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 March 4, 1995 Commission File No. 1-1210
CULBRO CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-0762310
(state or other jurisdiction of incorporation or (IRS Employer
organization) Identification Number)
387 Park Avenue South, New York, New York 10016-8899
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number including Area Code (212) 561-8700
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 of 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 March 31, 1995 - 4,308,513
CULBRO CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE
Consolidated Statement of Operations and
Retained Earnings - thirteen weeks ended
March 4, 1995 and February 26, 1994 . . . . . .. . . . . . . . 3
Consolidated Balance Sheet
March 4, 1995 and December 3, 1994. . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows -
thirteen weeks ended March 4, 1995
and February 26,1994. . . . . . . . . .. . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . .. . . . . . . . 6-7
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . .. . . . . 8-9
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .10
<PAGE>
<TABLE>
<CAPTION>
CULBRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(dollars in thousands except per share data)
(unaudited)
13 Weeks Ended
------------------------------
March 4, February 26,
1995 1994
------------ --------------
<S> <C> <C>
Net sales and other revenue $ 41,991 $ 33,360
Costs and expenses
Cost of goods sold 25,892 20,350
Selling, general and administrative
expenses 13,569 12,453
----------- -----------
Operating profit 2,530 557
Income (loss) from equity investments, net 112 (646)
Other nonoperating income 587 -
Interest expense, net 2,314 1,884
----------- ------------
Income (loss) before tax provision (benefit) 915 (1,973)
Income tax provision (benefit) 365 (924)
----------- ------------
Net income (loss) $ 550 $ (1,049)
=========== ============
Net income (loss) per common share $ 0.13 (0.24)
=========== ============
Weighted average common
shares outstanding 4,308,000 4,308,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
CULBRO CORPORATION
CONSOLIDATED BALANCE SHEET
(dollars in thousands except per share data)
March 4,
1995 December 3,
(unaudited) 1994
-------------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 240 $ 6,682
Receivables, less allowance of $1,463
(1994 - $1,426) 22,275 25,084
Inventories 71,545 68,189
Other current assets 5,696 5,759
------------ ------------
Total current assets 99,756 105,714
Property and equipment, net 76,023 76,873
Real estate held for sale or lease, net 31,113 31,373
Investment in Series B preferred stock of
The Eli Witt Company 13,360 12,773
Investment in real estate joint ventures 7,711 7,864
Other, including investment in Centaur
Communications Limited of $14,657
(1994- $14,545) 19,632 19,643
Intangible assets, net 18,836 18,997
------------ -----------
Total assets $266,431 $273,237
============== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 18,434 $ 22,885
Long-term debt due within one year 4,248 4,158
Income taxes 100 299
----------- ----------
Total current liabilities 22,782 27,342
------------ -----------
Long-term debt 96,226 98,976
Accrued retirement benefits 15,470 15,227
Deferred income taxes 4,539 4,765
Other noncurrent liabilities
and deferred credits 14,824 14,890
------------- ----------
Total liabilities 153,841 161,200
------------- ----------
Shareholders' Equity
Common stock, par value $1
Authorized - 10,000,000 shares
Issued - 4,549,190 shares 4,549 4,549
Capital in excess of par value 13,296 13,296
Retained earnings 100,047 99,497
------------- ----------
117,892 117,342
Less - Common stock in Treasury,
at cost, 240,677 shares
(1994 - 240,902) (5,302) (5,305)
-------------- -----------
Total shareholders' equity 112,590 112,037
-------------- -----------
Total liabilities and
shareholders' equity $266,431 $273,237
============== ==========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
<TABLE>
<CAPTION>
CULBRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
13 Weeks Ended
----------------------------------
March 4, February 26,
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
- --------------------
Net income (loss) $ 550 $(1,049)
Adjustments to reconcile net
income (loss) to net cash used
in operating activities:
Depreciation and amortization 1,889 1,783
(Income) loss from equity
investments (112) 646
Discount and interest on
subordinated note 587 -
Other nonoperating income (587) -
Provision for bad debts 127 238
Changes in assets and liabilities:
Decrease in real estate held
for sale or lease, net 260 262
Increase in inventories (3,356) (3,385)
Decrease in accounts receivable 2,682 7,028
Decrease in accounts payable
and accrued liabilities (4,451) (5,222)
Other, net (314) (1,397)
-------- ----------
Net cash used in operating activities (2,725) (1,096)
-------- ----------
INVESTING ACTIVITIES:
- ----------------------
Additions to property and equipment (845) (785)
--------- ----------
Net cash used in investing activities (845) (785)
---------- -----------
FINANCING ACTIVITIES:
- ---------------------
Payments of debt (2,872) (3,309)
Increase in debt - 5,000
---------- ------------
Net cash (used in) provided
by financing activities (2,872) 1,691
---------- -----------
Net decrease in cash and cash
equivalents (6,442) (190)
Cash and cash equivalents at beginning
of period 6,682 875
--------- ------------
Cash and cash equivalents at end
of period $ 240 $ 685
========== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
CULBRO CORPORATION
Notes to Consolidated Financial Statements
(dollars in thousands)
(unaudited)
A. The unaudited financial statements included in this report 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. Also, the financial
statements have been prepared in accordance with the accounting policies
stated in the Corporation's 1994 Annual Report to Shareholders included in
Form 10K, and should be read in conjunction with the Notes to Consolidated
Financial Statements appearing in that report. All adjustments which are,
in the opinion of management, necessary for a fair presentation of results
for the interim period have been reflected.
The results of operations for the thirteen weeks ended March 4,
1995 are not necessarily indicative of the results to be expected for the
full year.
B. At March 4, 1995, The Eli Witt Company ("Eli Witt") had a common
deficit position of approximately $29,000. The Corporation accounts for its
ownership of 50.1% of Eli Witt's outstanding common stock under the equity
method of accounting. Accordingly, the Corporation did not recognize its
share of Eli Witt's results in the 1995 first quarter, and will not
recognize future results of Eli Witt until Eli Witt's common deficit is
recouped.
Eli Witt is currently operating under a temporary waiver of the
covenants under its Credit Agreement, pending the satisfactory negotiations
of new covenants and terms with its creditor banks. The Corporation
is considering an additional investment of up to $5 million in Eli Witt.
C. Supplemental Financial Statement Information
INVENTORIES
Inventories consist of:
March 4, December 3,
1995 1994
----------- ------------
Raw materials and supplies $ 33,877 $ 32,645
Work-in-process 18,396 18,490
Finished goods 19,272 17,054
---------- -------------
$ 71,545 $ 68,189
========== ==============
PROPERTY AND EQUIPMENT
Property and equipment consist of:
March 4, December 3,
1995 1994
----------- -------------
Land $ 11,281 $ 11,303
Buildings 62,535 62,366
Machinery and equipment 58,747 58,592
Accumulated Depreciation (56,540) (55,388)
------------ -------------
$ 76,023 $ 76,873
============ =============
<PAGE>
CASH FLOW
Cash paid during the period for:
13 Weeks Ended
----------------------------------
March 4, February 26,
1995 1994
-------------- --------------
Interest, net of
amounts capitalized $1,846 $2,292
============= ============
Income taxes, net $ 284 $ 437
============ ============
OTHER NONOPERATING INCOME
Other nonoperating income reflects dividends of $375 and accretion
of $212 on the Series B preferred stock of Eli Witt held by the Corporation.
These amounts equal the accrued interest and amortization of the discount on
the subordinated note that are included in consolidated interest expense.
The Corporation has the unilateral right to exchange the Series B preferred
stock for the subordinated note and all accrued interest upon the note's
maturity in August 1998.<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In the 1995 first quarter, the Corporation's cash balance decreased due
to cash used in operations, capital expenditures and a reduction of the
amount outstanding under the Corporation's Credit Agreement. The cash used
in operations was greater than the 1994 first quarter, as increased sales of
General Cigar Co., Inc. partially offset cash generated from collections.
The Corporation is currently negotiating with its creditor banks and
Senior noteholders regarding an additional investment by the Corporation of
up to $5 million in The Eli Witt Company ("Eli Witt"), a wholesale
distribution company, of which the Corporation holds a 50.1% equity interest.
Other than this investment in Eli Witt, no significant increases over 1994
levels of capital expenditures or other capital outlays are anticipated in
the remainder of 1995. The Corporation's liquidity was substantially
unchanged in the 1995 first quarter, as the amount available under its
Credit Agreement increased to $24 million at the end of the first quarter
from $21 million at year end.
Management believes that cash flow from operations and the Corporation's
existing liquidity will be sufficient to meet its maturing near-term
obligations and normal capital expenditures. Over the long-term, management
will seek to maintain a level of indebtedness which is commensurate with the
Corporation's earnings and cash flow and will continue to pursue
opportunities to supplement cash flow from operations by proceeds generated
from other transactions.
RESULTS OF OPERATIONS
Net income of $550,000 in the 1995 first quarter, as compared to a net
loss of $(1,049,000) in the 1994 first quarter, reflects the Corporation's
higher operating profit of $2,530,000 as compared to $557,000 in 1994 and
the exclusion of equity losses from Eli Witt as a result of the
deconsolidation of Eli Witt last year and accounting for the Corporation's
remaining investment in Eli Witt under the equity method. Under equity
accounting, the Corporation is precluded from recognizing its share of Eli
Witt's results until Eli Witt's common deficit is recouped.
The Corporation's higher operating profit reflects principally improved
results of General Cigar Co., Inc. ("General Cigar") and CMS Gilbreth
Packaging Systems, Inc. ("CMS Gilbreth"). Higher operating profit at General
Cigar is due principally to higher sales. The sales increase in premium
cigars experienced in 1994 continued into the 1995 first quarter,
as premium sales volume increased 50% as compared to the 1994 first quarter.
Sales volume of other categories also increased in the 1995 first quarter.
CMS Gilbreth reported a record high sales and operating profit for the
quarter due principally to higher sales of packaging machinery and lower
costs. Increased sales volume of packaging machinery more than offset a
sales volume decline in packaging materials, partially attributed to timing
of shipments. The closing of a facility in 1994 led to the lower costs in
1995 as compared to the 1994 first quarter. The previously reported change
in label technology by CMS Gilbreth's largest customer is expected to reduce
the quantity of labels purchased from CMS Gilbreth beginning in the second
quarter.
Operating results in the Corporation's Connecticut real estate business,
Culbro Land Resources ("CLR"), and in the nursery products business, Imperial
Nurseries, Inc. ("Imperial Nurseries"), were substantially unchanged from
the prior year. At CLR, increased profit from commercial land sales and
lower expenses were substantially offset by lower sales of residential lots.
First quarter operating losses at Imperial Nurseries reflect the normal low
sales activity of the winter months in this seasonal business.
Higher interest expense in the 1995 first quarter reflected the higher
interest rate of the subordinated note as compared to the rate on debt repaid
with the proceeds from the subordinated note last year, partially offset by
the Corporation's lower overall debt level in the 1995 first quarter versus
the comparable period last year. The accrued interest and discount on the
subordinated note of $587,000 included in first quarter interest expense
is offset by an equal amount of accretion income and accrued dividends on
the mandatorily redeemable Series B preferred stock of Eli Witt held by the
Corporation. These items are reflected as other nonoperating income in the
Corporation's consolidated statement of operations. The Corporation has the
unilateral right to exchange the Series B preferred stock for the
subordinated note in 1998, and therefore may satisfy the note without the
use of cash.<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.
CULBRO CORPORATION
(Registrant)
Date: April 17, 1994 (Jay M. Green)
Jay M. Green
Executive Vice President -
Chief Financial Officer and
Treasurer
Date: April 17, 1994 (Joseph Aird)
Joseph Aird
Vice President - Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-02-1995
<PERIOD-END> MAR-04-1995
<CASH> 240
<SECURITIES> 0
<RECEIVABLES> 23,738
<ALLOWANCES> (1,463)
<INVENTORY> 71,545
<CURRENT-ASSETS> 99,756
<PP&E> 132,563
<DEPRECIATION> (56,540)
<TOTAL-ASSETS> 266,431
<CURRENT-LIABILITIES> 22,782
<BONDS> 0
<COMMON> 4,549
0
0
<OTHER-SE> 108,041
<TOTAL-LIABILITY-AND-EQUITY> 266,431
<SALES> 41,838
<TOTAL-REVENUES> 41,991
<CGS> 25,892
<TOTAL-COSTS> 39,461
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,314
<INCOME-PRETAX> 915
<INCOME-TAX> 365
<INCOME-CONTINUING> 550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 550
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0
</TABLE>
