-----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, G3brD9EX8EjuGYkcyWXfUvuqZMnKA/kTKdShcqfijEmlXumEDZuAqZc6SIrPdeYO 1TLBZeYHBCnEOOvz+pt83w== 0000941158-99-000043.txt : 19991115 0000941158-99-000043.hdr.sgml : 19991115 ACCESSION NUMBER: 0000941158-99-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: 99748339 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 September 30, 1999 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 September 30, 1999 - 16,146,751 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 9 - 12 PART II OTHER INFORMATION Item 1. Legal Proceedings 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 - 13 HIGH PLAINS CORPORATION Balance Sheets (Unaudited) September 30, 1999 and June 30, 1999
September 30, June 30, Assets 1999 1999 (Unaudited) ** Current Assets: Cash and cash equivalents $ 354,654 $ 330,672 Accounts Receivable Trade (less allowance of $75,000) 5,625,337 5,081,396 Production credits and incentives (less allowance of $124,222) 510,430 917,717 Inventories 5,329,304 5,038,199 Notes receivable 0 1,000,000 Prepaid expenses 1,062,297 391,590 Total current assets 12,882,022 12,759,574 Property, plant and equipment, at cost: Land and land improvements 450,403 450,403 Ethanol plants 93,513,662 92,994,900 Other equipment 573,911 573,911 Office equipment 311,672 308,699 Leasehold improvements 48,002 48,002 Construction in process 861,324 892,664 95,758,974 95,268,579 Less accumulated depreciation (28,507,771) (27,563,913) Net property, plant and equipment 67,251,203 67,704,666 Other assets: Deferred loan costs (less accumulated amortization of $87,313 and $75,181, respectively) 109,984 122,116 Other 26,578 26,578 Total other assets 136,562 148,694 $80,269,787 $80,612,934
[FN] See accompanying notes to financial statements. ** From audited financial statements. HIGH PLAINS CORPORATION Balance Sheets Continued (Unaudited) September 30, 1999 and June 30, 1999
September 30, June 30, Liabilities and Stockholders' Equity 1999 1999 (Unaudited) ** Current liabilities: Revolving lines-of-credit $ 9,550,000 $ 9,200,000 Current maturities of capital lease obligations 529,521 520,168 Accounts payable 7,431,749 6,693,746 Accrued interest 7,857 55,342 Accrued payroll and property taxes 665,949 721,463 Accrued income taxes payable 0 10,000 Total current liabilities 18,185,076 17,200,719 Revolving line-of-credit 6,850,000 7,700,000 Capital lease obligations, less current maturities 1,341,669 1,477,534 Deferred income tax payable 955,846 945,845 Other 327,568 426,107 9,475,083 10,549,486 Stockholders' equity: Common stock, $.10 par value, authorized 50,000,000 shares; issued 16,428,098 and 16,410,622 shares at September 30, 1999 and June 30, 1999 respectively, of which 281,347 and 411,178 shares were held as treasury stock at September 30, 1999 and June 30, 1999 respectively. 1,642,810 1,641,062 Additional paid-in capital 37,678,423 37,486,655 Retained earnings 14,091,958 14,705,578 53,413,191 53,833,295 Less: Treasury stock - at cost (755,903) (863,911) Deferred compensation (47,660) (106,655) Total Stockholders' equity 52,609,628 52,862,729 $80,269,787 $80,612,934
[FN] See accompanying notes to financial statements. ** From audited financial statements. HIGH PLAINS CORPORATION Statements of Operations (Unaudited) Three Months Ended September 30, 1999 and 1998
Three Months Three Months Ended Ended September 30, September 30, 1999 1998 Net sales and revenues $22,703,652 $26,389,859 Cost of products sold 22,051,469 25,679,801 Gross profit 652,183 710,058 Selling, general and administrative expenses 902,788 457,461 Operating income (loss) (250,605) 252,597 Other income (expense): Interest and other income 14,630 251,615 Interest expense (389,646) (442,599) Gain on sale of equipment 22,000 143,000 (353,016) (47,984) Net earnings before income taxes (603,621) 204,613 Income tax (expense) benefit (10,000) (75,000) Net earnings $ (613,621) $ 129,613 Basic and diluted earnings per share: $ (.04) $ .01
[FN] See accompanying notes to financial statements. HIGH PLAINS CORPORATION Statement of Stockholders' Equity (Unaudited) Three Months Ended September 30, 1999
Common Stock Additional Number Paid-in Retained Treasury Deferred of Shares Amount Capital Earnings Stock Compensation Total Balance, June 30, 1999 16,410,622 $1,641,062 $37,486,654 $14,705,579 $(863,911) $(106,655) $52,862,729 Re-issuance of Treasury stock 121,027 108,008 229,035 Exercise of Options 17,476 1,748 70,742 72,490 Employee Stock purchase 36,249 36,249 Amortization of deferred compensation 22,746 22,746 Net Earnings for the Quarter (613,621) (613,621) Balance, September 30, 1999 16,428,098 $1,642,810 $37,678,423 $14,091,958 $(755,903) $ (47,660) $52,609,628
[FN] See accompanying notes to financial statements. HIGH PLAINS CORPORATION Statements of Cash Flows (Unaudited) Three Months Ended September 30, 1999 and 1998
1999 1998 Cash flows from operating activities: Net earnings $ (613,621) $ 129,613 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 955,990 936,283 Amortization of deferred compensation 22,744 11,166 Gain on sale of equipment (22,000) (143,000) Debt forgiveness -0- (231,359) Compensation expense on treasury stock granted 222,802 -0- Payments received on notes receivable 1,000,000 23,388 Deferred Income Taxes 0 75,000 Changes in operating assets and liabilities: Accounts receivable (136,654) (1,975,891) Inventories (291,105) 2,635,431 Refundable income tax -0- 30,000 Prepaid expenses (670,707) (995,850) Accounts payable 853,992 102,333 Accrued liabilities (212,752) 89,532 Net cash provided by operating activities 1,108,689 686,646 Cash flows from investing activities: Proceeds from sale of equipment 22,000 205,233 Acquisition of property, plant and equipment (490,395) (799,783) Decrease in other non-current assets -0- 26,957 Net cash used in investing activities (468,395) (567,593) Cash flows from financing activities: Proceeds from revolving lines-of-credit -0- 900,000 Payment on revolving line-of-credit (500,000) (850,000) Payments on capital lease obligations (126,512) (121,716) Increase in other non-current liabilities 10,200 17,649 Net cash provided by financing activities (616,312) (54,067) Increase in cash and cash equivalents 23,982 64,986 Cash and cash equivalents: Beginning of quarter 330,672 674,894 End of quarter $ 354,654 $ 739,880
[FN] 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, unless otherwise noted. 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 result of operations for the period ended September 30, 1999 are not necessarily indicative of the operating results for the entire year. (2) Debt Forgiveness For the period ended September 30, 1998, the Company recorded $231,359 in debt forgiveness related to funds advanced by a customer to the Company for the acquisition and installation of certain process equipment. The debt forgiveness results from the renegotiation of an existing supply agreement between the Company and the customer. (3) Revolving-lines-of-credit At September 30, 1999 the Company failed to meet certain financial covenant ratios as required under the Company's existing lending agreement. However, on November 09, 1999 the lender waived its rights to declare the debt due and payable based on these covenant violations at September 30, 1999. The Company is currently seeking to refinance the company's existing lines-of-credit. (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 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 earnings per share above would have been reduced to the proforma amounts below:
For the quarters ending September 30, 1999 1998 Net earnings As reported $(613,621) $ 129,613 Pro forma (740,957) 113,242 Diluted earnings per share: As reported $ (.04) $ .01 Pro forma (.05) .01
(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 September 30, 1999 and 1998 have been calculated based on 16,104,340 and 16,181,721 diluted shares outstanding, respectively. The Company's diluted earnings per share in the financial statements contained herein are the same as the basic 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 10Q, 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. Forward looking statements are identified as including terms such as "may", "will", "should", "expects", "plans", or similar language. THREE MONTHS ENDED SEPTEMBER 30, 1999 and 1998 Net Sales and Revenues and Operating Expenses and Results of Operations. During the three months ended September 30, 1999, approximately 15.1 million gallons of fuel grade ethanol were sold at an average price of $0.97 per gallon, compared to approximately 17.1 million gallons sold during the same period ended September 30, 1998, at an average price of $1.05 per gallon. Industrial grade ethanol sold during the three months ended September 30, 1999 totaled approximately .5 million gallons at an average price of $1.44 per gallon, compared to approximately .8 million gallons sold during the same period ended at September 30, 1998 at an average price of $1.38 per gallon. Additionally, the Company purchased and sold approximately 1.0 million gallons of fuel and industrial grade ethanol with no significant gain or loss on the transactions for each of the three month periods ended September 30, 1999 and 1998. Lower net sales and revenues for the three months ended September 30, 1999 compared to the same period ended September 30, 1998 resulted from reduced sales volume and lower average sale price for fuel grade ethanol. Fuel grade ethanol sales volume dropped off approximately 2.0 million gallons compared to the same period a year ago. The lower sales volumes were primarily a result of planned inventory build at the Portales, New Mexico facility necessary to fulfil contractual obligations in the event of a potential Portales plant closure or other similar course of action. Management is continuing to monitor the situation at Portales very closely due to continued losses at the facility. At this time management has not made a definitive decision on the future of the facility and is currently considering pursuing local or state production incentives; the use of less costly feedstock; and diversification into additional product lines. Other options for the facility include sale or closure of the facility, or the relocation of the facility to another site with better access to feedstock. Revenues were further affected by an 8% decline in the average sale price of fuel grade ethanol experienced in the Company's fiscal 2000 first quarter compared to the average sale price for fuel grade ethanol for the same period in fiscal 1999. Cost of products sold as a percentage of net sales and revenues was 97.1% and 97.3% for the three month periods ended September 30, 1999 and 1998, respectively. The cost of products sold, as a percent of net sales revenue, remained relatively flat compared to the same period a year ago, as the average cost per bushel of grain trended down offsetting the decrease in average sales prices, as discussed above. Average grain costs for the period ended September 30, 1999 were $2.02 per bushel compared to an average cost of $2.29 per bushel for the period ended September 30, 1998. Selling, general and administrative expenses increased approximately $.4 million for the three months ended September 30, 1999, compared to the same period ended September 30, 1998. The increase is a result of increased staffing, raises, and stock grants to key management personnel. Net earnings decreased from .5% as a percentage of net sales and revenues for the three months ended September 30, 1998 to a net loss of (2.7%) as a percentage of net sales and revenues for the same period ended September 30, 1999. The decrease in net earnings as a percentage of net sales and revenues results from a slight decrease in gross profits, increased selling, general and administrative expenses, and a decrease in other income (primarily related to debt forgiveness in the first quarter of fiscal 1998) for the 1999 period compared to the same period in 1998. Liquidity and Capital Resources The Company's primary source of funds during the first fiscal quarter of 2000 was cash flow from operations. At September 30, 1999, the Company had negative working capital of approximately ($5.3) million. Working capital decreased compared to the June 30, 1999 negative working capital of ($4.4) million. This decrease is the result of increased inventories and prepaid expenses netted against a decrease in notes receivable and increases in accounts payable and revolving lines-of-credit. Capital expenditures in the first three months of fiscal 2000 amounted to $.5 million compared to $.8 million, for the same period in fiscal 1999. These expenditures were primarily for modifications at the three plants. 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, seek additional funding through sale of stock, exercise of options held by directors and officers, or issue debt and/or equity securities, or sale of assets as additional sources of financing are needed. Seasonality Ethanol prices remained relatively flat through the first fiscal quarter for 2000, and into October. Prices for ethanol sold in mandated oxygen markets historically increase during the months September through March due to the Federal Oxygenate Program. This historical increase has not been as significant this season due to a continued ethanol surplus, which the Company believes to be a result of excess inventory liquidation by major producers, and early contracting for winter season needs by customers. While some improvement in the ethanol spot market has been observed, it is not as significant as in prior years. Additionally, the Company has contracted for the sale of most of its ethanol production through March (the end of the wintertime oxygenate season) so even if ethanol prices do rise they will not effect the majority of the Company's production gallons until after that time. Unless progress is made in the political issues affecting demand for ethanol (the replacement of certain MTBE gallons with ethanol, or the modification of the RFG II vapor pressure requirements discussed in the Company's most recent 10K filing) the Company expects to see only modest ethanol price increases over the next fiscal quarter. Fortunately, grain prices continue to be very favorable for the ethanol industry. Corn and milo prices have continued to decline to 10 year low levels based on projections for a good harvest, and many experts are predicting comparatively low grain prices for another year (subject as always to risks of weather, carryouts, exports, foreign production and consumption, and other similar factors). The Company has forward contracted most of its grain requirements through December, and a significant portion of its needs into March of 2000. Prices for the Company's distillers grain by-products (DDGS), which historically fluctuate with the price of corn and provide the company with some hedge against the possibility of higher grain prices, have actually improved over the last fiscal quarter. While July, August and September DDGS prices were still lower than prices received in the first fiscal quarter of 1999, October 1999 prices were higher than October 1998, and prices are expected to strengthen further into the second fiscal quarter of 2000. This year appears to be more typical than last year for DDGS prices, as early wintertime demand increases have brought a corresponding increase in market prices. Year 2000 Issues The Year 2000 "Y2K" issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. Certain computer systems will be unable to properly recognize dates beyond the year 1999. This could result in a system failure or miscalculations causing disruptions of operations. In fiscal 1998, the Company developed a three-phase compliance program: (1) identify major areas of exposure to ensure compliance, (2) development and implementation of action plans to be Y2K compliant in all systems by mid-1999, and (3) final testing of each major area of exposure to ensure compliance by the end of 1999. Under Phase 1 a number of applications were identified as being Y2K compliant due to recent upgrades. The Company incurred less than $10,000 in costs to upgrade these systems. Under phase 2, the Company conducted tests and diagnostic procedures to verify compliance with regards to its core systems. The Company incurred approximately $10,000 in costs for the upgrading of the core software to be Year 2000 compliant. The Company is continuing the process of making inquiries and gathering information regarding Y2K compliance exposures faced by its vendors. Management has insufficient information at this time to assess the degree to which such vendors and suppliers have addressed or are addressing Y2K compliance issues, and to fully evaluate the risk of disruption to operations that those businesses might face relating to Year 2000 compliance issues. However, no major part or critical operation of any segment of the Company's business is reliant on a single source for raw materials, supplies, or services. Nonetheless, there can be no assurance that the Company will be able to identify all Y2K compliance risks, or, that all contingency plans will assure uninterrupted business operations across the millennium. PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS No new legal proceedings were instigated during the quarter ended September 30, 1999 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. SUBSEQUENT EVENTS. None. Item 6. EXHIBITS AND REPORTS ON FORM 8-K a). Exhibit 27-1 Financial Data Schedule b). Reports on Form 8-K and 8-KA. During the quarter for which this report is filed, the Company filed the following Form 8-K's: July 26, 1999 Company announced fiscal 1999 fourth quarter earnings and earnings per share at June 30, 1999. August 03, 1999 Company announced board restructuring. August 16, 1999 Company announced fiscal 1999 year-end earning and earnings per share at June 30, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report be signed on its behalf by the undersigned thereunto duly authorized. HIGH PLAINS CORPORATION Date November 15, 1999 /s/Gary R. Smith President Chief Executive Officer EX-27 2
5 3-MOS JUN-30-2000 SEP-30-1999 354,654 0 6,334,989 199,222 5,329,304 12,882,022 95,758,974 28,507,771 80,269,787 18,185,076 16,400,000 0 0 1,642,810 50,966,818 80,269,787 22,703,652 22,703,652 22,051,469 22,051,469 902,788 0 389,646 (603,621) 10,000 0 0 0 0 (613,621) (.04) (.04)
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