<PAGE>
UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 26, 1998
-------------------------
AgriBioTech, Inc.
-------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 1-1935 85-0325742
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
120 Corporate Park Drive, Henderson, Nevada (89014)
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 566-2440
--------------
<PAGE>
EXPLANATORY NOTE
This amendment on Form 8-K/A is submitted to correct certain clerical errors in
previously filed information and to clarify certain disclosures. Therefore, the
Company hereby amends its Form 8-K in accordance with Rule 12b-15 under the
Securities Exchange Act of 1934.
<PAGE>
[LETTERHEAD OF PRICE, KOONTZ & DAVIES, P.C.]
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Willamette Seed Co.
We have audited the accompanying balance sheets of Willamette Seed Co. as of
June 30, 1997 and 1996, and the related statements of income, retained earnings,
and cash flows for the years then ended. These financial statements are the
responsibility of the management of Willamette Seed Co. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willamette Seed Co. as of June
30, 1997 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Price, Koontz & Davies, P.C.
September 2, 1997
Albany, Oregon
<PAGE>
WILLAMETTE SEED CO.
BALANCE SHEETS
June 30, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,049 $ 68,499
Accounts and notes receivable 8,435,244 7,862,682
Inventories 5,133,384 4,898,680
Prepaid expenses 158,306 120,497
Prepaid income taxes 57,767 --
Deferred income taxes 221,058 213,827
----------- -----------
TOTAL CURRENT ASSETS 14,010,808 13,164,185
PROPERTY, PLANT, AND EQUIPMENT 3,754,172 3,136,028
OTHER ASSETS
Cash value of life insurance 1,315,776 1,156,335
Protected plant varieties 12,500 25,000
----------- -----------
1,328,276 1,181,335
----------- -----------
$19,093,256 $17,481,548
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ 146,004 $ --
Note payable - bank 4,787,000 3,271,000
Notes payable - others 1,435,653 2,210,453
Accounts payable and accrued liabilities 8,985,240 8,736,251
Current portion of long-term debt 177,503 102,948
----------- -----------
TOTAL CURRENT LIABILITIES 15,531,400 14,320,652
LONG-TERM DEBT 1,091,806 909,476
STOCKHOLDERS' EQUITY
Common stock, no par value; 200,000
shares authorized; 198,750 and 197,750
shares outstanding, respectively 485,000 475,000
Retained earnings 1,985,050 1,776,420
----------- -----------
2,470,050 2,251,420
----------- -----------
$19,093,256 $17,481,548
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
WILLAMETTE SEED CO.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
SALES $41,813,922 $41,439,169
COST OF SALES 33,965,669 34,266,273
----------- -----------
GROSS PROFIT 7,848,253 7,172,896
EXPENSES
General and administrative expenses 6,783,850 6,192,685
Interest 667,664 480,192
Officers' life insurance 42,151 49,279
----------- -----------
7,493,665 6,722,156
----------- -----------
NET INCOME BEFORE OTHER INCOME 354,588 450,740
OTHER INCOME 13,372 35,465
----------- -----------
NET INCOME BEFORE INCOME TAXES 367,960 486,205
INCOME TAXES 159,330 195,838
----------- -----------
NET INCOME 208,630 290,367
BEGINNING RETAINED EARNINGS 1,776,420 1,486,053
----------- -----------
ENDING RETAINED EARNINGS $ 1,985,050 $ 1,776,420
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
WILLAMETTE SEED CO.
STATEMENTS OF CASH FLOWS
Years ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 208,630 $ 290,367
Adjustments to reconcile net income
to cash flows:
Depreciation and amortization 767,291 617,114
(Increase) decrease in net receivables (572,562) (624,572)
(Increase) decrease in inventories (234,704) (401,479)
(Increase) decrease in prepaid expenses (37,809) (7,376)
(Increase) decrease in prepaid income taxes (57,767) --
(Increase) decrease in deferred income taxes (7,231) (30,231)
Increase (decrease) in note payable - bank 1,516,000 (438,000)
Increase (decrease) in note payable - other (774,800) 153,100
Increase (decrease) in accounts payable 248,989 2,227,501
Increase (decrease) in accrued income taxes -- (66,841)
Increase (decrease) in current portion of long-term debt 74,555 8,577
(Increase) decrease in life insurance (159,441) (147,352)
----------- -----------
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 971,151 1,580,808
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures - net (1,374,925) (1,571,260)
Sale of fixed assets 1,990 40,942
----------- -----------
NET CASH FLOWS (USED) BY
INVESTING ACTIVITIES (1,372,935) (1,530,318)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 369,576 --
Repayment of long-term debt (187,246) (101,558)
Issuance of common shares 10,000 125,000
Increase (decrease) in bank overdraft 146,004 (10,157)
----------- -----------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 338,334 13,285
----------- -----------
NET INCREASE (DECREASE) IN CASH (63,450) 63,775
CASH AT BEGINNING OF YEAR 68,499 4,724
----------- -----------
CASH (OVERDRAFT) AT END OF YEAR $ 5,049 $ 68,499
=========== ===========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 629,117 $ 478,550
Income taxes paid 192,727 308,841
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
WILLAMETTE SEED CO.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
THE COMPANY
The Company operates an agribusiness at various locations in the Willamette
Valley of Oregon. The Company's primary products are fertilizers, chemicals,
and various grass seeds which are sold to customers throughout the United
States, but primarily to customers in the Willamette Valley of Oregon. The
Company's continuing business is heavily dependent upon the agribusiness
economic sector.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present, on an accrual basis, the operating results
and the financial position of Willamette Seed Co.
CASH
The Company invests excess cash balances in a money market fund via Key Bank
of Oregon's cash management program.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company uses the reserve method to provide for doubtful accounts.
INVENTORIES
Inventories are stated at the lower of cost or market, generally on an
identified cost basis for grass seed and the first in, first out cost flow
assumption for valuing fertilizers and chemicals.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements which significantly increase asset
values or extend useful lives are capitalized. Expenditures for maintenance
and repairs are expensed as incurred. Depreciation for financial purposes is
computed using various methods, primarily declining balance methods for
personal property and the straight line method for real property. Estimated
lives generally range from 15 to 39 years for buildings and 5 to 10 years for
machinery and equipment. Depreciation for tax purposes is the same.
INTANGIBLE ASSETS
Protected plant varieties are being amortized over their estimated useful
lives of ten years.
<PAGE>
CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of its cash and cash equivalents and trade
receivables.
The trade receivables balances reflect the Company's source of revenue from
their nationwide grass seed customer base and their local chemical and
fertilizer customer base. The local chemical and fertilizer customer base
credit risk is minimized by filing crop liens on problem accounts.
The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables, and notes payable. The book
values of these accounts are considered to be representative of their
respective fair values.
ADVERTISING EXPENDITURES
Advertising expenditures are expensed as incurred.
ENVIRONMENTAL EXPENDITURES
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments are made or remedial efforts are probable and the costs can be
reasonably estimated.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INCOME TAXES
Income taxes are computed on the basis of financial statement income.
Differences between financial and tax reporting in the timing of recognition
of income, expenses, and tax credits give rise to deferred taxes. The Company
accounts for tax credits on the flow-through method, whereby the provision for
income taxes is reduced to reflect credits when realized.
ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Accounts receivable $8,685,244 $8,091,787
Notes receivable -- 20,895
---------- ----------
8,685,244 8,112,682
Less allowance for doubtful accounts 250,000 250,000
---------- ----------
$8,435,244 $7,862,682
========== ==========
</TABLE>
<PAGE>
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consists of:
<TABLE>
<CAPTION>
1997 1996 Life in years
------------ ----------- --------------
<S> <C> <C> <C>
Land $ 364,183 $ 364,183 --
Buildings and improvements 2,704,575 2,466,962 15-39
Leasehold improvements 90,666 90,666 7
Machinery and equipment 5,338,122 4,202,800 5-10
---------- ----------
8,497,546 7,124,611
Accumulated depreciation 4,743,374 3,988,583
---------- ----------
$3,754,172 $3,136,028
========== ==========
</TABLE>
NOTE PAYABLE - BANK
The note payable - bank is a nondisclosable line of credit loan which is
renewed each November 1. This note has an $8,000,000 limit and carries
interest at the bank's announced prime rate. This note contains an option to
fix amounts at LIBOR/BA plus 2.50% for a period of 30, 60, or 90 days. No
prepayment is allowed during these selected periods. At June 30, 1997,
$2,000,000 was at LIBOR/BA plus 2.50%. The note payable - bank is secured by
most of the Company assets, as well as the personal guarantees of the
shareholders.
NOTES PAYABLE - OTHERS
Notes payable - others are primarily demand notes to the shareholders with the
annual interest rate at .25% less than the current bank rate.
<TABLE>
<CAPTION>
LONG-TERM DEBT
1997 1996
-------- --------
<S> <C> <C>
Notes payable to the shareholders are demand notes with
interest stated at .25% less than the current bank rate
with interest payable at least annually. The stockholders
have indicated they will not demand payment in the next
twelve months. $153,249 $153,249
8.85%, adjustable October 5, 1999, note payable to Key
Bank of Oregon, payable in monthly payments of $14,573
until October 5, 2002 at which time the entire unpaid
principal balance shall become due. This note is secured
by the machinery and equipment of the Company as well
as the personal guarantees of the shareholders. 757,296 859,175
Lease purchase agreement with Hyster Sales Company,
payable in 36 monthly payments of $641. This lease was
capitalized per Statement of Financial Accounting Standards
No. 13. Interest is 7.993% 18,420 --
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Lease purchase agreement with Keycorp Leasing Ltd., payable
in 60 monthly payments of $7,278. This lease was capitalized per
Statement of Financial Accounting Standards No. 13. Interest
is 9.120%. This lease is secured by machinery and equipment
of the Company $ 340,344 $ --
---------- ----------
1,269,309 1,012,424
Less current portion 177,503 102,948
---------- ----------
$1,091,806 $ 909,476
========== ==========
</TABLE>
The aggregate maturities of long-term debt for the five years after June 30,
1997 are $193,971, $209,384, $223,455, $229,667, and $82,080, respectively.
COMMON STOCK
During fiscal 1997, 1,000 shares of common stock were issued to existing
shareholders at $10 a share. During fiscal 1996, an additional 10,500 shares
of common stock were issued to an existing shareholder at $10 a share. Two
thousand shares were also issued to new shareholders at $10 a share during
fiscal 1996.
A summary of activity in common stock is as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------ --------------------------
Shares Amount Shares Amount
------- ------- ------- -------
<S> <C> <C> <C> <C>
Beginning of year 197,750 $475,000 185,250 $350,000
Stock option exercised - - 10,500 105,000
Stock sold and issued 1,000 10,000 2,000 20,000
------- -------- ------- --------
End of year 198,750 $485,000 197,750 $475,000
======= ======== ======= ========
</TABLE>
STOCK OPTIONS
The Company adopted an incentive stock option plan in 1986 for a key employee.
Under the terms of this plan, a total of 22,500 common shares were reserved
for future issuance. Options granted under this plan are at 100% of the fair
market value of the shares on the day of grant and therefore no expense was
reflected. The options expire ten years after the date of grant. All 10,000
options outstanding at July 1, 1995 were exercised during the year ended June
30, 1996.
INCOME TAXES
The provision for income taxes consists of:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Federal income tax $140,869 $205,597
Oregon excise tax 25,692 20,472
-------- --------
166,561 226,069
Deferred income taxes (7,231) (30,231)
-------- --------
Total income taxes $159,330 $195,838
======== ========
</TABLE>
<PAGE>
The difference between actual income tax expense and the expected income tax
expense at the federal statutory rate is primarily due to state income taxes.
A deferred income tax charge is reflected on the balance sheet due to the
capitalization of certain inventory costs for income tax purposes, as required
by the Tax Reform Act of 1986. These additional costs are not included in
inventories for financial statement purposes. The allowance for doubtful
accounts is used for financial statement purposes but not for income tax
purposes, resulting in an additional deferred income tax charge.
Deferred tax assets are due to the following:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Capitalization of inventory costs per IRC Sec 263A $125,168 $117,937
Bad debt reserve 95,890 95,890
-------- --------
$221,058 $213,827
</TABLE>
PENSION PLAN
The Company has a qualified employee profit sharing pension plan.
Contributions to the plan are voluntary as determined annually by the board of
directors, but may not exceed 15% of the annual compensation of covered
employees. Contributions of $290,148 and $350,000, respectively, were made for
the years ended June 30, 1997 and 1996. The Company also maintains a qualified
401(k) plan for its employees. The electing employees may defer up to 10% of
their earnings during any one year period. The Company does not match any of
these deferrals.
LEASES
The Company has various land leases from Southern Pacific Railroad and
Burlington Northern Railroad. These leases are renewable annually at the
option of the lessor.
CONTINGENCIES
The Company is a party to various contingencies, generally incidental to its
business. Although the ultimate disposition of these contingencies cannot be
predicted with certainty, it is the present opinion of the Company's
management that the outcome of any claim which is pending or threatened will
not have a material adverse effect on the financial condition of Willamette
Seed Co.
In accordance with the Company's accounting policy described in Summary of
Significant Accounting Policies, liabilities are recorded for environmental
matters generally on the completion of feasibility studies or the settlement
of claims, but in no event later than the Company's commitment to a plan of
action. The Company does not currently possess sufficient information to
reasonably estimate the amounts of the liabilities to be recorded upon future
completion of studies.
RELATED PARTY TRANSACTIONS
The Company leased its experimental farm property from a shareholder under a
lease which expires on December 31, 2009. The cash rent paid, and to be paid
is $12,320 per year for the land plus 1% per month of the present value of the
improvements upon the land.
One of the Company's shareholders is a grass seed farmer who sells seed
through and purchases chemicals and fertilizers from Willamette Seed Co. Seed
transactions amounted to $3,217,710, and chemical and fertilizer transactions
amounted to $1,054,359 for fiscal 1997. For 1996, seed transactions amounted
to $3,570,189, and chemical and fertilizer transactions amounted to
$1,006,270.
<PAGE>
WILLAMETTE SEED CO.
BALANCE SHEETS
MARCH 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
1998
----------
<S> <C>
ASSETS
Current Assets
Cash $1,809
Accounts and notes receivable 3,670,967
Inventories 7,933,674
Prepaid expenses 35,003
Deferred income taxes 221,058
-----------
Total Current Assets 11,862,511
-----------
Property, Plant and Equipment 4,394,764
-----------
Other Assets
Cash value of life insurance 1,456,593
Protected plant varieties 12,500
-----------
1,469,093
-----------
$17,726,368
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft $807,308
Note payable - bank 6,061,000
Notes payable - others 1,688,403
Accounts payable and accrued liabilities 5,220,444
Accrued income taxes 115,667
Current portion of long term debt 211,683
-----------
Total Current Liabilities 14,104,505
-----------
Long Term Debt
Note payable - bank 558,551
Notes payable - stockholders' 153,249
-----------
711,800
-----------
Stockholders' Equity
Common stock, no par value; 200,000 shares
authorized: 199,750 shares and 197,750
shares outstanding, respectively. 495,000
Retained earnings 2,415,063
-----------
2,910,063
-----------
$17,726,368
===========
</TABLE>
<PAGE>
WILLAMETTE SEED CO.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Nine months ended March 31, 1998 and 1997
Unaudited
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
SALES $25,686,733 $26,488,966
COST OF SALES 20,093,280 20,815,665
----------- -----------
GROSS PROFIT 5,593,453 5,673,301
----------- -----------
EXPENSES
General and administrative expenses 4,418,442 4,359,632
Interest expense 506,749 413,822
----------- -----------
4,925,191 4,773,454
----------- -----------
NET INCOME BEFORE OTHER INCOME 668,262 899,847
OTHER INCOME 6,428 -
----------- -----------
NET INCOME BEFORE INCOME TAXES 674,690 899,847
INCOME TAX EXPENSE 244,677 285,803
----------- -----------
NET INCOME 403,013 614,044
BEGINNING RETAINED EARNINGS 1,985,050 1,776,420
----------- -----------
ENDING RETAINED EARNINGS $2,415,063 $2,390,464
=========== ===========
</TABLE>
<PAGE>
WILLAMETTE SEED CO.
STATEMENTS OF CASH FLOWS
Nine months ended March 31, 1998 and 1997
Unaudited
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $430,013 $614,044
Adjustments to reconcile net income to cash flows:
Depreciation and amortization 535,005 536,775
(Increase) decrease in net receivables 4,764,277 4,632,073
(Increase) decrease in inventories (2,800,290) (3,835,810)
(Increase) decrease in prepaid expenses 181,070 81,764
(Increase) decrease in deferred income taxes - -
Increase (decrease) in note payable - bank 1,274,000 1,339,000
Increase (decrease) in notes payable - others 252,750 (754,782)
Increase (decrease) in accounts payable (3,764,796) (1,999,135)
Increase (decrease) in accrued income taxes 115,667 111,649
Increase (decrease) in current portion of long-term debt 34,180 9,200
(Increase) decrease in life insurance (140,817) (152,057)
---------- ----------
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 881,059 582,721
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,175,597) (1,058,811)
---------- ----------
NET CASH FLOWS USED BY
INVESTING ACTIVITIES (1,175,597) (1,058,811)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (380,006) (84,885)
Issuance of common stock 10,000
Increase(decrease) in bank overdraft 661,304 500,752
---------- ----------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 291,298 415,867
---------- ----------
NET (DECREASE) IN CASH (3,240) (60,223)
CASH AT BEGINNING OF PERIOD 5,049 68,499
---------- ----------
CASH AT END OF PERIOD $1,809 $8,276
========== ==========
SUPPLEMENTAL DISCLOSURES
Interest paid $489,688 $413,822
Income taxes paid 129,010 142,727
</TABLE>
<PAGE>
WILLAMETTE SEED CO.
Notes to Financial Statements
March 31, 1998 and 1997
(Unaudited)
(1) Presentation of Unaudited Financial Statements
----------------------------------------------
The unaudited financial statements have been prepared in accordance with
the rules of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and retained earnings and cash
flows, in conformity with generally accepted accounting principles. The
information furnished, in the opinion of management reflects all
adjustments (consisting primarily of normal recurring accruals) necessary
to present fairly the financial position, results of operations and cash
flows for the nine-month periods ended March 31, 1998 and 1997. The
Company's business is subject to wide seasonal fluctuations and, therefore,
the results of operations are not necessarily indicative of results which
may be expected for any other interim period or for the year as a whole.
(2) Subsequent Event
----------------
On January 26, 1998, the Company entered into a letter of intent with
AgriBioTech, Inc. ("ABT"), in which, ABT will acquire all of the capital
stock of the Company for a purchase price of $14,000,000. The transaction
is to be effective as of April 1, 1998. The Company will become a wholly
owned subsidiary of ABT. The transaction will be recorded using the
purchase method of accounting.
<PAGE>
AGRIBIOTECH, INC.
Pro Forma Combined Financial Information
(Unaudited)
The following pro forma combined summary of operations combines the results of
operations of AgriBioTech, Inc. ("ABT"), W-L Research, Inc. and Germain's, Inc.
(collectively "WL/Germain's"), E.F. Burlingham & Sons and Subsidiary
("Burlingham"), Olsen Fennell Seeds, Inc. ("Olsen Fennell"), Lofts Seed, Inc.
and Budd Seed, Inc. (collectively "Lofts"), Seed Corporation of America and
Green Seed Company Limited Partnership (collectively "SeedCo"), Willamette Seed
Co. ("Willamette"), Ramy Commercial Properties Inc. and Subsidiary ("LaCrosse"),
Zajac Performance Seeds, Inc. et al. ("Zajac"), Van Dyke Seed Company, Inc.
("Van Dyke"), Oseco Inc. ("Oseco"), and other individually insignificant
acquisitions since July 1, 1996 (collectively "Other Acquisitions") as if all
acquisitions occurred at the beginning of the periods presented. The pro forma
combined summary of operations reflects known changes resulting from the
acquisitions but does not reflect impacts of any changes in operations,
anticipated efficiencies and synergies from consolidation.
The pro forma combined summary balance sheet reflects ABT's consolidated balance
sheet as of March 31, 1998 combined with the balance sheets of Willamette,
Oseco, and, to the extent effective after March 31, 1998, Other Acquisitions, as
if all such acquisitions occurred as of March 31, 1998.
The business of these entities is subject to wide seasonal fluctuations and,
therefore, the results of operations for periods less than twelve months may not
be indicative of annual results. The pro forma adjustments are based on
preliminary estimates, available information, and certain assumptions that
management deems appropriate and may be revised as additional information
becomes available. The pro forma combined financial information does not purport
to represent what ABT's financial position or results of operations would
actually have been if such transactions had in fact occurred on those dates and
are not necessarily representative of ABT's financial position or results of
operation for any future period. The pro forma combined financial information
should be read in conjunction with the historical financial statements of ABT,
WL/Germain's, Burlingham, Olsen Fennell, Lofts, SeedCo, Willamette, LaCrosse,
Zajac, Van Dyke, and Oseco included herein or previously filed with the
Securities and Exchange Commission.
<PAGE>
AGRIBIOTECH, INC. ("ABT");
Pro Forma Combined Summary of Operations
(Unaudited)
Year ended June 30, 1997
<TABLE>
<CAPTION> Olsen
ABT (A) W-L/Germains (A) Burlingham (A) Fennell (A) Lofts (A)
------------- ---------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $65,904,058 $2,671,772 $31,040,752 $28,566,907 $74,696,000
Cost of sales 49,527,150 1,816,236 25,439,688 25,214,881 53,802,000
----------- ---------- ----------- ----------- -----------
Gross profit 16,376,908 855,536 5,601,064 3,352,026 20,894,000
Operating expenses 17,971,813 1,014,557 3,383,987 3,444,793 16,291,530
----------- ---------- ----------- ----------- -----------
Income (loss) from operations (1,594,905) (159,021) 2,217,077 (92,767) 4,602,470
Other income (expense) (1,118,860) 57,075 (7,314) (24,940) (1,514,000)
----------- ---------- ----------- ----------- -----------
Earnings (loss) before income
taxes (2,713,765) (101,946) 2,209,763 (117,707) 3,088,470
Income tax expense (benefit) - - 719,057 - -
----------- ---------- ----------- ----------- -----------
Net earnings (loss) (2,713,765) (101,946) 1,490,706 (117,707) 3,088,470
Discount and imputed dividends on
preferred stock 3,233,426 - - - -
----------- ---------- ----------- ----------- -----------
Net earnings (loss) attributable
to common stock $(5,947,191) $ (101,946) $ 1,490,706 $ (117,707) $ 3,088,470
=========== ========== =========== =========== ===========
Shares of common stock used in
computing loss per share:
Basic 15,549,184
Diluted 15,549,184
===========
Net earnings (loss) per common share:
Basic $ (0.38)
Diluted (0.38)
==========
</TABLE>
<TABLE>
<CAPTION>
SeedCo(A) Willamette(A) LaCrosse(A) Van Dyke(A) Zajac(A) Oseco(A)
----------- ------------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $39,130,541 $41,813,922 $9,377,225 $9,737,858 $8,404,236 $9,414,835
Cost of sales 31,108,155 33,965,669 7,362,174 6,296,597 6,414,298 6,409,961
----------- ----------- ---------- ----------- ---------- ----------
Gross profit 8,022,386 7,848,253 2,015,051 3,441,261 1,989,938 3,004,874
Operating expenses 7,813,290 6,826,001 1,855,480 3,048,905 1,150,767 2,691,579
----------- ----------- ---------- ----------- ---------- ----------
Income (loss) from operations 209,096 1,022,252 159,571 392,356 839,171 313,295
Other income (expense) (150,603) (654,292) 10,852 (181,053) (23,785) 28,641
----------- ----------- ---------- ----------- ---------- ----------
Earnings (loss) before income
taxes 58,493 367,960 170,423 211,303 815,386 341,936
Income tax expense (benefit) - 159,330 80,639 - - 63,000
----------- ----------- ---------- ----------- ---------- ----------
Net earnings (loss) 58,493 208,630 89,784 211,303 815,386 278,936
Discount and imputed dividends on
preferred stock - - - - - -
----------- ----------- ---------- ----------- ---------- ----------
Net earnings (loss) attributable
to common stock $ 58,493 $ 208,630 $ 89,784 $ 211,303 $ 815,386 $ 278,936
=========== =========== ========== =========== ========== ==========
Shares of common stock used in
computing loss per share:
Basic
Diluted
Net earnings (loss) per common share:
Basic
Diluted
</TABLE>
<TABLE>
<CAPTION>
Other Pro Forma
Acquisitions(A) Adjustments Continued
---------------- ------------- -----------
<S> <C> <C> <C>
Net sales $107,676,008 $(21,673,639) (F) $406,760,475
Cost of sales 87,705,118 (21,673,639) (F) 312,975,287
(413,001) (K)
------------ ------------ ------------
Gross profit 19,970,890 413,001 93,785,188
Operating expenses 18,682,719 6,715,651 (C) 85,793,382
(5,063,690) (J)
(34,000) (L)
------------ ------------ ------------
Income (loss) from operations 1,288,171 (1,204,960) 7,991,806
Other income (expense) 426,097 (3,775,897) (D) (6,928,079)
------------ ------------ ------------
Earnings (loss) before income
taxes 1,714,268 (4,980,857) 1,063,727
Income tax expense (benefit) 241,949 (15,729) (M) 1,248,246
------------ ------------ ------------
Net earnings (loss) 1,472,319 (4,965,128) (184,519)
Discount and imputed dividends on
preferred stock - - 3,233,426
------------ ------------ ------------
Net earnings (loss) attributable
to common stock $ 1,472,319 $(4,965,128) $ (3,417,945)
============ ============ ============
Shares of common stock used in
computing loss per share:
Basic 10,017,230 (E) 25,566,414
Diluted 10,017,230 (E) 25,566,414
============ ============
Net earnings (loss) per common share:
Basic $ (0.13)
Diluted (0.13)
============
</TABLE>
See accompanying notes to pro forma combined financial information.
<PAGE>
AGRIBIOTECH, INC. ("ABT");
Pro Forma Combined Summary of Operations
(Unaudited)
Nine-month period ended March 31, 1998
<TABLE>
<CAPTION>
ABT (B) Lofts (B) SeedCo(B) Willamette(B)
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net sales $139,695,295 $39,022,000 $16,401,233 $25,686,733
Cost of sales 109,209,431 28,063,000 12,693,089 20,093,280
---------------- --------------- --------------- ----------------
Gross profit 30,485,864 10,959,000 3,708,144 5,593,453
Operating expenses 27,441,877 10,318,757 4,048,483 4,925,191
---------------- --------------- --------------- ----------------
Income (loss) from operations 3,043,987 640,243 (340,339) 668,262
Other income (expense) (1,633,853) (679,000) 295,005 6,428
---------------- --------------- --------------- ----------------
Earnings (loss) before income
taxes 1,410,134 (38,757) (45,334) 674,690
Income tax expense (benefit) (2,907,500) - - 244,677
---------------- --------------- --------------- ----------------
Net earnings (loss) 4,317,634 (38,757) (45,334) 430,013
Discount and imputed dividends on
preferred stock 80,154 - - -
---------------- --------------- --------------- ----------------
Net earnings (loss) attributable to
common stock $ 4,237,480 $ (38,757) $ (45,334) $ 430,013
================ =============== =============== ================
Shares of common stock used in
computing earnings (loss) per share:
Basic 28,044,125
Diluted 32,373,638
================
Net earnings (loss) per common share:
Basic $ 0.15
Diluted 0.13
================
</TABLE>
<TABLE>
<CAPTION>
Other
Van Dyke (B) Zajac (B) Oseco (B) Acquisitions (B)
-------------- -------------- ------------- -------------------
<S> <C> <C> <C> <C>
Net sales $6,410,744 $3,497,853 $7,180,783 $70,583,987
Cost of sales 4,284,349 3,534,201 4,729,095 58,063,018
-------------- -------------- ------------- -------------------
Gross profit 2,126,395 (36,348) 2,451,688 12,520,969
Operating expenses 1,610,783 890,156 2,024,222 14,803,218
-------------- -------------- ------------- -------------------
Income (loss) from operations 515,612 (926,504) 427,466 (2,282,249)
Other income (expense) (115,989) 1,821 - 953,646
-------------- -------------- ------------- -------------------
Earnings (loss) before income
taxes 399,623 (924,683) 427,466 (1,328,603)
Income tax expense (benefit) - - 150,500 (44,030)
-------------- -------------- ------------- -------------------
Net earnings (loss) 399,623 (924,683) 276,966 (1,284,573)
Discount and imputed dividends on
preferred stock - - - -
-------------- -------------- ------------- -------------------
Net earnings (loss) attributable to
common stock $ 399,623 $ (924,683) $ 276,966 $(1,284,573)
============== ============== ============= ===================
Shares of common stock used in
computing earnings (loss) per share:
Basic
Diluted
Net earnings (loss) per common share:
Basic
Diluted
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments combined
--------------- -------------
<S> <C> <C>
Net sales $(14,305,726) (F) $294,172,902
Cost of sales (14,305,726) (F) 226,540,889
27,152 (K)
150,000 (F)
--------------- -------------
Gross profit (177,152) 67,632,013
Operating expenses 3,744,205 (C) 65,461,962
(3,635,930) (J)
(709,000) (L)
--------------- -------------
Income (loss) from operations 423,573 2,170,051
Other income (expense) (1,152,856) (D) (2,324,798)
--------------- -------------
Earnings (loss) before income
taxes (729,283) (154,747)
Income tax expense (benefit) (162,977) (N) (2,719,330)
--------------- -------------
Net earnings (loss) (566,306) 2,564,583
Discount and imputed dividends on
preferred stock - 80,154
--------------- -------------
Net earnings (loss) attributable to
common stock $ (566,306) $ 2,484,429
=============== =============
Shares of common stock used in
computing earnings (loss) per share:
Basic 7,434,409 (E) 35,478,534
Diluted 7,434,409 (E) 39,808,047
=============== =============
Net earnings (loss) per common share:
Basic $ 0.07
Diluted 0.06
=============
</TABLE>
See accompanying pro forma combined financial information.
<PAGE>
AGRIBIOTECH, INC. ("ABT");
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
MARCH 31, 1998
<TABLE>
<CAPTION>
ABT (G) Willamette (G) Oseco (G)
------------- -------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 2,966,830 $ 1,809 $ -
Accounts receivable 51,680,818 3,670,967 3,036,481
Inventories 66,845,197 7,933,674 2,908,191
Other 2,216,406 35,003 174,999
------------- ------------ -------------
Total current assets 123,709,251 11,641,453 6,119,671
Property, plant and equipment, net 36,257,048 4,394,764 1,155,368
Intangible assets, net of accumulated amortization 95,540,148 1,469,093 -
Investment in associated entity, at equity 934,576 - -
Deferred income taxes 1,845,955 221,058 -
Other 483,241 - 1,159
------------- ------------ -------------
Total assets $ 258,770,219 $ 17,726,368 $ 7,276,198
============= ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 48,589,412 $ 8,556,711 $1,455,847
Current installments of long-term obligations 1,705,288 211,683 -
Accounts payable 26,348,501 5,220,444 1,636,834
Accrued liabilites 5,452,918 115,667 110,639
Amount due in connection with acquisition 17,350,000 - -
------------- ------------ -------------
Total current liabilities 99,446,119 14,104,505 3,203,320
Long-term obligations, excluding current installments 8,433,383 711,800 3,010,000
Deferred income taxes - - 137,892
------------- ------------ -------------
Total liabilites 107,879,502 14,816,305 6,351,212
------------- ------------ -------------
Stockholders' equity:
Preferred stock 1 - -
Common stock 33,681 495,000 70
Capital in excess of par value 144,349,482 - -
Common stock to be issued in acquisition 14,615,000 - -
Accumulated (deficit) (8,107,447) 2,415,063 924,916
------------- ------------ -------------
Total stockholders' equity 150,890,717 2,910,063 924,986
------------- ------------ -------------
Total liabilities and stockholders' equity $ 258,770,219 $ 17,726,368 $ 7,276,198
============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Other Pro Forma
Acquisitions (G) Adjustments Combined
---------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $(1,216,443) $ - (I) $ 1,752,196
Accounts receivable 14,875,635 120,000 (I) 71,460,429
(1,923,472) (H)
Inventories 13,300,923 (95,954) (I) 90,892,031
Other 664,540 (161,116) (I) 2,929,832
----------- ------------ ------------
Total current assets 27,624,655 (2,060,542) 167,034,488
Property, plant and equipment, net 3,985,986 14,084,452 (I) 59,877,618
Intangible assets, net of accumulated amortization - 31,684,007 (I) 128,693,248
Investment in associated entity, at equity - - 934,576
Deferred income taxes 82,500 (2,149,513) (I) -
Other 2,023,208 - 2,507,608
----------- ------------ ------------
Total assets $33,716,349 $ 41,558,404 $359,047,538
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 9,380,995 $ 63,483,053 (I) $111,927,518
(19,538,500) (O)
Current installments of long-term obligations 165,534 - 2,082,505
Accounts payable 11,088,165 (1,923,472) (H) 42,370,472
Accrued liabilites 492,616 659,546 (I) 6,831,386
Amount due in connection with acquisition - (17,350,000) (I) -
----------- ------------ ------------
Total current liabilities 21,127,310 25,330,627 163,211,881
Long-term obligations, excluding current installments 3,517,699 (3,010,000) (I) 12,662,882
Deferred income taxes 43,277 3,162,391 (I) 3,343,560
----------- ------------ ------------
Total liabilites 24,688,286 25,483,018 179,218,323
----------- ------------ ------------
Stockholders' equity:
Preferred stock - - 1
Common stock 266,539 (759,806) (I) 36,841
1,357 (O)
Capital in excess of par value - 24,013,195 (I) 187,899,820
19,537,143 (O)
Common stock to be issued in acquisition - (14,615,000) (I) -
Accumulated (deficit) 8,761,524 (12,101,503) (I) (8,107,447)
----------- ------------ ------------
Total stockholders' equity 9,028,063 16,075,386 179,829,215
----------- ------------ ------------
Total liabilities and stockholders' equity $33,716,349 $ 41,558,404 $359,047,538
=========== ============ ============
</TABLE>
See accompanying notes to pro forma combined financial information.
<PAGE>
See accompanying notes to pro forma combined financial information.
AGRIBIOTECH, INC.
Notes to Pro Forma Combined Financial Information
(Unaudited)
(A) The year ended June 30, 1997 for ABT includes the operations of WL/Germain's
for the period from September 1, 1996 through June 30, 1997, the operations
of Burlingham for the period from April 1, 1997 through June 30, 1997, and
the operations of Olsen Fennell for the period from June 1, 1997 through
June 30, 1997. The amounts under the WL/Germain's column are for the two-
month period ended August 31, 1996. The amounts under the Burlingham column
are for the nine-month period ended March 31, 1997. The amounts under the
Olsen Fennell column are for the eleven-month period ended May 31, 1997. The
amounts under the Lofts, SeedCo, Willamette, LaCrosse, Van Dyke, Zajac, and
Oseco columns are for the twelve-month period ended June 30, 1997. The
amounts in the Other Acquisition column include such acquisitions for
periods not included in the ABT column. The amounts for Lofts include its
affiliates with intercompany transactions having been eliminated.
(B) The nine-month period ended March 31, 1998 for ABT includes the operations
of WL/Germain's, Burlingham, Olsen Fennell, and LaCrosse for the entire
period and the operations of Lofts, SeedCo, Van Dyke and Zajac for the
period from January 1, 1998 through March 31, 1998. The amounts under the
Lofts, SeedCo, Van Dyke and Zajac columns are for the six-month period ended
December 31, 1997. The amounts in the Willamette and Oseco columns are for
the nine-month period ended March 31, 1998. The amounts in the Other
Acquisition column include such acquisitions for periods not included in the
ABT column.
(C) To reflect depreciation of property, plant and equipment and amortization of
intangible assets based on market value adjustments in connection with
applying purchase accounting. Intangible assets resulting from the
application of purchase accounting and amortization periods include goodwill
of approximately $111 million (10 to 40 years, with a weighted average of 29
years) and covenants not to compete of approximately $9 million (6 to 8
years).
(D) To reflect reduction of interest income earned and additional interest
expense for the cash purchase price of the acquisitions. The pro forma
amounts assume that payments required to be made in the acquisitions would
be obtained through approximately $67.7 million of proceeds from the sale of
the Company's common stock in private placement transactions from December
1997 through May 1998 and the balance of $73.0 million from the Company's
existing or similar short-term credit facilities. Interest expense was
computed using an interest rate of 8.5%.
(E) To reflect the impact on average shares outstanding of shares of ABT common
stock issued in connection with the acquisitions (4,942,048 for the year
ended June 30, 1997 and 2,931,203 for the nine months ended March 31, 1998)
and private placements of the Company's common stock (5,075,182 for the year
ended June 30, 1997 and 4,503,206 for the nine months ended March 31, 1998)
as if they had been outstanding for the entire period. The dilutive impacts
of options and warrants are not considered in loss periods.
(F) To eliminate intercompany sales and other revenue.
<PAGE>
(G) The consolidated balance sheet of ABT as of March 31, 1998 includes the
accounts of WL/Germain's, Burlingham, Olsen Fennell, LaCrosse, Lofts,
SeedCo, Zajac, and Van Dyke. The amounts under the Willamette and Oseco
columns reflect their accounts as of March 31, 1998. The amounts in the
Other Acquisitions column include such acquisitions to the extent not
included in the ABT column.
(H) To eliminate intercompany balances.
(I) To reflect the application of purchase accounting to the Willamette and
Oseco acquisitions and, to the extent effective after March 31, 1998, the
Other Acquisitions. The total purchase price of $50.7 million is anticipated
to be paid through the issuance of approximately 548,673 shares of the
Company's common stock valued at approximately $9.4 million and cash of
approximately $41.3 million.
(J) Prospective reductions in compensation of former owners of acquired
entities, employee benefits, management fees, and property rent resulting
from employment agreements, property purchased directly from former owners
and other contractual arrangements entered into in connection with
acquisitions.
(K) Impacts of using the first-in, first-out method of accounting for inventory
accounted for using the last-in, first-out method prior to acquisition.
(L) Acquisition costs expensed by acquired entities that are not applicable to
ongoing operations.
(M) Reflects adjustment to income taxes on pro forma combined earnings before
income taxes adjusted for nondeductible goodwill amortization.
(N) Reflects income taxes on the impacts of pro forma adjustments and treating
acquired entities that were not taxable under prior ownership as if they
were taxable adjusted for nondeductible goodwill amortization.
(O) To reflect the sale of 1,357,000 shares of common stock and warrants to
purchase 586,500 shares of common stock and the application of the proceeds
therefrom used to fund acquisitions aggregating $19,538,500.
<PAGE>
SIGNATURE
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.
AgriBioTech, Inc.
(Registrant)
/s/ Henry A. Ingalls
--------------------
Henry A. Ingalls
Date: August 10, 1998
