UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Quarter Ended Commission File No.
March 31, 1994 1-6442-1
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
---------------- ----------------
ORANGE-CO, INC.
(Exact name of registrant as specified in its charter)
FLORIDA
(State or other jurisdiction of incorporation or organization)
59-0918547
(IRS Employer Identification Number)
2020 U.S. Highway 17 South, P. O. Box 2158, Bartow, Florida 33830
(Address of principal executive offices)
(813) 533-0551
(Registrant's telephone no.)
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 XX No
-- --
Number of shares outstanding of common stock, $.50 par value, as of
May 13, 1994: 10,298,475 shares
<PAGE>
ORANGE-CO, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
March 31, 1994 (unaudited) and September 30, 1993
(audited) . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (unaudited)
Six and Three Months ended March 31, 1994 and 1993 . 4
Consolidated Statements of Cash Flows (unaudited)
Six Months ended March 31, 1994 and 1993 . . . . . . 5
Notes to Consolidated Financial Statements (unaudited) 6-9
ITEM 2.
Management's Discussion and Analysis of Results of Operations and
Financial Conditions . . . . . . . . . . . . . . . 10-15
PART II. OTHER INFORMATION
Item 6 . . . . . . . . . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, September 30,
1994 1993
ASSETS (unaudited) (audited)
----------- -------------
<S> <C> <C>
Current assets:
Cash and short-term investments $ 721 $ 1,071
Receivables 5,192 5,907
Advances on fruit purchases 885 2,137
Inventories 39,685 20,460
Prepaid and other 230 85
--------- ---------
Total current assets 46,713 29,660
--------- ---------
Property and equipment, net 100,289 94,486
--------- ---------
Other assets:
Excess of cost over net assets of
acquired companies 12,645 12,841
Property held for disposition 1,778 1,777
Other 1,541 1,038
--------- ---------
Total other assets 15,964 15,656
--------- ---------
Total assets $162,966 $139,802
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 2,181 $ 2,182
Note payable to bank 5,000 -
Accounts payable 4,916 3,062
Accrued liabilities 6,306 9,839
--------- ---------
Total current liabilities 18,403 15,083
Deferred income taxes 18,238 17,336
Other liabilities 311 248
Long-term debt 36,348 19,683
--------- ---------
Total liabilities 73,300 52,350
--------- ----------
Stockholders' equity:
Preferred stock,$.10 par value,
10,000,000 shares authorized;
none issued - -
Common stock,$.50 par value, 30,000,000
shares authorized; 10,349,399 issued 5,175 5,175
Capital in excess of par value 71,417 71,417
Retained earnings 13,557 11,343
--------- ---------
90,149 87,935
Less:
Treasury stock, at cost: 50,924 and
50,240 shares at March 31, 1994 and
September 30, 1993, respectively (483) (483)
--------- ---------
Total stockholders' equity 89,666 87,452
--------- ---------
Total liabilities and stockholders'
equity $162,966 $139,802
========= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
3
<PAGE>
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands except for per share data)
Six Months Three Months
1994 1993 1994 1993
------------- --------------
<S> <C> <C> <C> <C>
Sales $34,001 $30,873 $18,289 $18,977
Cost of sales 28,227 28,516 16,170 18,176
-------- -------- -------- --------
Gross profit 5,774 2,357 2,119 801
Other costs and expenses, net:
Selling, general and administrative (1,967) (1,948) (995) (900)
Gain(loss) on disposition of property
and equipment 446 14 (33) -
Other 9 (59) 9 (53)
Interest (629) (1,146) (347) (608)
-------- -------- -------- -------
Income(loss) from continuing operations
before income taxes 3,633 (782) 753 (760)
Income tax expense (benefit) 1,397 (320) 258 (311)
-------- -------- -------- -------
Net income(loss) from continuing
operations 2,236 (462) 495 (449)
Discontinued operations:
Net income(loss) from operations of
discontinued Petroleum Division,
[net of applicable income tax expense
(benefit) of $(13), $(17), $2
and $(32)] (22) (27) 2 (52)
Loss on Disposal of Petroleum Division - (513) - (513)
------- -------- -------- -------
(Loss)income from Discontinued
Operations (22) (540) 2 (565)
------- -------- -------- --------
Net income(loss) before extraordinary
loss 2,214 (1,002) 497 (1,014)
Extraordinary (loss):
Early extinguishment of debt (loss net
of applicable tax benefit of $366) - (597) - (597)
-------- -------- -------- --------
Net income(loss) $ 2,214 $(1,599) $ 497 $(1,611)
======== ======== ======== ========
Net income(loss) per common and common
equivalent shares:
Continuing operations $ .21 $ (.05) $ .05 $ (.05)
-------- -------- -------- --------
Discontinued operations $ - $ (.05) $ - $ (.05)
-------- -------- -------- --------
Extraordinary (loss) $ - $ (.06) $ - $ (.06)
-------- -------- -------- --------
Net income $ .21 $ (.16) $ .05 $ (.16)
======== ======== ======= ========
Average number of common and common
equivalent shares outstanding 10,299 10,286 10,298 10,299
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,214 $(1,599)
--------- ---------
Adjustments to reconcile net income to
net cash provided by (used for) operating
activities:
Depreciation and amortization 1,811 1,662
Provision for disposal of Petroleum Division - 513
Increase(decrease) deferred income taxes 902 (758)
Provision for extraordinary loss from early
extinguishment of debt - 963
(Gain) on disposition of property
and equipment and other (450) (14)
Change in assets & liabilities:
(Increase)decrease in receivables 715 (1,934)
Decrease in advance on fruit purchases 1,252 228
(Increase) in inventory (19,225) (4,357)
(Increase) in prepaids and other (145) (106)
(Decrease) in accounts payable and
accrued liabilities (1,679) (65)
Other, net (359) (37)
--------- --------
Total adjustments (17,178) (3,905)
--------- --------
Net cash used for operating activities (14,964) (5,504)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 672 11
(Increase)decrease in note & mortgage
receivables (128) 21
Additions to property & equipment (7,594) (3,373)
--------- --------
Net cash provided by (used for)
investing activities (7,050) (3,341)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 21,664 5,374
Issuance of treasury stock - 275
--------- --------
Net cash provided by (used for)
financing activities 21,664 5,649
--------- --------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (350) (3,196)
--------- --------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,071 3,659
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 721 $ 463
========= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
ORANGE-CO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. MANAGEMENT'S OPINION
____________________
The Consolidated Financial Statements include the accounts of
Orange-co, Inc. and Subsidiaries (the "Company"), after elimination
of material intercompany accounts and transactions.
In the opinion of the management of the Company, the accompanying
financial statements reflect adjustments, consisting only of normal
recurring adjustments unless otherwise disclosed, which are necessary
to present fairly the financial position, results of operations and
cash flows for the periods presented:
. Unaudited Consolidated Balance Sheet at March 31, 1994
. Audited Consolidated Balance Sheet at September 30, 1993
. Unaudited Consolidated Statements of Operations for the
six and three month periods ended March 31, 1994 and 1993.
. Unaudited Consolidated Statements of Cash Flows for the
six month periods ended March 31, 1994 and 1993.
2. NOTES PAYABLE AND LONG-TERM DEBT
________________________________
As of March 31, 1994, the Company had access to a $20 million
working capital credit facility payable in January, 1996.
Accordingly, the balance at March 31, 1994 was classified as long-
term. This facility is collateralized by most of the Company's
current assets. The outstanding balance at March 31, 1994 was
approximately $17,611,000. Approximately $2,389,000 were
additionally available to be borrowed under this facility. The
interest rate on the facility is variable based upon the financial
institution's cost of funds plus a margin with a maximum rate of
prime less 1/2 of 1%.
Additionally, as of March 31, 1994 the Company had a $5,000,000
short-term capital revolving credit facility to provide interim
financing for capital projects. As of March 31, 1994 the balance on
this facility was $5,000,000. The interest rate on this facility is
variable based upon the financial institution's cost of funds plus a
margin with a maximum rate of prime less 1/2 of 1%.
As of April 1, 1994 the working capital credit facility was
increased to $30 million and the capital revolving facility was
increased to $6 million.
At March 31, 1994, the Company's outstanding long-term debt
(including the $17,611,000 balance on the working capital line of
credit facility) was approximately $38,529,000, of which $2,181,000
matures in the next 12 months and the remainder matures at various
times over the subsequent eighteen years.
Interest paid, net of amounts capitalized, was approximately
$656,000 and $1,176,000 for the six months ended March 31, 1994 and
1993, respectively. Interest capitalized was approximately $279,000
and $125,000 for the six months ended March 31, 1994 and 1993
respectively.
Certain mortgage agreements contain loan covenants. At March
31, 1994, the Company was in compliance with its loan covenants.
6
<PAGE>
3. INVENTORIES
___________
<TABLE>
<CAPTION>
The major components of inventory are summarized as follows (in
thousands):
March 31, September 30,
1994 1993
__________ ___________
<S> <C> <C>
Finished goods $34,203 $12,764
Fruit-on-tree inventory 4,579 6,636
Other 903 1,060
_______ _______
Total $39,685 $20,460
======= =======
</TABLE>
4. BUSINESS SEGMENT
________________
<TABLE>
<CAPTION>
Segment financial data for the six and three months ended March
31, 1994 and 1993, except for total assets which are as of March 31,
1994 and September 30, 1993, are as follows (in thousands):
Petroleum
and Related
Period Citrus Products Total
------ ------ ----------- -----
<S> <C> <C> <C> <C>
Sales Six months ended 3/31/94 $ 34,001 $ 6,765 $ 40,766
Three months ended 3/31/94 18,289 3,443 21,732
Six months ended 3/31/93 $ 30,873 $ 8,070 $ 38,943
Three months ended 3/31/93 18,977 4,166 23,143
Operating Six months ended 3/31/94 $ 3,807 $ - $ 3,807
Profit (Loss) Three months ended 3/31/94 1,124 - 1,124
Six months ended 3/31/93 $ 409 $ - $ 409
Three months ended 3/31/93 (99) - (99)
Total Assets March 31, 1994 $160,013 $ 2,953 $162,966
September 30, 1993 136,783 3,019 139,802
Depreciation Six months ended 3/31/94 $ 1,737 $ 74 $ 1,811
& amortization Three months ended 3/31/94 874 32 906
Six months ended 3/31/93 $ 1,577 $ 85 $ 1,662
Three months ended 3/31/93 735 43 778
Capital Six months ended 3/31/94 $ 7,574 $ 18 $ 7,592
expenditures Three months ended 3/31/94 3,350 8 3,358
Six months ended 3/31/93 $ 3,371 $ 2 $ 3,373
Three months ended 3/31/93 1,300 5 1,305
</TABLE>
Intersegment sales approximate market and are not significant.
7
<PAGE>
<TABLE>
<CAPTION>
RECONCILIATION OF OPERATING PROFIT(LOSS) TO INCOME(LOSS) BEFORE INCOME TAXES:
-----------------------------------------------------------------------------
Six Months Three Months
Ended March 31, Ended March 31,
1994 1993 1994 1993
------------------ -----------------
<S> <C> <C> <C> <C>
Operating profit $3,807 $ 409 $1,124 $ (99)
Gain on disposition of
property and equipment 446 14 (33) -
Other 9 (59) 9 (53)
Interest (629) (1,146) (347) (608)
------- -------- -------- ------
Income(loss) from
continuing operations
before income taxes $3,633 $ (782) $ 753 $(760)
======= ======== ====== ======
</TABLE>
During the six and three month periods ended March 31, 1994,
the Company had two customers who individually accounted for
approximately 26.7% and 8.8%, and 24.2% and 8.4% of total sales for
the respective periods. During the six and three month periods
ended March 31, 1993, the Company had two customers who individually
accounted for approximately 26.6% and 6.9%, and 21.0% and 5.6% of
total sales for the respective periods.
5. INCOME TAXES AND OTHER
----------------------
<TABLE>
<CAPTION>
The provision for income taxes for continuing and discontinued
operations for the six and three month periods ended March 31, 1994
and 1993 is summarized as follows (in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1994 1993 1994 1993
---------------- ---------------
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 109 $(413) $ 40 $(425)
State income tax 18 (44) 7 (45)
------ ------ ---- ------
Total 127 (457) 47 (470)
------ ------ ---- ------
Deferred:
Federal income 1,143 (222) 196 (216)
State income tax 114 (24) 17 (23)
------ ------ ---- ------
Total 1,257 (246) 213 (239)
------ ------ ---- ------
Total provision for
income taxes $1,384 $(703) $260 $(709)
====== ====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
Following is a reconciliation of the expected income tax expense
computed at the U.S. Federal statutory rate of 34% and the actual income
tax provisions for the quarters ended March 31, 1994 and 1993
(in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1994 1993 1994 1993
--------------- ---------------
<S> <C> <C> <C> <C>
Expected income tax
expense(benefit) $1,223 $(783) $258 $(789)
Increase(decrease) resulting
from:
State income taxes,
net of federal tax benefit 134 (62) 25 (68)
Loss on foreign investments 36 67 14 19
Permanent items and other (9) 75 (37) 129
------- ------ ----- ------
Total provision for
income taxes $1,384 $(703) $260 $(709)
====== ====== ===== ======
</TABLE>
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" (FAS No. 109). FAS No. 109 required a
change from the deferred method of accounting for
8
<PAGE>
income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of
FAS No. 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under FAS No. 109, the effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The Company adopted FAS No. 109 during the fourth quarter of
fiscal 1993 and has applied the provisions of FAS No. 109
retroactively to October 1, 1990. The prior year periods have been
adjusted to reflect the effects of the retroactive implementation of
FAS No. 109.
6. DISCONTINUED OPERATIONS
During the second quarter of 1993, the Company decided to sell
the Petroleum Division comprised of Frank Carroll Oil Company. This
decision resulted in a charge of $513,000 during that quarter,
including a write down of the operating assets to their estimated net
realizable value and an accrual for operating losses through the
anticipated phase-out period. These charges were disclosed on the
Consolidated Statements of Operations during fiscal 1993 for the
respective periods. The Consolidated Statements of Operations have
been restated deleting sales, cost of sales, gross profit, selling,
general and administrative expenses, interest expense, and all other
items of profit and loss related to the Petroleum Division from net
income from continuing operations. See Note 4, for disclosure of
selected components of the Petroleum Division. As of May 13, 1994
the Company had not completed the sale of this division.
See Management's Discussion and Analysis, "Other Significant Events".
7. EMPLOYEE BENEFITS
-----------------
Certain officers and employees have employment contracts for
additional retirement benefits, the cost of which is being accrued on a
present value basis over the remaining term of the employment
agreements. The lives of the officers and employees have been
insured as a means of funding such benefits. These contracts become
effective for fiscal 1994 and thereafter. The accrued liability for
these additional retirement benefits at March 31, 1994 was
approximately $46,000.
9
<PAGE>
ORANGE-CO, INC. AND SUBSIDIARIES
PART I - ITEM 2
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Fiscal 1994 versus Fiscal 1993
______________________________
The following is management's discussion and analysis of
significant factors which have affected the Company's continuing
operations during the periods included.
The following table reflects changes in sales, cost of sales
and gross profit by product line and other changes in the Statements
of Operations through net income from continuing operations. The
respective periods have been restated deleting sales, cost of sales,
gross profit, selling, general and administrative expenses, interest
expense and all other items of profit and loss related to the
Petroleum Division. Additionally, the prior year periods have been
adjusted and restated to reflect the effects of retroactive
implementation of FAS No. 109. (See Note 5 "Income Taxes" of the
Notes to the Consolidated Financial Statements.)
<TABLE>
<CAPTION>
Six Months (YTD) and Three Months (QTR) Ended March 31, 1994
vs Six Months (YTD) and Three Months (QTR) Ended March 31, 1993
Increases/(Decreases)
(in thousands)
Sales Cost of Sales Net Change
YTD QTR YTD QTR YTD QTR
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beverage Division. . . $3,276 $(739) $(185) $(2,069) $3,461 $1,330
Grove Management . . . (148) 51 (104) 63 (44) (12)
------- ------ ------ -------- ------- ------
$3,128 $(688) $(289) $(2,006) 3,417 1,318
======= ====== ====== ========
Other costs and expenses:
Selling, general and administrative . . . . . . . . . (19) (95)
Gain on disposition of property and equipment . . . . 432 (33)
Other expense . . . . . . . . . . . . . . . . . . . . 68 62
Interest . . . . . . . . . . . . . . . . . . . . . . . 517 261
------ ------
Income from continuing operations before income taxes . 4,415 1,513
Provision for income taxes from continuing operations . (1,717) (569)
------- ------
Net income from continuing operations . . . . . . . . . $2,698 $ 944
======= ======
</TABLE>
RESULTS OF OPERATIONS
_____________________
SALES
_____
Sales for the six and three month periods ended March 31, 1994
increased approximately $3,128,000 or 10.1% and decreased
approximately $688,000 or 3.6%, respectively compared to the same
periods in the prior year. The Beverage Division accounted for the
principal increase for the six month period with increased sales of
approximately $3,276,000. This increase was partially offset by a
reduction of approximately $148,000 in Grove Management Division
sales. The Beverage Division accounted for the principal decrease
for the current three month period with a reduction in sales of
$739,000. This decrease was partially offset by an increase in Grove
Management Division sales of approximately $51,000.
BEVERAGE DIVISION The Beverage Division sales increased
approximately $3,276,000 or 11.5% and decreased approximately
$739,000 or 4.2% in the current six and three month respective
periods compared to the same periods in the prior year. The
10
<PAGE>
principal increase during the current six month period of
approximately $4,304,000 resulted from increased prices for bulk
frozen concentrated orange juice (FCOJ). Prices during the same
period in the prior year decreased sharply as a result of the United
States Department of Agriculture's (U.S.D.A.) announcement of the
much larger crop for the 1992-93 season in October 1992. Revenues
from the sales of bulk FCOJ also increased approximately $811,000
during the current six month period as a result of an increase in
the volume of bulk sold due to the development of an improved bulk
sales program and the availability of bulk FCOJ resulting from a
larger carryover inventory. The principal increase in revenues
during the current three month period of approximately $2,294,000
was primarily a result of increased prices for bulk FCOJ. However,
this increase was more than offset by a decrease in revenues of
approximately $2,958,000 resulting from a decrease in the volume of
bulk FCOJ sold during the current three month period compared to the
same period in the prior year.
The Company experienced a decrease in the sales of food service
orange juice products of approximately $2,651,000 and $894,000 as a
result of lower volumes for the current six and three month periods
compared to the same periods in the prior year. The reduction in
volume was due in part to the decision of one of the Company's food
service customers to move its business to an alternate supplier.
Partially offsetting these decreases in volume were increases in the
prices of food service orange juice products of approximately
$202,000 and $188,000 for the current six and three month periods.
The Company also experienced a decrease in revenues of food
service non-orange juice beverage products of approximately $653,000
and $455,000 as a result of lower volumes for the current six and
three month periods compared to the same periods in the prior year.
This reduction in sales volumes of non-orange juice beverage
products was also due in part to the movement of a food service
customer to an alternate supplier as previously mentioned. Lower
prices during the current six month period accounted for decreases
of approximately $279,000. However, during the current three month
period higher prices accounted for increases of approximately
$226,000. Partially offsetting these decreases were sales of the
Company's new line of drink base products acquired with the purchase
of International Fruit, Inc. in August of 1993 of approximately
$700,000 and $381,000 for the current six and three month periods.
There were no comparable sales for these products in the same
periods in the prior year.
During the current six and three month periods the Company
experienced an increase in revenues of approximately $1,389,000 and
$424,000 due principally from the sale of higher volumes of bulk
frozen concentrated grapefruit juice (FCGJ) compared to the same
periods in the prior year. The Company experienced a sales decrease
for the current six and three month periods of approximately
$134,000 and $127,000 principally as a result of lower sales volumes
of single strength fresh squeezed citrus juices.
In addition, revenues from processing citrus into concentrate
for customers under contract increased approximately $70,000 and
$357,000 for the current six and three month periods. This increase
in the current periods is primarily due to seasonal fluctuations
compared to last year. Revenues from storage, handling and other
activities increased approximately $94,000 and decreased
approximately $38,000 for the current six and three month periods.
Revenues from the sale of by-products decreased approximately
$577,000 and $137,000 during the current six and three month
periods. These decreases are primarily the result of lower market
prices on by-products.
GROVE MANAGEMENT DIVISION Grove Management sales decreased
approximately $148,000 or 6.4% for the current six month period and
increased by approximately $51,000 or 4.3% for the current three
month period compared to the same periods in the prior year. The
principal decrease during the current six month period of
approximately $118,000 was due to a reduction in boxes harvested.
However, for the current three month period, revenues from
harvesting increased approximately $19,000 due to an increase in
harvesting services provided. Additionally, revenues from
11
<PAGE>
sales of fruit to third party packers and processors decreased
approximately $110,000 and $48,000 respectively for the current six and
three month periods. Offsetting these decreases was an increase in
grove caretaking revenues of approximately $80,000 during the current
six and three month periods primarily as a result of an increase in the
volume of services performed.
GROSS PROFIT
____________
Gross profit for the six and three month periods ended March
31, 1994 increased approximately $3,417,000 or 144.9% and $1,318,000
or 164.5%, respectively compared to the same periods in the prior
year. The principal increases of approximately $3,461,000 and
$1,330,000 during the current six and three month respective periods
occurred in the Beverage Division. The Grove Management Division
partially offset these with decreases during the six and three month
periods of $44,000 and $12,000, respectively.
BEVERAGE DIVISION Gross profit of the Beverage Division increased
approximately $3,461,000 and $1,330,000 for the current six and
three month periods compared to the same periods in the prior year.
The principal increases of approximately $3,050,000 and $1,097,000
resulted from the sale of bulk FCOJ. Of these bulk FCOJ increases,
higher prices for FCOJ during the current six and three month
periods accounted for increases in gross profit of approximately
$4,304,000 and $2,294,000. Lower prices for FCOJ during the same
periods of the prior year resulted from the expectation of a larger
crop for the 1992-93 season as previously mentioned. Partially
offsetting these increases in prices for the current periods were
increases in the cost of bulk FCOJ of approximately $1,139,000 and
$1,639,000 respectively. This resulted from last year's lower cost
carryover bulk FCOJ inventory being depleted during the first
quarter and the current year's higher cost inventory beginning to be
utilized. An increase in the volume of bulk FCOJ sold during the
current six month period resulted in a decrease in gross profit of
approximately $115,000 primarily due to the use of the higher cost
inventory during the current period compared to the same period in
the prior year. However, during the current three month period a
decrease in the volume of bulk FCOJ sold resulted in an increase in
gross profit of approximately $442,000 compared to the same period
in the prior year. Management expects the cost of bulk FCOJ
inventory sold as bulk FCOJ and utilized in its value added products
to be higher over the next two quarters compared to the same periods
in the prior year as a result of a higher cost of fruit and
purchased FCOJ compared to the prior fiscal year's carryover FCOJ
inventory.
The Company has in the past utilized and may in the future
utilize the FCOJ futures market to hedge fruit inventory,
anticipated requirements and sales commitments of FCOJ. The effects
of this hedging activity, if any, are reflected in the cost of
inventories and flow through cost of sales in the Consolidated
Statements of Operations as a component of the cost of FCOJ as the
associated product is sold. As of March 31, 1994 the Company held
long positions (obligations to purchase) in FCOJ futures with
unrealized losses of approximately $109,000 which would have been
realized if said positions would have been prematurely liquidated on
that date. These unrealized losses are based upon the closing
market price of equivalent futures positions on that date compared
to the Company's futures obligation and do not necessarily represent
prices at which the Company expects to sell the FCOJ once acquired
for resale or utilized in the production of its products.
Gross profit on the sale of food service orange juice products
increased approximately $455,000 and $189,000 during the current six
and three month periods compared to the same periods in the prior
year. Of this increase, approximately $202,000 and $188,000 during
the current six and three month periods resulted from higher prices.
Lower cost of inventory carried over from last year accounted for
increases in gross profit of approximately $558,000 and $86,000
during the current six and three month periods. A reduction in
volume accounted for a decrease in gross profit of approximately
$305,000 and $85,000 for the current six and three month periods
compared to the same periods in the prior year.
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<PAGE>
Additionally, the Company experienced an increase in gross
profit on its non-orange juice and beverage products of
approximately $294,000 and $110,000 for the current six and three
month periods. Of this increase in the current six month period,
approximately $607,000 resulted from a reduction in the cost of
ingredients and conversion cost compared to the same period in the
prior year. However, during the current three month period an
increase in the cost of ingredients and conversion cost compared to
the same period in the prior year resulted in a decrease in gross
profit of approximately $85,000. Lower prices during the current
six month period accounted for decreases of approximately $279,000.
However, during the current three month period higher prices
accounted for an increase of approximately $226,000. Reductions in
volume accounted for decreases of approximately $34,000 and $31,000,
respectively.
Increases in gross profit of approximately $92,000 and $63,000
during the current six and three month periods resulted from the
sales of the Company's new line of drink base products as previously
mentioned. There were no comparable sales for these products in the
same periods in the prior year. Additionally, the Company
experienced an increase in gross profit for the current six and
three month periods of approximately $39,000 and $46,000 from sales
of single strength fresh squeezed citrus juices.
Additionally, increases in gross profit during the current six
and three month periods of approximately $51,000 and $89,000
respectively resulted from processing citrus into concentrate for
customers under contract. Gross profit from storage, handling, and
marketing fees and other activities increased approximately $118,000
during the current six month period and decreased approximately
$28,000 during the current three month period.
Offsetting these increases was a decrease in the gross profit
during the current six and three month periods from the sale of bulk
FCGJ of approximately $249,000 and $127,000. The Company also
experienced a decrease in gross profit from the sale of by-products
of approximately $389,000 and $109,000 during the current six and
three month periods. This decrease was a combined result of reduced
volumes and lower prices during the current periods compared to the
same periods in the prior year.
GROVE MANAGEMENT Grove Management gross profit for the six and
three month periods decreased approximately $44,000 and $12,000
respectively compared to the same periods in the prior year. Gross
profit from harvesting increased approximately $6,000 during the
current six and three month periods. Offsetting this increase was a
decrease in gross profit from sales of fruit to third party packers
and processors of approximately $71,000 and $11,000 respectively for
the current six and three month periods. Gross profit from grove
caretaking increased in the current six month period by
approximately $21,000 primarily as a result of an increase in the
volume of services performed. However, during the current three
month period gross profit from grove caretaking decreased by
approximately $7,000 principally as a result of a decrease in volume
of caretaking services performed.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
____________________________________________
Selling, general and administrative expenses increased
approximately $19,000 or 1.0% and $95,000 or 10.6% for the current
six and three month periods, respectively, compared to the same
periods in the prior year. These increases were primarily caused by
increases in labor and were partially offset by reductions in other
costs.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT AND OTHER
--------------------------------------------------------------
The increased gain on the disposition of property, equipment
and other of approximately $432,000 for the six month period ending
March 31, 1994 compared to the same period in the prior year was
principally due to a gain on a sale of commercial
13
<PAGE>
property in the first quarter of fiscal 1994. There was no comparable
sale during the same period in the prior year.
INTEREST EXPENSE
________________
Interest expense decreased approximately $517,000 or 45.1% and
$261,000 or 42.9% in the current six and three month periods
respectively, compared to the same periods in the prior year. The
primary decreases of approximately $390,000 and $205,000 in the current
respective periods were the result of lower interest rates on debt.
Additionally, interest capitalized increased approximately $154,000
and $127,000 in the current respective periods and other interest
related charges decreased approximately $94,000 and $31,000.
Offsetting these decreases were increases of approximately $121,000
and $102,000 for the six and three month periods respectively, which
were due to increased borrowings during those periods.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company's Bartow processing plant normally operates from
early December through late May or June. While the plant is in
operation, the inventory of processed juice increases to a level
which will cover anticipated sales until the following December when
the plant begins operation again. The Company's working capital
credit facility is generally utilized to finance the inventories.
Borrowings under this credit facility normally peak in late May or
June. The Company began processing activities for the current
season in late November.
The Company's ability to generate cash adequate to meet its
needs, including the financing of its inventories and trade
receivables, has been supported primarily by cash flow from
operations and periodic borrowings under its primary $20 million
credit facility. This facility is secured principally by most of
the Company's current assets. The outstanding balance at March 31,
1994 was approximately $17,611,000 and approximately $2,389,000 of
additional borrowings were available under this facility. As of
April 1, 1994 the working capital credit facility was increased to
$30 million. The interest rate is variable based upon the financial
institution's cost of funds plus a margin. The terms of the
agreement call for repayment of the principal amount in January 1996;
accordingly, it is classified as long-term. As of April 30, 1994,
the Company's outstanding balance approximately $20,376,000. The
Company anticipates that the working capital facility will be
adequately serviced with cash proceeds from operations.
Additionally, as of March 31, 1994 the Company had a $5 million
short-term capital revolving credit facility to provide interim
financing for capital projects. As of March 31, 1994 the
outstanding balance on this facility was $5,000,000. The interest
rate on this facility is variable based upon the financial
institution's cost of funds plus a margin. As of April 1, 1994 this
credit facility was increased to $6 million and as of April 31, 1994
the balance remained at $5 million.
Current assets increased approximately $17,053,000 as of March
31, 1994 compared to the fiscal year ended September 30, 1993. The
principal component of this was an increase in inventories of
approximately $19,225,000 in the first six months of the current
year due to the start of the processing season in November 1993.
The Company's accounts receivable balance decreased approximately
$715,000 compared to the fiscal year end. Additionally, there was a
decrease in cash and short-term cash investments of approximately
$350,000 and advances on fruit purchases decreased approximately
$1,252,000 as the Company began processing the purchased fruit.
Current liabilities increased during the first six months of
fiscal 1994 approximately $3,320,000 compared to the fiscal year
ended September 30, 1993. The principal reason for this increase
was due to increased capital expenditures financed with the
previously mentioned short-term capital revolving credit facility.
Long-term debt increased approximately $16,665,000 during the
current six month period. This was principally the result of an
increase of approximately $17,611,000
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<PAGE>
on the Company's long-term working capital facility due to the beginning
of the processing season. Offsetting this increase was a decrease of
approximately $946,000 which represents scheduled principal payments
made on long-term debt during the six month period.
At March 31, 1994 the Company's outstanding long-term debt was
approximately $36,348,000 including the working capital facility of
approximately $17,611,000. In addition current installments of
long-term debt are approximately $2,181,000 with the remaining
amounts due on various dates over the subsequent 18 years. The
Company anticipates that amounts due over the next twelve months
will be paid out of working capital. At March 31, 1994, the Company
was in compliance with its loan covenants.
The Company completed the installation of new irrigation
systems for 1,670 acres of Company-owned Joshua and Bermont groves
during the first six months of the current fiscal year at a cost of
approximately $1,373,000. Irrigation improvements to an additional
1,235 acres are currently under consideration. Additional
expenditures of approximately $647,000 have been made during the
current year primarily for grove operations equipment. Other
capital projects totaling approximately $4.9 million are in varying
stages of completion for the purpose of improving the efficiency and
capacity of the Bartow processing facility, including the recently
completed project that expanded the capacity of its concentrate bulk
storage facility at Bartow by approximately 3.8 million gallons.
The Company anticipates that these improvements will be
financed principally by securing additional funds under existing
mortgages or from working capital.
OTHER SIGNIFICANT EVENTS
________________________
In October 1993 the USDA announced a Florida crop estimate of
approximately 172,000,000 boxes of oranges for the 1993-94 season.
This estimate was revised in January 1994 to approximately
176,000,000 boxes of oranges and again in April 1994 to
approximately 174,300,000 boxes of oranges. Even though this is a
decrease from the prior season's crop of 186,500,000 boxes of
oranges, expectations of ample supplies resulting from an unusually
large Florida citrus industry carryover of concentrated orange juice
into the current season has caused sharply decreased prices for bulk
FCOJ.
The Company has negotiated with several parties for the sale of
the Petroleum Division and discussions with a potential purchaser
are ongoing. The Company is continuing to operate the Petroleum
Division as discussions progress and it is now likely that the sale
of the Petroleum Division will be completed by the end of fiscal
1994. During the interim period the operations of the Petroleum
Division are not expected to materially affect net income or
liquidity of the continuing operations of the Company.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
<TABLE>
<CAPTION>
At the Annual Meeting of Stockholders on February 24, 1994, the
stockholders of the Company (i) elected directors, and (ii) voted
against a shareholder proposal requiring all directors to own 10,000
shares of Company stock to qualify. The results of these votes were
as follows:
AUTHORITY
(i) DIRECTOR NOMINEES FOR WITHHELD
----------------- --- ---------
<S> <C> <C>
John R. Alexander 9,241,551 69,395
Richard A. Coonrod 9,242,726 68,220
Paul E. Coury, M.D. 9,236,748 74,198
Ben Hill Griffin, III 9,237,666 73,280
George W. Harris, Jr. 9,235,626 75,320
Dr. W. Bernard Lester 9,242,926 68,020
Gene Mooney 9,241,237 69,709
C. B. Myers, Jr. 9,236,724 74,222
Thomas H. Taylor 9,241,152 69,794
</TABLE>
<TABLE>
<CAPTION>
(ii) SHAREHOLDER PROPOSAL FOR AGAINST ABSTAIN
-------------------- --- ------- -------
<S> <C> <C> <C>
749,669 6,941,460 69,343
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT PAGE NO.
<S> <C> <C>
10.18 First Amendment to the Loan Agreement by and 17
between Orange-co, Inc. and Orange-co of Florida,
Inc. and Sun Bank National Association for a
Revolving Line of Credit dated January 10, 1994.
10.19 Second Amendment to the Loan Agreement by and 24
between Orange-co, Inc. and Orange-co of Florida,
Inc. and Sun Bank National Association for a
Revolving Line of Credit dated April 1, 1994.
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.
ORANGE-CO, INC.
(Registrant)
Date: May 13, 1994 By: Gene Mooney
_____________________
Gene Mooney
President and
Chief Operating Officer
Date: May 13, 1994 By: Dale A. Bruwelheide
------------------------
Dale A. Bruwelheide
Vice President and
Chief Financial Officer
16
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</TABLE>
