<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 29, 1996
-----------------
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: 0-15881
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MYCOGEN CORPORATION
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3802654
- ---------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5501 Oberlin Drive, San Diego, California 92121
- ------------------------------------------ ------------------------
(Address of principal executive offices) (Zip Code)
(619) 453-8030
---------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name or former address, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
---- ----
30,570,160 shares of Common Stock were outstanding as of March 31, 1996.
AMENDMENT NO. 1
The undersigned registrant hereby amends Item 1. Financial Statements of its
Form 10-Q for the quarterly period ended February 29, 1996 filed on April 12,
1996 as set forth in the pages attached.
1
<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.
Mycogen Corporation
-------------------
(Registrant)
Date: April 25, 1996 /s/ James A. Baumker
--------------- -----------------------
James A. Baumker
Executive Vice President
Chief Financial Officer
2
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Mycogen Corporation
Interim Consolidated Condensed Statements of Operations
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net operating revenues................... $ 35,575 $27,661 $ 47,624 $37,170
Contract and other revenues.............. 2,580 1,715 4,151 3,611
-------- ------- -------- -------
Total revenues..................... 38,155 29,376 51,775 40,781
-------- ------- -------- -------
Costs and expenses:
Cost of operating revenues............. 23,446 16,997 31,269 23,242
Selling, general and administrative.... 11,250 8,024 19,431 15,039
Research and development............... 5,080 5,025 9,659 10,221
Amortization of intangible assets...... 480 540 1,084 1,033
Special charges........................ 22,890 -- 22,890 --
-------- ------- -------- -------
Total costs and expenses........... 63,146 30,586 84,333 49,535
-------- ------- -------- -------
Operating loss .......................... (24,991) (1,210) (32,558) (8,754)
Interest income and expense, net....... 625 324 773 888
Exchange gain ......................... 16 47 23 12
-------- ------- -------- -------
Net loss................................. (24,350) (839) (31,762) (7,854)
Dividends on preferred stock............. (194) (373) (578) (742)
-------- ------- -------- -------
Net loss applicable to common shares..... $(24,544) $(1,212) $(32,340) $(8,596)
======== ======= ======== =======
Net loss per common share................ $ (1.00) $ (.06) $ (1.47) $ (.45)
======== ======= ======== =======
Weighted average number of shares........ 24,426 19,138 21,937 19,118
======== ======= ======== =======
</TABLE>
See accompanying Notes to Interim Consolidated Condensed Financial Statements.
3
<PAGE>
Mycogen Corporation
Consolidated Condensed Balance Sheets
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
Assets (Unaudited) (Note)
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 38,924 $ 5,687
Securities available-for-sale..................................... 36,429 11,913
Accounts and notes receivable, net of allowances.................. 35,659 27,402
Inventories....................................................... 62,985 33,633
Other current assets.............................................. 5,031 1,267
--------- ---------
Total current assets............................................ 179,028 79,902
Net property, plant and equipment................................... 48,362 49,646
Net intangible assets............................................... 23,716 17,759
Other assets........................................................ 14,077 12,301
--------- ---------
Total assets........................................................ $ 265,183 $ 159,608
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable.................................................. $ 14,787 $ 6,760
Accrued compensation and related taxes............................ 4,186 3,553
Deferred revenues................................................. 33,044 5,670
Other current liabilities......................................... 10,878 5,225
--------- ---------
Total current liabilities....................................... 62,895 21,208
Long-term liabilities............................................... 7,085 3,291
Minority interest................................................... -- 21,406
Stockholders' equity:
Common stock, $.001 par value, 40,000,000 shares authorized;
30,534,281 and 19,400,764 shares issued and outstanding at
February 29, 1996 and August 31, 1995, respectively............. 31 19
Additional paid in capital........................................ 329,686 216,436
Deficit........................................................... (134,514) (102,752)
--------- ---------
Total stockholders' equity...................................... 195,203 113,703
--------- ---------
Total liabilities and stockholders' equity.......................... $ 265,183 $ 159,608
========= =========
</TABLE>
Note: The balance sheet at August 31, 1995 has been derived from the audited
financial statements at that date.
See accompanying Notes to Interim Consolidated Condensed Financial Statements.
4
<PAGE>
Mycogen Corporation
Interim Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
February 29, February 28,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Operating activities:
Net loss.................................................... $(31,762) $ (7,854)
Items which did not use cash:
Special charges .......................................... 20,890 --
Depreciation ............................................. 2,472 2,487
Amortization of intangible assets......................... 1,084 1,033
Other expense not requiring cash.......................... 1,003 335
Changes in operating assets and liabilities:
Accounts and notes receivable............................. 4,935 (377)
Inventories............................................... (10,666) (18,127)
Prepaid expenses.......................................... (1,473) (259)
Accounts payable.......................................... 1,005 1,467
Deferred revenues......................................... 19,128 14,345
Other current liabilities................................. (4,847) (3,281)
-------- --------
Cash provided by (used in) operating activities......... 1,769 (10,231)
-------- --------
Investing activities:
Proceeds from sales of available-for-sale securities........ 13,420 2,000
Proceeds from maturities of available-for-sale securities... 564 4,462
Purchases of available-for-sale securities.................. (38,431) --
Capital expenditures........................................ (1,990) (3,650)
Prepaid contract manufacturing.............................. -- (6,758)
Change in intangibles and other assets...................... (793) (742)
-------- --------
Cash used in investing activities....................... (27,230) (4,688)
-------- --------
Financing activities:
Net change in short-term borrowings......................... -- 3,800
Proceeds from long-term borrowings.......................... -- 2,500
Payments on long-term borrowings............................ (208) (95)
Proceeds from sale of common stock.......................... 58,744 169
-------- --------
Cash provided by financing activities..................... 58,536 6,374
-------- --------
Effect of exchange rate changes on cash and cash equivalents.. 162 275
-------- --------
Increase (decrease) in cash and cash equivalents.............. 33,237 (8,270)
Cash and cash equivalents at beginning of period.............. 5,687 8,681
-------- --------
Cash and cash equivalents at end of period.................... $ 38,924 $ 411
======== ========
</TABLE>
See accompanying Notes to Interim Consolidated Condensed Financial Statements.
5
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (continued).
Mycogen Corporation
-------------------
Notes to Interim Consolidated Condensed Financial Statements
General
- -------
The accompanying financial statements include the accounts of Mycogen
Corporation, and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The interim
financial statements have been prepared by the Company, without audit, according
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. In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments (which include only normal recurring adjustments) necessary to state
fairly the financial position, results of operations and cash flows as of and
for the periods indicated.
It is suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Annual Report and
Form 10-K of the Company for the fiscal year ended August 31, 1995.
The Company's business is highly seasonal. Operating revenues are expected to
be concentrated principally in the quarters ending in February and May as a
result of the North American agricultural growing season. Consequently,
operating revenues and results of operations for the three months ended and six
months ended February 29, 1996 are not indicative of operating revenues and
results to be expected for a full fiscal year.
Acquisition of United AgriSeeds, Inc.
- -------------------------------------
In February 1996, the Company issued 4,453,334 shares of common stock to
DowElanco in exchange for $26.4 million in cash and all of the shares in
DowElanco's seed business, United AgriSeeds, Inc. ("UAS"). The principal seed
products of UAS are corn and soybean. As of February 29, 1996 DowElanco owned
14,088,366 shares of the Company's common stock or 46.14%, and may acquire
additional shares of the Company's common stock subject to certain restrictions.
The acquisition of UAS is accounted for as a purchase and, accordingly, the
assets and liabilities of UAS are included in the Consolidated Balance Sheet as
of February 29, 1996. The results of operations of UAS from the date of
acquisition will be reflected in the consolidated financial statements of the
Company commencing with the third fiscal quarter. The acquisition resulted in a
purchase price allocation to in-process technology of $2.6 million, which was
written-off upon acquisition. The following consolidated, pro forma, unaudited
summary of operations data for the six months ended February 29, 1996 and
February 28, 1995 assumes that the acquisition occurred on September 1, 1995 and
1994, respectively.
6
<PAGE>
<TABLE>
<CAPTION>
Six months ended
-----------------------------------
February 29, February 28,
(In thousands, except per share data) 1996 1995
--------------- --------------
<S> <C> <C>
Total revenues $ 68,809 $ 57,838
Net loss applicable to common shares $ (28,731) $ (7,315)
Net loss per common share $ (1.10) $ (.31)
</TABLE>
These pro forma results may not be indicative of the results of operations that
would have been reported if the transactions had occurred on the dates
indicated, or which may be reported in the future. These results do not include
the nonrecurring special charge of $2.6 million related to the write-off of
acquired in-process technology.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
- -----------------------------------------------------------------------
The Company's Seed Segment recognized impairment losses and exit costs totaling
$11.7 million and $.9 million, respectively, during the quarter ended February
29, 1996 as a result of management's decision to dispose of or sell certain corn
production plants and related assets that do not meet quality production
standards in connection with a plan to upgrade the quality of seed production.
The asset disposals will occur during the third quarter of 1996. The production
plants are expected to be sold during 1996 and 1997. The fair values of the
assets were based on letters of intent from prospective buyers and management
estimates.
The impairment losses and exit costs are included in special charges in the
Consolidated Statement of Operations. The carrying amount of the assets held
for sale total $3.5 million, of which $2.3 million is included in other current
assets and $1.2 million is included in other long-term assets in the
Consolidated Balance Sheet at February 29, 1996. Exit costs totaling $.9
million are included in other current liabilities at February 29, 1996.
Purchase and Write-off of In-Process Technology
- -----------------------------------------------
In January 1996, the Company agreed to reacquire certain rights in oil seed
technology from SVO Specialty Products, a subsidiary of Lubrizol, for $8.0
million. Of the $8.0 million in rights acquired, $7.2 million was allocated to
certain technologies not yet completed and, therefore, was written-off as in-
process technology on the acquisition date. The Company made an initial payment
of $2.0 million and will pay $2.5 million and $3.5 million in January 1997 and
1998, respectively.
Common Shares Issued for Lubrizol's Interest in MPS and Conversion of Preferred
- -------------------------------------------------------------------------------
Stock
- -----
In January 1996, The Lubrizol Corporation ("Lubrizol") sold its 19.46% ownership
interest in Mycogen Plant Sciences (formerly MPS, now "Mycogen Seeds") to the
Company for 1,538,008 shares of common stock. In a simultaneous transaction,
Lubrizol converted 3,158 shares of Series A Senior Convertible Cumulative
Preferred Stock, representing their entire interest in preferred stock, into
1,815,274 shares of common stock at a rate of $17.398 per share which was based
on 25% over the average closing price of the Company's common stock for the 60
days prior to the conversion. At February 29, 1996 there were 3,940 shares
authorized for issuance of Series A Preferred Stock, $.001 par value, and no
outstanding shares. At August 31, 1995 there were 3,100 shares issued to
Lubrizol and outstanding with an aggregate liquidation preference of $31
million.
7
<PAGE>
In February 1996 Lubrizol sold its entire interest in the Company, 9,502,348
shares of common stock or 36.58%, to DowElanco for $126 million. DowElanco is a
joint venture partnership between Dow Chemical and Ely Lilly and Company engaged
in the discovery, development, manufacture and distribution of agricultural
products used in crop protection and production, and for industrial pest
control.
Supplemental Schedule of Non-Cash Investing and Financing Activities
- --------------------------------------------------------------------
In conjunction with the acquisition of UAS and the remaining ownership interest
in Mycogen Seeds in 1996, and an acquisition in 1995, non-cash investing and
financing activities were allocated as follows:
<TABLE>
<CAPTION>
Six months ended
-----------------------------------
(In thousands) February 29, February 28,
1996 1995
--------------- ---------------
<S> <C> <C>
Business acquisitions:
Fair value of assets acquired, other
than cash $ 55,692 $ 1,350
Liabilities assumed (20,573) -
Liabilities and acquisition costs
incurred (2,512) -
Minority interest purchased from
Lubrizol 21,406 -
Common stock issued (54,013) (1,350)
--------------- ---------------
Net cash paid for acquisitions $ - $ -
=============== ===============
Other non-cash investing and financing
activities are as follows:
Six months ended
-----------------------------------
(In thousands) February 29, February 28,
1996 1995
--------------- ---------------
Technology rights acquired by incurring
directly related liabilities $ 6,000 $ -
=============== ===============
Dividends on preferred stock $ 578 $ 742
=============== ===============
Common stock issued upon conversion
of convertible preferred stock $ 31,582 $ -
=============== ===============
Inventories
- -----------
Inventories are comprised of:
February 29, August 31,
(In thousands) 1996 1995
--------------- --------------
Raw materials and supplies $ 5,580 $ 5,895
Work in process 12,231 3,578
Finished goods 45,174 24,160
=============== ==============
Total $ 62,985 $ 33,633
=============== ==============
</TABLE>
8
<PAGE>
Accumulated Depreciation and Amortization
- -----------------------------------------
Accumulated depreciation of property, plant and equipment was $16.2 million and
$16.7 million at February 29, 1996 and August 31, 1995, respectively.
Accumulated amortization of intangible assets was $7.8 and $6.8 million at
February 29, 1996 and August 31, 1995, respectively.
Income Taxes
- ------------
No provision for income tax is recognized for the three and six months ended
February 29, 1996 since the Company anticipates that the effective tax rate for
the year ending August 31, 1996 will be zero due to the available net operating
loss carryforwards.
Net Loss Per Common Share
- -------------------------
Net loss per common share for the three and six months ended February 29, 1996
and February 28, 1995 is determined by deducting dividends on preferred stock
from net loss and dividing the net result by the weighted average number of
common shares outstanding during the respective period. The dilutive effect of
common shares issuable under stock options was less than 3% and was not included
in the computation of primary earnings per share.
Research and Development Arrangement
- ------------------------------------
In December 1995, the Company entered into an agreement with Pioneer to develop
transgenic crops with built-in resistance. Under the agreement, Pioneer
purchased 3,000,000 shares of the Company's common stock for $30 million and
provided $10 million in research and development funding. Pioneer will provide
an additional $11 million in funding near the end of 1998. Pioneer will receive
non-exclusive rights to all Bt crop protection technology and associated
technologies codeveloped by the Company and Pioneer during the next 10 years.
The Company and Pioneer are able to market their own products resulting from the
collaboration, royalty-free, in North America. Pioneer will pay a royalty to
Mycogen for jointly developed technology that it markets through seed products
outside of North America. The Company has exclusive world wide rights to
license jointly developed technology to third parties. No proprietary seed
lines will be shared by the companies. Contract revenues recognized under this
agreement totaled $.7 million for the three and six months ended February 29,
1996. Deferred revenues of $9.3 million are included in the Consolidated
Balance Sheet at February 29, 1996.
9
