<PAGE>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
AMENDMENT TO 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)
California 95-2312900
------------------------------- -----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
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
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form 10-Q
for the three months ended December 31, 1993, as set forth on the pages
attached hereto:
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
<PAGE>
<PAGE> 2
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
ERLY INDUSTRIES INC.
----------------------
Resistrant
Date: June 17, 1994 By /S/
------------------------
Richard N. McCombs
Vice President and
Chief Financial Officer
<PAGE>
ERLY INDUSTRIES INC.
QUARTER ENDED DECEMBER 31, 1993
TABLE OF CONTENTS
FORM 10-Q/A
AMENDMENT No. 1
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> Page
Consolidated Balance Sheets <C>
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 7-14
Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-19
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
<PAGE>
<PAGE> 1
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1993 1993
<S> (Unaudited)
Assets <C> <C>
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) 3,985,000
----------- ----------
Total current assets 119,285,000 69,655,000
Long-term notes receivable, net 1,091,000 6,623,000
Property, plant and equipment, net 56,626,000 30,857,000
Assets held for sale, net (Note 4) 23,037,000 4,210,000
Investment in American Rice, Inc. (Note 1) 13,104,000
Other assets 18,128,000 10,651,000
------------ ------------
$218,167,000 $135,100,000
============ ============
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 13,292,000 7,298,000
Income taxes payable 2,215,000 1,829,000
Current portion of long-term and
subordinated debt 9,096,000 22,531,000
----------- -----------
Total current liabilities 118,710,000 114,123,000
Long-term debt (Note 5) 62,104,000 26,881,000
Subordinated debt (Note 5) 8,407,000 1,094,000
Deferred income taxes 1,311,000
Minority interest in consolidated
subsidiary 16,817,000 790,000
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) (5,709,000) (24,119,000)
Cumulative foreign currency adjustments (1,161,000) (949,000)
------------ ------------
Total stockholders' equity 9,117,000 (9,194,000)
------------ ------------
$218,167,000 $135,100,000
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
<PAGE>
<PAGE>
<PAGE> 2
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 $235,323,000 $173,343,000
Cost of sales 87,813,000 36,371,000 203,530,000 154,061,000
----------- ----------- ------------ ------------
Gross profit 11,760,000 5,208,000 31,793,000 19,282,000
Selling, general and
administrative expense 8,339,000 5,159,000 22,661,000 13,968,000
Interest expense 3,241,000 1,800,000 8,671,000 5,823,000
Interest income (116,000) (192,000) (511,000) (619,000)
Investment income (1,349,000) (426,000) (1,840,000)
Other (income) expense (43,000) (316,000) 260,000 (822,000)
Gain on partial sale of
investment in Comet Rice (11,768,000)
Minority interest in earnings
of consolidated subsidiary 148,000 372,000
Writedown of plant
facility (Note 3) 4,000,000
---------- --------- ---------- ----------
11,569,000 5,102,000 19,259,000 20,510,000
Income (loss) before
taxes on income,
discontinued operations
and extraordinary items 191,000 106,000 12,534,000 (1,228,000)
Taxes on income (benefit) (40,000) (61,000) 480,000 452,000
------- ------- ---------- ----------
Income (loss) from
continuing operations 231,000 167,000 12,054,000 (1,680,000)
Discontinued operations
(Note 2):
Loss from discontinued
operations (1,638,000) (2,123,000) (5,104,000) (2,760,000)
Loss on disposal
of discontinued
operations (872,000) (3,562,000)
---------- ---------- ---------- ----------
Income (loss) before
extraordinary items (2,279,000) (1,956,000) (3,388,000) (4,440,000)
Extraordinary income -
gain on extinguishment
of debt (Note 3) 897,000 15,022,000 4,726,000
----------- ----------- ---------- ----------
Net income (loss) ($ 1,382,000) ($ 1,956,000) $ 18,410,000 $ 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.
<PAGE>
<PAGE> 3
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 $ .06 $ .05 $ 3.36 $ (.49)
Discontinued operations (.70) (.62) (2.42) (.80)
Extraordinary items .25 4.20 1.37
---------- ---------- ---------- ----------
($ .39) ($ .57) $ 5.14 $ .08
========== ========== ========== ==========
Fully Diluted:
Continuing operations $ .06 $ .05 $ 3.13 $ (.45)
Discontinued operations (.70) (.62) (2.25) (.75)
Extraordinary items .25 3.91 1.28
---------- ---------- ---------- ----------
($ .39) ($ .57) $ 4.79 $ .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.
<PAGE>
<PAGE> 4
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) ($1,382,000) ($ 1,956,000) $18,410,000 $ 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 872,000 3,562,000
Extraordinary income on
extinguishment of debt (897,000) (15,022,000)
Gain on partial sale of
investment in Comet Rice (11,768,000)
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 236,000 (220,000) 386,000 148,000
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (7,950,000) 3,941,000 (7,728,000) 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
<PAGE>
<PAGE> 5
ERLY INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
For the three and nine months ended December 31, 1993 and 1992
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 (930,000) (326,000) (3,775,000) (995,000)
--------- ------- ---------- ---------
NET CASH (USED IN)
INVESTING ACTIVITIES 7,359,000 (600,000) 30,160,000 (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.
<PAGE>
<PAGE> 6
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine months ended December 31, 1993
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Additional Retained Foreign Total
Common Stock Paid-in Earnings Currency Stockholders'
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 ($24,119,000) ($949,000) ($9,194,000)
Net income
for the period 18,410,000 18,410,000
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 ($5,709,000) ($1,161,000) $9,117,000
========= =================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
<PAGE>
<PAGE> 7
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.
<PAGE>
<PAGE> 8
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.
Since ERLY, the sole shareholder of Comet at the time of the Transaction,
owned the larger portion of the voting rights in the surviving
corporation, the Transaction is accounted for as a reverse acquisition of
ARI by ERLY through its subsidiary, Comet, reflecting the change of
control that occured. The fair value of ARI was estimated to be
approximately $35 million as determined by a valuation study performed by
an investment banking firm. The Transaction was accounted for under the
guidelines of APB Opinion No. 16, "Business Combinations" and Emerging
Issues Task Force ("EITF") Issue No. 90-13, "Accounting for Simultaneous
Common Control Mergers".
The accounting consists of three steps: Step one consists of a
recognition by ARI of ERLY's historical cost of it's original 48%
interest. When ERLY purchased 48% of ARI in 1988 for $20 million, the
purchase price was $8.4 million greater than 48% of ARI stockholders'
equity. ERLY attributed the excess to ARI's 39 acres of land in Houston,
which excess was carried at $5.2 million at March 31, 1993. The $5.2
million excess attributed to the Houston property was "pushed down" or
added to the book value of the Houston property on ARI's books with a
corresponding increase in its equity.
Step two recognizes the step acquisition by ERLY of an additional equity
interest in ARI of approximately 33 percent in exchange for substantially
all of the assets of Comet and all of Comet's liabilities.
In accordance with EITF 90-13, under Step 3, the fair value of Comet's
assets to the extent sold to the shareholders of ARI was determined. ERLY
accounted for the Transaction as a partial sale of 19% of Comet Rice, and
a partial acquisition of ARI, increasing its ownership from 48% to 81%.
Under EITF 90-13, a gain of $11.6 million was recognized by ERLY on the
sale of its 19% interest in Comet Rice.
<PAGE>
<PAGE> 9
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 (by December 21, 1994) or
else ING Capital may declare a default with the right to foreclosure on
ERLY's subsidiary, Chemonics Industries, Inc.
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 (6,229,000) (24,223,000) (34,603,000) (67,153,000)
Interest expense (434,000) (916,000) (1,776,000) (2,702,000)
---------- ----------- ----------- -----------
Loss from discontinued
operations ($1,638,000) ($ 2,123,000) ($ 5,104,000) ($ 2,760,000)
========== =========== =========== ===========
Loss on disposal
of discontinued
operations ($ 872,000) $ - ($ 3,562,000) $ -
========== =========== =========== ===========
</TABLE>
<PAGE>
<PAGE> 10
Note 2 - Discontinued Operations - Disposition of Juice Business (continued)
At December 31, 1993, remaining ERLY Juice assets of $4.0 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 7,464,000
Other current liabilities 662,000
Income taxes payable 28,000
Current portion of long-term debt 484,000
-----------
$17,035,000
===========
</TABLE>
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.
<PAGE>
<PAGE> 11
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.
Note 4 - Assets Held For Sale - Long-term
The consolidated balance sheets include assets held for sale of $23
million at December 31, 1993. This includes property held for sale in
Houston, Texas ($19 million) and the remaining net assets of the Company's
discontinued wine business ($4 million).
<PAGE>
<PAGE> 12
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>
Note 5 - Long-term and Subordinated Debt (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. 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 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.
<PAGE>
<PAGE> 13
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.
<PAGE>
<PAGE> 14
Note 5 - Long-term and Subordinated Debt (continued)
A comparison of the current ARI financial covenants and ARI's actual
financial ratios is presented below:
<TABLE>
<CAPTION>
Financial Actual as of
Covenant December 31, 1993
<S> <C> <C>
Net book value (greater than) $25,461,000 $38,497,000
Working capital (greater than) $ 7,986,000 $13,284,000
Financial leverage (less than) 4.8 to 1 3.9 to 1
Working capital leverage (less than) 8.0 to 1 6.52 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.
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.
<PAGE>
<PAGE> 15
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 $1,382,000 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 $231,000, losses of $2,510,000 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 $231,000 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.
<PAGE>
<PAGE> 16
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 $1,638,000
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 $872,000. 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 $18.4 million compared to net income of $286,000 last year.
Results for the current nine month period include income on continuing
operations of $12,054,000, losses on the Company's discontinued juice
operations of $8,666,000 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.
<PAGE>
<PAGE> 17
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 $12,054,000 on sales of $235 million compared
to a loss on continuing operations of $1.7 million on sales of $173
million last year. The results for the current nine month period include
a gain of $11,768,000 on the partial sale of the Company's investment in
Comet Rice, Inc. (See Note 1).
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.
<PAGE>
<PAGE> 18
Results of Operations - Nine Months Ended December 31, 1993
(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 $5,104,000
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 $3,562,000. 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 $575,000
compared to a negative $44 million and negative $15 million at March 31
and September 30, 1993, respectively. The improvement 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 $9.1 million at December 31, 1993, an improvement
of $18.3 million from March 31, 1993.
<PAGE>
<PAGE> 19
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.
<PAGE>
<PAGE> 20
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
Vice President and
Chief Financial Officer
<PAGE>
<PAGE> 21
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 $ 231,000 $ 167,000 $12,054,000 ($1,680,000)
Loss on discontinued
operations (2,510,000) (2,123,000) (8,666,000) (2,760,000)
Income from extra-
ordinary items 897,000 15,022,000 4,726,000
---------- ---------- ----------- ----------
Net income (loss) ($1,382,000) ($1,956,000) $18,410,000 $ 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 $ .06 $ .05 $ 3.36 ($ .49)
Income (loss) on dis-
continued operations (.70) (.62) (2.42) (.80)
Income from extra-
ordinary items .25 4.20 1.37
---------- ---------- ----------- ----------
Primary income (loss)
per common share ($ .39) ($ .57) $ 5.14 $ .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.
<PAGE>
<PAGE> 22
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 $ 231,000 $ 167,000 $12,054,000 ($1,680,000)
Loss on discontinued
operations (2,510,000) (2,123,000) (8,666,000) (2,760,000)
Income from extra-
ordinary items 897,000 15,022,000 4,726,000
---------- ---------- ----------- ----------
Net income (loss) ($1,382,000) ($1,956,000) $18,410,000 $ 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 $ .06 $ .05 $ 3.13 ($ .45)
Loss on discontinued
operations (.70) (.62) (2.25) (.75)
Income from extra-
ordinary items .25 3.91 1.28
---------- ----------- ------------ ----------
Fully diluted income
(loss) per common
share ($ .39) $ .57 $ 4.79 $ .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.
