================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 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: NOVEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934
Commission file: No. 33-94644
MINN-DAK FARMERS COOPERATIVE
----------------------------
(Exact named of registrant as specified in its charter)
North Dakota 23-7222188
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
7525 Red River Road
Wahpeton, North Dakota 58075
---------------------- -----
(Address of principal (Zip Code)
executive offices)
(701) 642-8411
----------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------
(Former name, former address and former fiscal year,
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, and (2) has been subject to such filing requirements
for the past 90 days.
YES _X_ NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock January 12, 2001
--------------------- ----------------
$250 Par Value 483
<PAGE>
================================================================================
MINN-DAK FARMERS COOPERATIVE
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements for the three month periods
ended November 30, 2000 and November 30, 1999 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim period. The
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report to Stockholders
previously submitted in the Company's Annual 10-K for the fiscal year ended
August 31, 2000. The results of operations for the three months ended
November 30, 2000 are not necessarily indicative of the results for the
entire fiscal year ending August 31, 2001.
2. In August 2000, the company declared a revolvement of the remaining 15% of
the 1990 crop and 70% of the 1991 crop per unit retains and allocated
patronage. That amount, $4.4 million, was paid to the stockholders on
September 29, 2000.
<PAGE>
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, 2000 AUGUST 31, 2000
ASSETS (UNAUDITED) (AUDITED)
------ --------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 363 $ 2,505
--------- ---------
Current portion of long-term note receivable 3 3
--------- ---------
Receivables:
Trade accounts 11,639 11,749
Growers 442 3,996
--------- ---------
12,081 15,745
--------- ---------
Advances to affiliate (1,358) (201)
--------- ---------
Inventories:
Refined sugar, pulp and molasses to be sold
on a pooled basis 32,425 27,737
Nonmember refined sugar 734 3
Yeast 92 88
Materials and supplies 4,682 5,561
Beet Inventory 42,246 -
Other 0 -
--------- ---------
80,179 33,389
--------- ---------
Deferred charges 52 1,123
--------- ---------
Prepaid expenses 1,092 595
--------- ---------
Property and equipment available for sale 200 200
--------- ---------
Total current assets 92,610 53,358
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 20,968 20,968
Buildings 35,592 35,592
Factory equipment 111,922 111,922
Other equipment 3,520 3,528
Construction in progress 380 22
--------- ---------
172,382 172,032
Less accumulated depreciation (66,932) (65,281)
--------- ---------
105,450 106,751
--------- ---------
LONG-TERM NOTES RECEIVABLE, NET OF
CURRENT PORTION 28 28
--------- ---------
OTHER ASSETS:
Investments restricted for capital lease projects 0 -
Investment in stock of other corporations, unconsolidated
marketing subsidiaries and other cooperatives 10,461 10,408
Deferred income taxes 800 1,240
Other 973 1,016
--------- ---------
12,234 12,664
--------- ---------
$ 210,323 $ 172,800
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, 2000 AUGUST 31, 2000
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
LIABILITIES AND MEMBERS' INVESTMENT
-----------------------------------
CURRENT LIABILITIES:
Short-term notes payable $ 26,910 $ 15,459
------------ ------------
Current portion of long-term debt 4,988 3,788
------------ ------------
Accounts payable:
Trade 862 2,224
Growers 35,305 16,927
------------ ------------
36,167 19,151
------------ ------------
Accrued liabilities 2,425 2,725
------------ ------------
Total current liabilities 70,490 41,123
LONG-TERM DEBT, NET OF CURRENT PORTION 42,707 43,910
OBLIGATION UNDER CAPITAL LEASE 10,495 10,495
OTHER 1,050 847
COMMITTMENTS AND CONTINGENCIES - 0
------------ ------------
Total liabilities 124,742 96,375
------------ ------------
MINORITY INTEREST IN EQUITY OF SUBSIDIARY 1,141 1,089
------------ ------------
MEMBERS' INVESTMENT:
Preferred stock:
Class A - 100,000 shares authorized, $105 par value;
72,200 shares issued and outstanding 7,581 7,581
Class B - 100,000 shares authorized, $75 par value;
72,200 shares issued and outstanding 5,415 5,415
Class C - 100,000 shares authorized, $76 par value;
72,200 shares issued and outstanding 5,487 5,487
------------ ------------
18,483 18,483
Common stock, 600 shares authorized, $250 par value; issued and
outstanding, 484 shares at November 30, 2000
and 484 shares at August 31, 2000 121 121
Paid in capital in excess of par value 32,094 32,094
Unit retention capital 7,148 7,148
Qualified allocated patronage 3,817 3,817
Nonqualified allocated patronage 21,739 12,895
Retained earnings (deficit) 1,038 778
------------ ------------
84,440 75,336
------------ ------------
$ 210,323 $ 172,800
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUE:
From sales of sugar, by-products, and
yeast, net of discounts $ 59,398 $ 65,750
Other income 72 116
----------- -----------
59,470 65,866
----------- -----------
EXPENSES:
Production costs of sugar, by-products,
and yeast sold 13,121 13,751
Marketing (includes freight and storage) 7,978 8,148
General and administrative 1,420 1,326
Interest 1,118 1,128
(Gain) loss on disposition of property and equipment 3 0
----------- -----------
23,640 24,353
----------- -----------
NET PROCEEDS RESULTING FROM MEMBER AND
NONMEMBER BUSINESS $ 35,830 $ 41,513
=========== ===========
DISTRIBUTION OF NET PROCEEDS:
Credited to members' investment:
Components of net income:
Income (loss) from non-member business $ 260 $ 204
Patronage income 8,844 10,935
----------- -----------
Net income 9,103 11,140
Unit retention capital 0 0
----------- -----------
Net credit to members' investment 9,103 11,140
Payments to members for sugarbeets, net of unit
retention capital 26,726 30,373
----------- -----------
NET PROCEEDS RESULTING FROM MEMBER AND
NONMEMBER BUSINESS $ 35,830 $ 41,513
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
MINN-DAK FARMERS COOPERATIVE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30,
---------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income allocated to members' investment $ 9,103 $ 10,267
Add (deduct) noncash items:
Depreciation and amortization 1,656 1,638
Equipment disposals - loss 3 0
Discount on estate payout 0 0
Net income allocated from unconsolidated marketing subsidiaries (53) (55)
Noncash portion of patronage capital credits 0 0
Retention of nonqualified unit retains 0 0
Changes in operating assets and liabilities:
Accounts receivable and advances 4,821 202
Inventory, prepaid expenses, and equipment held for resale (47,287) (52,443)
Deferred charges 1,071 775
Other assets 483 101
Accounts payable, advances, and accrued liabilities 21,297 21,461
----------- -----------
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (8,905) (18,056)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property, plant and equipment 0 0
Capital expenditures (358) (801)
Investment in stock of other corporations, unconsolidated
marketing subsidiaries and other cooperatives 0 (2,910)
Minority interest in equity of subsidiaries 52 37
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (306) (3,674)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of short-term debt 11,451 17,771
Payment of long-term debt (3) (3)
Payment of unit retains and allocated patronage (4,377) (2,377)
Issuance of long-term debt 0 2,993
Provision for long-term tax 0 0
Sale and repurchase of common stock, net 0 (2)
Issuance of stock 0 0
Issuance of long term tax-exempt bonds 0 0
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,070 18,381
----------- -----------
NET INCREASE (DECREASE) IN CASH (2,141) (3,348)
CASH, BEGINNING OF YEAR 2,505 546
----------- -----------
CASH, END OF QUARTER $ 363 $ (2,802)
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for:
Interest $ 1,243 $ 1,089
=========== ===========
Income taxes, net of refunds $ 1 $ 0
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2000 AND 1999
The following discussion and analysis relates to the financial condition and
results of operations of Minn-Dak Farmers Cooperative ("the Company") for the
three months ended November 30, 2000 (the first quarter of the Company's
2000-2001 fiscal year) and 1999 (the first quarter of the Company's 1999-2000
fiscal year). The Company's fiscal year runs from September 1 to August 31.
Any statements regarding future market prices, anticipated costs, agricultural
results, operating results and other statements that are not historical facts
contained in this Quarterly Report on Form 10-Q are forward-looking statements.
The words "expect", "project", "estimate", "believe", "anticipate", "plan",
"intend", "could", "may", "predict" and similar expressions are also intended to
identify forward-looking statements. Such statements involve risks,
uncertainties and assumptions, including, without limitation, market factors,
the effect of weather and economic conditions, farm and trade policy, the
available supply of sugar, available quantity and quality of sugarbeets and
other factors detailed elsewhere in this and other Company filings with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.
RESULTS FROM OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 2000 AND 1999
Revenue for the three months ended November 30, 2000 decreased $6.4 million from
the 1999 period, a decrease of 10%. Revenue from the sale of finished goods
decreased $6.4 million, while Other income remained steady.
Revenue from the sales of sugar increased $10.9 million, or 27%, reflecting a
43.9% increase in volume and a 16.3% decrease in the price for sugar. The
increase in volume and revenue is the result of forfeiture of sugar to the USDA
from the FY 2000 inventory as of 10-1-00.
Revenue from pulp and molasses sales increased $0.2 million or 8.6%, reflecting
a 5.7% decrease in sales volume and a 14.3% increase in the average gross
selling price.
Revenues from yeast sales increased $0.1 million or 8.8%, reflecting a 18.3%
increase in sales volume and a 9.5% decrease in the average selling price.
Selling prices are down due to the competitive nature of the current yeast
market.
The other contributing factor to the change in revenues results from the
increase or decrease in finished goods inventories. The increase in the value of
finished goods inventories for the three months ended November 30, 2000 amounted
to $4.7 million or $17.5 million less than the increase in the value of finished
goods inventories for November 30, 1999. For November 30, 2000 the increase in
the value of sugar inventories was $16.5 million less than the increase of that
of the prior year, and for pulp $1.0 million more. The increase in sugar and
pulp inventory values is the result of more sugar and pulp on hand versus the
prior period.
In the consolidated statements of operations, Expenses section, production costs
of sugar, co-products and yeast totaled $13.1 million, $.6 million or 4% less
than the prior year. The decrease is mainly attributable to normal operations
and expense accrual timings when comparing the three month period ending
November 30, 2000 versus the prior period. Marketing costs totaled $8.0 million,
$.2 million or 3% more than the prior year.
In the section Distribution of Net Proceeds, payments to members for sugarbeets,
net of unit retention capital and unprocessed sugarbeet inventory decreased $2.0
million or 18% from the fiscal year 2000 period. For fiscal year 2001 the
<PAGE>
Company is projecting a payment to growers for sugarbeets totaling $69.0
million, which is $14.9 million or 18% less than the prior fiscal year. The
payment is based upon (i) an average delivered sugar content of 18.49%, (ii) a
total sugarbeet crop to process of 2.1 million tons and (iii) the Company's
projected selling price for its sugar, which is currently estimated to be lower
than the previous year. In addition to payments for sugarbeets, growers were
paid $6.9 million as a result of the 2000 Sugar PIK program destroyed acres in
December 2000. Details of the 2000 Sugar PIK program are available in the United
States Department of Agriculture "Notice SU-60".
ESTIMATED FISCAL YEAR 2001 INFORMATION
The agreements between the Company and its members regarding the delivery of
sugarbeets to the Company require payment for members' sugarbeets in several
installments throughout the year. As only the final payment is made after the
close of the fiscal year, the first payments to members for their sugarbeets are
based upon the Company's then-current estimates of the financial results to be
obtained from processing the crop and the sale of finished products. This
discussion contains a summary of the Company's current estimates of the
financial results to be obtained from the Company's processing of the 2000 sugar
beet crop. Given the nature of the estimates required in connection with the
payments to members for their sugarbeets, this discussion includes
forward-looking statements. These forward-looking statements are based largely
upon the Company's expectations and estimates of future events; as a result,
they are subject to a variety of risks and uncertainties. Some of those
estimates, such as the selling price for the Company's products and the quantity
of sugar produced from the sugar beet crop are beyond the Company's control. The
actual results experienced by the Company may differ materially from the
forward-looking statements contained herein.
The recently completed harvest of the sugar beet crop grown during 2000 produced
a total of 2.1 million tons of sugarbeets exceeding the prior crop tons per
acre, but due to the Sugar PIK program, there were less harvested acres. The
sugar content and purity from the 2000 crop were above long-term averages.
During the month of October, unfavorable weather patterns did cause storage
problems at several storage sites with frost damaged beets. During the month of
November, these beets were processed in a manner to minimize the losses. The
remaining beets as of this report are considered to be in average storage
condition.
The Company expects to produce slightly less volume of sugar from the 2000 sugar
beet crop because of the sugar PIK program and associated reduction of tons
delivered, but considerably more than the five year average production of sugar.
Currently, the factory is averaging a sugarbeet slice rate of 9,369 tons per
day; within reason for the targeted 9,500 tons per day, and that average is
climbing. The targeted rate for the fiscal year 2001 plan is 9,500 tons per day
and it is believed that any minor deviation from plan will not have a
detrimental impact to the bottom line of the Company.
Based upon marketing information developed by United Sugars Corporation, the
Company currently estimates the average net selling price of the Company's sugar
will be less than that of the prior year because of the volume available for
sale (domestic production & foreign imports) relative to the estimated domestic
consumption.
From the revenues generated from the sale of products produced from each ton of
sugarbeets, the Company's operating and fixed costs must be deducted. The
deduction of those operating costs results in an estimated gross beet payment of
$33.44 per ton of sugarbeets.
LIQUIDITY AND CAPITAL RESOURCES
Because the Company operates as a cooperative, payments for member-delivered
sugarbeets, the principal raw material used in producing the sugar and
agri-products it sells, are subordinated to all member business expenses. In
addition, actual cash payments to members are spread over a period of
approximately one year following delivery of sugarbeet crops to the Company and
are net of unit retains and patronage allocated to them, all three of which
remain available to meet the Company's capital requirements. This member
financing arrangement may result in an additional source of liquidity and
reduced outside financing requirements in comparison to a similar business
operated on a non-cooperative basis. However, because sugar is sold throughout
the year (while sugarbeets are processed primarily between September and April)
and because substantial amounts of equipment are required for its operations,
the Company has utilized substantial outside
<PAGE>
financing on both a seasonal and long-term basis to fund such operations. The
financing has been provided by Co-Bank (the "Bank"). The Company has a
short-term line of credit with the Bank for calendar years 2000 and 2001 of
$45.0 million.
The loan agreements between the Bank and the Company obligate the company to
maintain the following financial covenants, and in accordance with GAAP:
o Maintain working capital of not less than $9.0 million as of August 31,
2001.
o Maintain a long-term debt and capitalized leases to equity ratio of not
greater than .8:1.
o Maintain a current ratio of not less than 1.2:1.0 based on monthly
financial statements and attain a current ratio of not less than 1.2:1.0
based on fiscal year end audits.
o Maintain an available cash to current long-term debt ratio as defined in
the agreement of not less than 1.25:1..
As of November 30, 2000 the Company was in compliance with its loan agreement
covenants with the Bank.
Working Capital as of November 30, 2000 totals $22.1 million compared to $12.2
million at August 31, 2000, an increase of $9.9 million for the period.
Increased working capital is a result of normal financing, operational and
capital expenditure activities of the Company.
The targeted working capital for August 31, 2001 is approximately $11.0 million
dollars and, in the Company's opinion, will be attained.
The primary factor for the changes in the Company's financial condition for the
three months ended November 30, 2000 was due to the seasonal needs of the
2000/2001 sugarbeet-processing season. The cash used to provide for operations
of $8.9 million and for investing activities of $.3 million was funded through
cash flow financing activities, and a reduction in cash. The net cash provided
through financing activities of $7.1 million was primarily provided through
proceeds from the issuance of short term debt of $11.5 million; offset by 15%
payment of the 1990 crop and 70% of the 1991 crop unit retains and allocated
patronage payments of $1.1 million and $3.3 million, in each respective year.
Capital expenditures for the three months ended November 30, 2000 totaled $.4
million. Capital expenditures for fiscal year 2001 are currently estimated at
$3.0 million.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
================================================================================
SIGNATURES
Pursuant to the requirement 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.
MINN-DAK FARMERS COOPERATIVE
----------------------------
(Registrant)
Date: January 14, 2001 /s/ STEVEN M. CASPERS
-------------------- -------------------------------------
Steven M. Caspers
President and Chief Executive Officer
Date: January 14, 2001 /s/ ALLEN E. LARSON
-------------------- -------------------------------------
Allen E. Larson
Chief Financial Officer
