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.
MAY 30, 1998 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 JULY 3, 1998: 4,752,704
GRIFFIN LAND & NURSERIES, INC.
FORM 10Q
PART I - FINANCIAL INFORMATION PAGE
CONSOLIDATED STATEMENT OF OPERATIONS
13 WEEKS ENDED
MAY 30, 1998 AND MAY 31, 1997 3
CONSOLIDATED STATEMENT OF OPERATIONS
26 WEEKS ENDED
MAY 30, 1998 AND MAY 31, 1997 4
CONSOLIDATED BALANCE SHEET
MAY 30, 1998 AND NOVEMBER 29, 1997 5
CONSOLIDATED STATEMENT OF CASH FLOWS
26 WEEKS ENDED
MAY 30, 1998 AND MAY 31, 1997 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7-10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11-13
PART II - OTHER INFORMATION 14-15
SIGNATURES 16
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
FOR THE 13 WEEKS ENDED,
---------------------------
MAY 30, 1998 MAY 31, 1997
------------ ------------
Net sales and other revenue $23,707 $20,905
Cost and expenses:
Cost of goods sold 16,800 14,569
Selling, general and administrative expenses 3,966 3,634
------- -------
Operating profit 2,941 2,702
Interest income 54 50
Interest expense 36 67
------- -------
Income before income tax provision 2,959 2,685
Income tax provision 1,095 1,220
------- -------
Income before equity investments 1,864 1,465
Income from equity investments 574 524
------- -------
Net income $ 2,438 $ 1,989
======= =======
Basic net income per common share $ 0.51 $0.42(a)
======= =======
Diluted net income per common share $ 0.48 $0.41(a)
======= =======
(A) PER SHARE RESULTS FOR THE PRIOR YEAR ARE PRO FORMA. SEE NOTE 5.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 3
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
FOR THE 26 WEEKS ENDED,
---------------------------
MAY 30, 1998 MAY 31, 1997
------------ ------------
Net sales and other revenue $27,221 $23,630
Cost and expenses:
Cost of goods sold 19,295 16,512
Selling, general and administrative expenses 7,432 6,842
------- -------
Operating profit 494 276
Interest income 187 50
Interest expense 82 866
------- -------
Income (loss) before income tax benefit 599 (540)
Income tax provision (benefit) 222 (14)
------- -------
Income (loss) before equity investments 377 (526)
Income from equity investments 631 502
------- -------
Net income (loss) $ 1,008 $ (24)
======= =======
Basic net income (loss) per common share $ 0.21 $(0.01)(a)
======= ======
Diluted net income (loss) per common share $ 0.19 $(0.01)(a)
======= ======
(A) PER SHARE RESULTS FOR THE PRIOR YEAR ARE PRO FORMA. SEE NOTE 5.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 4
GRIFFIN LAND & NURSERIES, INC
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share data)
MAY 30, 1998 NOV. 29, 1997
------------ --------------
ASSETS (UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 2,606 $ 11,519
Accounts receivable, less allowance of $544 and
$456 11,853 4,745
Inventories 26,402 25,343
Deferred income taxes 1,636 1,858
Other current assets 1,245 1,903
-------- --------
TOTAL CURRENT ASSETS 43,742 45,368
Real estate held for sale or lease, net 27,795 26,429
Equity investments 15,692 15,061
Property and equipment, net 12,721 12,524
Other assets, including investment in real estate
joint venture of $3,163 and $3,261 3,349 3,368
-------- --------
TOTAL ASSETS $103,299 $102,750
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 4,804 $ 4,980
Long-term debt due within one year 255 244
-------- --------
TOTAL CURRENT LIABILITIES 5,059 5,224
Long-term debt 2,802 2,830
Other noncurrent liabilities 3,854 4,173
-------- --------
TOTAL LIABILITIES 11,715 12,227
-------- --------
Commitments and Contingencies (See Note 7)
Common stock, par value $0.01 per share,
authorized 10,000,000 shares, issued and
outstanding 4,752,704 shares 48 47
Additional paid in capital 93,002 92,950
Accumulated deficit (1,466) (2,474)
-------- --------
Total stockholders' equity 91,584 90,523
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $103,299 $102,750
======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 5
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
FOR THE 26 WEEKS ENDED,
---------------------------
MAY 30, 1998 MAY 31, 1997
OPERATING ACTIVITIES ------------ ------------
Net income (loss) $ 1,008 $ (24)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 1,027 1,004
Income from equity investments (631) (502)
Deferred income taxes 222 (302)
Changes in assets and liabilities, net of effect
of Liability Assumption in 1997:
Accounts receivable (7,196) (6,733)
Inventories (1,059) (534)
Accounts payable and accrued liabilities (176) (1,208)
Other, net 446 (191)
------- -------
Net cash used in operating activities (6,359) (8,490)
------- -------
INVESTING ACTIVITIES
Additions to real estate held for sale or lease (1,712) (564)
Additions to property and equipment (745) (628)
------- -------
Net cash used in investing activities (2,457) (1,192)
------- -------
FINANCING ACTIVITIES
Payments of debt (150) (35)
Increases in debt - 7,222
Proceeds from exercise of stock options 53 -
Net transactions with Culbro, excluding Liability
Assumption in 1997 - 66
------- -------
Net cash (used in) provided by financing activities (97) 7,253
------- -------
Net decrease in cash and cash equivalents (8,913) (2,429)
Cash and cash equivalents at beginning of period 11,519 7,371
------- -------
Cash and cash equivalents at end of period $ 2,606 $ 4,942
======= =======
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 1997
Financial Statements included in Form 10K as filed with the Securities and
Exchange Commission on February 27, 1998, 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 period
have been reflected.
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 (see Note 2).
The results of operations for the six-month period ended May 30, 1998, 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. CERTAIN TRANSACTIONS
On February 27, 1997, Griffin, Culbro and General Cigar Holdings, Inc. ("GC
Holdings"), a Culbro subsidiary, entered into a Distribution Agreement (the
"Distribution Agreement"), which provided for the transfer of certain assets
from Culbro to Griffin (the "Asset Transfers") and the Distribution of Griffin's
common stock to the existing shareholders of Culbro. 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 were recorded by Griffin 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"). Griffin's 1997 six-month results include interest
expense of approximately $0.7 million related to debt that was assumed by GC
Holdings as part of the Liability Assumption. Such debt was not part of
Griffin's capital structure subsequent to February 27, 1997.
As Griffin was a wholly-owned subsidiary of Culbro in the 1997 second
quarter and six-month period, 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. Griffin's 1997 second quarter and six-month
results of operations include general and administrative expenses of $0.5
million and $0.9 million, respectively, allocated by Culbro to Griffin for these
services. 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.
PAGE 7
3. LONG-TERM DEBT
On May 6, 1998, Imperial Nurseries, Inc. ("Imperial"), Griffin's subsidiary
in the landscape nursery business, entered into a Revolving Credit Agreement
(the "Credit Agreement") with a bank which provides a seasonally adjusted line
of credit up to $10 million to supplement Imperial's cash flow from operations,
as required. Borrowings under the Credit Agreement may be, at Imperial's
option, on an overnight basis or for periods of one, two, three or six months.
Overnight borrowings bear interest at the bank's prime rate. Borrowings of one
month and longer bear interest at the London Interbank Offered Rate plus a
margin of 1.75%. The Credit Agreement terminates in June, 1999, and there are
no compensating balance requirements. Imperial will pay a commitment fee of 1/4
of 1% per annum on unused borrowing capacity. The Credit Agreement is secured
principally by Imperial's accounts receivable and inventories, and is guaranteed
by Griffin. The Credit Agreement contains financial covenants with respect to
Imperial's net worth, fixed charge coverage (as defined), capital expenditures
and cash distributions to Griffin. There were no amounts borrowed under the
Credit Agreement in the second quarter.
4. STOCKHOLDERS' EQUITY
Changes in stockholders' equity for the six months ended May 30, 1998, are
as follows:
Common Additional Paid Accumulated
Stock in Capital Deficit
----- ---------- -------
Balance - November 29, 1997 $47 $92,950 $(2,474)
Net income - - 1,008
Exercise of stock options 1 52 -
--- ------- -------
Balance - May 30, 1998 $48 $93,002 $(1,466)
=== ======= =======
For the six months ended May 30, 1998, activity under the Culbro Stock
Option Plans and the Griffin Stock Option Plan was as follows:
CULBRO STOCK OPTION PLANS:
Options outstanding at November 29, 1997 253,721
Exercised (9,114)
-------
Options outstanding at May 30, 1998 244,607
=======
Option prices vary between $0.43 and $8.51
Number of option holders as of May 30, 1998 9
GRIFFIN STOCK OPTION PLAN:
Options outstanding at November 29, 1997 229,000
Cancelled (20,000)
-------
Options outstanding at May 30, 1998 209,000
=======
Option prices range between $13.88 and $14.69
Number of option holders 8
PAGE 8
5. PER SHARE RESULTS
Per share results for the 1997 second quarter and six-month period are pro
forma because Griffin was a wholly-owned subsidiary of Culbro during that
period. Per share results for the 1997 periods have been restated to present
basic and diluted per share results consistent with Griffin's required adoption
of Statement of Financial Accounting Standard No. 128, "Earnings per Share" at
the beginning of fiscal 1998. Basic and diluted per share results were based on
the following information:
Second Quarter Six Months
1998 1997 1998 1997
---- ---- ---- ----
Net income (loss) as reported for computation of
basic per share results $2,438 $1,989 $1,008 $(24)
Adjustment to net income for assumed exercise of
options by stockholders of equity investee (41) (7) (49) (7)
------ ------ ------ ----
Adjusted net income (loss) for computation of diluted
per share results $2,397 $1,982 $ 959 $(31)
====== ====== ====== ====
Second Quarter Six Months
1997 1997
1998 (pro forma) 1998 (pro forma)
---- ----------- ---- -----------
Weighted average shares outstanding for computation
of basic per share results 4,747,000 4,734,000 4,745,000 4,716,000
Incremental shares from assumed exercise of stock
options 201,000 138,000 196,000 -
--------- --------- --------- ---------
Adjusted weighted average shares for computation of
diluted per share results 4,948,000 4,872,000 4,941,000 4,716,000
========= ========= ========= =========
6. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
INVENTORIES
Inventories consist of:
MAY 30, 1998 NOV. 29, 1997
------------ -------------
Nursery stock $23,544 $23,224
Finished goods 1,748 1,255
Materials and supplies 1,110 864
------- -------
$26,402 $25,343
======= =======
PAGE 9
PROPERTY AND EQUIPMENT
Property and equipment consist of:
MAY 30, 1998 NOV. 29, 1997
------------ -------------
Land and improvements $ 6,333 $ 6,205
Buildings 3,878 3,824
Machinery and equipment 13,248 12,714
-------- --------
23,459 22,743
Accumulated depreciation (10,738) (10,219)
-------- --------
$ 12,721 $ 12,524
======== ========
REAL ESTATE HELD FOR SALE OR LEASE
Real estate held for sale or lease consists of:
MAY 30, 1998 NOV. 29, 1997
------------ -------------
Land $ 4,806 $ 4,808
Land improvements 11,045 10,967
Buildings 19,074 17,438
------- -------
34,925 33,213
Accumulated depreciation (7,130) (6,784)
------- -------
$27,795 $26,429
======= =======
7. COMMITMENTS AND CONTINGENCIES
As a result of the Asset Transfers last year, Griffin acquired the 50.1%
interest in Eli Witt previously held by Culbro. In 1993 and 1994, Culbro, Eli
Witt and other parties engaged in two complex acquisitions and reorganizations,
pursuant to which Culbro received significant distributions from Eli Witt to
repay debt, including substantial amounts Culbro had previously borrowed from
unaffiliated third parties to fund Eli Witt's business. Culbro subsequently
loaned $5 million to Eli Witt. In 1996, Eli Witt filed for protection under
Chapter 11 of the Federal Bankruptcy Law. In connection with such filing, Eli
Witt sold all of its operating assets to another wholesale distributor in March
1997. Shareholders of Eli Witt did not receive any proceeds from the sale.
These transactions (including the transfer of funds to Culbro) were reviewed by
Eli Witt's creditors and other parties in interest in connection with Eli Witt's
Chapter 11 filing. On May 21, 1998, the United States Bankruptcy Court approved
a motion whereby Griffin released all of its remaining claims against Eli Witt
in exchange for the creditors of Eli Witt releasing Griffin from any liability
in connection with the Chapter 11 filing by Eli Witt in 1996. The claims that
Griffin released had been fully reserved for by Griffin in previous years,
therefore there was no effect on Griffin's 1998 financial statements as a result
of the Bankruptcy Court ruling.
On April 22, 1998, Griffin agreed to purchase 500,000 shares of common
stock of Centaur from a current stockholder of Centaur for approximately $3.0
million. This purchase is in connection with transactions whereby the
stockholder who will sell Griffin the Centaur common stock will also sell its
remaining Centaur common stock to a third party, and Centaur will purchase its
common stock from certain other stockholders. As a result of these
transactions, Griffin's ownership in Centaur's common stock is expected to
increase to approximately 34%. These transactions are expected to be completed
in the third quarter.
PAGE 10
GRIFFIN LAND & NURSERIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SECOND QUARTER
Griffin's net sales and other revenue were $23.7 million in the 1998 second
quarter as compared to net sales and other revenue of $20.9 million in the 1997
second quarter. The overall increase of $2.8 million was due to net sales at
Imperial, which increased $2.9 million to $23.0 million in the 1998 second
quarter from $20.1 million in the 1997 second quarter. Imperial's net sales
increase principally reflected higher volume at its wholesale sales and service
centers and higher volume of plants shipped from its Connecticut and Florida
container production facilities. 1998 second quarter net sales and other
revenue at Griffin's real estate division, Griffin Land, were $0.7 million as
compared to $0.8 million in the prior year's second quarter. The decrease
reflects a land sale in the 1997 second quarter, with no comparable sales in the
current quarter.
Griffin's operating profit (before interest) was $2.9 million in the 1998
second quarter as compared to $2.7 million in the 1997 second quarter. Imperial
generated operating profit of $3.6 million in the 1998 second quarter as
compared to $3.2 million in the 1997 second quarter. The increased sales volume
at Imperial generated an increase of $0.7 million in gross profit to $6.6
million in the 1998 second quarter from $5.9 million in the 1997 second quarter.
Imperial's gross margins declined to 29.0% in the 1998 second quarter from 29.5%
in the 1997 second quarter, due principally to lower margins on sales at the
wholesale sales and service centers. The higher gross profit was partially
offset by higher operating expenses, although operating expenses were 13.3% of
net sales in the 1998 second quarter as compared to 13.8% of net sales in the
1997 second quarter.
Griffin Land incurred an operating loss of $0.1 million in the 1998 second
quarter, versus break even results in last year's second quarter. The slightly
lower results principally reflect the effect of a gain on a land sale in the
1997 second quarter partially offset by higher rental revenue in the 1998 second
quarter as compared to the 1997 second quarter. Griffin's general corporate
expense was $0.5 million in both the 1998 and 1997 second quarters.
Griffin's interest expense in the 1998 second quarter was slightly lower
than the 1997 second quarter as a result of the capitalization of interest on
the construction of a warehouse facility that took place in the 1998 second
quarter. The lower effective tax rate in the 1998 second quarter as compared to
the 1997 second quarter reflects the effect of the reclassification of the
income for equity investments last year.
SIX MONTHS
In the six month period, Griffin's net sales increased $3.6 million from
$23.6 million in 1997 to $27.2 million in 1998. The increase was due to higher
net sales at Imperial, which increased $3.7 million to $25.8 million in the 1998
six month period from $22.1 million in the comparable 1997 six month period.
The sales increase at Imperial reflected increased sales volume from its
wholesale sales and service centers and increased sales volume of containerized
plants shipped from its Connecticut and Florida production facilities. In the
1998 six month period, net sales at Griffin Land decreased $0.1 million to $1.4
million in 1998 from $1.5 million in 1997. The decrease reflected net sales
from a land sale in the 1997 six month period partially offset by higher rental
revenue in the 1998 six month period.
Griffin's operating profit (before interest) in the 1998 six month period
increased $0.2 million to $0.5 million as compared to $0.3 million in the 1997
six month period. Operating profit at Imperial increased $0.4 million to $1.7
million in the 1998 six month period from $1.3 million in the comparable 1997
period. Imperial's higher sales volume resulted in a $1.0 million increase in
gross profit to $7.5 million in the 1998 six month period from $6.5 million in
the 1997 six month period. The increased gross profit was partially offset by
higher operating expenses, which increased by $0.5 million to $5.7 million in
the 1998 six month period from $5.2 million in the
PAGE 11
1997 six month period. The increased expenses principally reflected higher
selling expenses related to the increased sales volume. Operating expenses were
22.2% of net sales in the 1998 six month period as compared to 23.5% in the 1997
six month period. Griffin Land incurred an operating loss in the 1998 six month
period of $0.3 million as compared to an operating loss of $0.2 million in the
1997 six month period. The change principally reflects the gain on a land sale
in the 1997 six month period. Griffin's general corporate expense was $0.9
million in the 1998 and 1997 six month periods.
Griffin's interest expense decreased to $0.1 million in the 1998 six month
period from $0.9 million in the 1997 six month period. The decrease reflected
the inclusion in 1997 of interest expense of $0.7 million related to Culbro's
general corporate debt that was assumed by General Cigar Holdings at the end of
the 1997 first quarter (see Note 2).
Interest income increased from $0.1 million in the 1997 six month period to
$0.2 million in the 1998 six month period, reflecting a higher average cash
balance in 1998 as compared to 1997. The change in the effective tax rate from
the 1997 six month period to the 1998 six month period reflects the effect of
the reclassification of income from equity investments.
Income from equity investments increased to $0.6 million in the 1998 six
month period from $0.5 million in the 1997 six month period due to improved
results from Centaur's magazine publishing business.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flow used in operating activities was $6.4 million in the 1998
six month period as compared to net cash flow used in operating activities of
$8.5 million in the 1997 six month period. The reduced use of cash reflects
increased results of operations and net favorable changes in working capital
items, principally a smaller decrease in accounts payable as compared to last
year.
Net cash flow used in investing activities reflected an increase in
additions to real estate held for sale, due to the construction of a new
warehouse facility by Griffin Land, and higher capital expenditures in the
landscape nursery business. The increased additions to property and equipment
principally reflected expenditures for equipment at Imperial's production
facilities in Connecticut and Florida. Net cash used in financing activities
principally reflects the payment of Griffin Land's mortgages and capital leases
for equipment used in the landscape nursery business. Net cash provided by
financing activities in the 1997 six month period principally reflected
borrowings under Culbro's general corporate debt prior to such debt being
assumed by GC Holdings on February 27, 1997.
On May 6, 1998, Imperial entered into a Revolving Credit Agreement with a
bank which provides a seasonally adjusted line of credit of up to $10 million to
supplement Imperial's cash flow from operations, as required. The Credit
Agreement is secured principally by Imperial's accounts receivable and
inventories, and is guaranteed by Griffin. The Credit Agreement contains
financial covenants with respect to Imperial's net worth, fixed charge coverage
(as defined), capital expenditures and cash distributions to Griffin. There
were no borrowings under the Credit Agreement in the second quarter.
Griffin Land's construction of an approximately 98,000 square foot
warehouse facility in the New England Tradeport, Griffin's industrial park
located near Bradley International Airport in the Hartford-Springfield corridor,
was substantially completed in the 1998 second quarter. Construction costs,
which include an investment in off-site infrastructure on behalf of Windsor,
Connecticut, were approximately $4.5 million, which are being financed from cash
on hand and are projected to be substantially paid by the end of the third
quarter. This facility is currently 25% leased. Griffin Land recently
authorized the construction of an approximately 100,000 square foot warehouse to
be located nearby the recently completed facility in the New England Tradeport.
In the 1998 second quarter, Griffin agreed to purchase 500,000 additional
shares of Centaur common stock from a current Centaur stockholder for
approximately $3.0 million. The purchase of Centaur common stock by Griffin is
part of an overall transaction in which several current Centaur stockholders
will sell their common stock to a new stockholder or to Centaur. Griffin's
common equity interest in Centaur is expected to increase to approximately 34%
as a result of these transactions. Griffin's purchase of the Centaur common
stock is expected to be completed in the 1998 third quarter.
PAGE 12
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 Imperial's Credit Agreement or real estate mortgage placements
will be sufficient to finance its landscape nursery business, fund future real
estate projects and consummate the additional investment in Centaur.
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 the new warehouse construction and the additional
investment in Centaur. 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 13
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Prior to July 3, 1997, Griffin was a wholly-owned subsidiary of Culbro.
As a result of the transaction pursuant to which Griffin became a public
company, Griffin acquired Culbro's 50.1% common stock interest in Eli Witt.
In November 1996, Eli Witt filed for protection under Chapter 11 of Title 11
of the United States Code (the Bankruptcy Code). Prior to February 1993, Eli
Witt was a wholly-owned subsidiary of Culbro and filed consolidated tax
returns with Culbro. Culbro, Eli Witt and other parties engaged in two
complex acquisitions and reorganizations in 1993 and 1994, pursuant to which
Culbro received material distributions. The distributions made to Culbro in
February 1993 included approximately $46 million in repayment of
inter-company liabilities to Culbro and approximately $42 million in
repayment of capital. The integration of a subsequent acquisition was not
successful. Culbro subsequently loaned $5 million to Eli Witt. These
transactions (including the transfer of funds to Culbro) were reviewed by Eli
Witt creditors and other parties in interest in connection with the Chapter
11 filing.
On May 21, 1998, the United States Bankruptcy Court approved a motion
whereby Griffin released all of its remaining claims against Eli Witt in
exchange for a release of any and all claims (including claims related to the
transactions described in the immediately preceding paragraph) that Eli Witt,
Eli Witt's estate or any person or entity that seeks to assert claims by or
through Eli Witt or its estate may have had against Culbro, Griffin and their
successors and assigns.
Item 4 Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Stockholders: May 20, 1998
(b) The following were elected as Directors at the Annual meeting:
(c)(i) 1) Mr. Winston J. Churchill, Jr. was elected a Director
for 1998 with 4,492,406 votes in favor, 16,131 opposed
and 235,053 not voting.
2) Mr. Edgar M. Cullman was elected a Director for 1998
with 4,487,185 votes in favor, 21,352 opposed and
235,053 not voting.
3) Mr. Frederick M. Danziger was elected a Director for
1998 with 4,487,306 votes in favor, 21,231 opposed and
235,053 not voting.
4) Mr. John L. Ernst was elected a Director for 1998 with
4,487,306 votes in favor, 21,231 opposed and 235,053
not voting.
5) Mr. David F. Stein was elected a Director for 1998 with
4,492,306 votes in favor, 16,231 opposed and 235,053
not voting.
(ii) The selection of Price Waterhouse LLP as independent
accountants for 1998 was approved by 4,501,330 votes in
favor and 1,902 opposed with 5,305 abstentions and 235,053
not voting.
Item 6 Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit No. Description
----------- -----------
10.16 Revolving Credit Agreement and Guaranty dated
May 6, 1998
27 Financial Data Schedule
PAGE 14
(b) Reports on Form 8K
(1) Griffin filed Form 8K dated April 29, 1998, stating
that Griffin's common stock had been accepted for
listing on the Nasdaq National Market, effective for
trading on April 29, 1998.
(2) Griffin filed Form 8K dated May 21, 1998, announcing
the United States Bankruptcy Court's approval of a
motion to release Griffin from any liability in
connection with the Chapter 11 filing of Eli Witt in
1996.
PAGE 15
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
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DATE: July 13, 1998 FREDERICK M. DANZIGER
PRESIDENT
/S/ ANTHONY J. GALICI
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DATE: July 13, 1998 ANTHONY J. GALICI
VICE PRESIDENT, FINANCE
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