- 14 -
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly September 30, 1995
period ended
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 0-14784
CABLE CAR BEVERAGE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 52-0880815
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation)
717 17th Street, Suite 1475, Denver, CO 80202-3314
(Address of principal executive offices)
(303) 298-9038
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
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 Registrant had 8,581,992 shares of its $.01 par value common
stock outstanding as of November 10, 1995.
<PAGE>
Form 10-Q
3rd Quarter
INDEX
PAGE
PART I FINANCIAL INFORMATION
- -
Item 1. Consolidated Financial Statements:
Unaudited consolidated balance sheet
at September 30, 1995 and consolidated
balance sheet at December 31, 1994 3
Unaudited consolidated statement of
operations for the nine-month periods
ended September 30, 1995 and September 4
30, 1994
Unaudited consolidated statement of
cash flows for the nine-month periods
ended September 30, 1995 and September 5
30, 1994
Unaudited consolidated statement of
changes in stockholders' equity 6
Notes to unaudited consolidated 7
financial statements
Item 2. Management's Discussion and Analysis
of 9
Financial Condition and Results of
Operations
PART II OTHER INFORMATION 13
PART III FINANTIAL DATA SCHEDULE 15
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION> September December
30, 31,
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$ 571,589 $ 580,658
Short-term investments 93,774 151,876
Accounts receivable, net 1,291,638 657,824
Inventories 1,790,629 598,937
Prepaid expenses and other current 39,039 32,374
assets
Deferred income tax assets 323,586 0
Total Current Assets 4,110,255 2,021,669
PROPERTY AND EQUIPMENT, NET 125,750 46,155
OTHER ASSETS:
Intangibles, net 601,332 630,253
Investment in AMCON Distributing Co. 99,185 1,746,934
Other assets 3,821 3,821
Deferred income tax assets 612,854 0
$5,553,198 $4,448,832
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 456,212 $ 103,485
Other current liabilities 788,552 385,813
Current portion of long-term debt 7,692 8,786
Total Current Liabilities 1,252,456 498,084
LONG-TERM DEBT 374 5,970
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
25,000,000 shares 86,584 81,547
authorized; 8,658,349 shares
issued
Additional paid-in capital $9,502,876 9,133,464
Accumulated deficit (5,260,457) (5,241,598)
Less - 76,357 common shares in (28,635) (28,635)
treasury
4,213,784 3,863,232
$5,553,198 $4,448,832
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION> THREE-MONTHS NINE-MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUE:
Sales
$ 4,286,294 $ 2,759,084 $ 9,628,768 $ 6,525,675
COST AND EXPENSES:
Cost of goods sold 3,226,095 1,961,118 7,103,425 4,689,072
General and administrative 228,399 193,126 591,061 503,876
Selling and distribution 478,347 234,684 1,046,873 639,207
Depreciation and 17,119 14,448 47,380 42,784
amortization
$ 3,949,960 $ 2,403,376 $ 8,788,739 $ 5,874,939
INCOME FROM OPERATIONS: 336,334 355,708 840,029 650,735
OTHER INCOME AND
(EXPENSES):
Interest and other non-
operating 9,946 4,056 37,438 11,630
income
Interest expense (259) (534) (950) (1,799)
Loss on AMCON stock (848,342) 0 (848,342) 0
INCOME BEFORE INCOME TAXES (502,321) 359,230 28,175 660,566
PROVISION (BENEFIT) FOR
INCOME TAXES (858,083) 12,000 (752,371) 12,000
NET INCOME
$ 355,763 $ 347,230 $ 780,547 $ 648,566
EARNINGS PER COMMON SHARE
& COMMON EQUIVALENT SHARE:
NET INCOME
$ .04 $ .04 $ .09 $ .08
WEIGHTED AVERAGE COMMON &
COMMON EQUIVALENT SHARES: 9,059,421 8,006,799 8,928,463 7,908,251
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION> NINE-MONTHS ENDED
SEPTEMBER 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 780,547 $ 648,566
Adjustment to reconcile net income to
net cash from
operating activities:
Loss on investment in AMCON 848,342 0
Depreciation and amortization 47,380 42,784
Provision for loss on accounts 8,370 30,000
receivable
Changes in assets and liabilities:
Accounts receivable (642,184) (477,188)
Inventories (1,191,692) (443,649)
Prepaid expenses and other current (6,665) (20,015)
assets
Other assets 0 9,478
Deferred income tax assets (936,440) 0
Accounts payable and accrued liabilities 352,727 280,372
Other current liabilities 402,739 103,203
NET CASH FROM OPERATING ACTIVITIES (336,876) 173,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments 58,102 0
Property and equipment (98,054) (18,609)
Acquisition of licensing fee 0 (12,500)
NET CASH FROM INVESTING ACTIVITIES (39,952) (31,109)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on debt (6,690) (1,543)
Proceeds from issuance of stock 374,449 40,202
NET CASH FROM FINANCING ACTIVITIES 367,759 38,659
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (9,069) 181,101
CASH AND CASH EQUIVALENTS AT BEGINNING
OF 580,658 373,183
PERIOD
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 571,589 $ 554,284
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
Dividend of AMCON stock
$ 799,407 $ 0
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> COMMON STOCK ADDITION ACCUMU- TREASURY STOCK
AL
NUMBER PAID-IN LATED NUMBER
OF SHARES AMOUNT CAPITAL DEFICIT OF SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
Balance December
31, 1994 8,154,618 $ 81,547 $ 9,133,464 $(5,241,598) 76,357 $(28,635)
Issuance for
exercise of
warrants 503,731 5,037 369,412
Dividend of
AMCON stock (799,407)
Net income 780,547
Balance September
30, 1995 8,658,349 $ 86,584 $ 9,502,876 $(5,241,598) 76,357 $(28,635)
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statements Presented:
The consolidated interim data of Cable Car Beverage Corporation
(the "Company") at September 30, 1995 and for the three and nine-
month periods ended September 30, 1995 and September 30, 1994
respectively, is unaudited. In the opinion of management, the
interim data includes all adjustments (which include only normal
recurring adjustments) necessary for a fair statement of the
results for the interim periods.
The Company's consolidated financial statements at and for the
nine-months ended September 30, 1995 include the accounts of its
wholly-owned subsidiaries, Old San Francisco Seltzer, Inc. and
Fountain Classics, Inc.
Certain information and substantially all footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's consolidated financial statements,
filed in Form 10-K for December 31, 1994. The results of
operations for the period ended September 30, 1995 are not
necessarily indicative of the operating results for the full
year.
Certain reclassifications have been reflected in the prior year
financial statements to conform to the current year presentations.
Note 2 - Net Income Per Common and Common Equivalent Share:
Net income per common and common equivalent share was computed
under the treasury stock method using the weighted average number
of common shares and dilutive common stock equivalent shares
outstanding during the period.
<PAGE>
Note 3 - Inventories:
Inventories consist of:
<TABLE>
<CAPTION> September December
30, 31,
1995 1994
<S> <C> <C>
Finished Goods $ 984,797 $ 398,470
Raw Materials 805,832 200,467
$ 1,790,629 $ 598,937
</TABLE>
Note 4 - Income Taxes:
As of September 30, 1995, the Company had deferred income tax
assets of $936,440, consisting primarily of $741,737 in net
operating loss carryforwards and $194,703 of other future
deductible temporary differences. The net operating loss
carryforwards are subject to certain annual utilization limits.
Previously, the Company had recorded a valuation allowance equal
to the deferred income tax assets due to management's uncertainty
about the likelihood that the Company would fully utilize these
benefits. However, it was determined by the Company at September
30, 1995 that, based upon the Company's recent and expected
future operating results, it is now more likely than not that the
Company will realize all of its future income tax benefits.
Based on this determination, the Company has eliminated the
valuation allowance against the deferred income tax assets which
resulted in an income tax benefit of $936,440 for the quarter
ended September 30, 1995.
Note 5 - Loss on Investment in AMCON/ Dividend of AMCON Common
Stock:
During the September 1995 quarter, the Company wrote-down its
investment in AMCON Distributing Company, Inc. ("AMCON") to the
market price of AMCON common stock as reported by NASDAQ on
August 4, 1995, the date upon which the stock was initially
included on NASDAQ, which resulted in a charge of $848,342. On
July 31, 1995, the Company distributed 266,469 shares of AMCON
common stock as a dividend to the Company's shareholders of
record as of July 5, 1995. This distribution of 266,469 shares
of AMCON represented 87% of the Company's holdings in AMCON. At
September 30, 1995, the Company continued to hold 39,674 shares
of AMCON common stock.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations
Current Developments
Operations. The Company continued to experience growth of its
line of Stewart's premium soft drinks during the quarter ended
September 30, 1995. The Company is presently selling Stewart's in
various cities throughout the United States and Canada. During
the September quarter, the Company also continued to test market
its two new product lines, ASPEN Extreme and Fountain Classics
Seltzer. ASPEN Extreme is a sport drink and Fountain Classics
Seltzer is a non-sweetened seltzer water.
Loss on Investment in AMCON/ Dividend of AMCON Common Stock.
During the September 1995 quarter, the Company wrote-down its
investment in AMCON Distributing Company, Inc. ("AMCON") to the
market price of AMCON common stock as reported by NASDAQ on
August 4, 1995, the date upon which the stock was initially
included on NASDAQ, which resulted in a charge of $848,342. On
July 31, 1995, the Company distributed 266,469 shares of AMCON
common stock as a dividend to the Company's shareholders of
record as of July 5, 1995. This distribution of 266,469 shares
of AMCON represented 87% of the Company's holdings in AMCON. At
September 30, 1995, the Company continued to hold 39,674 shares
of AMCON common stock.
Deferred tax benefit. As of September 30, 1995, the Company had a
deferred income tax assets of $936,440, consisting primarily of
$741,737 in net operating loss carryforwards and $194,703 of
other future deductible temporary differences. The net operating
loss carryforwards are subject to certain annual utilization
limits. Previously, the Company had recorded a valuation
allowance equal to the deferred income tax assets due to
management's uncertainty about the likelihood that the Company
would fully utilize these benefits. However, it was determined
by the Company at September 30, 1995 that, based upon the
Company's recent and expected future operating results, it is now
more likely than not that the Company will realize all of its
future income tax benefits. Based on this determination, the
Company has eliminated the valuation allowance against the
deferred income tax assets which resulted in an income tax
benefit of $936,440 for the quarter ended September 30, 1995.
Liquidity and Capital Resources
The Company's current ratio at September 30, 1995 was 3.28 as
compared to 4.06 at December 31, 1994. Working capital at
September 30, 1995 was $2,857,799 as compared to $1,523,585 at
December 31, 1994. For the nine-months ended September 30, 1995,
cash decreased by $9,069. The principal source was from financing
activities, but such sources were more than offset by cash used
in operations. A majority of the cash used in operations related
to increases in accounts receivable and inventories offset by
increases in accounts payable and accrued liabilities of
$352,729. Financing activities generated cash of $367,758,
primarily from the net proceeds of stock issuances from exercised
<PAGE>
options and warrants. Investing activities used a net of $39,952
primarily for the purchase of production equipment and was
partially offset by the maturing of short-term investments in
certificates of deposit.
The Company intends to utilize cash from operations to meet its
ongoing obligations. The Company has also established a bank
line of credit in the amount of $500,000 which it may utilize
from time to time to meet seasonal cash needs. Management does
not expect liquidity problems during 1995 assuming the Company
can maintain or exceed its current sales volume and expenses as a
percentage of sales remain relatively constant.
Results of Operations
Comparison of the nine-month periods ended September 30, 1995 and
September 30, 1994
The following table reflects certain unaudited financial
information for the Company for the nine-months ended September
30, 1995 and September 30, 1994:
<TABLE>
<CAPTION> 1995 1994
<S> <C> <C>
Sales $ 9,628,768 $ 6,525,675
Cost of Goods Sold 7,103,425 4,689,072
Selling, General &
Administrative 1,685,314 1,185,867
Income From Operations 840,029 650,735
Other Income (Loss) (811,854) 9,831
Income Before Income
Taxes 28,175 660,566
Provision (Benefit)
for Income Taxes (752,371) 12,000
Net Income $ 780,547 $ 648,566
</TABLE>
As reflected in the above table, the Company had net income of
$780,547 for the nine-months ended September 30, 1995 compared
with net income of $648,566 for the nine-months ended September
30, 1994. This 20% increase in net income resulted from an
increase in operating income, a non-operating loss relating to a
write-down of an investment, and recording of a deferred income
tax benefit primarily relating to the Company's net operating
loss carryforwards.
The Company's operating income increased to $840,029 for the nine-
months ended September 30, 1995 versus $650,735 for the nine-
months ended September 30, 1994. This 29% increase in operating
income was primarily due to increased revenue in 1995.
Net income was also affected by certain non-operating items.
Other income (loss) for the nine-months ended September 30, 1995
resulted in a loss of $811,854 compared with a gain of $9,831
for the nine-months ended September 30, 1994. This decrease is
attributable to the recording of a write-down during the
September 1995 quarter of its investment in AMCON (See "Current
Developments", above).
<PAGE>
Net income also reflects certain changes to the Company's
provision for income taxes at September 30, 1995. The Company's
provision for income taxes for the nine-months ended September
30, 1995 includes an income tax benefit related to the
elimination of the valuation allowance of $936,440 whereas the
provision for income taxes for the nine-months ended September
30, 1994 did not include such a benefit. The deferred income tax
benefit recorded at September 30, 1995 was due to the Company's
determination that it is more likely than not that all the
Company's future income tax benefits will be realized (see
"Current Developments", above). Prior to the inclusion of the
loss on the AMCON investment and the benefit related to the
elimination of the valuation allowance, the Company's income tax
provision reflects a tax rate of 21% for the nine-months ended
September 30, 1995 versus 2% for the nine-months ended September
30, 1994. This increase was attributable to a reduction in net
operating loss carryforwards available to offset the Company's
income tax liability this year as compared to last year.
Revenue from the sale of products increased to $9,628,768 in 1995
from $6,525,675 in 1994. This increase of $3,103,093 or 48% was
due primarily to increased Stewart's case sales.
Cost of goods sold increased $2,414,353 in the nine-months ended
September 30, 1995 versus 1994, and increased as a percentage of
sales from 71.9% to 73.8%. The percentage increase was due
primarily to increased glass costs, increased production costs,
and increased warehousing costs.
Selling expense increased $407,666 from 1994 to 1995, and
increased slightly as a percentage of sales from 9.8% to 10.9%.
The increase was due primarily to the following factors: (1)
salary and related selling expenses associated with expanding
distribution and (2) expenses incurred in 1995 for designing,
packaging and introducing the Company's new products.
General and administrative expense increased $87,185 from 1994 to
1995, but decreased as a percentage of sales from 7.7% to 6.1%.
The percentage decrease in general and administrative expenses
was primarily attributable to a 48% increase in sales while
administrative expense increased only 17%. The dollar increase
was due primarily to the following factors: (1) salary and
related expenses and (2) administrative expenses incurred in the
development of the Company's new proprietary products.
<PAGE>
Comparison of the three-month periods ended September 30, 1995
and September 30, 1994
The following table reflects certain unaudited financial
information for the Company for the three-months ended September
30, 1995 and September 30, 1994:
<TABLE>
<CAPTION> 1995 1994
<S> <C> <C>
Sales $ 4,286,294 $ 2,759,084
Cost of Goods Sold 3,226,095 1,961,118
Selling, General &
Administrative 723,865 442,258
Income From Operations 336,334 355,708
Other Income (Loss) (838,655) 3,522
Income (Loss) Before
Income Taxes (502,321) 359,230
Provision (Benefit) for
Income Taxes (858,083) 12,000
Net Income $ 355,763 $ 347,230
</TABLE>
As reflected in the above table, the Company had net income of
$355,763 for the three-months ended September 30, 1995 compared
with net income of $347,230 for the three-months ended September
30, 1994. This 2.5% increase in net income resulted from a
decrease in operating income, a non-operating loss relating to a
one-time write-down of an investment, and a tax benefit relating
to the Company's future income tax benefits.
The Company's operating income decreased slightly to $336,334 for
the three-months ended September 30, 1995 versus $355,708 for the
three-months ended September 30, 1994. This 5% decrease in
operating income was primarily due to higher costs of goods and
higher selling expenses in the September 1995 quarter versus the
September 1994 quarter.
Net income was also affected by certain non-operating items.
Other income (loss) for the three-months ended September 30, 1995
resulted in a loss of $838,655 compared with a gain of $3,522
for the three-months ended September 30, 1994. This decrease is
attributable to the recording of a write-down during the
September 1995 quarter of its investment in AMCON (see "Current
Developments", above).
Net income also reflects certain changes to the Company's
provision for income taxes at September 30, 1995. The Company's
provision for income taxes for the three-months ended September
30, 1995 includes an income tax benefit of $936,440 whereas the
provision for income taxes for the three-months ended September
30, 1994 did not include such a benefit. The deferred income tax
benefit recorded at September 30, 1995 was due to the Company's
determination that it is more likely than not that all the
Company's future income tax benefits (see "Current Developments",
above). Prior to the inclusion of the loss on the AMCON
investment and the deferred income tax benefits related to the
elimination of the valuation allowance, the Company's income tax
provision reflects a tax rate of 23% for the three-months ended
September 30, 1995 versus 3% for the three-months ended September
30, 1994. This increase was attributable to a reduction in net
operating loss carryforwards available to offset the Company's
income tax liability this year as compared to last year.
Revenue from the sale of products increased to $4,286,294 in 1995
from $2,759,084 in 1994. This increase of $1,527,210 or 55% was
due primarily to increased Stewart's case sales.
Cost of goods sold increased $1,264,977 in the third quarter of
1995 versus 1994, and increased as a percentage of sales from 71%
to 75%. The percentage increase was due primarily to increased
glass costs, production costs, and warehousing costs.
Selling expense increased $243,663 from 1994 to 1995, and
increased as a percentage of sales from 8.5% to 11.2%. The
increase was due primarily to the following factors: (1) salary
and related selling expenses associated with expanding
distribution and (2) expenses incurred in 1995 for designing,
packaging and introducing the Company's new proprietary products.
General and administrative expense increased $35,273 from 1994 to
1995, but decreased as a percentage of sales from 7.0% to 5.3%.
The percentage decrease in general and administrative expenses
was primarily attributable to a 55% increase in sales while
administrative expense increased only 18%. The dollar increase
was due primarily to the following factors: (1) salary and
related expenses and (2) administrative expenses incurred in the
development of the Company's new proprietary products.
PART II - OTHER INFORMATION
None.
<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, hereunto duly authorized.
CABLE CAR BEVERAGE CORPORATION
(registrant)
Date: November 13, 1995 By /s/ Samuel M. Simpson
:
Samuel M. Simpson
President
/s/Myron D. Stadler
Myron D. Stadler
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedulle contains summary financial information extracted from the
consolidated Balance sheets and consolidated statements of operations
found on pages 3 and 4 of the company's form 10-q for the year-to-date,
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> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 572
<SECURITIES> 0
<RECEIVABLES> 1,360
<ALLOWANCES> 68
<INVENTORY> 1,791
<CURRENT-ASSETS> 4,110
<PP&E> 216
<DEPRECIATION> 90
<TOTAL-ASSETS> 5,553
<CURRENT-LIABILITIES> 1,252
<BONDS> 0
<COMMON> 87
0
0
<OTHER-SE> 4,127
<TOTAL-LIABILITY-AND-EQUITY> 5,553
<SALES> 9,629
<TOTAL-REVENUES> 9,629
<CGS> 7,103
<TOTAL-COSTS> 8,789
<OTHER-EXPENSES> (37)
<LOSS-PROVISION> 848
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 28
<INCOME-TAX> (752)
<INCOME-CONTINUING> 781
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 781
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
