<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 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
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Commission File Number 0-14784
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CABLE CAR BEVERAGE CORPORATION
- ---------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 52-0880815
- ------------------------------- ---------------------------------
(State or other jurisdiction
of incorporation) (I.R.S. EmployerIdentification No.)
717 17th Street, Suite 1475, Denver, CO 80202-3314
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(Address of principal executive offices)
(303) 298-9038
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(Registrant's telephone number, including area code)
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(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 8,895,324 shares of its $.01 par value common stock
outstanding as of November 8, 1996.
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Form 10-Q
3rd Quarter
INDEX
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PAGE
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PART I -
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
---------------------------------
Unaudited consolidated balance sheet at September 30,
1996 and at December 31, 1995 3
Unaudited consolidated statement of operations for the
nine-month and three-month periods ended September
30, 1996 and September 30, 1995 4
Unaudited consolidated statement of cash flows for the
nine-month periods ended September 30, 1996 and
September 30, 1995 5
Unaudited consolidated statement of changes in
stockholders' equity 6
Notes to unaudited consolidated financial statements for
the nine-month period ended September 30, 1996 7
Item 2. Management's Discussion and Analysis of
--------------------------------------
Financial Condition and Results of Operations 8
---------------------------------------------
PART II - OTHER INFORMATION
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
UNAUDITED CONSOLIDATED BALANCE SHEET
------------------------------------
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
ASSETS
- ------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,293,232 $ 576,191
Accounts receivable, net of
allowance for doubtful
accounts of $99,241 at
September 30, 1996 and
$55,949 at December 31, 1995 1,885,589 1,063,040
Inventories, net 2,499,441 1,808,257
Prepaid expenses and
other current assets 48,222 40,394
Deferred income tax assets 411,219 340,389
--------- ---------
Total Current Assets 6,137,703 3,828,271
PROPERTY AND EQUIPMENT, NET
Property and equipment less
accumulated depreciation
of $130,586 at September 30,
1996 and $99,231 at
December 31, 1995 132,542 116,466
OTHER ASSETS:
Goodwill and other intangibles,
less accumulated amortization of
$376,432 at September 30, 1996
and $347,007 at December 31, 1995 602,001 631,426
Investment in AMCON Distributing Co. 99,185 99,185
Other assets 142,380 72,498
Deferred income tax assets 558,966 612,854
--------- ---------
$7,672,777 $5,360,700
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 855,659 $ 380,198
Other current liabilities 1,231,177 578,081
--------- -------
Total Current Liabilities 2,086,836 958,279
--------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
25,000,000 shares authorized;
8,905,015 shares issued at
September 30, 1996 and
8,658,349 issued at
December 31, 1995 89,050 86,584
Additional paid-in capital 9,635,409 9,502,877
Accumulated deficit (4,109,883) (5,158,405)
Less - 76,357 common shares
in treasury (28,635) (28,635)
---------- ----------
5,585,941 4,402,421
---------- ----------
$7,672,777 $5,360,700
=========== ===========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
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UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
THREE-MONTHS NINE-MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
-------- ---------- --------- -----------
REVENUE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Sales $5,664,924 $4,286,294 $14,597,468 $9,628,768
COST AND EXPENSES:
Cost of goods sold 4,085,908 3,226,095 10,549,749 7,103,425
General and
administrative 306,217 228,398 821,346 591,060
Selling and
distribution 503,836 478,347 1,469,167 1,046,873
Depreciation and
amortization 21,785 17,119 63,869 47,380
--------- -------- --------- ---------
4,917,746 3,949,959 12,904,131 8,788,738
--------- --------- ---------- ---------
INCOME FROM
OPERATIONS 747,178 336,335 1,693,337 840,030
OTHER INCOME AND
(EXPENSES):
Interest income
and other non-
operating income 11,626 9,946 31,519 37,438
Interest expense (42) (259) (270) (950)
Loss on Amcon stock (848,342) (848,342)
--------- -------- --------- --------
INCOME (LOSS)
BEFORE
INCOME TAXES 758,762 (502,320) 1,724,586 28,176
PROVISION (BENEFIT)
FOR INCOME TAXES 313,647 (858,083) 676,064 (752,371)
--------- ------- -------- --------
NET INCOME $ 445,115 $355,763 $1,048,522 $780,547
========= ======== ========= =======
NET INCOME PER
COMMON SHARE $ .05 $ .04 $ .12 $ .09
========= ======== ========== ========
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES 9,268,101 9,059,421 9,066,057 8,928,463
========= ========= ========= =========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
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UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
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NINE-MONTHS ENDED
SEPTEMBER 30,
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<CAPTION>
<S> <C> <C>
Net income $ 1,048,522 $ 780,547
Adjustment to reconcile net income to
net cash from operating activities:
Loss on investment in AMCON 848,342
Other 1,973
Depreciation and amortization 63,869 47,380
Provision for loss on accounts receivable 43,292 8,370
Change in current assets and liabilities:
Accounts receivable (865,841) (642,184)
Inventories (691,184) (1,191,692)
Prepaid expenses and other current assets (7,828) (6,665)
Other assets (69,882)
Deferred income tax assets (16,942) (936,440)
Accounts payable and accrued liabilities 475,461 352,727
Other current liabilities 658,681 402,739
-------- --------
NET CASH FROM OPERATING ACTIVITIES 640,121 (336,876)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash provided by short-term investments 58,102
Property and equipment acquisitions (52,493) (98,054)
------- -------
NET CASH FROM INVESTING ACTIVITIES (52,493) (39,952)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on debt (5,585) (6,690)
Proceeds from issuance of stock 134,998 374,449
------- -------
NET CASH FROM FINANCING ACTIVITIES 129,413 367,759
------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 717,041 (9,069)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 576,191 580,658
--------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $1,293,232 $571,589
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
Dividend of AMCON stock $799,407
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES
-------------------------------------------
IN STOCKHOLDERS' EQUITY
-----------------------
COMMON STOCK ADDITIONAL ACCUMU TREASURY STOCK
------------ PAID-IN -LATED --------------
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
-------- -------- ------- --------- ------- -------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Balance,
December
31, 1995 8,658,349 $ 86,584 $9,502,877 $(5,158,405) 76,357 $(28,635)
Exercise
of stock
options 246,666 2,466 132,532
Net
Income 1,048,522
-------- ------ ------- --------- ------- -------
Balance
September
30, 1996 8,905,015 $ 89,050 $9,635,409 $(4,109,883) 76,357 $(28,635)
========= ======== ========= ========== ====== =======
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
Note 1 - Financial Statements Presentation:
- ------------------------------------------
The consolidated interim financial statements of Cable Car Beverage
Corporation (the "Company") at September 30, 1996, and for the nine-month
and three-month periods ended September 30, 1996, and September 30, 1995 are
unaudited. In the opinion of management, all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the consolidated
financial position, results of operations and cash flows for all periods
presented have been made.
The Company's consolidated interim financial statements 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, 1995. The results of operations for the
period ended September 30, 1996 are not necessarily indicative of the
operating results for the full year.
Certain reclassifications have been reflected in the prior period financial
statements to conform to the current year presentations.
Note 2 - Net Income Per Common Share:
- ------------------------------------
Net income per common 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.
Note 3 - Inventories:
- --------------------
Inventories consisted of:
September 30, December 31,
1996 1995
------------ -----------
<TABLE>
<CAPTION>
<S> <C> <C>
Finished Goods $1,290,744 $1,009,223
Raw Materials 1,208,697 799,034
--------- ---------
$2,499,441 $1,808,257
========= =========
</TABLE>
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Note 4 - Income Taxes:
- ----------------------
At September 30, 1996, the Company had net deferred income tax assets of
approximately $970,000, consisting primarily of $645,075 in net operating
loss carryforwards and $325,110 of other future deductible temporary
differences. The net operating loss carryforwards are subject to certain
annual utilization limits. Prior to September 30, 1995, 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 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, 1996 the Company continued to
hold 39,674 shares of AMCON common stock.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain statements in the following discussions regarding the Company's
future product and business plans, financial results, performance and events
are forward-looking statements and are based on current expectations. Actual
results may differ materially due to a number of risks and uncertainties.
Current Developments
- --------------------
The Company continued to experience growth of its line of Stewart's brand
soft drinks during the September 1996 quarter. During the third quarter of
1996, the Company also announced the introduction of Java Cola, a carbonated
coffee flavored line of Cola drinks.
Liquidity and Capital Resources
- -------------------------------
At September 30, 1996, the Company's working capital was $4,050,867, an
increase of $1,180,875, or 41%, from December 31, 1995. During the nine-month
period ending September 30, 1996, the Company generated $640,121 in cash from
operations, purchased equipment
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<PAGE>
aggregating approximately $52,000, and received approximately $135,000 from
the exercise of stock options. This activity resulted in an increase in the
Company's cash balance of approximately $717,000 to a September 30, 1996
balance of $1,293,232. The Company's other current liabilities increased by
$653,096 to a September 30, 1996 balance of $1,231,177. This change is
primarily due to increases in accrued promotional expense and payroll expense,
and an increase in the current year tax liability.
The Company intends to continue utilizing cash from operations to meet its
ongoing obligations. However, 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 1996 assuming the Company can maintain or exceed its current sales
volume and expenses as a percentage of sales remain relatively constant.
As of September 30, 1996, the Company had net deferred income tax assets of
approximately $970,000, consisting primarily of net operating loss
carryforwards and other deferred reserves. As of September 30, 1996, the
Company has net operating loss carryforwards of approximately $1,700,000
which expire from 1999 through 2005. Pursuant to Section 382 of the Internal
Revenue Code, the Company is limited in the amount of net operating loss
carryforwards it may use each year to offset taxable income. The Company's
consolidated Section 382 annual limitation is approximately $343,000.
Results of Operations
- ---------------------
Comparison of the nine-month periods ended September 30, 1996 and September
30, 1995 Revenue for the nine-months ended September 30, 1996 was $14,597,468
versus revenue of $9,628,768 for the nine-months ended September 30, 1995.
This increase of $4,968,700, or 52%, was primarily due to increased sales of
Stewart's brand products
Cost of goods sold increased by $3,446,324 for the comparative nine-months
ended September 30, 1996 and September 30, 1995. As a percentage of sales,
cost of goods sold decreased to 72.3% for the nine-months ended September 30,
1996 from 73.8% for the nine-months ended September 30, 1995. This decrease
is primarily due to a combination of the following: increase in costs on
certain raw materials, increase in selling price for certain packages of the
Stewart's selling line, and greater sales of larger package sizes in the
Stewart's line.
General and administrative expenses increased by $230,286 for the nine-months
ended September 30, 1996 compared to the nine-months ended September 30, 1995.
General and administrative costs decreased as a percentage of sales to 5.6%
from 6.1% for the nine-months ended September 30, 1996 and 1995, respectively.
The increase is due to increased salaries, and bad debt expense.
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<PAGE>
Selling expense increased $422,294 for the comparative nine-months ended
September 30, 1996 from September 30, 1995, primarily due to increased
promotional spending on the Stewart's brand products. As a percentage of
sales, selling expense was relatively constant.
Net income increased by $267,975, or 34.3%, to $1,048,522 for the nine-months
ended September, 1996 from $780,547 for the nine-months ended September 30,
1995. The Company recorded income taxes using a 38% income tax rate compared
to 21% for the nine-months ended September 30, 1996 and 1995, respectively.
Comparison of the three-month periods ended September 30, 1996 and September
- ----------------------------------------------------------------------------
30, 1995
- --------
Revenue for the three-months ended September 30, 1996 was $5,664,924 versus
revenue of $4,286,294 for the three-months ended September 30, 1995. This
increase of $1,378,630, or 32.2%, was primarily due to increases sales of
Stewart's brand products
Cost of goods sold increased by $859,813 for the comparative three-months
ended September 30, 1996 and September 30, 1995. As a percentage of sales,
cost of goods sold decreased to 72.1% for the three-months ended September
30, 1996 from 75.3% for the three-months ended September 30, 1995. This
decrease is primarily due to a combination of the following: increase in
costs on certain raw materials, increase in selling price for certain packages
of the Stewart's selling line, greater sales of larger package sizes in the
Stewart's line, and temporarily higher production costs in the third quarter
of 1995.
General and administrative expenses increased by $77,819 for the three-months
ended September 30, 1996 compared to the three-months ended September 30,
1995. General and administrative costs increased as a percentage of sales to
5.4% from 5.3% for the three-months ended September 30, 1996 and 1995,
respectively. The increase is primarily due to increased salaries expense,
and an increase in bad debts expense.
Selling expense increased $25,489 for the comparative three-months ended
September 30, 1996 from September 30, 1995. As a percentage of sales,
selling expense decreased to 8.9% from 11.2% for the three-months ended
September 30, 1996 and 1995, respectively. This decrease is primarily due to
the timing of promotional expense resulting in lower promotional spending as
a % of sales in the third quarter of 1996 as compared with the third quarter
of 1995.
Net income increased by $89,352, or 25.1%, to $445,115 for the three-months
ended September 30, 1996 from $355,763 for the three-months ended September
30, 1995. The Company recorded its income taxes using a 38% income tax rate
compared to 21% for the three-months ended September 30, 1996 and 1995,
respectively.
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<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3 (i) Certificate of Incorporation*
3 (ii) Certificate of Amendment (Changing Name)**
3 (iii) By-Laws*
27 Financial Data Schedule
* Incorporated by reference to Form 10-K dated 10/09/87
** Incorporated by reference to Form S-1 filed 09/25/89 (SEC #33-30480)
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Commission for
the quarter ended September 30, 1996.
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<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 11, 1996 By:/s/Samuel M. Simpson
---------------------
Samuel M. Simpson
President
/s/Myron D. Stadler
--------------------
Myron D. Stadler
Chief Accounting Officer
- 12 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,293,232
<SECURITIES> 0
<RECEIVABLES> 1,984,830
<ALLOWANCES> 99,241
<INVENTORY> 2,499,441
<CURRENT-ASSETS> 6,137,703
<PP&E> 263,128
<DEPRECIATION> 130,586
<TOTAL-ASSETS> 7,672,777
<CURRENT-LIABILITIES> 2,086,836
<BONDS> 0
0
0
<COMMON> 8,905,015
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,672,777
<SALES> 5,664,924
<TOTAL-REVENUES> 5,664,924
<CGS> 4,085,908
<TOTAL-COSTS> 4,917,746
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 758,762
<INCOME-TAX> 313,647
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 445,115
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
