X
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED May 31, 2008
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM ______ TO
_____
|
Delaware
|
06-0868496
|
(state
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
One
Rockefeller Plaza, New York, New York
|
10020
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
Telephone Number including Area Code
|
(212)
218-7910
|
Yes x
|
No
¨
|
Large
accelerated filer ¨
|
Non-accelerated
filer ¨
|
||
Accelerated
filer x
|
Smaller
reporting company ¨
|
Yes ¨
|
No x
|
PART
I -
|
FINANCIAL
INFORMATION
|
||
ITEM
1
|
Financial
Statements
|
||
Consolidated
Statements of Operations (unaudited)
|
|||
13
and 26 Weeks Ended May 31, 2008 and June 2, 2007
|
3
|
||
Consolidated
Balance Sheets (unaudited)
|
|||
May
31, 2008 and December 1, 2007
|
4
|
||
Consolidated
Statements of Changes in Stockholders’ Equity (unaudited)
|
|||
26
Weeks Ended May 31, 2008 and June 2, 2007
|
5
|
||
Consolidated
Statements of Cash Flows (unaudited)
|
|||
26
Weeks Ended May 31, 2008 and June 2, 2007
|
6
|
||
Notes
to Consolidated Financial Statements (unaudited)
|
7-18
|
||
ITEM
2
|
Management’s
Discussion and Analysis of
|
||
Financial
Condition and Results of Operations
|
19-30
|
||
ITEM
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
31
|
|
ITEM
4
|
Controls
and Procedures
|
31-32
|
|
PART
II -
|
OTHER
INFORMATION
|
||
ITEM
1
|
Legal
Proceedings
|
32
|
|
ITEM
1A
|
Risk
Factors
|
33
|
|
ITEM
2
|
Unregistered
Sale of Equity Securities and Use of Proceeds
|
33
|
|
ITEM
3
|
Not
Applicable
|
||
ITEM
4
|
Submission
of Matters to a Vote of Security Holders
|
33-34
|
|
ITEM
5
|
Not
Applicable
|
||
ITEM
6
|
Exhibits
|
34-36
|
|
SIGNATURES
|
37
|
PART
I
|
FINANCIAL
INFORMATION
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
For
the 13 Weeks Ended,
|
For
the 26 Weeks Ended,
|
|||||||||||||||
May
31, 2008
|
June
2, 2007
|
May
31, 2008
|
June
2, 2007
|
|||||||||||||
Landscape
nursery net sales
|
$ | 17,053 | $ | 18,866 | $ | 17,477 | $ | 19,433 | ||||||||
Rental
revenue and property sales
|
4,011 | 13,030 | 8,068 | 17,049 | ||||||||||||
Total
revenue
|
21,064 | 31,896 | 25,545 | 36,482 | ||||||||||||
Costs
of landscape nursery sales
|
14,481 | 16,162 | 14,919 | 16,787 | ||||||||||||
Costs
related to rental revenue and property sales
|
2,830 | 4,335 | 6,301 | 7,107 | ||||||||||||
Total
costs of goods sold and costs related to rental revenue and property
sales
|
17,311 | 20,497 | 21,220 | 23,894 | ||||||||||||
Gross
profit
|
3,753 | 11,399 | 4,325 | 12,588 | ||||||||||||
Selling,
general and administrative expenses
|
3,712 | 3,927 | 6,421 | 6,865 | ||||||||||||
Operating
profit (loss)
|
41 | 7,472 | (2,096 | ) | 5,723 | |||||||||||
Gain
on sale of Centaur Media common stock
|
- | 2,397 | - | 2,397 | ||||||||||||
Interest
expense
|
(812 | ) | (808 | ) | (1,661 | ) | (1,546 | ) | ||||||||
Investment
income
|
186 | 486 | 569 | 913 | ||||||||||||
(Loss)
income before income tax (benefit) provision
|
(585 | ) | 9,547 | (3,188 | ) | 7,487 | ||||||||||
Income
tax (benefit) provision
|
(208 | ) | 3,574 | (1,202 | ) | 2,802 | ||||||||||
Net
(loss) income
|
$ | (377 | ) | $ | 5,973 | $ | (1,986 | ) | $ | 4,685 | ||||||
Basic
net (loss) income per common share
|
$ | (0.07 | ) | $ | 1.16 | $ | (0.39 | ) | $ | 0.91 | ||||||
Diluted
net (loss) income per common share
|
$ | (0.07 | ) | $ | 1.13 | $ | (0.39 | ) | $ | 0.89 | ||||||
May
31, 2008
|
December
1, 2007
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 4,200 | $ | 11,120 | ||||
Short-term
investments, net
|
13,544 | 22,875 | ||||||
Accounts
receivable, less allowance of $148 and $124
|
11,544 | 2,222 | ||||||
Inventories,
net
|
29,708 | 30,374 | ||||||
Deferred
income taxes
|
1,318 | 1,384 | ||||||
Other
current assets
|
2,906 | 3,640 | ||||||
Total
current assets
|
63,220 | 71,615 | ||||||
Real
estate held for sale or lease, net
|
112,399 | 109,644 | ||||||
Property
and equipment, net
|
7,961 | 8,270 | ||||||
Investment
in Centaur Media, plc
|
7,320 | 10,308 | ||||||
Other
assets
|
7,443 | 6,966 | ||||||
Total
assets
|
$ | 198,343 | $ | 206,803 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 1,266 | $ | 1,239 | ||||
Accounts
payable and accrued liabilities
|
7,400 | 5,694 | ||||||
Deferred
revenue
|
1,925 | 3,141 | ||||||
Total
current liabilities
|
10,591 | 10,074 | ||||||
Long-term
debt
|
47,874 | 48,456 | ||||||
Deferred
income taxes
|
3,736 | 4,987 | ||||||
Other
noncurrent liabilities
|
4,367 | 4,383 | ||||||
Total
liabilities
|
66,568 | 67,900 | ||||||
Commitments
and contingencies (Note 7)
|
||||||||
Stockholders'
Equity:
|
||||||||
Common
stock, par value $0.01 per share, 10,000,000 shares
|
||||||||
authorized,
5,329,709 and 5,321,232 shares issued, respectively,
|
||||||||
and
5,028,027 and 5,092,649 shares outstanding, respectively
|
53 | 53 | ||||||
Additional
paid-in capital
|
101,989 | 101,703 | ||||||
Retained
earnings
|
37,200 | 40,199 | ||||||
Accumulated
other comprehensive income, net of tax
|
3,060 | 5,002 | ||||||
Treasury
stock, at cost, 301,682 and 228,583 shares, respectively
|
(10,527 | ) | (8,054 | ) | ||||
Total
stockholders' equity
|
131,775 | 138,903 | ||||||
Total
liabilities and stockholders' equity
|
$ | 198,343 | $ | 206,803 | ||||
Shares
of Common Stock Issued
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income
|
Treasury
Stock
|
Total
|
Total
Comprehensive
Income (Loss)
|
|||||||||||||||||
Balance
at Dec. 2, 2006
|
5,177,709 | $ | 52 | $ | 98,549 | $ | 32,377 | $ | 9,942 | $ | (1,306 | ) | $ | 139,614 | ||||||||||
Exercise
of stock options,
|
||||||||||||||||||||||||
including
tax benefit of $931,
|
||||||||||||||||||||||||
and
shares tendered related to
|
||||||||||||||||||||||||
stock
options exercised
|
129,023 | 1 | 2,715 | - | - | (2,568 | ) | 148 | ||||||||||||||||
Stock-based
compensation
|
- | - | 65 | - | - | - | 65 | |||||||||||||||||
expense
|
||||||||||||||||||||||||
Repurchase
of common stock
|
- | - | - | - | - | (1,555 | ) | (1,555 | ) | |||||||||||||||
Net
income
|
- | - | - | 4,685 | - | - | 4,685 | $ | 4,685 | |||||||||||||||
Reclassification
adjustment for
|
||||||||||||||||||||||||
gains
on the sale of Centaur
|
||||||||||||||||||||||||
Media,
plc included in net income
|
- | - | - | - | (1,559 | ) | - | (1,559 | ) | (1,559 | ) | |||||||||||||
Other
comprehensive income,
|
||||||||||||||||||||||||
from
Centaur Media, plc,
|
||||||||||||||||||||||||
net
of tax
|
- | - | - | - | 126 | - | 126 | 126 | ||||||||||||||||
Balance
at June 2, 2007
|
5,306,732 | $ | 53 | $ | 101,329 | $ | 37,062 | $ | 8,509 | $ | (5,429 | ) | $ | 141,524 | $ | 3,252 | ||||||||
Balance
at Dec. 1, 2007
|
5,321,232 | $ | 53 | $ | 101,703 | $ | 40,199 | $ | 5,002 | $ | (8,054 | ) | $ | 138,903 | ||||||||||
Exercise
of stock options,
|
||||||||||||||||||||||||
including
tax benefit of $53,
|
||||||||||||||||||||||||
and
shares tendered related to
|
||||||||||||||||||||||||
stock
options exercised
|
8,477 | - | 186 | - | - | (136 | ) | 50 | ||||||||||||||||
Stock-based
compensation
|
||||||||||||||||||||||||
expense
|
- | - | 100 | - | - | - | 100 | |||||||||||||||||
Repurchase
of common stock
|
- | - | - | - | - | (2,337 | ) | (2,337 | ) | |||||||||||||||
Dividends
declared
|
- | - | - | (1,013 | ) | - | - | (1,013 | ) | |||||||||||||||
Net
loss
|
- | - | - | (1,986 | ) | - | - | (1,986 | ) | $ | (1,986 | ) | ||||||||||||
Other
comprehensive loss,
|
||||||||||||||||||||||||
from
Centaur Media, plc,
|
||||||||||||||||||||||||
net
of tax
|
- | - | - | - | (1,942 | ) | - | (1,942 | ) | (1,942 | ) | |||||||||||||
Balance
at May 31, 2008
|
5,329,709 | $ | 53 | $ | 101,989 | $ | 37,200 | $ | 3,060 | $ | (10,527 | ) | $ | 131,775 | $ | (3,928 | ) | |||||||
See Notes to Consolidated Financial Statements. |
For
the 26 Weeks Ended,
|
||||||||
May
31, 2008
|
June
2, 2007
|
|||||||
Operating
activities:
|
||||||||
Net
(loss) income
|
$ | (1,986 | ) | $ | 4,685 | |||
Adjustments
to reconcile net (loss) income to net cash
|
||||||||
provided
by operating activities:
|
||||||||
Depreciation
and amortization
|
3,147 | 2,861 | ||||||
Gain
on sales of properties
|
(647 | ) | (8,409 | ) | ||||
Provision
for inventory losses
|
200 | 350 | ||||||
Deferred
income taxes
|
(139 | ) | (524 | ) | ||||
Stock-based
compensation expense
|
100 | 65 | ||||||
Amortization
of debt issuance costs
|
50 | 50 | ||||||
Change
in unrealized gains on trading securities
|
47 | 301 | ||||||
Payment
of employee withholding taxes on stock options exercised
|
(37 | ) | (994 | ) | ||||
Provision
for bad debts
|
25 | 10 | ||||||
Equity
income from equity investment
|
(6 | ) | (7 | ) | ||||
Gain
on sale of common stock in Centaur Media, plc
|
- | (2,397 | ) | |||||
Current
taxes in other comprehensive income reclassified into net
|
||||||||
income
|
- | 164 | ||||||
Changes
in assets and liabilities which increased (decreased)
cash:
|
||||||||
Short-term
investments
|
9,284 | 12,658 | ||||||
Accounts
receivable
|
(9,347 | ) | (10,840 | ) | ||||
Inventories
|
466 | 2,561 | ||||||
Other
current assets
|
734 | 3,652 | ||||||
Accounts
payable and accrued liabilities
|
1,276 | 328 | ||||||
Deferred
revenue
|
(556 | ) | (167 | ) | ||||
Other
noncurrent assets and noncurrent liabilities, net
|
(586 | ) | (887 | ) | ||||
Net
cash provided by operating activities
|
2,025 | 3,460 | ||||||
Investing
activities:
|
||||||||
Additions
to real estate held for sale or lease
|
(4,732 | ) | (6,105 | ) | ||||
Additions
to property and equipment
|
(320 | ) | (344 | ) | ||||
Proceeds
from sales of properties, net of expenses
|
- | 9,295 | ||||||
Increase
in cash held in escrow by a third party
|
- | (6,325 | ) | |||||
Proceeds
from sale of common stock in Centaur Media, plc
|
- | 2,348 | ||||||
Net
cash used in investing activities
|
(5,052 | ) | (1,131 | ) | ||||
Financing
activities:
|
||||||||
Repurchase
of common stock
|
(2,337 | ) | (1,555 | ) | ||||
Dividends
paid to stockholders
|
(1,018 | ) | - | |||||
Payments
of debt
|
(625 | ) | (587 | ) | ||||
Tax
benefit of stock options exercised
|
53 | 931 | ||||||
Exercise
of stock options
|
34 | 211 | ||||||
Net
cash used in financing activities
|
(3,893 | ) | (1,000 | ) | ||||
Net
(decrease) increase in cash and cash equivalents
|
(6,920 | ) | 1,329 | |||||
Cash
and cash equivalents at beginning of period
|
11,120 | 2,265 | ||||||
Cash
and cash equivalents at end of period
|
$ | 4,200 | $ | 3,594 | ||||
For
the 13 Weeks Ended,
|
For
the 26 Weeks Ended,
|
|||||||||||||||
May
31, 2008
|
June
2, 2007
|
May
31, 2008
|
June
2, 2007
|
|||||||||||||
Total
revenue:
|
||||||||||||||||
Landscape
nursery net sales
|
$ | 17,053 | $ | 18,866 | $ | 17,477 | $ | 19,433 | ||||||||
Rental
revenue and property sales
|
4,011 | 13,030 | 8,068 | 17,049 | ||||||||||||
$ | 21,064 | $ | 31,896 | $ | 25,545 | $ | 36,482 | |||||||||
Operating
profit (loss):
|
||||||||||||||||
Landscape
nursery
|
$ | 817 | $ | 796 | $ | (154 | ) | $ | (205 | ) | ||||||
Real
estate
|
454 | 7,963 | 386 | 8,509 | ||||||||||||
Industry
segment totals
|
1,271 | 8,759 | 232 | 8,304 | ||||||||||||
General
corporate expense
|
(1,230 | ) | (1,287 | ) | (2,328 | ) | (2,581 | ) | ||||||||
Operating
profit (loss)
|
41 | 7,472 | (2,096 | ) | 5,723 | |||||||||||
Gain
on sale of Centaur Media common stock
|
- | 2,397 | - | 2,397 | ||||||||||||
Interest
expense
|
(812 | ) | (808 | ) | (1,661 | ) | (1,546 | ) | ||||||||
Investment
income
|
186 | 486 | 569 | 913 | ||||||||||||
(Loss)
income before income tax (benefit) provision
|
$ | (585 | ) | $ | 9,547 | $ | (3,188 | ) | $ | 7,487 | ||||||
Identifiable
assets:
|
May
31, 2008
|
December
1, 2007
|
||||||
Landscape
nursery
|
$ | 49,725 | $ | 42,107 | ||||
Real
estate
|
120,559 | 118,121 | ||||||
Industry
segment totals
|
170,284 | 160,228 | ||||||
General
corporate (consists primarily of investments)
|
28,059 | 46,575 | ||||||
Total
assets
|
$ | 198,343 | $ | 206,803 | ||||
May
31, 2008
|
December
1, 2007
|
|||||||
Nonrecourse
mortgages:
|
||||||||
8.54%,
due July 1, 2009
|
$ | 7,533 | $ | 7,585 | ||||
6.08%,
due January 1, 2013
|
7,734 | 7,834 | ||||||
6.30%,
due May 1, 2014
|
1,010 | 1,078 | ||||||
5.73%,
due July 1, 2015
|
20,571 | 20,721 | ||||||
8.13%,
due April 1, 2016
|
5,176 | 5,287 | ||||||
7.0%,
due October 1, 2017
|
6,901 | 6,983 | ||||||
Total
nonrecourse mortgages
|
48,925 | 49,488 | ||||||
Capital
leases
|
215 | 207 | ||||||
Total
|
49,140 | 49,695 | ||||||
Less:
current portion
|
(1,266 | ) | (1,239 | ) | ||||
Total
long-term debt
|
$ | 47,874 | $ | 48,456 | ||||
For
the 13 Weeks Ended,
|
For
the 26 Weeks Ended,
|
|||||||||||||||
May
31, 2008
|
June
2, 2007
|
May
31, 2008
|
June
2, 2007
|
|||||||||||||
Net
(loss) income as reported for computation
|
||||||||||||||||
of
basic and diluted per share results
|
$ | (377 | ) | $ | 5,973 | $ | (1,986 | ) | $ | 4,685 | ||||||
Weighted
average shares outstanding for
|
||||||||||||||||
computation
of basic per share results
|
5,042,000 | 5,150,000 | 5,067,000 | 5,141,000 | ||||||||||||
Incremental
shares from assumed exercise
|
||||||||||||||||
of
Griffin stock options (a)
|
- | 133,000 | - | 143,000 | ||||||||||||
Weighted
average shares outstanding for
|
||||||||||||||||
computation
of diluted per share results
|
5,042,000 | 5,283,000 | 5,067,000 | 5,284,000 | ||||||||||||
(a)
|
Incremental
shares from the assumed exercise of Griffin stock options are not included
in periods where the inclusion of such shares would be
anti-dilutive. The incremental shares from the assumed exercise
of stock options for the thirteen and twenty-six weeks ended May 31, 2008
would have been 94,000 and 96,000,
respectively.
|
For
the 26 Weeks Ended,
|
|||||
May
31, 2008
|
June
2, 2007
|
||||
Expected
volatility
|
38.6%
to 41.1%
|
43.4%
|
|||
Risk
free interest rate
|
3.5%
|
4.7%
|
|||
Expected
option term
|
7
to 8 years
|
8.8
years
|
|||
Annual
dividend yield
|
$0.40
|
none
|
For
the 26 Weeks Ended,
|
||||||||||||||||
May
31, 2008
|
June
2, 2007
|
|||||||||||||||
Vested
Options
|
Number
of Shares
|
Weighted
Avg. Exercise Price
|
Number
of Shares
|
Weighted
Avg. Exercise Price
|
||||||||||||
Outstanding
at beginning of period
|
218,378 | $ | 14.13 | 347,300 | $ | 13.84 | ||||||||||
Exercised
|
(8,477 | ) | $ | 15.72 | (129,023 | ) | $ | 13.84 | ||||||||
Vested
|
5,140 | $ | 31.13 | 14,601 | $ | 19.71 | ||||||||||
Outstanding
at end of period
|
215,041 | $ | 14.48 | 232,878 | $ | 14.21 | ||||||||||
Range
of Exercise Prices for Vested Options
|
Outstanding
at May 31, 2008
|
Weighted
Avg. Exercise Price
|
Weighted
Avg. Remaining Contractual Life
(in
years)
|
Total
Fair Value
|
||||||||||||
$9.00-$18.00 | 196,415 | $ | 13.30 | 1.5 | $ | 1,032 | ||||||||||
Over
$24.00
|
18,626 | $ | 26.84 | 6.9 | 248 | |||||||||||
215,041 | $ | 14.48 | 2.0 | $ | 1,280 | |||||||||||
For
the 26 Weeks Ended,
|
||||||||||||||||
May
31, 2008
|
June
2, 2007
|
|||||||||||||||
Unvested
Options
|
Number
of Shares
|
Weighted
Avg. Exercise Price
|
Number
of Shares
|
Weighted
Avg. Exercise Price
|
||||||||||||
Unvested
at beginning of period
|
18,348 | $ | 32.62 | 28,741 | $ | 25.27 | ||||||||||
Granted
|
29,704 | $ | 34.03 | 4,208 | $ | 38.00 | ||||||||||
Vested
|
(5,140 | ) | $ | 31.13 | (14,601 | ) | $ | 19.71 | ||||||||
Unvested
at end of period
|
42,912 | $ | 33.78 | 18,348 | $ | 32.62 | ||||||||||
Range
of Exercise Prices for Unvested Options
|
Outstanding
at May 31, 2008
|
Weighted
Avg. Exercise Price
|
Weighted
Avg. Remaining Contractual Life
(in
years)
|
Total
Fair Value
|
||||||||||||
Over
$24.00
|
42,912 | $ | 33.78 | 9.3 | $ | 678 | ||||||||||
Number
of option holders at May 31, 2008
|
19
|
||
Remainder
of Fiscal 2008
|
$
103
|
|
Fiscal
2009
|
$
175
|
|
Fiscal
2010
|
$
124
|
|
Fiscal
2011
|
$
64
|
|
Fiscal
2012
|
$
27
|
|
Fiscal
2013
|
$
2
|
For
the 26 Weeks Ended,
|
||||||||
May
31, 2008
|
June
2, 2007
|
|||||||
Balance
at beginning of period
|
$ | 5,002 | $ | 9,942 | ||||
Reclassification
adjustment for gains on Centaur Media, plc
|
||||||||
included
in net income, net of tax provision of $853
|
- | (1,559 | ) | |||||
(Decrease)
increase in fair value of Centaur Media, net of taxes of
|
||||||||
($950)
and $75, respectively
|
(1,763 | ) | 141 | |||||
Decrease
in fair value of Centaur Media, due to exchange
|
||||||||
loss,
net of taxes of ($96) and ($9), respectively
|
(179 | ) | (15 | ) | ||||
Balance
at end of period
|
$ | 3,060 | $ | 8,509 | ||||
May
31, 2008
|
December
1, 2007
|
|||||||||||||||
Cost
|
Fair
Value
|
Cost
|
Fair
Value
|
|||||||||||||
U.S.
Treasury securities
|
$ | 9,949 | $ | 9,940 | $ | 10,930 | $ | 10,970 | ||||||||
Certificates
of deposit
|
246 | 246 | 454 | 454 | ||||||||||||
Federal
agency coupon notes
|
3,355 | 3,358 | 11,450 | 11,451 | ||||||||||||
Total
short-term investments
|
$ | 13,550 | $ | 13,544 | $ | 22,834 | $ | 22,875 | ||||||||
For
the 13 Weeks Ended,
|
For
the 26 Weeks Ended,
|
|||||||||||||||
May
31, 2008
|
June
2, 2007
|
May
31, 2008
|
June
2, 2007
|
|||||||||||||
Interest
and dividend income
|
$ | 153 | $ | 182 | $ | 190 | $ | 211 | ||||||||
Net
realized gains on the sales of short-term investments
|
219 | 427 | 420 | 996 | ||||||||||||
Change
in unrealized gains on short-term investments
|
(192 | ) | (130 | ) | (47 | ) | (301 | ) | ||||||||
Other
investment income
|
6 | 7 | 6 | 7 | ||||||||||||
$ | 186 | $ | 486 | $ | 569 | $ | 913 | |||||||||
May
31, 2008
|
December
1, 2007
|
|||||||
Nursery
stock
|
$ | 27,846 | $ | 29,228 | ||||
Materials
and supplies
|
2,730 | 1,913 | ||||||
30,576 | 31,141 | |||||||
Reserves
|
(868 | ) | (767 | ) | ||||
$ | 29,708 | $ | 30,374 | |||||
Estimated Useful
Lives
|
May
31, 2008
|
December
1, 2007
|
|||||||
Land
|
$ | 674 | $ | 674 | |||||
Land
improvements
|
10
to 20 years
|
5,550 | 5,550 | ||||||
Buildings
and improvements
|
10
to 40 years
|
3,060 | 3,060 | ||||||
Machinery
and equipment
|
3
to 20 years
|
17,737 | 17,381 | ||||||
27,021 | 26,665 | ||||||||
Accumulated
depreciation
|
(19,060 | ) | (18,395 | ) | |||||
$ | 7,961 | $ | 8,270 | ||||||
May
31, 2008
|
|||||||||||||
Estimated Useful
Lives
|
Held
for Sale
|
Held
for Lease
|
Total
|
||||||||||
Land
|
$ | 1,696 | $ | 7,770 | $ | 9,466 | |||||||
Land
improvements
|
10
to 30 years
|
690 | 6,761 | 7,451 | |||||||||
Buildings
and improvements
|
10
to 40 years
|
- | 97,280 | 97,280 | |||||||||
Tenant
improvements
|
Shorter
of useful life or term of related lease
|
- | 10,328 | 10,328 | |||||||||
Development
costs
|
7,144 | 8,987 | 16,131 | ||||||||||
9,530 | 131,126 | 140,656 | |||||||||||
Accumulated
depreciation
|
- | (28,257 | ) | (28,257 | ) | ||||||||
$ | 9,530 | $ | 102,869 | $ | 112,399 | ||||||||
December
1, 2007
|
|||||||||||||
Estimated Useful
Lives
|
Held
for Sale
|
Held
for Lease
|
Total
|
||||||||||
Land
|
$ | 1,696 | $ | 7,732 | $ | 9,428 | |||||||
Land
improvements
|
10
to 30 years
|
691 | 6,757 | 7,448 | |||||||||
Buildings
and improvements
|
10
to 40 years
|
- | 97,167 | 97,167 | |||||||||
Tenant
improvements
|
Shorter
of useful life or term of related lease
|
- | 10,127 | 10,127 | |||||||||
Development
costs
|
6,803 | 4,717 | 11,520 | ||||||||||
9,190 | 126,500 | 135,690 | |||||||||||
Accumulated
depreciation
|
- | (26,046 | ) | (26,046 | ) | ||||||||
$ | 9,190 | $ | 100,454 | $ | 109,644 | ||||||||
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
|
CONDITION
AND RESULTS OF OPERATIONS
|
Total
Square
Footage
|
Square
Footage
Leased
|
Percentage
Leased
|
|||||
As
of May 31, 2008
|
2,016,000
|
1,332,000
|
66%
|
||||
As
of December 1, 2007
|
2,016,000
|
1,322,000
|
66%
|
||||
As
of June 2, 2007
|
1,837,000
|
1,251,000
|
68%
|
2008
|
2007
|
|||||||
Second
Qtr.
|
Second
Qtr.
|
|||||||
(amounts
in thousands)
|
||||||||
Rental
revenue
|
$ | 3,606 | $ | 3,453 | ||||
Costs
related to rental revenue excluding
|
||||||||
depreciation
and amortization expense (a)
|
(1,492 | ) | (1,577 | ) | ||||
Profit
from leasing activities before general and
|
||||||||
administrative
expenses and before depreciation
|
||||||||
and
amortization expense (a)
|
2,114 | 1,876 | ||||||
Revenue
from property sales
|
405 | 9,577 | ||||||
Costs
related to property sales
|
(88 | ) | (1,654 | ) | ||||
Gain
from property sales
|
317 | 7,923 | ||||||
Profit
from leasing activities and gain from property sales
|
||||||||
before
general and administrative expenses and before
|
||||||||
depreciation
and amortization expense (a)
|
2,431 | 9,799 | ||||||
General
and administrative expenses excluding depreciation
|
||||||||
and amortization expense (a)
|
(719 | ) | (723 | ) | ||||
Profit
before depreciation and amortization expense
|
1,712 | 9,076 | ||||||
Depreciation
and amortization expense related to costs of
|
||||||||
rental revenue
|
(1,250 | ) | (1,104 | ) | ||||
Depreciation
and amortization expense - other
|
(8 | ) | (9 | ) | ||||
Operating
profit
|
$ | 454 | $ | 7,963 | ||||
(a)
|
The
costs related to rental revenue excluding depreciation and amortization
expense, profit from leasing activities before general and administrative
expenses and before depreciation and amortization expense, general and
administrative expenses excluding depreciation and amortization expense
and profit before depreciation and amortization expense are disclosures
not in conformity with accounting principles generally accepted in the
United State of America. They are presented because Griffin
believes they are useful financial indicators for measuring the results in
its real estate business segment. However, they should not be
considered as an alternative to operating profit as a measure of operating
results in accordance with accounting principles generally accepted in the
United States of America. The aggregate of (i) costs related to
rental revenue excluding depreciation and amortization expense; (ii) costs
related to property sales; and (iii) depreciation and amortization expense
related to costs of rental revenue equals the costs related to rental
revenue and property sales as reported on Griffin’s consolidated
statements of operations.
|
2008
|
2007
|
|||||||
Second
Qtr.
|
Second
Qtr.
|
|||||||
(amounts
in thousands)
|
||||||||
Net
sales and other revenue
|
$ | 17,053 | $ | 18,866 | ||||
Cost
of goods sold
|
14,481 | 16,162 | ||||||
Gross
profit
|
2,572 | 2,704 | ||||||
Selling,
general and administrative expenses
|
(1,755 | ) | (1,908 | ) | ||||
Operating
profit
|
$ | 817 | $ | 796 | ||||
2008
|
2007
|
|||||||
Six
Month Period
|
Six
Month Period
|
|||||||
(amounts
in thousands)
|
||||||||
Rental
revenue
|
$ | 7,242 | $ | 6,952 | ||||
Costs
related to rental revenue excluding
|
||||||||
depreciation
and amortization expense (a)
|
(3,645 | ) | (3,243 | ) | ||||
Profit
from leasing activities before general and
|
||||||||
administrative
expenses and before depreciation
|
||||||||
and
amortization expense (a)
|
3,597 | 3,709 | ||||||
Revenue
from property sales
|
826 | 10,097 | ||||||
Costs
related to property sales
|
(179 | ) | (1,688 | ) | ||||
Gain
from property sales
|
647 | 8,409 | ||||||
Profit
from leasing activities and gain from property sales
|
||||||||
before general and administrative expenses and before
|
||||||||
depreciation and amortization expense (a)
|
4,244 | 12,118 | ||||||
General
and administrative expenses excluding depreciation
|
||||||||
and amortization expense (a)
|
(1,364 | ) | (1,414 | ) | ||||
Profit
before depreciation and amortization expense (a)
|
2,880 | 10,704 | ||||||
Depreciation
and amortization expense related to costs of
|
||||||||
rental revenue
|
(2,477 | ) | (2,176 | ) | ||||
Depreciation
and amortization expense - other
|
(17 | ) | (19 | ) | ||||
Operating
profit
|
$ | 386 | $ | 8,509 | ||||
(a)
|
The
costs related to rental revenue excluding depreciation and amortization
expense, profit from leasing activities before general and administrative
expenses and before depreciation and amortization expense, general and
administrative expenses excluding depreciation and amortization expense,
and profit before depreciation and amortization expense are disclosures
not in conformity with accounting principles generally accepted in the
United States of America. They are presented because Griffin
believes they are useful financial indicators for measuring the results in
its real estate business segment. However, they should not be
considered as an alternative to operating profit as a measure of operating
results in accordance with accounting principles generally accepted in the
United States of America. The aggregate of (i) costs related to
rental revenue excluding depreciation and amortization expense; (ii) costs
related to property sales; and (iii) depreciation and amortization expense
related to costs of rental revenue equals the costs related to rental
revenue and property sales on Griffin’s consolidated statement of
operations.
|
2008
|
2007
|
|||||||
Six
Month Period
|
Six
Month Period
|
|||||||
(amounts
in thousands)
|
||||||||
Net
sales and other revenue
|
$ | 17,477 | $ | 19,433 | ||||
Cost
of goods sold
|
14,919 | 16,787 | ||||||
Gross
profit
|
2,558 | 2,646 | ||||||
Selling,
general and administrative expenses
|
(2,712 | ) | (2,851 | ) | ||||
Operating
loss
|
$ | (154 | ) | $ | (205 | ) | ||
Total
|
Due
Within One Year
|
Due
From 1-3 Years
|
Due
From 3-5 Years
|
Due
in More Than 5 Years
|
||||||||||||||||
(in
millions)
|
||||||||||||||||||||
Mortgages
|
$ | 66.4 | $ | 4.4 | $ | 14.9 | $ | 13.7 | $ | 33.4 | ||||||||||
Capital
Lease Obligations
|
0.2 | 0.1 | 0.1 | - | - | |||||||||||||||
Operating
Lease Obligations
|
1.2 | 0.2 | 0.5 | 0.4 | 0.1 | |||||||||||||||
Purchase
Obligations (1)
|
3.2 | 3.2 | - | - | - | |||||||||||||||
Other
(2)
|
2.4 | - | - | - | 2.4 | |||||||||||||||
$ | 73.4 | $ | 7.9 | $ | 15.5 | $ | 14.1 | $ | 35.9 | |||||||||||
(1)
|
Includes
obligations for the construction of the shell of a new industrial building
at Griffin Land, completion of tenant improvements, infrastructure
improvements in Tradeport and for the purchase of plants and raw materials
by Imperial.
|
(2)
|
Includes
Griffin’s deferred compensation plan and other postretirement benefit
liabilities.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
PART
II
|
OTHER
INFORMATION
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM
1A.
|
RISK
FACTORS
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(c)
Issuer Purchases of Equity
Securities
|
(a)
|
(b)
|
(c)
|
(d)
|
|
Date
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
March
7, 2008
|
56,100
|
$34.02
|
169,000
|
81,000
|
May
30, 2008
|
12,900
|
$33.19
|
181,900
|
68,100
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
(a)
|
Annual
Meeting of Stockholders: May 13, 2008
|
||
(b)
|
The
following were elected as Directors at the Annual Meeting, representing
all of the directors:
|
||
(i)
|
1)
Mr. Winston J. Churchill, Jr. was elected a Director for 2008 with
3,580,704 votes in favor, 1,405,215 withheld, and 50,630 not
voting.
|
||
2)
Mr. Edgar M. Cullman was elected a Director for 2008 with 3,584,534 votes
in favor, 1,401,385 withheld, and 50,630 not voting.
|
|||
3)
Mr. David M. Danziger was elected a Director for 2008 with 3,584,534 votes
in favor, 1,401,385 withheld, and 50,630 not voting.
|
|||
4)
Mr. Frederick M. Danziger was elected a Director for 2008 with 3,584,534
votes in favor, 1,401,385 withheld, and 50,630 not
voting.
|
5)
Mr. Thomas C. Israel was elected a Director for 2008 with 3,564,319 votes
in favor, 1,421,600 withheld, and 50,630 not voting.
|
|||
6)
Mr. Alan Plotkin * was elected a Director for 2008 with 3,585,554 votes in
favor, 1,400,365 withheld, and 50,630 not voting.
|
|||
7)
Mr. David F. Stein was elected a Director for 2008 with 3,391,319 votes in
favor, 1,594,600 withheld, and 50,630 not voting.
|
|||
* Subsequent
to his election to Griffin’s Board of Directors at the 2008 Annual
Meeting, Mr. Plotkin died. There has not yet been an
appointment made to replace Mr. Plotkin on Griffin’s Board of
Directors.
|
|||
(c)
|
The
selection of McGladrey & Pullen, LLP as independent registered public
accountants for 2008 was ratified with 4,984,242 votes in favor, 900
opposed, and 51,407 not voting.
|
ITEM
6.
|
EXHIBITS
|
|
Exhibit
No.
|
Description
|
|
3.1
|
Form
of Amended and Restated Certificate of Incorporation of Griffin Land &
Nurseries, Inc. (incorporated by reference to the Form 10 of Griffin Land
& Nurseries, Inc., filed April 8, 1997, as amended)
|
|
3.2
|
Form
of Bylaws of Griffin Land & Nurseries, Inc. (incorporated by reference
to the Form 10 of Griffin Land & Nurseries, Inc., filed April 8,
1997, as amended)
|
|
10.4
|
Form
of Agricultural Lease between Griffin Land & Nurseries, Inc. and
General Cigar Holdings, Inc. (incorporated by reference to the
Registration Statement on Form S-1 of General Cigar Holdings, Inc., filed
December 24, 1996, as amended)
|
|
10.6
|
Form
of 1997 Stock Option Plan of Griffin Land & Nurseries, Inc.
(incorporated by reference to the Form 10 of Griffin Land & Nurseries,
Inc., filed April 8, 1997, as amended)
|
|
10.7
|
Form
of 401(k) Plan of Griffin Land & Nurseries, Inc. (incorporated by
reference to the Form 10 of Griffin Land & Nurseries, Inc., filed
April 8, 1997, as amended)
|
|
10.17
|
Loan
Agreement dated June 24, 1999 (incorporated by reference to Form 10-Q
dated August 28, 1999 filed October 8,
1999)
|
10.21
|
Mortgage
Deed, Security Agreement, Financing Statement and Fixture Filing with
Absolute Assignment of Rents and Leases dated September 17, 2002 between
Tradeport Development I, LLC and Farm Bureau Life Insurance Company
(incorporated by reference to Form 10-Q dated August 31, 2002 filed
October 11, 2002)
|
|
10.22
|
Letter
of Agreement between Griffin Land & Nurseries, Inc. and USAA Real
Estate Company (incorporated by reference to Form 10-Q dated August 31,
2002 filed October 11, 2002)
|
|
10.23
|
Agreement
of Purchase and Sale of Partnership Interest between Griffin Land &
Nurseries, Inc. and USAA Real Estate Company dated December 3, 2002
(incorporated by reference to Form 10-K dated November 30, 2002 filed
February 28, 2003)
|
|
10.24
|
Mortgage
Deed and Security Agreement dated December 17, 2002 between Griffin Center
Development IV, LLC and Webster Bank (incorporated by reference to Form
10-K dated November 30, 2002 filed February 28, 2003)
|
|
10.28
|
Secured
Installment Note and First Amendment of Mortgage and Loan Documents dated
April 16, 2004 among Tradeport Development I, LLC, and Griffin Land &
Nurseries, Inc. and Farm Bureau Life Insurance Company (incorporated by
reference to Form 10-Q dated May 29, 2004, filed July 13,
2004)
|
|
10.29
|
Mortgage
Deed Security Agreement, Fixture Filing, Financing Statement and
Assignment of Leases and Rents dated July 6, 2005 by Tradeport Development
II, LLC in favor of First Sunamerica Life Insurance Company (incorporated
by reference to Form 10-Q dated May 28, 2005 filed on November 2,
2005)
|
|
10.30
|
Promissory
Note dated July 6, 2005 (incorporated by reference to Form 10-Q dated May
28, 2005 filed on November 2, 2005)
|
|
10.31
|
Guaranty
Agreement as of July 6, 2005 by Griffin Land & Nurseries, Inc. in
favor of Sunamerica Life Insurance Company (incorporated by reference to
Form 10-Q dated May 28, 2005 filed on November 2, 2005)
|
|
10.32
|
Amended
and Restated Mortgage Deed Security Agreement, Fixture Filing, Financing
Statement and Assignment of Leases and Rents dated November 16, 2006 by
Tradeport Development II, LLC in favor of First Sunamerica Life Insurance
Company (incorporated by reference to Form 10-K dated December 2, 2006
filed February 15, 2007)
|
|
10.33
|
Amended
and Restated Promissory Note dated November 16, 2006 (incorporated by
reference to Form 10-K dated December 2, 2006 filed February 15,
2007)
|
10.34
|
Guaranty
Agreement as of November 16, 2006 by Griffin Land & Nurseries, Inc. in
favor of Sunamerica Life Insurance Company (incorporated by reference to
Form 10-K dated December 2, 2006 filed February 15,
2007)
|
|
10.35
|
Employment
Agreement by and between Imperial Nurseries, Inc. and Gregory Schaan dated
January 1, 2001, as amended April 9, 2008 (incorporated by reference to
Form 10-Q dated March 1, 2008 filed April 10, 2008)
|
|
14.1
|
Griffin
Land & Nurseries, Inc. Code of Ethics (incorporated by reference to
Form 10-K dated November 29, 2003, filed February 25,
2004)
|
|
16.1
|
Letter
from PricewaterhouseCoopers LLP dated March 26, 2008 (incorporated by
reference to Form 8-K dated March 25, 2008 filed March 27,
2008)
|
|
21
|
Subsidiaries
of Griffin Land & Nurseries, Inc. (incorporated by reference to the
Form 10 of Griffin Land & Nurseries, Inc., filed April 8, 1997, as
amended)
|
|
31.1
*
|
Certifications
of Chief Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
*
|
Certifications
of Chief Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant
to Section 302 of the Sarbanes Oxley Act of 2002
|
|
32.1
*
|
Certifications
of Chief Executive Officer Pursuant to 18 U.S.C
|
|
Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
||
32.2
*
|
Certifications
of Chief Financial Officer Pursuant to 18 U.S.C
|
|
Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
||
GRIFFIN
LAND & NURSERIES, INC.
|
||
/s/ FREDERICK M.
DANZIGER
|
||
Date: July
10, 2008
|
Frederick
M. Danziger
|
|
President
and Chief Executive Officer
|
||
/s/
ANTHONY J. GALICI
|
||
Date: July
10, 2008
|
Anthony
J. Galici
|
|
Vice
President, Chief Financial Officer and Secretary
|
||