<PAGE> 1
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-14170
NATIONAL BEVERAGE CORP.
(Exact name of registrant as specified in its charter)
Delaware 59-2605822
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE NORTH UNIVERSITY DRIVE, FT. LAUDERDALE, FL 33324
---------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(954) 581-0922
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No. [ ]
The number of shares of Registrant's common stock outstanding as of December 1,
2000 was 18,150,138.
================================================================================
<PAGE> 2
NATIONAL BEVERAGE CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 28, 2000
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of October 28, 2000 and April 29, 2000 .............................. 3
Condensed Consolidated Statements of Income for the three months and
six months ended October 28, 2000 and October 30, 1999 ................. 4
Condensed Consolidated Statements of Cash Flows for the six months
ended October 28, 2000 and October 30, 1999 ............................ 5
Notes to Condensed Consolidated Financial Statements ................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ................................. 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk ............. 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ..................... 14
Item 6. Exhibits and Reports on Form 8-K ........................................ 14
</TABLE>
2
<PAGE> 3
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 28, 2000 AND APRIL 29, 2000
(In thousands, except share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
October 28, April 29,
2000 2000
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 34,389 $ 38,482
Trade receivables - net of allowances of $464 ($534 at April 29, 2000) 39,794 39,116
Inventories 33,788 29,056
Deferred income taxes 1,594 1,465
Prepaid and other 5,217 5,554
--------- ---------
Total current assets 114,782 113,673
Property - net 61,696 62,430
Intangible assets - net 15,486 15,754
Other assets 5,430 5,897
--------- ---------
$ 197,394 $ 197,754
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,493 $ 37,199
Accrued liabilities 20,921 19,646
Income taxes payable 2,713 1,921
--------- ---------
Total current liabilities 53,127 58,766
Long-term debt 29,042 33,933
Deferred income taxes 8,241 8,011
Other liabilities 3,265 3,358
Commitments and contingencies
Shareholders' equity:
Preferred stock, 7% cumulative, $1 par value, aggregate liquidation
preference of $15,000 - 1,000,000 shares authorized; 150,000
shares issued; no shares outstanding 150 150
Common stock, $.01 par value - authorized 50,000,000 shares; issued
22,122,772 shares (22,117,332 shares at April 29, 2000) 221 221
Additional paid-in capital 15,584 15,556
Retained earnings 104,990 94,725
Treasury stock - at cost:
Preferred stock - 150,000 shares (5,100) (5,100)
Common stock - 3,972,634 shares (3,939,034 shares at April 29, 2000) (12,126) (11,866)
--------- ---------
Total shareholders' equity 103,719 93,686
--------- ---------
$ 197,394 $ 197,754
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 28, 2000 AND OCTOBER 30, 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $120,760 $105,111 $260,986 $235,196
Cost of sales 81,843 70,706 176,016 157,276
-------- -------- -------- --------
Gross profit 38,917 34,405 84,970 77,920
Selling, general and administrative expenses 33,434 29,438 68,065 61,932
Interest expense 642 796 1,288 1,500
Other income - net 515 383 966 644
-------- -------- -------- --------
Income before income taxes 5,356 4,554 16,583 15,132
Provision for income taxes 2,041 1,707 6,318 5,674
-------- -------- -------- --------
Net income $ 3,315 $ 2,847 $ 10,265 $ 9,458
======== ======== ======== ========
Net income per share -
Basic $ .18 $ .16 $ .56 $ .51
======== ======== ======== ========
Diluted $ .18 $ .15 $ .55 $ .49
======== ======== ======== ========
Average common shares outstanding -
Basic 18,154 18,353 18,166 18,409
======== ======== ======== ========
Diluted 18,767 19,058 18,814 19,134
======== ======== ======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 28, 2000 AND OCTOBER 30, 1999
(In thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 10,265 $ 9,458
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,390 5,365
Deferred income tax provision 101 199
Loss on sale of property 10 --
Changes in:
Trade receivables (678) 7,151
Inventories (1,255) (1,808)
Prepaid and other assets (155) (1,855)
Accounts payable (8,066) (11,006)
Other liabilities, net 934 (2,770)
-------- --------
Net cash provided by operating activities 6,546 4,734
-------- --------
INVESTING ACTIVITIES:
Property additions (1,417) (3,840)
Acquisitions, net of cash acquired (3,780) (5,200)
-------- --------
Net cash used in investing activities (5,197) (9,040)
-------- --------
FINANCING ACTIVITIES:
Debt borrowings -- 10,000
Debt repayments (5,200) (9,000)
Repurchase of common stock (260) (1,021)
Proceeds from stock options exercised 18 58
-------- --------
Net cash provided by (used in) financing activities (5,442) 37
-------- --------
NET DECREASE IN CASH AND EQUIVALENTS (4,093) (4,269)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 38,482 37,480
-------- --------
CASH AND EQUIVALENTS - END OF PERIOD $ 34,389 $ 33,211
======== ========
OTHER CASH FLOW INFORMATION:
Interest paid $ 1,463 $ 1,537
Income taxes paid 5,514 5,631
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 28, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
National Beverage Corp. and its subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information. The financial statements do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. Except for the matters disclosed, however, there has been
no material change in the information disclosed in the notes to consolidated
financial statements for the fiscal year ended April 29, 2000. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Results for the interim
periods presented are not necessarily indicative of results which might be
expected for the entire fiscal year. Certain prior year amounts have been
reclassified to conform to the current year presentation.
2. INVENTORIES
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories at October 28, 2000 are comprised of finished goods of $18,363,000
and raw materials of $15,425,000. Inventories at April 29, 2000 are comprised of
finished goods of $15,377,000 and raw materials of $13,679,000.
3. PROPERTY
Property consists of the following:
(In thousands)
October 28, April 29,
2000 2000
--------- ---------
Land $ 10,625 $ 10,617
Buildings and improvements 34,477 34,416
Machinery and equipment 92,379 89,345
--------- ---------
Total 137,481 134,378
Less accumulated depreciation (75,785) (71,948)
--------- ---------
Property - net $ 61,696 $ 62,430
========= =========
Depreciation expense was $1,950,000 and $3,843,000 for the three and six month
periods ended October 28, 2000, respectively, and $1,804,000 and $3,617,000 for
the three and six month periods ended October 30, 1999, respectively.
6
<PAGE> 7
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 28, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
4. DEBT
Debt consists of the following:
(In thousands)
October 28, April 29,
2000 2000
---------- -------
Senior Notes $ 8,333 $ 8,333
Credit Facilities -- 5,000
Term Loan Facilities 20,400 20,600
Other 309 --
------- -------
Total $29,042 $33,933
======= =======
A subsidiary of National Beverage Corp. had outstanding 9.95% unsecured senior
notes in the original principal amount of $50 million (the "Senior Notes"), of
which the final annual principal installment of $8.3 million was paid on
November 1, 2000. Additionally, certain subsidiaries maintain unsecured
revolving credit facilities aggregating $48 million (the "Credit Facilities")
and unsecured term loan facilities ("Term Loan Facilities") with banks. The
Credit Facilities expire through December 9, 2001 and bear interest at 1/2%
below the banks' reference rate or 1% above LIBOR, at the subsidiaries'
election. The Term Loan Facilities are repayable in installments through July
31, 2004, and bear interest at the banks' reference rate or 1 1/4% above LIBOR,
at the subsidiaries' election. The Company intends to utilize its existing
long-term credit facilities to fund the next principal payment due on its Senior
Notes and Term Loan Facilities.
Certain of the Company's debt agreements contain restrictions which require
subsidiaries to maintain certain financial ratios and minimum net worth, and
limit subsidiaries with respect to incurring additional indebtedness, paying
cash dividends and making certain loans, advances or other investments. At
October 28, 2000, net assets of subsidiaries totaling approximately $68 million
were restricted from distribution. The Company was in compliance with all loan
covenants and restrictions and such restrictions are not expected to have a
material adverse impact on the operations of the Company.
5. CAPITAL STOCK
During the six months ended October 28, 2000, options for 5,440 shares were
exercised at prices ranging from $2.09 to $5.00 per share. At October 28, 2000,
options to purchase 1,086,656 shares at a weighted average exercise price of
$3.05 (ranging from $.13 to $9.88 per share) were outstanding and stock-based
awards to purchase 586,024 shares of common stock were available for grant.
During the six months ended October 28, 2000, the Company purchased 33,600
shares of its common stock. Such shares are classified as treasury stock.
7
<PAGE> 8
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 28, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
6. ACQUISITION
In September 2000, the Company acquired certain operations and assets of
Beverage Canners International, Inc ("BCI"). The assets acquired include a
leased manufacturing facility, inventory, and the Ritz(R) and Crystal Bay(R)
brands. The BCI acquisition has been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
acquired based upon their estimated fair values at the date of acquisition.
Operating results of the acquired business, which are not material to
consolidated results, have been included in the consolidated statements of
income from the date of acquisition.
8
<PAGE> 9
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
National Beverage Corp. (the "Company") is a holding company for various
subsidiaries that develop, manufacture, market and distribute a complete
portfolio of quality beverage products throughout the United States. The
Company's proprietary brands include Shasta(R), Faygo(R), Ritz(R) and Big
Shot(R), complete lines of multi-flavored and cola soft drinks. In addition, the
Company offers an assortment of premium "good-for-you" beverages geared toward
the health-conscious consumer, including Everfresh(R), Home Juice(R) and Mr.
Pure(R) 100% juice and juice-based products; and LaCROIX(R), Mt. Shasta(TM),
Crystal Bay(R) and ClearFruit(R) flavored and spring water products. The Company
also provides specialty products, including VooDoo Rain(TM), a line of
alternative beverages geared toward young consumers, and St. Nick's(TM) holiday
soft drinks. Substantially all of the Company's brands are produced in its
sixteen manufacturing facilities, which are strategically located throughout the
continental United States. The Company also develops and produces soft drinks
for retail grocery chains, warehouse clubs, mass-merchandisers and wholesalers
("allied brands") as well as soft drinks for other beverage companies.
The Company's strategy emphasizes the growth of its branded products by offering
a beverage portfolio of proprietary flavors; by supporting the franchise value
of regional brands; by developing and acquiring innovative products tailored
toward healthy lifestyles; and by appealing to the "quality-price" sensitivity
factor of the family consumer. In addition, the strength of its brands and
location of its manufacturing facilities distinguish the Company as a
single-source supplier of branded and allied branded beverages for national and
regional retailers that rely on the warehouse distribution system.
Various means are utilized by the Company to maintain its position as a
cost-effective producer of its beverage products. These include vertical
integration of the supply of raw materials for the manufacturing process, bulk
delivery to customer distribution centers, regionally targeted media promotions
and the use of multiple distribution systems. Management believes it is able to
offer retailers a higher profit margin on Company branded products and allied
brands than is typically available from those soft drink companies that utilize
the direct-store delivery method.
Beverage industry sales are seasonal with the highest volume typically realized
during the summer months. Additionally, the Company's operating results are
subject to numerous factors, including fluctuations in the costs of raw
materials, changes in consumer preference for beverage products and competitive
pricing in the marketplace. Management believes that brand recognition, quality,
customer service, availability and value are primary factors affecting the
Company's position in the marketplace.
9
<PAGE> 10
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 28, 2000 (SECOND QUARTER OF FISCAL 2001) COMPARED TO
THREE MONTHS ENDED OCTOBER 30, 1999 (SECOND QUARTER OF FISCAL 2000)
Net sales for the three months ended October 28, 2000 increased approximately
$15.6 million, or 15%, over the three months ended October 30, 1999. This sales
increase is due to broad-based volume growth as a result of favorable market
conditions, an improvement in pricing of branded products, and sales of Ritz
and Crystal Bay brands recently acquired from Beverage Canners International,
Inc. ("BCI"). See Note 6 of Notes to Condensed Consolidated Financial
Statements.
Gross profit approximated 32.2% of net sales for the second quarter of fiscal
2001 and 32.7% of net sales for the second quarter of fiscal 2000. This change
was the result of increases in certain raw material costs and costs
related to the integration of operations acquired from BCI, which was
partially offset by the pricing improvement mentioned above.
Selling, general and administrative expenses increased to $33.4 million or 27.7%
of net sales for the second quarter of fiscal 2001. This increase was primarily
due to distribution and selling costs related to increased volume and
incremental costs related to the acquired BCI operations.
Interest expense declined during the second quarter of fiscal 2001 compared to
the prior year due to a reduction in average debt outstanding. Other income
increased to $515,000 primarily due to an increase in interest income resulting
from higher average investment balances and yields. See Note 4 of Notes to
Condensed Consolidated Financial Statements.
The Company's effective rate for income taxes, based upon estimated annual
income tax rates, approximated 38.1% of income before taxes for the second
quarter of fiscal 2001 and 37.5% for the second quarter of fiscal 2000. The
difference between the effective rate and the federal statutory rate of 35% was
primarily due to the effects of state income taxes and non-deductible expenses.
Net income amounted to $3.3 million or $.18 per share for the three months ended
October 28, 2000, compared to $2.8 million or $.16 per share for the three
months ended October 30, 1999.
10
<PAGE> 11
SIX MONTHS ENDED OCTOBER 28, 2000 (FIRST SIX MONTHS OF FISCAL 2001) COMPARED TO
SIX MONTHS ENDED OCTOBER 30, 1999 (FIRST SIX MONTHS OF FISCAL 2000)
Net sales for the six months ended October 28, 2000 increased approximately
$25.8 million, or 11%, over the first six months of the prior year. This sales
improvement is due to broad-based volume growth as a result of favorable market
conditions, an improvement in pricing of branded products, increased
distribution in the convenience channel, and sales of newly acquired Ritz and
Crystal Bay brands.
Gross profit approximated 32.6% of net sales for the first six months of fiscal
2001 and 33.1% of net sales for the first six months of fiscal 2000. This change
was primarily due to an increase in certain raw material costs and costs related
to the integration of operations acquired from BCI.
Selling, general and administrative expenses increased to $68.1 million or 26.1%
of net sales for the first six months of fiscal 2001. This increase was
primarily due to distribution and selling costs related to increased volume and
incremental costs related to the acquired BCI operations.
Interest expense declined during the six months ended October 28, 2000 compared
to the prior year due to a reduction in average debt outstanding. Other income,
primarily consisting of interest income, increased to $966,000 due to higher
average investment balances and yields.
The effective rate for income taxes, based upon estimated annual income tax
rates, amounted to 38.1% and 37.5% of income before taxes for the first six
months of fiscal 2001 and fiscal 2000, respectively. The difference between the
effective rate and the federal statutory rate of 35% was primarily due to the
effects of state income taxes and non-deductible expenses.
Net income increased to $10.3 million or $.56 per share for the six months ended
October 28, 2000 from $9.5 million or $.51 per share for the six months ended
October 30, 1999.
11
<PAGE> 12
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
OCTOBER 28, 2000 COMPARED TO APRIL 29, 2000
Management views earnings before interest expense, taxes, depreciation and
amortization ("EBITDA") as a key indicator of the Company's operating
performance and enterprise value, although not as a substitute for cash flow
from operations or operating income. During the six months ended October 28,
2000, the Company generated EBITDA of $23.3 million as compared to EBITDA of
$22.0 million for the comparable period last year.
For the six months ended October 28, 2000, net cash provided by operating
activities of $6.5 million was comprised of net income of $10.3 million and
non-cash charges of $5.4 million less cash used primarily for working capital
requirements of $9.2 million. Cash of $5.2 million was used for capital
expenditures and the BCI acquisition. At October 28, 2000, the Company's ratio
of current assets to current liabilities was 2.2 to 1 and working capital
amounted to $61.7 million.
The Company continually evaluates capital projects to expand capacity and
improve efficiency at its manufacturing facilities. The Company presently has no
material commitments for capital expenditures and expects that the capital
expenditures for fiscal 2001 will be comparable to fiscal 2000.
In January 1998, the Board of Directors authorized the Company to repurchase up
to 800,000 shares of its common stock and purchases to date aggregate 441,910
shares. During the six months ended October 28, 2000 and October 30, 1999, the
Company purchased 33,600 shares and 120,980 shares, respectively, of its common
stock.
At October 28, 2000, certain subsidiaries of the Company had outstanding
long-term debt of $29.0 million. Debt agreements contain restrictions which
require these subsidiaries to maintain certain financial ratios and minimum net
worth, and limit the subsidiaries with respect to incurring additional
indebtedness, paying cash dividends and making certain loans, advances or other
investments. At October 28, 2000, net assets of the subsidiaries totaling
approximately $68 million were restricted from distribution. Management believes
that cash and equivalents, together with funds generated from operations and
borrowing capabilities, will be sufficient to meet the Company's operating cash
requirements, and the cash requirements of the parent company, for the
foreseeable future. The Company was in compliance with all loan covenants and
restrictions at October 28, 2000, and such restrictions are not expected to have
a material adverse impact on the operations of the Company. See Note 4 of Notes
to Condensed Consolidated Financial Statements.
12
<PAGE> 13
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q (this "Form 10-Q"),
including statements under "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations," constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to, the
following: general economic and business conditions; pricing of competitive
products; success of the Company's Strategic Alliance objective; success of the
Company in acquiring other beverage businesses; success of new product and
flavor introductions; fluctuations in the costs of raw materials; the Company's
ability to increase prices; continued retailer support for the Company's brands;
changes in consumer preferences; changes in business strategy or development
plans; government regulations; regional weather conditions; and other factors
referenced in this Form 10-Q. The Company disclaims an obligation to update any
such factors or to publicly announce the results of any revisions to any
forward-looking statements contained herein to reflect future events or
developments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There are no material changes to the disclosures made on this matter in the
Company's Annual Report on Form 10-K for the fiscal year ended April 29, 2000.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the company's Annual Meeting of Shareholders held October 16, 2000, Mr.
Joseph G. Caporella and Mr. Samuel C. Hathorn, Jr. were re-elected to the Board
of Directors for a three-year term. Out of 16,995,079 shares voted, 16,559,273
shares were voted for the election of Mr. Joseph G. Caporella (435,806 shares
were withheld) and 16,678,166 shares were voted for the election of Mr. Samuel
C. Hathorn, Jr. (316,913 shares were withheld).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description
------- -----------
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K: None
14
<PAGE> 15
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.
DATE: December 12, 2000
NATIONAL BEVERAGE CORP.
(Registrant)
By: /s/ Dean A. McCoy
-------------------------------------
Dean A. McCoy
Vice President - Controller
(On behalf of the Registrant and as
Principal Accounting Officer)
15
