Item 2. Properties
Item 2 — Properties
We own or lease five principal production facilities, one of which is currently classified as held for sale. Our primary processing and distribution facility is located at our Elgin, Illinois site which also houses our primary manufacturing operations and corporate headquarters (the “Elgin Site”). The remaining principal production facilities are located in Bainbridge, Georgia; Garysburg, North Carolina; Selma, Texas and Gustine, California. In addition, we operate a retail store at the Elgin Site.
As described below in Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”, the Mortgage Facility (as defined below) is secured by mortgages on essentially all of our owned real property located in Elgin, Illinois, Gustine, California and Garysburg, North Carolina.
We believe that our facilities are generally well maintained and in good operating condition.
a. Principal Facilities
The following table provides certain information regarding our principal facilities:
Location
Square
Footage
Type of
Interest
Description of Principal Use
Date Company
Constructed,
Acquired or
First
Occupied
Bainbridge, Georgia
300,000
Owned
and
Leased
Peanut shelling, purchasing, processing, packaging, warehousing and distribution
1987
Garysburg, North Carolina (1)
160,000
Owned
Formerly used for peanut shelling, purchasing, warehousing and distribution
1994
Selma, Texas (2)
300,000
Leased
Pecan shelling, processing, bulk packaging, warehousing and distribution
1992
Gustine, California
215,000
Owned
Walnut shelling, processing, packaging, warehousing and distribution
1993
Elgin, Illinois (3)
(Elgin Office Building)
400,000
Owned
Rental property
2005
Elgin, Illinois
(Elgin Warehouse Building)
1,001,000
Owned
Processing, packaging,
warehousing, distribution and corporate offices
2005
(1)
After the fire that occurred at our Garysburg facility during fiscal 2020, the Company considered strategic alternatives for the facility and decided to cease all operations permanently at the end of fiscal 2021. As of June 24, 2021, the facility and its related assets have been reclassified as held for sale on the Consolidated Balance Sheets. See Note 19 — “Garysburg, North Carolina Facility” to the Consolidated Financial Statements.
(2)
The sale and lease back of the Selma properties to related party partnerships was consummated in fiscal 2007. See Note 7 —“Long-Term Debt” to the Consolidated Financial Statements.
(3)
The Elgin Office Building (part of the Elgin Site) was acquired in April 2005. Approximately 70% of the Elgin Office Building is currently vacant. Approximately 29% of the rentable area has not been built-out.
The vacant portion of the office building may be leased to third parties; however, there can be no assurance that we will be able to lease the unoccupied space. Further capital expenditures will likely be necessary to fully lease the remaining space.
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b. Manufacturing Capability, Utilization, Technology and Engineering
Our principal production facilities are equipped with modern processing and packaging machinery and equipment.
The Elgin Site was designed to our specifications with what we believe to be state-of-the-art
equipment. The layout is designed to efficiently move products from raw storage to processing to packaging to distribution. The Elgin Site was designed to minimize the risk of cross contamination between tree nuts and peanuts. As currently configured, the Elgin Site can accommodate an increase in production capacity of 15% to 20% of our current capacity, however certain production lines are at full capacity, and finished good storage space is nearing full capacity during peak shipping periods. Additional storage and production space may be needed to fulfill any meaningful increases in future demand.
The Selma facility is used for our automated pecan shelling, packaging, bulk packaging, warehousing and distribution operations. The facility’s pecan shelling production lines currently have the capacity to shell in excess of 90 million inshell pounds of pecans annually. During fiscal 2021, we processed approximately 33 million inshell pounds of pecans at the Selma facility. The quantity of pecans processed varies depending on the amount of inshell nuts purchased due to, among other things, commodity acquisition cost risk, the size and cost of the crop, the impact of international demand and expected demand based on our current sales forecast.
The Bainbridge facility is located in the largest peanut producing region in the United States and is used for peanut shelling and peanut butter production. This facility takes direct delivery of farmer stock peanuts and cleans, shells, sizes, inspects, blanches, roasts and packages them for sale to our customers. The production line at the Bainbridge facility is almost entirely automated and has the capacity to shell approximately 120 million inshell pounds of peanuts annually. During fiscal 2021, the Bainbridge facility shelled approximately 89 million inshell pounds of peanuts.
The Gustine facility is used for walnut shelling, pasteurization, processing, bulk packaging, warehousing and distribution. This facility has the capacity to shell in excess of 60 million inshell pounds of walnuts annually. During fiscal 2021, the Gustine facility shelled approximately 28 million inshell pounds of walnuts. The quantity of walnuts shelled will vary depending on the amount of inshell nuts purchased due to, among other things, commodity acquisition cost risk, the size and cost of the crop, the impact of international demand, and expected demand based on our current sales forecast.
The Garysburg facility had the capacity to process approximately 60 million inshell pounds of farmer stock peanuts annually. During fiscal 2021, the Garysburg facility processed approximately 5 million inshell pounds of peanuts. Due to a fire that occurred at our Garysburg facility during fiscal 2020, the Company considered strategic alternatives for the facility and decided to cease all operations permanently at the facility by the end of fiscal 2021. See Note 19 — “Garysburg, North Carolina Facility” of the Notes to Consolidated Financial Statements for additional detail regarding the facility and the Company’s plan to sell these assets.
The Bainbridge, Selma and Gustine facilities are equipped to handle the processing, packaging, warehousing and distribution, and in the case of our Bainbridge facility, the purchasing of nuts. Furthermore, at our Elgin Site, we process, package, warehouse and distribute nuts. We currently have more than sufficient capacity at our facilities to handle the aforementioned operations.