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 December 31, 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 February 7, 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 Nine Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
----------------------------------------
Net sales $153,699 $101,440 $372,619 $278,201
Cost of sales 130,701 93,131 327,911 250,638
----------------------------------------
Gross profit 22,998 8,309 44,708 27,563
Selling, general and
administrative expenses 12,997 6,158 27,864 18,003
Provision for loss on
disposal of property - 7,200 - 7,200
----------------------------------------
Operating income 10,001 (5,049) 16,844 2,360
Interest expense 5,738 4,914 15,926 12,516
Interest income (615) (642) (1,781) (1,170)
Other (income) and expense 50 (117) 402 (212)
----------------------------------------
Earnings (loss) before
income taxes 4,828 (9,204) 2,297 (8,774)
Provision for
income taxes (benefit) 1,738 (3,313) 827 (3,159)
----------------------------------------
Net earnings (loss) $3,090 ($5,891) $1,470 ($5,615)
========================================
Preferred stock dividend
requirements 1,483 1,483 4,448 4,448
----------------------------------------
Net earnings (loss) applicable
to common stock $1,607 ($7,374) ($2,978) ($10,063)
========================================
Loss per applicable
common and common equivalent
share:
Primary $.50 ($3.02) ($1.22) ($4.12)
========================================
Fully diluted $.33 ($3.02) ($1.22) ($4.12)
========================================
See Notes to Consolidated Financial Statement
Page 1<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31, March 31,
1996 1996
--------------------
ASSETS (Unaudited)
Current assets:
Cash $ 3,501 $2,803
Accounts receivable, net 71,508 33,541
Inventories
Finished goods 58,425 26,535
Raw materials 54,458 44,489
Prepaid expenses 934 832
Deferred income taxes 2,982 2,982
Net assets of Houston properties held for sale - 13,535
----------------------
Total current assets 191,808 124,717
Restricted cash and investments (Note 3) 10,472 -
Other assets 21,812 20,587
Receivable from ERLY 24,087 24,795
Property, plant and equipment, net 58,279 42,062
----------------------
Total assets $306,458 $212,161
======================
Continued on next page
See Notes to Consolidated Financial Statement
Page 2<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Thousands of Dollars)
December 31, March 31,
1996 1996
----------------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 4) $ 67,117 $19,826
Accounts payable and accrued expenses 96,510 53,233
Current portion of long-term debt 437 106
----------------------
Total current liabilities 164,064 73,165
Long-term debt 96,923 95,609
Deferred income taxes 5,632 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 8,928 7,458
Cumulative foreign currency translation
adjustments (697) (714)
----------------------
Total stockholders' equity 39,839 38,352
----------------------
Total liabilities and stockholders' equity $306,458 $212,161
======================
See Notes to Consolidated Financial Statement
Page 3<PAGE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited) Nine Months
Ended December 31,
1996 1995
--------------------
OPERATING ACTIVITIES:
Net earnings (loss) $1,470 ($5,615)
Adjustments to reconcile net earnings to net cash
provided by (used in) in operating activities:
Depreciation and amortization 5,122 4,377
Mortgage note discount accretion 442 190
(Gain) loss on sales of property 142 7,200
Deferred income taxes, net 597 (3,390)
Changes in assets and liabilities that
provided (used) cash (excluding working capital
from the Campbell olive acquisition:
Accounts receivable (36,089) (8,896)
Inventories (20,504) (14,681)
Prepaid expenses (49) (106)
Other assets (1,672) 128
Receivable from ERLY 708 (2,028)
Accounts payable and accrued expenses 37,305 2,926
Income taxes payable to ERLY - (1,037)
--------------------
Net cash used in
operating activities (12,528) (20,932)
INVESTING ACTIVITIES:
Property, plant and equipment additions (2,933) (4,390)
Campbell olive acquisition (33,952) -
Proceeds from sales of assets 2,690 85
Loan to ERLY - (10,500)
--------------------
Net cash used in
investing activities (34,195) (14,805)
FINANCING ACTIVITIES:
Increase (decrease) in notes payable 47,291 1,788
Proceeds from issuance of long-term debt 348 95,290
Mortgage notes issuance costs (5) (6,620)
Repayment of long-term debt (230) (55,300)
Other, net 17 (26)
--------------------
Net cash provided by
financing activities 47,421 35,132
--------------------
NET INCREASE (DECREASE) IN CASH 698 (605)
CASH:
Beginning of the period 2,803 1,864
--------------------
End of the period $3,501 $1,259
====================
See Notes to Consolidated Financial Statement
Page 4<PAGE>
<TABLE>
AMERICAN RICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended December 31, 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 - - - 1,470 - 1,470
Foreign currency
translation - - - - 17 17
--------- --------- --------- --------- --------- ---------
Balance
December 31, 1996 $3,878 $2,444 $25,286 $8,928 ($697) $39,839
========= ========= ========= ========= ========= =========
<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 December 31, 1996
and for each of the three and nine month periods ended December 31, 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 the operating period presented (thousands of dollars, except per
share):
Nine Months
Ended December 31,
1996
--------
Net Sales $391,642
Net Earnings (loss) (659)
Earnings (loss) per share:
Primary $ (2.09)
Fully diluted (2.09)
Page 6<PAGE>
3. Restricted Cash and Investments
In accordance with the indenture for the $100 million in principal amount of
13.0% mortgage notes due 2002 (the "Mortgage Notes") proceeds from any asset
sale involving Mortgage Note collateral are to be held in a segregated account
pledged to the trustee of the Mortgage Notes. Such proceeds may be used by ARI
for investment in a related business, for capital expenditures, and under
certain circumstances to redeem the Mortgage Notes. On September 18, 1996, ARI
closed the sale of its 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 $10.5 million has been omitted
from the consolidated statement of cash flows as a non-cash transaction.
Pursuant to the terms of the indenture for the Mortgage Notes, the Company
offered to purchase Mortgage Notes with substantually all of the net proceeds
of the sale. Such offers expired on February 7, 1997, with a total $1.0
million in aggregate principal amount of Mortgage Notes tendered for purchase.
The balance of the proceeds of the sale of the property, approximately $9.5
million, will be used for general corporate purposes.
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. The Company has obtained
amendments to these covenants causing them to be less restrictive. The Company
is now in compliance with all such covenants. The line also contains certain
cross default provisions with the indenture for Mortgage Notes. 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 nine months ended December
31, 1996 and 1995 totaled $217 million and $289 million, respectively, and
repayments during the same periods totaled $170 million and $287 million,
respectively. ARI made cash payments for interest and financing fees of
approximately $12.2 million and $7.3 million during the nine months ended
December 31, 1996 and 1995, respectively. ARI paid $253 thousand and $1.3
million for federal and state income taxes during the nine months ended
December 31, 1996 and 1995, respectively.
Page 7<PAGE>
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. 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.
Historically, sales of olives have pronounced seasonal elements, with higher
sales occurring in conjunction with holiday consumption. Accordingly, because
the quarterly period ending December 31 contains both the Thanksgiving and
Christmas holidays, the two holidays of highest consumption, it will have
significantly higher sales than will the other three quarters of the fiscal
year. Margins are expected to follow the seasonal pattern of sales.
Page 8<PAGE>
Three Months Ended December 31, 1996 Compared to
Three Months Ended December 31, 1995
Net Sales. Net sales increased $52.3 million, or 51.5%, from $101.4 million in
fiscal 1996 to $153.7 million in fiscal 1997. The sales increase was composed
of $35.6 million in olives sales, $12.2 million in increases in sales of
exported rice, and $4.4 million in increases in sales of rice in the U.S. and
Canada.
Export rice sales increased due to higher prices and higher volume. The export
sales volume increase accounted for a $9.4 million sales increase. Average
export rice prices increased approximately 4%, accounting for $2.8 million in
sales increases. Domestic rice sales were higher as a result of higher average
prices and higher volume.
In late January 1997, ARI experienced a disruption of shipments to its
customers in Saudi Arabia due to contractual difficulties with a third party
processing facility in Saudi Arabia, and alternative processing and
distribution means may be employed.
Gross Profit. Gross profit was 15.0% of sales for the fiscal 1997 quarter and
8.2% for the same period in 1996. Gross profit increased $14.7 million from
$8.3 million in the fiscal 1996 third quarter to $23.0 million in fiscal 1997,
due primarily to the Acquisition.
Selling, general and administrative expense. Selling, general and
administrative expense increased $6.8 million to $13.0 million in the fiscal
1997 quarter due primarily to higher advertising and promotional expenses
associated with the Acquisition.
Interest. Interest expense increased $824 thousand from $4.9 million in the
fiscal 1996 period to $5.7 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 $100
million in principal amount of 13.0% mortgage notes due 2002.
Nine Months Ended December 31, 1996 Compared to
Nine Months Ended December 31, 1995
Net Sales. Net sales increased $94.4 million, or 33.9%, from $278.2 million in
fiscal 1996 to $372.6 million in fiscal 1997. The sales increase of $94.4
million was composed of $54.2 million in olives sales, $25.4 million in
increases in sales of exported rice, and $14.8 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 $14.5 million in
sales increases. The export sales volume increase accounted for a $10.9
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 12.0% of sales for the fiscal 1997 period and
9.9% for the same period in 1996. Gross profit increased $17.1 million, or
62.2%, from $27.6 million in fiscal 1996 to $44.7 million in fiscal 1997, due
primarily to the Acquisition.
Page 9<PAGE>
Selling, general and administrative expense. Selling, general and
administrative expense increased $9.9 million to $27.9 million in fiscal 1997
due primarily to higher advertising and promotional expenses associated with
the Acquisition.
Interest. Interest expense increased $3.4 million from $12.5 million in fiscal
1996 to $15.9 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 $611 thousand to $1.8 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 December 31, 1996 to March 31, 1996 balances ARI accounts receivable
increased $38 million to $71.5 million and inventories increased $41.9 million
to $112.9 million.
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 Mortgage 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 Mortgage Notes corresponding to such contingent
interest has not then matured and become due and payable. The consolidated
cash flow for the quarter ended December 31, 1996 was $13.1 million. No
continent interest was accrued or paid during the quarter. The total
contingent interest accrued and unpaid at December 31, 1996 was $447 thousand.
An additional $861 thousand of contingent interest will accrue over the period
from March 1 to August 31, 1997. It is anticipated that because the applicable
fixed cost coverage ratio permits deferral of payment of contingent interest
at August 31, 1997, such payment will be deferred.
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. 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
Page 10<PAGE>
related to minimum tangible net worth. The Company has obtained amendments to
these covenants causing them to be less restrictive. The Company is now in
compliance with all such covenants. The line also contains certain cross
default provisions with the indenture for Mortgage Notes. 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.
In accordance with the indenture for the $100 million in principal amount of
13.0% mortgage notes due 2002, proceeds from any asset sale involving Mortgage
Note collateral are to be held in a segregated account pledged to the trustee
of the Mortgage Notes. Such proceeds may be used by ARI for investment in a
related business, for capital expenditures, and under certain circumstances to
redeem the Mortgage Notes. On September 18, 1996, ARI closed the sale of its
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 $10.5 million has been omitted from the consolidated
statement of cash flows as a non-cash transaction. Pursuant to the terms of
the indenture for the Mortgage Notes, the Company offered to purchase Mortgage
Notes with substantually all of the net proceeds of the sale. Such offers
expired on February 7, 1997, with a total $1.0 million in aggregate principal
amount of Mortgage Notes tendered for purchase. The balance of the proceeds of
the sale of the property, approximately $9.5 million, will be used for general
corporate purposes.
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
$2.9 million and $4.4 million for the nine months ended December 31, 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 December 31, 1996. As of December 31, 1996, the
Preferred B dividends accumulated but not declared are $18.562 million and the
Preferred C dividends accumulated but not declared are $2.688 million.
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
Page 11<PAGE>
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of Earnings Per Share
27 Financial Data Schedule
(b) During the quarter ended December 31, 1996, Registrant did not file any
Form 8-K Reports.
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 / Controller
Page 12<PAGE>
Exhibit 11.1
AMERICAN RICE, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands of Dollars Except Per Share Data)
Three Months Nine Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
--------------------------------------------
PRIMARY EARNINGS (LOSS) PER SHARE
Net earnings (loss) $3,090 ($5,891) $1,470 ($5,615)
Less dividends on preferred stock:
Series B (1,295) (1,295) (3,885) (3,885)
Series C (188) (188) (563) (563)
--------------------------------------------
(1,483) (1,483) (4,448) (4,448)
--------------------------------------------
Earnings (loss) applicable
to common stock $1,607 ($7,374) ($2,978) ($10,063)
============================================
Average common and common
equivalent shares outstanding:
Common 2,444 2,444 2,444 2,444
Preferred Series A 778 - - -
--------------------------------------------
3,222 2,444 2,444 2,444
============================================
Earnings (loss) per share
applicable to common stock $.50 ($3.02) ($1.22) ($4.12)
============================================
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 Nine Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
--------------------------------------------
FULLY DILUTED EARNINGS PER SHARE
Net earnings (loss) $3,090 ($5,891) $1,470 ($5,615)
Less dividends on preferred stock:
Series C (188) (188) (563) (563)
--------------------------------------------
Earnings (loss) applicable to
common stock $2,902 ($6,079) $907 ($6,178)
============================================
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 $.33 ($.69)* $.10* ($.70)*
============================================
* 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.
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<ARTICLE> 5
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<S> <C>
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> 9-MOS
<CASH> 3,501
<SECURITIES> 0
<RECEIVABLES> 83,226
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<PP&E> 83,542
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0
3,878
<COMMON> 2,444
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<SALES> 372,619
<TOTAL-REVENUES> 372,619
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<INTEREST-EXPENSE> 15,926
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<EPS-PRIMARY> (1.22)
<EPS-DILUTED> (1.22)
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