-----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, Ogiucyrax+JOvj+k8IUY+fW4x1oQxYMQXHEUCKh237NtXMDFjvbYqJnwk9y5vxBO 2++ky8h8gpMuXIX/034dLw== 0000897101-03-000280.txt : 20030411 0000897101-03-000280.hdr.sgml : 20030411 20030411125035 ACCESSION NUMBER: 0000897101-03-000280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030228 FILED AS OF DATE: 20030411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MINN DAK FARMERS COOPERATIVE CENTRAL INDEX KEY: 0000948218 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 237222188 STATE OF INCORPORATION: ND FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-94644 FILM NUMBER: 03646671 BUSINESS ADDRESS: STREET 1: 7525 RED RIVER RD CITY: WAHPETON STATE: ND ZIP: 58075-9698 BUSINESS PHONE: 7016428411 MAIL ADDRESS: STREET 1: 7525 RED RIVER RD CITY: WAHPETON STATE: ND ZIP: 58075-9698 10-Q 1 minn-dak031752_10q.txt MINN-DAK FARMERS COOPERATIVE FORM 10Q ================================================================================ 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 THE QUARTERLY PERIOD ENDED: FEBRUARY 28, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 Commission file: No. 33-94644 MINN-DAK FARMERS COOPERATIVE (Exact named of registrant as specified in its charter) North Dakota 23-7222188 ------------ ---------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 7525 Red River Road Wahpeton, North Dakota 58075 ---------------------- ----- (Address of principal (Zip Code) executive offices) (701) 642-8411 --------------------------------- (Registrant's telephone number, including area code) Not Applicable --------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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, 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. Outstanding at Class of Common Stock April 10, 2003 --------------------- -------------- $250 Par Value 487 Minn-Dak Farmers Cooperative has previously registered securities for offer and sale pursuant to the Securities Act of 1933, as amended (the "Securities Act"). As a result of that previous registration under the Securities Act, under Sections 15(d) and 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Cooperative is obligated to file quarterly reports on form 10-Q, annual reports on Form 10-K and supplemental reports on Form 8-K. However, the Cooperative has not registered any of its securities under Section 12(g) of the Exchange Act. The Cooperative is exempt from any obligation to register its securities under the Exchange Act due to the provisions of Section 12(g)(2)(E), which exempts from Exchange Act registration any security of an issuer, such as the Cooperative, which is a "cooperative association" as defined in the Agricultural Marketing Act of 1929. As a result, those provisions of the Exchange Act, which are applicable only to securities registered under Section 12 of that act, do not apply to shares issued by the Cooperative. The provisions, which do not apply to the Cooperative's shares, include the regulation of proxies under Section 14 of the Exchange Act and the reporting and other obligations of directors, officers and principal stockholders under Section 16 of the Exchange Act. ================================================================================ MINN-DAK FARMERS COOPERATIVE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The condensed consolidated financial statements for the six month periods ended February 28, 2003 and 2002 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report to Stockholders previously submitted in the Company's Annual 10-K for the fiscal year ended August 31, 2002. The results of operations for the six months ended February 28, 2003 are not necessarily indicative of the results for the entire fiscal year ending August 31, 2003. 2. In August 2002, the company declared a revolvement of 46% of the unit retains and allocated patronage for the 1992 crop totaling $3,333,326. That amount was paid to the stockholders on September 27, 2002. MINN-DAK FARMERS COOPERATIVE CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS (IN THOUSANDS)
FEBRUARY 28, AUGUST 31, 2003 2002 ASSETS (UNAUDITED) (AUDITED) ---------- --------- CURRENT ASSETS: Cash $ 30 $ 757 --------- --------- Current portion of long-term note receivable 3 3 --------- --------- Receivables: Trade accounts 14,234 13,086 Growers 0 4,157 --------- --------- 14,234 17,243 --------- --------- Advances to affiliate 848 135 --------- --------- Inventories: Refined sugar, pulp and molasses to be sold on a pooled basis 59,336 19,072 Nonmember refined sugar 629 56 Yeast 114 125 Materials and supplies 5,358 5,796 Beet and Juice Inventory 23,915 0 Other 0 0 --------- --------- 89,352 25,049 --------- --------- Deferred charges 310 1,085 --------- --------- Prepaid expenses 1,180 1,278 --------- --------- Property and equipment available for sale 200 200 --------- --------- Total current assets 106,157 45,749 --------- --------- PROPERTY, PLANT AND EQUIPMENT: Land and land improvements 21,847 21,734 Buildings 36,109 36,087 Factory equipment 114,389 114,062 Other equipment 3,291 3,311 Construction in progress 4,168 2,333 --------- --------- 179,804 177,528 Less accumulated depreciation (79,658) (76,510) --------- --------- 100,146 101,018 --------- --------- LONG-TERM NOTES RECEIVABLE, NET OF CURRENT PORTION 190 238 --------- --------- OTHER ASSETS: Investments restricted for capital lease projects 9,335 11,063 Investment in stock of other corporations, unconsolidated marketing subsidiaries and other cooperatives 12,630 12,574 Deferred income taxes 0 0 Other 1,075 931 --------- --------- 23,041 24,569 --------- --------- See Notes to Consolidated Financial Statements. $ 229,534 $ 171,573 ========= =========
MINN-DAK FARMERS COOPERATIVE CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (IN THOUSANDS)
FEBRUARY 28, AUGUST 31, 2003 2002 (UNAUDITED) (AUDITED) --------- --------- LIABILITIES AND MEMBERS' INVESTMENT CURRENT LIABILITIES: Short-term notes payable $ 50,964 $ 11,795 --------- --------- Current portion of long-term debt 3,600 3,600 Current portion of long-term lease 905 860 --------- --------- 4,505 4,460 Accounts payable: Trade (4,172) 4,808 Growers 27,283 10,167 --------- --------- 23,111 14,975 --------- --------- Accrued liabilities 3,937 2,871 --------- --------- Total current liabilities 82,517 34,101 LONG-TERM DEBT, NET OF CURRENT PORTION 31,900 34,300 OBLIGATION UNDER CAPITAL LEASE 21,915 22,820 OTHER 1,845 1,951 COMMITTMENTS AND CONTINGENCIES 0 0 --------- --------- Total liabilities 138,178 93,173 --------- --------- MINORITY INTEREST IN EQUITY OF SUBSIDIARY 1,477 1,489 --------- --------- MEMBERS' INVESTMENT: Preferred stock: Class A - 100,000 shares authorized, $105 par value; 72,200 shares issued and outstanding 7,581 7,581 Class B - 100,000 shares authorized, $75 par value; 72,200 shares issued and outstanding 5,415 5,415 Class C - 100,000 shares authorized, $76 par value; 72,200 shares issued and outstanding 5,487 5,487 --------- --------- 18,483 18,483 Common stock, 600 shares authorized, $250 par value; issued and outstanding, 490 shares at February 28, 2003 and 488 shares at August 31, 2002 123 122 Paid in capital in excess of par value 32,094 32,094 Unit retention capital 5,840 5,868 Qualified allocated patronage 2,897 2,911 Nonqualified allocated patronage 28,371 15,858 Retained earnings (deficit) 2,071 1,576 --------- --------- 89,879 76,912 --------- --------- See Notes to Consolidated Financial Statements. $ 229,534 $ 171,573 ========= =========
PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MINN-DAK FARMERS COOPERATIVE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY 28, FEBRUARY 28, -------------------- -------------------- 2003 2002 2003 2002 -------- -------- -------- -------- REVENUE: From sales of sugar, co-products, and yeast, net of discounts $ 65,777 $ 67,500 $130,795 $122,028 Other income 206 284 400 320 -------- -------- -------- -------- 65,983 67,784 131,195 122,348 -------- -------- -------- -------- EXPENSES: Production costs of sugar, co-products, and yeast sold 16,033 14,192 29,569 26,802 Marketing (includes freight and storage) 7,616 5,357 16,541 11,796 General and administrative 1,534 1,404 2,937 2,735 Interest 1,057 1,053 1,970 1,958 (Gain) loss on disposition of property and equipment (2) 12 67 11 -------- -------- -------- -------- 26,239 22,019 51,085 43,302 -------- -------- -------- -------- NET PROCEEDS RESULTING FROM MEMBER AND NONMEMBER BUSINESS $ 39,744 $ 45,765 $ 80,110 $ 79,046 ======== ======== ======== ======== DISTRIBUTION OF NET PROCEEDS: Credited to members' investment: Components of net income: Income (loss) from non-member business $ 265 $ 372 $ 495 $ 559 Patronage income 6,427 10,227 12,583 20,468 -------- -------- -------- -------- Net income 6,692 10,598 13,078 21,027 Unit retention capital 0 0 0 0 -------- -------- -------- -------- Net credit to members' investment 6,692 10,598 13,078 21,027 Payments to members for sugarbeets, net of unit retention capital 33,052 35,167 67,032 58,019 -------- -------- -------- -------- NET PROCEEDS RESULTING FROM MEMBER AND NONMEMBER BUSINESS $ 39,744 $ 45,765 $ 80,110 $ 79,046 ======== ======== ======== ========
See Notes to Consolidated Financial Statements. MINN-DAK FARMERS COOPERATIVE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED FEBRUARY 28, 2003 2002 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Income allocated to members' investment $ 13,078 $ 21,027 Add (deduct) noncash items: Depreciation and amortization 3,546 3,320 Equipment disposals - loss 71 11 Net income allocated from unconsolidated marketing subsidiaries (143) (143) Noncash portion of patronage capital credits 0 0 Retention of nonqualified unit retains 0 0 Changes in operating assets and liabilities: Accounts receivable and advances 2,296 7,331 Inventory, prepaid expenses, and equipment held for resale (64,205) (61,263) Deferred charges and other assets 441 233 Deferred income taxes 0 0 Accounts payable, advances, and accrued liabilities 9,092 102 --------------------- NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (35,823) (29,383) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposition of property, plant and equipment 9 4 Capital expenditures (2,562) (837) Investment in stock of other corporations, unconsolidated marketing subsidiaries and other cooperatives (98) 0 Net proceeds from patronage refunds and equity revolvements 186 106 Issuance of notes receivable 0 (198) Proceeds on notes receivable 48 0 Restricted bond/lease fund investment 1,728 (13,725) Minority interest in equity of subsidiaries (12) 104 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (702) (14,545) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of short-term debt 39,169 31,030 Payment of long-term debt (3,260) (2,021) Payment of financing fees 0 0 Payment of unit retains and allocated patronage (112) 0 Issuance of long-term lease 0 14,000 Provision for long-term tax 0 0 Sale and repurchase of common stock, net 1 (2) Issuance of stock (0) 1 Issuance of long term tax-exempt bonds 0 0 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 35,798 43,008 -------- -------- NET INCREASE (DECREASE) IN CASH (727) (920) CASH, BEGINNING OF YEAR 757 459 -------- -------- CASH, END OF QUARTER $ 30 $ (461) ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash payments for: Interest $ 1,849 $ 1,835 ======== ======== Income taxes, net of refunds $ 58 $ 3 ======== ========
See Notes to Consolidated Financial Statements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE THREE MONTHS ENDED AND SIX MONTHS ENDED FEBRUARY 28, 2003 AND FEBRUARY 28, 2002 The following discussion and analysis relates to the financial condition and results of operations of Minn-Dak Farmers Cooperative ("the Company") for the three months ended February 28, 2003 (the second quarter of the Company's 2002-2003 fiscal year) and February 28, 2002 (the second quarter of the Company's 2001-2002 fiscal year). The Company's fiscal year runs from September 1 to August 31. Any statements regarding future market prices, anticipated costs, agricultural results, operating results and other statements that are not historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. The words "expect", "project", "estimate", "believe", "anticipate", "plan", "intend", "could", "may", "predict" and similar expressions are also intended to identify forward-looking statements. Such statements involve risks, uncertainties and assumptions, including, without limitation, market factors, the effect of weather and economic conditions, farm and trade policy, the available supply of sugar, available quantity and quality of sugarbeets and other factors detailed elsewhere in this and other Company filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. RESULTS FROM OPERATIONS COMPARISON OF THE THREE MONTHS ENDED FEBRUARY 28, 2003 AND 2002 Revenue for the three months ended February 28, 2003 decreased $1.8 million from the 2002 period, a decrease of 3%. Revenue from the sale of finished goods increased $13.2 million and Change in Inventories decreased $14.9 million. Revenue from the sales of sugar increased $10.3 million, or 34.1%, reflecting a 31.6% increase in volume and a 2.6% increase in the price for sugar. The increase in volume reflects the large 2002 crop while the increase in price reflects the impact of improved sugar market conditions. Revenue from pulp and molasses sales increased $2.3 million or 64.0%, reflecting a 56.2% increase in sales volume and a 7.8% increase in the average gross selling price. The increase in sales volume was primarily due to differences in the timing of sales. Revenues from the Company's subsidiary yeast production facility, Minn-Dak Yeast Company, increased $0.5 million or 36.8%, reflecting a 33.4% increase in sales volume and a 3.4% increase in the average selling price. Selling prices are up due to the competitive nature of the current yeast market, while volume is up due to added customers and volume from existing customers. The other contributing factor to the change in revenues results from the decrease in finished goods inventories. The decrease in the value of finished goods inventories for the three months ended February 28, 2003 amounted to $17.2 million or $14.9 million less than the increase in the value of finished goods inventories for February 28, 2002. For February 28, 2003 the increase in the value of sugar inventories was $10.5 million less than the increase of that of the prior year, and for pulp and molasses $.4 million less. The decrease in sugar inventory increase in values is the result of the 2001 PIK Program (described in prior filings) contributing $6.0 MM to the prior year quarter and improved sugar market conditions. The 2002 Farm Program provides for beet sugar marketing allotments. The beet segment's allotment for the current year is estimated to be greater than the actual sugar available in the beet sugar segment. In the consolidated statements of operations, Expenses section, production costs of sugar, co-products and yeast totaled $16.0 million, $1.8 million or 13% more than the prior year. The increase is mainly attributable to normal operations timing when comparing the three month period ending February 28, 2003. Marketing costs totaled $7.6 million, $2.2 million or 42.2% more than the prior year. This increase over the prior year is attributed to differences in the timing of sales locations, quantity and type. In the section Distribution of Net Proceeds, payments to members for sugarbeets, net of unit retention capital and unprocessed sugarbeet inventory decreased $2.1 million or 6.0% from the fiscal year 2002 period. This decrease is the result of an increase in the 2001 crop payment being announced in the second quarter of 2002, while no increase in payment was announced during the same period in 2003 for the 2002 crop. For fiscal year 2003 the Company is projecting a payment to growers for sugarbeets totaling $90.9 million, which is $17.6 million or 24% more than the prior fiscal year. The increase in payments to members is due to: (1) the result of a 43% increase in tons of beets delivered by members versus the prior year, and (2) 9% less sugar per ton of the beets delivered versus the prior year. The payment is based upon (i) an average delivered sugar content of 16.94%, (ii) a total sugarbeet crop to process of 2.4 million tons and (iii) the Company's projected selling price for its sugar, which is currently estimated to be slightly higher than the previous year. For the quarter ended February 28, 2003, there were no PIK program payments to growers, in contrast to $6.8 million the growers were paid in December 2001 and January 2002. COMPARISON OF THE SIX MONTHS ENDED FEBRUARY 28, 2003 AND FEBRUARY 28, 2002 Revenue for the six months ended February 28, 2003 increased $8.9 million from the 2002 period, an increase of 7.2%. Revenue from the sale of finished goods increased $18.1 million, while the change in the value of finished goods inventory decreased $9.3 million. Revenue from the sales of sugar increased $15.5 million or 25.0%, reflecting an 18.9% increase in volume and a 6.0% increase in the price for sugar. The increase in volume and revenue is the result of a large 2002 crop, the stronger demand for sugar resulting from the improved sugar market conditions, and the absence of a USDA PIK program for the 2002 crop vs. the 2000 and 2001 crops. Revenue from pulp and molasses sales increased $1.9 million or 24.8%, reflecting a 22.3% increase in sales volume and a 2.5% increase in the average gross selling price. Revenues from yeast sales from the Company's subsidiary yeast production facility, Minn-Dak Yeast Company ("MDYC") increased $0.7 million or 28.0%, reflecting a 23.7% increase in sales volume and a 4.3% increase in the average selling price. Sensient anticipated this increase in volume in their marketing plan, which targeted new customer volumes. The other contributing factor to the change in revenues results from the increase or decrease in finished goods inventories. The increase in the value of finished goods inventories for the six months ended February 28, 2003 amounted to $40.3 million or $9.3 million less than the increase in the value of finished goods inventories for February 28, 2002. This reduced increase was a combination of more sales and the lack of a PIK Program impact. The 2001 PIK Program contributed $2.9 MM to the six months ending February 2002 increase in sugar inventory. In the consolidated statements of operations, Expenses section, Production costs of sugar, by-products and yeast sold increased $2.8 million or 10.3%. The increase in production costs for the six months ended February 28, 2003 are mainly due to a larger crop and more sugar marketed to date. In the section Distribution of Net Proceeds, payments to members for sugarbeets (net of unit retention capital and unprocessed sugarbeet inventory) increased $9.0 million or 15.5% from the prior period. For fiscal year 2003 the Company is projecting a payment to growers for sugarbeets totaling $90.9 million, which is $17.6 million or 24% more than the prior fiscal year. The increase in payments to members is due to: (1) the result of a 43% increase in tons of beets delivered by members versus the prior year, and (2) 9% less sugar per ton of the beets delivered versus the prior year. The payment is based upon (i) an average delivered sugar content of 16.94%, (ii) a total sugarbeet crop to process of 2.4 million tons and (iii) the Company's projected selling price for its sugar, which is currently estimated to be slightly higher than the previous year. In addition to payments for sugarbeets, growers were paid $6.8 million in December 2001 and January 2002 as a result of acres of sugarbeets destroyed as part of the 2001 Sugar PIK program. ESTIMATED FISCAL YEAR 2003 INFORMATION The agreements between the Company and its members regarding the delivery of sugarbeets to the Company require payment for members' sugarbeets in several installments throughout the year. As only the final payment is made after the close of the fiscal year, the first payments to members for their sugarbeets are based upon the Company's then-current estimates of the financial results to be obtained from processing the crop and the sale of finished products. This discussion contains a summary of the Company's current estimates of the financial results to be obtained from the Company's processing of the 2002 sugar beet crop. Given the nature of the estimates required in connection with the payments to members for their sugarbeets, this discussion includes forward-looking statements. These forward-looking statements are based largely upon the Company's expectations and estimates of future events; as a result, they are subject to a variety of risks and uncertainties. Some of those estimates, such as the selling price for the Company's products and the quantity of sugar produced from the sugar beet crop are beyond the Company's control. The actual results experienced by the Company may differ materially from the forward-looking statements contained herein. The Company's members harvested 2.4 million tons of sugarbeets from the 2002 crop, the largest crop ever delivered to the Company. Sugar content of the 2002 crop at harvest was 4% below the average of the five most recent years. Because of the record size of the crop delivered, the production of sugar from the 2002 crop sugarbeets is expected to be the most sugar ever produced by the Company. The remaining beets, as of this report, are in storage sheds and are not considered to be at risk. This forward-looking material is based on the Company's expectations regarding the processing of the 2002 sugarbeet crop; with over 90% of the 2002 crop processed, the actual production results obtained by processing those sugarbeets appears to be slightly greater than the original estimates for the Company's 2002 sugarbeet crop. Currently, the factory is averaging a sugarbeet slice rate of approximately 9,500 tons per day, and the ending slice rate is expected to be near the targeted rate for the fiscal year 2003 plan of 9,500 tons per day. It is believed that any minor deviation from plan will not have a detrimental impact to the bottom line of the Company. Based upon marketing information developed by United Sugars Corporation (the Company's sales agent), the Company currently estimates the average net selling price of the sugar will be more than that of the prior year and current year estimates because of the volume available for sale (domestic production & foreign imports) relative to the estimated domestic consumption. The 2002 Farm Bill contains provisions for marketing allotments, which can potentially restrict the company's ability to market all the sugar it produces. The Company anticipates it will obtain the allocations necessary for the marketing of its entire 2002 crop because the beet sector within the domestic industry has more sugar sales allocations than available sugar to market. The Company's initial beet payment estimate totals $38.15 per ton or $.13130869 per harvested/bonus pound of sugar, with the final beet payment determined in October of 2003, after the completion of the Company's fiscal year. ESTIMATED FISCAL YEAR 2004 INFORMATION The Board of Directors announced that the 2003 crop plantings would remain at the 2002 crop level of approximately 113,000 acres. The 2002 Farm Bill contains provisions for marketing allotments, which can potentially restrict the company's ability to market all the sugar it produces. MDFC has a marketing plan in place for the 2003 crop that it feels will allow for the marketing of the entire 2003 crop to be marketed within the framework of the 2002 Farm Bill. Sugar sales for non-human consumption uses and for export consumption are not restricted by the 2002 Farm Bill. This marketing plan assumes no changes in the 2002 Farm Bill and a five-year average crop size. LIQUIDITY AND CAPITAL RESOURCES Because the Company operates as a cooperative, payment for member-delivered sugarbeets, the principal raw material used in producing the sugar and agri-products it sells, are subordinated to all member business expenses. In addition, actual cash payments to members are spread over a period of approximately one year following delivery of sugarbeet crops to the Company and are net of unit retains and patronage allocated to them, all three of which remain available to meet the Company's capital requirements. This member financing arrangement may result in an additional source of liquidity and reduced outside financing requirements in comparison to a similar business operated on a non-cooperative basis. However, because sugar is sold throughout the year (while sugarbeets are processed primarily between September and April) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund such operations. The financing has been provided by Co-Bank (the "Bank"). The Company has a short-term line of credit with the Bank for calendar years 2002 and 2003 of $45.0 million, of which $1.0 million is currently restricted for a letter of credit. The seasonal line of credit is scheduled for renewal in May 2003. The loan agreements between the Bank and the Company obligate the company to maintain the following financial covenants, and in accordance with GAAP: o Maintain working capital of not less than $9.0 million as of August 31, 2003. o Maintain a long-term debt and capitalized leases to equity ratio of not greater than .8:1. o Maintain a current ratio of not less than 1.2:1.0 based on monthly financial statements and attain a current ratio of not less than 1.2:1.0 based on fiscal year end audits. o Maintain available cash to current long-term debt ratio as defined in the agreement of not less than 1.25:1. As of February 28, 2003 the Company was in compliance with its loan agreement covenants with the Bank. Working Capital as of February 28, 2003 totals $23.6 million compared to $11.6 million at August 31, 2002, an increase of $12.0 million for the period. Increased working capital is a result of normal financing, operational and capital expenditure activities of the Company. The targeted working capital for August 31, 2003 is approximately $10.4 million dollars and, in the Company's opinion, will be attained. The primary factor for the changes in the Company's financial condition for the six months ended February 28, 2003 was due to the seasonal needs of the 2002/2003 sugarbeet-processing season. The cash used to provide for operations of $35.8 million and for investing activities of $.7 million was funded through cash flow financing activities, and a reduction in cash. The net cash provided through financing activities of $35.8 million was primarily provided through proceeds from the issuance of short-term debt of $39.2 million; offset by payment of long term debt of $3.3 million.
- ------------------------- ------------- ----------- -------------- ------------ ------------- Contractual Less Obligations Total Than 1 1 - 3 4 -5 After 5 Year Years Years Years - ------------------------- ------------- ------------ ------------- ------------ ------------- Long-Term Debt $35.5MM $3.6MM $14.4MM $9.6MM $ 7.9MM - ------------------------- ------------- ------------ ------------- ------------ ------------- Capital Lease Obligations $22.8MM $ .9MM $ 3.6MM $3.7MM $14.6MM - ------------------------- ------------- ------------ ------------- ------------ ------------- Operating Leases $ 2.4MM $ .9MM $ 1.0MM $ .2MM $ .3MM - ------------------------- ------------- ------------ ------------- ------------ ------------- Unconditional Purchase Obligations $ 3.5MM $3.5MM 0 0 0 - ------------------------- ------------- ------------ ------------- ------------ ------------- Other Long-Term Obligations 0 0 0 0 0 - ------------------------- ------------- ------------ ------------- ------------ ------------- Total Contractual Cash Obligations $64.2MM $8.9MM $19.0MM $13.5MM $22.8MM - ------------------------- ------------- ------------ ------------- ------------ -------------
Capital expenditures for the six months ended February 28, 2003 totaled $2.6 million. $1.7 million of the capital expenditures qualified for tax-exempt bond financing and as such drew down against investments restricted for capital lease projects. Capital expenditures for fiscal year 2003 are currently estimated at $3.5 million excluding a multi-year steam dryer addition listed below. The board of directors has approved a $9.3 million capital expenditure project for the installation of a pulp steam dryer. The company obtained tax -exempt bonds to finance this project. The projected physical completion date of this project is August 31, 2003. As a result of this project, current bank covenant requirements have been reviewed and the Company projects that during and after the completion of the pulp steam dryer project these bank covenants will be in compliance without needing to be modified. PART I Item 4. OTHER INFORMATION Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information required to be included in the Company's periodic SEC filings relating to the Company (including its consolidated subsidiary). There were no significant changes in the Company's internal controls or in other factors that could significantly affect these internal controls subsequent to the date of our most recent evaluation. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of the shareholders was held on December 10, 2002. At the meeting the Cooperative held election of directors. Elected to three year terms by voice vote and unanimous consent were the following directors: Mike Hasbargen, district four; Jack lacey, district five; Paul Summer, district seven. In addition, the following directors (including current expiration of term) continued on following the Cooperative's annual meeting: Jerry Meyer, district one (2003); Charles Steiner, district six (2003); and Douglas Etten, district eight (2003), Victor Krabbenhoft, district nine (2004), Ed Moen Jr., district three (2004); Russell Mauch, district two (2004). ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit Description ------- ----------- 99 906 Certification ================================================================================ SIGNATURES Pursuant to the requirement 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. MINN-DAK FARMERS COOPERATIVE ------------------------------------- (Registrant) Date: April 14, 2003 /s/ DAVID H. ROCHE ---------------- ------------------------------------- David H. Roche President and Chief Executive Officer Date: April 14, 2003 /s/ STEVEN M. CASPERS ---------------- ------------------------------------- Steven M. Caspers Executive Vice President and Chief Financial Officer CERTIFICATION - ------------- I, David H. Roche, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Minn Dak Farmers Cooperative; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 14, 2003 /s/ David H. Roche ------------------------ ------------------------------------ President and Chief Executive Officer CERTIFICATION - ------------- I, Steven M. Caspers, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Minn Dak Farmers Cooperative; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 14, 2003 /s/ Steven M. Caspers ----------------------- ------------------------------------ Executive Vice President and Chief Financial Officer CERTIFICATION - ------------- I, Allen E. Larson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Minn Dak Farmers Cooperative; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 14, 2003 /s/ Allen E. Larson --------------------------- --------------------------------------- Controller and Chief Accounting Officer EX-99 3 minn-dak031752_ex99.txt CERTIFICATIONS OF CEO AND CFO EXHIBIT 99 906 CERTIFICATION The undersigned certify pursuant to 18 U.S.C.ss.1350, that: (1) The accompanying Quarterly Report on Form 10-Q for the period ended February 28, 2003, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the accompanying Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 14, 2003 /s/ David H. Roche ----------------------- President and Chief Executive Officer EXHIBIT 99 906 CERTIFICATION The undersigned certify pursuant to 18 U.S.C.ss.1350, that: (1) The accompanying Quarterly Report on Form 10-Q for the period ended February 28, 2003, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the accompanying Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 14, 2003 /s/ Steven M. Caspers ---------------------------- Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----