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 March 31, 1996
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
Commission File No. 1-6442
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)
(941) 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 10, 1996: 10,301,975 shares
ORANGE-CO, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets 3
March 31, 1996 (unaudited) and September 30, 1995 (audited)
Consolidated Statements of Operations (unaudited) 4
Six and Three Months ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows (unaudited) 5
Six Months ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited) 6-8
ITEM 2.
Management's Discussion and Analysis of Results of 9-14
Operations and Financial Condition
PART II. OTHER INFORMATION
ITEM 4
Submission of Matters to a Vote of Security Holders 15
ITEM 6
Exhibits and Reports on Form 8-K 15
SIGNATURES 15
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, September 30,
1996 1995
ASSETS (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 669 $ 845
Receivables 9,236 9,617
Advances on fruit purchases 249 787
Inventories 53,178 36,067
Prepaid and other 277 33
--------- ---------
Total current assets 63,609 47,349
--------- ---------
Property and equipment, net 112,880 107,785
--------- ---------
Other assets:
Excess of cost over net assets of
acquire companies 11,590 11,778
Property held for disposition 427 692
Other 4,046 3,408
--------- ---------
Total other assets 16,063 15,878
--------- ---------
Total assets $192,552 $171,012
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 2,106 $ 2,094
Note payable to bank 3,000 -
Accounts payable 5,441 4,394
Accrued liabilities 5,955 11,318
--------- ---------
Total current liabilities 16,502 17,806
Deferred income taxes 21,620 21,585
Other liabilities 516 437
Long-term debt 50,709 31,252
--------- ---------
Total liabilities 89,347 71,080
--------- ---------
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 27,063 23,823
--------- ---------
103,655 100,415
Less:
Treasury stock, at cost: 47,424 shares
at March 31, 1996 and 50,924 at September
30, 1995 (450) (483)
--------- ---------
Total stockholders' equity 103,205 99,932
--------- ---------
Total liabilities and stockholders' equity $192,552 $171,012
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-3-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
(in thousands except for per share data)
Six Months Three Months
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sales $51,356 $60,112 $28,006 $29,539
Cost of sales 41,560 51,231 22,948 23,178
-------- -------- -------- --------
Gross profit 9,796 8,881 5,058 6,361
Other costs and expenses, net:
Selling, general and administrative (2,521) (2,259) (1,376) (1,186)
Gain on disposition of property
and equipment 63 509 63 83
Other (8) 8 3 -
Interest (995) (915) (578) (368)
-------- -------- -------- --------
Income before income taxes 6,335 6,224 3,170 4,890
Income tax expense 2,050 2,442 928 1,886
-------- -------- -------- --------
Net income $ 4,285 $ 3,782 $ 2,242 $ 3,004
======== ======== ======== ========
Net income per common and common
equivalent shares $ .42 $ .37 $ .22 $ .29
======== ======== ======== ========
Average number of common and
common equivalent shares outstanding 10,300 10,298 10,301 10,298
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-4-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
(in thousands)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,285 $ 3,782
--------- --------
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Depreciation and amortization 2,274 2,057
Deferred income taxes 35 1,608
(Gain) on disposition of property and
equipment and other (63) (509)
Change in assets & liabilities:
(Increase)decrease in receivables 381 (1,850)
Decrease in advances on fruit purchases 538 272
(Increase)decrease in inventory (17,111) 6,772
(Increase) in prepaid and other (244) (171)
(Decrease) in accounts payable and
accrued liabilities (4,316) (2,271)
Other, net (670) (389)
--------- --------
Total adjustments (19,176) 5,519
--------- --------
Net cash provided by (used for)
operating activities (14,891) 9,301
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 33 41
Proceeds from sale of property held for
disposal 328 714
(Increase)decrease in note & mortgage
receivables 70 (200)
Additions to property & equipment (7,173) (4,062)
--------- --------
Net cash (used for) investing activities (6,742) (3,507)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of treasury stock 18 -
Payment of cash dividends (1,030) -
Proceeds from (payments on) short-term debt 3,000 (2,000)
Proceeds from (payments on) long-term debt 19,469 (3,619)
--------- --------
Net cash provided by (used for) financing
activities 21,457 (5,619)
--------- --------
NET INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS (176) 175
--------- --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 845 765
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 669 $ 940
========= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
-5-
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, 1996
Audited Consolidated Balance Sheet at September 30, 1995
Unaudited Consolidated Statements of Operations for the
six and three month periods ended March 31, 1996 and 1995.
Unaudited Consolidated Statements of Cash Flows for the
six month periods ended March 31, 1996 and 1995.
2. NOTES PAYABLE AND LONG-TERM DEBT
As of March 31, 1996, the Company had access to a $40 million
working capital credit facility payable in April, 1998.
Accordingly, the balance at March 31, 1996 was classified as
long-term debt. This facility is collateralized by substantially
all of the Company's current assets. The outstanding balance at
March 31, 1996 was approximately $37,550,000 and approximately
$1,850,000 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 March 31, 1996 the Company had a $6,000,000
short-term capital revolving credit facility to provide interim
financing for capital projects. As of March 31, 1996 the balance on
this facility was $3,000,000. The interest rate on this facility is
variable based upon the financial institution's cost of funds plus a
margin. In April 1996 this facility was increased from $6,000,000
to $10,000,000.
At March 31, 1996, the Company's outstanding long-term debt
(including the $37,550,000 balance on the working capital line of
credit facility) was approximately $52,815,000, of which $2,106,000
matures in the next twelve months and the remainder matures at
various times over the subsequent twelve years.
Interest paid, net of amounts capitalized, was approximately
$1,001,000 and $921,000 for the six months ended March 31, 1996 and
1995, respectively. Interest capitalized was approximately $296,000
and $219,000 for the six months ended March 31, 1996 and 1995, respectively.
Certain mortgage agreements contain loan covenants. At March
31, 1996, the Company was in compliance with these loan covenants.
-6-
3. INVENTORIES
<TABLE>
<CAPTION>
The major components of inventory are summarized as follows (in
thousands):
March 31, September 30,
1996 1995
<S> <C> <C>
Finished goods $43,920 $24,086
Fruit-on-tree inventory 7,812 7,952
Other 1,446 4,029
------- -------
Total $53,178 $36,067
======= =======
</TABLE>
As of March 31, 1996 contracts held by the Company for net frozen
concentrated orange juice ("FCOJ") futures positions were immaterial.
Exposure to off-balance sheet risk related to these positions which results
from market fluctuations of FCOJ futures prices relative to the Company's
open positions was also immaterial.
4. OTHER
The Company operates in one industry segment, "Citrus".
Substantially all sales are to entities that market citrus and
citrus-related products.
During the six and three month periods ended March 31, 1996, the
Company had two customers who individually accounted for approximately
21.3% and 20.2%, and 19.7% and 18.9% of total sales for the respective
periods. During the six and three month periods ended March 31, 1995,
the Company had two customers who individually accounted for approximately
17.4% and 13.0% and 17.3% and 14.7% of total sales for the respective
periods.
5. INCOME TAXES
The provision for income taxes is calculated using the asset and
liability method prescribed by Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("FAS No. 109").
Under this method 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 or a deferred tax asset valuation reserve is recognized in
income in the period that includes the enactment or revaluation
date.
-7-
Income tax expense attributable to income for the six and
three month periods ended March 31, 1996 and 1995 consist of the
following (in thousands):
<TABLE>
<CAPTION>
Six Months Three Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Current:
Federal income tax $1,687 $ 786 $ 888 $ 756
State income tax 328 49 172 49
------ ------ ------- ------
Total $2,015 $ 835 $1,060 $ 805
------ ------ ------- ------
Deferred:
Federal income tax 32 1,420 (42) 949
State income tax 3 187 (90) 132
------ ------ ------- ------
Total 35 $1,607 (132) $1,081
------ ------ ------- ------
Total provision for income
taxes $2,050 $2,442 $928 $1,886
====== ====== ======= ======
</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 six and three month periods ended
March 31, 1996 and 1995 (in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Expected income tax $2,154 $2,116 $1,078 $1,662
Increase(decrease) resulting from:
Loss on foreign investments 25 24 13 8
Permanent items 64 64 23 33
State income taxes, net of
federal tax benefit 216 236 20 183
Change in valuation
allowance for deferred
tax asset (507) - (507) -
Other, net 98 2 301 -
------- ------ ------- ------
Total provision for
income taxes $2,050 $2,442 $ 928 $1,886
======= ====== ======= ======
</TABLE>
The reduction of $507,000 during the current periods in the
valuation allowance for a deferred tax asset reflects management's
estimate that the Company is more likely than not to receive benefit
from investment tax credit carryforwards which expire in 1998 and
thereafter.
-8-
6. CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
The following table reflects the changes in Stockholders' Equity
since September 30, 1995 as a result of net income, dividends
declared, and treasury stock transactions (in thousands):
September 30, Net Dividends Treasury March 31,
1995 Income Declared Issued 1996
<S> <C> <C> <C> <C> <C>
Common stock $ 5,175 $ - $ - $ - $ 5,175
Capital in excess
of par value 71,417 - - - 71,417
Retained earnings 23,823 4,285 (1,030) (15) 27,063
Treasury stock (483) - - 33 (450)
-------- ------ -------- ------ ---------
Total stockholders'
equity $99,932 $4,285 $(1,030) $ 18 $103,205
======== ====== ======== ====== =========
</TABLE>
-9-
ORANGE-CO, INC. AND SUBSIDIARIES
PART I - ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Fiscal 1996 versus Fiscal 1995
The following is management's discussion and analysis of
significant factors which have affected the Company's continuing
operations during the periods included. It compares the Company's
operations for the six and three month periods ended March 31, 1996
to operations for the six and three month periods ended March 31,
1995.
The following table reflects changes in sales, cost of sales and
gross profit by division and other changes in the Statements of
Operations through net income between the respective periods.
<TABLE>
<CAPTION>
Six Months (YTD) and Three Months (QTR) Ended March 31, 1996
vs Six Months (YTD) and Three Months (QTR) Ended March 31, 1995
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 $(8,930) $(1,441) $(9,794) $(207) $864 $(1,234)
Grove Management
Division 174 (92) 123 (23) 51 (69)
-------- -------- -------- ------ ---- --------
Total $(8,756) $(1,533) $(9,671) $(230) 915 (1,303)
======== ======== ======== ======
Other costs and expenses net:
Selling, general and administrative (262) (190)
Gain on disposition of property and equipment (446) (20)
Other income and expense (16) 3
Interest (80) (210)
----- -------
Income before income taxes 111 (1,720)
Provision for income taxes 392 958
----- --------
Net income $503 $ (762)
===== ========
</TABLE>
RESULTS OF OPERATIONS
SALES
Sales for the six and three month periods ended March 31, 1996
decreased approximately $8,756,000 or 14.6% and approximately
$1,533,000 or 5.2%, respectively compared to the same periods in the
prior year. The Beverage Division accounted for the principal
decrease for the six month period with decreased sales of
approximately $8,930,000. This decrease was partially offset by an
increase in Grove Management Division sales of approximately
$174,000 for the six month period. The Beverage Division accounted
for the principal decrease for the current three month period with a
decrease in sales of approximately $1,441,000. Grove Management
Division Sales decreased by approximately $92,000 for the current
three month period.
BEVERAGE DIVISION The Beverage Division sales decreased
approximately $8,930,000 or 15.5% and $1,441,000 or 5.1% in the
current six and three month respective periods compared to the same
periods in the prior year. Of these
-10-
decreases, revenues from the sale of the Company's bulk citrus juice
products decreased approximately $7,474,000 during the current six month
period and increased approximately $919,000 during the current three month
period as a result of offsetting increases and decreases. As part of the
decrease during the current six month period, revenues from the volume of
bulk citrus products sold decreased approximately $9,463,000. This decrease
in sales volume was due primarily to a lower level of carryover inventory
from the prior year. This decrease in volume during the current six month
period was partially offset by increased prices for bulk citrus juice
products of approximately $1,989,000 compared to the same period
in the prior year. During the current three month period an increase
in prices resulted in an increase in revenues of approximately $808,000
compared to the same period in the prior year. The volume of bulk
citrus juice products sold during the current three month period
increased approximately $111,000 compared to the same period in
the prior year.
Sales of the Company's packaged 100% citrus juice products sold
increased approximately $739,000 and $622,000 during the current six
and three month respective periods compared to the same periods in
the prior year. Higher volumes of these products sold resulted in
increases in revenues of approximately $239,000 and $295,000 during
the current six and three month periods. Additionally, sales
increased due to increased prices by approximately $500,000 and
$327,000 during the current respective periods.
The Company's packaged allied juices and drink base product sales
increased approximately $2,207,000 and $1,311,000 during the current
six and three month periods compared to the same periods in the
prior year. Increases in the volume of sales of these allied
products accounted for increases of approximately $1,795,000 and
$1,169,000 during the current six and three month periods.
Additionally, prices on these products increased approximately
$412,000 and $142,000 during the current six and three month
periods.
Revenues from the sale of the Company's citrus by-products,
including feed, pulp cells, and citrus oils, decreased approximately
$1,711,000 and $2,331,000 during the current six and three month
periods compared to the same periods in the prior year. Seasonal
fluctuations in the sale of the volume of by-products sold was
the principal reason for the decrease of approximately $1,565,000
and $2,071,000 during the current six and three month periods.
Revenues also decreased approximately $146,000 and $260,000 during
the current six and three month periods as a result of lower prices
for by-products sold compared to the same periods in the prior year.
Storage, handling, processing citrus for customers under
contract, and other revenues decreased approximately $2,691,000 and
$1,962,000 during the current six and three month periods compared
to the same periods in the prior year. These decreases were due
primarily to decreases in the volume of these services performed
during the current six and three month periods compared to the same
periods in the prior year.
GROVE MANAGEMENT DIVISION Grove Management Division sales increased
approximately $174,000 or 6.8% for the current six month period and
decreased by approximately $92,000 or 8.0% for the current three
month period compared to the same periods in the prior year. The
principal increase of approximately $212,000 and $43,000 for the
current six and three month periods resulted from an increase in
grove caretaking revenues. Additionally, revenues from the sale of
fruit to third party packers and processors increased approximately
$124,000 and $46,000 during the current six and three month periods
as a result of higher prices. Revenues from harvesting activities
decreased approximately $162,000 and $181,000
-11-
during the current six and three month periods primarily due to a decrease
in the volume of boxes harvested compared to the same period in the prior
year.
GROSS PROFIT
Gross profit for the six and three month periods ended March 31,
1996 increased approximately $915,000 or 10.3% and decreased
approximately $1,303,000 or 20.5% during the current three month
period compared to the same periods in the prior year. The
principal increase of approximately $864,000 during the current
six month period occurred in the Beverage Division. However,
during the current three month period gross profit from the Beverage
Division decreased by approximately $1,234,000 compared to the same
period in the prior year. Gross profit for the Grove Management
Division increased during the current six month period by approximately
$51,000 and decreased by approximately $69,000 during the current
three month period.
BEVERAGE DIVISION Gross profit of the Beverage Division increased
approximately $864,000 and decreased approximately $1,234,000 during
the current six and three month respective periods compared to the
same periods in the prior year. Contributing to the increase and
decrease in gross profit were increases during the current six and
three month respective periods of approximately $2,602,000 and
$435,000 from the sale of bulk citrus juice products. Of the
increases during the current six month period and three month
respective periods, approximately $1,989,000 and $808,000 resulted
from increased prices for bulk citrus juice products. Additionally,
during the current six month period gross profit increased
approximately $1,436,000 resulting from a lower cost of carryover
inventory for bulk citrus juice products compared to the same
period in the prior year. Partially offsetting this increase was a
decrease in gross profit of approximately $823,000 as a result of a
decrease in the volume of bulk citrus products sold during the
current six month period compared to the same period in the prior
year. This decrease in the volume of bulk citrus juice products
sold during the current six month period resulted primarily from a
lower level of carryover from the prior year. Also, during the
current three month period gross profit decreased approximately
$373,000 principally due to higher cost of raw fruit and concentrate
used in production of bulk citrus juice products compared to the
same period 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 the associated products are sold.
As of March 31, 1996 these contracts held by the Company and
the related unrealized gains or losses were immaterial.
Gross profit on the sales of packaged 100% citrus juice products
sold primarily to the food service industry increased approximately
$797,000 and $395,000 during the current six and three month
respective periods compared to the same periods in the prior year.
Of these increases, approximately $500,000 and $327,000 were a
result of increased prices during the current six and three month
periods. Additionally, increases in volume combined with lower cost
of carryover inventories resulted in increases in gross profit of
approximately $297,000 and $68,000 during the current six and three
month periods respectively, compared to the same periods in the
prior year.
Gross profit from the sale of the Company's packaged allied
juices and drink base products increased approximately $303,000 and
$154,000 during the current
-12-
six and three month respective periods compared to the same periods in the
prior year. These increases were principally a result of higher prices.
Gross Profit from citrus by-products, including feed, pulp cells,
and citrus oils, decreased approximately $1,732,000 and $1,726,000
during the current six and three month respective periods compared
to the same periods in the prior year. Of these decreases
approximately $1,202,000 and $1,289,000 were the result of lower
volumes of sales of these products in part as a
result of seasonal fluctuations during the current six and three
month respective periods compared to the same periods in the prior
year. Additionally, lower prices and higher costs of production
decreased gross profit approximately $530,000 and $437,000 during
the current six and three month respective periods compared to the
same periods in the prior year. Gross profit from storage,
handling, and other activities also decreased by approximately
$1,106,000 and $492,000 during the current six and three month
periods due to a decrease in these activities compared to the
same periods in the prior year.
GROVE MANAGEMENT DIVISION Grove Management Division gross profit
increased approximately $51,000 for the current six month period and
decreased approximately $69,000 for the current three month period.
The principal increase of approximately $61,000 in the current six
month period was due to an increase in grove caretaking activities
and an increase in the prices of fruit sold to third party packers
and processors. These increases during the current six month period
were partially offset by a decrease of approximately $10,000 from
harvesting activities. During the current three month period gross
profit from grove caretaking and harvesting activities decreased
approximately $32,000. Additionally, gross profit from fruit sold
to third party packers and processors decreased by approximately
$37,000 during the current three month period primarily due to an
increase in the cost of fruit sold compared to the same period in
the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $262,000 or 11.6% and $190,000 or 16.0% for the
current six and three month periods, compared to the same periods in
the prior year. These increases were primarily the result of
increases in staffing and benefit costs.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The decreased gain on the disposition of property, equipment and
other of approximately $446,000 for the six month period and
approximately $20,000 for the three month period ending March 31,
1996 compared to the same periods in the prior year was principally
due to differences in gains on sales of commercial properties not
utilized in citrus production or processing.
INTEREST EXPENSE
Interest expense increased approximately $80,000 or 8.8% and
$210,000 or 57.1% in the current six and three month periods
respectively, compared to the same periods in the prior year. The
primary increases of approximately $136,000 and $140,000 in the
current respective periods were the result of increases in interest
rates. Additionally, increases of approximately $9,000 and $106,000
were due to an increase in outstanding debt, while interest income
decreased approximately $31,000 and $25,000. Offsetting these
increases were decreases of $77,000 and $51,000 due to an increase
in capitalized interest and decreases
-13-
of $19,000 and $10,000 as a result of a decrease in amortization of deferred
loan costs and other related interest charges in the current six and three
month respective periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's Bartow processing plant normally operates from
early November 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 November when
the plant begins operation again. The Company's working capital
credit facility is generally utilized to finance these inventories.
Borrowings under this credit facility normally peak in late May or
June. The Company began processing activities for the 1995-96
season in late October.
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 $40 million
credit facility. This facility is secured principally by
substantially all of the Company's current assets. The outstanding
balance at March 31, 1996 was approximately $37,550,000 and
approximately $1,850,000 of additional borrowings were available under
this facility. 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 April 1998; accordingly, it is classified as long-term debt.
The Company anticipates that the working capital facility will
be adequately serviced with cash proceeds from operations.
Additionally, as of March 31, 1996 the Company had a $6 million
short-term capital revolving credit facility principally to provide
interim financing for capital projects. As of March 31, 1996 the
outstanding balance on this facility was $3,000,000. The interest
rate on this facility is variable based upon the financial
institution's cost of funds plus a margin. The terms of this
facility call for repayment of the principal amount in April 1997.
In April 1996 this facility was increased from $6 million to $10
million.
Current assets increased approximately $16,260,000 as of March
31, 1996 compared to September 30, 1995. The principal component of
this was an increase in inventories of approximately $17,111,000 in
the first six months of the current year due to the seasonal
accumulation of inventories. The Company's accounts receivable
balance decreased approximately $381,000 during the six months
ending March 31, 1996. Additionally, there was a decrease in cash
and short-term cash investments of approximately $176,000. Advances
on fruit purchases decreased approximately $538,000 as the Company
began processing the purchased fruit and collected these advances.
Current liabilities decreased during the first six months of
fiscal 1996 approximately $1,304,000 compared to September 30, 1995.
This decrease was due principally to payments of approximately
$6,725,000 of accrued expenses associated with fruit purchased
during the previous season. Offsetting this decrease were an
increase of $3,000,000 in the note payable to bank and increases in
accounts payable and other accrued expenses of approximately
$2,409,000.
Long-term debt increased approximately $19,457,000 during the
current six month period. This was primarily the result of an
increase of approximately $20,456,000 in the Company's long-term
working capital facility used principally to finance the seasonal
accumulation of inventories. There was also a decrease of
-14-
approximately $1,016,000 which represents scheduled principal
payments made on long-term debt during the six month period.
At March 31, 1996 the Company's outstanding long-term debt was
approximately $50,709,000 including the working capital facility of
approximately $37,550,000. In addition current installments of long-
term debt were approximately $2,106,000 with the remaining amounts
due on various dates over the subsequent twelve years. The Company
anticipates that amounts due over the next twelve months will be
paid out of working capital. At March 31, 1996 the Company was in
compliance with its loan covenants.
During the first six months of the current fiscal year, capital
expenditures of approximately $1,238,000 were made for the
installation of new irrigation systems on 3,682 acres of Company-owned
groves. Additional expenditures of approximately $4,278,000 were
made during the same period primarily for the purpose of improving
the efficiency of the Bartow processing facility. Also during
this period, expenditures of approximately $289,000 were made for
grove operations equipment. The Company anticipates that these
improvements will be financed principally by working capital or by
securing additional funds under existing mortgages.
OTHER SIGNIFICANT EVENTS
In October 1995 the United States Department of Agriculture
("USDA") announced a Florida crop estimate of approximately
202,000,000 boxes of round oranges for the 1995-96 season.
This estimate was most recently revised in May 1996 to
approximately 201,200,000 boxes.
-15-
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 22, 1996, the
stockholders of the Company elected directors. The results of these
votes were as follows:
DIRECTOR NOMINEES FOR AUTHORITY WITHHELD
<S> <C> <C>
John R. Alexander 8,951,211 56,235
Richard A. Coonrod 8,951,211 56,235
Paul E. Coury, MD 8,949,737 57,709
Ben Hill Griffin, III 8,952,061 55,385
George W. Harris, Jr. 8,950,836 56,610
Dr. W. Bernard Lester 8,950,736 56,710
Gene Mooney 8,951,086 56,360
C. B. Myers, Jr. 8,949,199 58,247
Thomas H. Taylor 8,951,191 56,255
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit EXHIBIT Page
No. No.
[S] [C] [C]
10.23 The Fifth Amendment to the Loan Agreement
By and Among Orange-co, Inc. Orange-co of
Florida, Inc. and SunTrust Bank, Central
Florida, National Association Dated April
5, 1996.
27 Financial Data Schedule (Electronic Filing
Only)
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 14, 1996 By: /s/Gene Mooney
-----------------------
Gene Mooney
President and
Chief Operating Officer
Date: May 14, 1996 By: /s/Dale A. Bruwelheide
------------------------
Dale A. Bruwelheide
Vice President and
Chief Financial Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000004507
<NAME> ORANGE-CO, INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 669
<SECURITIES> 0
<RECEIVABLES> 9620
<ALLOWANCES> (384)
<INVENTORY> 53,178
<CURRENT-ASSETS> 63,609
<PP&E> 150,122
<DEPRECIATION> 37,242
<TOTAL-ASSETS> 192,552
<CURRENT-LIABILITIES> 16,502
<BONDS> 0
0
0
<COMMON> 76,142
<OTHER-SE> 27,063
<TOTAL-LIABILITY-AND-EQUITY> 192,552
<SALES> 51,356
<TOTAL-REVENUES> 51,356
<CGS> (41,560)
<TOTAL-COSTS> (41,560)
<OTHER-EXPENSES> (2,466)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (995)
<INCOME-PRETAX> 6,335
<INCOME-TAX> (2,050)
<INCOME-CONTINUING> 4,285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,285
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
FIFTH AMENDMENT TO LOAN AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AGREEMENT dated as of April 5,
1996, by and between:
ORANGE-CO, INC., a Florida corporation and ORANGE-CO
OF FLORIDA, INC., a Florida corporation, 2020 Highway
17 South, Bartow, Florida 33830 (hereinafter
collectively referred to as the "Borrowers");
and
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
a national banking association, 200 South Orange
Avenue, Post Office Box 3833, Orlando, Florida 32897
(hereinafter referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement, dated June 16, 1993, by and
among the Bank and the Borrowers, as amended, the Bank agreed to extend to
the Borrowers a working capital line of credit loan in the maximum principal
amount of $40,000,000.00 (the "Working Capital Loan") and a revolving line of
credit loan in the maximum principal amount of $6,000,000.00 (the Revolving
Loan ); and
WHEREAS, the Borrowers have requested the Bank to (a) renew and extend
the maturity of the Revolving Loan from April 30, 1996 until April 30, 1997
and increase the principal amount of the same from $6,000,000.00 to
$10,000,000.00 and provide for a term loan option relating to the same and (b)
renew and extend the maturity date of the Working Capital Loan from April 30,
1997 until April 30, 1998; and
WHEREAS, the Bank has agreed to the foregoing subject to the terms and
conditions hereof and the other Loan Documents including but not limited to,
securing the Revolving Loan with the collateral securing the Working Capital
Loan.
NOW, THEREFORE, for and in consideration of the above premises, and the
mutual covenants and agreements contained herein, the Borrowers and the Bank
do hereby agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is hereby
amended as follows:
(a) The definition of "Interest Rate" in Section 1.01 of the
Loan Agreement is hereby deleted and, in lieu thereof, there is substituted
the following:
"'Interest Rate' shall mean the fluctuating interest rate
applicable to the Loan, which, (A) in the case of the
Revolving Loan shall equal either (i) LIBOR plus one hundred
(100) basis points or (ii) Prime Rate minus one half of one
percent (0.5%); and, (B) in the case of the Working Capital
Loan shall equal either (i) LIBOR plus seventy five (75)
basis points or (ii) Prime Rate minus three fourth of one
percent (0.75%); provided, however, the Interest Rate shall
never exceed the maximum rate allowable by law."
(b) The definition of "'Loan' or 'Loans' " in Section 1.01 of the
Loan Agreement is hereby deleted and, in lieu thereof, there is substituted
the following:
"'Loan' or 'Loans' shall mean the Revolving Loan, the
Working Capital Loan and, if converted, the Term Loan, as
the context may require.
(c) The definition of "Revolving Loan" in Section 1.01 of the
Loan Agreement is hereby deleted and, in lieu thereof, there is substituted
the following:
"'Revolving Loan' shall mean the loan or loans up to but not
exceeding the principal amount of $10,000,000.00 made to the
Borrowers by the Bank pursuant to and in accordance with the
terms of this Agreement which Loan may be converted into the
Term Loan in accordance with the terms hereof."
(d) The definition of "Revolving Period" is hereby deleted and,
in lieu thereof, there is substituted the following:
"'Revolving Period' shall mean the period
during the term of the Loans, which, in
the case of the Revolving Loan, shall
commence on the date hereof and end on the
earlier of the occurrence of (i) an Event
of Default or (ii) April 30, 1997, or such
later date as the Bank may agree to in
writing, and in the case of the Working
Capital Loan, shall commence on the date
hereof and end on the occurrence of (i) an
Event of Default or (ii) April 30, 1998,
or such later date as the Bank may agree
to in writing."
(e) A definition of "Term Loan" is hereby inserted into the
Section 1.01 of the Loan Agreement to read as follows:
"'Term Loan' shall mean the term loan
created upon conversion of the Revolving
Loan into a term facility in accordance
with the terms hereof in an amount not to
exceed $10,000,000.00"
(f) Section 2.01 of the Loan Agreement is hereby deleted and, in
lieu thereof, there is substituted the following:
"SECTION 2.01. The Loans. (a) The Bank agrees from
time to time during the applicable Revolving Period to lend
to the Borrowers, upon the request of either Borrower, or
pursuant to the Cash Management Agreement, on the terms and
conditions set forth herein, up to the maximum principal
amount of (A) the aggregate of (i) $10,000,000.00 with
respect to the Revolving Loan, and (ii) $40,000,000.00 with
respect to the Working Capital Loan, or (B) the amount of
the Borrowing Base, whichever is less. During the Revolving
Period, the Borrowers shall be entitled to receive the
entire proceeds of the Loans in one or more Advances
pursuant to Section 2.02 hereof, except as otherwise
specifically set forth in this Agreement. Advances under the
Revolving Loan and the Working Capital Loan shall be
evidenced by the Revolving Note and the Working Capital
Note, respectively, payable as provided in Section 2.08
hereof. After the expiration of the Revolving Period, the
Borrowers shall not be entitled to receive any Subsequent
Advance. The Working Capital Loan and Revolving Loan may
revolve during the Revolving Period; accordingly, during the
Revolving Period, the Borrowers may borrow up to the maximum
principal amount of said Working Capital Loan and Revolving
Loan, repay all or any portion of such principal amount of
said Loans, and reborrow up to such maximum principal
amount, subject to the terms and conditions set forth
herein. If at any time the principal amount outstanding
under the Loans exceeds the amount of the Borrowing Base,
the Borrowers shall immediately reduce the excess principal
balance of the Loans.
(b) The Borrowers may at any time prior to April 1, 1997,
elect to convert the Revolving Loan into the Term Loan by
notifying the Bank in writing of (i) their intent to so
convert (ii) the date selected for such conversion (which
shall be at least 7 Days and not more than 21 after the date
the notice is received by the Bank), and (iii) the principal
amount of the Loan upon conversion. The conversion shall
take effect upon the Borrowers execution of additional loan
documentation to effect such conversion which shall occur
within the timeframe noted above. Following such
conversion, the Interest Rate applicable to the Term Loan
shall be adjusted to the then average yield on United States
Treasury non-callable bonds and notes having a maturity date
closest to (on, before or after) five years from the date of
conversion plus 110 basis points. Following conversion, the
outstanding principal balance of the Term Loan shall be
amortized on a ten year basis commencing with the date of
conversion, payable quarterly on the then existing interest
payment dates with a term of ten (10) years from the date of
conversion and principal amounts repaid shall not be
readvanced. The Term Loan shall remain secured by the
Collateral securing the Revolving Loan; provided, however,
in the event that the Borrowing Base is at any time less
than the principal amounts outstanding under the Revolving
Loan and the Term Loan, then either (i) principal shall be
repaid on the Loans in such amount as may be necessary to
reduce the principal amounts outstanding on the Loans to
less than the Borrowing Base or (ii) or the Borrowers shall
provide additional collateral for the Term Loan which may be
citrus groves acceptable to the Bank based upon a seventy
percent (70.0%) loan to value (determined by the Bank)
together with all of the Accounts, Chattel Paper, Documents,
Farm Products, General Intangibles, Instruments and
Inventory that are produced upon or otherwise relate to the
citrus groves, whether now owned or hereafter acquired,
together with Proceeds of all of the foregoing. If citrus
groves are provided as additional collateral, environmental
site assessments and title insurance shall be required and
all matters relating thereto must be acceptable to the
Bank.
(g) Section 2.04 of the Loan Agreement is hereby deleted and, in
lieu thereof, there is substituted the following:
SECTION 2.04 Restriction on Prepayment, Funding Losses and
Yield Maintenance. The Borrowers may not prepay all or any
part of the principal amount of the Loans outstanding except
on the last Banking Day of the Interest Period applicable to
a particular Advance. Each prepayment other than full
payment shall be made prior to 2:00 P.M. (Orlando time) on
the date of the prepayment, and shall be made on a Banking
Day in immediately available funds. Prepayments may be made
by the Bank pursuant to the Cash Management Agreement on the
last Banking Day of the Interest Period.
If the Borrowers fail to convert the Revolving Loan into the
Term Loan after notice has been given to the Bank to so
convert or if the Borrowers make any prepayment of principal
with respect to the Term Loan, the Borrowers shall reimburse
the Bank on demand for any resulting loss, cost or expense
incurred by the Bank as a result thereof, including without
limitation, (i) any such loss, cost or expense incurred in
hedging or obtaining, liquidating, employing or redeploying
deposits from third parties, whether or not the Bank shall
have funded or committed to fund such advance and (ii) the
excess amount, if any, of (A) the total amount of interest
that would have been paid on the amount of said prepayment
or, in the event of failure to complete the conversion after
giving a notice of conversion, the requested outstanding
principal balance under the Term Loan, from the date of
prepayment or failure to convert to the expiration of the
term of the Term Loan calculated at the interest rate
applicable to the Term Loan or the interest rate quoted by
the Bank to be applicable on the Term Loan, as applicable,
less (B) the amount that said prepayment amount/Term Loan
amount would yield if said amount were fully invested on the
date of prepayment or conversion in United States Treasury
non-callable bonds and notes having a maturity date closest
to (before, on, or after) the expiration date of the Term
Loan.
2. Capitalized Terms. All capitalized terms contained herein shall
have the meanings assigned to them in the applicable Loan Documents (as
defined in the Loan Agreement) unless the context herein otherwise dictates
or unless different meanings are specifically assigned to such terms herein.
3. Representations and Warranties. Each of the Borrowers represents
and warrants as follows:
(a) The execution, delivery and performance of this Fifth
Amendment to Loan Agreement and the other loan documents provided to the Bank
in connection therewith has been duly authorized by all requisite action of
the Borrowers; and
(b) The Loan Documents are valid, legal binding obligations of
the Borrowers enforceable in accordance with their terms. There are no
defenses, counterclaims, rights of setoff or recoupment thereunder.
4. Miscellaneous. The Borrowers hereby confirm the terms conditions,
representations and warranties of the Loan Agreement. The Loan Agreement, as
amended hereby, shall remain in full force and effect and this Fifth
Amendment to Loan Agreement shall not be deemed to be a novation.
5. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
IN WITNESS WHEREOF, the parties have executed the Fifth Amendment to
Loan Agreement as of the day and year first above written.
BORROWERS:
ORANGE-CO, INC., a Florida corporation
By: /s/Dale A. Bruwelheide
----------------------------------------
Dale A. Bruwelheide, Vice President
ATTEST
/s/John R. Alexander
- ----------------------------
John R. Alexander, Secretary
(CORPORATE SEAL)
ORANGE-CO OF FLORIDA, INC., a Florida
corporation
By:/s/Dale A. Bruwelheide
------------------------------------
Dale A. Bruwelheide, Vice President
ATTEST
/s/John R. Alexander
- ----------------------------
John R. Alexander, Secretary
(CORPORATE SEAL)
BANK:
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION
By:/s/William A. Mang
--------------------------------------
William A. Mang, First Vice President
