Farmland Industries, Inc. - Page 42




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             and 1983 for the first time in its history.  Petitioner's                
             management attributed the company's poor performance to                  
             the end of the energy crisis and resulting glut of oil,                  
             worldwide over-production of grains, high interest rates,                
             and the Federal Government's implementation of the payment-              
             in-kind program, which caused a general decrease in the                  
             production of many agricultural commodities.  Petitioner's               
             members were also adversely affected by a general recession              
             in the agricultural sector of the economy during this                    
             period.  Petitioner's consolidated financial data regarding              
             the company's farm supply operations for the period from                 
             1980 to 1983 are as follows:                                             

                                        1980      1981     1982     1983              
             Gross farm supply revenue $2,725   $3,040    $2,775   $2,546             
             Farm supply operating                                                    
                                         273       187       90        2              
             savings                                                                  
             Total net savings1          202       68      (32)    (138)              
             Interest expense             92       105      122      106              
             Funded long-term debt       584       684      795      566              
             Fixed assets before                                                      
                                       1,410     1,655    1,787    1,149              
             depreciation                                                             

                  1Total net savings before income taxes, patronage refunds, and      
             extraordinary items.                                                     

                  During the period from 1981 to 1983, petitioner's                   
             operating and capital needs were met primarily through a                 
             combination of bank financing on a floating-rate basis,                  
             issuance of medium- and long-term subordinated debt, and                 
             retained earnings, including patronage dividends not paid                
             in cash.  During this period, petitioner's loans from the                





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