UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-----------------------
Date of Report
(Date of earliest
event reported): December 30, 1998
Northland Cranberries, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-16130 39-1583759
-------------- --------------- --------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
800 First Avenue South P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
---------------------------------------------
(Address of principal executive offices including zip code)
(715) 424-4444
------------------------
(Registrant's telephone number)
<PAGE>
The undersigned registrant hereby amends Item 7 of its Current Report
on Form 8-K dated December 30, 1998 to provide in its entirety as follows:
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The following financial statement information of the juice division of
Seneca Foods Corporation is provided herein:
Audited Statement of Net Assets to be Sold at March 31, 1998
Audited Statement of Revenue and Direct Operating Expenses for
the Year Ended March 31, 1998
Notes to Financial Statements
Unaudited Statement of Net Assets to be Sold at September 26,
1998
Unaudited Statements of Revenue and Direct Operating Expenses
for the Six Month Periods Ended September 26, 1998 and
September 27, 1997
Note to Unaudited Financial Statements
(b) Pro Forma Financial Information.
The following pro forma financial statement information of the
registrant and Seneca is provided herein:
Unaudited Consolidated Pro Forma Condensed Balance Sheet at
November 30, 1998
Unaudited Consolidated Pro Forma Condensed Statement of
Operations for the Year Ended August 31, 1998
Unaudited Consolidated Pro Forma Condensed Statement of
Operations for the Three Months Ended November 30, 1998
Notes to Unaudited Consolidated Pro Forma Condensed Financial
Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
Seneca Foods Corporation
We have audited the accompanying statement of net assets to be sold of the
Seneca Foods Juice Division (the "Company"), a division of Seneca Foods
Corporation ("Seneca"), as of March 31, 1998 and the related statement of
revenue and direct operating expenses for the year ended March 31, 1998. These
financial statements are the responsibility of management of the Company and
Seneca. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets to be sold of the Seneca Foods Juice Division as of
March 31, 1998 and the results of its revenues and direct operating expenses for
the year ended March 31, 1998 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, the Company is a division of
Seneca. Certain expenses included in the financial statements represent
allocations of amounts applicable to the Company. As a result, the accompanying
financial statements may not necessarily be indicative of conditions that would
have existed or the results of operations that would have occurred had the
Company been operated as an unaffiliated entity.
DELOITTE & TOUCHE LLP
Rochester, New York
December 23, 1998
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
STATEMENT OF NET ASSETS TO BE SOLD
MARCH 31, 1998
ASSETS
CURRENT ASSETS:
Inventories:
Finished products $ 7,830,000
In process 14,199,143
Raw materials 2,516,336
------------
Total current assets 24,545,479
------------
PROPERTY, PLANT AND EQUIPMENT:
Land 667,378
Buildings 5,243,288
Machinery and equipment 24,694,267
------------
30,604,933
Less accumulated depreciation and amortization 19,450,201
------------
Net property, plant and equipment 11,154,732
------------
Total assets 35,700,211
------------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable 10,068,676
Accrued liabilities 1,069,497
Current portion of long-term debt 23,000
------------
Total current liabilities 11,161,173
------------
LONG-TERM DEBT 294,000
------------
Total liabilities 11,455,173
------------
NET ASSETS TO BE SOLD $24,245,038
============
See notes to financial statements.
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
STATEMENT OF REVENUE AND DIRECT OPERATING EXPENSES
YEAR ENDED MARCH 31, 1998
REVENUE $106,334,000
------------
DIRECT OPERATING EXPENSES:
Cost of product sold 94,361,000
Selling, general and administrative expense 10,849,000
------------
105,210,000
------------
REVENUE OVER DIRECT OPERATING EXPENSES $ 1,124,000
============
See notes to financial statements.
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1998
1. ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION
The Seneca Foods Juice Division (the "Company"), a division of Seneca Foods
Corporation ("Seneca"), produces fruit and juice products from five
manufacturing facilities located in Mountain Home, North Carolina, Dundee, New
York, Jackson, Wisconsin, Eau Claire, Michigan and Prosser, Washington. In
addition to its branded products, the Company has a private label, co-pack, and
industrial business. The fruit business and the industrial juice business of the
Company is not being sold as a part of this transaction.
The Company does not maintain stand-alone corporate treasury, legal, tax and
other similar corporate support functions. In addition, Seneca's systems and
procedures do not provide sufficient information to develop a reasonable cost
allocation for corporate general and administrative expense, income taxes,
corporate debt and interest expense. Accordingly, distinct and separate accounts
necessary to present the Company's individual balance sheet and income statement
as of and for the year ended March 31, 1998 have not been maintained.
With respect to cash flows, purchases of inventory, payroll, capital and other
expenditures are funded through the Company's intercompany account with Seneca.
Remittances from sales to customers are collected by the Company and are
accounted for through the intercompany account. Accordingly, the Company has no
cash flows on a stand alone basis.
Financial Statement Presentation - Based upon the above, the following financial
information is presented:
o Statement of Net Assets to be Sold. This statement includes only the net
assets of the Company being sold to Northland Cranberries, Inc.
o Statement of Revenue and Direct Operating Expenses of the Company related to
the net assets to be sold to Northland Cranberries, Inc. Direct operating
expenses include all costs necessary for the production, marketing and
distribution of the products. These include selling costs and direct overhead
other than costs of general corporate activities.
A Statement of Cash Flows is not presented for the Company as all cash flow
activity is handled by Seneca.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal year - The Company's fiscal year ends on March 31, 1998.
Inventories - Inventories are stated at the lower of cost (first-in, first-out)
or market.
Property, plant and equipment is recorded at cost. Depreciation is provided
using the straight line method over the estimated useful lives of the assets.
The carrying amount of long-lived assets is
<PAGE>
evaluated annually to determine if adjustment to the depreciation period or to
the unamortized balance is warranted. Ranges of estimated useful lives for
computing depreciation are as follows:
Buildings 15-40 years
Machinery and equipment 4-12 years
Purchases of property, plant and equipment and depreciation expense for the year
ended March 31, 1998 were $4,238,635 and $1,228,311, respectively.
The Company regularly assesses all of its long-lived assets for impairment and
recognizes a loss when the carrying value of an asset exceeds its fair value.
The Company determined that no impairment loss need be recognized for applicable
assets in 1998.
Revenue Recognition - Sales are recorded at the date of shipment.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.
3. LONG-TERM DEBT
Long-term debt at March 31, 1998 represents a non-interest bearing,
seller-financed mortgage with a ten year term (due January 1, 2007). The Company
imputed an interest rate of 10 percent which approximates Seneca's borrowing
rate. The mortgage is secured by land.
The aggregate maturities of long-term debt, under the original terms of the
Company's agreement, for the year ending March 31 are as follows:
1999 $ 23,000
2000 26,239
2001 28,223
2002 31,046
2003 34,150
Thereafter 174,342
---------
Total 317,000
Less current portion 23,000
---------
Long-term debt $294,000
=========
4. LEASE COMMITMENTS
The Company has short-term noncancelable leases for the use of certain
buildings, equipment and land. The leases are for varying periods not longer
than one year and are renewable, monthly, quarterly and annually. The rental
expense under such agreements totaled approximately $417,735 for the year ended
March 31, 1998.
<PAGE>
5. EMPLOYEE BENEFIT PLANS
Employees of the Company participate in Seneca's benefit plan which is a defined
contribution plan. Expenses for the benefit plan has been allocated to the
Company by Seneca as disclosed in Note 6.
Upon the sale of the Company to Northland Cranberries, Inc. in December 1998
(see Note 7), certain employees of the Company were terminated from the benefit
plan. Additionally, certain employees of the Company became eligible to
participate in the Northland Cranberries, Inc. benefit plans.
6. CORPORATE ALLOCATIONS AND RELATED PARTY INFORMATION
The Company does not maintain stand-alone corporate treasury, legal, tax and
other similar corporate support functions. The Company records certain expenses
allocated from Seneca related primarily to employee benefits, interest expense,
and property insurance. For purposes of preparing the financial information for
the Company, these expenses were allocated based upon a variety of factors which
include the number of employees of the Company and the identification of costs
specifically attributable to the Company. Management believes that these
allocations are based on assumptions that are reasonable under the
circumstances; however, the statements of net assets to be acquired and revenue
and direct operating expenses of the Company may not be indicative of the
conditions that would have existed or results of operations that would have
occurred had the Company been operated as an unaffiliated entity.
The following represents a summary of the costs allocated to the Company by
Seneca which were included in the statement of revenue and direct operating
expenses for the year ended March 31, 1998:
Employee benefits $748,045
Property insurance $121,943
All of the assets of the Company served as collateral for portions of the
Seneca's debt at March 31, 1998.
7. SALE OF SENECA FOODS JUICE DIVISION
On December 2, 1998, Seneca entered into an Asset Purchase Agreement to sell a
significant portion of its Juice Division to Northland Cranberries, Inc. The
purchase includes manufacturing facilities, machinery and equipment,
inventories, prepaid expenses and the assumption of operating liabilities and
agreements in effect related to the acquired assets, such as leases, supply
agreements and labor agreements.
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
STATEMENT OF NET ASSETS TO BE SOLD
SEPTEMBER 26, 1998 (In thousands)
ASSETS
CURRENT ASSETS:
Inventories
Finished products $ 7,001
In process 12,424
Raw materials 3,650
-----------------
Total current assets 23,075
-----------------
PROPERTY, PLANT AND EQUIPMENT:
Land 667
Buildings 5,243
Machinery and equipment 24,691
-----------------
30,551
Less accumulated depreciation and amortization 20,118
-----------------
Net property, plant and equipment 10,433
Total assets $ 33,508
-----------------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 7,420
Accrued liabilities 1,185
Current portion of long-term debt 23
-----------------
Total current liabilities 8,628
LONG-TERM DEBT 294
-----------------
Total liabilities 8,922
-----------------
NET ASSETS TO BE SOLD $ 24,586
=================
See note to unaudited financial statements.
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
STATEMENT OF REVENUE AND DIRECT OPERATING EXPENSES
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 26, 1998 AND
SEPTEMBER 27, 1997 (In thousands)
- --------------------------------------------------------------------------------
Sept. 26, 1998 Sept. 27, 1997
-------------- --------------
REVENUE $ 53,720 $ 50,032
DIRECT OPERATING EXPENSES
Cost of product sold 49,612 42,325
Selling, general and administrative expense 3,934 4,539
------------ ------------
53,546 46,864
------------ ------------
REVENUE OVER DIRECT OPERATING EXPENSES $ 174 $ 3,168
============ ============
See note to unaudited financial statements.
<PAGE>
SENECA FOODS JUICE DIVISION
(A Division of Seneca Foods Corporation)
NOTE TO UNAUDITED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements included herein have been prepared by the registrant
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of the registrant, the foregoing statement
of net assets to be sold of the Seneca Foods Juice Division, a division of
Seneca Foods Corporation, as of September 26, 1998 and the related statements of
revenue and direct operating expenses for the six month periods ended September
26, 1998 and September 27, 1997 present fairly the net assets to be sold of the
Seneca Foods Juice Division as of September 26, 1998 and the results of it
revenues and direct operating expenses for the six month periods ended September
26, 1998 and September 27, 1997.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations, although the
registrant believes that the disclosures are adequate to make the information
presented not misleading.
<PAGE>
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following unaudited consolidated pro forma condensed balance sheet combines
the consolidated condensed balance sheet of the registrant as of November 30,
1998 and the statement of net assets to be sold of the Seneca Foods Juice
Division as of September 26, 1998. The following unaudited consolidated pro
forma condensed statements of operations combine the consolidated condensed
statements of operations of the registrant for the year ended August 31, 1998
and for the three months ended November 30, 1998, with the statements of revenue
and direct operating expenses of the Seneca Foods Juice Division for the twelve
month period ended June 30, 1998 and the three month period ended September 26,
1998, as if the transaction had occurred beginning September 1, 1997. The pro
forma information is based on the historical financial statements of the
registrant and Seneca, giving effect to the transaction under the purchase
method of accounting, and assumptions and adjustments in the accompanying notes
of the pro forma consolidated condensed financial statements.
The unaudited pro forma consolidated condensed balance sheet and the pro forma
consolidated condensed statements of operations have been prepared by management
of the registrant based upon the financial statements of the registrant and
Seneca for the periods indicated, including an estimated preliminary allocation
of the purchase price. The registrant is in the process of determining the fair
value of the assets acquired at the date of acquisition. The allocations of the
purchase price assigned to the assets acquired and liabilities is based upon
preliminary estimates an will be revised (possibly materially) when the final
fair value allocations are determined, as will the related income tax effects of
the pro forma adjustments.
The pro forma net income per common share, the pro forma consolidated condensed
operations statements and the pro forma consolidated condensed balance sheet are
presented for informational purposes only and are not necessarily indicative
either of what the registrant's actual results would have been after giving
effect to the assumptions referred to above or of the registrant's future
consolidated financial position or results of operations.
<PAGE>
<TABLE>
<CAPTION>
NORTHLAND CRANBERRIES, INC. AND SENECA FOODS JUICE DIVISION
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED BALANCE SHEET
NOVEMBER 30, 1998 (In thousands)
- --------------------------------------------------------------------------------
ASSETS
HISTORICAL
---------------------------
Northland Seneca Pro Forma
Nov. 30, 1998 Sept. 30, 1998 Adjustments Pro Forma
-----------------------------------------------------------
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash & Cash Equivelents $ 811 $ 811
Accounts & Notes Receivable 20,881 20,881
Inventories 70,782 $ 23,075 $ (23,075)(c) 89,707
18,925 (c)
Other 3,094 3,094
Deferred income taxes 2,490 - - 2,490
--------- --------- --------- ---------
Total current assets 98,058 23,075 (4,150) 116,983
Property and equipment, net 152,487 10,433 (10,433)(b) 165,051
12,564 (b)
Investments and other assets 2,448 9,019 (d) 11,467
Goodwill 25,128 - 25,128
--------- --------- --------- ---------
Total assets $ 278,121 $ 33,508 $ 7,000 $ 318,629
--------- --------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,787 $ 7,420 $ 22,207
Accrued liabilities 16,384 1,185 17,569
Current portion of
long-term debt 3,892 23 3,915
--------- --------- ---------
Total current liabilities 35,063 8,628 43,691
Long-term obligations 78,642 294 $ 31,586 (e) 110,522
Deferred income taxes 10,958 - - 10,958
--------- --------- --------- ---------
Total current liabilities 124,663 8,922 31,586 165,171
Seneca divisional investment 24,586 (24,586)(e) -
Shareholders' equity 153,458 - - 153,458
--------- --------- --------- ---------
Total liabilities and
shareholders; equity $ 278,121 $ 33,508 $ 7,000 $ 318,629
========= ========= ========= =========
See notes to unaudited pro forma financial statements.
</TABLE>
<PAGE>
NORTHLAND CRANBERRIES, INC. AND SENECA FOODS JUICE DIVISION
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE
FISCAL YEAR ENDED AUGUST 31, 1998
(In thousands, except per share data)
- --------------------------------------------------------------------------------
HISTORICAL
---------------------------
Northland Seneca
for the for the
Fiscal year 12 months
Ended ended
Aug. 31, June 30, Pro Forma
1998 1998 Adjustments Pro Forma
-------------------------------------------------
Revenues $ 112,828 $ 106,028 $ 218,856
Cost of sales 62,475 97,056 $ (1,748)(f) 158,568
- - 785 (g) -
--------- --------- --------- --------
Gross profits 50,353 8,972 963 60,287
Costs and expenses
Selling, general and
administrative expense 38,752 10,524 227 (h) 49,503
Interest expense 6,827 - 2,270 (i) 9,097
--------- --------- --------- --------
Total costs and expenses 45,579 10,524 2,497 58,600
--------- --------- --------- --------
Income before income taxes 4,774 (1,552) (1,534) 1,686
Income taxes 1,920 - (1,210)(j) 710
--------- --------- ---------- --------
Net income $ 2,854 $ (1,552) $ (324) $ 978
--------- ---------- ---------- ---------
Net income per share - Basic $ 0.19 $ 0.07
---------- ----------
Net income per share - Diluted $ 0.19 $ 0.06
========== ==========
See notes to unaudited pro forma financial statements.
<PAGE>
NORTHLAND CRANBERRIES, INC. AND SENECA FOODS JUICE DIVISION
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED NOVEMBER 30, 1998
(In thousands, except per share data)
- --------------------------------------------------------------------------------
HISTORICAL
---------------------------
Northland Seneca
for the for the
3 months 3 months
ended ended
Nov. 30, Sept. 26, Pro Forma
1998 1998 Adjustments Pro Forma
------------------------------------------------
Revenues $ 34,236 $ 27,918 $ 62,154
Cost of sales 20,357 25,495 $ (386)(f) 45,662
- - 196 (g) -
--------- --------- --------- --------
Gross profits 13,879 2,423 190 16,492
Costs and expenses
Selling, general and
administrative expense 12,364 1,943 57 (h) 14,364
Interest expense 1,303 - 568 (i) 1,871
--------- --------- --------- --------
Total costs and expenses 13,667 1,943 624 16,234
--------- --------- --------- ---------
Income before income taxes 212 480 (435) 257
Income taxes 92 - 18(j) 110
--------- --------- ---------- --------
Net income $ 120 $ 480 $ (452) $ 148
--------- --------- ---------- ---------
Net income per share - Basic $ 0.01 $ 0.01
---------- ----------
Net income per share - Diluted $ 0.01 $ 0.01
========== ==========
See notes to unaudited pro forma financial statements.
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA CONDENSED
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(a) Reflects those adjustments necessary to record the acquisition of certain
assets and the assumption of certain liabilities of the Seneca Food Juice
Division.
(b) Reflects the removal of Seneca property and equipment and records the
estimated value of property and equipment as determined by Northland.
(c) Reflects the removal of Seneca inventory and records the estimated value of
inventory as determined by Northland.
(d) Reflects the estimated portion of the purchase price of the Seneca Foods
Juice Division allocated to trademarks.
(e) Reflects the removal of Seneca Divisional Investment and records estimated
long-term obligations to fund the acquisition.
(f) Reflects the reversal of depreciation expense recorded by Seneca.
(g) Reflects the estimated depreciation expense of Seneca assets based upon the
change in valuation of property, plant and equipment. Such property, plant
and equipment is being depreciated over a 16-year period.
(h) Reflects the estimated amortization of trademarks from the Seneca Foods
Juice Division acquisition. Trademarks are being amortized over a 40-year
period.
(i) Reflects the addition of interest expense on debt used to finance the
acquisition. The interest rate used was the current rate of interest under
the Company's revolving line of credit of 7.1875.
(j) Reflects the income taxes on the pro forma adjustments and Seneca pre-tax
earnings.
<PAGE>
(c) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed as part
of this Current Report on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to the report to be signed on its
behalf by the undersigned hereunto duly authorized.
NORTHLAND CRANBERRIES, INC.
Date: March 15, 1999 By: /s/John A. Pazurek
---------------------------
John A. Pazurek
Vice President - Finance, Treasurer, and
Chief Financial Officer
<PAGE>
NORTHLAND CRANBERRIES, INC.
EXHIBIT INDEX TO FORM 8-K
Report Dated December 30, 1998
Exhibit
No. Description
(2) Asset Purchase Agreement, dated as of December 2, 1998, by and among
Northland Cranberries, Inc. and Seneca Foods Corporation.* [Previously
filed with this Current Report on Form 8-K]
(23) Consent of Deloitte & Touche LLP
- --------------------------
*The schedules and exhibits to this document are not being filed herewith. The
registrant agrees to furnish supplementally a copy of any such schedule or
exhibit to the Securities and Exchange Commission upon request.
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-32525, 33-62723 and 333-01557 on Form S-8 and Registration Statement No.
333-08563 on Form S-4 of our report dated December 23, 1998, relating to Seneca
Foods Juice Division (a division of Seneca Foods Corporation) for the year ended
March 31, 1998, appearing in the Current Report on Form 8-K of Northland
Cranberries, Inc.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
March 12, 1999
