<PAGE>
UNITED STATES
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 December 31, 1998
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 January 29, 1999 the Registrant had 8,312,384 shares of
Common Stock, $0.01 Par Value, outstanding. This report on Form
10-Q contains 16 pages.
<PAGE>
CELESTIAL SEASONINGS, INC.
INDEX
PART I - FINANCIAL INFORMATION
- ------------------------------
PAGE(S)
-------
ITEM 1. FINANCIAL STATEMENTS
Unaudited consolidated income 3
statements
Unaudited consolidated balance 4
sheets
Unaudited consolidated statements of 5
cash flows
Notes to unaudited consolidated 6-8
financial statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 9-12
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
PAGE 2
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------
1998 1997
------- -------
<S> <C> <C>
Case volume 1,896 1,491
Net sales $37,662 $27,400
Cost of goods sold 14,003 10,131
------- -------
Gross profit 23,659 17,269
Operating expenses:
Selling and marketing 17,244 11,619
General and administrative 1,694 1,575
Amortization of intangibles 311 320
------- -------
Total operating expenses 19,249 13,514
Operating income 4,410 3,755
Interest expense 242 116
------- -------
Income before income taxes 4,168 3,639
Income taxes 1,563 1,401
------- -------
Net income $ 2,605 $ 2,238
======= =======
Earnings per share-basic:
Net income per common share $ 0.31 $ 0.28
======= =======
Weighted average common shares 8,307 8,124
======= =======
Earnings per share-assuming dilution:
Net income per common share $ 0.30 $ 0.26
======= =======
Weighted average common shares 8,771 8,500
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
PAGE 3
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1998
------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 768 $ 2,533
Accounts receivable, net of allowance
(Dec. - $756 Sept. - $534) 19,144 15,156
Inventory 19,204 23,185
Deferred income taxes 268 93
Prepaid income taxes - 630
Prepaid expenses 3,598 2,111
---------- ----------
Total current assets 42,982 43,708
Property, plant and equipment, net 18,806 19,240
Intangible assets, net 12,383 12,598
Goodwill, net 5,800 5,870
Deferred income taxes 191 217
Other assets 1,027 1,014
---------- ----------
Total assets $ 81,189 $ 82,647
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,095 $ 8,656
Accrued liabilities and wages 6,966 7,551
Accrued income taxes 1,078 -
Accrued interest payable 79 47
Current portion of long-term debt 300 4,323
---------- ----------
Total current liabilities 15,518 20,577
Long-term debt 11,675 10,750
Commitments
Stockholders' equity:
Common stock, $.01 par value -
authorized 15,000,000 shares;
Dec. - issued 8,325,896 shares,
outstanding 8,308,096 shares;
Sept. - issued 8,322,528 shares,
outstanding 8,304,728 shares 83 83
Capital surplus 35,082 35,011
Retained earnings 19,006 16,401
Treasury stock, 17,800 shares of
common stock at cost (175) (175)
---------- ---------
Total stockholders' equity 53,996 51,320
---------- ---------
Total liabilities and stockholders' equity $ 81,189 $ 82,647
========== =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
PAGE 4
<PAGE>
CELESTIAL SEASONINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,605 $ 2,238
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 430 324
Amortization of intangibles 311 320
Amortization of financing fees 52 49
Deferred income taxes (149) (17)
Gain on sale of asset (100) -
Changes in operating assets and liabilities:
Accounts receivable (3,988) (3,133)
Inventory 3,981 (1,304)
Prepaid expenses (1,487) 256
Accounts payable (1,561) 756
Accrued liabilities and wages (585) 1,298
Accrued income taxes 1,708 1,256
Accrued interest payable 32 -
-------- --------
Net cash provided by operating activities 1,249 2,043
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of asset 148 -
Capital expenditures (44) (18)
Increase in intangible assets (26) (73)
Increase in other assets (65) (14)
-------- --------
Net cash provided by (used in) investing activities 13 (105)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance 71 115
Increase in long-term debt - -
Reduction in long-term debt (3,098) (88)
-------- --------
Net cash (used in) provided by financing activities (3,027) 27
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,765) 1,965
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,533 2,829
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 768 $ 4,794
======== ========
CASH PAID FOR INTEREST $ 160 $ 61
CASH PAID FOR INCOME TAXES $ 4 $ 162
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
PAGE 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 first fiscal quarter ends on the last Saturday
of December. For presentation purposes, however, the first fiscal
quarter is presented as if it ended on December 31.
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, 1998. 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, 1999. 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 December 31, 1998 and 1997
covered thereby.
Earnings Per Share - In accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share," the increase in
weighted average common shares - assuming dilution is due to the
application of the treasury share method for outstanding stock
options. The application of the treasury share method resulted in an
additional 464,000 and 376,000 weighted average shares for the
quarters ended December 31, 1998 and 1997, respectively.
Comprehensive Income - In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130
requires companies to disclose comprehensive income and its
components. The Company currently has no items of other comprehensive
income and therefore SFAS 130 does not apply.
PAGE 6
<PAGE>
Operating Segments - In fiscal 1999, the Company redefined its
reportable segments as wellness products and beverage products. The
wellness segment includes the Company's dietary supplements in
capsule form along with related wellness teas. The beverage segment
contains the Company's herb, green, specialty black, organic and chai
teas. The Company believes that its current forms of advertising
are designed to develop an overall brand awareness. Therefore,
advertising is treated as a corporate expense, not directly
attributable to any one segment. Should the Company alter its
approach to advertising, this treatment could change in the
future. Trade and consumer promotion expenses for specific product
lines are charged directly to operating segments.
<TABLE>
<CAPTION>
Three months ended
December 31,
------------------
1998 1997
-------- --------
<S> <C> <C>
Net sales:
Beverages $ 29,816 $ 25,524
Wellness 7,846 1,876
-------- --------
Total net sales $ 37,662 $ 27,400
======== ========
Operating income:
Beverages $ 10,385 $ 6,595
Wellness 576 (330)
-------- --------
10,961 6,265
Corporate advertising expense (4,546) (615)
General and administrative (1,694) (1,575)
Amortization of intangibles (311) (320)
-------- --------
Total operating income 4,410 3,755
Interest expense 242 116
-------- --------
Income before income taxes $ 4,168 $ 3,639
======== ========
<CAPTION>
December 31, September 30,
1998 1998
-------- --------
<S> <C> <C>
Assets:
Beverages $ 59,708 $ 55,894
Wellness 15,870 20,341
Corporate 5,611 6,412
-------- --------
Total assets $ 81,189 $ 82,647
======== ========
</TABLE>
PAGE 7
<PAGE>
2. DETAIL OF INVENTORY ACCOUNTS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1998
------------ ------------
<S> <C> <C>
Raw materials and supplies $ 11,822 $ 10,941
Work in process 1,518 2,047
Finished goods 6,118 10,406
-------- --------
19,458 23,394
Less inventory reserves 254 209
-------- --------
Total $ 19,204 $ 23,185
======== ========
</TABLE>
3. 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
district court. The plaintiff appealed the district court's decision
to the United States Court of Appeals for the Tenth Circuit. On
September 5, 1997, the court of appeals reversed the decision of the
district court. The court of appeals found that the plaintiff's
complaint alleged sufficient facts to support his claim. The case has
been returned to the district court for further proceedings and has
been certified as a class action. Due to the uncertainties inherent
in the litigation process, the Company is unable to predict the
outcome of this matter.
PAGE 8
<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 tea products in the cooler months of the year. The following
table sets forth selected unaudited quarterly consolidated financial
and operational data for the five most recent quarters.
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
Fiscal 1999 Fiscal 1998
----------- -------------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31
------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Case sales 1,896 1,120 857 1,611 1,491
Net sales $37,662 $23,073 $19,395 $32,329 $27,400
Gross profit 23,659 14,586 12,573 21,131 17,269
Operating income 4,410 1,782 355 5,549 3,755
Operating margin 11.7% 7.7% 1.8% 17.2% 13.7%
Net income $ 2,605 $ 1,053 $ 124 $ 3,341 $ 2,238
Percent of fiscal
year net sales N/A 22.6% 19.0% 31.6% 26.8%
</TABLE>
Quarterly fluctuations in sales volume and operating results are
due to a number of factors, including the timing of trade promotions,
advertising and consumer promotions. Due to the timing and extent of
these factors the impact on sales volume and operating results can be
significant.
RESULTS OF OPERATIONS
The following table is derived from the Company's unaudited
consolidated income statements 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 Increase/(Decrease)
----------------------- -------------------
Three Months Ended Three Months Ended
December 31, December 31,
------------------ ------------------
1998 1997 1998 to 1997
------ ------ ------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 37.5%
Cost of goods sold 37.2 37.0 38.2
----- -----
Gross profit 62.8 63.0 37.0
Selling and marketing 45.8 42.4 48.4
General and administrative 4.5 5.7 7.6
Amortization of intangibles 0.8 1.2 (2.8)
----- -----
Operating income 11.7 13.7 17.4
Interest expense 0.6 0.4 108.6
----- -----
Income before income taxes 11.1 13.3 14.5
Income taxes 4.2 5.1 11.6
----- -----
Net income 6.9% 8.2% 16.4%
===== =====
</TABLE>
PAGE 9
<PAGE>
THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THE THREE MONTHS
ENDED DECEMBER 31, 1997
Net sales. Net sales for the three months ended December 31,
1998 increased 37.5% to $37.7 million from $27.4 million for the
comparable period in fiscal 1998. Net sales growth was primarily the
result of increased sales of the Company's wellness, herb tea and
green tea products. This increase was partially offset by a decrease
in sales of the Company's specialty black tea products. The Company's
wellness products contributed net sales of approximately $7.9 million
during the first quarter of fiscal 1999, as compared to $1.9 million
for the comparable period in 1998. Net sales of the Company's
beverage products increased 17.0% to $29.8 million from $25.5 million
for the comparable period in fiscal 1998.
Gross profit. Gross profit for the three months ended December
31, 1998 increased 37.0% to $23.7 million from $17.3 million for the
comparable period in fiscal 1998. The Company's gross profit margin
as a percent of net sales remained relatively unchanged from 1998.
The Company experienced increased margins in its beverage segment due
to increased sales of its higher margin green tea products and
decreased sales of its lower margin specialty black tea products. The
increase was offset by the effect of increased sales of dietary
supplements which have lower margins than most of the Company's tea
products.
Selling and marketing expenses. Selling and marketing expenses
for the three months ended December 31, 1998 increased 48.4% to $17.2
million from $11.6 million for the comparable period in fiscal 1998,
and increased as a percentage of net sales to 45.8% from 42.4%. The
increase in selling and marketing expenses was primarily due to
increased advertising expenses associated with building the Company's
brand awareness and increased trade promotion expenses associated
with the ongoing development of its wellness products.
General and administrative expenses. General and administrative
expenses for the three months ended December 31, 1998 increased 7.6%
from the comparable period in fiscal 1998, and decreased as a
percentage of net sales to 4.5% from 5.7%. The increase was
primarily due to increased expenses associated with the support of
accounts receivable and increased personnel costs. These increases
were partially offset by the recognition of a gain associated with
the sale of an asset and the effect of larger acquisition expenses
during the comparable period in fiscal 1998.
Amortization of intangibles. Amortization of intangibles,
including amortization of goodwill and other intangible assets for
the three months ended December 31, 1998, remained relatively
unchanged from the comparable period in fiscal 1998.
Operating income. Operating income for the three months ended
December 31, 1998, increased 17.4% to $4.4 million from $3.8 million
for the comparable period in fiscal 1998, primarily due to increased
net sales. Operating income as a percentage of net sales decreased to
11.7% from 13.7%, primarily due to increased selling and marketing
expenses.
Interest expense. Interest expense for the three months ended
December 31, 1998 increased 108.6% from the comparable period in
fiscal 1998 primarily as a result of increased borrowings under the
Company's credit facility in support of accounts receivable and
inventories.
Income taxes. Income tax expense for the three months ended
December 31, 1998 increased 11.6% from the comparable period in
fiscal 1998 due to increased pre-tax income.
PAGE 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.
Other than funding ongoing operations, the Company's principal uses
of funds in the future will be the development of new or existing
beverage and wellness 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 credit facilities. The
Company currently believes that funds from operations and funds
expected to be available under the Company's credit facilities are
likely to be sufficient to meet operating and capital requirements
unless a significant acquisition is made.
Cash and cash equivalents decreased $1.8 million for the three
months ended December 31, 1998. Cash provided by operating activities
was $1.2 million for the three months ended December 31, 1998. The
Company's cash flow associated with investing activities was immaterial,
while financing activities used cash of $3.0 million for the three
months ended December 31, 1998.
The Company incurred capital expenditures of approximately
$70,000 during the three months ended December 31, 1998, including
$44,000 for factory and computer equipment and $26,000 for the design
and development of new packaging artwork. The Company currently
anticipates making capital expenditures of approximately $3.6 million
in fiscal 1999.
YEAR 2000 COMPLIANCE
A number of computer programs are written using two digits
rather than four to define the applicable year. As a result, computer
programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to
process transactions, send invoices, or engage in similar normal
business activities.
The Company, after an inventory of its business systems and
business interactions, is currently executing a plan to prepare its
systems and business relationships for the Year 2000. Although the
exact steps and timing vary depending upon component type, the
Company expects to complete its plan of preparation for all
components on or around July 1, 1999. In the event there is a delay
in the completion of the Year 2000 compliance plan, the Company is in
the process of developing a contingency plan which will include some
non-computerized backup systems. The ability for the Company to
achieve Year 2000 compliance is, however, highly dependent upon
compliance of the systems of the Company's customers, suppliers and
other third parties with which the Company has business
relationships.
The total cost to the Company of Year 2000 compliance activities
has not yet been, and is not anticipated to be, material to its
financial position or results of operations in any given year. These
costs, and the date on which the Company plans to complete the Year
2000 modification and testing processes, are based on management's
best estimates, which were derived using numerous assumptions of
future events including the continued availability of certain
resources, third party modification plans and other factors. However,
there can be no guarantee that these estimates will be achieved and
actual results could differ from those plans.
PAGE 11
<PAGE>
FORWARD LOOKING STATEMENTS
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,"
"Liquidity and Capital Resources" and "Year 2000 Compliance" 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. Such risks and uncertainties include,
without limitation, seasonality, interest in the Company's products,
general economic conditions, consumer trends, costs and availability
of raw materials and management information systems, competition,
litigation and the effect of governmental regulation. The Company
disclaims any intention or obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
PAGE 12
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
The information in Note 3 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 unaudited consolidated
financial statements
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K for the quarter ended December
31, 1998.
PAGE 13
<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)
February 5, 1999 By: /s/ Darrell F. Askey
--------------------
Darrell F. Askey
Vice President - Finance and Chief Financial
Officer
(Principal Financial Officer)
PAGE 14
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
Sequentially
Exhibit Numbered
No. Description Pages
- ------- ----------- ------------
23.1 - Report of Deloitte & Touche LLP on
unaudited consolidated financial
statements 16
PAGE 15
Exhibit 23.1
INDEPENDENT ACCOUNTANTS' REPORT
Celestial Seasonings, Inc.:
We have reviewed the accompanying consolidated balance sheet of
Celestial Seasonings, Inc. and subsidiaries (the "Company") as of
December 31, 1998 and the related consolidated statements of income
and cash flows for the three-month periods ended December 31, 1998
and 1997. 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 as
of September 30, 1998, and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then ended
(not presented herein); and in our report dated November 10, 1998, 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, 1998 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
January 13, 1999
PAGE 16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CELESTIAL SEASONINGS, INC.'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 768
<SECURITIES> 0
<RECEIVABLES> 19900
<ALLOWANCES> (756)
<INVENTORY> 19204
<CURRENT-ASSETS> 42982
<PP&E> 31023
<DEPRECIATION> (12217)
<TOTAL-ASSETS> 81189
<CURRENT-LIABILITIES> 15518
<BONDS> 11675
0
0
<COMMON> 83
<OTHER-SE> 53913
<TOTAL-LIABILITY-AND-EQUITY> 81189
<SALES> 37662
<TOTAL-REVENUES> 37662
<CGS> 14003
<TOTAL-COSTS> 14003
<OTHER-EXPENSES> 19249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 242
<INCOME-PRETAX> 4168
<INCOME-TAX> 1563
<INCOME-CONTINUING> 2605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2605
<EPS-PRIMARY> .31
<EPS-DILUTED> .30
</TABLE>
