-----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, b6ZH2EfJkxC9ps9AsDsdWiEMEwMnOWUjYrNeqe1ubb+b5/V7C+XVjTA7e3Qlyn6f kZnzM2T5RcUCLUORAtmsQQ== 0000835015-95-000001.txt : 19950608 0000835015-95-000001.hdr.sgml : 19950608 ACCESSION NUMBER: 0000835015-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEKALB GENETICS CORP CENTRAL INDEX KEY: 0000835015 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 363586793 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17005 FILM NUMBER: 95501257 BUSINESS ADDRESS: STREET 1: 3100 SYCAMORE RD CITY: DEKALB STATE: IL ZIP: 60115 BUSINESS PHONE: 8157589196 MAIL ADDRESS: STREET 1: 3100 SYCAMORE ROAD CITY: DEKALB STATE: IL ZIP: 60115 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the three month period ended November 30, 1994 or Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act 1934 For the transition period from to Commission file number: 0-17005 DEKALB Genetics Corporation (Exact name of registrant as specified in its charter) Delaware 36-3586793 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3100 Sycamore Road, DeKalb, Illinois 60115 (Address of principal executive offices) (Zip Code) 815-758-3461 (Registrant's telephone number, including area code) Indicate 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 Title of class Outstanding as of November 30, 1994 Class A Common, no par value 790,700 Class B Common, no par value 4,360,221 Exhibit index is located on page 2 Total number of pages 14 DEKALB GENETICS CORPORATION INDEX Page No. Part I - Financial Information (Unaudited except for the Condensed Consolidated Balance Sheet as of August 31, 1994): Management's Discussion and Analysis of Financial Condition and Results of Operations 3-5 Condensed Consolidated Statements of Operations for the three months ended November 30, 1994 and 1993 6 Condensed Consolidated Balance Sheets, November 30, 1994 and 1993 and August 31, 1994 7 Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 1994 and 1993 8 Notes to Condensed Consolidated Financial Statements 9-11 Part II - Other Information 12 EXHIBIT 11 - Computation of Net Earnings per Common and Common Equivalent Share for the three months ended November 30, 1994 13 and 1993 EXHIBIT 27 - Financial Data Schedule 14 Management's Discussion and Analysis of Financial Condition and Results of Operations and Financial Position The Company incurred a net loss of $1.2 million ($.23 per share) in the first quarter of fiscal 1995 compared with net earnings of $0.8 million ($.15 per share) in fiscal 1994. Consolidated revenues were $8.4 million higher in fiscal 1995, of which $7.3 million was largely due to increased corn sales volume and selling prices in Argentina. North American seed and other international seed revenues were $1.6 million and $1.0 million higher than last year respectively, while swine and poultry revenues were $0.9 million and $0.6 million lower, respectively. The $2.0 million ($.38 per share) decline in fiscal 1995 after-tax earnings, as compared to fiscal 1994, was largely attributable to lower market hog prices in the swine segment. North American seed earnings were also lower in fiscal 1995 due to a change in the timing of recognition of certain corporate charges. This change will have no impact on full-year results. Prior year earnings included $0.6 million ($.12 per share) of after-tax benefit related to the curtailment of the defined benefit portion of the company's retirement plans, and were reduced by $0.4 million ($.09 per share) for the change in accounting for income taxes. North American seed sales and net earnings are primarily realized in the second and third fiscal quarters (December through May), and for that reason, first quarter results should not be viewed as indicative of full year results. Most expenses incurred in the first quarter related to the North American seed business are deferred until later in the year when sales are recorded. Quarterly Industry Segment Revenues and Earnings In Millions (Unaudited) November November 1994 1993 Revenues North American Seed $ 4.3 $ 2.7 International Seed 28.8 20.5 Swine 12.1 13.0 Poultry 4.0 4.6 Total revenues $ 49.2 $ 40.8 Earnings North American Seed $ (0.3) $ 0.6 International Seed 2.9 2.8 Swine (0.9) 1.8 Poultry (0.3) (0.2) Total operations 1.4 5.0 General corporate expenses (1.1) (1.2) Net interest expense (2.1) (1.9) Earnings before income taxes and accounting change (1.8) 1.9 Income tax provision (0.6) 0.7 Earnings before cumulative effect of accounting change (1.2) 1.2 Cumulative effect of accounting change - (0.4) Net Earnings $ (1.2) $ 0.8 Seed Seed revenues and earnings in the first quarter were primarily the result of southern hemisphere operations since the North American seed business and other northern hemisphere operations do not report any material sales or earnings until the second quarter. International Seed International seed segment earnings increased by $0.1 million from the prior year first quarter. Earnings from Argentina were $0.4 million higher than the prior year while European and other international seed earnings were below the prior year. In Argentina, revenues in fiscal 1995 were 39 percent higher than those in fiscal 1994. Unit sales of all products were above those of the prior year which was partially caused by corn and sunflower planted acreage increases of eight percent and 15 percent, respectively. Results from international seed operations outside of Latin America are largely in the northern hemisphere and will not generate any significant earnings until the second quarter. North American Seed Early soybean shipments were greater than in fiscal 1994 and were primarily responsible for the $1.6 million revenue increase over the prior year. Earnings in the first quarter of fiscal 1994 were $0.9 million higher, primarily because of a benefit resulting from the restatement of corporate charges. First quarter North American seed results are not representative of annual results because significant seed shipment activity does not occur until the second and third quarters. Swine Swine segment earnings were $2.7 million lower than the prior year. While revenues from breeding stock were 12 percent higher, a fourteen-year low in market hog prices caused market hog revenues to fall 32% and total revenues to drop five percent below those reported in the first quarter of fiscal 1994. The average market hog price received by DEKALB in the first quarter of fiscal 1995 was approximately $35.00/cwt. compared with $50.00/cwt. in the first quarter of last year. Breeding stock volumes increased 28% over prior year but this, combined with higher market animal volume, was not enough to offset the drastic reduction in market hog prices. Operating expenses increased $0.5 million compared to fiscal 1994 which had a $0.4 million benefit from the suspension of the defined benefit portion of the retirement plan. Poultry The first quarter loss of $0.3 million from the poultry segment was $0.1 million more than the prior year. Gross margins from domestic breeder and commercial hatchery operations were both lower than a year ago. General The effective tax rate decreased from 37 percent in the first quarter of fiscal 1994 to 34 percent for the same period in fiscal 1995. A change in the earnings mix and an increase in research and development tax credits were the principal factors causing the decrease. For each interim period, the tax rate is determined from an estimate of full year earnings and the resultant tax. Fiscal 1994 ended with a tax benefit associated with international seed losses incurred in prior years but not reflected until the second quarter of fiscal 1994. First quarter fiscal 1994 net earnings reflected the adoption of Statement of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes". The cumulative effect of this accounting change was an after-tax charge to net earnings of $0.4 million ($.09 per share). In October 1993, the Board of Directors approved management's suspension of the defined benefit portion of the company's retirement plans. This curtailment created a one-time after-tax benefit of $0.6 million to first quarter net earnings in fiscal 1994. Only the portion applicable to swine, poultry and corporate had an impact on 1994 first quarter net earnings. Due to the company's method of annualizing seed segment expenses to match revenues, the seed segment portion was deferred to subsequent 1994 periods. Financial Position During the first quarter, the net cash outflow from operations of $31.2 million was $23.1 million greater than the prior year. Fiscal 1994 included cash generated from an early cash discount program for seed customers and that same program was not offered in the first quarter of fiscal 1995. In addition, more cash was required in fiscal 1995 for significantly higher seed production costs resulting from a larger seed crop. Cash requirements for the first quarter were provided by earnings and existing short-term credit facilities. Committed credit lines include a $50 million revolving credit facility through December 31, 1997 and $20 million in facilities available through November 26, 1995. These agreements contain various restrictions on the activities of the Company as to maintenance of working capital and tangible net worth, amount and type of indebtedness, and the acquisition or disposition of capital shares or assets of the Company and its subsidiaries. Management believes its operating cash flow and existing lines of credit are sufficient to cover normal and expected working capital needs, capital expenditures, dividends and debt maturities.
DEKALB Genetics Corporation CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended November 30, 1994 and 1993 (Dollars in millions except per share amounts) (Unaudited) November November 1994 1993 Revenues $ 49.2 $ 40.8 Cost of revenues 29.3 21.5 GROSS MARGIN 19.9 19.3 Selling expenses 7.2 5.4 Research and development cost 6.1 5.3 General and administrative expense 5.9 4.2 19.2 14.9 OPERATING EARNINGS 0.7 4.4 Interest expense, net of interest income of $0.1 in 1994 and 1993 (2.1) (1.9) Other expense, net (0.4) (0.6) Earnings before income taxes and cumulative effect of accounting change (1.8) 1.9 Income tax provision (0.6) 0.7 Earnings before cumulative effect of accounting change (1.2) 1.2 Cumulative effect of accounting change - (0.4) NET EARNINGS $ (1.2) $ 0.8 Earnings per share before cumulative effect of accounting change $ (0.23) $ 0.24 Accounting change - (0.09) NET EARNINGS PER SHARE $ (0.23) $ 0.15 DIVIDENDS PER SHARE $ 0.20 $ 0.20 The accompanying notes are an integral part of the financial statements.
DEKALB Genetics Corporation CONDENSED CONSOLIDATED BALANCE SHEETS November 30, 1994 and 1993 and August 31, 1994 (Dollars in millions) November November August 1994 1993 1994 (Unaudited) Current assets: Cash and cash equivalents ($0.5) $0.9 $6.2 Notes and accounts receivable, net of allowance for doubtful accounts of $2.4 at November 30, 1994, $1.5 at November 30, 1993, and $2.4 at August 31, 1994 47.3 34.8 47.5 Inventories (Note 2) 170.5 176.5 100.8 Deferred income taxes 4.7 5.4 4.7 Other current assets 21.9 15.5 4.8 Total current assets 243.9 233.1 164.0 Investments in and advances to related companies 9.0 8.1 8.9 Intangible assets 41.0 42.3 41.3 Other assets 3.8 7.8 4.2 Property, plant and equipment, at cost 248.1 235.2 246.0 Less accumulated depreciation and amortization (147.1) (140.4) (145.4) Net property, plant and equipment 101.0 94.8 100.6 Total assets $398.7 $386.1 $319.0 Current liabilities: Notes payable $73.5 $65.7 $45.1 Accounts payable, trade 65.9 61.5 7.0 Other accounts payable 5.0 15.5 13.4 Other current liabilities 32.1 26.0 29.6 Total current liabilities 176.5 168.7 95.1 Deferred compensation and other credits 5.6 5.6 5.4 Deferred income taxes 12.2 12.5 12.2 Long-term debt, less current maturities 85.0 85.1 85.0 Commitments and contingent liabilities (Note 4) Shareholders' equity: Capital stock: Common, Class A; authorized 5,000,000 shares 0.1 0.1 0.1 Common, Class B; authorized 15,000,000 shares 0.4 0.4 0.4 Capital in excess of stated value 80.3 79.8 80.1 Retained earnings 43.5 39.0 45.8 Currency translation adjustments (Note 3) (2.5) (2.7) (2.7) 121.8 116.6 123.7 Less treasury stock, at cost (2.4) (2.4) (2.4) Total shareholders' equity 119.4 114.2 121.3 Total liabilities and shareholders' equity $398.7 $386.1 $319.0 The accompanying notes are an integral part of the financial statements.
DEKALB Genetics Corporation CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended November 30, 1994 and 1993 (Dollars in millions) (Unaudited) November Novembe 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net income ($1.2) $0.8 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 2.8 2.9 Equity earnings, net of dividends 0.3 0.7 Cumulative effect of accounting change - 0.4 Other 0.3 0.1 Changes in assets and liabilities: Receivables (0.2) 2.1 Inventories (69.7) (58.3) Other current assets (17.1) (12.1) Accounts payable 50.5 64.7 Accrued expenses 4.3 (5.4) Other assets and liabilities (1.2) (4.0) Net cash flow from operating activities ($31.2) ($8.1) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (3.2) (4.1) Proceeds from sale of property, plant and equipment 0.3 0.1 Other (0.4) - Net cash flow from investing activities ($3.3) ($4.0) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuing debt 28.4 10.5 Dividends paid (1.0) (1.0) Other 0.2 0.1 Net cash flow from financing activities $27.6 $9.6 Net effect of exchange rates on cash 0.2 (0.1) Net decrease in cash and cash equivalents (6.7) (2.6) Cash and cash equivalents August 31 6.2 3.5 Cash and cash equivalents at the end of November ($0.5) $0.9 Supplemental Cash Flow Information Cash paid during the period for: Income taxes $1.7 $1.0 Interest $2.1 $1.8 The accompanying notes are an integral part of the financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated financial statements included herein are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the Company's annual Form 10-K filing. In order to facilitate a better comparison of the highly seasonal seed operations of the Company, a Condensed Consolidated Balance Sheet at November 30, 1993 is included herein as part of the condensed consolidated financial statements. The results presented are unaudited (other than the Condensed Consolidated Balance Sheet at August 31, 1994, which is derived from the Company's audited year-end balance sheet) but include, in the opinion of management, all adjustments of a normal recurring nature necessary for a fair statement of the results of operations and financial position for the respective interim periods. Certain costs and expenses incurred in the North American and international seed businesses are charged against income as sales are recognized for interim reporting purposes. The Company believes this method more closely matches revenues with expenses and results in more comparability of reporting periods within the year. Since there are only minor North American seed sales recorded in the first and fourth quarters, this method defers first quarter expenses related to sales which will occur later in the year, primarily in the second quarter; it also anticipates expenses incurred in the fourth quarter, primarily in the third quarter. Southern hemisphere international seed sales occur largely in the first and second quarters and this same method anticipates future expenses from the third and fourth quarters and matches them against the first and second quarter revenues. The seed operations of the Company comprise a substantial portion of the Company's business each year. The first quarter results as presented should not be considered indicative of the results to be expected for the entire year. 2. Inventories, valued at the lower of cost or market (in millions), were as follows: November November August 1994 1993 1994 Restated Commercial seed $158.1 $162.5 $ 88.1 Commercial poultry and swine 8.2 8.5 8.9 Supplies and other 4.2 5.5 3.8 $170.5 $176.5 $100.8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued) During the third quarter of fiscal 1994, the Company changed the accounting method of valuing its commercial seed inventories, previously valued using the last-in, first-out (LIFO) method, to average cost. The change in accounting method has been applied retroactively and financial information for all periods presented has been restated to eliminate the effect of LIFO on prior periods. In the first quarter of fiscal 1994, the restatement impacted the balance sheet only as seed sales were negligible in this period. 3. Foreign-currency assets and liabilities, except for operations in economies historically experiencing hyperinflation, are translated into their U.S. dollar equivalents based on rates of exchange prevailing at the end of the respective period. Translation adjustments resulting from translating foreign currency financial statements of consolidated subsidiaries into their U.S. dollar equivalents are reported separately and accumulated in a separate component of stockholders' equity. The following summarizes the activity in the translation adjustment account: (In millions) November November 1994 1993 Balance at September 1 $(2.7) $(2.5) Translation gain (loss) 0.2 (0.2) Balance at end of May $(2.5) $(2.7) Aggregate exchange gains and losses arising from the translation of foreign currency transactions in other than the functional currency of the particular entity are included in income. Translation gains or losses in hyperinflationary economies are also included in income. 4. The Company and its subsidiaries are defendants in various legal actions arising in the course of business activities. In the opinion of management, these actions will not result in a material adverse effect on the Company's consolidated operations or financial position. Most potential property losses are self-insured. 5. In October 1993, the Board of Directors approved management's suspension of the defined benefit portion of the Company's retirement plans. This curtailment created a one-time after-tax benefit of $0.6 million to fiscal 1994 first quarter net earnings. Only the portion applicable to swine, poultry and corporate had an impact on 1994 first quarter net earnings. Due to the Company's method of annualizing seed segment expenses to match expected revenues, the seed segment portion was deferred to subsequent 1994 periods. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued) 6. Effective September 1, 1993, the Company changed its method of accounting for income taxes by adopting the provisions of Statement of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes". SFAS 109 requires a change from the deferred method of accounting for income taxes under APB Opinion 11 to the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply in the years in which the temporary differences are expected to reverse. The adoption of SFAS 109 resulted in the recognition of $0.4 million, $.09 per share, of deferred tax expense. This amount was included as a charge to net earnings as the cumulative effect of change in accounting principle in the first quarter of fiscal 1994. 7. Certain corporate expense reclassifications have been made for comparability purposes. These restatements had no effect on net earnings. Part II OTHER INFORMATION Item 1. Legal Proceedings The Company and its subsidiaries are defendants in various legal actions arising in the course of business activities. In the opinion of management, these actions will not result in a material adverse effect on the Company's consolidated operations or financial position. Item 6. Exhibits and Reports on Form 8-K Page (a) Exhibit 11 - Earnings Per Share Computation 13 (b) Reports on Form 8-K - No Form 8-K was filed during the three months ended November 30, 1994. SIGNATURE 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. DEKALB Genetics Corporation Date: January 12, 1994 Thomas R. Rauman (Signature) Thomas R. Rauman Vice President-Finance, Chief Financial Officer EXHIBIT 11 COMPUTATION OF NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE For the three months ended November 30, 1994 and 1993 November November 1994 1993 PRIMARY EARNINGS PER SHARE: Shares Average shares outstanding 5,148,324 5,138,953 Net average additional shares outstanding assuming dilutive stock options exercised and proceeds used to purchase treasury stock at average market price 79,623 53,856 Average number of common and common equivalent shares outstanding 5,227,947 5,192,809 Net Earnings Net earnings for primary earnings per share $(1,183,000) $ 753,000 Primary Earnings Per Share $(.23) $0.15 EX-27 2
5 This schedule contains summary financial information extracted from the Consolidated Statement of Operations and the Consolidated Balance Sheets and is qualified in it entirety by reference to such financial statements. 1,000 QTR-1 AUG-31-1995 NOV-30-1994 (500) 0 47300 2400 170500 243900 248100 147100 398700 176500 0 500 0 0 118900 398700 49200 49200 29300 7200 12000 400 2100 (1800) (600) (1200) 0 0 0 (1200) (.23) 0
-----END PRIVACY-ENHANCED MESSAGE-----