AgriBioTech Inc. Announces Third- Quarter Results: Loss Due to Redundant Expenses and Nonrecurring Special Charges Related to Integration of Acquired Companies.HENDERSON, Nev.--(BUSINESS WIRE)--May 13, 1999-- AgriBioTech Inc. (ABT ABT About ABT Abteilung (German: Department) ABT Abbott Laboratories (stock symbol) ABT American Ballet Theatre ABT Associação Brasileira de Telemarketing ABT Abort ABT Availability Based Tariff ) (Nasdaq/NMS:ABTX) Thursday announced fiscal 1999 (FY1999) third-quarter results for the period ended March 31, 1999. The company had a net loss of $2.3 million for the quarter. The loss was primarily due to two things: special charges related to the integration of acquired companies associated with building ABT into a new, large company in an historically fragmented frag·ment n. 1. A small part broken off or detached. 2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript. 3. seed sector; and, second, continued high levels of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. overhead, prior to integration. "The third-quarter results released today highlight and reinforce what we have been telling investors, analysts and our lenders ever since the new management team at ABT assumed control of the company March 1, 1999," said Richard Budd, new chairman and chief executive officer of ABT. "ABT's long-term business plan is sound. Revenues and gross profits are on target with new management expectations. Expenses are the problem. To be successful at integrating the companies and building ABT into a major new player in the seed industry, we need to reduce and control expenses to levels appropriate for the new organization. "Second, in order to be successful, we need to improve our capital structure. We're doing both and expect to resolve both issues favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. in the next few weeks. "We are now 10 weeks into the process of reducing expenses to an appropriate level that supports our integration plan and will make it successful," added Budd. "This started in early March when we announced we would remove at least $14 million in annual operating expenses from the business by the end of our fiscal year (June 30, 1999). "Within the past month we have identified the specific reductions that we believe will result in the $14 million savings. It is part of our plan to integrate our 34 acquisitions into a single, large, customer-driven company. We are implementing that plan right now. "When we finish this work, we believe ABT will be both successfully organized into a new single business operation, and profitable in fiscal year 2000 (FY2000). "Once profitable, we intend to help lead in transforming the forage-and-turfgrass-seed sector into a higher margin, R&D-based business," said Budd. "We are confident a successful integration will result in a strong, profitable company that will allow us to carry out our long-term strategy to bring improved, higher-margin products to this part of the seed business, and make money in the process." Randy Ingram, co-president and chief financial officer of ABT added: "During the third quarter ABT incurred approximately $2 million of special charges. Special charges include restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other nonrecurring or infrequent in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. integration-related expenses such as severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, travel costs for plan development and implementation, facility-closing costs, consulting and legal fees, and other related costs. "The large majority of the nonrecurring restructuring and special charges related to the integration will be recorded in the fourth quarter of FY1999." Company management said last year that ABT would have a loss for FY1999 due to the costs associated with implementing ABT's long-term business plan of integrating the company's acquisitions into a single business entity (ABT). "We continue to forecast a loss for the current fiscal year," said Ingram, "but believe that FY1999 will not be indicative of future financial performance of the company. We are in the final stages of transition from a mergers-and-acquisitions-driven growth company to an integrated, operations-driven, and, what we expect to be, profitable company." An important part of the reason ABT management believes it can successfully execute the company's long-term business plan is demand for ABT's proprietary forage- and turfgrass-seed products. Through the spring of 1999, the company has experienced strong demand for its proprietary products. At March 31, 1999, many of the company's important, leading, proprietary forage- and turfgrass-seed varieties were virtually sold out. There has been strong demand during the winter and spring for many of the company's leading proprietary varieties, including: Rebel III and Falcon II tall fescues, Pennant Pennant A continuation pattern in technical analysis formed when there is a large movement in a stock, the flagpole, followed by a consolidation period with converging trendlines, the pennant, followed by a breakout movement in the same direction as the initial large movement, the , Pennant II, Excel, Prelude prelude (prā`l  d), musical composition of no universal style, usually for the keyboard. It was originally used to precede a ceremony and later a second, often larger piece. III
and Yorktown III perennial perennial, any plant that under natural conditions lives for several to many growing seasons, as contrasted to an annual or a biennial. Botanically, the term perennial ryegrasses, Rio and Stampede stam·pede n. 1. A sudden frenzied rush of panic-stricken animals. 2. A sudden headlong rush or flight of a crowd of people. 3. ryegrasses, ABT 350, and WL711WF alfalfas, and BMR BMR basal metabolic rate. BMR abbr. basal metabolic rate BMR, n See basal metabolic rate. BMR basal metabolic rate. 100 forage forage Vegetable food, including corn and hay, of wild or domestic animals. Harvested, processed, and stored forage is called silage. Forage should be harvested in early maturity to avoid a decrease in protein and fibre content as crops mature. sorghum sorghum, tall, coarse annual (Sorghum vulgare) of the family Gramineae (grass family), somewhat similar in appearance to corn (but having the grain in a panicle rather than an ear) and used for much the same purposes. . Details on the company's third quarter FY1999 earnings and results follow. For the third-quarter FY1999, ABT reported a net loss attributable to common stock, including special, nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". related to the integration of acquired companies, of $2.3 million, or $0.05 per share (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), on net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $106.4 million. In the third quarter of fiscal 1998 (FY1998), the company recorded net earnings attributable to common stock of $4.9 million, or $0.15 per share (basic) and $0.13 per share (diluted), on net sales of $75.9 million. The company also announced third-quarter FY1999 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest expense, income taxes, depreciation, amortization and special charges) for the period of $5.4 million, compared with EBITDA of $5.3 million for the third quarter in FY1998. EBITDA is a cash- based measure of operating profitability. Net loss attributable to common stock for the first nine months of FY1999 was $12.2 million, or $0.31 per share (basic and diluted), on net sales of $272 million. This compares with net earnings attributable to common stock of $4.2 million, or $0.15 per share (basic) and $0.13 (diluted), on net sales of $139.7 million for the same period last year. EBITDA, excluding special charges, for the first nine months of FY1999 was $6.2 million, compared with $7.1 million for the same period last year. Since April 1, 1998, the company has made 11 acquisitions that had a total of approximately $144.8 million in pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma sales, excluding intercompany sales, for the 12-month period ended June 30, 1998. Therefore, results for the three- and nine-month periods ended March 31, 1999, are not comparable to the prior year since ABT's size and composition is considerably different today. Selected financial information for the company's third quarter and nine months for FY1999 and earlier periods is as follows: -0-
AGRIBIOTECH INC. AND SUBSIDIARIES
(In thousands, except net earnings (loss) per common share)
Three-month period Nine-month period
ended March 31, ended March 31,
1999 1998 1999 1998
Net sales $106,436 75,880 271,976 139,695
Gross profit 28,359 18,257 69,658 30,486
Operating expenses 27,071 14,763 73,374 27,442
Special charges 1,957 -- 1,957 --
Earnings (loss) from
operations (668) 3,494 (5,673) 3,044
Interest (expense) (2,258) (1,794) (7,836) (2,904)
Earnings (loss) before
income taxes (2,252) 2,019 (12,170) 1,410
Net earnings (loss) (2,263) 4,926 (12,212) 4,318
Net earnings (loss)
attributable to common stock (2,263) 4,899 (12,212) 4,237
Net earnings (loss) per common share:
Basic (0.05) 0.15 (0.31) 0.15
Diluted (0.05) 0.13 (0.31) 0.13
Average shares of common stock:
Basic 41,847 32,417 39,974 28,044
Diluted 41,847 36,982 39,974 32,374
EBITDA (excluding special
charges) 5,389 5,332 6,236 7,127
Total assets (at end of
period) 422,118 258,770
Total stockholders' equity
(at end of period) 217,127 150,891
As previously announced, new ABT management believes the company can break even on the pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern profit line, excluding nonrecurring restructuring and special charges associated with the integration, for the second half of FY1999. Also, as previously announced, the company intends to pay off the subordinated convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. sold in late December 1998 and early January 1999 ("subdebt") in full with cash to prevent a resetting of the amount of shares into which this debt can be converted ("reset of the debt"). Early redemption of the subdebt will be recorded as an extraordinary charge in the company's financials. AgriBioTech is a fully integrated, full-service seed company specializing in the forage-and-turfgrass-seed sector, complete with research and development of proprietary seed varieties, seed- processing plants, and a national and international distribution and sales network. ABT's vision is to lead the turf-and-forage-seed industry in discovering its value potential. The company has essentially completed the first phase of its business strategy through an acquisition program that enabled ABT to accumulate Accumulate Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security the critical mass it believes is necessary to help lead the transformation of the forage-and-turfgrass-seed sector of the seed industry. ABT is now beginning the process of integrating the acquired businesses, which have generally been operating as they were prior to being acquired, into a single, customer-driven business entity centered around the ABT name and logo. In the integration process, the company's objectives include raising margins and reducing expenses. Interested parties may listen to an audiotape au·di·o·tape n. 1. A relatively narrow magnetic tape used to record sound for subsequent playback. 2. A tape recording of sound. tr.v. of a company-hosted conference call Thursday regarding results. A replay of the conference call will be available at approximately 7:30 p.m. Thursday (ET), or 4:30 p.m. PT, by calling 800/475-6701, access code 449528. The statements in this news release regarding future profitability, demand for ABT's proprietary products, the status of the company's integration implementation, expense management and control, inventory management, future proprietary products and improvement of capital structure are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties, and they are not a guarantee of future performance. Actual results could differ materially. The risks and uncertainties associated with these statements include, but are not limited to: management's ability to control costs, total acres of turfgrass and forage planted, customer purchases, deliveries and payments for ABT products, competitive pricing, weather, effective management of the integration process, ability of the company to successfully transition to the new IT systems throughout its operations, customer response to the integration, overall financial condition and asset status of ABT, relationships with and perceptions of potential lenders and investors, ability to obtain additional capital, and other factors as detailed from time to time in the company's Securities and Exchange Commission filings. |
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