** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

----

 

**FORM 10-Q**

 

**ý        QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF**

**THESECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended  March 30, 2002**

 

**OR**

 

**o        TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF**

**THESECURI­TIES EXCHANGE ACT OF 1934**

 

**Forthe transition period from                    to                   .**

 

**Commissionfile number  000-23483**

 

 

**COLOR SPOTNURSERIES, INC.**

(Exact Name ofRegistrant as Specified in Its Charter)

 

 
| **Delaware**                                                    |               | **68-0363266**                        |
|-----------------------------------------------------------------|--------------------|---------------------------------------|
| (State or Other  Jurisdiction of Incorporation or Organization) |               | (I.R.S. Employer  Identification No.) |
|                                                            |               |                                  |
| **3478 Buskirk Avenue, Suite 260,  Pleasant Hill, CA**          |               | **94523**                             |
| (Address of Principal  Executive Offices)                       |               | (Zip Code)                            |
|                                                            |               |                                  |
| Registrant’s Telephone  Number, Including Area Code        | **(925) 934-4443** |                                  |
|                                                                 |                    |                                       |  |

 

 

Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes  ý                        No  o

 

As of May 1, 2002,the Registrant had 7,186,008 shares of its common stock outstanding.

 

 

 

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** **

**COLOR SPOT NURSERIES, INC.**

 

 

 

**FORWARD-LOOKING STATEMENTS**

 

*Certainstatements under the captions “Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and “Item 3. Quantitative andQualitative Disclosures About Market Risk,” and elsewhere throughout thisQuarterly Report on Form 10-Q (“Quarterly Report”) of Color Spot Nurseries,Inc. which are not historical in nature are forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933 and Section 21E of theSecurities Exchange Act of 1934.  Forward-looking statements deal with the current intentions, beliefs andexpectations of management with respect to the Company’s business and are typicallyidentified by phrases such as “the Company plans” or “Management believes” andother phrases of similar meaning.  Thesestatements involve known and unknown risks and other factors which may causeactual results, levels of activity, performance or achievements to differ,perhaps materially, from anticipated results. These risks and uncertainties include, among others:*

 

•                  TheCompany’s substantial leverage and debt service;

 

•                  restrictionsimposed by debt covenants;

 

•                  theuncertainty of additional financing to fund future operating and capital needs;

 

•                  weatherand general agricultural risks;

 

•                  seasonalityand the variability of quarterly results;

 

•                  dependenceon major customers such as Home Depot;

 

•                  regulatoryconstraints and changes in laws or regulations concerning the gardening industry;

 

•                  laborlaws and changes in the minimum wage;

 

•                  theshort operating history under current management;

 

•                  sensitivityto price increases of certain raw materials, fuel and utilities;

 

•                  dependenceon leased facilities;

 

•                  lackof a market for the Company’s securities; and

 

•                  otherfactors as may be identified from time to time in the Company’s filings withthe Securities and Exchange Commission or in press releases.

 

*Fora discussion of these factors and others, please see “Management’s Discussionand Analysis of Financial Condition and Results of Operation — Certain BusinessConsiderations” of the Company’s Annual Report on Form 10-K for the periodended December 31, 2001 (as filed with the Securities and Exchange Commissionon April 2, 2002). Readers are cautioned not to place undue reliance onforward-looking statements made in, or incorporated by reference into, thisQuarterly Report or other filings with the Securities and Exchange Commission,any document or statement referring to this Quarterly Report or press releases.*

 

 

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**COLOR SPOT NURSERIES, INC.**

 

 

**INDEX**

 

**                                                                                                                                                                                                               **

 
| **Part I — Financial Information** |                                                                                                       |
|-----------------------------------------|------------------------------------------------------------------------------------------------------------|
|                                    |                                                                                                       |   |
| Item 1.                                 | Financial Statements:                                                                                      |   |
|                                    |                                                                                                       |   |
|                                    | Consolidated Balance Sheets as of  March 30, 2002 and December 31, 2001                                    |   |
|                                    |                                                                                                       |   |
|                                    | Consolidated  Statements of Operations for the Three Months Ended March 30, 2002 and March  31, 2001       |   |
|                                    |                                                                                                       |   |
|                                    | Consolidated  Statement of Changes in Stockholders’ Equity for the Three Months Ended March  30, 2002 |   |
|                                    |                                                                                                       |   |
|                                    | Consolidated  Statements of Cash Flow for the Three Months Ended March 30, 2002 and March  31, 2001        |   |
|                                    |                                                                                                       |   |
|                                    | Condensed Notes to Consolidated  Financial Statements as of March 30, 2002                                 |   |
|                                    |                                                                                                       |   |
| Item 2.                                 | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                |   |
|                                    |                                                                                                       |   |
| Item  3.                                | Quantitative and Qualitative  Disclosure About Market Risk                                                 |   |
|                                    |                                                                                                       |   |
| **Part II — Other  Information**   |                                                                                                       |
|                                    |                                                                                                       |   |
| Item 1.                                 | Legal Proceedings                                                                                          |   |
|                                    |                                                                                                       |   |
| Item 2.                                 | Changes in Securities and Use of  Proceeds                                                                 |   |
|                                    |                                                                                                       |   |
| Item 3.                                 | Defaults Upon Senior Securities                                                                            |   |
|                                    |                                                                                                       |   |
| Item 4.                                 | Submission of Matters to a Vote of  Security Holders                                                       |   |
|                                    |                                                                                                       |   |
| Item 5.                                 | Other Information                                                                                          |   |
|                                    |                                                                                                       |   |
| Item 6.                                 | Exhibits and Reports  on Form 8-K                                                                          |   |
|                                    |                                                                                                       |   |
| Signatures                              |                                                                                                       |   |

 

 

 

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**COLOR SPOTNURSERIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE****SHEETS**

**(in thousands, except share data)**

** **

 
|                                                                                       |       | **March 30,**   |    | **December  31,** |   |
|--------------------------------------------------------------------------------------------|------------|-----------------|---------|-------------------|--------|
|                                                                                       |       | **2002**        |    | **2001**          |   |
|                                                                                       |       | **(Unaudited)** |    |              |   |
| **ASSETS**                                                                                 | ** ** |
| CURRENT ASSETS:                                                                            |       |            |    |              |   |
| Cash                                                                                       |       | $               | 918     |              | $      | 2,474 |   |
| Accounts  receivable, net of allowances of $1,893 and $1,610, respectively                 |       | 22,950          |    | 10,955            |   |
| Receivables from  employees                                                                |       | 1,019           |    | 1,335             |   |
| Inventories, net                                                                           |       | 63,449          |    | 48,637            |   |
| Prepaid expenses  and other                                                                |       | 1,236           |    | 1,558             |   |
|                                                                                       |       |            |    |              |   |
| Total current  assets                                                                      |       | 89,572          |    | 64,959            |   |
|                                                                                       |       |            |    |              |   |
| CHRISTMAS TREE  INVENTORIES                                                                |       | 10,363          |    | 8,760             |   |
| PROPERTY, PLANT  AND EQUIPMENT, net                                                        |       | 46,080          |    | 47,499            |   |
| INTANGIBLE  ASSETS, net                                                                    |       | 45,698          |    | 46,325            |   |
| NOTES RECEIVABLE  AND  OTHER ASSETS                                                   |       | 692             |    | 639               |   |
|                                                                                       |       |            |    |              |   |
| Total assets                                                                               |       | $               | 192,405 |              | $      | 168,182 |   |
|                                                                                       |       |            |    |              |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                    | ** ** |
| CURRENT  LIABILITIES:                                                                      |       |            |    |              |   |
| Accounts payable                                                                           |       | $               | 15,369  |              | $      | 6,313 |   |
| Bank overdrafts                                                                            |       | 4,773           |    | 5,314             |   |
| Accrued  liabilities                                                                       |       | 16,077          |    | 14,544            |   |
| Dividends  payable to stockholders                                                         |       | 762             |    | 738               |   |
| Current  maturities of long-term debt                                                      |       | 49,068          |    | 36,027            |   |
|                                                                                       |       |            |    |              |   |
| Total current  liabilities                                                                 |       | 86,049          |    | 62,936            |   |
|                                                                                       |       |            |    |              |   |
| LONG-TERM DEBT                                                                             |       | 79,987          |    | 80,246            |   |
| OTHER LONG-TERM  LIABILITIES                                                               |       | 600             |    | 600               |   |
|                                                                                       |       |            |    |              |   |
| Total  liabilities                                                                         |       | 166,636         |    | 143,782           |   |
|                                                                                       |       |            |    |              |   |
| REDEEMABLE  PREFERRED STOCK (See Note 6)                                                   |       | 114,144         |    | 108,405           |   |
| REDEEMABLE  COMMON STOCK, $0.001 par value, 1,080,510 shares                               |       |            |    |              |   |
| issued and  outstanding                                                                    |       | 22              |    | 22                |   |
| STOCKHOLDERS’  EQUITY (DEFICIT):                                                      |       |            |    |              |   |
| Common stock,  $0.001 par value, 50,000,000 shares authorized, 6,105,498                   |       |            |    |              |   |
| shares issued  and outstanding                                                             |       | 12              |    | 12                |   |
| Additional  paid-in capital                                                                |       | 51,846          |    | 51,846            |   |
| Treasury stock,  5,989,238 shares                                                          |       | (45,651         | )       | (45,651           | )      |
| Warrants,  825,000 exercisable at $0.01 per share                                          |       | 8,250           |    | 8,250             |   |
| Accumulated  deficit                                                                       |       | (102,854        | )       | (98,484           | )      |
|                                                                                       |       |            |    |              |   |
| Total  stockholders’ deficit                                                          |       | (88,397         | )       | (84,027           | )      |
|                                                                                       |       |            |    |              |   |
| Total  liabilities and stockholders’ deficit                                          |       | $               | 192,405 |              | $      | 168,182 |   |
|                                                                                       |       |            |    |              |   |
|                                                                                       |       |            |    |              |   |
|                                                                                       |       |            |    |              |   |
| (The accompanying notes  are an integral part of these consolidated financial statements.) |

 

 

1

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**COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in thousands, except per share data)**

 

 
|                                     |   | **Three  Months Ended** |       |
|------------------------------------------|--------|-------------------------|------------|
|                                     |   | **March 30,**           |       | **March 31,** |   |
|                                     |   | **2002**                | ** ** | **2001** |   |
|                                     |   | **(Unaudited)**         |       | **(Unaudited)** |   |
|                                     |   |                    |       |   |   |
| NET SALES                                |   | $                       | 39,084     |   | $ | 42,089 |   |
| COST OF SALES                            |   | 19,632                  |       | 22,442 |   |
|                                     |   |                    |       |   |   |
| Gross profit                             |   | 19,452                  |       | 19,647 |   |
|                                     |   |                    |       |   |   |
| SALES, MARKETING  AND DELIVERY EXPENSES  |   | 9,821                   |       | 10,263 |   |
| GENERAL AND  ADMINISTRATIVE EXPENSES     |   | 4,795                   |       | 5,146 |   |
| AMORTIZATION OF  INTANGIBLE ASSETS       |   | 29                      |       | 509 |   |
|                                     |   |                    |       |   |   |
| Income from  operations                  |   | 4,807                   |       | 3,729 |   |
|                                     |   |                    |       |   |   |
| INTEREST EXPENSE                         |   | 3,411                   |       | 4,460 |   |
| OTHER EXPENSE,  net                      |   | 3                       |       | 184 |   |
|                                     |   |                    |       |   |   |
| Income (loss)  before income taxes       |   | 1,393                   |       | (915 | ) |
|                                     |   |                    |       |   |   |
| INCOME TAX  BENEFIT                      |   | 0                       |       | 190 |   |
|                                     |   |                    |       |   |   |
| Net income  (loss)                       |   | 1,393                   |       | (725 | ) |
|                                     |   |                    |       |   |   |
| STOCK DIVIDENDS  / ACCRETION             |   | 5,763                   |       | 2,181 |   |
|                                     |   |                    |       |   |   |
| Net loss  applicable to common stock     |   | $                       | (4,370     | ) | $ | (2,906 | ) |
|                                     |   |                    |       |   |   |
| Basic and  diluted loss per common share |   | $                       | (0.61      | ) | $ | (0.42 | ) |
|                                     |   |                    |       |   |   |
| Shares used in  per share calculation    |   | 7,186,008               |       | 6,948,597 |   |
|                                     |   |                    |       |   |   |
|                                     |   |                    |       |   |   |
|                                     |   |                    |       |   |   |
|                                     |   |                    |       |   |   |
|                                     |   |                    |       |   |   |
|                                     |

 

 

 

 

(The accompanying notesare an integral part of these consolidated financial statements.)

 

2

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**COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)**

**(in thousands, except common shares)**

** **

 
|                                |   |       |   |       |   |           |   |         |   |         |    | **Retained**     |   | **Total**         |   |                  |     |
|-------------------------------------|--------|------------|--------|------------|--------|----------------|--------|--------------|--------|--------------|---------|------------------|--------|-------------------|--------|-----------------------|----------|
|                                |   |       |   |       |   | **Additional** |   |         |   |         |    | **Earnings**     |   | **Stockholders'** |   |                  |     |
|                                |   | **Common** |   | **Common** |   | **Paid-In**    |   | **Treasury** |   |         |    | **(Accumulated** |   | **Equity**        |   | **Comprehensive**     |     |
|                                |   | **Shares** |   | **Stock**  |   | **Capital**    |   | **Stock**    |   | **Warrants** |    | **Deficit)**     |   | **(Deficit)**     |   | **Income (Los****s)** |     |
|                                |   |       |   |       |   |           |   |         |   |         |    |             |   |              |   |                  |     |
| Balance, December 31, 2001          |   | 6,105,498  |   | $          | 12     |           | $      | 51,846       |   | $            | (45,651 | )                | $      | 8,250             |   | $                     | (98,484  | ) | $ | (84,027 | ) | $ | (24,550 | ) |
|                                |   |       |   |       |   |           |   |         |   |         |    |             |   |              |   |                  |     |
| Accretion of preferred stock        |   | -          |   | -          |   | -              |   | -            |   | -            |    | (1,326           | )      | (1,326            | )      | -                     |     |
| Preferred stock dividends           |   | -          |   | -          |   | -              |   | -            |   | -            |    | (4,437           | )      | (4,437            | )      | -                     |     |
| Net income                          |   | -          |   | -          |   | -              |   | -            |   | -            |    | 1,393            |   | 1,393             |   | 1,393                 |     |
|                                |   |       |   |       |   |           |   |         |   |         |    |             |   |              |   |                  |     |
| Balance, March 30, 2002 (unaudited) |   | 6,105,498  |   | $          | 12     |           | $      | 51,846       |   | $            | (45,651 | )                | $      | 8,250             |   | $                     | (102,854 | ) | $ | (88,397 | ) | $ | 1,393 |   |
|                                |   |       |   |       |   |           |   |         |   |         |    |             |   |              |   |                  |     |

 

 

 

 

 

 

 

 

(The accompanying notesare an integral part of these consolidated financial statements.)

 

3

----

 

**COLOR SPOT NURSERIES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOW**

**(inthousands)**

 

 
|                                                                             |   | **Three  Months Ended** |   |
|----------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                             |   | **March 30,**           |   | **March 31,** |   |
|                                                                             |   | **2002**                |   | **2001** |   |
|                                                                             |   | **(Unaudited)**         |   | **(Unaudited)** |   |
|                                                                             |   |                    |   |   |   |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                           |   |                    |   |   |   |
| Net income  (loss)                                                               |   | $                       | 1,393  |   | $ | (725 | ) |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |   |                    |   |   |   |
| Depreciation and  amortization                                                   |   | 1,916                   |   | 2,089 |   |
| Other losses  (gains)                                                            |   | (513                    | )      | 180 |   |
| Interest paid in  kind                                                           |   | 269                     |   | 182 |   |
| Deferred fees  and expenses                                                      |   | 598                     |   | 510 |   |
| Deferred income  taxes                                                           |   | 0                       |   | (190 | ) |
| Changes in  operating assets and liabilities:                                    |   |                    |   |   |   |
| Increase in  accounts receivable                                                 |   | (11,679                 | )      | (11,091 | ) |
| Increase in  inventories                                                         |   | (14,812                 | )      | (13,563 | ) |
| Decrease  (increase) in prepaid expenses and other current assets                |   | 322                     |   | (124 | ) |
| Increase in  Christmas tree inventory                                            |   | (589                    | )      | (294 | ) |
| Decrease  (increase) in notes receivable and other assets                        |   | (53                     | )      | 205 |   |
| Increase in  accounts payable                                                    |   | 9,056                   |   | 4,864 |   |
| Increase in  accrued liabilities                                                 |   | 524                     |   | 1,190 |   |
|                                                                             |   |                    |   |   |   |
| Net cash used in  operating activities                                           |   | (13,568                 | )      | (16,767 | ) |
|                                                                             |   |                    |   |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                           |   |                    |   |   |   |
| Purchases of  fixed assets                                                       |   | (473                    | )      | (1,342 | ) |
| Proceeds from  sale of fixed assets                                              |   | 0                       |   | 432 |   |
|                                                                             |   |                    |   |   |   |
| Net cash used in  investing activities                                           |   | (473                    | )      | (910 | ) |
|                                                                             |   |                    |   |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                           |   |                    |   |   |   |
| Net increase  (decrease) in bank overdrafts                                      |   | (541                    | )      | 1,840 |   |
| Net borrowings  under revolving line of credit                                   |   | 13,121                  |   | 16,258 |   |
| Repayments of  long-term debt                                                    |   | (95                     | )      | (109 | ) |
|                                                                             |   |                    |   |   |   |
| Net cash  provided by financing activities                                       |   | 12,485                  |   | 17,989 |   |
|                                                                             |   |                    |   |   |   |
| NET INCREASE  (DECREASE) IN CASH                                                 |   | (1,556                  | )      | 312 |   |
|                                                                             |   |                    |   |   |   |
| CASH AT  BEGINNING OF PERIOD                                                     |   | 2,474                   |   | 874 |   |
| CASH AT END OF  PERIOD                                                           |   | $                       | 918    |   | $ | 1,186 |   |
|                                                                             |   |                    |   |   |   |
| SUPPLEMENTAL  DISCLOSURE OF CASH FLOW INFORMATION:                               |   |                    |   |   |   |
| Cash paid during  the period for:                                                |   |                    |   |   |   |
| Interest                                                                         |   | $                       | 3,002  |   | $ | 1,099 |   |
| Income taxes                                                                     |   | $                       | -      |   | $ | - |   |
|                                                                             |   |                    |   |   |   |

 

(The accompanying notesare an integral part of these consolidated financial statements.)

 

4

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**COLOR SPOT NURSURIES, INC.**

**CONDENSEDNOTES****TO CONSOLIDATED FINANCIAL STATEMENTS**

**March 30, 2002**

 

 

 

**Note 1 — Basis of Presentation,Operations and Liquidity**

 

The consolidatedfinancial statements of Color Spot Nurseries, Inc. (the “Company”) as of March30, 2002, and for the three months ended March 30, 2002 and March 31, 2001 areunaudited.  However, in the opinion ofmanagement, these financial statements reflect all adjustments (of a normal andrecurring nature) that are necessary for a fair presentation of the Company’sfinancial position, results of operations and cash flows for the interimperiods. The preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from thoseestimates. Accounting measurements at interim dates inherently involve greaterreliance on estimates than at year-end. The Company’s operations are highlyseasonal and the results of operations for the interim periods are notnecessarily indicative of the results to be expected for the entire year.

 

The informationcontained in the following notes to the consolidated financial statements iscondensed from that which would appear in the annual consolidated financialstatements.  Accordingly, thesefinancial statements should be read in conjunction with the Company’s annualfinancial statements for the fiscal year ended December 31, 2001, contained inits Annual Report on Form 10-K filed with the Securities and ExchangeCommission on April 2, 2002.

 

The Company is one of thelargest wholesale nurseries in the United States, based on revenue andgreenhouse square footage. The Company provides a wide assortment of highquality plants, including packaged bedding plants, flowering potted plants,groundcover, ornamental plants and shrubs, and fresh-cut Christmas trees. As ofMarch 30, 2002, the Company operates 13 production facilities located in 4states. The Company also owns or leases growing fields for Christmas trees inOregon, Michigan, North Carolina, and Tennessee.  The Company sells primarily to leading home centers and massmerchants, and to independent garden centers and commercial landscapers,located predominantly in California, Texas and other western states.  The Company conducts its operations throughone reportable segment.

 

As of March 30, 2002, theCompany had $129.1 million of debt and an accumulated deficit of $102.9million. The Company is highly leveraged and has significant debt serviceobligations.  The Company’s debt serviceobligations have important consequences to holders of its debt, stock andwarrants, including the following: (i) a substantial portion of its cash flowfrom operations will be dedicated to the payment of principal and interest onits indebtedness, thereby reducing the funds available for operations,acquisitions, future business opportunities and other purposes and increasingits vulnerability to adverse general economic and industry conditions; (ii) itsleveraged position may increase its vulnerability to competitive pressures;(iii) the financial covenants and other restrictions contained in the currentcredit agreement with Fleet Capital Corporation, as agent, the securitiespurchase agreement with Catalyst Equity Fund, L.P., the indenture for the 13%notes, and the certificate of designation for the Series A Preferred Stock andSeries B Preferred Stock will require the Company to meet certain financialtests and will restrict its ability to borrow additional funds, to dispose ofassets or to pay cash dividends on, or repurchase, preferred or common stock;and (iv) funds available for working capital, capital expenditures,acquisitions and general corporate purposes may be limited.

 

 

 

 

 

 

 

 

 

 

5

----

 

** **

 
| **Note 2  — Inventories**                                                                    |                             |            |   |              |
|---------------------------------------------------------------------------------------------------|----------------------------------|-----------------|--------|-------------------|
|                                                                                              |                             |            |   |              |
| Inventories at  March 30, 2002 and December 31, 2001, consisted of the following (in  thousands): |                             |            |   |
|                                                                                              |                             |            |   |              |   |
|                                                                                              |                             | **March 30,**   |   | **December  31,** |   |
|                                                                                              |                             | **2002**        |   | **2001**          |   |
|                                                                                              |                             | **(Unaudited)** |   |              |   |
|                                                                                              | Current:                         |            |   |              |   |   |
|                                                                                              | Plants, shrubs  and ground cover |            | $      | 62,141            |   | $ | 47,418 |   |
|                                                                                              | Raw materials  and supplies      |            | 4,849  |              | 4,077 |   |
|                                                                                              | Inventory  reserves              |            | (3,541 | )                 | (2,858 | ) |
|                                                                                              | Total current  inventories       |            | 63,449 |              | 48,637 |   |
|                                                                                              | Non-current:                     |            |   |              |   |   |
|                                                                                              | Christmas trees                  |            | 10,363 |              | 8,760 |   |
|                                                                                              | Total  inventories               |            | $      | 73,812            |   | $ | 57,397 |   |
|                                                                                                   |                                  |                 |        |                   |  |  |  |  |

 

 

 

 

 
| **Note 3 — Property, Plant and  Equipment**                                                                    |                                 |            |       |              |    |
|---------------------------------------------------------------------------------------------------------------------|--------------------------------------|-----------------|------------|-------------------|---------|
|                                                                                                                |                                 |            |       |              |    |
| Property, plant  and equipment at March 30, 2002 and December 31, 2001, consisted of the  following (in thousands): |                                 |
|                                                                                                                |                                 |            |       |              |    |
|                                                                                                                |                                 | **March 30,**   |       | **December  31,** |    |
|                                                                                                                |                                 | **2002**        |       | **2001**          |    |
|                                                                                                                |                                 | **(Unaudited)** | ** ** |              |    |
|                                                                                                                | Land and land  improvements          |            | $          | 10,459            |    | $ | 10,459 |   |
|                                                                                                                | Greenhouses and  buildings           |            | 23,523     |              | 23,523  |   |
|                                                                                                                | Furniture and  fixtures              |            | 10,546     |              | 10,343  |   |
|                                                                                                                | Machinery and  equipment             |            | 21,229     |              | 21,214  |   |
|                                                                                                                | Leasehold  improvements              |            | 10,485     |              | 10,438  |   |
|                                                                                                                | Assets under  capital leases         |            | 564        |              | 564     |   |
|                                                                                                                | Construction in  progress            |            | 571        |              | 368     |   |
|                                                                                                                |                                 |            | 77,377     |              | 76,909  |   |
|                                                                                                                | Less:  Accumulated depreciation      |            | (31,297    | )                 | (29,410 | ) |
|                                                                                                                | Total property,  plant and equipment |            | $          | 46,080            |    | $ | 47,499 |   |
|                                                                                                                |                                 |            |       |              |    |
|                                                                                                                     |                                      |                 |            |                   |         |  |  |  |

 

 

 

 

 

 

 

 

 

6

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| **Note 4 — Intangible Assets**                                                                     |                            |            |       |              |   |
|---------------------------------------------------------------------------------------------------------|---------------------------------|-----------------|------------|-------------------|--------|
|                                                                                                    |                            |            |       |              |   |
| Intangible  assets at March 30, 2002 and December 31, 2001, consisted of the following  (in thousands): |                            |            |
|                                                                                                    |                            |            |       |              |   |
|                                                                                                    |                            | **March 30,**   |       | **December  31,** |   |
|                                                                                                    |                            | **2002**        |       | **2001**          |   |
|                                                                                                    |                            | **(Unaudited)** | ** ** |              |   |
|                                                                                                    |                            |            |       |              |   |
|                                                                                                    | Goodwill                        |            | $          | 47,517            |   | $ | 47,517 |   |
|                                                                                                    | Financing costs                 |            | 4,381      |              | 4,381  |   |
|                                                                                                    | Non-compete  agreements         |            | 1,694      |              | 1,694  |   |
|                                                                                                    | Other                           |            | 916        |              | 916    |   |
|                                                                                                    | Total intangible  assets        |            | 54,508     |              | 54,508 |   |
|                                                                                                    | Less:  Accumulated amortization |            | (8,810     | )                 | (8,183 | ) |
|                                                                                                    | Total intangible  assets, net   |            | $          | 45,698            |   | $ | 46,325 |   |
|                                                                                                    |                            |            |       |              |   |
|                                                                                                         |                                 |                 |            |                   |        |  |  |  |

** **

 

 

 

                
| **Note  5 — Debt**                                                                   |                                             |            |       |             |    |
|-------------------------------------------------------------------------------------------|--------------------------------------------------|-----------------|------------|------------------|---------|
|                                                                                      |                                             |            |       |             |    |
| Debt at March  30, 2002 and December 31, 2001, consisted of the following (in thousands): |                                             |            |       |
|                                                                                      |                                             |            |       |
|                                                                                      |                                             | **March 30,**   |       | **December 31,** |    |
|                                                                                      |                                             | **2002**        |       | **2001**         |    |
|                                                                                      |                                             | **(Unaudited)** | ** ** |             |    |
|                                                                                      |                                             |            |       |             |    |
|                                                                                      | Revolving  line of credit                        |            | $          | 48,903           |    | $ | 35,782 |   |
|                                                                                      | Catalyst Note                                    |            | 12,000     |             | 12,000  |   |
|                                                                                      | Subordinated  Notes, including premium of $7,351 |            | 60,557     |             | 60,805  |   |
|                                                                                      | Heller Note,  including premium of $1,605        |            | 6,415      |             | 6,411   |   |
|                                                                                      | Acquisition note                                 |            | 1,000      |             | 1,000   |   |
|                                                                                      | Other debt                                       |            | 180        |             | 275     |   |
|                                                                                      | Total debt                                       |            | 129,055    |             | 116,273 |   |
|                                                                                      | Less:  current maturities                   |            | (49,068    | )                | (36,027 | ) |
|                                                                                      | Long-term  portion                               |            | $          | 79,987           |    | $ | 80,246 |   |
|                                                                                           |                                                  |                 |            |                  |         |  |  |  |

 

                The revolving lineof credit represents borrowings under the Company’s credit agreement with FleetCapital Corporation, as agent (“Credit Agreement”) which provides up to $55.0million of credit, of which  $10.0million is available without limitation from October 1, 2001 through April 30,2002, $8.0 million is available without limitation from October 1, 2002 throughApril 30, 2003, and the remainder is subject to certain borrowing baselimitations based upon a percentage of eligible inventory and eligible accountsreceivable.  The Credit Agreement alsoincludes a $5.0 million maximum letter of credit facility.  As of March 30, 2002, a total of $48.9million was outstanding and an additional $2.7 million was available under theCredit Agreement.

 

 

7

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** **

 

 
| **Note  6 — Redeemable Preferred Stock**                                                                    |                              |            |       |              |   |
|------------------------------------------------------------------------------------------------------------------|-----------------------------------|-----------------|------------|-------------------|--------|
|                                                                                                             |                              |            |       |              |   |
| Redeemable preferred  stock at March 30, 2002 and December 31, 2001, consisted of the following (in  thousands): |                              |
|                                                                                                             |                              |            |       |              |   |
|                                                                                                             |                              | **March 30,**   |       | **December  31,** |   |
|                                                                                                             |                              | **2002**        |       | **2001**          |   |
|                                                                                                             |                              | **(Unaudited)** | ** ** |              |   |
|                                                                                                             |                              |            |       |              |   |
|                                                                                                             | Series A                          |            | $          | 61,890            |   | $ | 59,501 |   |
|                                                                                                             | Series B                          |            | 47,954     |              | 44,869 |   |
|                                                                                                             | Series B-1                        |            | 4,300      |              | 4,035  |   |
|                                                                                                             | Total redeemable  preferred stock |            | $          | 114,144           |   | $ | 108,405 |   |
|                                                                                                                  |                                   |                 |            |                   |        |  |  |  |

 

 

**Note 7**—**Recent Accounting Pronouncements**

 

                In July 2001, the FinancialAccounting Standards Board (“FASB”) issued Statement of Accounting StandardsNo. 141, “Business Combinations” (“SFAS141”) and Statement of AccountingStandards No. 142, “Accounting for Goodwill” (“SFAS 142”).  SFAS 141 requires that all businesscombinations be accounted for using the purchase method of accounting; use ofthe pooling-of-interests method is prohibited. The provisions of the statement apply to all business combinationsinitiated after June 30, 2001.  TheCompany does not expect that SFAS No. 141 will have a material impact on itsconsolidated financial statements.  SFAS142 establishes accounting standards for existing goodwill related to purchasebusiness combinations. SFAS 142 requires the Company to discontinue theperiodic amortization of goodwill effective January 1, 2002.  Additionally, the Statement requires theCompany to evaluate all unamortized goodwill for possible impairment within thefirst six months of fiscal 2002 based on new valuation criteria set forth inthe Statement.  All provisions of SFAS142 must be applied for the fiscal year beginning January 1, 2002 to all of theCompany’s goodwill and other intangible assets, regardless of when those assetswere initially recognized.  At thistime, the Company cannot reasonably estimate the impact of this statement ontheir consolidated financial statements, however, the effect may be material.

 

                In August 2001, the FASB issuedSFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143establishes accounting standards for recognition and measurement of an assetretirement obligation and an associated asset retirement cost and is effectivefor fiscal year 2003. The Company does not expect SFAS No. 143 to have amaterial impact on its financial position or the results of its operations.

 

The FASB issued SFAS 144, “Accounting for theImpairment or Disposal of Long-Lived Assets,” dated August 2001. This statementsupercedes SFAS 121,” Accounting for the Impairment of Long-Lived Assets andfor Long-Lived Assets to Be Disposed of,” and the accounting and reportingprovisions of APB Opinion No. 30, “Reporting Results of Operations - Reportingthe Effects of Disposal of a Segment of a Business, and Extraordinary, Unusualand Infrequently Occurring Events and Transactions.”  SFAS 144 requires that the same accounting model be used forlong-lived assets to be disposed of by sale, whether previously held and usedor newly acquired, and it broadens the presentation of discontinued operationsto include more disposal transactions. The Company will adopt the provisions ofSFAS 144 on the first day of fiscal year 2003 and is currently evaluating theimpact SFAS 144 may have on its financial position and results of operations.

 

 

8

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| **Item 2.** |   | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|--------|-------------------------------------------------------------------------------------------------|

 

**General**

 

The Company is oneof the largest wholesale nurseries in the United States, based on annualrevenue and greenhouse square footage. The Company sells a wide assortment of high quality bedding plants,shrubs, potted flowering plants, ground cover and Christmas trees as well asextensive merchandising services primarily to leading  home centers and mass merchants. The Company’s business is highly seasonal with a peak selling seasongenerally extending from March through June.

 

**Three Months Ended March30, 2002 as Compared to the Three Months Ended March 31, 2001**

 

*Net Sales.* Net sales decreased $3.0 million, or 7.1%, to $39.1 million for thethree months ended March 31, 2002, from $42.1 million during the three monthsended March 30, 2001.  This decrease isprimarily the result of softer retail sales reflecting the general economicslowdown combined with unfavorable weather patterns in the southwest andnorthern California regions, product availability shortages in southernCalifornia and lower sales to Atlantic and Midwest regions.  Additionally, net sales to the Company’slargest customer represented 41.2% of the Company’s total net sales for the threemonths ended March 31,2002 down from 44.2% during the three months ended March30, 2001.

 

*Gross Profit.* Gross profit decreased approximately $0.2 million to $19.5 million forthe three months ended March 31, 2002, from $19.6 million during the threemonths ended March 30, 2001.  Grossprofit as a percentage of net sales increased to 49.8% for the three monthsended March 31, 2002, from 46.7% for the three months ended March 30, 2001. Theincrease in gross profit as a percentage of net sales was primarily the resultof lower utility and natural gas rates during the three months ended March 31,2002.

 

*Sales, Marketing and DeliveryExpenses.*  Sales, marketing and delivery expensesdecreased $0.4 million to $9.8 million for the three months ended March 31,2002, from $10.3 million in the three months ended March 30, 2001.  Sales, marketing and delivery expenses, as apercentage of net sales, increased slightly to 25.1% for the three months endedMarch 31, 2002, from 24.4% for the three months ended March 30, 2001, primarilydue to the impact of certain fixed costs combined with lower net sales.

 

*General and Administrative Expenses.* General and administrative expenses decreased $0.4 million, to $4.8million for the three months ended March 31, 2002, from $5.1 million in thethree months ended March 30, 2001. This decrease is primarily due to effectivecost containment efforts commencing generally in June 2001.

 

*Interest Expense.* Interest expense decreased to $3.4 million for the three months endedMarch 31, 2002, from $4.5 million in the three months ended March 30, 2001, asa result of the company’s debt restructuring completed in November 2001.

 

***                Taxes.***The Company provided a valuationallowance against its net deferred tax assets of $10.6 million in 2001 as aresult of uncertainties relating to the realizability of the relatedassets.  The federal net operatinglosses expire beginning on June 30, 2011 and the state net operating losscarryforwards expire through June 30, 2003. These net operating losses may be limited in use in any given year, subjectto IRS Section 382 as a result of an ownership change.  In addition, significant taxable income mustbe generated in order to realize these recorded benefits.  **The Company adjusted its valuation allowance to continue tofully reserve against all of its deferred tax assets at March 30, 2002 and as aresult did not recognize a benefit on its pretax income for the three monthsended March 30, 2002 compared to a 20.8% benefit recognized during the threemonths ended March 31, 2001**.

 

 

**Liquidity and Capital Resources**

 

The Company’s cashrequirements are primarily to fund its working capital needs, meet its interestobligations and fund necessary capital expenditures.  During the three months ended March 30, 2002 and March 31, 2001,the Company’s primary source of capital was borrowings on its revolving line ofcredit. The Company’s operating activities used cash of $13.6 million duringthe three months ended March 30, 2002 compared to $16.8 million during  the three months ended March 31, 2001. TheCompany’s operating activities typically use significant amounts of cash duringthe first quarter to fund its seasonal working capital requirements asreceivables and inventory grow in advance of the peak spring selling season. The Company alsoinvested $0.5 million and $1.3 million, during the three months ended March 30,2002 and March 31, 2001, respectively, for necessary production equipment andfacility infrastructure repairs and 

 

 

9

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improvements as well asrequired capital projects to meet environmental requirements.

 

The Company funds itsoperations primarily from cash provided by operating activities, if any, andthrough borrowings under its revolving credit facility.  The availability of a revolving credit facilityis critical to the Company’s ability to continue as a going concern.  The Company’s Credit Agreement containsvarious covenant requirements that the Company must meet and the lender has theability to stop advancing funds to the Company in the event of a materialadverse change.  The Company was incompliance with its covenants at March 30, 2002 and the Company’s managementcurrently believes that it will be in compliance with all covenants for thenext twelve months, however no assurance can be given to this effect.  If the Credit Agreement, which expires onSeptember 15, 2003, is not extended or a replacement is not obtained, theCompany will not be able to continue in its present form if at all.

 

Although there can be noassurance that this will be the case, the Company believes that funds availablethrough the Credit Agreement combined with funds provided by operatingactivities will be adequate to fund the Company’s operations, capitalrequirements and debt service obligations for at least the next twelve months.

 

**CriticalAccounting Policies**

**               **In response to the Securities andExchange Commission’s Release No. 33-8040, “Cautionary Advice RegardingDisclosure About Critical Accounting Policies,” the Company identified the mostcritical accounting principles upon which its financial status depends.  The Company determined the criticalprinciples by considering accounting policies that involve the most complex orsubjective decisions or assessments. The most critical accounting policies were determined to be thoserelated to revenue recognition, bad debt reserves, inventory valuation andreserves, valuation allowances on deferred taxes, self-insurance reserves andimpairment of fixed assets and goodwill. We state these accounting policies in the notes to the consolidatedfinancial statements and at relevant sections in this discussion and analysis.

 

                The Company’s discussion and analysis of itsfinancial condition and results of operations are based upon the Company’sconsolidated financial statements, which have been prepared in accordance withaccounting principles generally accepted in the United States. The preparationof these financial statements requires the Company to make estimates andjudgments that affect the reported amounts of assets, liabilities, revenues andexpenses, and related disclosure of contingent liabilities. On an on-goingbasis, the Company evaluates its estimates, including those related   to product returns, customer rebates, baddebts, inventory reserves, self-insurance reserves and contingencies.  The Company bases its estimates onhistorical experience and forecasts as well as on various other assumptionsthat are believed to be reasonable under the circumstances. Actual results maydiffer from these estimates under different assumptions or conditions. TheCompany records estimated reductions to revenue for customer volume-based  incentives which may occasionally vary on apercentage basis depending upon certain volume levels. If market conditionswere to change such that actual sales were significantly different thanforecasted sales, actual amounts due may differ significantly from estimatedamounts. The Company records estimates of expected product returns based uponhistorical experience as well as an on-going review of current marketconditions.  The Company maintainsallowances for doubtful accounts for estimated losses resulting from theinability of its customers to make required payments. The Company bases itsestimates upon on-going review of the financial condition of it’s customers aswell as upon the age of its receivables. If the financial condition of the Company’s customers were todeteriorate, resulting in an impairment of their ability to make payments,additional allowances may be required. The Company records reserves against itsinventory for its estimated unmarketable inventory.  Amounts are estimated based upon the relationship of end ofperiod inventory levels to projected future sales over the next 13 weeks. Ifactual market conditions are less favorable than those projected by management,additional inventory reserves may be required. The Company records a valuationallowance to reduce its deferred tax assets to the amount that is more likelythan not to be realized. The Company has considered past performance as well asfuture taxable income in assessing the need for the valuation allowance. In theevent the Company were to determine that it would be able to realize itsdeferred tax assets in the future in excess of its net recorded amount, anadjustment to the deferred tax asset would increase income in the period suchdetermination was made. The Company records a reserve for its self-insurancepolicies in an amount equal to the expected ultimate costs less stop-lossrepayment of all claims incurred and expected to be incurred during theperiod.  The actual claims experiencemay differ significantly from such estimates. The Company carries significant balances in its financial statements forfixed assets and goodwill.  The Companyis currently evaluating the impact of recent accounting pronouncements upon thecarrying 

 

 

10

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value of assets.  At this time, the Company cannot reasonablyestimate the impact on their consolidated financial statements of such pronouncements;however, the effect may be material. See Note 7 to Condensed Notes to Consolidated Financial Statements —“Recent Accounting Pronouncements.”

 

** **

** **

** **

** **

** **

** **

 

11

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**Item3.  QUANTITATIVE****AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

 

The Company’sliabilities consist primarily of a revolving line of credit, seniorsubordinated notes, other notes and accounts payable.  The Company has also issued preferred stock and redeemable commonstock.  Such liabilities andstockholders’ equity have varying levels of sensitivity to changes in marketinterest rates.  Interest rate riskresults when, due to different maturity dates and re-pricing intervals,interest rate indices for interest-bearing liabilities increase relative toincome earning assets, thereby creating a risk of decreased net earnings andcash flow.  The Company does not haveany derivative financial instruments as of March 30, 2002.

 

The followingtable provides information about the Company’s market sensitive liabilities,categorized by maturity, and constitutes a “forward-looking statement.”  For more information, please refer to Item1. “Financial Statements and Condensed Notes to Consolidated FinancialStatements.”

 

 

|                        |   | **December  31, 2001  Expected Maturities** |       |
|-----------------------------|--------|---------------------------------------------|------------|
|                        |   |                                        |       |
| **Long-term  Liabilities**  |   | **2002**                                    |       | **2003** |   | **2004** |   | **2005** |   | **2006** |   | **Thereafter** |   | **Total** |   |
|                        |   |                                        | ** ** |   | ** ** | **(dollars in millions)** | ** ** |   | ** ** |   | ** ** |
| Fixed Rate:                 |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Series A  Preferred Stock   |   | —                                      |       | — |   | — |   | — |   | $ | 14.4 |   | $ | 143.3 |   | $ | 157.7 |   |
| Average Interest  Rate      |   | 13                                          | %          | 13 | % | 13 | % | 13 | % | 13 | % | 13 | % |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Series B  Preferred Stock   |   | —                                      |       | $ | 5.0 |   | $ | 10.1 |   | $ | 87.6 |   | — |   | — |   | $ | 102.7 |   |
| Average Interest  Rate      |   | 13                                          | %          | 13 | % | 13 | % | 13 | % | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Series B-1  Preferred Stock |   | —                                      |       | — |   | — |   | 9.3 |   | — |   | — |   | $ | 9.3 |   |
| Average Interest  Rate      |   | 12                                          | %          | 12 | % | 12 | % | 12 | % | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Catalyst Note               |   | $                                           | 1.8        |   | $ | 13.4 |   | — |   | — |   | — |   | — |   | $ | 15.2 |   |
| Average Interest  Rate      |   | 15                                          | %          | 15 | % | — |   | — |   | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| New Notes                   |   | $                                           | 5.9        |   | $ | 6.5 |   | $ | 7.1 |   | $ | 61.6 |   | — |   | — |   | $ | 81.1 |   |
| Average Interest  Rate      |   | 13                                          | %          | 13 | % | 13 | % | 13 | % | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| New Heller Note             |   | —                                      |       | — |   | — |   | 6.5 |   | — |   | — |   | $ | 6.5 |   |
| Average Interest  Rate      |   | 8.0                                         | %          | 8.0 | % | 8.0 | % | 8.0 | % | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisition Note            |   | $                                           | 0.1        |   | $ | 0.1 |   | $ | 1.1 |   | — |   | — |   | — |   | $ | 1.3 |   |
| Average Interest  Rate      |   | 9.0                                         | %          | 9.0 | % | 9.0 | % | — |   | — |   | — |   |   |   |
|                        |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable Rate:              |   |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Amended Loan  Agreement (1) |   | —                                      |       | $ | 55.0 |   |   |   |   |   |   |   |   |   | $ | 55.0 |   |
|                             |        |                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

(1)  The Credit Agreement expires on September15, 2003.  See also “Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations - Liquidity and Capital Resources” and “Note 5 to Condensed Notes toConsolidated Financial Statements”.

 

Most of the Company’s debt is subject to acceleration upon various eventsof default.

 

12

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**PARTII. - OTHER INFORMATION**

 

 

**Item1.  Legal Proceedings**

 

In May 2001,Campbell Tree & Land, Co. (“Campbell”) filed an action against the Company,entitled Campbell Tree & Land v. Color Spot Nurseries, Inc., Color SpotChristmas Trees, Inc., Case number 01-C-0555, in the U.S. District Court forthe Eastern District of Wisconsin. The dispute underlying this litigation arosefrom the sale of tree inventory by Campbell to the Company during the fall of2000, while the parties were negotiating a Purchase and Marketing Agreement.The Purchase and Marketing Agreement was never finalized or executed becausethe parties never agreed upon the terms, although the Company paid over $1million to Campbell for the inventory. Campbell is claiming that because thePurchase and Marketing Agreement was never finalized, higher prices applied tothe inventory and the Company owes Campbell an additional $985,000. Althoughthe Company has had settlement discussions with Campbell representatives, theCompany now intends to vigorously defend its position. However, the Companycannot reasonably predict the outcome of the case nor estimate the financialloss that may result from any unfavorable outcome.  The Company believes, however, that an unfavorable outcome ofthis matter could have a material adverse effect on the Company’s financialposition, results of operations or cash flows.

 

The Company is from timeto time subject to various legal proceedings incidental to its business.  Management believes that the ultimateresolution of these proceedings will not have a material adverse effect on itsfinancial position or results of operations, taken as a whole.

 

 

**Item2.  Changes****in Securities and Use of Proceeds**

 

          None.

 

**Item3.  Defaults****Upon Senior Securities**

 

          None.

 

**Item4.  Submission****of Matters to a Vote of Security Holders**

 

          None.

 

**Item5.  Other****Information**

 

On April 8, 2002,Stephen L. Pellegrini was appointed Chief Financial Officer of theCompany.  Since 1996, Mr. Pellegriniheld various positions within Invensys including Vice President, Finance.  From 1981 to 1996, Mr. Pellegrini heldvarious positions of expanding responsibility within General Electric.  Mr. Pellegrini holds a BA in accounting fromthe University of Kentucky.  Mr.Pellegrini is a results oriented financial executive with extensive experiencein strategic planning, business analysis, manufacturing finance, mergerintegration and cost management.

 
| **Item  6.** | **Exhibits  and Reports on Form 8-K** |   |
|--------------|---------------------------------------|--------|
|         |                                  |   |
| **(a)**      | **Exhibits**                          |   |
|         |                                  |   |
|         | None.                                 |   |
|         |                                  |   |
| **(b)**      | **Reports  on Form 8-K.**             |   |
|         |                                  |   |
|         | None.                                 |   |

 

13

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**SIGNATURES**

 

Pursuant to therequirements of Section 13 of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

Date:  May 13, 2002.

 
|   | COLOR SPOT NURSERIES, INC. |
|--------|----------------------------|
|   | a Delaware corporation     |
|   |                       |   |
|   | By:                        | /s/  David J.  Barrett |
|   | Name:                      | David J. Barrett |
|   | Title:                     | Chief Executive Officer *(Principal Executive Officer)* |
|   |                       |   |
|   | By:                        | /s/ Stephen L. Pellegrini |
|   | Name:                      | Stephen L. Pellegrini |
|   | Title:                     | Chief Financial Officer *(Principal Financial Officer and  Principal Accounting Officer)* |
|   |                       |   |

 

 

 

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