SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the three months ended September 30, 1996
Commission File Number 0-17039
American Rice, Inc.
(Exact Name of Registrant as Specified in its Charter)
Texas 76-0231626
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
16825 Northchase, Suite 1600
Houston, Texas 77060
(Address of Principal Executive Offices) (Zip Code)
(713) 873-8800
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 [ ]
The number of shares outstanding of the registrant's common stock,
$1 par value, as of November 10, 1996 is 2,443,706 shares
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
Three Months Six Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
----------------------------------------
Net sales $121,513 $90,369 $218,920 $176,761
Cost of sales 106,346 80,652 197,210 157,507
----------------------------------------
Gross profit 15,167 9,717 21,710 19,254
Selling, general and
administrative expenses 8,442 6,074 14,867 11,845
----------------------------------------
Operating income 6,725 3,643 6,843 7,409
Interest expense 5,569 4,204 10,188 7,602
Interest income (600) (353) (1,166) (528)
Other (income) and expense 231 (51) 352 (95)
----------------------------------------
Earnings (loss) before
income taxes 1,525 (157) (2,531) 430
Provision for
income taxes (benefit) 549 (56) (911) 155
----------------------------------------
Net earnings (loss) $ 976 ($101) ($1,620) $275
========================================
Preferred stock dividend
requirements 1,483 1,483 2,965 2,965
----------------------------------------
Net loss applicable
to common stock ($507) ($1,584) ($4,585) ($2,690)
========================================
Loss per applicable
common and common equivalent
share:
Primary ($.21) ($.65) ($1.88) ($1.10)
========================================
Fully diluted ($.21) ($.65) ($1.88) ($1.10)
========================================
See Notes to Consolidated Financial Statements
Page 1<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
September 30, March 31,
1996 1996
--------------------
ASSETS (Unaudited)
Current assets:
Cash $ 2,711 $2,803
Accounts receivable, net 47,829 33,541
Inventories
Finished goods 43,945 26,535
Raw materials 39,168 44,489
Prepaid expenses 1,528 832
Deferred income taxes 2,982 2,982
Net assets of Houston properties held for sale - 13,535
----------------------
Total current assets 138,163 124,717
Restricted cash and investments (Note 3) 10,863 -
Other assets 22,107 20,587
Receivable from ERLY 24,421 24,795
Property, plant and equipment, net 58,801 42,062
----------------------
Total assets $254,355 $212,161
======================
Continued on next page
See Notes to Consolidated Financial Statements
Page 2<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Thousands of Dollars)
September 30, March 31,
1996 1996
----------------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 4) $54,472 $19,826
Accounts payable and accrued expenses 62,071 53,233
Income taxes payable to ERLY - -
Current portion of long-term debt 430 106
----------------------
Total current liabilities 116,973 73,165
Long-term debt 96,750 95,609
Deferred income taxes 3,894 5,035
Commitments and contingencies (Note 6) - -
Stockholders' equity:
Preferred stock, $1.00 par value; 4,000,000
shares authorized;
Series A- 777,777 convertible shares issued
and outstanding, liquidation preference
of $19,989 778 778
Series B- 2,800,000 convertible shares issued
and outstanding, liquidation preference
of $14,000 2,800 2,800
Series C- 300,000 shares issued
and outstanding, liquidation preference
of $1,500 300 300
Common stock, $1.00 par value; 10,000,000
shares authorized; 2,443,892 shares
issued and outstanding 2,444 2,444
Paid-in capital 25,286 25,286
Retained earnings 5,838 7,458
Cumulative foreign currency translation
adjustments (708) (714)
----------------------
Total stockholders' equity 36,738 38,352
----------------------
Total liabilities and stockholders' equity $254,355 $212,161
======================
See Notes to Consolidated Financial Statements
Page 3<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited) Six Months
Ended September 30,
1996 1995
--------------------
OPERATING ACTIVITIES:
Net earnings (loss) ($1,620) $275
Adjustments to reconcile net earnings to net cash
provided by (used in) in operating activities:
Depreciation and amortization 3,237 2,924
Mortgage note discount accretion 284 56
(Gain) loss on sales of property 138 (3)
Deferred income taxes, net (1,141) (56)
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable (12,410) 2,924
Inventories 9,266 (5,784)
Prepaid expenses (643) (567)
Other assets (1,537) 83
Receivable from ERLY 374 (669)
Accounts payable and accrued expenses 2,866 (1,094)
Income taxes payable to ERLY - (1,037)
--------------------
Net cash used in
operating activities (1,186) (2,948)
INVESTING ACTIVITIES:
Property, plant and equipment additions (1,998) (2,863)
Campbell olive acquisition (33,952) -
Proceeds from sales of assets 2,299 8
Loan to ERLY - (10,500)
--------------------
Net cash used in
investing activities (33,651) (13,355)
FINANCING ACTIVITIES:
Increase (decrease) in notes payable 34,646 (16,907)
Proceeds from issuance of long-term debt 233 94,000
Mortgage notes issuance costs (3) (5,425)
Repayment of long-term debt (137) (55,300)
Other, net 6 (26)
--------------------
Net cash provided by
financing activities 34,745 16,342
--------------------
NET INCREASE (DECREASE) IN CASH (92) 39
CASH:
Beginning of the period 2,803 1,864
--------------------
End of the period $2,711 $1,903
====================
See Notes to Consolidated Financial Statements
Page 4<PAGE>
<TABLE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended September 30, 1996
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Foreign Total
Additional Currency Stock -
Preferred Common Paid-in Retained Translation Holders'
Stock Stock Capital Earnings Adjustments Equity
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance April 1, 1996 $3,878 $2,444 $25,286 $7,458 ($714) $38,352
Net earnings - - - (1,620) 6 (1,614)
--------- --------- --------- --------- --------- ---------
Balance
September 30, 1996 $3,878 $2,444 $25,286 $5,838 ($708) $36,738
========= ========= ========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements
</TABLE>
Page 5<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
The consolidated financial statements presented herein at September 30, 1996
and for each of the three and six month periods ended September 30, 1996 and
1995 are unaudited; however, all adjustments which are, in the opinion of
management necessary for a fair presentation of the financial position,
results of operations and cash flows for the periods covered have been made
and are of a normal, recurring nature. The results of the interim periods are
not necessarily indicative of results for the full year. The consolidated
balance sheet at March 31, 1996 is derived from the March 31, 1996 audited
consolidated financial statements but does not include all disclosures
required by generally accepted accounting principles. Although management
believes the disclosures are adequate, certain information and disclosures
normally included in the notes to the financial statements have been condensed
or omitted as permitted by the rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the audited financial statements and notes thereto included in American
Rice, Inc.'s ("ARI" or the "Company") Annual Report on Form 10-K for the
fiscal year ended March 31, 1996.
2. Olive Business Acquisition
On July 5, 1996, the Company acquired the domestic and foreign olive business
of Campbell Soup Company ("CSC Olives") for approximately $36 million (the
"Acquisition"). Assets acquired include domestic inventories and fixed assets,
all of the outstanding common stock of Compania Envasadora Loreto, S.A., a
Spanish company which comprises the foreign olive business, and fifty-one
percent of the stock of Sadrym California, a marketer of olive processing
machinery. The purchase was funded primarily from ARI's credit facilities. The
acquisition is accounted for as a purchase, and the results of operations of
the acquired business are included in the Company's consolidated financial
statements after July 5, 1996.
Operating results reflected in the accompanying financial statements do not
include CSC Olives operating activities before July 5, 1996. The following
summarized pro forma information assumes the Acquisition occurred on the first
day of each of the operating periods presented (thousands of dollars, except
per share):
Three Months Six Months
Ended September 30, Ended September 30,
1996 1996
-------- --------
Net Sales $122,314 $237,943
Net Earnings (loss) 886 (3,749)
Earnings (loss) per share:
Primary $(.24) $(2.75)
Fully diluted (.24) (2.75)
Page 6<PAGE>
3. Restricted Cash and Investments
In accordance with the indenture for the $100 million principle amount of
mortgage notes due 2002 (the "Notes"), proceeds from any asset sale involving
mortgage note collateral are to be held in a segregated account pledged to the
trustee of the Notes. Such proceeds may be used by ARI for investment in a
related business, for capital expenditures, and under certain circumstances to
redeem the Notes. On September 18, 1996, ARI closed the sale of it's principal
Houston property held for sale and received gross proceeds of approximately
$13.1 million. The net amount of the proceeds after expenses of the sale of
approximately $10.9 million has been omitted from the consolidated statement
of cash flows as a non-cash transaction.
4. Notes Payable
On June 7, 1996 ARI replaced its existing $47.5 million revolving credit loan
with a $47.5 million revolving credit loan from a new lender, Harris Trust and
Savings Bank ("Harris"). Funds available for borrowing (including letters of
credit of up to $20.0 million) under this revolving credit loan at any time
may not exceed 85% of eligible accounts receivable (or 90% of accounts
receivable backed by acceptable letters of credit from customers), 75% of
eligible rough rice inventory, and 70% of eligible finished goods inventory.
The line is collateralized by substantially all of ARI's accounts receivable
and inventory. In addition, this facility contains restrictive covenants
which, among other things, require the attainment of certain financial ratios,
the maintenance of a minimum level of tangible net worth (as defined), and
provide limitations on capital expenditures, lease obligations, and prohibit
dividend payments. As of September 30, 1996, ARI was not in compliance with
certain of the covenants related to the attainment of financial ratios and the
covenant related to minimum tangible net worth. Subsequently, the Company
obtained waivers from compliance with these covenants from Harris covering the
period up to and including December 30, 1996. The Company is actively seeking
amendments to these covenants causing them to be less restrictive. However,
there can be no assurance such amendments will be obtained. If the amendments
are not effective by December 31, 1996, the Company may not be in compliance
with some or all of these covenants as of December 31, 1996. The line also
contains certain cross default provisions with the indenture for the $100
million in principal amount of 13.0% mortgage notes due 2002. The Harris
revolving credit line bears interest at ARI's option at either the prime rate
or the London Interbank Offered Rate plus an applicable margin based upon
ARI's adjusted funded debt ratio as defined, with outstanding principal and
interest due upon termination of the agreement, which continues in full force
and effect until May 31, 1999 or until terminated with five days written
notice from ARI subsequent to May 31, 1997. This revolving credit loan was
amended on June 28, 1996 to increase the borrowing limit to $85.0 million.
5. Statement of Cash Flows
Borrowings under the revolving credit lines in the six months ended September
30, 1996 and 1995 totaled $166.3 million and $176 million, respectively, and
repayments during the same periods totaled $131.7 million and $192.9 million,
respectively. ARI made cash payments for interest and financing fees of
approximately $9.3 million and $6.2 million during the six months ended
September 30, 1996 and 1995, respectively. ARI paid $230 thousand and $1.2
Page 7<PAGE>
million for federal and state income taxes during the six months ended
September 30, 1996 and 1995, respectively.
6. Commitments and Contingencies
The Company is involved in legal proceedings that arise in the ordinary course
of its business, all of which are routine in nature except for the matters
noted below. While the results of such litigation cannot be predicted with
certainty, the Company believes that the resolution of such legal proceedings,
including the matters noted below, will not have a material adverse effect on
the consolidated financial position or consolidated results of operations of
ARI.
The Company and ERLY have been named as defendants in a lawsuit filed in the
district court of Harris County, Texas. This is a dispute between the general
partner of a proposed real estate development and G.D. Murphy and D.A. Murphy,
Chairman and President, respectively, of ARI and ERLY. Damages sought are in
the range of $10 million plus attorneys' fees and punitive damages. ARI and
ERLY are named as defendants in the lawsuit because of their actions to obtain
restraining orders to prevent threatened foreclosures on ERLY common stock
pledged as collateral by G.D. Murphy and to stop interference by the plaintiff
with ARI's mortgage note financing, as well as certain other alleged
activities. The Company and ERLY believe they have valid defenses in this case
and that damages, if any, will not have a material effect on the Company's
financial condition; however, as with any litigation, the ultimate outcome is
unknown. Accordingly, no provision for any liability that might result from
this litigation has been made in the accompanying consolidated financial
statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results Of Operations
The Company purchases and processes rough rice into branded and commodity rice
for sale in both international and domestic markets. Demand for branded rice
products is relatively constant and margins are typically higher than those
for commodity rice products. Demand for commodity rice products is relatively
constant globally, but demand for U.S. grown commodity rice is dependent upon
supply and its cost relative to other sources of supply. Supply and costs for
both branded and commodity products depend on many factors including
governmental actions, crop yields and weather, and such factors can persist
through one or more fiscal years.
On July 5, 1996, the Company acquired the domestic and foreign olive business
of Campbell Soup Company for approximately $36 million (the "Acquisition").
Assets acquired include domestic inventories and fixed assets, all of the
outstanding common stock of Compania Envasadora Loreto, S.A., a Spanish
company which comprises the foreign olive business, and fifty-one percent of
the stock of Sadrym California, a marketer of olive processing machinery. The
purchase was funded primarily from ARI's credit facilities. The acquisition is
accounted for as a purchase, and the results of operations of the acquired
business are included in the Company's consolidated financial statements after
July 5, 1996.
Page 8<PAGE>
Three Months Ended September 30, 1996 Compared to
Three Months Ended September 30, 1995
Net Sales. Net sales increased $31.1 million, or 34.5%, from $90.4 million in
fiscal 1996 to $121.5 million in fiscal 1997. The sales increase of $31.1
million was composed of $16.3 million in olives sales, $10.0 million in
increases in sales of exported rice, and $4.8 million in increases in sales of
rice in the U.S. and Canada.
Export rice sales increased due to higher prices and higher volume. Average
export rice prices increased approximately 9%, accounting for $5.7 million in
sales increases. The export sales volume increase accounted for a $4.3 million
sales increase. There were no major sales to Japan in the 1997 quarter or in
the corresponding period of the prior year. These sales are expected to occur
in the third and fourth quarters of the fiscal year as was the case in fiscal
1996. Domestic rice sales were higher as a result of higher average prices
partially offset by lower volume.
Gross Profit. Gross profit was 12% of sales for the fiscal 1997 quarter and
11% for the same period in 1996. Gross profit increased $5.5 million, or
56.1%, from $9.7 million in the fiscal 1996 first quarter to $15.2 million in
fiscal 1997, due primarily to the Acquisition.
Selling, general and administrative expense. Selling, general and
administrative expense increased $2.4 million to $8.4 million in the fiscal
1997 quarter due primarily to higher advertising and promotional expenses
associated with the Acquisition.
Interest. Interest expense increased $1.4 million from $4.2 million in the
fiscal 1996 period to $5.6 million in fiscal 1997 due to higher average
balances outstanding, primarily as a result of the Acquisition, and higher
average interest rates. Interest expense in both periods includes amortization
of capitalized debt issuance costs. Interest expense in the fiscal 1997 period
includes accretion of the $6 million original issue discount on the Notes.
Partially offsetting the increase in interest expense, interest income
increased $247 thousand to $600 thousand.
Six Months Ended September 30, 1996 Compared to
Six Months Ended September 30, 1995
Net Sales. Net sales increased $42.2 million, or 23.9%, from $176.8 million in
fiscal 1996 to $218.9 million in fiscal 1997. The sales increase of $42.2
million was composed of $16.3 million in olives sales, $13.2 million in
increases in sales of exported rice, and $12.7 million in increases in sales
of rice in the U.S. and Canada.
Export rice sales increased due to higher prices and higher volume. Average
export rice prices increased approximately 11%, accounting for $11.9 million
in sales increases. The export sales volume increase accounted for a $1.3
million sales increase. Domestic rice sales were higher as a result of higher
average prices partially offset by lower volume.
Gross Profit. Gross profit was 10% of sales for the fiscal 1997 quarter and
11% for the same period in 1996. Gross profit increased $2.4 million, or
Page 9<PAGE>
12.8%, from $19.3 million in fiscal 1996 to $21.7 million in fiscal 1997, due
primarily to the Acquisition offset partially by lower gross profit from rice
sales.
Selling, general and administrative expense. Selling, general and
administrative expense increased $3.0 million to $14.9 million in fiscal 1997
due primarily to higher advertising and promotional expenses associated with
the Acquisition.
Interest. Interest expense increased $2.6 million from $7.6 million in fiscal
1996 to $10.2 million in fiscal 1997 due to higher average balances
outstanding, primarily as a result of the Acquisition, and higher average
interest rates. Partially offsetting the increase in interest expense,
interest income increased $638 thousand to $1.2 million.
Liquidity and Capital Resources
ARI requires liquidity and capital primarily for the purchase of rough rice
and to invest in property, plant and equipment necessary to support
operations. Historically, ARI has financed both working capital and capital
expenditures through internally generated funds and by funds provided by
credit lines.
Comparing September 30, 1996 to March 31, 1996 balances ARI accounts
receivable increased $14.3 million to $47.8 million and inventories increased
$12.1 million to $83.1 million. The acquisition of the olive business was
responsible for $1.9 million of the increase to accounts receivable and $21.3
million of the increase to inventories.
The $100 million in principal amount of 13.0% mortgage notes due 2002 (the
"Mortgage Notes") provide for interest payments semiannually, accruing fixed
interest at an annual rate of 13.0%, an effective yield rate of 14.4%. In
addition to fixed interest, the Notes bear contingent interest of 4.0% of
consolidated cash flow (as defined) up to a limit of $40.0 million of
consolidated cash flow during the fiscal year in which such interest accrues.
Contingent interest accrues in each semiannual period (as defined) in which
consolidated cash flow in such period and the immediately preceding semiannual
period is equal to or greater than $20.0 million. Contingent interest is
payable semiannually, but ARI may elect to defer all or a portion of any such
payment to the extent that (a) the payment of such portion of contingent
interest will cause ARI's adjusted fixed charge coverage ratio (as defined)
for the two consecutive applicable semiannual periods to be less than 2.0:1
and (b) the principal of the Notes corresponding to such contingent interest
has not then matured and become due and payable. The consolidated cash flow
for the quarter ended September 30, 1996 was $8.3 million. No continent
interest was accrued or paid during the quarter. The total contingent interest
accrued at September 30, 1996 was $447 thousand.
On June 7, 1996 ARI replaced its existing $47.5 million revolving credit loan
with a $47.5 million revolving credit loan from a new lender, Harris Trust and
Savings Bank ("Harris"). Funds available for borrowing (including letters of
credit of up to $20.0 million) under this revolving credit loan at any time
may not exceed 85% of eligible accounts receivable (or 90% of accounts
receivable backed by acceptable letters of credit from customers), 75% of
Page 10<PAGE>
eligible rough rice inventory, and 70% of eligible finished goods inventory.
The line is collateralized by substantially all of ARI's accounts receivable
and inventory. In addition, this facility contains restrictive covenants
which, among other things, require the attainment of certain financial ratios,
the maintenance of a minimum level of tangible net worth (as defined), and
provide limitations on capital expenditures, lease obligations, and prohibit
dividend payments. As of September 30, 1996, ARI was not in compliance with
certain of the covenants related to the attainment of financial ratios and the
covenant related to minimum tangible net worth. Subsequently, the Company
obtained waivers from compliance with these covenants from Harris covering the
period up to and including December 30, 1996. The Company is actively seeking
amendments to these covenants causing them to be less restrictive. However,
there can be no assurance such amendments will be obtained. If the amendments
are not effective by December 31, 1996, the Company may not be in compliance
with some or all of these covenants as of December 31, 1996. The line also
contains certain cross default provisions with the indenture for the $100
million in principal amount of 13.0% mortgage notes due 2002. The Harris
revolving credit line bears interest at ARI's option at either the prime rate
or the London Interbank Offered Rate plus an applicable margin based upon
ARI's adjusted funded debt ratio as defined, with outstanding principal and
interest due upon termination of the agreement, which continues in full force
and effect until May 31, 1999 or until terminated with five days written
notice from ARI subsequent to May 31, 1997. This revolving credit loan was
amended on June 28, 1996 to increase the borrowing limit to $85.0 million. The
outstanding balance on this loan at September 30, 1996 was $48.4 million. At
September 30, 1996, the borrowing base under this line of credit was $71.8
million and the maximum borrowing during the period of June 7, 1996 through
September 30, 1996 was $63.6 million.
In accordance with the indenture for the $100 million principle amount of
mortgage notes due 2002 (the "Notes"), proceeds from any asset sale involving
mortgage note collateral are to be held in a segregated account pledged to the
trustee of the Notes. Such proceeds may be used by ARI for investment in a
related business, for capital expenditures, and under certain circumstances to
redeem the Notes. On September 18, 1996, ARI closed the sale of it's principal
Houston property held for sale and received gross proceeds of approximately
$13.1 million. The net amount of the proceeds after expenses of the sale of
approximately $10.9 million has been omitted from the consolidated statement
of cash flows as a non-cash transaction.
Capital expenditures, limited by the indenture for the Mortgage Notes to
$5.5 million per fiscal year (with carryover provisions as defined) if the
consolidated cash flow (as defined) does not exceed $30 million per year, were
$2 million and $2.9 million for the six months ended September 30, 1996 and
1995, respectively. Management anticipates the $5.5 million limitation will
allow for maintenance of existing facilities and will also support limited
growth.
ARI's Preferred B and C stock carries annual cumulative, non-participating
dividends of $5.2 million and $750 thousand respectively. No dividends have
been declared or paid as of September 30, 1996. As of September 30, 1996, the
Preferred B dividends accumulated but not declared are $17.267 million and the
Preferred C dividends accumulated but not declared are $2.5 million.
Page 11<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in legal proceedings that arise in the ordinary course
of its business, all of which are routine in nature except for the matters
noted below. While the results of such litigation cannot be predicted with
certainty, the Company believes that the resolution of such legal proceedings,
including the matters noted below, will not have a material adverse effect on
the consolidated financial position or consolidated results of operations of
ARI.
The Company and ERLY have been named as defendants in a lawsuit filed in the
district court of Harris County, Texas. This is a dispute between the general
partner of a proposed real estate development and G.D. Murphy and D.A. Murphy,
Chairman and President, respectively, of ARI and ERLY. Damages sought are in
the range of $10 million plus attorneys' fees and punitive damages. ARI and
ERLY are named as defendants in the lawsuit because of their actions to obtain
restraining orders to prevent threatened foreclosures on ERLY common stock
pledged as collateral by G.D. Murphy and to stop interference by the plaintiff
with ARI's mortgage note financing, as well as certain other alleged
activities. The Company and ERLY believe they have valid defenses in this case
and that damages, if any, will not have a material effect on the Company's
financial condition; however, as with any litigation, the ultimate outcome is
unknown. Accordingly, no provision for any liability that might result from
this litigation has been made in the accompanying consolidated financial
statements.
Page 12<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.24 Amended and Restated Secured Credit Agreement between American Rice,
Inc. as Borrower and Harris Trust and Savings Bank
11.1 Computation of Earnings Per Share
27 Financial Data Schedule
(b) During the quarter ended September 30, 1996, Registrant filed a report on
Form 8-K/A regarding the acquisition of the olive business from Campbell Soup
Co.
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.
American Rice, Inc.
-------------------
Registrant
/S/ Joseph E. Westover
---------------------------
Joseph E. Westover
Vice-President / Controlle
Page 13<PAGE>
Exhibit 11.1
AMERICAN RICE, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands of Dollars Except Per Share Data)
Three Months Six Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
--------------------------------------------
PRIMARY EARNINGS (LOSS) PER SHARE
Net earnings (loss) $976 ($101) ($1,620) $275
Less dividends on preferred stock:
Series B (1,295) (1,295) (2,590) (2,590)
Series C (188) (188) (375) (375)
--------------------------------------------
(1,483) (1,483) (2,965) (2,965)
--------------------------------------------
Loss applicable to
common stock ($507) ($1,584) ($4,585) ($2,690)
============================================
Average common and common
equivalent shares outstanding:
Common 2,444 2,444 2,444 2,444
Preferred Series A - - - -
--------------------------------------------
2,444 2,444 2,444 2,444
============================================
Loss per share
applicable to common stock ($.21) ($.65) ($1.88) ($1.10)
============================================
Continued on next page
<PAGE>
Exhibit 11.1 (Continued)
AMERICAN RICE, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands of Dollars Except Per Share Data)
Three Months Six Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
--------------------------------------------
FULLY DILUTED EARNINGS PER SHARE *
Net earnings (loss) $976 ($101) ($1,620) $275
Less dividends on preferred stock:
Series C (188) (188) (375) (375)
--------------------------------------------
Earnings (loss) applicable to
common stock $788 ($289) ($1,995) ($100)
============================================
Average common and common
equivalent shares outstanding:
Common 2,444 2,444 2,444 2,444
Preferred Series A 778 778 778 778
Preferred Series B 5,600 5,600 5,600 5,600
--------------------------------------------
8,822 8,822 8,822 8,822
============================================
Earnings (loss) per share
applicable to common stock $.09 ($.03) ($.23) ($.01)
============================================
* This calculation is presented in accordance with Regulation
S-K item 601(b)(11) although it is contrary to paragraphs 14, 30,
and 40 of APB Opinion No. 15 because it produces an antidilutive
result. The Opinion provides that a computation on a fully
diluted basis which results in an improvement in earnings
per share when compared to primary earnings per share
(antidilution) not be taken into account. Therefore fully diluted
earnings per share reported on the income statement are the same
as primary earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 2,711
<SECURITIES> 0
<RECEIVABLES> 49,443
<ALLOWANCES> 1,614
<INVENTORY> 83,113
<CURRENT-ASSETS> 138,163
<PP&E> 82,648
<DEPRECIATION> 23,847
<TOTAL-ASSETS> 254,355
<CURRENT-LIABILITIES> 116,973
<BONDS> 96,750
0
3,878
<COMMON> 2,444
<OTHER-SE> 30,416
<TOTAL-LIABILITY-AND-EQUITY> 254,355
<SALES> 218,920
<TOTAL-REVENUES> 218,920
<CGS> 197,210
<TOTAL-COSTS> 197,210
<OTHER-EXPENSES> 352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,188
<INCOME-PRETAX> (2,531)
<INCOME-TAX> (911)
<INCOME-CONTINUING> (1,620)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,620)
<EPS-PRIMARY> (1.88)
<EPS-DILUTED> (1.88)
</TABLE>
