SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1999 Commission file number 0-18761
HANSEN NATURAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 39-1679918
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2380 Railroad Street, Suite 101,
Corona, California 91720
(Address of principal executive offices) (Zip Code)
(909) 739 - 6200
Registrant's telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The registrant had 9,938,414 shares of common stock
outstanding as of April 30, 1999
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
March 31, 1999
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 3
Consolidated Statements of Income for the
three-months ended March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows for the
three-months ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. OTHER INFORMATION
Items 1-5. Not Applicable 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 16
Exhibit Index 17
2
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
March 31, December 31,
1999 1998
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,076,543 $ 3,806,089
Accounts receivable (net of allowance for doubtful
accounts, sales returns and cash discounts of $403,487
in 1999 and $378,641 in 1998 and promotional allowances
of $1,846,228 in 1999 and $1,608,123 in 1998) 3,156,781 1,827,544
Inventories, net 5,405,772 5,211,077
Prepaid expenses and other current assets 341,551 244,318
------------------- ------------------
10,980,647 11,089,028
PROPERTY AND EQUIPMENT, net 640,567 601,523
INTANGIBLE AND OTHER ASSETS:
Trademark license and trademarks (net of accumulated amortization
of $2,761,610 in 1999 and $2,687,462 in 1998) 9,929,269 10,003,417
Note receivable from director 10,587 20,861
Deposits and other assets 313,462 211,903
------------------- ------------------
10,253,318 10,236,181
=================== ==================
$ 21,874,532 $ 21,926,732
=================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,755,346 $ 1,870,253
Accrued liabilities 328,291 403,864
Accrued compensation 181,404 476,001
Current portion of long-term debt 1,111,525 2,072,818
Income taxes payable 200,310 1,269,185
------------------- ------------------
5,576,876 6,092,121
LONG-TERM DEBT, less current portion 693,684 1,334,967
DEFERRED INCOME TAX LIABILITY 707,836 557,461
SHAREHOLDERS' EQUITY:
Common stock - $.005 par value; 30,000,000 shares authorized; 9,938,414 and
9,911,905 shares issued
and outstanding in 1999 and 1998, respectively 49,692 49,560
Additional paid-in capital 11,228,333 11,207,765
Retained earnings 3,618,111 2,684,858
------------------- ------------------
Total shareholders' equity 14,896,136 13,942,183
------------------- ------------------
$ 21,874,532 $ 21,926,732
=================== ==================
</TABLE>
3
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1999 1998
---- ----
NET SALES $ 15,229,104 $ 11,264,856
COST OF SALES 7,821,425 5,613,428
------------------- -------------
GROSS PROFIT 7,407,679 5,651,428
OPERATING EXPENSES:
Selling, general and administrative 5,771,247 4,278,486
Amortization of trademark license and trademarks 74,148 73,800
Other expenses 15,000 15,000
------------------- --------------
Total operating expenses 5,860,395 4,367,286
------------------- --------------
OPERATING INCOME 1,547,284 1,284,142
NONOPERATING EXPENSE (INCOME):
Interest and financing expense 63,031 109,936
Interest income (26,159) (1,103)
------------------- ----------------
Net nonoperating expense 36,872 108,833
------------------- ----------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,510,412 1,175,309
PROVISION FOR INCOME TAXES 601,500 470,123
------------------- --------------
NET INCOME $ 908,912 $ 705,186
=================== ================
NET INCOME PER COMMON SHARE:
Basic $ 0.09 $ 0.08
=================== ================
Diluted $ 0.09 $ 0.07
=================== ================
NUMBER OF COMMON SHARES USED
IN PER SHARE COMPUTATIONS:
Basic 9,924,933 9,130,869
=================== ================
Diluted 10,521,733 9,740,264
=================== ================
</TABLE>
4
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 908,912 $ 705,186
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of trademark license and trademarks 74,148 73,800
Depreciation and other amortization 64,226 76,466
Compensation expense related to issuance of stock options 24,341
Deferred income taxes 150,375
Effect on cash of changes in operating assets and liabilities:
Accounts receivable (1,329,237) (663,137)
Inventories (194,695) 423,161
Prepaid expenses and other current assets (97,233) 37,735
Accounts payable 1,885,093 (438,580)
Accrued liabilities (75,573) (127,150)
Accrued compensation (294,597) (70,989)
Income taxes payable (1,068,875) 458,790
------------------ ------------------
Net cash provided by operating activities 46,885 475,282
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (103,270) (264,441)
Increase in trademark license and trademarks (17,233)
Decrease in note receivable from director 10,274 10,872
Increase in deposits and other assets (101,559) (7,784)
------------------ ------------------
Net cash used in investing activities (194,555) (278,586)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,602,576) (126,008)
Issuance of common stock 20,700
------------------ ------------------
Net cash used in financing activities (1,581,876) (126,008)
------------------ ------------------
NET (DECREASE) INCREASE IN CASH (1,729,546) 70,688
CASH, beginning of period 3,806,089 395,231
================== ==================
CASH, end of period $ 2,076,543 $ 465,919
================== ==================
SUPPLEMENTAL INFORMATION Cash paid during the year for:
Interest $ 75,252 $ 96,544
================== ==================
Income taxes $ 1,520,000 $ 2,400
================== ==================
</TABLE>
NONCASH TRANSACTIONS:
During the three-month period ended March 31, 1999, the Company issued
11,509 shares of common stock to employees in connection with a net
exercise of options to purchase 15,800 shares of common stock.
5
<PAGE>
HANSEN NATURAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTHS ENDED MARCH 31,
1999 AND YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
Reference is made to the Notes to Consolidated Financial Statements, in
the Company's Form 10-K for the year ended December 31, 1998, which is
incorporated by reference, for a summary of significant policies
utilized by Hansen Natural Corporation ("Hansen" or "Company") and its
wholly-owned subsidiaries, Hansen Beverage Company ("HBC") and CVI
Ventures, Inc. The information set forth in these interim financial
statements is unaudited and may be subject to normal year-end
adjustments. The information reflects all adjustments, which include
only normal recurring adjustments, which in the opinion of management
are necessary to make the financial statements not misleading. Results
of operations covered by this report may not necessarily be indicative
of results of operations for the full fiscal year.
2. INVENTORIES
Inventories consist of the following at:
March 31, December 31,
1999 1998
------------- -------------
Raw materials $ 2,520,686 $ 1,815,040
Finished goods 3,155,646 3,664,270
------------- -------------
5,676,332 5,479,310
Less inventory reserve (270,560) (268,233)
------------- -------------
$ 5,405,772 $ 5,211,077
============= =============
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
General
During the three-months ended March 31, 1999 the Company continued to
make progress towards achieving its goal of expanding both the Hansen's(R) brand
product range and distribution of such products into new markets outside of
California. Sales of the Company's functional drinks continued to exhibit
strength and good repeat purchase by consumers. During the period concerned, the
Company introduced its new line of premium Hansen's(R) Signature Sodas. Higher
than expected sales of Signature Sodas during the period bodes well for the
future prospects for this new line. In addition, Southland Corporation, which
operates and/or franchises more than 5,000 7-11 stores throughout the United
States and Canada, has authorized its 7-11 stores to sell the Hansen's(R)
Signature Soda line.
During the period concerned, the Company participated in an aggressive
sampling program in club stores, which resulted in increased marketing and
promotional expenses.
The redesign of the graphics for the Company's Natural Sodas and
Smoothie products in cans is progressing and should be completed during the
second quarter of 1999. The Company anticipates introducing its new line of
premium functional Smoothies in cans during the second quarter of 1999 and in
bottles later in the year.
The increase in net sales and profitability in the first quarter of
1999 was primarily attributable to the Signature Soda line which was introduced
during January 1999, the Company's Healthy Start(TM) juice line and apple juice
blends, as well as increased sales of the Company's energy and other functional
drinks in 8.2 oz. slim cans as compared to the comparable period in 1998. Sales
of Natural Sodas and Smoothies in cans and bottles were also higher in the
period concerned as compared to the comparable period in 1998. The increase in
net sales was partially offset by decreased sales principally of apple juice and
teas, lemonades and juice cocktails.
The Company continues to incur expenditures in connection with the
development and introduction of new products and flavors.
7
<PAGE>
Results of Operations for the Three-months Ended March 31, 1999 Compared to the
Three-months Ended March 31, 1998
Net Sales. For the three-months ended March 31, 1999, net sales were
approximately $15.2 million, an increase of $4.0 million or 35.2% higher than
the $11.2 million net sales for the three-months ended March 31, 1998. The
increase in net sales was primarily attributable to sales of the Company's new
Signature Soda line, which was introduced in the first quarter of 1999, the
Healthy Start(TM) juice line, which was introduced during the second quarter of
1998, power, which was introduced in the fourth quarter of 1998, the Company's
apple juice blends, which were introduced in the second quarter of 1998, and
increased sales of the Company's energy and other functional drinks in 8.2 oz.
slim cans, Smoothies in cans and bottles, and Natural Sodas in cans. The
increase in net sales was partially offset by decreased sales principally of
apple juice and teas, lemonades and juice cocktails.
Gross Profit. Gross profit was $7.4 million for the three-months ended
March 31, 1999, an increase of $1.8 million or 31.1% higher than the $5.7
million gross profit for the three-months ended March 31, 1998. Gross profit as
a percentage of net sales decreased to 48.6% for the three-months ended March
31, 1999 from 50.2% for the three-months ended March 31, 1998. The increase in
gross profit was primarily attributable to increased net sales. The decrease in
gross profit as a percentage of net sales was primarily attributable to lower
margins achieved as a result of a change in the Company's product mix.
Total Operating Expenses. Total operating expenses were $5.9 million
for the three-months ended March 31, 1999, an increase of $1.5 million or 34.2%
higher than total operating expenses of $4.4 million for the three-months ended
March 31, 1998. Total operating expenses as a percentage of net sales were 38.5%
for the three-months ended March 31, 1999 which was comparable to operating
expenses as a percentage of net sales of 38.8% for the three-months ended March
31, 1998. The increase in total operating expenses was primarily attributable to
increased selling, general and administrative expenses.
Selling, general and administrative expenses were $5.8 million for the
three-months ended March 31, 1999, an increase of $1.5 million or 34.9% higher
than selling, general and administrative expenses of $4.3 million for the
three-months ended March 31, 1998. Selling, general and administrative expenses
as a percentage of net sales was 37.9% for the three-months ended March 31, 1999
which was comparable to selling, general and administrative expenses as a
percentage of net sales of 38.0% for the three-months ended March 31, 1998. The
increase in selling expenses was primarily attributable to increases in
distribution expenses in connection with sales made in areas outside California,
promotional allowances and materials, and expenditures for sampling and product
demonstrations primarily in connection with the introduction of new products.
The costs that were incurred by the Company in sampling the Healthy Start(TM)
juice line in club stores during its introductory phase were unusually high. The
increase in general and administrative expenses was primarily attributable to
increased payroll and other costs in connection with the Company's expansion
activities into additional states and operating activities to support the
increase in net sales.
8
<PAGE>
Operating Income. Operating income was $1.5 million for the
three-months ended March 31, 1999, an increase of $263,000 or 20.5% higher than
operating income of $1.3 million for the three-months ended March 31, 1998.
Operating income as a percentage of net sales decreased to 10.2% for the
three-months ended March 31, 1999 from 11.4% in the comparable period in 1998.
The increase in operating income was attributable to a $1.8 million increase in
gross profit which was offset by an increase of $1.5 million in operating
expenses. The decrease in operating income as a percentage of net sales was
primarily attributable to a decrease in gross profit as a percentage of net
sales.
Net Nonoperating Expense. Net nonoperating expense was $37,000 for the
three-months ended March 31, 1999, a decrease of $72,000 or 66.1% lower than net
nonoperating expense of $109,000 for the three-months ended March 31, 1998. Net
nonoperating expense consists of interest and financing expense, and interest
income. Interest and financing expense for the three-months ended March 31, 1999
was $63,000 as compared to interest and financing expense of $110,000 for the
three-months ended March 31, 1998. The decrease in interest and financing
expense was primarily attributable to lower interest expense incurred on the
Company's long-term debt (including current portion of long-term debt), which
was substantially lower than the average outstanding long-term debt during the
comparable period in 1998 and also due to the fact that no financing expenses
were incurred during 1999. Interest income for the three-months ended March 31,
1999 was $26,000 as compared to $1,000 for the three-months ended March 31,
1998. The increase in interest income was primarily attributable to increased
cash invested in interest-bearing securities during the period.
Provision for Income Taxes. Provision for income taxes for the
three-months ended March 31, 1999 was $602,000 as compared to provision for
income taxes of $470,000 for the comparable period in 1998. The $131,000
increase in provision for income taxes was primarily attributable to increased
operating income and decreased net nonoperating expense.
Net Income. Net income was $909,000 for the three-months ended March
31, 1999, an increase of $204,000 or 28.9% higher than net income of $705,000
for the three-months ended March 31, 1998. The increase in net income was
attributable to an increase in operating income of $263,000 and a decrease in
nonoperating expense of $72,000 that was offset by an increase in the provision
for income taxes of $131,000.
Liquidity and Capital Resources
As of March 31, 1999, the Company had working capital of $5,404,000
compared to working capital of $4,997,000 as of December 31, 1998. The increase
in working capital was primarily attributable to net income earned after
adjustments for certain noncash expenses, primarily amortization of trademark
license and trademarks, depreciation and other amortization, and deferred income
taxes. The increase in working capital was partially offset by repayments made
in reduction of HBC's term loan and increases in noncurrent assets.
9
<PAGE>
Net cash provided by operating activities decreased to $47,000 for the
three-months ended March 31, 1999 as compared to net cash provided by operating
activities of $475,000 for the comparable period in 1998. The decrease in net
cash provided by operating activities was primarily attributable to an increase
in net cash used in connection with operating assets and liabilities including
the acquisition of increased inventories, increases in accounts receivable and
the payment of income taxes. During the three-months ended March 31, 1999, a
portion of the Company's cash reserves was also used for the acquisition of
property and equipment, and to reduce long-term debt. The acquisition of
increased inventories and increases in accounts receivable, acquisition of
property and equipment and repayment of the Company's long-term debt, as well as
HBC's acquisition and development plans are, and for the foreseeable future, are
expected to remain HBC's principle recurring use of cash and working capital
funds.
Net cash used in investing activities decreased to $195,000 for the
three-months ended March 31, 1999 as compared to net cash used in investing
activities of $279,000 for the comparable period in 1998. The decrease in net
cash used in investing activities was primarily attributable to decreased
purchases of property and equipment and no expenditure was incurred in
connection with trademark license and trademarks. The decrease in cash used was
partially offset by increases in deposits and other assets which include certain
graphic design expenses which are amortized over a number of years. Although the
Company has no current plans to incur any material capital expenditures,
management, from time to time, considers the acquisition of capital equipment,
particularly coolers, merchandise display racks, vans and promotional vehicles,
and businesses compatible with the image of the Hansen's(R) brand as well as the
development and introduction of new product lines. The Company may require
additional capital resources in the event of any such transaction, depending
upon the cash requirements relating thereto. Any such transaction will also be
subject to the terms and restrictions of HBC's credit facilities.
Net cash used in financing activities increased to $1,582,000 for the
three-months ended March 31, 1999 as compared to net cash used in financing
activities of $126,000 for the comparable period in 1998. The increase in net
cash used in financing activities was primarily attributable to increased
principal payments made in reduction of HBC's term loan. Such increase was
partially offset by cash received by the Company from the issuance of its common
stock.
As of March 31, 1999, approximately $1,799,000 was outstanding under
the term loan.
HBC's revolving line of credit has been renewed by its bank until May
1, 2000. The effective borrowing rate under the revolving line of credit is
prime plus 1/4%. HBC anticipates that the revolving line of credit will be
renewed when it expires on May 1, 2000; however, there can be no assurance that
it will in fact be renewed or, if renewed, that the terms of such renewal will
not be disadvantageous to HBC and its business.
10
<PAGE>
Management believes that cash generated from operations and the
Company's cash resources and amounts available under HBC's revolving line of
credit, will be sufficient to meet its operating cash requirements in the
foreseeable future, including purchase commitments for raw materials, debt
servicing, expansion and development needs as well as any purchases of capital
assets or equipment.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries or be modified in some fashion to
distinguish twenty-first century dates from twentieth century dates. This
problem could force computers to either shut-down or provide incorrect data.
Incomplete or untimely resolution of Year 2000 issues by the Company, by
critically important suppliers, co-packers or customers of the Company could
have a material adverse impact on the Company's business, operations or
financial condition in the future.
The Company's Year 2000 compliance efforts are ongoing and its overall
plan, as well as the consideration of contingency plans, will continue to
evolve, as new information becomes available. While the Company anticipates no
major interruption of its business activities, this will be dependent in part,
upon the ability of third parties to be Year 2000 compliant. Although the
Company has implemented the actions described below to address third party
issues, it has no direct ability to influence compliance actions by such third
parties or to verify their representations that they are Year 2000 compliant.
The Company's most significant potential risk is the temporary inability of
certain key suppliers to supply raw materials and/or key co-packers to pack some
of the Company's products in certain locations and/or certain of the Company's
major customers to order and pay on a timely basis, should their systems not be
Year 2000 compliant by January 1, 2000.
The Company is in the process of investigating its information
technology ("IT") systems as well as its non-information technology ("NIT")
systems. Based upon such investigation, the Company believes that the majority
of its IT and NIT systems are Year 2000 compliant. However, certain systems such
as the communication and voice mail system still require remediation. To date,
the expenses incurred by the Company in order to become Year 2000 compliant,
including computer software costs, have been approximately $80,000 and the
current estimated cost to complete remediation is expected not to exceed
$45,000. Such costs, other than software, have been and will continue to be
expensed as incurred. Remediation and testing activities are well underway with
approximately 85% of the Company's systems already compliant. The Company
estimates that it will complete the required remediation, including testing of
all of its IT and NIT systems, and be fully compliant, by the end of the third
quarter of 1999.
11
<PAGE>
An assessment of Year 2000 compliance issues by third parties with whom
the Company has relationships, such as critically important suppliers,
co-packers, customers, banking institutions, payroll processors and others is
ongoing. The Company has inquired and continues to inquire of such third parties
as to their readiness with respect to Year 2000 compliance issues and has to
date received indications from certain of them that their systems are compliant
or in the process of remediation. The Company will continue to monitor these
third parties to determine the possible impact of their non-compliance or
otherwise on the business of the Company and the actions the Company can take,
if any, in the event of non-compliance by any of these third parties. The
Company believes there are multiple vendors of many of the goods and services it
receives from its suppliers and thus Year 2000 compliance issue risks with
respect to any particular supplier is mitigated by this factor. However, certain
flavors and ingredients used by the Company are unique to certain suppliers and
the Company does not have and may not be able to secure alternative suppliers
therefor or alternatively, alternative suppliers that are able to supply flavors
or ingredients of the same or similar quality and/or with the same and similar
taste. The Company also is dependent on customers for sales and for cashflow.
Interruptions in customers' operations due to Year 2000 issues could result in
decreased revenue, increased inventory and cash flow reductions.
Contingency plans for Year 2000 related interruptions will be developed
during 1999 where necessary and possible and will include, but not be limited
to, the development of emergency back-up and recovery procedures, remediation of
existing systems parallel with the installation of new systems, replacing
electronic applications with manual processes, identification and securing of
alternative suppliers and increasing raw material and finished goods inventory
levels and alternative sales strategies. All plans are expected to be completed
by the end of 1999.
The Company's plans, which continue to evolve, including estimated
costs and dates for completion of Year 2000 remediation, are based in important
part on numerous assumptions about future events. Certain of these assumptions,
involving key matters such as the availability of certain resources, third party
remediation plans and other factors, involve inherent uncertainties or are not
within the Company's control. Given the numerous and significant uncertainties
involved, there can be no assurance that these estimates will be achieved and
therefore, actual results could differ materially. Specific factors that might
cause material differences include, but are not limited to, the ability to
identify and correct all relevant computer codes and imbedded chips,
unanticipated difficulties or delays in the implementation of project plans and
the ability of third parties to remediate their respective systems.
12
<PAGE>
European Monetary Union
Within Europe, The European Economic and Monetary Union (the "EMU")
introduced a new currency, the euro, on January 1, 1999. The new currency is in
response to the EMU's policy of economic convergence to harmonize trade policy,
eliminate business costs associated with currency exchange and to promote the
free flow of capital, goods and services.
On January 1, 1999, the participating countries adopted the euro as
their local currency, initially available for currency trading on currency
exchanges and noncash transactions such as banking. The existing local
currencies, or legacy currencies, will remain legal tender through January 1,
2002. Beginning on January 1, 2002, euro-denominated bills and coins will be
used for cash transactions. For a period of up to six months from this date,
both legacy currencies and the euro will be legal tender. On or before July 1,
2002, the participating countries will withdraw all legacy currencies and
exclusively use the euro.
The Company's transactions are recorded in U.S. Dollars and the Company
does not currently anticipate future transactions being recorded in the euro.
Based on the lack of transactions recorded in the euro, the Company does not
believe that the euro will have a material effect on the financial position,
results of operations or cash flows of the Company. In addition, the Company has
not incurred and does not expect to incur any significant costs from the
continued implementation of the euro, including any currency risk, which could
materially affect the Company's business, financial condition or results of
operations.
The Company has not experienced any significant operational disruptions
to date and does not currently expect the continued implementation of the euro
to cause any significant operational disruptions.
13
<PAGE>
Forward Looking Statements
The Private Security Litigation Reform Act of 1995 (the "Act") provides
a safe harbor for forward looking statements made by or on behalf of the
Company. The Company and it's representatives may from time to time make written
or oral forward looking statements, including statements contained in this
report and other filings with the Securities and Exchange Commission and in
reports to shareholders and announcements. Certain statements made in this
report, including certain statements made in management's discussion and
analysis, may constitute forward looking statements (within the meaning of
Section 27.A of the Securities Act 1933 as amended and Section 21.E of the
Securities Exchange Act of 1934, as amended) regarding the expectations of
management with respect to revenues, profitability, adequacy of funds from
operations and the Company's existing credit facility, among other things. All
statements which address operating performance, events or developments that
management expects or anticipates will or may occur in the future including
statements related to new products, volume growth, revenues, profitability,
adequacy of funds from operations, and/or the Company's existing credit
facility, earnings per share growth, statements expressing general optimism
about future operating results and non-historical Year 2000 information, are
forward looking statements within the meaning of the Act.
Management cautions that these statements are qualified by their terms and/or
important factors, many of which are outside the control of the Company that
could cause actual results and events to differ materially from the statements
made including, but not limited to, the following:
- Company's ability to generate sufficient cash flows to support capital
expansion plans and general operating activities;
- Changes in consumer preferences;
- Changes in demand that are weather related, particular in areas outside of
California;
- Competitive products and pricing pressures and the Company's ability to
gain or maintain share of sales in the marketplace as a result of actions
by competitors;
- The introduction of new products;
- Laws and regulations, and/or any changes therein, including changes in
accounting standards, taxation requirements (including tax rate changes,
new tax laws and revised tax law interpretations) and environmental laws as
well as the Federal Food Drug and Cosmetic Act, the Dietary Supplement
Health and Education Act, and regulations made thereunder or in connection
therewith, especially those that may affect the way in which the Company's
products are marketed as well as laws and regulations or rules made or
enforced by the Food and Drug Administration;
- Changes in the cost and availability of raw materials and the ability to
maintain favorable supply arrangements and relationships and procure timely
and/or adequate production of all or any of the Company's products;
- The Company's ability to achieve earnings forecasts, which may be based on
projected volumes and sales of many product types and/or new products,
certain of which are more profitable than others. There can be no assurance
that the Company will achieve projected levels or mixes of product sales;
14
<PAGE>
- The Company's ability to penetrate new markets;
- The marketing efforts of distributors of the Company's products, most of
which distribute products that are competitive with the products of the
Company;
- Unilateral decisions by distributors, grocery chains, specialty chain
stores, club stores and other customers to discontinue carrying all or any
of the Company's products that they are carrying at any time;
- The terms and/or availability of the Company's credit facilities and the
actions of it's creditors;
- The effectiveness of the Company's advertising, marketing and promotional
programs;
- Adverse weather conditions, which could reduce demand for the Company's
products;
- The Company's customers', co-packers' and suppliers' ability to replace,
modify or upgrade computer programs in ways that adequately address Year 2000
issues; and
- The Company's project plans, which continue to evolve, including estimated
costs and dates for completion of Year 2000 remediation, are based in
important part on numerous assumptions about future events. Certain of
these assumptions, involving key matters such as the availability of
certain resources, third party remediation plans and other factors, involve
inherent uncertainties or are not within the Company's control. Given the
numerous and significant uncertainties involved, there can be no assurance
that these estimates will be achieved and actual results could differ
materially. Specific factors that might cause material differences include,
but are not limited to, the inability to identify and correct all relevant
computer codes and imbedded chips, unanticipated difficulties or delays in
the implementation of project plans and the ability of third parties to
remediate their respective systems.
The foregoing list of important factors is not exhaustive.
Inflation
The Company does not believe that inflation has a significant impact on
the Company's results of operations for the periods presented.
15
<PAGE>
PART II - OTHER INFORMATION
Items 1 - 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index
(b) Reports on Form 8-K - None
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.
HANSEN NATURAL CORPORATION
Registrant
Date: May 10, 1999 /s/ Rodney C. Sacks
Chairman of the Board
and Chief Executive Officer
Date: May 10, 1999 /s/ Hilton H. Schlosberg
Vice Chairman of the Board,
President, Chief Operating Officer,
Chief Financial Officer and Secretary
16
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10Q FOR THE YEAR, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,076,543
<SECURITIES> 0
<RECEIVABLES> 5,406,496
<ALLOWANCES> 2,249,715
<INVENTORY> 5,405,772
<CURRENT-ASSETS> 10,980,647
<PP&E> 1,508,824
<DEPRECIATION> 868,257
<TOTAL-ASSETS> 21,874,532
<CURRENT-LIABILITIES> 5,576,876
<BONDS> 0
0
0
<COMMON> 49,692
<OTHER-SE> 14,846,444
<TOTAL-LIABILITY-AND-EQUITY> 21,874,532
<SALES> 15,229,104
<TOTAL-REVENUES> 15,255,263
<CGS> 7,821,425
<TOTAL-COSTS> 5,845,395
<OTHER-EXPENSES> 15,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,031
<INCOME-PRETAX> 1,510,412
<INCOME-TAX> 601,500
<INCOME-CONTINUING> 908,912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 908,912
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
