UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1998
Commission File No.: 0-11854
BIOTECHNICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2344703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4001 WAR MEMORIAL DRIVE
PEORIA, ILLINOIS 61614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (309) 681-0300
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
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, and (2) has been subject to such
filing requirements for the past 90 days:
Yes X_ No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. X
At August 31, 1998, the Company had 103,055,577 shares (not including 39,160
treasury shares) of its Common Stock, $.01 par value, issued and outstanding.
At August 31, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $286,039 (4,767,319 shares at $0.06
per share).
FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this Report,
including those under the captions "Narrative Description of Business",
"Competition", and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995, and are subject to the safe harbor created by that Act. Such
forward-looking statements include, without limitation, the future
availability and prices of raw materials, the availability of capital on
acceptable terms, the competitiveness of the agricultural seed industry, the
future availability and pricing of export sale arrangements and other
statements contained herein that are not historical facts. Because such
forward-looking statements involve risks and uncertainties, there are
important factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ materially include, but are not limited
to, changes in general economic and business conditions (including in the
agricultural seed industry), the Company's ability to recover its costs of
goods sold in the pricing of its products, the availability of capital on
acceptable terms, the availability of raw materials, actions of competitors
and governmental entities, adverse weather conditions, the future
availability of export sale arrangements, the support of the Company's
parent and affiliates, changes in the Company's business strategies and
other factors.
PART I
ITEM 1. BUSINESS
Narrative Description of Business
The primary business of BioTechnica International, Inc., a Delaware
corporation formed in 1981 (the "Registrant", which together with its
subsidiary, is referred to herein as "BioTechnica" or the "Company"), is the
production, processing and sale of agricultural seeds. Corn, soybeans
and alfalfa comprise the Company's major product lines. During Fiscal 1998,
sales of corn, soybeans, alfalfa, and other agricultural products represented
65%, 28%, 5%, and 2% of net sales, respectively. This compares to 63%, 26%,
5%, and 6% of the Company's net sales during Fiscal 1997, and 60%, 31%, 4%,
and 5% of the net sales for corn, soybeans, alfalfa, and other agricultural
products in Fiscal 1996. The Company's fiscal year begins on July 1 and ends
on June 30 of each respective year.
The Company contracts with independent farmer-growers for the production of
corn, soybeans, and wheat 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 products 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.
The Company buys alfalfa and other seed products as finished goods from seed
producers based upon annually negotiated terms which fluctuate with growing
conditions and supply levels.
The Company sells its products throughout the Midwestern United States mainly
to farmer-dealers who in turn market the seed to farmers. Because of the
seasonal nature of the agricultural seed business, the Company's sales are
highly concentrated during the period beginning in December and running
through the spring planting season of each year. This heavy sales season is
followed by a period during which the dealers are generally allowed to return
unplanted seed to the Company. Reserves are made throughout the selling
season in anticipation of these returns.
The Company issues settlement statements to its dealers following the return
period each year and generally collects payments on annual sales during the
summer or at harvest time in the fall, although some payments are received at
various times throughout the year as induced by early payment discounts.
Management believes these practices and policies are typical of those
of competitors in the seed industry.
The Company's foundation seed and other raw materials are generally available
and the Company is not dependent on a single supplier. The foundation seeds
needed to produce a particular hybrid or variety are typically available
only from the supplier holding patent rights to those genetics and supply
may be limited in some situations, depending on customer demand or growing
conditions.
Seed product revenues were $21,340,000 for Fiscal 1998, including $2,984,000
in sales to affiliated companies, primarily in Europe. These sales to
affiliated companies are the result of annual production contracts for
specific corn varieties and are based on market price prior to planting
season each year. Total export sales, most of which are made to affiliated
companies, represent approximately 15% of revenues for Fiscal 1998, 15% of
revenues for Fiscal 1997, and 9% of revenues for Fiscal 1996. Sales to
affiliated companies are based solely on their respective needs. There is
no assurance that these levels of sales will be maintained in the future.
Government Regulation
The Company's business is subject to Federal, state and local regulations.
The Company is not aware of any material administrative, regulatory or
judicial actions, suits, demand letters, liens, notices of non-compliance or
violations, investigations or proceedings which will materially impact the
Company.
Competition
The Company markets its products primarily in the Corn Belt Region of the
United States, comprised of approximately 12 Midwestern states from
Colorado to Ohio, and from Kentucky to the Canadian border. Competitors of
the Company consist of several very large seed companies and numerous
smaller operations throughout the Midwestern United States. The competitors
of the Company in these markets differentiate their products primarily based
on price and yield and other agronomic characteristics, as well as on seed
quality, brand name recognition, and customer service. The Company
believes that its products are competitively priced and offer similar
agronomic characteristics, yield performance, seed quality, and customer
service as the products of its major competitors in these areas.
The Company's alliance with Groupe Limagrain Holdings S.A. ("Limagrain"),
which through a majority-owned subsidiary, Limagrain Genetics Corp.,
a Delaware corporation ("LG Corp."), holds approximately 95% of the common
stock of the Company, allows the Company to position itself to compete with
other large seed companies on a more effective basis. Limagrain, together
with its affiliates ("the Limagrain Group"), being one of the largest seed
organizations in the world, has extensive research capabilities and
experience in the seed industry in which the Company now shares. In
particular, the germplasm resources of the Limagrain Group are available
to the Company.
The benefits of association with the Limagrain Group extend not only to
the technical side of the business, but also to the extensive management,
marketing, financial, and personnel resources and expertise of the
Limagrain Group throughout the world.
Customers
No single domestic customer represents more than 10% of the total revenues
of the Company for Fiscal 1998, 1997, or 1996.
Employees
The Company employed 136 people as of August 31, 1998, including 30
part-time employees.
Share Repurchases
From time to time the Company evaluates various alternatives available to it
to enhance the value of the common stock to the minority shareholders.
These alternatives include, but are not limited to, the repurchase of
large blocks of shares at a substantial discount. On February 2, 1998, the
Company repurchased and retired 1,000,000 shares of its common stock
(approximately 1.0% of the then-outstanding shares) from a shareholder for
$0.01 per share. This price per share was substantially below the
then-current market price. The effect of this repurchase was to increase
proportionately the percentage of common stock of the Company held by all
shareholders by 1.0%, including LG Corp., whose ownership increased from 94%
to 95%.
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.
ITEM 2. PROPERTIES
The following table identifies the properties owned or leased by the Company
and its subsidiary as of June 30, 1998:
Approximate
Acreage Square Footage
Owned Owned Leased
Peoria, IL Corporate Headquarters 6,000
Prescott, WI Office/Warehouse 16,056
Mt. Pleasant, IA Office/Plant/Warehouse 3.0 32,000
Tekamah, NE Office/Plant/Warehouse 17.7 74,620
Decatur, IL Office/Plant/Warehouse 8.3 59,000
Windfall, IN Office/Plant/Warehouse 9.9 49,300
Elmwood, IL Office/Plant/Warehouse 40.5 122,577
Conditioning facilities have peak usage only a few months of the year during
the fall harvest season of September and October. Weather conditions at
harvest time can shorten the time available for harvest, requiring more
capacity at these locations. During the fall harvest season, the Company's
production facilities generally run at full capacity. The Company believes
it has adequate conditioning/warehouse capacity for the effective operation
of its business.
ITEM 3. LEGAL PROCEEDINGS
As of August 31, 1998, there are no material pending legal proceedings to
which the Company is a party or of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the
fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The common stock of the Company is traded on the Over-the-Counter Bulletin
Board under the symbol BIOT.
No dividends on common stock have been paid since the Company's inception
and the Company anticipates that for the foreseeable future any earnings that
would otherwise be available for the payment of dividends to the holders of
common stock will be retained to partially fund the Company's cash
requirements.
The Class A Preferred Stock of the Company (all of which is owned by LG Corp.)
pays a 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.
Pursuant to the Company's line of credit arrangement with its principal bank
(the "Line of Credit"), the Company has agreed that the payment of dividends
in any fiscal year, if any, will not exceed the Company's net income
determined on a consolidated basis. If the Company is in default on any of
the terms of the Line of Credit, then the Company may not pay or declare any
dividends, other than dividends payable in stock of the Company.
As of August 31, 1998 there were approximately 500 shareholders of record
of the Company's common stock, representing approximately 1,500 beneficial
owners. As of August 31, 1998, the closing price per share of common stock
was $0.06.
Price range of common stock:
High Last Sale/Bid Quotation Low Last Sale/Bid Quotation
Quarter Ended
June 30, 1998 $0.1300 $0.0800
March 31, 1998 $0.1875 $0.0625
December 31, 1997 $0.5000 $0.0625
September 30, 1997 $0.1875 $0.0625
Quarter Ended
June 30, 1997 $0.25 $0.07
March 31, 1997 $0.375 $0.125
December 31, 1996 $0.50 $0.125
September 30, 1996 $0.75 $0.375
The Source of Bid Quotations is a computerized on-line bid quotation service.
These quotations reflect inter-dealer prices, without retail markup, markdown,
or commission, and may not necessarily represent actual transactions.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth selected consolidated financial and operating
data for the Company and its predecessors for the periods and at the dates
indicated. The selected consolidated operating and financial data presented
below was derived from the Consolidated Financial Statements of the Company,
which were audited by KPMG Peat Marwick LLP, independent auditors. The
table should be read in conjunction with the Consolidated Financial
Statements, related notes, and other financial information.
<TABLE>
For Years Ended June 30,
1998 1997 1996 1995 1994
($000's, except per share data)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Operations:
Net sales $ 21,340 $ 20,085 $ 18,767 $ 23,961 $ 24,587
Operating income
(loss) (2,035) (781) (2,594) (1,531) (477)
Net income (loss) (2,996) $ (1,449) $ (2,685) $ (2,394) $ (832)
Net income (loss)
per common share: (0.04) $ (0.02) $ (0.03) $ (0.02) $ (0.01)
Balance Sheet:
Total assets $33,630 $ 33,436 $ 32,957 $ 34,502 $ 39,320
Notes payable and
long-term debt 431 295 201 285 513
Due to affiliate
long-term 6,761 5,261 3,261 5,326 3,261
Shareholders'
equity $11,469 $ 14,475 $ 16,105 $ 16,790 $ 17,245
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Under the Line of Credit arrangement, the Company may borrow up to $12,000,000
subject to the limitations of a borrowing base formula and other limitations
contained in the Line of Credit. Borrowings under the Line of Credit are
secured by the inventory and accounts receivable of the Company and by the
guarantees of Limagrain, LG Corp. and the Company's subsidiary. Borrowings
outstanding under the Line of Credit at June 30, 1998 and 1997 totaled
$7,700,000 and $10,900,000, respectively. The Company has been in compliance
with, or received waivers for, all loan covenants.
Effective December 1, 1997, the Line of Credit was extended until December 31,
1998. Management expects that this Line of Credit will be renewed under
substantially the same conditions for one year at that time and that the
Company will have access to sufficient cash resources to meet the reasonably
foreseeable obligations of its continuing business operations. Management
believes that subsequent to the events described above in "Item 1. 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.
There is no assurance that LG Corp., or any other affiliate of Limagrain, 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/or conversions, the
Company would be able to comply with the Line of Credit during seasonal
fluctuations in the Company's borrowing base and net tangible assets,
respectively.
Fiscal 1998
During Fiscal 1998, cash and cash equivalents increased by $146,000. The cash
balance primarily represented cash collected at Company locations at the end
of June that had not yet been transferred to reduce borrowings under the
Line of Credit.
Cash flow used in operations totaled $1,855,000 in Fiscal 1998. This usage
consisted of a net loss of $2,996,000, and an increase of $2,390,000 in
accounts receivable resulting from later settlements, and a higher sales
level. Items that partially offset this usage were the non-operating loss
on disposal of fixed assets of $225,000 (primarily resulting from the disposal
of a portion of the Company's Mt. Pleasant, IA facility), a decrease in
inventory of $569,000 due to lower current-year seed production, $1,439,000
in depreciation and amortization, and an increase in accounts payable and
accrued liabilities of $1,300,000, due primarily to later year-end
settlements and returns due to weather.
Cash flow from investing activities provided $111,000 of the Company's cash.
This consisted of capital expenditures totaling $130,000 offset by proceeds
from assets sold totaling $241,000 (primarily the Mt. Pleasant, IA
transaction discussed above).
Cash flow provided by financing totaled $1,890,000. Borrowings under the Line
of Credit decreased by $3,200,000, primarily due to new borrowings from
affiliates. Proceeds from additional debt to affiliates provided $5,100,000.
During the year, LG Corp. was in a position to lend this additional amount
due to its own cash flow situation. In February 1998, the Company
repurchased 1,000,000 shares of common stock at $0.01 per share, which consumed
$10,000 in cash.
Fiscal 1997
During Fiscal 1997, cash and cash equivalents increased by $13,000. The
Company has a policy of using excess cash to reduce the principal amount
outstanding under its Line of Credit. As of June 30, 1997, the Company had
a cash balance of $207,000.
Cash flow used in operations totaled $1,504,000 in Fiscal 1997. This consisted
of a net loss of $1,449,000, a non-operating gain on disposal of assets of
$13,000, an increase in inventory of $2,354,000, and a decrease in accounts
payable and accrued liabilities of $124,000 which were partially offset by
$1,453,000 in depreciation and amortization, an $896,000 decrease in accounts
receivable, and an $87,000 reduction in other current assets. The significant
increase in inventory resulted from (i) the rebuilding of inventory levels
after the decrease in Fiscal 1996 due to poor production yields,
(ii) inventory produced for new product introduction, and (iii) lower than
anticipated domestic sales in Fiscal 1997. The decrease in accounts
receivable resulted from (i) lower domestic sales, and (ii) higher levels of
advance payments by the Company's dealers.
Cash flow from investing activities used $535,000 of the Company's cash.
Capital expenditures totaled $600,000, with $507,000 of that amount relating
to the replacement of the Elmwood building destroyed by fire in August of
1995. The remainder of capital expenditures were primarily for upgrades
to the Company's information system.
Cash flow provided by financing activities totaled $2,052,000. $2,000,000 in
short-term debt to affiliates was converted into long-term debt to LG Corp.
Borrowings under the Line of Credit increased by $2,400,000, primarily to
cover the increased level of inventory. Payments on long-term notes
consumed $107,000 in cash. In June 1997, the Company repurchased and retired
11,324,051 shares of common stock, which consumed $181,000 in cash.
RESULTS OF OPERATIONS
FISCAL 1998 COMPARED TO FISCAL 1997
Domestic Sales
The Company had domestic seed sales in Fiscal 1998 of $18,047,000, compared to
$17,004,000 in Fiscal 1997. The Company is introducing new products into its
lineup to reflect the trends in American agriculture toward
genetically-modified seeds. In Fiscal 1998, the Company sold limited
quantities of various genetically modified corn seeds, and significant
quantities of genetically modified soybean seeds. In Fiscal 1998 and future
years, the Company expects to market larger quantities of these products,
as well as other new products as they become available. Although in many
cases these products carry significantly higher costs to the ultimate
customer, most of the additional amount collected must be remitted to the
technology supplier in the form of technology fees and increased royalties.
Export Sales
Export sales for Fiscal 1998 showed an increase compared to Fiscal 1997.
Fiscal 1998 sales were $3,293,000, compared to Fiscal 1997 sales of
$3,081,000. Of these amounts, sales to affiliates amounted to $2,984,000
and $2,977,000, respectively. Since most export sales are based on
annually negotiated production contracts - negotiated at current market rates
by management of the Company and a representative of the respective
affiliate - the fluctuations in sales were the result of changes in
production yields from year to year and changes in demand by affiliated
companies in Europe. Typically, high export sales to Europe in one year
translate into lower sales in the following year, as the affiliates have a
larger carryover inventory to sell. There is no assurance that the Company
and the Limagrain affiliates will continue to reach agreement on such export
sales arrangements in the future and, if no such agreement is reached, there
would be a negative impact upon the Company's sales and profit margins.
Cost of Goods Sold
Cost of goods sold was significantly higher in Fiscal 1998 than in Fiscal 1997
by $1,839,000. This resulted primarily from higher production costs caused by
lower production volumes and the poor growing conditions in the sandy
production areas south of Peoria, IL, where much of the Company's corn
seeds are grown, during the Summer of 1997, resulting in a higher cost per
unit. These higher costs per unit accounted for approximately $1,200,000 in
higher costs. The remainder of the change was related primarily to volume
changes.
Sales and Marketing
Sales and marketing costs were $4,710,000 in Fiscal 1998, compared to
$4,163,000 in Fiscal 1997. This increase was related to a significantly
increased effort in advertising, marketing, and promotion and higher payroll
costs.
Warehouse and Distribution
Warehouse and distribution costs were $1,331,000 in Fiscal 1998, compared to
$1,316,000 in Fiscal 1997. This increase resulted from operating improvements
and additional costs at the Company's warehouses. An additional factor was
logistical associated with product exchanges and replanting by our
customers in Spring 1998 due to wet weather conditions.
General and Administrative
General and Administrative costs were $2,677,000 in Fiscal 1998, compared to
$2,569,000 in Fiscal 1997. This increase was primarily due to higher health
insurance costs and higher payroll costs.
Interest Expense
Interest expense was higher in Fiscal 1998 than in Fiscal 1997 by $86,000.
This increase was generated primarily by the higher borrowings resulting
from the Company's net loss and capital expenditures. This was partially
offset by a reduced interest rate on some intercompany borrowings.
FISCAL 1997 COMPARED TO FISCAL 1996
Domestic Sales
The Company had domestic seed sales in Fiscal 1997 of $17,004,000, compared to
$17,151,000 in Fiscal 1996. Both domestic corn and soybean sales volumes
decreased due to competitive pressures. However, these decreases were
almost entirely offset by increases in selling prices of the products. The
Company is introducing new products into its lineup to reflect the trends in
American agriculture toward genetically-modified seeds. In Fiscal 1997, the
Company sold limited quantities of Roundup Ready(c) Soybeans and Liberty
Link(c) Corn. In Fiscal 1997 and future years, the Company expects to
market larger quantities of these products, as well as other new products
as they become available.
During Fiscal 1997, the Company experienced an increase in alfalfa sales,
principally in the northern parts of its marketing area. This resulted from
better alfalfa planting conditions in the spring than in the previous
several years.
Export Sales
Export sales for Fiscal 1997 showed an increase compared to Fiscal 1996.
Fiscal 1997 sales were $3,081,000, compared to Fiscal 1996 sales of $1,616,000.
Of these amounts, sales to affiliates amounted to $2,977,000 and $1,489,000,
respectively. Since most export sales are based on annually negotiated
production contracts - negotiated at current market rates by management of
the Company and a representative of the respective affiliate - the fluctuations
in sales were the result of changes in production yields from year to year
and changes in demand by affiliated companies in Europe. Typically, high
export sales to Europe in one year translate into lower sales in the
following year, as the affiliates have a larger carryover inventory to sell.
(See "ITEM 1. BUSINESS--NARRATIVE DESCRIPTION OF BUSINESS.") There is no
assurance that the Company and the Limagrain affiliates will continue to
reach agreement on such export sales arrangements in the future and, if no
such agreement is reached, there would be a negative impact upon the Company's
sales and profit margins.
Cost of Goods Sold
Cost of goods sold was lower in Fiscal 1997 than in Fiscal 1996 by $671,000.
This resulted primarily from lower production costs caused by higher production
volumes and the better growing conditions during the Summer of 1996,
resulting in a lower cost per unit. These lower costs per unit accounted for
approximately $1,000,000 in lower costs. The remainder of the change was
related primarily to volume changes.
Warehouse and Distribution
Warehouse and distribution costs were $1,316,000 in Fiscal 1997, compared to
$1,196,000 in Fiscal 1996. This increase resulted from operating improvements
and additional costs at the Company's warehouses. An additional factor was
cost of returning a significant quantity of wheat seed that was not planted
by our customers in Fall 1996.
Sales and Marketing
Sales and marketing costs were $4,163,000 in Fiscal 1997, compared to
$4,203,000 in Fiscal 1996. This decrease was related to the decrease in
sales volume and the Company's efforts to keep costs under control.
Interest Expense
Interest expense was higher in Fiscal 1997 than in Fiscal 1996 by $48,000.
This increase was generated primarily by the higher borrowings to support the
higher inventory level and capital expenditures. This was partially offset
by a reduced interest rate on intercompany borrowings.
ACCOUNTING STANDARDS
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" was issued in June 1998 and is effective
for Fiscal 2000. Management is assessing the effects of the provisions of
this Statement on the financial condition and results of operations of the
Company. For additional disclosure, see Note 1.H to the Consolidated
Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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, 199
<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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to the Directors of the
Corporation:
Principal Occupations the Last Director
Name Age Five Years; Other Directorships Since
Claude Agier 54 Mr. Agier has been a member of the Limagrain 1994
Cooperative since 1966 and has served as a
director of all the companies belonging to
the Field Seeds Division of the Limagrain
Group since 1985. Mr. Agier manages a farm
of 150 acres.
George R. Allbritten 67 Mr. Allbritten retired as the Vice President- 1994
Finance, Secretary, Treasurer,and Chief
Financial Officer of the Corporation on
August 31, 1994, an office he had held
since October 1993. From December 1990 to
October 1993, Mr. Allbritten was President-
Chief Operating Officer of Ferry-Morse Seed
Company, a subsidiary of Limagrain, where
he also served as Senior Vice President from
1983 to 1990 and Vice President-Finance
from 1973 to 1983.
Bruno Carette 43 Mr. Carette was appointed Chief Executive 1997
Officer of the Corporation effective
September 1, 1997. In addition, he
has served as President and Chief Operating
Officer since July 1, 1996. He served as
Vice President, Sales and Marketing of the
Corporation from 1994 to 1996. From 1990
to 1993, Mr. Carette was Company Production
Manager at Vilmorin S.A., a Limagrain
affiliate. Prior to that, he
was the Overseas Production Manager for
Vilmorin S.A. from 1988 to 1990.
Ralph W.F. Hardy 64 In 1996, Dr. Hardy became President of the 1984
National Agricultural Biotechnology Council
and a Board member and Corporate Secretary
of the United States Department
of Agriculture's Alternative Agriculture
Research and Commercialization Corporation.
From September 1987 until August 1995, Dr.
Hardy was President and Chief Executive
Officer of the Boyce Thompson Institute for
Plant Research at Cornell University. From
November 1984 to January 1986,
Dr. Hardy was President and Chief Operating
Officer of the Corporation.
Francois Heyraud Mr. Heyraud has served as a director of 1998
the Corporation since May 1998. He has
been a member of the Limagrain
Cooperative Board of Directors since 1984.
Mr. Heyraud owns a farm near Clermont-Ferrand,
France.
Serge Lebreton 57 Mr. Lebreton joined the Limagrain 1997
Cooperative Board of Directors in 1969
as Vice Chairman/Treasurer. In 1984
he was appointed President of the Corn
Seeds Division of the Limagrain Group.
Since 1993, he has been the President
of the Bio-Health Division of the Group and
Chairman of the Dolisos companies. He
serves as President of the regional
section of ONIC (Office National
Interprofessional des Cereales) and as a
member of the Board of Directors of a local
banking agency of the Credit Agricole.
Claude Lescoffit 51 Mr. Lescoffit is an Engineer of Ecole des 1997
Mines de Paris. After several years in
French Research Laboratories, and
industrial experience in the steelmaking
and automotive industry, he joined Michelin
in 1982. In 1987, he became Executive
Vice President in charge of process engineering.
He was a member of the Executive Committee
of Michelin. He joined Groupe Limagrain
in 1996 as Corporate Vice President in charge
of development of biotechnologies.
In 1997, became Chief Executive Officer
of Limagrain Agro-Genetics, the field seeds
division of Limagrain. He is also President
of the Executive Committee of BIOGEMMA, a joint
venture in biotechnology between several
seed companies in Europe.
Laurent Petoton 62 Mr. Petoton has been a member of the Limagrain 1994
Cooperative since 1971 and has served as
director since 1978. He has been Chairman of
the Board of Directors of Force Limagrain BV
(Holland) since 1989 and has served as a
director of all the companies belonging to
the Field Seeds Division of the Limagrain
Group since 1985. Mr. Petoton is a Board
member of the local branch of the Credit
Agricole Bank.
Information about the executive officers of the Corporation who are not
nominees for election as Directors is set forth below. All executive
officers serve at the discretion of the Board of Directors and are
indicated below by an asterisk (*) after their names. Day-to-day operations
of the Corporation are managed by the BioTechnica Internanational, Inc./
LG Seeds, Inc. Operating Committee. A listing of the Operating Committee
members follows.
Position with the Corporation, Principal
Name Age Occupations During the Last Five Years
Roger E. Bonsack 46 Mr. Bonsack was appointed National Sales Manager of
the Corporation as of July 1, 1996. Prior to that
date, he was the Location Sales and Marketing
Manager of the Corporation's Tekamah, NE Service
Center since July, 1991. Prior to that, he
served in various management positions
with Dekalb Genetics.
Jacqui Doublier 47 Mr. Doublier was appointed Manager, Marketing and
Product Development of the Corporation as of
September 16, 1996. Prior to that, he was Ex-
port Sales Manager from 1989 to 1996 at Vilmorin S.A.,
a Limagrain affiliate in the field of vegetable seeds.
Edward M. Germain* 46 Mr. Germain was appointed Vice President, Finance,
Chief Financial Officer and Secretary of the
Corporation as of July 1, 1996. Prior to
that date, he served as Chief Financial Officer
and Secretary of the Corporation since November 1,
1994. Prior to that, he served as Controller of
Shissler Seed Company from 1993 to 1994 and
held various financial and management positions
with Briggs Industries, Inc. and Pekin Energy
Company.
Larry D. Rieffel* 51 Mr. Rieffel was appointed Vice President, Production
and Logistics as of July 1, 1996. Prior to that
date he served as Corporate Production
and Logistics Manager of the Corporation since
July 1, 1994. Prior to that, he served in senior
management positions of the Corportion and
with NobleBear Seed Company before it was acquired
by the Corporation.
Barbara A. Wittig 32 Ms. Wittig was appointed Human Resources, Training
and Internal Communications Manager of the
Corporation as of July 1, 1997. Prior to
that date, she was the Human Resources Manager of
the Corporation since August, 1994. Prior to
that, she served in various positions with
Dialysis Centers of America and Burns International
Security Services.
Jean Paul Zink* 49 Mr. Zink was appointed Executive Vice President of
the Corporation as of November 1,1997. Prior to
that date, he was General Manager of Limagrain
Canada Seeds, a Limagrain Affiliate headquartered
in Saskatoon, Saskathewan. Prior to April, 1993,
he served in various management positions with
other Limagrain affiliates in Europe.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE: The following table summarizes, for each of
the last three fiscal periods, the compensation awarded, paid to or earned
by (i) the current CEO, and (ii) each of the four most highly compensated
executive officers other than the CEO who served as executive officers of
the Corporation or its subsidiaries, as of June 30, 1998, whose annual
compensation exceeded $100,000, if any. The Corporation does not currently
award (and there are no outstanding) restricted stock, stock options, stock
appreciation rights, or other long-term incentive compensation.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Name and Annual Compensation Awards All Other
Principal Position Year Salary Bonus Options/SARs Compensation
Bruno Carette 1998 $127,155(1) (3) (2) $-0-
President and Chief 1997 $107,570(1) $13,077 (2) $-0-
Executive Officer 1996 $ 88,225(1) $-0- (2) $-0-
Note: Prior to July 1, 1996, Mr. Carette was Vice President-Sales and
Marketing of the Corporation. From July 1, 1996 to the present, he
was President and Chief Operating Officer. Effective September 1,
1997, Mr. Carette assumed the duties of Chief Executive
Officer upon the resignation of the previous CEO.
No other officers of the Corporation had annual compensation in excess
of $100,000.
(1) Includes personal use of Corporation automobile.
(2) Mr. Carette is covered under the retirement system established under
French law. The French retirement system is similar to the United States
social security system -- a company makes mandatory contributions on
behalf of all of its employees based on a percentage of the employee's
salary. The funds are paid to, and administered by, a governmental
entity. The amount of the contribution on behalf of each employee is
mandatory. In addition, in France a company may elect to make
additional contributions on behalf of its employees and if a company
chooses to do so, such additional contributions are governed by the same
principles as for the mandatory contributions as described herein.
Limagrain normally makes additional contributions on behalf of all of its
employees. See discussion of Limagrain Genetics International Service
Agreement under "CERTAIN RELATIONSHIPS AND OTHER RELATED TRANSACTIONS."
(3) This amount will be determined at a later date. It is estimated to be
approximately $5,000.
The following is the report of the Compensation Committee of the Corporation
(the "Committee") on executive compensation for Fiscal 1998 for executives
of the Corporation.
COMPENSATION PHILOSOPHY: The Committee believes that it is in the best
interest of the shareholders of the Corporation for the Corporation to
attract, maintain and motivate top quality management personnel, especially
its executive officers. The general philosophy of the Committee is to
integrate (i) reasonable levels of annual base compensation and (ii) annual
cash bonuses based on achievement of short-term corporate and individual
performance goals, such that executive compensation levels will be higher in
years in which performance goals are achieved or exceeded.
The elements of the Committee's integrated compensation philosophy are
summarized as follows:
BASE COMPENSATION LEVELS: The base compensation levels for the management of
the Corporation are determined according to the compensation policy in place
at Limagrain for its executives.
PERFORMANCE BASED COMPENSATION: The compensation package for management of
the Corporation also includes performance-based elements. Annual cash
bonuses can be earned based on achievement of Corporation and/or individual
base performance goals determined at the beginning of the year by the
Committee for Mr. Carette, President and Chief Executive Officer of the
Corporation, and proposed by Mr. Carette and reviewed by the Committee for
all other executives. Economic results are the primary measure of Corporate
performance.
RELATIONSHIP OF CORPORATE PERFORMANCE TO FISCAL 1998 COMPENSATION: For Fiscal
1998, the potential performance based compensation amount for Mr. Carette
consisted of a cash bonus to be paid subsequent to the end of the fiscal
year. The amount to be paid will be calculated based on two factors:
(i) an amount based on an amount approximately equal to cash generated by
operations above a certain level; and (ii) an amount based upon the financial
results of Limagrain Genetics International. As of August 31, 1998, the
amount of such bonus has been estimated at $5,000.
A substantially similar arrangement existed for Fiscal 1997 under which Mr.
Carette received a cash bonus of $13,077.
The Compensation Committee is composed of Messrs. Lescoffit, Petoton and
Agier, none of whom are employees of the Corporation, but all of whom are
representatives of Limagrain.
Claude LESCOFFIT, Chairman
Laurent PETOTON
Claude AGIER
Directors who are not salaried employees of, or consultants to, the
Corporation or representatives of Limagrain are entitled to receive an
annual retainer of $4,000 each. Directors who are salaried employees of the
Corporation are not entitled to any additional remuneration above and beyond
their salary. Directors who are representatives of Limagrain are not
entitled to any remuneration from the Corporation. Directors who are
consultants to the Corporation are not entitled to any additional
remuneration above and beyond the amounts set forth in their individual
consulting agreements. Messrs. Lebreton, Lescoffit, Agier, Heyraud, and
Petoton are considered representatives of Limagrain and, therefore, received
no remuneration from the Company for their services as Directors of the
Corporation. Dr. Hardy had a consulting agreement with the Corporation
which provided for the payment of $15,000 per year. During the year ended
June 30, 1998 and 1997, Dr. Hardy was paid $15,000. Mr. Allbritten received an
annual retainer of $4,000. Mr. Carette is an employee of the Corporation
and, therefore, receives no additional remuneration above and beyond his
salary.
STOCK PERFORMANCE GRAPH
The following line graph compares the yearly percentage change:
(i) in the Corporation's cumulative Total Stockholders Return (as
herein defined) (the "diamond" line); with
(ii) the cumulative Total Stockholders Return of the NASDAQ States
Composite Index (the "triangle" line); with
(iii) the cumulative Total Stockholders Return of a customized group
of companies involved in the seed industry (the "Custom Composite
Index") (the "square" line).
"Total Stockholders Return" is calculated quarterly, with dividends
reinvested at the ex-dividend date for each quarter and return compounded.
The graph uses an initial investment of $100 on December 31, 1992, cumulating
the total return for each month for each component, BioTechnica, the NASDAQ
United States Composite Index and the Custom Composite Index, each
assuming dividend reinvestment. The Custom Composite Index was prepared by
weighting the return of each group member according to its respective
market capitalization on a quarterly basis.
The Custom Composite Index consists of AgriBioTech, Inc., DEKALB Genetics
Corp. - Class B, Delta and Pine Land Co., Mycogen Corp., Pioneer Hi-Bred
International, The Scotts Company - Class A, and Zeneca Group Plc-ADR.
Some companies included in the Custom Composite Index became publicly traded
after December 1989. These companies and the dates they began trading are:
The Scotts Company-Class A-January 31, 1992; Zeneca Group Plc ADR-May 12,
1993; Delta and Pine Land Co.-June 30, 1993; and AgriBioTech, Inc.-
December 13, 1993.
The Corporation's fiscal year currently ends June 30. Prior to 1994, the
Corporation's fiscal year ended July 31; prior to 1992, the Corporation's
fiscal year ended December 31.
The historical stock price performance shown on this graph is not necessarily
indicative of future performance.
<TABLE>
1993 1994 1995 1996 1997 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
BioTechnica Intl. $100.00 $ 20.84 $ 11.12 $ 33.33 $ 5.56 $ 4.00
Custom Composite
Index $100.00 $121.23 $183.08 $247.12 $373.02 $525.33
NASDAQ Market
Index $100.00 $109.66 $126.61 $161.89 $195.02 $258.52
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the record
and beneficial ownership of each shareholder known to the Corporation to be
the beneficial owner of more than five percent of the Corporation's common
stock as of September 1, 1998. The persons identified have sole voting and
investment power with respect to all such shares unless otherwise noted.
Number of Shares of Approximate Percentage
Common Stock of Common Stock
Beneficially Owned(1) Beneficially Owned(2)
Groupe Limagrain 98,277,178(3) 95%
Holding S.A.
BP1
63720 Chappes FRANCE
(1)None of the shares disclosed in this column represent shares with
respect to which the holders thereof have the right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under
the Securities Exchange Act of 1934, as amended.
(2)Percentages of common stock held are based on 103,055,577 shares of
common stock outstanding as of September 1, 1998, excluding 39,160
treasury shares.
(3)Consists of 98,277,178 shares of common stock owned beneficially and
of record by its subsidiary, LG Corp.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 1, 1998, certain information
regarding the beneficial ownership of the common stock held by each and by
all directors and executive officers as a group. None of the directors
beneficially own any other class of equity securities other than common
stock. The persons identified have sole voting and investment power with
respect to such shares unless otherwise noted. Claude Agier, George
Allbritten, Bruno Carette, Francois Heyraud, Claude Lescoffit, Serge
Lebreton, Laurent Petoton, and Jean Paul Zink are not record or beneficial
owners of any shares of common stock of the Corporation.
Number of Shares of Approximate Percentage
Common Stock of Common Stock
Beneficially Owned Beneficially Owned
Ralph W.F. Hardy 4,830 *
All directors and executive 11,080 *
officers as a group--eleven
(11) persons
*Denotes less than 1%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation, through relationships with LG Corp. (its 95% parent), is an
affiliate of Limagrain. The Limagrain Group ("Limagrain Group") consists of
a cooperative of approximately 500 French farmers and the multi-national
group of companies owned by them. In total, these companies represent one
of the largest seed organizations in the world. The Limagrain Group is
recognized as a leader in seed research, seed production, and seed marketing,
as well as traditional breeding and biotechnology research and applications.
The Limagrain Group also has investments and joint ventures with other
companies throughout the world in various agribusiness-related industries.
The Corporation has contractual relationships with a number of other
Limagrain affiliated companies. The terms of these contracts are negotiated
annually between the Corporation and each individual affiliated company.
Management believes that such contracts (i) are reasonable, necessary and in
the best interests of all of the shareholders of the Corporation, and (ii)
are on terms no less favorable to the Corporation than the Corporation could
obtain from non-affiliated third parties or on which the Corporation could
internally perform the services provided in such contracts.
The Corporation has adopted internal procedures to evaluate the fairness
of all related party transactions. These transactions are negotiated by
management and approved by the independent (i.e., non-Limagrain) members of
the Board of Directors. In determining whether or not to approve the
related party transactions, the independent Directors evaluate (i) the
relative costs and benefits of the transaction, and (ii) whether the
transaction is on terms no less favorable than those that could be obtained
from non-affiliated third parties or could be internally generated by the
Company. With respect to the related party transactions disclosed in the
Proxy Statement, the following is a brief summary of the evaluation process:
Royalties - The Company pays royalties to LG Corp. for both corn and soybean
seeds sold. The Company pays a royalty on corn genetics licensed from LG
Corp. in the amount of 7.5% of the list price of those products sold. The
Company also pays a soybean royalty of approximately $0.75 per bag of
non-transgenic and $1.75 per bag of transgenic soybeans sold to LG Corp.
These royalties are (i) typical in the seed industry, (ii) are similar to
royalties paid by the Company to non-affiliates, and (iii) are similar to
royalties charged by LG Corp. to non-affiliates. The amounts accrued for
Fiscal 1998 for corn and soybean royalties were $87,000 and $31,000,
respectively.
Service fee to Limagrain Genetics International - The amount of this fee for
Fiscal 1998 was $200,000. The services provided for this fee included
contracts that enabled the Corporation to enter into export sales contracts
and provided the services of five members of the Board of Directors. In
addition, the Company receives various marketing, accounting, administrative,
and planning services. The Company is also able to enter into purchase
agreements for various goods and services (insurance and paper bags, for
example) whereby the Company is able to pool its needs with those of
affiliates to achieve cost savings. The Company determined that the value
of the services was in excess of $200,000 and that the Company could not obtain
such services from non-affiliates (or internally generate the services) in
more favorable terms.
Service fee to Groupe Limagrain Holding and BIOCEM - The amount of these
fees for Fiscal 1998 was $200,000. The most significant item provided by
Groupe Limagrain Holding is the loan guarantee to the Company's primary
lender. Without this guarantee, the Corporation believes the Corporation
would have a significantly higher borrowing rate on its bank borrowings, (if it
would be able to borrow at all). Assuming, conservatively, an increased
borrowing rate of 2% on approximately $15,000,000 of affiliate and bank debt
for Fiscal 1998, the value of the loan guarantee alone is in excess of the
service fee. Other serviced provided for in this fee included human
resources, internal auditing and various forms of internal and external
communication.
BIOCEM is the Limagrain biotechnology research program. This relationship
gives the Corporation (i) access to studies conducted by BIOCEM throughout
the world in the field of biotechnology, (ii) access to BIOCEM scientists
for advice and consultation within their areas of expertise, (iii) input in
determining the avenues that BIOCEM will work on in the future, and (iv) a
favorable position to determine the marketability of products and techniques
developed through the research program.
The Corporation believes that the value of participation in these contracts
is in excess of the service fees charged and that the Company could not
obtain such services from non-affiliates (or internally generate the
services) on more favorable terms.
Sales to Affiliates - These are essentially equivalent to wholesale seed
sales and are similar to those made by the Company routinely to non-
affiliates. The margin and selling prices on the affiliate sales are
similar to those to non-affiliates.
Tax Sharing Agreement - The Company could not enter into this agreement
with a non-affiliate.
Nickerson Service Agreement - The Company provides clerical support and
office space for a representative of Nickerson S.A. in the United States.
The Company currently received $43,000 per year for this service. The
amount received is estimated to exceed the costs incurred.
Inter-company Borrowings - From time to time, the Company borrows funds from
affiliates who may have additional cash available or who may have excess
borrowing capacity. The Company borrows these funds at either (i) the
actual borrowing cost of the affiliate plus a small premium not exceeding
0.5% or (ii) the rate at which the affiliate could have invested the funds
plus a small premium not exceeding 0.5%. In either case, the interest rate
is less than what the Company would receive from a non-affiliate for an
unsecured loans.
FINANCIAL TRANSACTIONS WITH AFFILIATES
At June 30, 1998, LG Corp. had five outstanding loans to the Corporation:
(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. This note is subordinated
to all debt outstanding to the Company's principal bank. The note bears
interest at Canadian Prime plus 0.18% or 6.5%, whichever is lower and is due
July 1, 2000.
(v) a demand note in the amount of $3,000,000. This note bears interest
at Canadian Prime plus 0.18% or 6.5%, whichever is lower and is due at any
time within ten (10) days' notice.
(vi) a cash management agreement that allows the Coropration to borrow cash
from LG Corp. (as available) repayable on demand. Interest is paid at the
rate as LG Corp. could have invested these amounts on a short-term basis.
As of June 30, 1998, the Corporation had outstanding $600,000 under this
agreement.
In addition, from time to time during Fiscal 1998, the Corporation was
advanced cash by LG Corp. and other Limagrain affiliates, to allow the
Corporation to reduce its borrowings from its principal bank. The
Corporation reimbursed LG Corp. and these affiliaties for actual interest costs
and fees incurred to borrow these funds or paid interest at the same rate at
which LG Corp. or the affiliate could have invested these funds in
short-term investments. Except as described above, all of these advances
have been repaid to LG Corp. and other Limagrain affiliates as of June 30,
1998.
Management believes these loans bear interest at or below a rate which the
Corporation would be able to obtain from an unaffiliated lender for an
unsecured loan.
There is no assurance that LG Corp., or any other affiliate of Limagrain, will
continue to (i) guarantee the Corporation's credit arrangement (which it has
not had the legal obligation to do since November 1994), (ii) loan funds to
the Corporation, or (iii) invest additional equity in the Corporation. In
addition, there is no assurance that, without such guarantees, loans, and/or
investments, the Corporation would not be out of compliance with terms of its
bank line of credit during seasonal fluctuations in the Corporation's
borrowing base and net tangible assets, respectively.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements. See Item 8 for the financial statements of
the Company filed as part hereof.
2. Financial Statement Schedules. 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.
3. Exhibits. The exhibits listed in the following index are incorporated
herein by reference.
Exhibit No. Description of Exhibit
2.1 Credit Enhancement and Reorganization Agreement among the
Company, Groupe Limagrain Holding S.A., and Limagrain Genetics Corp. dated
as of October 26, 1993 (incorporated by reference to Exhibit 2.1 to Form 8-K
filed with the Commission November 10, 1993, File No. 0-11854).
2.2 Amendment to Credit Enhancement and Reorganization Agreement dated
December 10, 1993, among the Company, Groupe Limagrain Holding S.A., and
Limagrain Genetics Corp. (incorporated by reference to Exhibit 1 to Form 8-K
filed with the Commission December 16, 1993, File No. 0-11854).
3.1 Amended and Restated Certificate of Incorporation dated March 7,
1994, of the Company, as amended on June 28, 1994 (incorporated by reference
to Exhibit 3.1 to Form 10-K filed with the Commission on October 13, 1994,
File No. 0-11854).
3.2 By-laws of the Company, as amended on October 29, 1983, May 7, 1987
and May 18, 1994 (incorporated by reference to Exhibit 3.2 to Form 10-K
filed with the Commission on October 13, 1994, File No. 0-11854).
4.1 Specimen Certificate of Common Stock of the Company (incorporated
by reference to Exhibit 4(A) to the Company's Annual Report on Form 10-K filed
with the Commission on March 31, 1986, File No. 0-11854).
4.8 Specimen Certificate of Class A Preferred Stock of the Company
(incorporated by reference to Exhibit 4.8 to Form 10-K filed with the
Commission on October 13, 1994, File No. 0-11854).
4.9 Certificate of Designations (incorporated by reference to Exhibit 4.9
to Form 10-K filed with the Commission on October 13, 1994, File No. 0-11854).
10.1 The Company's 1982 Incentive Stock Option Plan adopted on July 30,
1982, as amended on January 31, 1987, on May 7, 1987, and on May 11, 1989
(incorporated by reference to Exhibit 10.1 to Form 10-K filed with the
Commission on March 29,1990, File No. 0-11854).
10.2 The Company's 1992 Stock Incentive Plan adopted on May 7, 1992, as
amended on May 18, 1994 (incorporated by reference to Exhibit 10.2 to Form
10-K filed with the Commission on October 13, 1994, File No. 0-11854).
10.3 Secured Revolving Credit Agreement dated October 26, 1993, between
Harris Trust and Savings Bank and the Company (incorporated by reference to
Exhibit 10.31 to Form 10-K filed with the Commission on November 15, 1993,
File No. 0-11854).
10.4 Eighth Amendment to Secured Revolving Credit Agreement and
Fifth Amendment to Secured Revolving Credit Note between Harris Trust and
Savings Bank and the Company dated as of November 27, 1996.*
10.5 Debt Subordination Agreement between Harris Trust and Savings Bank
and the Company dated June 29, 1994 (incorporated by reference to Exhibit
10.42 to Form 10-K filed with the Commission on October 13, 1994, File
No. 0-11854).
10.6 Debt Restructuring Agreement by and among Limagrain Genetics Corp.,
Shissler Seed Co., Inc., Limagrain Holding S.A. and the Company dated June 29,
1994 (incorporated by reference to Exhibit 10.43 to Form 10-K filed with the
Commission October 13, 1994, File No. 0-11854).
10.7 Remuneration Individuelle Sur Objectifs Cadres Associes (Individual
Compensation and Performance Objectives for Associate Level Employees) for
Bruno Carette dated October 4, 1995, amended February 9, 1996.*/**
10.8 Letter Amendment to Consulting Agreement between the Company and
Ralph W.F. Hardy dated November 27, 1996.*
10.9 Five promissory notes issued to LG Corp. by the Company dated
May 8, 1998.*
10.10 Service Agreement between LG Seeds, Inc. and Limagrain Genetics
International dated July 1, 1994 (incorporated by reference to Exhibit 10.29
to Form 10-K filed with the Commission September 22, 1995, File No. 0-11854).
10.11 Amendment 3 to Exhibit A, dated July 1, 1997, to Service Agreement
between LG Seeds, Inc. and Limagrain Genetics International dated
July 1, 1994.*
10.12 Biotechnology Service Agreement between LG Seeds, Inc. and
BIOCEM S.A. dated July 1, 1994 (incorporated by reference to Exhibit 10.30
to Form 10-K filed with the Commission on September 22, 1995, File No.
0-11854).
10.13 Amendment 3 to Exhibit A dated July 1, 1997 to Biotechnology
Service Agreement between LG Seeds, Inc. and BIOCEM S.A. dated July 1, 1994.*
10.14 Service Agreement between LG Seeds, Inc. and Groupe Limagrain
Holding S.A. dated July 1, 1996.*
10.15 Amendment 2 to Exhibit A dated July 1, 1997 to Service Agreement
between LG Seeds, Inc. and Groupe Limagrain Holding dated July 1, 1996.*
10.16 Tax Allocation Agreement among the Limagrain Affiliated U.S.
corporations filing a consolidated tax return with Limagrain Genetics
Corporation (incorporated by reference to Exhibit 10.32 to Form 10-K filed
with the Commission September 22, 1995, File No. 0-11854).
21.00 Subsidiaries of the Company.*
(b) Reports on Form 8-K.
None were filed during the fiscal quarter ended June 30, 1998.
(*)Filed herewith.
(**)Management contract filed pursuant to Item 14(c) of Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BIOTECHNICA INTERNATIONAL, INC.
By: /s/Serge Lebreton_______
Serge Lebreton
Chairman, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Signature Title Date
/s/ Serge Lebreton Chairman of the Board, September 25, 1998
Serge Lebreton Director
/s/ Bruno Carette President, Chief Executive September 25, 1998
Bruno Carette Officer, Director
/s/ Claude Agier Director September 25, 1998
Claude Agier
/s/ George R. Allbritten Director September 25, 1998
George R. Allbritten
/s/ Ralph W.F. Hardy Director September 25, 1998
Ralph W.F. Hardy
/s/ Francois Heyraud Director September 25, 1998
Francois Heyraud
/s/ Claude Lescoffit Director September 25, 1998
Claude Lescoffit
/s/ Laurent Petoton Director September 25, 1998
Laurent Petoton
/s/ Edward M. Germain Chief Financial Officer and September 25, 1998
Edward M. Germain Chief Accounting Officer
CORPORATE INFORMATION
SHAREHOLDER REFERENCE EXECUTIVE OFFICERS
CORPORATE HEADQUARTERS Bruno Carette
BioTechnica International, Inc. President and Chief Executive
4001 War Memorial Drive Officer
Suite 200
Peoria, IL 61614 Jean Paul Zink
(309) 681-0300 Executive Vice President
OPERATING SUBSIDIARY Edward M. Germain
LG Seeds, Inc. Vice President, Secy, Treas,
4001 War Memorial Drive and Chief Fin Officer
Peoria, IL 61614
Larry D. Rieffel
Vice President, Production
and Logistics
TRANSFER AGENTS Jacqui Doublier
American Stock Transfer & Marketing and Product
Trust Company Development Manager
40 Wall Street
New York, NY 10005 Roger Bonsack
(212) 936-5100 National Sales Manager
AUDITORS Barbara A. Wittig
KPMG Peat Marwick L.L.P. Human Resources, Training and
Indianapolis, IN Internal Communications Manager
COUNSEL BOARD OF DIRECTORS
Shook, Hardy & Bacon L.L.P. Serge Lebreton
Kansas City, MO 64105 Chairman of the Board
Bruno Carette
SEC FORM 10-K President and Chief Executive
A copy of the Company's Officer
annual report to
the Securities and Exchange Claude Agier
Commission on Form 10-K is available
without charge upon written request George R. Allbritten
to:
Shareholder Relations Ralph W.F. Hardy
BioTechnica International, Inc.
4001 War Memorial Drive Francois Heyraud
Peoria, IL 61614
Claude Lescoffit
Laurent Petoton
EXHIBIT 10.4
BIOTECHNICA INTERNATIONAL, INC.
EIGHTH AMENDMENT TO SECURED REVOLVING CREDIT AGREEMENT
AND FIFTH AMENDMENT TO SECURED REVOLVING CREDIT NOTE
Harris Trust and Savings Bank
Chicago, Illinois
Gentlemen:
Reference is hereby made to that certain Secured Revolving credit Agreement
dated as of October 26, 1993, as amended (the "CREDIT AGREEMENT") between
the undersigned, BioTechnica International, Inc., a Delaware corporation
(the "COMPANY") and you (the "BANK"). All capitalized terms used herein
without definition shall have the same meanings herein as such terms have in
the Credit Agreement.
The Company has requested that the Bank extend the Termination Date of the
Credit Agreement and the Bank is willing to do so under the terms and
conditions set forth in this Amendment.
1. AMENDMENTS.
Upon your acceptance hereof in the space provided for that purpose below,
and the satisfaction of the conditions precedent set forth in Section 2
hereof, the Credit Agreement shall be and hereby is amended as follows:
1.1. Section 1.1(a) of the Credit Agreement shall be amended by replacing
the date "December 1, 1997" appearing therein with the date "December 31,
1998".
1.2. Exhibit A to the Credit Agreement and the Revolving Note of the
Company payable to the order of Harris Trust and Savings Bank (the "Note")
shall each be amended by replacing the date "December 31, 1997" appearing in
the first paragraph therein with the date "December 31, 1998".
1.3. The Bank shall type the following legend on its Note:
"This Note has been amended pursuant to the terms of an Ninth
Amendment to Secured Revolving Credit Agreement and Sixth Amendment to
Secured Revolving Credit Note dated as of December ___, 1997, including an
extension of the maturity date hereof, to which reference is hereby made for
a statement of terms thereof"
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all of
the following conditions precedent:
2.1. The Company and the Bank shall have executed and delivered this
Amendment.
2.2. Each of the representations and warranties set forth in Section 5 of
the Credit Agreement shall be true and correct.
2.3. The Company shall be in full compliance with all of the terms and
conditions of the Credit Agreement and no Event of Default or Potential
Default shall have occurred and be continuing thereunder or shall result
after giving effect to this Amendment.
2.4. All legal matters incident to the execution and delivery hereof and
the instruments and documents contemplated hereby shall be satisfactory to
the Bank.
2.5. Each of Genetics and each Guarantor Subsidiary shall have executed and
delivered to the Bank its acknowledgment in the form set forth below.
2.6. The Bank shall have received copies, certified as true, complete and
Correct by the secretary or assistant secretary of the Company, of
resolutions adopted by the Company's Board of Directors authorizing the
Company to execute and deliver this Amendment and perform its obligations
under the Credit Agreement and Note as amended hereby.
3. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Amendment, the
Company hereby represents to the Bank that as of the date hereof, each of
the representations and warranties set forth in Section 5 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 5.4 shall be deemed to refer to the
most recent financial statements of the Company delivered to the Bank) and
the Company is in full compliance with all of the terms and conditions of
the Credit Agreement and no Potential Default or Event of Default has
occurred and is continuing thereunder or shall result after giving effect to
this Amendment.
4. MISCELLANEOUS.
4.1. The Company has heretofore executed and delivered to the Bank that
certain Security Agreement Re: Accounts Receivable, General Intangibles and
Inventory dated as of October 26, 1993 (the "SECURITY AGREEMENT") and the
Company hereby agrees that notwithstanding the execution and delivery of
this Amendment, the Security Agreement shall be and remain in full force and
effect and that any rights and remedies of the Bank thereunder, obligations
of the Company thereunder and any liens and security interests created or
provided for thereunder shall be and remain in full force and effect and
shall not be affected, impaired or discharged thereby. Nothing herein
contained shall in any manner affect or impair the priority of the liens and
security interests created and provided for by the Security Agreement as to
the indebtedness which would be secured thereby prior to giving effect to
this Amendment.
4.2. Except as specifically amended herein, the Credit Agreement and the
Note shall continue in full force and effect in accordance with its original
terms. Reference to this specific Amendment need not be made in any note,
document, letter, certificate, the Credit Agreement itself, the Note or any
communication issued or made pursuant to or with respect to the Credit
Agreement or the Note, any reference in any of such to the Credit Agreement
or the Note being sufficient to refer to the Credit Agreement or the Note as
amended hereby.
4.3. The Company agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Bank.
4.4. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterparts, all of which taken together
shall constitute one and the same agreement. Any of the parties hereto may
execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
Dated as of December ___, 1997.
BIOTECHNICA INTERNATIONAL, INC.
By /s/ Bruno Carette
Its President-COO
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Julie K. Hossack
Its Vice President
EXHIBIT 10.7
EXECUTIVE COMPENSATION AGREEMENT
1997/98
EXECUTIVE: B. CARETTE MANAGER: CL. LESCOFFIT
The EXECUTIVE compensation plan is based on two components:
1. a salary, aligned with market information
2. a bonus linked to the accomplishments of specific, quantifiable
objectives
The agreement between the EXECUTIVE and his MANAGER determines the salary
and objectives for the year ended June 30, 1998 ("Fiscal 1998").
At the end of this period, the parties concerned will decide on the
continuation of the process.
I. SALARY
Starting July 1, 1997, the EXECUTIVE'S annual gross salary will be
$126,000.
It will be in effect for a period of 12 months, except in the event of
a change in job function.
II. BONUS
For the period from July 1, 1997 to June 30, 1998, the objectives and
relevant bonuses for the EXECUTIVE are noted hereafter.
1. Improvement of Operating Income of BioTechnica/LG Seeds for Fiscal
1998
- - If Operating Income is equal to or less than $0, bonus will be $0
- - If Operating Income is greater than $0, bonus will be $8,400
2. Improvement of CAF of the Limagrain Field Seeds Division for Fiscal
1998
- - If CAF is equal to or above 175 million FRF, bonus will be $6,300
- - If CAF is less than 175 million FRF, bonus will be $0
NOTE: CAF is a French accounting measurement of cash generated by
operations. It is equal to net income plus depreciation and amortization,
adjusted by changes in inventory reserves, accounts receivable reserves, and
gain or loss on disposal of fixed assets.
Payment of these bonuses is conditional upon the completion of the
objectives as determined by the MANAGER and the EXECUTIVE for Fiscal 1998.
Each objective will be analyzed separately during a meeting between the
EXECUTIVE and his MANAGER.
If the Groupe Limagrain CAF for 97/98 is lower than 350 million FRF, the
above calculated amounts will be divided by two.
I understand and agree with the compensation plan as outlined above. I have
retained a signed copy of this agreement for my records.
Executed in Duplicate
/s/ CL. LESCOFFIT /s/ B. CARETTE
MANAGER EXECUTIVE
Dated: September 30, 1997
EXHIBIT 10.8
January 5, 1998
Dr. Ralph W.F. Hardy
PO Box 509
Clarence Center, NY 14032
Dear Dr. Hardy:
By this letter agreement, BioTechnica would like to amend your Consulting
Agreement dated November 27, 1996, as follows:
2. Term; Payment Upon Termination
(a) The term of this Agreement shall commence on January 1, 1998, and shall
terminate on the earlier of the death of the Consultant or on December 31,
1998 (the "Expiration Date").
If the provisions of this letter are in accordance with your understanding,
please sign and return one of the enclosed copies.
Very truly yours,
/s/ Bruno Carette
President
/s/ Ralph W.F. Hardy January 5, 1998
Ralph W.F. Hardy Date
EXHIBIT 10.9
NOTE BTI-11
BioTechnica International, Inc.
Promissory Note
For value received, BioTechnica International, Inc., a Delaware corporation,
promises to pay to Limagrain Genetics Corp., a Delaware corporation, the sum
of Three Million, Two Hundred Sixty Thousand, Eight Hundred and forty-six
U.S. Dollars ($3,260,846).
This note replaces and cancels NOTE BTI-6, dated April 22, 1997, in the same
face amount. By acceptance of this note, the previous note is considered
canceled.
The indebtedness evidenced by this note is subordinated to any and all
indebtedness, obligations, and liabilities of BioTechnica International,
Inc., hereof to Harris Trust and Savings Bank in the manner and to the
extent set forth in that certain Subordination Agreement with said Bank
dated June 29, 1994, to which reference is hereby made of a more full
statement thereof.
This note covers the period July 1, 1998 through July 1, 2000. This note
will be due and payable on July 1, 2000.
The interest rate for each period (July 1 through June 30 of the following
year) will be at a rate of five percent per annum (5%).
Interest will be paid annually to Limagrain Genetics Corp. on June 20 prior
to the end of each annual period.
In the event of default, BioTechnica International, Inc. agrees to pay all
costs of collection and reasonable attorneys fees to the extent permitted
by law. This note will be governed under the laws of the State of Illinois.
Signed under seal this 8th day of May, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
__________________________________ __________________________________
by Edward M. Germain, VP/CFO by Bruno Carette, President and CEO
NOTE BTI-12
BioTechnica International, Inc.
Promissory Note
(Non-Subordinated)
For value received, BioTechnica International, Inc., a Delaware corporation,
promises to pay to Limagrain Genetics Corp., a Delaware corporation, the sum
of One Million U.S. Dollars ($1,000,000).
This note replaces and cancels NOTE BTI-7, dated April 22, 1997, in the same
face amount. By acceptance of this note, the previous note is considered
canceled.
The interest rate is five percent per annum (5%). Interest accrued through
June 30, 1998 will be paid to Limagrain Genetics Corp. on June 20, 1998.
Interest accrued through July 1, 1999 will be paid to Limagrain Genetics
Corp. on June 20, 1999. Interest accrued through July 1, 2000 will be paid
to Limagrain Genetics Corp. on June 20, 2000.
The term of the note will be for a period of twenty-four (24) months from
July 1, 1998 to July 1, 2000.
Early payments against principal are allowed upon the mutual agreement of
BioTechnica International, Inc. and Limagrain Genetics Corp. In such case,
the interest cost will be calculated through the date of the prepayment.
In the event of default, BioTechnica International, Inc. agrees to pay all
costs of collection and reasonable attorneys fees to the extent permitted
by law. This note will be governed under the laws of the State of Illinois.
Signed under seal this 8th day of May, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
__________________________________ __________________________________
by Edward M. Germain, VP/CFO by Bruno Carette, President and CEO
NOTE BTI-13
BioTechnica International, Inc.
Promissory Note
(Subordinated)
For value received, BioTechnica International, Inc., a Delaware corporation,
promises to pay to Limagrain Genetics Corp., a Delaware corporation, the sum
of One Million U.S. Dollars ($1,000,000).
This note replaces and cancels NOTE BTI-8, dated April 22, 1997, in the same
face amount. By acceptance of this note, the previous note is considered
canceled.
The indebtedness evidenced by this note is subordinated to any and all
indebtedness, obligations, and liabilities of BioTechnica International,
Inc., hereof to Harris Trust and Savings Bank in the manner and to the
extent set forth in that certain Subordination Agreement with said bank
dated June 29, 1994, to which reference is hereby made of a more full
statement thereof.
The interest rate is five percent per annum (5%). Interest accrued through
June 30, 1998 will be paid to Limagrain Genetics Corp. on June 20, 1998.
Interest accrued through July 1, 1999 will be paid to Limagrain Genetics
Corp. on June 20, 1999. Interest accrued through July 1, 2000 will be paid
to Limagrain Genetics Corp. on June 20, 2000.
The term of the note will be for a period of twenty-four (24) months from
July 1, 1998 to July 1, 2000.
Early payments against principal are allowed upon the mutual agreement of
BioTechnica International, Inc. and Limagrain Genetics Corp. In such case,
the interest cost will be calculated through the date of the prepayment.
In the event of default, BioTechnica International, Inc. agrees to pay all
costs of collection and reasonable attorneys' fees to the extent permitted
by law. This note will be governed under the laws of the State of Illinois.
Signed under seal this 8th day of May, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
__________________________________ __________________________________
by Edward M. Germain, VP/CFO by Bruno Carette, President and CEO
NOTE BTI-14
BioTechnica International, Inc.
Promissory Note
(Subordinated)
For value received, BioTechnica International, Inc., a Delaware corporation,
promises to pay to Limagrain Genetics Corp., a Delaware corporation, the sum
of One Million Five Hundred Thousand U.S. Dollars ($1,500,000).
This note replaces and cancels NOTE BTI-9, dated September 26, 1997, in the
same face amount. By acceptance of this note, the previous note is
considered canceled.
The indebtedness evidenced by this note is subordinated to any and all
indebtedness, obligations, and liabilities of BioTechnica International,
Inc., hereof to Harris Trust and Savings Bank in the manner and to the
extent set forth in that certain Subordination Agreement with said bank
dated June 29, 1994, to which reference is hereby made of a more full
statement thereof.
The interest rate will be Canadian Prime plus 0.18%, or 6.5%, whichever is
lesser. Interest will be paid quarterly.
The term of the note will be for a period of twenty-four (24) months from
July 1, 1998 to July 1, 2000.
Early payments against principal are allowed upon the mutual agreement of
BioTechnica International, Inc. and Limagrain Genetics Corp. In such case,
the interest cost will be calculated through the date of the prepayment.
In the event of default, BioTechnica International, Inc. agrees to pay all
costs of collection and reasonable attorneys' fees to the extent permitted
by law. This note will be governed under the laws of the State of Illinois.
Signed under seal this 8th day of May, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
__________________________________ __________________________________
by Edward M. Germain, VP/CFO by Bruno Carette, President and CEO
Cash Management Agreement Between Limagrain Genetics Corp. and
BioTechnica International, Inc.
From time to time, Limagrain Genetics Corp. ("LG Corp.") may have excess
cash available that BioTechnica International, Inc. ("BTI") would like to
borrow. Generally, LG Corp. has been able to invest this cash with Harris
Bank in Chicago, IL at approximately 5% return on a short-term basis.
Therefore, LG Corp. agrees to lend cash to BTI as available at 5% p.a.
Interest will be paid to LG Corp. quarterly.
This agreement covers the period July 1, 1997 through June 30, 1998.
LG Corp. reserves the right to amend the rate at any time. Additionally, LG
Corp. makes no commitment to lend specific amounts for any specific periods
of time. Any amounts lent to BTI are due on demand to LG Corp.
In the event of default, BTI agrees to pay all costs of collection and
reasonable attorneys' fees to the extent permitted by law. This agreement
will be governed under the laws of the State of Illinois.
Signed under seal this 1st day of November, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
("BTI") ("LG Corp.")
___________________________________ ________________________________
by Edward M. Germain, VP/CFO By Bruno Carette, President
NOTE BTI-15
BioTechnica International, Inc.
Promissory Note
(Non-Subordinated)
For value received, BioTechnica International, Inc., a Delaware corporation,
promises to pay to Limagrain Genetics Corp., a Delaware corporation, the sum
of Three Million U.S. Dollars ($3,000,000).
This note replaces and cancels NOTE BTI-10, dated September 26, 1997, in the
same face amount. By acceptance of this note, the previous note is
considered canceled.
The interest rate will be Canadian Prime plus 0.18%, or 6.5%, whichever is
lesser. Interest will be paid quarterly.
This note is payable to Limagrain Genetics Corp. upon demand with ten (10)
days notice.
Early payments against principal are allowed upon the mutual agreement of
BioTechnica International, Inc. and Limagrain Genetics Corp. In such case,
the interest cost will be calculated through the date of the prepayment.
In the event of default, BioTechnica International, Inc. agrees to pay all
costs of collection and reasonable attorneys' fees to the extent permitted
by law. This note will be governed under the laws of the State of Illinois.
Signed under seal this 8th day of May, 1998.
BIOTECHNICA INTERNATIONAL, INC. LIMAGRAIN GENETICS CORP.
__________________________________ __________________________________
by Edward M. Germain, VP/CFO by Bruno Carette, President and CEO
EXHIBIT 10.11
AMENDMENT 3 TO EXHIBIT A
LIMAGRAIN GENETICS INTERNATIONAL SERVICE AGREEMENT
EXHIBIT A to LIMAGRAIN GENETICS INTERNATIONAL SERVICE AGREEMENT dated July
1, 1994, by and between LIMAGRAIN GENETICS INTERNATIONAL and LG SEEDS, INC.,
is hereby amended as follows:
For the one-year period beginning on July 1, 1997, LG Seeds, Inc. agrees to
pay a fee (the "Annual Fee") of $200,000 for services rendered under the
Agreement.
All other terms and conditions remain the same.
LIMAGRAIN GENETICS
LG SEEDS, INC. INTERNATIONAL S.A.
/s/ B. Carette /s/ C. Lescoffit
B. Carette C. Lescoffit
President and Chief Operating Officer Chief Executive Officer
EXHIBIT 10.12
AMENDMENT 3 TO EXHIBIT A
BIOTECHNOLOGY SERVICE AGREEMENT
EXHIBIT A to BIOTECHNOLOGY SERVICE AGREEMENT dated July 1, 1994, by and
between BIOCEM S.A. and LG SEEDS, INC., is hereby amended as follows:
For the one-year period beginning on July 1, 1997, LG Seeds, Inc.
agrees to pay a fee (the "Annual Fee") of $50,000 for services rendered
under the Agreement.
All other terms and conditions remain the same.
LG SEEDS, INC. BIOCEM S.A.
/s/ B. CARETTE /s/
B. CARETTE
President and Chief Operating Officer Chief Executive Officer
EXHIBIT 10.14
AMENDMENT 2 TO EXHIBIT A
GROUPE LIMAGRAIN HOLDING SERVICE AGREEMENT
EXHIBIT A to GROUPE LIMAGRAIN HOLDING SERVICE AGREEMENT dated July 1, 1996,
by and between GROUPE LIMAGRAIN HOLDING and LG SEEDS INC., is hereby amended
as follows:
For the one-year period beginning on July 1, 1997, LG SEEDS, INC. agrees to
pay a fee (the "Annual Fee") of $150,000 USD for services rendered under
the Agreement.
All other terms and conditions remain the same.
LG SEEDS, INC. GROUPE LIMAGRAIN HOLDING
/s/ BRUNO CARETTE /s/ ALAIN CATALA
BRUNO CARETTE ALAIN CATALA
President and Chief Operating Officer Chief Executive Officer
Exhibit 21
SUBSIDIARIES OF THE COMPANY
at June 30, 1998
% Ownership
LG Seeds, Inc. 100%
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