-----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, RpdRkSFE1Ip8HlIUlWaCtRJI9hKPtioloXB0W9e0cO5Nfl+4QRalq1ClGibsgnS3 WShwV3eQGdCN/VtS4KrvbQ== 0000897069-99-000023.txt : 19990115 0000897069-99-000023.hdr.sgml : 19990115 ACCESSION NUMBER: 0000897069-99-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHLAND CRANBERRIES INC /WI/ CENTRAL INDEX KEY: 0000818010 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 391583759 STATE OF INCORPORATION: WI FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16130 FILM NUMBER: 99506534 BUSINESS ADDRESS: STREET 1: 800 FIRST AVE SO STREET 2: P O BOX 8020 CITY: WISCONSIN RAPIDS STATE: WI ZIP: 54494 BUSINESS PHONE: 7154244444 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-16130 NORTHLAND CRANBERRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-1583759 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, Wisconsin 54495-8020 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code (715)-424-4444 - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class A Common Stock December 31, 1998 19,123,484 - ------------------------------------------------------------------------------ Class B Common Stock December 31, 1998 636,202 - ------------------------------------------------------------------------------ NORTHLAND CRANBERRIES, INC. FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Condensed Consolidated Balance Sheets..........................3 Condensed Consolidated Statements of Operations................4 Condensed Consolidated Statements of Cash Flows................5 Notes to Condensed Consolidated Financial Statements....................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................7-9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K..............................10 SIGNATURE.....................................................11 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NORTHLAND CRANBERRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) ASSETS (Unaudited) November 30, August 31, 1998 1998 --------------- --------------- Current assets: Cash and cash equivalents $ 811 $ 633 Accounts and notes receivable 20,881 22,422 Inventories 70,782 43,811 Other 3,094 1,942 Deferred income taxes 2,490 2,490 --------------- ---------------- Total current assets 98,058 71,298 --------------- ---------------- Property and equipment - at cost 184,036 181,994 Less accumulated depreciation 31,549 29,795 --------------- ---------------- Net property and equipment 152,487 152,199 Investments and other assets 2,448 2,151 Goodwill 25,128 25,224 --------------- ---------------- Total assets $ 278,121 $ 250,872 =============== ================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,787 $ 9,995 Accrued liabilities 16,384 7,924 Current portion of long-term obligations 3,892 3,892 --------------- ---------------- Total current liabilities 35,063 21,811 Long-term obligations 78,642 64,276 Deferred income taxes 10,958 10,915 --------------- ---------------- Total liabilities 124,663 97,002 --------------- ---------------- Shareholders' equity: Common stock - Class A 191 191 Common stock - Class B 6 6 Additional paid-in capital 144,732 144,477 Retained earnings 8,529 9,196 --------------- ---------------- Total shareholders' equity 153,458 153,870 --------------- ---------------- Total liabilities and shareholders' equity $ 278,121 $ 250,872 =============== ================ See accompanying notes to condensed consolidated financial statements - 3 - NORTHLAND CRANBERRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (Unaudited) For the 3 months ended November 30, 1998 1997 --------------- ---------------- Revenues $ 34,236 $ 18,431 Cost of sales 20,357 8,814 --------------- ---------------- Gross profit 13,879 9,617 Costs and expenses: Selling, general and administrative 12,364 8,004 Interest 1,303 1,432 --------------- ---------------- Total costs and expenses 13,667 9,436 --------------- ---------------- Income before income taxes 212 181 Income taxes 92 79 --------------- ---------------- Net income $ 120 $ 102 =============== ================ Basic income per share $ 0.01 $ 0.01 =============== ================ Diluted income per share $ 0.01 $ 0.01 =============== ================ See accompanying notes to condensed consolidated financial statements - 4 - NORTHLAND CRANBERRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (Unaudited) For the 3 months ended November 30, 1998 1997 -------- --------- Cash flows from operating activities: Net income $ 120 $ 102 Adjustments to reconcile net income to net cash provided by (used for)operating activities: Depreciation and amortization 1,991 1,542 Changes in assets and liabilities: Receivables and other current assets 389 (4,023) Inventories (26,971) (12,336) Accounts payable and accrued liabilities 13,252 5,966 Deferred income taxes 84 58 -------- -------- Net cash used for operating activities (11,135) (8,691) -------- -------- Investing activities: Property and equipment additions, net (2,177) (2,555) Other (303) (80) -------- -------- Net cash used for investing activities (2,480) (2,635) -------- -------- Financing activities: Increase in debt 14,366 12,104 Dividends paid (787) (551) Exercise of stock options 214 3 Other 0 (150) -------- -------- Net cash provided by financing activities 13,793 11,406 -------- -------- Net decrease in cash and cash equivalents 178 80 Cash and cash equivalents: Beginning of period 633 231 -------- -------- End of period $ 811 $ 311 ======== ======== Supplemental disclosures of cash flow information: Cash paid for: Interest (net of amount capitalized) $ 827 $ 997 ======== ======== See accompanying notes to condensed consolidated financial statements - 5 - NORTHLAND CRANBERRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all adjustments necessary to present fairly the financial position of the Company as of November 30, 1998, and its results of operations and cash flows for the three-month periods ended November 30, 1998 and 1997, respectively. The Company's consolidated balance sheet as of August 31, 1998 included herein has been taken from the Company's audited financial statements of that date included in the Company's latest annual report. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements can be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report. The Company periodically reviews long-lived assets to assess recoverability and impairments will be recognized in operating results if a permanent diminution in value were to occur. NOTE 2 ACQUISITIONS On December 30, 1998, the Company completed the acquisition of the juice division of Seneca Foods Corporation. The purchase included bottling and packaging facilities located in New York, North Carolina and Wisconsin; warehousing in Michigan; and a grape receiving station in New York. The purchase price for the acquisition was approximately $28.3 million in cash and is subject to subsequent adjustment based on the value of "net assets" purchased. - 6 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Our total revenues for the three months ended November 30, 1998 were $34.2 million, compared to $18.4 million in the prior year's quarter. This 85.9% increase was primarily due to private label sales generated by our recently acquired subsidiary, Minot Food Packers, Inc., and the continuing growth of Northland brand 100% juice products. Trade industry data for the 12-week period ended December 6, 1998, shows that our juice products achieved an 12.6% market share of supermarket shelf-stable cranberry beverages on a national basis, up from a 8.6% market share for the same period last year. We anticipate that the Seneca acquisition will also help increase revenues in fiscal 1999. We continue to experience intense competition in our efforts to develop private label accounts and sales of concentrate and bulk frozen fruit. Cost of sales for the first quarter of fiscal 1999 was $20.4 million compared to $8.8 million for the first quarter of fiscal 1998, resulting in gross margins of 40.5% and 52.2% in each respective period. The decrease in gross margin in fiscal 1999 was primarily due to our changing product mix. Fiscal 1999 revenues included a significant amount of lower margin private label sales due to the acquisition of Minot Food Packers, Inc. compared to minimal private label sales in fiscal 1998. Our gross margins during the remainder of fiscal 1999 will be dependent upon our product mix and existing market conditions. Selling, general and administrative expenses were $12.4 million, or 36.1% of total revenues, for the three-month period ended November 30, 1998. For the three months ended November 30, 1997, selling, general and administrative expenses were $8.0 million, or 43.4% of total revenues for that quarter. This planned increase in selling, general and administrative expenses was primarily attributable to costs related to the Company's aggressive marketing campaign to support the development and growth of its Northland brand 100% juice products. We plan to continue to aggressively promote our juice products throughout the fiscal year. We also anticipate that selling, general and administrative expenses will increase in fiscal 1999 as a result of the addition of new branded products through the Seneca acquisition. Interest expense was $1.3 million for the three-month period ended November 30, 1998 compared to $1.4 million during the same period in fiscal 1998. Interest expense will increase in subsequent quarters as a result of additional borrowings necessary to fund the purchase price for the Seneca acquisition. Fiscal 1999 first quarter net income and per share earnings were $120,000 and $0.01 per share, respectively, compared to fiscal 1998 first quarter net income of $102,000, or $0.01 per share. FINANCIAL CONDITION Net cash used for operating activities was $11.1 million in the first three months of fiscal 1999 compared to $8.7 million used for operating activities in the same period in fiscal 1998. First quarter net cash used for operating activities was the result of increases in current assets and liabilities in the ordinary course of business during the period. Inventory increased $27.0 million due to the fall harvest of the Company's crop, the - 7 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANAL CONDITION AND RESULTS OF OPERATIONS (CONT.) purchase of 190,000 barrels of raw cranberries from other independent cranberry growers and increased raw materials and finished goods inventories to support increased branded juice sales. Accounts payable increased $13.3 million primarily due to contract installment payments due independant cranberry growers for the purchase of their raw cranberries. Working capital increased $13.5 million to $63.0 million at November 30, 1998 compared to working capital of $49.5 million at August 31, 1998. Net cash used for investing activities decreased during the three-month period ended November 30, 1998 to $2.5 million from $2.6 million during the same period in the prior fiscal year. The decrease was principally the result of reduced property and equipment additions. First quarter fiscal 1999 property and equipment additions were $2.2 million compared to total property and equipment additions of $2.6 million in the first quarter of the prior year. Net cash provided by financing activities was $13.8 million in the three-month period ended November 30, 1998, compared to $11.4 million during the same period in the prior fiscal year. Our debt increased $14.4 million in the first quarter of fiscal 1999 primarily due to financing a $13.5 million increase in seasonal and growth working capital and $2.2 million for property and equipment additions. Working capital was $63.0 million at November 30, 1998 compared to working capital of $38.5 million at August 31, 1998. Our total debt (including current portion) was $82.5 million at November 30, 1998 for a total debt-to-equity ratio of 0.54 to 1 compared to total debt of $68.2 million and a total debt-to-equity ratio of 0.44 to 1 at August 31, 1998. We utilize our revolving bank credit facility, together with cash generated from operations, to fund our working capital requirements throughout the fiscal year, and we are currently negotiating to obtain a new credit facility. As of November 30, 1998, the principal amount outstanding under our revolving credit facility was $48.3 million, with an additional $46.7 million available under our credit facilities with a syndicate of regional banks until December 2000. We believe our credit facilities, together with cash generated from operations, are sufficient to fund our ongoing operational needs over the remainder of fiscal 1999. On December 30, 1998, we completed the acquisition of the juice division of Seneca Foods Corporation. The purchase included bottling and packaging facilities located in New York, North Carolina and Wisconsin; warehousing in Michigan; and a grape receiving station in New York. The purchase price for the acquisition was approximately $28.3 million in cash, subject to adjustment based on the final value of the "net assets" we acquired. The purchase price was borrowed under our revolving credit facility. Any adjustment to the purchase price will also be borrowed under our revolver. - 8 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANAL CONDITION AND RESULTS OF OPERATIONS (CONT.) - -------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain matters discussed in this 10-Q are "forward-looking statements," including statements about the Company's future plans, goals and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by the Private Securities Litigation Reform Act of 1995. They can generally be identified because the context of such statements will include words such as "believes," "anticipates," "expects" or words of similar import. Whether or not these forward-looking statements will be accurate in the future will depend on certain risks and factors including risks associated with (i) development, market share growth and continued consumer acceptance of the Company's branded juice products; (ii) integration of the operations of Minot Food Packers, Inc., acquired in fiscal 1998, and the juice division of Seneca Foods Corporation, acquired in fiscal 1999; (iii) strategic actions of Northland's competitors in pricing, marketing and advertising; (iv) risks associated with the turning of the year 2000; and (v) agricultural factors affecting Northland's crop. Readers should consider these risks and factors and the impact they may have when evaluating these forward-looking statements. These statements are based only on management's knowledge and expectations on the date of this Form 10-Q. The Company will not necessarily update these statements or other information in this Form 10-Q based on future events or circumstances. - -------------------------------------------------------------------------------- - 9 - PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits Exhibit 27 - Financial Data Schedule b. Form 8-K No reports on Form 8-K were filed by the Company during the quarterly period to which this Form 10-Q relates. The Company filed a Form 8-K, dated December 30, 1998, relating to its acquisition of the juice division of Seneca Foods Corporation, on January 13, 1999. - 10 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned Chief Financial Officer thereunto duly authorized. NORTHLAND CRANBERRIES, INC. DATE: January 13, 1999 By: /s/ John Pazurek ---------------------------- John Pazurek Chief Financial Officer - 11 - EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule - 12 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF NORTHLAND CRANBERRIES, INC. AS OF AND FOR THE 3 MONTHS ENDED NOVEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 3-MOS AUG-31-1998 SEP-01-1998 NOV-30-1998 811 0 20,881 0 70,782 98,058 184,036 31,549 278,121 35,063 78,642 0 0 197 144,732 278,121 33,832 34,236 20,357 13,667 0 0 1,303 212 92 120 0 0 0 120 0.01 0.01
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