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, 1997
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, 1997: 10,308,975 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, 1997 (unaudited) and September 30, 1996 (audited)
Consolidated Statements of Operations (unaudited) 4
Six and Three Months ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows (unaudited) 5
Six Months ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements (unaudited) 6-9
ITEM 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition 10-15
PART II. OTHER INFORMATION
ITEM 4.
Submission of Matters to a Vote of Security Holders 16
ITEM 6.
Exhibits and Reports on Form 8-K 16
SIGNATURES 16
-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,
1997 1996
ASSETS (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 1,040 $ 1,508
Receivables 8,812 14,905
Advances on fruit purchases 173 717
Inventories 57,868 42,148
Deferred income tax 2,124 1,166
Prepaid and other 293 18
--------- ---------
Total current assets 70,310 60,462
--------- ---------
Property and equipment, net 123,203 120,538
--------- ---------
Other assets:
Excess of cost over net assets of
acquired companies 11,213 11,401
Notes receivable 2,392 2,558
Other 5,130 4,736
--------- ---------
Total other assets 18,735 18,695
--------- ---------
Total assets $212,248 $199,695
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 3,669 $ 3,655
Note payable 1,008 -
Accounts payable 3,998 5,493
Accrued liabilities 6,264 11,997
--------- ---------
Total current liabilities 14,939 21,145
Deferred income taxes 23,485 22,247
Other liabilities 786 629
Long-term debt 63,206 46,663
--------- ---------
Total liabilities 102,416 90,684
--------- ---------
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 33,624 32,869
--------- ---------
110,216 109,461
Less:
Treasury stock, at cost: 40,424 shares
at March 31, 1997 and 47,424 at shares
September 30, 1996 (384) (450)
--------- ---------
Total stockholders' equity 109,832 109,011
--------- ---------
Total liabilities and stockholders'
equity $212,248 $199,695
========= =========
</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, 1997 AND 1996
(unaudited)
(in thousands except for per share data)
Six Months Three Months
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Sales $57,578 $51,356 $29,154 $28,006
Cost of sales 50,117 41,560 26,404 22,948
-------- -------- -------- --------
Gross profit 7,461 9,796 2,750 5,058
Other costs and expenses, net:
Selling, general and administrative (3,319) (2,521) (1,618) (1,376)
Gain on disposition of property
and equipment (18) 63 (18) 63
Other (56) (8) (46) 3
Interest (1,189) (995) (649) (578)
-------- -------- -------- --------
Income before income taxes 2,879 6,335 419 3,170
Income tax expense 1,065 2,050 143 928
-------- -------- -------- --------
Net income $ 1,814 $ 4,285 $ 276 $ 2,242
======== ======== ======== ========
Net income per common and common
equivalent shares $ .18 $ .42 $ .03 $ .22
======== ======= ======== ========
Average number of common and
common equivalent shares outstanding 10,305 10,300 10,307 10,301
======== ======== ======== ========
</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, 1997 AND 1996
(unaudited)
(in thousands)
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,814 $ 4,285
-------- --------
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Depreciation and amortization 2,793 2,274
Deferred income taxes 280 35
(Gain)loss on disposition of property and
equipment and other 18 (63)
Change in assets & liabilities:
Decrease in receivables 6,093 381
Decrease in advances on fruit purchases 544 538
(Increase) in inventory (15,720) (17,111)
(Increase) in prepaid and other (275) (244)
(Decrease) in accounts payable and
accrued liabilities (7,228) (4,316)
Other, net 115 11
-------- --------
Total adjustments (13,380) (18,495)
-------- --------
Net cash (used for) operating activities (11,566) (14,210)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 8 361
Decrease in note & mortgage receivables 166 70
Additions to property & equipment (5,197) (7,173)
(Increase) in other assets (451) (681)
-------- --------
Net cash (used for) investing activities (5,474) (7,423)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of treasury stock 38 18
Payment of cash dividends (1,031) (1,030)
Proceeds from short-term debt 1,008 3,000
Proceeds from long-term debt 16,557 19,469
-------- --------
Net cash provided by financing activities 16,572 21,457
-------- --------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (468) (176)
-------- --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,508 845
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,040 $ 669
======== ========
</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, 1997
. Audited Consolidated Balance Sheet at September 30, 1996
. Unaudited Consolidated Statements of Operations for the
six and three month periods ended March 31, 1997 and 1996
. Unaudited Consolidated Statements of Cash Flows for the
six month periods ended March 31, 1997 and 1996
2. NOTES PAYABLE AND LONG-TERM DEBT
As of March 31, 1997, the Company had access to a $40 million
working capital credit facility payable in April, 1999. Accordingly,
the balance at March 31, 1997 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, 1997 was
approximately $39,400,000. The interest rate on the facility
is variable based upon the financial institution's cost of funds
plus a margin. In April 1997 this facility was increased from
$40 million to $45 million.
Additionally, as of March 31, 1997 the Company had a
$10,000,000 short-term capital revolving credit facility. As of
March 31, 1997 the outstanding balance on this facility was
$1,008,000. The interest rate on this facility is variable based
upon the financial institution's cost of funds plus a margin.
At March 31, 1997, the Company's outstanding long-term debt
(including the $39,400,000 balance on the working capital line of
credit facility) was approximately $66,875,000, of which $3,669,000
matures in the next twelve months and the remainder matures at
various times over the subsequent eleven years.
Interest paid, net of amounts capitalized, was approximately
$1,177,000 and $1,001,000 for the six months ended March 31, 1997
and 1996, respectively. Interest capitalized was approximately
$425,000 and $296,000 for the six months ended March 31, 1997 and
1996, respectively.
Certain mortgage agreements contain loan covenants. At March
31, 1997, the Company was in material 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,
1997 1996
<S> <C> <C>
Finished goods $45,892 $28,634
Fruit-on-tree inventory 8,349 9,626
Other 3,627 3,888
------- -------
Total $57,868 $42,148
======= =======
</TABLE>
As of March 31, 1997 the Company held futures contracts for
frozen concentrated orange juice ("FCOJ"). The net futures
positions totaled approximately $6,727,000 with unrealized gains of
approximately $676,000. Exposure to off-balance sheet risk related
to these positions results from market fluctuations of FCOJ futures
prices relative to the Company's open positions. As of March 31,
1997 deposits with brokers totaled $254,000.
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, 1997, the
Company had two customers who individually accounted for
approximately 18.9% and 14.7%, and 17.9% and 13.6% of total sales
for the respective periods. 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.
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-
<TABLE>
<CAPTION>
Income tax expense attributable to income for the six and three
month periods ended March 31, 1997 and 1996 consists of the following
(in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Current:
Federal income tax $ 658 $1,687 $(165) $ 888
State income tax 127 328 30 172
------- ------ ------ -------
Total $ 785 $2,015 $(135) $1,060
------- ------ ------ -------
Deferred:
Federal income tax $ 294 $ 32 $ 293 $ (42)
State income tax (14) 3 (15) (90)
------- ------ ------ -------
Total $ 280 $ 35 $ 278 $ (132)
------- ------ ------ -------
Total provision for
income taxes $1,065 $2,050 $ 143 $ 928
======= ====== ====== =======
</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, 1997 and 1996 (in thousands):
Six Months Three Months
Ended March 31, Ended March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Expected income tax $ 979 $2,154 $ 143 $1,078
Increase(decrease) resulting
from:
Loss on foreign investments - 25 - 13
Permanent items 6 64 (3) 23
State income taxes, net
of federal tax benefit 74 216 41 20
Change in valuation
allowance for deferred
tax asset - (507) - (507)
Other, net 6 98 (38) 301
------ ------- ------ -------
Total provision for
income taxes $1,065 $2,050 $ 143 $ 928
====== ======= ====== =======
</TABLE>
The reduction of $507,000 during the prior year period 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, 1996 as a result of net income, dividends
paid, and treasury stock transactions (in thousands):
Treasury
September 30, Net Dividends Stock March 31,
1996 Income Paid Issued 1997
<S> <C> <C> <C> <C> <C>
Common stock $ 5,175 $ - $ - $ - $ 5,175
Capital in
excess of par value 71,417 - - - 71,417
Retained earnings 32,869 1,814 (1,031) (28) 33,624
Treasury stock (450) - - 66 (384)
--------- ------ -------- ----- ---------
Total stockholder's
equity $109,011 $1,814 $(1,031) $ 38 $109,832
========= ====== ======== ===== =========
</TABLE>
-9-
ORANGE-CO, INC. AND SUBSIDIARIES
PART I - ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Fiscal 1997 versus Fiscal 1996
The following is management's discussion and analysis of
significant factors which have affected the Company's operations
during the periods included. It compares the Company's operations
for the six and three month periods ended March 31, 1997 to
operations for the six and three month periods ended March 31, 1996.
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, 1997
vs Six Months (YTD) and Three Months (QTR) Ended March 31, 1996
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 $5,943 $ 606 $8,297 $2,958 $(2,354) $(2,352)
Grove Management
Division 279 542 260 498 19 44
------ ------ ------ ------ -------- --------
Total $6,222 $1,148 $8,557 $3,456 (2,335) (2,308)
====== ====== ====== ======
Other costs and expenses net:
Selling, general and administrative (798) (242)
Gain on disposition of property and equipment (81) (81)
Other income and expense (48) (49)
Interest (194) (71)
-------- --------
Income before income taxes (3,456) (2,751)
Provision for income taxes 985 785
-------- --------
Net income $(2,471) $(1,966)
======== ========
</TABLE>
SALES
Sales for the six and three month periods ended March 31, 1997
increased approximately $6,222,000 or 12.1% and approximately
$1,148,000 or 4.1%, respectively compared to the same periods in the
prior year. The Beverage Division accounted for the principal
increases for the six and three month periods with increased sales
of approximately $5,943,000 and $606,000. Grove Management Division
sales also increased by approximately $279,000 and $542,000 for the
current six and three month periods compared to the same periods in
the prior year.
BEVERAGE DIVISION The Beverage Division sales increased
approximately $5,943,000 or 12.2% and $606,000 or 2.3% in the
current six and three month respective periods compared to the same
periods in the prior year. Of these increases, revenues from the
sale of the Company's bulk citrus juice products increased
approximately $4,458,000 during the current six month period and
decreased approximately $152,000 during the current three month
period as a result of offsetting increases and decreases.
As part of the increase during the current
10
six month period, revenues from the volume of bulk citrus juice
products sold increased approximately $8,038,000. This increase in
volume during the current six month period was partially offset by
decreased prices for bulk citrus juice products of approximately
$3,580,000 compared to the same period in the prior year. During
the current three month period a decrease in prices resulted in
a decrease in revenues of approximately $3,616,000 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 $3,464,000 compared to the same period in the
prior year.
As the Company entered the 1996-97 season, the United States
Department of Agriculture ("USDA") announced a significantly
increased crop estimate of approximately 220,000,000 boxes of
round oranges. This estimate, if true will provide the largest
Florida crop in history. This expectation has resulted in sharply
decreased prices of bulk FCOJ. Management expects the price of bulk
FCOJ to be significantly lower for at least the next two fiscal
quarters as compared to fiscal 1996 levels. The Florida citrus
industry is highly cyclical subject to varying weather conditions
and other natural phenomena sometimes creating wide swings in
economic conditions and opportunities.
Sales of the Company's packaged citrus juice products sold
increased approximately $1,331,000 and $308,000 during the
current six and three month respective periods compared to the
same periods in the prior year. Contributing to these increases
were increases in the volumes of packaged citrus juice products
sold during the current six and three month periods of approximately
$2,011,000 and $869,000 respectively. Additionally, higher prices
resulted in increased revenues of approximately $973,000 and $437,000
during the current six and three month respective periods. Partially
offsetting these increases were decreases during the current six
and three month periods of approximately $1,653,000 and $998,000
which resulted from the conversion of a pasteurized single strength
packaging program to a bulk supply program. The conversion
of these sales are now reflected as bulk citrus juice sales.
The Company's non-orange packaged juices and drink base product
sales increased approximately $277,000 during the current six month
period and decreased approximately $307,000 during the current three
month period compared to the same periods in the prior year.
Decreases in the volume of sales of these products accounted for
decreases of approximately $573,000 and $654,000 during the current
six and three month periods. Offsetting increases in prices contributed
approximately $850,000 and $347,000 to increased revenues during the
current six and three month respective periods compared to the same
periods in the prior year.
Revenues from the sale of the Company's citrus by-products,
including feed, pulp cells, and citrus oils, decreased approximately
$303,000 during the current six month period and increased
approximately $369,000 during the current three month period compared
to the same period 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 $233,000 during the current six month
period and the increase during the current three month period of
approximately $338,000. Revenues also decreased approximately
$70,000 during the current six month period as a result of lower
prices for by-products sold compared to the same period in the prior
year. However, revenues for by-products sold during the current
three month period increased approximately $31,000 due to slightly
higher prices compared to the same three month period in the prior
year.
Storage, handling, processing citrus for customers under
contract, and other revenues increased approximately $180,000 and
$388,000 during the current six and
11
three month periods compared to the same periods in the prior year.
These increases were due primarily to increases 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 $279,000 or 10.1% and $542,000 or 51.0% for the
current six and three month periods compared to the same periods in
the prior year. The principal increases of approximately $357,000
and $492,000 occurred in harvesting revenues during the current six
and three month periods and resulted from increases in the volume
of boxes harvested during the current periods compared to the same
periods in the prior year. Revenues also increased approximately
$50,000 and $33,000 during the current six and three month periods
as a result of increases in caretaking activities. Partially
offsetting these increases during the current six month period
was a decrease of approximately $128,000 resulting from a
decrease in the volume of fruit sold to third party packers
and processors. However, during the current three month period
revenues for fruit sold to third party packers and processors
increased approximately $17,000.
GROSS PROFIT
Gross profit for the current six and three month periods ended
March 31, 1997 decreased approximately $2,335,000 or 23.8% and
approximately $2,308,000 or 45.6% compared to the same periods in
the prior year. The principal decreases of approximately $2,354,000
and $2,352,000 during the current six and three month periods
occurred in the Beverage Division. Gross profit for the Grove
Management Division increased during the current six and three month
periods by approximately $19,000 and $44,000 compared to the same
periods in the prior year.
BEVERAGE DIVISION Gross profit of the Beverage Division decreased
approximately $2,354,000 and $2,352,000 during the current six and
three month respective periods compared to the same periods in the
prior year. Contributing to the decrease in gross profit were
decreases during the current six and three month respective periods
of approximately $3,798,000 and $3,165,000 from the sale of bulk
citrus juice products. Of the decreases during the current six
month and three month respective periods, approximately $3,580,000
and $3,616,000 resulted from decreased prices for bulk citrus juice
products. Additionally, during the current six month period gross
profit decreased approximately $218,000 resulting from a higher
cost of carryover inventory for bulk citrus juice products sold
during the current period compared to the same period in the prior
year. Partially offsetting the decrease in gross profit
during the current three month period was an increase of
approximately $451,000 resulting primarily from a combination
of higher sales volumes and lower cost of production principally
as result of lower costs of raw fruit and concentrate.
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, 1997 the Company held contracts for FCOJ futures with
unrealized gains of approximately $676,000 which would have been
realized if said positions had been prematurely liquidated on that
date. These unrealized gains are based upon the closing market
prices of equivalent futures obligations and do not necessarily
represent prices at which the Company expects to sell the FCOJ.
-12-
Gross profit on sales of packaged citrus juice products
increased approximately $1,065,000 and $448,000 during the current
six and three month respective periods compared to the same periods
in the prior year. Higher prices during the current six and three
month periods accounted for increases in gross profit of approximately
$973,000 and $437,000 respectively. Additionally, gross profit increased
approximately $542,000 and $237,000 during the current six and three
month periods as a result of increases in the volume of packaged citrus
juices sold. Partially offsetting the increased prices were higher
cost of production of approximately $400,000 and $153,000 during
the current six and three month periods. Additionally, there were
decreases of approximately $50,000 and $73,000 during the current
respective periods resulting from the conversion of a pasteurized
single strength packaging program to a bulk supply program as
previously mentioned.
Gross profit from the sale of the Company's non-orange packaged
juices and drink base products increased approximately $126,000
and $8,000 during the current six and three month respective
periods compared to the same periods in the prior year. These
increases were principally a result of increased sales volumes.
Gross profit from citrus by-products, including feed, pulp cells,
and citrus oils, decreased approximately $203,000 and $19,000 during
the current six and three month respective periods compared to the
same periods in the prior year. Of these decreases approximately
$267,000 and $82,000 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, higher prices and
lower costs of production increased gross profit approximately
$64,000 and $63,000 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
increased by approximately $456,000 and $376,000 during the current
six and three month periods due to an increase in these activities
compared to the same periods in the prior year.
GROVE MANAGEMENT DIVISION Grove Management Division gross profit
increased approximately $19,000 or 3.3% and $44,000 or 28.3% during
the current six and three month periods compared to the same periods
in the prior year. The principal increase of approximately $29,000
in the current six month period was due to an increase in grove
caretaking. This increase in gross profit was partially offset by a
decrease of approximately $10,000 from a reduction in fees charged for
harvesting services and from fruit sold to third party packers and
processors. However, during the current three month period gross
profit increased approximately $92,000 from fruit sold to third
party packers and processors. This increase in gross profit was
partially offset during the current three month period by a decrease
in grove caretaking and harvesting activities of approximately
$48,000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $798,000 or 31.7% and $242,000 or 17.6% for the
current six and three month periods compared to the same periods in
the prior year. Of these increases, approximately $356,000 and
$157,000 resulted from an increase in salary and benefit costs in
the current respective periods. Additionally, approximately
$442,000 and $85,000 were a result of increases in other costs. A
significant portion of these increases resulted from the Company's
operation of the Birds Eye foodservice juice business acquired in
July 1996.
-13-
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The decreased gain on the disposition of property, equipment and
other of approximately $81,000 for the six and three month periods
ending March 31, 1997 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 $194,000 or 19.5% and
$71,000 or 12.2% in the current six and three month periods
respectively, compared to the same periods in the prior year. The
primary increases of approximately $401,000 and $200,000 in the
current respective periods were the result of increases in the
average outstanding debt. Partially offsetting these increases were
decreases of approximately $29,000 and $72,000 due to decreases in
interest rates. Also, increases in capitalized interest resulted in
decreases of approximately $129,000 and $33,000, while decreases in
amortization of deferred loan costs and other related interest
charges resulted in decreases of approximately $49,000 and $24,000
in the current six and three month periods respectively.
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 1996-97
season in 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 $40 million
credit facility. This facility is principally secured by
substantially all of the Company's current assets. The outstanding
balance at March 31, 1997 was approximately $39,400,000. 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 1999; 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. In April 1997 this facility was
increased from $40 million to $45 million to more adequately
service the Company's working capital needs.
Additionally, as of March 31, 1997 the Company had a $10 million
short-term capital revolving credit facility. As of March 31, 1997
the outstanding balance on this facility was $1,008,000. 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 1998.
As of April 30, 1997 the outstanding balance on this facility was
$573,000 and approximately $9,427,000 of additional
borrowings were available under this facility.
Current assets increased approximately $9,848,000 as of March 31,
1997 compared to September 30, 1996. The principal component of
this was an increase
14
in inventories of approximately $15,720,000 in the first six months
of the current year due to the seasonal accumulation of inventories.
The Company's accounts receivable balance decreased approximately
$6,093,000 during the six months ending March 31, 1997. Additionally,
there was a decrease in cash and short-term cash investments of
approximately $468,000. Advances on fruit purchases decreased
approximately $544,000 as the Company began processing the purchased
fruit and collected these advances.
Current liabilities decreased approximately $6,206,000 during
the first six months of fiscal 1997 compared to September 30, 1996.
This decrease was due principally to payments of approximately
$4,216,000 of accrued expenses associated with fruit purchased
during the previous season and decreases in accounts payable and
other accrued expenses of approximately $3,012,000. Offsetting these
decreases was an increase of $14,000 in the current portion of long-
term debt, and an increase in notes payable of $1,008,000.
Long-term debt increased approximately $16,543,000 during the
current six month period. This was primarily the result of an
increase of approximately $18,314,000 in the Company's long-term
working capital facility used principally to finance the seasonal
accumulation of inventories. There was a decrease of approximately
$1,820,000 which represents scheduled principal payments made on
long-term debt during the six month period.
At March 31, 1997 the Company's outstanding long-term debt was
approximately $63,206,000 including the working capital facility of
approximately $39,400,000. In addition current installments of long-
term debt were approximately $3,669,000 with the remaining amounts
due on various dates over the subsequent eleven years. The Company
anticipates that amounts due over the next twelve months will be
paid out of working capital. At March 31, 1997 the Company was in
material compliance with its loan covenants.
During the first six months of the current fiscal year, capital
expenditures of approximately $330,000 were made for the
installation of new irrigation systems on 2,271 acres of Company-
owned groves. Also, cost of caring for newly planted citrus trees
in the amount of $697,000 were capitalized and expenditures of
approximately $226,000 were made for grove operations equipment.
Additionally, expenditures of approximately $3,206,000 were made
during the same period primarily for the purpose of improving the
efficiency of the Bartow processing facility. 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 1996 the USDA announced a Florida crop estimate of
approximately 220,000,000 boxes of round oranges for the 1996-97
season. This estimate was most recently revised in May 1997 to
approximately 224,200,000 boxes. This estimate, if true, will
provide the largest Florida Crop in history. This expectation has
resulted in sharply decreased prices of bulk FCOJ. Management
expects the price of bulk FCOJ to be significantly lower for at
least the next two fiscal quarters as compared to fiscal 1996 levels.
The Florida citrus industry is highly cyclical subject to varying
weather conditions and other natural phenomena sometimes creating
wide swings in economic conditions and opportunities.
-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 27, 1997,
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 9,224,898 27,141
Richard A. Coonrod 9,224,836 27,203
Paul E. Coury, MD 9,222,326 29,713
Ben Hill Griffin, III 9,224,732 27,307
George W. Harris, Jr. 9,224,643 27,396
Dr. W. Bernard Lester 9,224,846 27,193
Gene Mooney 9,223,599 28,440
C. B. Myers, Jr. 9,222,262 29,777
Thomas H. Taylor 9,224,696 27,343
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No EXHIBIT Page No.
10.27 The Sixth Amendment to the Loan Agreement 17
By and Among Orange-co, Inc., Orange-co of
of Florida, Inc. and SunTrust Bank, Central
Florida, National Association, Dated April
25, 1997.
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, 1997 By: /s/Gene Mooney
------------------------
Gene Mooney
President and
Chief Operating Officer
Date: May 14, 1997 By: /s/Dale A. Bruwelheide
------------------------
Dale A. Bruwelheide
Vice President and
Chief Financial Officer
SIXTH AMENDMENT TO LOAN AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AGREEMENT dated as of April 25, 1997,
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 $10,000,000.00 (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, 1997 until April 30, 1998
and (b) renew and extend the maturity date of the Working Capital Loan from
April 30, 1998 until April 30, 1999, (c) increase the commitment amount
under the Working Capital Loan to $45,000,000.00 and (d) no longer require
that the Revolving Loan be secured by the security interest created pursuant
to the Security Agreement (as defined in the Loan Agreement, as amended);
and
WHEREAS, the Bank has agreed to the foregoing subject to the terms and
conditions hereof and the other Loan Documents.
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 "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 and the
Working Capital Loan, as the context may require."
(b) 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."
(c) 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,
1998, 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, 1999, or such
later date as the Bank may agree to in writing."
(d) The definition of "Term Loan" in Section 1.01 of the Loan
Agreement is hereby deleted.
(e) Section 2.01 of the Loan Agreement is hereby deleted and, in
lieu thereof, there is substituted the following:
"SECTION 2.01. The Loans. 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
$10,000,000.00 with respect to the Revolving Loan and up to
the lesser of (i) $45,000,000.00 or (ii) the amount of the
Borrowing Base with respect to the Working Capital Loan.
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 Working Capital Loan exceeds the
amount of the Borrowing Base, the Borrowers shall
immediately reduce the excess principal balance of the
Working Capital Loan.
(f) 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. 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. Borrowers shall reimburse the Bank on
demand for any funding losses due to a prepayment of a
LIBOR loan."
(g) Section 4.01(t) of the Loan Agreement is hereby deleted.
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 Sixth
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 Sixth
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 Sixth 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
(CORPORATE SEAL)
ORANGE-CO OF FLORIDA, INC., a Florida corporation
By:/s/Dale A. Bruwelheide
----------------------------------------
Dale A. Bruwelheide, Vice President
(CORPORATE SEAL)
BANK:
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION
By:/s/William A. Mang
------------------------------------------
William A. Mang, First Vice President
<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-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,040
<SECURITIES> 0
<RECEIVABLES> 9,316
<ALLOWANCES> (504)
<INVENTORY> 57,868
<CURRENT-ASSETS> 70,310
<PP&E> 164,778
<DEPRECIATION> 41,575
<TOTAL-ASSETS> 212,248
<CURRENT-LIABILITIES> 14,939
<BONDS> 0
0
0
<COMMON> 76,208
<OTHER-SE> 33,624
<TOTAL-LIABILITY-AND-EQUITY> 212,248
<SALES> 57,578
<TOTAL-REVENUES> 57,578
<CGS> (50,117)
<TOTAL-COSTS> (50,117)
<OTHER-EXPENSES> (3,393)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,189)
<INCOME-PRETAX> 2,879
<INCOME-TAX> 1,065
<INCOME-CONTINUING> 1,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,814
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
