UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report
(Date of earliest
event reported): March 8, 2000
Northland Cranberries, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 0-16130 39-1583759
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
800 First Avenue South, P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
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(Address of principal executive offices including zip code)
(715) 424-4444
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(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets.
On March 8, 2000, Northland Cranberries, Inc. (the "Company")
consummated the previously announced sale of its private label juice business to
Cliffstar Corporation ("Cliffstar"), based in Dunkirk, New York, pursuant to the
terms of an Asset Purchase Agreement, dated as of January 5, 2000, and First
Amendment to Asset Purchase Agreement, dated as of March 8, 2000, by and between
the Company and Cliffstar (together, the "Agreement"), which are filed as
exhibits to this Current Report on Form 8-K and which are incorporated by
reference herein.
The private label juice business assets sold by the Company consisted
primarily of finished goods and work-in-process inventories, raw materials
inventories consisting of labels and ingredients that relate to customers of the
private label juice business (other than cranberry juice and cranberry juice
concentrates), certain trademarks (MINOT, CONWAY'S and MIN-OT) and goodwill,
contracts relating to the purchase of raw materials inventory and the sale of
products, and 135,000 gallons of cranberry juice concentrate. No plants or
equipment were included in the sale. Cliffstar also assumed certain liabilities
under purchased contracts. The Company's private label juice business
represented approximately $43 million of its $237 million in fiscal 1999
revenues.
In connection with the sale, the Company received Cliffstar's
unsecured, subordinated promissory note for $28 million which will be amortized
over six years and bears interest at a rate of 10% per annum, as well as
approximately $6.3 million in cash related to inventory transferred to Cliffstar
on the closing date. The Company will also receive additional amounts related to
inventory following completion of a transition period and final inventory
adjustments, as well as approximately $3.5 million in installment payments over
the remainder of the year 2000 for cranberry concentrate sold to Cliffstar.
Additionally, the Agreement provides that Cliffstar will make certain annual
earn-out payments to the Company for a period of six years from the closing date
based generally on operating profit from Cliffstar's sale of cranberry juice,
cranberry juice cocktail and drinks, blended cranberry juice and blended
cranberry juice cocktail and drinks. Cliffstar has a one-time option to
terminate its obligation to make earn-out payments to the Company under certain
circumstances. That option is exerciseable at any time prior to the last day of
the 30th calendar month after the closing. If Cliffstar elects to terminate the
earn-out obligation, it will be required to make a termination payment equal to
$50,000,000 less all principal payments made on the aforementioned promissory
note up to the date of such termination.
The Company and Cliffstar also entered into:
o a Non-Competition Agreement pursuant to which the Company agreed
not to compete with Cliffstar in the United States and Canada in
the private label juice business for the period during which
Cliffstar is making earn-out payments to the Company and for two
years thereafter;
o a Cranberry Purchase and Supply Agreement pursuant to which
Cliffstar agreed to purchase a minimum of 150,000 barrels of
cranberries from the Company (subject to downward adjustment of
either quantity or price in certain circumstances) each year
during the period in which Cliffstar is making earn-out payments
to the Company, commencing with the twelve month period beginning
November 1, 2000;
o a Trademark License Agreement pursuant to which the Company
licensed back from Cliffstar the use of the Minot name for
cranberry sauce and non-juice private label purposes; and
o a CoPacking Agreement pursuant to which the Company agreed to
pack specified quantities of Cliffstar juice products during each
year of the period in which Cliffstar is making earn-out payments
to the Company.
The Company and Cliffstar also agreed to negotiate in good faith to
enter into a Cranberry Sauce Agreement pursuant to which Cliffstar would be the
exclusive sales representative for the Company for the sale of private label and
Minot brand cranberry sauce for an indefinite term and terminable on 3 years
advance notice.
As a result of the sale, Northland expects to realize an after-tax
gain on sale of approximately $1.2 million, or approximately $.06 per fully
diluted share.
The purchase price paid for the assets was based on arms-length
negotiations between the Company and Cliffstar.
Item 7 Financial Statements and Exhibits.
(b) The Company will provide pro forma financial information required
by Item 7 by amendment to this Current Report on Form 8-K within sixty days of
the date hereof.
(c) The Company has filed the exhibits listed in the accompanying
Exhibit Index as part of this Current Report on Form 8-K.
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 hereunto duly authorized.
NORTHLAND CRANBERRIES, INC.
Date: March 23, 2000 By: /s/ John Swendrowski
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John Swendrowski
Chairman and Chief Executive Officer
NORTHLAND CRANBERRIES, INC.
EXHIBIT INDEX TO FORM 8-K
Report Dated March 8, 2000
Exhibit
No. Description
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(2.1) Asset Purchase Agreement, dated as of January 5, 2000, by and among
Northland Cranberries, Inc. and Cliffstar Corporation.*
(2.2) First Amendment to Asset Purchase Agreement, dated as of March 8,
2000, by and among Northland Cranberries, Inc. and Cliffstar
Corporation.
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* The schedules and exhibits to this document are not being filed herewith. The
registrant agrees to furnish supplementally a copy of any such schedule or
exhibit to the Securities and Exchange Commission upon request.