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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K/A-1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
_________________
FOR THE FISCAL YEAR ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 1-7894
ERLY INDUSTRIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-2312900
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
10990 WILSHIRE BOULEVARD, #1800, LOS ANGELES, CALIFORNIA 90024-3955
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (213) 879-1480
_________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS)
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, and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
As of August 1, 1997, there were 5,117,701 common shares outstanding and
the aggregate market value of the common shares of ERLY Industries Inc.
(based upon the closing price for these shares on the NASDAQ National
Market) held by non-affiliates was approximately $35.6 million.
DOCUMENTS INCORPORATED BY REFERENCE
None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
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PART II
Item 3. Legal Proceedings
In April 1995, a lawsuit was filed in the district court of Harris County,
Texas by Kingwood Lakes South, L.P. and Tenzer Company, Inc. as plaintiffs
against G.D. Murphy and D.A. Murphy, Chairman and President of the Company
and ARI, respectively. ERLY and ARI were named as codefendants in the
lawsuit by an amendment to the original petition in September 1995. This is
a dispute between the general partner of a proposed real estate development
and G.D. Murphy and D.A. Murphy. Damages sought are in the range of $10
million, plus attorneys' fees and punitive damages. The Company and ARI
were named as codefendants 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, as well as
certain other alleged activities, including knowing participation in breaches
of fiduciary duties, civil conspiracy with the Murphys and conversion. The
plaintiff recently added a claim that ERLY and ARI were alter egos of the
Murphys. 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 position or results of operations; however, as with any litigation,
the ultimate outcome is unknown. In order to minimize legal expenses, ERLY,
ARI, and the Murphys are using common legal counsel in this matter and have
agreed to share legal expenses ratably.
ARI has also been named as a codefendant with Messrs. John M. Howland and
George E. Prchal in a lawsuit filed in February 1997 in U.S. district court
in Houston, Texas by Rice Milling & Trading Investments, LTD., an Isle of
Man Company ("RMTI"). In 1994, ARI entered into an agreement with RMTI for
processing the Company's rice through RMTI's facility in Jeddah, Saudi
Arabia. Messrs. Howland and Prchal were officers of RMTI through January
1997 and have also been directors of ARI since October 1993 and prior to
October 1993 were officers of ARI. In January 1997, RMTI ceased shipping
ARI's rice through its Jeddah facility and terminated the employment of
Messrs. Howland and Prchal. The lawsuit alleges among other things ARI
failed to perform under the terms of the agreement and Messrs. Howland and
Prchal breached their fiduciary duties to RMTI. On April 21, 1997, the
Company obtained a restraining order from the U.S. District Court for the
Southern District of Texas ordering RMTI to desist and refrain from purchasing
rice of U.S. or Vietnam origin from any supplier other than ARI and from
introducing and/or marketing rice of U.S. and Vietnam origin in Saudi Arabia
targeted against ARI's U.S. origin and Vietnam origin rice. The Company
believes that this litigation will not have a material effect on the
Company's financial position or results of operations; however, as with
any litigation, the ultimate outcome is unknown.
<PAGE>
<PAGE> 3
On July 24, 1997, Farmers Rice Milling Company, a Louisiana corporation
and beneficial owner of 171,933 shares of ERLY, filed a derivative complaint
on behalf of ERLY and American Rice, Inc., against Gerald D. Murphy,
Douglas A. Murphy, the Company and ARI in the United States District Court,
Central District of California. The complaint alleges among other things
that G.D. Murphy endangered ERLY and ARI by pledging ERLY stock owned
personally by him, as part of a proposed real estate development (see
above paragraph regarding the Tenzer lawsuit). Both the Company and ARI
are nominal defendants, with the lawsuit being brought on behalf of the
Company and ARI. The Murphys believe they have valid defenses against
the complaint.
The Company is involved in other legal proceedings that arise in the ordinary
course of its business, all of which are routine in nature. Management
believes that the resolution of such legal proceedings will not have a
material adverse affect on the consolidated financial position or
consolidated results of operations of the Company.
<PAGE>
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PART III
Item 10. Directors and Executive Officers of the Company
The following is a list of the directors of ERLY Industries Inc. with
information provided as of July 31, 1997:
DATE ELECTED
AS DIRECTOR
NAME OF DIRECTOR AGE OF COMPANY
Gerald D. Murphy 69 April 1964
Mr. Murphy is Chairman of the Board and Chief Executive Officer (since 1964)
of the Company, and is Chairman of the Board (since 1993) and Director (since
1988) of American Rice, Inc. (which is 81% owned by ERLY). He also serves as
a Director of Pinkerton's, Inc., a security and investigation services firm.
Douglas A. Murphy 41 January 1988
Mr. Murphy is President (since 1990) and Chief Operating Officer (since 1992)
of ERLY Industries Inc., President, Chief Executive Officer (since 1993) and
Director (since 1990) of American Rice, Inc. and President of ERLY Juice Inc.
(since 1988), a subsidiary of the Company. He was President of Comet American
Marketing, a division of American Rice, Inc. from 1986 to 1990. He is also a
director advisor of Compass Bank Houston.
William H. Burgess 80 September 1975
Mr. Burgess is a private business consultant, Chairman of CMS Digital, Inc., a
privately held company, and a Director of American Rice, Inc. (since 1988).
From 1978 to 1986 Mr. Burgess was Chairman of International Controls Corp.,
an internationally diversified manufacturing company.
Bill J. McFarland 60 August 1986
Mr. McFarland has served as Vice President of the Company since 1975 and as
Director since 1986. He has served as President of the Comet American
Marketing division of American Rice, Inc. since 1993 and Senior Vice President
of American Rice, Inc. since 1993. He was President of ERLY Food Group from
1990 to 1993, President of The Beverage Source from 1979 to 1990 and President
of Early California Foods from 1975 until its sale in 1985 (all subsidiaries
of the Company).
Alan M. Wiener 59 March 1995
Mr. Wiener has served as a Director of the Company since 1995. He was
President of Impulse Designs, Inc. from 1974 to 1995. He is also a
Director of FloTool International, Inc. He previously served as a Director
of Cal Fame Citrus Products, Inc. and Leisure Technology, Inc.
<PAGE>
<PAGE> 5
The following is a list of the executive officers of ERLY Industries Inc.,
their ages and their positions as of July 31, 1997:
Gerald D. Murphy 69 Chairman of the Board and Chief Executive
Officer of ERLY Industries since formation of
the Company in 1964 and President of the
Company from 1964 to 1990; and Chairman of the
Board of American Rice, Inc. (since 1993).
Douglas A. Murphy 41 President since 1990 and Chief Operating
Officer since 1992 of ERLY Industries;
President and Chief Executive Officer since
1993 and Director since 1990 of American Rice,
Inc.; President of ERLY Juice Inc. since 1988;
and President of Comet American Marketing from
1986 to 1990.
Bill J. McFarland 60 Vice President of the Company since 1975;
President of the Comet American Marketing
division of American Rice, Inc. since 1993;
Senior Vice President of American Rice, Inc.
since 1993; President of ERLY Food Group from
1990; President of The Beverage Source from
1979 to 1990; and President of Early
California Foods from 1975 until its sale in
1985.
Richard N. McCombs 51 Vice President and Chief Financial Officer of
the Company since 1990; Executive Vice
President of Finance and Administration,
Secretary, Treasurer and Director of American
Rice, Inc. since 1993; Managing Director of
the ARI-Vinafood joint venture since 1994;
President of ISC Wines of California from 1984
to 1986; and Executive Vice President of The
Beverage Source from 1986 to 1990 and
President since 1990.
Kurt A. Grey 56 Vice President of the Company since 1982;
President, Cicero Industries from 1981 to 1982;
and Vice President, Union Bank, from 1976 to
1981.
Lolan M. Pullen 63 Vice President of the Company since 1986; Vice
President - Finance of the Early California
Foods division of American Rice, Inc. since
1996; Vice President of Comet Rice, Inc. from
1986 to 1993; and Vice President - Finance of
Early California Foods from 1976 until its sale
in 1985.
Thomas A. Whitlock 47 Vice President and Corporate Controller of
the Company since 1991; Vice President and
Controller of The Beverage Source from 1987
to 1990; and Corporate Controller of the
Company from 1981 to 1987.
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Douglas A. Murphy, President of ERLY Industries Inc. and American Rice, Inc.
is the son of Gerald D. Murphy, Chairman of the Board of the Company. There
are no other family relationships among the directors or executive officers
of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Executive officers and directors of the Company are required to file initial
reports of ownership and reports of changes in ownership with the Securities
and Exchange Commission pursuant to Section 16(a) of the Securities Exchange
Act of 1934. The Company has reviewed such reports received by it and
believes that, except as specified below, all of its executive officers and
directors complied with all applicable Section 16(a) filing requirements
during the fiscal year ended March 31, 1997.
Annual Report Form 5 to report the effect of the 10% stock dividend in the
fiscal year ended March 31, 1997 was not timely filed for R.N. McCombs,
and Form 4 to report a sale of stock in August 1996 was not timely filed
by J.S. Poole.
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Item 11. Executive Compensation
The following table sets forth information for each of the three fiscal
years ended March 31, 1997 for the Chief Executive Officer of the Company
and the four other most highly compensated executive officers of the Company
and its subsidiaries:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-term Compensation
---------------------------------- -------------------------------------
Awards Payouts
----------------------- ----------
Fiscal Other Securities
Year Annual Restricted Underlying All Other
Name and ended Compen- Stock Options/ LTIP Compen-
Principal Position March 31 Salary($) Bonus($) sation($) Awards($) SARs(#) Payouts($) sation($)
- ------------------ -------- -------- --------- --------- ---------- ----------- ---------- ----------
(1) (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald D. Murphy 1997 $336,000 $101,535 $ 7,542 $ 99,525 - - $ 6,000(3)
Chairman of the Board and 1996 325,000 100,000 6,630 - - - 5,609(3)
Chief Executive Officer 1995 310,000 120,160 7,233 43,774 - - 9,060(3)
of ERLY Industries Inc.
Chairman of the Board of
American Rice, Inc.
Douglas A. Murphy 1997 259,000 88,665 6,784 93,225 - - 6,000(3)
President and Chief 1996 250,000 100,000 5,000 - - - 5,319(3)
Operating Officer of 1995 230,000 93,280 5,791 36,858 - - 8,914(3)
ERLY Industries Inc.
President and Chief
Executive Officer of
American Rice, Inc.
Bill J. McFarland 1997 210,000 29,325 3,893 7,425 - - 6,000(3)
Vice President of ERLY 1996 204,000 - 5,555 - - - 4,002(3)
Industries Inc. 1995 198,000 55,400 4,075 14,263 - - 7,500(3)
Senior Vice President of
American Rice, Inc.
Thurston F. Teele 1997 206,000 85,000 10,852 - - - 6,000(3)
President of Chemonics 1996 200,000 253,000 5,058 - - - 7,500(3)
Industries, Inc. 1995 183,600 364,000 1,640 - - - 7,500(3)
Richard N. McCombs 1997 180,000 - 2,759 - - - 6,000(3)
Vice President and Chief 1996 175,000 15,000 435 - 88,550 - 3,392(3)
Financial Officer of 1995 170,000 28,560 2,418 7,347 - - 8,106(3)
ERLY Industries Inc.
Executive Vice President
of Finance and
Administration of
American Rice, Inc.
</TABLE>
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(1) Amounts included in this column reflect: (i) the cost of Company provided
automobiles relating to personal use, (ii) the taxable value of life
insurance provided by the Company, and (iii) reimbursements under the
Company's Executive Medical Plan (the "Plan"). Under the Plan, key
executive officers of the Company are entitled to be reimbursed for
expenses incurred for medical and dental care provided to the key
executive officer and his dependents which are not otherwise covered by
other sources.
(2) The number of shares of restricted stock and the market value thereof held
by the executive officers listed in the table at March 31, 1997, was as
follows: G.D. Murphy, 11,700 shares ($99,525); D.A. Murphy, 11,300 shares
($93,225); B.J. McFarland, 900 shares ($7,425); Thurston F. Teele, none;
and, R.N. McCombs, none. Such shares are restricted for a one-year period
from the date of issuance. Although no cash dividends have ever been
paid on ERLY common stock, dividends, if any, would be paid on restricted
stock at the times and in the same amounts as dividends paid to all
shareholders.
(3) Amounts represent Company contributions to the ERLY Industries Inc.
Employees Profit Sharing Retirement Plan.
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The following table presents information on stock options held by the
executive officers named in the Compensation Table at the end of fiscal 1997.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1997
AND MARCH 31, 1997 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares March 31, 1997 (#) March 31, 1997 ($)(1)
Acquired on Value -------------------------- --------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------ ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald D. Murphy - - - - - -
Douglas A. Murphy - - 84,186 - $394,832 -
Bill J. McFarland - - 33,674 - $157,931 -
Thurston F. Teele - - - - - -
Richard N. McCombs - - 88,550 - $327,635 -
</TABLE>
(1) Market value of underlying securities at March 31, 1997 ($8.25 per share),
less the exercise price. The values in the last two columns have not been,
and may never be, realized by the officers. Actual gains, if any, on option
exercises will depend on the value of the Company's common stock on the date
of exercise.
No options were granted to the above named executive officers during fiscal
year 1997.
<PAGE>
<PAGE> 10
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not officers of the
Company receive compensation of $2,000 per quarter plus a fee of
$1,500 for each meeting attended in person or by telephone. In
addition, in fiscal 1997, Mr. Burgess received fees of $22,500
for public relations services provided to the Company. Effective
April 1, 1996, the Company will pay for outside Board members to
participate in the Company's group insurance plan for medical
benefits.
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Board of Directors of American Rice, Inc. has approved an employment
agreement effective July 1997 with Mr. G.D. Murphy which provides that,
as an employee, he shall be entitled to certain benefits for a five-year
term commencing (i) on the date of termination, if termination is by
notice of ARI and there has been no Change-of-Control (as defined),
(ii) on the occurrence of a Benefits Event (as defined), following a
Change-of-Control, if termination is at the option of Mr. Murphy, or
(iii) on the occurrence of the last Change-of-Control preceding the
date of termination, if termination is by notice of ARI. Under the
terms of the employment agreement, such benefits are provided unlesss
termination is both, at the option of Mr. Murphy and in the absence of
a Change-of-Control. A Change-of-Control is deemed to occur if (i) any
person becomes beneficial owner of 25% or more of the voting power of
ARI or ERLY or (ii) during any consecutive years, the individuals
comprising a majority of the Board of Directors of ARI or ERLY at the
beginning of such period shall cease to constitute a majority. Generally,
benefits payable under the employment agreement include: continuation of
Mr. Murphy's base salary, continuation of Mr. Murphy's participation in
profit sharing, and other executive compensations plans, various health
care and disability plans, the right to a cash bonus in the amount of
the bonus last received if ARI awards a cash bonus to any member of
the Executive Group (as defined) during such five-year period, and
indemnification for judgements, fines and expenses incurred by Mr. Murphy
by reason of his serving as an officer. In consideration of these benefits,
Mr. Murphy has agreed not to compete with ARI or to disclose any confidential
information of ARI during the five-year period during which he is to receive
such benefits. If ARI or its successor fails to make timely payments as
required by the employment agreement, liquidated damages are set at treble
the amount of such untimely payments. Certain amounts that may be paid
under the employment agreement upon termination may be deemed to be
"excess parachute payments" within the meaning of Section 280G of the
Internal Revenue Code and, as such, would not be deductible by ARI or
ERLY for federal income tax purposes.
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<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Decisions on the compensation of the Company's executive officers are made
by the Compensation Committee of the Board of Directors which consists of Mr.
William H. Burgess, Chairman, Mr. Gerald D. Murphy and Mr. Alan M. Wiener. Mr.
Burgess is a private business consultant, Chairman of CMS Digital, Inc. and a
Director of American Rice, Inc. He is the beneficial owner of 4.1% of the
Company's common stock. Mr. Murphy is Chairman and Chief Executive Officer of
the Company and is the beneficial owner of 30.5% of the Company's common stock.
He is also Chairman of the Board of American Rice, Inc. Mr. Wiener is
retired and is the beneficial owner of .08% of the Company's common stock.
All decisions by the Compensation Committee were reviewed and approved
without change, by the full Board of Directors of the Company. Committee
members Mr. Burgess and Mr. Wiener were responsible for the determination of
Mr. G.D. Murphy's compensation as Chief Executive Officer and Mr. Murphy did
not participate in any Compensation Committee or Board of Directors discussions
or decisions concerning his own compensation. Except for Mr. Murphy, who is
the Chief Executive Officer of the Company, no other member of the Compensation
Committee is now or ever has been an officer or employee of the Company or its
subsidiaries.
Mr. Burgess and Mr. Murphy are also Directors of American Rice, Inc. Both
serve on ARI's Compensation Committee of the Board of Directors, with Mr.
Murphy as Chairman of the Committee.
Messrs. G.D. Murphy, D.A. Murphy and W.H. Burgess also serve as Directors
of American Rice, Inc. Mr. B.J. McFarland, a Director and Vice President of
ERLY, is a Senior Vice President of American Rice, Inc. In addition, Mr. R.N.
McCombs, Vice President and Chief Financial Officer of ERLY Industries, is a
Director and Executive Vice President of American Rice.
TRANSACTIONS WITH MANAGEMENT
At March 17, 1997, the Company had a $1.0 million convertible promissory
note payable to Douglas A. Murphy, President of the Company, which arose in
April 1992. The note was convertible at any time into ERLY Industries
common shares at a conversion price of $2.95 per share, the average market
price of the ERLY stock for the seven trading days immediately prior to the
April 1, 1993 renewal of the note (as adjusted for stock dividends issued
through October 1996). The note was renewed on an annual basis each year
and on April 1, 1997 Mr. Murphy again renewed the note. The new note had an
interest rate of prime plus 2%, and was due in full on April 1, 1998. In July
1997, Mr. Murphy converted the entire note plus accrued interest into
351,773 shares of ERLY Industries Inc. common stock.
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<PAGE> 12
In April 1995, a lawsuit was filed in the district court of Harris County,
Texas by Kingwood Lakes South, L.P. and Tenzer Company, Inc., as plantiffs,
against G.D. Murphy and D.A. Murphy, Chairman and President of the Company
and ARI, respectively. ERLY and ARI were named as codefendants in the lawsuit
by an amendment to the original petition in September 1995. This is a
dispute between the general partner of a proposed real estate development and
G.D. Murphy and D.A. Murphy. Damages sought are in the range of $10 million,
plus attorneys' fees and punitive damages. The Company and ARI were named
as codefendants 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, as well as certain other alleged
activities, including knowing participation in breaches of fiduciary duties,
civil conspiracy with the Murphys and conversion. The plaintiff recently
added a claim that ERLY and ARI were alter egos of the Murphys. 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 position or
results of operations; however, as with any litigation, the ultimate outcome
is unknown. In order to minimize legal expenses, ERLY, ARI and the Murphys
are using common legal counsel in this matter and have agreed to share legal
expenses ratably.
In October 1996, the Company's subsidiary, American Rice, Inc., entered into a
new seven year lease agreement for office space in Houston, Texas with a
limited partnership owned directly and indirectly by D.A. Murphy, President,
and G.D. Murphy, Chairman, of the Company. ARI's annual lease expense under
the lease ranges from approximately $600,000 in the first year to
approximately $740,000 in the seventh year, which management believes is
comparable to, or better than, rates for similar office space in the
proximaty. In connection with the lease, ARI performs building management
services in exchange for certain reductions in the lease cost. At June 30,
1997 ARI had an account receivable of $101,639 related to amounts paid on
behalf of the limited partnership.
During the fiscal year ended March 31, 1997, Gerald D. Murphy, Chairman of
the Company, received officer advances of $85,000 from ARI which was the
largest amount of indebtedness outstanding to ARI during the fiscal year.
The amount outstanding at July 31, 1997 was $44,192. There was no interest
charged on such advances.
<PAGE>
<PAGE> 13
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the ownership of
the Company's Common Stock as of August 1, 1997 of (i) each person
known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock; (ii) each director
and nominee for director of the Company; (iii) each executive officer
named in the Compensation Table; and (iv) all directors and executive
officers of the Company and its subsidiaries as a group. Except as
indicated, each of the stockholders has sole voting and investment
power with respect to the shares beneficially owned by each stockholder.
<TABLE>
<CAPTION>
Name and address of Amount and nature of Percent of
beneficial owner beneficial ownership class *
-------------------- -------------------- ----------
<S> <C> <C>
Gerald D. Murphy, Chairman 1,587,817 shares 30.5%
ERLY Industries Inc. Direct (1) and
10990 Wilshire Blvd. Indirect (2)
Los Angeles, CA 90024
Douglas A. Murphy, President 631,252 shares 12.1%
and Director Direct (3)
ERLY Industries Inc.
10990 Wilshire Blvd.
Los Angeles, CA 90024
Kennedy Capital Management, Inc. 585,518 shares 11.4%
10829 Olive Boulevard Direct (4)
St. Louis, MO 63141
William H. Burgess, Director 210,000 shares 4.1%
550 Palisades Drive Direct
Palm Springs, CA 92262
Richard N. McCombs 137,461 shares 2.6%
Vice President and Direct
Chief Financial Officer
ERLY Industries Inc.
10990 Wilshire Blvd.
Los Angeles, CA 90024
Bill J. McFarland, Director 45,453 shares .9%
ERLY Industries Inc. Direct
10990 Wilshire Blvd.
Los Angeles, CA 90024
Alan M. Wiener, Director 4,009 shares .08%
ERLY Industries Inc. Direct
10990 Wilshire Blvd.
Los Angeles, CA 90024
Thurston F. Teele, President -- --
Chemonics Industries, Inc.
1133 20th Street, N.W., #600
Washington, D.C. 20036
All directors and executive officers
as a group (11 persons) 2,010,815 shares (5) 37.7%
</TABLE>
<PAGE>
<PAGE> 14
* The percentages of shares held assume that options,
warrants or convertible notes held by the particular
individual, if any, have been exercised or converted,
and no others.
(1) Mr. Gerald D. Murphy, Chairman of the Board of the
Company, is the record holder of 951,515 shares.
(2) Mr. Gerald D. Murphy's indirect beneficial ownership
represents 636,302 shares owned (1) directly by his
son Douglas A. Murphy, President of the Company, and
(2) held in trust for his grandson. Of this total,
Gerald D. Murphy has voting control of the 5,050
shares held in trust for his grandson, however, he
denies holding voting or investment control of the
balance of the 631,252 shares owned directly by his
son, Douglas A. Murphy.
(3) Mr. Douglas A. Murphy, President of the Company, is
the record holder of 547,066 shares and has the right
to acquire an additional 84,186 shares pursuant to
options granted under the 1982 Incentive Stock Option
Plan.
(4) Based on Schedule 13G filed February 7, 1997 with the
Securities and Exchange Commission. The filer is an
investment advisor with discretionary accounts for
investment purposes.
(5) The number of shares shown as beneficially owned by
all directors and officers as a group includes stock
options held by officers to purchase 213,145 shares
of the Company's stock.
<PAGE>
<PAGE> 15
Item 13. Certain Relationships and Related Transactions
See "Compensation Committee Interlocks and Insider Participation" under
Item 11.
Certain Business Relationships
In conjunction with a transaction completed in May 1993, ERLY combined its
investment in its wholly owned subsidiary, Comet Rice, Inc. into American Rice,
Inc. As a result of the transaction, ERLY increased its ownership in the
combined voting rights of ARI stock outstanding from 48% to 81%. ERLY's
ownership in ARI consists of 777,777 shares of ARI Common Stock (each share of
which is entitled to one vote), 777,777 shares of Series A Preferred Stock
(each share of which is entitled to one vote and is convertible into one share
of ARI Common Stock), and 2,800,000 shares of Series B Preferred Stock (each
share of which is entitled to two votes and is convertible into two shares of
ARI Common Stock). Because of their positions as directors and significant
shareholders of ERLY Industries, Messrs. G.D. Murphy, D.A. Murphy, and
W.H. Burgess could be deemed to be the beneficial owners of the ARI stock
owned by ERLY Industries.
<PAGE>
<PAGE> 17
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
3. Exhibits
Exhibit Exhibit
Number Description Reference
(3)(i) Articles of Incorporation (as amended
September 6, 1995) (incorporated by
reference to Exhibit 3 to the Company's
1996 Form 10-K).
(4) The Indenture dated as of December 1, 1993 for
$8,880,000 12 1/2% Subordinated Sinking Fund
Debentures due 2002 (incorporated by reference
to Exhibit 4 to the Company's 1994 Form 10-K).
(4) Trust Indenture dated August 24, 1995 by and
among American Rice, Inc. and U.S. Trust Company
of Texas for $100,000,000 13% Mortgage Notes
due 2002 (incorporated by reference to Exhibit
4.1 of ARI's Form S-1, file No. 33-60539).
(10) Form of Employment Agreement Between American
Rice, Inc. and G.D. Murphy (incorporated by
reference to ARI's 1997 Form 10-K/A, Amendment
No. 1, file No. 0-17039).
(11) Calculation of Primary Income (Loss) Per Share. Exhibit 11.1
(11) Calculation of Fully Diluted Income (Loss) Per
Share. Exhibit 11.2
(21) Subsidiaries of ERLY Industries Inc. Exhibit 21
(27) Financial Data Schedule (electronic filing) Exhibit 27
(28) Asset Purchase Agreement dated March 23, 1993,
between and among American Rice, Inc., Comet
Rice, Inc. and ERLY Industries Inc.
(incorporated by reference to Exhibit 1 to the
Company's Form 8-K, filed June 16, 1993, File
No. 1-7894).
(28) Amendment to Asset Purchase Agreement dated
May 25, 1993, between and among American Rice,
Inc., Comet Rice, Inc. and ERLY Industries Inc.
(incorporated by reference to Exhibit 2 to the
Company's Form 8-K, filed June 16, 1993, File
No. 1-7894).
(28) Asset Purchase and Sale Agreement between American
Rice, Inc. and Campbell Soup Company, dated as of
June 11, 1996 (incorporated by reference to Exhibit
2.1 of Form 8-K, filed July 22, 1996).
(28) Share Sale Agreement between American Rice, Inc.
and Campbell Soup Company, dated as of June 11, 1996
(incorporated by reference to Exhibit 2.2 of Form 8-K,
filed July 22, 1996).
(28) American Rice, Inc. 1997 Annual Report and Form
10-K (incorporated by reference to ARI's 1997
Form 10-K, filed June 30, 1997, file No. 0-17039).
<PAGE>
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, ERLY Industries Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ERLY INDUSTRIES INC.
By /s/ Gerald D. Murphy
--------------------------------------
Gerald D. Murphy, Chairman of the Board
(Chief Executive Officer)
By /s/ Thomas A. Whitlock
--------------------------------------
Thomas A. Whitlock, Vice President and
Corporate Controller
(Chief Accounting Officer)
Dated: August 8, 1997
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