-----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, Cyk23VMOCS7fV+CZQsO2QRJOAlQ6hgKp4pPA9DlXlEmMrdXWS7m17uEfehiid9ZN jiS919x72+3GhmSWqt6Tlg== 0000835015-97-000028.txt : 19970714 0000835015-97-000028.hdr.sgml : 19970714 ACCESSION NUMBER: 0000835015-97-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970711 SROS: NYSE 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: 001-13035 FILM NUMBER: 97639195 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 UNITED STATES 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 nine month period ended May 31, 1997 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 incorporation or organization) (I.R.S. Employer 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 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 _______ _______ Title of class Outstanding as of May 31, 1997 ____________________________ ______________________________ Class A Common, no par value 2,354,251 Class B Common, no par value 14,808,371 Exhibit index is located on page 2 Total number of pages 12 DEKALB GENETICS CORPORATION INDEX PART 1. FINANCIAL INFORMATION (Unaudited except for the Condensed Consolidated Balance Sheet as of August 31, 1996) Page Item 1. Financial Statements Condensed Consolidated Statements of Operations for the nine months ended May 31, 1997 and 1996................3 Condensed Consolidated Statements of Operations for the three months ended May 31, 1997 and 1996................4 Condensed Consolidated Balance Sheets, May 31, 1997 and 1996 and August 31, 1996...............................5 Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 1997 and 1996................6 Notes to Condensed Consolidated Financial Statements. . . .7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................9-11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K..................12 DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MAY 31, 1997 AND 1996 (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
May May 1997 1996 _________ ________ Revenues $438.0 $367.4 Cost of revenues 221.3 192.0 _________ ________ GROSS MARGIN 216.7 175.4 Selling expense 78.0 69.7 Research and development cost 54.2 44.4 General and administrative expense 30.1 26.0 _________ ________ OPERATING EARNINGS 54.4 35.3 Interest expense, net of interest income of $0.8 in 1997 and $0.3 in 1996 (4.1) (5.8) Other income, net 1.3 0.3 ________ _________ Earnings before income taxes 51.6 29.8 Income tax provision 20.1 11.6 ________ _________ NET EARNINGS $ 31.5 $ 18.2 NET EARNINGS PER SHARE $ 1.76 $ 1.12 ========== ========= DIVIDENDS PER SHARE $ 0.21 $ 0.203 ========= ========= The accompanying notes are an integral part of the financial statements.
DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 31, 1997 AND 1996 (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
May May 1997 1996 _______ _______ Revenues $178.6 $137.0 Cost of revenues 89.0 68.4 ________ _______ GROSS MARGIN 89.6 68.6 Selling expense 33.5 26.7 Research and development cost 22.8 17.5 General and administrative expense 11.0 9.8 ________ _______ OPERATING EARNINGS 22.3 14.6 Interest expense, net of interest income of $0.4 in 1997 and $0.1 in 1996 (1.7) (1.4) Other income, net 0.8 0.9 ________ _______ Earnings before income taxes 21.4 14.1 Income tax provision 8.3 5.5 ________ _______ NET EARNINGS $ 13.1 $ 8.6 ======== ======== NET EARNINGS PER SHARE $ 0.73 $ 0.51 ======== ======== DIVIDENDS PER SHARE $ 0.07 $ 0.07 ======== ======== The accompanying notes are an integral part of the financial statements.
DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS MAY 31, 1997 AND 1996 AND AUGUST 31, 1996 (DOLLARS IN MILLIONS)
May May August 1997 1996 1996 ------- ------ ------- (Unaudited) ------------------ Current assets: Cash and cash equivalents $ - $1.7 $23.3 Notes and accounts receivable, net of allowance for doubtful accounts of $5.3 at May 31, 1997, $4.2 at May 31, 1996, and $3.6 at August 156.1 139.0 54.6 31, 1996 Inventories (Note 2) 96.0 69.2 99.1 Deferred income taxes 8.2 4.7 8.2 Other current assets 10.2 6.0 4.8 ------ ------ ------ Total current assets 270.5 220.6 190.0 Investments in and advances to related 5.1 3.8 5.0 companies Intangible assets 40.6 42.2 41.6 Other assets 9.4 6.2 7.2 Property, plant and equipment, at cost 292.6 252.5 266.0 Less accumulated depreciation and (151.5) (144.9) (146.5) amortization ------- ------- ------- Net property, plant and equipment 141.1 107.6 119.5 ------- ------- ------- Total assets $466.7 $380.4 $363.3 ======= ====== ======= Current liabilities: Notes payable $58.9 $14.3 $ - Accounts payable, trade 10.5 5.7 13.6 Other accounts payable 7.0 26.9 34.1 Other current liabilities 73.8 61.1 39.6 ------- ------ ------ Total current liabilities 150.2 108.0 87.3 Deferred compensation and other 8.3 6.3 7.1 credits Deferred income taxes 24.4 11.2 15.3 Long-term debt, less current 85.0 85.0 85.0 maturities Shareholders' equity: Capital stock: Common, Class A; no par value, authorized 15,000,000 shares, shares, issued 2,354,251 at May 31, 1997 and 2,405,289 at May 31, 1996 0.2 0.2 0.2 Common, Class B; no par value, non-voting authorized, 45,000,000 shares, issued 15,029,974 at May 31, 1997 and 14,588,562 at May 31, 1996 1.5 1.5 1.5 Capital in excess of stated value 112.8 109.6 109.7 Retained earnings 91.6 66.0 63.7 Currency translation adjustments (4.8) (5.0) (4.1) ------- ------ ------ 201.3 172.3 171.0 Less treasury stock, at cost (2.5) (2.4) (2.4) ------- ------ ------ Total shareholders' equity 198.8 169.9 168.6 ------- ------ ------ Total liabilities and shareholders' $466.7 $380.4 $363.3 equity ======= ======= ======= The accompanying notes are an integral part of the financial statements.
DEKALB GENETICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 1997 AND 1996 (DOLLARS IN MILLIONS) (UNAUDITED)
May May 1997 1996 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $31.5 $18.2 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 9.3 8.2 Equity earnings, net of dividends of (0.3) (0.6) $1.8 in 1997 Other 14.8 7.4 Changes in assets and liabilities: Receivables (102.5) (82.6) Inventories (0.1) 30.0 Other current assets (5.6) (2.3) Accounts payable (30.2) 10.2 Accrued expenses 31.0 25.4 Other assets and liabilities 1.7 3.1 ------ ------ Net cash flow (used) provided by ( 50.4) 17.0 operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and (31.3) (13.4) equipment Proceeds from sale of property, plant 1.4 0.4 and equipment Other - (3.2) -------- -------- Net cash flow used by investing ( 29.9) (16.2) activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings 58.9 - Principal payments made on short-term - (28.5) borrowings Dividends paid (3.6) (3.1) Sale of equity - 27.7 Other 2.3 1.1 -------- ------- Net cash flow provided (used) by 57.6 ( 2.8) financing activities Net effect of exchange rates on (0.6) 0.7 cash -------- ------- Net decrease in cash and cash (23.3) (1.3) equivalents Cash and cash equivalents August 31 23.3 3.0 -------- ------- Cash and cash equivalents at the end of $ 0.0 $ 1.7 May ========= ======== Supplemental Cash Flow Information Cash paid during the period for: Income taxes $6.0 $4.2 Interest $5.0 $6.9 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 May 31, 1996 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 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. 2.Inventories, valued at the lower of cost or market (in millions), were as follows:
May May August 1997 1996 1996 ------ ------ ------ Commercial seed $80.9 $54.6 $86.0 Swine 9.6 8.9 9.6 Supplies and other 5.5 5.7 3.5 ------- ------ ------ $96.0 $69.2 $99.1 ======= ====== ======
During the first nine months of fiscal 1997, inventories increased primarily due to a larger corn production crop when compared to the same period a year ago. 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. Most potential property losses are self-insured. 4. On January 31, 1996, the Company entered into a series of agreements with Monsanto Company (Monsanto), including an agreement which provides for a long-term 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. 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 has risen to over17.0 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. Additionally, DEKALB received $4.0 million from Monsanto in March, 1996, and $3.0 million in February, 1997, the first two payments under the companies' collaboration agreement, which calls for total payments of $19.5 million over the term of the agreement. As of May 31, 1997, Monsanto held 242,721 shares of Class A and 6,582,706 shares of Class B Common Stock. This represents approximately ten percent of the Class A voting shares and 45 percent of the Class B non-voting shares. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- Net earnings for the first nine months of fiscal 1997 were $31.5 million ($1.76 per share) compared with $18.2 million ($1.12 per share) for the same period of fiscal 1996. Revenues increased 19 percent as corn average selling prices in Argentina and North America increased largely due to a significant portion of the volume shifting to higher price categories. Swine segment revenues increased as the result of higher market hog prices. North American Seed segment earnings were up $13.4 million largely due to higher corn unit margins and third party royalties. The increase in international seed segment earnings was due to higher corn volume and margins from increased sales of single cross hybrids in Argentina combined with higher equity earnings from Mexico. In addition, consolidated interest expense for the first nine months of fiscal 1997 was $1.7 million less than in the prior year first nine months due to lower average corporate borrowing requirements. Fiscal 1997 third quarter net earnings of $13.1 million ($.73 per share) were substantially higher than a year ago when net earnings were $8.6 million ($.51 per share). Higher North American corn unit margins combined with increased average selling prices in Argentina accounted for the improvement. Quarterly Industry Segment Revenues and Earnings ------------------------------------------------ In Millions ----------- (Unaudited) -----------
Third Quarter Year-to-Date -------------- -------------- May May May May 1997 1996 1997 1996 ---- ---- ---- ---- Revenues North American Seed $140.0 $105.5 $302.4 $254.6 International Seed 24.7 20.9 93.9 78.6 Swine 13.9 10.6 41.7 34.2 ------ ------ ------- ------ Total revenues $178.6 $137.0 $438.0 $367.4 ====== ====== ====== ====== Earnings North American Seed $21.1 $15.6 $44.4 $31.0 International Seed 6.3 2.4 18.4 9.6 Swine (0.5) (0.6) 0.1 0.1 ------ ------ ----- ----- Total operations 26.9 17.4 62.9 40.7 General corporate (3.8) (1.9) (7.2) (5.1) expenses Net interest expense (1.7) (1.4) (4.1) (5.8) ------ ------ ------ ------ Earnings before income taxes 21.4 14.1 51.6 29.8 Income tax provision 8.3 5.5 20.1 11.6 ------ ------ ------ ------ Net Earnings $13.1 $ 8.6 $31.5 $18.2 ====== ====== ====== ======
Seed - ---- North American Seed ------------------- North American seed segment earnings for the first nine months of fiscal 1997 were 43 percent, or $13.4 million, higher than a year ago. Corn unit margins increased over $5.00 per unit based on sales mix, selling price increases, and lower production costs. Fiscal 1996 costs were negatively impacted by adverse planting and growing conditions in the summer of 1995 while current year costs benefited from above-target production yields, partly offset by a projected increase in discard units. The corn gross margin improvements were partially offset by shared increases in operating expenses as the Company continues to expand research and development efforts. Revenues increased 19 percent during the first nine months of fiscal 1997 compared to the corresponding period a year ago. Higher volumes and selling prices for both corn and soybeans, together with third-party royalties, resulted in the increase. Royalties, which depend on sales by third parties, were accrued in the second and third quarters, consistent with the historical pattern of DEKALB sales. Corn sales volume increased about five percent compared with a year ago, but the magnitude of the market share gain will be dependent upon final planted acreage. Fiscal 1997 third quarter segment earnings improvement of $5.5 million was the result of the same factors described for the nine month period. International Seed ------------------ International seed segment earnings for the first nine months of fiscal 1997 increased by $8.8 million, or 92 percent, over the prior year nine month results on a 19 percent increase in revenues. Operations in Argentina and Mexico were primarily responsible for the earnings improvement. Higher corn margins, driven largely by increased sales volume accompanied by higher average selling prices, were the major factors contributing to the improvement in Argentina. Increased demand for single-cross corn hybrids generated a volume mix shift to higher priced products. In Mexico, higher corn and sorghum sales volumes generated improved earnings from the Company's equity investment. Revenues for the third quarter of fiscal year 1997 increased 18 percent from the same period a year ago. An increase in Argentine corn sales volume was the main contributing factor. Swine - ----- Swine segment revenues for the first nine months of fiscal 1997 increased 22 percent over the prior year nine months mainly due to higher market hog prices. The fiscal 1997 average market hog price received by the Company was $56 per hundred weight compared with $49 per hundred weight for the first nine months of fiscal 1996. Increased demand for genetically improved breeding stock also contributed to higher revenues. Swine segment profitability in the first nine months of fiscal 1997 was flat with the same period in fiscal 1996. Gross margin was negatively impacted by higher production costs and offset the revenue improvements when compared with prior year. General - ------- The effective tax rate was 39 percent in each of the nine month periods reported. For each interim period, the tax rate is determined from an estimate of full year earnings and the resultant tax. Interest expense decreased $1.7 million in fiscal 1997 due to lower average corporate borrowing requirements during the nine month period. Financial Position - ------------------ During the first nine months of fiscal 1997, a larger seed corn production crop and additional investments in seed production facilities resulted in increased short-term borrowings. In the prior year, cash from the sale of equity allowed the Company to reduce the short-term debt level to $14.3. Consistent with the Company's intentions, investments in research and development have increased $9.8 during the first nine months of fiscal 1997 when compared with the same period of fiscal 1996. Cash requirements for the first nine months were provided by earnings and existing short-term credit facilities. Committed credit lines include a $50 million revolving credit facility through December, 1999. 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. Any forward-looking statements, oral or written, are subject to several risk factors that could cause actual results to differ from projections. Among these factors are the company's relative product performance and competitive market position, weather conditions, commodity prices, trade policies, market conditions, and results of pending litigation. Part II OTHER INFORMATION ----------------- Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------------- (a) Exhibit 11 - Computation of Net Earnings per Common and Common Equivalent Shares for the nine months ended May 31, 1997 and 1996 and for the three months ended May 31, 1997 and 1996. (b) Reports on Form 8-K - No Form 8-K was filed during the three months ended May 31, 1997. 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: July 10, 1997 Thomas R. Rauman ----------------------- (Signature) Thomas R. Rauman Vice President-Finance, Chief Financial Officer EX-11 2 EXHIBIT 11 ---------- COMPUTATION OF NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE For the nine months ended May 31, 1997 and 1996
May May 1997 1996 --------- --------- PRIMARY EARNINGS PER SHARE: Shares* ------- Average shares outstanding 17,111,137 16,020,515 Net average additional shares outstanding assuming dilutive stock options exercised and proceeds used to purchase treasury stock at average market price 740,682 161,661 ---------- ---------- Average number of common and common equivalent shares outstanding 17,851,819 16,182,176 =========== ========== Net Earnings ------------ Net earnings for primary earnings $31,460,000 $18,172,000 per share =========== =========== Primary Earnings Per Share* $1.76 $1.12 =========== ============ *Earnings per share and all share amounts have been adjusted to reflect the three-for-one split of the Common Stock to holders of record May 10, 1996.
EX-11 3 EXHIBIT 11 ----------- COMPUTATION OF NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE For the three months ended May 31, 1997 and 1996
May May 1997 1996 ---------- ---------- PRIMARY EARNINGS PER SHARE: Shares* Average shares outstanding 17,154,100 16,690,225 Net average additional shares outstanding assuming dilutive stock options exercised and proceeds used to purchase treasury stock at average market price 767,452 189,626 ----------- --------- Average number of common and common equivalent shares outstanding 17,921,552 16,879,851 =========== ========== Net Earnings Net earnings for primary earnings per $13,072,000 $8,581,000 share =========== ========== Primary Earnings Per Share* $0.73 $0.51 =========== ========== *Earnings per share and all share amounts have been adjusted to reflect the three-for-one split of the Common Stock to holders of record May 10, 1996.
EX-27 4
5 This schedule contains summary financial information extracted from the Consolidated Statement of Operations and the Consolidated Balance Sheets and is qualified in its entirety by reference to such financial statements. 1000 9-MOS AUG-31-1997 MAY-31-1997 0 0 148000 5300 96000 270500 292600 151500 466700 150200 0 0 0 1700 197100 466700 438000 438000 221300 221300 162300 0 4100 51600 20100 31500 0 0 0 31500 1.76 0
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