SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
Quarterly Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the 13 Weeks Ended Commission File No.
February 26, 2000 0-29288
GRIFFIN LAND & NURSERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0868496
(state or other jurisdiction of incorporation (IRS Employer
or organization) Identification Number)
One Rockefeller Plaza, New York, New York 10020
(Address of Principal Executive Offices) (ZIP CODE)
Registrant's Telephone Number Including Area Code (212) 218-7910
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
--- ---
Number of Shares of Common Stock Outstanding at March 31, 2000: 4,862,704
GRIFFIN LAND & NURSERIES, INC.
FORM 10Q
PART I Financial Information PAGE
Consolidated Statement of Operations
13 Weeks Ended February 26, 2000 and February 27, 1999 3
Consolidated Balance Sheet
February 26, 2000 and November 27, 1999 4
Consolidated Statement of Stockholders' Equity
13 Weeks Ended February 26, 2000 and February 27, 1999 5
Consolidated Statement of Cash Flows
13 Weeks Ended February 26, 2000 and February 27, 1999 6
Notes to Consolidated Financial Statements 7-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
Quantitative and Qualitative Disclosures About Market Risk 13
PART II Other Information 14
SIGNATURES 15
PART I
ITEM 1. FINANCIAL STATEMENTS
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
FOR THE 13 WEEKS ENDED,
-----------------------
FEB. 26, FEB. 27,
2000 1999
------- -------
Net sales and other revenue $ 5,462 $ 5,165
Cost and expenses:
Cost of goods sold 3,663 3,568
Selling, general and administrative expenses 4,174 3,704
------- -------
Operating loss (2,375) (2,107)
Interest expense 212 37
Interest income 21 25
------- -------
Loss before income tax benefit (2,566) (2,119)
Income tax benefit (1,026) (784)
------- -------
Loss before equity investment (1,540) (1,335)
Loss from equity investment (147) (171)
------- -------
Net loss $(1,687) $(1,506)
======= =======
Basic net loss per common share $ (0.35) $ (0.31)
======= =======
Diluted net loss per common share $ (0.35) $ (0.31)
======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
GRIFFIN LAND & NURSERIES, INC
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share data)
FEB. 26, NOV. 27,
2000 1999
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 336 $ 2,003
Accounts receivable, less allowance of $555 and $564 1,809 5,966
Inventories 33,453 29,196
Deferred income taxes 2,566 2,566
Other current assets 2,203 2,338
--------- ---------
TOTAL CURRENT ASSETS 40,367 42,069
Real estate held for sale or lease, net 34,072 33,766
Investment in Centaur Communiciations, Ltd. 16,871 17,018
Property and equipment, net 14,628 14,359
Other assets 6,095 6,159
--------- ---------
TOTAL ASSETS $ 112,033 $ 113,371
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,449 $ 5,412
Long-term debt due within one year 306 320
--------- ---------
TOTAL CURRENT LIABILITIES 5,755 5,732
Long-term debt 10,047 8,860
Deferred income taxes 375 1,401
Other noncurrent liabilities 3,787 3,622
--------- ---------
TOTAL LIABILITIES 19,964 19,615
--------- ---------
Commitments and contingencies -- --
Common stock, par value $0.01 per share, 10,000,000 shares
authorized, 4,862,704 shares issued and outstanding 49 49
Additional paid in capital 93,584 93,584
Retained earnings (deficit) (1,564) 123
--------- ---------
Total stockholders' equity 92,069 93,756
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 112,033 $ 113,371
========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(dollars in thousands)
SHARES OF ADDITIONAL RETAINED
COMMON COMMON PAID-IN EARNINGS
STOCK STOCK CAPITAL (DEFICIT) TOTAL
--------- ------ ---------- ----------- -----
Balance at November 28, 1998 4,842,704 $ 48 $ 93,491 $ (2,353) $ 91,186
Net loss -- -- -- (1,506) (1,506)
--------- --------- --------- --------- ---------
Balance at February 27, 1999 4,842,704 $ 48 $ 93,491 $ (3,859) $ 89,680
========= ========= ========= ========= =========
Balance at November 27, 1999 4,862,704 $ 49 $ 93,584 $ 123 $ 93,756
Net loss -- -- -- (1,687) (1,687)
--------- --------- --------- --------- ---------
Balance at February 26, 2000 4,862,704 $ 49 $ 93,584 $ (1,564) $ 92,069
========= ========= ========= ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
FOR THE 13 WEEKS ENDED,
-----------------------
FEB. 26, FEB. 27,
2000 1999
------- -------
OPERATING ACTIVITIES:
Net loss $(1,687) $(1,506)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 624 542
Loss from equity investment 147 171
Deferred income taxes (1,026) (784)
Changes in assets and liabilities:
Accounts receivable 4,166 3,340
Inventories (4,257) (3,642)
Income tax refund received -- 926
Accounts payable and accrued liabilities 37 (195)
Other, net 441 67
------- -------
Net cash used in operating activities (1,555) (1,081)
------- -------
INVESTING ACTIVITIES:
Additions to property and equipment (631) (1,030)
Additions to real estate held for sale or lease (629) (1,413)
Other, net -- (377)
------- -------
Net cash used in investing activities (1,260) (2,820)
------- -------
FINANCING ACTIVITIES:
Increase in debt 1,235 2,000
Payments of debt (87) (82)
------- -------
Net cash provided by financing activities 1,148 1,918
------- -------
Net decrease in cash and cash equivalents (1,667) (1,983)
Cash and cash equivalents at beginning of period 2,003 2,059
------- -------
Cash and cash equivalents at end of period $ 336 $ 76
======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 6
GRIFFIN LAND & NURSERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements of Griffin Land &
Nurseries, Inc. ("Griffin") have been prepared in conformity with the standards
of accounting measurement set forth in Accounting Principles Board Opinion No.
28 and any amendments thereto adopted by the Financial Accounting Standards
Board ("FASB"). Also, the accompanying financial statements have been prepared
in accordance with the accounting policies stated in Griffin's audited 1999
Financial Statements included in the Report on Form 10-K as filed with the
Securities and Exchange Commission on February 25, 2000, and should be read in
conjunction with the Notes to Financial Statements appearing in that report. All
adjustments, comprising only normal recurring adjustments, which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods have been reflected.
The results of operations for the thirteen weeks ended February 26,
2000, are not necessarily indicative of the results to be expected for the full
year.
Certain amounts from the prior year have been reclassified to conform
to the current presentation.
2. INDUSTRY SEGMENT INFORMATION
Griffin's reportable segments are defined by their products and
services, and are comprised of the landscape nursery and real estate segments.
Griffin has no operations outside the United States. Griffin's export sales and
transactions between segments are not material.
FOR THE 13 WEEKS ENDED,
-----------------------
FEB. 26, FEB. 27,
2000 1999
-------- --------
NET SALES AND OTHER REVENUE
Landscape nursery $ 4,130 $ 4,226
Real estate 1,332 939
-------- --------
$ 5,462 $ 5,165
======== ========
OPERATING LOSS
Landscape nursery $ (2,098) $ (1,718)
Real estate 129 (46)
-------- --------
Industry segment totals (1,969) (1,764)
General corporate expense 406 343
Interest expense, net 191 12
-------- --------
Loss before income tax benefit $ (2,566) $ (2,119)
======== ========
FEB. 26, NOV. 27,
2000 1999
-------- --------
IDENTIFIABLE ASSETS
Landscape nursery $ 51,067 $ 52,564
Real estate 38,746 38,248
-------- --------
Industry segment totals 89,813 90,812
General corporate 22,220 22,559
-------- --------
$112,033 $113,371
======== ========
See Note 3 for information on Griffin's equity investment in
Centaur Communications, Ltd.
Page 7
3. EQUITY INVESTMENT
Griffin accounts for its approximately 35% ownership of the
outstanding common stock of Centaur Communications, Ltd. ("Centaur") under
the equity method of accounting for investments. The summarized financial
data of Centaur shown below was derived from Centaur's financial statements
which are prepared in accordance with generally accepted accounting
principles in the United Kingdom. Griffin's equity loss from Centaur reflects
adjustments necessary to present Centaur's results in accordance with
generally accepted accounting principles in the United States.
THREE MONTHS ENDED,
-----------------------
FEB. 26, FEB. 27,
2000 1999
-------- --------
Net sales $23,141 $17,427
Costs and expenses 22,009 16,997
-------- --------
Operating profit 1,132 430
Nonoperating expense, principally interest 871 449
-------- --------
Income (loss) before taxes 261 (19)
Income tax provision 267 23
-------- --------
Net loss $ (6) $ (42)
======== ========
FEB. 26, NOV. 27,
2000 1999
-------- --------
Current assets $35,290 $35,957
Intangible assets 24,816 25,002
Other assets 11,537 11,018
-------- --------
Total assets $71,643 $71,977
======== ========
Current liabilities $28,990 $29,219
Debt 42,323 42,859
Other liabilities 3,970 3,530
-------- --------
Total liabilities 75,283 75,608
Accumulated deficit (3,640) (3,631)
-------- --------
Total liabilities and deficit $71,643 $71,977
======== ========
4. STOCK OPTIONS
On January 18, 2000, Griffin's Board of Directors approved the
issuance of 20,000 options under the Griffin Land & Nurseries, Inc., 1997
Stock Option Plan (the "Griffin Stock Option Plan") to certain employees.
Activity under the Griffin Stock Option Plan is summarized as follows:
NUMBER OF WEIGHTED AVG.
OPTIONS EXERCISE PRICE
--------- --------------
Outstanding at November 27, 1999 601,707 $12.16
Issued after November 27, 1999 20,000 11.22
Cancelled after November 27, 1999 (600) 13.25
------- ------
Outstanding at February 26, 2000 621,107 $12.13
======= ======
Number of option holders at February 26, 2000 37
=======
Page 8
WEIGHTED AVG.
REMAINING
OUTSTANDING AT WEIGHTED AVG. CONTRACTUAL LIFE
RANGE OF EXERCISE PRICES FEB. 26, 2000 EXERCISE PRICE (IN YEARS)
------------------------ ------------- -------------- ----------
Under $3.00 34,435 $ 1.75 4.1
$3.00-$9.00 100,172 7.52 6.0
Over $9.00 486,500 13.81 8.3
-------
621,107
=======
Options granted in 2000 vest in equal installments on the third, fourth
and fifth anniversaries from the date of grant. At February 26, 2000, there were
140,607 vested options outstanding under the Griffin Stock Option Plan with a
weighted average price of $6.39 per share.
5. PER SHARE RESULTS
Basic and diluted per share results were based on the following:
FOR THE 13 WEEKS ENDED,
--------------------------
FEB. 26, FEB. 27,
2000 1999
----------- -----------
Net loss for computation of basic and diluted per
share results $ (1,687) $ (1,506)
=========== ===========
Weighted average shares for computation of basic
and diluted per share results 4,863,000 4,843,000
=========== ===========
6. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
INVENTORIES
Inventories consist of:
FEB. 26, NOV. 27,
2000 1999
------- -------
Nursery stock $30,237 $26,728
Finished goods 1,666 1,481
Materials and supplies 1,550 987
------- -------
$33,453 $29,196
======= =======
Page 9
PROPERTY AND EQUIPMENT
Property and equipment consist of:
ESTIMATED USEFUL FEB. 26, NOV. 27,
LIVES 2000 1999
---------------- -------- --------
Land and improvements $ 7,457 $ 7,402
Buildings 10 to 40 years 4,576 4,198
Machinery and equipment 3 to 20 years 14,699 14,560
-------- --------
26,732 26,160
Accumulated depreciation (12,104) (11,801)
-------- --------
$ 14,628 $ 14,359
======== ========
Griffin incurred capital lease obligations of $25 and $81, respectively,
in the thirteen weeks ended February 26, 2000 and February 27, 1999.
REAL ESTATE HELD FOR SALE OR LEASE
Real estate held for sale or lease consists of:
ESTIMATED USEFUL FEB. 26, NOV. 27,
LIVES 2000 1999
---------------- -------- --------
Land $ 4,680 $ 4,723
Land improvements 15 years 3,461 3,461
Buildings 40 years 24,049 23,836
Development costs 10,388 10,027
------- -------
42,578 42,047
Accumulated depreciation (8,506) (8,281)
------- -------
$34,072 $33,766
======= =======
Page 10
ITEM 2
GRIFFIN LAND & NURSERIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Griffin's operations are comprised of two segments: the landscape
nursery business and the real estate business. The following discussion contains
information relating to the consolidated operations of Griffin and, where
appropriate, separate information regarding each of these segments. As used in
this discussion the term "Imperial" refers to Griffin's landscape nursery
operations (conducted by Griffin's wholly-owned subsidiary, Imperial Nurseries,
Inc.) and the term "Griffin Land" refers to Griffin's real estate operations.
RESULTS OF OPERATIONS
Thirteen Weeks Ended February 26, 2000 Compared to the Thirteen Weeks
Ended February 27, 1999
Griffin's net sales and other revenue were $5.5 million in the thirteen
weeks ended February 26, 2000 (the " 2000 first quarter") as compared to net
sales and other revenue of $5.2 million in the thirteen weeks ended February 27,
1999 (the "1999 first quarter"). The increase of $0.3 million reflects higher
net sales at Griffin Land partially offset by slightly lower net sales at
Imperial. Imperial's net sales decreased $0.1 million to $4.1 million in the
2000 first quarter from $4.2 million in the 1999 first quarter. The decrease
reflects lower sales volume of winter related products in the 2000 first quarter
as compared to the 1999 first quarter at Imperial's wholesale sales and service
centers. The decrease of winter product sales was attributed to the relatively
milder winter weather in Imperial's markets in the 2000 first quarter as
compared to the 1999 first quarter. Net sales and other revenue at Griffin Land
increased $0.4 million to $1.3 million in the 2000 first quarter from $0.9
million in the 1999 first quarter. The net sales and other revenue increase at
Griffin Land principally reflects sales of residential lots in the 2000 first
quarter which generated proceeds of $0.3 million. There were no land sales in
the 1999 first quarter. The balance of the net sales and other revenue increase
at Griffin Land in the 2000 first quarter, as compared to the 1999 first
quarter, was due to higher revenue from leasing.
Griffin's operating loss (before interest) was $2.4 million in the 2000
first quarter as compared to an operating loss of $2.1 million in the 1999 first
quarter. Imperial incurred an operating loss of $2.1 million in the 2000 first
quarter as compared to an operating loss of $1.7 million in the 1999 first
quarter. The first quarter historically incurs an operating loss in the nursery
business because of the low volume of plant sales during the winter months. The
increase in Imperial's operating loss in the 2000 first quarter, as compared to
the 1999 first quarter, principally reflects higher operating expenses incurred
to support Imperial's sales and service centers.
Griffin Land had an operating profit (before interest) of $0.1
million in the 2000 first quarter as compared to an operating loss of $0.1
million in the 1999 first quarter. The improved results at Griffin Land
reflect gains on the residential land sales and the higher rental revenue in
the 2000 first quarter, partially offset by slightly higher operating
expenses.
Griffin's interest expense increased to $0.2 million in the 2000 first
quarter as compared to less than $0.1 million in the 1999 first quarter. The
higher interest expense reflects the mortgage entered into by Griffin Land in
the third quarter of last year.
The loss from Griffin's equity investment in Centaur Communications,
Ltd. ("Centaur") was slightly lower in the 2000 first quarter as compared to
the 1999 first quarter. Centaur had an increase in operating profit,
substantially offset by higher interest expense. The increase in Centaur's
interest expense principally reflects Centaur's borrowings to finance an
acquisition in the 1999 second quarter.
LIQUIDITY AND CAPITAL RESOURCES
Griffin's net cash used in operating activities was $1.6 million in the
2000 first quarter as compared to net cash used in operating activities of $ 1.1
million in the 1999 first quarter. The increase in cash used in operations
principally reflects the effect of an income tax refund of $0.9 million received
in the 1999 first quarter. Net cash
Page 11
used for working capital items in the 2000 first
quarter was less than net cash used for working capital items in the 1999 first
quarter.
Net cash used in investing activities was $1.3 million in the 2000
first quarter as compared to $2.8 million in the 1999 first quarter, reflecting
a lower amount of additions to property and equipment and a lower amount of
additions to Griffin's real estate holdings. The lower amount of additions to
property and equipment in the 2000 first quarter, as compared to the 1999 first
quarter, principally reflects the 1999 first quarter additions including the
acquisition of land to expand Imperial's Cincinnati sales and service center. In
the 2000 first quarter, Imperial continued several capital projects, started in
fiscal 1999, to improve and expand its containerized plant production facilities
in Florida and Connecticut. These projects are expected to be completed over the
next six to twelve months at a projected cost of approximately $3.5 million. In
fiscal 1999, Imperial entered into an agreement to acquire land in central New
Jersey for a new wholesale sales and service center. Completion of the land
purchase is contingent upon receiving all required regulatory approvals to
operate a wholesale sales and service center on that site. If such approval is
received, expenditures for the land acquisition and site work are projected to
be approximately $2.5 million over the next nine months. Sites for additional
sales and service centers are also being considered.
The lower amount of additions to real estate in the 2000 first quarter,
as compared to the 1999 first quarter, reflects the effect of expenditures in
the 1999 first quarter for construction of a 100,000 square foot warehouse in
the New England Tradeport. The shell of that new warehouse was completed in the
1999 second quarter. There were no such construction projects during the 2000
first quarter. A significant portion of Griffin's additions to its real estate
holdings in the 2000 first quarter reflect subdivision activities related to a
proposed residential development. Griffin is considering construction of new
buildings in fiscal 2000 to provide additional space for lease. Some of the
construction being considered is dependent on future space requirements of
certain of Griffin's current tenants and the leasing status of the recently
constructed 100,000 square foot warehouse in the New England Tradeport, which is
being actively marketed but is not yet leased.
Net cash provided by financing activities in the 2000 first quarter
reflects Griffin's initial borrowings under its $20 million revolving credit
loan (the "Griffin Credit Agreement") entered into in the 1999 third quarter.
Management believes that in the near term, based on the current level
of operations and anticipated growth, its cash on hand, cash flow from
operations and borrowings under the Griffin Credit Agreement will be sufficient
to finance the working capital requirements and expected capital expenditures of
its landscape nursery business and fund development of its real estate assets.
Over the intermediate and long term, selective mortgage placements or additional
bank credit facilities may also be required to fund capital projects.
FORWARD-LOOKING INFORMATION
The information in Management's Discussion and Analysis of Financial
Condition and Results of Operations includes forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Although Griffin believes that its plans, intentions and
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such plans, intentions or expectations will be
achieved, particularly with respect to leasing of its new warehouse completed
in 1999 and possible construction of additional facilities in the real estate
business, subdivision approvals, the improvements and expansion of Imperial's
farm operations, and the opening of a wholesale sales and service center in
central New Jersey. The projected information disclosed herein is based on
assumptions and estimates that, while considered reasonable by Griffin as of
the date hereof, are inherently subject to significant business, economic,
competitive and regulatory uncertainties and contingencies, many of which are
beyond the control of Griffin.
Page 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices. Changes in these factors could
cause fluctuations in earnings and cash flows.
For fixed rate debt, changes in interest rates generally affect the
fair market value of the debt instrument, but not earnings or cash flows.
Griffin does not have an obligation to prepay any fixed rate debt prior to
maturity, and therefore, interest rate risk and changes in the fair market value
of fixed rate debt should not have a significant impact on earnings or cash
flows until such debt is refinanced, if necessary. For variable rate debt,
changes in interest rates generally do not impact the fair market value of the
debt instrument, but do affect future earnings and cash flows. Griffin had $1.2
million of variable rate debt outstanding at February 26, 2000.
Griffin is exposed to market risks from fluctuations in interest rates
and the effects of those fluctuations on market values of Griffin's cash
equivalent short-term investments. These investments generally consist of
overnight investments that are not significantly exposed to interest rate risk,
except to the extent that changes in interest rates will ultimately affect the
amount of interest income earned and cash flow from these investments.
Griffin does not currently have any derivative financial instruments in
place to manage interest costs, but that does not mean that Griffin will not use
them as a means to manage interest rate risk in the future.
Griffin does not use foreign currency exchange forward contracts or
commodity contracts and does not have foreign currency exposure in its
operations. Griffin does have investments in companies based in the United
Kingdom, and changes in foreign exchange rates could affect the results of
equity investments in Griffin's financial statements, and the ultimate
liquidation of those investments and conversion of proceeds into United States
currency.
Page 13
PART II OTHER INFORMATION
Items 1 - 5 not applicable
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) There were no reports filed on Form 8K by the Registrant
during the 2000 first quarter.
Page 14
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.
GRIFFIN LAND & NURSERIES, INC.
/S/ FREDERICK M. DANZIGER
DATE: April 10, 2000 ----------------------------------------
FREDERICK M. DANZIGER
President and Chief Executive Officer
/S/ ANTHONY J. GALICI
DATE: April 10, 2000 ----------------------------------------
ANTHONY J. GALICI
Vice President, Chief Financial Officer
and Secretary
Page 15