<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
<TABLE>
<S> <C> <C>
- --------------------------- ---------------------------
For the 13 Weeks Ended Commission File No.
MAY 31, 1997 0-29288
</TABLE>
GRIFFIN LAND & NURSERIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-0868496
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
204 WEST NEWBERRY ROAD, BLOOMFIELD CT 06002
(Address of principal executive offices) (Zip Code)
</TABLE>
(860) 286-7660
(Registrant's Telephone Number including Area Code)
(Former name, former address and former fiscal year, NOT APPLICABLE
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____ No_X_
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT JULY 8, 1997: 4,559,132
- --------------------------------------------------------------------------------
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<PAGE>
GRIFFIN LAND & NURSERIES, INC.
FORM 10Q
<TABLE>
<CAPTION>
PART I / / FINANCIAL INFORMATION PAGE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
Consolidated Statement of Operations
13 Weeks Ended
May 31, 1997 and June 1, 1996............................................................................. 3
Consolidated Statement of Operations
26 Weeks Ended
May 31, 1997 and June 1, 1996............................................................................. 4
Consolidated Balance Sheet
May 31, 1997 and November 30, 1996........................................................................ 5
Consolidated Statement of Cash Flows
26 Weeks Ended
May 31, 1997 and June 1, 1996............................................................................. 6
Notes to Consolidated Financial Statements................................................................ 7-11
Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................................. 12-13
SIGNATURES................................................................................................ 14
</TABLE>
2
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Net sales and other revenue........................................................... $ 20,905 $ 18,238
Cost and expenses:
Cost of goods sold.................................................................... 14,569 12,748
Selling, general and administrative expenses.......................................... 3,634 3,401
------------ ------------
Operating profit...................................................................... 2,702 2,089
Income from equity investment in Centaur Communications, Ltd.......................... 524 175
Other nonoperating income............................................................. -- 587
Interest income....................................................................... 50 --
Interest expense...................................................................... 67 2,112
------------ ------------
Income before income taxes............................................................ 3,209 739
Income tax provision.................................................................. 1,220 284
------------ ------------
Income from continuing operations..................................................... 1,989 455
Income from discontinued operation, net of taxes of $206.............................. -- 272
------------ ------------
Net income............................................................................ $ 1,989 $ 727
------------ ------------
------------ ------------
Pro forma income per common share from continuing operations.......................... $ 0.41 $ 0.10
Pro forma income per common share from discontinued operation......................... -- 0.06
------------ ------------
Pro forma net income per common share................................................. $ 0.41 $ 0.16
------------ ------------
------------ ------------
Pro forma weighted average common shares and equivalents outstanding.................. 4,872,000 4,669,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 26 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Net sales and other revenue........................................................... $ 23,630 $ 21,590
Cost and expenses:
Cost of goods sold.................................................................... 16,512 15,156
Selling, general and administrative expenses.......................................... 6,842 5,969
------------ ------------
Operating profit...................................................................... 276 465
Income from equity investment in Centaur Communications, Ltd.......................... 502 157
Other nonoperating income, net........................................................ -- 924
Interest income....................................................................... 50 --
Interest expense...................................................................... 866 4,014
------------ ------------
Loss before income tax benefit........................................................ (38) (2,468)
Income tax benefit.................................................................... (14) (956)
------------ ------------
Loss from continuing operations....................................................... (24) (1,512)
Income from discontinued operation, net of taxes of $527.............................. -- 768
------------ ------------
Net loss.............................................................................. $ (24) $ (744)
------------ ------------
------------ ------------
Pro forma loss per common share from continuing operations............................ $ (0.01) $ (0.33)
Pro forma income per common share from discontinued operation......................... -- 0.17
------------ ------------
Pro forma net loss per common share................................................... $ (0.01) $ (0.16)
------------ ------------
------------ ------------
Pro forma weighted average common shares and equivalents outstanding.................. 4,837,000 4,646,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31, 1997 NOVEMBER 30, 1996
------------ -----------------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................................... $ 4,942 $ 7,371
Accounts receivable, less allowance of $389 and $302............................ 10,577 3,962
Inventories..................................................................... 28,064 27,530
Deferred income taxes........................................................... 2,783 4,047
Other current assets............................................................ 687 1,158
------------ --------
TOTAL CURRENT ASSETS............................................................ 47,053 44,068
Property and equipment, net..................................................... 12,624 12,676
Real estate held for sale or lease, net......................................... 27,026 26,862
Investment in Centaur Communications, Ltd....................................... 15,197 14,695
Other assets, including investment in real estate joint venture of $3,290 and
$3,403........................................................................ 3,426 3,474
------------ --------
TOTAL ASSETS.................................................................... $ 105,326 $ 101,775
------------ --------
------------ --------
LIABILITIES AND CULBRO INVESTMENT
CURRENT LIABILITIES
Accounts payable and accrued liabilities........................................ $ 4,362 $ 7,093
Long-term debt due within one year.............................................. 240 277
------------ --------
TOTAL CURRENT LIABILITIES....................................................... 4,602 7,370
Long-term debt.................................................................. 2,870 38,846
Other noncurrent liabilities.................................................... 2,742 8,110
------------ --------
TOTAL LIABILITIES............................................................... 10,214 54,326
CULBRO INVESTMENT............................................................... 95,112 47,449
------------ --------
TOTAL LIABILITIES AND CULBRO INVESTMENT......................................... $ 105,326 $ 101,775
------------ --------
------------ --------
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 26 WEEKS ENDED,
----------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
-------------- ------------
OPERATING ACTIVITIES
Net loss............................................................................ $ (24) $ (1,512)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization....................................................... 1,004 1,281
Income from discontinued operation, before tax...................................... -- (1,295)
Income from equity investment in Centaur............................................ (502) (157)
Discount and interest on subordinated note.......................................... -- 1,174
Accretion and dividend income on Series B preferred stock........................... -- (1,174)
Deferred income taxes............................................................... (302) 788
Changes in assets and liabilities, net of effect of Liability Assumption in 1997:
Accounts receivable................................................................. (6,733) (5,295)
Inventories......................................................................... (534) (809)
Real estate held for sale or lease.................................................. (564) 562
Accounts payable and accrued liabilities............................................ (1,208) (2,152)
Other, net.......................................................................... (191) 929
-------------- ------------
Net cash used in operating activities of continuing operations...................... (9,054) (7,660)
Cash provided by operating activities of discontinued operation..................... -- 462
-------------- ------------
Net cash used in operating activities............................................... (9,054) (7,198)
-------------- ------------
INVESTING ACTIVITIES
Additions to property and equipment................................................. (628) (370)
Investing activities of discontinued operation...................................... -- (677)
-------------- ------------
Net cash used in investing activities............................................... (628) (1,047)
-------------- ------------
FINANCING ACTIVITIES
Net transactions with Culbro, excluding Liability Assumption........................ 66 (5,283)
Payments of debt.................................................................... (35) (68)
Increase in debt.................................................................... 7,222 12,000
-------------- ------------
Net cash provided by financing activities........................................... 7,253 6,649
-------------- ------------
Net decrease in cash and cash equivalents........................................... (2,429) (1,596)
Cash and cash equivalents at beginning of period.................................... 7,371 7,687
-------------- ------------
Cash and cash equivalents at end of period.......................................... $ 4,942 $ 6,091
-------------- ------------
-------------- ------------
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
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"), a wholly owned subsidiary of Culbro Corporation ("Culbro"),
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 six-month periods ended
May 31, 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
Griffin, Culbro and General Cigar Holdings, Inc. ("GC Holdings"), a Culbro
subsidiary, entered into a Distribution Agreement (the "Distribution Agreement")
on February 27, 1997. Pursuant to the Distribution Agreement, Culbro transferred
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 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 (the "Distribution") 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 was approved by
Culbro's Board of Directors on June 16, 1997. Each Culbro shareholder received
one share of Griffin common stock for each share of Culbro common stock. The
Distribution was completed on July 3, 1997.
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.
7
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
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 May 31, 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
<TABLE>
<CAPTION>
FOR THE 26 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Net sales and other revenue........................................................... $ 23,630 $ 21,590
------------ ------------
Operating profit...................................................................... 276 465
Income from equity investment in Centaur Communications, Ltd.......................... 502 157
Interest expense, net................................................................. 86 272
------------ ------------
Income before income tax provision.................................................... 692 350
Income tax provision.................................................................. 271 144
------------ ------------
Income from continuing operations..................................................... $ 421 $ 206
------------ ------------
------------ ------------
Income per common share from continuing operations.................................... $ 0.09 $ 0.04
------------ ------------
------------ ------------
Weighted average common shares and equivalents outstanding............................ 4,837,000 4,646,000
------------ ------------
------------ ------------
</TABLE>
4. RELATED PARTY TRANSACTIONS
CULBRO INVESTMENT
Griffin maintained an intercompany account with Culbro in which intercompany
transactions, including cash transfers and the liability for employee benefit
and insurance costs and allocated general and administrative expenses described
below, were recorded. The balance in the intercompany account at the end of each
period presented has been included in Culbro Investment in the consolidated
balance sheet. The Culbro Investment account also includes the cumulative net
earnings of Griffin and its capital stock. Subsequent to the July 3, 1997
Distribution, the balance in the Culbro Investment account will be reclassified
to capital and additional paid in capital in Griffin's consolidated balance
sheet. The changes in the Culbro Investment account are summarized as follows:
8
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
4. RELATED PARTY TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE 26 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Balance beginning of period........................................................... $ 47,449 $ 61,299
Net loss.............................................................................. (24) (744)
------------ ------------
47,425 60,555
------------ ------------
Transactions with Culbro:
Liability Assumption.................................................................. 47,621 --
Net operating cash flow transferred to Culbro......................................... (821) (5,964)
Allocated Culbro general and administrative expenses.................................. 901 869
Intercompany income tax benefits...................................................... (14) (956)
------------ ------------
Total transactions with Culbro, net................................................... 47,687 (6,051)
------------ ------------
Balance end of period................................................................. $ 95,112 $ 54,504
------------ ------------
------------ ------------
</TABLE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
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 $0.5 million and $0.9 million in the three-month and six-month
periods ended May 31, 1997 and $0.4 million and $0.9 million in the three-month
and six-month periods ended June 1, 1996 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 associated with
Griffin's operations and are considered by management to be reasonable.
5. LONG-TERM DEBT
Long-term debt includes:
<TABLE>
<CAPTION>
MAY 31, 1997 NOVEMBER 30, 1996
------------- -----------------
<S> <C> <C>
Credit Agreement................................................................ $ -- $ 36,000
Mortgages....................................................................... 2,609 2,644
Capital leases.................................................................. 501 479
------ -------
Total........................................................................... 3,110 39,123
Less: due within one year....................................................... 240 277
------ -------
Total long-term debt............................................................ $ 2,870 $ 38,846
------ -------
------ -------
</TABLE>
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.
9
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
6. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
INVENTORIES
Inventories consists of:
<TABLE>
<CAPTION>
MAY 31, 1997 NOVEMBER 30, 1996
------------ -----------------
<S> <C> <C>
Raw materials and supplies...................................................... $ 1,252 $ 742
Work in process................................................................. 16,750 15,112
Finished goods.................................................................. 10,062 11,676
------------ -------
$ 28,064 $ 27,530
------------ -------
------------ -------
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment consist of:
<TABLE>
<CAPTION>
MAY 31, 1997 NOVEMBER 30, 1996
------------ -----------------
<S> <C> <C>
Land............................................................................ $ 6,043 $ 5,982
Buildings and improvements...................................................... 3,821 3,807
Machinery and equipment......................................................... 12,515 12,337
------------ -------
22,379 22,126
Accumulated depreciation........................................................ (9,755) (9,450)
------------ -------
$ 12,624 $ 12,676
------------ -------
------------ -------
</TABLE>
7. EARNINGS PER SHARE
For the periods presented herein, Griffin was a wholly owned subsidiary of
Culbro. Accordingly, earnings per share are presented on a pro forma basis. The
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.
10
<PAGE>
GRIFFIN LAND & NURSERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
7. EARNINGS PER SHARE (CONTINUED)
The following pro forma results reflect basic and diluted income (loss) per
share in accordance with the provisions of SFAS No. 128.
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Pro forma basic income per share from continuing operations........................... $ 0.44 $ 0.10
Pro forma basic income per share from discontinued operation.......................... -- 0.06
------------ ------------
Pro forma basic net income per share.................................................. $ 0.44 $ 0.16
------------ ------------
------------ ------------
Pro forma weighted average shares outstanding......................................... 4,550,000 4,483,000
------------ ------------
------------ ------------
Pro forma diluted income per share from continuing operations......................... $ 0.41 $ 0.10
Pro forma diluted income per share from discontinued operation........................ -- 0.06
------------ ------------
Pro forma diluted net income per share................................................ $ 0.41 $ 0.16
------------ ------------
------------ ------------
Pro forma weighted average shares and equivalents outstanding......................... 4,872,000 4,669,000
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE 26 WEEKS ENDED,
--------------------------
<S> <C> <C>
MAY 31, 1997 JUNE 1, 1996
------------ ------------
Pro forma basic loss per share from continuing operations............................. $ (0.01) $ (0.34)
Pro forma basic income per share from discontinued operation.......................... -- 0.17
------------ ------------
Pro forma basic net loss per share.................................................... $ (0.01) $ (0.17)
------------ ------------
------------ ------------
Pro forma weighted average shares outstanding......................................... 4,532,000 4,447,000
------------ ------------
------------ ------------
Pro forma diluted loss per share from continuing operations........................... $ (0.01) $ (0.33)
Pro forma diluted income per share from discontinued operation........................ -- 0.17
------------ ------------
Pro forma diluted net loss per share.................................................. $ (0.01) $ (0.16)
------------ ------------
Pro forma weighted average shares and equivalents outstanding......................... 4,837,000 4,646,000
------------ ------------
------------ ------------
</TABLE>
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows used in operating activities were $9.1 million in the 1997
six month period as compared to $7.2 million in the 1996 six month period. The
increased use of cash reflected higher working capital usage in the landscape
nursery business and an increase in real estate held for sale or lease. Cash
used in investing activities decreased to $0.6 million in the 1997 six month
period versus $1.0 million in the 1996 period. The difference reflects the use
of cash in 1996 for capital expenditures in the discontinued operation, CMS
Gilbreth Packaging Systems, Inc. ("CMS Gilbreth "), and was partially offset by
increased 1997 capital expenditures in the landscape nursery business. Cash
provided by financing activities principally reflected seasonal borrowings to
finance the landscape nursery business. In 1996, financing activities also
included borrowings of approximately $5 million that were transferred to Culbro.
Through February 27, 1997, the date of the Distribution Agreement between
Griffin, Culbro and General Cigar Holdings, Inc. ("General Cigar"), a subsidiary
of Culbro, 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, Griffin's cash
flows were segregated from Culbro and its other subsidiaries.
Prior to the date of the Distribution Agreement, Griffin did not maintain
its own separate credit facilities. Borrowings under the Culbro credit
facilities are reflected in Griffin's financial statements until this debt was
assumed by General Cigar at the end of the 1997 first quarter. Prospectively,
this debt will not be included in Griffin's capital structure. Griffin is in the
process of negotiating a line of credit for general working capital purposes of
its landscape nursery business to supplement cash flow from operations, as
required. Management expects that in the short-term, Griffin's real estate
business will be financed through cash on hand and real estate financing, as
required. 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 an 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. Griffin
expects, based on discussions to date with potential lenders, that it will be
able to obtain the desired credit facilities.
RESULTS OF OPERATIONS
In the 1997 second quarter, net sales and other revenue increased $2.7
million to $20.9 million from $18.2 million in the 1996 second quarter. Net
sales and other revenue increased $2.0 million to $23.6 million from $21.6
million in the 1996 six month period. The increased net sales in the second
quarter and six month periods reflected higher sales in the landscape nursery
business, which more than offset lower sales in the real estate business. Higher
net sales in the landscape nursery business principally reflected increased
volume at the wholesale sales and service centers. The lower sales in the real
estate business reflected the effect of the revenue 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 current year's revenue.
Operating profit in the 1997 second quarter was $2.7 million as compared to
$2.1 million in the 1996 second quarter. The increase reflected higher profit in
the landscape nursery business, due principally to the increased sales.
Operating profit in the real estate business was slightly lower in the 1997
second quarter as compared to the 1996 second quarter, as the earlier year
included operating profit from the real estate joint venture and commercial
building disposed of in the 1996 fourth quarter. Operating profit in
12
<PAGE>
the 1997 six month period was $0.3 million as compared to $0.5 million in the
1996 six month period. The slightly lower operating profit in the 1997 period
reflected lower results in the real estate business.
Griffin's equity income from its investment in Centaur Communications, Ltd.
("Centaur"), increased to $0.5 million in the 1997 second quarter and six month
period from $0.2 milion in the 1996 second quarter and six month period. This
increase reflected improved conditions in Centaur's markets.
Interest expense in the 1997 second quarter and six month period was
substantially lower than the 1996 comparable periods. The decreases reflect the
satisfaction last year of a subordinated note payable (see below) and the
assumption by General Cigar of all of Griffin's general corporate debt pursuant
to the Distribution Agreement between Griffin, Culbro, and General Cigar.
Griffin's 1997 first quarter included interest expense of $0.7 million on debt
assumed by General Cigar at the end of the 1997 first quarter. Accordingly, the
1997 second quarter did not include interest expense on the debt assumed by
General Cigar, nor will such interest be incurred by Griffin in subsequent
periods, as such debt is not part of Griffin's capital structure prospectively.
Interest income reflects earnings on short-term investments of Griffin's cash.
The other nonoperating income in the 1996 second quarter and six month
period reflected accrued dividends and accretion income on the preferred stock
of Eli Witt previously held by Griffin. The accrued dividends and accretion
income was equal to interest on a subordinated note payable that was satisified
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 second
quarter and six month period.
The income from the discontinued operation in the 1996 second quarter and
six month period reflected the results of CMS Gilbreth, the packaging operation
sold in November 1996.
13
<PAGE>
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.
<TABLE>
<S> <C>
GRIFFIN LAND & NURSERIES, INC.
DATE: July 18, 1997 /s/ FREDERICK M. DANZIGER
-------------------------------------------
Frederick M. Danziger
PRESIDENT
DATE: July 18, 1997 /s/ ANTHONY J. GALICI
-------------------------------------------
Anthony J. Galici
VICE PRESIDENT, FINANCE
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-29-1997
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0
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