-----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, RmLULNe82yfYcSJxSRct30CJGOth8g/Gi4ibwzLL2rwDIXZM5N6TOxmtDiKpJrH2 hFK81/Ji6LGgsxhh5OTW7w== 0000078716-95-000002.txt : 19950509 0000078716-95-000002.hdr.sgml : 19950508 ACCESSION NUMBER: 0000078716-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER HI BRED INTERNATIONAL INC CENTRAL INDEX KEY: 0000078716 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 420470520 STATE OF INCORPORATION: IA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07908 FILM NUMBER: 95501183 BUSINESS ADDRESS: STREET 1: 700 CAPITAL SQ STREET 2: 400 LOCUST ST CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152453500 10-Q 1 LIVE 10-Q FILING 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 quarterly period ended November 30, 1994 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 : 0-7908 PIONEER HI-BRED INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Iowa 42-0470520 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 Capital Square, 400 Locust, Des Moines, Iowa 50309 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (515) 248-4800 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at December 27, 1994 Common Stock ($1.00 par value) 84,534,812 1 PIONEER HI-BRED INTERNATIONAL, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. ITEM 1 FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS- NOVEMBER 30, 1994, AUGUST 31, 1994, AND NOVEMBER 30, 1993 3-4 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS- 5 THREE MONTHS ENDED NOVEMBER 30, 1994 AND 1993 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS- 6 THREE MONTHS ENDED NOVEMBER 30, 1994 AND 1993 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7 ITEM 2 MANAGEMENT'S DISCUSSION AND 8-10 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 11 2 PIONEER HI-BRED INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited, in millions) November 30, August 31, November 30, ASSETS 1994 1994 1993 CURRENT ASSETS Cash and cash equivalents $ 67 $ 135 $ 64 Accounts and notes receivable, net 146 193 111 Inventories: Finished seed 367 164 339 Unfinished seed 339 190 254 Other 6 5 7 Prepaid expenses and other current assets 13 3 11 Deferred income taxes 62 52 54 Total current assets $1,000 $ 742 $ 840 LONG-TERM ASSETS 38 38 40 PROPERTY AND EQUIPMENT, net of accumulated depreciation and allowances November 30, 1994 $401 August 31, 1994 $397 November 30, 1993 $366 451 450 444 INTANGIBLES 21 23 26 $1,510 $1,253 $1,350 See Notes to Consolidated Condensed Financial Statements.
3 PIONEER HI-BRED INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited, in millions) November 30, August 31, November 30, 1994 1994 1993 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term borrowings $ 199 $ 14 $ 160 Current maturities of long-term debt 1 1 1 Accounts payable, trade 324 80 219 Accrued compensation 28 54 27 Income taxes payable - 31 - Other accruals 37 52 47 Total current liabilities $ 589 $ 232 $ 454 LONG-TERM DEBT $ 65 $ 66 $ 66 DEFERRED ITEMS, primarily income taxes and retirement benefits $ 78 $ 67 $ 59 MINORITY INTEREST IN SUBSIDIARIES $ 6 $ 7 $ 6 SHAREHOLDERS' EQUITY Preferred stock, no par value $ - $ - $ - Common stock, $1 par value 93 93 93 Additional paid-in capital 15 15 13 Retained earnings 932 995 778 Cumulative translation adjustment (1) (3) (11) $1,039 $1,100 $ 873 Less: Cost of common shares acquired for the treasury (257) (207) (98) Unearned compensation (10) (12) (10) $ 772 $ 881 $ 765 $1,510 $1,253 $1,350 See Notes to Consolidated Condensed Financial Statements.
4 PIONEER HI-BRED INTERNATIONAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited, in millions) Three Months Ended November 30, 1994 1993 Net sales $ 69 $ 67 Operating costs and expenses: Cost of goods sold $ 40 $ 39 Research and development 27 24 Selling 50 44 General and administrative 29 25 Restructuring and settlements - 5 $ 146 $ 137 Operating (loss) $ (77) $ (70) Investment income 4 3 Interest expense (3) (3) Net exchange (loss) (2) (2) (Loss) before income taxes $ (78) $ (72) Provision for income taxes 30 28 Net (loss) $ (48) $ (44) (Loss) per common share* $ (.57) $ (.49) Weighted average number of common shares outstanding 85 89 * Not in millions See Notes to Consolidated Condensed Financial Statements.
5 PIONEER HI-BRED INTERNATIONAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited, in millions) Three Months Ended November 30, 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ (48) $ (44) Noncash items included in net loss: Depreciation and amortization 17 16 Restructuring of operations - 5 Other 3 - Net change in assets and liabilities (144) (77) Net cash used in operating activities $(172) $(100) CASH FLOWS FROM INVESTING ACTIVITIES Payments received on notes receivable $ 3 $ 6 Disbursements for notes receivable (1) (2) Capital expenditures (15) (21) Other (3) (1) Net cash used in investing activities $ (16) $ (18) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds on short-term borrowings $ 185 $ 101 Purchase of treasury stock (49) (1) Dividends paid (15) (13) Other (1) - Net cash provided by financing activities $ 120 $ 87 Effect of foreign currency exchange rate changes on cash and cash equivalents $ - $ (1) Effect of change in year-end of the Company's international subsidiaries on cash and cash equivalents $ - $ 4 Net decrease in cash and cash equivalents $ (68) $ (28) Cash and cash equivalents, beginning $ 135 $ 92 CASH AND CASH EQUIVALENTS, ENDING $ 67 $ 64 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest $ 7 $ 6 Income taxes $ 10 $ 9 See Notes to Consolidated Condensed Financial Statements.
6 PIONEER HI-BRED INTERNATIONAL, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to fairly present the financial position as of November 30, 1994 and 1993, and the results of operations and cash flows for the three months ended November 30, 1994 and 1993. Because of the seasonal nature of the Company's business, the results of operations for the three months ended November 30, 1994, are not indicative of the results to be expected for the full year. 2. The Company has guaranteed the repayment of principal and interest on certain obligations of Village Court Associates, an affiliated real estate venture. At November 30, 1994, such guarantees totaled approximately $23 million. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes, and with the Company's audited financial statements and notes for the fiscal year ended August 31, 1994. MATERIAL CHANGES IN FINANCIAL CONDITION: Due to the seasonal nature of the agricultural seed business, the Company generates most of its cash from operations during the second and third quarters of the fiscal year. Cash generated during this time is used to meet the cash needs of the period and to pay the commercial paper and accounts payable which are the Company's primary sources of financing during the first and fourth quarters of the fiscal year. Any excess funds are invested, primarily in short-term commercial paper. Most of the Company's financing is done through the issuance of commercial paper in the U.S., backed by revolving and seasonal lines of credit. In addition, foreign lines of credit and direct borrowing agreements are relied upon to support overseas financing needs. The Company also has a $100 million private medium-term note program of which $50 million is available as of November 30, 1994. Short-term debt at November 30, 1994, consisted of $168 million in domestic commercial paper and $31 million in direct short-term borrowings from foreign banks. Long-term debt at November 30, 1994, consisted principally of $50 million in medium-term notes maturing in February, 1996. During fiscal 1995, the Company has the following domestic lines of of credit available: Quarter: Revolving Seasonal Total First $100 $ 74 $174 Second $100 $118 $218 Third $ 50 $ - $ 50 Fourth $ 50 $ - $ 50
At November 30, 1994, accounts and notes receivable increased from a year earlier primarily due to higher prior year sales and an increase in sales on credit. Seed inventories, short-term borrowings, and accounts payable at November 30, 1994, are higher than the same point in time a year ago primarily due to higher production costs associated with the larger production crop harvested in the fall of 1994 compared to the fall of 1993. The Company repurchased $49 million of its stock during the three months ended November 30, 1994. At November 30, 1994, authorized shares remaining to be repurchased totaled 2 million. 8 MATERIAL CHANGES IN RESULTS OF OPERATIONS: Net loss for the three months ended November 30, 1994, was $48 million, or $.57 per share, compared to a net loss of $44 million, or $.49 per share, for the first quarter of fiscal 1994. Last year's results included $5 million in restructuring and settlement costs which are not present in this year's numbers. Due to the seasonality of the seed business, single quarter results and quarter-to-quarter comparisons are not always meaningful. Accordingly, such comparisons are not emphasized. Typically, most of the Company's revenue and operating profit is generated in the third quarter. Management believes the Company is on track to post another outstanding year. In North America, Pioneer(R) brand hybrids once again performed very well compared to the competition. On-farm yield comparisons in the fall of 1994 showed that the average Pioneer(R) brand hybrid out yielded the average competitor by 5.6 bushels per acres. Another strong sales year is expected in North America and early sales orders support that. As of January 3, 1995, sales orders are three and a half percent ahead of last year. Overall, operating profit is expected to increase in North America in 1995 compared to 1994. In total, the Company's operations outside North America are expected to be comparable to last year. This year's higher first quarter loss was due to increased fixed costs. These were partially offset by an increase in operating profit in South America and Asia resulting from increased sales. Fixed costs are approximately $12 million higher than last year due to increases in research and selling expenses and due to a change in the structure of the Company's operations in France. During the fourth quarter of fiscal 1994, the Company purchased 65 percent of the entity which handles the distribution and marketing of Pioneer(R) brand products in France. This purchase brought the Company's ownership of this entity to 100 percent. Beginning in fiscal 1995 the revenues and expenses of this distribution entity are fully consolidated in the Company's financial statements. Therefore, while operating profit in total for France is expected to remain comparable to last year, reported revenues and expenses will both increase. Since France's selling season is in the spring, revenues were not recorded during the first quarter, however, one quarter of the year's operating expenses for this new entity were reflected. This accounted for approximately $4 million of the increase in first quarter's selling and marketing costs. Net sales through the first quarter of fiscal 1995 increased $2 million to $69 million. First quarter seed corn sales, generated almost entirely outside of North America and Europe, increased $5 million to $31 million. South American sales increased $7 million as a result of increased unit sales and price in Brazil, Argentina, and Chile. In Asia, sales increased $2 million due to higher unit sales in several countries. Seed corn sales in Mexico decreased $3 million due to a reduction in corn acreage in northern Mexico resulting from a reduction in corn subsidies and irrigation restrictions. Other products revenues decreased $3 million to $38 million primarily due to lower specialty plant product sales. 9 For the year, the Company expects sales and operating profits in South America and Asia to be higher than last year. Mexico's results for 1995 are expected to be lower than 1994 due to the reduction in corn acreage and the peso devaluation. European operating results for 1995 are expected to be comparable to 1994. In North America, management believes seed corn unit sales could be close to the record 11.8 million in 1994 despite an anticipated decrease in corn acreage for the 1995 planting season. The acreage decrease is expected due to the announced change in the U.S. feed grains program set-aside from zero to 7.5 percent. Management expects the continued strong performance of Pioneer(R) brand products to help increase market share again in 1995. The Company expects 1995 seed corn margins in North America to increase due to an increase in the average sales price of seed corn and lower cost of sales. The list price of most of the Company's hybrids increased $1.50 to $2.00 per unit. In addition management expects to sell a larger portion of the Company's higher-performing, higher-priced hybrids. Combined, this is expected to increase the average sales price four to five percent. Seed corn cost of sales are expected to be approximately three percent lower than 1994, on a per unit basis, primarily due to excellent seed field yields on the large 1994 crop and lower commodity costs. Research expense increased $3 million, or 13 percent over the first quarter of 1994. This is in line with the Company's expected 11 percent increase in research expenses for 1995. Selling and general and administrative expenses for the first three months of fiscal 1995 increased $10 million over the same period a year earlier. As previously mentioned, the change in operations in France accounts for $4 million of this increase. In North America, selling and marketing expenses increased $2 million in part due to planned increases in advertising expenses and personnel costs and in part due to the earlier timing of certain expenses. Indirect general and administrative expenses were $2 million higher than last year due to normal merit and personnel cost increases and an increase in charitable contributions. Last year's first quarter included a $5 million charge related to restructuring the company's operations in Africa and the Middle East. Management does not expect to incur any additional restructuring charges for this region in 1995. The estimated fiscal 1995 world-wide effective tax rate reflected in the first quarter is 38 percent. The actual world-wide effective tax rate for fiscal 1994 was 38.5 percent. 10 PIONEER HI-BRED INTERNATIONAL, INC. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed with the Commission during the three months ended November 30, 1994. The Exhibits filed as part of this report are listed below. Exhibit 27 - Financial data schedule. 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. PIONEER HI-BRED INTERNATIONAL, INC. (Registrant) Date January 12, 1995 THOMAS N. URBAN, CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT Date January 12, 1995 JERRY L. CHICOINE, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY 11 EX-27 2
5 1,000,000 QTR-1 QTR-1 AUG-31-1995 AUG-31-1994 NOV-30-1994 NOV-30-1993 67 64 0 0 165 124 20 13 712 600 1,000 840 852 810 401 366 1,510 1,350 589 454 0 0 93 93 0 0 0 0 679 672 1,510 1,350 69 67 69 67 67 63 67 63 79 74 0 0 3 3 (78) (72) 30 28 (48) (44) 0 0 0 0 0 0 (48) (44) (.57) (.49) (.57) (.49)
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