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
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For the 13 Weeks Ended Commission File No.
August 30, 1997 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
Former name, former address and former fiscal year, Former Address:
if changed since last report 204 West Newberry Road
Bloomfield, CT
06002
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 October 7, 1997: 4,743,613
GRIFFIN LAND & NURSERIES, INC.
------------------------------
Form 10Q
PART I FINANCIAL INFORMATION Page
Consolidated Statement of Operations
13 Weeks Ended
August 30, 1997 and August 31, 1996 3
Consolidated Statement of Operations
39 Weeks Ended
August 30, 1997 and August 31, 1996 4
Consolidated Balance Sheet
August 30, 1997 and November 30, 1996 5
Consolidated Statement of Cash Flows
39 Weeks Ended
August 30, 1997 and August 31, 1996 6
Notes to Consolidated Financial Statements 7-11
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-14
PART II OTHER INFORMATION 14
SIGNATURES 15
GRIFFIN LAND & NURSERIES, INC.
Consolidated Statement of Operations
(dollars in thousands, except per share data)
(unaudited)
For the 13 Weeks Ended,
----------------------------
Aug. 30, 1997 Aug. 31, 1996
------------- -------------
Net sales and other revenue $ 10,878 $ 11,110
Cost and expenses:
Cost of goods sold 10,565 7,658
Selling, general and administrative expenses 3,284 3,267
----------- -----------
Operating (loss) profit (2,971) 185
Other nonoperating income -- 587
Interest income 90 --
Interest expense 69 2,121
----------- -----------
Loss before income tax benefit (2,950) (1,349)
Income tax benefit (1,277) (465)
----------- -----------
Loss before equity investment (1,673) (884)
Income (loss) from equity investment in Centaur
Communications, Ltd. 22 (131)
----------- -----------
Loss from continuing operations (1,651) (1,015)
Provision for loss on sale of discontinued
operation, net of tax benefit and reversal of
excess deferred taxes of $4,316 -- (1,311)
----------- -----------
Net loss $ (1,651) $ (2,326)
=========== ===========
Pro forma loss per common share from continuing
operations $ (0.33) $ (0.22)
Pro forma loss per common share from discontinued
operation -- (0.28)
----------- -----------
Pro forma net loss per common share $ (0.33) $ (0.50)
=========== ===========
Pro forma weighted average common shares
and equivalents outstanding 4,914,000 4,678,000
=========== ===========
See Notes to Consolidated Financial Statements
GRIFFIN LAND & NURSERIES, INC.
Consolidated Statement of Operations
(dollars in thousands, except per share data)
(unaudited)
For the 39 Weeks Ended,
----------------------------
Aug. 30, 1997 Aug. 31, 1996
------------- -------------
Net sales and other revenue $ 34,508 $ 32,700
Cost and expenses:
Cost of goods sold 27,077 22,814
Selling, general and administrative expenses 10,126 9,236
----------- -----------
Operating (loss) profit (2,695) 650
Other nonoperating income, net -- 1,511
Interest income 140 --
Interest expense 935 6,135
----------- -----------
Loss before income tax benefit (3,490) (3,974)
Income tax benefit (1,291) (1,421)
----------- -----------
Loss before equity investment (2,199) (2,553)
Income from equity investment in Centaur
Communications, Ltd. 524 26
----------- -----------
Loss from continuing operations (1,675) (2,527)
----------- -----------
Discontinued operation:
Income from operations, net of taxes of $527
-- 768
Provision for loss on sale, net of tax
benefit and reversal of excess
deferred taxes of $4,316 -- (1,311)
----------- -----------
Loss from discontinued operation -- (543)
----------- -----------
Net loss $ (1,675) $ (3,070)
=========== ===========
Pro forma loss per common share from continuing
operations $ (0.34) $ (0.54)
Pro forma loss per common share from discontinued
operation -- (0.12)
----------- -----------
Pro forma net loss per common share $ (0.34) $ (0.66)
=========== ===========
Pro forma weighted average common shares and
equivalents outstanding 4,863,000 4,656,000
=========== ===========
See Notes to Consolidated Financial Statements.
GRIFFIN LAND & NURSERIES, INC.
Consolidated Balance Sheet
(dollars in thousands, except per share data)
Aug. 30, 1997 Nov. 30, 1996
------------- -------------
ASSETS (Unaudited)
Current Assets
Cash and cash equivalents $ 9,617 $ 7,371
Accounts receivable, less allowance of $438 and
$302 4,281 3,962
Inventories 24,980 27,530
Deferred income taxes 4,074 4,047
Other current assets 1,746 1,158
--------- --------
Total current assets 44,698 44,068
Real estate held for sale or lease, net 26,932 26,862
Investment in Centaur Communications, Ltd 15,219 14,695
Property and equipment, net 12,507 12,676
Other assets, including investment in
real estate joint venture of $3,313 and
$3,403 3,536 3,474
--------- --------
Total assets $ 102,892 $101,775
========= ========
LIABILITIES, CULBRO INVESTMENT AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 4,314 $ 7,093
Long--term debt due within one year 260 277
--------- --------
Total current liabilities 4,574 7,370
Long--term debt 2,886 38,846
Other noncurrent liabilities 2,614 8,110
--------- --------
Total liabilities 10,074 54,326
--------- --------
Culbro Investment -- 47,449
Common stock, par value $0.01 per share,
Authorized 10,000,000 shares,
Issued and Outstanding 4,559,132 shares 46 --
Additional paid in capital 94,810 --
Accumulated deficit (2,038) --
--------- --------
92,818 47,449
--------- --------
Total Liabilities, Culbro Investment and
Shareholders' Equity $ 102,892 $101,775
========= ========
See Notes to Consolidated Financial Statements.
GRIFFIN LAND & NURSERIES, INC.
Consolidated Statement of Cash Flows
(dollars in thousands)
(unaudited)
For the 39 Weeks Ended,
-----------------------
Aug. 30, Aug. 31,
1997 1996
OPERATING ACTIVITIES ---- ----
Net loss $(1,675) $ (3,070)
Adjustments to reconcile net loss to cash (used in)
provided by operating activities:
Depreciation and amortization 1,504 1,534
Loss from discontinued operation, before tax -- 4,332
Income from equity investment in Centaur (524) (26)
Discount and interest on subordinated note -- 1,761
Accretion and dividend income on Series B preferred
stock -- (1,761)
Deferred income taxes (1,604) (550)
Changes in assets and liabilities, net of effect of
Liability Assumption in 1997:
Accounts receivable (455) 164
Inventories 2,550 (485)
Real estate held for sale or lease (650) 629
Accounts payable and accrued liabilities (1,245) (3,030)
Other, net (1,466) 2
------- --------
Net cash used in operating activities of continuing
operations (3,565) (500)
Cash provided by operating activities of
discontinued operation -- 1,871
------- --------
Net cash (used in) provided by operating activities (3,565) 1,371
------- --------
INVESTING ACTIVITIES
Additions to property and equipment (835) (746)
Investing activities of discontinued operation -- (731)
------- --------
Net cash used in investing activities (835) (1,477)
------- --------
FINANCING ACTIVITIES
Net transactions with Culbro, excluding Liability
Assumption (577) (16,590)
Payments of debt (199) (7,092)
Increase in debt 7,422 21,035
------- --------
Net cash provided by (used in) financing activities 6,646 (2,647)
------- --------
Net increase (decrease) in cash and cash equivalents 2,246 (2,753)
Cash and cash equivalents at beginning of period 7,371 7,687
------- --------
Cash and cash equivalents at end of period $ 9,617 $ 4,934
======= ========
See Notes to Consolidated Financial Statements.
GRIFFIN LAND & NURSERIES, INC.
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
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 1996
Financial Statements included in Form 10 as filed with the Securities and
Exchange Commission on June 13, 1997, 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 three-month and nine-month periods ended
August 30, 1997, are not necessarily indicative of the results to be expected
for the full year. The results in the 1996 periods include CMS Gilbreth
Packaging Systems, Inc. ("CMS Gilbreth") as a discontinued operation. This
business was sold in the 1996 fourth quarter.
2. Certain Transactions
Prior to July 3, 1997, Griffin was a wholly owned subsidiary of Culbro
Corporation ("Culbro"). On July 3, 1997, as previously approved by Culbro's
Board of Directors, Culbro distributed (the "Distribution") the common stock of
Griffin to Culbro's shareholders on a one-to-one ratio. On February 27, 1997,
Griffin, Culbro and General Cigar Holdings, Inc. ("GC Holdings"), a Culbro
subsidiary, entered into a Distribution Agreement (the "Distribution
Agreement"). Pursuant to the Distribution Agreement, Culbro transferred (the
"Asset Transfers") to Griffin substantially all the non-tobacco related assets
of Culbro, including: (i) all of the outstanding common stock of Imperial
Nurseries, Inc., then a wholly owned subsidiary of Culbro; (ii) approximately
5,500 acres of land in Connecticut and Florida, as well as nursery wholesale
service centers; (iii) Culbro's interests in The Eli Witt Company ("Eli Witt")
and assets previously owned by Eli Witt; (iv) Culbro's 25% interest in Centaur
Communications, Ltd. ("Centaur"); and (v) all licenses, permits, accounts
receivable, prepaid expenses, reserves and other assets (other than cash)
related to the real estate and nursery businesses. The Distribution Agreement
provided for (i) the consummation of the Asset Transfers described above, (ii)
the Distribution of Griffin's common stock to the existing shareholders of
Culbro following the initial public offering (the "Offering") of GC Holdings
Class A Common Stock, and (iii) following the Distribution, the merger of
Culbro, subject to certain conditions, with and into GC Holdings (the "Merger").
The Distribution Agreement also provided for the assumption by Griffin of
all of the liabilities related to the businesses and assets transferred to
Griffin from Culbro. Pursuant to the Distribution Agreement, Griffin was also
allocated $7 million in cash. All of the transferred assets and related
liabilities are included in the accompanying consolidated financial statements
at Culbro's historical cost.
Under the terms of the Distribution Agreement, on February 27, 1997, GC
Holdings assumed all of Culbro's general corporate debt and certain other
liabilities, principally retirement obligations, which were included in
Griffin's historical financial statements through that date (the "Liability
Assumption"). See Note 3 for the pro forma effect of the Liability Assumption on
Griffin's results of operations.
3. Consolidated Condensed Unaudited Pro Forma Financial Information
The following consolidated condensed unaudited pro forma statement of
operations of Griffin gives effect to the Liability Assumption by GC Holdings as
if it had been completed at the beginning of the respective periods. The
unaudited pro forma statement of operations for the 1996 period also gives
effect to the use of the proceeds from the sale of CMS Gilbreth and the exchange
of Series B preferred stock of Eli Witt in satisfaction of Griffin's obligations
on the related subordinated note payable (transactions which were completed in
the 1996 fourth quarter) as if these transactions had been completed at the
beginning of the 1996 period. The Liability Assumption is already reflected in
Griffin's August 30, 1997, balance sheet. The consolidated condensed unaudited
pro forma statement of operations presented herein may not necessarily reflect
the results of operations had these transactions actually taken place on the
assumed dates.
Consolidated Condensed Unaudited Pro Forma Statement of Operations
For the 39 Weeks Ended,
-----------------------
Aug. 30, Aug. 31,
1997 1996
---- ----
Net sales and other revenue $ 34,508 $ 32,700
----------- ----------
Operating (loss) profit (2,695) 650
Interest expense, net 65 435
----------- ----------
(Loss) income before income tax (benefit) provision (2,760) 215
Income tax (benefit) provision (1,006) 214
----------- ----------
(Loss) income before equity investment (1,754) 1
Income from equity investment in Centaur
Communications, Ltd. 524 26
----------- ----------
(Loss) income from continuing operations $ (1,230) $ 27
=========== ==========
(Loss) income per common share from continuing
operations $ (0.25) $ 0.01
=========== ==========
Weighted average common shares and equivalents
outstanding 4,863,000 4,656,000
=========== ==========
4. Related Party Transactions
Culbro Investment
Through the date of the Distribution, Griffin's retained earnings, common
stock and intercompany account with Culbro were presented as Culbro Investment
in Griffin's consolidated balance sheet. On July 3, 1997, the balance in the
Culbro Investment account was reclassified to common stock and additional
paid-in capital in Griffin's consolidated balance sheet. The changes in the
Culbro Investment account are summarized as follows:
For the 39 Weeks Ended,
-----------------------
Aug. 30, Aug. 31,
1997 1996
---- ----
Balance beginning of period $ 47,449 $ 61,299
Net income (loss) through July 3, 1997,
and August 31, 1996 363 (3,070)
Liability Assumption (see Note 2) 47,621 --
Transactions with Culbro (577) (16,590)
Reclassification of remaining balance in Culbro
Investment to common stock and additional paid
in capital (94,856) --
-------- --------
Balance end of period $ -- $ 41,639
======== ========
Selling, General and Administrative Expenses
Prior to the Distribution, a portion of Culbro management time and
resources were related to Griffin's operations, and Culbro also performed
certain specific administrative functions for Griffin, including legal, tax,
treasury, human resources and internal audit. The consolidated statement of
operations reflects general and administrative expenses of $0.1 million in the
1997 third quarter period prior to the Distribution and $1.0 million in the 1997
year to date period prior to the Distribution. In 1996, $0.4 million and $0.9
million was allocated by Culbro to Griffin for these services in the third
quarter and year to date periods ended August 31, 1996, respectively. These
charges were based principally on Griffin's proportionate share of expenses
relating to the Culbro corporate activities that were associated with Griffin's
operations and are considered by management to be reasonable.
5. Long-term Debt
Long-term debt includes:
Aug. 30, 1997 Nov. 30, 1996
------------- -------------
Credit Agreement $ -- $36,000
Mortgages 2,592 2,644
Capital leases 554 479
------ -------
Total 3,146 39,123
Less: due within one year 260 277
------ -------
Total long-term debt $2,886 $38,846
====== =======
On February 27, 1997, pursuant to the Distribution Agreement, Culbro's
general corporate debt that had been included in Griffin's financial statements
was assumed by GC Holdings, and therefore will not be part of Griffin's debt
structure prospectively.
6. Supplemental Financial Statement Information
Cost of Goods Sold
Included in the 1997 third quarter and nine month period cost of
goods sold is a charge of $3.3 million to reserve for certain plant inventories
in the landscape nursery business. Approximately 75% of the charge relates to
field grown plant inventories in which the current carrying cost will not be
recovered as a result of horticultural problems and market conditions. The
remaining portion of the charge relates principally to certain container grown
plant inventories which have not matured properly.
Inventories
Inventories consist of:
Aug. 30, 1997 Nov. 30, 1996
------------- -------------
Nursery stock $22,719 $25,651
Finished goods 1,410 1,137
Materials and supplies 851 742
------- -------
$24,980 $27,530
======= =======
Property and Equipment
Property and equipment consist of:
Aug. 30, 1997 Nov. 30, 1996
------------- -------------
Land $ 6,000 $ 5,982
Buildings and improvements 3,825 3,807
Machinery and equipment 12,658 12,337
------ ------
22,483 22,126
Accumulated depreciation (9,976) (9,450)
------- -------
$12,507 $12,676
======= =======
7. Earnings Per Share
Through July 3, 1997, Griffin was a wholly owned subsidiary of
Culbro. Accordingly, earnings per share are presented on a pro forma basis. For
the periods prior to the Distribution of Griffin stock to Culbro's shareholders,
pro forma income (loss) per share was computed using the weighted average common
shares and equivalents outstanding equal to Culbro's weighted average common
shares and equivalents outstanding because the Griffin common stock was
distributed to Culbro shareholders on a one-for-one basis.
In February 1997, the FASB issued Statement of Financial Accounting
Standard ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 requires companies
to present basic earnings per share and, if applicable, diluted earnings per
share instead of primary and fully diluted earnings per share. Basic earnings
per share include the weighted-average number of common shares outstanding
during the period, and does not include common stock equivalents. Under SFAS No.
128, diluted earnings per share include the weighted-average shares outstanding
and common stock equivalents. SFAS No. 128 must be adopted by Griffin in the
1998 first quarter. Early adoption of SFAS No. 128 is not permitted.
The following pro forma results reflect basic and diluted income (loss)
per share in accordance with the provisions of SFAS No. 128.
For the 13 Weeks Ended,
-----------------------
Aug. 30, 1997 Aug. 31, 1996
------------- -------------
Pro forma basic loss per share from continuing
operations $ (0.36) $ (0.22)
Pro forma basic loss per share from discontinued
operation -- (0.29)
----------- ---------
Pro forma basic net loss per share $ (0.36) $ (0.51)
=========== =========
Pro forma weighted average shares outstanding 4,559,000 4,512,000
=========== =========
Pro forma diluted loss per share from continuing
operations $ (0.33) $ (0.22)
Pro forma diluted loss per share from discontinued
operation -- (0.28)
----------- -----------
Pro forma diluted net loss per share $ (0.33) $ (0.50)
=========== ===========
Pro forma weighted average shares and equivalents
outstanding 4,914,000 4,678,000
=========== ===========
For the 39 Weeks Ended,
-----------------------
Aug. 30, 1997 Aug. 31, 1996
------------- -------------
Pro forma basic loss per share from continuing
operations $ (0.37) $ (0.57)
Pro forma basic loss per share from
discontinued operation -- (0.12)
----------- -----------
Pro forma basic net loss per share $ (0.37) $ (0.69)
=========== ===========
Pro forma weighted average shares outstanding 4,541,000 4,468,000
=========== ===========
Pro forma diluted loss per share from continuing
operations $ (0.34) $ (0.54)
Pro forma diluted loss per share from
discontinued operation -- (0.12)
----------- -----------
Pro forma diluted net loss per share $ (0.34) $ (0.66)
=========== ===========
Pro forma weighted average shares and equivalents
outstanding 4,863,000 4,656,000
=========== ===========
GRIFFIN LAND & NURSERIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Net cash flows used in operating activities of continuing operations were
$3.6 million in the 1997 nine month period as compared to $0.5 million used in
operating activities of continuing operations in the 1996 nine month period. The
increased use of cash reflects several factors. The change in real estate held
for sale reflected a use of cash in 1997 versus providing cash in 1996,
resulting from increased spending in 1997 and lower relief from sales in the
current year as compared to 1996. Additionally, the noncash equity income from
Centaur was a larger factor in 1997 results versus 1996. Cash flows used in
investing activities reflected capital expenditures in the landscape nursery
business, which were slightly higher in 1997 as compared to 1996. Financing
activities reflect borrowings to finance the landscape nursery and real estate
businesses. In 1996, borrowings included approximately $17 million that were
transferred to Culbro.
Through February 27, 1997, the date of the Distribution Agreement between
Griffin, Culbro and GC Holdings, the cash management and treasury activities of
Griffin were integrated with those of Culbro. Griffin's cash receipts were
transferred daily into Culbro's cash account and Griffin's cash disbursement
accounts were reimbursed by Culbro on a daily basis. Subsequent to that date and
through the distribution of Griffin common stock to Culbro's shareholders on
July 3, 1997, Griffin's cash flows were segregated from those of Culbro and its
other subsidiaries.
As a subsidiary of Culbro, Griffin did not maintain its own separate
credit facilities. Borrowings under the Culbro credit facilities were reflected
in Griffin's financial statements until, in accordance with the Distribution
Agreement, this debt was assumed by GC Holdings at the end of the 1997 first
quarter. Prospectively, this debt will not be included in Griffin's capital
structure. Griffin has entered into a letter of intent with a commercial bank to
obtain a $10 million line of credit for general working capital purposes of its
landscape nursery business to supplement cash flow from operations, as required.
The line of credit is subject to completion of a definitive loan agreement.
Griffin recently received local regulatory approval to construct an
approximately 95,000 square foot warehouse facility in the New England
Tradeport, Griffin's industrial park located near Bradley International Airport
in the Hartford-Springfield corridor. Griffin intends to begin construction in
the 1997 fourth quarter with completion anticipated in the 1998 second quarter.
Construction costs, which will include investment in off-site infrastructure on
behalf of Windsor, Connecticut, are estimated to be approximately $4.5 million,
which will be financed from cash on hand. The above information 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 the construction of
the new warehouse. 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.
Management believes, based on the current level of operations and
anticipated growth, that cash flow from operations, cash on hand and, if needed,
borrowings under the anticipated credit facility or real estate financing will
be sufficient to finance its landscape nursery business and fund future real
estate projects. Over the longer term, selective mortgage placements and
additional credit facilities may also be required to fund capital projects.
Results of Operations
In the 1997 third quarter, net sales decreased $0.2 million to $10.9
million from $11.1 million in the 1996 third quarter. The decrease reflected
lower revenue in the real estate business, substantially offset by higher sales
in the landscape nursery business. The lower sales in the real estate business
principally reflected the effect of revenue included in the 1996 third quarter
from a real estate joint venture and a commercial building, both of which were
disposed of in the 1996 fourth quarter, and therefore not included in the 1997
third quarter revenue. The higher net sales in the landscape nursery business
reflected higher plant sales, principally at the wholesale sales and service
centers.
Cost of sales in the 1997 third quarter included a charge of $3.3 million
to reserve for certain plant inventories in the landscape nursery business.
Approximately 75% of the charge relates to field grown plant inventories in
which the current carrying cost will not be recovered as a result of
horticultural issues and market conditions. The remaining portion of the charge
relates principally to certain container grown plants originally potted in 1994
which have not matured properly. Imperial Nurseries is continuing to phase out
its field grown plant program and will concentrate its production resources on
its container plant facilities in Connecticut and Florida which are
substantially larger than its field grown inventory operation. Imperial is
replacing its field grown program by entering into strategic alliances and
contract growing agreements.
The 1997 third quarter operating loss of $3.0 million as compared to
operating profit of $0.2 million in the 1996 third quarter reflected the effect
of the inventory charge noted above. In the landscape nursery business,
excluding this charge, operating results were slightly lower than last year's
third quarter. Increased gross profit, due to the higher sales, was more than
offset by higher operating expenses. Operating results in the real estate
business were lower in the 1997 third quarter as compared to the 1996 third
quarter. The lower 1997 results reflect the prior year's quarter including
profit from a real estate joint venture and a commercial building that were
disposed of in the 1996 fourth quarter, partially offset by a provision for loss
on sale of the joint venture that was reflected in the 1996 third quarter.
Interest expense of $0.1 million in the 1997 third quarter was
substantially lower than the interest expense of $2.1 million in the 1996 third
quarter, reflecting the satisfaction in last year's fourth quarter of a
subordinated note payable (see below) and, on February 27, 1997, the assumption
by GC Holdings of all of Griffin's general corporate debt pursuant to the
Distribution Agreement between Griffin, Culbro and GC Holdings.
The other nonoperating income of $0.6 million in the 1996 third quarter
reflected accrued dividends and accretion income on the preferred stock of Eli
Witt previously held by Griffin. The accrued dividends and accretion income were
equal to interest on a subordinated note payable that was satisfied by exchange
of the Eli Witt preferred stock in November 1996. Interest on the subordinated
note payable was included in interest expense in the 1996 third quarter.
In the 1997 nine month period, net sales and other revenue increased $1.8
million to $34.5 million from $32.7 million in the 1996 nine month period. The
increase reflected higher net sales in the landscape nursery business, due
principally to increased volume at the wholesale sales and service centers and
increased sales of container plants from the Connecticut and Florida facilities.
The higher net sales in the landscape nursery business was partially offset by
lower revenue in the real estate business, principally due to the factors that
affected the third quarter sales in the real estate business noted above.
The operating loss of $2.7 million in the 1997 nine month period as
compared to an operating profit of $0.7 million in the 1996 nine month period
reflected the $3.3 million charge in the current year to reserve for unsaleable
inventories in the landscape nursery business. Excluding this item, operating
results for the 1997 nine month period in the landscape nursery business
increased over the prior year's nine month period. This increase reflected
higher net sales, principally at the wholesale sales and service centers,
partially offset by higher operating expenses. As a percentage of net sales,
operating expenses in this business remained constant in the 1997 nine month
period as compared to the 1996 nine month period. Operating results in the real
estate business for the 1997 nine month period were lower than the 1996 nine
month period due principally to the factors noted above that affected the third
quarter.
Equity income from Griffin's investment in Centaur Communications, Ltd.
increased to $0.5 million in the 1997 nine month period from break even in the
1996 nine month period. The increase reflected improved conditions in Centaur's
markets.
Interest expense of $0.9 million in the 1997 nine month period as compared
to $6.1 million in the 1996 nine month period reflected reduced debt due to the
factors described above. Included in the 1997 nine month interest expense is
$0.7 million of interest expense on general corporate debt incurred in the first
quarter. Such debt was assumed by GC Holdings on February 27, 1997, therefore,
all periods subsequent to that date will not include such interest expense.
Interest income of $0.1 million in the 1997 nine month period reflects earnings
on short-term investments of Griffin's cash.
The other nonoperating income of $1.5 million in the 1996 nine month
period was related to the preferred stock of Eli Witt noted above. The preferred
stock of Eli Witt was exchanged in the 1996 fourth quarter, therefore, there is
no nonoperating income reflected in 1997.
The results, net of tax benefits, from the discontinued operation in the
1996 third quarter reflect the provision for the loss on sale of CMS Gilbreth.
The 1996 nine month period reflects the provision for the loss on sale and
results of operations of CMS Gilbreth. The sale of CMS Gilbreth was completed in
November 1996.
PART II OTHER INFORMATION
Item 6. Reports on Form 8-K
Griffin filed Form 8-K on June 27, 1997 stating that the distribution of
the shares of Griffin to Culbro's shareholders would take place on July 3, 1997.
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: October 14, 1997 Frederick M. Danziger
PRESIDENT
/s/ Anthony J. Galici
--------------------------------------
DATE: October 14, 1997 Anthony J. Galici
VICE PRESIDENT, FINANCE