<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the three months ended September 30, 1995 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 90024-3955
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (213) 879-1480
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 September 30, 1995, there were 4,275,685 shares of the Registrant's
common stock outstanding (including redeemable common stock).
<PAGE>
<PAGE> 2
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
------------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,739,000 $ 3,718,000
Notes and accounts receivable, less
allowance for doubtful accounts of
$2,157,000 (September 30) and
$1,831,000 (March 31) 50,925,000 53,432,000
Inventories:
Raw materials 34,146,000 35,615,000
Finished goods 28,345,000 20,407,000
---------- ----------
62,491,000 56,022,000
Prepaid expenses and other
current assets 2,199,000 1,382,000
----------- -----------
Total current assets 118,354,000 114,554,000
Long-term notes receivable, net 1,668,000 1,668,000
Property, plant and equipment, net 56,090,000 54,520,000
Assets held for sale, net 21,057,000 21,282,000
Other assets 19,393,000 15,034,000
------------ ------------
$216,562,000 $207,058,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, collateralized $ 22,492,000 $ 41,883,000
Accounts payable 30,415,000 31,172,000
Accrued payroll and other
current liabilities 12,362,000 13,739,000
Income taxes payable 4,043,000 4,058,000
Current portion of long-term
and subordinated debt 1,083,000 7,810,000
---------- ----------
Total current liabilities 70,395,000 98,662,000
Long-term debt 98,416,000 61,511,000
Subordinated debt 5,670,000 6,670,000
Minority interest 17,624,000 19,104,000
Commitments and contingencies
Redeemable common stock
and common stock warrants 4,312,000 4,312,000
Stockholders' equity:
Common stock, par value $.01 a share:
Authorized: 15,000,000 shares
Issued and outstanding:
3,930,685 shares (September 30)
and 3,418,272 shares (March 31) 39,000 34,000
Additional paid-in capital 22,046,000 16,407,000
Retained earnings (deficit) (733,000) 1,750,000
Cumulative foreign currency
adjustments (1,207,000) (1,392,000)
---------- ----------
Total stockholders' equity 20,145,000 16,799,000
------------ ------------
$216,562,000 $207,058,000
============ ============
</TABLE>
See accompanying Notes to Consolidated 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
For the three and six months ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
--------------------------- ---------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $111,641,000 $111,866,000 $224,530,000 $233,128,000
Cost of sales 95,986,000 93,833,000 192,161,000 199,432,000
------------ ------------ ------------ ------------
Gross profit 15,655,000 18,033,000 32,369,000 33,696,000
Selling, general and
administrative expenses 10,861,000 10,284,000 21,362,000 18,897,000
Interest expense 4,798,000 4,374,000 8,998,000 7,848,000
Interest income (135,000) (79,000) (254,000) (145,000)
Other (income) expense (40,000) 81,000 (153,000) 217,000
---------- ---------- ---------- ----------
15,484,000 14,660,000 29,953,000 26,817,000
Income before taxes on income
and minority interest 171,000 3,373,000 2,416,000 6,879,000
Taxes on income 160,000 910,000 706,000 1,509,000
--------- --------- --------- ---------
Income before minority interest 11,000 2,463,000 1,710,000 5,370,000
Minority interest* 889,000 595,000 1,454,000 49,000
----------- ---------- ---------- ----------
Net income $ 900,000 $3,058,000 $3,164,000 $5,419,000
=========== ========== ========== ==========
Net income per share of common
and common stock equivalents**:
Primary $ .18 $ .63 $ .61 $1.12
===== ===== ===== =====
Fully diluted $ .17 $ .60 $ .59 $1.06
===== ===== ===== =====
Weighted average common and
common stock equivalents**:
Primary 5,056,000 4,843,000 5,174,000 4,843,000
Fully diluted 5,363,000 5,150,000 5,481,000 5,150,000
</TABLE>
* Represents minority interest in net earnings or loss of American Rice, Inc.
applicable to common stock, after preferred stock dividend requirements (see
Note 1).
** Retroactively adjusted to give effect to a 15% stock dividend in September
1995.
See accompanying Notes to Consolidated 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 six months ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Six months ended
September 30,
---------------------------
1995 1994
------------ ----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $3,164,000 $5,419,000
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Minority interest in ARI (1,454,000) (49,000)
Depreciation and amortization 3,678,000 3,447,000
Provision for loss on receivables 326,000 (18,000)
Change in assets and liabilities:
(Increase) decrease in receivables 2,181,000 (18,975,000)
(Increase) decrease in inventories (6,469,000) 16,040,000
(Increase) in prepaid expenses
and other current assets (817,000) (363,000)
Increase (decrease) in accounts
payable, other current
liabilities and taxes payable (2,149,000) 11,432,000
Other, net 404,000 200,000
--------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,136,000) 17,133,000
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,213,000) (2,490,000)
Disposition of property, plant and equipment 8,000 84,000
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES (4,205,000) (2,406,000)
FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes 94,000,000
Mortgage notes issuance cost (5,425,000)
(Decrease) in notes payable (19,391,000) (9,463,000)
Principal payments on long-term
and subordinated debt (64,822,000) (3,908,000)
---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 4,362,000 (13,371,000)
---------- ----------
INCREASE (DECREASE) IN CASH
DURING THE PERIOD (979,000) 1,356,000
CASH, BEGINNING OF PERIOD 3,718,000 3,065,000
----------- -----------
CASH, END OF PERIOD $ 2,739,000 $ 4,421,000
=========== ===========
Supplemental cash flow information:
Net cash paid during the period for:
Interest expense $ 7,203,000 $ 5,379,000
Income taxes $ 406,000 $ 195,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
<PAGE>
<PAGE> 5
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the six months ended September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Common Stock Additional Retained Foreign Total
------------------- Paid-in Earnings Currency Stockholders'
Shares Dollars Capital (Deficit) Adjustments Equity
--------- -------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance
April 1, 1995 3,418,272 $34,000 $16,407,000 $ 1,750,000 ($1,392,000) $16,799,000
Net income
for the period 3,164,000 3,164,000
Foreign currency
adjustments 185,000 185,000
15% stock
dividend 512,314 5,000 5,638,000 (5,643,000) --
Cash payments
in lieu of
fractional
shares (4,000) (4,000)
Common stock
issued 99 1,000 1,000
--------- -------- ----------- --------- ----------- ------------
Balance
September 30,
1995
(unaudited) 3,930,685 $39,000 $22,046,000 ($733,000) ($1,207,000) $20,145,000
========= ======= =========== ======== ========== ===========
</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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended September 30, 1995 and 1994
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 1995 Form 10-K 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.
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement basis and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future.
Such deferred income tax asset and liability computations are based on enacted
tax laws and rates applicable to periods in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. At March
31, 1995, the Company had net operating loss carryforwards for federal tax
reporting purposes of approximately $44 million, which expire at various dates,
primarily in years 2002 through 2008. Tax expense reflected in the
consolidated statements of operations represents estimated federal, state and
foreign tax expense on pre-tax earnings reduced by the utilization of deferred
tax assets relating to net operating loss carryforwards that had previously
been reserved.
Primary earnings per share are based on the weighted average number of: (1)
common shares, and (2) dilutive common share equivalents (consisting of stock
options and warrants) outstanding during each period presented. Fully diluted
earnings per share assumes conversion of a $1 million convertible note payable,
unless conversion would be antidilutive. All calculations have been
retroactively adjusted to give effect to a 15% stock dividend in September 1995
(see Note 6).
Note 1 - Minority Interest
In May 1993, substantially all of the assets and liabilities of ERLY's wholly
owned subsidiary, Comet Rice, Inc. ("Comet"), were acquired by American Rice,
Inc. ("ARI"), in a transaction accounted for as a reverse acquisition by its
subsidiary, Comet. 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. As a result of the transaction, ERLY's ownership increased to 81% of
the voting rights of ARI.
<PAGE>
<PAGE> 7
Note 1 - Minority Interest (continued)
ERLY's 81% voting interest in ARI consists of the following securities of ARI:
* 777,777 shares of ARI common stock which represent 32% of ARI's total
outstanding common stock and 9% of ARI's common shares on a fully
converted basis.
* 777,777 shares of ARI Series A Preferred Stock, which is convertible one
for one, has voting rights, liquidation preferences of $25.70 per share,
but has no stated dividend. These shares represent 9% of ARI's common
shares on a fully converted basis.
* 2,800,000 shares of ARI Series B Preferred Stock, which is convertible
into 5,600,000 common shares, has voting rights and an annual cumulative
dividend of approximately $5.2 million. These shares represent 63% of
ARI's common shares on a fully converted basis.
ARI has also issued a Series C Preferred Stock to third parties which does not
have voting or conversion rights but does have an annual cumulative dividend of
$750,000. The Series A, Series B and Series C Preferred Stocks are unique
securities with preferential rights which are superior to common stock rights.
The Minority Interest of ARI in ERLY's consolidated financial statements
represents the 68% of the common stock of ARI which ERLY does not own and the
Series C Preferred Stock, for a total of 19% of the voting interest in ARI on a
fully converted basis.
ARI's earnings or losses are allocated between ERLY and the Minority Interest
in accordance with the underlying terms of the various securities, rather than
allocation based on voting ownership of the subsidiary. No conversion is
assumed in the case of convertible preferred stocks for purposes of this
calculation, even though conversion may occur at any time at the option of
ERLY.
ARI's cumulative annual dividends of $5.2 million related to the Series B
Preferred Stock and $750,000 related to the Series C Preferred Stock are
deducted from ARI earnings or loss to yield earnings or loss to be allocated to
common stock. The Series B Preferred Stock dividend is allocated entirely to
ERLY, while the Series C Preferred Stock dividend is allocated entirely to
Minority Interest. These dividends are allocated even if not declared as the
dividends are cumulative. The remaining earnings or losses to be allocated to
common stock after deduction of the preferred stock dividends is allocated in
accordance with the relative common stock ownership of ERLY (32%) and the
Minority Interest (68%). ERLY's share of ARI's net earnings (loss) applicable
to common stock after preferred dividend requirements was ($507,000) and
($861,000) for the three and six months ended September 30, 1995, respectively,
and ($368,000) and ($199,000) for the three and six months ended September 30,
1994, respectively. ERLY also earned Series B preferred dividends of
$1,295,000 for each of the three month periods ended September 30, 1995 and
1994, and $2,590,000 for each of the six month periods ended September 30, 1995
and 1994. As of September 30, 1995, ARI Series B Preferred Stock dividends
accumulated, but not declared, total $12.1 million.
<PAGE>
<PAGE> 8
Note 2 - Assets Held for Sale - Long-term
The consolidated balance sheets include assets held for sale classified as
long-term of $21 million at September 30, 1995. This includes 39 acres of land
in Houston, Texas held for sale by ARI ($19 million) and the remaining net
assets of the Company's discontinued winery operations ($2 million) which
management intends to dispose of in an orderly manner.
ARI's Board of Directors previously adopted a resolution authorizing its
management to sell the Houston property. Management has had conversations with
developers interested in the property, however, no decision has yet been made
about how to market the property. Management's intention is an orderly,
outright sale to a third party rather than to develop the property. However,
ARI might consider some form of joint venture with a developer in order to
maximize the property's value. ARI has the ability and intent to hold the
property over a normal marketing period. The proceeds of any such sale, when
and if it occurs, are required by the terms of ARI's debt agreements to be used
to reduce debt.
Note 3 - Long-term and Subordinated Debt
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.
In a public offering completed in August 1995, ARI issued $100 million
principal amount of 13.0% mortgage notes due 2002 (the "Notes"). Portions of
the net proceeds of $94 million were used to repay $53.8 million of ARI's
existing long-term debt, to make a $10.5 million 15% loan to ERLY due 2002, and
to reduce borrowings outstanding under ARI's $47.5 million revolving credit
loan.
The Notes provide for interest semiannually, mature on July 31, 2002 and are
non-callable by ARI prior to July 31, 1999, after which date the Notes are
callable at the option of ARI, in whole or in part, at any time upon not less
than 30 nor more than 60 days notice, at 107.0% of the principal amount,
declining ratably to par on or after July 31, 2001. Except under certain
changes of control, upon remarketing of industrial revenue bonds, or asset
sales, as defined in the related indenture, ARI is not required to make
mandatory redemption payments on the Notes. The Notes accrue fixed interest
at an annual rate of 13.0%, an effective yield rate of 14.4%.
In addition to fixed interest, the Notes bear contingent interest of 4.0% of
consolidated cash flow (as defined) up to a limit of $40 million of
consolidated cash flow during the fiscal year in which such interest accrues.
Contingent interest accrues in each semiannual period (as defined) in which
consolidated cash flow in such period and the immediately preceding semiannual
period is equal to or greater than $20 million. Contingent interest is payable
semiannually, but ARI may elect to defer all or a portion of any such payment
to the extent that (a) the payment of such portion of contingent interest will
cause ARI's adjusted fixed charge coverage ratio (as defined) for the two
consecutive applicable semiannual periods to be less than 2.0:1 and (b) the
principal of the Notes corresponding to such contingent interest has not then
matured and become due and payable. For the quarter ended September 30, 1995,
the consolidated cash flow was $4.8 million and the contingent interest accrued
at September 30, 1995 was $89,000.
<PAGE>
<PAGE> 9
Note 3 - Long-term and Subordinated Debt (continued)
The Notes are secured by (a) a first or second priority security interest in
substantially all of ARI's property, plant and equipment (including related
leasehold interests), (b) a first priority security interest in 39 acres of
land in Houston, Texas held for sale, (c) a pledge agreement creating first
priority security interests in the capital stock of ARI held by ERLY (other
than 200,000 shares of ARI's Series B Preferred Stock pledged to the holders of
ARI's Series C Preferred Stock), (d) notes receivable from ERLY (as defined),
and (e) a security agreement creating a first priority security interest in all
registered U.S. trademarks and a security interest in all other registered
trademarks owned or licensed by ARI.
The Notes rank senior in right of payment to all subordinated indebtedness and
pari passu in right of payment with all existing and future senior indebtedness
of ARI, including borrowings under the revolving credit loan. The indenture
includes covenants that in certain instances restrict, among other things,
(a) the payment of dividends, (b) the redemption of equity interests of ARI,
(c) the payment on or redemption of indebtedness subordinate to the Notes,
(d) certain investments (as defined), (e) the incurrence of certain
indebtedness and issuance of preferred stock, (f) certain transactions with
affiliates, and (g) certain mergers, consolidations or sales of assets. In
addition, the indenture contains certain limitations on capital expenditures,
operating lease obligations and rice contract polices and procedures.
ARI used a portion of the proceeds from the $100 million notes to make a $10.5
million, 15% loan to ERLY, due 2002. ERLY utilized the loan to repay a
remaining $9.5 million obligation to ING Capital, the lender to the Company's
subsidiary ERLY Juice, which ERLY had guaranteed (see Note 4).
Note 4 - Redeemable Common Stock and Common Stock Warrants
In connection with the discontinuation of the Company's juice business in
December 1993, the Company issued warrants to acquire up to 10% of ERLY's
common stock at $.01 per share. Warrants for 5% of ERLY's stock became
exercisable in April 1994 and warrants for the other 5% became exercisable
in April 1995. All of these warrants expire on April 30, 1998. The warrants
are subject to a redemption provision at the option of the holder at the
current market value of ERLY's stock. This provision is subject to amendments
described below.
In conjunction with an extension of approximately $9.5 million of remaining
ERLY Juice debt in February 1995, the Company issued additional warrants to the
lender, ING Capital, to purchase 5% of ERLY's common stock at $.01 per share.
These additional warrants were canceled upon the repayment of the ERLY Juice
debt in August 1995 (see Note 3). In connection with the extension in February
1995, the warrants issued in 1993 were amended to include a call feature, under
which the Company could repurchase the warrants at a price of $8.75 per share,
assuming the ERLY Juice debt was repaid before April 1, 1996, the expiration
date of the call feature. The call feature also eliminates the redemption
provision, until the call period expires. In June 1995, the February extension
was amended to reduce the $8.75 call price per share to $4.78 per share (as
adjusted for a 15% stock dividend) if the ERLY Juice debt was repaid before
September 30, 1995. In such event, the call feature would be extended through
September 30, 1996. The Company repaid the ERLY Juice debt in August 1995 (as
discussed in Note 3), and intends to exercise its call option prior to
September 30, 1996 and, accordingly, the warrants are classified as redeemable
common stock warrants at the net obligation of $2,512,000 at September 30,
1995. If the call option is not exercised, the Company would have outstanding
warrants to purchase approximately 525,000 shares of common stock at $.01 per
share, all of which would be subject to redemption at the current market price
of ERLY's stock.
<PAGE>
<PAGE> 10
Note 4 - Redeemable Common Stock and Common Stock Warrants (continued)
In fiscal 1992, ERLY issued 345,000 shares (as adjusted for a 15% stock
dividend) of ERLY common stock in exchange for $5.4 million of debt. In
conjunction with this transaction, ERLY entered into an agreement to repurchase
all of such stock at a price of $5.22 per share, as adjusted, ($1,800,000 total
obligation), at the option of the stockholder, through December 31, 1997.
These shares are classified as redeemable common stock in the consolidated
balance sheets. In October 1995, the stockholder disposed of the shares subject
to the repurchase agreement to a third party, thereby canceling the repurchase
agreement between ERLY and the stockholder. Accordingly, these shares and the
related $1.8 million obligation, will be transferred to common stock and
paid-in capital in the quarter ending December 31, 1995.
Note 5 - Commitments and Contingencies
The Company has made a $700,000 non-refundable deposit towards the purchase
price of a foreign and domestic green olive business which had an expiration
date of August 18, 1995. ERLY has entered into negotiations to acquire the
seller's ripe olive business in addition to its green olive business and will
apply the deposit to the total purchase price if the transaction is completed.
Note 6 - Stockholders' Equity
In September 1995, the Company declared a 15% stock dividend to shareholders of
record at the close of business on September 15, 1995.
<PAGE>
<PAGE> 11
Item 2. ERLY INDUSTRIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
--------------------------------------------------------------
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Consolidated Results
For the quarter ended September 30, 1995, the Company reported net income of
$900,000 on sales of $112 million, as compared to net income of $3.1 million on
sales of $112 million for the second quarter of the prior fiscal year. Sales
for the second quarter of fiscal 1996 reflect a $12 million increase in sales
by American Rice over the second quarter of last year, partially offset by
sales decreases of $11 million and $1 million by Chemonics Fire-Trol and
Chemonics International, respectively.
Gross profit for the quarter ended September 30, 1995 was $15.7 million, a
decrease of $2.4 million from the quarter ended September 30, 1994 primarily as
a result of decreases by Fire-Trol ($2.6 million) and Chemonics International
($.5 million), partially offset by a $.7 million increase at ARI.
American Rice
Sales for the quarter ended September 30, 1995 increased $12.1 million, or
15.4%, from $78.3 million in fiscal 1995 to $90.4 million in fiscal 1996. Of
this increase, $10.4 million resulted from increased export sales and $1.7
million resulted from increased sales in the United States and Canada.
Export sales increased due to higher volume and higher average prices. Total
export sales volume increased approximately 800,000 equivalent rough rice
hundredweight ("cwt."), or 18%, accounting for an $8.3 million sales increase.
Average export prices increased approximately 4%, accounting for $2.1 million
in sales increases. Export volume was higher primarily due to increased volume
in the Middle East, partially offset by lower sales to Japan compared to the
second quarter of the prior year. Management anticipates that sales to Japan
will begin in November 1995 pursuant to Japan's commitment under the General
Agreement on Tariffs and Trade ("GATT") treaty.
Domestic sales were higher as a result of higher volume partially offset by
lower average prices.
Gross profit was 11% of sales for the quarter ended September 30, 1995 compared
to 12% last year. Gross profit increased $667,000, or 7.4%, from $9.1 million
in the second quarter last year to $9.7 million in the second quarter of this
year, due primarily to increases in gross profit from Western Hemisphere and
Middle East sales partially offset by lower gross profits from Japan business.
ARI's selling, general and administrative expenses of $6.1 million increased
$.5 million, or 8.3%, from $5.6 million last year. Selling, general and
administrative expenses as a percentage of net sales decreased from 7.2% in the
second quarter of last year to 6.7% this year.
<PAGE>
<PAGE> 12
Chemonics International - Consulting
For the quarter ended September 30, 1995, revenues for International were $14.9
million, a decrease of $1.1 million, or 6%, from revenues of $16.0 million for
the comparable period last year. The decrease in revenues for the quarter was
primarily due to the wind-down of certain stages of projects in the former
Soviet Union countries. Revenues for these projects will increase next quarter
as the next stages of these projects begin. Gross profit was $4.3 million (28%
of revenues) for the quarter compared to gross profit of $4.7 million (30% of
revenues) for the second quarter of last year.
Chemonics Industries - Fire-Trol
Fire-Trol reported net sales of $6.3 million for the quarter compared to the
record sales of $17.6 million reported last year, a decrease of $11.3 million,
or 64%. The previous year experienced a record level of forest fire activity
resulting in significant demand for the Company's forest fire retardant
products. The decrease in sales from last year reflects a more normal level of
forest fire activity this year. Gross profit for the quarter was $1.7 million,
or 27% of sales, compared to $4.3 million, or 24% of sales last year.
Corporate
Consolidated interest expense totaled $4.8 million for the quarter ended
September 30, 1995, compared to $4.4 million for the same quarter of last year.
This increase reflects increased borrowings and the increase in interest rates
from a year ago due to increases in the prime rate. Interest expense in both
periods includes amortization of capitalized debt issuance costs.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Consolidated Results
For the six months ended September 30, 1995, the Company reported net income of
$3.2 million on sales of $225 million, as compared to net income of $5.4
million on sales of $233 million for the first six months of the prior fiscal
year. Sales for the current year were down $8 million from last year,
primarily due to a $7 million decrease in sales by American Rice and a $9
million decrease by Fire-Trol, partially offset by an $8 million increase by
Chemonics International.
Gross profit for the six months ended September 30, 1995 was $32.4 million
compared to $33.7 million for the comparable period of last year.
American Rice
Sales for the six months ended September 30, 1995 declined $7.2 million, or
3.9%, from $184.0 million in fiscal 1995 to $176.8 million in fiscal 1996.
The decline in sales was composed of $7.7 million in decreased export sales,
partially offset by $.5 million in increased sales in the United States and
Canada.
Export sales declined due to lower volume partially offset by higher average
prices. Total export sales volume declined approximately 1.7 million
equivalent rough rice hundredweight ("cwt."), or 14%, accounting for a $16.4
million sales decline. Average export prices increased approximately 8%,
accounting for $8.7 million in sales increases. Export volume was lower
primarily due to the lack of sales to Japan compared to the prior year. This
sales decline was partially offset by higher sales to the Middle East.
<PAGE>
<PAGE> 13
Domestic sales were higher as a result of higher volume partially offset by
lower average prices.
Gross profit was 11% of sales for each of the six month periods ended September
30, 1995 and 1994. Gross profit declined $1.1 million, or 5.5%, from $20.4
million in the first six months of last year to $19.3 million in the first six
months of this year, due primarily to lower sales to Japan from ARI's Maxwell,
California facility, partially offset by increases in gross profit from Western
Hemisphere and Middle East sales.
ARI's selling, general and administrative expenses of $11.8 million increased
$964,000, or 8.9%, from $10.9 million last year. Selling, general and
administrative expenses as a percentage of net sales increased from 5.9% in the
first six months of last year to 6.7% this year due primarily to a higher
proportion of branded sales in the current fiscal year.
Chemonics International - Consulting
For the six months ended September 30, 1995, revenues for International were
$35.4 million, an increase of $7.6 million, or 27%, from revenues of $27.8
million for the comparable period last year. Gross profit was $10.1 million
(28% of revenues) for the period compared to gross profit of $8.3 million (30%
of revenues) for the comparable period last year.
Chemonics Industries - Fire-Trol
Fire-Trol reported net sales of $12.3 million for the six months compared to
the record sales of $21.3 million reported last year, a decrease of $9.0
million, or 42%. The previous year experienced a record level of forest fire
activity resulting in significant demand for the Company's forest fire
retardant products. The decrease in sales from last year reflects a more
normal level of forest fire activity this year. Gross profit for the six
months was $3.0 million, or 25% of sales, compared to $5.1 million, or 24% of
sales last year.
Corporate
Consolidated interest expense totaled $9.0 million for the six months ended
September 30, 1995, compared to $7.8 million for the same period of last year.
This increase reflects increased borrowings and the increase in interest rates
from a year ago due to increases in the prime rate. Interest expense in both
periods includes amortization of capitalized debt issuance costs.
Liquidity and Capital Resources
At September 30, 1995, consolidated working capital was $48.0 million, compared
to $15.9 million at March 31, 1995, an increase of $32.1 million. In August
1995, the Company's subsidiary, ARI, issued $100 million principal amount of
13.0% Mortgage Notes due in the year 2002. Portions of the net proceeds of
$94 million were used to repay $53.8 million of existing ARI term debt and to
reduce borrowings outstanding under ARI's $47.5 million revolving credit loan
(see Note 3).
In addition, ARI used a portion of the proceeds from the $100 million notes to
make a $10.5 million 15% loan to ERLY, due 2002. ERLY utilized the loan to
repay a remaining $9.5 million obligation to ING Capital, the lender to the
Company's subsidiary, ERLY Juice, which ERLY guaranteed in conjunction with a
$6 million write-down of ERLY Juice obligations.
Stockholders' equity was $20.1 million at September 30, 1995, compared to $16.8
million at March 31, 1995, an improvement of $3.3 million as a result of the
net income for the quarter.
<PAGE>
<PAGE> 14
The Company's subsidiary, ARI, executed an amendment to its $47.5 million
revolving credit loan effective June 30, 1995. The loan bears interest at
prime plus .5% and matures in May 1996. Previously, the interest rate on the
loan was prime plus 2.0%.
<PAGE>
<PAGE> 15
Part II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on September 6, 1995.
(b) At the September 6, 1995 Annual Shareholders Meeting, a vote was passed to
amend the Articles of Incorporation of the Company to increase the number
of authorized shares of the Company's common stock, $.01 par value, from
5,000,000 shares to 15,000,000 shares. Results were as follows: 2,911,121
votes (98%) were cast for the proposal; 53,635 votes (2%) were cast against
the proposal; and, 11,038 abstentions (-%) were received.
In addition to the vote on the above amendment, a vote was passed to
approve the Incentive Compensation Plan of the Company's subsidiary,
American Rice, Inc. Results were as follows: 2,774,006 votes (96%) were
cast for the proposal; 11,808 votes (4%) were cast against the proposal;
and, 8,342 abstentions (-%) were received.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Calculation of Primary Income Per Share
11.2 Calculation of Fully Diluted Income Per Share
27 Financial Data Schedule (electronic filing)
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1995.
<PAGE>
<PAGE> 16
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.
Date: November 14, 1995 By /s/ Thomas A. Whitlock
---------------------
Thomas A. Whitlock
Vice President and
Corporate Controller
<PAGE>
<PAGE> 17
EXHIBIT 11.1
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CALCULATION OF PRIMARY INCOME PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
----------------------------- ----------------------------
1995 1994 1995 1994
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Income before minority interest $ 11 $ 2,463 $ 1,710 $ 5,370
Minority interest 889 595 1,454 49
------- ------- ------- -------
Net income $ 900 $ 3,058 $ 3,164 $ 5,419
======= ======= ======= =======
Average number of shares of
common stock and common
stock equivalents outstanding*:
Average number of shares of
common stock outstanding 4,276 4,226 4,276 4,226
Common stock equivalents*:
Dilutive effect of stock
options and warrants based
on application of treasury
stock method 780 617 898 617
----- ----- ----- -----
Total 5,056 4,843 5,174 4,843
===== ===== ===== =====
Primary income per
common share* $ .18 $ .63 $ .61 $ 1.12
====== ====== ======= =======
</TABLE>
* Retroactively adjusted to give effect to a 15% stock dividend in September
1995.
<PAGE>
<PAGE> 18
EXHIBIT 11.2
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CALCULATION OF FULLY DILUTED INCOME PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
----------------------------- ------------------------------
1995 1994 1995 1994
-------- --------- ---------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Income before minority interest $ 11 $ 2,463 $ 1,710 $ 5,370
Interest adjustment - convertible
note payable 28 20 55 40
Income before minority interest, ------- ------- ------- -------
as adjusted 39 2,483 1,765 5,410
Minority interest 889 595 1,454 49
------- ------- ------- -------
Net income, as adjusted $ 928 $ 3,078 $ 3,219 $ 5,459
======= ======= ======= =======
Average number of shares of
common stock and common
stock equivalents outstanding* 5,056 4,843 5,174 4,843
Other potentially
dilutive securities:
Common stock issuable upon
conversion of note payable* 307 307 307 307
----- ----- ----- -----
Total 5,363 5,150 5,481 5,150
===== ===== ===== =====
Fully diluted income
per common share* $ .17 $ .60 $ .59 $ 1.06
======= ======= ======= =======
</TABLE>
* Retroactively adjusted to give effect to a 15% stock dividend in September
1995.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 2,739,000
<SECURITIES> 0
<RECEIVABLES> 53,082,000
<ALLOWANCES> 2,157,000
<INVENTORY> 62,491,000
<CURRENT-ASSETS> 118,354,000
<PP&E> 83,600,000
<DEPRECIATION> 27,510,000
<TOTAL-ASSETS> 216,562,000
<CURRENT-LIABILITIES> 70,395,000
<BONDS> 99,670,000
<COMMON> 39,000
0
0
<OTHER-SE> 20,106,000
<TOTAL-LIABILITY-AND-EQUITY> 216,562,000
<SALES> 224,530,000
<TOTAL-REVENUES> 224,530,000
<CGS> 192,161,000
<TOTAL-COSTS> 192,161,000
<OTHER-EXPENSES> 19,501,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,998,000
<INCOME-PRETAX> 3,870,000
<INCOME-TAX> 706,000
<INCOME-CONTINUING> 3,164,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,164,000
<EPS-PRIMARY> .61
<EPS-DILUTED> .59
</TABLE>
