-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N1XxfGrR/mhmx9xWtSv/a9bxjjoiO5SYuSFb7bhTwxP4rmbjYYZRfi7spS5ItDa0 PCVa0m8XkPobN0N70OLmng== 0000034616-95-000001.txt : 19950509 0000034616-95-000001.hdr.sgml : 19950508 ACCESSION NUMBER: 0000034616-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FARMLAND INDUSTRIES INC CENTRAL INDEX KEY: 0000034616 STANDARD INDUSTRIAL CLASSIFICATION: MEAT PACKING PLANTS [2011] IRS NUMBER: 440209330 STATE OF INCORPORATION: KS FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-07250 FILM NUMBER: 95501227 BUSINESS ADDRESS: STREET 1: 3315 N OAK TRAFFICWAY CITY: KANSAS CITY STATE: MO ZIP: 64116 BUSINESS PHONE: 8164596000 FORMER COMPANY: FORMER CONFORMED NAME: CONSUMERS COOPERATIVE ASSOCIATION DATE OF NAME CHANGE: 19681201 10-Q 1 10-Q FOR 1ST QUARTER END 11/30/94 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission File November 30, 1994 Number 2-67985 FARMLAND INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Kansas 44-0209330 (State of Incorporation) (I.R.S. Employer Identification No.) 3315 North Oak Trafficway, Kansas City, Missouri (Address of principal executive offices) 64116 (Zip Code) 816-459-6000 (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 { } FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
November 30 August 31 1994 1994 (Amounts in Thousands) CURRENT ASSETS Cash and cash equivalents . . . . . . . $ -0- $ 44,084 Accounts receivable . . . . . . . . . . 380,854 394,906 Inventories (note 2) . . . . . . . . . . 590,826 538,314 Prepaid expenses . . . . . . . . . . . . 10,769 15,159 Other current assets . . . . . . . . . . 95,060 103,980 TOTAL CURRENT ASSETS . . . . . . . . . . . $ 1,077,509 $ 1,096,443 INVESTMENTS AND LONG-TERM RECEIVABLES . . $ 197,094 $ 189,601 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at cost . $ 1,218,935 $ 1,202,159 Less accumulated depreciation and amortization 711,943 700,869 NET PROPERTY, PLANT AND EQUIPMENT . . . . . $ 506,992 $ 501,290 OTHER ASSETS . . . . . . . . . . . . . . . $ 138,783 $ 139,297 TOTAL ASSETS . . . . . . . . . . . . . . . $ 1,920,378 $ 1,926,631 See Accompanying notes to condensed consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND EQUITIES
November 30 August 31 1994 1994 (Amounts in Thousands) CURRENT LIABILITIES Accounts and notes payable . . . . . . . $ 442,479 $ 548,476 Current maturities of long-term debt . . 34,943 27,840 Customers' advances on product purchases 74,466 24,438 Other current liabilities . . . . . . . 215,963 204,985 TOTAL CURRENT LIABILITIES . . . . . . . . . $ 767,851 $ 805,739 LONG-TERM DEBT (excluding current maturities) $ 493,161 $ 517,806 DEFERRED INCOME TAXES (note 1) . . . . . . $ 6,340 $ 6,340 MINORITY OWNERS' EQUITY IN SUBSIDIARIES . . $ 11,453 $ 11,733 INTERIM INCOME BEFORE INCOME TAXES, PATRONAGE REFUNDS AND APPROPRIATION FOR EARNED SURPLUS (note 1) $ 56,713 $ -0- CAPITAL SHARES AND EQUITIES Common shares, $25 par value - Authorized 50,000,000 shares .. . . . $ 399,361 $ 363,562 Other equities . . . . . . . . . . . . . 185,499 221,451 TOTAL CAPITAL SHARES AND EQUITIES . . . . . $ 584,860 $ 585,013 TOTAL LIABILITIES AND EQUITIES . . . . . . $ 1,920,378 $ 1,926,631
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
hree Months Ended November 30 November 30 1994 1993 (Amounts in Thousands) Sales . . . . . . . . . . . . . . . . . . . $ 1,616,167 $ 1,473,992 Cost of sales . . . . . . . . . . . . . . 1,481,889 1,383,764 Gross income . . . . . . . . . . . . . . . $ 134,278 $ 90,228 Selling, general & administrative expenses $ 75,346 $ 65,905 Other income (deductions): Interest expense . . . . . . . . . . . . $ (13,443) $ (13,133) Equity in income (loss) of investees . . 6,370 (4,067) Other, net . . . . . . . . . . . . . . . 4,642 2,930 Total other income (deductions) . . . . . . $ (2,431) $ (14,270) Income before income taxes, minority owners' interest and patronage refunds (note 1) . . . . . $ 56,501 $ 10,053 Minority owners' interest in net loss of subsidiaries 212 1,441 Income before income taxes and patronage refunds (note 1) . $ 56,713 $ 11,494 See Accompanying notes to condensed consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended November 30 November 30 1994 1993 (Amounts in Thousands) Cash flows from operating activities: Income before income taxes and patronage refunds . . . . $ 56,713 $ 11,494 Adjustments to reconcile income before income taxes and patronage refunds to net cash provided by (used in) operating activities: Depreciation and amortization . . . . 16,435 16,625 Equity in (income) loss of investee . (6,370) 4,067 Other, net . . . . . . . . . . . . . (628) (1,616) Changes in assets and liabilities: Accounts receivable . . . . . . . 12,724 (15,518) Inventories . . . . . . . . . . . (52,512) (56,782) Other assets . . . . . . . . . . . 14,036 (51,809) Accounts payable . . . . . . . . . (23,860) 29,795 Advances on product purchases . . 50,028 28,461 Accrued interest and other liabilities (7,912) 8,589 Net cash provided by (used in) operating activities $ 58,654 $ (26,694) Cash flows from investing activities: Proceeds from disposal of investments and notes receivable $ 6,502 $ 2,829 Acquisition of investments and notes receivable (9,232) (10,038) Acquisition of businesses . . . . . . . -0- (2,223) Capital expenditures . . . . . . . . . . (20,764) (21,407) Proceeds from sale of fixed assets . . . 1,312 8,504 Net cash used in investing activities . . . $ (22,182) $ (22,335) Cash flows from financing activities: Net increase of demand loan certificates $ 3,768 $ 7,999 Proceeds from bank loans and notes payable 191,610 256,530 Payments on bank loans and notes payable (300,727) (295,803) Proceeds from issuance of subordinated debt certificates 9,0921 4,472 Payments for redemption of subordinated debt certificates (3,433) (3,857) Increase of checks and drafts outstanding 57,536 40,063 Payments for redemption of equities . . (12,166) (16) Payments of patronage refunds and dividends (26,236) -0- Other . . . . . . . . . . . . . . . . . -0- 1,268 Net cash provided by (used in) financing activities $ (80,556) $ 20,656 Net decrease in cash and cash equivalents . $ (44,084) $ (28,373) Cash and cash equivalents at beginning of period 44,084 28,373 Cash and cash equivalents at end of period $ -0- $ -0- See accompanying notes to condensed consolidated financial statements
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) INTERIM FINANCIAL STATEMENTS The information included in these condensed consolidated financial statements of Farmland and its subsidiaries (the "Company") reflects all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. In accordance with the bylaws of Farmland Industries, Inc. ("Farmland") and its cooperative subsidiaries, patronage refunds are apportioned and distributed or patronage losses are apportioned at the at the end of each fiscal year. As this apportionment is determined only at the end of each fiscal year, and since the provision for income taxes, dividends, and the resultant amount of net income (loss) transferred to surplus are dependent upon the determination of the amount of the patronage refund or patronage loss, the Company has historically, in accordance with cooperative practices, made no provisions for income taxes or patronage refunds in its interim financial statements. Therefore, the amount of interim income before income taxes and patronage refunds has been reflected as a separate item in the accompanying November 30, 1994 condensed consolidated balance sheet. (2) INVENTORIES Major components of inventories at November 30, 1994, and August 31, 1994, are as follows:
November 30 August 31 1994 1994 (Amounts in Thousands) Finished and in-process products $ 313,956 $ 286,381 Materials . . . . . . . . . . . . 46,586 51,428 Supplies . . . . . . . . . . . . 41,602 39,885 Beef . . . . . . . . . . . . . . 25,451 24,267 Grain . . . . . . . . . . . . . . 163,231 136,353 $ 590,826 $ 538,314
All inventories, other than supplies, grain and certain beef and petroleum inventories, are valued at the lower of first-in, first-out (FIFO) cost or market. Supplies are valued at cost. The Company follows a policy of hedging its grain inventories which are valued at market adjusted for the net unrealized gains or losses on open grain contracts. Crude oil, refined petroleum products, beef and beef by-products are valued at the lower of last-in, first-out (LIFO) cost or market. In applying the lower of cost or market valuation method in the case of petroleum LIFO inventory, the general practice is modified to conform to the integral view of interim financial statements. Accordingly, a seasonal market value decline below cost of LIFO inventories, at an interim date, which is reasonably expected to be restored by year-end, is not recognized in interim results of operations since no loss is expected to be incurred in the annual period. At November 30, 1994, the carrying value of petroleum inventories stated under the LIFO method was $100,654,000. This exceeded the market value of such inventory by $18,034,000. However, based on historical prices of energy products and seasonal market price variations, the market value decline below cost is expected to be a temporary seasonal price fluctuation. Had the lower of first-in, first-out (FIFO) cost or market been used to value these petroleum products, inventories at November 30, 1994 would have been lower by $8,689,000. The carrying value of beef inventories stated under the LIFO method was $25,451,000 at November 30, 1994. The LIFO method of accounting for beef inventories had no effect on the carrying value of inventories or on the income reported for the three months ended November 30, 1994 because market value of these inventories was lower than LIFO or FIFO cost. (3) CONTINGENCIES On July 28, 1983, Farmland sold the stock of Terra Resources, Inc. ("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and production operations, and exited its oil and gas exploration and production activities. The gain from the sale of Terra amounted to $237,200,000 for tax reporting purposes. During 1983, and prior to the sale of the Terra stock, Farmland received certain distributions from Terra totaling $24,800,000. For tax purposes, Farmland claimed intercorporate dividends-received deductions for the entire amount of such distributions. On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory notice to Farmland asserting deficiencies in federal income taxes (exclusive of statutory interest thereon) in the aggregate amount of $70,775,000. The asserted deficiencies relate primarily to the Company's tax treatment of the sale of the Terra stock and the distributions received from Terra prior to the sale. The IRS asserts that Farmland incorrectly treated the Terra sale gain as income against which certain patronage-sourced operating losses could be offset, and that, as a nonexempt cooperative, Farmland was not entitled to an intercorporate dividends-received deduction in respect of the 1983 distribution by Terra. It further asserts that Farmland incorrectly characterized gains for tax purposes aggregating approximately $14,600,000, and a loss of approximately $2,300,000, from the disposition of certain other assets. On June 11, 1993, Farmland filed a petition in the United States Tax Court contesting the asserted deficiencies in their entirety. Discovery and other pre-trial phases of the litigation have since been ongoing. The case is scheduled for trial on March 6, 1995. If the IRS ultimately prevails on all of the adjustments asserted in the statutory notice, Farmland would have additional federal and state income tax liabilities aggregating approximately $85,800,000 plus accumulating statutory interest thereon through December 31, 1994, of approximately $159,668,000 (before tax benefits of the interest deduction). In addition, such adjustments would affect the computation of Farmland's taxable income for its 1989 tax year and, as a result, could increase Farmland's federal and state income taxes for that year by approximately $5,000,000 plus applicable statutory interest thereon. No provision has been made in the consolidated financial statements for federal or state income taxes (or interest thereon) in respect of the IRS claims described above. Farmland believes that it has meritorious positions with respect to all of these claims and will continue to vigorously pursue their favorable resolution through the pending litigation. In the opinion of Bryan Cave, Farmland's special tax counsel, it is more likely than not that the courts will ultimately conclude that (i) Farmland's treatment of the Terra sale gain was substantially, if not entirely, correct; and (ii) Farmland properly claimed a dividends-received deduction in respect of the 1983 distributions which it received from Terra prior to the sale of the Terra stock. Counsel has further advised, however, that none of the issues involved in these disputes is free from doubt, and that there can be no assurance that the courts will ultimately rule in favor of Farmland on any of these issues. Should the IRS ultimately prevail on all of its asserted claims, the claimed federal and state income taxes as well as accrued interest would become immediately due and payable, and would be charged to current operations. In such case, the Company would be required to renegotiate its agreements with its banks to maintain compliance with various provisions of such agreements, including working capital and funded indebtedness provisions. However, no assurance can be given that such renegotiation would be successful. Alternatives could include other financing arrangements or the possible sale of assets. The Company has been designated by the Environmental Protection Agency as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), at various National Priority List ("NPL") sites. In addition, the Company is aware of possible obligations associated with environmental matters at other sites, including sites where no claim or assessment has been made. The Company's probable and reasonably determinable obligations for resolution of environmental matters at NPL and other sites are estimated to be $8,562,000 and such amount has been accrued at November 30, 1994. The ultimate costs of resolving environmental matters are not quantifiable because many such matters are in preliminary stages and the timing and extent of actions which governmental authorities may ultimately require are unknown. It is possible that the costs of such resolution may be greater than the liabilities which, in the opinion of management, are probable and reasonably determinable at November 30, 1994. In the opinion of management, it is reasonably possible for such costs to approximate up to $37,600,000 and to extend over 30 years. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The business of Farmland and subsidiaries (the"Company") is conducted in two areas: On the input side of the agricultural industry, the Company operates as a farm supply cooperative, and on the output side of the agricultural industry, the Company operates as a processing and marketing cooperative. Farm supply operations consist of three product divisions--petroleum, crop production and feed. Products of the petroleum division are principally refined fuels, propane, by-products of petroleum refining, lubricants and a complete line of car, truck and tractor tires and accessories. Principal products of the crop production division are nitrogen-, phosphate- and potash-based plant nutrients and a complete line of plant protection products. Feed division products include swine, dairy, pet, beef, poultry, mineral and specialty feeds, feed ingredients and supplements, animal health products and livestock services. The Company distributes farm supply products at wholesale. Geographically, the Company's markets are mid-western states which comprise the corn belt and the wheat belt. In fiscal 1994, 65% of consolidated farm supply product sales were to local farm cooperative associations which are members and owners of Farmland. These local cooperatives distribute products primarily to farmers and ranchers who utilize the products in the production of farm crops and livestock. Cooperative marketing operations include the storage and marketing of grain, processing pork and beef, and marketing fresh pork, processed pork, fresh beef and boxed beef. Hogs and grain are supplied to the Company primarily by members. Cattle are purchased from producers in the proximity of beef plants at Liberal and Dodge City, Kansas. A substantial portion of the Company's farm supply, pork and beef products are produced in facilities owned by the Company or operated by the Company under long-term lease arrangements. No material part of the business of any segment of the Company is dependent on a single customer or a few customers. The Company's revenues depend to a large extent on conditions in agriculture and may be volatile due to factors beyond the Company's control, such as weather, crop failures, federal agricultural programs, production efficiencies, and direct imports or exports. In addition, global variables which affect supply, demand and price of crude oil and refined fuels impact the Company's petroleum operations. Management cannot determine the extent to which future operations of the Company may be impacted by these factors. The Company's cash flow and net income may be volatile as conditions affecting agriculture and markets for the Company's products change. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company maintains two primary sources for debt capital: a continuous public offering of its debt securities and bank lines of credit. The Company's debt securities are offered on a best efforts basis by Farmland Securities Company and American Heartland Investments, Inc. and may be offered by selected broker-dealers. The types of securities currently offered include certificates payable on demand and subordinated debt certificates which mature in five and ten years. The total amount of such debt outstanding and the flow of funds to, or from, the Company as a result of this public offering are influenced by the rate of interest which Farmland establishes for each type of debt certificate offered and by options of Farmland to call for redemption certain of its outstanding debt certificates. During the three months ended November 30, 1994, the outstanding balance of demand loan and subordinated debt certificates increased $9.4 million. Farmland has a $650.0 million syndicated credit facility provided by eight domestic and international banking institutions. This agreement provides short- term credit of up to $450.0 million to finance seasonal operations and inventory, and revolving term credit of up to $200.0 million. At November 30, 1994, short-term borrowings under this facility were $139.0 million, revolving term borrowings were $80.0 million and $59.1 million was being utilized to support letters of credit issued on behalf of Farmland by participating banks. Farmland pays commitment fees of 1/8 of 1% annually on the unused portion of the short-term commitment and 1/4 of 1% annually on the unused portion of the revolving term commitment. In addition, Farmland must maintain consolidated working capital of not less than $150.0 million, consolidated net worth of not less than $475.0 million and funded indebtedness and senior funded indebtedness of not more than 52% and 43% of capitalization, respectively. All computations are based on consolidated financial data adjusted to exclude nonrecourse subsidiaries (as defined in the credit agreement). At November 30, 1994, Farmland was in compliance with all covenants. The Company maintains other borrowing arrangements with banks and financial institutions. Under such agreements, at November 30, 1994, $48.3 million was borrowed and letters of credit issued by banks amounted to $2.2 million. Financial covenants of these arrangements are not more restrictive than the Company's syndicated credit facility. National Beef Packing Company, L.P. ("NBPC"), 58%-owned by Farmland, maintains borrowing agreements with a bank which provides financing support for its beef packing operations. Borrowings under this credit agreement are nonrecourse to Farmland or Farmland's other affiliates. At November 30, 1994, $82.6 million was available under this agreement of which $59.4 million was borrowed and $8.5 million was utilized to support letters of credit. All assets of NBPC (carried at $152.4 million) are pledged to support its borrowings. Tradigrain, which is comprised of seven international grain trading subsidiaries of Farmland, has borrowing agreements with various international banks which provide financing and letters of credit to support current international grain trading transactions. Obligations of Tradigrain under these loan agreements are nonrecourse to Farmland or Farmland's other affiliates. Leveraged leasing has been utilized to finance railcars and a substantial portion of crop production equipment. Under the most restrictive covenants of its leases, the Company has agreed to maintain working capital of at least $75 million, consolidated funded indebtedness not greater than 65% of consolidated capitalization, and consolidated senior funded indebtedness not greater than 50% of consolidated capitalization. Major uses of cash during the three months ended November 30, 1994 include payments of $300.7 million on bank loans and other notes, $26.2 million for patronage refunds and dividends distributed from income of the 1994 fiscal year, $20.8 million for capital expenditures, $12.1 million for the redemption of equities under the Farmland base capital plan and special redemption plan and $9.2 million for acquisition of investments. Major sources of cash include $191.6 million from an increase in the net outstanding bank loans and other notes, $58.7 million from operations, $57.5 million from an increase in the balance of checks and drafts outstanding and $9.4 million from an increase in the balance of demand loan and subordinated debt outstanding. The Internal Revenue Service issued a statutory notice to Farmland asserting significant deficiencies in federal income taxes and statutory interest thereon. Farmland filed a petition in the United States Tax Court contesting the asserted deficiencies in their entirety. See note 3 of the notes to the condensed consolidated financial statements. RESULTS OF OPERATIONS Operating results for any quarter are not necessarily indicative of the results expected for the full year. The principal businesses of the Company are highly seasonal. The majority of sales of farm supply products historically occur in the spring months, revenues in the beef business and in grain marketing historically are concentrated in the summer months and summer is the lowest sales period for pork products. In view of the seasonality of the Company's businesses, it must be emphasized that the results for the three months ended November 30, 1994 should not be annualized to project a full year's results. THREE MONTHS ENDED NOVEMBER 30, 1994 COMPARED WITH THREE MONTHS ENDED NOVEMBER 30, 1993 SALES Sales for the three months ended November 30, 1994 increased $142.2 million or 9.6% compared with the corresponding period of the prior year. The increase includes $117.0 million higher sales of agricultural output products, $22.1 million higher sales of farm production input products and $3.1 million higher sales of other products and services. Sales of agricultural output products increased principally because grain sales reported in the three months ended November 30, 1994 (which reflect an increase of $95.6 million) include operations of a grain trading company acquired in May 1994 and sales at elevators in Utah and Idaho which Farmland leased in February 1994. These operations were not included in financial reports of the Company for the first quarter of the prior year. In addition, sales of beef and pork increased $15.1 million and $6.3 million, respectively. This increase resulted from higher unit sales of beef and pork partly offset by lower unit prices of pork. The increased sales of farm production input products includes $52.9 million higher sales of crop production products, $17.2 million in lower sales of petroleum products and $13.6 million lower feed sales. Sales of crop production products increased because unit prices of plant nutrients increased approximately 19% and unit sales of these products increased approximately 4%. Sales of petroleum products decreased because of lower refined fuel and propane prices and lower propane unit sales. Feed sales decreased because of lower formula feed unit sales and because of lower prices of formula feed and feed ingredients. INCOME BEFORE INCOME TAXES AND PATRONAGE REFUNDS Income before income taxes and patronage refunds of $56.7 million (see note 1) for the three months ended November 30, 1994 increased $45.2 million compared with the corresponding period of the prior year. Operating profit in the Company's crop production and food marketing businesses increased $33.2 million and $23.1 million, respectively. In addition, the Company's share of net income from joint ventures engaged in crop production and beef packing operations increased $5.5 million and $4.5 million, respectively. These increases were partially offset by decreased operating profits of $13.8 million in petroleum and by $2.8 million higher general corporate expenses. Operating profit of the crop production business increased in the three months ended November 30, 1994 as a result of higher prices of nitrogen-based products coupled with decreased per unit costs of natural gas (the principal raw material used in production of nitrogen-based plant nutrients). Operating profit of the food marketing business increased in the three months ended November 30, 1994 compared with the corresponding period of the prior year with improved results in pork and beef. Pork processing and marketing operating profit increased $19.0 million primarily due to increased margins on fresh pork products partially offset by slightly higher promotional expenses. Operating profits in the beef business were $2.0 million in the three months ended November 30, 1994 compared with a loss of $2.1 million in the corresponding period of the prior year. This increase is attributable to higher market prices for beef and the availability of cattle at more favorable cost levels. Results from petroleum operations decreased due to lower unit sales of refined fuels and propane coupled with lower prices for refined fuels. Selling, general and administrative expenses increased $9.4 million in the three months ended November 30, 1994 compared with the corresponding period the prior year. Approximately $6.6 million of the increase was directly connected to business segments, primarily the output businesses (grain, beef and pork) and related to increased sales. Corporate general expenses, not identified to business segments, increased $2.8 million ensuing primarily from higher cost of variable compensation plans and employee pension expenses. RECENT ACCOUNTING PRONOUNCEMENTS In the first quarter of fiscal year 1995, the Company adopted the provisions of Statement of Financial Accounting Standards No. 112, "Employer's Accounting for Postemployment Benefits." Statement 112 establishes standards of accounting and reporting for the estimated cost of benefits provided to former employees. The effect of implementation of Statement 112 at September 1, 1994 was insignificant. In the first quarter of fiscal year 1995, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Statement 115 expands the use of fair value accounting and the reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The effect of implementation of Statement 115 at September 1, 1994 was insignificant. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits The exhibits listed below are filed as part of Form 10-Q for quarter ended November 30, 1994. None (b) No reports on Form 8-K were filed during the quarter ended November 30, 1994. 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 hereunto duly authorized. FARMLAND INDUSTRIES, INC. (Registrant) By: /s/ JOHN F. BERARDI John F. Berardi Executive Vice President and Chief Financial Officer Date: January 13, 1995 EX-27 2 FDS FOR 10-Q 1ST QUARTER PERIOD ENDING 11/30/94
5 Art 5 FDS for 1st quarter 10-Q 1,000 3-MOS AUG-31-1995 SEP-01-1994 NOV-30-1994 0 0 380,854 0 590,826 1,077,509 1,218,935 711,943 1,920,378 774,779 493,161 399,361 0 3,701 181,799 1,920,378 1,592,037 1,616,167 1,469,098 1,481,889 0 0 13,443 56,501 10,649 46,064 0 0 0 46,064 0 0
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