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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE NORTH UNIVERSITY DRIVE, FT. LAUDERDALE, FL 33324
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(Address of principal executive offices) (Zip Code)
(954) 581-0922
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(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 August 28,
2000 was 18,160,938.
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NATIONAL BEVERAGE CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 29, 2000
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
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Page
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of July 29, 2000 and April 29, 2000 .................................. 3
Condensed Consolidated Statements of Income for the three months ended
July 29, 2000 and July 31, 1999.......................................... 4
Condensed Consolidated Statements of Cash Flows for the three months
ended July 29, 2000 and July 31, 1999.................................... 5
Notes to Condensed Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk............... 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................... 12
</TABLE>
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 29, 2000 AND APRIL 29, 2000
(In thousands, except share amounts)
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<TABLE>
<CAPTION>
(Unaudited)
July 29, April 29,
2000 2000
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<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 36,570 $ 38,482
Trade receivables - net of allowances of $419 ($534 at April 29, 2000) 46,919 39,116
Inventories 30,400 29,056
Deferred income taxes 1,579 1,465
Prepaid and other 4,837 5,554
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Total current assets 120,305 113,673
Property - net 61,122 62,430
Intangible assets - net 15,595 15,754
Other assets 5,953 5,897
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$ 202,975 $ 197,754
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,734 $ 37,199
Accrued liabilities 22,138 19,646
Income taxes payable 5,486 1,921
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Total current liabilities 62,358 58,766
Long-term debt 28,733 33,933
Deferred income taxes 8,089 8,011
Other liabilities 3,315 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, $.01 par value - authorized 50,000,000 shares; issued
22,122,772 shares (22,117,332 shares at April 29, 2000) 221 221
Additional paid-in capital 15,584 15,556
Retained earnings 101,675 94,725
Treasury stock - at cost:
Preferred stock - 150,000 shares (5,100) (5,100)
Common stock - 3,961,834 shares (3,939,034 shares at April 29, 2000) (12,050) (11,866)
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Total shareholders' equity 100,480 93,686
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$ 202,975 $ 197,754
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</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JULY 29, 2000 AND JULY 31, 1999
(In thousands, except per share amounts)
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<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
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2000 1999
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<S> <C> <C>
Net sales $140,226 $130,085
Cost of sales 94,173 86,570
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Gross profit 46,053 43,515
Selling, general and administrative expenses 34,631 32,494
Interest expense 646 704
Other income - net 451 261
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Income before income taxes 11,227 10,578
Provision for income taxes 4,277 3,967
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Net income $ 6,950 $ 6,611
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Net income per share -
Basic $ .38 $ .35
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Diluted $ .37 $ .34
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Average common shares outstanding -
Basic 18,177 18,464
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Diluted 18,861 19,210
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</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 29, 2000 AND JULY 31, 1999
(In thousands)
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<TABLE>
<CAPTION>
(Unaudited)
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 6,950 $ 6,611
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,627 2,778
Deferred income tax provision (benefit) (36) 118
Loss on sale of property 10 --
Changes in:
Trade receivables (7,803) (565)
Inventories (1,344) (2,962)
Prepaid and other assets 87 (1,137)
Accounts payable (2,465) (3,832)
Other liabilities, net 6,024 2,193
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Net cash provided by operating activities 4,050 3,204
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INVESTING ACTIVITIES:
Property additions (596) (1,521)
Acquisition -- (5,200)
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Net cash used in investing activities (596) (6,721)
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FINANCING ACTIVITIES:
Debt borrowings -- 6,000
Debt repayments (5,200) (7,000)
Repurchase of common stock (184) (300)
Proceeds from stock options exercised 18 19
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Net cash used in financing activities (5,366) (1,281)
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NET DECREASE IN CASH AND EQUIVALENTS (1,912) (4,798)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 38,482 37,480
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CASH AND EQUIVALENTS - END OF PERIOD $ 36,570 $ 32,682
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OTHER CASH FLOW INFORMATION:
Interest paid $ 821 $ 816
Income taxes paid 840 1,382
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 29, 2000
(UNAUDITED)
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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 July 29, 2000 are comprised of finished goods of $15,824,000 and
raw materials of $14,576,000. 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)
July 29, April 29,
2000 2000
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Land $ 10,625 $ 10,617
Buildings and improvements 34,421 34,416
Machinery and equipment 89,912 89,345
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Total 134,958 134,378
Less accumulated depreciation (73,836) (71,948)
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Property - net $ 61,122 $ 62,430
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Depreciation expense was $1,893,000 and $1,813,000 for the three-month periods
ended July 29, 2000 and July 31, 1999, respectively.
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4. DEBT
Debt consists of the following:
(In thousands)
July 29, April 29,
2000 2000
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Senior Notes $ 8,333 $ 8,333
Credit Facilities -- 5,000
Term Loan Facilities 20,400 20,600
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Total $28,733 $33,933
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A subsidiary of National Beverage Corp. has 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 is due 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 bank's
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 July
29, 2000, net assets of subsidiaries totaling approximately $67 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 three months ended July 29, 2000, options for 5,440 shares were
exercised at prices ranging from $2.09 to $5.00 per share. At July 29, 2000,
options to purchase 1,116,656 shares at a weighted average exercise price of
$3.28 (ranging from $.13 to $13.50 per share) were outstanding and stock-based
awards to purchase 586,024 shares of common stock were available for grant.
During the three months ended July 29, 2000, the Company purchased 22,800 shares
of its common stock. Such shares are classified as treasury stock.
6. ACQUISITION
In September 2000, the Company acquired certain operations and assets of
Beverage Canners International, Inc. The assets acquired include a manufacturing
facility, inventory, and the Ritz(R) and Crystal Bay(R) brands. The acquisition
of such assets will be accounted for using the purchase method of accounting
and, accordingly, the purchase price will be allocated to the assets acquired
based upon their estimated fair values at the date of acquisition. Operating
results of the acquired business will be included in the consolidated statements
of income from the date of acquisition.
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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.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 29, 2000 (FIRST QUARTER OF FISCAL 2001) COMPARED TO
THREE MONTHS ENDED JULY 31, 1999 (FIRST QUARTER OF FISCAL 2000)
Net sales for the three months ended July 29, 2000 increased approximately $10.1
million or 7.8%, over the three months ended July 31, 1999. This sales increase
is primarily attributable to an increase in case volume of the Company's brands
and, to a lesser extent, a slight increase in the case volume of allied brands.
The Company's soft drink brands, including Shasta and Faygo, experienced
broad-based volume increases as a result of favorable market conditions within
the grocery segment of the take-home channel. Additionally, the Company's
premium beverages gained volume during the first quarter of fiscal 2001 as a
result of increased distribution within the convenience channel.
Gross profit approximated 32.8% of net sales for the first quarter of fiscal
2001 and 33.5% of net sales for the first quarter of fiscal 2000. This decline
was the result of increases in raw material costs partially offset by higher
margins from increased sales of branded products.
Selling, general and administrative expenses were $34.6 million or 24.7% of net
sales for the first quarter of fiscal 2001, compared to $32.5 million or 25.0%
of net sales for the first quarter of fiscal 2000. This change was primarily due
to the higher distribution and selling costs related to increased volume.
Interest expense declined during the first quarter of fiscal 2001 compared to
the prior year due to a reduction in average debt outstanding. Other income
increased to $451,000 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 first
quarter of fiscal 2001 and 37.5% for the first 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 $6,950,000 or $.38 per share for the three months ended
July 29, 2000, compared to $6,611,000 or $.35 per share for the three months
ended July 31, 1999.
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
JULY 29, 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 three months ended July 29,
2000, the Company generated EBITDA of $14.5 million, as compared to EBITDA of
$14.1 million for the comparable period last year.
For the three months ended July 29, 2000, net cash provided by operating
activities of $4.1 million was comprised of net income of $7.0 million plus
non-cash charges of $2.6 million less cash used primarily for working capital
requirements of $5.5 million. Cash of $.6 million was used for capital
expenditures and debt repayments aggregated $5.2 million. At July 29, 2000, the
Company's ratio of current assets to current liabilities was 1.9 to 1 and
working capital amounted to $57.9 million. Increases in trade receivables,
inventories and accrued liabilities were primarily due to seasonal increases in
sales volume, inventory requirements and accrued sales expenses.
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 431,110
shares. During the three months ended July 29, 2000 and July 31, 1999, the
Company purchased 22,800 shares and 33,200 shares, respectively, of its common
stock.
At July 29, 2000, certain subsidiaries of the Company had outstanding long-term
debt of $28.7 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 July
29, 2000, net assets of the subsidiaries totaling approximately $67 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 July 29, 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.
In September 2000, the Company acquired certain operations and assets of
Beverage Canners International, Inc. See Note 6 of Notes to Condensed
Consolidated Financial Statements.
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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.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description
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27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K: None
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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: September 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)
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