Index to Exhibits at page 16
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended October 28, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0 - 1653
GENESEE CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 16-0445920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
445 St. Paul Street, Rochester, New York 14605
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 546-1030
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
As of the date of this report, the Registrant had the following shares of common
stock outstanding:
Number of Shares
Class Outstanding
Class A Common Stock (voting), par
value $.50 per share 209,885
Class B Common Stock (non-voting), par
value $.50 per share 1,411,453
1
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
October 28, 2000 and April 29, 2000
(Dollars in thousands, except per share data)
<TABLE>
<S> <C> <C>
UNAUDITED AUDITED
October 28, 2000 April 29, 2000
Assets
Current assets:
Cash and cash equivalents $ 3,903 $ 7,649
Marketable securities available for sale 8,480 8,029
Trade accounts receivable, less allowance for doubtful receivables
of $262 at October 28, 2000 and April 29, 2000 3,941 2,776
Inventories, at lower of cost (first-in, first-out) or market 11,200 9,197
Deferred income tax assets, current portion 83 113
Other current assets 117 61
------------------------------------------------------------------------------------------------------------------------------------
Total current assets 27,724 27,825
Net property, plant and equipment 12,709 12,629
Goodwill and other intangibles net of accumulated amortization of $3,741
at October 28, 2000 and $3,107 at April 29, 2000 26,028 26,662
Other assets 1,427 1,446
Net assets held for disposal - noncurrent 24,601 27,209
------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 92,489 $ 95,771
----------------------------------------------------------------------------------=================-================
--------------------------------------------------------------------------------- =================-================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable, current portion $ 300 $ 300
Accounts payable 1,688 1,454
Income taxes payable 198 64
Accrued compensation 397 235
Accrued expenses and other 1,173 1,384
Net liabilities held for disposal - current 685 2,127
------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 4,441 5,564
Notes payable, noncurrent portion 5,823 5,973
Deferred income tax liabilities, noncurrent portion 418 381
Other liabilities 21 646
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 10,703 12,564
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock:
Class A common stock, voting, $.50 par value. Authorized 450,000 shares; 105 105
209,885 shares issued and outstanding
Class B common stock, non-voting, $.50 par value. Authorized 3,850,000 shares; 753 753
1,506,876 shares issued
Additional paid-in capital 5,831 5,847
Retained earnings 78,464 80,023
Accumulated other comprehensive loss 0 (120)
Less: Class B treasury stock, at cost; 95,597 shares in October 2000 and (3,367) (3,401)
96,564 shares in April 2000
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 81,786 83,207
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 92,489 $ 95,771
---------------------------------------------------------------------------------=============- ================
-------------------------------------------------------------------------------- =============- ================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Earnings and Comprehensive Loss
Thirteen Weeks Ended October 28, 2000 and October 30, 1999
(Dollars in thousands, except per share data)
<TABLE>
<S> <C> <C>
UNAUDITED UNAUDITED
2000 1999
Revenues $ 12,869 $ 12,517
Cost of goods sold 10,861 10,757
---------------------------------------------------------------------------------------------------------------------------
Gross profit 2,008 1,760
Selling, general and administrative expenses 1,473 1,656
---------------------------------------------------------------------------------------------------------------------------
Operating income 535 104
Investment income 146 115
Other income 81 19
Interest expense (108) (150)
---------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 654 88
Income tax expense 499 73
---------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 155 15
Discontinued operations:
Loss from operations of the discontinued segments
(less applicable income tax benefit of $831and $1,327,respectively) (1,303) (1,487)
Adjustment to the loss on disposal of Genesee Ventures, Inc.
(less applicable net income tax expense of $89 in fiscal 2001) 139 0
---------------------------------------------------------------------------------------------------------------------------
Net loss (1,009) (1,472)
Other comprehensive income / (loss), net of income taxes:
Unrealized holding gains / (losses) arising during the period 51 (31)
---------------------------------------------------------------------------------------------------------------------------
Comprehensive loss $ (958) $ (1,503)
------------------------------------------------------------------------------ =============--==============---------------
------------------------------------------------------------------------------ =============--==============---------------
Basic earnings per share from continuing operations $ 0.10 $ 0.01
Basic loss per share from discontinued operations $ (0.80) $ (0.92)
Basic gain per share from disposal of Genesee Ventures, Inc. $ 0.09 $ -
---------------------------------------------------------------------------------------------------------------------------
Basic loss per share $ (0.61) $ (0.91)
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share from continuing operations $ 0.10 $ 0.01
Diluted loss per share from discontinued operations $ (0.80) $ (0.92)
Diluted gain per share from disposal of Genesee Ventures, Inc. $ 0.09 $ -
---------------------------------------------------------------------------------------------------------------------------
Diluted loss per share $ (0.61) $ (0.91)
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 1,621,164 1,620,197
Weighted average and common equivalent shares 1,621,164 1,620,197
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Earnings and Comprehensive Loss
Twenty Six Weeks Ended October 28, 2000 and October 30, 1999
(Dollars in thousands, except per share data)
<TABLE>
<S> <C> <C>
UNAUDITED UNAUDITED
2000 1999
Revenues $ 23,943 $ 23,002
Cost of goods sold 21,525 20,400
----------------------------------------------------------------------------------------------------------------------------
Gross profit 2,418 2,602
Selling, general and administrative expenses 2,878 3,273
----------------------------------------------------------------------------------------------------------------------------
Operating loss (460) (671)
Investment income 298 276
Other income 326 48
Interest expense (216) (292)
----------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations before income taxes (52) (639)
Income tax expense (benefit) 323 (210)
----------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations (375) (429)
-
Discontinued operations:
Loss from operations of the discontinued segments
(less applicable income tax benefit of $563 and $595, respectively) (881) (517)
Adjustment to the loss on disposal of Genesee Ventures, Inc.
(less applicable net income tax expense of $168 in fiscal 2001) 264 0
----------------------------------------------------------------------------------------------------------------------------
Net loss (992) (946)
Other comprehensive income / (loss), net of income taxes:
Unrealized holding gains / (losses) arising during the period 120 (161)
----------------------------------------------------------------------------------------------------------------------------
Comprehensive loss $ (872) $ (1,107)
-------------------------------------------------------------------------------==============-===============---------------
-------------------------------------------------------------------------------==============-===============---------------
Basic loss per share from continuing operations $ (0.23) $ (0.26)
Basic loss per share from discontinued operations $ (0.54) $ (0.32)
Basic gain per share from disposal of Genesee Ventures, Inc. $ 0.16 $ -
----------------------------------------------------------------------------------------------------------------------------
Basic loss per share $ (0.61) $ (0.58)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per share from continuing operations $ (0.23) $ (0.26)
Diluted loss per share from discontinued operations $ (0.54) $ (0.32)
Diluted gain per share from disposal of the Foods Division $ 0.16 $ -
----------------------------------------------------------------------------------------------------------------------------
Diluted loss per share $ (0.61) $ (0.58)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 1,620,904 1,618,909
Weighted average and common equivalent shares 1,620,904 1,618,909
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Twenty Six Weeks Ended October 28, 2000 and October 30, 1999
(Dollars in thousands)
<TABLE>
<S> <C> <C>
UNAUDITED UNAUDITED
2000 1999
Cash flows from operating activities:
Net loss from continuing operations $ (375) $ (429)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Net loss on sale of marketable securities 10 23
Depreciation and amortization 1,520 1,325
Other 35 36
Changes in non-cash assets and liabilities:
Trade accounts receivable (1,165) (1,383)
Inventories (2,003) 1,798
Other assets 599 (43)
Accounts payable 234 1,438
Accrued expenses and other (142) (879)
Income taxes payable 134 (1,696)
Other liabilities (625) 0
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by continuing operating activities (1,778) 190
Net cash (used in) provided by discontinued operations (1,347) 375
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (3,125) 565
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures, net (560) (2,626)
Proceeds from sale of marketable securities 408 2,413
Purchases of marketable securities and other investments (654) (2,262)
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in continuing investing activities (806) (2,475)
Net cash provided by discontinued operations 902 1,068
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 96 (1,407)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from acquisition of debt 0 1,700
Principal payments on debt (150) (40)
Payment of dividends (567) (1,134)
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (717) 526
------------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (3,746) (316)
Cash and cash equivalents at beginning of the period 7,649 5,836
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of the period $ 3,903 $ 5,520
-----------=================================================================================-================--------------------
-----------=================================================================================-================--------------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (A) Planned Divestiture of the Corporation's Operating Businesses
The Corporation's Board of Directors has authorized the sale of all the
Corporation's assets and on October 19, 2000, the Corporation's shareholders
approved a plan to dissolve and liquidate the Corporation. The Corporation will
be liquidated by selling or otherwise disposing of all the Corporation's assets
and winding up all of the Corporation's affairs. The proceeds from this
liquidation will then be distributed, after paying or providing for all its
claims, obligations and expenses, to the Corporation's shareholders in a series
of liquidating distributions, after which the Corporation will be dissolved.
On December 15, 2000, the Corporation sold substantially all the assets of the
brewing business for $25.8 million to a management group led by the
Corporation's former President and Chief Executive Officer. In August 2000 the
Corporation entered into a letter of intent to sell all of the outstanding stock
of Ontario Foods, Inc., which represents the Corporation's Foods Division, to
Ralcorp Holdings, Inc. The letter of intent has now expired, but the Corporation
is continuing to have discussions with Ralcorp. The Corporation's equipment
leasing subsidiary has signed a Portfolio Purchase Agreement to sell a
significant portion of its lease portfolio for $15.3 million, generating net
proceeds to the Corporation of approximately $13 million. This transaction is
expected to result in an estimated net loss of approximately $3.1 million, which
was recorded in the fourth quarter of fiscal 2000. The Corporation adjusted this
loss by $264,000, net of tax expense for fiscal 2001, year to date, which
reflects better than expected leasing operating results. The Corporation is
evaluating strategies to sell or otherwise divest the Corporation's remaining
assets. In accordance with generally accepted accounting principles, the results
of operations of the Corporation's brewing, equipment leasing and real estate
businesses have been segregated from the Corporation's continuing operations and
accounted for as discontinued operations in the accompanying consolidated
statements of earnings and comprehensive income and in the consolidated
statements of cash flows. Continuing operations consist of the Corporate
segment, which operates primarily as the Corporation's treasury, and the Foods
Division.
The results of operations for the discontinued brewing, equipment leasing and
real estate investment businesses were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Thirteen weeks ended Twenty six weeks ended
(Dollars in thousands) October 28, 2000 October 30, 1999 October 28, 2000 October 30, 1999
Revenue $ 25,737 $ 29,938 $ 55,624 $ 66,961
Less Beer Taxes (4,751) (5,820) (10,742) (13,653)
Net Revenue 20,986 24,118 44,882 53,308
Cost of Goods Sold (16,346) (18,424) (33,879) (39,253)
Selling, General, and Admin. ( 6,557) (8,308) (12,035) (15,074)
Other Income (Expense) 11 (200) 20 (93)
Loss from operations of the
discontinued segments, net of tax
benefit (1,303) ( 1,487) (881) (517)
Adjustment to the Loss on Disposal of
Genesee Ventures, Inc., net of tax $ 139 $ 0 $ 264 $ 0
expense
</TABLE>
6
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE(A)Planned Divestiture of the Corporation's Operating Businesses (continued)
The net assets of the brewing, equipment leasing and real estate investment
businesses have been excluded from their respective captions and reported as net
(liabilities) assets held for disposal in the accompanying consolidated balance
sheet at October 28, 2000. The net assets of the brewing, equipment leasing and
real estate investment businesses at October 28, 2000 were as follows:
(Dollars in thousands)
Accounts receivable, net $ 4,764
Inventory 5,774
Net deferred income tax asset, current portion 1,008
Other current assets 1,278
Accounts payable (5,448)
Federal and state beer taxes payable (1,065)
Accrued compensation (2,642)
Accrued postretirement benefits, current portion (600)
Accrued expenses and other (3,754)
-----------------
Net liabilities held for disposal - current ($685)
-----------------
-----------------
Net property, plant and equipment $ 22,021
Investment in and notes receivable from unconsolidated real
estate partnerships 5,218
Investment in direct financing and leveraged leases 20,047
Other assets 966
Net deferred income tax liability, noncurrent portion (6,372)
Accrued postretirement benefits, noncurrent portion (14,476)
Other liabilities (65)
Minority interest (2,738)
-----------------
Net assets held for disposal - noncurrent $ 24,601
-----------------
-----------------
7
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (B) The Corporation's consolidated financial statements
presented herein are unaudited with the exception of the
Consolidated Balance Sheet at April 29, 2000 and, because of
the seasonal nature of the business and the varying schedule
of its special sales efforts, these results are not
necessarily indicative of the results to be expected for the
entire year. In the opinion of management, the interim
financial statements reflect all adjustments which are
necessary for a fair presentation of the results for the
periods presented. The accompanying financial statements have
been prepared in accordance with GAAP and SEC guidelines
applicable to interim financial information. These statements
should be reviewed in conjunction with the annual report on
Form 10-K for the year ended April 29, 2000. It is the
Corporation's policy to reclassify certain amounts in the
prior year consolidated financial statements to conform with
the current year presentation.
Certain reclassifications of the October 30, 1999 financial
statements have been made to reflect the Company's fiscal 2001
discontinued operations (as discussed in Note A above.)
NOTE (C) Inventories of continuing operations are summarized as follows:
Dollars in thousands
October 30, 2000 April 29,2000
Finished goods $ 4,606 $ 4,867
Raw materials, containers and packaging
supplies 6,594 4,330
----------- ---------
Total inventories $ 11,200 $ 9,197
----------- ---------
----------- ---------
8
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (D) Segment Reporting
The Corporation has two reportable segments included in continuing operations:
food processing and corporate. The food processing segment produces dry side
dish, bouillon, artificial sweeteners, soup, drink mix and instant iced tea
products under private label for many of the country's largest supermarket
chains. The corporate segment retains the Corporation's investments in
marketable securities, generating investment income as well as supporting
corporate costs.
The Corporation has two business segments included in discontinued operations:
brewing and equipment leasing and real estate. The brewing segment, which was
sold on December 15, 2000 (see Note A), produced beers and ales for wholesale
and retail distribution throughout the United States, primarily in the northeast
region of the country. The equipment leasing and real estate segment leases
construction, transportation and other high-value equipment and machinery, and
partners with experienced real estate developers to invest in certain
properties.
The Corporation evaluates performance based on operating income or loss and
earnings before income taxes.
Intersegment sales and transfers are not material and are eliminated in
consolidation. No single customer accounted for more than 10% of revenues, and
the Corporation's international revenues are not significant.
The Corporation's segments, other than corporate, are strategic business units
that offer different products and services. They are managed separately because
each business requires different technology and marketing strategies.
Financial information for the Corporation's reportable segments is as follows:
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Food Discontinued
For the thirteen week period ended: Processing Corporate Operations Consolidated
-------------------------------------------- -----------------------------------------------
----------------------------------------------------------------------------------------------------------
October 28, 2000
----------------------------------------------------------------------------------------------------------
Net revenues from external customers $ 12,869 $ - $ - $ 12,869
Depreciation and amortization 758 - - 758
Operating income (loss) 685 (150) - 535
Investment income - 146 - 146
Earnings (loss) from continuing
Operations before income taxes 658 (4) - 654
Identifiable assets 55,464 12,424 24,601 92,489
Capital expenditures 141 - - 141
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
October 30, 1999
----------------------------------------------------------------------------------------------------------
Net revenues from external customers $ 12,517 $ - $ - $ 12,517
Depreciation and amortization 626 - - 626
Operating income (loss) 279 (175) - 104
Investment income - 115 - 115
Income (loss) from continuing
Operations before income taxes 194 (106) - 88
Identifiable assets 54,729 2,474 81,589 138,792
Capital expenditures 564 - - 564
----------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (D) Segment Reporting (continued)
Financial information for the Corporation's reportable segments is as follows:
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
Food Discontinued
For the twenty six week period ended: Processing Corporate Operations Consolidated
-------------------------------------------- -----------------------------------------------
----------------------------------------------------------------------------------------------------------
October 28, 2000
----------------------------------------------------------------------------------------------------------
Net revenues from external customers $ 23,943 $ - $ - $ 23,943
Depreciation and amortization 1,520 - - 1,520
Operating loss (210) (250) - (460)
Investment income - 298 - 298
(Loss)/earnings from continuing
Operations before income taxes (100) 48 - (52)
Identifiable assets 55,464 12,424 24,601 92,489
Capital expenditures 560 - - 560
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
October 30, 1999
----------------------------------------------------------------------------------------------------------
Net revenues from external customers $ 23,002 $ - $ - $ 23,002
Depreciation and amortization 1,325 - - 1,325
Operating loss (288) (383) - (671)
Investment income - 276 - 276
Loss from continuing
Operations before income taxes (436) (203) - (639)
Identifiable assets 54,729 2,474 81,589 138,792
Capital expenditures 2,626 - - 2,626
----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE (E) Supplemental Cash Flow Information
Cash paid for taxes was $ 67,000 and $ 1,034,000 for the
thirteen week period ended October 28, 2000 and October 30,
1999, respectively; cash paid for interest was $ 108,000 and $
150,000 for the thirteen week period ended October 28, 2000
and October 30, 1999, respectively.
Cash paid for taxes was $ 133,000 and $ 1,485,000 for the
twenty six week period ended October 28, 2000 and October 30,
1999, respectively; cash paid for interest was $ 216,000 and $
292,000 for the twenty six week period ended October 28, 2000
and October 30, 1999, respectively.
10
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This financial review should be read in conjunction with the
accompanying consolidated financial statements. The discussion of operating
results and liquidity and capital resources for fiscal 2001 and fiscal 2000
excludes the discontinued brewing and equipment leasing and real estate
investment businesses discussed in Note (A) to the accompanying consolidated
financial statements.
SUMMARY OF CONTINUING AND DISCONTINUED OPERATIONS
Comparison of 13 weeks ended October 28, 2000 to 13 weeks ended October 30, 1999
On a consolidated basis, the Corporation reported operating income from
continuing operations of $535,000, which was an increase of $431,000 as compared
to the same period last year.
On a consolidated basis, the Corporation reported earnings from
continuing operations of $155,000, or $.10 basic and diluted earnings per share,
in the second quarter this year, compared to earnings from continuing operations
of $15,000, or $.01 basic and diluted earnings per share, for the same period
last year.
The Corporation reported a net loss from discontinued operations of
$1.2 million, net of tax benefit of $742,000, or $.71 basic and diluted loss per
share for the second quarter of fiscal 2001, compared to a net loss from
discontinued operations of $1.5 million, net of tax benefit of $1.3 million, or
$.92 basic and diluted loss per share for the same period last year.
Comparison of 26 weeks ended October 28, 2000 to 26 weeks ended October 30, 1999
On a consolidated basis, the Corporation reported an operating loss
from continuing operations of $460,000, which was an improvement of $211,000 as
compared to the same period last year.
On a consolidated basis, the Corporation reported a loss from
continuing operations of $375,000, or $.23 basic and diluted loss per share, in
the first half of this year, compared to a loss from continuing operations of
$429,000, or $.26 basic and diluted loss per share, for the same period last
year.
The Corporation reported a net loss from discontinued operations of
$617,000, net of tax benefit of $395,000, or $.38 basic and diluted loss per
share for the first half of fiscal 2001, compared to a net loss from
discontinued operations of $517,000, net of tax benefit of $595,000, or $.32
basic and diluted loss per share for the same period last year.
11
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
RESULTS OF CONTINUING OPERATIONS
Comparison of 13 weeks ended October 28, 2000 to 13 weeks ended October 30, 1999
Foods Division
Net sales for the Corporation's Foods Division increased $352,000 to
$12.9 million in the second quarter this year as compared to $12.5 million for
the same period last year. The increase in net sales was primarily attributable
to increased sales of a new drink mix product.
Gross profit for the Foods Division increased by $ 249,000 to $2.0
million in the second quarter this year as compared to $1.8 million for the same
period last year.
Selling, general and administrative expenses decreased $158,000 to $1.3
million in the second quarter of fiscal 2001 compared to $1.5 million for the
same period last year. This decrease is the result of a variety of reductions in
SG&A costs realized in the second quarter of fiscal 2001.
The Foods Division had operating income of $685,000 in fiscal 2001,
which was $406,000 greater than the $279,000 operating income reported in fiscal
2000. Foods Division profitability in fiscal 2001 was positively impacted by the
reasons identified above.
Comparison of 26 weeks ended October 28, 2000 to 26 weeks ended October 30, 1999
Foods Division
Net sales for the Corporation's Foods Division increased $941,000 to
$23.9 million in the first half of fiscal 2001 as compared to $23.0 million for
the same period last year. The increase in net sales was primarily attributable
to increased sales of a new drink mix product.
Gross profit for the Foods Division decreased by $185,000 when
comparing the first half of fiscal 2001 and fiscal 2000. Gross profit for the
first half of fiscal 2001 includes a $900,000 pre-tax charge for estimated costs
associated with a product quality problem involving a new drink mix product
while the prior year gross profit reflects $1.1 million of costs associated with
transitioning production to the Medina, New York facility.
Selling, general and administrative expenses decreased $261,000 to $2.6
million in the first half of fiscal 2001 compared to $2.9 million for the same
period last year. This decrease is the result of a variety of reductions in SG&A
costs realized in the first half of fiscal 2001.
The Foods Division had an operating loss of $210,000 in fiscal 2001,
which was $78,000 less than the $288,000 operating loss reported in fiscal 2000.
12
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (from continuing operations)
Cash and cash equivalents and marketable securities in the aggregate
decreased $3.3 million from April 29, 2000 to October 28, 2000. Cash and cash
equivalents decreased $3.7 million from April 29, 2000 to October 28, 2000.
Marketable securities increased $451,000 from April 29, 2000 to October 28,
2000.
Net trade accounts receivable increased by $1.2 million. This
increase from the April 29, 2000 balance is primarily attributable to timing and
increased sales volume at the Foods Division.
Inventories increased by $2.0 million. This increase from April 29,
2000 is related to additional purchases of sugar by the Foods Division.
Net property, plant and equipment increased an immaterial amount as
a result of routine capital expenditures by the Foods division exceeding normal
depreciation expense for the first quarter of fiscal 2001.
Other liabilities decreased by $625,000. This decrease from April 29,
2000 is due to payment of a deferred compensation arrangement to the estate of
the former Chairman of the Board and Chief Executive Officer of the Corporation
during the first half of fiscal 2001.
Notes payable decreased $150,000. This decrease from April 29, 2000
is a result of normal debt payments and expected amortization of notes payable.
In connection with the decision to sell or dispose of all the
Corporation's assets and dissolve and liquidate the Corporation, the
Corporation's Board of Directors has decided to suspend the payment of quarterly
dividends and to instead make liquidating distributions as and when feasible
under the Corporation's plan of liquidation and dissolution.
Forward-Looking Statements
This report contains forward-looking statements within the meaning
of the federal securities laws. These forward-looking statements may include
statements about the operations and prospects for the Corporation and its
subsidiary businesses. These forward-looking statements include statements
regarding the timing and results of the sale of the Corporation's equipment
leasing business, the estimated loss from the sale of the equipment leasing
businesses, and the dissolution and liquidation of the Corporation. These
forward-looking statements involve significant risks and uncertainties and there
can be no assurance that the expectations or results reflected in these
statements will be realized or achieved. Risks and uncertainties relating to the
proposed sale of the Corporation's equipment leasing business include, without
limitation, the failure of the transaction to close for whatever reasons,
further negotiation of terms and conditions, purchase price adjustments,
post-closing indemnification obligations, the failure to satisfy other
conditions necessary to consummate the transaction such as failure to obtain
necessary regulatory approvals and third party consents, and the possibility
that a delay in resolving such conditions could jeopardize the transaction.
Risks and uncertainties relating to the disposition of the Corporation's food
business include, without limitation, failure to reach agreement with Ralcorp on
the sale of the business, failure to find another suitable buyer if a sale to
Ralcorp is not completed, and risks associated with continuing to operate the
business while seeking other buyers. Risks and uncertainties relating to the
dissolution and liquidation of the Corporation include, without limitation, the
actual amount of proceeds from the sale of the Corporation's assets, the
ultimate settlement amounts of the Corporation's liabilities and obligations,
actual costs incurred in connection with carrying out the plan of dissolution
and liquidation, including administrative costs during the liquidation period,
the amount of income earned on the Corporation" cash and cash equivalents and
short-term investments during the liquidation period, and the actual timing of
distributions.
13
<PAGE>
GENESEE CORPORATION
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Corporation's annual meeting of Class A shareholders was
held on October 19, 2000. At the annual meeting, shareholders elected Gary C.
Geminn (by a vote of 187,696 shares For and 6,042 withheld) and Charles S. Wehle
(by a vote of 187,999 shares For and 5,739 withheld) to serve as directors until
the annual meeting of shareholders in 2003. The terms of office of Stephen B.
Ashley, William A. Buckingham, and Samuel T. Hubbard, Jr. continued after the
annual meeting of shareholders.
At the annual meeting, Class A shareholders also approved (a)
by a vote of 168,293 shares For and 1,213 shares against, a proposal to approve
a plan of Liquidation and Dissolution and (b) by a vote of 165,970 shares For
and 3,484 shares against, a proposal to amend the Corporation's Certificate of
Incorporation.
Item 5. Other Information
Following the completion of the management buyout of the Corporation's
brewing business, the following officers of the Corporation (who are investors
in the management buyout entity) resigned as officers of the Corporation: Samuel
T. Hubbard, Jr., President and Chief Executive Officer; John B. Henderson,
Senior Vice President and Chief Financial Officer; William A. Neilson, Vice
President - Human Resources; and Michael C. Atseff, Vice President and
Controller. Mr. Hubbard will continue as a director of the Corporation.
The Board of Directors has elected Stephen B. Ashley President of the
Corporation, Mark W. Leunig Senior Vice President and Chief Administrative
Officer, and Steven M. Morse Vice President and Treasurer.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are attached to this report:
Exhibit 2-1 Plan of Liquidation and Dissolution
(b) Reports on Form 8-K. The Corporation filed reports on
Form 8-K on August 16, 2000, August 30, 2000,
September 27, 2000, and October 19, 2000 to report
information under Item 5 (Other Events.)
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GENESEE CORPORATION
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.
GENESEE CORPORATION
Date: 12/18/00 /s / Mark W. Leunig
Mark W. Leunig
Sr. Vice President and
Chief Administrative Officer
Date: 12/18/00 /s / Steven M. Morse
Steven M. Morse
Vice President and Treasurer
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GENESEE CORPORATION
EXHIBIT INDEX
Exhibit Number Exhibit Page No.
2-1 Plan of Liquidation and Dissolution 17
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Exhibit 2-1
PLAN OF LIQUIDATION AND DISSOLUTION
OF
GENESEE CORPORATION
This Plan of Liquidation and Dissolution (the "Plan") is intended to
affect the complete, voluntary liquidation and dissolution of Genesee
Corporation, a New York corporation (the "Corporation"), in accordance with
Section 331 of the Internal Revenue Code and Article 10 of the New York Business
Corporation Law ("BCL") in substantially the following manner:
1. This Plan shall be effective on the date (the "Effective Date") on
which it is approved by the shareholders of the Corporation in accordance with
the BCL. After the Effective Date, the following actions shall be taken:
(a) The Corporation shall sell, exchange, lease or otherwise
dispose of its assets, upon such terms and conditions and for such consideration
as may be fixed from time to time by the Corporation's Board of Directors.
(b) The Corporation shall collect or make provision for the
collection of accounts receivable, debts and claims owing it.
(c) The Corporation shall (i) pay and discharge or make
adequate provision for the payment and discharge of all debts, expenses, taxes
and liabilities of the Corporation, (ii) withdraw from all jurisdictions in
which the Corporation is qualified to do business, (iii) wind up its business
and affairs, and (iv) complete the formal dissolution of the Corporation under
the New York Business Corporation Law.
(d) Subject to the payment of or the making of other provision
for the debts, expenses, taxes and other liabilities of the Corporation,
including contingent liabilities, all of the assets of the Corporation shall be
distributed to or on behalf of its shareholders in accordance with their
respective rights in one or a series of distributions, at any time or from time
to time, before or after the formal dissolution of the Corporation, in cash or
in kind, in any manner that the Board of Directors, in its discretion, may
determine.
2. Implementation of this Plan shall be under the direction of the
Board of Directors of the Corporation, which shall have full authority and
discretion to carry out the provisions of this Plan or such other actions it
deems appropriate, including without limitation amendment or abandonment of this
Plan, whether prior or subsequent to the formal dissolution of the Corporation,
without further shareholder action.
3. Subject to the direction of the Corporation's Board of Directors,
the appropriate officers of the Corporation are hereby authorized to take any
and all actions and to execute, deliver and file any and all agreements,
documents or other instruments which are necessary or convenient to carry out
this Plan, including without limitation the execution and filing with the New
York Department of State of a certificate of dissolution.
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