<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999
Sparkling Spring Water Group Limited
------------------------------------
19 Fielding Avenue, Dartmouth, Nova Scotia, Canada B3B 1C9
----------------------------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F]
Form 20-F X Form 40-F
------ ------
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3 - 2(b) under the
Securities Exchange Act of 1934.]
Yes No X
------- -------
SIGNATURE
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.
Sparkling Spring Water Group Limited
By:
-------------------------------------------
Name: David M. Arnold
Title: Vice President Finance, Treasurer
Date:
--------------
<PAGE>
Sparkling Spring Water Group Limited
Quarterly Report On Form 6 - K
For The Quarter Ended March 31, 1999
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998..................................................................1
Consolidated Statements of Operations for the three months
ended March 31, 1999 and 1998..........................................................2
Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998.........................................................3
Notes to Consolidated Financial Statements............................................ 4
Item 2 Management's Discussion And Analysis Of
Financial Condition And Results Of Operations..........................................7
</TABLE>
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY STANDARD
INDUSTRIAL
STATE OR OTHER JURISDICTION OF CLASSIFICATION CODE
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER INCORPORATION OF ORGANIZATION NUMBER
<S> <C> <C>
Sparkling Spring Water Limited Nova Scotia 5149
Spring Water, Inc. Delaware 5149
Cullyspring Water Co., Inc. Washington 5149
Crystal Springs Acquisition, Inc. Delaware 5149
Canadian Springs Water Company Limited Nova Scotia 5149
Sparkling Spring Water UK Limited England 5149
Aquaporte (UK) Limited England 5149
Krystal Fountain Water Co. Limited England 5149
Marlborough Employment Limited Scotland 5149
Water at Work Limited Scotland 5149
Natural Water Limited Scotland 5149
</TABLE>
The address of the principal executive offices of each of the Additional
Registrants is the same as for Sparkling Spring Water Group Limited, as set
forth on the facing page of this Report.
<PAGE>
Part I Financial Information
Item 1. Financial Statements
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(in U.S. dollars)
March 31, December 31,
1999 1998
------------- --------------
<S> <C> <C>
ASSETS (Unaudited)
Current
Cash and cash equivalents $ 8,263,933 $ 9,728,373
Accounts receivable 11,175,284 10,983,492
Inventories [NOTE 3] 1,207,557 1,340,350
Prepaid expenses 1,320,268 1,320,054
------------- --------------
Total current assets 21,967,042 23,372,269
Deferred taxes 857,011 854,240
Fixed assets 31,386,428 31,136,458
Goodwill and deferred charges 50,504,083 51,162,360
Due from parent company 1,108,000 1,108,000
------------- --------------
Total assets $105,822,564 $107,633,327
------------- --------------
------------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current
Accounts payable and accrued liabilities $ 11,609,922 $ 9,107,830
Income tax payable 115,662 130,000
Customer deposits 4,902,646 5,032,841
Debt due within one year 1,219,748 1,399,116
------------- --------------
Total current liabilities 17,847,978 15,669,787
------------- --------------
Obligations under capital leases and other debt 3,030,390 3,252,032
Senior bank debt 6,157,806 7,664,961
Subordinated notes payable [NOTE 4] 100,000,000 100,000,000
Other liabilities [NOTE 4] 395,000 835,998
------------- --------------
Total long-term liabilities 109,583,196 111,752,991
------------- --------------
Shareholder's equity (deficit)
Capital Stock
Issued and outstanding:
Class D common shares - 1,383,328 5,905,640 5,769,132
Class E common shares - 5,860 167,962 164,080
Less: Subscriptions receivable (107,984) (230,003)
------------- --------------
5,965,618 5,703,209
Cumulative translation adjustment (3,405,499) (3,180,597)
Deficit (24,168,729) (22,312,063)
------------- --------------
Total shareholder's equity (deficit) (21,608,610) (19,789,451)
------------- --------------
Total liabilities and shareholder's equity (deficit) $105,822,564 $107,633,327
------------- --------------
------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES
1
<PAGE>
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
(in U.S. dollars) Three Three
Months Ended Months Ended
March 31, March 31,
1999 1998
------------- -------------
<S> <C> <C>
Revenue:
Water $ 9,206,469 $ 7,341,857
Rental 3,382,867 2,872,317
Other 1,823,596 1,647,573
----------- -----------
Total revenue 14,412,932 11,861,747
----------- -----------
Cost of sales:
Water 1,995,114 1,836,513
Other 765,178 678,487
----------- -----------
Total cost of sales 2,760,292 2,515,000
----------- -----------
Gross profit 11,652,640 9,346,747
Expenses:
Selling, delivery and administrative 8,241,844 6,571,362
Depreciation and amortization 2,525,064 1,778,309
----------- -----------
Operating profit 885,732 997,076
Interest expense 2,742,398 3,373,990
----------- -----------
Loss before income taxes (1,856,666) (2,376,914)
Recovery of income taxes - 1,132,221
----------- -----------
Net loss (1,856,666) (1,244,693)
Other comprehensive loss:
Foreign currency translation adjustment (224,902) (120,303)
----------- -----------
Comprehensive loss $(2,081,568) $(1,364,996)
----------- -----------
----------- -----------
Basic and diluted loss per share $ (1.34) $ (0.90)
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES
2
<PAGE>
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Three
(in U.S. dollars) Months Ended Months Ended
March 31, March 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,856,666) $(1,244,693)
Items not requiring cash
Depreciation and amortization 2,525,064 1,778,309
Deferred taxes - (566,884)
Amortization of deferred financing costs 100,156 96,494
Cross currency swap [NOTE 4] (409,687) 618,479
----------- ------------
358,867 681,705
Net change in non-cash working capital balances 2,308,861 328,441
----------- ------------
Cash provided by operating activities 2,667,728 1,010,146
----------- ------------
INVESTING ACTIVITIES
Purchase of fixed assets, net (2,319,632) (1,734,678)
Acquisitions - (4,217,724)
----------- ------------
Cash used in investing activities (2,319,632) (5,952,402)
----------- ------------
FINANCING ACTIVITIES
Increase in long-term debt - 93,587
Repayment of long-term debt (1,928,941) (481,478)
Issuance of common shares - 262,080
Decrease in subscriptions receivable 122,019 -
Decrease (increase) in deferred charges 20,236 (490,949)
----------- ------------
Cash used in financing activities (1,786,686) (616,760)
----------- ------------
Effect of foreign currency translation on cash (25,850) (244,652)
----------- ------------
Decrease in cash and cash equivalents during the period (1,464,440) (5,803,668)
Cash and cash equivalents, beginning of period 9,728,373 27,507,257
----------- ------------
Cash and cash equivalents, end of period $ 8,263,933 $ 21,703,589
----------- ------------
----------- ------------
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid $ 391,695 $ 179,407
----------- ------------
----------- ------------
Income taxes paid $ 12,971 $ 9,501
----------- ------------
----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1999
(Unaudited)
1. Basis of Presentation
Sparkling Spring Water Group Limited ("Sparkling Spring") is
incorporated under the laws of the Province of Nova Scotia, Canada and
provides containered water to home and office markets in British Columbia and
the Maritime provinces of Canada, England, Scotland and the Pacific
Northwestern United States.
The Company uses the U.S. dollar as its reporting currency. Balance
sheet accounts of all non-U. S. entities are translated into U.S. dollars at
the exchange rates in effect at the balance sheet date. Income statement
accounts of all non-U.S. entities are translated into U.S. dollars at average
exchange rates prevailing during the period. Gains and losses on translation
are included in a separate component of shareholder's equity titled
"cumulative translation adjustment".
The accompanying unaudited consolidated financial statements have been
prepared on a historical cost basis by management in accordance with United
States generally accepted accounting principles for interim financial
information. Accordingly, they do not include all information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, the unaudited interim consolidated
financial statements of the Company reflect all adjustments necessary to
present fairly the financial position of the Company, the results of its
operations and the changes in its cash flows for the interim periods
presented. All such adjustments are of a normal recurring nature.
The accompanying consolidated financial statements should be read in
conjunction with the Audited Financial Statements for the year ended December
31, 1998 and the notes thereto contained in the Company's Annual Report on
Form 20-F filed with the Securities and Exchange Commission.
2. Seasonal Nature of Business
Operating results for the three month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1999 due to the seasonal nature of the business. This
seasonality results from a combination of higher unit sales of the Company's
products in the second and third quarters and the accounting for such
administrative and other overhead costs including but not limited to
depreciation, amortization and interest expense which are not significantly
impacted by business seasonality.
3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
<S> <C> <C>
Packaging materials $ 539,990 $ 598,985
Goods for resale 403,109 482,733
Cooler parts 139,218 142,695
Other 125,240 115,937
----------- ------------
$ 1,207,557 $ 1,340,350
----------- ------------
----------- ------------
</TABLE>
4
<PAGE>
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1999
(Unaudited)
4. Financial Instruments
In December 1997, the company entered into two cross currency interest
rate swaps with a US bank to more closely match the interest requirements of
its subordinated notes with the cash flows earned by the Company's Canadian
and UK subsidiaries. The Company entered into a $30 million US six year swap
in British pounds sterling and a $28 million US five year swap in Canadian
dollars which was terminated in October 1998. The semi annual interest
payments on the pounds sterling swap are approximately 1.1 million pounds. At
March 31, 1999 and December 31, 1998, the aggregate fair market value
liability of the pounds sterling swap was approximately $395,000 and $835,000
in favor of the bank respectively. For the three months ended March 31, 1999,
approximately $410,000 of the $440,000 decrease in the swap liability between
December 31, 1998 and March 31, 1999 was recorded as a decrease in interest
expense. For the three months ended March 31, 1998, approximately $618,000 of
the increase in the swap liability between December 31, 1997 and March 31,
1998 was recorded as an increase in interest expense.
5. Earnings per Share
The weighted average number of shares used to calculate basic and
diluted loss per share is 1,389,188 and 1,383,328 respectively for the three
months ended March 31, 1999 and 1998 respectively. The effect of the exercise
of outstanding options and warrants has not been included in the computation
of earnings per share as the effect would be antidilutive.
6. Acquisitions
On February 24, 1998, the Company purchased all of the outstanding
capital stock of Coastal Mountain Water Corp. (Coastal) for approximately
$4.2 million. Coastal is based in Vancouver, British Columbia and focuses on
the direct delivery of eighteen litre containers of water to residential and
commercial customers and the rental of water coolers.
On May 15, 1998, the Company purchased all of the outstanding shares of
Krystal Fountain Water Co. Limited (Krystal Fountain) for approximately $6.7
million. Krystal Fountain operates in the M25 area in London, England.
On August 31, 1998, the Company purchased the assets of the Springfield
Water Division of Brio Industries Inc. ("Springfield") for approximately $3.9
million. Springfield operates primarily in the Vancouver, British Columbia
market.
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the acquisitions of Coastal Mountain
Water Corp., Krystal Fountain Water Co. Limited and the Springfield Water
Division of Brio Industries Inc. had occurred at January 1, 1998.
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Total revenue $ 14,412,932 $ 13,332,770
Net loss (1,856,666) (1,235,373)
Basic loss per share (1.34) (0.89)
</TABLE>
5
<PAGE>
7. Senior Credit Facility
On May 26, 1998, the Company completed a $40 million Senior Credit
Facility for purposes of financing future capital investments, working
capital, business acquisitions and general corporate purposes. As at December
31, 1998, the Company was in violation of a financial covenant under the
Senior Credit Facility. On May 5, 1999, the Company reached agreement with
its lenders to amend the Senior Credit Facility ( the "Amended Facility").
The Amended Facility restores the Company's compliance with all financial
covenants.
The Amended Facility will be structured as a multi-currency facility and
provides for a $15 million operating line which is renewable annually by
April 30th, a $5 million five year acquisition line and a $10 million short
term credit line expiring October 31, 1999 that provides the Company with
flexibility to repurchase, at its discretion, certain of the Company's
outstanding Subordinated Notes Payable. Any amounts borrowed under this
Facility will be repaid ratably over a five-year period commencing October
31, 2000. The Company has pledged as collateral a first priority security
interest granted in favor of the lenders over substantially all of the assets
of the Company. The Company's obligations under the Amended Facility rank
senior to the payment of the Company's Subordinated Notes Payable.
8. Summary of Business Segments
The Company's business segments derive substantially all their revenues
from the sale of bottled water and the rental of water coolers. The Company
has identified three primary business segments: Canada, the United Kingdom
and the United States.
Segment detail is summarized as follows:
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenue:
Canada $ 5,506,764 $ 4,565,718
United Kingdom 5,703,743 4,525,028
United States 3,202,425 2,771,001
----------- -----------
$14,412,932 $11,861,747
----------- -----------
----------- -----------
Net income before depreciation, interest and income taxes:
Canada $ 1,125,668 $ 739,216
United Kingdom 1,908,016 1,441,985
United States 611,747 594,184
Unallocated corporate overhead (234,635) -
----------- -----------
$ 3,410,796 $ 2,775,385
----------- -----------
----------- -----------
</TABLE>
9. Comparative Figures
Certain of the comparative figures have been reclassified to conform
with the presentation adopted in the current period.
6
<PAGE>
ITEM 2. Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying
consolidated financial statements.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated certain
statement of operations and other data of the Company.
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenue 100% 100%
Cost of sales 19.1 21.2
---- ----
Gross profit 80.9 78.8
Selling, delivery and administrative 57.2 55.4
---- ----
EBITDA 23.7 23.4
Depreciation and amortization 17.5 15.0
---- ----
Operating profit 6.2 8.4
Interest expense 19.0 28.4
---- ----
Loss before income taxes (12.8) (20.0)
Provision for (recovery of) income taxes - (9.5)
---- ----
Net loss (12.8) (10.5)
---- ----
---- ----
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1998
REVENUE. Revenue increased $2.5 million or 21.5% to $14.4 million in the
three months ended March 31, 1999 compared to $11.9 million in the three
months ended March 31, 1998. A decline in the exchange rate for both the
Canadian Dollar and the Pound Sterling reduced the revenue increase by
approximately $0.3 million or 3.0%. Revenues from acquisitions completed
during and after the 1998 first quarter accounted for approximately $1.5
million of the increase. The balance of the increase was from growth in sales
from the Company's higher customer location base. The Company's water cooler
customer locations ended the first quarter in excess of 149,000, down 6,000
from December 31, 1998 after a 7,000 downward adjustment to eliminate
accounts that have not purchased a product or paid a rental payment in the
last 84 days.
7
<PAGE>
COST OF SALES. The cost of sales increased by $0.2 million or 9.7% to
$2.7 million in 1999 compared to $2.5 million in 1998 largely as a result of
acquisitions completed since the 1998 period. The cost of sales as a
percentage of revenue decreased by 2.1% from 21.2% in 1998 to 19.1% in 1999
as a result of growth in higher margin home and office water and cooler
rental revenues and a decrease in the Company's revenues from lower margin
products.
OPERATING EXPENSES. Selling, delivery, and administrative operating
expenses increased by $1.7 million or 25.4% to $8.2 million for the three
months ended March 31, 1999 compared to $6.5 million in the 1998 period. This
increase is due to increased business operations from businesses acquired
during and after the 1998 period and from the underlying growth in the
Company's water cooler location base.
As a percentage of revenue, selling, delivery and administrative
expenses increased from 55.4% for the three months ended March 31, 1998 to
57.2% for the three months ended March 31, 1999. This increase is primarily
due to an increased accrual rate for bad debt reserves (1.1%), increased
distribution expenses and an increase in general and administrative
expenditures to fund increases in corporate personnel and enhanced computer
systems.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $0.7 million or 42.0% to $2.5 million from $1.8 million in the
1998 period. This increase was the result of depreciation of capital
expenditures made in 1998 to support the growth in the Company's water cooler
customer base and due to the significant increase in fixed and intangible
assets acquired as a result of acquisitions consummated during and after the
1998 period.
OPERATING PROFIT. Operating profit decreased $0.1 million or 11.2% from
$1.0 million in 1998 to $0.9 million in 1999. As a percentage of revenue,
operating profit decreased from 8.4% in the 1998 period to 6.2% in the three
months ended March 31, 1999. Earnings before interest, taxes, depreciation
and amortization expense increased by 22.9% or $0.6 million to $3.4 million
from $2.8 million in the 1998 period as a result of the changes noted above.
INTEREST EXPENSE. Interest expense decreased by $0.6 million from $3.4
million in the 1998 period to $2.8 million in the 1999 period. Interest
expense was reduced by approximately $1.0 million as a result of interest
accrued due to the fluctuating value of the Company's cross currency swaps
(see Note 4 of the Notes to Consolidated Financial Statements included
elsewhere in this Report). Excluding the impact of accounting for the cross
currency swap, interest expense increased over 1998 by $0.4 million as a
result of higher borrowing levels incurred to fund capital expenditures and
business acquisitions during and after the 1998 period.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its capital and operating
requirements with a combination of cash flow from operations, borrowings
under bank credit facilities and equity investments from shareholders. The
Company has utilized these sources of funds to make acquisitions, to fund
significant capital expenditures at its properties, to fund operations and to
service debt. The Company presently expects to fund its future capital and
operating requirements at its existing operations through a combination of
cash generated from operations and borrowings under the Senior Credit
Facility (see below).
Net cash provided by operating activities was $2.7 million for the three
months ended March 31, 1999 and $1.0 million for the three months ended March
31, 1998. Net cash used in investment activities was $2.3 million in 1999 and
$6.0 million in 1998. The 1998 balance includes $4.2 million related to the
acquisition of Coastal Mountain Water Corp. The Company made net capital
expenditures of $2.3 million in
8
<PAGE>
the three months ended March 31, 1999 and $1.7 million in 1998. Capital
expenditures in the 1999 period were primarily related to the addition of
water bottles, water coolers, delivery trucks and computer equipment. Based
on the Company's existing operations, management expects that the Company's
capital expenditures will total approximately $9.3 million in 1999 including
the costs in the second and third quarter to outfit a new plant in the
Company's Vancouver, B. C. market.
The Company believes that existing cash balances together with available
cash, cash generated from operations and available borrowings under the
Senior Credit Facility will be sufficient to finance the Company's working
capital and capital expenditure requirements for 1999 as well as some small
acquisitions. However, there can be no assurance that such resources will be
sufficient to meet the Company's anticipated requirements or that capital
will be available to the Company on terms and conditions acceptable to the
Company.
SENIOR CREDIT FACILITY
On May 26, 1998, the Company completed a $40 million Senior Credit
Facility (the "Credit Facility") with the Toronto-Dominion Bank. The Credit
Facility was to be used for purposes of financing future capital investments,
working capital, business acquisitions and general corporate purposes. As at
December 31, 1998, the Company was in violation of a financial covenant under
the Senior Credit Facility. On May 5, 1999, the Company reached agreement
with its lenders to amend the Senior Credit Facility (the "Amended
Facility"). The Amended Facility will provide the Company with increased
operating flexibility and restore the Company's compliance with all financial
covenants.
The Amended Facility will be structured as a multi- currency facility
and provides for a $15 million operating line which is renewable annually by
April 30, a $5 million five year acquisition line and a $10 million short
term credit line expiring October 31, 1999 that provides the Company with
flexibility to repurchase, at its discretion, certain of the Company's
outstanding Subordinated Notes Payable. The Company's payment obligation
under the Amended Facility is secured by a first priority security interest
over substantially all of the assets of the Company; obligations under the
Amended Facility rank senior to the payment of the Subordinated Notes
Payable. Any amounts borrowed under the Amended Facility will be repaid
ratably over a five year period commencing October 31, 2000 based on the
balances outstanding as of that date.
Amounts outstanding under the Amended Facility will bear interest at
specified rates based on the Canadian prime, U.S. prime, London inter-bank
market and Bankers' Acceptances rates. As of April 30, 1999, the Company had
approximately $5.2 million and $3 million in letters of credit outstanding
under the $15 million operating line and no amounts outstanding under the
acquisition and Subordinated Note repurchase facilities.
YEAR 2000
The Year 2000 issue arises due to computer programs using two digits
rather than four to define an applicable year. Computer programs may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failures or miscalculations leading to disruptions in
the Company's operations. If the Company or its significant customers or
suppliers fail to adequately address the Year 2000 issue, such failure could
have an adverse impact on the Company's ability to operate its business.
Sparkling Spring has taken action to address and complete the work
associated with the Year 2000. Each of the Company's business locations has
established a team to identify and correct Year 2000 issues. The Company's
principal financial and operational computer systems utilize software
developed and supported by an outside computer software supplier. It is the
Company's understanding that this supplier has completed an analysis of the
changes required to accommodate the Year 2000 and that these changes are
incorporated in the most recent software upgrades provided to the Company. To
date the Company has installed these software upgrades at two of its
locations and intends to complete the installation and testing of these
upgrades at all of its remaining locations by the end of August 1999. In
9
<PAGE>
addition, the impact of Year 2000 on manufacturing plants and building
facilities is also being addressed. The Company is also investigating the
Year 2000 capabilities of suppliers, customers and other external entities,
and developing contingency plans where necessary.
The Company estimates that the total cost of addressing and completing
the work associated with the Year 2000 issue will be approximately $150,000
exclusive of expenditures for software and telephone system upgrades required
to accommodate the Company's growth and anticipated future requirements. This
expectation is based on the assumption that the Company has contemplated all
significant actions required and that significant costs related to Year 2000
will not be incurred on behalf of the Company's customers or suppliers.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, SFAS No. 130, Reporting Comprehensive Income, and SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information were
issued. These standards are applicable to the Company commencing with its
December 31, 1998 Financial Statements and its March 31, 1999 Interim
Financial Statements.
The impact of SFAS No. 130 is to include the change in the cumulative
translation adjustment account in the determination of Comprehensive Income.
The impact of SFAS No. 131 is to disclose certain information about the
revenues the Company derives from each of its major products in addition to
segmented information for the countries in which it earns revenues and holds
assets.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements included in this Report that do not relate to present or
historical conditions are "forward looking statements" within the meaning of
the Safe Harbor provisions of the Private Securities Litigation Reform Act of
1995 (the "1995 Reform Act"). Additional oral or written forward-looking
statements may be made by the Company from time to time, and such statements
may be included in documents other than this Report that are filed with the
SEC. Such forward-looking statements involve risks and uncertainties that
could cause results or outcomes to differ materially from those expressed in
such forward-looking statements. Forward-looking statements in this Report
and elsewhere may include without limitation, statements relating to the
Company's plans, strategies, objectives, expectations, intentions and
adequacy of resources and are intended to be made pursuant to the safe harbor
provisions of the 1995 Reform Act. Words such as "believes," "forecasts,"
"intends," "possible," "expects," "estimates," "anticipates," or "plans" and
similar expressions are intended to identify forward-looking statements.
Investors are cautioned that such forward-looking statements involve risks
and uncertainties including without limitation the following: (i) the
Company's plans, strategies, objectives, expectations and intentions are
subject to change at any time at the discretion of the Company; (ii) the
Company's ability to expand by acquisitions is dependent upon, and may be
limited by, the availability of suitable acquisition candidates and the
availability of financing therefor on suitable terms; (iii) the Company's
ability to obtain financing will be affected by restrictions contained in the
Indenture and the Company's other existing and future financing arrangements;
(iv) the Company's proposed expansion strategy will be substantially
dependent upon the Company's ability to hire and retain skilled management,
financial, marketing and other personnel; (v) the Company's plans and results
of operations will be affected by the Company's ability to successfully
manage growth (including monitoring operations, controlling costs and
maintaining effective quality and inventory controls; (vi) the market for
attractive acquisitions in the bottled water industry is becoming
increasingly competitive, which could make the Company's acquisition strategy
more difficult to achieve; (vii) the Company's operations are subject to the
jurisdiction of various governmental and regulatory agencies which regulate
the quality of drinking water and other products and any failure by the
Company to comply with existing and future laws and regulations could subject
the Company to significant penalties or impose additional costs on the
Company or otherwise have a material adverse affect on its financial position
or results of operations; (viii) any interruption in the availability of
water to the Company
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from municipal sources and local natural springs could have a material
adverse affect on the Company's operations until suitable replacement sources
are located; (ix) risks associated with issues surrounding Year 2000 for the
Company, its customers and suppliers: and (x) other risks and uncertainties
indicated from time to time in the Company's filings with the SEC.
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