<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, 1996 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 October 31, 1996 there were 4,739,180 shares of the Registrant's
common stock outstanding.
<PAGE>
<PAGE> 2
ERLY INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 5,247,000 $ 3,819,000
Notes and accounts receivable, less
allowance for doubtful accounts of
$1,889,000 (September 30) and
$1,715,000 (March 31) 73,505,000 56,665,000
Inventories:
Raw materials 42,564,000 47,883,000
Finished goods 47,932,000 30,121,000
---------- ----------
90,496,000 78,004,000
Prepaid expenses and other
current assets 1,842,000 2,020,000
Properties held for sale, net -- 13,535,000
----------- -----------
Total current assets 171,090,000 154,043,000
Restricted cash and investments 10,863,000 --
Long-term notes receivable, net 1,574,000 1,574,000
Property, plant and equipment, net 72,792,000 56,360,000
Other assets 24,332,000 23,158,000
------------ ------------
$280,651,000 $235,135,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, collateralized $ 66,297,000 $ 27,413,000
Accounts payable 51,950,000 48,670,000
Accrued payroll and other
current liabilities 19,905,000 16,497,000
Income taxes payable 3,789,000 3,757,000
Current portion of long-term
and subordinated debt 1,487,000 1,163,000
---------- ----------
Total current liabilities 143,428,000 97,500,000
Long-term debt 101,254,000 100,113,000
Subordinated debt 5,665,000 5,665,000
Minority interest 9,068,000 11,811,000
Redeemable common stock warrants -- 2,512,000
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 a share:
Authorized: 15,000,000 shares
Issued and outstanding:
4,739,180 shares (September 30)
and 4,284,985 shares (March 31) 47,000 43,000
Additional paid-in capital 27,526,000 23,879,000
Retained earnings (deficit) (5,088,000) (5,046,000)
Cumulative foreign currency
adjustments (1,249,000) (1,342,000)
------------ ------------
Total stockholders' equity 21,236,000 17,534,000
------------ ------------
$280,651,000 $235,135,000
============ ============
</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, 1996 and 1995
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $155,966,000 $111,641,000 $280,557,000 $224,530,000
Cost of sales 131,616,000 95,986,000 242,893,000 192,161,000
------------ ------------ ------------ ------------
Gross profit 24,350,000 15,655,000 37,664,000 32,369,000
Selling, general and
administrative expenses 13,625,000 10,861,000 25,285,000 21,362,000
Interest expense 6,094,000 4,798,000 11,258,000 8,998,000
Interest income (146,000) (135,000) (232,000) (254,000)
Other (income) expense (54,000) (40,000) 265,000 (153,000)
---------- ---------- ---------- ----------
19,519,000 15,484,000 36,576,000 29,953,000
Income before taxes on income
and minority interest 4,831,000 171,000 1,088,000 2,416,000
Taxes on income 225,000 160,000 318,000 706,000
--------- --------- --------- ---------
Income before minority interest 4,606,000 11,000 770,000 1,710,000
Minority interest* 157,000 889,000 2,743,000 1,454,000
----------- ---------- ---------- ----------
Net income $ 4,763,000 $ 900,000 $3,513,000 $3,164,000
=========== ========== ========== ==========
Net income per share of common
and common stock equivalents**:
Primary $ .94 $ .16 $ .67 $ .56
===== ===== ===== =====
Fully diluted $ .89 $ .16 $ .64 $ .53
===== ===== ===== =====
Weighted average common and
common stock equivalents**:
Primary 5,041,000 5,561,000 5,225,000 5,691,000
Fully diluted 5,378,000 5,898,000 5,562,000 6,028,000
</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 10% stock dividend in September
1996.
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, 1996 and 1995
<TABLE>
<CAPTION>
Six months ended
September 30,
---------------------------
1996 1995
------------ ----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $3,513,000 $3,164,000
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Minority interest in ARI (2,743,000) (1,454,000)
Depreciation and amortization 4,107,000 3,678,000
Provision for loss on receivables 174,000 326,000
Gain on redemption of warrant
repurchase obligation (387,000)
Change in assets and liabilities,
excluding effect from acquisition
of olive business:
(Increase) decrease in receivables (15,136,000) 2,181,000
(Increase) decrease in inventories 8,863,000 (6,469,000)
(Increase) decrease in prepaid
expenses and other current assets 231,000 (817,000)
Increase (decrease) in accounts
payable, other current
liabilities and taxes payable 748,000 (2,149,000)
Other, net (1,000,000) 404,000
--------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,630,000) (1,136,000)
INVESTING ACTIVITIES:
Acquisition of olive business (33,952,000)
Disposition of property held for sale 2,255,000
Purchases of property, plant and equipment (2,552,000) (4,213,000)
Disposition of property, plant and equipment 71,000 8,000
--------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (34,178,000) (4,205,000)
FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes -- 94,000,000
Mortgage notes issuance cost (3,000) (5,425,000)
Increase (decrease) in notes payable 38,884,000 (19,391,000)
Increase (decrease) in long-term
and subordinated debt 380,000 (64,822,000)
Redemption of redeemable
common stock warrants (2,125,000)
Proceeds from sale of stock 100,000
---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 37,236,000 4,362,000
---------- ----------
INCREASE (DECREASE) IN CASH
DURING THE PERIOD 1,428,000 (979,000)
CASH, BEGINNING OF PERIOD 3,819,000 3,718,000
----------- -----------
CASH, END OF PERIOD $ 5,247,000 $ 2,739,000
=========== ===========
Supplemental cash flow information:
Net cash paid during the period for:
Interest expense $10,289,000 $ 7,203,000
Income taxes $ 719,000 $ 406,000
</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, 1996
(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, 1996 4,284,985 $43,000 $23,879,000 ($ 5,046,000) ($1,342,000) $17,534,000
Net income
for the period 3,513,000 3,513,000
Foreign currency
adjustments 93,000 93,000
10% stock
dividend 430,417 4,000 3,547,000 (3,551,000) --
Cash payments
in lieu of
fractional
shares (4,000) (4,000)
Common stock
issued 13,944 62,000 62,000
Exercise of
stock options 9,834 38,000 38,000
--------- -------- ----------- ---------- ----------- ------------
Balance
September 30,
1996
(unaudited) 4,739,180 $47,000 $27,526,000 ($5,088,000) ($1,249,000) $21,236,000
========= ======= =========== =========== =========== ============
</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, 1996 and 1995
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 1996 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, 1996, the Company had net operating loss carryforwards for federal
tax reporting purposes of approximately $47 million, which expire at various
dates, primarily in years 2002 through 2011. 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 10% stock dividend in September 1996
(see Note 7).
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, liquidation preferences
of $5.00 per share 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 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. The current ARI loan agreements prohibit the payment of any
dividends. 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 ($162,000) and
($1,467,000) for the three and six months ended September 30, 1996,
respectively, and ($507,000) and ($861,000) for the three and six months ended
September 30, 1995, respectively. ERLY also earned Series B preferred
dividends of $1,295,000 for each of the three month periods ended September 30,
1996 and 1995, and $2,590,000 for each of the six month periods ended
September 30, 1996 and 1995. As of September 30, 1996, ARI Series B Preferred
Stock dividends accumulated, but not declared, total $17.6 million.
<PAGE>
<PAGE> 8
Note 2 - Olive Business Acquisition
On July 5, 1996, the Company's subsidiary, ARI, acquired the domestic and
foreign olive business of Campbell Soup Company ("CSC Olives") for
approximately $36 million (the "Acquisition"). Assets acquired include
domestic inventories and fixed assets, all of the outstanding common stock of
a Spanish company which comprises the foreign olive business, and 51% of the
stock of Sadrym California, a manufacturer of olive processing machinery.
The purchase was funded primarily from ARI's credit facilities. The
acquisition was accounted for as a purchase and the results of operations of
the acquired business have been included in the Company's consolidated
financial statements after July 5, 1996. The olive business will be operated
as the Early California Foods division of ARI.
Operating results reflected in the accompanying financial statements do not
include CSC Olives' operating activities before July 5, 1996. The following
summarized pro forma information assumes the Acquisition occurred on the first
day of each of the operating periods presented (in thousands, except per share
data):
Three months ended Six months ended
September 30, 1996 September 30, 1996
------------------ ------------------
Net sales $156,767 $299,580
Net income $ 4,737 $ 1,688
Earnings per share:
Primary $ .94 $ .32
Fully diluted $ .89 $ .31
Note 3 - Properties Held for Sale
The consolidated balance sheet included properties held for sale of $13.5
million at March 31, 1996. This primarily represented 39 acres of land in
Houston, Texas, held for sale by ARI, subject to an agreement to sell after
the demolition of existing structures on the property and updated
environmental studies. In September 1996, ARI completed the sale of the
property and received gross proceeds of approximately $13.1 million. The
terms of ARI's $100 million mortgage notes (see Note 4) provide that proceeds
are to be held in a segregated account pledged to the trustee of the notes.
Such proceeds may be used by ARI for investment in a related business, for
capital expenditures, and under certain circumstances to redeem the notes.
At September 30, 1996, net proceeds from the sale (after expenses) amounting
to $10.9 million are classified as "Restricted Cash and Investments" in the
consolidated balance sheet.
Note 4 - 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.
<PAGE>
<PAGE> 9
Note 4 - Long-term and Subordinated Debt (continued)
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 the balance of ARI's
existing term debt, to make a $10.5 million 15% loan to ERLY due 2002, and to
reduce borrowings outstanding under ARI's revolving credit loan.
ERLY utilized a portion of the proceeds to repay the remaining $9.5 million
bank debt of its subsidiary, ERLY Juice Inc., which ERLY had guaranteed (see
Note 5).
Note 5 - Redeemable 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. In conjunction with the repayment of the ERLY
Juice debt in August 1995 described in Note 4, the Company had the right to
call the warrants prior to September 30, 1996 for $2,512,000 and, accordingly,
the warrants were classified as redeemable common stock warrants at March 31,
1996.
In August 1996, the Company exercised its call option and redeemed all of the
outstanding common stock warrants in exchange for a payment of $2,125,000,
resulting in a gain of $387,000 which is included in other income.
Note 6 - Commitments and Contingencies
The Company and ARI have been named as codefendants in a lawsuit filed in the
district court of Harris County, Texas. This is a dispute between the general
partner of a proposed real estate development and G.D. Murphy and D.A. Murphy,
Chairman and President, respectively, of the Company and ARI. Damages sought
are in the range of $10 million, plus attorneys' fees and punitive damages.
The Company and ARI were named as defendants in the lawsuit because of their
actions to obtain restraining orders to prevent threatened foreclosures on
ERLY common stock pledged as collateral by G.D. Murphy and to stop interference
by the plaintiff in the lawsuit, with ARI's mortgage note financing described
in Note 4, as well as certain other alleged activities. The Company and ARI
believe they have valid defenses in this case and that damages, if any, will
not have a material effect on the Company's financial condition; however, as
with any litigation, the ultimate outcome is unknown. Accordingly, no
provision for any liability that might result has been made in the accompanying
consolidated financial statements.
Note 7 - Stockholders' Equity
In September 1996 the Company declared a 10% stock dividend to shareholders of
record at the close of business on September 23, 1996.
<PAGE>
<PAGE> 10
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, 1996 AND 1995
--------------------------------------------------------------
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated Results
For the quarter ended September 30, 1996, the Company reported net income of
$4.8 million on sales of $156 million, as compared to net income of $900,000
on sales of $112 million for the second quarter of the prior fiscal year.
Sales for the second quarter of fiscal 1997 reflect a $31 million increase in
sales by American Rice over the second quarter of last year, plus sales
increases of $7 million and $6 million by Chemonics Fire-Trol and Chemonics
International, respectively.
Gross profit for the quarter ended September 30, 1996 was $24.4 million, an
increase of $8.7 million from the quarter ended September 30, 1995 as a result
of increases by American Rice of $5.5 million, Fire-Trol of $2.4 million and
Chemonics International of $842,000.
American Rice
Sales for the quarter ended September 30, 1996 increased $31.1 million, or 34%,
from $90.4 million in fiscal 1996 to $121.5 million in fiscal 1997. The sales
increase for the quarter reflects sales of $16.3 million from the olive
business acquired during the quarter, $10.0 million from increased sales of
exported rice and $4.8 million in increased sales of rice in the United States
and Canada.
Export rice sales increased due to higher prices and higher volume. Average
export rice prices increased approximately 9%, accounting for $5.7 million in
sales increases. The export sales volume increase accounted for a $4.3 million
sales increase. There were no major sales to Japan in the quarter ended
September 30, 1996 or the corresponding period of the prior year. These sales
are expected to occur in the third and fourth quarters of the fiscal year, as
was the case in fiscal year 1996.
Domestic rice sales were higher as a result of higher average prices, partially
offset by lower volume.
Gross profit was 12% of sales for the quarter ended September 30, 1996 compared
to 11% last year. Gross profit increased $5.5 million, or 56%, from $9.7
million in the second quarter last year to $15.2 million in the second quarter
of this year, due primarily to the acquisition of the Early California Foods
olive business.
ARI's selling, general and administrative expenses of $8.4 million increased
$2.3 million, or 39%, from $6.1 million last year. The increase is due to
higher advertising and promotional expenses associated with the acquisition
of the olive business in the quarter. Selling, general and administrative
expenses as a percentage of net sales were 6.9% in the second quarter of
the current year compared to 6.7% last year.
<PAGE>
<PAGE> 11
Chemonics International - Consulting
For the quarter ended September 30, 1996, revenues for International were $21.1
million, an increase of $6.2 million, or 42%, from revenues of $14.9 million
for the comparable period last year. The large percentage increase is
primarily due to revenues being down in the second quarter of last year as
some projects were winding down, and the next phases had not yet started up.
Gross profit was $5.1 million (24% of revenues) for the quarter compared to
gross profit of $4.3 million (28% of revenues) for the second quarter of
last year.
Chemonics Industries - Fire-Trol
Fire-Trol reported sales of $13.3 million for the quarter compared to sales of
$6.3 million reported last year, an increase of $7.0 million, or 110%. The
current year experienced a near record level of forest fire activity resulting
in significant demand for the Company's forest fire retardant products,
especially in the Western United States. Last year's sales reflected a more
normal level of forest fire activity. Gross profit for the quarter was $4.1
million, or 31% of sales, compared to $1.7 million, or 27% of sales last year.
Corporate
Consolidated interest expense totaled $6.1 million for the quarter ended
September 30, 1996, compared to $4.8 million for the same quarter of last year.
This increase reflects increased average borrowings from a year ago due to the
acquisition of the olive business and the issuance of $100 million of mortgage
notes by ARI in August 1995. Interest expense in both periods includes
amortization of capitalized debt issuance costs.
Results for the quarter include a $387,000 gain on settlement of the liability
recorded for the redemption of common stock warrants (see Note 5).
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated Results
For the six months ended September 30, 1996, the Company reported net income of
$3.5 million on sales of $281 million, as compared to net income of $3.2
million on sales of $225 million for the first six months of the prior fiscal
year. Sales for the current year were up $56 million from last year, primarily
due to a $42 million increase in sales by American Rice plus a $7 million
increase by Chemonics Fire-Trol, and a $7 million increase by Chemonics
International.
Gross profit for the six months ended September 30, 1996 was $37.7 million
compared to $32.4 million for the comparable period of last year.
<PAGE>
<PAGE> 12
American Rice
Sales for the six months ended September 30, 1996 increased $42.2 million, or
24%, from $176.8 million in fiscal 1996 to $218.9 million in fiscal 1997. The
increase in sales was composed of $16.3 million in sales from the olive
business acquired in July 1996, $13.2 million in increased export rice sales,
and $12.7 million in increased sales of rice in the United States and Canada.
Export rice sales increased due to higher prices and higher volume. Average
export rice prices increased approximately 11%, accounting for $11.9 million
in sales increases. The export sales volume increase accounted for a $1.3
million sales increase.
Domestic rice sales were higher as a result of higher average prices, partially
offset by lower volume.
Gross profit was 10% of sales for the six month period ended September 30,
1996, compared to 11% in fiscal 1996. Gross profit increased $2.5 million, or
12.8%, from $19.3 million in the first six months of last year to $21.7 million
in the first six months of this year, due primarily to the Early California
Foods acquisition, partially offset by lower gross profit from rice sales.
ARI's selling, general and administrative expenses of $14.9 million increased
$3.0 million, or 26%, from $11.8 million last year. The increase is primarily
due to higher advertising and promotional expenses associated with the
acquisition of the olive business. Selling, general and administrative
expenses as a percentage of net sales increased slightly from 6.7% in the
first six months of last year to 6.8% this year.
Chemonics International - Consulting
For the six months ended September 30, 1996, revenues for International were
$42.4 million, an increase of $7.0 million, or 20%, from revenues of $35.4
million for the comparable period last year. Gross profit was $10.3 million
(24% of revenues) for the period compared to gross profit of $10.1 million
(28% of revenues) for the comparable period last year.
Chemonics Industries - Fire-Trol
Fire-Trol reported net sales of $19.2 million for the six months ended
September 30, 1996, compared to sales of $12.3 million reported last year, an
increase of $6.9 million, or 56%. The current year experienced a near record
level of forest fire activity resulting in significant demand for the
Company's forest fire retardant products, especially in the Western United
States. The increase in sales from last year reflects an increased level of
forest fire activity this year compared to a more normal level of forest fire
activity last year. Gross profit for the six months was $5.6 million, or 29%
of sales, compared to $3.0 million, or 25% of sales last year.
<PAGE>
<PAGE> 13
Corporate
Consolidated interest expense totaled $11.3 million for the six months ended
September 30, 1996, compared to $9.0 million for the same period of last year.
This increase reflects increased average borrowings due to the acquisition of
the olive business and the issuance of $100 million of mortgage notes by ARI
in August 1995. Interest expense in both periods includes amortization of
capitalized debt issuance costs.
Results for the six months include a $387,000 gain on settlement of the
liability recorded for the redemption of common stock warrants (see Note 5).
Liquidity and Capital Resources
At September 30, 1996, consolidated working capital was $27.7 million, compared
to $56.5 million at March 31, 1996, a decrease of $28.8 million. This decrease
was primarily due to the acquistion of the olive business in July 1996 and the
related increase in short-term borrowings used to finance the acquisition.
Stockholders' equity was $21.2 million at September 30, 1996, compared to $17.5
million at March 31, 1996, an improvement of $3.7 million as a result of the
net income for the six months.
For the fiscal year ended March 31, 1996, ARI had a $47.5 million revolving
credit loan with interest at the prime rate of interest plus .5%. In June
1996, this loan was refinanced with a new lender. The new loan bears interest
at ARI's option at either the prime rate or the London Interbank Offered Rate
plus an applicable margin based upon ARI's adjusted funded debt ratio. The
borrowing limit on the new loan was increased to $85.0 million and will provide
financing for ARI's rice operations in addition to the operations of the olive
business acquired on July 5, 1996, as discussed in Note 2. At September 30,
1996, ARI was not in compliance with certain covenants related to financial
ratios and minimum tangible net worth. ARI has subsequently obtained waivers
from compliance with these covenants through December 30, 1996, from its
lender.
In addition, in June 1996 Chemonics International increased its existing line
of credit from $16 million to $20 million. The new line of credit provides
financing for both Consulting and Fire-Trol.
<PAGE>
<PAGE> 14
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 17, 1996.
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) A Form 8-K was filed in July 1996 to report the acquisition on July 5, 1996
of the ripe and green olive businesses of Campbell Soup Company. This was
amended by the filing of a Form 8K-A on September 26, 1996 to provide
proforma financial information.
<PAGE>
<PAGE> 15
SIGNATURE
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)
Date: November 14, 1996 By /s/ Thomas A. Whitlock
----------------------
Thomas A. Whitlock
Vice President and
Corporate Controller
<PAGE>
<PAGE> 16
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,
----------------------------- ----------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Income before minority interest $ 4,606 $ 11 $ 770 $ 1,710
Minority interest 157 889 2,743 1,454
------- ------- ------- -------
Net income $ 4,763 $ 900 $ 3,513 $ 3,164
======= ======= ======= =======
Average number of shares of
common stock and common
stock equivalents outstanding*:
Average number of shares of
common stock outstanding 4,733 4,703 4,723 4,703
Common stock equivalents*:
Dilutive effect of stock
options and warrants based
on application of treasury
stock method 308 858 502 988
----- ----- ----- -----
Total 5,041 5,561 5,225 5,691
===== ===== ===== =====
Primary income per
common share* $ .94 $ .16 $ .67 $ .56
====== ====== ======= =======
</TABLE>
* Retroactively adjusted to give effect to a 10% stock dividend in September
1996.
<PAGE>
<PAGE> 17
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,
----------------------------- ------------------------------
1996 1995 1996 1995
-------- --------- ---------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Income before minority interest $ 4,606 $ 11 $ 770 $ 1,710
Interest adjustment - convertible
note payable 25 28 51 55
Income before minority interest, ------- ------- ------- -------
as adjusted 4,631 39 821 1,765
Minority interest 157 889 2,743 1,454
------- ------- ------- -------
Net income, as adjusted $ 4,788 $ 928 $ 3,564 $ 3,219
======= ======= ======= =======
Average number of shares of
common stock and common
stock equivalents outstanding* 5,041 5,561 5,225 5,691
Other potentially
dilutive securities:
Common stock issuable upon
conversion of note payable* 337 337 337 337
----- ----- ----- -----
Total 5,378 5,898 5,562 6,028
===== ===== ===== ======
Fully diluted income
per common share* $ .89 $ .16 $ .64 $ .53
======= ======= ======= =======
</TABLE>
* Retroactively adjusted to give effect to a 10% stock dividend in September
1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 5,247,000
<SECURITIES> 0
<RECEIVABLES> 75,394,000
<ALLOWANCES> 1,889,000
<INVENTORY> 90,496,000
<CURRENT-ASSETS> 171,090,000
<PP&E> 105,763,000
<DEPRECIATION> 32,971,000
<TOTAL-ASSETS> 280,651,000
<CURRENT-LIABILITIES> 143,428,000
<BONDS> 105,665,000
<COMMON> 47,000
0
0
<OTHER-SE> 21,189,000
<TOTAL-LIABILITY-AND-EQUITY> 280,651,000
<SALES> 280,557,000
<TOTAL-REVENUES> 280,557,000
<CGS> 242,893,000
<TOTAL-COSTS> 242,893,000
<OTHER-EXPENSES> 265,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,258,000
<INCOME-PRETAX> 3,831,000
<INCOME-TAX> 318,000
<INCOME-CONTINUING> 3,513,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,513,000
<EPS-PRIMARY> .67
<EPS-DILUTED> .64
</TABLE>
