SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For the Quarter Ended May 31 , 1997
Commission File Number 01-19001
MILLER DIVERSIFIED CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 84-1070932
------------------------- ----------------------
(State or other jurisdic- (I.R.S. Employer Iden-
tion of incorporation or tification Number)
organization)
Mailing Address:
P. O. Box 937
La Salle, Colorado 80645
23360 Weld County Road 35
La Salle, Colorado 80645
--------------------------------------
(Address of Principal Executive Office)
(970) 284-5556
----------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
Number of shares of Common Stock, par value $.0001, outstanding on May 31, 1997,
6,364,640.
Transitional Small Business Disclosure Format: YES NO X
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
-----------------------------
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
May 31, August 31,
1997 1996
- -------------------------------------------------------------------------------
ASSETS
- ------
Current Assets:
Cash $ 76,368 $ 86,551
Trade accounts receivable 1,073,848 735,809
Trade accounts receivable - related parties 37,155 116,692
Account receivable - related party 45,188 81,102
Income tax refunds receivable 94,345 --
Inventories 234,994 283,279
Prepaid expenses 21,574 21,725
Deposits on feeder cattle -- 14,520
- -------------------------------------------------------------------------------
Total Current Assets 1,583,472 1,339,678
- -------------------------------------------------------------------------------
Property and Equipment:
Land held for sale -- 700,000
Feedlot facilities under capital lease
- related party 1,497,840 1,497,840
Equipment 77,453 81,007
Equipment under capital leases - related party 149,453 149,453
Leasehold improvements 84,793 72,173
--------- ---------
1,809,539 2,500,473
Less: Accumulated depreciation and amortization 586,350 506,964
- -------------------------------------------------------------------------------
Total Property and Equipment 1,223,189 1,993,509
- -------------------------------------------------------------------------------
Other Assets:
Note receivable - related party 550,000 250,000
Water shares held for sale -- 120,000
Deferred income taxes 362,018 124,018
Deposits and other 31,500 1,500
- -------------------------------------------------------------------------------
Total Other Assets 943,518 495,518
- -------------------------------------------------------------------------------
TOTAL ASSETS $ 3,750,179 $ 3,828,705
- -------------------------------------------------------------------------------
Continued on next page.
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<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS - Continued
------------------------------------------------------------------------------
May 31, August 31,
1997 1996
------------------------------------------------------------------------------
LIABILITIES
-----------
Current Liabilities:
Bank overdraft $ 35,845 $ 16,710
Notes payable -- 160,000
Trade accounts payable 485,970 534,839
Accrued expenses 5,788 21,989
Accrued income taxes payable -- 86,579
Customer advance feed contracts 172,011 14,907
Customer advance feed contracts - related parties -- 175,263
Current portion of capital lease
obligations-related party 28,660 47,880
- -------------------------------------------------------------------------------
Total Current Liabilities 728,274 1,058,167
- -------------------------------------------------------------------------------
Capital Lease Obligations - related party 1,025,405 1,044,551
- -------------------------------------------------------------------------------
Total Liabilities 1,753,679 2,102,718
- -------------------------------------------------------------------------------
Commitments
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock -- --
Common Stock, par value $.0001 per share; 25,000,000
shares authorized; 6,364,640 issued and outstanding 636 636
Additional Paid-In Capital 1,351,693 1,351,693
Retained Earnings 644,171 373,658
- -------------------------------------------------------------------------------
Total Stockholders' Equity 1,996,500 1,725,987
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,750,179 $ 3,828,705
================================================================================
See Accompanying Note to Unaudited Consolidated Financial Statements.
-3-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------
Nine Months Ended May 31, 1997 1996
- -------------------------------------------------------------------------------
Revenues:
Feed and other sales $ 7,119,214 $ 7,487,836
Feedlot services 1,730,534 1,174,498
Other 61,510 412,029
Interest 18,361 24,478
Interest on note receivable related party 11,250 11,250
- -------------------------------------------------------------------------------
Total Revenues 8,940,869 9,110,091
- -------------------------------------------------------------------------------
Costs and Expenses
Cost of feed and other sales 6,582,429 6,839,499
Cost of feedlot services 1,575,622 933,679
Selling, general and administrative 560,979 925,153
Interest 10,485 28,404
Interest on capital leases - related party 88,313 94,553
Loss on sale of assets 178,452 --
- -------------------------------------------------------------------------------
Total Costs and Expenses 8,996,280 8,821,288
- -------------------------------------------------------------------------------
Earnings (Loss) before Income Taxes (55,411) 288,803
Income Tax Expense (Benefits) (325,924) 39,733
- -------------------------------------------------------------------------------
NET EARNINGS $ 270,513 $ 249,070
- -------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE AND
COMMON EQUILAVENT SHARE $ .04 $ .04
- -------------------------------------------------------------------------------
Weighted Average Number of Common and
Common Equilavent Shares Outstanding 6,364,640 5,764,640
- -------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-4-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------
Three Months Ended May 31, 1997 1996
- -------------------------------------------------------------------------------
Revenues:
Feed and other sales $ 2,414,806 $ 2,958,424
Feedlot services 613,178 401,348
Other 15,192 215,182
Interest 4,480 2,905
Interest on note receivable related party 3,750 3,750
- -------------------------------------------------------------------------------
Total Revenues 3,051,406 3,581,609
- -------------------------------------------------------------------------------
Costs and Expenses
Cost of feed and other sales 2,205,699 2,744,558
Cost of feedlot services 547,756 301,586
Selling, general and administrative 165,544 302,151
Interest (512) 1,459
Interest on capital leases - related party 29,138 30,895
Loss on sale of assets 178,452 --
- -------------------------------------------------------------------------------
Total Costs and Expenses 3,126,077 3,380,649
- -------------------------------------------------------------------------------
Profit (Loss) Before Income Taxes (74,671) 200,960
Income Tax Expense (Benefits) (329,631) 12,810
- -------------------------------------------------------------------------------
NET EARNINGS $ 254,960 $ 188,150
- -------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE AND
COMMON EQUILAVENT SHARE $ .04 $ .03
- -------------------------------------------------------------------------------
Weighted Average Number of Common and
Common Equilavent Shares Outstanding 6,364,640 5,764,640
- -------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-5-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
Nine Months Ended May 31, 1997 1996
- -------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Cash received from customers $ 9,085,358 $ 9,423,136
Cash paid to suppliers and employees (8,808,882) (8,674,373)
Interest received 29,611 35,727
Interest paid (100,432) (127,851)
Taxes paid (93,000) (22,406)
- -------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 112,655 634,233
- -------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Acquisition of property and equipment (13,864) (15,497)
Proceeds from sale of investments - subsidiaries -- 44,929
Proceeds from sale of property and equipment 645,893 --
Loans to related party (300,000) --
Collections on loan to related party -- 112,781
- -------------------------------------------------------------------------------
Net Cash Provided by Investing Activities 332,029 142,213
- -------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from notes payable 1,213,000 1,420,000
Principal payments on:
Short-term notes payable (1,373,000) (2,096,000)
Capital lease obligations - related party (38,365) (79,271)
Net increase (decrease) in short-term cattle financing (275,637) 97,683
Increase in cash overdraft 19,135 --
- -------------------------------------------------------------------------------
Net Cash Used by Financing Activities (454,867) (657,588)
- -------------------------------------------------------------------------------
Net Increase (Decrease) in Cash (10,183) 118,858
Cash, Beginning of Period 86,551 72,272
- -------------------------------------------------------------------------------
Cash, End of Period $ 76,368 $ 191,130
- -------------------------------------------------------------------------------
Continued on next page.
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<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
- --------------------------------------------------------------------------------
Nine Months Ended May 31, 1997 1996
- --------------------------------------------------------------------------------
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings $ 270,513 $ 249,070
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Gain on sale of investments - subsidiaries -- (20,000)
Loss on sale of property and equipment 178,452 --
Depreciation and amortization expense 79,838 123,386
Recognition of deferred gain -- (13,963)
Decrease in deferred income taxes (238,000) --
Changes in assets and liabilities net
of short-term cattle financing:
(Increase) decrease in:
Trade accounts receivable 16,996 254,374
Trade accounts receivable - related party 79,536 23,441
Accounts receivable - related party 35,914 61,080
Income taxes receivable (94,345) 11,082
Inventories (33,091) (68,410)
Prepaid expense 151 (14,063)
Deposits and other (30,000) (100)
Increase (decrease) in:
Trade accounts payable and accrued expenses (48,571) 62,171
Income taxes payable (86,579) 6,245
Customer advance feed contracts 157,104 172,748
Customer advance feed contracts-related parties (175,263) 27,461
Obligation payable -- (240,289)
- -------------------------------------------------------------------------------
Net Cash Provided by Operating Activities $ 112,655 $ 634,233
- -------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-7-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------------------------------------
The consolidated balance sheets as of May 31, 1997 and August 31, 1996, the
consolidated statements of earnings for the three months and nine months ended
May 31, 1997 and 1996 and consolidated statements of cash flows for the nine
months ended May 31, 1997 and 1996 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 as allowed by the rules and
regulations of the Securities and Exchange Commission.
In preparation of the above-described financial statements, all adjustments of a
normal and recurring nature have been made in addition to the transactions
described in the preceding paragraphs. The Company believes that the
accompanying unaudited financial statements contain all adjustments necessary to
present fairly the results of operations and cash flows for the periods
presented. Further, management believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the annual financial statements
and the notes thereto. The operations for the nine months and three months
periods ended May 31, 1997 are not necessarily indicative of the results to be
expected for the year.
-8-
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
-------------------------
Results of Operations
A summary of the net earnings (loss) by quarter for the first nine months
of the fiscal year ended May 31, 1997, compared to the same periods the year
before is as follows:
----------------------------------------------------------------
Nine Months Ended Increase
May 31 1997 1996 (Decrease)
----------------------------------------------------------------
First Quarter $ 31,524 $ 63,986 $(32,462)
Second Quarter (15,972) (3,066) (12,906)
Third Quarter 254,960 188,150 66,810
----------------------------------------------------------------
Nine Months Combined $270,513 $249,070 $ 21,443
The most significant factor that affects operating results is the average
head numbers of cattle per day ("average head days") in the Company's feedlot
because feed is sold and feedlot services are rendered to the cattle owners.
Sales of feed and feedlot services account for 95% or more of the Company's
revenues. The average head days for the periods being compared were as follows:
----------------------------------------------------------------
Nine Months Ended Increase
May 31 1997 1996 (Decrease)
----------------------------------------------------------------
First Quarter 16,377 15,782 595
Second Quarter 15,616 15,038 578
Third Quarter 16,656 16,093 563
Nine months combined 16,038 15,466 572
The 572, or 3.6%, increase in average head days, impacts several areas, as
described below.
Another factor that affected earnings for the nine months ended May 31,
1997 and 1996, and that did or will impact average head numbers and earnings
later in the fiscal year, is the Company's "fall calf program". As a service to
customers, the Company purchases for them calves weaned in the fall and places
them with local farmer-feeders who feed and care for the calves until the
following February through April when the cattle are transferred to the
Company's feedlot. These fall calf programs are undertaken on essentially a
breakeven basis; that is, the amounts paid to the farmer-feeders are about the
same as the amounts charged to the customers. The Company offers this service to
improve placements in February through April when cattle placements are usually
low. The revenues are recorded as sales of feedlot services and the costs as the
cost of feedlot services. Therefore, a high volume in the fall calf program can
reduce the gross profit percentage on sales of feedlot services. During the
quarter ended May 31, 1997, the Company had 4,146 head in its fall calf program
as compared to 1,310 head the previous year. This resulted in an increase in the
sales and costs of the fall calf program for the nine months ended May 31, 1997
over the same period the previous year of about $513,000 and caused a small
decrease in the gross profit percentage from sales of feedlot services as noted
below.
-9-
<PAGE>
Other key factors that affect earnings are the gross profit percentages on
feed and other sales, and on feedlot services. The following is a brief summary
of gross profit and gross profit percentages on feed and other sales:
----------------------------------------------------------------------
Nine Months Ended Increase
May 31 1997 1996 (Decrease)
----------------------------------------------------------------------
Feed and other sales $7,119,214 $7,487,836 $ (368,622)
Cost of feed and
other sales 6,582,429 6,839,499 (257,070)
----------------------------------------------------------------------
Gross profit $ 536,785 $ 648,337 $ (111,552)
Gross profit percentage 7.5% 8.7% (1.2%)
A variety of feed ingredients are combined in varying percentages and sold
as various rations. The ingredients are separately marked up so the gross profit
percentage on feed sales is affected by three variables:
(1) the type and quantity of individual rations sold
(2) management's discretionary pricing decisions
(3) feed ingredients sold under customer advance feed contracts which are
not subject to management's discretionary pricing decisions
The $111,552 decrease in gross profit from feed and other sales for the
period ended May 31, 1997 from the same period the previous year is a result of
changes in two variables described above. For the period ended May 31, 1997,
more rations were sold which contained more ingredients that do not contribute
as many dollars to the gross profit due to their lower cost and markup. Also,
the price of corn, the main ingredient in the majority of the rations sold, had
reached near record highs during the fourth quarter of the previous year and
first quarter of the current year. In an effort to maintain a competitive edge
in the industry by keeping feeding costs down, as well as building goodwill with
its customers, management lowered the markup on corn for a portion of the nine
months ended May 31,1997 from the same period the previous year. Management is
not anticipating the continuation of this lower markup policy into the balance
of the fiscal year. Management has implemented procedures by which certain
feedlot services are expected to generate additional revenues.
The following is a brief summary of the gross profit and gross profit
percentages on sales of feedlot services:
----------------------------------------------------------------------
Nine Months Ended Increase
May 31 1997 1996 (Decrease)
----------------------------------------------------------------------
Sales of feedlot services $1,730,534 $1,174,498 $ 556,036
Cost of feedlot services 1,575,622 933,679 641,943
Gross profit $ 154,912 $ 240,819 $ (85,907)
Gross profit percentage 9.0% 20.5% (11.5%)
-10-
<PAGE>
Sales of feedlot services consist primarily of yardage (pen rent) charged
to the owners of the cattle on feed and grain processing charged for the
processing of certain feed ingredients before they can be fed to the cattle.
Yardage charges for the quarter ended May 31, 1997 increased $74,051 or 16.87%
from the same period the prior year due to the increased head numbers and
procedural changes as described previously. Grain processing charges, however,
decreased $30,756 or 8.0% for the period ended May 31, 1997 due to a decrease in
the quantity of feed ingredients that require processing used in the mix of
ingredients as described above.
As previously noted, the sales and cost of sales for the fall calf program
are also included in the sales and cost of sales of feedlot services. If the
fall calf program sales and costs are excluded, the gross profit percentage for
the period ended May 31, 1997 is 18.0% compared to 29.2% for the same period the
previous year.
The cost of feedlot services consists primarily of feedlot operating
expenses. The total cost of feedlot services increased $641,943 for the period
ended May 31, 1997 compared to the same period the prior year. If the fall calf
program costs are excluded, the increase for the period ended May 31, 1997
compared to the same period the prior year is $128,160. As a result of the
increase in average head days and a change in the types of ingredients used in
the rations, labor costs increased about $72,800 and equipment fuel and repair
costs increased approximately $27,500. To increase the capacity and accommodate
the need for less than optimum occupancy per pen, the Company rented, on a month
to month basis, several pens from third party farmer/feeders during the period
ended May 31, 1997, but not during the same period the previous year. This
proceedure resulted in additional costs of about $21,000 which are included in
the cost of feedlot services. The balance of the change is due to increases and
decreases in various expenses. Management does not anticipate any additional
increases in labor, although labor costs are expected to remain at or slightly
below current levels.
Other revenues decreased $255,230. This decrease is primarily the result of
the sale of two of the Company's commodity brokerage subsidiaries, LaSalle
Commodities and Cattle Services Co. and Miller Trading Co., in May 1996. For the
period ended May 31, 1996, these discontinued operations had generated
approximately $220,000 in revenues. Due to corresponding reductions in
management, sales and adminstrative costs, as described below, management does
not expect the loss of revenue from the discontinued operations to have a
negative effect on the Company's earnings. The balance of the increase is the
result of increases and decreases in various accounts.
Interest income decreased $6,116 or 25.0% for the period ended May 31, 1997
over the same period the prior year. Interest income received from the Company's
"carrying" or financing customer feeding charges decreased about $15,000 but
interest received from investments increased about $8,800. This reduction in
revenues is accompanied by a reduction in interest expense, as discussed below,
and therefore does not have a negative effect on the Company's earnings.
Selling, general, and administrative expenses decreased $364,174 for the
period ended May 31, 1997 over the same period the prior year. Payroll expenses,
related to the decrease in the revenues from discontinued operations as
described above, decreased $121,700, while telephone and advertising expenses,
-11-
<PAGE>
the two most significant expenses of the discontinued operations, decreased
$56,900. For the quarter ended May 31, 1997, the Company incurred $10,400 in
customer death loss adjustments, compared to $35,500 for the same period the
previous year, a decrease of $25,100. These adjustments, although not required,
are made to customers for the purpose of creating goodwill and/or when
management feels that death losses incurred by a customer are extraordinary in
nature. Legal and accounting fees decreased $47,700 for the period ended May 31,
1997 over the same period the prior year. During the period ended May 31, 1996
the Company was involved in litigation with the past president of Genetic
Engineering, Inc. which had merged with the Company, concerning debts allegedly
owed him. A settlement was reached in April 1996. The balance of the increase in
selling, general, and administrative expenses are various increases and
decreases in several accounts.
Interest expense decreased $24,159 for the period ended May 31, 1997 over
the same period the prior year. This is the result of reduced borrowings. The
need to borrow funds was reduced by a decrease in the amount of customer's feed
charges that the Company financed, as described previously, and the increase in
funds received from customer advance feed contracts, as described below.
In May 1997, the Company sold the land held for sale and water rights in
Thornton, Colorado to an unrelated third party. This sale resulted in a book
loss of approximately $176,700. Due to zoning changes and requirements by the
City of Thornton, the value of the property had continually declined in recent
years. The Company reduced its book value during the year ended August 31, 1994
by $380,913 after an appraisal was made for a prospective buyer. This declining
value, coupled with continued operating losses for the operation and maintance
of the property prompted the Company to limit its losses and accept the contract
for the sale at a loss. The sale did generate considerable income tax benefits,
as described below, which exceed the current book loss. This benefit is the
result of the non-deductability, for income tax purposes, of the write down of
the land's value by the Company and a write down of the value before the Company
acquired the land through its merger with Genetic Engineering, Inc. in 1992.
Although income taxes are usually directly related to the net earnings
before income taxes and certain assumptions that are made with the estimations
other events can have a major impact. For the period ended May 31, 1997, income
taxes decreased $365,657 from the same period the prior year while pretax income
decreased $344,214. As a result of the sale of the land held for sale, as
described above, the Company recorded an income tax refund receivable of
approximately $88,000 for taxes paid in previous years and recorded a deferred
income tax benefit of $238,000.
Liquidity and Capital Resources
- -------------------------------
For the nine months ended May 31, 1997, the internally-generated funds from
operating activities were $112,655 compared to $634,233 for the same period the
previous year, a decrease of $521,578. Cash received from customers for the
period decreased $337,778 and cash paid to suppliers and employees increased
$134,509, for a total cash decrease of $472,287. Interest received for the
period decreased $6,116, while interest paid decreased $27,419, for a total cash
increase of $21,303. For the period ended May 31, 1997, net income tax payments
totalled $93,000 compared to $22,406 for the same period the previous year, a
net cash decrease of $70,594.
-12-
<PAGE>
For the nine months ended May 31, 1997 the net cash that was provided by
investing operations of $332,029 compared to the net cash provided by investing
operations the same period the previous year of $142,213, resulting a net cash
increase of $189,816. For the period ended May 31, 1997, acquisition of property
and equipment decreased $1,633. For the period ended May 31, 1997 proceeds from
the sale of assets (property and equipment) generated $645, 893 compared to the
proceeds from the sale of assets (investments in subsidiaries) the prior year of
$44,929, a cash increase of $600,964. For the period ended May 31, 1997, the
Company made loans to a related party for the purpose of feeding cattle in the
total amount of $300,000 compared to collections that were made on a loan to a
related party the previous year of $112,781, a cash decrease of $412,781.
The net cash used by financing activities was $454,867 for the nine months
ended May 31, 1997, a decrease of $202,721 from the usage of $657,588 for the
same period the prior year. The change in net borrowings over repayments of
notes and other obligations resulted in a $556,906 decrease in funds used for
the nine months ended May 31, 1997 compared to the same period the previous
year. Net short-term cattle financing for the nine months ended May 31, 1997
used $275,637 compared to the provision of funds the same period the prior year
of $97,683, a decrease in funds provided of $373,320. The increase in the cash
overdraft, provided an additional $19,135 for the nine months ended May 31,
1997.
The Company's working capital (current assets minus current liabilities)
increased by $573,687 during the nine months ended May 31, 1997 from $281,511 at
August 31, 1996 to $855,198 at May 31, 1997. The most significant changes are as
follows:
----------------------------------------------------------------------
May 31, August 31, Increase
1997 1996 (Decrease)
----------------------------------------------------------------------
CURRENT ASSETS
Trade accounts receivable $1,073,848 $ 735,809 $ 338,039
Trade accounts receivable
Related parties 37,155 116,692 (79,537)
Tax refunds receivable 94,345 -- 94,345
Inventories 234,994 283,279 (48,285)
CURRENT LIABILITIES
Notes payable -- 160,000 (160,000)
Trade accounts payable 485,970 534,839 (48,869)
Customer feed contracts 172,011 14,907 157,104
Customer feed contracts -
Related parties -- 175,263 (175,263)
Trade accounts receivable increased by $338,039 for the nine months ended
May 31, 1997. Feed accounts receivable decreased $48,663 due to the collection
of financed amounts from customers; feeder cattle accounts receivable increased
$355,034 due to sales that were made on May 29, 1997. The reduction in trade
accounts receivable from related parties is due to the decrease in sales to
related parties.
-13-
<PAGE>
Inventories decreased $48,285 due to a decrease in the level of feed
ingredient inventories on hand. The amount of feed ingredient inventories on
hand at any given time will fluctuate depending on such variables as anticipated
weather conditions, consumption levels, delivery schedules, and the number of
various ingredients being fed. These fluctuations are the result of normal
operations.
Deposits on feeder cattle decreased $14,520 due to the fact that the cattle
for which the deposits had been made have been delivered to the feedlot, and the
deposits made for them has been applied against the purchase price.
For the nine months ended May 31, 1997 the bank overdraft increased
$19,135.
Notes payable were reduced by $160,000 for the nine months ended May
31,1997 mainly because of the increase in customer advance feed contracts of
$157,104. Customers make advance purchases of feed ingredients primarily in
December both for tax purposes and to stabilize their feeding costs. These
advance payments provide additional cash which lessens the amount of borrowed
funds required.
The decrease in trade accounts payable of $48,869 is due to normal business
transactions.
The decrease in accrued income taxes payable of $86,579 is due to the
increase in income tax refunds receivable as described above.
The Company has a revolving line of credit of $200,000 from a local bank
that matures December 31, 1997 and bears interest at 1.5% over the prime rate
(actual rate of 10.0% at May 31, 1997). There was no outstanding balance at May
31, 1997 which meant that the Company could generate an additional $200,000 cash
if needed under this line of credit. The note is secured by feed accounts
receivable, feed inventories, and equipment. Miller Feeders, Inc. (MFI) has a
$300,000 revolving line of credit at the same local bank for the procurement of
feeder cattle for resale to customers. The line of credit matures on December
31, 1997 and bears interest at 1.5% over the prime rate (actual rate of 10.0% at
May 31, 1997). There was no outstanding balance at May 31, 1997 which meant that
MFI could borrow up to $300,000 to purchase feeder cattle for resale to
customers. The line is secured by feeder cattle inventories and feeder cattle
accounts receivable.
The Company had no material commitments for capital expenditures at May 31,
1997.
Management believes it has adequate financial resources to conduct
operations at present and reasonably anticipated levels.
-14-
<PAGE>
PART II OTHER INFORMATION
Items 1 through 6 None.
- -----------------
-15-
<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.
MILLER DIVERSIFIED CORPORATION
------------------------------
(Registrant)
Date: July 17, 1997 /s/JAMES E MILLER
------------------------------
James E. Miller
President,
Chief Executive Officer,
Chief Financial Officer
Date: July 17, 1997 /s/STEPHEN R. STORY
------------------------------
Stephen R. Story
Secretary-Treasurer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
from Form 10-QSB for the nine months ended May 31, 1997 and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> MAY-31-1997
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0
0
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