-----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, MvVTdfWxl07fKQXIDbD6EOfPwcwKc4QjhJDLYv8wb5oCwCDEpKDM+K/CMllHf0+S TaSRlg8M7nOneUc4j6iL3Q== 0000835015-97-000012.txt : 19970120 0000835015-97-000012.hdr.sgml : 19970120 ACCESSION NUMBER: 0000835015-97-000012 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970117 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17005 FILM NUMBER: 97507227 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/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington DC 20549 FORM 10-Q/A AMENDMENT TO APPLICATION OR REPORT Filed pursuant to Section 12, 13, or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 DEKALB Genetics Corporation (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, exhibits or other portions of its Quarterly Report for the three month period ended November 30, 1996 on form 10-Q as set forth in the pages attached hereto: Page ---- Item 1. - Financial Statements Condensed Consolidated Statements of Operations for the three months ended November 30, 1996 and 1995 3 Condensed Consolidated Balance Sheets, November 30, 1996 and 1995 and August 31, 1996 4 Condensed Consolidated Statements of Cash Flows for the three months ended Novebmer 30, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6-7 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURE Date: January 17, 1997 Thomas R. Rauman ------------------ (Signature) Thomas R. Rauman Vice President-Finance, Chief Financial Officer DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995 (DOLLARS IN MILLION EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
November November 1996 1995 -------- -------- Revenues $ 67.1 $ 50.1 Cost of revenues 38.9 28.4 --------- --------- GROSS MARGIN 28.2 21.7 Selling expenses 9.7 7.5 Research and development cost 6.0 5.5 General and administrative expenses 8.2 6.2 ---------- --------- 23.9 19.2 OPERATING EARNINGS 4.3 2.5 Interest expense, net of interest income of $0.4 in 1996 and $0.2 in 1995 (1.3) (2.3) Other income (expense), net 0.4 (0.4) ---------- --------- Earnings (loss) before income taxes 3.4 (0.2) Income tax provision (benefit) 1.3 (0.1) ---------- --------- NET EARNINGS (LOSS) $ 2.1 $(0.1) ---------- --------- ---------- --------- NET EARNINGS (LOSS) PER SHARE $ 0.12 $(0.01) ----------- --------- ----------- --------- DIVIDENDS PER SHARE $ 0.07 $ 0.067 ----------- -------- ----------- --------
The accompanying notes are an integral part of the financial statements. DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS NOVEMBER 30, 1996 AND 1995 AND AUGUST 31, 1996 (DOLLARS IN MILLIONS)
November November August 1996 1995 1996 -------- -------- ------- (Unaudited) ------------------- Current assets: Cash and cash equivalents $ 0.1 $ 4.6 $ 23.3 Notes and accounts receivable, net of allowance fo doubtful accounts of $3.8 at November 30, 1996, $2.7 at November 30, 1995, and $3.6 at August 31, 1996 51.1 48.5 54.6 Inventories (Note 2) 227.4 186.3 99.1 Deferred income taxes 8.2 4.7 8.2 Other current assets 29.0 19.8 4.8 -------- ------- ------- Total current assets 315.8 263.9 190.0 Investments in and advances to related companies 4.6 3.3 5.0 Intangible assets 41.3 39.6 41.6 Other assets 8.1 5.1 7.2 Property, plant and equipment, at cost 273.3 245.1 266.0 Less accumulated depreciation and amortization (148.5) (141.5) (146.5) -------- -------- -------- Net property, plant and equipment 124.8 103.6 119.5 -------- -------- -------- Total assets $ 494.6 $ 415.5 $ 363.3 -------- -------- -------- -------- -------- -------- Current liabilities: Notes payable $ 38.0 $ 69.8 $ - Accounts payable, trade 107.5 74.8 13.6 Other accounts payable 5.0 4.5 34.1 Other current liabilities 64.9 39.4 39.6 -------- -------- -------- Total current liabilities 215.4 188.5 87.3 Deferred compensation and other credits 6.9 5.7 7.1 Deferred income taxes 16.1 11.3 15.3 Long term debt, less current maturities 85.0 85.0 85.0 Shareholders' equity: Capital stock: Common, Class A; no par value, authorized 15,000,000 shares, issued 2,408,888 at November 30, 1996 and 771,825 at November 30, 1995 0.2 0.1 0.2 Common, Class B; no par value, non-voting, authorized 45,000,000 shares, issued 14,892,283 at November 30, 1996 and 4,495,396 at November 30, 1995 1.5 0.4 1.5 Capital in excess of stated value 111.1 81.2 109.7 Retained earnings 64.6 51.2 63.7 Currency translation adjustments (3.8) (5.5) (4.1) ------- ------- ------- 173.6 127.4 171.0 Less treasury stock, at cost (2.4) (2.4) (2.4) ------- ------- ------- Total shareholders' equity 171.2 125.0 168.6 ------- ------- ------- Total liabilities and shareholder's equity $ 494.6 $ 415.5 $ 363.3 -------- -------- -------- -------- -------- --------
The accompanying notes are an integral part of the financial statements. DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS CASH FLOWS FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995 (DOLLARS IN MILLIONS) (UNAUDITED)
November November 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 2.1 $(0.1) Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 3.1 2.7 Equity (earnings) loss, net of dividends 0.9 0.1 Other 1.0 (0.1) Changes in assets and liabilities: Receivables 3.3 9.2 Inventories (128.3) (80.4) Other current assets (24.4) (16.1) Accounts payable 64.8 57.0 Accrued expenses 26.4 9.0 Other assets and liabilities (1.3) - -------- ------- Net cash flow used by operating activities $ (52.4) $ (18.7) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (8.1) (6.1) Proceeds from sale of property, plant and equipment 0.1 0.2 Other - - ------- ------- Net cash flow used by investing activities $ (8.0) $(5.9) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings 38.0 27.0 Dividends paid (1.2) (1.0) Other 0.7 0.2 ------- ------- Net cash flow provided by financing activities $ 37.5 $ 26.2 Net effect of exchange rates on cash (0.3) 0.1 ------- ------- Net (decrease) increase in cash and cash equivalents (23.2) 1.7 Cash and cash equivalents August 31 23.3 3.0 ------- ------- Cash and cash equivalents at the end of November $ 0.1 $ 4.7 ------- ------- ------- ------- Supplemental Cash Flow Information Cash paid (refunded) during the period for: Income taxes $ 0.9 $(1.0) Interest $ 1.2 $ 2.2
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 report on Form 10-K. In order to facilitate a better comparison of the highly seasonal seed operations of the Company, a Condensed Consolidated Balance Sheet at November 30, 1995 is included herein as part of the condensed consolidated financial statements. The Company declared a three-for-one stock split to holders of record May 10, 1996 with shares being distributed on May 24, 1996; thus, earnings per share and all other share amounts have been restated to reflect a tripling in the number of shares outstanding. The results presented are unaudited (other than the Condensed Consolidated Balance Sheet at August 31, 1996, 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 respect 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 1996 1995 1996 --------- --------- -------- Commercial seed $ 212.2 $ 172.7 $ 86.0 Swine 9.5 7.6 9.6 Supplies and other 5.7 6.0 3.5 --------- --------- -------- $ 227.4 $ 186.3 $ 99.1 --------- --------- -------- --------- --------- --------
3. 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. Additional information in Part II, Other Information, Item 1 - Legal Proceedings. Most potential property losses are self-insured. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued) 4. On January 31, 1996, the Company entered into a series of agreements with Monsanto Company (Monsanto), including an agreement which provides for a longterm research and development collaboration with Monsanto in the field of agricultural biotechnology, particularly corn seed. DEKALB and Monsanto also entered into cross- licensing agreements covering insect-resistant and herbicide-tolerant corn products targeted to reach the market over the next two years. The two companies will share the royalties received from third parties relating to the patents covered by such cross- licensing agreements. During the third quarter of fiscal 1996, DEKALB completed a sale of equity to Monsanto as part of an Investment Agreement. The three- for-one stock split to shareholders of record on May 10, 1996 is reflected in the following share and price information. Monsanto purchased from DEKALB 242,721 newly issued shares of DEKALB Class A (voting) Common Stock at a price per share of $21.67 and 1,134,000 newly issued shares of Class B (non-voting) Common Stock at a price per share of $21.67. As a result of the new stock issued to Monsanto, the total number of outstanding shares of Common Stock of the Company rose to over 17.0 million from about 15.6 million. Monsanto also acquired 5,171,214 shares of DEKALB's publicly traded Class B Stock in a separate cash tender offer at a price of $23.67 per share. Upon completion of the tender offer, Monsanto held ten percent of the Class A voting shares and approximately 43 percent of the Class B non-voting shares. Additionally, DEKALB received $4.0 million from Monsanto in March, 1996, the first payment under the companies' collaboration agreement, which calls for total payments of $19.5 million over the term of the agreement. As of November 30, 1996, Monsanto held 242,721 shares of Class A and 6,566,355 share of Class B Common Stock. This represents ten percent of the Class A voting shares and 45 percent of the Class B non-voting shares. The Investment Agreement, among other things: (i) provides Monsanto with the right, for one year after the closing under the Investment Agreement (the "Closing"), to purchase in the stock market additional Class B Stock so long as the total Common Stock owned by Monsanto does not exceed 40% of the Common Stock outstanding at such time, (ii) restricts the ability of Monsanto to transfer securities of DEKALB; (iii) provides DEKALB under specified circumstances with a right of first refusal in respect of certain proposed transfers by Monsanto of securities of DEKALB; (iv) limits for ten years, subject to certain exceptions, the ability of Monsanto to acquire additional securities of DEKALB; (v) requires DEKALB to provide notice to Monsanto of certain transactions in order to provide Monsanto with the opportunity to propose an alternative transaction to DEKALB; and (vi) prohibits Monsanto from engaging in specified activities. Pursuant to the Investment Agreement, Robert T. Fraley, president of the Ceregen unit at Monsanto Co., was named to the board of directors of DEKALB Genetics Corporation at the April, 1996 board of directors meeting. The Investment Agreement also provides that Monsanto may nominate for election in January, 1997 an additional member to DEKALB's Board. DEKALB is obligated to support any such nominations made in accordance with the terms of the Investment Agreement. The Investment Agreement further provides that, during any period in which Monsanto is entitled to nominate one or more members to DEKALB's Board, DEKALB will use all reasonable efforts to assure that there be at least three members of its Board who are independent of DEKALB, Monsanto and certain large holder of Class A Stock. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net earnings for the first quarter of fiscal 1997 were $2.1 million ( $.12 per share) compared with a net loss of $0.1 million ($.01 per share) in the first quarter of fiscal 1996. Revenues increased 34% as sales activity in Argentina occurred earlier than in prior years. A 53% increase in international seed revenues reflect, in part, Argentine customer deposits of approximately $26 million held by DEKALB at fiscal year end 1996 representing advance orders which were converted into shipments in the first quarter of fiscal 1997. The increase in international seed segment earnings was due to these early shipments in Argentina combined with higher equity earnings from Mexico. In addition, interest expense in the current year first quarter was $1.0 million less than in the prior year first quarter due to lower corporate borrowing requirements. 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 which are incurred in the first quarter and 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 1996 1995 --------- --------- Revenues North American Seed $ 5.1 $ 6.4 International Seed 48.1 31.5 Swine 13.9 12.2 --------- --------- Total revenues 67.1 50.1 --------- --------- --------- --------- Earnings North American Seed $ (0.2) $ (0.5) International Seed 5.9 3.0 Swine 0.3 0.7 --------- --------- Total operations 6.0 3.2 General corporate expenses (1.3) (1.1) Net interest expense (1.3) (2.3) --------- -------- Earnings before income taxes 3.4 (0.2) Income tax provision 1.3 (0.1) --------- -------- Net Earnings $ 2.1 $(0.1) --------- -------- --------- --------
Seed - ---- Seed revenues and earnings in the first quarter are primarily the result of Latin American operations because 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 nearly doubled over the prior year first quarter results. Operations in Argentina and Mexico were primarily responsible for the improvement. Corn and sunflower sales volumes in Argentina increased significantly over the prior year as good economic conditions, together with greater demand for single-cross corn hybrids, generated higher earnings in Argentina. In Mexico, higher corn and sorghum sales volumes generated improved earnings from the Company's equity investment. Results from international seed operations outside of Latin America are largely in the northern hemisphere and will not generate any significant results until the second quarter. North American Seed - ------------------- The variance in North Amercian seed revenues was primarily attributable to fewer soybean shipments in the first quarter of fiscal 1997 while the net loss for the quarter was not substantially different from a year ago. 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 revenues increased 14% over the prior year first quarter due to higher market hog prices. The fiscal 1997 first quarter average market hog price received by DEKALB was $56 per hundred weight compared with $46 per hundred weight in the first quarter of fiscal 1996. Breeding stock and market animal sales volumes were nearly comparable with the same period a year ago. Swine segment profitability decreased $0.4 million from the same period in fiscal 1996. Total gross margin was negatively affected by the impact of high feed costs incurred during the spring and summer of 1996 and currently charged through cost of goods sold. General - ------- The effective tax rate increased to 39% in the first quarter of fiscal 1997 from 37% in the same period of fiscal 1996. A change in the assumptions related to research credits was the primary reason for the rate increase. For each interim period, the tax rate is determined from an estimate of full year earnings and the resultant tax. Interest expense decreased $1.0 million in fiscal 1997 due to lower corporate borrowing requirements. Financial Position - ------------------ During the first quarter, the net cash outflow from operations was $52.4 million compared with $18.7 milliion in the prior year. Cash required for seed corn production increased substantially due to a larger crop and higher commodity prices. 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, 1999 and $6 million in facilities available through May 28, 1997. 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, other potential sources of funds, and existing lines of credit are sufficient to cover normal and expected working capital needs, capital expenditures, dividends and debt maturities. -----END PRIVACY-ENHANCED MESSAGE-----