Henderson firm says it’s victimized by Internet lies

Wednesday, Aug. 26, 1998 | 11:10 a.m.

The stock price of Henderson-based AgriBioTech Inc. began to rebound today from its weeklong slide as the company refuted critics' comments as "lies placed on the Internet by short sellers, with no basis in fact."

Chief Executive Officer Johnny Thomas conducted a conference call this morning to discuss reports the company would have to restate its earnings.

The high-technology turf and forage seed company saw its stock plunge in Nasdaq trading by 4 to 11 5/16 on Tuesday in trading of 6.3 million shares, more than six times the three-month daily average. The stock was at 12 this morning, up 11/16 from Tuesday's close.

The shares are down 38 percent from 18 1/4 a week ago, before the company disclosed that a Securities and Exchange Commission review will require it to change the way it records acquisitions.

That led to concern that the company would have to restate some of its earnings, said Stephens Inc. analyst Berry Summerour. The company said last week it wouldn't have to do that and today Thomas reiterated the statement.

"People have gone on the website saying we are having a massive audit with a massive restatement," he said. "Nothing could be further from the truth."

AgriBioTech has historically used an agreed-upon effective date to begin operations of an acquired company. Thomas said the company, at the SEC's request, now will use the closing date.

The effect of the ruling will be to reduce the company's earnings in the fiscal fourth quarter ended in June to a small loss from the slight profit it had expected, Thomas said. That's because it won't be able to include sales and earnings from seven acquired companies that it would have included under the old system, he said.

Summerour reduced his estimates for the quarter to a loss of 4 cents a share from net income of 4 cents, and his earnings estimates for fiscal 1998 to 8 cents from 17 cents.

While the accounting change does create a delay in when the company will be able to recognize revenue of future acquisitions, it won't result in a restatement of any numbers, Thomas and analysts said.

"In my opinion, people are misunderstanding what that release is about and reading too much into it," said Summerour, who reiterated his "buy" rating on the stock.

In February, AgriBioTech shares fell almost 10 percent after the company restated its results for 1996 and 1997 because of an accounting rule change by the SEC that required it to change the way it reported the value of the conversion features of preferred shares it issued in 1996.

The restatement changed losses attributable to common stock to 38 cents a share from 17 cents for the fiscal year ended June 30, 1997 and to 76 cents from 45 cents for fiscal 1996.

"My feeling is that he (Thomas) has put together a sizable market share in turf and forage grass and to the extent he can implement some consolidation to cut overheads, it could lead to better earnings," said James Wilbur, an analyst at Salomon Smith Barney who has a "hold" recommendation on the stock.

The company issued a news release about five minutes before the market opened today denying that it will have to restate its earnings.

In it, Thomas defended the company in a point-by-point restatement of AgriBioTech's business plan.

In the release, Thomas said the company has closed 14 acquisitions since Jan. 1 and will close on the buy-out of Oseco Inc. within two weeks. The revenues, assets, equity and earnings will be shown at closing instead of the "effective dates" of the transactions, he added.

The statement also said AgriBioTech will continue to evaluate acquisitions to reach its goal of $500 million in annual revenues by Dec. 31, two years ahead of its original business plan's schedule.

The company has deleted analyst reports and chairman's updates from its Internet website as a result of the SEC registration process. According to Thomas, "it is unfortunate that management is unable to provide more complete information on the company to shareholders."

The company has completed 30 acquisitions since Jan. 1, 1995 and is the largest forage and cool-season turfgrass seed company in the United States, with a current level of annualized net sales of about $425 million, including the previously announced pending acquisition of Oseco.