-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VIkqsT0mt8nKk+JWhibH9Tmrwy47uAJwf0YeXHRhzvPLXhfeHGlA/5F6rdXtpqnw GAxwERoCNltcO9jgYosUBg== 0000941158-98-000005.txt : 19980518 0000941158-98-000005.hdr.sgml : 19980518 ACCESSION NUMBER: 0000941158-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIGH PLAINS CORP CENTRAL INDEX KEY: 0000317551 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 480901658 STATE OF INCORPORATION: KS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08680 FILM NUMBER: 98623429 BUSINESS ADDRESS: STREET 1: 200 W DOUGLAS STREET 2: STE 820 CITY: WICHITA STATE: KS ZIP: 67202 BUSINESS PHONE: 3162694310 MAIL ADDRESS: STREET 1: 200 W DOUGLAS STREET 2: STE 820 CITY: WICHITA STATE: KS ZIP: 67202 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GASOHOL REFINERS INC DATE OF NAME CHANGE: 19830807 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 1998 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 1-8680 HIGH PLAINS CORPORATION (Exact name of registrant as specified in its charter) Kansas #48-0901658 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 200 W. Douglas 67202 Suite #820 (Zip Code) Wichita, Kansas (Address of principal executive offices) (316)269-4310 (Registrant's telephone number) 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO Common Stock, Par Value $.10 per share, Outstanding at March 31, 1998 - 15,999,444 PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Balance Sheets 3 - 4 Statements of Operations 5 Statements of Stockholders' Equity 6 Statements of Cash Flows 7 Selected Notes to Financial Statements 8 - 9 Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 - 13 PART II OTHER INFORMATION Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 HIGH PLAINS CORPORATION Balance Sheets (Unaudited) March 31, 1998 and June 30, 1997
March 31, June 30, Assets 1998 1997 (Unaudited) ** Current Assets: Cash and cash equivalents $ 2,016,821 $ 2,389,758 Accounts Receivable Trade (less allowance of $75,000) 5,584,488 4,102,173 Production credits and incentives 303,149 1,536,541 Inventories 6,208,561 4,246,783 Current portion of long-term notes receivable 72,174 117,417 Prepaid expenses 590,236 309,350 Refundable income tax -0- 145,328 Total current assets 14,775,429 12,847,350 Property, plant and equipment, at cost: Land and land improvements 323,496 323,496 Ethanol plants 92,011,343 85,055,215 Other equipment 549,280 393,683 Office equipment 255,735 202,135 Leasehold improvements 48,428 48,002 93,188,282 86,022,531 Less accumulated depreciation (22,988,410) (20,444,381) Net property, plant and equipment 70,199,872 65,578,150 Other assets: Equipment held for resale 601,015 427,432 Deferred loan costs (less accumulated amortization of $30,200 and $10,857, respectively) 119,016 103,623 Long-term notes receivable, less current portion -0- 41,742 Other 67,081 76,235 Total other assets 787,112 649,032 $ 85,762,413 $ 79,074,532 See accompanying notes to financial statements. ** From audited financial statements.
HIGH PLAINS CORPORATION Balance Sheets Continued (Unaudited) March 31, 1998 and June 30, 1997
March 31, June 30, Liabilities and Stockholders' Equity 1998 1997 (Unaudited) ** Current liabilities: Revolving lines-of-credit $ 7,400,000 $ 6,200,000 Current maturities of capital lease obligations 489,970 519,384 Accounts payable 6,713,011 5,114,452 Accrued interest 287,151 298,551 Accrued payroll and property taxes 932,273 644,846 Total current liabilities 15,822,405 12,777,233 Revolving line-of-credit 10,150,000 7,700,000 Capital lease obligation, excluding current maturities 2,140,781 2,500,014 Other 408,200 441,109 12,698,981 10,641,123 Stockholders' equity: Common stock, $.10 par value, authorized 50,000,000 shares; issued 16,410,622 shares at March 31, 1998 and 16,396,622 shares at June 30, 1997, of which 411,178 shares were held as treasury stock at March 31, 1998 and June 30, 1997 1,641,062 1,639,662 Additional paid-in capital 37,406,803 37,348,072 Retained earnings 19,240,491 17,763,627 58,288,356 56,751,361 Less: Treasury stock - at cost (863,911) (863,911) Deferred compensation (183,418) (231,274) Total stockholders' equity 57,241,027 55,656,176 $ 85,762,413 $ 79,074,532 See accompanying notes to financial statements. ** From audited financial statements.
HIGH PLAINS CORPORATION Statements of Income (Unaudited) Three Months Ended March 31, 1998 and 1997 and Nine Months Ended March 31, 1998 and 1997
Three Months Ended Nine Months Ended March 31, March 31, 1998 1997 1998 1997 Net sales $19,123,056 $20,570,905 $63,354,876 $38,699,005 Cost of sales 18,685,219 19,608,559 59,681,110 35,135,099 Gross Profit 437,837 962,346 3,673,766 3,563,906 Selling, general and administrative expenses 366,580 340,815 1,281,920 1,068,360 Operating income 71,257 621,531 2,391,846 2,495,546 Other income (expense): Interest and other income 31,348 24,504 93,168 115,933 Interest expense (394,878) (348,910) (1,062,001) (1,116,547) Gain on sale of equipment and property -0- 139,488 1,050 140,063 (363,530) 184,918 (967,783) (860,551) Net (loss) earnings before income taxes (292,273) 436,613 1,424,063 1,634,995 Income tax expense (benefit) 7,152 8,691 (52,801) 32,601 Net (loss) earnings $ (299,425) $ 427,922 $ 1,476,864 $ 1,602,394 Diluted (loss) earnings per share $ (.02) $ .03 $ .09 $ .10 See accompanying notes to financial statements.
HIGH PLAINS CORPORATION Statements of Stockholders' Equity (Unaudited) Nine Months Ended March 31, 1998
Common Stock Additional Number Amount Paid-in Retained Treasury Deferred Total of Shares Capital Earnings Stock Compensation Balance, June 30, 1997 16,396,622 $ 1,639,662 $ 37,348,072 $ 17,763,627 $ (863,911) $ (231,274) $ 55,656,176 Amortization of deferred compensation 17,713 17,713 Compensation expense on stock options granted 39,131 39,131 Net earnings for the quarter 1,370,881 1,370,881 Balance, September 30, 1997 16,396,622 $ 1,639,662 $ 37,387,203 $ 19,134,508 $ (863,911) $ (213,561) $ 57,083,901 Amortization of deferred compensation 15,235 15,235 Net earnings for the quarter 405,408 405,408 Balance December 31, 1997 16,396,622 $ 1,639,662 $ 37,387,203 $ 19,539,916 $ (863,911) $ (198,326) $ 57,504,544 Amortization of deferred compensation 14,908 14,908 Exercise of options 14,000 1,400 19,600 21,000 Net loss for the quarter (299,425) (299,425) Balance March 31, 1998 16,410,622 $ 1,641,062 $ 37,406,803 $ 19,240,491 $ (863,911) $ (183,418) $ 57,241,027 See accompanying notes to financial statements.
HIGH PLAINS CORPORATION Statements of Cash Flows (Unaudited) Nine Months Ended March 31, 1998 and 1997
1998 1997 Cash Flows from operating activities: Net earnings $ 1,476,864 $ 1,602,394 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,593,785 2,308,844 Amortization of deferred compensation 47,856 32,264 Gain on sale of equipment (1,050) (140,063) Payments on notes receivable 86,985 133,936 Changes in operating assets and liabilities: Accounts receivable (248,923) (5,978,504) Inventories (1,961,778) (2,162,879) Refundable income tax 145,328 -0- Prepaid expenses (280,886) (271,892) Accounts payable 1,598,559 4,587,825 Accrued liabilities 276,027 414,934 Estimated contract commitments -0- (629,093) Net cash provided by operating activities 3,732,767 (102,234) Cash flows from investing activities: Proceeds from sale of equipment 8,590 3,318,345 Acquisition of property, plant and equipment (7,372,287) (6,553,264) Increase in other non-current assets (25,582) (43,115) Net cash used in investing activities (7,389,279) (3,278,034) Cash flows from financing activities: Proceeds from short-term debt -0- 4,000,000 Proceeds from long-term debt -0- 11,000,000 Proceeds from revolving lines-of-credit 7,700,000 -0- Payment on long-term debt -0- (19,895,238) Payment on capital lease obligations (393,647) (174,812) Payment on revolving lines-of-credit (4,050,000) -0- Proceeds from exercise of options 60,131 418,869 (Decrease) increase in other non-current liabilities (32,909) 18,693 Net cash provided by financing activities 3,283,575 (4,632,488) Decrease in cash and cash equivalents (372,937) (8,012,756) Cash and cash equivalents Beginning of period 2,389,758 8,889,246 End of period $ 2,016,821 $ 876,490 See accompanying notes to financial statements.
HIGH PLAINS CORPORATION Selected Notes to Financial Statements (1) Basis Of Presentation The accompanying financial statements have been prepared by High Plains Corporation ("Company) without audit. In the opinion of management, all adjustments (which include only normally recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position for the periods presented, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted. The results of operations for the period ended March 31, 1998 are not necessarily indicative of the operating results for the entire year. (2) Ethanol Production Business In December 1997, the Company acquired its third fuel grade ethanol facility located in Portales, New Mexico. The plant was refurbished and test runs performed during January and February of 1998 due to the extended shutdown of approximately two years by the previous owners. In March 1998 full production was initiated and approximately 1.0 million gallons were produced. The plant has a rated capacity of about 13 million gallons per year. (3) Stock Options On February 20, 1998, 14,000 options were exercised at $1.50 per share. These options did not contain any reload features. (4) Stock-Based Compensation The Company continues to account for stock-based compensation for employees using the intrinsic value method prescribed in APB No. 25. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. Had compensation cost for the stock-based compensation been determined based on the fair value grant date, consistent with the provisions of FAS 123, the Company's net earnings and diluted earnings per share above would have been reduced to the pro forma amounts below:
For the three months ending March 31, 1998 1997 Net (loss) earnings As reported $ (299,425) $ 427,922 Pro forma (299,425) 346,736 Diluted (loss) earnings per share: As reported $ (.02) $ .03 Pro forma (.02) .02 For the nine months ending March 31, Net earnings As reported $ 1,476,864 $ 1,602,394 Pro forma 1,199,646 1,316,802 Diluted earnings per share: As reported $ .09 $ .10 Pro forma .08 .08
The Company's basic earnings per share for the pro forma information noted above are the same as the Company's diluted earnings per share for all the periods disclosed. (5) Earnings Per Share The Company, as required under FASB Statement No. 128 Earnings Per Share (FAS 128) has replaced the presentation of primary earnings per share (EPS) with Basic EPS and Diluted EPS. Under FAS 128 both the basic and diluted must be presented in the financial statements. Also, under the FAS 128 all prior period EPS data presented in the financial statements must be restated for comparative purposes. The diluted earnings per share for the three months ended March 31, 1998 and 1997 have been calculated based on 16,009,802 and 15,996,437 diluted shares outstanding, respectively. The diluted earnings per share for the nine months ended March 31, 1998 and 1997 have been calculated based on 16,018,715 and 16,065,434, respectively. The Company's diluted (loss) earnings per share in the financial statements contained herein are the same as the basic (loss) earnings per share for each of the periods disclosed. Part I MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 2. Forward-looking Statements Forward-looking statements in this Form 10-Q, future filings including but not limited to, the Company's annual 10K, Proxy Statement, and 8K filings by the Company with the Securities and Exchange Commission, the Company's press releases and oral statements by authorized officers of the Company are intended to be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward- looking statements involve risks and uncertainty, including without limitation, the risk of a significant natural disaster, the inability of the Company to ensure against certain risks, the adequacy of its loss reserves, fluctuations in commodity prices, change in market prices or demand for motor fuels and ethanol, legislative changes regarding air quality, fuel specifications or incentive programs, as well as general market conditions, competition and pricing. The Company believes that forward-looking statements made by it are based upon reasonable expectations. However, no assurances can be given that actual results will not differ materially from those contained in such forward- looking statements. The words "estimate", "anticipate", "expect", "predict", "believe" and similar expressions are intended to identify forward-looking statements. Nine Months Ended March 31, 1998 and 1997 Net Sales and Operating Expenses. Net sales and revenues for the nine months ended March 31, 1998, were higher than net sales for the same period ended March 31, 1997. During the nine months ended March 31, 1998, approximately 35.7 million gallons of fuel grade ethanol were sold at an average price of $1.15 per gallon compared to 20.8 million gallons sold at an average price of $1.29 per gallon, for the same period ending March 31, 1997. In addition, approximately 2.2 million gallons of industrial grade ethanol were sold at an average price of $1.48 per gallon during the nine months ended March 31, 1998. Industrial grade ethanol production capabilities and sales were not significant during the same period ending March 31, 1997. Fuel grade gallons sold increased 72% due to the increased production available for sale compared to reduced production resulting from the temporary shutdown of the Colwich and York facilities during fiscal 1997. In addition, the Company's Portales facility sold .3 million gallons of fuel grade ethanol during it's startup and operations which began in March, 1998. Cost of sales as a percentage of net sales was 94.2% and 90.8% for the nine month periods ended March 31, 1998 and 1997, respectively. The slight increase in the cost of sales as a percentage of net sales was primarily due to the decrease in the average sale price for fuel grade ethanol offset by a decrease in average grain prices. The average cost of grain declined to $2.44 per bushel for the nine months ended March 31, 1998, down from $2.59 per bushel for the same period in 1997. Selling, general and administrative expenses increased 19.9% for the nine months ended March 31, 1998, compared to the same period ended March 31, 1997. This increase is primarily due to administrative costs in the prior fiscal year being below typical levels as a result of the temporary shutdown of the Company's plants during the prior fiscal year. Net Earnings. Net earnings decreased 7.8% for the nine months ended March 31, 1998, compared to earnings for the same period in 1997. Net earnings as a percentage of net sales and revenues decreased from 4.1% to 2.3%, due to an increase in cost of sales combined with a decrease in the average sale price for ethanol in the 1998 period compared to the same period in 1997. Diluted earnings per share at March 31, 1998 were 10% lower than diluted earnings per share at March 31, 1997 due to a decline in net earnings. MATERIAL CHANGES IN RESULTS AND OPERATIONS Three Months Ended March 31, 1998 and 1997 Net Sales and Operating Expenses and Results of Operations. Net sales and revenues for the three months ended March 31, 1998, decreased 6.7% compared to the same period in 1997. During the quarter ended March 31, 1998, approximately 10.3 million gallons of fuel grade ethanol were sold at an average price of $1.10 per gallon compared to approximately 11.9 million gallons sold during the same period in 1997 at an average price of $1.22 per gallon. The average sale price declined for the three months ended March 31, 1998, compared to the same period in 1997 in response to decreasing spot market prices for fuel grade ethanol. Fuel grade gallons sold during the three months ended March 31, 1998 decreased 13.3% compared to the same period in 1997 due to reduced fuel grade production in response to lower prices. In addition, approximately 1.0 million gallons of industrial grade ethanol was sold at an average price of $1.39 per gallon during the three months ended March 31, 1998, compared to zero sales in the same period in 1997. Cost of sales as a percentage of net sales and revenues was 97.7% and 95.3% for the three month periods ended March 31, 1998 and 1997, respectively. The slight increase in cost of sales as a percentage of sales is primarily due to a decrease in the average sale price for fuel grade ethanol. The average cost of grain decreased slightly to $2.48 per bushel for the three months ended March 31, 1998, down from $2.51 per bushel for the same period ended March 31, 1997. Selling, general and administrative expenses increased 7.0% for the three months ended March 31, 1998, compared to the period ended March 31, 1997. The increase was primarily due to administrative costs related to the startup of the Company's production facility in Portales, New Mexico. Net Earnings. Net earnings decreased 170% for the three months ended March 31, 1998 from the prior period in 1997. The decline in net earnings was due to the decrease in sales in the 1998 period compared to 1997. Diluted earnings per share for the three months ended March 31, 1998 decreased 166% compared to diluted earnings per share for the three months ending March 31, 1997, as a result of the decrease in net earnings. Liquidity and Capital Resources The Company's primary sources of funds during the third fiscal quarter for 1998 were cash flow from operations, and advances on a revolving line of credit from the Company's primary lender for $2,000,000, for working capital needs. At March 31, 1998, the Company had negative working capital of $(1,046,976) compared to a working capital surplus of $70,117 at June 30, 1997. Cash flow from operating activities amounted to $(3,732,767) for the first nine months of fiscal 1998 compared to $(102,234) for the same period in fiscal 1997. The increase in cash flow from operations in fiscal 1998 was attributable to the 1997 temporary shutdown of the Company's production facilities. Capital expenditures in the first nine months of fiscal 1998 amounted to $7.4 million compared to $6.6 million for the same period in fiscal 1997. These expenditures were a result of the Portales, New Mexico purchase and refurbishment totaling approximately $4.7 million with the remaining balance primarily expended on the York, Nebraska facility. In the opinion of management, funds expected to be generated from future operations and the Company's ability to rely upon future secured borrowings will provide adequate liquidity for the foreseeable future. The Company may, however, issue debt and equity securities as additional sources of financing as needed. Seasonality Ethanol prices on product sold in mandated oxygen markets generally increase during the months of September through March, and decrease during the summer months, due to the Federal Oxygen Program. However, during the latter part of this program season, ethanol prices softened as a result of the significant decline in the wholesale price of gasoline. Since ethanol replaces gasoline, changes in gasoline prices have historically resulted in similar changes in the price paid for ethanol. Currently, both gasoline and ethanol prices are lower than those experienced in the spring and summer of 1997. However, the Energy Information Administration predicts that there will be a significant increase in highway travel by American motorists this summer, generating an increase in gasoline demand by an expected 2.8%. If this increase in demand occurs, summertime ethanol prices could benefit. Average grain prices were flat for most of the quarter ended March 31, 1998. However, during the latter part of March, prices began to trend lower and have continued to decline. The USDA's latest acreage and stocks reports predict planting of this year's corn crop to be the largest in 13 years. An increase in planted acres of 1% over the previous year is anticipated. Although weather, carryouts, exports and other factors can significantly affect grain prices, prices in good crop years have typically declined into and during the harvest period. As part of the Company's risk management program, the Company has forward contracted grain deliveries and acquired tradable board positions. In total, these provide protection against grain price increases for approximately 41% of the Company's feedstock requirements through December, 1998. Should feedstock prices decline, the Company would benefit from lower prices on the remaining 59% of uncovered grain needs. The Company also anticipates that the sale of its distiller's grain by-products, which historically fluctuates with the price of corn, will continue to provide an additional hedge against adverse fluctuations in grain prices. PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS No new legal proceedings were instigated during the quarter ended March 31, 1998 which would be considered other than in the ordinary course of the Company's business. Item 2. CHANGES IN SECURITIES Not applicable. Item 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. Item 5. OTHER INFORMATION The Company is in the process of finalizing an agreement with ICM, Inc. to assume responsibility for purchasing and merchandising all of the Company's cattle feed by-products, dried distillers grains (DDG). This function is currently being performed by ConAgra, Inc., but was previously performed by ICM, Inc. prior to the assumption of those duties by ConAgra. Item 6. EXHIBITS AND REPORTS ON FORM 8-K a). Exhibit 27-1 Financial Data Schedule b). Reports on Form 8-K. During the quarter for which this report is filed, the Company filed one Form 8-K on January 26, 1998 concerning the Company's second quarter earnings and earnings per share for the period ending December 31, 1997. 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: HIGH PLAINS CORPORATION Date May 7, 1998 /s/ Gary R. Smith Chief Executive Officer EX-27 2
5 9-MOS JUN-30-1998 MAR-31-1998 2,016,821 0 5,731,662 75,000 6,208,561 14,775,429 93,188,282 (22,988,410) 85,762,413 15,822,405 19,690,781 0 0 1,641,062 55,599,965 85,762,413 19,123,056 19,123,056 18,685,219 18,685,219 366,580 0 394,878 (292,273) 7,152 (299,425) 0 0 0 (299,425) (.02) (.02)
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