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2001 Annual Report
Notes to Consolidated Financial Statements (5-8)
Note 5. Property - net
Depreciation and amortization expense was $5.6 million for 2001 and $7.3 million for 2000. In fiscal 2001, the Company recognized a gain of $200,000 on the sale of $5.5 million of property and equipment.
In accordance with SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," Sunkist capitalized $450,000 and $215,000, respectively, of certain internal and external costs incurred in the development of internal-use computer software in 2001 and 2000.
The Company's Research Division builds various types of packinghouse machinery and equipment which it leases to both member and non-member packinghouses. In addition, the Company leases excess office space at its corporate headquarters location to various tenants. All such leases are classified as operating leases under the provisions of Statement of Financial Accounting Standards No. 13, "Accounting for Leases." Rental income recognized on these leases totaled $6.8 million and $7.6 million in 2001 and 2000, respectively, and is included in other revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss). At October 31, 2001, the Company's minimum future rental income on non-cancelable operating leases, for the years indicated, was as follows: $5.3 million for 2002; $3.0 million for 2003; $1.1 million for 2004; $200,000 for 2005; and $100,000 for 2006. These minimum future amounts do not include contingent rentals, which may be received under certain leases of equipment on the basis of the amount of fruit handled on such equipment. Such income totaled $654,000 and $659,000 in 2001 and 2000, respectively.
The Company's investment in equipment leased to packinghouses subject to these operating leases totaled $16 million as of October 31, 2001, and is included in machinery, equipment, and fixtures in the above table. Accumulated depreciation on such assets totaled $11 million as of October 31, 2001.
Note 6. Other Assets
Other assets as of October 31, 2001 includes $14.2 million of purchased lemon oil as part of an agreement with an outside party and $5 million of deferred cost related to a rebate paid to one of the Company's customers.
(See Note 12. "Commitments and Contingencies" for additional information).
Note 7. Short-term Obligations
Short-term obligations outstanding as of October 31, 2001 and 2000 included $3.4 million and $7.6 million, respectively, relating to the Company's deferred payment program, under which member and affiliated packinghouses may request that the Company defer, on a short-term basis, fruit and other payments that are otherwise due them. Such future payments, and the interest thereon (2.03 percent at October 31, 2001), are made by the Company at the request of the respective packinghouses.
The Company is authorized by its Board to utilize short-term debt to finance its daily operations. Such debt can include lines of credit with the National Bank for Cooperatives ("CoBank") and several commercial banks, up to a combined maximum amount outstanding at any one time of $62.5 million. At October 31, 2001, the Company had $5.5 million of unsecured debt outstanding at an interest rate of 2.77%. At October 31, 2000, the Company had $17.4 million of unsecured debt outstanding at an interest rate of 6.94%.
Note 8. Trade Payables and Other Accrued Liabilities
Trade payables and accrued liabilities include various outstanding payments due to the Company's vendors, its trade partners, and various agencies as of October 31, 2001 and 2000. These payables and accrued liabilities result primarily from the Company's normal operating activities.
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