<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-22018
CELESTIAL SEASONINGS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1097571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 SLEEPYTIME DRIVE, BOULDER CO 80301-3292
(Address of principal executive offices, including zip code)
(303) 530-5300
(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 [ ]
As of July 31, 1996 the Registrant had 4,049,147 shares of Common Stock, $0.01
Par Value, outstanding. This report on Form 10-Q contains 15 pages.
<PAGE>
CELESTIAL SEASONINGS, INC.
INDEX
-----
PART I - FINANCIAL INFORMATION
- ------------------------------
PAGE(S)
-------
ITEM 1. FINANCIAL STATEMENTS
Unaudited consolidated statements of operations 3
Unaudited consolidated balance sheets 4
Unaudited consolidated statements of cash flows 5
Notes to unaudited consolidated financial statements 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-11
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
2
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -----------------
1996 1995 1996 1995
------- ------- ------ ------
<S> <C> <C> <C> <C>
Case volume 647 764 3,506 3,443
Net sales $10,829 $11,265 $58,411 $56,622
Cost of goods sold 4,989 5,370 22,494 21,613
------- ------- ------- -------
Gross profit 5,840 5,895 35,917 35,009
Operating expenses:
Selling and marketing 4,768 4,056 23,675 21,915
General and administrative 850 609 3,055 3,378
Amortization of intangibles 361 408 1,103 1,385
------- ------- ------- -------
Total operating expenses 5,979 5,073 27,833 26,678
Operating income (loss) (139) 822 8,084 8,331
Interest expense 203 295 674 952
------- ------- ------- -------
Income (Loss) before income taxes (342) 527 7,410 7,379
Income taxes (206) 142 2,853 1,992
------- ------- ------- -------
Net income (loss) $ (136) $ 385 $ 4,557 $ 5,387
======= ======= ======= =======
Net income (loss) per common share $(0.03) $0.09 $1.11 $1.32
======= ======= ======= =======
Weighted average common shares 4,131 4,094 4,116 4,084
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
-------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 352 $ 375
Accounts receivable, net of allowance (June -$111 Sept. - $71) 5,278 5,298
Inventory 7,583 7,721
Deferred income taxes 593 835
Prepaid expenses 732 660
------- -------
Total current assets 14,538 14,889
Property, plant and equipment, net 16,827 16,645
Intangible assets, net 13,684 14,139
Goodwill, net 6,499 5,791
Deferred income taxes 162 229
Other assets 1,377 1,634
------- -------
Total assets $53,087 $53,327
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,951 $3,516
Accrued liabilities and wages 3,921 4,161
Accrued income taxes 527 564
Accrued interest payable 36 54
Current portion of long-term debt 335 355
------ -------
Total current liabilities 7,770 8,650
Long-term debt 8,622 12,768
Commitments
Stockholders' equity:
Common stock, $.01 par value - authorized 15,000,000 shares;
June - issued 4,052,976 shares, outstanding 4,047,976 shares
Sept. - issued 4,041,378 shares, outstanding 4,036,378 shares 41 40
Capital surplus 33,234 33,006
Retained earnings (Accumulated deficit) 3,515 (1,042)
Treasury stock, 5,000 shares of common stock at cost (95) (95)
------- -------
Total stockholders' equity 36,695 31,909
------- -------
Total liabilities and stockholders' equity $53,087 $53,327
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,557 $ 5,387
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 784 635
Gain on sale of equipment - (202)
Amortization of intangibles 1,103 1,385
Amortization of financing fees 168 167
Deferred income taxes 309 (66)
Changes in operating assets and liabilities:
Accounts receivable 20 1,238
Inventory 138 (2,150)
Prepaid expenses (72) 225
Accounts payable (565) (1,448)
Accrued liabilities and wages (1,111) (30)
Accrued income taxes (37) 251
Accrued interest payable (18) (3)
-------- -------
Net cash provided by operating activities 5,276 5,389
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (966) (532)
Proceeds from sale of equipment - 202
Increase in intangible assets (485) (452)
Investment in affiliate - (80)
Decrease (Increase) in other assets 89 (8)
-------- -------
Net cash used in investing activities (1,362) (870)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance 229 169
Acquisition of treasury stock - (95)
Increase in long-term debt 8,535 6,500
Reduction in long-term debt (12,701) (9,874)
-------- -------
Net cash used in financing activities (3,937) (3,300)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (23) 1,219
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 375 266
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 352 $ 1,485
======== =======
CASH PAID FOR INTEREST $ 492 $ 788
CASH PAID FOR INCOME TAXES $ 2,581 $ 1,807
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
CELESTIAL SEASONINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Basis of Presentation - Each fiscal quarter includes thirteen weeks. The
Company's third fiscal quarter ends on the last Saturday of June. For
presentation purposes, however, the third fiscal quarter is presented as if it
ended on June 30.
The unaudited consolidated financial statements include the accounts of the
Company and its subsidiaries. Intercompany balances have been eliminated in
consolidation.
Interim Financial Information - The financial information contained herein
is unaudited but includes all normal and recurring adjustments which, in the
opinion of management, are necessary to present fairly the information set
forth. The unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements which are included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1995. The
Company's business is seasonal; therefore, results for interim periods are not
necessarily indicative of results to be expected for the fiscal year of the
Company ending September 30, 1996. The Company believes that this Quarterly
Report filed on Form 10-Q is representative of its financial position, its
results of operations and its cash flows for the periods ended June 30, 1996 and
1995 covered thereby.
2. DETAIL OF INVENTORY ACCOUNTS
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
---------- --------------
<S> <C> <C>
Raw materials and supplies $5,279 $4,850
Work in process 888 1,057
Finished goods 1,770 2,693
------ ------
7,937 8,600
Less inventory reserves 354 879
------ ------
Total $7,583 $7,721
====== ======
</TABLE>
3. BUSINESS COMBINATION
On June 30, 1995 the Company acquired the net assets of Botalia
Pharmaceutical, Inc., a developer and marketer of herbal supplements. At the
time of the acquisition, various accruals and reserves were established based on
management's analysis. During the third quarter of fiscal 1996 the Company
completed its purchase price allocation and recorded an
6
<PAGE>
increase to goodwill of $871,000 primarily for the accrual of additional
preacquisition liabilities. This amount will be amortized on a straight-line
basis over the remaining goodwill life of 14 years.
4. LEGAL PROCEEDINGS
On May 5, 1995, a purported stockholder of the Company filed a lawsuit,
Schwartz v. Celestial Seasonings, Inc. et. al., in the United States District
- ----------------------------------------------
Court for the District of Colorado (Civil Action Number: 95-K-1045), in
connection with disclosures by the Company concerning the Company's license
agreement with Perrier Group of America, Inc. which was terminated on January 1,
1995. In addition to the Company, the complaint names as defendants certain of
the Company's present and former directors and officers, PaineWebber, Inc.,
Shearson/Lehman Brothers, Inc., and Vestar/Celestial Investment Limited
Partnership. The complaint, which was pled as a class action on behalf of
persons who acquired the Company's common stock from July 12, 1993 through May
18, 1994, sought money damages from the Company and the other defendants for the
class in the amount of their loss on their investment in the Company's common
stock, punitive damages, costs and expenses of the action, and such other relief
as the court may order.
On November 6, 1995, the federal district court granted a motion by the
Company and the other defendants to dismiss the case. The court's order became
final on December 11, 1995, after the plaintiff failed to amend the complaint
within the time permitted by the trial court. The plaintiff has appealed the
trial court's decision to the United States Court of Appeals for the Tenth
Circuit.
7
<PAGE>
CELESTIAL SEASONINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SEASONALITY
The Company's business is seasonal and its quarterly results of operations
reflect the results of increased demand for the Company's hot herb tea products
in the cooler months of the year. In addition, quarterly results for the period
January 1995 through December 1995 included sales of bottled iced tea, a product
now licensed to Royal Crown Company, Inc. The following table sets forth
selected unaudited quarterly consolidated financial and operational data for the
seven most recent quarters.
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------------------------
Fiscal 1996 Fiscal 1995
--------------------------------- --------------------------------------------------
June 30 MAR.31 DEC.31 SEPT.30 JUNE 30 MAR.31 DEC.31
-------- ------------ --------- -------------- ------------ --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Case sales 647 1,437 1,422 831 764 1,456 1,223
Net sales $10,829 $23,950 $23,632 $13,482 $11,265 $24,232 $21,125
Gross profit 5,840 15,195 14,882 7,746 5,895 15,644 13,470
Operating income (loss) (139) 4,929 3,294 849 822 4,477 3,032
Operatiog margin (1.3)% 20.6% 13.9% 6.3% 7.3% 18.5% 14.4%
Net income(loss) $ (136) $ 2,841 $ 1,852 $ 480 $ 385 $ 3,147 $ 1,855
Percent of fiscal year net sales N/A N/A N/A 19.2% 16.1% 34.6% 30.1%
</TABLE>
The Company has experienced quarterly fluctuations in sales volume and
operating results when compared to previous years due to a number of factors,
including the timing of trade promotions, advertising and consumer promotional
expenditures. The Company, as is common in the tea industry, offers trade
promotions for limited time periods on specific items in order to provide
incentives for the purchase and promotion of products. The impact on case sales
from period to period due to the timing and extent of such trade promotions can
be significant.
RESULTS OF OPERATIONS
The following table is derived from the Company's unaudited consolidated
statements of operations for the periods indicated and presents (i) the results
of operations as a percentage of net sales and (ii) the percentage change in the
dollar amounts of each item from the prior period.
<TABLE>
<CAPTION>
Period-to-Period
Percentage of Net Sales Percentage Increase/(Decrease)
----------------------------------------------- --------------------------------
Three Months Nine Months
Three Months Ended Nine Months Ended Ended Ended
June 30, June 30, June 30, June 30,
------------------- ------------------ ------------------ ------------
1996 1995 1996 1995 1996 to 1995 1996 to 1995
-------- -------- ------- ------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0 % 100.0% 100.0% 100.0% (3.9)% 3.2 %
Cost of goods sold 46.1 47.7 38.5 38.2 (7.1) 4.1
------ ----- ----- ----- ------- ------
Gross profit 53.9 52.3 61.5 61.8 (0.9) 2.6
Selling and marketing 44.0 36.0 40.6 38.7 17.6 8.0
General and administrative 7.9 5.4 5.2 6.0 39.6 (9.6)
Amortization of intangibles 3.3 3.6 1.9 2.4 (11.5) (20.4)
------ ----- ----- ----- ------- ------
Operating income (loss) (1.3) 7.3 13.8 14.7 (116.9) (3.0)
Interest expense 1.9 2.6 1.1 1.7 (31.2) (29.2)
------ ----- ----- ----- ------- ------
Income (Loss) before income taxes (3.2) 4.7 12.7 13.0 (164.9) 0.4
Income taxes (1.9) 1.3 4.9 3.5 (245.1) 43.2
------ ----- ----- ----- ------- ------
Net income (loss) (1.3)% 3.4% 7.8% 9.5% (135.3)% (15.4)%
====== ===== ===== ===== ======= ======
</TABLE>
8
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
Net sales. Net sales for the three months ended June 30, 1996 decreased 3.9%
to $10.8 million from $11.3 million for the comparable period in fiscal 1995.
Case sales decreased 15.3% to 647,000 cases from 764,000 cases. Dry tea case
volume and net sales for the three months ended June 30, 1996 remained
relatively unchanged from the comparable period in fiscal 1995, while the
Company's nutraceutical products contributed net sales of approximately $0.6
million during the third quarter of fiscal 1996. Fiscal 1995 case and net sales
reflect sales of bottled iced tea, a product now licensed to Royal Crown
Company, Inc. and not included in the comparable period of fiscal 1996.
Gross profit. Gross profit for the three months ended June 30, 1996 decreased
0.9% to $5.8 million from $5.9 million for the comparable period in fiscal 1995.
The Company's gross profit margin increased to 53.9% from 52.3% for the
comparable prior year period. The increase in gross margin was primarily
attributable to the inclusion of bottled iced tea sales in fiscal 1995, which
had lower gross margins than the Company's dry tea products. This increase was
partially offset by a decrease in dry tea gross margins in fiscal 1996 as a
result of increased sales through channels of distribution which have lower
gross margins than the Company's traditional channels of distribution.
Selling and marketing expenses. Selling and marketing expenses for the three
months ended June 30, 1996 increased 17.6% to $4.8 million from $4.1 million for
the comparable period in fiscal 1995, and increased as a percentage of net sales
to 44.0% from 36.0%. The increase in selling and marketing expenses primarily
was due to increased advertising and consumer promotion expenses.
General and administrative expenses. General and administrative expenses for
the three months ended June 30, 1996 increased 39.6% from the comparable period
in fiscal 1995, and increased as a percentage of net sales to 7.9% from 5.4%.
The increase was primarily due to the sale of equipment in fiscal 1995,
resulting in the recognition of a gain, which partially offset general and
administrative expenses.
Amortization of intangibles. Amortization of intangibles, including
amortization of goodwill and other intangible assets for the three months ended
June 30, 1996, decreased 11.5% from the comparable period in fiscal 1995.
Amortization of intangibles was lower for fiscal 1996, as compared to fiscal
1995, as certain intangible assets became fully amortized or were written off.
These reductions were partially offset by increases in amortization on new
additions to artwork and plates resulting from the Company's continued
development of new products and improved packaging. As discussed in Note 3 to
the Unaudited Consolidated Financial Statements, amortization of the Botalia
Pharmaceutical, Inc. goodwill increase will begin effective July 1, 1996.
Operating income (loss). The Company experienced an operating loss of 1.3% of
net sales for the three months ended June 30, 1996, as compared to operating
income of 7.3% of net sales for the third quarter of fiscal 1995. This change
was primarily the result of increased operating expenses in fiscal 1996,
primarily related to advertising and consumer promotion.
Interest expense. Interest expense for the three months ended June 30, 1996
declined 31.2% from the comparable period in fiscal 1995 primarily as a result
of reduced outstanding borrowings.
Income taxes. Income tax expense for the three months ended June 30, 1996
decreased 245.1% from the comparable period in fiscal 1995. The decrease was
primarily due to the fiscal 1996 loss and the recognition of tax credits for
prior years' amended income tax returns. Fiscal 1995 reflects the utilization
of net operating loss carryforwards and the realization of deferred tax assets
for which valuation allowances had been provided in accordance with SFAS No. 109
in prior periods. These items were not available for use in fiscal 1996.
9
<PAGE>
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 1995
Net sales. Net sales for the nine months ended June 30, 1996 increased 3.2%
to $58.4 million from $56.6 million for the comparable period in fiscal 1995.
The increase primarily was attributable to an increase in case sales of 1.8% to
3,506,000 cases from 3,443,000 cases. Case sales growth was the result of
increased sales of the Company's herb and specialty black hot tea products and
the contribution of nutraceutical product sales. Sales volume in the Company's
traditional channels of distribution remained relatively unchanged, while
increases were realized as the result of expansion into other channels. The
second and third quarters of fiscal 1995 and the first quarter of fiscal 1996
reflect sales of bottled iced tea, a product now licensed to Royal Crown
Company, Inc. and not included in the comparable periods of fiscal 1996 and
1995.
Gross profit. Gross profit for the nine months ended June 30, 1996 increased
2.6% to $35.9 million from $35.0 million for the comparable period in fiscal
1995. The Company's gross profit margin of 61.5% was relatively unchanged from
the comparable prior year period.
Selling and marketing expenses. Selling and marketing expenses for the nine
months ended June 30, 1996 increased 8.0% to $23.7 million from $21.9 million
for the comparable period in fiscal 1995, and increased as a percentage of net
sales to 40.6% from 38.7%. The increase in selling and marketing expenses
primarily was due to an increase in advertising expenses. This increase was
partially offset by a decrease in trade promotion expenses.
General and administrative expenses. General and administrative expenses for
the nine months ended June 30, 1996 decreased 9.6% from the comparable period in
fiscal 1995, and decreased as a percentage of net sales to 5.2% from 6.0% for
the same period of the prior fiscal year. The primary reason for the decrease in
general and administrative expenses was a one-time charge incurred in the first
quarter of fiscal 1995 related to the Company's acquisition efforts.
Amortization of intangibles. Amortization of intangibles, including
amortization of goodwill and other intangible assets for the nine months ended
June 30, 1996, decreased 20.4% from the comparable period in fiscal 1995.
Amortization of intangibles was lower for fiscal 1996, as compared to fiscal
1995, as certain intangible assets became fully amortized or were written off.
These reductions were partially offset by increases in amortization on new
additions to artwork and plates resulting from the Company's continued
development of new products and improved packaging.
Operating income. Operating income for the nine months ended June 30, 1996
decreased 3.0% from the comparable period in fiscal 1995. Operating income as a
percentage of net sales decreased to 13.8% from 14.7% primarily due to increased
operating expenses.
Interest expense. Interest expense for the nine months ended June 30, 1996
declined 29.2% from the comparable period in fiscal 1995 primarily as a result
of reduced outstanding borrowings.
Income taxes. Income tax expense for the nine months ended June 30, 1996
increased 43.2% from the comparable period in fiscal 1995. The increase in
income tax expense primarily was due to the utilization of net operating loss
carryforwards in fiscal 1995 and realization of deferred tax assets during
fiscal 1995 for which valuation allowances had been provided in accordance with
SFAS No. 109 in prior periods. These items were not available for use in fiscal
1996.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The operations of the Company historically have been funded with a
combination of internally generated funds and external borrowings. Purchases of
inventory, marketing expenditures, support of accounts receivable and payment of
principal and interest under the Company's credit facility have historically
been, and are expected to remain, the Company's principal recurring uses of
funds for the foreseeable future. The Company's other principal uses of funds in
the future will be the development of new or existing products, including the
Company's iced teas and nutraceutical products, and the possible acquisition of
brands, product lines or other assets. The Company expects its primary sources
of financing for its future business activities will be funds from operations
plus borrowings under the credit facility. The Company currently believes that
funds from operations and funds expected to be available under the credit
facility are likely to be sufficient to meet operating and capital requirements
unless a significant acquisition is made.
Cash and cash equivalents were relatively unchanged for the nine months ended
June 30, 1996. Cash provided by operating activities was $5.3 million for the
nine months ended June 30, 1996. The Company's investing activities used cash of
$1.4 million, and the Company's financing activities used cash of $3.9 million
for the nine months ended June 30, 1996.
The Company incurred capital expenditures of approximately $1,451,000 during
the nine months ended June 30, 1996, including $966,000 primarily for factory
equipment and $485,000 for the design and development of new packaging artwork.
The Company anticipates making capital expenditures of approximately $2.0
million in fiscal 1996.
The statements contained in this Quarterly Report on Form 10-Q which are not
historical facts, including, but not limited to, statements found under the
captions "Results of Operations" and "Liquidity and Capital Resources" above,
are forward-looking statements that involve a number of risks and uncertainties.
The actual results of the future events described in such forward-looking
statements could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to differ
materially are the risks and uncertainties discussed in this Quarterly Report,
including, without limitation, the portions of such reports under the captions
referenced above, and the uncertainties set forth from time to time in the
Company's filings with the Securities and Exchange Commission, and other public
statements.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
The information in Note 4 to the Unaudited Consolidated Financial Statements
included in Part I is incorporated herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
--------
Exhibit No. Description
- ----------- -----------
23.1 - Report of Deloitte & Touche LLP on consolidated financial
statements
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K for the quarter ending June 30, 1996.
12
<PAGE>
SIGNATURES
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.
CELESTIAL SEASONINGS, INC.
(Registrant)
August 12, 1996 BY: /s/ Darrell F. Askey
--------------------
Darrell F. Askey
Vice President - Finance, Secretary and Treasurer
(Principal Financial Officer)
13
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
Sequentially
Numbered
Exhibit No. Description Pages
- ----------- ----------- ------------
23.1 - Report of Deloitte & Touche LLP on 15
consolidated financial statements
14
<PAGE>
Exhibit 23.1
INDEPENDENT ACCOUNTANTS' REPORT
Celestial Seasonings, Inc.:
We have reviewed the accompanying consolidated balance sheet of Celestial
Seasonings, Inc. ("Company") and subsidiaries as of June 30, 1996 and the
related consolidated statements of operations and cash flows for the three-month
and nine-month periods ended June 30, 1996 and June 30, 1995. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company and subsidiaries as of
September 30, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated November 7, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
September 30, 1995 is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
Denver, Colorado
July 22, 1996
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CELESTIAL
SEASONINGS, INC.'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 352
<SECURITIES> 0
<RECEIVABLES> 5,389
<ALLOWANCES> (111)
<INVENTORY> 7,583
<CURRENT-ASSETS> 14,538
<PP&E> 25,945
<DEPRECIATION> (9,118)
<TOTAL-ASSETS> 53,087
<CURRENT-LIABILITIES> 7,770
<BONDS> 8,622
0
0
<COMMON> 41
<OTHER-SE> 36,654
<TOTAL-LIABILITY-AND-EQUITY> 53,087
<SALES> 58,411
<TOTAL-REVENUES> 58,411
<CGS> 22,494
<TOTAL-COSTS> 22,494
<OTHER-EXPENSES> 27,833
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 674
<INCOME-PRETAX> 7,410
<INCOME-TAX> 2,853
<INCOME-CONTINUING> 4,557
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,557
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
</TABLE>
