-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SSxavz+2eXHiLM8StkbHjs5DA7uk0NFPhcPreaAuD3iKbgeNLcnPz7lfg48TJGor 2jbTZejJH2HDOzTgB3ry1g== 0000040934-97-000003.txt : 19970312 0000040934-97-000003.hdr.sgml : 19970312 ACCESSION NUMBER: 0000040934-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970127 FILED AS OF DATE: 19970311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESEE CORP CENTRAL INDEX KEY: 0000040934 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 160445920 STATE OF INCORPORATION: NY FISCAL YEAR END: 0503 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01653 FILM NUMBER: 97554245 BUSINESS ADDRESS: STREET 1: 445 ST PAUL ST CITY: ROCHESTER STATE: NY ZIP: 14605 BUSINESS PHONE: 7165461030 MAIL ADDRESS: STREET 1: 445 ST PAUL STREET CITY: ROCHESTER STATE: NY ZIP: 14605 FORMER COMPANY: FORMER CONFORMED NAME: GENESEE BREWING CO INC DATE OF NAME CHANGE: 19880322 10-Q 1 FORM 10-Q FOR PERIOD ENDING 1/27/97 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JANUARY 25, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-1653 GENESEE CORPORATION (Exact name of registrant as specified in its charter) STATE OF NEW YORK 16-0445920 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 445 St. Paul Street, Rochester, New York 14605 (Address of principal executive offices) (ZipCode) Registrant's telephone number, including area code (716) 546-1030 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 the date of this report, the Registrant had the following shares of common stock outstanding: Number of Shares Class Outstanding Class A Common Stock (voting), 209,885 par value $.50 per share Class B Common Stock (non-voting), 1,407,342 par value $.50 per share 1 GENESEE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS January 25, 1997 and April 30, 1996 UNAUDITED AUDITED (Dollars in Thousands) January 25, 1997 April 30, 1996 ASSETS Current assets: Cash and cash equivalents $ 1,925 2,560 Marketable securities available for sale 32,042 34,896 Trade accounts receivable, less allowance for doubtful receivables of $402 at January 25, 1997; $433 at April 30, 1996 11,235 13,168 Inventories, at lower of cost (first-in, first-out) or market 12,983 11,959 Deferred income tax assets 899 898 Other current assets 1,238 1,376 Total current assets 60,322 64,857 Net property, plant and equipment 32,779 30,306 Investment in and notes receivable from unconsolidated real estate partnerships 8,345 8,466 Investments in direct financing and leveraged leases 31,899 28,092 Other assets 2,403 2,314 Total assets 135,748 134,035 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 9,360 10,210 Income taxes payable 935 455 Federal and state beer taxes payable 918 2,246 Accrued expenses and other 7,617 5,827 Total current liabilities 18,830 18,738 Deferred income tax liabilities 7,899 7,482 Accrued postretirement benefits 15,526 15,526 Other liabilities 405 428 Total liabilities 42,660 42,174 Minority interests in consolidated subsidiaries 1,828 1,527 Shareholders' equity: Common stock Class A 105 105 Common stock Class B 753 753 Additional paid-in capital 5,849 5,839 Retained earnings 87,429 87,285 Unrealized gain / (loss) on marketable securities, net of income taxes 629 (113) Less treasury stock, at cost 3,505 3,535 Total shareholders' equity 91,260 90,334 Total liabilities and shareholders' equity $ 135,748 134,035 See accompanying notes to consolidated financial statements.
2 GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS Thirteen Weeks Ended January 25, 1997 and January 27, 1996 (Dollars in Thousands, Except Per Share Data) UNAUDITED 1997 1996 Revenues $44,644 41,358 Federal and state beer taxes 9,315 8,990 Net revenues 35,329 32,368 Cost of sales 27,557 25,638 Gross profit 7,772 6,730 Selling, general and administrative expenses 8,242 7,486 Operating loss (470) (756) Investment income 1,120 959 Other income / (expense), net 150 99 Interest of minority partners in earnings of consolidated subsidiaries (154) (204) Earnings before income taxes 646 98 Income taxes 232 39 Net earnings - $.26 per share in 1997 and $.04 in 1996 414 59 Retained earnings at beginning of period 87,015 85,895 Retained earnings at end of period $87,429 85,954 See accompanying notes to consolidated financial statements.
3 GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS Thirty Nine Weeks Ended January 25, 1997 and January 27, 1996 (Dollars in Thousands, Except Per Share Data) UNAUDITED 1997 1996 Revenues $143,508 136,881 Federal and state beer taxes 30,780 30,824 Net revenues 112,728 106,057 Cost of sales 85,881 82,612 Gross profit 26,847 23,445 Selling, general and administrative expenses 26,010 24,366 Operating income / (loss) 837 (921) Investment income 2,252 2,561 Other income / (expense), net 292 175 Interest of minority partners in earnings of consolidated subsidiaries (503) (519) Earnings before income taxes 2,878 1,296 Income taxes 1,036 518 Net earnings - $1.14 per share in 1997 and $.48 in 1996 1,842 778 Retained earnings at beginning of period 87,285 86,870 Less: Dividends - $1.05 per share in 1997 and $1.05 per share in 1996 1,698 1,694 Retained earnings at end of period $87,429 85,954 See accompanying notes to consolidated financial statements.
4 GENESEE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Thiry Nine Weeks Ended January 25, 1997 and Janaury 27, 1996 UNAUDITED (Dollars in thousands) 1997 1996 Cash flows from operating activities: Net earnings $ 1,842 778 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,549 3,348 Gain on disposition of assets (188) 0 Deferred tax provision (1) 111 Other 474 538 Changes in non-cash assets and liabilities: Trade accounts receivable 1,964 2,219 Inventories (1,024) 1,689 Other assets 49 (666) Accounts payable (850) (790) Accrued expenses and other 1,790 (1,208) Income taxes payable 480 (446) Federal and state beer taxes (1,328) (888) Other liabilities (23) 120 Net cash provided by operating activities 6,734 4,805 Cash flows from investing activities: Capital expenditures (6,024) (4,862) Sales of marketable securities 11,694 8,568 Purchases of marketable securities (7,493) (8,407) Investments in and advances to unconsolidated real real estate investments, net of distributions 121 (4,164) Net investment in direct financing and leveraged leases (3,807) (3,578) Withdrawals by minority interest (202) (470) Repayment of real estate mortgage receivable 0 5,807 Net cash used in investing activities (5,711) (7,106) Cash flows from financing activities: Principal payments on long term debt 0 (4,038) Payment of dividends (1,698) (1,693) Net proceeds from treasury stock transactions 40 430 Net cash used in financing activities (1,658) (5,301) Net decrease in cash and cash equivalents (635) (7,602) Cash and cash equivalents at beginning of the year 2,560 10,422 Cash and cash equivalents at end of the period $ 1,925 2,820 See accompanying notes to consolidated financial statements.
5 GENESEE CORPORATION Notes to Consolidated Financial Statements NOTE (A) The Corporation's consolidated financial statements enclosed herein are unaudited with the exception of the Consolidated Balance Sheet at April 30, 1996 and, because of the seasonal nature of the business and the varying schedule of its special sales efforts, these results are not necessarily indicative of the results to be expected for the entire year. In the opinion of management, the interim financial statements reflect all adjustments, consisting of only normal recurring items, which are necessary for a fair presentation of the results for the periods presented. The accompanying financial statements have been prepared in accordance with GAAP and SEC guidelines applicable to interim financial information. These statements should be reviewed in conjunction with the annual report to shareholders for the year ended April 30, 1996. NOTE (B) The weighted average number of Class A and Class B shares outstanding used in the computation of net earnings per share is 1,617,227 for the thirteen week period ended January 25, 1997 and 1,616,250 for the thirteen week period ended January 27, 1996. The weighted average number of Class A and Class B shares outstanding used in the computation of net earnings per share is 1,617,057 for the thirty nine weeks ended January 25, 1997 and 1,609,121 for the thirty nine weeks ended January 27, 1996. NOTE (C) Inventories are summarized as follows: Dollars in thousands January 25, 1997 April 30, 1996 Finished goods $ 4,425 $ 3,219 Goods in process 1,701 1,891 Raw materials, containers and packaging supplies 6,857 6,849 Total inventories $ 12,983 $ 11,959
6 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of 13 weeks ended January 25, 1997 to 13 weeks ended January 27, 1996 Consolidated net revenues for the thirteen weeks ended January 25, 1997 were $35.3 million, an increase of $2.9 million over consolidated net revenues reported for the same period last year. The higher revenues were due to increased malt beverage sales by Genesee Brewing Company and higher sales by Ontario Foods. On a consolidated basis, the Corporation reported net earnings of $414,000, or $.26 per share, in the third quarter this year, compared to a net earnings of $59,000, or $.04 per share, for the same period last year. The higher profit relative to last year was primarily attributable to improved performance by Genesee Brewing Company. Genesee Brewing Company Genesee Brewing Company's net sales in the third quarter were $29.0 million, an increase of $2.5 million from last year's third quarter net sales of $26.5 million. Barrel sales (which include volume under the contract to brew and package product for Boston Beer Company) were up 28,000 barrels, or 6.6%. The increase in barrel sales was primarily attributable to higher volume under the contract with Boston Beer Company. Volume under this contract was up 41,000 barrels compared to the third quarter last year when production had just recently commenced. In addition, sales of Genesee Brewing Company's HighFalls craft brands continued to grow, with third quarter barrel sales up 22,000 barrels, or 25%, relative to the same period a year ago. Sales of Genesee Brewing Company's established core brands continued to decline, although the rate of decline in the third quarter was lower than the rate experienced in the first two quarters this year. The overall increase in barrel sales as well as the shift in product mix towards higher priced HighFalls products also resulted in increased sales revenues. In addition, sales revenues in the third quarter this year benefited from a general industry price increase that went into effect late in fiscal 1996. The price increase, in turn, had a favorable impact on Genesee Brewing Company's gross profit which increased to $6.7 million, or 23.0% of net sales, in the third quarter of fiscal 1997, compared to $5.7 million, or 21.4% of net sales, in the third quarter of fiscal 1996. The increase in gross profit was also attributable to lower aluminum can costs. The unit prices paid by Genesee Brewing Company for aluminum cans increased substantially on January 1, 1995 due to sharply higher world aluminum prices. However, commencing January 1, 1996, aluminum can prices began to decline. Thus, although aluminum can prices for the third quarter this year were still higher than they were in the third quarter of fiscal 1995, they were below the prices paid in the third quarter last year. 7 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Genesee Brewing Company's selling, general and administrative expenses were up $756,000 in the third quarter of fiscal 1997 compared to the same period last year. The increase was primarily due to the timing of planned increases in sales and marketing expenditures to support the company's HighFalls brands. In particular, Genesee Brewing Company increased its HighFalls sales force as it pursued its strategy to expand distribution of its craft brands to new markets. Genesee Brewing Company reported an operating loss of $930,000 for the third quarter this year versus a $1.2 million operating loss for the third quarter last year. Increased contract brewing and HighFalls volume, higher selling prices and lower aluminum can costs all contributed to Genesee Brewing Company's improved profit performance in the third quarter of fiscal 1997 despite lower core brand volume. Ontario Foods Third quarter net sales for Ontario Foods were $5.7 million, compared to $5.2 million for the third quarter last year. The sales increase was attributable to higher private label tea and side dish sales. Contract sales were down due to the loss of a major contract customer that moved production to its own production facility late in fiscal 1996. Ontario Foods reported a third quarter operating profit of $38,000, compared to an operating loss of $40,000 in the third quarter last year. Despite the lower contract sales, Ontario Food's operating profit increased due to higher private label sales and a more favorable product mix. Genesee Ventures Genesee Ventures, Inc., the Corporation's equipment leasing and real estate investment subsidiary, reported operating income of $575,000 for the third quarter of fiscal 1997, compared to $583,000 for the third quarter of fiscal 1996. Lease revenues continued to be strong, reflecting the effect of the large volume of leases closed last year. Genesee Ventures' real estate investments maintained high occupancy rates and performance was generally on plan for the third quarter. Comparison of 39 weeks ended January 25, 1997 to 39 weeks ended January 27, 1996 Consolidated net revenues for the thirty-nine weeks ended January 25, 1997 were $112.7 million, an increase of $6.7 million from the consolidated net revenues of $106.0 million reported for the same period last year. The higher revenues were due to increased malt beverage sales by Genesee Brewing Company and higher sales by Ontario Foods. 8 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) On a consolidated basis, the Corporation reported net earnings of $1.8 million, or $1.14 per share, for the first three quarters this year, compared to net earnings of $778,000, or $.48 per share, for the same period last year. The $1.1 million, or $.66 per share, increase in net earnings was primarily attributable to Genesee Brewing Company's improved operating performance. Genesee Brewing Company Genesee Brewing Company's net sales in the first three quarters of fiscal 1997 were $94.4 million, an increase of $5.1 million, or 5.7%, from the prior year's net sales of $89.3 million. Barrel sales (which include volume under the contract to brew and package product for Boston Beer Company) were up 56,000 barrels, or 3.8%, in the first three quarters of fiscal 1997. The increase in barrel sales for Genesee Brewing Company were the result of higher sales under the Boston Beer Company contract, which totaled 184,000 barrels in the first three quarters of this year compared to 20,000 barrels in the same period last year, an increase of 164,000 barrels. HighFalls craft brand sales were also up on a year-to-date basis, increasing 89,000 barrels or 38%. Sales of Genesee Brewing Company's core brands, however, continued to decline, although the rate of decline in the third quarter was lower than the rate of the first two quarters this year. The increase in net sales revenue was attributable to the overall barrelage increase as well as to the general industry price increase. Genesee Brewing Company's gross profit was $23.4 million, or 24.8% of net sales, in the first three quarters of fiscal 1997, compared to $20.2 million, or 22.6% of net sales, in the first three quarters of fiscal 1996. The increase in gross profit as a percent of net sales was primarily the result of the industry price increase and lower aluminum can costs. Genesee Brewing Company's selling, general and administrative expense increased $1.6 million in the first three of fiscal 1997 compared to the same period last year. The increase was primarily due to the timing of planned increases in selling and marketing expenditures to support the growth of the company's HighFalls brands, including expansion into new markets, such as Arkansas, California, New Mexico and Oklahoma in the current fiscal year. Genesee Brewing Company reported an operating loss of $649,000 for the first three quarters of this year compared to an operating loss of $2.3 million reported in the first three quarters of last year. Increased contract brewing and HighFalls volume, higher selling prices and lower aluminum can costs all contributed to Genesee Brewing Company's improved profit performance in the first three quarters of fiscal 1997 despite lower core brand volume. 9 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Ontario Foods Net sales for Ontario Foods were $16.5 million in the first three quarters of fiscal 1997, compared to $15.2 million for the first three quarters last year. The increase in net sales of $1.3 million, or 8.6%, for the first three quarters was attributable to a $1.3 million increase in private label tea sales and a $1.4 million increase in side dish sales, offset by a $1.3 million decline in contract revenues. Ontario Foods reported operating income of $174,000 for the first three quarters of fiscal 1997, compared to operating income of $276,000 for the same period last year. The decrease in operating income was due to lower contract manufacturing volume, higher sugar costs and an increase in freight costs. Genesee Ventures Genesee Ventures, Inc. reported operating income of $1.8 million for the first three quarters of fiscal 1997, compared to $1.5 million for the same period last year. The increase in operating income was primarily attributable to higher equipment lease revenues, which were due to the high volume of leases closed in fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents, and marketable securities totaled $34.0 million at January 25, 1997, compared to $37.5 million at April 30, 1996. This decrease of $3.5 million is largely attributable to internally funded capital expenditures of Genesee Brewing Company. During fiscal 1997, Genesee Brewing Company began on a multi-million dollar capital project to install a new keg filling system and purchase new cooperage to run on the system. This new system enhances Genesee Brewing Company's overall packaging capabilities and allows it to package draft beer for both types of draft dispensing systems currently used by the retail trade. The capital project was substantially completed during the third quarter of fiscal 1997 and expenditures for this project totaled approximately $5 million of which $3.5 million was expended in the third quarter. The Corporation accounts receivable balance at January 25, 1997 was approximately $2.0 million lower than the balance at April 30, 1996. The peak selling season for Genesee Brewing Company is typically April through August. Genesee Brewing Company's receivables are traditionally higher at fiscal year end and throughout the summer months. In addition, consolidated accounts receivable at April 30, 1996 included a receivable created when the Corporation re-balanced its cash investment portfolio. The receivable was collected the following day and the cash was re-invested in marketable securities. 10 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Inventories at January 25, 1997 were $1.0 million higher than the balance reported at April 30, 1996. The higher inventory balances were due primarily to the timing of an inventory buildup prior to planned annual maintenance on Genesee Brewing Company's packaging lines. The Corporation expects to fund future capital needs internally as it has in the past. With respect to equipment leasing and real estate, such investments may also include a debt component, generally obtained on a non-recourse basis. During the second quarter this year, the mortgage on the Clinton Square office building (in which the Corporation has both a partner's and creditor's interest) was extended for one year with the existing lender. As part of that extension, the Corporation agreed to extend its $2.5 million limited guarantee of the mortgage loan for one year. The building is currently 97% occupied, operating on plan and in compliance with all covenants and obligations contained in the mortgage loan agreement. The building has an appraised value in excess of the debt against it. In addition, the other partners in the project have provided the Corporation with additional collateral to secure the Corporation's obligation under its guaranty to the bank. To enhance the Corporation's opportunities for future growth and to capitalize on its strong financial condition, the Corporation's long term strategy includes plans to seek investment opportunities outside its core brewing business. The Corporation continues to search for and develop such opportunities. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) No exhibits are being filed with this report. (b) The Corporation filed a report on Form 8-K on January 22, 1997 to report the change in the Corporation's fiscal year from a fiscal year ending on April 30th in each year to a fiscal year ending on the Saturday nearest to April 30th in each year. 11 GENESEE CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENESEE CORPORATION Date: 3/11/97 / s / Robert N. Latella Robert N. Latella Executive Vice President and Chief Operating Officer Date: 3/11/97 / s / Edward J. Rompala Edward J. Rompala Vice President and Treasurer 12 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS MAY-3-1997 JAN-27-1997 1,925 32,042 11,637 402 12,983 60,322 109,738 76,959 135,748 18,830 0 858 0 0 91,260 135,748 143,508 143,508 85,881 30,780 26,010 0 0 2,878 1,036 1,842 0 0 0 1,842 1.14 0 -----END PRIVACY-ENHANCED MESSAGE-----