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, 2000 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 92880
(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 10,109,431 shares of common stock
outstanding as of May 1, 2000
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
March 31, 2000
INDEX
<TABLE>
<S> <C> <C>
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999 3
Consolidated Statements of Income for the
three-months ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows for the
three-months ended March 31, 2000 and 1999 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
</TABLE>
2
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2000 1999
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 133,687 $ 2,009,155
Accounts receivable (net of allowance for doubtful
accounts, sales returns and cash discounts of $383,875
in 2000 and $415,305 in 1999 and promotional allowances
of $1,723,575 in 2000 and $1,651,604 in 1999) 4,244,322 3,751,258
Inventories, net 9,994,854 9,894,414
Prepaid expenses and other current assets 707,029 553,689
Deferred income tax asset 743,364 743,364
-------------------- --------------------
15,823,256 16,951,880
PROPERTY AND EQUIPMENT, net 596,502 504,191
INTANGIBLE AND OTHER ASSETS:
Trademark license and trademarks (net of accumulated amortization
of $3,077,699 in 2000 and $2,995,285 in 1999) 10,690,510 10,768,493
Deposits and other assets 611,579 484,388
-------------------- --------------------
11,302,089 11,252,881
-------------------- --------------------
$ 27,721,847 $ 28,708,952
==================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 350,000 $ -
Accounts payable 4,552,072 5,936,873
Accrued liabilities 240,143 345,794
Accrued compensation 41,629 462,285
Current portion of long-term debt 885,416 863,501
Income taxes payable 770,565 346,636
-------------------- --------------------
Total current liabilities 6,839,825 7,955,089
LONG-TERM DEBT, less current portion 702,716 902,716
DEFERRED INCOME TAX LIABILITY 1,225,271 1,225,271
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock - $.005 par value; 30,000,000 shares authorized; 10,106,198 and
10,010,084 shares issued
in 2000 and 1999 respectively 50,531 50,050
Additional paid-in capital 11,569,593 11,340,074
Retained earnings 7,923,855 7,235,752
Common stock in treasury, at cost - 149,175 and 0 shares
in 2000 and 1999 respectively (589,944) -
-------------------- --------------------
Total shareholders' equity 18,954,035 18,625,876
-------------------- --------------------
$ 27,721,847 $ 28,708,952
==================== ====================
</TABLE>
3
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
NET SALES $ 15,978,002 $ 15,229,104
COST OF SALES 8,774,042 7,821,425
-------------------- --------------------
GROSS PROFIT 7,203,960 7,407,679
OPERATING EXPENSES:
Selling, general and administrative 5,953,412 5,771,247
Amortization of trademark license and trademarks 82,659 74,148
Other operating expenses - 15,000
-------------------- --------------------
Total operating expenses 6,036,071 5,860,395
-------------------- --------------------
OPERATING INCOME 1,167,889 1,547,284
NON-OPERATING EXPENSE (INCOME):
Interest and financing expense 28,295 63,031
Interest income (7,244) (26,159)
-------------------- --------------------
Net non-operating expense 21,051 36,872
-------------------- --------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,146,838 1,510,412
PROVISION FOR INCOME TAXES 458,735 601,500
-------------------- --------------------
NET INCOME $ 688,103 $ 908,912
==================== ====================
NET INCOME PER COMMON SHARE:
Basic $ 0.07 $ 0.09
==================== ====================
Diluted $ 0.07 $ 0.09
==================== ====================
NUMBER OF COMMON SHARES USED
IN PER SHARE COMPUTATIONS:
Basic 9,998,657 9,924,933
==================== ====================
Diluted 10,481,940 10,521,733
==================== ====================
</TABLE>
4
<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 688,103 $ 908,912
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of trademark license and trademarks 82,414 74,148
Depreciation and other amortization 45,995 64,226
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 (493,064) (1,329,237)
Inventories (100,440) (194,695)
Prepaid expenses and other current assets (153,340) (97,233)
Accounts payable (1,384,801) 1,885,093
Accrued liabilities (105,651) (75,573)
Accrued compensation (420,656) (294,597)
Income taxes payable 423,929 (1,068,875)
---------------- ----------------
Net cash (used in) provided by operating activities (1,417,511) 46,885
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (138,306) (103,270)
Increase in trademark license and trademarks (4,431)
Decrease in note receivable from director 10,274
Increase in deposits and other assets (127,191) (101,559)
---------------- ----------------
Net cash used in investing activities (269,928) (194,555)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 350,000
Principal payments on long-term debt (178,085) (1,602,576)
Issuance of common stock 230,000 20,700
Purchases of treasury stock (589,944)
---------------- ----------------
Net cash used in financing activities (188,029) (1,581,876)
EFFECT OF EXCHANGE RATE CHANGES ON CASH - -
---------------- ----------------
NET DECREASE IN CASH (1,875,468) (1,729,546)
CASH AND CASH EQUIVALENTS, beginning of the period 2,009,155 3,806,089
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of the period $ 133,687 $ 2,076,543
================ ================
SUPPLEMENTAL INFORMATION Cash paid during the period for:
Interest $ 22,078 $ 75,252
================ ================
Income taxes $ 34,806 $ 1,520,000
================ ================
</TABLE>
NONCASH TRANSACTIONS:
During the three month period ended March 31, 2000, the Company issued
4,114 shares of common stock to employees in connection with a net
exercise of options to purchase 5,600 shares of common stock.
5
<PAGE>
HANSEN NATURAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTHS ENDED MARCH 31,
2000 AND YEAR ENDED DECEMBER 31, 1999
- ------------------------------------------------------------------------------
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, 1999, 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 Hard
Energy Company. 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,
2000 1999
---------------- -----------------
Raw materials $ 3,663,621 $ 3,615,269
Finished goods 6,499,641 6,442,193
---------------- -----------------
10,163,262 10,057,462
Less inventory reserves (168,408) (163,048)
---------------- -----------------
$ 9,994,854 $ 9,894,414
================ =================
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
General
The increase in sales and profitability that was achieved by the Company
during the first quarter of 1999 was attributable in large measure to the
introduction during that quarter of the Company's Healthy Start juice line in
multi-serve P.E.T. bottles, which were sold mainly to club stores, and the
Signature Soda line. Late in the first quarter of 2000, the Company began
introducing its new Slim Down functional drink and its Healthy Start juice line
in glass bottles. However, due to the late introduction, the contribution by
those products to sales during the quarter was minimal.
The increase in sales during the first quarter of 2000 was primarily
attributable to sales of the Company's children's multi-vitamin juice drinks in
8.45-oz. aseptic packages, which were introduced during the third quarter of
1999, and increased sales of the Company's functional drinks in 8.2-oz. slim
cans. Such increase was, however, largely offset by decreased sales of Healthy
Start juices in multi-serve PET bottles and, to a lesser extent, by decreased
sales of Smoothies in 11.5-oz. cans, Signature Sodas, Smoothies in multi-serve
PET bottles, and teas, lemonades and juice cocktails.
Due to the lower gross profit margins achieved by the Company on its
children's multi-vitamin juice drinks in 8.45-oz. aseptic packages compared to
Healthy Start juices and Signature Sodas, the overall gross profit margin
achieved by the Company during the first quarter of 2000 decreased to 45.1% from
48.6% during the first quarter of 1999.
The Company continues to incur expenditures in connection with the
development and introduction of new products and flavors.
During the first quarter of 2000, the Company repurchased 149,175 shares of
its common stock at an average price of $3.95 per share.
7
<PAGE>
Results of Operations for the Three-months Ended March 31, 2000 Compared to the
Three-months Ended March 31, 1999
Net Sales. For the three-months ended March 31, 2000, net sales were
approximately $16.0 million, an increase of $749,000 or 4.9% higher than the
$15.2 million net sales for the three-months ended March 31, 1999. The increase
in net sales was primarily attributable to sales of the Company's multi-vitamin
juice drinks, which were introduced in the third quarter of 1999, Super
Smoothies, which were also introduced in the third quarter of 1999, and
increased sales of the Company's energy and other functional drinks in 8.2 oz.
slim cans and sodas in cans. The increase in net sales was largely offset by
decreased sales of Healthy Start juices in multi-serve PET bottles, and to a
lesser extent, decreased sales of Smoothies in 11.5 oz. cans, Signature Sodas,
Smoothies in multi-serve PET bottles, and teas, lemonades and juice cocktails.
Gross Profit. Gross profit was $7.2 million for the three-months ended
March 31, 2000, a decrease of $204,000 or 2.8% lower than the $7.4 million gross
profit for the three-months ended March 31, 1999. Gross profit as a percentage
of net sales decreased to 45.1% for the three-months ended March 31, 2000 from
48.6% for the three-months ended March 31, 1999. The decrease in gross profit
and 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 $6.0 million for
the three-months ended March 31, 2000, an increase of $176,000 or 3.0% higher
than total operating expenses of $5.9 million for the three-months ended March
31, 1999. Total operating expenses as a percentage of net sales decreased to
37.8% for the three-months ended March 31, from 38.5% for the three-months ended
March 31, 1999. The increase in total operating expenses was primarily
attributable to increased selling, general and administrative expenses. The
decrease in total operating expenses as a percentage of net sales was primarily
attributable to a comparably lower increase in total operating expenses as
compared to the increase in net sales.
Selling, general and administrative expenses were $6.0 million for the
three-months ended March 31, 2000, an increase of $182,000 or 3.2% higher than
selling, general and administrative expenses of $5.8 million for the
three-months ended March 31, 1999. The increase in selling, general and
administrative expenses was primarily attributable to increased slotting fees of
$336,000 for the three-months ended March 31, 2000 as compared to slotting fees
of $50,000 for the three-months ended March 31, 1999 and increased distribution
expenses. The increase in selling, general and administrative expenses was
partially offset by a decrease in certain selling and marketing expenses,
particularly expenditures relating to in-store demonstrations and the costs of
merchandise displays.
Operating Income. Operating income was $1.2 million for the three-months
ended March 31, 2000, a decrease of $380,000 or 24.5% lower than operating
income of $1.5 million for the three-months ended March 31, 1999. Operating
income as a percentage of net sales decreased to 7.3% for the three-months ended
March 31, 2000 from 10.2% for the three-months ended March 31, 1999. The
decrease in operating income was attributable to a $204,000 decrease in gross
profit and an increase of $176,000 in operating expenses. The 2.9% decrease
8
<PAGE>
in operating income as a percentage of net sales was partially attributable to a
3.6% decrease in gross profit as a percentage of net sales which was partially
offset by a 0.7% decrease in operating expenses as a percentage of net sales.
Net Non-operating Expense. Net non-operating expense was $21,000 for the
three-months ended March 31, 2000, a decrease of $16,000 or 42.9% lower than net
non-operating expense of $37,000 for the three-months ended March 31, 1999. Net
non-operating expense consists of interest and financing expense and interest
income. Interest and financing expense for the three-months ended March 31, 2000
was $28,000 as compared to interest and financing expense of $63,000 for the
three-months ended March 31, 1999. The decrease in interest and financing
expense was primarily attributable to lower interest expense incurred on the
Company's long-term debt, which was substantially lower than the average
outstanding long-term debt during the comparable period in 1999. Interest income
for the three-months ended March 31, 2000 was $7,000 as compared to $26,000 for
the three-months ended March 31, 1999. The decrease in interest income was
primarily attributable to decreased cash available for investing in
interest-bearing securities during the period.
Provision for Income Taxes. Provision for income taxes for the three-months
ended March 31, 2000 was $459,000 as compared to provision for income taxes of
$602,000 for the comparable period in 1999. The $143,000 decrease in provision
for income taxes was primarily attributable to the decrease in operating income.
Net Income. Net income was $688,000 for the three-months ended March 31,
2000, a decrease of $221,000 or 24.3% lower than net income of $909,000 for the
three-months ended March 31, 1999. The decrease in net income was attributable
to the decrease in gross profit of $204,000 and the increase in operating
expenses of $176,000 which was partially offset by the decrease in non-operating
expense of $16,000 and the decrease in provision for income taxes of $143,000.
Liquidity and Capital Resources
As of March 31, 2000, the Company had working capital of $9.0 million which
was comparable to working capital of $9.0 million as of December 31, 1999.
Increases in working capital were primarily attributable to net income earned
after adjustments for certain noncash expenses, primarily amortization of
trademark license and trademarks and depreciation and other amortization.
Decreases in working capital were primarily attributable to purchases of
treasury stock, repayments made in reduction of HBC's term loan and increases in
noncurrent assets.
Net cash used in operating activities increased to $1.4 million for the
three-months ended March 31, 2000 as compared to net cash provided by operating
activities of $47,000 for the comparable period in 1999. The increase in net
cash used in operating activities was primarily attributable to the decrease in
net income and the increase in net cash used in connection with operating assets
and liabilities including the payment of accounts payable, accrued liabilities,
accrued compensation and the increase in accounts receivable and prepaid
expenses. During the three-months ended March 31, 2000, a portion of the
Company's cash reserves was also used for the acquisition of property and
equipment and the payment of income taxes. Increases in inventories, accounts
receivable, payment of payables and
9
<PAGE>
accrued liabilities, acquisition of property and equipment, repayment of the
Company's short-term borrowings and payment of income taxes, 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 increased to $270,000 for the
three-months ended March 31, 2000 as compared to net cash used in investing
activities of $195,000 for the comparable period in 1999. The increase in net
cash used in investing activities was primarily attributable to increased
purchases of property and equipment and increases in deposits and other assets.
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 decreased to $188,000 for the
three-months ended March 31, 2000 as compared to net cash used in financing
activities of $1,582,000 for the comparable period in 1999. The decrease in net
cash used in financing activities was primarily attributable to decreased
principal payments on long-term debt and cash received from short-term
borrowings and issuance of common stock. Such decrease was partially offset by
cash paid to repurchase shares of the Company's common stock.
As of March 31, 2000, approximately $1.2 million was outstanding under the
term loan.
HBC's revolving line of credit has been renewed by its bank until June 30,
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 June 30, 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.
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 and
repurchases of shares of the Company's common stock.
Year 2000 Compliance
Prior to January 1, 2000, the Company reviewed the readiness of its
computer systems and business practices for handling Year 2000 issues. These
issues involve systems that are date sensitive and may not be able to properly
process the transition from year 1999 to year 2000 and beyond, resulting in
miscalculations and software failures. Year 2000 compliance updates were
completed in the fourth quarter of 1999 and the Company's information technology
("IT") and non-information technology ("NIT") computer systems completed the
transition to the year 2000 without material issues or problems. No additional
10
<PAGE>
expenditures to enable the Company to become Year 2000 compliant are currently
anticipated. The Company has been in contact with critical suppliers,
co-packers, customers, and other third parties to determine the extent to which
they may be vulnerable to Year 2000 issues. The Company cannot currently predict
any future effect of third parties' Year 2000 issues. However, the Company has
not been made aware of any matter which would materially impact the Company's
business from third parties.
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.
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 its 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
11
<PAGE>
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:
o Company's ability to generate sufficient cash flows to support capital
expansion plans and general operating activities;
o Changes in consumer preferences;
o Changes in demand that are weather related, particular in areas
outside of California;
o 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;
o The introduction of new products;
o 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;
o 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;
o 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;
o The Company's ability to penetrate new markets;
o The marketing efforts of distributors of the Company's products, most of
which distribute products that are competitive with the products of the
Company;
o 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;
o The terms and/or availability of the Company's credit facilities and the
actions of its creditors;
o The effectiveness of the Company's advertising, marketing and promotional
programs;
o Adverse weather conditions, which could reduce demand for the
Company's products;
o The Company's ability to make suitable arrangements for the co-packing of
its functional drinks in 8.2-ounce slim cans and Smoothies in 11.5 ounce
cans;
12
<PAGE>
o The Company's customers', co-packers' and suppliers' ability to replace,
modify or upgrade computer programs in ways that adequately address Year
2000 issues. Given the numerous and significant uncertainties involved,
there can be no assurance regarding their ability to identify and correct
all relevant computer codes and imbedded chips and other unanticipated
difficulties or 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.
13
<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 15, 2000 /s/
Rodney C. Sacks
Chairman of the Board
and Chief Executive Officer
Date: May 15, 2000 /s
Hilton H. Schlosberg
Vice Chairman of the Board,
President, Chief Operating Officer,
Chief Financial Officer and Secretary
14
<PAGE>
EXHIBIT INDEX
Exhibit 10 (xxx) Amended and Restated Variable Rate Installment Note by and
between Comerica Bank - California and Hansen Beverage Company.
Exhibit 27 Financial Data Schedule
15
<PAGE>
AMENDED AND RESTATED
VARIABLE RATE INSTALLMENT NOTE
AMOUNT $4,000,000.00
NOTE DATE OCTOBER 14, 1997
MATURITY DATE OCTOBER 1, 2002
(AS AMENDED AND RESTATED ON APRIL 20, 2000)
(U.S.) TAX IDENTIFICATION 39-1679918
For Value Received, the undersigned promise(s) to pay to the order of Comerica
Bank California ("Bank"), at any office of the Bank in the State of California,
Four Million Dollars and No Cents ($4,000,000.00) (U.S.) in installments in the
amounts set forth in the next succeeding sentence, plus interest on the unpaid
balance from the date of this Note at a per annum rate equal to the Bank's base
rate from time to time in effect from time to time, plus one-half of a
percentage point (0.500%) per annum until maturity, whether by acceleration or
otherwise, or until Default, as later defined, and after that at a default rate
equal to the rate of interest otherwise prevailing under this Note plus 3% per
annum. (but in no event in excess of the maximum rate permitted by law).
Payments of principal on the Note shall be made in monthly payments as follows:
(i) $41,667.00 beginning on November 1, 1997 and on the first day of each
calendar month thereafter until October 1, 1998; (ii) $50,000.00 beginning on
November 1, 1998 and on the first day of each calendar month thereafter until
October 1, 1999; (iii) $58,333.00 beginning on November 1, 1999 and on the first
day of each calendar month thereafter until October 1, 2000; (iv) $66,667.00
beginning on November 1, 2000 and on the first day of each calendar month
thereafter until October 1, 2001; and (v) $116,666 beginning on November 1, 2001
and on the first day of each calendar month thereafter until September 1, 2002
(each of the payment dates described in clauses (i) through (v), a "Payment
Date"); and (vi) a final payment of all remaining principal on October 1, 2002,
or such earlier Payment Date as all of the principal on the Note shall have been
paid in full (the "Maturity Date") . Each such payment of principal on the Note
shall be accompanied by a payment of accrued interest thereon, and all accrued
but unpaid interest, fees and costs shall be due on the Maturity Date. Interest
shall be calculated for the actual number of days the principal is outstanding
on the basis of a 360 day year if this Note evidences a business or commercial
loan or a 365 day year if a consumer loan. The Bank's "base rate" is that annual
rate of interest so designated by the Bank and which is changed by the Bank from
time to time. Interest rate changes will be effective for interest computation
purposes as and when the Bank's base rate changes. If the frequency of principal
and interest installments is not otherwise specified, installments of principal
and interest due under this Note shall be payable monthly on the first day of
each month.
In addition to the payments of principal set forth above, the undersigned agrees
to make additional mandatory prepayments of principal as follows:
(a) within five business days of a full or partial repayment of the
indebtedness of the undersigned to ERLY Industries, Inc., 100 percent of the
amount by which the reduction of the outstanding balance of such indebtedness by
virtue of such full or partial repayment exceeds the amount of the consideration
paid to ERLY Industries, Inc. in connection with such full or partial repayment;
and
(b) within five business days of any sale or other transfer of any
assets of the undersigned, 100 percent of the proceeds thereof, net of
reasonable transaction costs of such transaction provided, however, that the
foregoing shall not be deemed a waiver by the Bank the requirement that the
undersigned obtain the prior written consent of the Bank in connection with any
such sale; and
(c) within five business days of any sale of equity securities of the
undersigned, 100 percent of the proceeds of such sale net of reasonable costs of
such transaction.
The additional mandatory principal prepayments described in subparagraphs (a),
(b) and (c) of the preceding paragraph are referred to as Mandatory Principal
Prepayments. Each Mandatory Principal Prepayment shall be applied to the payment
of principal last coming due, and accordingly shall not reduce the amount of any
scheduled prior payment of principal due on this Note.
If this Note or any installment under this Note shall become payable on a day
other than a day on which the Bank is open for business, this payment may be
extended to the next succeeding business day and interest shall be payable at
the rate specified in this Note during this extension. Any payments of principal
in excess of the installment payments required under this Note need not be
accepted by the Bank (except as required under applicable law), but if accepted
shall apply to the installments last falling due. A late installment charge
equal to 5% of each late installment may be charged on any installment payment
not received by the Bank within 10 calendar days after the installment due date,
but acceptance of payment of this charge shall not waive any default under this
Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other agreement which has
been, or will at any time(s) later be, executed by any (or all) of the
undersigned to or for the benefit of the Bank, specifically including that
certain Revolving Credit Loan and Security Agreement (Accounts and Inventory)
between the undersigned and the Bank of even date herewith (collectively
"Collateral"). Notwithstanding the above, (i) to the extent that any portion of
the Indebtedness is a consumer loan, that portion shall not be secured by any
deed of trust or mortgage on or other security interest in any of the
undersigned's principal dwelling or in any of the undersigned's real property
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the undersigned
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure this
Note or any other indebtedness of the undersigned (or any of them), unless
expressly provided to the contrary in another place.
If the undersigned (or any of them) or any guarantor under a guaranty of all or
part of the Indebtedness ("guarantor") (a) fail(s) to pay this Note or any of
the Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to
pay any Indebtedness owing on a demand basis upon demand; or (b) fail(s) to
comply with any of the terms or provisions of any agreement between the
undersigned (or any of them) or any guarantor and the Bank; or (c) become(s)
insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy,
or a reorganization, arrangement or creditor composition proceeding, (if a
business entity) cease(s) doing business as a going concern, (if a natural
person) die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any
general partner of it dies, becomes incompetent or becomes the subject of a
bankruptcy proceeding or (if a corporation or a limited liability company) is
the subject of a dissolution, merger or consolidation: or (d) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall' be discovered to be untrue or
incomplete; or (e) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the Indebtedness; or (f) if there is any failure
by any of the undersigned or any guarantor to pay when due any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such indebtedness; or (g) if the Bank deems itself insecure, believing that the
prospect of payment of this Note or any of the Indebtedness is impaired or shall
fear deterioration, removal or waste of any of the Collateral; or (h) if there
is filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon the undersigned (or any of them) or any guarantor or any
of the Collateral, including without limit, any accounts of the undersigned (or
any of them) or any guarantor with the
Bank, then the Bank, upon the occurrence of any of these events (each a
"Default"), may at its option and without prior notice to the undersigned (or
any of them), declare any or all of the Indebtedness to be immediately due and
payable (notwithstanding any provisions contained in the evidence thereof to the
contrary), sell or liquidate all or any portion of the Collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned (or
any of them), charge interest at the default rate provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the rights
and remedies granted to the Bank by any agreement with the undersigned (or any
of them) or given to it under applicable law. In addition, if this Note is
secured by a deed of trust or mortgage covering real property, then the trustor
or mortgagor shall not mortgage or pledge the mortgaged premises as security for
any other indebtedness or obligations. This Note, together with all other
indebtedness secured by said deed of trust or mortgage, shall become due and
payable immediately, without notice, at the option of the Bank, (a) if said
trustor or mortgagor shall mortgage or pledge the mortgaged premises for any
other indebtedness or obligations or shall convey, assign or transfer the
mortgaged premises by deed, installment sale contact or other instrument, or (b)
if the title to the mortgaged premises shall become vested in any other person
or party in any manner whatsoever, or (c) if there is any disposition (through
one or more transactions) of legal or beneficial title to a controlling interest
of said trustor or mortgagor. All payments under this Note shall be in
immediately available United States funds, without setoff or counterclaim.
Notwithstanding anything contained in this paragraph to the contrary, Bank shall
refrain from exercising its rights and remedies and Default shall thereafter not
be deemed to have occurred by reason of the occurrence of any of the events set
forth in clause (c) (as it relates to a person or entity other than a natural
person) or clause (h) of this paragraph if, within ten (10) days from the date
thereof, the same is released, discharged dismissed, bonded against or
satisfied; provided, however, if the event is the institution of insolvency,
bankruptcy or similar proceedings against Borrower, Bank shall not be obligated
to make advances to Borrower during such cure period.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations, and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-605 of the California Uniform
Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations, or any interest, in any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make
other disclosures to the full extent allowable, the Bank may disclose all
documents and information which the Bank now or later has relating to the
undersigned or the Indebtedness. The undersigned agree(s) that the Bank may
provide information relating to this Note or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorney fees, whether inside or outside counsel is used, whether
or not suit is instituted and, if suit is instituted, whether at the trial court
level, appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or incurred
in any other matter or proceeding relating to this Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, endorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED THE HIGHEST APPLICABLE USURY CEILING.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
For Corporations, Partnerships, Trusts, or Estates
HANSEN BEVERAGE COMPANY
OBLIGOR NAME TYPED/PRINTED
By: \s\ Rodney C. Sacks Its: Chairman
SIGNATURE OF TITLE
2380 Railroad St Ste 101
STREET ADDRESS
Corona,
CITY
CA 92880-5471
STATE ZIP CODE
For Bank Use Only CCR#
Loan Officer Initials Loan Group Name Obligor(s) Name
Loan Officer I.D. No. Loan Group No. Obligor # Note # Amount
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE 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 QUARTER, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 133,687
<SECURITIES> 0
<RECEIVABLES> 6,351,772
<ALLOWANCES> 2,107,450
<INVENTORY> 9,994,854
<CURRENT-ASSETS> 15,823,256
<PP&E> 1,518,975
<DEPRECIATION> 922,473
<TOTAL-ASSETS> 27,721,847
<CURRENT-LIABILITIES> 6,839,825
<BONDS> 0
0
0
<COMMON> 50,531
<OTHER-SE> 18,903,504
<TOTAL-LIABILITY-AND-EQUITY> 27,721,847
<SALES> 15,978,002
<TOTAL-REVENUES> 15,985,246
<CGS> 8,774,042
<TOTAL-COSTS> 6,036,071
<LOSS-PROVISION> 0
<OTHER-EXPENSES> 0
<INTEREST-EXPENSE> 28,295
<INCOME-PRETAX> 1,146,838
<INCOME-TAX> 458,735
<INCOME-CONTINUING> 688,103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 688,103
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
