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.
June 30, 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 August
12, 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
June 30, 1994 (unaudited) and September 30, 1993
(audited) . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (unaudited)
Nine and three Months ended June 30, 1994 and 1993 . 4
Consolidated Statements of Cash Flows (unaudited)
Nine months ended June 30, 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)
June 30, September 30,
1994 1993
ASSETS (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 601 $ 1,071
Receivables 6,946 5,907
Advances on fruit purchases - 2,137
Inventories 50,987 20,460
Prepaid and other 173 85
_________ _________
Total current assets 58,707 29,660
_________ _________
Property and equipment, net 101,322 94,486
_________ _________
Other assets:
Excess of cost over net assets of
acquired companies 12,547 12,841
Property held for disposition 1,774 1,777
Other 1,827 1,038
_________ _________
Total other assets 16,148 15,656
_________ _________
Total assets $176,177 $139,802
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 2,187 $ 2,182
Note payable to bank 5,000 -
Accounts payable 6,160 3,062
Accrued liabilities 10,539 9,839
_________ _________
Total current liabilities 23,886 15,083
Deferred income taxes 18,168 17,336
Other liabilities 326 248
Long-term debt 43,745 19,683
_________ _________
Total liabilities 86,125 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 13,943 11,343
_________ _________
90,535 87,935
Less:
Treasury stock, at cost: 50,924 and
50,240 shares at June 30, 1994 and September
30, 1993, respectively (483) (483)
_________ _________
Total stockholders' equity 90,052 87,452
_________ _________
Total liabilities and stockholders' equity $176,177 $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 NINE AND THREE MONTHS ENDED June 30, 1994 AND 1993
(unaudited)
(in thousands except for per share data)
Nine Months Ended Three Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Sales $57,201 $53,160 $23,200 $22,286
Cost of sales 49,343 48,545 21,116 20,029
________ ________ ________ ________
Gross profit 7,858 4,615 2,084 2,257
Other costs and expenses, net:
Selling, general and administrative (3,076) (2,905) (1,109) (956)
Gain on disposition of property and
equipment 453 140 7 126
Other 15 (66) 6 1
Interest (1,113) (1,639) (484) (502)
________ ________ _______ _______
Income from continuing operations
before income taxes 4,137 145 504 926
Income tax expense 1,492 59 95 379
________ ________ _______ _______
Net income from continuing operations 2,645 86 409 547
Discontinued operations:
Net income(loss) from operations of
discontinued Petroleum Division,
[net of applicable income tax expense
(benefit) of $(27), $(32), $(14)
and $(15)] (45) (52) (23) (24)
Loss on Disposal of Petroleum Division - (513) - -
________ _______ _______ ______
Loss from Discontinued Operations (45) (565) (23) (24)
________ _______ _______ ______
Net income(loss) before extraordinary
loss 2,600 (479) 386 523
Extraordinary (loss):
Early extinguishment of debt (loss net
of applicable tax benefit of $366) - (597) - -
Net income(loss) $ 2,600 $(1,076) $ 386 $ 523
======== ======== ======== ========
Net income(loss) per common and common
equivalent shares:
Continuing operations $ .25 $ .01 $ .04 $ .05
-------- -------- -------- --------
Discontinued operations $ - $ (.05) $ - $ -
-------- -------- -------- --------
Extraordinary (loss) $ - $ (.06) $ - $ -
-------- -------- -------- --------
Net income(loss) $ .25 $ (.10) $ .04 $ .05
======== ======== ======== ========
Average number of common and common
equivalent shares outstanding 10,299 10,290 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 NINE MONTHS ENDED June 30, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,600 $(1,076)
--------- --------
Adjustments to reconcile net income to
net cash provided by (used for) operating
activities:
Depreciation and amortization 2,823 2,401
Provision for disposal of Petroleum Division - 513
Deferred income taxes 832 (338)
(Gain) on disposition of property
and equipment and other (453) (140)
Change in assets & liabilities:
(Increase) in receivables (1,039) (3,205)
Decrease in advance on fruit purchases 2,137 392
(Increase) in inventory (30,527) (887)
(Increase) in prepaids and other (88) (51)
Increase(decrease) in accounts payable
and accrued liabilities 3,798 (242)
Other, net (555) (126)
-------- -------
Total adjustments (23,072) (1,683)
-------- -------
Net cash used for operating activities (20,472) (2,759)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 934 30
(Increase) in note & mortgage receivables (143) (116)
Additions to property & equipment (9,856) (5,135)
-------- -------
Net cash provided by (used for) investing activities (9,065) (5,221)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 29,067 4,405
Issuance of treasury stock - 274
-------- -------
Net cash provided by (used for) financing activities 29,067 4,679
-------- --------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (470) (3,301)
-------- -------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,071 3,659
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 601 $ 358
======== =======
</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 June 30, 1994
. Audited Consolidated Balance Sheet at September 30, 1993
. Unaudited Consolidated Statements of Operations for the
nine and three month periods ended June 30, 1994 and 1993.
. Unaudited Consolidated Statements of Cash Flows for the
nine month periods ended June 30, 1994 and 1993.
2. NOTES PAYABLE AND LONG-TERM DEBT
As of June 30, 1994, the Company had access to a $30 million
working capital credit facility payable in January, 1996.
Accordingly, the balance at June 30, 1994 was classified as long-
term. This facility is collateralized by most of the Company's
current assets. The outstanding balance at June 30, 1994 was
approximately $25,477,000. Approximately $4,523,000 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.
Additionally, as of June 30, 1994 the Company had a $6,000,000
short-term capital revolving credit facility to provide interim
financing for capital projects. As of June 30, 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.
At June 30, 1994, the Company's outstanding long-term debt
(including the $25,477,000 balance on the working capital line of
credit facility) was approximately $45,932,000, of which $2,187,000
matures in the next 12 months and the remainder matures at various
times over the subsequent seventeen years.
Interest paid, net of amounts capitalized, was approximately
$750,000 and $1,523,000 for the nine months ended June 30, 1994 and
1993, respectively. Interest capitalized was approximately $373,000
and $188,000 for the nine months ended June 30, 1994 and 1993
respectively.
Certain mortgage agreements contain loan covenants. At June
30, 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):
June 30, September 30,
1994 1993
<S> <C> <C>
Finished goods $44,771 $12,764
Fruit-on-tree inventory 5,161 6,636
Other 1,055 1,060
------- -------
Total $50,987 $20,460
======= =======
</TABLE>
4. BUSINESS SEGMENT
<TABLE>
<CAPTION>
Segment financial data for the nine and three months ended June
30, 1994 and 1993, except for total assets which are as of June 30,
1994 and September 30, 1993, are as follows (in thousands):
Petroleum
and Related
Period Citrus Products Total
<S> <C> <C> <C> <C>
Sales Nine months ended 6/30/94 $ 57,201 $10,044 $ 67,245
Three months ended 6/30/94 23,200 3,279 26,479
Nine months ended 6/30/93 $ 53,160 $12,142 $ 65,302
Three months ended 6/30/93 22,286 4,073 26,359
Operating Nine months ended 6/30/94 $ 4,782 $ - $ 4,782
Profit (Loss) Three months ended 6/30/94 975 - 975
Nine months ended 6/30/93 $ 1,710 $ - $ 1,710
Three months ended 6/30/93 1,301 - 1,301
Total Assets June 30, 1994 $173,494 $ 2,683 $176,177
September 30, 1993 136,783 3,019 139,802
Depreciation Nine months ended 6/30/94 $ 2,713 $ 110 $ 2,823
& amortization Three months ended 6/30/94 975 34 1,009
Nine months ended 6/30/93 $ 2,271 $ 130 $ 2,401
Three months ended 6/30/93 775 45 820
Capital Nine months ended 6/30/94 $ 9,832 $ 22 $ 9,854
expenditures Three months ended 6/30/94 2,255 6 2,261
Nine months ended 6/30/93 $ 5,123 $ 12 $ 5,135
Three months ended 6/30/93 1,760 2 1,762
</TABLE>
Intersegment sales approximate market and are not significant.
-7-
<TABLE>
<CAPTION>
RECONCILIATION OF OPERATING PROFIT(LOSS) TO INCOME(LOSS) BEFORE
INCOME TAXES:
Nine Months Three Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating profit $4,782 $1,710 $975 $1,301
Gain on disposition of property
and equipment 453 140 7 126
Other 15 (66) 6 1
Interest (1,113) (1,639) (484) (502)
------- ------- ----- ------
Income from continuing
operations before income taxes $4,137 $ 145 $504 $ 926
======= ======= ===== =======
</TABLE>
During the nine and three month periods ended June 30, 1994,
the Company had one customer who individually accounted for
approximately 25.4% and 23.5% of total sales for the respective
periods. During the nine and three month periods ended June 30,
1993, the Company had one customer who individually accounted for
approximately 24.7% and 21.9% 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 nine and three month periods ended June 30,
1994 and 1993 is summarized as follows (in thousands):
Nine months Three Months
Ended March 31, Ended March 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 148 $(337) $39 $ 76
State income tax 24 (36) 6 8
------ ------ --- ----
Total 172 (373) 45 84
------ ------ --- ----
Deferred:
Federal income $1,161 31 20 253
State income tax 132 3 16 27
------ ------ --- ----
Total 1,293 34 36 280
------ ------ --- ----
Total provision for
income taxes $1,465 $(339) $81 $364
====== ====== === ====
</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 nine and three month periods
ended June 30, 1994 and 1993 (in thousands):
Nine Months Three Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Expected income tax $1,382 $(481) $159 $302
Increase(decrease) resulting from:
State income taxes,
net of federal tax benefit 156 (50) 22 12
Loss on foreign operations 47 32 11 (35)
Permanent items and other (120) 160 (111) 85
------- ------ ----- -----
Total provision for income taxes $1,465 $(339) $ 81 $364
======= ====== ===== =====
</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 income
-8-
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 periods have been
adjusted and restated 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 reflect the deletion of 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 financial data for
the Petroleum Division. As of August 12, 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
June 30, 1994 was approximately $69,000.
-9-
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.
During the second quarter of 1993, the Company decided to sell the
Petroleum Division comprised of Frank Carroll Oil Company.
Accordingly, the respective periods delete 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>
Nine months (YTD) and Three Months (QTR) Ended June 30, 1994
vs Nine months (YTD) and Three Months (QTR) Ended June 30, 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. . . $3,703 $428 $518 $ 702 $3,185 $(274)
Grove Management . . . 338 486 280 385 58 101
------ ---- ---- ------ ------ ------
$4,041 $914 $798 $1,087 3,243 (173)
====== ==== ==== ======
Other costs and expenses:
Selling, general and administrative . . . . . . . . . . . . (171) (153)
Gain on disposition of property and equipment . . . . . . . 313 (119)
Other expense . . . . . . . . . . . . . . . . . . . . . . . 81 5
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 526 18
_______ ______
Income from continuing operations before income taxes . . . . 3,992 (422)
Provision for income taxes from continuing operations . . . (1,433) 284
------- ------
Net income from continuing operations . . . . . . . . . . . $2,559 $(138)
======= ======
</TABLE>
RESULTS OF OPERATIONS
SALES
Sales for the nine and three month periods ended June 30, 1994
increased approximately $4,041,000 or 7.6% and approximately
$914,000 or 4.1%, respectively compared to the same periods in the
prior year. The Beverage Division accounted for the principal
increase for the nine month period with increased sales of
approximately $3,703,000. Grove Management sales increased by
approximately $338,000 for the nine month period compared to the
prior year. The Beverage Division and Grove Management accounted
for increases of $428,000 and $486,000 respectively in the current
three month period compared to the same period in the prior year.
BEVERAGE DIVISION The Beverage Division sales increased
approximately $3,703,000 or 7.4% and $428,000 or 2.0% in the current
nine and three month respective periods compared to the same periods
in the prior year. The principal increase during the current nine
month period of approximately $5,916,000 resulted from increased
prices
-10-
for bulk frozen concentrated orange juice (FCOJ). Lower prices
during the same period in the prior year were primarily the result
of a larger crop in the 1992-93 season. Partially offsetting this
increase was a decrease in revenues from the sales of bulk FCOJ
of approximately $3,495,000 due to lower volumes. These
lower volumes were a result of a larger movement of bulk FCOJ into
the futures market in the same period in the prior year partially
as a result of a larger crop from the 1992-93 season previously
mentioned and significantly less available storage during
that processing season. The Company subsequently increased its bulk
storage capacity by 3.8 million gallons during fiscal 1994.
Revenues from the sales of bulk FCOJ decreased approximately
$4,494,000 during the current three month period as a result of
lower volumes compared to the same period in the prior year.
Partially offsetting this decrease were revenues of approximately
$1,802,000 due to higher prices for bulk FCOJ during the current
three month period.
During the current nine and three month periods the Company
experienced an increase in revenues of approximately $2,472,000 and
$1,084,000 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 decrease in revenues from food service
orange juice products of approximately $3,051,000 and $433,000 as a
result of lower volumes for the current nine and three month
respective periods compared to the same periods in the prior year.
These reductions in volume were 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 $547,000 and $378,000 for the current nine and
three month periods.
Additionally, the Company experienced an increase in revenues of
non-orange juice beverage and drink base products of approximatley
$948,000 during the current nine month period compared to the same
period in the prior year as a result of increased volume. Lower
prices on some of these products accounted for a decrease of
approximately $358,000 during the current nine month period.
During the current three month period the Company experienced
an increase in revenues of approximatley $820,000 principally
as a result of increased sales volumes on these same products.
The Company experienced a sales decrease for the current nine and
three month periods of approximately $807,000 and $673,000,
respectively, of single strength citrus juices principally as a
result of lower sales volumes. In addition, revenues from
storage, handling and other activities decreased by approximately
$332,000 and $496,000 during the current nine and three month
respective periods compared to the same periods in the prior year.
Offsetting these decreases were increases in revenues from the sale
of by-products of approximately $1,863,000 and $2,440,000 during the
current nine and three month periods. These increases were primarily
the result of higher sales volumes of by-products during the current
periods compared to the same periods in the prior year.
GROVE MANAGEMENT DIVISION Grove Management sales increased
approximately $338,000 or 10.1% and $486,000 or 47.1% for the
current nine and three month periods respectively, compared to the
-11-
same periods in the prior year. The principal increases of
approximately $261,000 for the current nine month period were due to
an increase in the price of fruit sold to third party packers and
processors. Partially offsetting this was a decrease of
approximately $71,000 in the volume of fruit sold to third party
packers and processors. The principal increase for the current
three month period of approximately $300,000 compared to the same
period in the prior year also resulted from higher prices.
Additionally, grove caretaking revenues increased approximately
$137,000 and $58,000 for the current nine and three month periods.
Also, harvesting revenues increased approximately $11,000 and
approximately $128,000 for the current nine and three month periods.
GROSS PROFIT
Gross profit for the current nine and three month periods ended
June 30, 1994 increased approximately $3,243,000 or 70.3% and
decreased approximately $173,000 or 7.7%, respectively compared to
the same periods in the prior year. The principal increases of
approximately $3,185,000 during the current nine month period
occurred in the Beverage Division. Grove Management gross profit
increased approximately $58,000 in the current nine month period.
Of the decrease in the current three month period, approximately
$274,000 resulted from a decreased gross profit in the Beverage
Division. This was partially offset by an increase of approximately
$101,000 in Grove Management gross profit.
BEVERAGE DIVISION Gross profit of the Beverage Division increased
approximately $3,185,000 during the current nine month period and
decreased approximately $274,000 during the current three month
period compared to the same periods in the prior year. The
principal increases of $3,682,000 and $632,000 for the current
respective periods resulted from the sale of bulk FCOJ. Of these
bulk FCOJ increases, higher prices for FCOJ during the current nine
and three month periods accounted for increases in gross profit of
approximately $5,916,000 and $1,802,000 respectively. Lower prices
for FCOJ during the same periods in the prior year resulted from the
larger crop for the 1992-93 season as previously mentioned.
Partially offsetting these increases in prices for the current
periods were decreases in gross profit during the current nine and
three month periods of approximately $2,234,000 and $1,170,000,
primarily as a combined result of higher cost of raw fruit and
concentrate used in the production of bulk FCOJ in the current
periods and lower volumes sold compared to the same periods in the
prior year. Management expects the cost of bulk FCOJ inventory sold
as bulk FCOJ and utilized in its value added products to continue to
be higher over the next two quarters compared to the same periods in
the prior year.
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
products are sold. As of June 30, 1994 the Company held long
positions in FCOJ futures with unrealized losses of approximately
$266,000 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 obligation and do not necessarily represent prices at
which the Company expects to sell the FCOJ. Additionally,
the Company has recognized in the current nine and three month
periods approximately $523,000 in losses on long positions in
excess of anticipated purchase requirements.
The Company experienced decreases in gross profit during the current
nine and three month periods from the sale of bulk FCGJ of
approximately $500,000 and $251,000 principally as a combined result
of higher cost and higher volumes.
Gross profit on the sale of food service orange juice products
increased during the current nine month period by approximately
$335,000. Of this increase during the current nine month period
approximately $547,000 was a result of higher prices.
-12-
Lower cost of inventory carried over from last year accounted for an
increase in gross profit of $167,000 during the current nine month
period. These increases for the current nine month period were
partially offset by a decrease in the volume of sales of approximately
$378,000. Gross profit on the sale of food service orange juice
products decreased during the current three month period by
approximately $119,000. Of this decrease, approximately $434,000
was a result of a higher cost of inventory in the current period
compared to the same period in the prior year as the current
season's higher cost bulk FCOJ inventory began to be utilized. This
decrease was partially offset by an increase in prices during the
current three month period of approximately $378,000. A reduction
in volume accounted for a decrease in gross profit of approximately
$63,000 for the current three month period compared to the same
period in the prior year.
The Company experienced an increase in gross profit on its
non-orange juice beverage and drink base products of approximately
$491,000 and $103,000 for the current nine and three month periods
respectively. Offsetting these increases were decreases in gross
profit for the current nine and three month periods of approximately
$53,000 and $92,000 from the sales of single strength citrus juices.
Gross profit from storage, handling and other activities decreased
approximately $89,000 and $254,000 in the current nine and three
month periods respectively compared to the same period in the prior
year.
The Company experienced an increase in gross profit from the sale of
by-products of approximately $1,388,000 and $1,777,000 for the
current nine and three month respective periods compared to the same
periods in the prior year principally as a result of higher volumes.
At the end of the third quarter the Company provided for a write-
down of approximately $1,547,000 to its various bulk inventories as
a net realizable value adjustment relative to the anticipated market
prices for these products as of June 30, 1994. The Florida citrus
industry is highly cyclical with market prices for processed citrus
juices subject to wide fluctuations. Market prices are highly
sensitive to crop sizes as well as other factors such as weather and
competition from foreign crops.
GROVE MANAGEMENT Grove Management gross profit for the nine and
three month periods increased approximately $58,000 and $101,000
respectively compared to the same periods in the prior year. The
principal increases of approximately $85,000 for the nine month
period and $156,000 for the three month period were due to an
increase in the price of fruit sold to third party packers and
processors. Additionally, gross profit from caretaking operations
increased approximately $33,000 and $12,000 for the current nine and
three month respective periods. Offsetting these increases were
decreases in the gross profit from harvesting operations during the
nine and three month periods of approximately $60,000 and $67,000
respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $171,000 or 5.9% and $153,000 or 16.0% for the current
nine and three month periods, respectively, compared to the same
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periods in the prior year. Of the increase for the nine month
period, approximately $160,000 resulted from increased labor costs
and approximately $11,000 resulted from increased other costs. Of
the increase for the three month period, approximately $66,000
resulted from increased labor costs and approximately $87,000
resulted from increased 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 $313,000 for the nine month period ending
June 30, 1994 was principally due to a gain on a sale of commercial
property in fiscal 1994 as compared to a gain on a sale of property
held for disposal during the prior fiscal year.
INTEREST EXPENSE
Interest expense decreased approximately $526,000 or 32.1% and
$18,000 or 3.6% in the current nine and three month periods
respectively, compared to the same periods in the prior year. The
primary decrease of approximately $661,000 during the nine month
period was due to lower interest rates on debt. Additionally,
interest capitalized increased approximately $185,000 and other
interest-related charges decreased approximately $124,000.
Offsetting these decreases was an increase of approximately $444,000
due to increased borrowings. For the three month period, interest
expense increased approximately $9,000 due to increased rates and
increased approximately $34,000 due to borrowings. These increases
were offset by a decrease in other interest-related charges of
approximately $30,000 and an increase in interest capitalized of
approximately $31,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's Bartow processing plant normally operates from
early December through 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 May or June.
The Company began processing activities for the current season in
late November 1993.
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 $30 million credit
facility. This facility is secured principally by most of the
Company's current assets. The outstanding balance at June 30, 1994
was approximately $25,477,000 and approximately $4,523,000 of
additional borrowings were available under this facility. As of
April 1, 1994 the working capital credit facility was increased from
$20 million to $30 million. This increase in the working capital
facility was necessary to finance the larger inventories resulting
from the increased volume of fruit being processed and due to the
increased inventory storage capacity previously mentioned. 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 July 31, 1994, the Company's
outstanding balance was approximately $26,216,000 and approximately
$3,784,000 of additional borrowings were available under this
facility. The Company anticipates that the working capital facility
will be adequately serviced with cash proceeds from operations.
Additionally, as of June 30, 1994 the Company had a $6 million
short-term capital revolving credit facility to provide interim
financing for capital projects. As of June 30, 1994 the outstanding
balance on this facility was $5 million. The interest rate on this
facility is variable based upon the financial institution's cost of
funds plus a margin.
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Current assets increased approximately $29,047,000 as of June
30, 1994 compared to the fiscal year ended September 30, 1993. The
principal component of this was an increase in inventories of
approximately $30,527,000 in the first nine months of the current
year due the processing season. The Company's accounts receivable
balance increased $1,039,000 compared to the fiscal year end.
Additionally, there was a decrease in cash and short-term cash
investments of approximately $470,000 and advances on fruit
purchases decreased approximately $2,137,000 to zero as the Company
received the purchased fruit associated with the deposits.
Current liabilities increased during the first nine months of
fiscal 1994 approximately $8,803,000 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 $24,067,000 during the
current nine month period. This was principally the result of an
increase of approximately $25,477,000 on the Company's long-term
working capital facility due to the processing season. Offsetting
this increase was a decrease of approximately $1,410,000 which
represents scheduled principal payments made on long-term debt
during the nine month period.
At June 30, 1994 the Company's outstanding long-term debt was
approximately $43,745,000 including the working capital facility of
approximately $25,477,000. In addition, current installments of
long-term debt are approximately $2,187,000 with the remaining
amounts due on various dates over the subsequent seventeen years.
The Company anticipates that amounts due over the next twelve months
will be paid out of working capital. At June 30, 1994, the Company
was in compliance with its loan covenants.
The Company completed the installation of new irrigation
systems for 1,798 acres of Company-owned Joshua and Bermont groves
during the first nine months of the current fiscal year at a cost of
approximately $1,361,000. 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 $5.5 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.
As of June 30, 1994, the updated estimated 1993-94 crop was estimated
at 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 since the beginning of the current fiscal year.
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. 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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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT
Exhibit Description of Exhibits Page No.
No.
10.18 The First Amendment to the Loan Agreement 17
By and Among Orange-co, Inc. and SunBank,
National Association for a Revolving Line
of Credit.
10.19 The Second Amendment to the Loan Agreement 24
By and Among Orange-co, Inc. and SunBank
National Association for a Revolving Line
of Credit.
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: August 12, 1994 By:Gene Mooney
_____________
Gene Mooney
President and
Chief Operating Officer
Date: August 12, 1994 By:Dale A. Bruwelheide
___________________
Dale A. Bruwelheide
Vice President and
Chief Financial Officer
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