| |
NOTE C: MEMBER’S EQUITY (continued) |
|
| The total price differential for all cancelled contracts was $8,688,548, of which up to $4,344,274 paid out of excess cash flow and up to $4,344,274 paid in Class B Units (4,344,274 Class B Units, valued at $1 per unit). Each Class B Unit represents the right to receive 0.00000092 percent of the company’s assets, profits, losses and distributions. The company’s managers, officers, affiliates and future business partners that had corn contracts were able to purchase Class B Units in this offering. No cash proceeds were received from the sale of Class B Units in this offering. The company terminated this offering on November 17, 2009. |
| |
| In total, 175 of the 214 producers who had cancelled contracts accepted all or partial terms of the prospectus and executed new corn delivery contracts, which provided for total cash payments in the amount of $2,810,401 and Class B Units in the amount of $2,727,604. During the years ended July 31, 2011 and 2010, a total of $1,010,217 and $1,730,948 of excess cash flows was paid and Class B Units valued at $396,340 and $2,262,029 have been issued in connection with these corn contracts, respectively. |
| |
| On June 30, 2010, the company issued 100 Class A Units in exchange for $6,805,055. The units are to be held by the subscriber for its own interests and not for sale or freely transferable in connection with any distribution of such interest. |
| |
| Also on June 30, 2010, the majority owner of the company entered into an agreement to sell 48,949 Class A Units to another party. The agreement included an initial transfer constituting 48.9% of the outstanding Class A units, and an option to purchase additional Class A units from the majority owner up to an amount which would give the member a total of 51% of the total outstanding voting and economic interests of the company. As of July 31, 2011, this option has not been exercised. |
| |
| As of July 31, 2011, the company had outstanding 100,100 Class A units, 2,658,369 Class B units and no Class C units. |
| |
NOTE D: INVENTORIES |
| |
| Inventories consist of the following as of July 31, 2011 and 2010: |
NOTE E: LONG-TERM DEBT
Long-term debt consists of the following as of July 31, 2011 and 2010:
| | | | | | | |
| | 2011 | | 2010 | |
| | | | | | | |
Term loan | | $ | 74,547,488 | | $ | 81,937,295 | |
Revolving line of credit | | | 8,500,000 | | | 11,303,458 | |
| | | 83,047,488 | | | 93,240,753 | |
Current maturities | | | (15,297,488 | ) | | — | |
| | $ | 67,750,000 | | $ | 93,240,753 | |
On July 23, 2009, the company entered into loan agreements with Dougherty Funding LLC that became effective on July 30, 2009, which include a term loan of $87,874,547 and a $20,000,000 revolving line of credit. These loans are secured by substantially all assets of the company. They contain restrictive covenants and require principal prepayments based on excess cash flows.
The term loan agreement requires monthly payments be made into reserve accounts with the proceeds to be used for replacement of machinery and equipment and payment of real estate taxes. The company paid loan fees of $539,375 at closing and an additional $269,658 over a twenty-four month period.
The term loan contains a variable interest rate at LIBOR plus 3% (3.2458% at July 31, 2011) and requires interest-only monthly payments for twenty-four months. Thereafter, payments will be based on monthly amortized payments of principal and interest sufficient to amortize the remaining unpaid principal balance over a period of fifteen years with the entire unpaid principal and interest due on August 1, 2015.
The maximum funding available under the revolving line of credit was permanently reduced to $16,000,000 in June 2010 upon the receipt of additional member contributions, per the lending agreement. Availability on the revolving line of credit is also limited to the amount calculated in the borrowing base report and expires August 1, 2015. The loan agreement provides a variable interest rate at LIBOR plus 3% (3.2458% at July 31, 2011). There is an unused line fee on the daily unused portion of the commitment at a rate of 0.25% per quarter.
Subsequent to year-end, the company refinanced the term loan and revolving line of credit. Included in current maturities are principal payments of $2,750,000 due within twelve months of the reporting period as determined by the new debt terms. Also included in current maturities is $4,631,961 which represents payments made against the existing debt subsequent to year-end but before the refinancing date, and $7,915,527 that the company was required to pay on the existing debt as part of the refinancing agreement. See Note I for further details.
F-13
| |
NOTE E: LONG-TERM DEBT (continued) |
| |
| Long-term debt maturities are as follows: |
| | | | | |
Years ending July 31, | | | | |
| | | | |
2012 | | | $ | 15,297,488 | |
2013 | | | | 14,000,000 | |
2014 | | | | 5,500,000 | |
2015 | | | | 5,500,000 | |
2016 | | | | 5,500,000 | |
Thereafter | | | | 37,250,000 | |
| | | $ | 83,047,488 | |
NOTE F: RELATED PARTY TRANSACTIONS
| |
| Grain agency agreement |
| |
| In June 2009, the company entered into a grain agency agreement with FREMAR, LLC, a party related through common ownership, to act as the company’s agent to procure all corn required for ethanol production through the agency agreement. All purchases must be approved by the company prior to a contract being entered into. The agreement’s initial term is for four years and will be automatically renewed for two successive four-year terms unless either party gives written notice within six months of the current term expiration to the other party of its election not to renew. The agreement may also be terminated by either party upon sixty days’ written notice. |
| |
| The agreement requires the company to pay FREMAR, LLC a fee per bushel of corn purchases for the initial four year term. The fee may be adjusted at the renewal of the agreement. The company is also required to maintain a security deposit of $500,000 with FREMAR, LLC for corn purchases, which is included in deposits on the accompanying balance sheet. The company has purchased $19,295,435 and $34,606,206 of corn, which $316,857 and $224,401 are included in related party payables, and incurred $622,182 and $673,392 in marketing fees related to this agreement, for the years ended July 31, 2011 and 2010, respectively. |
| |
| Management agreement |
| |
| In June 2009, the company entered into a management agreement with Central Farmers Cooperative, a member of the company, to receive consulting and management services with respect to the operation of the ethanol production facility. The company pays monthly installments for the services provided for the full term of the agreement. The company is required to reimburse Central Farmers Cooperative for reasonable expenses incurred with prior written notification required for expenditures amounting to more than $10,000. |
F-14
| |
NOTE F: RELATED PARTY TRANSACTIONS (continued) |
|
| The term of the agreement is for five years. The company may extend the agreement for additional periods of five years each. Any party may terminate the agreement for any reason by giving the other party at least ninety days’ prior written notice prior to the expiration of the then current term. The company has incurred $1,248,000 and $1,248,000 in management fees for the years ended July 31, 2011 and 2010, respectively with $104,000 included in related party payables as of July 31, 2011. |
| |
| Utility Management Agreement |
| |
| The company assumed a utility management agreement with an entity owned by a member of the company’s board of managers which was initially entered into in October 2006. In August 2009, the company extended this agreement for an additional 42 month term commencing in March 2011. The agreement can be terminated by either party upon 60 days written notice prior to the contract end date and requires the company to pay the greater of a per month fee or a per MMBtu fee of actual usage with a percentage increase in the base fee on an annual basis. The company has incurred $193,290 and $250,632 in utility management fees for the years ended July 31, 2011 and 2010, respectively. |
| |
| Advisory Service Agreement |
| |
| The company entered into agreements with an entity owned by a member of the company’s board of managers to advise the company on management and operations. The agreement is on a month-to-month term and the company may terminate at its sole discretion. The company has incurred $197,404 and $310,028 in advisory services for the years ended July 31, 2011 and 2010, respectively. |
| |
| Other transactions |
| |
| The company frequently purchases corn from members of its board of managers. The purchases are at market-driven prices and settled at the manager’s discretion. For the years ended July 31, 2011 and 2010, the company has purchased approximately $248,051 and $664,000 from it managers, respectively. The company could purchase corn from other suppliers without any significant effects on operations. |
| |
| During the year ended July 31, 2010, the company incurred costs related to an equity contribution agreement, which required reimbursement to the company from the related parties involved in the agreement. These costs of $88,296 were recorded as the related party accounts receivable on the accompanying balance sheet. The amount in related party accounts receivable as of July 31, 2011 of $3,206 represents sales of distillers grains to a member of the company. |
F-15
NOTE G: LEASES
| |
| The company leases rail cars under long-term operating lease agreements expiring at various dates through September 2012. The company also leases rail cars on month to month terms. The company is required to pay executory costs such as maintenance and insurance. |
| |
| Minimum lease payments in future years are as follows: |
| | | | | |
Years ending July 31, | | | | | |
| | | | | |
2012 | | $ | 955,440 | |
2013 | | | 159,940 | |
Total minimum future lease payments | | $ | 1,115,380 | |
| |
| Total lease expense, including maintenance and insurance costs of $2,154,373 and $1,877,166 was incurred during the years ended July 31, 2011 and 2010, respectively. |
NOTE H: COMMITMENTS AND CONTINGENCIES
| |
| Substantially all of the company’s facilities are subject to federal, state, and local regulations relating to the discharge of materials into the environment. Compliance with these provisions has not had, nor does management expect to have, any material effect upon operations other than the items noted below. Management believes that the current practices and procedures for the control and disposition of such wastes will comply with the applicable federal and state requirements. |
| |
| Marketing agreements |
| |
| The company had an ethanol sales and marketing agreement with an unrelated party which provided for the entire output of ethanol for the facility. The initial term of the agreement expired in July 2011. The agreement required the company to pay the marketer an agreed upon percentage of the net sales price as defined in the agreements with a minimum cost per gallon. The ethanol could have been marketed by other marketers without any significant effect on operations. The company did not extend this agreement upon its expiration in July 2011. |
| |
| The company also has a distillers grain sales and marketing agreement with this same marketer which provides for the entire distillers grains marketing for the facility. The initial term of the agreement expires in July 2012 and shall be automatically extended for additional one-year terms thereafter, unless either party provides notice of non-renewal 120 days prior to the end of the then-current term. The agreement requires the company to pay the marketer an agreed upon percentage of the net sales price as defined in the agreement with a minimum cost per ton. The distillers grains can be sold through other marketers without any significant effects on operations. |
F-16
NOTE H: COMMITMENTS AND CONTINGENCIES (continued)
| |
| In April 2010, the company entered into a license agreement for the use of a process fouling control and bio-refining improvements invention system. The agreement also included the costs of chemicals and services necessary to control the process. The initial term of the agreement expires in March 2013 unless the licenser provides a 90-day advance written cancellation, or the company provides a 12 month advance written notice of cancellation. The agreement requires the company to pay the license for estimated chemical usage in monthly installments of $29,269. These installments will be reviewed on 6 month intervals beginning in year two of the agreement. |
| |
| Letter of Credit |
| |
| An unsecured letter of credit in the amount of $1,086,987 has been issued on the company’s behalf as security for obligations to a vendor. The letter of credit will be available for approximately six years from the reporting date. As of July 31, 2011, there have been no amounts drawn against the letter of credit. |
| |
NOTE I: SUBSEQUENT EVENTS |
| |
| In August 2011, the company executed an ethanol sales and marketing agreement with an unrelated party which provides for approximately fifty percent of the ethanol marketing for the facility. The initial term of the agreement expires in January 2012 and shall be automatically extended for additional three-month terms thereafter, unless either party provides notice of non-renewal 90 days prior to the end of the then-current term. The agreement requires the company to meet volume requirements on a monthly basis. The company will receive a price per gallon of ethanol sold based upon the Chicago OPIS values less a fixed index. |
| |
| In November 2011, the majority Class A member executed an agreement to sell 100% of its units to an existing Class A member, giving said member 100% of the Class A units and voting rights. The purchasing member also contributed $7,000,000 to the company to reduce long-term debt. Concurrently, the company refinanced their term loan and revolving line of credit. The new loan agreement provides for a term loan of $55,000,000 for the purpose of refinancing the company’s existing indebtedness and a $10,000,000 revolving line of credit. The term loan bears interest of LIBOR plus 3.25%, subject to a 4% floor. Principal and interest payments are due quarterly based on a ten year amortization schedule and the remaining unpaid principal and interest is due on October 31, 2016. The revolving line of credit bears interest of LIBOR plus 3% subject to a 3.75% floor. All amounts owing on the line of credit will be due in full on November 1, 2012. The company has included as current maturities all payments that are due within 12 months of the reporting period as required under the new terms, payments that were made subsequent to year-end but before the refinancing date, and payments made against the existing debt as required by the refinancing agreement. |
F-17
NOTE I: SUBSEQUENT EVENTS (continued)
| |
| A reconciliation of the existing long-term debt to the subsequent refinanced long-term debt is as follows: |
| | | | |
Term loan as of July 31, 2011 | | $ | 74,547,488 | |
Payments made subsequent to year-end, as required by existing terms, prior to refinancing | | | (4,631,961 | ) |
Payments made as required by refinancing agreement | | | (7,915,527 | ) |
Payments made as required by refinancing agreement, funds provided by capital contribution from member | | | (7,000,000 | ) |
Refinanced term loan as of November 1, 2011 | | $ | 55,000,000 | |
| |
| The amount of $8,500,000 owed under the line of credit as of July 31, 2011 was fully refinanced under the new line of credit. |
| |
| In addition, the company amended the terms of the existing agency agreement for corn procurement which eliminated the requirement to maintain a deposit of $500,000 with the agent. The company subsequently received a refund of this deposit. The company will also have the ability to purchase corn from other suppliers if offered at a lesser price.
In preparing these financial statements, the company has evaluated events and transactions for potential recognition or disclosure through November 14, 2011, the date the financial statements were available to be issued. |
F-18
| |
| (b) REX American Resources Corporation |
| Pro Forma Consolidated (unaudited) Financial Information |
| |
| On November 1, 2011, REX NuGen, LLC, a wholly owned subsidiary of REX American Resources Corporation (“REX” or “the Company”) completed the acquisition of Class A membership interest units of NuGen Energy, LLC (“NuGen”) from Central Farmers Cooperative (“CFC”) pursuant to the Unit Purchase and Option Agreement dated July 25, 2011 (the “Agreement”) among REX and CFC. The Class A Units constitute a 51% voting interest and a 50% equity interest in NuGen on a fully diluted basis. The acquisition resulted in the Company owning a 100% voting interest and a 98% equity interest in NuGen. |
| |
| The data in the unaudited pro forma consolidated statements of operations for the year ended January 31, 2011 and the nine months ended October 31, 2011 assumes that the acquisition was completed on February 1, 2010. The unaudited pro forma consolidated balance sheet as of October 31, 2011 gives effect to the acquisition as if it had occurred on October 31, 2011. |
| |
| The unaudited pro forma consolidated financial information has been derived from the application of pro forma adjustments to the historical consolidated financial statements of the Company and NuGen. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the acquisition occurred as of the beginning of the periods presented or at the balance sheet date presented, nor is it necessarily indicative of future financial position or results of operations. The pro forma adjustments give effect to the preliminary estimated allocation of the acquisition purchase price. The pro forma adjustments are based upon available information and certain assumptions we believe are reasonable. |
| |
| The unaudited pro forma consolidated financial information includes historical financial information for the Company and NuGen. The Company’s historical consolidated balance sheet as of October 31, 2011 and its historical consolidated statement of operations for the nine months ended October 31, 2011 were taken from the unaudited consolidated condensed financial statements in the Company’s quarterly report on Form 10-Q for the quarter ended October 31, 2011. The Company’s historical consolidated statement of operations for the year ended January 31, 2011 was taken from the audited consolidated financial statements in the Company’s most recent annual report on Form 10-K for the year ended January 31, 2011. |
| |
| Information related to NuGen’s historical balance sheet used to determine the investment value as of October 31, 2011 was derived from NuGen’s unaudited balance sheet as of October 31, 2011 not included in this Form 8-K/A. Information related to NuGen’s historical statement of operations for the year ended January 31, 2011 for inclusion in the consolidated pro forma statements of operations was derived from NuGen’s unaudited statement of operations for the twelve months ended January 31, 2011 not included in this Form 8-K/A. Information related to NuGen’s historical statement of operations for the nine months ended October 31, 2011 was derived from its unaudited statement of operations for the nine months ended October 31, 2011 not included in this Form 8-K/A. |
| |
| The preliminary purchase price of approximately $29.1 million includes the estimated fair value of the Company’s previous 48% equity interest in NuGen, which was $18.6 million, and cash of $10.5 million (representing $12.7 million cash paid at closing, net of $2.2 million which was used to repay the remaining contingent consideration liability associated with the Company’s initial equity method investment). Amounts disbursed at closing of $12.7 million were paid out of the Company’s cash holdings and no debt was issued in connection with the acquisition. The purchase price of $29.1 million has been allocated on a preliminary basis to assets acquired and liabilities assumed based on the estimated fair value as of the date of acquisition. This allocation resulted in the book basis of fixed assets being decreased for purposes of pro forma presentation. Thus, less depreciation expense was taken in the pro forma financial statements for the “step down” of fixed assets. Furthermore, the Company determined that it has a controlling interest in NuGen; therefore, the Company will consolidate the financial results of NuGen in its consolidated financial statements. |
| |
| The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company included on Form 10-Q for the quarter ended October 31, 2011 and Form 10-K for the year ended January 31, 2011 and with the historical audited financial statements of NuGen for the years ended July 31, 2011 and 2010 included in this Form 8-K/A. |
PF-1
|
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES |
Consolidated Pro Forma Balance Sheet |
October 31, 2011 |
(Amounts in Thousands) |
| | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | | |
| | REX
Historical | | NuGen
Historical | | Pro Forma
Adjustments | | Pro Forma
Consolidated | |
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 86,768 | | $ | 23,683 | | $ | (12,678 | )(1) | $ | 97,773 | |
Accounts receivable | | | 7,301 | | | 7,380 | | | — | | | 14,681 | |
Inventory | | | 10,085 | | | 8,064 | | | 427 | (2) | | 18,576 | |
Refundable income taxes | | | 1,250 | | | — | | | — | | | 1,250 | |
Prepaid expenses and other | | | 2,266 | | | 711 | | | — | | | 2,977 | |
Restricted cash | | | — | | | 1,289 | | | — | | | 1,289 | |
Deferred taxes, net | | | 1,090 | | | — | | | — | | | 1,090 | |
| |
|
| |
|
| |
|
| |
|
| |
Total current assets | | | 108,760 | | | 41,127 | | | (12,251 | ) | | 137,636 | |
Property and equipment, net | | | 158,856 | | | 80,411 | | | (1,793 | )(2) | | 237,474 | |
Other assets | | | 4,235 | | | 2,995 | | | — | | | 7,230 | |
Deferred taxes, net | | | 2,421 | | | — | | | (1,826 | )(6) | | 595 | |
Equity method investments | | | 80,755 | | | — | | | (22,826 | )(8) | | 57,929 | |
Restricted investments and deposits | | | 1,600 | | | — | | | — | | | 1,600 | |
| |
|
| |
|
| |
|
| |
|
| |
Total assets | | $ | 356,627 | | $ | 124,533 | | $ | (38,696 | ) | $ | 442,464 | |
| |
|
| |
|
| |
|
| |
|
| |
Liabilities and equity: | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Current portion of long-term debt, alternative energy | | $ | 10,741 | | $ | 13,416 | | $ | — | | $ | 24,157 | |
Current portion of long-term debt, other | | | 342 | | | — | | | — | | | 342 | |
Revolving line of credit | | | — | | | 8,500 | | | — | | | 8,500 | |
Accounts payable, trade | | | 1,246 | | | 2,355 | | | — | | | 3,601 | |
Deferred income | | | 2,252 | | | — | | | — | | | 2,252 | |
Accrued real estate taxes | | | 2,132 | | | 354 | | | — | | | 2,486 | |
Accrued payroll and related items | | | 1,637 | | | 213 | | | — | | | 1,850 | |
Derivative financial instruments | | | 1,740 | | | — | | | — | | | 1,740 | |
Other current liabilities | | | 4,415 | | | 2,829 | | | (62 | )(1) | | 7,182 | |
| |
|
| |
|
| |
|
| |
|
| |
Total current liabilities | | | 24,505 | | | 27,667 | | | (62 | ) | | 52,110 | |
| |
|
| |
|
| |
|
| |
|
| |
Long-term liabilities: | | | | | | | | | | | | | |
Long-term debt, alternative energy | | | 60,955 | | | 56,500 | | | — | | | 117,455 | |
Long-term debt, other | | | 789 | | | — | | | — | | | 789 | |
Deferred income | | | 873 | | | — | | | — | | | 873 | |
Derivative financial instruments | | | 3,045 | | | — | | | — | | | 3,045 | |
Other | | | 2,826 | | | — | | | (2,203 | )(1) | | 623 | |
| |
|
| |
|
| |
|
| |
|
| |
Total long-term liabilities | | | 68,488 | | | 56,500 | | | (2,203 | ) | | 122,785 | |
| |
|
| |
|
| |
|
| |
|
| |
Equity: | | | | | | | | | | | | | |
REX shareholders’ equity: | | | | | | | | | | | | | |
Common stock | | | 299 | | | — | | | — | | | 299 | |
Paid-in capital | | | 142,379 | | | — | | | — | | | 142,379 | |
Retained earnings | | | 309,534 | | | — | | | 2,979 | | | 312,513 | |
Members’ capital | | | — | | | 40,366 | | | (40,366 | ) | | — | |
Treasury stock | | | (214,057 | ) | | — | | | — | | | (214,057 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Total REX/NuGen shareholders’ equity | | | 238,155 | | | 40,366 | | | (37,387 | ) | | 241,134 | |
Noncontrolling interests | | | 25,479 | | | — | | | 956 | (2) | | 26,435 | |
| |
|
| |
|
| |
|
| |
|
| |
Total equity | | | 263,634 | | | 40,366 | | | (36,431 | ) | | 267,569 | |
| |
|
| |
|
| |
|
| |
|
| |
Total liabilities and equity | | $ | 356,627 | | $ | 124,533 | | $ | (38,696 | ) | $ | 442,464 | |
| |
|
| |
|
| |
|
| |
|
| |
See notes to pro forma consolidated financial information.
PF-2
|
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES |
Consolidated Pro Forma Statements Of Operations |
For the Nine Months Ended October 31, 2011 |
(Amounts in Thousands, Except Per Share Amounts) |
| | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | | |
| | REX
Historical | | NuGen
Historical | | Pro Forma
Adjustments | | Pro Forma
Consolidated | |
| | | | | | | | | |
Net sales and revenue | | $ | 239,483 | | $ | 274,663 | | $ | — | | $ | 514,146 | |
Cost of sales | | | 226,178 | | | 251,777 | | | (134 | )(3) | | 477,821 | |
| |
|
| |
|
| |
|
| |
|
| |
Gross profit | | | 13,305 | | | 22,886 | | | 134 | | | 36,325 | |
Selling, general and administrative expenses | | | (6,590 | ) | | (3,665 | ) | | 936 | (4) | | (9,319 | ) |
Interest income | | | 362 | | | 7 | | | — | | | 369 | |
Interest expense | | | (1,923 | ) | | (2,081 | ) | | — | | | (4,004 | ) |
Income from synthetic fuel investments | | | 2,883 | | | — | | | — | | | 2.883 | |
Equity in income of unconsolidated ethanol affiliates | | | 15,827 | | | — | | | (8,063 | )(5) | | 7,764 | |
Other income | | | — | | | 986 | | | — | | | 986 | |
Losses on derivative financial instruments, net | | | (1,190 | ) | | — | | | — | | | (1,190 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Income from continuing operations before provision for income taxes and discontinued operations | | | 22,674 | | | 18,133 | | | (6,993 | ) | | 33,814 | |
Provision for income taxes | | | (8,158 | ) | | — | | | (4,087 | )(6) | | (12,245 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Income from continuing operations including noncontrolling interests | | | 14,516 | | | 18,133 | | | (11,080 | ) | | 21,569 | |
Income from discontinued operations, net of tax | | | 975 | | | — | | | — | | | 975 | |
Gain on disposal of discontinued operations, net of tax | | | 425 | | | — | | | — | | | 425 | |
| |
|
| |
|
| |
|
| |
|
| |
Net income including noncontrolling interests | | | 15,916 | | | 18,133 | | | (11,080 | ) | | 22,969 | |
Net income attributable to noncontrolling interests | | | (2,435 | ) | | — | | | (384 | )(7) | | (2,819 | ) |
| |
|
| |
|
| |
|
| |
|
| |
Net income attributable to REX/NuGen common shareholders | | $ | 13,481 | | $ | 18,133 | | $ | (11,464 | ) | $ | 20,150 | |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Weighted average shares outstanding – basic | | | 9,385 | | | — | | | — | | | 9,385 | |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Basic income per share from continuing operations attributable to REX common shareholders | | $ | 1.29 | | $ | — | | $ | — | | $ | 2.00 | |
Basic income per share from discontinued operations attributable to REX common shareholders | | | 0.10 | | | — | | | — | | | 0.10 | |
Basic income per share on disposal of discontinued operations attributable to REX common shareholders | | | 0.05 | | | — | | | — | | | 0.05 | |
| |
|
| |
|
| |
|
| |
|
| |
Basic net income per share attributable to REX common shareholders | | $ | 1.44 | | $ | — | | $ | — | | $ | 2.15 | |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Weighted average shares outstanding – diluted | | | 9,453 | | | — | | | — | | | 9,453 | |
| |
|
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| | | | | | | | | | | | | |
Diluted income per share from continuing operations attributable to REX common shareholders | | $ | 1.28 | | $ | — | | $ | — | | $ | 1.98 | |
Diluted income per share from discontinued operations attributable to REX common shareholders | | | 0.10 | | | — | | | — | | | 0.10 | |
Diluted income per share on disposal of discontinued operations attributable to REX common shareholders | | | 0.05 | | | — | | | — | | | 0.05 | |
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|
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Diluted net income (loss) per share attributable to REX common shareholders | | $ | 1.43 | | $ | — | | $ | — | | $ | 2.13 | |
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| | | | | | | | | | | | | |
Amounts attributable to REX common shareholders: | | | | | | | | | | | | | |
Income from continuing operations, net of tax | | $ | 12,081 | | $ | 18,133 | | $ | (11,464 | ) | $ | 18,750 | |
Income from discontinued operations, net of tax | | | 1,400 | | | — | | | — | | | 1,400 | |
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Net income | | $ | 13,481 | | $ | 18,133 | | $ | (11,464 | ) | $ | 20,150 | |
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See notes to pro forma consolidated financial information.
PF-3
|
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES |
Consolidated Pro Forma Statements Of Operations |
For the Year Ended January 31, 2011 |
(Amounts in Thousands, Except Per Share Amounts) |
| | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | | |
| | REX
Historical | | NuGen
Historical | | Pro Forma
Adjustments | | Pro Forma
Consolidated | |
| | | | | | | | | |
Net sales and revenue | | $ | 301,674 | | $ | 260,341 | | $ | — | | $ | 562,015 | |
Cost of sales | | | 271,300 | | | 243,021 | | | (179 | )(3) | | 514,142 | |
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Gross profit | | | 30,374 | | | 17,320 | | | 179 | | | 47,873 | |
Selling, general and administrative expenses | | | (9,719 | ) | | (4,661 | ) | | 1,248 | (4) | | (13,132 | ) |
Impairment charges and loss on deconsolidation | | | (18,424 | ) | | — | | | — | | | (18,424 | ) |
Interest income | | | 447 | | | 6 | | | — | | | 453 | |
Interest expense | | | (5,593 | ) | | (3,152 | ) | | — | | | (8,745 | ) |
Loss on early termination of debt | | | (48 | ) | | — | | | — | | | (48 | ) |
Equity in income of unconsolidated ethanol affiliates | | | 14,558 | | | — | | | (4,011 | )(5) | | 10,547 | |
Other income | | | 310 | | | 68 | | | — | | | 378 | |
Losses on derivative financial instruments, net | | | (2,116 | ) | | — | | | — | | | (2,116 | ) |
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Income from continuing operations before provision for income taxes and discontinued operations | | | 9,789 | | | 9,581 | | | (2,584 | ) | | 16,786 | |
Provision for income taxes | | | (3,019 | ) | | — | | | (2,575 | )(6) | | (5,594 | ) |
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Income from continuing operations including noncontrolling interests | | | 6,770 | | | 9,581 | | | (5,159 | ) | | 11,192 | |
Income from discontinued operations, net of tax | | | 1,800 | | | — | | | — | | | 1,800 | |
Gain on disposal of discontinued operations, net of tax | | | 172 | | | — | | | — | | | 172 | |
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Net income including noncontrolling interests | | | 8,742 | | | 9,581 | | | (5,159 | ) | | 13,164 | |
Net income attributable to noncontrolling interests | | | (3,673 | ) | | — | | | (220 | )(7) | | (3,893 | ) |
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Net income attributable to REX common shareholders | | $ | 5,069 | | $ | 9,581 | | $ | (5,379 | ) | $ | 9,271 | |
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Weighted average shares outstanding – basic | | | 9,651 | | | — | | | — | | | 9,651 | |
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| | | | | | | | | | | | | |
Basic income per share from continuing operations attributable to REX common shareholders | | $ | 0.32 | | $ | — | | $ | — | | $ | 0.75 | |
Basic income per share from discontinued operations attributable to REX common shareholders | | | 0.19 | | | — | | | — | | | 0.19 | |
Basic income per share on disposal of discontinued operations attributable to REX common shareholders | | | 0.02 | | | — | | | — | | | 0.02 | |
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Basic net income per share attributable to REX common shareholders | | $ | 0.53 | | $ | — | | $ | — | | $ | 0.96 | |
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| | | | | | | | | | | | | |
Weighted average shares outstanding – diluted | | | 9,825 | | | — | | | — | | | 9,825 | |
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Diluted income per share from continuing operations attributable to REX common shareholders | | $ | 0.32 | | $ | — | | $ | — | | $ | 0.74 | |
Diluted income per share from discontinued operations attributable to REX common shareholders | | | 0.18 | | | — | | | — | | | 0.18 | |
Diluted income per share on disposal of discontinued operations attributable to REX common shareholders | | | 0.02 | | | — | | | — | | | 0.02 | |
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Diluted net income per share attributable to REX common shareholders | | $ | 0.52 | | $ | — | | $ | — | | $ | 0.94 | |
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Amounts attributable to REX common shareholders: | | | | | | | | | | | | | |
Income from continuing operations, net of tax | | $ | 3,097 | | $ | 9,581 | | $ | (5,379 | ) | $ | 7,299 | |
Income from discontinued operations, net of tax | | | 1,972 | | | — | | | — | | | 1,972 | |
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Net income | | $ | 5,069 | | $ | 9,581 | | $ | (5,379 | ) | $ | 9,271 | |
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See notes to pro forma consolidated financial information.
PF-4
REX AMERICAN RESOURCES CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Consolidated Financial Information (unaudited)
(Amounts in Thousands)
Note 1 Represents the acquisition of the 50% interest in NuGen resulting in REX having a total ownership of 98% of NuGen:
| | | | |
Cash paid at closing | | $ | 12,678 | |
Fair value of 48% equity method investment | | | 18,642 | |
Contingent consideration at closing | | | (2,265 | ) |
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| |
Total fair value of acquisition | | $ | 29,055 | |
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Note 2The estimated fair value of the assets acquired, net of liabilities assumed was approximately $38.0 million, which exceeds the fair value of the consideration by approximately $9.0 million (bargain purchase). The bargain purchase was calculated after the original 48% equity method investment was adjusted to estimated fair value at the acquisition date. This adjustment resulted in REX’s original 48% equity method investment being reduced by approximately $5.4 million. In addition, fixed assets and inventory were adjusted to their estimated fair values at the acquisition date. Depreciation expense on this adjustment of fixed assets is included as a pro forma adjustment. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of November 1, 2011:
| | | | |
Cash | | $ | 23,683 | |
Accounts receivable | | | 7,380 | |
Inventory | | | 8,491 | |
Prepaid expenses and other current assets | | | 711 | |
Restricted cash | | | 1,289 | |
Property and equipment, net | | | 78,618 | |
Other long term assets | | | 2,995 | |
| |
|
| |
Total assets acquired | | | 123,167 | |
Current portion of long-term debt | | | (13,416 | ) |
Revolving line of credit | | | (8,500 | ) |
Accounts payable, trade | | | (2,355 | ) |
Accrued real estate taxes | | | (354 | ) |
Accrued payroll and related items | | | (213 | ) |
Other current liabilities | | | (2,829 | ) |
Long-term debt | | | (56,500 | ) |
Noncontrolling interests | | | (956 | ) |
| |
|
| |
Net assets acquired | | | 38,044 | |
Acquisition bargain purchase | | | (8,989 | ) |
| |
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| |
Purchase price | | $ | 29,055 | |
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|
| |
Note 3 Cost of sales in the Consolidated Pro Forma Statements of Operations has been adjusted as follows:
| | | | | | | |
| | Nine Months Ended
October 31, 2011 | | Year Ended
January 31, 2011 | |
| | | | | | | |
Depreciation expense for adjustment to carrying value of fixed assets | | $ | 134 | | $ | 179 | |
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|
| |
|
| |
Note 4 Selling, general and administrative expenses in the Consolidated Pro Forma Statements of Operations has been adjusted as follows:
| | | | | | | |
| | Nine Months Ended
October 31, 2011 | | Year Ended
January 31, 2011 | |
| | | | | | | |
Management fees related to contract with former shareholder recognized in the historical financial statements of NuGen (contract canceled at closing of acquisition) | | $ | 936 | | $ | 1,248 | |
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Note 5 Equity in income of unconsolidated ethanol affiliates in the Consolidated Pro Forma Statements of Operations has been adjusted for historical amounts REX reported as its share of NuGen’s earnings using the equity method of accounting.
Note 6 A tax rate of 38%, REX’s statutory rate for the year ended January 31, 2011 and the nine months ended October 31, 2011, was used to calculate related income tax effects of the pro forma adjustments.
Note 7 Net income attributable to noncontrolling interests was computed as two percent of NuGen’s historical pre-tax income adjusted for the pro forma depreciation and management fee adjustments.
PF-5
Note 8 The carrying value (at October 31, 2011) of REX’s equity method investment in NuGen (REX owned 48% of NuGen at October 31, 2011) of $22.8 million is eliminated from the pro forma consolidated balance sheet as REX will be consolidating the results of NuGen, subsequent to the acquisition.
Note 9 Subsequent to the acquisition, NuGen refinanced its existing long-term debt and its revolving line of credit. The new loan agreement provided for a term loan of $55.0 million for the purpose of refinancing NuGen’s existing indebtedness and a $10.0 million revolving line of credit. The term loan bears interest of LIBOR plus 3.25%, subject to a 4% floor. Principal and interest payments are due quarterly based on a ten year amortization schedule and the remaining unpaid principal and interest is due on October 31, 2016. The revolving line of credit bears interest of LIBOR plus 3% subject to a 3.75% floor. All amounts owing on the line of credit will be due in full on November 1, 2012. The refinancing resulted in NuGen using $14.8 million of existing cash (which includes $7.0 million that was contributed by REX to NuGen subsequent to the acquisition) and using $1.3 million of restricted cash. Such amounts were used to pay down the existing debt, loan fees and other costs associated with the refinancing.
PF-6
