- Quarterly Report
- Quarterly Report
Quarterly Report for the quarter ended May 31, 1996
July 12, 1996
To Our Shareowners:
It appears that North American sales volumes for corn and soybean, Mycogen's primary seed products, will be up as much as 20 percent for the year. Corn acreage is estimated to be up about 10 percent and soybean acreage less than five percent, so that would indicate significant market share gains in both crops. Unfortunately, that top line growth didn't flow through to the bottom line. Write-offs for obsolete or defective seed inventory as part of our commitment to transforming Mycogen into a top quality seed brand resulted in reduced gross profit margins. As detailed below, production system and facility improvements that should go a long way toward solving those problems are progressing well and we expect a substantial increase in gross margins for fiscal 1997. Following is a brief overview of other notable developments.
Oil Seed Deals - In June, Mycogen agreed to acquire technology and assets for specialty and high oleic sunflowers and high oleic and high erucic rapeseed from Lubrizol, and we're finalizing an agreement to produce crude high oleic sunflower oil for AC Humko, a leading supplier of specialty oils and related products. In March, we announced a collaboration with DowElanco Canada to develop high value traits in canola and commence a joint breeding program. These agreements further strengthen the platform we're building to expand our oil crop planting seed business and forward integrate into the edible oils business.
Seed Production System - Our $10 million program to expand and modernize seed processing plants in Minnesota and Nebraska to complement the large, efficient production facilities acquired from DowElanco is nearing completion. This revamped production system, which will be fully operational in time to handle our 1996 seed crop, is a key element in Mycogen Seeds' initiative to significantly improve both quality control and efficiency in becoming a high-quality, low-cost producer of seed corn and soybean products.
New Officer, Directors - In June, Michael J. Muston joined Mycogen as a corporate vice president and general manager of Mycogen Seeds. Mike's 18 years of broad agribusiness experience and strong financial orientation will complement the new seed business management team we've put into place over the past several months. At the June board meeting, W. Wayne Withers, senior vice president, secretary and general counsel of Emerson Electric and former general counsel of Monsanto Agricultural Company, and William C. Schmidt , vice president and chief financial officer of DowElanco, were elected directors.
Mycogen Crop Protection - Nine-month Crop Protection revenues were up 14 percent over the same period last year, as both our biopesticide products and Soilserv crop protection business continued to perform strongly. Our new microbial biopesticide fermentation facility is allowing us to be more price-competitive while still improving gross margins, and both Mattch™, our new bioinsecticide for vegetables, and Scythe®, our new fatty acid herbicide are contributing to increased sales volume.
Outlook - We've ramped up production of a much stronger lineup of proprietary seed products under the Mycogen® brand for what promises to be another growth year for the seed industry in 1997. Building share owner value remains our top priority, and we understand that we must demonstrate that we can operate our businesses profitably to deliver on that commitment. Our forward-looking statements are intended to give stockholders insight into Mycogen's prospects. Please recognize that they are based on projections and estimates regarding the economy and the seed and crop protection industries, and that various factors could cause actual results to vary significantly from our expectations. These include the impact of weather on production and sales, competitive and regulatory actions, fluctuations in crop acreage, commodity prices and intellectual property positions. We appreciate your interest and support. We appreciate your support.
| Jerry
Caulder Chairman & Chief Executive Officer |
Carl Eibl President & Chief Operating Officer |
Mycogen Corporation
Interim Consolidated Condensed Statements of Operations
(Amounts in thousands, except per share data)
Three months ended May 31, Nine months ended May 31,
1996 1995 1996 1995
____________ ____________ ____________ ____________
(Unaudited) (Unaudited)
Revenues:
Net operating revenues:
Seed segment $ 66,092 $ 44,439 $ 98,148 $ 68,944
Crop protection segment 11,923 11,430 27,491 24,095
____________ ____________ ____________ ____________
78,015 55,869 125,639 93,039
Contract and other revenues 2,360 1,971 6,511 5,582
____________ ____________ ____________ ____________
Total revenues 80,375 57,840 132,150 98,621
____________ ____________ ____________ ____________
Costs and expenses:
Cost of operating revenues 57,152 36,529 88,421 59,771
Operating expenses 20,383 14,035 50,557 40,328
Special charges - - 22,890 -
____________ ____________ ____________ ____________
Total costs and expenses 77,535 50,564 161,868 100,099
____________ ____________ ____________ ____________
Operating income (loss) 2,840 7,276 (29,718) (1,478)
Interest and other, net 681 63 1,477 963
____________ ____________ ____________ ____________
Net income (loss) (3,521) 7,339 (28,241) (515)
Dividends on preferred stock - (378) (578) (1,120)
____________ ____________ ____________ ____________
Net income (loss) applicable
to common shares $ 3,521 $ 6,691 $ (28,819) $ (1,635)
============= ============= ============= =========
Net income (loss) per common share:
Primary $ .11 $ .36 $ (1.16) $ (.09)
============= ============= ============= =========
Assuming full dilution $ .11 $ .34 $ (1.16) $ (.09)
============= ============= ============= =========
Weighted average number of shares:
Primary 32,334 19,308 24,816 19,182
============= ============= ============= =========
Assuming full dilution 32,415 21,284 24,816 19,182
============= ============= ============= =========
Please Email Questions about Mycogen to Mycogen's Corporate Communications
Home | Corporate Info. | Seeds | Crop Protection |Other Links
Copyright © Mycogen Corporation 1996