Oregon | 93-0981021 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
8800 Enchanted Way, S.E., Turner, Oregon | 97392 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | (503) 588-9463 |
o | Large accelerated filer | o | Accelerated filer |
o | Non-accelerated filer | x | Smaller reporting company |
Part I - Financial Information
|
3 |
Item 1 - Financial Statements
|
3 |
Balance Sheets
|
3 |
|
|
Statements of Operations
|
4 |
Statements of Cash Flows
|
5 |
Notes to Unaudited Interim Financial Statements
|
6 |
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
|
10 |
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
|
14 |
Item 4 - Controls and Procedures
|
14 |
Part II - Other Information
|
14 |
Item 1 - Legal Proceedings
|
14 |
Item 1A – Risk Factors
|
14 |
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
|
14 |
Item 3 - Defaults Upon Senior Securities
|
15 |
Item 4 – Mine Safety Disclosures
|
15 |
Item 5 – Other Information
|
15 |
Item 6 – Exhibits
|
16 |
Signatures
|
17 |
ASSETS
|
||||||||
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
(audited)
|
|||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 3,209,299 | $ | 4,553,113 | ||||
Accounts receivable, net
|
1,225,481 | 1,088,550 | ||||||
Inventories (Note 2)
|
8,660,642 | 9,226,884 | ||||||
Prepaid expenses and other current assets
|
237,039 | 89,503 | ||||||
Current portion of note receivable
|
- | 23,231 | ||||||
Current portion of distribution agreement receivable
|
250,000 | 250,000 | ||||||
Income tax receivable
|
- | 8,734 | ||||||
Total current assets
|
13,582,461 | 15,240,015 | ||||||
Vineyard development costs, net
|
2,104,274 | 1,567,976 | ||||||
Property and equipment, net (Note 3)
|
9,787,917 | 8,305,636 | ||||||
Debt issuance costs
|
60,678 | 47,369 | ||||||
Distribution agreement receivable, net of current portion
|
250,000 | 250,000 | ||||||
TOTAL ASSETS
|
$ | 25,785,330 | $ | 25,410,996 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable
|
$ | 801,398 | $ | 728,596 | ||||
Accrued expenses
|
430,998 | 474,776 | ||||||
Line of credit
|
5,250 | - | ||||||
Current portion of long term debt
|
215,823 | 209,327 | ||||||
Income taxes payable
|
325,083 | 17,659 | ||||||
Deferred income taxes
|
254,000 | 254,000 | ||||||
Current portion of liabilities from discontinued operations, net
|
- | 4,337 | ||||||
Current portion of deferred revenue-distribution agreement
|
142,857 | 142,857 | ||||||
Grapes payable
|
- | 539,584 | ||||||
Total current liabilities
|
2,175,409 | 2,371,136 | ||||||
Long-term debt, net of current portion
|
3,721,900 | 3,816,911 | ||||||
Deferred rent liability
|
189,866 | 197,241 | ||||||
Deferred revenue-distribution agreement, net of current portion
|
595,233 | 666,663 | ||||||
Deferred gain
|
201,504 | 217,551 | ||||||
Deferred income taxes
|
800,000 | 800,000 | ||||||
Total liabilities
|
7,683,912 | 8,069,502 | ||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Common stock, no par value, 10,000,000 shares authorized, 4,893,979
|
||||||||
shares issued at June 30, 2013 and December 31, 2012, 4,788,916
|
||||||||
and 4,803,710 shares outstanding at June 30, 2013 and
|
||||||||
December 31, 2012, respectively.
|
8,665,126 | 8,656,926 | ||||||
Retained earnings
|
9,821,501 | 9,003,783 | ||||||
Less: Common stock held in treasury, at cost, 105,063 and 90,269 shares
|
||||||||
at June 30, 2013 and December 31, 2012, respectively
|
(385,209 | ) | (319,215 | ) | ||||
Total shareholders’ equity
|
18,101,418 | 17,341,494 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 25,785,330 | $ | 25,410,996 |
Three months ended | Six months ended | |||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
SALES, NET
|
$ | 3,609,259 | $ | 2,851,146 | $ | 6,650,818 | $ | 5,573,750 | ||||||||
COST OF SALES
|
1,465,365 | 1,151,833 | 2,750,262 | 2,261,075 | ||||||||||||
GROSS PROFIT
|
2,143,894 | 1,699,313 | 3,900,556 | 3,312,675 | ||||||||||||
SELLING, GENERAL & ADMIN EXPENSES
|
1,258,697 | 1,213,979 | 2,526,655 | 2,374,512 | ||||||||||||
INCOME FROM OPERATIONS
|
885,197 | 485,334 | 1,373,901 | 938,163 | ||||||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Interest income
|
1,984 | 1,246 | 3,953 | 4,237 | ||||||||||||
Interest expense
|
(63,866 | ) | (42,668 | ) | (123,208 | ) | (81,788 | ) | ||||||||
Other income, net
|
31,540 | 35,630 | 103,930 | 73,054 | ||||||||||||
INCOME BEFORE INCOME TAXES
|
854,855 | 479,542 | 1,358,576 | 933,666 | ||||||||||||
INCOME TAX PROVISION
|
(333,730 | ) | (203,081 | ) | (540,858 | ) | (382,567 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS
|
$ | 521,125 | $ | 276,461 | $ | 817,718 | $ | 551,099 | ||||||||
DISCONTINUED OPERATIONS
|
||||||||||||||||
Loss from operations
|
- | (97,499 | ) | - | (253,330 | ) | ||||||||||
Income tax benefit
|
- | 40,950 | - | 106,399 | ||||||||||||
LOSS FROM DISCONTINUED OPERATIONS
|
- | (56,549 | ) | - | (146,931 | ) | ||||||||||
NET INCOME
|
$ | 521,125 | $ | 219,912 | $ | 817,718 | $ | 404,168 | ||||||||
BASIC NET INCOME FROM CONTINUING
|
||||||||||||||||
OPERATIONS PER COMMON SHARE
|
$ | 0.11 | $ | 0.06 | $ | 0.17 | $ | 0.11 | ||||||||
BASIC NET LOSS FROM DISCONTINUED
|
||||||||||||||||
OPERATIONS PER COMMON SHARE
|
- | $ | (0.01 | ) | - | $ | (0.03 | ) | ||||||||
BASIC NET INCOME PER COMMON SHARE
|
$ | 0.11 | $ | 0.05 | $ | 0.17 | $ | 0.08 | ||||||||
DILUTED NET INCOME FROM CONTINUING
|
||||||||||||||||
OPERATIONS PER COMMON SHARE
|
$ | 0.11 | $ | 0.06 | $ | 0.17 | $ | 0.11 | ||||||||
DILUTED NET LOSS FROM DISCONTINUED
|
||||||||||||||||
OPERATIONS PER COMMON SHARE
|
$ | - | $ | (0.01 | ) | $ | - | $ | (0.03 | ) | ||||||
DILUTED NET INCOME PER COMMON SHARE
|
$ | 0.11 | $ | 0.05 | $ | 0.17 | $ | 0.08 | ||||||||
Weighted average number of
|
||||||||||||||||
basic common shares outstanding
|
4,796,926 | 4,871,303 | 4,798,429 | 4,879,494 | ||||||||||||
Weighted average number of
|
||||||||||||||||
diluted common shares outstanding
|
4,842,081 | 4,877,145 | 4,838,232 | 4,885,336 |
Six months ended June 30,
|
||||||||
2013
|
2012
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS
|
||||||||
Net income
|
$ | 817,718 | $ | 551,099 | ||||
Adjustments to reconcile net income to net cash:
|
||||||||
from operating activities
|
||||||||
Depreciation and amortization
|
371,193 | 394,536 | ||||||
(Gain)/loss on sale of assets
|
(675 | ) | 1,733 | |||||
Stock based compensation expense
|
8,200 | 9,802 | ||||||
Deferred rent liability
|
(7,375 | ) | (3,478 | ) | ||||
Deferred revenue-distribution agreement
|
(71,430 | ) | (71,430 | ) | ||||
Deferred gain
|
(16,047 | ) | (16,048 | ) | ||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(136,931 | ) | 28,671 | |||||
Inventories
|
566,242 | (19,934 | ) | |||||
Prepaid expenses and other current assets
|
(147,536 | ) | 32,670 | |||||
Income taxes receivable
|
8,734 | 194,539 | ||||||
Other assets
|
- | 4,456 | ||||||
Income taxes payable
|
307,424 | - | ||||||
Grapes payable
|
(539,584 | ) | (389,233 | ) | ||||
Accounts payable
|
(503,734 | ) | 159,253 | |||||
Accrued expenses
|
(43,778 | ) | (74,392 | ) | ||||
Net cash from operating activities
|
612,421 | 802,244 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES OF CONTINUING OPERATIONS
|
||||||||
Additions to vineyard development costs
|
(574,133 | ) | - | |||||
Additions to property and equipment
|
(1,256,487 | ) | (565,729 | ) | ||||
Proceeds from sale of asset
|
19,750 | - | ||||||
Payments received on note receivable
|
23,231 | 28,389 | ||||||
Net cash from investing activities
|
(1,787,639 | ) | (537,340 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES OF CONTINUING OPERATIONS
|
||||||||
Payments on long-term debt
|
(103,515 | ) | (82,474 | ) | ||||
Borrowings on long-term debt
|
15,000 | - | ||||||
Borrowings on line of credit
|
5,250 | - | ||||||
Payment of debt issuance costs
|
(15,000 | ) | - | |||||
Repurchase of common stock
|
(65,994 | ) | (248,965 | ) | ||||
Net cash from financing activities
|
(164,259 | ) | (331,439 | ) | ||||
CASH FLOWS FROM DISCONTINUED OPERATIONS
|
||||||||
Net cash from operating activities of discontinued operations
|
(4,337 | ) | 629,489 | |||||
Net cash from discontinued operations
|
(4,337 | ) | 629,489 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(1,343,814 | ) | 562,954 | |||||
CASH AND CASH EQUIVALENTS, beginning of period
|
4,553,113 | 3,411,292 | ||||||
CASH AND CASH EQUIVALENTS, end of quarter
|
$ | 3,209,299 | $ | 3,974,246 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Purchases of property and equipment included in
|
||||||||
accounts payable
|
$ | 576,536 | $ | - |
June 30, 2013
|
December 31, 2012
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Winemaking and packaging materials
|
$ | 410,331 | $ | 454,612 | ||||
Work-in-process (costs relating to
|
||||||||
unprocessed and/or unbottled wine products)
|
3,482,095 | 3,891,754 | ||||||
Finished goods - (bottled wine and related products)
|
4,768,216 | 4,880,518 | ||||||
Current inventories
|
$ | 8,660,642 | $ | 9,226,884 |
June 30, 2013
|
December 31, 2012
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Construction in progress
|
$ | 2,722,909 | $ | 1,227,028 | ||||
Land and improvements
|
2,892,108 | 2,892,108 | ||||||
Winery building and hospitality center
|
6,797,120 | 6,795,799 | ||||||
Equipment
|
6,583,902 | 6,299,500 | ||||||
$ | 18,996,039 | $ | 17,214,435 | |||||
Accumulated depreciation
|
(9,208,122 | ) | (8,908,799 | ) | ||||
$ | 9,787,917 | $ | 8,305,636 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30, 2013
|
June 30, 2013
|
|||||||||||||||
Weighted Average Exercise
|
Weighted Average Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding at beginning of period
|
311,200 | $ | 3.76 | 311,200 | $ | 3.76 | ||||||||||
Granted
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Outstanding at end of period
|
311,200 | $ | 3.76 | 311,200 | $ | 3.76 |
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||
Period
|
Total Number of Shares (or Units) Purchased
|
Average Price Paid per Share (or Unit)
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
|
||||||||||||
Month #1
|
||||||||||||||||
April 2013
|
1,894 | $ | 4.65 | 1,894 | $ | 161,279 | ||||||||||
Month #2
|
||||||||||||||||
May 2013
|
2,917 | $ | 4.59 | 2,917 | $ | 147,897 | ||||||||||
Month #3
|
||||||||||||||||
June 2013
|
7,283 | $ | 4.52 | 7,283 | $ | 114,982 | ||||||||||
Total
|
12,094 | $ | 4.56 | 12,094 | $ | 114,982 |
Director
|
|
For
|
|
Percent Voted For
|
|
Witheld
|
James Bernau
|
|
2,049,464
|
|
98.01%
|
|
41,611
|
Craig Smith
|
|
2,077,091
|
|
99.33%
|
|
13,984
|
James Ellis
|
|
2,058,564
|
|
98.45%
|
|
32,511
|
Sean Cary
|
2,076,829
|
|
99.32%
|
|
14,246
|
|
Thomas Brian
|
2,078,179
|
|
99.38%
|
|
12,896
|
|
Delna Jones
|
2,075,791
|
|
99.27%
|
|
15,284
|
|
Betty O’Brien
|
2,054,911
|
|
98.27%
|
|
36,164
|
|
Stan Turel
|
2,078,679
|
|
99.41%
|
|
12,396
|
For
|
Against
|
Abstain
|
||
3,447,345
|
|
5,143
|
|
16,912
|
WILLAMETTE VALLEY VINEYARDS, INC. | |||
Date: August 8, 2013
|
By:
|
/s/ James W. Bernau | |
James W. Bernau | |||
Chief Executive Officer
(Principal Executive Officer)
|
|||
Date: August 8, 2013
|
By:
|
/s/ Richard F. Goward Jr. | |
Richard F. Goward Jr. | |||
Chief Financial Officer
(Principal Accounting and Financial Officer)
|
|||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 8, 2013
|
By:
|
/s/ James W. Bernau | |
James W. Bernau | |||
Chief Executive Officer
(Principal Executive Officer)
|
|||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2013
|
By:
|
/s/ Richard F. Goward Jr. | |
Richard F. Goward Jr. | |||
Chief Financial Officer
(Principal Accounting and Financial Officer)
|
|||
|
(1)
|
the Quarterly Report of Willamette Valley Vineyards, Inc. on Form 10-Q for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
information contained in the Report fairly presents in all material respects the financial condition and results of operations of Willamette Valley Vineyards, Inc.
|
Date: August 8, 2013
|
By:
|
/s/ James W. Bernau | |
James W. Bernau | |||
Title: Chief Executive Officer
(Principal Executive Officer)
|
|||
|
(1)
|
the Quarterly Report of Willamette Valley Vineyards, Inc. on Form 10-Q for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
information contained in the Report fairly presents in all material respects the financial condition and results of operations of Willamette Valley Vineyards, Inc.
|
Date: August 8, 2013
|
By:
|
/s/ Richard F. Goward Jr. | |
Richard F. Goward Jr. | |||
Title: Chief Financial Officer
(Principal Accounting and Financial Officer)
|
|||
1. BASIS OF PRESENTATION (Details Narrative)
|
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Basis Of Presentation Details Narrative | ||
Potentially Dilutive Shares Included in the Computation of dilutive earnings per share | 45,155 | 5,842 |
STATEMENTS OF OPERATIONS (unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income Statement [Abstract] | ||||
SALES, NET | $ 3,609,259 | $ 2,851,146 | $ 6,650,818 | $ 5,573,750 |
COST OF SALES | 1,465,365 | 1,151,833 | 2,750,262 | 2,261,075 |
GROSS PROFIT | 2,143,894 | 1,699,313 | 3,900,556 | 3,312,675 |
SELLING GENERAL & ADMINISTRATIVE EXPENSES | 1,258,697 | 1,213,979 | 2,526,655 | 2,374,512 |
INCOME FROM OPERATIONS | 885,197 | 485,334 | 1,373,901 | 938,163 |
OTHER INCOME (EXPENSE) | ||||
Interest income | 1,984 | 1,246 | 3,953 | 4,237 |
Interest expense | (63,866) | (42,668) | (123,208) | (81,788) |
Other income, net | 31,540 | 35,630 | 103,930 | 73,054 |
INCOME BEFORE INCOME TAXES | 854,855 | 479,542 | 1,358,576 | 933,666 |
INCOME TAX PROVISION | (333,730) | (203,081) | (540,858) | (382,567) |
INCOME FROM CONTINUING OPERATIONS | 521,125 | 276,461 | 817,718 | 551,099 |
DISCONTINUED OPERATIONS | ||||
Loss from operations | (97,499) | (253,330) | ||
Income tax benefit | 40,950 | 106,399 | ||
LOSS FROM DISCONTINUED OPERATIONS | (56,549) | (146,931) | ||
NET INCOME | $ 521,125 | $ 219,912 | $ 817,718 | $ 404,168 |
BASIC NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE | $ 0.11 | $ 0.06 | $ 0.17 | $ 0.11 |
BASIC NET LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE | $ (0.01) | $ (0.03) | ||
BASIC NET INCOME PER COMMON SHARE | $ 0.11 | $ 0.05 | $ 0.17 | $ 0.08 |
DILUTED NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE | $ 0.11 | $ 0.06 | $ 0.17 | $ 0.11 |
DILUTED NET LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE | $ (0.01) | $ (0.03) | ||
DILUTED NET INCOME PER COMMON SHARE | $ 0.11 | $ 0.05 | $ 0.17 | $ 0.08 |
Weighted average number of basic common shares outstanding | 4,796,926 | 4,871,303 | 4,798,429 | 4,879,494 |
Weighted average number of diluted common shares outstanding | 4,842,081 | 4,877,145 | 4,838,232 | 4,885,336 |
5. DEBT
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Debt Disclosure [Abstract] | |
NOTE 5. LONG TERM DEBT | Line of Credit Facility In December of 2005 the Company entered into a revolving line of credit agreement with Umpqua Bank that allows borrowings of up to $2,000,000 against eligible accounts receivables and inventories as defined in the agreement. The revolving line bears interest at prime, is payable monthly, and is subject to annual renewal. The Company renewed the credit agreement in June of 2013 for a period of 12 months. The interest rate was 3.25% at June 30, 2013 and December 31, 2012. At June 30, 2013 there was an outstanding balance of $5,250 and at December 31, 2012 there was no balance outstanding on this revolving line of credit.
The line of credit agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage as defined, and limits the level of acquisitions of property and equipment. As of June 30, 2013, the Company was in compliance with these covenants.
Long Term Debt - The Company has four long term debt agreements with Farm Credit Services with an aggregate outstanding balance of $3,931,095 and $4,016,771 as of June 30, 2013 and December 31, 2012, respectively. These loans require monthly payments of $37,562 principal and interest for the life of the loans, at an annual fixed interest rate ranging from 4.75% to 6.70%, with maturity dates ranging from 2024 through 2028. The general purposes of these loans are to make capital improvements to the winery and vineyard facilities.
Included in the Farm Credit Services notes discussed above, is a new long term debt agreement entered into on March 3, 2013. This new loan agreement is a construction loan with total available borrowing of up to $2,000,000, at a fixed rate of 4.75%, maturing December 1, 2028. As of June 30, 2013, $15,000 has been borrowed from this loan and the remaining $1,985,000 is currently available. Management expects to utilize the full amount of available borrowing during 2013, to partially fund the remodel and expansion of the Hospitality Center at the Winery.
The Company has a long term debt agreement with Kubota with a balance of $6,628 and $9,467 as of June 30, 2013 and December 31, 2012, respectively. This loan requires a monthly payment of $473 principal only for the life of the loan, at an annual interest rate of 0.0%, maturing in 2014. |
7. INTEREST AND TAXES PAID (Details Narrative) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Interest And Taxes Paid Details Narrative | ||||
Income taxes | $ 137,300 | $ 80,000 | $ 224,700 | $ 80,000 |
Interest Paid | $ 63,866 | $ 42,668 | $ 123,208 | $ 81,788 |
2. INVENTORIES (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Inventory, Net [Abstract] | ||
Winemaking and packaging materials | $ 410,331 | $ 454,612 |
Work-in-progress (costs relating to unprocessed and/or unbottled wine products) | 3,482,095 | 3,891,754 |
Finished goods (bottled wine and related products) | 4,768,216 | 4,880,518 |
Current inventories | $ 8,660,642 | $ 9,226,884 |
8. DISCONTINUED OPERATIONS (Details Narrative) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
Bacchus [Member]
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Jun. 30, 2012
Bacchus [Member]
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Net Sales from Discontinued Operations | $ 0 | $ 93,135 | $ 0 | $ 575,242 |
1. BASIS OF PRESENTATION
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
NOTE 1. BASIS OF PRESENTATION | The accompanying unaudited interim financial statements as of and for the three and six months ended June 30, 2013 and 2012 have been prepared in conformity with accounting principles generally accepted in the United States (GAAP). The financial information as of December 31, 2012 is derived from the audited financial statements presented in the Willamette Valley Vineyards, Inc. (the Company) Annual Report on Form 10-K for the year ended December 31, 2012. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying financial statements include all adjustments necessary (which are of a normal recurring nature) for the fair statement of the results of the interim periods presented. The accompanying financial statements should be read in conjunction with the Companys audited financial statements for the year ended December 31, 2012, as presented in the Companys Annual Report on Form 10-K.
Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2013, or any portion thereof.
The Companys revenues include direct-to-consumer sales and national sales to distributors. These sales channels have mostly similar economic characteristics, offer comparable products to customers and utilize similar processes and shared resources for production, selling and distribution.
Effective June 30, 2012, the Company has discontinued their in-state distribution division, Bacchus Fine Wines. The Company had been in the process of winding down Bacchus operations since September 2011, when they entered into an agreement with Youngs Market of Oregon, LLC to distribute produced wines in-state. Since then, purchased wine inventories have been nearly completely liquidated, and substantially all Company in-state distribution activity has ceased. In-state distribution activities are now reported as discontinued operations.
Basic earnings per share are computed based on the weighted-average number of common shares outstanding each period. Diluted earnings per share are computed using the weighted average number of shares of common stock and potentially dilutive common shares outstanding during the period. Potentially dilutive shares from stock options and other potentially dilutive shares are excluded from the computation when their effect is anti-dilutive. At June 30, 2013 and 2012, potentially dilutive shares of 77,200 and 328,200, respectively, were excluded from the computation as their effect would be anti-dilutive. 45,155 and 5,842 potentially dilutive shares are included in the computation of dilutive earnings per share for the three and six month periods ended June 30, 2013 and 2012, respectively. |
3. PROPERTY AND EQUIPMENT
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Jun. 30, 2013
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NOTE 3. PROPERTY AND EQUIPMENT | The Companys property and equipment consists of the following, as of the dates shown:
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6. STOCK BASED COMPENSATION
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Jun. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 6. STOCK BASED COMPENSATION | The Company has a stock incentive plan, originally created in 1992, most recently amended in 2001. No additional grants may be made under the plan. All stock options have an exercise price that is equal to the fair market value of the Companys stock on the date the options were granted. Administration of the plan, including determination of the number, term, and type of options to be granted, lies with the Board of Directors or a duly authorized committee of the Board of Directors. Options were generally granted based on employee performance with vesting periods ranging from date of grant to seven years. At the date of the grant, the maximum term before expiration is ten years.
The following table presents information related to the value of outstanding stock options for the period shown:
At June 30, 2013, the Company had 88,000 unvested stock options with associated unrecognized compensation cost of $73,640 that will be recognized over a weighted-average period of 3.06 years. The intrinsic value of the 223,200 stock options exercisable at June 30, 2013 was $148,380.
The Company expenses stock options on a straight-line basis over the options related vesting term. Pretax compensation expense related to stock options for the three months ended June 30, 2013 and 2012 were $4,099 and $4,500, respectively. Pretax compensation expense related to stock options for the six months ended June 30, 2013 and 2012 were $8,200 and $9,802, respectively.
During the six months ended June 30, 2013 and 2012, there were no transactions related to stock options exercise activity.
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4. DISTRIBUTION AGREEMENT RECEIVABLE AND DEFERRED REVENUE
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6 Months Ended |
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Jun. 30, 2013
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Deferred Revenue Disclosure [Abstract] | |
4. DISTRIBUTION AGREEMENT RECEIVABLE AND DEFERRED REVENUE | Effective September 1, 2011, the Company entered into an agreement with Youngs Market Company for distribution of Company-produced wines in Oregon and Washington. The terms of this contract include exclusive rights to distribute Willamette Valley Vineyards wines in Oregon and Washington for seven years. In an effort to facilitate the transition with as little disruption as possible, Youngs Market Company has agreed to compensate Willamette Valley Vineyards for ongoing Oregon sales and branding efforts. As a result, the Company is due to receive $250,000 per year starting on September 2011 for each of the next four years for a total of $1,000,000. As of June 30, 2013 and December 31, 2012, the remaining amount to be collected was $500,000. The total amount of $1,000,000 to be received by the Company related to this agreement is being recognized as revenue on a straight line basis over the seven year life of the agreement. For the three months ended June 30, 2013 and 2012, the Company has recognized revenue related to this agreement in the amount of $35,715 and $35,715, respectively, recorded to other income. For the six months ended June 30, 2013 and 2012, the Company has recognized revenue related to this agreement in the amount of $71,430 and $71,430, respectively, recorded to other income. |