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
For the quarterly period ended November 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 0-16130
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NORTHLAND CRANBERRIES, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-1583759
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(State or other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
800 First Avenue South
P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
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(Address of principal executive offices)
Registrant's telephone number, including area code (715)-424-4444
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Former name, former address and former fiscal year, if changed since last
report.
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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
Class A Common Stock January 12, 2000 19,702,221
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Class B Common Stock January 12, 2000 636,202
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NORTHLAND CRANBERRIES, INC.
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets..........................3
Condensed Consolidated Statements of Income....................4
Condensed Consolidated Statements of Cash Flows................5
Notes to Condensed Consolidated
Financial Statements....................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................7-11
Item 3. Quantitative and Qualitative Disclosure About Market Risk.....11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..............................12
SIGNATURE.....................................................13
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
(Unaudited)
November 30, August 31,
1999 1999
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Current assets:
Cash and cash equivalents $ 801 $ 769
Accounts and notes receivable 37,018 35,453
Inventories 124,843 97,060
Prepaid expenses 6,141 3,870
Deferred income taxes 4,332 4,332
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Total current assets 173,135 141,484
Property and equipment - at cost 209,847 207,071
Less accumulated depreciation 39,846 37,651
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Property and equipment, net 170,001 169,420
Trademarks, tradenames and goodwill, net 40,813 41,074
Other assets 2,786 2,943
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Total assets $ 386,735 $ 354,921
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,257 $ 18,637
Accrued liabilities 21,203 9,925
Current portion of long-term debt 2,354 2,354
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Total current liabilities 47,814 30,916
Long-term debt 162,794 147,797
Deferred income taxes 15,853 15,655
Shareholders' equity:
Common stock - Class A, $.01 par value,
19,702,221 and 19,655,621 shares issued
and outstanding, respectively 197 196
Common stock - Class B, $.01 par value, 636,202
shares issued and outstanding 6 6
Additional paid-in capital 148,977 148,769
Retained earnings 11,094 11,582
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Total shareholders' equity 160,274 160,553
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Total liabilities and shareholders' equity $ 386,735 $ 354,921
========== ==========
See accompanying notes to condensed consolidated financial statements.
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NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
For the three months
ended November 30,
1999 1998
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Revenues $ 74,967 $ 34,236
Cost of sales 51,555 20,357
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Gross profit 23,412 13,879
Costs and expenses:
Selling, general and administrative 19,948 12,364
Interest 2,911 1,303
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Total costs and expenses 22,859 13,667
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Income before income taxes 553 212
Income taxes 232 92
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Net income $ 321 $ 120
========== ==========
Net Income Per Share:
Basic $ 0.02 $ 0.01
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Diluted $ 0.02 $ 0.01
========== ==========
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(Unaudited)
<CAPTION>
For the three months
ended November 30,
1999 1998
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Operating activities:
<S> <C> <C>
Net income $ 321 $ 120
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization of property and equipment 2,196 1,889
Amortization of tradenames, trademarks and goodwill 361 102
Provision for deferred income taxes 198 84
Changes in assets and liabilities:
Receivables, prepaid expenses and other current
assets (3,836) 389
Inventories (27,783) (26,971)
Accounts payable and accrued liabilities 16,898 13,252
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Net cash used in operating activities (11,645) (11,135)
Investing activities:
Property and equipment purchases (2,777) (2,177)
Net decrease (increase) in other assets 58 (303)
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Net cash used in investing activities (2,719) (2,480)
Financing activities:
Net increase in borrowings under revolving credit facilities 15,250 15,150
Payments on long-term debt (253) (784)
Dividends paid (809) (787)
Proceeds from exercise of stock options 208 214
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Net cash provided by financing activities 14,396 13,793
Net increase in cash and cash equivalents 32 178
Cash and cash equivalents
Beginning of period 769 633
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End of period $ 801 $ 811
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Supplemental disclosures of cash flow information:
Cash paid for:
Interest (net of amount capitalized) $ 2,440 $ 827
Income taxes, net $ 813 $ 405
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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NORTHLAND CRANBERRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
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The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of the Company, the
foregoing statements contain all adjustments necessary to present fairly the
financial position of the Company as of November 30, 1999, and its results of
operations and cash flows for the three-month periods ended November 30, 1999
and 1998, respectively. The Company's consolidated balance sheet as of August
31, 1999 included herein has been taken from the Company's audited financial
statements of that date included in the Company's latest annual report.
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 Company
believes that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements can be
read in conjunction with the financial statements and the notes thereto included
in the Company's latest annual report.
The Company periodically reviews long-lived assets to assess recoverability
and impairments will be recognized in operating results if a permanent
diminution in value occurs.
NOTE 2 SUBSEQUENT EVENTS
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On January 5, 2000, we agreed to sell the inventory, raw materials,
contracts and intangible assets comprising our shelf-stable private label juice
business to Cliffstar Corporation. In consideration for these assets, Cliffstar
will give us an unsecured promissory note for $28 million bearing interest at a
rate of 7% per annum (subject to upward adjustment after three years), pay us
approximately $4 million in cash at the closing for inventory transferred to
Cliffstar, pay additional amounts pursuant to an earn out provision over a
period of six years from the closing date (which will be a minimum total of $5
million), and assume certain contractual obligations. At closing, we will enter
into a cranberry supply agreement, a cranberry sauce sales agreement and a
co-packing agreement whereby we will process certain juice products for
Cliffstar on a subcontract basis. Subsequent to the closing, we expect to
receive approximately $2 million per quarter for the remainder of the fiscal
year related to installment payments for additional inventories and payments on
the unsecured note. Our private label juice business represented approximately
$43 million of our $237 million in fiscal 1999 revenues. No plants or equipment
are included in the sale. We intend to close the transaction in February, 2000
or as soon as possible after the satisfaction of certain regulatory
requirements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
GENERAL
On January 5, 2000, we agreed to sell the inventory, raw materials,
contracts and intangible assets comprising our shelf-stable private label juice
business to Cliffstar Corporation. In consideration for these assets, Cliffstar
will give us an unsecured promissory note for $28 million bearing interest at a
rate of 7% per annum (subject to upward adjustment after three years), pay us
approximately $4 million in cash at the closing for inventory transferred to
Cliffstar, pay additional amounts pursuant to an earn out provision over a
period of six years from the closing date (which will be a minimum total of $5
million), and assume certain contractual obligations. At closing, we will enter
into a cranberry supply agreement, a cranberry sauce sales agreement and a
co-packing agreement whereby we will process certain juice products for
Cliffstar on a subcontract basis. Subsequent to the closing, we expect to
receive approximately $2 million per quarter for the remainder of the fiscal
year related to installment payments for additional inventories and payments on
the unsecured note. Our private label juice business represented approximately
$43 million of our $237 million in fiscal 1999 revenues. No plants or equipment
are included in the sale. We intend to close the transaction in February, 2000
or as soon as possible after the satisfaction of certain regulatory
requirements.
On December 30, 1998, we acquired the juice division of Seneca Foods
Corporation for approximately $28.7 million in cash, and assumed certain
liabilities in connection with the acquisition. The assets acquired included an
exclusive license to market and sell all Seneca brand fruit beverages, bottling
and packaging facilities located in New York, North Carolina and Wisconsin, a
distribution center in Michigan, and a receiving station in New York. The
purchase price is subject to a final working capital adjustment that has not
been finalized.
RESULTS OF OPERATIONS
Total revenues for the three months ended November 30, 1999 were $75.0
million, an increase of 119% over revenues of $34.2 million in the prior year's
first quarter. Since the acquisition of the juice division of Seneca was not
completed until the second quarter of fiscal 1999, this increase was primarily
due to sales of Seneca juice products during the first quarter of the current
year. Co-packing production, sales of private label products and sales of
Northland branded products also contributed to the increased revenues. Trade
industry data for the 12-week period ended November 7, 1999 showed that our
Northland brand 100% juice products achieved a 10.9% market share of the
supermarket shelf-stable cranberry beverage category on a national basis, down
from a 12.2% market share for the 12-week period ended November 8, 1998.
However, that decrease was offset by gains in market share as a result of the
successful launch of our Seneca brand cranberry juice product line, resulting in
a total combined market share of supermarket shelf-stable cranberry beverages
for our Northland and Seneca branded product lines of 12.6% for the 12-
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week period ended November 7, 1999. We expect that the sale of our private label
business, if completed, will decrease the revenues we will realize in fiscal
2000 from the levels we could have expected had we not sold the private label
business.
Cost of sales for the first quarter of fiscal 2000 was $51.6 million
compared to $20.4 million for the first quarter of fiscal 1999, resulting in
gross margins of 31.2% and 40.5% in each respective period. The decrease in
gross margins in fiscal 2000 was primarily due to our changing product mix.
Fiscal 2000 revenues included a significant amount of lower margin private label
sales and contract co-packing revenues compared to minimal private label sales
and co-packing sales in fiscal 1999. Our gross margins during the remainder of
fiscal 2000 will be dependent upon our product mix and existing market
conditions, but may improve over gross margins in the first fiscal quarter of
2000 as a result of the sale of our private label business and anticipated
increases in Northland and Seneca branded product revenues as a result of our
planned second quarter media and marketing campaign and the continued rollout of
the Seneca brand cranberry juice products.
Selling, general and administrative expenses were $19.9 million, or 26.6%
of total revenues, for the three-month period ended November 30, 1999 compared
to $12.4 million, or 36.1% of total revenues, in the prior year's first fiscal
quarter. This increase in the dollar amount of selling, general and
administrative expenses was primarily attributable to (i) spending to support
the Seneca brand and the launch of a new Seneca line of cranberry juice
products; (ii) expenses in connection with private label and contract co-packing
sales; and (iii) costs related to our aggressive marketing campaign to support
the development and growth of our Northland and Seneca brand products. We do not
expect the sale of our private label business to result in any material changes
in our selling, general and administrative expenses as a percentage of sales.
However, we expect that our selling expenses may increase during the second and
third fiscal quarters as we commence aggressive media and marketing campaigns to
support sales of our branded products. We expect to spend approximately $6
million on this campaign, which will consist generally of television advertising
and in-store promotions.
Interest expense was $2.9 million for the three months ended November 30,
1999 compared to $1.3 million during the same period in fiscal 1999. This
increase generally resulted from increased debt levels to finance the December
1998 acquisition of Seneca's juice business, the March 1999 acquisition of
assets of Clermont, Inc. and to support increased levels of inventories. Net
income and per share earnings for the first quarter of fiscal 2000 were
$321,254, or $0.02 per share, up from fiscal 1999 first quarter net income and
per share earnings of $120,490, or $0.01 per share. Since we generally recognize
lower gross margins on our private label business, we do not expect a material
impact to net income on an ongoing basis as a result of the sale of our private
label business.
As of the date hereof, we have experienced no disruptions in the operation
of our internal information systems or other significant problems as a result of
the transition to the Year 2000. Nevertheless, we may experience such problems
in the future. With the exception of our accounting and distribution/order
tracking functions,
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our operations are not heavily dependent on internal computer software or
embedded systems. As a result, based on currently-available information, we
continue to believe that any Year 2000 related disruptions that may occur in the
future will not have a material adverse impact on our results of operations.
However, there can be no assurance that such disruptions will not occur and will
not have a material adverse impact on our results of operations. We will
continue to monitor our exposure as appropriate and intend to act promptly to
resolve any problems that may occur. Additionally, we do not rely heavily on
third party vendors whose potential Year 2000 noncompliance would have a
material adverse effect on our results of operations. We are not aware that of
any of our vendors experienced any disruptions during their transitions to the
year 2000. In fiscal 1997 we replaced our internal accounting and distribution
hardware and software systems at a cost of approximately $350,000. We estimate
that our total additional costs associated with ensuring Year 2000 compliance
amounted to approximately $250,000.
FINANCIAL CONDITION
Net cash used by operating activities was $11.6 million in the first three
months of fiscal 2000 compared to $11.1 million in the same period in fiscal
1999. This increase was the result of increases in current assets and
liabilities in the ordinary course of business during the period. Net of
previously deferred crop costs, we experienced a seasonal increase in inventory
of $27.8 million due to the fall harvest of our crop, our purchase of raw
cranberries from other independent cranberry growers, our purchase of Concord
grapes from an independent growers' cooperative, and increased raw materials and
finished goods inventories to support our expanding branded and private label
juice sales. Accounts payable and other current liabilities increased $16.9
million primarily due to seasonal liabilities for purchased crop. Primarily as a
result of the increase in accounts payable and other current liabilities, our
current ratio decreased to 3.6 to 1.0 from 4.6 to 1.0 at August 31, 1999.
Working capital increased $14.7 million to $125.3 million at November 30, 1999
compared to working capital of $110.6 million at August 31, 1999.
Net cash used for investing activities increased slightly during the
three-month period ended November 30, 1999 to $2.7 million from $2.5 million
during the same period in the prior fiscal year.
Net cash provided by financing activities was $14.4 million in the
three-month period ended November 30, 1999, compared to $13.8 million during the
same period in the prior fiscal year. Our total long term debt increased by
$15.0 million in the first three months of fiscal 2000 primarily due to
increased borrowing on our revolving credit facility to finance our seasonal and
growth working capital needs. Our total debt (including current portion) was
$165.1 million at November 30, 1999 for a total debt-to-equity ratio of 1.03 to
1.00 compared to total debt of $150.2 million and a total debt-to-equity ratio
of 0.94 to 1.00 at August 31, 1999. We utilize our revolving bank credit
facility, together with cash generated from operations, to fund our working
capital requirements throughout the fiscal year. On December 29, 1999 (in the
second quarter of fiscal 2000), we amended our existing credit facility with a
syndicate of regional
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banks to increase our revolving line of credit availability by $15 million to
$155 million until March 2002. As of November 30, 1999, the principal amount
outstanding under our revolving credit facility was $139.3 million. We believe
our existing credit facilities, together with cash generated from operations and
payments from the sale of our private label business, will be sufficient to fund
our ongoing operational needs for the remainder of fiscal 2000. We estimate the
sale of our private label business will result in a cash inflow of approximately
$4 million at the closing of the sale related to the sale of certain inventories
and approximately $2 million per quarter for the remainder of the fiscal year
related to installment payments for additional inventories and payments on the
unsecured note we will receive from Cliffstar as partial consideration for the
sale. We intend to use these payments to pay down existing debt levels or to
fund ongoing working capital requirements.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
-------------------------------------------------
We make certain "forward-looking statements," in this Form 10-Q, including
statements about our future plans, goals and other events which have not yet
occurred. We intend that these statements will qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
You can generally identify these forward-looking statements because the context
of such statements will include words such as "believes," "anticipates,"
"expects," or words of similar import. Whether or not these forward-looking
statements will be accurate in the future will depend on certain risks and
factors including risks associated with (i) development, market share growth and
continued consumer acceptance of our branded juice products; (ii) strategic
actions of our competitors in pricing, marketing and advertising; (iii)
aggressive spending to support our branded products; (iv) the results of the
sale of our private label business; (v) potential actions or marketing orders of
the Cranberry Marketing Committee of the United State Department of Agriculture;
and (vi) agricultural factors affecting our crop and the crop of other North
American growers. You should consider these risks and factors and the impact
they may have when you evaluate our forward-looking statements. We make these
statements based only on our management's knowledge and expectations on the date
of this Form 10-Q. We will not necessarily update these statements or other
information in this Form 10-Q based on future events or circumstances.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
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We have not experienced any material changes in our market risk since
August 31, 1999.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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a. Exhibits
Exhibits filed with this Form 10-Q report are incorporated herein by
reference to the Exhibit Index accompanying this report.
b. Form 8-K
We did not file any reports on Form 8-K during the quarterly period to
which this Form 10-Q relates.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned Chief Financial Officer thereunto duly authorized.
NORTHLAND CRANBERRIES, INC.
DATE: January 14, 2000 By: /s/ John Pazurek
----------------------------
John Pazurek
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
(4.1) First Amendment to Credit Agreement and Consent, dated as of May
1, 1999, by and among the Company, various financial institutions
and Firstar Bank Milwaukee, N.A. (now known as Firstar Bank,
N.A.), as Agent.
(4.2) Second Amendment to Credit Agreement and Consent, dated as of
December 29, 1999, by and among the Company, various financial
institutions and Firstar Bank, N.A., as Agent.
(10) Northland Cranberries, Inc. 2000 Incentive Bonus Plan.
(27) Financial Data Schedule
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FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT
FIRSTAR BANK MILWAUKEE, N. A., as Agent
Milwaukee, Wisconsin
and The Financial Institutions Identified Herein
Gentlemen:
The undersigned, NORTHLAND CRANBERRIES, INC., a Wisconsin corporation (the
"Company") hereby requests that the undersigned financial institutions (together
with their respective successors and assigns, collectively, the "Banks") agree
to amend the Credit Agreement dated as of March 15, 1999 (the "Credit
Agreement"), among the Company, the Banks and Firstar Bank Milwaukee, N.A., as
agent, to permit the transfer of certain trademarks and tradenames and a
Trademark License Agreement (the "License Agreement") dated December 29, 1998
between the Company and SENECA FOODS CORPORATION ("Seneca") to NCI Foods, LLC, a
newly formed limited liability company of which the Company is the sole member
and owner, on the terms and conditions set forth below. The Company further
requests that the Banks consent to the sale of a portion of one of its Juneau
County, Wisconsin marshes. Capitalized terms used herein and not defined shall
have the meanings assigned thereto in the Credit Agreement.
1. Amendment to Section 4.1. Section 4.1 of the Credit Agreement shall be
amended so that clauses (vi) and (vii) thereof read as follows:
(vi) the Minot Guaranty and the NCI Guaranty; and (vii)
Grants of Security Interests in Trademarks, to be executed
by the Company, Minot and NCI, respectively, in favor of the
Agent for itself and for the benefit of the Banks
(collectively, the "IP Grants").
2. Amendment to Section 5.2. Section 5.2 of the Credit Agreement shall be
amended to read as follows:
Section 5.2. Subsidiaries. The Company has no Subsidiaries
except Wildhawk, Inc., a Wisconsin corporation, W.S.C. Water
Management Corp., a Wisconsin corporation, Northland
Cranberries Foreign Sales Corp., a Virgin Islands
corporation, Minot, NCI, Northland Insurance Center Inc., a
Wisconsin corporation, and PFVA Acquisition Corp., a
Virginia corporation (the "Acquisition Subsidiary").
3. Amendment to Section 9. Section 9 of the Credit Agreement shall be
amended by adding the following definitions:
<PAGE>
"NCI" shall mean NCI Foods, LLC, a Wisconsin limited
liability company.
"NCI Guaranty" shall mean that certain Guaranty dated as of
May 1, 1999 executed by NCI for the benefit of the Agent and
the Banks.
4. Consent to Transfers. Subject to the terms and conditions of this
Amendment, and notwithstanding the provisions of Section 7.14 of the Credit
Agreement, the undersigned Banks hereby consent to (i) the transfer by the
Company to NCI of all of (a) its right, title and interest in and to the
trademarks and tradenames described on Exhibit A attached hereto and (b) the
License Agreement and all the rights granted to the Company by Seneca
thereunder, and (ii) the sale by the Company of an approximately twenty (20)
acre portion of one of its Juneau County, Wisconsin marshes.
5. Effectiveness. This Amendment shall become effective upon the Agent's
receipt of a copy of this Amendment duly executed by the Company and the
Required Banks, together with the following:
(a) the NCI Guaranty duly executed by NCI;
(b) a Grant of Security Interest in Trademarks duly executed by NCI;
(c) a Notice of Grant of Security Interest in Trademarks duly executed
by NCI and the Agent;
(d) such financing statements duly executed by NCI as the Agent may
reasonably require;
(e) a certificate of the member of NCI as to the attached Articles of
Organization of NCI, the Operating Agreement of NCI and resolutions
authorizing those documents required from NCI hereunder; and
(f) a certificate of the Secretary of the Company as to the continued
effectiveness, without amendment, of the Articles of Incorporation and
Bylaws of the Company delivered to the Agent on March 14, 1999 and the
attached resolution authorizing the transactions.
When this Amendment has become effective, the Agent will deliver to the Company
such partial releases of UCC financing statements and mortgages recorded by the
Agent as are necessary to complete the sale of the Juneau County, Wisconsin
parcel referred to herein.
6. Representations and Warranties of the Company. In order to induce the
Banks to enter into this Amendment and in recognition of the fact that the Banks
are acting in reliance thereupon, the Company represents and warrants to the
Banks as follows:
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(a) The Company has the corporate power and authority to enter into,
deliver and issue this Amendment and to continue to borrow under the Credit
Agreement, as amended hereby. Each of the Credit Agreement, as amended
hereby, and this Amendment when duly executed on behalf of the Company,
constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
(b) The execution and delivery of this Amendment and the prospective
borrowing and performance by the Company of its obligations under the
Credit Agreement, as amended hereby, have been authorized by all necessary
action on the part of the Company.
(c) The representations and warranties of the Company contained in the
Credit Agreement, as amended hereby, are true and correct in all material
respects as of the date of this Amendment as though made on and as of the
date of this Amendment.
(d) As of the date of this Amendment no Event of Default, or default
which with the passage of time would constitute an Event of Default under
the Credit Agreement, has occurred and is continuing.
7. Negative Covenant. The Company agrees for itself and on behalf of NCI
that, so long as any credit is available to or in use by the Company under the
Credit Agreement, NCI's sole business is and will be to own the trademarks and
tradenames described on Exhibit A and to hold the License Agreement and that at
no time will NCI own any tangible or other intangible assets without the prior
written consent of the Agent.
8. Counterparts. This Amendment may be executed in any number of
counterparts, and by different parties hereto on separate counterparts, and all
such counterparts taken together shall be deemed to constitute one and the same
instrument.
9. Miscellaneous.
(a) Each reference in the Credit Agreement to "this Agreement" shall
be deemed a reference to the Credit Agreement as amended by this Amendment.
(b) In accordance with Section 10.4 of the Credit Agreement, the
Company shall pay or reimburse the Agent for all of its expenses, including
reasonable attorneys' fees and expenses, incurred in connection with this
Amendment, for the preparation, examination and approval of documents in
connection herewith, the preparation hereof and expenses incurred in
connection herewith.
(c) This Amendment is being delivered and is intended to be performed
in the State of Wisconsin and shall be construed and enforced in accordance
with the laws of that state without regard for the principals of conflicts
of laws.
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(d) Except as expressly modified or amended herein, the Credit
Agreement shall continue in effect and shall continue to bind the parties
hereto. This Amendment is limited to the terms and conditions hereof and
shall not constitute a modification, acceptance or waiver of any other
provision of the Credit Agreement.
If this First Amendment to Credit Agreement and Consent is satisfactory to
you, please sign the form of acceptance below. Dated and effective as of the 1st
day of May, 1999.
Very truly yours,
NORTHLAND CRANBERRIES, INC.
By: /s/ John A. Pazurek
----------------------------------------
John A. Pazurek, Chief Financial Officer,
Vice President, Finance and Treasurer
Accepted and agreed to as of the day and year last above written.
FIRSTAR BANK MILWAUKEE, N. A.
By: /s/
----------------------------------------
Its:Lending Officer
NORWEST BANK MINNESOTA, N.A.
By: /s/ Kenneth E. LaChance
----------------------------------------
Its:Officer
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/
----------------------------------------
Its:Asst. Vice President
[Signatures continued on following page.]
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<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By: /s/
----------------------------------------
Its:Vice President
BANK OF AMERICA, NATIONAL TRUST
& SAVINGS ASSOCIATION
By: /s/ Barton. A. Francour
----------------------------------------
Its:Barton. A. Francour - Sr. Vice President
ST. FRANCIS BANK, F.S.B.
By: /s/
----------------------------------------
Its:V.P.
M&I MARSHALL & ILSLEY BANK
By: /s/
----------------------------------------
Its:Vice President
BANKBOSTON, N.A.
By: /s/
----------------------------------------
Its:Vice President
-5-
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT
FIRSTAR BANK, N. A., as Agent
(formerly known as Firstar Bank Milwaukee, N. A.)
Milwaukee, Wisconsin
and The Financial Institutions Identified Herein
Gentlemen:
The undersigned, NORTHLAND CRANBERRIES, INC., a Wisconsin corporation (the
"Company") hereby requests that the undersigned financial institutions (together
with their respective successors and assigns, collectively, the "Banks") agree
to amend the Credit Agreement dated as of March 15, 1999, as amended as of May
1, 1999 (the "Credit Agreement"), among the Company, certain of the Banks and
Firstar Bank, N. A., as agent, to increase the amount of Revolving Credit
Commitment available to the Company and to permit the sale of certain tangible
and intangible assets related to the Company's "private label" juice business,
on the terms and conditions set forth below. Capitalized terms used herein and
not defined shall have the meanings assigned thereto in the Credit Agreement.
1. Amendment to Section 1.1. Section 1.1 of the Credit Agreement shall be
amended to read as follows:
Section 1.1. The Revolving Credit. Subject to all of the terms and
conditions hereof, each Bank, severally and for itself alone, agrees to
extend such Bank's Percentage of a revolving credit facility to the Company
which may be availed of by the Company in its discretion from time to time,
be repaid and used again, during the period from the date hereof to and
including the Revolving Credit Termination Date. The revolving credit
facility may be utilized by the Company in the form of (i) revolving credit
loans (individually a "Revolving Credit Loan" and collectively the
"Revolving Credit Loans") from the Banks according to their respective
Percentages, (ii) swing line loans (individually a "Swing Line Loan" and
collectively, the "Swing Line Loans") from the Swing Line Lender, pursuant
to Section 1.2 hereof, and (iii) L/Cs issued by the Issuer upon request of
the Company and in which each Bank shall have purchased a participation,
provided that the aggregate amount of the Revolving Credit Loans, Swing
Line Loans, Reimbursement Obligations and the maximum amount available to
be drawn under all L/Cs outstanding at any one time shall not exceed One
Hundred Fifty Five Million Dollars ($155,000,000) (the "Revolving Credit
Commitment"). All Revolving Credit Loans shall be evidenced by Revolving
Credit Notes of the Company (the "Revolving Credit Notes") payable to the
order of each of the Banks in the amounts of their respective Percentages
of the Revolving Credit Commitment, such Revolving Credit Notes to be in
substantially the form attached hereto as Exhibit 1.1. Without regard to
the face principal amounts of each of the Revolving Credit Notes, the
actual principal amount at any time outstanding and owing by the Company on
account thereof during the period ending on the Revolving Credit
<PAGE>
Termination Date shall be the sum of all Revolving Credit Loans then or
theretofore made thereon less all principal payments actually received
thereon during such period.
2. Amendment to Section 3.3. Section 3.3 of the Credit Agreement shall be
amended by deleting the last sentence thereof in its entirety.
3. Amendment to Section 3.4. Section 3.4 of the Credit Agreement shall be
amended be deleting the third sentence thereof in its entirety.
4. Amendment to Section 4.1. Section 4.1 of the Credit Agreement shall be
amended by deleting the last sentence thereof in its entirety.
5. Amendment to Section 7.21. Section 7.21 of the Credit Agreement shall be
amended in its entirety to read as follows:
Section 7.21. [Intentionally left blank.]
6. Amendment to Section 9. Section 9 of the Credit Agreement shall be
amended by (a) deleting the definitions "Senior Notes" and "Terms Sheet" and (b)
amending the definition of Total Debt to read as follows:
"Total Debt" shall mean (without duplication) all consolidated
indebtedness for borrowed money of the Company and its Subsidiaries, and
shall include indebtedness for borrowed money created, assumed or
guaranteed by the Company either directly or indirectly, including all
amounts outstanding under this Agreement, including the aggregate principal
amount of Revolving Credit Loans and Swing Line Loans outstanding, the
aggregate face amount of outstanding L/Cs and the aggregate amount of
unreimbursed Reimbursement Obligations as of the date of determination.
7. Amendment to Schedule 1. Schedule 1 to the Credit Agreement (Bank
Percentages) shall be amended in its entirety to read as provided on Schedule 1
hereto.
8. Consent to Sale of Private Label Juice Business. Subject to the terms
and conditions of this Amendment, and notwithstanding the provisions of Section
7.14 (Sale of Property) and 7.13 (Investments, Loans, Advances and Acquisitions)
of the Credit Agreement, the undersigned Banks hereby consent to the sale by the
Company of certain inventory, trademarks, contracts and the goodwill of the
Company's private label juice business and, in payment of substantially all of
the purchase price therefor, acceptance of a promissory note of the buyer,
provided both the terms of the sale are substantially as outlined on Exhibit A
hereto and the Company pledges such note to the Banks, and delivers the original
note to the Agent, as additional collateral to support its obligations under the
Credit Agreement.
9. Transfer of Mercantile Bank National Association Interests. By their
execution hereof, each of the parties hereto acknowledges and agrees that all
interests of Mercantile Bank National Association ("Mercantile") in this credit
facility have been assumed by Firstar Bank,
-2-
<PAGE>
N. A. ("Firstar") in connection with the merger of Mercantile and Firstar on
September 20, 1999.
10. Effectiveness. This Amendment shall become effective as of December 29,
1999 upon the Agent's receipt of a copy of this Amendment duly executed by the
Company and the Banks, together with the following:
(a) the Revolving Credit Notes, copies of which are attached hereto as
Exhibit B, which shall replace the notes executed as of March 15, 1999; and
(b) a certificate of the Secretary of the Company as to the continued
effectiveness, without amendment, of the Articles of Incorporation and
Bylaws of the Company delivered to the Agent on March 14, 1999, the
signatures of officers of the Company authorized to execute this Amendment
and the Revolving Credit Notes and the attached resolutions authorizing the
transactions contemplated by this Amendment.
After this Amendment has become effective, the Agent agrees to deliver to the
Company when necessary such partial releases of UCC financing statements
recorded by the Agent as are necessary to complete the sale of the Company's
private label juice business referred to herein.
11. Representations and Warranties of the Company. In order to induce the
Banks to enter into this Amendment and in recognition of the fact that the Banks
are acting in reliance thereupon, the Company represents and warrants to the
Banks as follows:
(a) The Company has the corporate power and authority to enter into,
deliver and issue this Amendment and the replacement Revolving Credit Notes
and to continue to borrow under the Credit Agreement, as amended hereby.
Each of the Credit Agreement, as amended hereby, this Amendment and the
replacement Revolving Credit Notes when duly executed on behalf of the
Company, constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
(b) The execution and delivery of this Amendment and the replacement
Revolving Credit Notes and the prospective borrowing and performance by the
Company of its obligations under the Credit Agreement, as amended hereby,
have been authorized by all necessary action on the part of the Company.
(c) The representations and warranties of the Company contained in the
Credit Agreement, as amended hereby, are true and correct in all material
respects as of the date of this Amendment as though made on and as of the
date of this Amendment.
(d) As of the date of this Amendment no Event of Default, or default
which with the passage of time would constitute an Event of Default under
the Credit Agreement, has occurred and is continuing.
-3-
<PAGE>
(e) The Company is liable, without offset, counterclaim or other
defense, for all obligations of the Company to the Banks.
(f) No information, financial statement, exhibit or report furnished
by the Company to the Agent in connection with the negotiation of, or
pursuant to, this Amendment, contains any material misstatement of fact, or
omits to state a material fact, or omits any fact necessary to make the
statements contained therein, in light of the circumstances in which they
were made, not misleading.
12. Counterparts. This Amendment may be executed in any number of
counterparts, and by different parties hereto on separate counterparts, and all
such counterparts taken together shall be deemed to constitute one and the same
instrument.
13. Miscellaneous.
(a) Each reference in the Credit Agreement to "this Agreement" shall
be deemed a reference to the Credit Agreement as amended by this Amendment.
Each reference in the Credit Agreement to the "Revolving Credit Notes"
shall be deemed a reference to the Revolving Credit Notes issued in
connection with this Amendment.
(b) In accordance with Section 10.4 of the Credit Agreement, the
Company shall pay or reimburse the Agent for all of its expenses, including
reasonable attorneys' fees and expenses, incurred in connection with this
Amendment, for the preparation, examination and approval of documents in
connection herewith, the preparation hereof and expenses incurred in
connection herewith.
(c) This Amendment is being delivered and is intended to be performed
in the State of Wisconsin and shall be construed and enforced in accordance
with the laws of that state without regard for the principals of conflicts
of laws.
(d) Except as expressly modified or amended herein, the Credit
Agreement shall continue in effect and shall continue to bind the parties
hereto. This Amendment is limited to the terms and conditions hereof and
shall not constitute a modification, acceptance or waiver of any other
provision of the Credit Agreement.
(e) The Company agrees to hereafter execute such amendments to the
existing mortgages given by the Company to the Banks requested by the Banks
to evidence the increase in the Revolving Credit Commitment pursuant
hereto.
-4-
<PAGE>
If this Second Amendment to Credit Agreement and Consent is satisfactory to
you, please sign the form of acceptance below. Dated and effective as of the
29th day of December, 1999.
Very truly yours,
NORTHLAND CRANBERRIES, INC.
By: /s/
----------------------------------------
Its:Assistant Vice President of Finance and
----------------------------------------
Acting Chief Financial Officer
------------------------------
Accepted and agreed to as of the day and year last above written.
FIRSTAR BANK, N. A.
By: /s/
----------------------------------------
Its:Assistant Vice President
Address:
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Randall D. Olver,
Senior Vice President
NORWEST BANK MINNESOTA, N. A.
By /s/ Kenneth E. LaChance
----------------------------------------
Its:Officer
Address:
Sixth Street and Marquette Avenue
MAC N9305-l14
Minneapolis, Minnesota 55479-0091
Attention: Kenneth E. LaChance, Officer
-5-
<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By /s/ Michael Fordney
----------------------------------------
Its:SVP
Address:
201 West Wisconsin Avenue
Milwaukee, Wisconsin 53259-0911
Attention: Michael Fordney,
Senior Vice President
BANK OF AMERICA, NATIONAL
ASSOCIATION
By /s/ Edward L. Cooper, III
----------------------------------------
Its:SVP
Address:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Edward L. Cooper III,
Vice President
ST. FRANCIS BANK, F.S.B.
By /s/ John C. Tans
----------------------------------------
Its:VP
Address:
13400 Bishops Lane, Suite 190
Brookfield, Wisconsin 53005-6203
Attention: John Tans, Vice President/
Commercial Banking
-6-
<PAGE>
M&I MARSHALL & ILSLEY BANK
By /s/ Dennis D. Finnigan
----------------------------------------
Its:VP
By: /s/
----------------------------------------
Its:Vice President
Address:
770 North Water Street
Milwaukee, Wisconsin 53202
Attention: Dennis D. Finnigan, Vice President
FLEET CAPITAL CORPORATION
By /s/ Edward M. Bartkowski
----------------------------------------
Its:Senior Vice President
Address:
20800 Swenson Drive, Suite 350
Post Office Box 1641
Waukesha, Wisconsin 53187
Attention: Edward M. Bartkowski,
Vice President
-7-
<PAGE>
BANK ONE, NA
By /s/ A. F. Maggiore
----------------------------------------
Its:Managing Director
Address:
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Anthony F. Maggiore,
Managing Director
LaSALLE BANK NATIONAL ASSOCIATION
By /s/ James A. Meyer
----------------------------------------
Its:First Vice President
Address:
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: James A. Meyer,
First Vice President
-8-
NORTHLAND CRANBERRIES, INC.
2000 INCENTIVE BONUS PLAN
1. PURPOSE. The purpose of the Northland Cranberries, Inc. 2000
Incentive Bonus Plan (the "Plan") is to provide cash bonuses to officers and
employees of Northland Cranberries, Inc. or any current or future subsidiaries
thereof (collectively, unless the context indicates otherwise, the "Company") if
the Company attains certain objectives for earnings per share and the officers
and employees achieve specific corporate or department objectives and personal
goals during the Company's fiscal year ending August 31, 2000 (the "2000 Fiscal
Year"). The Board of Directors of the Company (the "Board") believes the Plan
will further the interests of the Company and its shareholders by increasing the
incentives and personal interest in the financial performance of the Company by
those officers and employees who contribute to the Company's continued growth
and financial success.
2. ADMINISTRATION. The Plan shall be administered by the Stock Option
and Compensation Committee (the "Committee") of the Board. In accordance with
the provision of the Plan, the Committee shall have complete authority to
approve the employees of the Company who shall be eligible to participate in the
Plan for the fiscal year and the amounts of bonuses paid thereto. The Committee
shall also have the authority to adopt such rules and regulations for carrying
out the Plan, which are not inconsistent with the terms hereof, as it may deem
proper and in the best interests of the Company and shall have complete
authority and discretion to resolve all questions regarding eligibility,
interpretation, administration and application of this Plan and any related
agreements of instruments. All such determinations by the Committee shall be
final. The existence of the plan or the grant of any bonuses hereunder shall not
restrict the ability of the Committee or the Board to grant any other
discretionary bonuses to any executive officers, employees or others outside of
the Plan.
A majority of the members of the Committee shall constitute a quorum.
All determinations of the Committee shall be made by at least a majority of a
quorum. Any decision or determination reduced to writing and signed by all of
the members of the Committee shall be fully as effective as if it had been made
by a unanimous vote at a meeting duly called and held.
3. ELIGIBILITY. Each eligible employee of the company who is selected
by the chief executive officer of the Company ("Management") for participation
in the Plan, subject to approval by the Committee, shall be a Participant and
shall be assigned to the Bonus Level for his or her position according to the
schedule attached as Schedule A. A Participant shall have no rights to be
selected for further participation in the Plan or any renewal or replacement
thereof in any subsequent fiscal year. Written notice of selection for
participation in the Plan shall be given to each Participant as soon as
practicable following date of selection.
4. AWARDS TO PARTICIPANTS. Participants shall be entitled to receive
from the Company an annual incentive cash compensation award for the 2000 Fiscal
Year ("Cash Bonus Award") based on a calculated percentage ("Bonus Percentage")
of such Participant's base salary earned during the 2000 Fiscal Year (excluding
benefits and bonuses).
-1-
<PAGE>
Such Bonus Percentage shall be determined pursuant to a formula based primarily
on the percentage that the "Net Income Per Common Share" of the Company for the
2000 Fiscal Year, bears to the "Target Earnings" for the 2000 Fiscal Year, and
other specified criteria. The formula and criteria for determining the Bonus
Percentage for each Bonus Level are set forth on Schedule B. Management shall
establish department and individual goals for Bonus Levels II through VI and
shall set the discretionary bonuses for Bonus Level I seasonal employees, all
subject to review by the Committee. The Target Earnings for the 2000 Fiscal Year
shall be Net Income Per Common Share of $0.60.
5. PAYMENT OF CASH BONUSES. The Cash Bonus Awards, if any, determined
under Section 4 for the 2000 Fiscal Year shall be distributed by the Company to
such Participants in cash, or to his or her estate in the event of death of the
Participant, no later than December 8, 2000.
6. NET INCOME PER COMMON SHARE. For purposes of the Plan, the
Company's "Net Income Per Common Share" for the 2000 Fiscal Year shall be equal
to the Company's net income per common share reflected on the Company's audited
consolidated financial statement for such fiscal year (excluding extraordinary
items, but not the issuance of additional shares of capital stock or rights with
respect thereto, other than as set forth in Section 10 below).
7. TERMINATION OF EMPLOYMENT. No Cash Bonus Award shall be made under
the Plan for a Participant whose employment with the Company (or subsidiary) is
terminated during the 2000 Fiscal Year for reasons other than retirement due to
age in accordance with the Company's policies, total or permanent disability, or
death, unless approved by the Committee after considering the cause of
termination.
8. NEW EMPLOYEES, TRANSFERS BETWEEN BONUS LEVELS.
(a) It is contemplated that employees may be approved for
participation during a portion of the 2000 Fiscal Year and may be eligible to
receive an award for the year based on the number of full months as a
Participant. A person newly hired or promoted on or before March 1, 2000, into a
position covered by a Bonus Level shall be eligible for participation in the
Plan and, if selected by Management, shall have his or her participation in the
Plan prorated for the fiscal year.
(b) Participants who are promoted or otherwise transferred to a
position covered by a different Bonus Level will receive Cash Bonus Awards
prorated to months served in each eligible position.
9. POWERS OF COMPANY NOT AFFECTED. The existence of the Plan shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalization, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred,
or prior preference stock ahead of or affecting the Company's stock or the
rights thereof, or dissolution or liquidation of the Company, or any
-2-
<PAGE>
sale or transfer of all or any part of its assets or business or any other
corporate act or proceeding, whether of a similar character or otherwise.
10. CAPITAL ADJUSTMENTS AFFECTING STOCK. In the event of a capital
adjustment resulting from a stock dividend (other than a stock dividend in lieu
of an ordinary cash dividend), stock split, reorganization, spin-off, split-up
or distribution of assets to shareholders, recapitalization, merger,
consolidation, combination or exchange of shares or the like, the Committee may
adjust the determination of net income per common share as it deems appropriate
in its sole discretion. The determination of the Committee as to any adjustment
shall be final (including any determination that no adjustment is necessary).
11. AMENDMENT. The Board shall have the right to amend the Plan at any
time and for any reason; provided, however, that no amendment of the Plan shall,
without the consent of the Participants, alter or impair any of the rights or
obligations under any bonuses previously earned and declared.
12. TAX WITHHOLDING. The Company may deduct and withhold from any
amounts payable to a Participant such amount as may be required for the purpose
of satisfying the Company's obligation to withhold federal, state or local
taxes.
13. EFFECTIVE DATE; FISCAL YEARS COVERED. The Effective Date of this
Amended and Restated Plan is September 21, 1999 and the Plan shall apply to and
cover the Company's 2000 Fiscal Year. This Plan shall be renewable for
additional one-year periods upon action of the Board.
14. RIGHTS OF PARTICIPANTS.
(a) No Participant shall have any interest in any specific asset or
assets of the Company (or any subsidiary) by reason of any account under the
Plan. It is intended that the Company has merely a contractual obligation to
make payments when due hereunder.
(b) No Participant may assign, pledge, or encumber his or her interest
under the Plan, or any part thereof.
(c) Nothing contained in this Plan shall be construed to:
(i) Give any Participant any right to receive any award
other than in the sole discretion of the Committee;
(ii) Limit in any way the right of the Company or subsidiary
to terminate an Participant's employment at any time; or
(iii) Be evidence of any agreement or understanding, express
or implied, that a Participant will be retained in any particular
position, at any particular rate of remuneration or for any length of
time.
-3-
<PAGE>
NORTHLAND CRANBERRIES, INC.
2000 INCENTIVE BONUS PLAN
SCHEDULE A
- --------------------------------------------------------------------------------
MAXIMUM
BONUS POSITIONS PERCENTAGE OF
LEVEL BASE SALARY
- --------------------------------------------------------------------------------
VII Chairman and Chief Executive Executive 60%
Officer
- --------------------------------------------------------------------------------
VI Executive Vice-President 50%
Vice President - Treasurer - Chief
Financial Officer
Senior Vice President - Corporate
Secretary
Branded Division President
Vice President - Packaging and Logistics
Industrial Ingredients Division President
Agricultural Operations Division President
Non-Branded Group President
Manufacturing Division President
Corporate Controller
- --------------------------------------------------------------------------------
V Division Vice Presidents 35%
Assistant Vice-President - Finance
Directors
- --------------------------------------------------------------------------------
IV Managers 25%
Plant Controllers
Plant Managers
- --------------------------------------------------------------------------------
III Assistant Managers 17%
Supervisors
- --------------------------------------------------------------------------------
II Non-Management Salaried and Hourly Employees 8%
- --------------------------------------------------------------------------------
I Seasonal Employees Discretionary
- --------------------------------------------------------------------------------
-4-
<PAGE>
NORTHLAND CRANBERRIES, INC.
2000 INCENTIVE BONUS PLAN
SCHEDULE B
BONUS LEVEL CRITERIA BONUS PERCENTAGE
- ----------- -------- ----------------
Sum of:
- --------------------------------------------------------------------------------
VII Company's Net Income Per Common
Share Equals--
80% or more of Target Earnings 15%
100% of Target Earnings 15%
More than 100% of Target Earnings 1% for Each Percentage
Point over Target Earnings
up to 10% Maximum
Criteria adopted by Committee Based on Discretionary from
Executive's individual contribution towards 0 to 20%
enhancement of Company's long-term outlook
-----------------------
Maximum Bonus 60% of Base Salary
- --------------------------------------------------------------------------------
VI Company's Net Income Per Common
Share Equals--
90% or more of Target Earnings 15%
100% or more of Target Earnings 20%
Achievement of Individual Goals 0 to 15%
-----------------------
Maximum Bonus 50 % of Base Salary
- --------------------------------------------------------------------------------
V Company's Net Income Per Common
Share Equals--
100% or more of Target Earnings 15%
Achievement of Department Goals 0 to 20%
-----------------------
Maximum Bonus 35% of Base Salary
- --------------------------------------------------------------------------------
-5-
<PAGE>
BONUS LEVEL CRITERIA BONUS PERCENTAGE
- ----------- -------- ----------------
Sum of:
- --------------------------------------------------------------------------------
IV Company's Net Income Per Common
Share Equals--
100% or more of Target Earnings 11%
Achievement of Individual Goals 0 to 14%
-----------------------
Maximum Bonus 25% of Base Salary
- --------------------------------------------------------------------------------
III Company's Net Income Per Common
Share Equals--
100% or more of Target Earnings 5%
Achievement of Individual Goals 0 to 12%
-----------------------
Maximum Bonus 17% of Base Salary
- --------------------------------------------------------------------------------
II Company's Net Income Per Common
Share Equals--
100% or more of Target Earnings 3%
Achievement of Individual Goals 0 to 5%
-----------------------
Maximum Bonus 8% of Base Salary
- --------------------------------------------------------------------------------
I Discretionary Bonuses Discretionary
- --------------------------------------------------------------------------------
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF NORTHLAND CRANBERRIES, INC. AS OF AND FOR
THE 3 MONTHS ENDED NOVEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 801
<SECURITIES> 0
<RECEIVABLES> 37,711
<ALLOWANCES> (693)
<INVENTORY> 124,843
<CURRENT-ASSETS> 173,135
<PP&E> 209,847
<DEPRECIATION> 39,846
<TOTAL-ASSETS> 386,735
<CURRENT-LIABILITIES> 47,814
<BONDS> 162,794
0
0
<COMMON> 203
<OTHER-SE> 160,071
<TOTAL-LIABILITY-AND-EQUITY> 386,735
<SALES> 74,967
<TOTAL-REVENUES> 74,967
<CGS> 51,555
<TOTAL-COSTS> 19,948
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,911
<INCOME-PRETAX> 553
<INCOME-TAX> 232
<INCOME-CONTINUING> 321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
