UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission File Number: 0-12177
DNA PLANT TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2395856
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
6701 San Pablo Avenue, Oakland, California 94608
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 547-2395
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding as of
Class March 31, 1995
Common Stock, $.01 par value 30,831,402
<PAGE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Consolidated Balance Sheets as of March 31, 1995 and
December 31, 1994
(b) Consolidated Statements of Operations for the Three Months
Ended March 31, 1995 and 1994
(c) Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1995 and 1994
(d) Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
<PAGE>
<TABLE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<CAPTION>
March 31, Dec. 31,
1995 1994
_________ ________
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 353 1,202
Temporary investments 789 3,287
Accounts receivable, net 2,235 2,344
Inventory 1,436 1,168
Other current assets 918 600
Assets held for sale 900 900
TOTAL CURRENT ASSETS 6,631 9,501
Fixed assets, net of accumulated depreciation of
$7,760 in 1995 and $7,834 in 1994 3,239 3,339
Note receivable 250 250
Patents and other assets, net of accumulated
amortization of $280 in 1995 and $256 in 1994 439 450
Excess of purchase price over net assets acquired,
net of amortization of $238 in 1995 and $190
in 1994 1,662 1,710
TOTAL ASSETS $ 12,221 $ 15,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,487 1,537
Dividend payable 776 776
Accrued compensation 540 462
Accrued restructuring and consolidation costs 977 808
Accrued liabilities 810 1,189
Amount payable to DuPont 983 983
TOTAL CURRENT LIABILITIES 5,573 5,755
Deferred revenue 468 518
Deferred compensation 314 285
TOTAL DEFERREDS 782 803
Stockholders' equity:
Preferred stock, par value $.01 per share;
authorized 5,000 shares; $2.25
convertible preferred stock; issued and
outstanding - 1,380 shares in 1995 and
1994 (aggregate liquidation preference
of $34,500) 14 14
Series A convertible preferred stock par value
$.01 per share; authorized 3 shares;
issued - and outstanding 3 shares in
1995, and 1994 (aggregate liquidation
preference of $16,500) -- --
Common stock, par value $.01 per share;
authorized 60,000 shares; issued 30,831
shares in 1995 and 30,713 shares in 1994 308 307
Common stock to be issued, par value $.01 per
share, none in 1995, 100 shares in 1994 -- 1
Additional paid in capital 149,195 149,918
Accumulated deficit (143,863) (141,752)
Unrealized holding gain 212 204
TOTAL STOCKHOLDERS' EQUITY 5,866 8,692
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,221 $15,250
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
___________________
1995 1994
________ _________
<S> <C> <C>
Revenues:
Produce sales $3,071 $3,454
Product development agreements 340 518
Investment and royalty income 1,479 56
TOTAL REVENUES 4,890 4,028
Operating expenses:
Cost of produce sales 3,619 6,717
Exit carrot processing 380 ---
Research and product development 1,636 2,069
Selling, general and administrative 1,340 1,367
Consolidation and relocation costs 50 1,208
TOTAL OPERATING EXPENSES 7,025 11,361
Loss from Operations (2,135) (7,333)
Gain on sale of assets 24 ---
Loss from continuing operations (2,111) (7,333)
Discontinued operations:
Loss from operations -- (640)
Loss on disposition -- (1,623)
TOTAL DISCONTINUED OPERATIONS -- (2,263)
Net loss (2,111) (9,596)
Preferred stock dividend (776) (776)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS (2,887) (10,372)
Net loss per common share:
Continuing operations (.09) (.30)
DISCONTINUED OPERATIONS -- (.09)
Net loss per common share (.09) (.39)
Weighted average common shares outstanding 30,793 26,766
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
_________________
1995 1994
________ ________
<S> <C> <C>
Cash flows from operating activities:
Net loss from continuing operations $(2,111) $(7,333)
Reconciliation of net loss to net
cash used in operating activities:
Depreciation and amortization 120 379
Provision for uncollectible accounts (161) --
Compensation in common stock 54 --
Net loss from disposal of fixed assets 32 --
Loss from discontinued operations -- (623)
Net changes in:
Accounts receivable 270 (618)
Inventory (268) (62)
Other current assets (318) (315)
Other assets (12) ---
Accounts payable and accrued liabilities (181) (2,189)
Deferred revenue and compensation (21) ---
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (2,596) (10,761)
Cash flows from investing activities:
Capital expenditures (6) (139)
Purchases of temporary investments -- (11,633)
Sales and maturities of temporary investments 2,505 6,642
Proceeds from sale of assets 24 --
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 2,523 (5,130)
Cash flows from financing activities:
Proceeds from sale of common stock -- 18,929
Proceeds from exercise of options -- 48
Preferred stock dividends (776) (776)
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (776) 18,201
Net increase (decrease) in cash and cash equivalents (849) 2,310
Cash and cash equivalents, beginning of period 1,202 3,254
CASH AND CASH EQUIVALENTS, END OF PERIOD 353 5,564
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1994 Annual Report on
Form 10-K.
In the opinion of the Company's management, the accompanying unaudited,
consolidated financial statements contain adjustments, all of which are of a
normal recurring nature, necessary to present fairly the Company's financial
position as of March 31, 1995 and the results of its operations and its cash
flows for the three months ended March 31, 1995.
Certain reclassifications have been made to prior period amounts to be
consistent with the current period presentation.
Interim results are not necessarily indicative of results for the full
fiscal year.
Note 2 - EXIT CARROT PROCESSING
During 1994, the Company discontinued processing its own carrots and
shut down its carrot processing plant. As a result of the plant closure, all
carrot processing personnel were terminated in the fourth quarter of 1994.
The Company's current plans are either to (a) enter a partnership arrangement
with another carrot processor in which the Company would contribute its carrot
processing equipment to the partnership or (b) dispose of the equipment by
selling it to a third party and enter into a co-packing arrangement with
another processor.
During 1994, the Company recorded a charge of $2.4 million consisting of
a $1.6 million non-cash charge to write down the equipment to estimated net
realizable value, a $.5 million charge to write down packaging material and
seed inventory, a $.2 million charge for lease payments, and $.1 million for
severance and termination benefits. This charge is based on the assumption
that the Company will be able to enter into a partnership arrangement with
another carrot processor where the Company would contribute its carrot
processing equipment at the net book value of $3.8 million and sublease its
facility at the current monthly lease amount. As a result of experiencing
delays in closing a partnership agreement, during the quarter ended March 31,
1995 the Company recorded additional charges of approximately $.4 million for
estimated lease payments to be incurred prior to finalizing a partnership
arrangement. The ultimate charge for the plant closure is dependent on the
outcome of certain future events, including negotiations regarding the carrot
processing partnership referred to above. The ultimate resolution of this
matter may result in additional charges, currently estimated to be up to
$1.8 million, being recognized.
<PAGE>
DNA PLANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 1995
(Unaudited)
Note 3 - SALE OF FROST TECHNOLOGY CORPORATION
During the three months ended March 31, 1995, the Company sold the stock
of Frost Technology Corporation, a wholly-owned subsidiary, to a third party
for $1.3 million of consideration. The assets of this subsidiary consisted of
technology rights and the subsidiary had no operating activities. This
transaction resulted in net revenues of $1.1 million which are recorded as
investment and royalty income in the accompanying Consolidated Statements of
Operations. The Company received $1.0 million of the consideration during the
three months ended March 31, 1995. The remaining $.3 million is due
September 30, 1995, and is recorded as an other current asset in the
accompanying Consolidated Balance Sheets.
Note 4 - CONSOLIDATION AND RELOCATION OF FACILITIES
During 1994, the Company relocated its headquarters and consolidated its
research operations from its New Jersey facility to its research facility in
Oakland, California. This consolidation and relocation was a further step in
the Company's efforts to consolidate its operations, eliminate duplication of
staff and facilities, and focus primarily on the development and marketing of
fresh and processed fruits and vegetables. In 1994, the Company incurred
$2.0 million of non-recurring costs to accomplish this relocation and
consolidation. During the three months ended March 31, 1995 the Company
incurred $50,000 of costs associated with this consolidation and relocation.
Note 5 - INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
___________ ____________
(Unaudited)
<S> <C> <C>
Prepaid grower fees $969 $581
Raw materials and seed 388 407
Finished goods 79 180
Total Inventory $1,436 $1,168
</TABLE>
<PAGE>
Note 6 - SUBSEQUENT EVENT
In the second quarter the Company privately placed 750,000 shares of its
common stock and received net proceeds after commissions and expenses of
$1.4 million.
<PAGE> MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1995
General
The Company is a leading agribusiness biotechnology company focused on
the development and marketing of premium, fresh and processed branded fruits
and vegetables developed through advanced biotechnological breeding, genetic
engineering, and other technologies.
Results of Operations
Three Months Ended March 31, 1995 Compared to Three Months Ended
March 31, 1994
For the three months ended March 31, 1995, the Company's loss from
continuing operations decreased to $2.1 million from $7.3 million in the 1994
period. This $5.2 million improvement in operations was primarily
attributable to changes in the Company's product mix. In the first quarter of
1994, the Company's highest revenue product was carrot. Tomatoes represent
the largest product in the first quarter 1995. The Company's net income also
improved as a result of the sale of Frost Technology Corporation ("Frost
Technology") for a net profit of $1.1 million. In addition, the Company
reduced consolidation and relocation cost by $.8 million.
For the three months ended March 31, 1995, produce sales decreased
eleven percent to $3.1 million from $3.5 in 1994. This $.4 million decrease
is a result of the Company exiting the cello carrot product line and
discontinuing the processing of its own carrots, which has resulted in
substantially lower carrot sales in 1995 as compared to the same period in
1994. This decrease in carrot sales, however, was offset by significant
increases in tomato sales as a result of expansion into new and existing
geographic areas.
Revenues from product development agreements decreased slightly to
$.4 million in 1995 from $.5 million in 1994, principally due to fewer
government grants.
Investment and royalty income increased to $1.5 million in 1995 from
$.1 million in 1994, principally as a result of recording $1.1 million of net
revenue from the sale of Frost Technology and recognizing revenue for cash
received on an option to purchase licensed technology.
Cost of produce sales decreased to $3.6 million in 1995, from
$6.7 million in 1994. The $3.1 million decrease in cost of produce sales was a
result of the Company discontinuing the processing of its own carrots,
changing its product mix toward the higher margin tomato product, and
improving margins in the tomato business.
Research and product development expenses decreased to $1.6 million in
1995 from $2.1 million in 1994, primarily due to the Company's decision to
<PAGE>
sharpen the focus of its research and concentrate its efforts principally in
the area of fruits and vegetables.
Selling, general and administrative expenses remained unchanged at $1.3
million.
<PAGE>
Liquidity and Capital Resources
At March 31, 1995, the Company had $1.1 million in cash and temporary
investments, a $3.4 million net decrease from $4.5 million at December 31,
1994. This decrease is primarily the net result of the funding of operating
losses of $2.1 million, funding $.5 million of other operating activities and
the payment of $0.8 million of dividends on the Company's $2.25 Convertible
Preferred Stock.
In the second quarter the Company privately placed 750,000 shares of its
common stock and received net proceeds after commissions and expenses of
$1.4 million.
At March 31, 1995, the Company had commitments of $687,000 for grower
fees related to the future harvest of crops.
Based on its current business plans, the Company believes that its
current cash resources, modest working capital borrowing, revenues from
prospective and existing research, product development and licensing
arrangements and revenues from projected increases in produce sales,
accompanied by projected improvements in the gross margin on such produce
sales will be sufficient to fund its cash requirements into 1996, when the
Company expects to generate sufficient cash flow from the marketing of its
products to fund its operations, although there can be no assurance with
respect thereto. Although the Company has had various negotiations concerning
prospective research, product development and licensing agreements, there can
be no assurance that any such agreements will be entered into or consummated;
nor can there be any assurance that the projected improvements in produce
sales and in gross margins will be achieved. Accordingly, the funds available
to the Company may not be sufficient to meet the Company's cash requirements,
in which case the Company may be required to issue additional equity
securities, enter into other financial arrangements, sell certain assets, or
curtail certain activities.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K -- No reports on Form 8-K were filed by the
Company during the quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DNA PLANT TECHNOLOGY CORPORATION
Date: May 2, 1995 By: /s/ Robert Serenbetz
Robert Serenbetz, Chairman
and Chief Executive Officer
(Principal Operating Officer)
Date: May 2, 1995 By: /s/ Chris Braunlich
Chris Braunlich, Vice President
& Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 353
<SECURITIES> 789
<RECEIVABLES> 2419
<ALLOWANCES> (184)
<INVENTORY> 1436
<CURRENT-ASSETS> 6631
<PP&E> 10999
<DEPRECIATION> (7760)
<TOTAL-ASSETS> 12221
<CURRENT-LIABILITIES> 5573
<BONDS> 0
<COMMON> 308
0
14
<OTHER-SE> 5544
<TOTAL-LIABILITY-AND-EQUITY> 12221
<SALES> 3071
<TOTAL-REVENUES> 4890
<CGS> 3619
<TOTAL-COSTS> 5255
<OTHER-EXPENSES> 430
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2887)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2887)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2887)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
