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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______
Commission File No. 0-29288
GRIFFIN LAND & NURSERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0868496
(state or other jurisdiction of incorporation (IRS Employer
or organization 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
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
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
Number of shares of Common Stock outstanding at April 2, 2004: 4,900,128
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GRIFFIN LAND & NURSERIES, INC.
Form 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Statements of Operations
13 Weeks Ended February 28, 2004 and March 1, 2003 3
Consolidated Balance Sheets
February 28, 2004 and November 29, 2003 4
Consolidated Statements of Changes in Stockholders' Equity
13 Weeks Ended February 28, 2004 and March 1, 2003 5
Consolidated Statements of Cash Flows
13 Weeks Ended February 28, 2004 and March 1, 2003 6
Notes to Consolidated Financial Statements 7-15
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 16-20
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk 21
ITEM 4 - Controls and Procedures 21-22
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K 22
SIGNATURES 23
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Griffin Land & Nurseries, Inc.
Consolidated Statements of Operations
(dollars in thousands, except per share data)
(unaudited)
For the 13 Weeks Ended,
----------------------------------
February 28, 2004 March 1, 2003
----------------- ---------------
Net sales and other revenue . . . . . . . . $ 3,095 $ 3,101
Cost of goods sold. . . . . . . . . . . . . 2,523 2,262
Selling, general and
administrative expenses. . . . . . . . . . . 1,969 2,329
----------------- ---------------
Operating loss. . . . . . . . . . . . . . . . (1,397) (1,490)
Interest expense. . . . . . . . . . . . . . . (707) (624)
Interest income . . . . . . . . . . . . . . . 6 8
----------------- ---------------
Loss before income tax benefit and
before equity investment (2,098) (2,106)
Income tax benefit. . . . . . . . . . . . . . (783) (744)
---------------- ---------------
Loss before equity investment . . . . . . . . (1,315) (1,362)
Loss from equity investment . . . . . . . . . (89) (290)
---------------- ---------------
Net loss. . . . . . . . . . . . . . . . . . .$ (1,404) $ (1,652)
================ ===============
Basic net loss per common share . . . . . . .$ (0.29) $ (0.34)
================ ===============
Diluted net loss per common share . . . . . .$ (0.29) $ (0.34)
================ ===============
See Notes to Consolidated Financial Statements.
- --------------------------------------------------------------------------------
Griffin Land & Nurseries, Inc
Consolidated Balance Sheets
(dollars in thousands, except per share data)
(unaudited)
February 28, 2004 November 29, 2003
----------------- -----------------
ASSETS. . . . . . . . . . . . . . . . . .
Current Assets:
Cash and cash equivalents. . . . . . . $ 19 $ 18
Accounts receivable, less
allowance of $129 and $149 940 1,948
Inventories. . . . . . . . . . . . . . 37,156 32,396
Deferred income taxes. . . . . . . . . 3,553 1,812
Other current assets . . . . . . . . . 3,851 3,161
---------------- -----------------
Total current assets. . . . . . . . . . . 45,519 39,335
Real estate held for sale or lease, net . 65,289 64,653
Investment in Centaur
Communications, Ltd.. . . . . . . 21,157 20,895
Property and equipment, net . . . . . . . 11,861 11,919
Other assets. . . . . . . . . . . . . . . 8,867 8,919
---------------- -----------------
Total assets. . . . . . . . . . . . . . .$ 152,693 $ 145,721
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and
accrued liabilities . . . . . . . . . $ 5,912 $ 4,573
Current portion of long-term debt . . 17,361 11,428
----------------- -----------------
Total current liabilities . . . . . . . 23,273 16,001
Long-term debt . . . . . . . . . . . . . 30,625 30,737
Other noncurrent liabilities . . . . . . 2,402 1,659
------------------ -----------------
Total liabilities . . . . . . . . . . 56,300 48,397
------------------ -----------------
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $0.01 per
share, 10,000,000 shares authorized,
4,888,128 and 4,876,916 shares
issued and outstanding, respectively . 49 49
Additional paid-in capital . . . . . . . 93,514 93,392
Retained earnings . . . . . . . . . . . 2,208 3,612
Accumulated other comprehensive income . 622 271
---------------- ------------------
Total stockholders' equity . . . . . . . 96,393 97,324
---------------- ------------------
Total liabilities and
stockholders' equity . . . . . . . . . $ 152,693 $ 145,721
================ ==================
See Notes to Consolidated Financial Statements.
- --------------------------------------------------------------------------------
Griffin Land & Nurseries, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands)
(unaudited)
Shares Of Additional
Common Common Paid-In Retained
Stock Stock Capital Earnings
--------- ------- ------------ --------
Balance at
November 30, 2002 . . . 4,864,916 $ 49 $ 93,372 $ 5,961
Net loss . . . . . . . . . - - - (1,652)
Other comprehensive
income . . . . . . . . - - - -
---------- -------- ----------- ------
Balance at
March 1, 2003 . . . . . 4,864,916 $ 49 $ 93,372 $ 4,309
========= ======= ========== =======
Accumulated
Other Total
Comprehensive Comprehensive
Income Total Income (Loss)
------------- ---------- -------------
Balance at
November 30, 2002 . . . $ (128) $ 99,254 $ -
Net loss . . . . . . . . . - (1,652) $ (1,652)
Other comprehensive
income . . . . . . . . . 69 69 69
------------- --------- -----------
Balance at
March 1, 2003 . . . . . $ (59) $ 97,671 $ (1,583)
=============== ========= ============
- --------------------------------------------------------------------------------
Shares Of Additional
Common Common Paid-In Retained
Stock Stock Capital Earnings
--------- ------- ------------ --------
Balance at
November 29, 2003 . . . 4,876,916 $ 49 $ 93,392 $ 3,612
Net loss . . . . . . . . . - - - (1,404)
Exercise of employee
stock options . . . . . 11,212 - 122 -
Other comprehensive
income . . . . . . . . - - - -
---------- -------- ----------- ------
Balance at
February 28, 2004 . . . 4,888,128 $ 49 $ 93,514 $ 2,208
========= ======= ========== =======
Accumulated
Other Total
Comprehensive Comprehensive
Income Total Income (Loss)
------------- ---------- -------------
Balance at
November 29, 2003 . . . . . $ 271 $ 97,324 $ -
Net loss . . . . . . . . . . . - (1,404) $ (1,404)
Exercise of employee
stock options . . . . . . . - 122 -
Other comprehensive
income . . . . . . . . . . 351 351 351
------------- --------- -----------
Balance at
February 28, 2004 . . . . . $ 622 $ 96,393 $ (1,053)
=========== ========= ============
- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
- --------------------------------------------------------------------------------
Griffin Land & Nurseries, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
For the 13 Weeks Ended,
-----------------------
February 28, 2004 March 1, 2003
----------------- -------------
Net loss. . . . . . . . . . . . . . . . . . . $ (1,404) $ (1,652)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization. . . . . . . 1,176 1,072
Loss from equity investment. . . . . . . . 89 290
Deferred income taxes. . . . . . . . . . . (1,036) (34)
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . 1,028 1,396
Inventories. . . . . . . . . . . . . . . . (4,760) (4,783)
Other current assets . . . . . . . . . . . (436) (1,076)
Accounts payable and accrued liabilities . 1,339 676
Other, net . . . . . . . . . . . . . . . . 35 170
------------------- -------------
Net cash used in operating activities . . . . (3,969) (3,941)
------------------- -------------
Investing activities:
Additions to real estate
held for sale or lease . . . . . . . . . . . . (1,385) (415)
Acquisition of 70% interest in
real estate joint venture,
net of cash acquired of $16 . . . . . . . . - (7,419)
Additions to property and equipment . . . . . (224) (248)
Investment in Shemin Acquisition Corporation (143) -
------------------ -------------
Net cash used in investing activities . . . . (1,752) (8,082)
------------------ -------------
Financing activities:
Increase in debt . . . . . . . . . . . . . . 5,925 12,400
Payments of debt . . . . . . . . . . . . . . (196) (157)
Exercise of stock options . . . . . . . . . . 122 -
Other, net . . . . . . . . . . . . . . . . . (129) -
------------------ -------------
Net cash provided by financing activities . . 5,722 12,243
----------------- --------------
Net increase in cash and cash equivalents . . 1 220
Cash and cash equivalents at beginning of period 18 24
----------------- --------------
Cash and cash equivalents at end of period . . $ 19 $ 244
================= ==============
See Notes to Consolidated Financial Statements.
- --------------------------------------------------------------------------------
Griffin Land & Nurseries, Inc.
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
1. Basis of Presentation
The unaudited consolidated financial statements of Griffin Land &
Nurseries, Inc. ("Griffin") include the accounts of Griffin's real estate
division ("Griffin Land") and Griffin's wholly-owned subsidiary, Imperial
Nurseries, Inc. ("Imperial"), and have been prepared in conformity with the
standards of accounting measurement set forth in Accounting Principles Board
Opinion No. 28 and amendments thereto adopted by the Financial Accounting
Standards Board ("FASB"). Also, the accompanying financial statements have been
prepared in accordance with the accounting policies stated in Griffin's audited
2003 Financial Statements included in the Report on Form 10-K as filed with the
Securities and Exchange Commission on February 25, 2004, and should be read in
conjunction with the Notes to Financial Statements appearing in that report. All
adjustments, comprising only normal recurring adjustments, which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods have been reflected. The year end consolidated balance sheet
data as of November 29, 2003 was derived from audited financial statements but
does not include all disclosures required by accounting principles generally
accepted in the United States of America.
The results of operations for the thirteen weeks ended February 28, 2004
are not necessarily indicative of the results to be expected for the full
year. Certain amounts from the prior year have been reclassified to conform
to the current presentation.
Griffin accounts for stock options under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and has adopted SFAS
No. 123 which requires disclosure of the pro forma effect on earnings and
earnings per share of the fair value method of accounting for stock-based
compensation and SFAS No. 148 which prescribes a method of disclosure.
Griffin's results would have been the following pro forma amounts under the
method prescribed by SFAS No. 123.
For the 13 Weeks Ended,
-----------------------
February 28, March 1,
2004 2003
------------ ----------
Net loss, as reported. . . . . . . . . . . . . . . . $ (1,404) $ (1,652)
Total stock based employee compensation
expense determined under fair value
based method for all awards,
net of tax effects. (28) (65)
------------ ----------
Net loss, pro forma (under SFAS No. 123) . . . . . . $ (1,432) (1,717)
============ ==========
Adjusted net loss for computation of
diluted per share results,
proforma (SFAS No. 123). . . . . . . . . . . . . .$ (1,432) $ (1,717)
============ ==========
Basic net loss per common share, as reported . . . . $ (0.29) $ (0.34)
============ ==========
Basic net loss per common share, pro forma
(under SFAS No. 123) . . . . . . . . . . . . . $ (0.29) $ (0.35)
============ ==========
Diluted net loss per common share, as reported . . . $ (0.29) $ (0.34)
============ ==========
Diluted net loss per common share, pro forma
(under SFAS No. 123) . . . . . . . . . . . . . $ (0.29) $ (0.35)
============ ==========
There were no stock options issued during the thirteen weeks ended February
28, 2004. The weighted average fair values of each option granted during the
thirteen weeks ended March 1, 2003 were $6.38, estimated as of the date of grant
using the Black-Scholes option-pricing model. The following weighted average
assumptions were used in the model to calculate the fair value of each option:
expected volatility of approximately 47%; risk free interest rate of 3.03%;
expected option term of 5 years and no dividend yield.
2. Recent Accounting Pronouncements
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of FASB
Statement No. 123." This Statement amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation, and requires enhanced disclosure of information on
stock-based compensation in annual and interim financial statements. Management
has not changed its method of accounting for stock-based compensation, but has
included the required enhanced disclosure.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities (an interpretation of Accounting Research Bulletin
No. 51, Consolidated Financial Statements)," ("Fin No. 46"). Fin No. 46 requires
existing unconsolidated variable interest entities to be included in the
consolidated financial statements of a business enterprise if the primary
beneficiaries of the variable interest entities do not effectively disperse risk
among all parties involved. The requirements of Fin No. 46 are effective for
Griffin in the first quarter of fiscal 2004. The adoption of Fin No. 46 did not
have an impact on Griffin's financial statements.
3. Industry Segment Information
Griffin's reportable segments are defined by their products and services,
and are comprised of the landscape nursery and real estate segments. Management
operates and receives reporting based upon these segments. Griffin has no
operations outside the United States. Griffin's export sales and transactions
between segments are not material.
For the 13 Weeks Ended,
-----------------------
February 28, March 1,
2004 2003
----------- ----------
Net sales and other revenue:
Landscape nursery product sales . . . . . . . . . . $ 422 $ 274
Real estate sales and rental revenue. . . . . . . . 2,673 2,827
----------- ----------
$ 3,095 $ 3,101
=========== ==========
Operating (loss) profit:
Landscape nursery . . . . . . . . . . . . . . . . . $ (873) $ (1,236)
Real estate . . . . . . . . . . . . . . . . . . . . 19 199
------------ ----------
Industry segment totals . . . . . . . . . . . . . . (854) (1,037)
General corporate expense . . . . . . . . . . . . . (543) (453)
------------ ----------
Operating loss. . . . . . . . . . . . . . . . . . . (1,397) (1,490)
Interest expense, net . . . . . . . . . . . . . . . (701) (616)
------------ ----------
Loss before income tax benefit. . . . . . . . . . . $ (2,098) $ (2,106)
============ ==========
February 28, November 29,
2004 2003
----------- -----------
Identifiable assets:
Landscape nursery . . . . . . . . . . . . . . . .$ 54,897 $ 50,904
Real estate . . . . . . . . . . . . . . . . . . . 72,204 71,124
----------- -----------
Industry segment totals . . . . . . . . . . . . . 127,101 122,028
General corporate
(consists primarily of investments) . . . . . 25,592 23,693
----------- ----------
$ 152,693 $ 145,721
=========== ===========
See Note 4 for information on Griffin's equity investment in Centaur.
4. Equity Investment
Griffin accounts for its approximately 35% ownership of the outstanding
common stock of Centaur Communications, Ltd. ("Centaur") under the equity method
of accounting for investments. Centaur reports on a June 30 fiscal year. The
unaudited summarized financial data of Centaur presented below were derived from
consolidated financial information of Centaur for the three month periods ended
February 29, 2004 and February 28, 2003. Griffin's equity loss from Centaur for
the thirteen weeks ended February 28, 2004 and March 1, 2003 includes $92 in
each reporting period for amortization of publishing rights. Griffin's equity
loss from Centaur also reflects adjustments necessary to present Centaur's
results for the three month periods in accordance with generally accepted
accounting principles in the United States of America.
Three Months Ended,
---------------------
February 29, 2004 February 28, 2003
----------------- -------------------
Net sales . . . . . . . . . . $ 25,410 $ 21,104
Costs and expenses. . . . . . 25,664 21,539
--------------------- -------------------
Operating loss. . . . . . . . (254) (435)
Nonoperating income (expense) 169 (307)
--------------------- -------------------
Pretax loss . . . . . . . . . (85) (742)
Income tax benefit. . . . . . (94) (176)
--------------------- -------------------
Net income (loss) . . . . . . $ 9 $ (566)
===================== ===================
As of,
------------------
February 29, 2004 November 30, 2003
------------------ ------------------
Current assets . . . . . . . . . . . . $ 30,668 $ 25,275
Intangible assets. . . . . . . . . . . 10,606 9,732
Other noncurrent assets. . . . . . . . . 11,074 10,975
------------------ ------------------
Total assets . . . . . . . . . . . . . $ 52,348 $ 45,982
================== ==================
Current liabilities. . . . . . . . . . $ 35,106 $ 30,047
Other noncurrent liabilities . . . . . 2,883 2,581
------------------ ------------------
Total liabilities. . . . . . . . . . . 37,989 32,628
Stockholders' equity . . . . . . . . . 14,359 13,354
------------------ ------------------
Total liabilities and
stockholders' equity $ 52,348 $ 45,982
================== ==================
On March 10, 2004, Griffin completed the sale of its equity investment
in Centaur to a newly formed company, Centaur Holdings PLC ("Centaur Holdings").
At the time of the sale, Griffin held 5,428,194 B Ordinary shares of Centaur
common stock. In conjunction with this transaction, Centaur Holdings completed
an initial offering of its common stock at 1.00 pound British Sterling per
share. Centaur Holdings is being traded on the Alternative Investment Market
of the London Stock Exchange. The sale agreement between Griffin, holders
of A Ordinary shares of Centaur and the holder of C Ordinary shares of Centaur
(collectively, the "Sellers") and Centaur Holdings contains certain warranties.
Warranty claims by Centaur Holdings must first exceed 1 million pounds British
Sterling in the aggregate before the Sellers are required to make any payments.
The warranty period expires on September 30, 2005, except for certain
warranties related to income taxes and pension liabilities, which expire on
September 30, 2010.
The consideration received by Griffin included initial cash proceeds
of approximately $69.0 million after estimated transaction expenses of
approximately $1.8 million but before income tax payments. The final amount of
the cash proceeds will be determined based on the amount of cash and working
capital on Centaur's balance sheet at closing and determination of actual
transaction expenses. In addition to the cash proceeds, Griffin received
6,477,150 shares of Centaur Holdings common stock (representing approximately
4.4% of its newly issued outstanding common stock), which was valued at
approximately $11.7 million based on the 1.00 pound British Sterling per share
price of the initial sale of shares by Centaur Holdings and the foreign
currency exchange rate in effect at that time. Griffin is prohibited from
selling its ownership in Centaur Holdings for six months from the date the
transaction was completed.
A portion of the cash proceeds from the sale were used to repay all of
the amount outstanding ($18.4 million) under Griffin's Credit Agreement with
Fleet National Bank. Griffin also expects to make income tax payments
totaling approximately $21.0 million related to the gain on the sale. The
remaining cash, after payment of income taxes and transaction expenses, will
be used for general corporate purposes.
Griffin expects to report a pretax gain on the sale of Centaur in the
thirteen weeks ending May 29, 2004 of approximately $52.0 million, including the
effect of foreign currency exchange, and subject to the determination of the
final amount of cash proceeds and the determination of actual transaction
expenses. Griffin's remaining investment in Centaur Holdings will be recorded
based on the fair market value of that investment. The difference of
approximately $5.7 million, net of tax, between the fair market value of
Griffin's investment in Centaur Holdings and the book value of the pro rata
portion of the investment in Centaur that remained will be reported as other
comprehensive income in the thirteen weeks ending May 29, 2004. Griffin expects
to account for its continuing investment in Centaur Holdings as an available for
sale security under SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," whereby future increases or decreases in the value of
that investment, along with the effect of future changes in the foreign currency
exchange rate, will be included in other comprehensive income (loss) in future
periods. In connection with the sale of Centaur, on February 27, 2004, Griffin
entered into a foreign currency exchange forward contract with Fleet National
Bank to hedge the currency fluctuation of British Sterling between the time the
final agreements on the Centaur sale were executed and the transaction closing
date. There was no cost to Griffin for the foreign currency exchange forward
contract, and Griffin's obligation under the contract was fulfilled with the
proceeds from the sale of Centaur.
5. Long-Term Debt
Long-term debt includes:
February 28, 2004 November 29, 2003
----------------- -----------------
Nonrecourse mortgages:
8.54% due July 1, 2009. . $ 7,896 $ 7,914
6.08% due January 1, 2013 9,567 9,610
8.13% due April 1, 2016 . 5,979 6,019
7.0% due October 1, 2017. 7,506 7,537
----------------- ------------------
Total nonrecourse mortgages . 30,948 31,080
Credit Agreement. . . . . . . 16,650 10,725
Capital leases. . . . . . . . 388 360
------------------ ------------------
Total . . . . . . . . . . . . 47,986 42,165
Less: current portion . . . . 17,361 11,428
----------------- ------------------
Total long-term debt. . . . . $ 30,625 $ 30,737
================= ==================
On December 17, 2002 Griffin completed a $9.75 million nonrecourse mortgage
of two office buildings. Proceeds of the mortgage were used to finance Griffin's
acquisition, completed on December 6, 2002, of a 70% interest in those
buildings. Griffin previously held the remaining 30% interest in those
buildings. The mortgage has a 6.08% rate and a term of ten years, with payments
based on a twenty-five year amortization period.
The amount outstanding under Griffin's Credit Agreement (the "Credit
Agreement") with Fleet National Bank ("Fleet") at February 28, 2004 had a
weighted average interest rate of 3.6%. The Credit Agreement is collateralized
by certain of Griffin's real estate assets and includes financial covenants with
respect to Griffin's fixed charge coverage (as defined), net worth and leverage.
On February 23, 2004, Griffin and Fleet completed the Fourth Amendment (the
"Fourth Amendment") to the Credit Agreement. The Fourth Amendment included a
waiver of the fixed charge coverage covenant as of November 29, 2003, and
required Griffin to pledge the accounts receivable and inventory of Imperial as
additional collateral for the Credit Agreement. The Fourth Amendment also
increased interest rates on overnight and LIBOR based borrowings under the
Credit Agreement by 0.5% each. Under the terms of the Fourth Amendment, Griffin
was required to either (a) complete the sale of Griffin's investment in Centaur
by May 1, 2004 with the proceeds used to pay down outstanding indebtedness under
the Credit Agreement, or (b) raise a minimum of $18 million in debt and equity
financing by June 1, 2004. The completion of the sale of Centaur on March 10,
2004 satisfied Griffin's requirement under the Fourth Amendment to raise
additional capital. A portion of the proceeds from the sale of Centaur were
used to repay all of the amounts outstanding under the Credit Agreement.
At February 28, 2004 and November 29, 2003, the fair values of Griffin's
mortgages were $32.5 million and $32.3 million, respectively. Fair value is
based on the present value of future cash flows discounted at estimated
borrowing rates for comparable risks, maturities and collateral. Management
believes that because of variable interest rates, the amounts included on
Griffin's balance sheets for the Credit Agreement at February 28, 2004 and
November 29, 2003 reflect their fair values.
6. Stock Options
Activity under the Griffin Land & Nurseries, Inc. 1997 Stock Option Plan
(the "Griffin Stock Option Plan") is summarized as follows:
Number of Weighted Avg.
Shares Exercise Price
--------- --------------
Outstanding at November 29, 2003 . . . . 659,542 $ 12.57
Exercised. . . . . . . . . . . . . . . . (11,212) 10.94
---------- --------------
Outstanding at February 28, 2004 . . . . 648,330 $ 12.60
========== ==============
Number of option holders at February 28, 2004 28
Weighted Average
Remaining
Range of Outstanding at Weighted Ave. Contractual Life
Exercise Prices February 28, 2004 Exercise Price (in years)
- --------------- ----------------- -------------- ------------------
Under $3.00. . . . 18,011 $ 1.80 0.8
3.00-$11.00 . . . . 100,172 7.52 2.0
Over $11.00. . . . 530,147 13.92 4.7
-----------------
648,330
=================
At February 28, 2004, 571,719 options outstanding under the Griffin Stock
Option Plan were exercisable with a weighted average price of $12.44 per share.
Subsequent to February 28, 2004, 12,000 options with an average exercise price
of $1.68 per share were exercised.
7. Per Share Results
Basic and diluted per share results were based on the following:
For the 13 Weeks Ended,
-----------------------
February 28, 2004 March 1, 2003
----------------- ------------------
Net loss as reported for
computation of basic and
diluted per share results . . . . . . .$ (1,404) $ (1,652)
================== ==================
Weighted average shares outstanding
for computation of basic
and diluted per share results . . . . . 4,879,000 4,865,000
================== ==================
Incremental shares from the assumed exercise of Griffin stock options were
not included in either period because inclusion of such shares would be
anti-dilutive.
8. Supplemental Financial Statement Information
Other Comprehensive Income
The Statements of Changes in Stockholders' Equity for the thirteen weeks
ended February 28, 2004 and March 1, 2003 include other comprehensive income of
$351 and $69, respectively, reflecting translation adjustments related to
Griffin's equity investment in Centaur.
Inventories
Inventories consist of:
Feb. 28, 2004 Nov. 29, 2003
------------- -------------
Nursery stock. . . . . . . . . $ 35,191 $ 31,076
Materials and supplies . . . . 1,965 1,320
------------- -------------
$ 37,156 $ 32,396
============= =============
Property and Equipment
Property and equipment consist of:
Estimated February 28, November 29,
Useful Lives 2004 2003
------------ ----------- -------------
Land and improvements . $ 4,972 $ 5,003
Buildings. . . . . . . . 10 to 40 years 3,033 3,028
Machinery and equipment. 3 to 20 years 15,514 15,309
----------- -------------
23,519 23,340
Accumulated depreciation . (11,658) (11,421)
----------- -------------
$ 11,861 $ 11,919
=========== ============
Griffin incurred capital lease obligations of $92 in the thirteen weeks
ended February 28, 2004. Griffin did not incur any capital lease obligations
during the thirteen weeks ended March 1, 2003.
Real Estate Held for Sale or Lease
Real estate held for sale or lease consists of:
February 28, 2004
-----------------
Estimated Held for Held for Total
Useful Lives Sale Lease
------------ --------- --------- --------
Land . . . . . . . . . . . . . . $ 1,330 $ 4,101 $ 5,431
Land improvements. . . . . . . . 15 years 9 4,522 4,531
Buildings. . . . . . . . . . . . 40 years - 58,694 58,694
Development costs . . . . . . . 7,118 4,922 12,040
--------- -------- ---------
8,457 72,239 80,696
Accumulated depreciation. . . . - (15,407) (15,407)
--------- --------- ---------
$ 8,457 $ 56,832 $ 65,289
========= ========= =========
November 29, 2003
-----------------
Estimated Held for Held for Total
Useful Lives Sale Lease
------------ --------- -------- --------
Land . . . . . . . . . . . . . $ 1,330 $ 4,101 $ 5,431
Land improvements. . . . . . . 15 years 9 4,522 4,531
Buildings. . . . . . . . . . . 40 years - 57,481 57,481
Development costs . . . . . . 6,880 5,073 11,953
--------- -------- ---------
8,219 71,177 79,396
Accumulated depreciation . . . - (14,743) (14,743)
--------- -------- ---------
$ 8,219 $ 56,434 $ 64,653
========= ======== ========
Real Estate Joint Venture
On December 6, 2002, Griffin acquired the remaining 70% interest in a
joint venture that owned two office buildings of approximately 80,000 square
feet each in Griffin Center in Windsor, Connecticut. Griffin previously held
the remaining 30% interest in the joint venture. Subsequent to the acquisition,
Griffin's investment in the joint venture was terminated. The book value of
Griffin's investment in the joint venture was $3.1 million at the time of the
acquisition (it had been included in other assets at November 30, 2002) and was
reclassified, principally into real estate held for lease. Griffin accounted
for its acquisition of the remaining 70% interest in the real estate joint
venture in accordance with SFAS No. 141 "Business Combinations", which required
the purchase price to be allocated to the assets acquired and liabilities
assumed. Accordingly, the purchase was allocated to real estate held for lease,
intangible assets related to the leases in place, lease commissions and tenant
relationships based upon their fair values. Approximately $1.0 million of the
purchase price was allocated to intangible assets and is being amortized over
periods ranging from five to fifteen years. At February 28, 2004, intangible
assets of $854, net of accumulated amortization, are included in other assets on
Griffin's balance sheet.
9. Commitments and Contingencies
As of February 28, 2004, Griffin had committed purchase obligations of $1.2
million.
Griffin is involved, as a defendant, in various litigation matters arising
in the ordinary course of business. In the opinion of management, based on the
advice of counsel, the ultimate liability, if any, with respect to these matters
will not be material to Griffin's consolidated financial position, results of
operations or cash flows.
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The consolidated financial statements of Griffin Land & Nurseries, Inc.
("Griffin") include the accounts of Griffin's subsidiary in the landscape
nursery business, Imperial Nurseries, Inc. ("Imperial"), and Griffin's
Connecticut and Massachusetts based real estate business ("Griffin Land").
During the periods discussed in this report, Griffin had an equity investment in
Centaur Communications, Ltd. ("Centaur"), a privately held magazine publishing
business based in the United Kingdom. Subsequent to the end of the fiscal
period ended February 28, 2004, Griffin completed the sale of its investment in
Centaur (see Note 4 to Griffin's consolidated financial statements included in
Item 1 of this report).
The significant accounting policies and methods used in the preparation of
Griffin's consolidated financial statements included in Item 1 are consistent
with those used in the preparation of Griffin's fiscal 2003 financial statements
included in Form 10-K as filed with the Securities and Exchange Commission on
February 25, 2004. The preparation of Griffin's financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the dates
of the financial statements and revenue and expenses during the periods
reported. Actual results could differ from those estimates. The significant
accounting estimates used by Griffin in preparation of its financial statements
for the thirteen weeks ended February 28, 2004 are consistent with those used by
Griffin in preparation of its fiscal 2003 financial statements.
Summary
Griffin's results for the thirteen weeks ended February 28, 2004 (the "2004
first quarter") were slightly improved over the results for the thirteen weeks
ended March 1, 2003 (the "2003 first quarter"). Due to the seasonality of its
landscape nursery business, Imperial historically incurs an operating loss in
the first quarter. The 2004 first quarter operating loss at Imperial was lower
than the operating loss in the 2003 first quarter due principally to the timing
of selling, general and administrative expenses. Operating results at Griffin
Land were lower in the 2004 first quarter as compared to the 2003 first quarter
due principally to lower revenue. Griffin's interest expense increased due to
the higher debt outstanding in the current quarter as the result of borrowings
to finance real estate investment and operate the landscape nursery business.
Results of Operations
Net sales and other revenue were $3.1 million in both the 2003 and 2004
first quarters. Net sales and other revenue at Imperial increased by $0.1
million which was offset by a $0.1 million decrease in net sales and other
revenue at Griffin Land.
Net sales and other revenue at Griffin Land decreased from $2.8 million in
the 2003 first quarter to $2.7 million in the 2004 first quarter, reflecting
lower revenue from leasing operations. There were no land sales in either the
2003 or 2004 first quarters. The decrease in revenue from leasing operations
principally reflects lower revenue for tenant services, principally reflecting
less snow removal charges in the 2004 first quarter as compared to the 2003
first quarter. At February 28, 2004, Griffin Land owned 1,130,000 square feet
of industrial, flex and office space, with 870,000 square feet (77%)
leased. At the end of the 2003 first quarter, Griffin Land had 1,013,000 square
feet of industrial, flex and office space, with 885,000 square feet (87%)
leased. The lower percentage of space leased at the end of the 2004 first
quarter and the increase in total square feet available in Griffin Land's
portfolio versus the comparable time last year principally reflects the
completion in the 2003 fourth quarter of the shell of a 117,000 square foot
industrial building that was built on speculation but was not leased at the
end of the 2004 first quarter. Although leasing in the industrial, flex
and office markets where Griffin Land's properties are located was generally
slow in fiscal 2003, activity of prospective tenants increased in the 2004
first quarter, particularly in the market for industrial space. Subsequent to
the end of the 2004 first quarter, Griffin Land entered into leases for
approximately 54,000 square feet of vacant space in the shell of the New
England Tradeport industrial building that was built on speculation in fiscal
2003 and for approximately 15,000 square feet of previously vacant
space in another of Griffin Land's industrial buildings in the New England
Tradeport.
Net sales and other revenue at Imperial increased from $0.3 million in the
2003 first quarter to $0.4 million in the 2004 first quarter. Imperial's
landscape nursery business is highly seasonal, with sales peaking in the spring.
Sales in the winter months that comprise the first quarter (December through
February) are not significant when compared to the full year's sales.
Imperial's 2003 first quarter net sales and other revenue was less than 2% of
its full year net sales and other revenue.
Griffin's consolidated operating loss decreased from $1.5 million in the
2003 first quarter to $1.4 million in the 2004 first quarter. The lower
consolidated operating loss reflects a $0.3 million lower operating loss at
Imperial, partially offset by a decrease of $0.2 million in operating profit at
Griffin Land.
Operating profit at Griffin Land decreased from $0.2 million in the 2003
first quarter to break even in the 2004 first quarter, reflecting the following:
2004 2003
First Qtr. First Qtr.
----------- ------------
(amounts in millions)
Profit from leasing activities before general and
administrative expenses and before depreciation
and amortization expense . . . . . . . . . . . . $ 1.4 $ 1.6
General and administrative expenses . . . . . . . . (0.6) (0.6)
------------ ------------
Profit before depreciation and amortization expense 0.8 1.0
Depreciation and amortization expense . . . . . . . (0.8) (0.8)
------------ ------------
Operating profit. . . . . . . . . . . . . . . . . . $ - $ 0.2
============ ============
Griffin Land's profit from leasing activities before general and
administrative expenses and before depreciation and amortization expense
decreased from $1.6 million in the 2003 first quarter to $1.4 million in the
2004 first quarter due to the $0.1 million decrease in revenue from leasing and
an increase of $0.1 million in higher building operating expenses. The building
operating expense increase reflects higher real estate taxes and higher utility
costs, including costs associated with the shell of the new industrial building
that was completed near the end of last year. Griffin Land's 2004 first
quarter general and administrative expenses and depreciation and amortization
expenses were consistent with the 2003 first quarter.
The operating loss at Imperial decreased from $1.2 million in the 2003
first quarter to $0.9 million in the 2004 first quarter. Due to the seasonality
of its landscape nursery business, Imperial historically incurs an operating
loss in the first quarter. The lower operating loss in the 2004 first quarter
as compared to the 2003 first quarter principally reflects the timing of
selling, general and administrative expenses. Selling expenses decreased
by $0.1 million, due principally to changes in compensation programs, whereby
a greater portion of compensation expenses in fiscal 2004 is based on
commissions, for which the expenses will be incurred when sales are made, as
compared to last year, which had a portion of selling expenses based on
salaries, which are incurred evenly throughout the year. Marketing expenses
were $0.1 million lower in the 2004 first quarter as compared to the 2003
first quarter because of 2003 first quarter expenses incurred in connection
with the new program to sell plants under the "Novalis" trade name. In
addition, general and administrative expenses decreased by $0.1 million in
the 2004 first quarter as compared to the 2003 first quarter principally due
to lower donation and contribution expenses.
Griffin's general corporate expense was $0.5 million in both the 2003 and
2004 first quarters. Griffin's consolidated interest expense increased by $0.1
million from $0.6 million in the 2003 first quarter to $0.7 million in the 2004
first quarter. The increase in interest expense reflects the higher amount of
borrowings outstanding in the 2004 first quarter as compared to the 2003 first
quarter. Griffin's average outstanding debt in the 2004 first quarter was $45.5
million as compared to average outstanding debt of $34.6 million in the 2003
first quarter. The increase in outstanding debt principally reflects borrowings
under Griffin's Credit Agreement with Fleet National Bank to finance Griffin
Land's additions to its real estate assets, including approximately $3.8 million
to build the shell of the new industrial building in fiscal 2003, and to finance
working capital requirements of its businesses.
Griffin's effective income tax benefit rate was 37.3% in the 2004 first
quarter as compared to 35.3% in the 2003 first quarter. The income tax benefit
rates reflect a 34% rate for a federal income tax benefit adjusted for expected
state income tax benefits. At February 28, 2004, Griffin had net deferred tax
assets of $0.7 million that will be realized in the 2004 second quarter as the
result of the sale, at a substantial pretax gain, of Griffin's investment in
Centaur.
Griffin's equity loss from Centaur decreased from $0.3 million in the 2003
first quarter to $0.1 million in the 2004 first quarter. Centaur's publishing
business is seasonal, and Centaur's operating results in the December to
February period are generally lower during that period than at other times of
the year. Subsequent to the end of the 2004 first quarter, Griffin completed
the sale of its investment in Centaur for mostly cash and an approximately 4.4%
equity interest in Centaur Holdings PLC ("Centaur Holdings"), a newly formed
public company. Griffin will report a significant gain on this transaction in
the 2004 second quarter (see Note 4 to Griffin's consolidated financial
statements included in Item 1 of this report).
Liquidity and Capital Resources
Cash used in operating activities increased from $3.9 million in the 2003
first quarter to $4.0 million in the 2004 first quarter. The cash used in
operating activities during Griffin's first quarter reflects working capital
needs of Griffin's businesses and the seasonality of Griffin's landscape nursery
business.
Cash used in investing activities decreased from $8.1 million in the 2003
first quarter to $1.8 million in the 2004 first quarter. The 2003 investing
activities included $7.4 million for the acquisition of a 70% interest in a real
estate joint venture that owned two office buildings of approximately 80,000
square feet each located in Griffin Center in Windsor, Connecticut. Griffin had
previously held the remaining 30% interest. Cash used in investing activities
for additions to real estate in the 2004 first quarter principally reflects
tenant improvements on space in which Griffin Land recently entered into a ten
year lease extension with a major tenant. The cost of the improvements and a
lease inducement payment made in fiscal 2003, in total, is not expected to
exceed $2.5 million. The new lease rates consider these expenditures, including
an interest factor, to provide Griffin Land an appropriate return over the lease
term on its investment of these initial costs. The capital improvements related
to the lease extension were completed in the early part of the 2004 second
quarter. Griffin Land has received a commitment from the mortgage holder on
this building and another building in the New England Tradeport for an
additional $1.5 million mortgage on those properties. The mortgage is expected
to close in the 2004 second quarter.
Additions to property and equipment, principally for Imperial, were
approximately $0.2 million in both the 2003 and 2004 first quarters. The
additions in the 2003 first quarter were generally for the completion of the
expansion of Imperial's northern Florida growing operation that had been ongoing
over the prior four years. Additions to property and equipment in the 2004
first quarter were to construct facilities needed for a portion of the product
to be sold under the new "Novalis" trade name and for general improvements.
Net cash generated from financing activities decreased from $12.2 million
in the 2003 first quarter to $5.7 million in the 2004 first quarter. The
decrease in net cash generated from financing activities reflects the inclusion
in the 2003 first quarter of the proceeds from the $9.75 million nonrecourse
mortgage placed on the two office buildings of the joint venture acquired in
December 2002. Excluding the new mortgage proceeds in the 2003 first quarter,
net cash generated from financing activities increased in the 2004 first quarter
as compared to the 2003 first quarter because of increased borrowings under
Griffin's Credit Agreement in the current period. The higher borrowings
reflected increased cash needs of Griffin's operating businesses.
For the balance of fiscal 2004, Griffin is planning to continue to invest
in its real estate business. In addition to the improvements made in
conjunction with the lease extension described above, additional amounts will be
required to complete the interiors of the shells of an office building and the
industrial building that were built on speculation. A portion of the space in
the industrial building shell was recently leased (see above), with tenant
improvements on the newly leased space to be started in the 2004 second quarter.
The office building is not yet leased. The buildout of the unleased parts of
these buildings will be started as leases are obtained. In 2004, Griffin Land
expects to start construction of the shell of a new approximately 130,000
square foot industrial building in the New England Tradeport. This new
building will be built on speculation. Griffin Land will also continue to seek
approval for its proposed residential developments, including a 50 lot
subdivision in Suffield, Connecticut, the proposed development in Simsbury,
Connecticut that is currently in litigation, and the sale of the remaining
development rights of Griffin Land's Walden Woods development in Windsor,
Connecticut. Griffin Land has an agreement for the sale of those development
rights, but completion of the transaction is subject to the purchaser receiving
approval of its plans from the town's land use commissions. Based on the terms
currently contemplated, proceeds from that sale are expected to be
approximately $3.0 million, with this transaction potentially being closed
before the end of fiscal 2004. Griffin Land intends to proceed with
residential development plans on other of its lands that are also appropriate
for that use.
On February 23, 2004, Griffin completed the Fourth Amendment (the "Fourth
Amendment") to its Credit Agreement. The Fourth Amendment waived Griffin's
noncompliance at November 29, 2003 of the fixed charge coverage covenant of the
Credit Agreement and required Griffin to either (a) complete the sale of the
investment in Centaur by May 1, 2004 with the proceeds being used to pay down
outstanding indebtedness of the Credit Agreement or (b) raise a minimum of
$18 million in debt and equity financing by June 1, 2004. On March 10, 2004,
Griffin completed the sale of its equity investment in Centaur to Centaur
Holdings, a newly formed company. The consideration received by Griffin
included initial cash proceeds of approximately $69.0 million, after estimated
transaction expenses, but before income tax payments. A portion of the cash
proceeds were used to repay the entire amount outstanding under the Credit
Agreement at the time the transaction was completed ($18.4 million).
Completion of this transaction satisfied Griffin's requirement under the
Fourth Amendment to the Credit Agreement to raise additional capital.
Griffin's payments (including principal and interest) under contractual
obligations as of February 28, 2004 are as follows:
Due Due Due Due in
Within From From More Than
Total One Year 1-3 Years 3-5 Years 5 Years
------- -------- --------- --------- ---------
(in millions)
Mortgages. . . . . . . . . . $ 49.7 $ 2.8 $ 5.6 $ 5.6 $ 35.7
2002 Credit Agreement (1). . 16.7 16.7 - - -
Capital Lease Obligations. . 0.4 0.2 0.2 - -
Operating Lease Obligations. 0.8 0.2 0.3 0.3 -
Purchase Obligations (2) . . 1.2 1.2 - - -
Other (3). . . . . . . . . . 1.1 - - - 1.1
------- ---------- --------- --------- --------
$ 69.9 $ 21.1 $ 6.1 $ 5.9 $ 36.8
======= ========== ========= ========= ========
(1) Reflects the amount outstanding for the Credit Agreement as of February
28, 2004. Due to the variable interest rate on this debt, interest for
future periods is not included above.
(2) Includes commitments made as of February 28, 2004 for the purchase of
services and materials for improvements to one of Griffin Land's
industrial buildings related to a lease extension with a major tenant,
a portion of which will be reimbursed by the tenant.
(3) Includes Griffin's deferred compensation plan and other postretirement
benefit liabilities.
Management believes that the significant amount of cash proceeds, after
payment of income taxes and transaction expenses, generated from the completion
of the Centaur transaction and cash flow generated from its operations will be
sufficient to finance the working capital requirements of Griffin's businesses
and fund continued investment in Griffin's real estate assets for the
foreseeable future. Griffin Land may also continue to seek nonrecourse mortgage
placements on selected properties.
FORWARD-LOOKING INFORMATION
The above information in Management's Discussion and Analysis of Financial
Condition and Results of Operations includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Although Griffin believes that its plans, intentions and expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such plans, intentions or expectations will be achieved,
particularly with respect to the improved return on assets of Imperial's
operations, successful completion of negotiations for leasing currently vacant
space, construction of additional facilities in the real estate business,
completion of the sale of the development rights of Walden Woods and approval of
other proposed residential subdivisions. The projected information disclosed
herein is based on assumptions and estimates that, while considered reasonable
by Griffin as of the date hereof, are inherently subject to significant
business, economic, competitive and regulatory uncertainties and contingencies,
many of which are beyond the control of Griffin.
- --------------------------------------------------------------------------------
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices. Changes in these factors could
cause fluctuations in earnings and cash flows.
For fixed rate mortgage debt, changes in interest rates generally affect
the fair market value of the debt instrument, but not earnings or cash flows.
Griffin does not have an obligation to repay any fixed rate debt prior to
maturity, and therefore, interest rate risk and changes in the fair market value
of fixed rate debt should not have a significant impact on earnings or cash
flows until such debt is refinanced, if necessary. For variable rate debt,
changes in interest rates generally do not impact the fair market value of the
debt instrument, but do affect future earnings and cash flows. Griffin had
$16.7 million of variable rate debt outstanding at February 28, 2004. An
increase in interest rates of 1% would have increased Griffin's interest expense
by approximately $31,000 in the thirteen weeks ended February 28, 2004.
Griffin is exposed to market risks from fluctuations in interest rates and
the effects of those fluctuations on market values of Griffin's cash equivalent
short-term investments. These investments generally consist of overnight
investments that are not significantly exposed to interest rate risk, except to
the extent that changes in interest rates will ultimately affect the amount of
interest income earned and cash flow from these investments.
Griffin does not currently have any derivative financial instruments in
place to manage interest costs, but that does not mean that Griffin will not use
them as a means to manage interest rate risk in the future.
In connection with the sale of its investment in Centaur, Griffin entered
into a foreign currency exchange forward contract with Fleet National Bank to
hedge Griffin's exposure to the short-term fluctuation in the foreign currency
exchange rate between the time the definitive agreement on the sale of Centaur
was completed and the closing of the transaction and receipt of the sale
proceeds. There was no cost to Griffin for the contract, and Griffin fulfilled
its obligation under the contract with the proceeds from the sale of Centaur.
Griffin does not have foreign currency exposure in its operations. Griffin
retains an investment in Centaur Holdings PLC, a newly formed public company
traded on the Alternative Investment Market of the London Stock Exchange. The
ultimate liquidation of this investment and conversion of proceeds into United
States currency is subject to future foreign currency exchange rates.
- --------------------------------------------------------------------------------
ITEM 4 . CONTROLS AND PROCEDURES
Griffin maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in Griffin's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and that
such information is accumulated and communicated to Griffin's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Also, we have
investments in certain unconsolidated entities. As we do not control or manage
these entities, our disclosure controls and procedures with respect to such
entities are necessarily substantially more limited than those we maintain with
respect to our consolidated subsidiaries.
As required by SEC Rule 13a-15(b), Griffin carried out an evaluation, under
the supervision and with the participation of Griffin's management, including
Griffin's Chief Executive Officer and Griffin's Chief Financial Officer, of the
effectiveness of the design and operation of Griffin's disclosure controls and
procedures as of the end of the quarter covered by this report. Based on the
foregoing, Griffin's Chief Executive Officer and Chief Financial Officer
concluded that Griffin's disclosure controls and procedures were effective at
the reasonable assurance level.
There has been no change in Griffin's internal controls over financial
reporting during Griffin's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, Griffin's internal
controls over financial reporting.
- --------------------------------------------------------------------------------
PART II OTHER INFORMATION
ITEMS 1 - 5. Not Applicable
ITEM 6. Exhibits And Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- ---------------------
31.1 Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a),
as Adopted Pursuant to Section 301 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 301 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
(b) (1) On January 16, 2004, Griffin filed Form 8-K to announce the
execution of a heads of agreement providing for the sale of all
of the outstanding equity interests in Centaur Communications,
Ltd.
(2) On February 13, 2004, Griffin filed Form 8-K to announce its
2003 fourth quarter and 2003 full year results of operations.
(3) On February 27, 2004, Griffin filed Form 8-K to announce the
execution of a Share Acquisition Agreement providing for the sale
of all of the A, B and C Ordinary Shares in Centaur Communications,
Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRIFFIN LAND & NURSERIES, INC.
/s/ Frederick M. Danziger
--------------------------------------
Date: April 12, 2004
Frederick M. Danziger
President and Chief Executive Officer
/s/ Anthony J. Galici
----------------------------------------
Date: April 12, 2004
Anthony J. Galici
Vice President, Chief Financial Officer
and Secretary
Exhibit 31.1
I, Frederick M. Danziger, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Griffin Land &
Nurseries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15e and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in the report our conclusions about the effectiveness
of the disclosure controls and procedures as of the end of the period covered by
this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial data information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: April 12, 2004
/s/ FREDERICK M. DANZIGER
------------------------
Frederick M. Danziger
President and Chief Executive Officer
- --------------------------------------------------------------------------------
Exhibit 31.2
I, Anthony J. Galici, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Griffin Land &
Nurseries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15e and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures as of the end of the period covered by
this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: April 12, 2004 /s/ANTHONY J. GALICI
--------------------
Anthony J. Galici
Vice President, Chief Financial Officer and
Secretary
- --------------------------------------------------------------------------------
Exhibit 32.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 UNITED STATES CODE SS. 1350
In connection with the Quarterly Report of Griffin Land & Nurseries, Inc.
(the "Company") on Form 10-Q for the quarter ended February 28, 2004 as filed
with the Securities and Exchange Commission on the date hereof (the "Periodic
Report"), I, Frederick M. Danziger, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Periodic Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ FREDERICK M. DANZIGER
-------------------------
Frederick M. Danziger
President and Chief Executive Officer
April 12, 2004
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Exhibit 32.2
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 UNITED STATES CODE SS. 1350
In connection with the Quarterly Report of Griffin Land & Nurseries, Inc.
(the "Company") on Form 10-Q for the quarter ended February 28, 2004 as filed
with the Securities and Exchange Commission on the date hereof (the "Periodic
Report"), I, Anthony J. Galici, Vice President, Chief Financial Officer and
Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Periodic Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ ANTHONY J. GALICI
---------------------
Anthony J. Galici
Vice President, Chief Financial Officer and
Secretary
April 12, 2004
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