<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993 Commission file number 1-7894
------
ERLY INDUSTRIES INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
California 95-2312900
- -------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
10990 Wilshire Boulevard, Los Angeles, California 90024-3913
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(213) 879-1480
- ------------------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--------- --------
As of December 31, 1993, there were 3,605,963 shares of the
Registrant's common stock outstanding (including redeemable common stock).
<PAGE> 2
ERLY INDUSTRIES INC.
QUARTER ENDED DECEMBER 31, 1993
TABLE OF CONTENTS
FORM 10-Q
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheets
December 31, 1993 and March 31, 1993 1
Consolidated Statements of Operations
Three and Nine months ended December 31, 1993 and 1992 2-3
Consolidated Statements of Cash Flows
Three and Nine months ended December 31, 1993 and 1992 4-5
Consolidated Statements of Stockholders' Equity
Nine months ended December 31, 1993 6
Notes to Consolidated Financial Statements 7-13
Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-18
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
<PAGE> 3
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1993 1993
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 2,507,000 $ 3,872,000
Notes and accounts receivable, less
allowance for doubtful accounts of
$4,516,000 (December 31) and
$3,280,000 (March 31) 44,472,000 35,534,000
Inventories:
Raw materials 38,864,000 14,817,000
Finished goods 28,313,000 12,908,000
------------ ------------
67,177,000 27,725,000
Prepaid expenses and other current assets 1,144,000 2,524,000
Assets of discontinued business
held for disposition (Note 2) 4,537,000
------------ ------------
Total current assets 119,837,000 69,655,000
Long-term notes receivable, net 1,091,000 6,623,000
Property, plant and equipment, net 37,666,000 30,857,000
Assets held for sale, net (Note 4) 26,227,000 4,210,000
Investment in American Rice, Inc. (Note 1) 16,294,000
Other assets 11,999,000 10,651,000
------------ ------------
$196,820,000 $138,290,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, collateralized $ 51,241,000 $ 62,359,000
Accounts payable 42,866,000 20,106,000
Accrued payroll and other
current liabilities 12,561,000 7,298,000
Income taxes payable 1,756,000 1,829,000
Current portion of long-term and
subordinated debt 9,096,000 22,531,000
------------ ------------
Total current liabilities 117,520,000 114,123,000
Long-term debt (Note 5) 62,104,000 26,881,000
Subordinated debt (Note 5) 8,407,000 1,094,000
Minority interest in consolidated
subsidiary 5,464,000 790,000
Redeemable common stock, 300,000 shares
issued and outstanding 1,701,000 1,406,000
Stockholders' equity:
Common stock, par value $.01 a share
(December 31) and $1.00 a share (March 31):
Authorized: 5,000,000 shares
Issued and outstanding:
3,305,963 shares (December 31) and
3,186,956 shares (March 31) 33,000 3,187,000
Additional paid-in capital 15,954,000 12,687,000
Retained earnings (deficit) (13,202,000) (20,929,000)
Cumulative foreign currency adjustments (1,161,000) (949,000)
------------ ------------
Total stockholders' equity 1,624,000 (6,004,000)
------------ ------------
$196,820,000 $138,290,000
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
1
<PAGE> 4
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31
-------------------------------- ---------------------------------
1993 1992 * 1993 1992 *
----------- ----------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $99,573,000 $41,579,000 $235,324,000 $173,343,000
Cost of sales 87,813,000 36,371,000 203,530,000 154,061,000
----------- ----------- ------------ ------------
Gross profit 11,760,000 5,208,000 31,794,000 19,282,000
Selling, general and
administrative expense 8,339,000 5,159,000 22,661,000 13,968,000
Interest expense 3,241,000 1,800,000 8,671,000 5,823,000
Interest income (116,000) (192,000) (511,000) (619,000)
Investment income (1,349,000) (426,000) (1,840,000)
Other (income) expense (43,000) (316,000) 261,000 (822,000)
Minority interest in earnings
of consolidated subsidiary 228,000 556,000
Writedown of plant
facility (Note 3) 4,000,000
----------- ----------- ------------ ------------
11,649,000 5,102,000 31,212,000 20,510,000
Income (loss) before
taxes on income,
discontinued operations
and extraordinary items 111,000 106,000 582,000 (1,228,000)
Taxes on income (benefit) (40,000) (61,000) 480,000 452,000
----------- ----------- ------------ ------------
Income (loss) from
continuing operations 151,000 167,000 102,000 (1,680,000)
Discontinued operations
(Note 2):
Loss from discontinued
operations (1,086,000) (2,123,000) (4,552,000) (2,760,000)
Loss on disposal
of discontinued
operations (155,000) (2,845,000)
----------- ----------- ------------ -----------
Income (loss) before
extraordinary items (1,090,000) (1,956,000) (7,295,000) (4,440,000)
Extraordinary income -
gain on extinguishment
of debt (Note 3) 897,000 15,022,000 4,726,000
----------- ----------- ------------ ------------
Net income (loss) ($ 193,000) ($ 1,956,000) $ 7,727,000 $ 286,000
=========== =========== ============ ============
</TABLE>
* Restated for discontinued operations.
See accompanying Notes to Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
2
<PAGE> 5
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31
-------------------------------- -------------------------------
1993 1992 1993 1992
----------- ----------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income (loss) per
common and common
share equivalents:
Primary:
Continuing operations $ .04 $ .05 $ .03 $ (.49)
Discontinued operations (.34) (.62) (2.07) (.80)
Extraordinary items .25 4.20 1.37
---------- ---------- ---------- ----------
($ .05) ($ .57) $ 2.16 $ .08
========== ========== ========== ==========
Fully Diluted:
Continuing operations $ .04 $ .05 $ .03 $ (.45)
Discontinued operations (.34) (.62) (1.92) (.75)
Extraordinary items .25 3.90 1.28
---------- ---------- ---------- ----------
($ .05) ($ .57) $ 2.01 $ .08
========== ========== ========== ==========
Weighted average common
and common share
equivalents:
Primary 3,563,000 3,438,000 3,580,000 3,433,000
Fully diluted 3,563,000 3,438,000 3,847,000 3,700,000
</TABLE>
See accompanying Notes to Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
3
<PAGE> 6
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31
-------------------------- ---------------------------
1993 1992 1993 1992
----------- ------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income (loss) ($ 193,000) ($ 1,956,000) $ 7,727,000 $ 286,000
Adjustments to reconcile
net income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 1,902,000 1,125,000 4,869,000 3,014,000
Provision for loss on receivables 456,000 (112,000) 1,896,000 (112,000)
Undistributed earnings of
investment in American
Rice, Inc. (1,349,000) (426,000) (1,840,000)
Loss on disposition of
juice business 155,000 2,845,000
Extraordinary income on
extinguishment of debt (897,000) (15,022,000)
Loss on disposition of
rice subsidiary 880,000
Extraordinary income on
disposal of rice facility (4,726,000)
Writedown on rice facility 4,000,000
Other, net (31,000) (331,000)
Changes in assets and liabilities:
Decrease (increase) in
receivables (2,919,000) 4,631,000 (6,039,000) 9,987,000
Decrease (increase) in
inventories (27,058,000) 1,681,000 (19,586,000) 17,821,000
(Decrease) in prepaid expenses
and other current assets 420,000 (69,000) 717,000 (788,000)
Increase (decrease) in notes
payable 4,443,000 (3,998,000) 4,277,000 (13,963,000)
Increase (decrease) in accounts
payable and other current
liabilities 15,977,000 4,239,000 10,116,000 (5,793,000)
Increase (decrease) in taxes
payable (224,000) (220,000) 326,000 148,000
--------- ------------ ----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (7,938,000) 3,941,000 (7,420,000) 7,703,000
INVESTING ACTIVITIES:
Proceeds from disposition of
juice business 8,400,000 8,400,000
Acquisition of American
Rice, Inc. 12,608,000
Proceeds from sale of
juice plant 11,838,000
Proceeds from disposition of
rice subsidiary 2,092,000
</TABLE>
4
<PAGE> 7
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31
------------------------------- --------------------------------
1993 1992 1993 1992
----------- ----------- ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Purchase of property, plant
and equipment (293,000) (689,000) (940,000) (1,981,000)
Disposition of property, plant
and equipment 202,000 427,000 405,000 883,000
Decrease (increase) in assets
held for sale (20,000) (12,000) (468,000) 358,000
Other, net (942,000) (326,000) (4,083,000) (995,000)
---------- ----------- ----------- -----------
NET CASH (USED IN)
INVESTING ACTIVITIES 7,347,000 (600,000) 29,852,000 (1,735,000)
FINANCING ACTIVITIES:
Proceeds from notes and
long-term debt 79,458,000
Repayment on notes and term
debt on rice refinancing (93,736,000)
Principal payments on
long-term debt (909,000) (2,242,000) (9,519,000) (4,423,000)
Principal payments on
subordinated debt (1,360,000) (1,361,000)
Proceeds from long-term debt 159,000
Proceeds from sales of stock 131,000 131,000
----------- ----------- ----------- -----------
NET CASH (USED IN)
FINANCING ACTIVITIES (909,000) (3,471,000) (23,797,000) (5,494,000)
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH
DURING THE PERIOD (1,500,000) (130,000) (1,365,000) 474,000
CASH, BEGINNING OF PERIOD 4,007,000 4,446,000 3,872,000 3,842,000
----------- ----------- ----------- -----------
CASH, END OF PERIOD $ 2,507,000 $ 4,316,000 $ 2,507,000 $ 4,316,000
=========== =========== =========== ===========
Supplemental cash flow information:
Interest paid $ 1,922,000 $ 1,741,000 $ 6,502,000 $ 5,262,000
Income taxes paid 196,000 2,000 561,000 675,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
5
<PAGE> 8
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
Common Stock Additional Retained Foreign Total
-------------------------- Paid-in Earnings Currency Stockholder's
Shares Dollars Capital (Deficit) Adjustments Equity
--------- ---------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE
April 1, 1993 3,187,000 $3,187,000 $12,687,000 ($20,929,000) ($949,000) ($6,004,000)
Net income
for the period 7,727,000 7,727,000
Common stock
issued 119,000 59,000 349,000 408,000
Reclassification
to reflect
reduction in par
value of ERLY
common stock (3,213,000) 3,213,000 -
Foreign currency
adjustments (212,000) (212,000)
Accretion of
redeemable
common stock (295,000) (295,000)
--------- ----------- ----------- ------------ ----------- ----------
BALANCE
December 31,
1993
(unaudited) 3,306,000 $ 33,000 $15,954,000 ($13,202,000) ($1,161,000) $1,624,000
========= =========== =========== ============ =========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
6
<PAGE> 9
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended December 31, 1993 and 1992
BASIS OF PRESENTATION:
The information furnished is unaudited but reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of results for the
interim periods. Results for interim periods are not necessarily indicative of
results to be expected for the entire year.
Reference should be made to the Notes To Consolidated Financial Statements in
the Company's 1993 Form 10-K and amended Form 10-K/A for a discussion of
accounting policies and other significant matters.
The accompanying consolidated financial statements include the accounts of ERLY
Industries Inc. and its subsidiaries (the "Company" or "ERLY"). All
significant intercompany accounts, intercompany profits and intercompany
transactions are eliminated. As discussed in Note 1, substantially all of the
assets and liabilities of ERLY's wholly owned subsidiary, Comet Rice, Inc.
("Comet"), were acquired by American Rice, Inc. ("ARI") on May 26, 1993. Prior
to the transaction, ERLY owned 48% of the voting rights of ARI, and its
investment in ARI was accounted for using the equity method. ERLY's 48% equity
in ARI's net results was reflected as investment income in the consolidated
statements of operations. As a result of the transaction, ERLY's ownership
increased to 81% of the voting rights of ARI and therefore, beginning in June
1993, ARI's balance sheet and results of operations are consolidated with
ERLY's, with appropriate adjustments to reflect minority interest of 19%.
Certain reclassifications have been made to prior periods in the consolidated
statements of operations to conform ERLY's report classifications to ARI's.
NOTE 1 - ACQUISITION OF COMET RICE, INC. BY AMERICAN RICE, INC. AND REFINANCING
OF ARI
On May 26, 1993, ARI consummated a transaction to acquire substantially all of
the assets of Comet and assume all of Comet's liabilities (the "Transaction").
In exchange for the assets acquired (and liabilities assumed) from Comet, ARI
issued to ERLY 14,000,000 shares of a newly created Series B Preferred Stock,
$1 par value. Each share of Series B Preferred Stock provides for annual
cumulative, non-participating dividends of $.37, is convertible into two shares
of ARI common stock, is entitled to two votes, and has a liquidation preference
of $1.00 per share. The Series B Preferred Stock issued to ERLY carries an
aggregate dividend of approximately $5.2 million per year. Applicable loan
agreements contain various restrictions on the ability of ARI to pay such
dividends and ARI is precluded from paying the dividends. The Comet assets
acquired by ARI did not include the ARI stock previously held by Comet. In
connection with the Transaction, Comet transferred the ARI stock held by it to
ERLY. Comet's combined holdings of ARI common stock and ARI Series A Preferred
Stock prior to the Transaction, represented approximately 48% of the voting
rights of the outstanding ARI stock. As a result of the Transaction, ERLY
holds 81% of the combined voting rights of ARI stock outstanding after the
Transaction.
7
<PAGE> 10
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACQUISITION OF COMET RICE, INC. BY AMERICAN RICE, INC. AND REFINANCING
OF ARI (CONTINUED)
ARI also refinanced the combined indebtedness of ARI and Comet ("Refinancing").
Under the Refinancing, ARI received $47.5 million in credit lines from a new
revolving credit lender and loans from new term lenders for $65.3 million. In
addition, ERLY is a guarantor for all of the new ARI debt and the loan
agreements contain certain restrictive covenants applicable to ERLY. These
agreements also provide the lenders with the option of accelerating repayment
of the ARI debt and terminating the agreements under certain conditions related
to ERLY's ability to meet its obligations as they come due, and to remain in
compliance with its debt agreements. As additional consideration, 13 million
shares of ARI Series B Preferred Stock, $1 par value, were pledged by ERLY for
the benefit of the new term lenders. ARI and Comet have capitalized
approximately $4 million of costs associated with the Refinancing at the date
of closing. These costs will be amortized over the respective terms of the new
ARI debt.
ARI's indebtedness to its former lenders was partially satisfied by ARI's
issuance to the former lenders of a combined aggregate of 1,500,000 shares of a
newly created Series C Preferred Stock, which carries annual cumulative,
non-participating dividends of $.50 per share, is non- convertible and
non-voting, has a liquidation preference of $1.00 per share, and is callable by
ARI at any time at a price of $5.27 per share less aggregate dividend payments
per share. Applicable loan agreements with the new lenders contain various
restrictions on the ability of ARI to pay these dividends and ARI is currently
precluded from paying the dividends. ARI's former lenders agreed to a debt
discount of approximately $10.3 million. As additional consideration for the
satisfaction of the existing indebtedness of ARI, ERLY issued notes of $3
million and pledged one million shares of ARI Series B Preferred Stock for the
benefit of the former lenders. This $3 million was offset by ARI against its
receivable from ERLY.
NOTE 2 - DISCONTINUED OPERATIONS - DISPOSITION OF JUICE BUSINESS
On December 21, 1993, Eau Claire Packing Company, a wholly owned subsidiary of
ERLY Industries Inc. operating in the juice business, sold its manufacturing
facility located in Eau Claire, Michigan, together with the inventory, accounts
receivable and certain trademarks associated with the plant facility, to Seneca
Foods Corporation ("Seneca"). Seneca paid approximately $5.1 million for the
plant facility and the related assets. ERLY Juice Inc., a wholly owned
subsidiary of ERLY Industries, also sold trademarks, inventory and accounts
receivable to Seneca for approximately $3.3 million. The purchase price was
paid in cash at the closing. The net proceeds from both sales were used to pay
down the State of Michigan Retirement System ("SMRS") and ING Capital as
required by each Company's respective secured loan agreements.
In connection with the payment on the ING Capital debt, ING Capital agreed to a
$6 million write-down in the amount of total debt. In exchange, ERLY
guaranteed the remaining balance of the obligations owed by ERLY Juice Inc. to
ING Capital. The amount of the ERLY Juice obligation to ING Capital
immediately prior to the transaction was approximately $17.9 million and, after
application of the write down and amounts paid, the current amount of the debt
is approximately $8.4 million (which is included in notes payable in the
Company's consolidated balance sheets). Under the terms of the guarantee, ERLY
is required to pay down the remaining $8.4 million of debt within one year or
else ING Capital may declare a default with the right to foreclosure on ERLY's
subsidiary, Chemonics Industries, Inc.
8
<PAGE> 11
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - DISCONTINUED OPERATIONS - DISPOSITION OF JUICE BUSINESS (CONTINUED)
As a result of the sale of the above assets, ERLY has no operating assets
remaining in the packaging, sales and marketing of citrus beverage products.
It is ERLY's intention to liquidate the remaining assets of ERLY Juice for the
benefit of the ERLY Juice creditors.
In July 1993, ERLY Juice sold its primary orange juice processing plant in
Lakeland, Florida to Florida Juice, Inc. for $11.9 million. This transaction
resulted in a loss of $2.7 million. ERLY Juice had access to the facility for
processing and packaging its retail and food service business through December
1993 under a co-pack agreement. This sale was intended in part to reduce
operating losses. One of ERLY Juice's primary creditors agreed to discount
term debt and accounts payable obligations in exchange for cash. This resulted
in a gain of $5.6 million which is reflected as extraordinary income as
described in Note 3.
The results of ERLY Juice have been reported separately as discontinued
operations in the consolidated statements of operations. Prior period
consolidated financial statements have been restated to present ERLY Juice as a
discontinued operation. Summarized results of ERLY Juice for the three and
nine month periods ended December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
------------------------------- ---------------------------------
1993 1992 1993 1992
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net sales $5,025,000 $23,016,000 $31,275,000 $67,095,000
Costs and expenses (5,677,000) (24,223,000) (34,051,000) (67,153,000)
Interest expense (434,000) (916,000) (1,776,000) (2,702,000)
---------- ----------- ----------- -----------
Loss from discontinued
operations ($1,086,000) ($ 2,123,000) ($ 4,552,000) ($ 2,760,000)
========== =========== =========== ===========
Loss on disposal
of discontinued
operations ($ 155,000) $ - ($ 2,845,000) $ -
========== =========== =========== ===========
</TABLE>
At December 31, 1993, remaining ERLY Juice assets of $4.5 million have been
classified as "assets of discontinued business held for disposition" in the
consolidated balance sheet. In addition, the December 31, 1993, consolidated
balance sheet includes liabilities of the juice business as follows:
<TABLE>
<S> <C>
Current liabilities:
Notes payable $ 8,397,000
Accounts payable 6,747,000
Other current liabilities 662,000
Income taxes payable 28,000
Current portion of long-term debt 484,000
-----------
$16,318,000
===========
</TABLE>
9
<PAGE> 12
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - EXTRAORDINARY INCOME
The Company had the following extraordinary items for the three and nine months
ended December 31, 1993 and 1992:
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
-------------------------------- --------------------------------
1993 1992 1993 1992
----------- ---------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Gain on extinguishment of
debt related to State of
Michigan Retirement System $897,000 $ - $ 897,000 $ -
Gain on extinguishment of
debt related to ERLY Juice 5,625,000
Gain on extinguishment of debt
related to ARI 8,500,000
Gain on extinguishment of
debt on rice facility 4,726,000
-------- ---------- ----------- ----------
$897,000 $ - $15,022,000 $4,726,000
======== ========== =========== ==========
</TABLE>
In December 1993, the Company exchanged various debt obligations to the State
of Michigan Retirement System for a note receivable with a net book value of
$3.8 million, 60,000 shares of ERLY Industries common stock, $100,000 cash and
a new note for approximately $800,000. This resulted in extraordinary income
on debt extinguishment of $897,000 in the quarter ended December 31, 1993.
During the quarter ended September 30, 1993, ERLY Juice settled approximately
$6.3 million of term debt and trade payables with a primary creditor in
exchange for $650,000. This resulted in a gain of $5,625,000 which is
reflected as extraordinary income.
Results for the first quarter ended June 30, 1993 included extraordinary income
of $8.5 million. This represents ERLY's interest in debt discounts of
approximately $10.3 million by ARI's former lenders.
Due to continuing operating losses resulting from low margins and uncertainty
about future U.S. rice exports, Comet ceased payments in January 1992 on a $16
million non-recourse obligation secured by its rice plant in Greenville,
Mississippi. In July 1992, the facility was sold through foreclosure sale and
in conjunction therewith, the Company eliminated debt of $16 million and the
related property, plant and equipment. The disposition of the facility was
accounted for in accordance with: (1) Statement of Financial Accounting
Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings," and (2) Emerging Issues Task Force Issue No. 91-2, "Debtor's
Accounting for Forfeiture of Real Estate Subject to a Nonrecourse Mortgage."
These guidelines require a two-step approach in accounting for the disposition.
Prior to the disposition, the plant was written down by $4,000,000 to its
estimated fair market value. This writedown was included in results of
operations prior to taxes on income and extraordinary items in the consolidated
statements of operations for the quarter ended September 30, 1992. Secondly,
the difference between the estimated fair market value of the facility and the
amount of debt extinguished (net of estimated shut-down and relocation
expenses) resulted in a gain of $4,726,000 on the extinguishment of debt which
was recorded as extraordinary income in the second quarter of the prior fiscal
year.
10
<PAGE> 13
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - ASSETS HELD FOR SALE
The consolidated balance sheets include assets held for sale of $26 million at
December 31, 1993. This includes property held for sale in Houston, Texas ($22
million) and the remaining net assets of the Company's discontinued wine
business ($4 million).
NOTE 5 - LONG-TERM AND SUBORDINATED DEBT
A schedule of outstanding long-term and subordinated debt at December 31, 1993
follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------
<S> <C>
Long-term debt:
Term loan due 1997, interest
at bank prime rate plus 3% $32,000,000
Term loan due 1997, interest
at bank prime rate plus 5% 17,200,000
Term loan due 1996, interest
at bank prime rate plus 3% 13,300,000
Notes payable due 2008, interest
at 6% 3,000,000
Term loan due 1993, interest
at bank prime rate plus 2.25% 1,000,000
Note payable to officer, due 1994,
interest at bank prime rate plus 2% 1,000,000
Various obligations with maturities
to 2000, interest rates ranging from
10% to 15% 2,133,000
Less current portion of
long-term debt (7,529,000)
------------
$ 62,104,000
============
Subordinated debt:
12-1/2% subordinated sinking fund
debentures, maturities through 2002 $ 8,880,000
Note payable on rice facility,
maturities through 1997,
non-interest bearing 1,094,000
Less current portion of
subordinated debt (1,567,000)
------------
$ 8,407,000
============
</TABLE>
The Company's 12-1/2% Subordinated Sinking Fund Debentures (the "Old
Debentures") with an outstanding principal balance of $8,880,000 matured on
December 1, 1993. The Company has offered to exchange $8,880,000 12-1/2%
Subordinated Sinking Fund Debentures due 2002 (the "New Debentures") for
the Old Debentures. As of April 8, 1994, holders of approximately 94% of
the Old Debentures have agreed to the exchange. The Company expects that
most of the remaining debentureholders (having debentures with a face value
of approximately $567,000) will also agree to exchange and has left open
the exchange offer until April 29, 1994 for the remaining debentureholders
to do so. The Company is in the process of paying the December 1, 1993
interest to all of the debentureholders. The Company does not currently
have adequate cash reserves to redeem the principal amount of all of the
Old Debentures which have not agreed to the exchange but is exploring ways
to deal with those debentureholders who will not exchange.
11
<PAGE> 14
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM AND SUBORDINATED DEBT (CONTINUED)
There is no assurance that the Company will be able to satisfactorily refinance
the remaining debentures. Management, however, believes that the exchange
offer can be completed.
In accordance with Statement of Financial Accounting Standards No. 6,
"Classification of Short-Term Obligations Expected to be Refinanced", the
classification of the 12-1/2% Subordinated Debentures in the consolidated
balance sheet at December 31, 1993, reflects the payment schedule of the
New Debentures which have agreed to the exchange described above.
Certain of the Company's and subsidiaries' long-term debt agreements require
maintenance of minimum amounts or ratios related to working capital, long-term
debt and net worth, in addition to the observance of other covenants. These
restrictions also preclude the payment of cash dividends. The Company's
Chemonics subsidiary is in violation of certain debt covenants and did not make
the final $1.0 million principal payment on its long-term debt. This is
included in "current portion of long-term debt" in the consolidated balance
sheets at December 31, 1993. Negotiations are in process with Chemonics'
lender, ING Capital, to provide a waiver to allow the Company additional time
to make the final payment on its term debt. This negotiation is expected to be
completed during the next 90 days.
As part of the Comet and ARI Transaction, ARI received $47.5 million in credit
lines from a new revolving credit lender and loans from new term lenders for
$65.3 million. The $47.5 million credit line expires in May 1995, carries an
interest rate of prime plus 2%, and is collateralized by receivables,
inventory, cash and junior liens on ARI assets pledged to the new term lenders.
The $65.3 million term loans mature on December 31, 1997 with annual principal
repayments required of $4.2 million, $5.9 million, $5.9 million, $5.9 million
and $43.4 million in 1994, 1995, 1996, 1997 and 1998, respectively. Interest
rates range from prime plus 3% to prime plus 5% through May 1995, increasing to
a range of prime plus 6% to prime plus 8% by 1997. Terms of the loans restrict
dividend payments, investments, capital expenditures and require maintenance of
certain working capital levels, leverage and net worth. These loans are
collateralized by substantially all of ARI's fixed assets and trademarks and
have junior liens on collateral for the credit lines. At December 31, 1993,
ARI was not in compliance with certain of the required financial ratios
included in the original debt covenants. Due to the unexpected 58 percent
increase in raw product inventory costs of rice during the third quarter,
working capital leverage (current liabilities divided by working capital)
exceeded the requirement in the financial covenants. Subsequent to the end of
the quarter, the term lenders agreed to a waiver of the existing default and
adjusted the working capital leverage covenant upward.
A comparison of the current ARI financial covenants and ARI's actual financial
ratios is presented below:
<TABLE>
<CAPTION>
Actual as of
Financial Covenant December 31, 1993
------------------ -----------------
<S> <C> <C>
Net book value (greater than) $25,461,000 $30,883,000
Working capital (greater than) $ 8,468,000 $11,584,000
Financial leverage (less than) 4.8 to 1 4.4 to 1
Working capital leverage (less than) 8.0 to 1 7.47 to 1
Coverage ratio (greater than) 1.0 to 1 1.21 to 1
</TABLE>
These loans are collateralized by substantially all of ARI's fixed assets and
trademarks, and have junior liens on collateral for the credit lines.
12
<PAGE> 15
ERLY INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM AND SUBORDINATED DEBT (CONTINUED)
In addition, ERLY is a guarantor for all of the new ARI debt and the loan
agreements contain certain restrictive covenants applicable to ERLY.
Consequently, the new ARI debt contains cross default provisions with the debt
of ERLY. ARI has capitalized approximately $4 million of costs in connection
with the Refinancing.
Principal maturities on ERLY's long-term and subordinated debt are as follows:
1994--$9,096,000; 1995--$8,255,000; 1996--$20,417,000;
1997--$32,724,000; 1998--$1,231,000; thereafter--$7,884,000.
13
<PAGE> 16
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1993 AND 1992
For the quarter ended December 31, 1993, the Company reported a net loss of
$193,000 compared to a net loss of $2.0 million for the comparable quarter of
the prior fiscal year. Results for the quarter include income on continuing
operations of $151,000, losses of $1,241,000 related to the Company's Juice
business which was discontinued in December 1993, and extraordinary income of
$897,000.
CONTINUING OPERATIONS
For the quarter ended December 31, 1993, the Company reported income on
continuing operations of $151,000 on sales of $100 million compared to income
from continuing operations of $167,000 on sales of $42 million for the
comparable period last year. Consolidated sales for the third quarter were up
by $58 million from the third quarter of the prior fiscal year due to increased
sales by the Company's Rice Division.
Prior to the May 1993 combination of Comet Rice, Inc. and American Rice, Inc.
("ARI"), the Company had a 48% investment in ARI which was accounted for on the
equity method of accounting. ERLY's 48% interest in ARI results for the
quarter ended December 31, 1992 resulted in income of $1,349,000. ERLY's 48%
equity in ARI's net results is reflected as investment income in the
consolidated statements of operations. Subsequent to the May 1993 combination,
ERLY owned 81% of the voting interest in the combined rice operations and its
results from that time are therefore consolidated with ERLY's, with appropriate
adjustments for minority interest.
Rice Operations
Sales for the three months ended December 31, 1993 of $89.1 million increased
$58.1 million or 188 percent from the prior year due to $30.6 million in export
sales increases and $27.5 in domestic sales increases. Estimated ARI sales
included in 1993 as a result of the Transaction amounted to $43.2 million,
including $21.3 million export sales and $21.9 million domestic sales.
Export sales increased due to higher volume and higher average prices. Total
export sales volume increased approximately 2.4 million equivalent rough rice
hundredweight ("cwt."), a 56 percent increase, due to increases of 1.6 million
cwt. as a result of the Transaction and higher export volume from the
Stuttgart, Arkansas facility. Total average milled rice prices increased 24
percent due to a higher proportion of branded sales as a result of the
Transaction and higher prices on unbranded commodity sales.
In addition to sales added by the Transaction, domestic sales increased due to
higher average prices. Average domestic milled rice sales prices increased 55
percent due to the higher retail sales from the ARI customers.
Market prices of rough rice approximately doubled in the three month period
ended December 31, 1993. In response to this increase in raw material costs,
ARI increased prices in some markets during the quarter. In other markets,
however, forward sales commitments delayed price increases until late in the
quarter.
Gross profit was 10 percent of sales for the three months ended December 31,
1993, and 4 percent of sales for 1992, increasing $7.5 million from the prior
period. ARI sales contributed approximately $4.6 million. Gross profit on
other domestic sales increased $1.3 million, while gross profit on other export
sales increased $1.6 million.
14
<PAGE> 17
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1993 AND 1992
(CONTINUED)
Rice Operations (continued)
The overall effect of the increase in rough rice prices on ARI's gross profit
is thought to be small as the higher rough rice prices were mitigated by
substantial inventories acquired at lower price levels and increases in prices
in some markets offsetting the negative impact from forward sales commitments
at lower price levels in other markets.
General
Interest expense totalled $3.2 million for the quarter ended December 31, 1993
compared with $1.8 million for the same quarter of last year. The increase
reflects the increase in long-term debt resulting from the combination of Comet
Rice and ARI. Long-term and subordinated debt (including current portion) at
December 31, 1993 totalled $80 million compared to $51 million at December 31,
1992.
DISCONTINUED OPERATIONS
In December 1993, the Company discontinued its operations in the juice business
(see Note 2). For the quarter ended December 31, 1993, the Company recorded a
loss from discontinued operations of $1,086,000 compared to a loss of
$2,123,000 for the comparable quarter of the prior year. Revenues for the
quarter were $5 million, compared to $23 million for the third quarter of the
previous fiscal year. The Company also recorded a loss on disposal for the
quarter of $155,000. This represented a loss on the sale of trademarks,
partially offset by a gain on the sale of plant facilities, gains on
settlements with trade creditors and a gain on the discount of bank debt.
EXTRAORDINARY INCOME
As discussed in Note 2, the Company exchanged various debt obligations to the
State of Michigan Retirement System for a note receivable with a net book value
of $3.8 million, 60,000 shares of ERLY Industries common stock, $100,000 cash
and a new note for approximately $800,000. This resulted in extraordinary
income on debt extinguishment of $897,000 in the quarter ended December 31,
1993.
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
For the nine months ended December 31, 1993 the Company reported net income of
$7.7 million compared to net income of $286,000 last year. Results for the
current nine month period include income on continuing operations of $102,000,
losses on the Company's discontinued juice operations of $7,397,000 and
extraordinary income of $15,022,000. Sales for the nine months were $62
million higher than a year ago due to increased sales by the Rice Division of
$63 million, offset by reduced sales of $1 million by the Company's subsidiary,
Chemonics Industries.
15
<PAGE> 18
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
(CONTINUED)
CONTINUING OPERATIONS
For the nine months ended December 31, 1993, the Company reported income on
continuing operations of $102,000 on sales of $235 million compared to a loss
on continuing operations of $1.7 million on sales of $173 million last year.
Rice Operations
Sales for 1993 of $196.2 million increased $62.9 million or 47 percent from the
prior year due to $41.1 million in export sales increases and $21.8 million in
domestic sales increases. Estimated ARI sales included in 1993 as a result of
the Transaction amounted to $89.6 million, including $46.6 million export sales
and $43 million domestic sales.
Export sales increased due to higher volume and higher average prices. Total
export sales volume increased approximately 4 million equivalent rough rice
cwt., a 62 percent increase, due primarily to increases of 3.7 million cwt. as
a result of the Transaction. Total average milled rice export prices increased
4 percent due to a higher proportion of branded sales as a result of the
Transaction partially offset by price declines of 13 percent on unbranded
commodity sales.
Domestic sales added by ARI in 1993 included $2 million in rough rice sales
versus none in the prior year. The increase in domestic sales from the
Transaction is partially offset by lower sales from the Greenville, Mississippi
facility disposed of in July 1992. Average domestic milled rice sales prices
increased 24 percent due primarily to the higher sales from the ARI customers.
Gross profit was 11 percent of sales for 1993 and 5 percent of sales for 1992.
Gross profit increased $14.8 million, more than doubling the 1992 level. ARI
sales contributed approximately $14.9 million. Gross profit on other domestic
sales increased $1.0 million, while gross profit on other export sales declined
$1.1 million.
Chemonics Industries, Inc.
The Company's Chemonics Industries division reported operating profits of $9.9
million for the nine months ended December 31, 1993, a decrease of $2.2 million
from last year. Revenues for the period were down by 12% in Chemonics' fire
retardant business and 1% in Chemonics' international consulting business.
General
Interest expense for the nine months ended December 31, 1993 was $8.7 million
compared to $5.8 million last year reflecting the increase in long-term debt
due to the combination of Comet Rice and ARI. Term debt (both long-term and
current portion) was $79.6 million at December 31, 1993 compared to $53.7
million at December 31, 1992, an increase of $25.9 million.
For the nine months ended December 31, 1993, the Company reported investment
income of $426,000 under the equity method of accounting for April and May 1993
when its investment in American Rice, Inc. was 48%. This compares to income of
$1.8 million for the nine months ended December 31, 1992, which was recorded on
the equity method for the entire period.
16
<PAGE> 19
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
(CONTINUED)
DISCONTINUED OPERATIONS
In December 1993, the Company discontinued its operations in the juice business
(see Note 2). For the nine months ended December 31, 1993, the Company
recorded a loss from discontinued operations of $4,552,000 compared to a loss
of $2,760,000 for the comparable period of the prior year. Revenues for the
nine months ended December 31, 1993 were $31.3 million, compared to $67.1
million for the comparable period of the previous fiscal year. The Company
also recorded a loss on disposal for the period of $2,845,000. This
represented a $2.7 million loss on the Company's Lakeland, Florida plant in the
second quarter ended September 30, 1993 and a loss in the current quarter on
the sale of trademarks, partially offset by a gain on the sale of plant
facilities, gains on settlements with trade creditors and a gain on the
discount of bank debt.
EXTRAORDINARY INCOME
For the nine months ended December 31, 1993, the Company has recorded
extraordinary income of $15,022,000. This consists of a gain on the discount
of ARI debt ($8,500,000); a gain on the discount of ERLY Juice trade payables
in the second quarter of fiscal 1994 ($5,625,000); and, a gain on discount of
debt with the State of Michigan Retirement System in December 1993 ($897,000).
LIQUIDITY AND CAPITAL RESOURCES
ERLY's management believes the Transaction which combined Comet Rice and
American Rice, as described in Note 1, will allow better utilization of both
companies' operating assets, improve cash flow and working capital through
operating efficiencies, and increase the overall financial strength of the
combined rice business through debt reduction. The intended result includes
the ability of the combined rice operations to provide sufficient cash flow to
permit the payment of dividends to ERLY in future years, which in turn will be
used by ERLY to service its debt obligations, including new debt of $3 million
to former ARI term lenders which was required as part of the Transaction. No
debt service on the $3 million debt is required unless preferred dividends are
declared by ARI to ERLY. The revolving credit agreement with Congress
Financial Corporation ("Congress") prohibits the payment of any dividends. ARI
could request a waiver of this covenant, but based on ARI's current financial
condition, there is no reason to believe such a waiver would be granted and
there are not any guidelines in the loan agreement which would indicate on what
basis Congress would approve a dividend.
At December 31, 1993 consolidated working capital amounted to $2.3 million
compared to a negative $44 million and negative $15 million at March 31 and
September 30, 1993, respectively. The increase from September 30 was due to
the sale of the ERLY Juice assets and the successful exchange of 94% of the
Company's 12-1/2% subordinated debentures. The increase from March 31 was
due to those factors plus the combination of Comet Rice and ARI in May 1993.
Inventory at December 31, 1993, was $67 million compared to $28 million at
March 31, 1993, an increase of $39 million. This increase is due primarily to
a 71 percent increase in raw product inventory costs of rice and the increased
rough rice inventory levels from the Transaction.
Stockholders' equity was $1.6 million at December 31, 1993, essentially
unchanged from September 30, 1993.
17
<PAGE> 20
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
(CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company's 12-1/2% Subordinated Sinking Fund Debentures (the "Old
Debentures") with an outstanding principal balance of $8,880,000 matured on
December 1, 1993. The Company has offered to exchange $8,880,000 12-1/2%
Subordinated Sinking Fund Debentures due 2002 (the "New Debentures") for the
Old Debentures. Management of the Company is of the opinion that if the Old
Debentures are exchanged for New Debentures, the Company will be able to
meet its interest and sinking fund payment obligations under the New
Debentures. Holders of the New Debentures will receive a return of the
principal amount of the debentures (pursuant to annual sinking fund payments)
either on or prior to their maturity in 2002 with the same 12-1/2% interest
rate.
As of April 8, 1994, holders of approximately 94% of the Old Debentures have
agreed to the exchange. The Company expects that most of the remaining
debentureholders (having debentures with a face value of approximately
$567,000) will also agree to exchange and has left open the exchange offer
until April 29, 1994 for the remaining debentureholders to do so.
The Company is in the process of paying the December 1, 1993 interest to all of
the debentureholders. The Company does not currently have adequate cash
reserves to redeem the principal amount of all of the Old Debentures which have
not agreed to the exchange but is exploring ways to deal with those
debentureholders who will not exchange.
There is no assurance that the Company will be able to satisfactorily refinance
the remaining debentures. Management, however, believes that the exchange
offer can be completed.
In accordance with Statement of Accounting Standards No. 6, "Classification of
Short-Term Obligations Expected to be Refinanced", the classification of the
12-1/2% Subordinated Debentures in the consolidated balance sheet at
December 31, 1993, reflects the payment schedule of the New Debentures which
have agreed to the exchange described above.
18
<PAGE> 21
ERLY INDUSTRIES INC. AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on November 22, 1993.
(c) At the November 22, 1993 Annual Shareholders Meeting, a vote was
passed to amend the Articles of Incorporation of the Company to
decrease the par value of Common Stock from $1.00 per share to $.01
per share. 2,450,634 votes (96%) were cast for the proposal, 73,827
votes (3%) were cast against the proposal and 34,460 abstentions (1%)
were received.
ITEM 6.(B) REPORTS ON FORM 8-K
On December 29, 1993, the Company filed a Form 8-K to report the disposition of
the Company's juice business in December 1993.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ERLY INDUSTRIES INC.
(Registrant)
April 14, 1994 By /s/ Richard N. McCombs
----------------------------------
Richard N. McCombs
Vice President and
Chief Financial
Officer
19
<PAGE> 22
EXHIBIT I
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CALCULATION OF PRIMARY INCOME (LOSS)
PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income (loss) from
continuing operations $ 151,000 $ 167,000 $ 102,000 ($1,680,000)
Loss on discontinued
operations (1,241,000) (2,123,000) (7,397,000) (2,760,000)
Income from extra-
ordinary items 897,000 15,022,000 4,726,000
---------- ---------- ----------- ----------
Net income (loss) ($ 193,000) ($1,956,000) $ 7,727,000 $ 286,000
========== ========== =========== ==========
Average number of shares
of common stock and
common stock
equivalents
outstanding:
Average number of
shares of common
stock outstanding 3,563,000 3,438,000 3,511,000 3,433,000
Common stock equivalents:
Dilutive effect of
stock options and
warrants based on
application of
treasury stock
method (a) (a) 69,000 (b)
---------- ---------- ----------- ----------
Total 3,563,000 3,438,000 3,580,000 3,433,000
========== ========== =========== ==========
Primary income (loss)
per common share:
Income (loss) from
continuing operations $ .04 $ .05 $ .03 ($ .49)
Income (loss) on dis-
continued operations (.34) (.62) (2.07) (.80)
Income from extra-
ordinary items .25 4.20 1.37
---------- ---------- ----------- ----------
Primary income (loss)
per common share ($ .05) ($ .57) $ 2.16 $ .08
========== ========== =========== ==========
</TABLE>
(a) A net loss is reported for the period. Therefore, exercise of stock
options and warrants is not assumed as the computation would be
anti-dilutive.
(b) The dilutive effect of stock options and warrants was less than 3%;
therefore, none are shown above.
20
<PAGE> 23
EXHIBIT I
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED INCOME (LOSS) PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31, December 31,
------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income (loss) from
continuing operations $ 151,000 $ 167,000 $ 102,000 ($1,680,000)
Loss on discontinued
operations (1,241,000) (2,123,000) (7,397,000) (2,760,000)
Income from extra-
ordinary items 897,000 15,022,000 4,726,000
---------- ---------- ----------- ----------
Net income (loss) ($ 193,000) ($1,956,000) $ 7,727,000 $ 286,000
========== ========== =========== ==========
Average number of shares
of common stock and
common stock
equivalents
outstanding:
Average number of
shares of common
stock outstanding 3,563,000 3,438,000 3,511,000 3,433,000
Common stock equivalents:
Dilutive effect of
stock options and
warrants based on
application of
treasury stock
method (a) (a) 69,000 (b)
Common stock issuable
upon conversion on
note payable (a) (a) 267,000 267,000
---------- ---------- ----------- ----------
Total 3,563,000 3,438,000 3,847,000 3,700,000
========== ========== =========== ==========
Fully diluted income
(loss) per common share:
Income (loss) from
continuing operations $ .04 $ .05 $ .03 ($ .45)
Loss on discontinued
operations (.34) (.62) (1.92) (.75)
Income from extra-
ordinary items .25 3.90 1.28
---------- ---------- ----------- ----------
Fully diluted income
(loss) per common
share ($ .05) $ .57 $ 2.01 $ .08
========== ========== =========== ==========
</TABLE>
(a) A net loss is reported for the period. Therefore, exercise of stock
options and warrants is not assumed as the computation would be
anti-dilutive.
(b) The dilutive effect of stock options and warrants was less than 3%;
therefore, none are shown above.
21
