net Income 9,285 6,273 6,406 4,074 177 5,546
EBITDA 31,997 33,662 35,324 24,814 9,622 17,868
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 1.19 1.31 1.24 1.43
Collection Period (Days) 22.73 22.45 26.01 * 22.67 *
Inventory Turnover 3.50 4.74 4.98 * 5.81 *
Sales/Assets (Avg.) 2.97 2.58 2.75 2.74 2.88 2.79 * 3.23 *
EBIT/Interest 2.85 1.74 1.87 1.74 * 2.70 *
EBITDA/CMLTD+Interest 1.53 1.76 1.47 * 2.12 *
Equity/Assets (Avg.) 0.20 0.17 0.17 0.17 0.18 0.20 0.23
Equity/Ttl.Capitaliz ( 0.53 0.52 0.50 0.48 0.50 0.52 0.53
SELECTED PROFITABILITY RATIOS
N I Cont. Ops./Sales 0.81% 0.87% 0.96% 0.57% 0.55% 0.41% 0.40%* 0.88%*
N I Cont. Ops./Avg. Eq 12.09% 12.91% 15.33% 9.50% 9.12% 5.60% * 12.64%*
N I Cont. Ops./Avg. As 2.42% 2.25% 2.63% 1.57% 1.60% 1.14% * 2.86%*
Gross Profit/Sales 15.37% 13.99% 13.79% 14.79% 16.07% 16.33%
Operating Exp/Sales 12.91% 11.77% 11.57% 13.20% 14.99% 13.82%
Taxes/Pre-Tax Income 40.09% 39.24% 46.13% 34.87% 37.46% 33.50%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Continuin $0.75 $0.83 $1.10 $0.74 $0.76 $0.50 $0.48 $1.18 $1.18**
Wtd Aver EPS Cont Ops 5 Yr $0.72 $0.72***
Foreced Next Yr EPS 12/98 $1.13
Fully Diluted EPS (As $0.75 $0.83 $1.10 $0.74 $0.76 $0.50 $0.02 $0.70
Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.12 $0.06 $0.08 $0.16****
Dividend Yield 1.35% 1.45%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 24.00% 300.00% 11.43% 13.56%
Last Twelve Mo Sales / Share $115.26 $130.22 $137.09 $122.41 $133.94 $133.94**
Last Twelve Mo EBITDA / Sh $3.80 $3.99 $4.19 $3.04 $4.15 $4.15**
Book Value Per Share $7.98 $8.76 $9.09 $9.71 $9.71**
Price Per Share $8.88 $11.00
Invested Capital Per Share $20.17 $21.48
Price Per Share/LTM EPS-Cont Ops 17.75 x 9.32 x
Price Per Share/Wt Avg EPS Cont Ops 5 yr 12.34 x 15.29 x
Price Per Share / Forecasted EPS 9.73 x
Price Per Share / Book Value Per Share 0.98 x 1.13 x
Price Per Share / Sales Per Share (LTM) 0.07 x 0.08 x
Price Per Share / EBITDA Per Share (LTM) 2.92 x 2.65 x
Invested Capital Per Share / Sales Per Share (LTM) 0.16 x 0.16 x
Invested Capital Per Share / EBITDA Per Share (LTM) 6.63 x 5.18 x
End of Period Shares Outstanding 8,360,000 7,939,000 7,949,520
Weighted Average Shares Outstanding 8,430,000 8,430,000 8,425,000 8,160,000 8,287,000 7,973,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) 39.06% 15.32% 20.66% 7.52% 7.27%
CAGR in Sales (1,2,3,4,5 Yrs.) 3.75% 12.23% 12.48% 10.62% 5.30%
CAGR in FD EPS Cont Ops 1,2,3,4,5 10.67% 21.11% -0.45% 0.33% -7.79%
EPS Cont. Ops. (5 Year Average) $0.79
EPS Cont. Ops. (5 Year Standard Deviation) $0.19
CAGR in F.D. EPS (1,2,3,4,5 Yrs.) 10.67% 21.11% -0.45% 0.33% -7.79%
EPS (5 Year Average) $0.79
EPS (5 Year Standard Deviation) $0.19
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 3/31/98
*** As of 12/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Six Months
CONSEP, INC. For the Years Ended December 31, Ended June 30, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ ------------------ ------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $3,797 $3,602 $4,734 $9,926
Inventory 8,012 7,994 9,316 9,988
Current Assets 14,433 15,405 16,565 21,394
Current Liabilities 5,649 7,972 8,293 13,332
Working Capital 7,435 1,973 6,862 8,784 7,433 8,272 8,063
Short Term Debt 1,711 1,170 1,493 3,975
Current Maturities LTD 444 347 559 496
Long Term Debt and Preferred S 1,496 1,273 689 951 1,191 2,168 2,062
Common Stockholders' Equity 10,636 6,489 12,440 14,681 17,010 15,217 15,147
Total Capitalization 12,132 7,762 13,129 15,632 18,201 17,385 17,209
Total Assets 16,003 13,840 19,653 21,559 23,411 25,678 30,541
SELECTED INCOME STATEMENT ITEMS
Sales 17,830 21,274 25,120 30,844 33,229 39,204 13,780 13,155
Cost of Goods Sold 19,816 23,094 25,242 29,787 10,045 9,946
Gross Profit 5,304 7,750 7,987 9,417 3,735 3,210
Other Income 336 304 359 467 177 20
Interest Expense 269 284 324 425 127 160
Deprec and Amort Exp 816 882 1,072 1,172 574 636
Sell, Gen & Adm Exp 8,544 7,997 9,051 10,078 2,254 1,374
Other Operating Exp 2,592 1,059 1,454 1,204 1,220 1,439
Other Expenses 85 0 0 0 0 7
Pre-Tax Income (5,849) (1,286) (2,483) (1,822) 311 250
Taxes 0 0 0 0 0 0
Net Income From Cont Ops (3,257) (4,126) (5,849) (1,286) (2,483) (1,822) 311 250
Disc Ops / Extrao Items 0 0 0 0 0 0 0 0
Net Income (3,257) (4,126) (5,849) (1,286) (2,483) (1,822) 311 250
EBITDA (4,764) (120) (1,087) (226) 1,012 1,046
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 2.55 1.93 2.00 1.60
Collection Period (Days) 44.94 40.64 38.80 * 69.35 *
Inventory Turnover 2.88 3.15 3.44 * 3.08 *
Sales/Assets (Avg.) 1.11 1.43 1.50 1.50 1.48 1.60 * 1.37 *
EBIT/Interest -20.71 -3.52 -6.66 -3.29 * -3.11 *
EBITDA/CMLTD+Interest -0.16 -1.62 -0.23 * -0.20 *
Equity/Assets (Avg.) 0.66 0.57 0.57 0.66 0.70 0.66 0.54
Equity/Ttl.Capitalization (Avg 0.88 0.86 0.91 0.94 0.94 0.91 0.88
SELECTED PROFITABILITY RATIOS
Net Income Cont. Ops./Sales -18.27% -19.39% -23.29% -4.17% -7.47% -4.65% * -4.88%*
Net Income Cont. Ops./Avg. Equ -30.62% -48.19% -61.80% -9.48% -15.67% -11.31% * -12.40%*
Net Income Cont. Ops./Avg. Ass -20.35% -27.65% -34.93% -6.24% -11.04% -7.42% * -6.70%*
Gross Profit/Sales 21.11% 25.13% 24.04% 24.02% 27.10% 24.40%
Operating Expenses/Sales 44.33% 29.36% 31.61% 28.78% 25.21% 21.38%
Taxes/Pre-Tax Income 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Continuing Operations ($1.01) ($0.97) ($0.19) ($0.31) ($0.19) $.019) ($0.19)**
Weighted Average EPS Cont. Ops. (5 Yr.) $0.00 0.00***
Forecasted Next Year EPS (12/98) ($0.12)
Fully Diluted EPS (As Reported) ($1.01) ($0.97) ($0.19) ($0.31) ($0.19) $0.03 $0.03
Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00****
Dividend Yield 0.00% 0.00%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Last Twelve Months Sales Per Share $4.19 $4.56 $4.17 $4.15 $3.98 $3.98**
Last Twelve Months EBITDA Per Share ($0.79) ($0.02) ($0.14) ($0.02) ($0.02) ($0.02)**
Book Value Per Share $1.94 $1.80 $1.61 $1.57 $1.57**
Price Per Share $1.50 $0.94
Invested Capital Per Share $1.95 $1.61
Price Per Share / LTM EPS - Continuing Operations nmf nmf
Price Per Share / Wt. Avg. EPS Cont. Ops. (5 years) nmf nmf
Price Per Share / Forecasted EPS nmf
Price Per Share / Book Value Per Share 0.93 x 0.60 x
Price Per Share / Sales Per Share (LTM) 0.36 x 0.24 x
Price Per Share / EBITDA Per Share (LTM) nmf nmf
Invested Capital Per Share / Sales Per Share (LTM) 0.47 x 0.41 x
Invested Capital Per Share / EBITDA Per Share (LTM) nmf nmf
End of Period Shares Outstanding 7,569,537 9,431,203 9,460,151 9,657,664
Weighted Average Shares Outstanding 6,001,863 6,761,623 7,963,358 9,450,963 9,537,979 9,683,674
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) -13.52% 10.82% 10.44% 9.98% 9.92%
CAGR in Sales (1,2,3,4,5 Yrs.) 19.32% 18.70% 20.04% 16.84% 17.07%
CAGR in F.D. EPS Cont. Ops. (1,2,3,4,5 Yrs nmf nmf nmf nmf nmf
EPS Cont. Ops. (5 Year Average) ($0.53)
EPS Cont. Ops. (5 Year Standard Deviation) $0.38
CAGR in F.D. EPS (1,2,3,4,5 Yrs.) nmf nmf nmf nmf nmf
EPS (5 Year Average) ($0.53)
EPS (5 Year Standard Deviation) $0.38
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 6/30/98
*** As of 12/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the 9 Months
DEKALB GENETICS CORPORATION For the Years Ended August 31, Ended May 31, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ ---------------- ------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $57,600 $54,600 $67,500 $176,300
Inventory 106,000 99,100 139,100 142,400
Current Assets 175,000 190,000 226,500 342,500
Current Liabilities 94,600 87,300 133,500 244,600
Working Capital 86,000 67,700 68,900 80,400 102,700 93,000 97,900
Short Term Debt 42,800 0 34,500 126,000
Current Maturities LTD 0 0 0 0
L T Debt and Preferred Stk 90,100 85,200 85,000 85,000 85,000 90,000 114,000
Com Stckhldrs' Equity 117,900 114,800 121,300 126,300 168,600 196,100 225,900
Total Capitalization 208,000 200,000 206,300 211,300 253,600 286,100 339,900
Total Assets 302,100 313,000 315,200 323,000 363,300 449,600 614,800
SELECTED INCOME STATEMENT ITEMS
Sales 285,900 277,400 300,200 319,400 387,500 451,400 438,000 496,500
Cost of Goods Sold 163,900 162,300 202,100 230,500 221,300 264,800
Gross Profit 136,300 157,100 185,400 220,900 216,700 231,700
Other Income 3,500 1,100 3,600 6,600 2,500 4,200
Interest Expense 8,200 9,600 8,300 7,500 5,300 8,300
Deprec and Amor Exp 10,800 11,100 11,300 13,800 9,300 11,100
Sell, Gen & Admin Exp 75,100 90,300 105,000 116,300 108,100 118,400
Other Operating Expenses 41,300 42,500 47,600 57,300 54,200 72,900
Other Expenses 0 700 0 0 0 0
Pre-Tax Income 13,900 (2,600) 15,200 15,100 28,100 46,400 51,600 36,300
Taxes 4,400 (3,400) 4,600 5,600 11,100 17,600 20,100 11,500
N I From Continuing Ops 9,500 800 10,600 9,500 17,000 28,800 31,500 24,800
Dis Ops Extrao 800 900 0 1,200 0 0 0 0
Net Income 10,300 1,700 10,600 10,700 17,000 28,800 31,500 24,800
EBITDA 34,200 35,800 47,700 67,700 66,200 55,700
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 2.22 1.70 1.75 1.85 2.18 1.70 1.40
Collection Period (Days) 65.82 52.84 49.36 * 87.26 *
Inventory Turnover 1.53 1.97 1.94 * 1.95 *
Sales/Assets (Avg.) 0.95 0.90 0.96 1.00 1.13 1.11 * 0.96 *
EBIT/Interest 2.85 2.57 4.39 7.19 * 3.96 *
EBITDA/CMLTD+Interest 3.73 5.75 9.03 * 5.45 *
Equity/Assets (Avg.) 0.39 0.38 0.38 0.39 0.43 0.45 0.40
Equity/Ttl.Capitalization Avg 0.57 0.57 0.58 0.59 0.63 0.68 0.67
SELECTED PROFITABILITY RATIOS
N I Cont. Ops./Sales 3.32% 0.29% 3.53% 2.97% 4.39% 6.38% 6.61%* 4.33%*
N I Cont. Ops./Avg. Equity 8.06% 0.69% 8.98% 7.67% 11.53% 15.79% * 10.47%*
N I Cont. Ops/Avg. Assets 3.14% 0.26% 3.37% 2.98% 4.95% 7.09% * 4.15%*
Gross Profit/Sales 45.40% 49.19% 47.85% 48.94% 49.47% 46.67%
Operating Expenses/Sales 38.77% 41.58% 39.38% 38.46% 37.05% 38.53%
Taxes/Pre-Tax Income 31.65% 130.77% 30.26% 37.09% 39.50% 37.93% 38.95% 31.68%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Cont Ops $0.31 $0.03 $0.34 $0.30 $0.51 $0.80 $0.85 $0.60 $0.60**
Wtd Avg EPS Cont Ops5 Yr $0.51 $0.51***
Forecasted Next Year EPS (8/99) $1.18
Fully Diluted EPS (As Reported $0.34 $0.05 $0.34 $0.34 $0.51 $0.80 $0.88 $0.68
Dividend Per Share $0.13 $0.13 $0.13 $0.13 $0.14 $0.14 $0.11 $0.11 $0.14****
Dividend Yield 0.36% 0.15%
Percentage Payout 39.70% 266.00% 39.12% 39.12% 26.86% 17.50% 11.93% 15.44% 23.33%
Last 12 Months Sales / Share $9.28 $8.90 $9.58 $10.12 $11.54 $12.62 $13.96 $13.96 **
Last 12 Months EBITDA / Share $1.09 $1.13 $1.42 $1.89 $1.57 $1.57 **
Book Value Per Share $3.84 $3.72 $3.93 $4.06 $4.94 $5.71 $6.55 $6.55 **
Price Per Share $39.25 $93.50
Invested Capital Per Share $42.87 $100.46
Price / Share - LTM EPS Contin Ops 49.06 x 155.83 x
Price / Share - Wt Avg EPS Cont Ops 5 yrs 76.96 x 183.33 x
Price / Share - Forecasted EPS 79.24 x
Price / Share - Book Value / Share 6.88 x 14.27 x
Price / Share - Sales / Share LTM 3.11 x 6.70 x
Price / Share - EBITDA / Share LTM 20.73 x 59.69 x
Invest Cap / Share - Sales / Share LTM 3.40 x 7.19 x
Invest Cap / Share - EBITDA / Share LTM 22.65 x 64.14 x
End of Period Shares Outstanding 31,093,662 34,103,034 34,361,173 34,474,073
Wtd Aver Shs Outstand 30,808,000 31,162,000 31,327,000 31,554,000 33,576,000 35,760,000 35,830,663 36,518,247
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) 3.61% 2.15% 2.25% 4.72% 8.28%
CAGR in Sales (1,2,3,4,5 Yrs.) -2.97% 2.47% 3.76% 7.90% 9.56%
CAGR in FD EPS Con Ops 1,2,3,4,5 Yrs -90.32% 4.73% -1.09% 13.25% 20.88%
EPS Cont Ops 5 Year Aver $0.40
EPS Cont Ops - 5 Year Std Dev $0.25
CAGR in F.D. EPS 1,2,3,4,5 Yrs -85.07% 0.74% 0.50% 11.08% 19.02%
EPS 5 Year Aver $0.41
EPS 5 Year Std Dev $0.25
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 5/31/98
*** As of 8/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Nine Months
DELTA AND PINE LAND COMPANY
-----------------For the Years Ended August 31,------------------------ Ended May 31, Sept. 21,
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ ----------------- ---------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $5,252 $66,650 $95,437 $183,707
Inventory 20,168 41,460 42,886 58,931
Current Assets 24,065 23,979 29,269 36,296 111,940 145,449 261,722
Current Liabilities 20,194 17,634 18,883 24,695 75,966 112,524 177,457
Working Capital 3,871 6,345 10,386 11,601 35,974 32,925 84,265
Short Term Debt 2,595 259 23,940
Current Maturities LTD 3,250 0 0 0 0 0 0
L T Debt and Preferred St 13,750 1,104 14,047 12,814 31,545 30,652 56,194
Com Stckhldrs' Equity 11,172 31,593 38,024 47,860 69,261 72,451 99,492
Total Capitalization 24,922 32,697 52,071 60,674 100,806 103,103 155,686
Total Assets 45,561 50,958 72,394 87,542 179,660 220,656 339,401
SELECTED INCOME STATEMENT ITEMS
Sales 68,395 77,605 80,602 98,950 153,271 183,249 189,167 208,614
Cost of Goods Sold 39,395 45,192 48,135 55,946 97,477 116,289 119,933 139,382
Gross Profit 29,000 32,413 32,467 43,004 55,794 66,960 69,234 69,232
Other Income 552 539 383 463 467 0
Interest Expense 1,366 2,038 2,418 2,204 2,083 2,570
Deprec and Amor Exp 2,544 3,150 4,026 5,060 3,691 5,030
Sell, Gen & Admin Exp 13,971 17,213 18,818 21,189 16,982 20,352
Other Operating Expenses 5,496 6,631 11,212 13,651 11,056 14,673
Other Expenses 0 0 0 0 0 254
Pre-Tax Income 12,458 13,767 12,186 17,661 23,729 30,379 39,580 31,383
Taxes 4,608 5,149 4,359 6,726 8,453 10,448 14,073 12,278
N I From Continuing Ops 7,850 8,618 7,827 10,935 15,276 19,932 25,507 19,105
Dis Ops Extrao 0 0 0 0 0 (13,019) 0 0
Net Income 7,850 8,618 7,827 10,935 15,276 6,913 25,507 19,105
Preferred Dividends 0 0 0 0 39 63 45 72
N I from Cont Ops ava for Com 7,850 8,618 7,827 10,935 15,237 19,869 25,462 19,033
EBITDA 16,096 22,849 30,173 37,643 45,354 38,983
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current ratio 1.19 1.36 1.55 1.47 1.47 1.29 1.47
Collection period (days) 19.37 85.61 161.42 * 251.33 *
Inventory turnover 2.77 3.16 2.76 * 2.67 *
Sales / Assets (Avg) 1.69 1.61 1.31 1.24 1.15 0.92 * 0.72 *
EBIT / Interest 9.92 9.67 10.81 14.78 * 9.24 *
EBITDA/DMLTD+Interest 11.78 11.21 12.48 17.08 * 11.62 *
Assets / Equity 0.34 0.44 0.56 0.54 0.44 0.35 0.31
Equity / Ttl Cap[italiz (Avg) 0.61 0.74 0.82 0.76 0.73 0.69 0.66
SELECTED PROFITABILITY RATIOS
N I Con Ops avail com sh/Sales 11.48% 11.10% 9.71% 11.05% 9.94% 10.84% 10.82%* 6.63%*
N I Con Ops avail com sh/AvEqu 57.65% 40.30% 22.49% 25.46% 26.02% 28.04% * 15.63%*
N I Con Ops avail com sh/AvAss 19.44% 17.86% 12.69% 13.67% 11.40% 9.93% * 4.80%*
Gross Profit / Sales 42.40% 41.77% 40.28% 43.46% 36.40% 36.54% 36.60% 33.03%*
Operating Expense / Sales 24.15% 24.10% 19.59% 19.01% 14.82% 20.64%*
Taxes / Pretax income 36.99% 37.40% 35.77% 38.08% 35.62% 34.39% 35.56% 39.12%
SELECTED EARNINGS AND PRICING RATIOS
LTM EPS From Cont Operations $0.23 $0.25 $0.22 $0.29 $0.39 $0.50 $0.49 $0.33 $0.33 **
Wtd Aver EPS Cont Ops (5 Yrs) $0.37 $0.37 ***
Forecasted Next Yr EPS 8/99 $1.03
Fully diluted EPS as reported $0.23 $0.25 $0.22 $0.29 $0.39 $0.17 $0.64 $0.47
Dividend per share $0.00 $0.00 $0.05 $0.05 $0.06 $0.08 $0.06 $0.09 $0.12 ****
Dividend yield 0.28% 0.26%
Percentage payout 0.00% 0.00% 20.45% 15.52% 15.90% 45.88% 8.80% 19.15% 36.36%
Last 12 Mo sales per sha $2.01 $2.25 $2.17 $2.63 $3.90 $4.60 $5.00 $5.00 **
Last 12 Mo EBITDA per sha $0.43 $0.61 $0.77 $0.94 $0.77 $0.77 **
Book value per share $0.33 $0.92 $1.03 $1.27 $1.80 $1.93 $2.60 $2.60 **
Price / Share $27.56 $46.25
Invested capital per share $28.38 $48.34
Price / Share - LTM EPS - Cont ops 55.13 x 140.15 x
Price / Share - Wt Av EPS con ops 5yr 73.66 x 123.61 x
Price / Share - Forecasted EPS 44.90 x
Price / Share - Book value per share 14.31 x 17.79 x
Price / Share - Sales per share LTM 6.00 x 9.24 x
Price / Share - EBITDA per share LTM 29.19 x 59.92 x
Invested cap / Share Sales per share LTM 6.17 x 9.66 x
Invested cap / Share EBITDA per share LTM 30.06 x 62.63 x
End of Period shares Outstanding 37,076,720 37,563,787 37,609,849 38,267,283
Wtd aver shares Outstand 34,041,746 34,497,778 37,064,889 37,589,000 39,264,000 39,863,000 39,638,000 40,516,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets 1,2,3,4,5 Yrs 11.85% 26.05% 24.32% 40.92% 37.10%
CAGR in Sales 1,2,3,4,5 Yrs 13.47% 8.56% 13.10% 22.35% 21.79%
CAGR in FD EPS con ops 12345Yr 6.45% -3.28% 7.64% 13.80% 16.55%
EPS Cont Ops 5yr aver $0.33
EPS Cont Ops 5yr std dev $0.10
CAGR in FD EPS 12345yrs 7.53% -2.73% 7.64% 13.80% -6.07%
EPS 5 yr average $0.26
EPS (5 Year Standard Deviation) $0.07
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
* Annualized
** As of 5/31/98
*** As of 8/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Years Ended Ten Months For the Nine Months
ECOGEN, INC. December 31, Ended Oct 31 --For the Years Ended October 31-- Ended July 31, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ ------------------ -------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $733 $1,784 $1,770 $1,790
Inventory 6,345 6,854 8,357 6,628
Current Assets 9,000 18,743 13,071 13,404
Current Liabilities 4,121 6,273 6,001 5,241
Working Capital 4,879 12,469 7,070 8,162
Short Term Debt 0 0 0 0
Current Maturities LTD 0 0 0 0
L T Debt and Preferred St 0 0 0 620 1,297 3,916 3,735
Com Stckhldrs' Equity 18,465 9,496 9,651 5,507 14,403 4,870 5,109
Total Capitalization 18,465 9,496 9,651 6,127 15,700 8,786 8,844
Total Assets 23,356 21,277 19,471 12,371 23,861 17,558 16,862
SELECTED INCOME STATEMENT ITEMS
Sales 3,519 7,151 8,550 9,135 8,600 8,783 7,684 6,674
Cost of Goods Sold 3,227 5,637 5,891 5,508 5,699 6,292 5,106 5,417
Gross Profit 292 1,514 2,659 3,628 2,901 2,491 2,579 1,257
Other Income 5,438 12,501 11,283 2,863 7,940 3,170 2,426 5,398
Interest Expense 8 8 115 142 107 290
Deprec and Amor Exp 423 614 404 1,355 306 580
Sell, Gen & Admin Exp 8,757 9,821 9,249 10,672 8,547 8,661 6,491 5,251
Other Operating Expenses 12,694 12,446 9,278 19,135 4,922 6,668 3,770 2,721
Other Expenses 0 0 0 0 210 0
Pre-Tax Income (4,593) (23,324) (2,743) (9,810)(5,574) (1,609)
Taxes 0 0 0 0 0 0
N I From Continuing Ops (21,366) (11,858) (4,593) (23,324) (2,743) (9,810)(5,574) (1,609)
Dis Ops Extrao 0 0 0 0 0 0 0 0
Net Income (21,366) (11,858) (4,593) (23,324) (2,743) (9,810)(5,574) (1,609)
Preferred Stock dividends 0 0 0 0 120 0 0 0
N I from ContOps ava for Com (21,366) (11,858) (4,593) (23,324) (2,863) (9,810)(5,574) (1,609)
N I avail for Com Sh (21,366) (11,858) (4,593) (23,324) (2,863) (9,810)(5,574) (1,609)
EBITDA (4,161) (22,702) (2,224) (8,313)(5,161) (738)
SELECTED LIQUIDITY, COVERAGE, & LEVERAGE RATIOS
Current ratio 2.18 2.99 2.18 2.56
Collection period (days) 29.29 53.41 73.83 * 83.59 *
Inventory turnover 0.87 0.86 0.83 * 0.88 *
Sales/Assets (Avg) 0.15 0.32 0.42 0.57 0.47 0.42 * 0.45 *
EBIT/Interest+Pref Div -560.59 -2914.55 -11.17 -68.08 * -16.96 *
EBIT/CMLTD+Interest+Pref Div -2837.80 -9.45 -58.54 * -11.95 *
Equity/Assets (Avg) 0.79 0.63 0.47 0.48 0.55 0.47 0.29
Equity/Ttl Capitalization (Avg) 1.00 1.00 1.00 0.96 0.91 0.79 0.57
SELECTED PROFITABILITY RATIOS
N I Cont Ops Avail com/Sales -607.16% -165.82% -53.72% -255.32% -33.29% -111.69% * -75.20%*
N I Cont Ops Avail com/Equity-115.71% -84.82% -47.97% -307.75% -28.76% -101.80% * -117.14%*
N I Cont Ops Avail com/AvAss -91.48% -53.14% -22.54% -146.50% -15.81% -47.37% * -33.96%*
Gross Profit/Sales 8.30% 21.17% 31.10% 39.71% 33.73% 28.36% 33.56% 18.83%
Operating expense/Sales 609.58% 311.38% 216.69% 326.29% 156.62% 174.53% 33.54% 119.46%
Taxes/Pretax income 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
SELECTED EARNING AND PRICING RATIOS
LTM EPS from Cont Ops ($6.30) ($3.39) ($1.24) ($4.34) ($0.40) ($1.23) ($0.73) ($0.73)**
Wtd Aver EPS Cont Ops $0.00 $0.00 ***
Forecasted Next Yr EPS(10/99) ($0.40)
Fully diluted EPS as report ($6.30) ($3.39) ($1.24) ($4.34) ($0.40) ($1.23) ($0.70) ($0.20)
Dividend per share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 ****
Dividend yield 0.00% 0.00%
Percentage payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
LTM Sales per share $1.04 $2.05 $2.30 $1.70 $1.20 $1.10 $0.97 $0.97 **
LTM EBITDA per share ($1.12) ($4.23) ($0.31) ($1.04) ($0.48) ($0.48)**
Book value per share $0.81 $1.83 $0.61 $0.60 $0.60 **
Price / Share $2.75 $1.25
Invested Capital / Share $3.24 $1.71
Price / Share - LTM EPS Cont Ops nmf nmf
Price / Share - Wtd Aver EPS CoOp nmf nmf
Price / Share - Forecasted EPS nmf
Price / Share - Book Value /Sh 4.52 x 2.07 x
Price / Share - Sales per sh LTM 2.49 x 1.29 x
Price / Share - EBITDA / Sh LTM nmf nmf
Inv Cap / Sh - Sales per sh LTM 2.94 x 1.77 x
Inv Cap / Sh - EBITDA per sh LTM nmf nmf
End of Period Shares Outstanding 5,942,386 7,801,523 8,001,680 8,142,573
Wtd Aver Shares Outstand 3,385,000 3,495,000 3,715,000 5,373,000 7,178,000 7,958,000 7,9934,000 8,041,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets 12345 Yrs -8.90% -8.69% -19.09% 0.54% -5.55%
CAGR in Sales 12345 Yrs 103.21% 55.87% 37.44% 25.03% 20.07%
CAGR in FD EPS ConOps 12345yrs nmf nmf nmf nmf nmf
EPS Con Ops 5 yr aver ($2.12)
EPS Con Ops 5 yr std dev $1.49
CAGR in FD EPS 12345 yrs nmf nmf nmf nmf nmf
EPS (5 Year Average) ($2.12)
EPS (5 Year Standard Deviation) $1.49
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 7/31/98
*** As of 10/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
Eight Months For the Nine Months
MYCOGEN CORPORATION Ended Aug 31 -----------For the Years Ended August 31--------------- Ended May 31, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------- ----------------- -------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $27,402 $30,700 $42,102 $92,404
Inventory 33,633 37,177 57,135 72,271
Current Assets 79,902 137,795 106,754 179,890
Current Liabilities 21,208 41,047 66,929 118,861
Working Capital 58,694 96,748 39,825 61,029
Short Term Debt 0 1,520 15,602 70,113
Current Maturities LTD 0 0 3,000 3,000 (Est)
L T Debt and Preferred Stk 2,262 0 11,250 11,250 (Est)
Com Stckhldrs' Equity 105,207 107,885 125,406 113,703 181,194 157,214 203,232
Total Capitalization 115,965 181,194 168,464 214,482
Total Assets 112,714 201,533 165,726 159,608 227,469 239,687 342,359
SELECTED INCOME STATEMENT ITEMS
Sales 23,427 112,583 104,383 106,169 146,800 202,407 170,895 177,562
Cost of Goods Sold 62,712 66,966 93,508 126,857 106,869 112,370
Gross Profit 41,671 39,203 53,292 75,550 64,026 65,192
Other Income 25,806 8,512 12,143 9,469 6,364 7,055
Interest Expense 254 389 263 2,483 671 2,159
Deprec and Amor Exp 6,501 8,989 9,078 10,014 6,547 8,277
Sell, Gen & Admin Exp 42,132 36,734 57,480 59,812 43,130 47,536
Other Operating Expenses 56,721 25,035 54,750 58,851 33,070 61,253
Other Expenses 0 0 0 22 0 0
Pre-Tax Income (31,630) (14,443) (47,058) (36,149) (6,481) (38,701)
Taxes 0 0 0 1,534 500 (944)
N I From Continuing Ops (31,630) (14,443) (47,058) (37,683) (6,981) (37,757)
Dis Ops Extrao 0 0 0 0 0 0
Net Income (31,630) (14,443) (47,058) (37,683) (6,981) (37,757)
Preferred Stock dividends 1,604 1,503 578 0 0 0
N I from ConOps ava for Com Sh (3,030) (27,514) (33,234) (15,946) (47,636) (37,683) (6,981) (37,757)
N I ava for Com Sh (3,030) (27,514) (33,234) (15,946) (47,636) (37,683) (6,981) (37,757)
EBITDA (24,875) (5,065) (37,717) (23,652) 737 (28,265)
SELECTED LIQUIDITY, COVERAGE, & LEVERAGE RATIOS
Current Ratio 3.77 3.36 1.60 1.51
Collection period (days) 94.21 72.23 65.64 * 117.41 *
Inventory turnover 1.99 2.64 2.69 * 2.05 *
Sales/Assets (avg) 0.21 0.72 0.57 0.65 0.76 0.87 * 0.72 *
EBIT/Interest+Pref Div -16.89 -7.43 -55.64 -13.56 * -16.22 *
EBITDA/CMLTD+Inter+Pref Div -2.68 -44.85 -4.31 * -7.55 *
Equity / Assets (avg) 0.93 0.68 0.64 0.73 0.76 0.72 0.62
Equity / Ttl Capitaliz (avg) 0.98 0.99 0.97 0.94
SELECTED PROFITABILITY RATIOS
N I ConOps avai com sh/sales -12.93% -24.44% -31.84% -15.02% -32.45% -18.62% -13.43%* -32.74%*
N I ConOps avai com sh/AvEqu -2.88% -25.82% -28.49% -13.34% -32.31% -22.27% * -37.99%*
N I ConOps avai com sh/AvAss -2.69% -17.51% -18.10% -9.80% -24.61% -16.13% * -23.52%*
Gross Profit/Sales 39.92% 36.93% 36.30% 37.33% 37.47% 36.72%
Operating Exp/Sales 94.70% 58.18% 76.45% 58.63% 44.59% 61.27%
Taxes/PreTax Inc 0.00% 0.00% 0.00% -4.24% -7.71% 2.44%
SELECTED EARNINGS AND PRICING RATIOS
LTM EPS from ConOps ($0.21) ($1.69) ($1.81) ($0.83) ($1.81) ($1.22) ($0.84) ($2.12) ($2.12)**
Wtd Avg EPS ConOps 5yr $0.00 $0.00 ***
Forecasted Next yr EPS(8/99) $0.07
FD EPS as reported ($0.21) ($1.69) ($1.81) ($0.83) ($1.81) ($1.22) ($0.23) ($1.13)
Dividend per share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 ****
Dividend yield 0.00% 0.00%
Percentage Payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
LTM Sales per sh $5.68 $5.52 $5.59 $6.55 $6.27 $6.27 **
LTM EBITDA per share ($1.35) ($0.26) ($1.44) ($0.76) ($1.58) ($1.58)**
Book value per share $5.86 $5.91 $5.01 $5.61 $5.61 **
Price / Share $24.75 $27.81
Invested Capital / Share $25.70 $30.14
Price / Share - LTM EPS ContOps nmf nmf
Price / Share - Wtd Avg EPS ConOps5yr nmf nmf
Price / Share - Forecasted EPS 397.32 x
Price / Share - Book Value per sh 4.94 x 4.95 x
Price / Share - Sales per share LTM 3.78 x 4.44 x
Price / Share - EBITDA/Share LTM nmf nmf
Invested Cap/Sh / Sales/shareLTM 3.93 x 4.81 x
Invested Cap/Sh / EBITDA/Sh LTM nmf nmf
End of period shares O/S 19,400,764 30,678,537 31,381,344 36,195,621
Wtd aver shares 18,377,000 19,225,000 26,275,000 30,920,000 30,663,000 33,353,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets 12345yrs 78.80% 21.26% 12.29% 19.19% 16.29%
CAGR in Sales 12345yrs 380.57% 111.08% 65.49% 58.22% 53.92%
CAGR in F.D. EPS 1,2,3,4,5 Yrs nmf nmf nmf nmf nmf
EPS ContOps 5 yr avg ($1.47)
EPS 5 Year Std Dev $0.39
CAGR in FD EPS 12345yrs nmf nmf nmf nmf nmf
EPS (5 Year Average) ($1.47)
EPS (5 Year Standard Deviation) $0.39
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 5/31/98
*** As of 8/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Nine Months
PIONEER HI-BRED INTERNATIONAL --------------For the Years Ended August 31,-------------------- Ended May 31, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
--------------------------------------------------------------------- ---------------------- ------------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $163,000 $208,000 $256,000 $ 561,000
Inventory 426,000 382,000 440,000 414,000
Current Assets 703,000 717,000 742,000 770,000 784,000 901,000 1,326,000
Current Liabilities 286,000 261,000 282,000 280,000 288,000 329,000 479,000
Working Capital 417,000 456,000 460,000 490,000 496,000 572,000 847,000
Short Term Debt 58,000 13,000 91,000 56,000
Current Maturities LTD 53,000 12,000 6,000 4,000
L T Debt and Preferred St 74,000 68,000 66,000 18,000 25,000 19,000 17,000
Com Stckhldrs' Equity 799,000 825,000 881,000 913,000 1,018,000 1,148,000 1,399,000
Total Capitalization 873,000 893,000 947,000 931,000 1,043,000 1,167,000 1,416,000
Total Assets 1,216,000 1,221,000 1,253,000 1,293,000 1,422,000 1,603,000 2,013,000
SELECTED INCOME STATEMENT ITEMS
Sales 1,262,000 1,343,000 1,479,000 1,532,000 1,721,000 1,784,000 1,642,000 1,698,000
Cost of Goods Sold 622,000 643,000 606,000 642,000 727,000 771,000 700,000 716,000
Gross Profit 640,000 700,000 873,000 890,000 994,000 1,013,000 942,000 982,000
Other Income 19,000 24,000 22,000 22,000 16,000 50,000
Interest Expense 11,000 13,000 11,000 8,000 6,000 9,000
Deprec and Amor Exp 75,000 74,000 77,000 89,000 64,000 64,000
Sell, Gen & Admin Exp 458,000 480,000 511,000 504,000 401,000 420,000
Other Operating Expenses 69,000 130,000 136,000 146,000 103,000 115,000
Other Expenses 7,000 2,000 8,000 7,000 2,000 3,000
Pre-Tax Income 239,000 223,000 347,000 289,000 350,000 370,000 446,000 485,000
Taxes 87,000 86,000 134,000 106,000 127,000 127,000 161,000 166,000
N I From Continuing Ops 152,000 137,000 213,000 183,000 223,000 243,000 285,000 319,000
Dis Ops Extrao 0 (17,000) 0 0 0 0 0 0
Net Income 152,000 120,000 213,000 183,000 223,000 243,000 285,000 319,000
EBITDA 433,000 376,000 438,000 467,000 516,000 558,000
SELECTED LIQUIDITY, COVERAGE & LEVERAGE RATIOS
Current Ratio 2.46 2.75 2.63 2.75 2.72 2.74 2.77
Collection Period (Days) 38.83 39.34 47.47 * 81.03 *
Inventory Turnover 1.51 1.80 1.88 * 1.84 *
Sales/Assets (Avg.) 1.04 1.10 1.20 1.20 1.27 1.18 * 1.02 *
EBIT/Interest 32.55 23.23 32.82 47.25 * 38.18 *
EBITDA/CMLTD+Interest 5.70 19.04 33.36 * 33.93 *
Equity/Assets (Avg.) 0.66 0.67 0.69 0.70 0.71 0.72 0.70
Equity/Ttl.Capitalization 0.92 0.92 0.93 0.96 0.98 0.98 0.99
SELECTED PROFITABILITY RATIOS
N I Cont. Ops./Sales 12.04% 10.20% 14.40% 11.95% 12.96% 13.62% 13.72%* 15.05%*
N I Cont. Ops./Avg. Equit 19.02% 16.87% 24.97% 20.40% 23.10% 22.44% * 21.75%*
N I Cont. Ops/Avg. Assets 12.50% 11.24% 17.22% 14.38% 16.43% 16.07% * 15.32%*
Gross Profit/Sales 50.71% 52.12% 59.03% 58.09% 57.76% 56.78% 57.37% 57.83%
Operating Expenses/Sales 35.63% 39.82% 37.59% 36.43% 30.69% 31.51%
Taxes/Pre-Tax Income 36.40% 38.57% 38.62% 36.68% 36.29% 34.32% 36.10% 34.23%
SELECTED EARNINGS AND PRICING RATIOS (Unaudited)
LTM EPS From Cont Ops $0.56 $0.51 $0.80 $0.72 $0.89 $0.98 $1.01 $1.09 $1.09 **
Wtd Avg EPS Cont Ops5 Yr $0.85 $0.85 ***
Forecasted Next Year EPS (8/99) $1.31
Fully Diluted EPS (As Rep $0.56 $0.45 $0.80 $0.72 $0.89 $0.98 $1.15 $1.26
Dividend Per Share $0.13 $0.17 $0.20 $0.24 $0.28 $0.32 $0.23 $0.26 $0.36 ****
Dividend Yield 1.11% 1.15%
Percentage Payout 23.81% 37.31% 24.58% 32.87% 30.97% 32.20% 20.00% 20.63% 32.93%
Last 12 Months Sales / Sh $4.63 $4.97 $5.56 $6.04 $6.90 $7.23 $7.27 $7.27 **
Last 12 Months EBITDA / Share $1.63 $1.48 $1.75 $1.89 $2.01 $2.01 **
Book Value Per Share $2.95 $3.08 $3.41 $3.65 $4.12 $4.65 $5.79 $5.79 **
Price Per Share $28.56 $31.44
Invested Capital Per Share $29.03 $31.76
Price / Share - LTM EPS Contin Ops 29.05 x 28.75 x
Price / Share - Wt Avg EPS Cont Ops 5 yrs 33.58 x 36.96 x
Price / Share - Forecasted EPS 24.00 x
Price / Share - Book Value / Share 6.14 x 5.43 x
Price / Share - Sales / Share LTM 3.95 x 4.33 x
Price / Share - EBITDA / Share LTM 15.10 x 15.64 x
Invest Cap / Share - Sales / Share LTM 4.02 x 4.37 x
Invest Cap / Share - EBITDA / Share LTM 15.35 x 15.80 x
End of Period Shares Outstanding 250,460,487 247,166,634 246,668,805 241,580,492
Wtd Aver Shs Outstand 272,400,000 270,300,000 265,800,000 253,500,000 249,600,000 246,900,000 247,600,000 253,200,000
SELECTED GROWTH RATE CALCULATIONS
CAGR in Assets (1,2,3,4,5 Yrs.) 0.41% 1.51% 2.07% 3.99% 5.68%
CAGR in Sales (1,2,3,4,5 Yrs.) 6.42% 8.26% 6.68% 8.06% 7.17%
CAGR in FD EPS Con Ops 1,2,3,4,5 Yrs -8.93% 19.52% 8.74% 12.38% 11.92%
EPS Cont Ops 5 Year Aver $0.78
EPS Cont Ops - 5 Year Std Dev $0.16
CAGR in F.D. EPS 1,2,3,4,5 Yrs -20.24% 19.52% 8.74% 12.38% 11.92%
EPS 5 Year Aver $0.77
EPS 5 Year Std Dev $0.18
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 5/31/98
*** As of 8/31/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE A (Dollars in Thousands, except per share data and ratios)
For the Nine Months
THE SCOTTS COMPANY ------------------- For the Years Ended September 30,------------------- Ended July 4, Sep 21
1992 1993 1994 1995 1996 1997 1997 1998 1998
------------------------------------------------------------------------ -------------------- --------
SELECTED BALANCE SHEET ITEMS (Unaudited)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $176,500 $110,400 $104,300 $164,600
Inventory 144,000 148,800 146,100 165,300
Current Assets 350,900 291,900 285,800 389,400
Current Liabilities 123,900 110,800 139,300 215,800
Working Capital 54,800 88,500 140,600 227,000 181,100 146,500 173,600
Short Term Debt 97 2,000 1,500 3,400
Current Maturities LTD 421 200 0 0
L T Debt and Preferred Stk 449,300 400,400 397,100 504,900
Com Stckhldrs' Equity 176,000 143,000 168,200 203,500 187,000 211,900 252,800
Total Capitalization 652,800 587,400 609,000 757,700
Total Assets 268,000 321,600 528,600 809,000 731,700 787,600 1,019,100
SELECTED INCOME STATEMENT ITEMS
Sales 413,600 466,000 606,300 732,800 751,900 900,800 745,400 923,200
Cost of Goods Sold 274,200 311,600 404,100 498,800 512,400 573,600 463,700 578,800
Gross Profit 139,400 154,400 202,200 234,000 239,500 327,200 281,700 344,400
Other Income 800 1,000 1,400 4,500 0 0 0 0
Interest Expense 15,900 8,500 17,500 26,300 26,500 26,700 21,500 27,000
Deprec and Amor Exp 18,100 21,900 25,700 29,300 30,400 24,000 27,600
Sell, Gen & Admin Exp 91,100 102,300 130,300 109,400 116,600 130,500 95,900 121,900
Other Operating Expenses 7,000 9,300 14,000 66,500 78,000 94,100 85,500 103,600
Other Expenses 0 0 0 0 17,100 6,300 2,800 2,700
Pre-Tax Income 26,200 35,300 41,800 36,300 1,300 69,600 76,000 89,200
Taxes 11,100 14,300 17,900 13,900 3,800 30,100 33,000 36,900
N I From Continuing Ops 15,100 21,000 23,900 22,400 (2,500) 39,500 43,000 52,300
Dis Ops Extrao 500 (13,100) (1,000) 0 0 0 0 (700)
Net Income 15,600 7,900 22,900 22,400 (2,500) 39,500 43,000 51,600
Preferred Stock Dividends 0 0 0 3,600 9,800 9,800 7,300 7,300
N I from ConOps ava ComSh 15,100 21,000 23,900 18,800 (12,300) 29,700 35,700 45,000
N I ava Com Sh 15,600 7,900 22,900 18,800 (12,300) 29,700 35,700 44,300
EBITDA 61,900 81,200 88,300 57,100 126,700 121,500 143,800
SELECTED LIQUIDITY, COVERAGE, & LEVERAGE RATIOS
Current ratio 2.83 2.63 2.05 1.80
Collection period (days) 87.91 69.64 43.50 * 45.50 *
Turnover 3.46 3.50 3.89 * 4.42 *
Sales/Assets (Avg) 1.54 1.58 1.43 1.10 0.98 1.19 * 1.19 *
EBIT/Interest+Pref Div 2.65 5.15 3.39 2.09 0.77 2.64 * 2.74 *
EBITDA/CMLTD+Interest+PreDiv 7.28 4.64 2.91 1.56 3.47 3.55 *
Equity / Assets (Avg) 0.66 0.54 0.37 0.28 0.25 0.26 0.26
Equity / Ttl Capitaliz(avg) 0.31 0.31 0.33 0.34
SELECTED PROFITABILITY RATIOS
N I ConOps ava Com / Sal 3.65% 4.51% 3.94% 2.57% -1.64% 3.30% * 3.62%*
N I ConOps ava Com / Avg Eq 8.58% 13.17% 15.36% 10.12% -6.30% 14.89% * 16.79%*
N I ConOps ava Com / Avg Ass 5.63% 7.12% 5.62% 2.81% -1.60% 3.91% * 4.32%*
Gross profit / Sales 33.70% 33.13% 33.35% 31.93% 31.85% 36.32% 37.79% 37.31%
Operating Exp / Sales 23.72% 23.95% 23.80% 24.00% 25.88% 24.93% 24.34% 24.43%
Taxes / Pretax incom 42.37% 40.51% 42.82% 38.29% 292.31% 43.25% 43.42% 41.37%
SELECTED EARNINGS AND PRICING RATIOS
LTM EPS from ConOps $0.84 $1.07 $1.27 $0.99 ($0.65) $1.35 $1.60 $1.60 **
Wtd Avg EPS ConOps(5yr) $0.89 $0.89 ***
Forecast Next Yr EPS (9/99) $1.92
F D EPS as reported $0.87 $0.40 $1.22 $0.99 ($0.65) $1.35 $1.47 $1.70
Dividend per share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00****
Dividend yield 0.00% 0.00%
Percentage payout 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
LTM Sales / Share $22.98 $23.65 $32.25 $32.42 $39.99 $30.74 $35.60 $35.60 **
LTM EBITDA / Share $3.14 $4.32 $3.91 $3.04 $4.32 $4.92 $4.92 **
Book value per share $7.66 $9.01 $11.92 $11.44 $12.19 $13.52 $13.52 **
Price per share $26.25 $28.50
Invested Cap / Share $47.57 $55.68
Price / Share - LTM EPS ConOps 19.44 x 17.81 x
Price / Share - Wtd Avg EPS CO5yr 29.54 x 32.07 x
Price / Share - Forecast EPS 14.84 x
Price / Share - Book Val per Sh 2.15 x 2.11 x
Price / Share - Sales / Sh LTM 0.85 x 0.80 x
Price / Share - EBITDA / Sh LTM 6.07 x 5.80 x
Invested Cap/Sh / Sales/Sh LTM 1.55 x 1.56 x
Invested Cap/Sh / EBITDA/Sh LTM 11.00 x 11.32 x
End of Per Shares O/S 18,694,000 18,600,000 18,700,000 18,700,000
Wtd Avg Shares O/S 18,000,000 19,700,000 18,800,000 22,600,000 18,800,000 29,300,000 29,300,000 30,300,000
SELECTED GROWTH RATE CALCUALTIONS
CAGR in assets 12345yrs 20.00% 40.44% 44.52% 28.54% 24.06%
CAGR in sales 12345yrs 12.67% 21.07% 21.00% 16.12% 16.84%
CAGR in FD EPS ConOps12345yr 27.38% 22.96% 5.63% nmf 9.95%
EPS ConOps 5 yr avg $0.81
EPS ConOps 5 Year Std Dev $0.74
CAGR in FD EPS 12345 yrs -54.02% 18.42% 4.40% nmf 9.18%
EPS (5 Year Average) $0.66
EPS (5 Year Standard Deviation) $0.73
EPS Cont. Ops. - Earnings per share before discontinued
operations and/or extraordinary and nonrecurring items
nmf - Not meaningful
n/a - Not available
* Annualized
** As of 7/4/98
*** As of 9/30/97
**** Indicated dividend rate
</TABLE>
<TABLE>
SCHEDULE B - FINANCIAL AND OPERATING RATIOS
BIOTECHNICA INTERNATIONAL, INC.
AND COMPARATIVE PUBLICLY TRADED COMPANIES
ASV AG Services of America NY
ABTX AgriBioTech NNM
ANDE The Andersons NNM
EECN Ecogen NNM
MYCO Mycogen NNM
PHB Pioneer HiBred NY
SMG The Scotts Company NY
Symbol ASV ABTX ANDE EECN MYCO PHB SMG * Average Median BioTechnica
For the Twelve Months Ended:For the Twelve Months Ended:
5/31/98 3/31/98 6/30/98 7/31/98 5/31/98 6/30/98 7/4/98 6/30/98
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIQUIDITY, COVERAGE & LEVERAGE
Current Ratio 1.23 1.24 1.43 2.56 1.51 2.77 1.80 1.71 1.51 1.18
Collection Period (Days) 235.82 76.75 22.67 83.59 117.41 81.03 45.50 80.86 81.03 141.33
Inventory Turnover 83.94 2.86 5.81 0.88 2.05 1.84 4.42 3.40 2.86 1.76
Sales/Assets (Avg.) 1.31 0.93 3.23 0.45 0.72 1.02 1.19 1.03 1.02 0.64
EBIT/Interest 2.43 0.97 2.70 -16.96 -16.22 38.18 2.74 1.77 2.43 -1.24
EBITDA/CMLTD + Interest 2.50 1.26 2.12 -11.95 7.55 33.93 3.55 3.40 2.50 -0.11
Equity/Assets (Avg.) 0.31 0.55 0.23 0.29 0.62 0.70 0.26 0.41 0.31 0.12
Equity/Ttl.Capitalization (Avg 0.88 0.95 0.53 0.57 0.94 0.99 0.34 0.77 0.88 0.21
PROFITABILITY
N I Cont Ops. / Sales 2.96% 1.70% 0.88% -75.20% 32.74% 15.05% 3.62% 1.83% 1.70% -17.20%
N I Cont Ops/Avg Equity 12.62% 2.85% 12.64% -117.14% 37.99% 21.75% 16.79% 8.98% 12.62% -92.42%
N I Cont Ops / Avg Assets 3.89% 1.58% 2.86% -33.96% 23.52% 15.32% 4.32% 2.53% 2.86% -10.95%
Gross Profit / Sales 5.48% 21.82% 16.33% 18.83% 36.72% 57.83% 37.31% 26.20% 21.82% 33.66%
Operating Expenses/Sales 3.96% 19.64% 13.82% 119.46% 61.27% 31.51% 24.43% 30.13% 24.43% 43.19%
Taxes / Pre-tax Income 35.94% -206.19% 33.50% 0.00% 2.44% 34.23% 41.37% 21.22% 33.50% -0.03%
SIZE AND GROWTH**
Size Measured by Sales($000)$192,098 $164,434 $1,067,918 $7,773 $209,074 $1,840,000 $1,078,600 $542,425 $209,074 $21,340
LTM EPS Cont. Ops. Growth n/a n/a 145.83% nmf nmf 7.92% n/a nmf nmf nmf
Forecasted Next Year EPS Growth 2.86% 13.79% -4.24% nmf nmf 20.18% 20.00% 12.22% 13.79% nmf
5 Year Forecasted EPS Growth 20.00% 49.00% 13.00% n/a 23.00% 16.00% 16.00% 18.75% 18.00% nmf
For the Fiscal Years Ended:
2/28/98 6/30/97 12/31/97 10/31/97 8/31/97 8/31/97 9/30/97 6/30/98
OTHER
EPS Coeff of Vari (2) 21.92% n/a 24.05% nmf nmf 20.51% 91.36% 22.98% 2.98% nmf
5 YEAR COMPOUND ANNUAL GROWTH RATE**
Assets 34.76% n/a 7.27% -5.55% 16.29% 5.68% 24.06% 13.33% 11.78% 27.64%
Sales 27.59% n/a 5.30% 20.07% 53.92% 7.17% 16.84% 17.92% 18.46% 20.97%
EPS Cont. Ops. 12.62% n/a -7.79% -27.87% nmf 11.92% 9.95% 7.29% 9.95% nmf
n/a = Not available * Average - mean, excluding the high and
and low amounts.
nmf = Not meaningful ** A negative value results in 0 value
being assinged.
EBIT = Earnings before interest and taxes (1) Total capitalization is long-term
debt plus stockholders' equity
EBITDA = Earnings before interest, taxes, depreciation and amortization (2) Coefficient of variation is a measure
of EPS volatility = five year standard
deviation
CMLTD = Current maturities of long-term debt of EPS/five year average EPS
</TABLE>
<TABLE>
SCHEDULE B.2 - FINANCIAL AND OPERATING RATIOS
BIOTECHNICA INTERNATIONAL, INC.
AND COMPARATIVE PUBLICLY TRADED COMPANIES
THAT HAVE RECEIVED OFFERS TO BE ACQUIRED
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Dekalb Delta and
Consep Genetics Pine Land
Exchange and Symbol NNM-CSEP NY-DKB NY-DLP Average Median BioTechnica
For the 12 Months ended: (6/30/98) (5/31/98) (5/31/98) (6/30/98)
LIQUIDITY, COVERAGE & LEVERAGE
Current Ratio 1.60 1.40 1.47 1.49 1.47 1.18
Collection Period (Days) 69.35 87.26 251.33 135.98 87.26 141.33
Inventory Turnover 3.08 1.95 2.67 2.57 2.67 1.76
Sales / Assets (Avg.) 1.37 0.96 0.72 1.02 0.96 0.64
EBIT / Interest -3.11 3.96 9.24 4.40 3.96 -1.24
EBITDA / CMLTD + Interest -0.20 5.45 11.62 5.69 5.45 -0.11
Equity / Assets (Avg.) 0.54 0.40 0.31 0.42 0.40 0.12
Equity / Ttl.Cap (Avg.) 0.88 0.67 0.66 0.74 0.67 0.21
PROFITABILITY
N I Cont. Ops/Sales -4.88% 4.33% 6.63% 3.65% 4.33% -17.20%
N I Cont. Ops. / Avg. Eq -12.40% 10.47% 15.63% 8.70% 10.47% -92.42%
N I Cont. Ops. / Avg. As -6.70% 4.15% 4.80% 2.98% 4.15% -10.95%
Gross Profit / Sales 24.40% 46.67% 33.03% 34.70% 33.03% 33.66%
Operating Expenses / Sales 21.38% 38.53% 20.64% 26.85% 21.38% 43.19%
Taxes / Pre-tax Income 0.00% 31.68% 39.12% 23.60% 31.68% -0.03%
SIZE AND GROWTH*
Size Measured by Sales$000 $38,579 $509,900 $202,696 $250,392 $202,696 $21,340
LTM EPS Cont. Ops. Growth nmf -29.41% -32.65% nmf nmf nmf
Forecasted Next Year EPS Growth nmf 96.67% 212.12% 154.39% 154.39% nmf
5 Year Forecasted EPS Growth n/a 25.00% 34.00% 29.50% 29.50% nmf
For the Fiscal Years Ended:
12/31/97 8/31/97 (8/31/97) (6/30/98)
OTHER
EPS Coefficient of Variation (2) nmf 62.50% 30.30% 46.40% 46.40% nmf
5 YEAR COMPOUND ANNUAL GROWTH RATE*
Assets 9.92% 8.28% 37.10% 18.43% 9.92% 27.64%
Sales 17.07% 9.56% 21.79% 16.14% 17.07% 20.97%
EPS Cont. Ops. nmf 20.88% 16.55% 18.72% 18.72% nmf
n/a = Not available * A negative value results in 0 value being assigned.
nmf = Not meaningful (1) Total capitalization is long-term debt + stockholders' equity
EBIT = Earnings before interest and taxes (2) Coefficient of variation is a measure of EPS volatility =
EBITDA = Earnings before interest, taxes, depreciation and amor five year standard deviation of EPS/five year average EPS
CMLTD = Current maturities of long-term debt
</TABLE>
<TABLE>
SCHEDULE C - MARKET COMPARISON APPROACH
BIOTECHNICA INTERNATIONAL, INC.
AND COMPARATIVE PUBLICLY TRADED COMPANIES
ASV AG Services of America NY
ABTX AgriBioTech NNM
ANDE The Andersons NNM
EECN Ecogen NNM
MYCO Mycogen NNM
PHB Pioneer Hi Bred NY
SMG The Scotts Company NY
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
------BioTechnica International, Inc.-----
Market Comparison Approach Selected Value
Selected Implied Based on
ASV ABTX ANDE EECN MYCO PHB SMG Multiples Values All Approaches
Fully Diluted EPS Cont. Ops.*
1997 $0.96 ($0.17) $0.50 ($1.23) ($1.22) $0.98 $1.35 ($0.04)
1996 $0.84 ($0.45) $0.76 ($0.40) ($1.81) $0.89 ($0.65) ($0.02)
1995 $0.73 ($0.26) $0.74 ($4.34) ($0.83) $0.72 $0.99 ($0.03)
1994 $0.60 $1.10 ($1.24) ($1.81) $0.80 $1.27 ($0.02)
1993 $0.52 $0.83 ($3.39) ($1.69) $0.51 $1.07 ($0.01)
Fiscal Year Ended
2/28/98 6/30/97 12/31/97 10/31/97 8/31/97 8/31/97 9/30/97 6/30/98
Wtd. Avg. EPS Cont. Ops. $0.80 n/a $0.72 $0.00 $0.00 $0.85 $0.89 $0.00
Last Twelve Months Ended
5/31/98 3/31/98 6/30/98 7/31/98 5/31/98 5/31/98 7/4/98 6/30/98
LTM EPS Cont. Ops. $1.05 $0.29 $1.18 ($0.73) ($2.12) $1.09 $1.60 ($0.04)
Forecasted Next Yr EPS $1.08 $0.33 $1.13 ($0.40) $0.07 $1.31 $1.92 ($0.02)
Book Value Per Share $8.91 $4.44 $9.71 $0.60 $5.61 $5.79 $13.52 $0.00
LTM Sales Per Share $35.21 $5.08 $133.94 $0.97 $6.27 $7.27 $35.60 $0.21
LTM EBITDA Per Share $2.86 $0.21 $4.15 ($0.48) ($1.58) $2.01 $4.92 ($0.01)
Invested Cap 9/21/98 $38.57 $14.49 $21.48 $1.71 $30.14 $31.76 $55.68
Inv. Capital as a Multiple of:
LTM Sales Per Sh 1.10 2.85 0.16 1.77 4.81 4.37 1.56 1.60 $0.33
LTM EBITDA Per Sh 13.50 70.33 5.18 nmf nmf 15.80 11.32 nmf nmf
Stock Price (9/21/98) 13.88 $12.75 $11.00 $1.25 $27.81 $31.44 $28.50 $0.05
Stock Price as a Multiple of:
LTM EPS 13.21 43.97 9.32 nmf nmf 28.75 17.81 nmf nmf nmf
Wtd Avg EPS Cont O 17.24 n/a 15.29 nmf nmf 36.96 32.07 nmf nmf nmf
Forec Next Yr EP 12.85 38.64 9.73 nmf 397.32 24.00 14.84 nmf nmf nmf
Book Value Per Sh 1.56 2.87 1.13 2.07 4.95 5.43 2.11 nmf nmf nmf
LTM Sales Per Share 0.39 2.51 0.08 1.29 4.44 4.33 0.80 0.21 $0.04 0.24
LTM EBITDA Per Shar 4.86 61.87 2.65 nmf nmf 15.64 5.80 nmf nmf nmf
SUMMARY: STOCK PRICE AS A MULTIPLE OF: Average Median
LTM EPS Cont. Ops. 19.93 17.81 x
Wtd. Avg. EPS Cont. Ops. 24.66 24.66 x
Forecasted Next Year EPS 22.58 19.42 x
Book Value Per Share 2.71 2.11 x
LTM Sales Per Share 1.86 1.29 x
LTM EBITDA Per Share 8.76 5.80 x
INVESTED CAPITAL AS A MULTIPLE OF:
LTM Sales Per Share 2.33 1.77 x
LTM EBITDA Per Share 13.54 13.50 x
(Note: Average excludes highs and lows)
* A loss year results in $0 value being assigned.
</TABLE>
<TABLE>
SCHEDULE C.2 - MARKET COMPARISON APPROACH
BIOTECHNICA INTERNATIONAL, INC.
AND COMPARATIVE PUBLICLY TRADED COMPANIES
THAT HAVE RECEIVED OFFERS TO BE ACQUIRED
<CAPTION>
<S> <C> <C> <C>
Dekalb Delta and
Consep Genetics Pine Land
NNM-CSEP NY-DKB NY-DLP Average Median
------------------------------------------------ --------------------------
Fully Diluted EPS Cont. Ops.*
1997 ($0.19) $0.80 $0.50
1996 ($0.31) $0.51 $0.39
1995 ($0.19) $0.30 $0.29
1994 ($0.97) $0.34 $0.22
1993 ($1.01) $0.03 $0.25
Fiscal Year Ended
(12/31/97) (8/31/97) (8/31/97)
Wtd. Avg. EPS Cont. Ops. $0.00 $0.51 $0.37
Last Twelve Months Ended
(6/30/98) (5/31/98) (5/31/98)
LTM EPS Cont. Ops. ($0.19) $0.60 $0.33
Forecasted Next Year ($0.12) $1.18 1.03
Book Value Per Share $1.57 $6.55 $2.60
LTM Sales Per Share $3.98 $13.96 $5.00
LTM EBITDA Per Share ($0.02) $1.57 $0.77
Invested Capital (9/21/98) $1.61 $100.46 $48.34
Inv. Capital as a Multiple of:
LTM Sales Per Share 0.41 7.19 9.66 5.75 7.14
LTM EBITDA Per Share nmf 64.14 62.63 63.38 63.51
Stock Price (9/21/98) $0.94 $93.50 $46.25
Stock Price as a Multiple of:
LTM EPS nmf 155.83 140.15 147.99 148.22
Wtd. Avg. EPS Cont. Ops. nmf 183.33 123.61 153.47 153.49
Forecasted Next Year EPS nmf 79.24 44.90 62.07 62.03
Book Value Per Share 0.60 14.27 17.79 10.88 14.15
LTM Sales Per Share 0.24 6.70 9.24 5.39 6.64
LTM EBITDA Per Share nmf 59.69 59.92 59.81 59.93
* A loss year results in $0 value being assigned.
CSEP has entered into a definitive agreement and plan of merger with Verdant
Brands, Inc. (formerly known as Ringer Corporation). Verdant Brands,
Inc. will issue 0.95 shares of its common stock in exchange for each
outstanding share of CSEP.
Monsanto Co. reached agreements to acquire DKB and DLP. Under terms of the
agreement with DKB, a Monsanto subsidiary will make a tender offer to
acquire all of the common stock of DKB for $100 per share. The offer will
be followed by a merger in which any remaining stock of DKB will be
exchanged for cash at the same price per share paid in the tender offer.
Under a separate agreement, DLP shareholders would be entitled to receive
0.8625 shares of Monsanto common in exchange for each share of DLP stock
they hold. Monsanto currently owns 4.7% of DLP common and 800,000
shares of non-voting preferred stock.
</TABLE>
<TABLE>
SCHEDULE D - DISCOUNTED FUTURE RETURNS APPROACH
BIOTECHNICA INTERNATIONAL, INC.
Dividend Discount Model
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <S>
Actual For the Years Ended June 30, 5 Yr.
FORECASTED INCOME STATEMENT 6/30/98 1999 2000 2001 2002 2003 CAGR
------------------------------------------------------------------------------- --------
Net sales $21,341,000 $22,835,000 $24,433,000 $26,143,000 $27,973,000 $29,931,000 7.00%
Cost of sales 14,307,000 14,386,000 15,393,000 16,470,000 17,623,000 18,857,000 5.68%
------------------------------------------------------------------------------- --------
Gross profit 7,034,000 8,449,000 9,040,000 9,673,000 10,350,000 11,074,000 9.50%
33% 37% 37% 37% 37% 37%
Operating expenses:
Sales and marketing 4,709,000 4,874,000 5,045,000 5,222,000 5,405,000 5,594,000 3.50%
Warehouse and distribution 1,327,000 1,420,000 1,519,000 1,625,000 1,739,000 1,861,000 7.00%
General and administrative 2,679,000 2,679,000 2,679,000 2,679,000 2,679,000 2,679,000 0.00%
Amortization of goodwill 499,000 499,000 499,000 499,000 499,000 499,000 0.00%
------------------------------------------------------------------------------ --------
9,214,000 9,472,000 9,742,000 10,025,000 10,322,000 10,633,000 2.91%
Operating income (loss) (2,180,000) (1,023,000) (702,000) (352,000) 28,000 441,000 nmf
Interest expense (966,000) (800,000) (800,000) (800,000) (800,000) (800,000) -3.70%
Other income (expenses) 150,000 200,000 200,000 200,000 200,000 200,000 5.92%
------------------------------------------------------------------------------- --------
(816,000) (600,000) (600,000) (600,000) (600,000) (600,000) -5.96%
Net loss before taxes (2,996,000) (1,623,000) (1,302,000) (952,000) (572,000) (159,000) -44.41%
Income tax expense (benefit) 0 0 0 0 0 0 0.00%
------------------------------------------------------------------------------- --------
Net loss ($2,996,000) ($1,623,000) ($1,302,000) ($952,000) ($572,000) ($159,000) -44.41%
------------------------------------------------------------------------------- --------
OTHER FORECASTED DATA :
Depreciation and amortization $1,449,000 $1,499,000 $1,499,000 $1,499,000 $1,499,000 $1,499,000 0.68%
Interest expense $966,000 $800,000 $800,000 $800,000 $800,000 $800,000 -3.70%
EBITDA ($581,000) $676,000 $997,000 $1,347,000 $1,727,000 $2,140,000 nmf
Dividends $0 $0 $0 $0 $0 $0 nmf
Capital expenditures $130,000 $400,000 $399,000 $398,000 $397,000 $396,000 24.95%
Net proceeds from loans $1,869,000 $0 $0 $0 $0 $0 -100.00%
Estimated common stockholders'
equity excluding
cumulative undeclared
preferred dividends 2,469,000 $846,000 ($456,000) ($1,408,000) ($1,980,000) ($2,139,000) nmf
Estimated cumulative undeclared
preferred dividend 2,425,000 3,100,000 3,775,000 4,450,000 5,125,000 5,800,000 19.05%
Estimated net book value 44,000 (2,254,000) (4,231,000) (5,858,000) (7,105,000) (7,939,000) nmf
</TABLE>
THESE FORECASTS WERE PROVIDED BY MANAGEMENT. NO ASSURANCES
CAN BE MADE THAT THESE FORECASTS WILL BE REALIZED.
<TABLE>
SCHEDULE D - DISCOUNTED FUTURE RETURNS APPROACH
BIOTECHNICA INTERNATIONAL, INC.
Dividend Discount Model
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the Years Ended June 30,
1999 2000 2001 2002 2003
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NET SALES $22,835,000 $24,433,000 $26,143,000 $27,973,000 $29,931,000
TERMINAL VALUE AS OF 9/21/03 (0.3 x 6/30/03 net sales) $8,979,300
DIVIDENDS $0 $0 $0 $0 $0
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CASH FLOW RECEIVED BY SHAREHOLDERS $0 $0 $0 $0 $8,979,300
Present value factor 0.87719 0.76947 0.67497 0.59208 0.51937
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PRESENT VALUE OF CASH FLOW $0 $0 $0 $0 $4,663,567
PRESENT VALUE OF CASH FLOW $4,663,567
Number of shares @ 9/21/98 103,055,577
Present value per share @ 9/21/98 $0.05
For the year Multiples For the year Multiples
ended 6/30/98 As of 9/21/98 ended 6/30/03As of 9/21/03
--------------------------- --------------------------
Indicated Value of BioTechnica $4,663,567
Terminal Value of BioTechnica $8,979,300
LTM EBITDA ($581,000) nmf $2,140,000 4.20x
LTM Net Sales $21,341,000 0.22x $29,931,000 0.30x
ASSUMPTIONS:
Components for the discount rate:
U.S. Treasury rate - risk free r 5.55%
Large cap. stock - risk premium 7.80%
BioTechnica's stock - risk premi 0.65%
-------------
Minority interest discount rate 14.00%
No dividends are paid.
Cash from the sale of the Company is received on 9/17/98.
In our model "Cash Flow" is defined as the sum of dividends and a
terminal value based on capitalization of revenues.
</TABLE>
<TABLE>
SCHEDULE E - UNDERLYING ASSETS APPROACH
BIOTECHNICA INTERNATIONAL, INC.
Balance Sheet and Adjustments for Fair Market Value
<CAPTION>
<S> <C> <C> <C>
Stated Value
As of As of
June 30, 1998 Adjustments Sept. 21, 1998
------------- ------------- -------------
Assets
Current assets:
Cash and cash equivalents $353,000 $353,000
Accounts receivable 9,458,000 9,458,000
Inventories 7,761,000 7,761,000
Prepaid expenses and other 139,000 139,000
------------- -------------
Total current assets 17,711,000 17,711,000
------------- -------------
Net property, plant, and equipment 8,040,000 (1,719,917) (1) 6,320,083
Investment in Illinois Foundation Seeds, Inc. 0 478,535 (2) 478,535
Goodwill 7,793,000 (7,793,000) (3) 0
Other assets 86,000 86,000
------------- -------------
$33,630,000 $24,595,618
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Liabilities
Current liabilities:
Borrowings under line of credit $7,700,000 7,700,000
Borrowings from affiliate - current 3,600,000 3,600,000
Accounts payable 489,000 489,000
Accrued liabilities 2,936,000 2,936,000
Due to affiliates 244,000 244,000
------------- -------------
Total current liabilities 14,969,000 14,969,000
------------- -------------
Borrowings from affiliates, long-term 6,761,000 6,761,000
Other noncurrent liabilities 431,000 431,000
Preferred stock, Class A 9,000,000 9,000,000
Cumulative undeclared preferred dividends 0 2,425,000 (4) 2,425,000
------------- -------------
Total liabilities 31,161,000 33,586,000
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Total common stockholders' equity 2,469,000 (11,459,382) (5) (8,990,382)
------------- -------------
$33,630,000 $24,595,618
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Implied Value Per Share ($0.09)
</TABLE>
Key to Adjustments
(1) Adjusted to management's estimate of fair market value.
(2) Valued at book value.
(3) Unidentifiable intangible asset - no value assigned.
(4) Cumulative undelcared dividends on Class A preferred stock.
(5) Total net adjustments to common equity.
Exhibit D
Form of Notice of Merger and Appraisal Rights
NOTICE OF MERGER AND APPRAISAL RIGHTS AVAILABLE TO STOCKHOLDERS OF
BIOTECHNICA INTERNATIONAL, INC. IN CONNECTION WITH THE MERGER OF
BIOTECHNICA INTERNATIONAL, INC. WITH AND INTO
BTI MERGER CORP.,
A WHOLLY OWNED SUBSIDIARY OF
LIMAGRAIN GENETICS CORP.
TO THE HOLDERS OF CERTIFICATES
REPRESENTING COMMON STOCK OF
BIOTECHNICA INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN pursuant to Section 262(d)(2) of the
General Corporation Law of the State of Delaware (the "DGCL") that effective on
January 8, 1999 (the "Effective Time of the Merger"), BioTechnica
International, Inc., a Delaware corporation (the "Company"), will be merged
(the "Merger") with and into BTI Merger Corp. ("Mergerco"), a Delaware
corporation and wholly-owned subsidiary of Limagrain Genetics Corp., a
Delaware corporation ("LG Corp"), with Mergerco as the surviving corporation
(Mergerco is sometimes referred to herein as the "Surviving Corporation").
The Merger will be effected pursuant to Section 253 of the DGCL when
Mergerco files a Certificate of Ownership and Merger with the Secretary of
State of Delaware. Immediately prior to the Merger, Mergerco will own
approximately 95% of the outstanding shares of common stock,
par value $.01 per share (the "Shares"), of the Company. Under the DGCL, no
action will be required by the board of directors or stockholders of the
Company, other than Mergerco (through its Board of Directors), for the Merger to
become effective. Prior to the consummation of the merger, LG Corp. and
Mergerco reserve the right to cancel the merger for any reason, including
without limitation if (i) any stockholder of the Company seeks to enjoin the
merger or (ii) in their judgment, the anticipated cost of the merger would be
materially increased by the number of stockholders of the Company seeking
their appraisal remedy.
As a result of the Merger, the separate corporate existence of the Company will
cease. At the Effective Time of the Merger, each of the outstanding Shares
of the Company (other than Shares held by Mergerco and Shares held in the
treasury of the Company) will be automatically converted, subject to the
appraisal rights described below, into the right to receive $.05 in cash,
without interest, upon surrender of the certificate for such Share to Harris
Trust Company of New York, as Paying Agent (the "Paying Agent"), as set forth
in the enclosed letter of transmittal (the "Letter of Transmittal").
SURRENDER OF CERTIFICATES
The Paying Agent will accept the surrender of certificates
representing Shares in exchange for the $.05 per Share cash payment.
TO RECEIVE THE $.05 PER SHARE CASH PAYMENT FOR ALL OR
PART OF A STOCKHOLDER'S SHARES, THE STOCKHOLDER OR A DULY
AUTHORIZED REPRESENTATIVE MUST (A) DELIVER THE ENCLOSED LETTER
OF TRANSMITTAL, APPROPRIATELY COMPLETED AND EXECUTED, TO THE
PAYING AGENT AND (B) SURRENDER SUCH SHARES BY DELIVERING THE
STOCK CERTIFICATE OR CERTIFICATES THAT, PRIOR TO THE MERGER,
HAD EVIDENCED SUCH SHARES TO THE PAYING AGENT, ALL AS SET
FORTH IN THE LETTER OF TRANSMITTAL AND ACCOMPANYING
INSTRUCTIONS.
Each person who does NOT plan to seek an appraisal of all such person's
Shares is urged to execute (or, if such person is not the record holder of
such Shares, to arrange for such record holder or such holder's duly authorized
representative to execute) and mail postage paid or deliver a Letter of
Transmittal to the Paying Agent at the address set forth in the Letter of
Transmittal. STOCKHOLDERS SHOULD NOTE THAT SURRENDER TO THE PAYING AGENT
OF CERTIFICATE(S) FOR THEIR SHARES MAY CONSTITUTE A WAIVER OF
APPRAISAL RIGHTS UNDER THE DGCL.
Each Company stockholder should note that the method of delivery
of the Letter of Transmittal, stock certificate(s) and all other required
documents is at the election and risk of the stockholder. IF THE DECISION IS
MADE TO SEND STOCK CERTIFICATE(S) BY MAIL, IT IS RECOMMENDED THAT SUCH
CERTIFICATE(S) BE SENT BY REGISTERED MAIL PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED.
APPRAISAL RIGHTS
Notwithstanding the Merger, Shares held by stockholders of the Company who
(a) do not execute and return (or cause to be executed and returned) a Letter
of Transmittal with respect to such Shares or otherwise surrender such Shares
for the $.05 per Share cash payment, (b) perfect their rights to appraisal of
such Shares in accordance with Section 262 of the DGCL ("Section 262") and (c)
do not thereafter withdraw their demands for appraisal of such Shares or
otherwise lose or waive their appraisal rights, in each case in accordance with
the DGCL, shall represent the right to receive from the Company such payment
as the holders thereof may be entitled to receive as determined by the Delaware
Court of Chancery in an appraisal proceeding.
Section 262 provides a procedure by which persons who were stockholders of
the Company at the Effective Time of the Merger may seek an appraisal of
their Shares in lieu of accepting the $.05 per Share cash payment. A demand
for appraisal must be made in writing by or for the stockholder of record
wishing to demand appraisal and must reasonably inform the Company of the
identity of the stockholder making the demand for appraisal and that such
stockholder intends thereby to demand appraisal of his Shares. In any such
appraisal proceeding, the Delaware Court of Chancery would determine the fair
value of the Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger. Stockholders should recognize
that such appraisal could result in a determination of a value higher or lower
than or equivalent to $.05 per Share. Following such an appraisal proceeding,
the Delaware Court of Chancery would direct the Surviving Corporation, pursuant
to Section 262, to make payment of such fair value of the Shares, together with
a fair rate of interest, if any, to the former stockholders entitled thereto
who properly demanded appraisal.
APPRAISAL PROCEDURE
This Notice of Merger and Appraisal rights from the Company affords stockholders
of the Company the notice required by Section 262(d)(2) of the DGCL. The
right to appraisal will be lost unless it is perfected by full and precise
satisfaction of the requirements of Section 262, the text of which is set
forth in full in APPENDIX A hereto. MERE FAILURE TO EXECUTE AND RETURN A
LETTER OF TRANSMITTAL TO THE PAYING AGENT DOES NOT SATISFY THE REQUIREMENTS
OF SECTION 262; RATHER, A SEPARATE WRITTEN DEMAND FOR APPRAISAL MUST BE
PROPERLY EXECUTED AND DELIVERED TO THE COMPANY AS DESCRIBED BELOW.
A stockholder of the Company who wishes to demand appraisal of his
Shares must make a written demand for appraisal ON OR PRIOR TO January 5,
1999 (i.e., within 20 calendar days after the date of mailing of this Notice
of Merger and Appraisal Rights). A demand for appraisal should be addressed
to the Company at the following address:
BioTechnica International, Inc.
4001 North War Memorial Drive
Peoria, Illinois 61614
Attn: Secretary
As provided under Section 262, failure of a stockholder of the Company to
make a written demand for appraisal (or a beneficial owner of Shares who
fails to cause the record holder of such Shares to demand an appraisal of such
Share) within such time limit will result in the loss of such stockholder's
appraisal rights. The written demand for appraisal must be executed by or for
the stockholder of record, fully and correctly, as such stockholder's name
appears on the certificate(s) for his or her Shares. If the Shares are owned
of record in a fiduciary or representative capacity, such as by a trustee,
executor, administrator, guardian, attorney-in-fact or officer of a corporation,
execution of the demand must be made in such capacity, and if the Shares are
owned of record by more than one person, such as in a joint tenancy or
tenancy in common, the demand must be executed by or for all joint owners.
An authorized agent, including one or two or more joint owners may execute
the demand for appraisal for a stockholder of record; however, the agent
must identify the record owner(s) and expressly disclose the fact that, in
executing the demand, the agent is acting as agent for the record owner(s).
A beneficial owner of Shares held in "street name" who desires appraisal
should take such actions as may be necessary to ensure that a timely and
proper demand for appraisal is made by the record holder of such Shares. Shares
held through brokerage firms, banks and other financial institutions are
frequently deposited with and held of record in the name of a nominee of a
central security deposit, such as Cede & Co., Philadep and others. Any
beneficial holder desiring appraisal who holds Shares through a brokerage
firm, bank or other financial institution is responsible for ensuring that
the demand for appraisal is made by the record holder. The beneficial
holder of such Shares should instruct such firm, bank or institution that
the demand for appraisal may be made by the record holder of the Shares,
which may be the nominee of a central security depository if the Shares
have been so deposited. As required by Section 262, a demand for appraisal
must reasonably inform the Company of the identity of the holder(s) of record
(which may be a nominee as described above) and of such holder's intention
thereby to demand appraisal of such Shares.
Within 120 calendar days after the Effective Time of the Merger, the Surviving
Corporation or any former stockholder entitled to appraisal rights under Section
262 who has complied with the provisions thereof may file a petition in the
Delaware Court of Chancery demanding a determination of the value of the Shares
of all such stockholders. The Surviving Corporation is under no obligation,
and has no present intention, to file such a petition. Accordingly, any
stockholder who wishes to perfect his or her appraisal rights will be required
to initiate all necessary action within the time prescribed in Section 262.
At any time within 60 calendar days after the Effective Time of the Merger,
any former stockholder who has demanded appraisal has the right to withdraw the
demand and accept the consideration offered pursuant to the Merger.
Within 120 calendar days after the Effective Time of the Merger, any stockholder
who has complied with the requirements for exercise of appraisal rights will
be entitled, upon written request, to receive from the Surviving Corporation a
statement setting forth the aggregate number of Shares with respect to which
demands for appraisal have been received and the aggregate number of holders
of such Shares. Such statement must be mailed (a) within 10 calendar days
after a written request therefor has been received by the Company or (b) by
January 15, 1999 (i.e., 10 calendar days after expiration of the period for
delivery of demands for appraisal), whichever is later.
If a petition for an appraisal is timely filed and a copy thereof is delivered
to the Surviving Corporation, the Surviving Corporation will then be obligated
within 20 calendar days to provide the Register in Chancery with a duly verified
list containing the names and addresses of all former stockholders of the
Company who have demanded an appraisal of their Shares and with whom agreements
as to the value of their Shares have not been reached by the Surviving
Corporation. After notice to such former stockholders, the Court of Chancery
is empowered to conduct a hearing on such petition to determine those former
stockholders who have complied with Section 262 and who have become entitled
to appraisal rights. The Court of Chancery may require the holders of Shares
who have demanded an appraisal for their Shares to submit their stock
certificates to the Register in Chancery for notation thereon of the pendency
of the appraisal proceeding; and if any former stockholder fails to comply
with such direction, the Court of Chancery may dismiss the proceedings as to
such former stockholder.
After determining the stockholders entitled to an appraisal, the Court
of Chancery will appraise the "fair value" of their Shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. The Delaware Supreme Court has stated that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. In addition, Delaware courts
have held that the Section 262 appraisal remedy, depending on factual
circumstances, may or may not be a dissenter's exclusive remedy.
The costs of the appraisal proceeding may be determined by the
Court of Chancery and taxed upon the parties as the Court of Chancery deems
equitable in the circumstances. The Court of Chancery may also order that all
or a portion of the expenses incurred by any former stockholder in connection
with an appraisal, including, without limitation, reasonable attorney's fees
and the fees and expenses of experts utilized in the appraisal proceeding, be
charged pro rata against the value of all the Shares entitled to be appraised.
No former stockholder, whether or not he or she has duly demanded an
appraisal in compliance with Section 262, will, from and after the Effective
Time of the Merger, be entitled to vote any Share for any purpose or be entitled
to the payment of dividends or other distributions on any Shares (except
dividends or other distributions payable to stockholders of record at a date
prior to the Effective Time of the Merger).
If any stockholder who demands appraisal of his Shares under Section 262 fails
to perfect, or effectively withdraws or loses, his or her right to appraisal,
as provided in the DGCL, the Shares of such stockholder will, at or after
the Effective Time of the Merger, be converted into the right to receive $.05
in cash per Share, without interest. Such stockholders must follow the
procedures set forth in the Letter of Transmittal and accompanying instructions.
The foregoing brief summary does not purport to be a complete description of
the applicable provisions of Section 262, and is qualified in its entirety
by reference to Section 262, which is attached hereto in full as APPENDIX A.
INFORMATION CONCERNING THE COMPANY
Prior to the Effective Time of the Merger, the Company was subject to the
information reporting and other requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and , in accordance therewith, was,
and, in certain circumstances, is required to file reports and other information
with the Securities and Exchange Commission (the "Commission") relating to the
Company's business, financial condition and certain other matters. These
reports and other information should be available for inspection at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and also should be available for inspection
and copying at the regional offices of the Commission located at Seven World
Trade Center (Suite 1300), New York, New York 10048; Northwest Atrium Center,
500 West Madison Street (Suite 1400), Chicago, Illinois 60661; and 5670
Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. Copies may also
be obtained by mail, upon payment of the Commission's customary fees, from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a World Wide Web site
on the Internet at http://www.sec.gov that contains certain reports and other
information regarding registrants that file electronically with the Commission.
Dated: December 16, 1998 BTI MERGER CORP.
By: /s/ Bruno Carette
Name: Bruno Carette
Title: President
APPENDIX A
DELAWARE GENERAL CORPORATION LAW
SECTION 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to S 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by
a depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with
the depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to S 251 (other than a merger effected pursuant to S 251(g)
of this title), S 252, S 254, S 257, S 258, S 263 or S 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent corporation
surviving a merger if the merger did not require for its approval the vote of
the stockholders of the surviving corporation as provided in subsection (f) of
S 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to S 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective date
of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares of fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under S 253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting
of stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand
the appraisal of such stockholder's shares shall deliver to the corporation,
before the taking of the vote on the merger or consolidation, a written
demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder electing
to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to S 228 or S 253
of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify stockholders
of the effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending
of the first notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded appraisal of such
holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
For purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which
the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration
of the period for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall
be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. In determining the
fair rate of interest, the Court may consider all relevant factors, including
the rate of interest which the surviving or resulting corporation would have
had to pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may, in its
discretion, permit discovery or other pretrial proceedings and may proceed
to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery if such is required, may
participate fully in all proceedings until it is finally determined that
such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as
the Court may direct. Payment shall be so made to each such stockholder in
the case of holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded such stockholder's appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the
stock (except dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the merger or
consolidation); provided, however, that if no petition for an appraisal
shall be filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder's demand for an appraisal
and an acceptance of the merger or consolidation, either within 60 days after
the effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease. Notwithstanding
the foregoing, no appraisal proceeding in the Court of Chancery shall be
dismissed as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
Exhibit G (1)
Audited Financial Statements for the Fiscal Years ended June 30, 1997 and
1998
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Financial Statements: Number
Independent Auditors' Report
Consolidated Balance Sheets at June 30, 1998 and 1997
Consolidated Statements of Operations for the years
ended June 30, 1998, 1997 and 1996
Consolidated Statements of Changes in Shareholders'
Equity for the years ended June 30, 1998, 1997
and 1996
Consolidated Statements of Cash Flows for the years
ended June 30, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
All schedules have been omitted because the required information is not
applicable or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
BioTechnica International, Inc.:
We have audited the consolidated financial statements of BioTechnica
International, Inc. and subsidiary (the "Company") as listed in the
accompanying index. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of BioTechnica
International, Inc. and subsidiary as of June 30, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1998, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Indianapolis, Indiana
July 17, 1998
<TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
June 30, June 30,
ASSETS 1998 1997
<CAPTION>
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 353 $ 207
Accounts receivable, less allowance for doubtful
accounts of $97 9,458 7,068
Inventories 7,761 8,330
Prepaid expenses and other current assets 139 130
Total current assets 17,711 15,735
Net property, plant and equipment 8,040 9,316
Goodwill and other assets, net 7,879 8,385
Total assets $33,630 $33,436
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit $ 7,700 $10,900
Borrowings from affiliates-current 3,600 --
Accounts payable 489 721
Accrued liabilities 2,936 1,669
Due to affiliates 244 115
Total current liabilities 14,969 13,405
Borrowings from affiliates long-term 6,761 5,261
Other noncurrent liabilities 431 295
Total liabilities $22,161 $18,961
Shareholders' equity:
Preferred stock, Class A, 900,000 shares
Outstanding (involuntary liquidation value of
$9 million at June 30, 1998 and 1997) $ 9 $ 9
Common stock, 103,094,737 and 104,094,737 shares
outstanding at June 30, 1998 and June 30, 1997,
respectively 1,031 1,041
Additional paid-in capital 20,823 20,823
Accumulated deficit (10,299) (7,303)
Treasury stock (95) (95)
Total shareholders' equity $11,469 $14,475
Commitments (note 12)
Total liabilities and shareholders' equity $33,630 $33,436
See accompanying notes to consolidated financial statement
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
---------Years Ended June 30,-----------
1998 1997 1996
<CAPTION>
<S> <C> <C> <C>
Net sales:
Domestic $18,047 $17,004 $ 17,151
Export-Affiliates 2,984 2,977 1,489
Export-Other 309 104 127
21,340 20,085 18,767
Cost of goods sold 14,158 12,319 12,990
Gross margin 7,182 7,766 5,777
Operating expenses:
Sales and marketing 4,710 4,163 4,203
Warehouse and distribution 1,331 1,316 1,196
General and administrative 2,677 2,569 2,473
Amortization of goodwill 499 499 499
9,217 8,547 8,371
Operating loss (2,035) (781) (2,594)
Other income (expense):
Interest expense (966) (880) (832)
Gain (loss) on disposition
of fixed assets (225) 13 405
Other 231 208 321
Loss before income taxes (2,995) (1,440) (2,700)
Income tax expense (benefit) 1 9 (15)
Net loss $(2,996) $ (1,449) $ (2,685)
Net loss per common share $ (.04) $ (.02) $ (0.03)
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands of dollars, except share data)
Preferred Stock Additional
Class A Non-Voting Common Stock Paid-In
Shares Par Value Shares Par Value Capital
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balance June 30, 1995 700,000 $ 7 115,418,788 $1,154 $18,893
Issuance of Preferred
Stock 200,000 2 -- -- 1,998
Net loss for Fiscal 1996 -- -- -- -- --
Balance June 30, 1996 900,000 $ 9 115,418,788 $1,154 $20,891
Repurchase of common shares -- -- (11,324,051) (113) (68)
Net loss for Fiscal 1997 -- -- -- -- --
Balance June 30, 1997 900,000 $ 9 104,094,737 $1,041 $20,823
Net loss for Fiscal 1998 -- -- -- -- --
Repurchase of common shares -- -- (1,000,000) (10) --
Balance June 30, 1998 900,000 $ 9 103,094,737 $1,031 $20,823
</TABLE>
<TABLE>
Total
Treasury Stock (Accumulated Shareholders'
Shares Par Value Deficit) Equity
<CAPTION>
<S> <C> <C> <C> <C>
Balance June 30, 1995 (39,160) $(95) $(3,169) $ 16,790
Issuance of Preferred Stock -- -- -- 2,000
Net loss for Fiscal 1996 -- -- (2,685) (2,685)
Balance June 30, 1996 (39,160) $(95) (5,854) $ 16,105
Repurchase of common shares -- -- -- (181)
Net loss for Fiscal 1997 -- -- (1,449) (1,449)
Balance June 30, 1997 (39,160) $(95) $(7,303) $ 14,475
Net loss for Fiscal 1998 -- -- (2,996) (2,996)
Repurchase of common shares -- -- -- (10)
Balance June 30, 1998 (39,160) $(95) $(10,299) 11,469
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
Years Ended June 30,
1998 1997 1996
<CAPTION>
<S> <C> <C> <C>
Cash Flow from Operating Activities:
Net loss $ (2,996) $ (1,449) $ (2,685)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 940 954 903
Amortization 499 499 499
(Gain) loss on disposition of fixed assets 225 (13) (405)
Changes in assets and liabilities:
Accounts receivable (2,390) 896 (186)
Inventories 569 (2,354) 951
Other assets (2) 87 27
Accounts payable and Accrued
liabilities, and Due to affiliates 1,300 (124) (178)
Net cash provided by (used in)
operating activities (1,855) (1,504) (1,074)
Cash Flow from Investing Activities:
Acquisition of property, plant
and equipment (130) (600) (1,527)
Proceeds from asset sales 241 65 1,078
Net cash provided by (used in)
investing activities 111 (535) (449)
Cash Flow from Financing Activities:
Net borrowing(repayment) under line of credit (3,200) 2,400 (700)
Proceeds (payment) of long-term debt
to affiliates 1,500 2,000 (2,065)
Proceeds (payment) of short-term debt
to affiliates 3,600 (2,060) 2,175
Payments on long-term debt and
notes payable -- (107) (92)
Repurchase of common stock (10) (181) --
Issuance of Class A Preferred Stock -- -- 2,000
Net cash provided by
financing activities 1,890 2,052 1,318
Net increase (decrease) in
cash and cash equivalents 146 13 (205)
Cash and cash equivalents at
beginning of year $ 207 $ 194 $ 399
Cash and cash equivalents at
end of year $ 353 $ 207 $ 194
See accompanying notes to consolidated financial statement
</TABLE>
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Business
BioTechnica International, Inc. and its subsidiary, LG Seeds, Inc. (the
"Company"), sell corn, soybean, alfalfa and other agricultural seed to
dealers, distributors and farmers through its seed operations. The Company
operates in a twelve-state region centered in the Midwestern United States.
Sales are generally made on open account to customers. Because of the
geographic concentration of the Company's customers in the Midwest, it is
significantly dependent upon the weather and market conditions in its market
areas. In addition, industry sales levels are dependent upon factors
resulting from governmental agriculture policies and farm programs.
As of June 30, 1998, approximately 95% of the common stock and 100% of the
Preferred Stock of the Company is owned by Limagrain Genetics Corporation
("LG Corp."), which is controlled by Groupe Limagrain Holding ("Limagrain")
of Chappes, France.
B. Principles of Consolidation
The consolidated balance sheets as of June 30, 1998 and 1997, and statements of
operations for the three years ended June 30, 1998, include the Company and its
wholly-owned subsidiary, LG Seeds, Inc. All significant intercompany
balances and transactions have been eliminated in consolidation.
C. Revenue Recognition
Sales of seed products are recorded upon shipment, reduced by a reserve for
estimated returns and discounts.
D. Research and Development Costs
Although the Company has no significant internal research and development
effort, it has access to research conducted by LG Corp. and other Limagrain
affiliates. The cost of this expertise is paid to LG Corp. in the form of
royalties on products sold.
E. Advertising
The Company expenses all advertising in the period incurred. Advertising
expenses for Fiscal 1998, 1997, and 1996 were $166,000, $133,000, and $80,000,
respectively.
F. Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and short-term investments
with original maturities of three months or less.
G. Inventories
Inventories consist primarily of seed products and supplies. 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. Gains or losses, if any, on commodity
hedging transactions are included as a component of inventory.
H. Derivatives
The Company has contractual commitments with seed growers for payments based on
the local commodity prices for soybeans and wheat. To mitigate the impact of
fluctuations in commodity prices on inventory costs, the Company attempts from
time to time to hedge these commitments by using Chicago Board of Trade
futures contracts for the respective crops. The Company matches these
futures contracts to its purchases of inventory, closing out the futures
contracts as payments are made to the seed growers and recognizing the gains
and losses as a component of the product cost in cost of sales. There were
no open futures contracts at either June 30, 1998 or 1997.
I. Property, Plant and Equipment
Property, plant and equipment are recorded at cost and are depreciated using
the straight-line method over the estimated useful lives of the assets.
Depreciable lives for asset classes are:
Land improvements 15 years
Buildings and improvements 15 to 32 years
Machinery and equipment 3 to 20 years
J. Goodwill
Goodwill is being amortized using the straight-line method over a period of 20
years. The Company evaluates the existence of goodwill impairment on the basis
of whether the goodwill is fully recoverable from projected, undiscounted
net cash flows.
K. Income Taxes
The Company utilizes the asset and liability method of accounting for income
taxes whereby deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
The Company files a Federal consolidated tax return with other corporations
controlled by LG Corp. The related tax sharing agreement provides that
consolidated Federal income tax is allocated among profitable companies.
Companies with operating losses receive benefits in the future by
effectively offsetting taxable income against prior operating losses.
L. Loss Per Common Share
Loss per common share has been computed by dividing the loss applicable to
common shareholders by the weighted-average number of common shares
outstanding. Net loss has been increased by current year cumulative
preferred stock dividends (whether or not declared) to arrive at loss
applicable to common shareholders. The Company has no dilutive potential
common shares.
M. Fair Value of Financial Instruments
Carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable, accrued liabilities, and due to affiliates-current, approximate fair.
The Company's borrowings under its Line of Credit are at variable interest
rates tied to market rates and, accordingly, the Company considers the fair
value to be the same as the carrying value. The estimated fair value
of Borrowings from Affiliates-long-term, based on borrowing rates currently
available to the Company on bank loans with similar terms and maturities would
be $5,919,000.
N. Use of Estimates
Management of the Company has made a number of estimates and assumptions
related to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles.
Actual results could differ from these estimates.
2. INVENTORIES
Inventories at June 30, 1998 and 1997 are as follows:
(in thousands of dollars)
1998 1997
Finished seed $ 4,473 $ 4,666
Unfinished seed 2,594 2,955
Supplies and other 694 709
Total inventories $ 7,761 $ 8,330
"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 cost associated with the seed crop planted in the spring of the
applicable fiscal year. "Supplies and other" consists of foundation seed,
unused bags, pallets and other supply items.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1998 and 1997 are as follows:
(in thousands of dollars)
1998 1997
Land and improvements $ 577 $ 768
Buildings and improvements 7,869 8,185
Machinery and equipment 5,399 5,312
Construction in progress 13 52
$13,858 $14,317
Less accumulated depreciation 5,818 5,001
Net property, plant and
equipment $ 8,040 $ 9,316
4. LOSS PER SHARE
Loss per share was calculated as follows: (in thousands of dollars)
1998 1997 1996
Net loss $ (2,996) $ (1,449) $ (2,685)
Current year cumulative preferred
stock dividends (undeclared) (675) (675) (608)
Net loss available for common
shares (3,671) (2,124) (3,293)
Weighted average shares outstanding 103,650,098 114,635,033 15,379,628
Net loss per common share (0.04) (0.02) (0.03)
5. GOODWILL AND OTHER ASSETS
Goodwill and other assets consist of the following:
(in thousands of dollars)
1998 1997
Goodwill $ 9,966 $ 9,966
Amortization of goodwill (2,173) (1,674)
Net goodwill $ 7,793 $ 8,292
Deposits and other 86 93
TOTAL $ 7,879 $ 8,385
6. LINE OF CREDIT AND NOTE PAYABLE
The Company has a revolving credit arrangement with its principal bank
("Line of Credit") whereby the Company can borrow up to $12,000,000 based on
a borrowing base formula and subject to certain limitations in availability.
This Line of Credit, which expires December 31, 1998, bears interest (at
the Company's option) based upon (i) the Bank Prime Loan rate, (ii) the
London Interbank Offered Rate ("LIBOR") index or (iii) the Bank Offered Rate.
Borrowings under this Line of Credit are secured by the inventory and accounts
receivable of the Company and its subsidiary and by the guarantees of
Limagrain and LG Corp. The maximum and average amounts outstanding under
this Line of Credit during the year ended June 30, 1998 were $10,900,000 and
$6,177,000, respectively. The weighted average interest rate during Fiscal
1998 was 6.92%.
7. BORROWINGS FROM AFFILIATES
Borrowings from affiliates at June 30, 1998 and 1997 were as follows:
(in thousands of dollars)
1998 1997
Current:
Limagrain Genetics Corp.
Due on demand at an annual interest $ 3,000 $ --
rate of 6.5%
Due on demand at an annual interest
rate of 5% 600 --
Total borrowings from affiliates-current $ 3,600 $ --
Long-term:
Limagrain Genetics Corp.
Due July 1, 2000 at an annual interest $ 1,500 $ --
rate of 6.5%
Due July 1, 2000 at an annual interest
rate of 5% 5,261 5,261
Total borrowings from affiliates-long-term $ 6,761 $ 5,261
In addition to these notes at June 30, 1998 and 1997, the Company owes
affiliates $244,000 and $115,000, respectively, for current items.
8. CAPITAL STOCK
Authorized shares of stock include: 150,000,000 shares of common stock;
11,100,000 shares of Class A common; 11,100,000 shares of Class B common;
and 2,000,000 shares of Class A Preferred.
As of June 30, 1998 and 1997, there were only two classes of stock issued and
outstanding: common stock and Class A Preferred Stock.
On November 30, 1995, the Company retired a long-term note of $2,000,000 in
exchange for $2,000,000 of the Company's Class A Preferred Stock.
On June 6, 1997, the Company repurchased and retired 11,324,051 shares of its
common stock from a shareholder at $0.016 per share. This common stock
represented approximately 9.8% of the total common stock. The price of
$0.016 per share was substantially below the then-current market price and
net book value per share.
On February 2, 1998, the Company repurchased and retired 1,000,000 shares of
its common stock from a shareholder at $0.01 per share. This common stock
represented approximately 1.0% of total common stock outstanding on that
date. The price of $0.01 per share was substantially below the then-current
market price and net book value per share.
The Class A Preferred Stock of the Company (all of which is owned by LG Corp.)
pays a cumulative dividend of $.75 per share per year when declared by the
Board of Directors. No such dividend has been declared by the Board of
Directors. Pursuant to the terms and conditions of the Company's Class A
Preferred Stock, should any dividend be declared or paid on the common stock
of the Company, the holders of Class A Preferred Stock would be entitled to
receive dividends at a rate per share equal to that of the common stock in
addition to their preferred dividends. As of June 30, 1998 and 1997, the
cumulative amount of undeclared dividends on the Class A Preferred Stock
was $2,425,000 and $1,750,000, respectively.
9. STOCK OPTION PLAN
The Company has reserved 1,500,000 shares of common stock for issuance under an
incentive stock option plan. During Fiscal 1996, all outstanding options
were either (i) repurchased by the Company or (ii) determined to have expired.
The cancellation of these options resulted in a reduction of general and
administrative expense of $150,000 during Fiscal 1996. As of June 30, 1998
and 1997, there were no options outstanding.
10. RETIREMENT PLAN
The Company participates in a 401(k) savings retirement plan sponsored by
LG Corp. The plan covers substantially all full-time employees of the
Company with at least one year of service. Vesting occurs over a five-year
period at 20% per year. Employees may contribute up to the lesser of 15% of
their salary or an amount determined annually by Federal income tax
regulations. Company contributions may consist of a basic amount for all
covered employees, a matching contribution for a portion of employee
contributions, and a potential additional discretionary contribution.
Company contributions under the plan were $168,207, $177,064, and $82,145, for
Fiscal 1998, Fiscal 1997, and Fiscal 1996, respectively.
11. INCOME TAXES
On June 30, 1998 and 1997, the Company had pre-acquisition net operating loss
carryforwards of approximately $1,360,000 and $1,496,000, respectively,
which expire at a rate of $136,000 per year through 2008. The Company had
post-acquisition net operating loss carryforwards of approximately $14,886,000
and $13,332,000 on June 30, 1998 and 1997, respectively, which expire through
2018.
The components of income tax expense (benefits) are as follows:
(in thousands of dollars)
1998 1997 1996
Federal $ -- $ -- $(28)
State 1 9 13
Total $ 1 $ 9 $(15)
The actual income tax benefit differed from the expected income tax benefit
(computed by applying the applicable U.S. Federal corporate income tax rate
of 34% to loss before income taxes) as follows:
(in thousands of dollars)
1998 1997 1996
Computed "expected" tax benefit $(1,018) $(490) $(933)
Amortization of goodwill 170 170 170
State income taxes, net of
Federal benefit -- 6 9
Alternative minimum tax -- -- (28)
Other (324) 24 (250)
Change in valuation allowance 1,173 299 1,017
Total $ 1 $ 9 $ (15)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities at June 30, 1998 and 1997 are
presented below.
(in thousands of dollars)
1998 1997
Deferred tax assets:
Net operating loss carryforward
(Pre-acquisition) $ 530 $ 583
Net operating loss carryforward
(Post-acquisition) 5,804 5,199
Allowance for doubtful accounts 38 38
Allowance for inventory valuation 179 121
Accrued compensation, sales allowances
and other expenses 827 295
Total gross deferred tax assets $ 7,378 $ 6,236
Valuation allowance (6,792) (5,623)
Total deferred tax assets 586 613
Deferred tax liability:
Difference between basis of fixed
assets for book and tax purposes $ (586) $ (613)
Net deferred tax assets $ -- $ --
The change in the deferred tax valuation allowance was an increase of
$1,173,000 in Fiscal 1998 compared to an increase of $299,000 in Fiscal 1997,
and an increase of $1,017,000 in Fiscal 1996.
At June 30, 1998 and June 30, 1997, the amount of valuation allowance, which if
realized would result in a reduction of goodwill, aggregated $530,000, and
$583,000, respectively.
12. COMMITMENTS
The Company leases various real and personal property under non-cancelable
operating leases which expire through 2002. Rental expenses charged to
operations were $638,407, $614,321, and $465,000 for the years ended
June 30, 1998, 1997 and 1996, respectively. Future annual minimum
rentals are $573,915, $432,917, $181,506, $46,468, and $739, for Fiscal 1999
through 2003, respectively.
13. RELATED PARTIES
The Company has access to the Limagrain germplasm. The cost to access this
germplasm is paid to LG Corp. as royalties on corn and soybean units sold.
Costs incurred for corn royalties were approximately $87,000, $71,000, and
$94,000 for Fiscal 1998, 1997 and 1996, respectively. The Company accrued
or paid $31,000, $44,000, and $50,000 to LG Corp. for royalties on soybean
genetics for Fiscal 1998, 1997 and 1996, respectively.
The Company has agreements with affiliated companies that provide for certain
administrative and management services. Combined costs incurred under
these agreements were $400,000, $300,000, and $320,000 for Fiscal 1998, 1997
and 1996, respectively. Fees for these arrangements are negotiated annually
by management and approved by the Board of Directors.
The Company sells seed to various affiliated companies in Europe primarily
under production contracts. These contracts are negotiated annually and are
based on market pricing and quantities determined by the affiliates'
requirements. Export sales to affiliates amounted to $2,984,000 for Fiscal
1998, $2,977,000 for Fiscal 1997, and $1,489,000 for Fiscal 1996.
During Fiscal 1996, the Company repurchased 70,000 stock options from officers
and directors for $3,400. The repurchase of the options, with exercise prices
between $1.31 and $3.50 per share, resulted in a reduction of approximately
$66,000 in long-term liabilities. The net result was a reduction of general
and administrative expenses of $62,000.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest aggregated approximately $1,074,000, $880,000 and
$728,000 for Fiscal 1998, 1997, and 1996, respectively.
15. LIQUIDITY
The Company has incurred net operating losses and negative cash flow from
operations for Fiscal 1998, 1997, and 1996. The Company's current line of
credit expires on December 31, 1998, at which time management expects to
renew this credit facility.
Management believes that subsequent to the events described below in "Note 17.
Subsequent Events", that Limagrain and LG Corp. will recapitalize the Company
to make additional capital resources available and take steps to improve the
operations and cash flow. At this time, specific plans and actions are not
known.
16. OTHER INCOME AND EXPENSE
Included in other income and expense are $123,000, $95,000, and $68,000 in
finance charge income on customer accounts for Fiscal 1998, 1997, and 1996,
respectively. Also included in other income and expense for Fiscal 1996 is
$94,000 of gain on the disposal of AgriBioTech, Inc. common stock received
during Fiscal 1995 by the Company as part of the proceeds from the disposal
of its Scott Seed Company operations.
17. SUBSEQUENT EVENTS
On September 21, 1998, the Company received a letter from LG Corp. notifying
the Company of LG Corp.'s intention to cash out the minority stockholders of
the Company via a short form merger effected pursuant to Section 253 of the
General Corporation Law of the State of Delaware (the "DGCL"). The
consideration to be paid to the minority stockholders of the Company in such
merger is $0.05 per share.
Under the DGCL, because LG Corp. owns more than 90% of the Company, no action
will be required of the board of directors of the Company or the stockholders
of the Company (other than LG Corp. acting through its board of directors),
for the merger to become effective. Also, as a "short form" merger, the
board of directors of the Company had no right to a role, nor did they have a
role, in negotiating the cash-out price, and the Company's directors have made
no determination, nor are they required to make a determination, with
respect to the fairness of the cash-out price.
The merger is expected to be consummated prior to December 31, 1998, or as soon
as practicable thereafter. Under the DGCL, minority stockholders of the
Company who do not wish to accept the consideration of $0.05 per share and
who follow the procedures set forth in Section 262 of the DGCL will be
entitled to have their shares of common stock appraised by the Delaware Court
of Chancery and to receive payment in cash of the "fair value" of such shares.
Prior to the consummation of the merger, LG Corp. reserves the right to
cancel the merger for any reason, including without limitation if (i) any
stockholder of the Company seeks to enjoin the merger or (ii) in LG Corp.'s
judgment, the anticipated cost of the merger would be materially increased
by the number of stockholders of the Company seeking their appraisal remedy.
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, 1998
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 31, 1998, the Registrant had 103,055,577 (103,094,737 total shares,
less 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)
<CAPTION>
<S> <C> <C>
September 30, June 30,
Assets 1998 1998
Current assets:
Cash & cash equivalents $ 101 $ 353
Accounts receivable 3,089 9,458
Inventories 10,977 7,761
Prepaid expenses & other assets 118 139
Total Current Assets 14,285 17,711
Property, plant & equipment 13,957 13,858
Less accumulated depreciation (6,029) (5,818)
Net property, plant & equipment 7,928 8,040
Goodwill and other assets 7,749 7,879
Total Assets $ 29,962 $ 33,630
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit $ 4,600 $ 7,700
Borrowings from affiliates 5,800 3,600
Accounts payable 1,712 489
Accrued liabilities 1,000 2,936
Due to affiliates 415 244
Total current liabilities 13,527 14,969
Long-term debt:
Due to affiliates 6,761 6,761
Other noncurrent liabilities 424 431
Total Liabilities $ 20,712 $ 22,161
Shareholders' Equity
Preferred Stock, Class A, 900,000
shares outstanding (Liquidation
value of $9 million) 9 9
Common Stock, 150,000,000
shares authorized; 103,055,577
shares outstanding, net of $95,000
for treasury shares 936 936
Additional paid-in capital 20,823 20,823
Accumulated deficit (12,518) (10,299)
Total Equity $ 9,250 $ 11,469
Total Liabilities
and Shareholders' Equity $ 29,962 $ 33,630
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,
1998 1997
<CAPTION>
<S> <C> <C>
Net Sales:
Domestic $ 316 $ 418
Export -- --
316 418
Cost of Goods Sold:
Cost of Goods Sold 305 364
Gross Margin 11 54
Operating expenses:
Sales & Marketing 1,039 1,084
Warehouse & Distribution 176 225
Administration 723 673
Amortization of goodwill 125 126
2,063 2,108
Operating income(loss) (2,052) (2,054)
Other income (expense):
Interest expense (257) (241)
Other 90 102
Net income before taxes (2,219) (2,193)
Income Taxes -- --
Net income(loss) $ (2,219) $ (2,193)
Net income (loss) per share $ (0.02) $ (0.02)
Weighted average
shares outstanding 103,055,577 104,055,577
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,
1998 1997
<CAPTION>
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ (2,219) $ (2,193)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 345 371
Changes in assets and liabilities
Accounts receivable 6,369 4,769
Inventories (3,216) (2,997)
Other current assets 18 (26)
Accounts payable & accrued liabilities (542) 208
Net cash provided by (used for)
operating activities 755 132
Cash flow from investing activities:
Acquisition of property,
plant & equipment (100) (83)
Net cash provided by (used for)
investing activities (100) (83)
Cash flow from financing activities:
Net repayment under line of credit (3,100) (6,100)
Increase in borrowings from affiliates 2,200 4,200
Increase in long-term debt to affiliates -- 1,500
Decrease in other long-term debts (7) (31)
Net cash provided by (used for)
financing activities (907) (431)
Net increase (decrease) in cash
and cash equivalents (252) (382)
Cash and cash equivalents at the
beginning of period 353 207
Cash and cash equivalents at the
end of period $ 101 $ (175)
See notes to Condensed Consolidated Financial Statement
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of dollars, except share data)
Preferred Stock Additional
Class A Non-Voting Common Stock Paid-In
Shares Par Value Shares Par Value Capital
<CAPTION>
<C> <C> <C> <C> <C> <C>
Balance
June 30, 1998 900,000 $9 103,094,737 $1,031 $20,823
Net loss 0 0 0 0 0
Balance
September 30,
1998 900,000 $9 103,094,737 $1,031 $20,823
</TABLE>
<TABLE>
Retained Total
Earnings Treasury Stock Shareholders'
(Deficit) Shares Par Value Equity
<CAPTION>
<C> <C> <C> <C> <C>
Balance
June 30, 1998 ($10,299) (39,160) ($95) $11,469
Net loss (2,219) 0 0 (2,219)
Balance
September 30, 1998 ($12,518) (39,160) ($95) $ 9,250
See notes to Condensed Consolidated Financial Statement
</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 consistent with the
audited consolidated financial statements incorporated in the Company's Form
10-K for the year ended June 30, 1998,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,
1998 1998
Finished seed $ 4,492 $ 4,473
Unfinished seed 5,808 2,594
Supplies and other 677 694
Total Inventory $ 10,977 $ 7,761
"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 1998,
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
Since October 1993, the Company has had a revolving credit arrangement with
its principal bank, 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. 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, 1998 and September 30, 1998
totaled $7,700,000 and $4,600,000, respectively. The maximum amounts
available under the Line of Credit pursuant to the borrowing base formula,
absent waivers, at June 30, 1998 and September 30, 1998 were $10,422,000 and
$5,951,000, respectively. In addition to the Line 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 Line of Credit.
Cash and cash equivalents decreased $252,000 during the first three months of
Fiscal 1999 from $353,000 at June 30, 1998 to $101,000 at September 30, 1998.
Cash flow from operations generated $755,000. Major items impacting cash flow
from operations for the three months ended September 30, 1998 were: (i) net
loss for the period of $2,219,000, offset by depreciation and amortization of
$345,000; (ii) a decrease in accounts receivable of $6,369,000 as a result of
collection on prior year sales; (iii) an increase in inventory of $3,216,000
resulting from inventory produced this year; (iv) a decrease in accrued
liabilities and payables of $542,000 primarily from the payment of accrued
technology fees to technology suppliers; and (v) $18,000 generated by other
changes in working capital.
Cash flow from investing activities consumed $100,000, related to new capital
expenditures.
Cash flow from financing activities consumed $907,000. The Company repaid
$3,100,000 in borrowings under its Line of Credit. The Company borrowed a
total of $2,200,000 from affiliates on demand notes at 5% interest.
Management believes that upon the maturities of these notes, either (i) the
notes will be extended, (ii) amounts due will be refinanced by affiliates, or
(iii) borrowings can be made under the Line of Credit to offset any needed
repayments to affiliates.
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 compliance with the Line of Credit during
seasonal fluctuations in the Company's borrowing base and net tangible assets,
respectively, or otherwise.
Results of Operations - Quarter Ended September 30, 1998
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 each 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 the third fiscal quarter.
Net sales for the first quarter of Fiscal 1999 decreased $112,000 compared to
Fiscal 1998, decreasing from $418,000 in Fiscal 1998 to $316,000 for Fiscal
1999. This decrease was primarily related to lower wheat sales in Fiscal
1999. This trend continues the decrease in wheat sales relative to Fiscal
1997, when sales were $755,000. The low commodity price of wheat, lower
wheat plantings in the Company's marketing area, and competition from
farmer-use of saved seeds have contributed to the declining sales volumes.
Additionally, in Fiscal 1999, the Company has attempted to minimize its
wheat inventory levels. This has hurt overall margins as wholesale sales
have been at margins lower than normal retail margins. Cost of goods
decreased $59,000 due primarily to volume compared to last year, decreasing
from $364,000 in Fiscal 1998 to $305,000 in Fiscal 1999.
Sales and marketing expenses have decreased $45,000 from $1,084,000 in the
first quarter of Fiscal 1998 to $1,039,000 for the first quarter of Fiscal
1999. Most of the decrease relates to timing of expenses from one year to
the next. Warehouse and distribution costs were lower by $49,000, decreasing
from $225,000 in the first quarter of Fiscal 1998 to $176,000 in the first
quarter of Fiscal 1999. Most of this decrease is attributed to the lower
wheat sales volume as discussed above.
General and administrative costs increased $50,000 from $673,000 for the first
quarter of Fiscal 1998 to $723,000 for the first quarter of Fiscal 1999.
Most of the decrease related to differences in when expenses were incurred
from year-to-year.
Interest costs increased $16,000 from $241,000 in the first quarter of Fiscal
1998 to $257,000 in the first quarter of Fiscal 1999, due primarily to higher
borrowing levels resulting from the Fiscal 1998 loss , partially offset by
lower interest rates.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Not applicable.
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.
On September 21, 1998, the Company received a letter from LG Corp. notifying
the Company of LG Corp.'s intention to cash out the minority stockholders of
the Company via a short form merger effected pursuant to Section 253 of the
General Corporation Law of the State of Delaware (the "DGCL"). The
consideration to be paid to the minority stockholders of the Company in such
merger is $0.05 per share.
Under the DGCL, because LG Corp. owns more than 90% of the Company, no action
will be required of the board of directors of the Company or the stockholders
of the Company (other than LG Corp. acting through its board of directors),
for the merger to become effective. Also, as a "short form" merger, the
board of directors of the Company had no right to a role, nor did they have
a role, in negotiating the cash-out price, and the Company's directors have
made no determination, nor are they required to make a determination, with
respect to the fairness of the cash-out price.
The merger is expected to be consummated prior to December 31, 1998, or as
soon as practicable thereafter. Under the DGCL, minority stockholders of
the Company who do not wish to accept the consideration of $0.05 per share
and who follow the procedures set forth in Section 262 of the DGCL will be
entitled to have their shares of common stock appraised by the Delaware Court
of Chancery and to receive payment in cash of the "fair value" of such shares.
Prior to the consummation of the merger, LG Corp. reserves the right to
cancel the merger for any reason, including without limitation if (i) any
stockholder of the Company seeks to enjoin the merger or (ii) in LG Corp.'s
judgment, the anticipated cost of the merger would be materially increased by
the number of stockholders of the Company seeking their appraisal remedy.
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:
Current Report on Form 8-K filed with the Commission on September 21, 1998,
announcing the intention of Limagrain Genetics Corp. to cash out the
minority stockholders of BioTechnica International, Inc. via a short form
merger.
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 13, 1998 /s/ Bruno Carette
Bruno Carette, President and
Chief Executive Officer
Date: November 13, 1998 /s/ Edward Germain
Edward Germain
Chief Financial Officer
