(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 28, 2005
OR
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 AND 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________to ________
Commission File Number 0-16130
|
NORTHLAND CRANBERRIES, INC. |
| (Exact name of registrant as specified in its charter) |
| Wisconsin |
39-1583759 | |
| (State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
|
2321 West Grand Avenue P.O. Box 8020 Wisconsin Rapids, Wisconsin 54495-8020 |
| (Address of Principal Executive Offices) |
Registrant's telephone number, including area code (715) 424-4444
|
Not Applicable
|
| (Former name, former address and former fiscal year, if changed since last report) |
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
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2). Yes No X
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
| Class A Common Stock | April 14, 2005 | 94,091,633 |
| PART I. | FINANCIAL INFORMATION | PAGE |
Item 1. |
Financial Statements | 3 |
| Condensed Consolidated Balance Sheets | 3 | |
| Condensed Consolidated Statements of Income | 4 | |
| Condensed Consolidated Statements of Cash Flows | 5 | |
| Condensed Consolidated Statement of Shareholders' Equity | 6 | |
| Notes to Condensed Consolidated Financial Statements | 7 - 14 | |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
15 - 22 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 22 |
Item 4. |
Controls and Procedures | 22 |
PART II. |
OTHER INFORMATION | |
Item 1. |
Legal Proceedings | 23 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 23 |
Item 3. |
Defaults Upon Senior Securities | 23 |
Item 4. |
Submission of Matters to a Vote of Security Holders | 23 |
Item 6. |
Exhibits | 23 |
| SIGNATURE | 24 | |
| Exhibit Index | 25 |
2
| PART I –FINANCIAL INFORMATION |
| ITEM 1. FINANCIAL STATEMENTS. |
|
NORTHLAND
CRANBERRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (Unaudited) |
| February 28, 2005 |
August 31, 2004 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 999 | $ | 2,442 | ||||
| Accounts receivable - net | 1,072 | 4,418 | ||||||
| Note receivable and accounts receivable - other | 3,014 | 0 | ||||||
| Inventories | 20,745 | 23,035 | ||||||
| Prepaid expenses and other current assets | 1,017 | 767 | ||||||
| Deferred income taxes | 3,175 | 6,194 | ||||||
| Total current assets | 30,022 | 36,856 | ||||||
| Property and equipment - net | 46,386 | 54,527 | ||||||
| Other assets | 809 | 854 | ||||||
| Debt issuance cost - net | 349 | 1,349 | ||||||
| Total assets | $ | 77,566 | $ | 93,586 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,621 | $ | 5,091 | ||||
| Accrued liabilities | 8,507 | 3,221 | ||||||
| Current maturities of long-term debt: | ||||||||
| Outstanding principal payments | 13,723 | 1,723 | ||||||
| Future interest payments from debt restructuring | 186 | 270 | ||||||
| Current maturities of long-term debt | 13,909 | 1,993 | ||||||
| Total current liabilities | 29,037 | 10,305 | ||||||
Long-term debt, less current maturities: | ||||||||
| Outstanding principal payments | 8,053 | 18,263 | ||||||
| Future interest payments from debt restructuring | 1,076 | 1,109 | ||||||
| Long-term debt, less current maturities | 9,129 | 19,372 | ||||||
| Total liabilities | 38,166 | 29,677 | ||||||
| Shareholders' equity: | ||||||||
| Common stock - Class A, $.01 par value, 94,091,633 shares | ||||||||
| issued and outstanding | 941 | 941 | ||||||
| Redeemable preferred stock - Series B, $.01 par value, 100 shares issued | ||||||||
| and outstanding | 0 | 0 | ||||||
| Additional paid-in capital | 154,902 | 154,902 | ||||||
| Accumulated deficit | (116,443 | ) | (91,934 | ) | ||||
| Total shareholders' equity | 39,400 | 63,909 | ||||||
| Total liabilities and shareholders' equity | $ | 77,566 | $ | 93,586 | ||||
See notes to condensed consolidated financial statements.
3
| For the Three Months Ended | For the Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 | |||||||||||
Net revenues |
$ | 7,782 | $ | 3,691 | $ | 17,709 | $ | 13,203 | ||||||
| Cost of sales | (5,784 | ) | (1,967 | ) | (11,655 | ) | (7,156 | ) | ||||||
| Gross profit | 1,998 | 1,724 | 6,054 | 6,047 | ||||||||||
Selling, general and administrative expenses | (1,182 | ) | (2,981 | ) | (4,091 | ) | (4,992 | ) | ||||||
| Write down of long-lived assets and assets | ||||||||||||||
| held for sale | 0 | (558 | ) | 0 | (558 | ) | ||||||||
| Gain (loss) on disposal of property & equipment (Note 4) | 32 | (326 | ) | 7,731 | (326 | ) | ||||||||
| Other income | 0 | 3,000 | 0 | 3,000 | ||||||||||
Income from operations | 848 | 859 | 9,694 | 3,171 | ||||||||||
Interest expense | (947 | ) | (621 | ) | (1,810 | ) | (1,256 | ) | ||||||
| (Loss) gain on debt extinguishment | (1,731 | ) | 5,339 | (1,731 | ) | 5,339 | ||||||||
| Interest income | 22 | 13 | 102 | 26 | ||||||||||
| Income (loss) before income taxes | (1,808 | ) | 5,590 | 6,255 | 7,280 | |||||||||
Income tax expense | (109 | ) | (20 | ) | (3,133 | ) | (20 | ) | ||||||
Net income (loss) from continuing operations | (1,917 | ) | 5,570 | 3,122 | 7,260 | |||||||||
| Discontinued operations | ||||||||||||||
| Income (loss) from discontinued operations | 210 | 961 | (854 | ) | 1,620 | |||||||||
Gain on disposition of discontinued operations | 5,112 | 0 | 5,112 | 0 | ||||||||||
Net income | $ | 3,405 | $ | 6,531 | $ | 7,380 | $ | 8,880 | ||||||
Net income per common share: | ||||||||||||||
| Basic: | $ | 0.04 | $ | 0.07 | $ | 0.08 | $ | 0.10 | ||||||
| Diluted: | $ | 0.03 | $ | 0.06 | $ | 0.07 | $ | 0.09 | ||||||
Shares used in computing net income per share: | ||||||||||||||
| Basic | 94,091,633 | 93,868,068 | 94,091,633 | 92,708,324 | ||||||||||
| Diluted | 100,851,645 | 100,914,582 | 100,975,372 | 100,848,579 | ||||||||||
See notes to condensed consolidated financial statements.
4
| For the Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| February 28, 2005 |
February 29, 2004 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 7,380 | $ | 8,880 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization of property and equipment | 1,464 | 1,756 | ||||||
| Amortization of debt issuance costs and debt discount | 970 | 557 | ||||||
| Provision for deferred income taxes | 3,019 | 0 | ||||||
| Provision for write down of assets held for sale | 0 | 558 | ||||||
| Loss on disposal of property and equipment | 0 | 326 | ||||||
| Gain on transaction with Ocean Spray | (7,731 | ) | 0 | |||||
| Gain on disposal of business | (5,112 | ) | 0 | |||||
| (Gain) loss on debt extinguishment | 1,731 | (5,339 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Receivables, prepaid expenses and other current assets | (1,813 | ) | 3,937 | |||||
| Inventories | (2,624 | ) | (10,012 | ) | ||||
| Accounts payable and accrued liabilities | 10,254 | 2,571 | ||||||
| Net cash provided by operating activities | 7,538 | 3,234 | ||||||
| Investing activities: | ||||||||
| Issuance of note receivable | 0 | (800 | ) | |||||
| Property and equipment purchases | (30 | ) | (733 | ) | ||||
| Proceeds from disposal of business | 9,701 | 0 | ||||||
| Proceeds from disposals of property and equipment | 12,149 | 3,997 | ||||||
| Net cash provided by investing activities | 21,820 | 2,464 | ||||||
| Financing activities: | ||||||||
| Payments on long-term debt and other obligations | (13,912 | ) | (12,164 | ) | ||||
| Proceeds from issuance of long-term debt | 15,000 | 0 | ||||||
| Dividends paid | (31,889 | ) | 0 | |||||
| Proceeds from issuance of common stock | 0 | 26 | ||||||
| Net cash used in financing activities | (30,801 | ) | (12,138 | ) | ||||
| Net increase in cash and cash equivalents | (1,443 | ) | (6,440 | ) | ||||
| Cash and cash equivalents, beginning of period | 2,442 | 9,058 | ||||||
| Cash and cash equivalents, end of period | $ | 999 | $ | 2,618 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION- | $ | 953 | $ | 355 | ||||
| Cash paid during the three months for: | ||||||||
| Interest | ||||||||
See notes to condensed consolidated financial statements.
5
| Common Stock - Class A |
Additional Paid-in Capital |
Accumulated Deficit |
Total Shareholders' Equity | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance, August 31, 2004 | $ | 941 | $ | 154,902 | $ | (91,934 | ) | $ | 63,909 | |||||
Cash dividend paid | ||||||||||||||
| ($.33 per share) | (31,889 | ) | (31,889 | ) | ||||||||||
Net income | 0 | 0 | 7,380 | 7,380 | ||||||||||
Balance, February 28, 2005 | $ | 941 | $ | 154,902 | $ | (116,443 | ) | $ | 39,400 | |||||
See notes to condensed consolidated financial statements.
6
| 1. | BASIS OF PRESENTATION |
| The accompanying condensed consolidated financial statements have been prepared by Northland Cranberries, Inc. (collectively with its subsidiaries, the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission and reflect normal and recurring adjustments, which are, in the opinion of the Company, considered necessary to present fairly the financial position of the Company as of February 28, 2005 and August 31, 2004, its related results of operations for the three and six months ended February 28, 2005 and February 29, 2004 and its cash flows for the six months ended February 28, 2005 and February 29, 2004. As permitted by these regulations, these condensed consolidated financial statements do not include all information required by accounting principles generally accepted in the United States of America to be included in an annual set of financial statements, however, the Company believes that the disclosures are adequate to make the information presented not misleading. The Company’s condensed consolidated balance sheet as of August 31, 2004 was derived from the Company’s latest audited consolidated financial statements. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the latest audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2004. |
| Business Risks — Ocean Spray Cranberries, Inc. (“Ocean Spray”), the industry leader, which controls the bulk of the cranberry supply in North America, effectively determines prices paid to growers for raw cranberries. In addition, the Company is obligated during the next ten years to sell to Ocean Spray all cranberry concentrate not otherwise sold by the Company to Apple & Eve, LLC (“Apple & Eve”) for use in its Northland branded juice business for a purchase price equal to the average price of concentrate sold by Ocean Spray to third party buyers during the prior six month period (see Notes 3 and 4). |
| Net Income Per Common Share – Net income per common share is calculated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share.” Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding increased by the number of potential dilutive common shares using the treasury stock method. |
| The weighted average shares outstanding used in calculating net income per common share for the three and six months ended February 28, 2005 and February 29, 2004 consisted of the following: |
7
| For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 |
|||||||||||||||||
| Basic shares outstanding | 94,091,633 | 93,868,068 | 94,091,633 | 92,708,324 | ||||||||||||||||
| Effect of dilution: | ||||||||||||||||||||
| Warrants | & | |||||||||||||||||||