Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
[] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from..to...
Commission File Number 0-12114
---------------------------
Cadiz Inc.
(Exact name of registrant specified in its charter)
DELAWARE 77-0313235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Wilshire Boulevard, Suite 1600
Santa Monica, CA 90401-1111
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (310) 899-4700
Securities Registered Pursuant to Section 12(b) of the Act: None
-------------------------------
Name of Each Exchange
Title of Each Class on Which registered
--------------------- --------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---- ----
The number of shares outstanding of each of the Registrant's classes of
Common Stock at May 12, 2000 was 35,307,911 shares of Common Stock, par
value $0.01.
CADIZ INC.
INDEX
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For the Three Months Ended March 31, 2000 Page
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PART I - FINANCIAL INFORMATION
1. Consolidated Financial Statements
A. Statement of Operations..................................2
B. Balance Sheet............................................3
C. Statement of Cash Flows..................................4
D. Statement of Stockholders' Equity........................5
E. Notes....................................................6
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................7
3. Quantitative and Qualitative Disclosures about Market Risk....14
PART II - OTHER INFORMATION......................................14
CADIZ INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------
For the Three Months Ended March 31, 2000 1999
- --------------------------------------------------------------
($ in thousands except per share data)
Revenues $ 7,936 $ 6,560
------ -------
Costs and expenses:
Cost of sales 8,466 5,649
General and administrative 2,937 2,951
Special litigation 173 227
Depreciation and amortization 700 740
------- -------
Total costs and expenses 12,276 9,567
------- -------
Operating loss (4,340) (3,007)
Interest expense, net 4,502 4,414
------- -------
Net loss $ (8,842) $ (7,421)
======= =======
Basic and diluted net loss per
common share $ (.25) $ (.22)
======== ========
Basic and diluted weighted average
shares outstanding 35,219 33,953
======= ========
See accompanying notes to the consolidated financial statements.
CADIZ INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
- -------------------------------------------------------------------------
March 31, December 31,
2000 1999
- -------------------------------------------------------------------------
($ in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 553 $ 4,537
Accounts receivable, net 6,997 8,436
Inventories 28,909 18,423
Prepaid expenses and other 900 917
------ ------
Total current assets 37,359 32,313
Investment in partnerships 1,528 1,497
Property, plant, equipment and
water programs, net 170,002 169,009
Other assets 11,403 11,283
------- --------
$220,292 $214,102
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,812 $ 8,110
Accrued liabilities 9,510 7,686
Revolving credit facility 10,100 -
Long-term debt, current portion 24,785 725
-------- -------
Total current liabilities 54,207 16,521
Long-term debt 118,241 142,089
Deferred income taxes 5,447 5,447
Other liabilities 370 375
Commitments and contingencies
Stockholders' equity:
Common stock - $.01 par value;
45,000,000 shares authorized;
shares issued and outstanding
35,302,911 at March 31, 2000
and 35,166,661 at December 31, 1999 353 352
Additional paid-in capital 137,398 136,200
Accumulated deficit (95,724) (86,882)
-------- -------
Total stockholders' equity 42,027 49,670
------- -------
$ 220,292 $ 214,102
======== ========
See accompanying notes to the consolidated financial statements.
CADIZ INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -----------------------------------------------------------------------
For the Three Months Ended March 31, 2000 1999
- -----------------------------------------------------------------------
($ in thousands)
Cash flows from operating activities:
Net loss $ (8,842) $ (7,421)
Adjustments to reconcile net loss from operations
to cash used for operating activities:
Depreciation and amortization 1,303 1,194
Gain on sale of assets (20) (40)
Share of partnership operations (31) -
Stock earned for services (313) -
Changes in operating assets and liabilities:
Decrease in accounts receivable 1,439 517
Increase in inventories (9,051) (10,611)
Decrease in prepaid expenses and other 17 226
Increase (decrease) in accounts payable 1,702 (393)
Increase in accrued liabilities 1,824 3,514
Decrease in other liabilities (5) (104)
------- -------
Net cash used for operating activities (11,977) (13,118)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (449) (805)
Proceeds from disposal of property, plant
and equipment 38 54
Additions to water programs (297) (669)
Additions to developing crops (1,278) (1,062)
Increase in other assets (118) (564)
-------- -------
Net cash used for investing activities (2,104) (3,046)
------- -------
Cash flows from financing activities:
Net proceeds from issuance of stock 174 3,505
Principal payments on long-term debt (177) (100)
Net proceeds from short-term debt 10,100 4,100
------- -------
Net cash provided by financing activities 10,097 7,505
------- --------
Net decrease in cash and cash equivalents (3,984) (8,659)
Cash and cash equivalents, beginning of period 4,537 13,635
------- -------
Cash and cash equivalents, end of period $ 553 $ 4,976
======= =======
See accompanying notes to the consolidated financial statements.
CADIZ INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
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For the Three Months Ended March 31, 2000
- -------------------------------------------------------------------------
($ in thousands)
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
Balance as of
December 31, 1999 35,166,661 $ 352 $ 136,200 $ (86,882) $ 49,670
Exercise of stock
options 36,250 - 174 - 174
Stock issued
for services 100,000 1 1,024 - 1,025
Net loss - - - (8,842) (8,842)
-------- ------ ------- -------- --------
Balance as of
March 31, 2000 35,302,911 $ 353 $ 137,398 $ (95,724) $ 42,027
========== ======= ========= ========= ========
See accompanying notes to the consolidated financial statements.
CADIZ INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The Consolidated Financial Statements have been prepared by the
Company without audit and should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in the
Company's latest Form 10-K for the year ended December 31, 1999. The
foregoing Consolidated Financial Statements include all adjustments,
consisting only of normal recurring adjustments, which the Company
considers necessary for a fair presentation. The results of operations
for the three months ended March 31, 2000 are not necessarily indicative
of the results to be expected for the full fiscal year.
See Note 2 to the Consolidated Financial Statements included in the
Company's latest Form 10-K for a discussion of the Company's accounting
policies.
NOTE 2 - INVENTORIES
- --------------------
Inventories consist of the following (dollars in thousands):
March 31,December 31,
2000 1999
---- ----
Growing crops $ 22,108 $ 14,297
Pepper seed 895 1,028
Harvested product 406 98
Materials and supplies 5,500 3,000
-------- -------
$ 28,909 $ 18,423
======== ========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (UNAUDITED)
RESULTS OF OPERATIONS
The financial statements set forth herein as of and for the three
months ended March 31, 2000 and 1999 reflect the results of operations
for the Company and its wholly-owned subsidiaries, including Sun World
International, Inc. ("Sun World").
A summary of the Sun World elements which management of the Company
believes is essential to an analysis of the results of operations for
such periods is presented below. For purposes of this summary, the term
Sun World will be used, when the context so requires, with respect to the
operations and activities of the Company's Sun World subsidiary, and the
term Cadiz will be used, when the context so requires, with respect to
those operations and activities of the Company not involving Sun World.
The Company's net income or loss in future fiscal periods will be
largely reflective of (a) the operations of the Company's water
development activities including the Cadiz Groundwater Storage and Dry-
Year Supply Program (the "Program") and (b) the operations of Sun World.
Sun World conducts its operations through four operating divisions:
farming, packing, marketing and proprietary product development. Net
income from farming operations varies from year to year primarily due to
yield and pricing fluctuations which can be significantly influenced by
weather conditions, and are, therefore, generally subject to greater
annual variation than Sun World's other divisions. However, the
geographic distribution of Sun World's farming operations and the
diversity of its crop mix makes it unlikely that adverse weather
conditions would affect all of Sun World's properties or all of its crops
in any single year. Nevertheless, net profit from Sun World's packing,
marketing and proprietary product development operations tends to be more
consistent from year to year than net profit from Sun World's farming
operations. As such, Sun World continues to strategically add volume in
the packing and marketing areas that will complement Sun World's in-house
production or fill in contra-seasonal marketing windows. Sun World has
entered into agreements internationally to license selected proprietary
fruit varieties and continues to pursue additional domestic and
international licensing opportunities.
The following discussion contains trend analysis and other forward-
looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of
1934, as amended. Actual results could differ materially from those
projected in the forward-looking statements throughout this document.
Specific factors that may cause such a difference include, but are not
limited to, price and yield fluctuations in the agricultural operations,
seasonality, timing and terms of various approvals required to complete
the Program. See additional discussions under the heading "Certain
Trends and Uncertainties" in Item 7 of the Company's latest Form 10-K.
Three Months Ended March 31, 2000 Compared to Three Months Ended March
- ------------------------------------------------------------------------
31, 1999
- --------
The Company's agricultural operations are impacted by the general
seasonal trends that are characteristic of the agricultural industry.
Sun World has historically received the majority of its net income during
the months of June to October following the harvest and sale of its table
grape and stonefruit crops. Due to this concentrated activity, Sun World
has historically incurred losses with respect to its agricultural
operations during the other months of the year.
The table below sets forth, for the periods indicated, the results
of operations for the Company's four main operating divisions (before
elimination of any interdivisional charges) as well as the categories of
costs and expenses incurred by the Company which are not included within
the divisional results (in thousands):
Three Months Ended
March 31,
---------
2000 1999
---- ----
Divisional net income (loss):
Farming $ (834) $ 1,104
Packing (186) (199)
Marketing (254) (433)
Proprietary product development 338 88
------- --------
(936) 560
General and administrative 2,531 2,600
Special litigation 173 227
Depreciation and amortization 700 740
Interest expense 4,502 4,414
------ ------
Net loss $ (8,842) $ (7,421)
======== =========
FARMING OPERATIONS. Net loss from farming operations totaled $(0.8)
million for the three months ended March 31, 2000, compared to net income
of $1.1 million for the three months ended March 31, 1999. Farming
revenues were $5.7 million and farming expenses were $6.5 million for the
first quarter of 2000. For the first quarter of 1999, farming revenues
were $4.4 million and farming expenses were $3.3 million. Farming
revenues and expenses generated in the first quarter of 2000 are
primarily due to harvesting sales of navel oranges and lemons in the San
Joaquin Valley. The December 1998 freeze eliminated the vast majority of
these citrus crops in 1999. During the quarter ended March 31, 2000, the
decrease in farming results primarily resulted from decreased F.O.B.
prices for navel oranges, artichokes and sweet red peppers from Mexico
resulting from an over supply in the industry. F.O.B. prices for lemons
remained strong during the first quarter of 2000 due to lower industry
volumes resulting from light yields in the San Joaquin Valley.
PACKING OPERATIONS. For the quarter ended March 31, 2000, Sun
World's four packing and handling facilities contributed revenues of $2.5
million offset by $2.7 million of expenses for a net loss of $(0.2)
million compared to a net loss of $(0.2) million for the quarter ended
March 31, 1999. For the first quarter of 1999, Sun World generated
revenues $1.8 million and expenses of $2.0 million. Packing operations
generally reflect a loss in the first quarter of the year as less than
10% of the annual volume is packed or handled during the first quarter
which does not provide adequate revenues to cover fixed infrastructure
costs associated with the packing and handling facilities. Units packed
during the quarter totaled 0.7 million in 2000 compared to 0.4 million in
1999. The increase in units was primarily due to the packing of Sun World-
grown citrus from the San Joaquin Valley at the Kimberlina facility
during the first quarter of 2000 compared to almost no units in 1999 due
to the freeze.
MARKETING OPERATIONS. Sun World's marketing operations include the
selling, merchandising and promoting of Sun World grown products, as well
as providing these services for third party growers. During the three
months ended March 31, 2000, a total of approximately 0.9 million units
were sold, consisting primarily of Sun World-grown lemons and navel
oranges, citrus from domestic third party growers in Coachella, and sweet
red peppers from Mexico. These unit sales resulted in marketing revenues
of $0.7 million offset by marketing expenses of $1.0 million resulting in
a net loss of $(0.3) million for the first quarter of 2000. For the first
quarter of 1999, Sun World marketed 0.7 million units and generated
revenues of $0.6 million offset by expenses of $1.0 million resulting in
a net loss of $(0.4) million. The increased units marketed and revenues
primarily relate to the increase in Sun World-grown citrus in the San
Joaquin Valley. Similar to the packing operations, marketing operations
ordinarily reflect a loss during the first quarter of the year as less
than 10% of the annual volume of units marketed are sold during the
quarter.
PROPRIETARY PRODUCT DEVELOPMENT. Sun World has a long history of
product innovation, and its research and development center maintains a
fruit breeding program that has introduced many proprietary fruit
varieties during the past five years. During the three months ended
March 31, 2000, net income from proprietary product development
was $0.3 million consisting of $0.2 million of international royalties
primarily related to the Company's licensing agreement of the Sugraone
table grape in South Africa and $0.5 million of management income from
Kingdom Agricultural Development Company (KADCO) for the Company's role
in developing agricultural land in Egypt offset by research and
development expenses of $0.4 million. During the three months ended
March 31, 1999, net income from proprietary product development was $0.1
million consisting primarily of $0.4 million in international royalties
primarily from South Africa offset by $0.3 million of research and
development expenses.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses during the three months ended March 31, 2000 totaled $2.5
million and approximated the $2.6 million in expenses for the three
months ended March 31, 1999.
SPECIAL LITIGATION. The Company is engaged in lawsuits seeking
monetary damages arising from activities adverse to the Company in
connection with a landfill, which until its defeat by the voters of San
Bernardino County in 1996, was proposed to be located adjacent to the
Company's Cadiz/Fenner Valley properties. See "Item 1 - Legal
Proceedings." During the three months ended March 31, 2000 and 1999,
expenses including litigation costs and professional fees totaled $0.2
million.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization
expense for the three months ended March 31, 2000 and 1999 totaled $0.7
million.
INTEREST EXPENSE, NET. Net interest expense totaled $4.5 million
during the three months ended March 31, 2000, compared to $4.4 million
during the same period in 1999. The following table summarizes the
components of net interest expense for the two periods (in thousands):
Three Months Ended
March 31,
-------
2000 1999
---- -----
Interest on outstanding debt - Sun World $ 3,483 $ 3,439
Interest on outstanding debt - Cadiz 490 491
Amortization of financing costs 602 562
Interest income (73) (78)
------- -------
$ 4,502 $ 4,414
======= ========
Financing costs, which include legal fees and warrants, are
amortized over the life of the debt agreements.
LIQUIDITY AND CAPITAL RESOURCES
General Discussion of Liquidity and Capital Resources
- -----------------------------------------------------
Current Financing Arrangements
- ------------------------------
CADIZ OBLIGATIONS
As Cadiz has not received significant revenues from its water
resource activity to date, Cadiz has been required to obtain financing to
bridge the gap between the time water resource development expenses are
incurred and the time that revenue will commence. Historically, Cadiz
has addressed these needs primarily through secured debt financing
arrangements with its lenders, private equity placements and the exercise
of outstanding stock options.
As of March 31, 2000, Cadiz was obligated for approximately $10.3
million under a senior term loan facility and $15 million under a $15
million revolving credit facility (the "Cadiz Revolver") with the same
lender. Both facilities have a maturity date of January 31, 2001.
Currently, the lender holds a senior deed of trust on substantially all
of Cadiz' non-Sun World related property under the term loan facility and
a second lien on substantially all of the non-Sun World assets of the
company under the Cadiz Revolver. The Company and the lender have
historically structured their financing arrangement with a view toward
effective implementation of the Program. While the Company currently
anticipates repayment of these facilities with monies to be received
under the Program, the Company may, if it deems necessary, replace or
renegotiate the terms of these facilities to accommodate other
developments such as delays in the timetable for regulatory
approvals of the Program.
As the Company continues to actively pursue its business strategy,
additional financing specifically in connection with the Company's water
programs may be required. Responsibility for funding the design,
construction and program implementation costs of the capital facilities
for the Program will, under currently developed principles and terms, be
shared equally by the Company and the Metropolitan Water District of
Southern California ("Metropolitan"). The Company is analyzing various
alternatives for funding its share of the estimated $125 million to $150
million cost of the Program capital facilities. These funding
alternatives include (a) long-term financing arrangements; (b)
utilization of monies to be received from Metropolitan for its initial
purchase of indigenous groundwater; and (c) financing through
Metropolitan by offsetting Cadiz' costs for capital facilities financing
against payments due to Cadiz for stored or transferred water. Based
upon the results of analyses performed by investment banking firms
retained by the Company, management believes that several alternative
long-term financing arrangements are available to the Company.
SUN WORLD OBLIGATIONS
Under Sun World's historical working capital cycle, working capital
is required primarily to finance the costs of growing and harvesting
crops, which generally occur from January through September with a peak
need in June. Sun World harvests and sells the majority of its crops
during the period from June through October, when it receives the
majority of its revenues. In order to bridge the gap between incurrence
of expenditures and receipt of revenues, large cash outlays are required
each year which are financed through a revolving $30 million credit
agreement (the "Sun World Revolver ") which is guaranteed by Cadiz. Sun
World obtained a one-year extension of the Revolver in February 2000. As
of March 31, 2000, $10.1 million was outstanding under the Sun World
Revolver. Additionally, Sun World has an intercompany revolving credit
agreement with Cadiz for seasonal working capital requirements as needed.
$2.7 million was outstanding under this facility at March 31, 2000,
which is expected to be repaid from proceeds from the sale of Sun
World's crops.
In addition, Sun World has outstanding $115 million of First
Mortgage Notes (the "Sun World Notes") which will mature on April 15,
2004 that are registered under the Securities Act of 1933 and are
publicly traded. The Sun World Notes are redeemable at the option of Sun
World, in whole or in part, at any time on or after April 15, 2001.
Interest accrues at the rate of 11-1/4% per annum and is payable semi-
annually on April 15 and October 15 of each year. The Sun World Notes are
secured by a first lien (subject to certain permitted liens) on
substantially all of the assets of Sun World and its subsidiaries, other
than growing crops, crop inventories and accounts receivable and proceeds
thereof, which secure the Sun World Revolver, and certain real property
pledged to third parties. The Sun World Notes are also secured by the
guarantee of Cadiz and the pledge by Cadiz of all of the stock of Sun
World.
CASH USED FOR OPERATING ACTIVITIES. Cash used for operating
activities totaled $12.0 million for the three months ended March 31,
2000, as compared to cash used for operating activities of $13.1 million
for the three months ended March 31, 1999. The decrease in cash used for
operating activities is primarily due to increased farming activity and
corresponding sales of Company-farmed citrus during the quarter coupled
with higher accounts payable.
CASH USED FOR INVESTING ACTIVITIES. Cash used for investing
activities totaled $2.1 million for the three months ended March 31,
2000, as compared to cash used for investing activities of $3.0 million
for the same period in 1999. The decrease was primarily due to reduced
capital expenditures for property, plant and equipment and water programs
offset by increased additions for developing crops during the first
quarter of 2000 compared to 1999. During the first quarter of 2000, the
Company invested $1.3 million in developing crops, $0.3 million in water
programs, and $0.4 million for the purchase of property, plant and
equipment.
CASH PROVIDED BY FINANCING ACTIVITIES. Cash provided by financing
activities totaled $10.1 million for the three months ended March 31,
2000, consisting primarily of borrowings by Sun World for seasonal
working capital compared to $7.5 million in 1999. Principal payments on
long-term debt totaled $0.2 million for the three months ended March 31,
2000 compared to $0.1 million for the three months ended March 31, 1999.
Net proceeds from the exercise of stock options totaled $0.2 million
during the three months ended March 31, 2000 compared to $3.5 million
during the three months ended March 31, 1999.
OUTLOOK
The Company is actively pursuing the development of its water
resources. Specifically, in July 1998, the Company and Metropolitan
approved the principles and terms for a 50-year agreement for the Cadiz
Groundwater Storage and Dry-Year Supply Program. The principles and
terms for agreement provide that Metropolitan will, during wet years
or periods of excess supply, store surplus water from its Colorado River
Aqueduct in the groundwater basin underlying the Company's property.
During dry years or times of reduced allocations from the Colorado River,
the previously imported water, together with additional existing
groundwater, will be extracted and delivered, via a conveyance pipeline,
back to the aqueduct.
The currently developed principles and terms of the agreement are as
follows:
* Metropolitan will store a minimum of 700,000 acre-feet of Colorado
River Aqueduct water in the Company's groundwater basin during the
first 20 years of the Agreement, and purchase up to a minimum of
1,500,000 acre-feet of existing groundwater for transfer during
dry-years. The Program will have the capacity to convey, either
for storage or transfer, up to approximately 150,000 acre-feet
in any given year.
* During storage operations, Metropolitan will pay a $50 fee per
acre-foot for put of water into storage and a $40 fee per acre-
foot for return of water from storage, and a storage fee of $5
per acre-foot every year that water is stored in the groundwater
basin for the first 5 million acre-feet of stored water. On the
transfer of water, Metropolitan will pay a base rate of
approximately $230 per acre-foot, which will be adjusted
according to a water price formula. Additionally, recognizing
that delivery of the Company's high-quality, indigenous
groundwater to the aqueduct provides a significant water quality
benefit, Metropolitan will pay the Company a water quality fee
for both transferred and returned water.
* Metropolitan will purchase the first 400,000 acre-feet in two
installments -- $44 million payable upon environmental
certification and the balance of $48 million, subject to
adjustment for the water price index, payable upon completion of
construction. Finally, Metropolitan will commit to purchase the
additional 1,100,000 acre-feet at the earlier of delivery or in
annual 40,000 acre-feet increments commencing at the start of
operations.
* The Program facilities, including spreading basins, extraction
wells, conveyance pipeline and a pumping plant, are estimated to
cost between $125 and $150 million, and both parties will share
these costs.
* All operational costs of the Program, including annual
operations, maintenance and energy costs, will be the obligation
of Metropolitan.
The principles and terms for agreement call for the establishment of
a comprehensive groundwater monitoring and management plan to ensure long-
term protection of the groundwater basin. The final agreement may
reflect adjustments to these currently developed principles and terms in
order to reflect and respond to information identified during the ongoing
environmental review process, and the final agreement will be subject to
the approval by the respective Boards of both parties. Also, see
"Narrative Description of Business - Water Resource Development - Cadiz
Groundwater Storage and Dry-Year Supply Program" in the Company's Form 10-
K for the year ended December 31, 1999.
In addition to the development of its water resources, the Company
is actively involved in further agricultural development and reinvestment
in its landholdings. Such development will be systematic and in
furtherance of the Company's business strategy to provide for
maximization of the value of its assets. The Company also continually
evaluates acquisition opportunities that are complimentary to its current
portfolio of water and agricultural resources.
The Company believes that, based upon current levels of operations
and anticipated growth, Sun World can adequately service its indebtedness
and meet its seasonal working capital needs utilizing available internal
cash, the Sun World Revolver and, if necessary, through an intercompany
revolver with Cadiz. Cadiz anticipates it will be able to meet its
ordinary working capital needs, in the short-term, through a combination
of cash on hand, payments under the Program, quarterly management fee
payments from Sun World, payments from Sun World under an agricultural
lease whereby Sun World now operates the Company's 1,600 acres of
developed agricultural property at Cadiz, California, and the possible
exercise of outstanding stock options and, if necessary, through an
intercompany revolver with Sun World. Except for the foregoing,
additional intercompany cash payments between Sun World and Cadiz are
subject to certain restrictions under its current lending arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about market risks for the three months ended March 31,
2000 does not differ materially from that discussed under Item 7A of the
registrant's Annual Report on Form 10-K for 1999.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
See "Item 3. Legal Proceedings" included in the Company's latest
Form 10-K for a complete discussion.
CADIZ LAND COMPANY, INC. V. WASTE MANAGEMENT, INC., Civil Action
No. SC 05743 (the "State Court Action"). In the State Court
Action, the Company filed its Second Amended Complaint. On May 12,
2000, the court denied a demurrer to, and motion to strike certain
causes of action from, the Company's Second Amended Complaint. The
Company will continue to vigorously prosecute its claims against
the WMI defendants.
ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended March 31, 2000, the Company issued
100,000 shares to a hydrological research company upon the deemed
satisfaction of certain contingencies with respect to the issuance
of such shares established in connection with the Company's 1998
acquisition of all of such company's assets. The issuance of
these shares was not registered under the Securities Act of 1933,
as amended (the "Securities Act"). The Company believes that such
issuance was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof as a transaction
not involving any public offerings. In this transaction, the
number of investors was limited, the investor confirmed to the
Company its investment intent, the investor was provided with
information about the Company and/or access to such information,
and restrictions were placed on the resale of the securities. No
underwriters were used or commissions paid in connection with this
issuance.
ITEM 3. - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
A. The annual meeting of the stockholders of the Company was
held on May 15, 2000. The stockholders took the following
action at the meeting:
1. Elected Dwight W. Makins, Keith Brackpool, Anthony Coelho,
Murray H. Hutchison, Mitt Parker and Timothy J. Shaheen
to the Company's Board of Directors. Mr. Makins was
elected by the vote of 28,705,882 in favor and 443,798
withheld and no broker non-votes. Mr. Brackpool was
elected by the vote of 28,704,762 in favor and 444,918
withheld and no broker non-votes. Mr. Coelho was elected
by the vote of 28,525,322 in favor and 624,358 withheld
and no broker non-votes. Mr. Parker was elected by the
vote of 28,706,362 in favor and 443,318 withheld and
no broker non-votes. Messrs. Hutchison and Shaheen were
each elected by the vote of 28,706,612 in favor and
443,068 withheld and no broker non-votes.
2. Approved the proposal to increase the number of
authorized shares of Common Stock from 45,000,000 to
70,000,000 by the vote of 28,001,268 in favor and
1,133,862 against, with 14,550 abstaining and no broker
non-votes.
3. Approved the proposal to adopt the Cadiz Inc. 2000 Stock
Award Plan by the vote of 25,581,639 in favor and 3,336,686
against with 231,355 abstaining and no broker non-votes.
4. Ratified the selection by the Company's Board of Directors
of PricewaterhouseCoopers LLP to continue as the Company's
independent auditors for fiscal 2000 by the vote of
29,119,672 in favor and 11,770 against, with 18,238
abstaining and no broker non-votes.
ITEM 5. - OTHER INFORMATION
Not applicable.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
1. Exhibit 27 - Financial Data Schedule
B. Reports on Form 8-K
None.
CADIZ INC.
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.
Cadiz Inc.
By: /s/ Keith Brackpool May 15, 2000
------------------------------------ ------------
Keith Brackpool, President and Date
Chief Executive Officer and Director
By: /s/ Stanley E. Speer May 15, 2000
------------------------------------ ------------
Stanley E. Speer Date
Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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0
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