United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended May 2, 2020April 29, 2023
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to _________
Commission file number 1-14170
NATIONAL BEVERAGE CORP.
(Exact name of Registrant as specified in its charter)
Delaware | 59-2605822 | |||
(State of incorporation) | (I.R.S. Employer Identification No.) |
8100 SW Tenth Street, Suite 4000, Fort Lauderdale, Florida 33324
(Address of principal executive offices including zip code)
Registrant’sRegistrant’s telephone number, including area code: (954) 581-0922
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $.01 per share | FIZZ | The NASDAQ Global Select Market |
Securities registered pursuant to Section 12(g) of the Act:None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☑
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ☐ No ☑
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 and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
Yes ☑ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.: Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☑ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the common stock held by non-affiliates of Registrant computed by reference to the closing sale price of $49.89$46.78 on October 25, 201928, 2022 was approximately $585 million.$1.1 billion.
The number of shares of Registrant’s common stock outstanding as of June 29, 202026, 2023 was 46,625,628.93,353,546.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant'sRegistrant’s Proxy Statement for the 20202023 Annual Meeting of Shareholders are incorporated by reference in Part III of this report.
table of contents TABLE OF CONTENTS
PART I | |||
ITEM 1. | 1 | ||
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ITEM 1A. | |||
ITEM 1B. |
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ITEM 5. |
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ITEM 6. |
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ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 7A. |
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ITEM 8. |
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ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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ITEM 9A. |
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ITEM 9B. |
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ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 42 | |
ITEM 10. |
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ITEM 11. |
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ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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ITEM 13. | Certain Relationships and Related Transactions, and Director Independence |
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ITEM 14. |
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ITEM 15. |
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ITEM 16. | Form 10-K Summary | 43 | |
SIGNATURES |
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GENERAL
National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks and, to a lesser extent, carbonated soft drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry.
Points of differentiation include the following:
Healthy Transformation – We focus on developing and delighting consumers with healthier beverages in response to the global shift in consumer buying habits and lifestyles. We are committed to tailoring the variety and types of beverages inbelieve our portfolio to satisfysatisfies the preferences of a diverse mix of consumers including ‘crossover consumers’ – a growing group desiring a healthier alternativealternatives to artificially sweetened or high-calorie beverages.
Creative Innovations – Building on a rich tradition of flavor and brand innovation with more than a 130-year history of development with iconic brands such as Shasta® and Faygo®, we have extended our flavor and essence leadership and technical expertise to the sparkling water category. Proprietary flavors and our naturally-essenced beverages are developed and tested in-house and made commercially available only after extensive concept and sensory evaluation. Our variety of distinctive flavors provides us a unique advantage with today’s consumers who demand variety and refreshing beverage alternatives.
Innovation Ethic – We believe that innovative marketing, packaging and consumer engagement is more effective in today’s marketplace than traditional higher-cost national advertising. In addition to our cost-effective social media platforms, we utilize regionally-focused marketing programs and in-store “brand ambassadors” to interact with and obtain feedback from our consumers. We also believe the design of our packages and the overall optical effect of their placement on the shelf (“shelf marketing”) has become more important as millennials and younger generations become increasingly influential consumers, and are now influencing baby boomers and older generations.
Presently, our primary market focus is the United States and Canada. Certain of our products are also distributed on a limited basis in other countries and options to expand distribution to other regions are being considered.
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National Beverage Corp. is incorporated in Delaware and began trading as a public company on the NASDAQ Stock Market in 1991. In this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries unless indicated otherwise.
BRANDS
Our brands consist of beverages geared to the active and health-conscious consumer (“Power+ Brands”) including sparkling waters, energy drinks, and juices. Our portfolio of Power+ Brands includes LaCroix®, LaCroix Cúrate®,and LaCroix NiCola® sparkling water products; Clear Fruit®; Rip It® energy drinks and shots; and Everfresh®, Everfresh Premier Varietals™ and Mr. Pure® 100% juice and juice-based products. Additionally, we produce and distribute carbonated soft drinks (“CSDs”) including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 130 years.
Power+ Brands –
LaCroix
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Everfresh and Mr. Pure
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ClearFruit
Rip It
RIP IT® Energy Fuel is “Real Energy for Real People” with 14 unique flavors and six sugar-free options. Building on the flavor tradition of original Rip It, a 2 oz. sugar-free shot version in eight flavors is marketed in displayable package configurations. RIP IT proudly supports military and first responder heroes at home and abroad with such energetic flavors as Tribute, Citrus X, Cherry Lime and Atomic Pom.
Power+ Brands –
LaCroix
Continual flavor and packaging innovations for LaCroix in recent years include the unique flavor of Cherry Blossom – a botanical twist of sweet and just a ‘kiss’ of tart. The distinctive taste and stunning packaging of Cherry Blossom conveys the ‘Dazzling Taste of Spring!’ The launch of Cherry Blossom featured an integrated effort involving social and outdoor media, spot radio, consumer sampling and attractive retail in-store displays. In June 2022, PEOPLE Magazine recognized LaCroix Cherry Blossom as the winner of the Flavored Water Category in the PEOPLE’s Food Awards 2022. PEOPLE described Cherry Blossom as “spring in a can…with fruity, lightly floral notes.”
Cherry Blossom joined the innovative trio of Beach Plum, Black Razzberry and Guava São Paulo launched in the fourth quarter of fiscal year 2021. Beach Plum excites the imagination and inspires dreams of summer with the delectable coolness of the luscious fruit native to the east coast of the U.S.; the sweet twist of Black Razzberry makes taste buds sing with decadent, smooth and irresistible fruit flavor; and consumers savor the sweet tropical delicacy and vibrant essence of Guava São Paulo.
Other successful LaCroix additions include Hi-Biscus, a unique flavor that adds the delicate essence of the hibiscus flower to sparkling water; the enticing savor of LimonCello, which instantly transports fans to the Italian Riviera; and the refreshing taste of Pastèque, which captures the lusciousness of a sweet picnic watermelon.
LaCroix’s dynamic ‘theme’ LaCroix Cúrate® (‘Cure Yourself’) celebrates French sophistication with Spanish zest and bold flavor pairings. Packaged in sleek 12 oz. tall cans, popular flavors include Cerise Limón, which pairs sweet cherry with tangy lime for a tasteful infusion that tickles the senses; Piña Fraise, an aromatic combination of pineapple and ripe strawberries that creates a tropical blend delight; and Múre Pepino, which combines sweet and sour blackberry notes with crisp cucumber to create a sensory and taste sensation.
Additional LaCroix flavors are in development that will continue to feature unique packaging and flavor concepts designed to capitalize on LaCroix brand loyalty and popularity of the sparkling water category.
Everfresh and Mr. Pure
Everfresh Premier Varietals, a unique theme from Everfresh, is positioned as a stand-alone brand for display in the produce section of supermarkets. Everfresh Premier Varietals is a premium line of apple juice derived from a variety of apples specific to the taste of the varietal, such as Granny Smith, McIntosh, Honey Crisp, Golden Delicious, Fuji and Pink Lady.
Clear Fruit is a crisp, clear, non-carbonated water beverage enhanced with fruit flavors. Clear Fruit is available in 14 delicious flavors, including consumer favorites Cherry Blast, Strawberry Watermelon, and Fruit Punch. Clear Fruit is available in 20-ounce and 16.9-ounce bottles with consumer-favored sports caps.
Rip It
Carbonated Soft Drinks –
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Many of our carbonated soft drink brands enjoy a regional identification that we believe fosters long-term consumer loyalty and makes them more competitive as a consumer choice. In addition, products produced locally often generate retailer-sponsored promotional activities and receive media exposure through community activities rather than costly national advertising.
In recent years, we reformulated many of our brands to reduce caloric content while still preserving their time-tested flavor profiles. Our brands, optically and ingredient-wise, are continually evolving. We always strive to make all our drinks healthier while maintaining their iconic taste profiles.
PRODUCTION
Our philosophy emphasizes vertical integration; our production model integrates the procurement of raw materials and crafting flavors and concentrates with the production of finished products. Our twelve strategically-located production facilities are near major metropolitan markets across the continental United States. The locations of our facilities enable us to efficiently produce and distribute beverages to substantially all geographic markets in the United States, including the top 25 metropolitan statistical areas. Each facility is generally equipped to produce both canned and bottled beverage products in a variety of package sizes.
We believe the innovative and controlled vertical integration of our production facilities provides an advantage over certain of our competitors that rely on independent third-party bottlers to manufacture and market their products. Since we control all national production, distribution and marketing of our brands, we believe we can more effectively manage quality control and consumer appeal while responding quickly to changing market conditions.
DISTRIBUTION
To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system to deliver our products through three primary distribution channels: take-home, convenience and food-service.
The take-home distribution channel consists of national and regional grocery stores, club stores, mass-merchandisers, wholesalers, e-commerce stores, drug stores and dollar stores. We distribute our products to this channel primarily through the warehouse distribution system and, to a lesser extent, the direct-store delivery system.
Warehouse distribution system products are shipped from our production facilities to the retailer’s centralized distribution centers and then distributed by the retailer to each of its store locations with other goods. This method allows our retail partners to further maximize their assets by utilizing their ability to pick-up product at our warehouses, thus lowering their/our product costs. Products sold through the direct-store delivery system are distributed directly to the customer’s retail outlets by our direct-store delivery fleet and by independent distributors.
We distribute our products to the convenience channel through our own direct-store delivery fleet and those of independent distributors. The convenience channel consists of convenience stores, gas stations and other smaller “up-and-down-the-street” accounts. Because of the higher retail prices and margins that typically prevail, we have developed packaging and graphics specifically targeted to this market. |
Our food-service division distributes products to independent, specialized distributors who sell to hospitals, schools, military bases, airlines, hotels and food-service wholesalers. Also, our Company-owned direct-store delivery fleet distributes products to certain schools and other food-service customers.locations.
Our take-home, convenience and food-service operations use vending machines and glass-door coolers as marketing and promotional tools for our brands. We provide vending machines and coolers on a placement or purchase basis to our customers. We believe vending and cooler equipment expands on-site visual trial, thereby increasing sales and enhancing brand awareness.
Our take-home, convenience and food-service operations use vending machines and glass-door coolers as marketing and promotional tools for our brands. We provide vending machines and coolers on a placement or purchase basis to our customers. We believe vending and cooler equipment expands on-site visual trial, thereby increasing sales and enhancing brand awareness. |
SALES AND MARKETING
Our marketing emphasizes programs designed to reach consumers directly through innovative digital marketing, digital social marketing, social media engagement, sponsorships and creative content. We are focused on increasing our digital presence and capabilities to further enhance the consumer experience across our brands. We periodically retain agencies to assist with social media content creative and platform selection for our brands. |
Additionally, we maintain and enhance consumer brand recognition and loyalty through a combination of participation in regional events, special event marketing, endorsements, consumer coupon distribution and product sampling. We also offer numerous promotional programs to retail customers, including cooperative advertising support, ‘BrandED’ ambassadors, in-store promotional activities and other incentives. These elements allow marketing and other consumer programs to be tailored to meet local and regional demographics. Additionally, the Company’s ‘MerchMx’ representatives work to develop a rapport with store managers for the purpose of optimizing shelf space, building displays, placing point-of-sale materials and expanding distribution.
RAW MATERIALS
Our centralized procurement group maintains relationships with numerous suppliers of ingredients and packaging. By consolidating the purchasing function for our production facilities, we believe we are able to procure more competitive arrangements with our suppliers, thereby enhancing our ability to compete as an efficient producer of beverages.
The products we produce and sell are made from various materials including aluminum cans, glass and plastic bottles, water, carbon dioxide, juice and flavor concentrates, sweeteners, cartons and closures. We craft a substantial portion of our flavors and concentrates while purchasing the remaining raw materials from multiple suppliers.
Substantially all of the materials and ingredients we purchase are presently available from several suppliers, although strikes, weather conditions, utility shortages, governmental control or regulations, national emergencies, quality, price or supply fluctuations or other events outside our control could adversely affect the supply of specific materials. A significant portion of our raw material purchases, including aluminum cans, plastic bottles, high fructose corn syrup, corrugated packaging and juice concentrates, are derived from commodities. Therefore, pricing and availability tend to fluctuate based upon worldwide commodity market conditions. In certain cases, we may elect to enter into multi-year agreements for the supply of these materials with one or more suppliers, the terms of which may include variable or fixed pricing, minimum purchase quantities and/or the requirement to purchase all supplies for specified locations. Additionally, we use derivative financial instruments to partially mitigate our exposure to changes in certain raw material costs.
SeasonalitySEASONALITY
Our operating results are affected by numerous factors, including fluctuations in costs of raw materials, holiday and seasonal programming and weather conditions. Beverage sales are seasonal with higher volume realized during summer months when outdoor activities are more prevalent.
COMPETITION
Competition
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Governmental RegulationTRADEMARKS
We own numerous trademarks for our brands that are significant to our business. We intend to continue to maintain all registrations of our significant trademarks and use the trademarks in the operation of our businesses.
GOVERNMENTAL REGULATION
The production, distribution and sale of our products in the United States are subject to the Federal Food, Drug and Cosmetic Act; the Dietary Supplement Health and Education Act of 1994; the Occupational Safety and Health Act; the Lanham Act; various environmental statutes; and various other federal, state and local statutes regulating the production, transportation, sale, safety, advertising, labeling and ingredients of such products. We believe that we are in compliance, in all material respects, with such existing legislation.
Certain states and localities require a deposit or tax on the sale of certain beverages. These requirements vary by each jurisdiction. Similar legislation has been or may be proposed in other states or localities or by Congress. We are unable to predict whether such legislation will be enacted or what impactbut believe its enactment would not have a material adverse impact on our business, financial condition or results of operations.
All of our facilities in the United States are subject to federal, state and local environmental laws and regulations. Compliance with these provisions has not had any material adverse effect on our financial or competitive position. We believe our current practices and procedures for the control and disposition of toxic or hazardous substances comply in all material respects with applicable law.
EmployeesHUMAN CAPITAL
As of May 2, 2020,April 29, 2023, we employed approximately 1,5501,593 people, of which 360374 are covered by collective bargaining agreements. These collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years. We believe these agreements can be renegotiated on terms satisfactory to us as they expire and we believe we maintain good relationsrelationships with our employees and their representative organizations.
We support a culture of diversity and inclusion that mirrors the markets we serve. We take a comprehensive view of diversity and inclusion across different races, ethnicities, religions and expressions of gender and sexual identity. Approximately 62 percent and 24 percent of our employee base identify as persons of color or female, respectively.
Our compensation programs are designed to ensure we attract and retain talent while maintaining alignment with market compensation. We utilize a mix of short-term incentive programs throughout the organization and provide long-term incentive programs to more senior employees generally through stock-based compensation programs. We offer competitive employee benefits that are effective in attracting and retaining talent and are designed to support the physical, mental and financial health of our employees. Our employee benefits program includes comprehensive health, dental, life and disability, and profit-sharing benefits.
Our operating philosophy emphasizes the health and safety of our employees. Our operations personnel, supplemented by risk management professionals, review all aspects of employee tasks and work environment to minimize risk. We strive to achieve an injury-free work environment in our operations. Key to these efforts are data analysis and preventative actions. We measure and benchmark lost-time incident rate, a reliable indication of total recordable injuries rate and severity, and use a risk- reduction process that thoroughly analyzes injuries and near misses.
During the COVID-19 pandemic, we took comprehensive measures to safeguard the well-being of our employees. These measures included enhanced sanitation procedures, physical distancing, and other health protocols. We continue to monitor the health and safety of our work force.
SUSTAINABILITY
National Beverage Corp. is dedicated to sustainable operations and responsible business initiatives. All our beverage products are produced in the U.S., providing thousands of jobs in local communities and boasting a lower carbon footprint than imported brands. In addition, the majority of our products are delivered through the warehouse distribution system which provides more efficient and lower greenhouse gas emissions than direct-store delivery systems.
Water is critical to our business, and we periodically conduct water quality assessments on a variety of measurements. All of our packaging is recyclable and we continually focus on reducing packaging content. More than 80% of our products are in aluminum cans, which generally contain approximately 73% recycled material. Each of our facilities has programs in place designed to minimize the use of water, energy, and other natural resources.
AVAILABLE INFORMATION
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are available free of charge on our website at www.nationalbeverage.com as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission. In addition, our Code of Ethics is available on our website. The information on the Company’s website is not part of this Annual Report on Form 10-K or any other report that we file with, or furnish to, the Securities and Exchange Commission.
In addition to other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating the Company’s business. Our business, financial condition, and results of operations and cash flows could be materially and adversely affected by any of these risks. Additional risks and uncertainties, including risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also impair our business, andfinancial position, results of operations.operations and cash flows.
Brand image and consumer preferences. Our beverage portfolio is comprised of a number of unique brands with reputations and consumer loyalty that have been built over time. Our investments in social media and marketing as well as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences. Unfavorable publicity, or allegations of quality issues, even if false or unfounded, may tarnish our reputation and brand image and cause consumers to choose other products. In addition, if we do not adequately anticipate and react to changing demographics, consumer trends, health concerns and product preferences, our financial resultsposition could be adversely affected.
Competition. The beverage industry is extremely competitive. Our products compete with a broad range of beverage products, most of which are manufactured and distributed by companies with substantially greater financial, marketing and distribution resources. In order to generate future revenues and profits, we must continue to sell products that appeal to our customers and consumers. Discounting and other actions by our competitors could adversely affect our ability to sustain revenues and profits.
Customer relationships. Our retail customer base has been consolidating over the last severalmany years resulting in fewer customers with increased purchasing power. This increased purchasing power can limit our ability to increase pricing for our products with certain of our customers. Additionally, e-commerce transactions and value stores are experiencing rapid growth. Our inability to adapt to customer requirements could lead to a loss of business and adversely affect our financial results.position.
Raw materials and energy. The production of our products is dependent on certain raw materials, including aluminum, resin, corn, linerboard, water and fruit juice. In addition, the production and distribution of our products is dependent on energy sources, including natural gas, diesel fuel, carbon dioxide and electricity. These items are subject to supply chain disruptions and price volatility caused by numerous factors. Commodity price increases ultimately result in a corresponding increase in the cost of raw materials and energy. We may be limited in our ability to pass these increases on to our customers or may incur a loss in sales volume to the extent price increases are taken. In addition, strikes, weather conditions, governmental controls, tariffs, national emergencies, natural disasters, supply shortages or other events could affect our continued supply and cost of raw materials and energy. If raw materials or energy costs increase, or thetheir availability is limited, our financial resultsposition could be adversely affected.
Governmental regulation. Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products. In addition, various governmental agencies have enacted or are considering changes in corporate tax laws as well as additional taxes on soft drinks and other sweetened beverages. Compliance with or changes in existing laws or regulations could require material expenses and negatively affect our financial results through lower sales or higher costs.position.
Sustained increases in the cost of employee wages and benefits. Our profitability is affected by the cost of employee wages as well as medical statutory and other benefits provided to employees, including employees covered under collective bargaining agreements and multi-employer pension plans. In recent years, we have experienced increasesCompetition in thesethe labor marketplace for qualified employees has led to increased costs, certain of which are self-insured. Although we seeksuch as higher wages and benefit costs in order to limit these cost increases, continued upward pressurerecruit and retain employees. A prolonged labor shortage or inflation in theselabor costs could reduceadversely impact our profitability.financial results.
Unfavorable weather conditions. Unfavorable weather conditions could have an adverse impact on our revenue and profitability. Unusually cold or rainy weather may temporarily reduce demand for our products and contribute to lower sales, which could adversely affect our profitability for such periods. Prolonged drought conditions in the geographic regions in which we do business could lead to restrictions on the use of water, which could adversely affect our ability to produce and distribute products.
Dependence on key personnel. Our performance significantly depends upon the continued contributions of our executive officers and key employees, both individually and as a group, and our ability to retain and motivate them. Our officers and key personnel have many years of experience with us and in our industry and it may be difficult to replace them. If we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely affected.
COVID-19 pandemic. The magnitudeDependence on information technology and durationthird-party service providers. We use information technology and third-party service providers to support our business processes and activities. Continuity of business applications and services may in the current COVID-19 pandemic is uncertain, rapidly changing and mayfuture be impacteddisrupted by events beyondsuch as infection by viruses or malware or other cybersecurity breaches or attacks; issues with systems’ maintenance or security; power outages; hardware or software failures; telecommunication failures; natural disasters; and other catastrophic occurrences. If our knowledgecontrols, disaster recovery and business continuity plans or control. Such events could include a shutdown of one or morethose of our facilities resulting from illnessthird party providers do not effectively respond to or government restrictions,resolve the issues related to any such disruptions in a timely manner, our sales, financial condition and the disruption of operations of our customers and suppliers. Such events could adversely impact our business, results of operations financial condition and cash flows.may be adversely affected.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.
ITEM 1B. UNRESOLVED STAFF COMMENTS2.
None.
Our principal properties include twelve production facilities located in ten states, which aggregate approximately two million square feet. We own ten production facilities in the following states: California (2), Georgia, Kansas, Michigan (2), Ohio, Texas, Utah and Washington. Two production facilities, located in Maryland and Florida, are leased subject to agreements that expire through 2025. We believe our facilities are generally in good condition and sufficient to meet our present needs.
The production of beverages is capital intensive but is not characterized by rapid technological change. The technological advances that have occurred have generally been of an incremental cost-saving nature, such as the industry’s conversion to lighter weight containers or improved blending processes that enhance ingredient yields. We are not aware of any anticipated industry-wide changes in technology that would adversely impact our current physical production capacity or cost of production.
We own and lease trucks, vans and automobiles used in the sale, delivery and distribution of our products. In addition, we lease warehouse and office space, transportation equipment, office equipment and certain manufacturing equipment.
The Company has been named in certain legal proceedings, including those containing derivative and class action allegations. One complaint alleges the Company’s LaCroix branded products contain synthetic ingredients and therefore violate state consumer protection statutes and other laws. A similar consumer complaint was voluntarily dismissed during the fiscal year along with a full written retraction of all claims by the plaintiff and counsel. The Company is vigorously defending all legal proceedings and believes litigation will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
MARKET FOR |
The common stock of National Beverage Corp., par value $.01 per share, (“Common Stock”) is listed on The NASDAQ Global Select Market under the symbol “FIZZ”.
At June 24, 2020,16, 2023, there were approximately 29,50040,200 holders of our Common Stock, the majority of which hold their shares in the names of banks, brokers and other financial institutions.
TheIn the last five fiscal years, the Company paid special cash dividends on Common Stock of $135.2 million ($2.90 per share) on January 29, 2019 and $69.9 million ($1.50 per share) on August 4, 2017.as follows:
● | $280.0 million ($3.00 per share) on December 29, 2021; |
● | $279.9 million ($3.00 per share) on January 29, 2021; and |
● | $135.2 million ($1.45 per share) on January 29, 2019; |
Our Board of Directors has authorized a program to repurchase 1.63.2 million shares of our common stock of which 943,428approximately 1.9 million shares remain available and authorized for repurchases. In March 2020, the Company purchased 47,651 shares of its common stock at an average price per share of $40.94 for a total of $1.9 million.
Performance Graph
The following graph shows a comparison of the five-year cumulative returnsreturn of an investment of $100 cash on May 2, 2015,April 28, 2018, assuming reinvestment of dividends, of our Common Stock with the NASDAQ Composite Index, the S&P 500 Index, a Company-constructed Peer Group (the “Peer Group”) and the newly-added Dow Jones US Soft Drinks Index. The Peer Group consists of Coca-Cola Bottling Company Consolidated and Cott Corporation and will be replaced by the Dow Jones US Soft Drinks Index to provide a broader representation of our industry peers. Going forward,and the Peer Group will be excluded from this performance graph.S&P 500 Index.
5/02/2015 | 4/30/2016 | 4/29/2017 | 4/28/2018 | 4/27/2019 | 5/02/2020 | |||||||||||||||||||
National Beverage Corp. | $ | 100.00 | $ | 208.47 | $ | 406.77 | $ | 418.81 | $ | 277.32 | $ | 241.48 | ||||||||||||
NASDAQ Composite - Total Return | 100.00 | 96.56 | 123.78 | 147.27 | 170.08 | 181.89 | ||||||||||||||||||
Dow Jones US Soft Drinks Index | 100.00 | 112.05 | 117.75 | 119.03 | 143.22 | 145.11 | ||||||||||||||||||
S&P 500 Index - Total Return | 100.00 | 100.11 | 118.05 | 134.81 | 151.44 | 148.79 | ||||||||||||||||||
Peer Group | 100.00 | 147.10 | 171.78 | 163.29 | 241.14 | 165.61 |
Total Returns Index For: | 4/28/2018 | 4/27/2019 | 5/02/2020 | 5/01/2021 | 4/30/2022 | 4/29/2023 | ||||||||||||||||||
National Beverage Corp. | 100.00 | 66.22 | 57.66 | 119.05 | 114.71 | 129.34 | ||||||||||||||||||
NASDAQ Composite - Total Return | 100.00 | 115.49 | 123.51 | 201.97 | 179.59 | 179.63 | ||||||||||||||||||
Dow Jones US Soft Drinks Index | 100.00 | 120.32 | 121.91 | 148.37 | 177.04 | 191.45 | ||||||||||||||||||
S&P 500 Index - Total Return | 100.00 | 112.33 | 110.37 | 165.75 | 166.10 | 170.53 |
RESERVED |
The following selected financial data should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and consolidated financial statements and notes thereto contained in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
MANAGEMENT’S DISCUSSION AND | |
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Fiscal Year Ended | ||||||||||||||||||||
May 2, | April 27, | April 28, | April 29, | April 30, | ||||||||||||||||
2020 (3) | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Summary of Operations: | ||||||||||||||||||||
Net sales | $ | 1,000,394 | $ | 1,014,105 | $ | 975,734 | $ | 826,918 | $ | 704,785 | ||||||||||
Cost of sales | 630,254 | 629,755 | 584,599 | 500,841 | 463,348 | |||||||||||||||
Gross profit | 370,140 | 384,350 | 391,135 | 326,077 | 241,437 | |||||||||||||||
Selling, general and administrative expenses | 204,394 | 204,415 | 186,947 | 163,600 | 148,384 | |||||||||||||||
Other (income) expense - net | (3,709 | ) | (3,942 | ) | (1,301 | ) | (348 | ) | 348 | |||||||||||
Income before income taxes | 169,455 | 183,877 | 205,489 | 162,825 | 92,705 | |||||||||||||||
Provision for income taxes | 39,483 | 43,024 | 55,715 | 55,780 | 31,507 | |||||||||||||||
Net income | $ | 129,972 | $ | 140,853 | $ | 149,774 | $ | 107,045 | $ | 61,198 | ||||||||||
Per Share Data: | ||||||||||||||||||||
Basic earnings per common share (1) | $ | 2.79 | $ | 3.02 | $ | 3.21 | $ | 2.30 | $ | 1.31 | ||||||||||
Diluted earnings per common share (1) | 2.78 | 3.00 | 3.19 | 2.29 | 1.31 | |||||||||||||||
Closing stock price | 50.07 | 57.50 | 89.78 | 88.59 | 46.74 | |||||||||||||||
Dividends paid on common stock (2) | - | 2.90 | 1.50 | 1.50 | - | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and equivalents (2) | $ | 304,518 | $ | 156,200 | $ | 189,864 | $ | 136,372 | $ | 105,577 | ||||||||||
Working capital (2) | 319,024 | 224,420 | 248,297 | 181,115 | 143,603 | |||||||||||||||
Property, plant and equipment - net | 120,627 | 111,316 | 85,807 | 65,150 | 61,932 | |||||||||||||||
Total assets (2) | 648,646 | 452,193 | 458,832 | 353,983 | 301,044 | |||||||||||||||
Long-term lease obligations | 32,159 | - | - | - | - | |||||||||||||||
Deferred income tax liability | 14,823 | 15,987 | 14,502 | 12,087 | 10,020 | |||||||||||||||
Total shareholders' equity (2) | 452,337 | 331,609 | 331,440 | 245,618 | 206,152 | |||||||||||||||
Dividends paid on common stock (2) | - | 135,247 | 69,878 | 69,850 | - |
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following Management’s Discussion and Analysis of Operations is intended to provide information
about the Company’s operations and business environment and should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes contained in Item 8 of this report.
National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, carbonated soft drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry.
National Beverage Corp., in recent years, has transformed to an innovative, healthier refreshment company. From our corporate philosophy, development of products and marketing to manufacturing, we are converting consumers to a ‘‘Better for You’You’ thirst quencher that compassionately cares for their nutritional health. We are committed to our quest to innovate for the joy, benefit and enjoyment of our consumers’ healthier lifestyle!
National Beverage Corp. isWe believe our brands are uniquely positioned in three distinctive ways:
(1) | The new consumer is the most competent/knowledgeable product analyzer ever, and personal mental/physical lifestyles demand that healthier is their preferred choice. Calories must qualify as worthy; sugar being enemy #1 in the life of the Millennial and younger consumers. |
(2) | The retail industry is in a revolution. In prior years, each retailer induced their consumer with a proprietary brand (especially soft drinks), but today |
| Retail today is in the most competitively-indexed service industry, without exception. Innovation, plus the urgent time demands on the consumer, requires quick, expedient shopping. Home delivery is even more of a current shoppers’ choice. Retailers cannot carry slower-moving items that home delivery will not support. |
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Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.
Presently, our primary market focus is the United States and Canada. Certain of our products are also distributed on a limited basis in other countries and options to expand distribution to other regions are being considered. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up product at our warehouses, further lowering their/our product costs.
National Beverage Corp. is incorporated in Delaware and began trading as a public company on the NASDAQ Stock Market in 1991. In this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries unless indicated otherwise.
Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, holiday and seasonal programming and weather conditions. While prior years witnessed more seasonality, higher sales are realized during the summer when outdoor activities are more prevalent.
Our highly innovative business, where new beverages are developed and produced for selective holidays and ceremonial dates, should not be analyzed on the common three-month (quarterly) periods, traditionally found acceptable. Today, costly development projects and seasonal weather periods plus promotional packaging, make quarter-to-quarter comparisons unworthy statistics and forces companies to decision making for that purpose, not truly beneficial for investors and shareholders alike.
Traditional and typical are not a part of an innovator’s vocabulary.
RESULTS OF OPERATIONS
The following section generally discusses the fiscal years ended May 2, 2020April 29, 2023 (Fiscal 2020)2023) and April 27, 201930, 2022 (Fiscal 2019)2022) items and year-to-year comparisons between Fiscal 20202023 and Fiscal 2019.2022. Discussions of fiscal year ended April 28, 2018May 1, 2021 (Fiscal 2018)2021) items and year-to-year comparisons between Fiscal 20192022 and Fiscal 20182021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended April 27, 2019,30, 2022, which is available free of charge on our website at www.nationalbeverage.com. Fiscal 2020 consisted of 53 weeks; Fiscal 2019 and Fiscal 2018 both consisted of 52 weeks. www.nationalbeverage.com.
Net Sales
Net sales for Fiscal 2020 declined 1.4%2023 increased 3.1% to $1,000$1,173 million compared to $1,014$1,138 million for Fiscal 2019.2022. The declineincrease in sales resulted from a 1.4% reduction8.4% increase in average selling price peroffset in part by a 4.9% decline in case due primarily to changes in product mix.volume, which impacted both Power+Brands volume declined 3.4% and branded carbonated soft drinks volume increased 6.6%.drinks.
Gross Profit
Gross profit for Fiscal 20202023 was $370.1$396.8 million compared to $384.4$417.8 million for Fiscal 2019.2022. The changeaverage cost per case increased 13.4% and gross margin decreased to 33.8% from 36.7% for Fiscal 2022. The decrease in gross profitmargin is due to a 1.0% increaseincreases in costpackaging, ingredients and freight costs offset in part by increased average selling price. Gross profit per case resulting primarily from changes in product mix and increased manufacturing costs. Gross margin was 37.0% for Fiscal 2020 compared to 37.9% in Fiscal 2019.flat.
Shipping and handling costs are included in selling, general and administrative expenses, the classification of which is consistent with many beverage companies. However, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. See Note 1 of Notes to the Consolidated Financial Statements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $204.4approximately $210 million for both Fiscal 20202023, and Fiscal 2019 or approximately 20%2022. Marketing and shipping costs declined and were offset by increased administrative costs. The decline in marketing costs was primarily due to reduced programs with retail partners. As a percent of net sales, for both periods. Selling,selling, general and administrative expenses reflect increased selling and administrative costs offset by reduced shipping and distribution costs. declined to 17.9% from 18.4% in Fiscal 2022.
Interest Expense and Other Expense (Income)(Expense) Income - Net
Other (expense) income, net is primarilyincludes interest income of $3.9$2.3 million for Fiscal 20202023 and $4.1$.1 million for Fiscal 2019.2022. The changeincrease in interest income is due to lower investment yields on an increased average investment balances. Interest expense is comprised of fees related to maintaining lines of credit. Interest expense was essentially flat for all years presented.invested balances and higher return on investments.
Income Taxes
Our effective tax rate was 23.3%23.7% for Fiscal 20202023 and 23.4%23.6% for Fiscal 2019.2022. The differences between the effective rate and the federal statutory rate of 21% were primarily due to the effects of state income taxes.
LIQUIDITY AND FINANCIAL CONDITION
Liquidity and Capital Resources
Our principal source of funds is cash generated from operations. At May 2, 2020,April 29, 2023, we had $158.1 million in cash and cash equivalents and maintained $100$150 million in unsecured revolving credit facilities, under which no borrowings were outstanding and $3.4$2.2 million was reserved for standby letters of credit. Cash generated from operations is our principal source of funds. We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months. See Note 5 of Notes to the Consolidated Financial Statements.
Expenditures for property, plant and equipment amounted to $23.9$22.0 million for Fiscal 20202023 primarily to expand production capacity. We continually evaluatefor capital projects to expand our production capacity, enhance sustainability and packaging capabilities orand improve efficiencies at our production facilities. We intend to continue production capacity and efficiency improvement projects in fiscal year 2021Fiscal 2024 and expect capital expenditures to be comparable to Fiscal 2020.
The Company paid special cash dividends on Common Stock of $135.2 million ($2.90 per share) on January 29, 2019 and $69.9 million ($1.50 per share) on August 4, 2017.
The Board of Directors has authorized the Company to repurchase up to 1.6 million shares of common stock. During Fiscal 2020, the Company purchased an aggregate 154,512 shares for a cost of $6.2 million. As of May 2, 2020, 656,572 shares were purchased under the program and 943,428 shares were available for repurchase.2022.
Pursuant to a management agreement, we incurred a fee to Corporate Management Advisors, Inc. (CMA) of $10.0$11.9 million for Fiscal 20202023 and $10.2$11.4 million for Fiscal 2019. At May 2, 2020, management fees payable to2022. Included in current liabilities were amounts due CMA were $2.6 million.of $2.9 million at April 29, 2023 and $4.0 million at April 30, 2022. See Note 6 of Notes to the Consolidated Financial Statements.
Cash Flows
During Fiscal 2020, $177.72023, $161.7 million was provided by operating activities, $23.9$22.0 million was used in investing activities and $5.5$29.7 million was used in financing activities. Cash provided by operating activities increased $38.3$28.5 million primarily due to decreasedreduced net working capital requirements and increased depreciation and amortizationother than cash, change in deferred taxes offset in part by lower net income. Cash used in investing activities decreased $7.1 million due to reducedlower capital expenditures. Cash used in financing activities includes the $6.2a $30 million repayment of stock repurchased during Fiscal 2020. In Fiscal 2019, $135.2 million ($2.90 per share) special cash dividend was paid on January 29, 2019.our Loan Facility.
Financial Position
During Fiscal 2020,2023, our working capital increased $92.9 million to $319.0 million from $224.4 million at April 27, 2019.$222.1 million. The increase in working capital resulted from increased cash and equivalents generated by operations, and reduced inventoriesincreased trade receivables offset in part by increased current liabilities. Current liabilities in Fiscal 2020 increased in part due to the adoption of the new lease Accounting Standards Update No. 2016-02, “Leases.” (Topic 842).lower inventories and reduced income tax prepayments. Trade receivables increased slightly$11.3 million and days sales outstanding was 29.533.3 days at April 29, 2023 compared to 32.230 days for 2019.at April 30, 2022. Inventories decreased $7.2$9.7 million or 10.2% as a result of reductions inthe reduced quantities of finished goods and raw materials. Annual inventory turns increaseddecreased to 9.47.9 from 8.88.2 times. As of May 2, 2020 andAt April 27, 2019,29, 2023, the current ratio was 3.32.5 to 1.1 compared to 1.9 to 1 at April 30, 2022.
CONTRACTUAL OBLIGATIONS
Contractual obligations at May 2, 2020April 29, 2023 are payable as follows:
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||
Total | 1 Year Or less | 2 to 3 Years | 3 to 5 Years | More Than 5 Years | Total | 1 Year Or less | 2 to 3 Years | 4 to 5 Years | More Than 5 Years | |||||||||||||||||||||||||||||||
Operating leases | $ | 52,394 | $ | 14,206 | $ | 22,251 | $ | 11,836 | $ | 4,101 | $ | 44,674 | $ | 12,798 | $ | 17,903 | $ | 10,304 | $ | 3,669 | ||||||||||||||||||||
Purchase commitments | 22,598 | 17,505 | 5,093 | - | - | 19,535 | 19,535 | - | - | - | ||||||||||||||||||||||||||||||
Total | $ | 74,992 | $ | 31,711 | $ | 27,344 | $ | 11,836 | $ | 4,101 | $ | 64,209 | $ | 32,333 | $ | 17,903 | $ | 10,304 | $ | 3,669 |
We contribute to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan. Annual contributions were $3.6 million for Fiscal 2020, $3.8 million for Fiscal 20192023 and $3.4$4.0 million for Fiscal 2018.2022. See Note 11 of Notes to Consolidated Financial Statements.
We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Other long-term liabilities include known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience. Since the timing and amount of claim payments vary significantly, we are not able to reasonably estimate future payments for specific periods and therefore such payments have not been included in the table above. Standby letters of credit aggregating $3.4$2.2 million have been issued in connection with our self-insurance programs. These standby letters of credit expire through June 2021March 2024 and are expected to be renewed.
OFF-BALANCE SHEET ARRANGEMENTS AND ESTIMATES
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management'smanagement’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. We believe that the critical accounting policies described in the following paragraphs comprise the most significant estimates and assumptions used in the preparation of our consolidated financial statements. For these policies, we caution that future events rarely develop exactly as estimated and the best estimates routinely require adjustment.
Credit Risk
We sell products to a variety of customers and extend credit based on an evaluation of each customer’s financial condition, generally without requiring collateral. Exposure to credit losses varies by customer principally due to the financial condition of each customer. We monitor our exposure to credit losses and maintain allowances for anticipated losses based on our experience with past due accounts, collectability and our analysis of customer data.
Impairment of Long-Lived Assets
All long-lived assets, excluding goodwill and intangible assets not subject to amortization, are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based on the best information available. Estimated fair value is generally measured by discounting future cash flows. Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner if we believe such assets may be impaired. An impairment loss is recognized if the carrying amount or, for goodwill, the carrying amount ofwritten down to its reporting unit, is greater than itsestimated fair value.market value based on discounted future cash flows.
Income Taxes
The Company'sCompany’s effective income tax rate is based on estimates of taxes which will ultimately be payable. Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established to reduce the carrying amounts of deferred tax assets when it is deemed, more likely than not, that the benefit of deferred tax assets will not be realized.
Insurance Programs
We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Accordingly, we accrue for known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience.
Revenue Recognition
We recognize revenue upon delivery to our customers, based on written sales terms that do not allow a right of return except in rare instances. Our products are typically sold on credit; however smaller direct-store delivery accounts may be sold on a cash basis. Our credit terms normally require payment within 30 days of delivery and may allow discounts for early payment. We estimate and reserve for bad debt exposure based on our experience with past due accounts, collectability and our analysis of customer data.
We offer various sales incentive arrangements to our customers that require customer performance or achievement of certain sales volume targets. Sales incentives are accrued over the period of benefit or expected sales. When the incentive is paid in advance, the aggregate incentive is recorded as a prepaid and amortized over the period of benefit. The recognition of these incentives involves the use of judgment related to performance and sales volume estimates that are made based on historical experience and other factors. Sales incentives are accounted for as a reduction of sales and actual amounts ultimately realized may vary from accrued amounts. Such differences are recorded once determined and have historically not been significant. We adopted ASU 2014-09, Revenue from Contracts with Customers, and its amendments on April 29, 2018.
FORWARD-LOOKING STATEMENTS
National Beverage Corp. and its representatives may make written or oral statements relating to future events or results relative to our financial, operational and business performance, achievements, objectives and strategies. These statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 and include statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our stockholders. Certain statements including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “plans,” “expects,” and “estimates” constitute “forward-looking statements” and involve known and unknown risk, uncertainties and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, pricing of competitive products, success of new product and flavor introductions, fluctuations in the costs and availability of raw materials and packaging supplies, ability to pass along cost increases to our customers, labor strikes or work stoppages or other interruptions in the employment of labor, continued retailer support for our products, changes in brand image, consumer demand and preferences and our success in creating products geared toward consumers’ tastes, success in implementing business strategies, changes in business strategy or development plans, government regulations, taxes or fees imposed on the sale of our products, unfavorable weather conditions and other factors referenced in this report, filings with the Securities and Exchange Commission and other reports to our stockholders. We disclaim anany obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained herein to reflect future events or developments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodities
We purchase various raw materials, including aluminum cans, plastic bottles, high fructose corn syrup, corrugated packaging and juice concentrates, the prices of which fluctuate based on commodity market conditions. Our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. At times, we manage our exposure to this risk through the use of supplier pricing agreements that enable us to establish all, or a portion of, the purchase prices for certain raw materials. Additionally, we use derivative financial instruments to partially mitigate our exposure to changes in certain raw material costs.
Interest Rates
At May 2, 2020,April 29, 2023, the Company had no borrowings outstanding. Based on a 1 percentage point increase, interest rates would have increased interest expense by $.1 million in Fiscal 2023. We had no debt-relatedare also subject to interest rate risk related to our investment in highly liquid short duration investment securities. These investments are managed with the guidelines of the Company’s investment policy. Our policy requires investments to be investment grade, with the primary objective of minimizing the risk of principal loss. In addition, our policy limits the amount of credit exposure during Fiscal 2020.to any one issue.
CONSOLIDATED BALANCE SHEETS | ||||||||||
(In thousands, except share data) |
May 2, | April 27, | April 29, | April 30, | |||||||||||||
2020 | 2019 | 2023 | 2022 | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and equivalents | $ | 304,518 | $ | 156,200 | $ | 158,074 | $ | 48,050 | ||||||||
Trade receivables - net | 84,921 | 84,841 | 104,918 | 93,592 | ||||||||||||
Inventories | 63,482 | 70,702 | ||||||||||||||
Inventory | 93,578 | 103,318 | ||||||||||||||
Prepaid and other assets | 7,791 | 9,714 | 9,835 | 29,560 | ||||||||||||
Total current assets | 460,712 | 321,457 | 366,405 | 274,520 | ||||||||||||
Property, plant and equipment - net | 120,627 | 111,316 | 148,423 | 144,258 | ||||||||||||
Right of use assets, net | 47,884 | - | ||||||||||||||
Right of use assets- net | 39,506 | 29,251 | ||||||||||||||
Goodwill | 13,145 | 13,145 | 13,145 | 13,145 | ||||||||||||
Intangible assets | 1,615 | 1,615 | 1,615 | 1,615 | ||||||||||||
Other assets | 4,663 | 4,660 | 5,248 | 5,015 | ||||||||||||
Total assets | $ | 648,646 | $ | 452,193 | $ | 574,342 | $ | 467,804 | ||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 74,369 | $ | 66,202 | $ | 85,106 | $ | 95,299 | ||||||||
Accrued liabilities | 42,476 | 30,433 | 47,318 | 39,090 | ||||||||||||
Operating lease liabilities | 16,980 | - | 11,745 | 10,543 | ||||||||||||
Income taxes payable | 7,863 | 402 | 152 | 387 | ||||||||||||
Total current liabilities | 141,688 | 97,037 | 144,321 | 145,319 | ||||||||||||
Long-term debt | - | 30,000 | ||||||||||||||
Deferred income taxes - net | 14,823 | 15,987 | 19,814 | 23,823 | ||||||||||||
Operating lease liabilities- non current | 32,159 | |||||||||||||||
Operating lease liability - non current | 29,782 | 20,703 | ||||||||||||||
Other liabilities | 7,639 | 7,560 | 7,938 | 8,521 | ||||||||||||
Total liabilities | 196,309 | 120,584 | 201,855 | 228,366 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Shareholders' equity: | ||||||||||||||||
Preferred stock, $1 par value - 1,000,000 shares authorized Series C - 150,000 shares issued | 150 | 150 | ||||||||||||||
Common stock, $.01 par value - 200,000,000 shares authorized; 50,803,184 shares (2020) and 50,678,084 shares (2019) issued | 508 | 507 | ||||||||||||||
Preferred stock, $1 par value - 1,000,000 shares authorized Series C - 150,000 shares issued | 150 | 150 | ||||||||||||||
Common stock, $.01 par value - 200,000,000 shares authorized; 101,727,658 and 101,712,358 shares issued, respectively | 1,017 | 1,017 | ||||||||||||||
Additional paid-in capital | 37,930 | 37,065 | 40,393 | 39,405 | ||||||||||||
Retained earnings | 443,402 | 313,430 | 358,345 | 216,181 | ||||||||||||
Accumulated other comprehensive (loss) | (5,420 | ) | (1,543 | ) | ||||||||||||
Accumulated other comprehensive (loss) income | (3,185 | ) | 6,918 | |||||||||||||
Treasury stock - at cost: | ||||||||||||||||
Series C preferred stock - 150,000 shares | (5,100 | ) | (5,100 | ) | (5,100 | ) | (5,100 | ) | ||||||||
Common stock - 4,187,056 shares (2020) and 4,032,544 shares (2019) | (19,133 | ) | (12,900 | ) | ||||||||||||
Common stock - 8,374,112 shares | (19,133 | ) | (19,133 | ) | ||||||||||||
Total shareholders' equity | 452,337 | 331,609 | 372,487 | 239,438 | ||||||||||||
Total liabilities and shareholders' equity | $ | 648,646 | $ | 452,193 | $ | 574,342 | $ | 467,804 |
See accompanying Notes to Consolidated Financial Statements.
The accompanying notes are an integral part of these consolidated financial statements. |
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(In thousands, except per share amounts) |
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||
May 2, | April 27, | April 28, | April 29, | April 30, | May 1, | |||||||||||||||||||
2020 | 2019 | 2018 | 2023 | 2022 | 2021 | |||||||||||||||||||
Net sales | $ | 1,000,394 | $ | 1,014,105 | $ | 975,734 | $ | 1,172,932 | $ | 1,138,013 | $ | 1,072,210 | ||||||||||||
Cost of sales | 630,254 | 629,755 | 584,599 | 776,143 | 720,208 | 650,594 | ||||||||||||||||||
Gross profit | 370,140 | 384,350 | 391,135 | 396,789 | 417,805 | 421,616 | ||||||||||||||||||
Selling, general and administrative expenses | 204,394 | 204,415 | 186,947 | 210,105 | 209,949 | 193,791 | ||||||||||||||||||
Operating income | 165,746 | 179,935 | 204,188 | 186,684 | 207,856 | 227,825 | ||||||||||||||||||
Other income, net | (3,709 | ) | (3,942 | ) | (1,301 | ) | ||||||||||||||||||
Other (expense) income - net | (242 | ) | (260 | ) | 312 | |||||||||||||||||||
Income before income taxes | 169,455 | 183,877 | 205,489 | 186,442 | 207,596 | 228,137 | ||||||||||||||||||
Provision for income taxes | 39,483 | 43,024 | 55,715 | 44,278 | 49,084 | 53,991 | ||||||||||||||||||
Net income | $ | 129,972 | $ | 140,853 | $ | 149,774 | $ | 142,164 | $ | 158,512 | $ | 174,146 | ||||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 2.79 | $ | 3.02 | $ | 3.21 | $ | 1.52 | $ | 1.70 | $ | 1.87 | ||||||||||||
Diluted | $ | 2.78 | $ | 3.00 | $ | 3.19 | $ | 1.52 | $ | 1.69 | $ | 1.86 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||
Basic | 46,628 | 46,633 | 46,598 | 93,347 | 93,323 | 93,280 | ||||||||||||||||||
Diluted | 46,828 | 46,917 | 46,921 | 93,608 | 93,599 | 93,620 |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||
(In thousands) |
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||
May 2, | April 27, | April 28, | April 29, | April 30, | May 1, | |||||||||||||||||||
2020 | 2019 | 2018 | 2023 | 2022 | 2021 | |||||||||||||||||||
Net income | $ | 129,972 | $ | 140,853 | $ | 149,774 | $ | 142,164 | $ | 158,512 | $ | 174,146 | ||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||
Cash flow hedges | (3,673 | ) | (6,318 | ) | 5,227 | (10,130 | ) | 3,882 | 7,930 | |||||||||||||||
Other | (204 | ) | 174 | (22 | ) | 27 | 19 | 507 | ||||||||||||||||
Total | (3,877 | ) | (6,144 | ) | 5,205 | (10,103 | ) | 3,901 | 8,437 | |||||||||||||||
Comprehensive income | $ | 126,095 | $ | 134,709 | $ | 154,979 | $ | 132,061 | $ | 162,413 | $ | 182,583 |
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||
(In thousands) |
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||
May 2, 2020 | April 27, 2019 | April 28, 2018 | April 29, 2023 | April 30, 2022 | May 1, 2021 | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
Series C Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning and end of year | 150 | $ | 150 | 150 | $ | 150 | 150 | $ | 150 | 150 | $ | 150 | 150 | $ | 150 | 150 | $ | 150 | ||||||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 50,678 | 507 | 50,651 | 507 | 50,616 | 506 | 101,712 | 1,017 | 101,676 | 1,016 | 101,606 | 1,016 | ||||||||||||||||||||||||||||||||||||
Stock options exercised | 125 | 1 | 27 | - | 35 | 1 | 15 | - | 36 | 1 | 70 | - | ||||||||||||||||||||||||||||||||||||
End of year | 50,803 | 508 | 50,678 | 507 | 50,651 | 507 | 101,727 | 1,017 | 101,712 | 1,017 | 101,676 | 1,016 | ||||||||||||||||||||||||||||||||||||
Additional Paid-In Capital | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 37,065 | 36,358 | 35,638 | 39,405 | 38,375 | 37,422 | ||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | 740 | 456 | 559 | 311 | 335 | 491 | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 125 | 251 | 161 | 677 | 695 | 462 | ||||||||||||||||||||||||||||||||||||||||||
End of year | 37,930 | 37,065 | 36,358 | 40,393 | 39,405 | 38,375 | ||||||||||||||||||||||||||||||||||||||||||
Retained Earnings | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 313,430 | 307,824 | 227,928 | 216,181 | 337,672 | 443,402 | ||||||||||||||||||||||||||||||||||||||||||
Net income | 129,972 | 140,853 | 149,774 | 142,164 | 158,512 | 174,146 | ||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividend | - | (135,247 | ) | (69,878 | ) | - | (280,003 | ) | (279,876 | ) | ||||||||||||||||||||||||||||||||||||||
End of year | 443,402 | 313,430 | 307,824 | 358,345 | 216,181 | 337,672 | ||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | (1,543 | ) | 4,601 | (604 | ) | 6,918 | 3,017 | (5,420 | ) | |||||||||||||||||||||||||||||||||||||||
Cash flow hedges | (3,673 | ) | (6,318 | ) | 5,227 | (10,130 | ) | 3,882 | 7,930 | |||||||||||||||||||||||||||||||||||||||
Other | (204 | ) | 174 | (22 | ) | 27 | 19 | 507 | ||||||||||||||||||||||||||||||||||||||||
End of year | (5,420 | ) | (1,543 | ) | 4,601 | (3,185 | ) | 6,918 | 3,017 | |||||||||||||||||||||||||||||||||||||||
Treasury Stock - Series C Preferred | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning and end of year | 150 | (5,100 | ) | 150 | (5,100 | ) | 150 | (5,100 | ) | 150 | (5,100 | ) | 150 | (5,100 | ) | 150 | (5,100 | ) | ||||||||||||||||||||||||||||||
Treasury Stock - Common | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 4,033 | (12,900 | ) | 4,033 | (12,900 | ) | 4,033 | (12,900 | ) | |||||||||||||||||||||||||||||||||||||||
Beginning and end of year | 8,374 | (19,133 | ) | 8,374 | (19,133 | ) | 8,374 | (19,133 | ) | |||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | 154 | (6,233 | ) | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
End of year | 4,187 | (19,133 | ) | 4,033 | (12,900 | ) | 4,033 | (12,900 | ) | |||||||||||||||||||||||||||||||||||||||
8,374 | (19,133 | ) | 8,374 | (19,133 | ) | 8,374 | (19,133 | ) | ||||||||||||||||||||||||||||||||||||||||
Total Shareholders' Equity | $ | 452,337 | $ | 331,609 | $ | 331,440 | $ | 372,487 | $ | 239,438 | $ | 355,997 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(In thousands) |
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||
May 2, | April 27, | April 28, | April 29, | April 30, | May 1, | |||||||||||||||||||
2020 | 2019 | 2018 | 2023 | 2022 | 2021 | |||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||
Net income | $ | 129,972 | $ | 140,853 | $ | 149,774 | $ | 142,164 | $ | 158,512 | $ | 174,146 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 17,234 | 15,439 | 13,226 | 20,041 | 18,544 | 18,097 | ||||||||||||||||||
Deferred income tax provision | 11 | 3,351 | 676 | |||||||||||||||||||||
Loss on disposal of property, net | 206 | 12 | 149 | |||||||||||||||||||||
Deferred income taxes | (821 | ) | 5,326 | (132 | ) | |||||||||||||||||||
Loss (gain) on disposal of property, net | 141 | (7 | ) | 114 | ||||||||||||||||||||
Stock-based compensation | 125 | 251 | 161 | 677 | 695 | 462 | ||||||||||||||||||
Amortization of operating right of use assets | 13,351 | - | - | 13,240 | 13,258 | 13,060 | ||||||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||||||
Trade receivables | (80 | ) | (481 | ) | (13,041 | ) | (11,326 | ) | (7,150 | ) | (1,521 | ) | ||||||||||||
Inventories | 7,220 | (9,782 | ) | (7,565 | ) | 9,740 | (31,838 | ) | (7,998 | ) | ||||||||||||||
Operating lease right of use assets | (23,495 | ) | (6,054 | ) | (11,092 | ) | ||||||||||||||||||
Prepaid and other assets | (5,633 | ) | (2,806 | ) | (5,437 | ) | 15,472 | (5,084 | ) | 35 | ||||||||||||||
Accounts payable | 8,168 | (8,651 | ) | 16,753 | (10,193 | ) | 6,545 | 14,385 | ||||||||||||||||
Accrued and other liabilities | 7,118 | 1,256 | 25 | (4,256 | ) | (12,444 | ) | (4,524 | ) | |||||||||||||||
Operating lease liabilities | 10,281 | (7,170 | ) | (1,262 | ) | |||||||||||||||||||
Net cash provided by operating activities | 177,692 | 139,442 | 154,721 | 161,665 | 133,133 | 193,770 | ||||||||||||||||||
Investing Activities: | ||||||||||||||||||||||||
Additions to property, plant and equipment | (23,890 | ) | (38,333 | ) | (31,974 | ) | (21,979 | ) | (29,015 | ) | (25,308 | ) | ||||||||||||
Proceeds from sale of property, plant and equipment | 9 | 18 | 63 | 27 | 11 | (6 | ) | |||||||||||||||||
Net cash used in investing activities | (23,881 | ) | (38,315 | ) | (31,911 | ) | (21,952 | ) | (29,004 | ) | (25,314 | ) | ||||||||||||
Financing Activities: | ||||||||||||||||||||||||
Borrowing under loan facility | - | 50,000 | - | |||||||||||||||||||||
Repayments under loan facility | (30,000 | ) | (20,000 | ) | - | |||||||||||||||||||
Dividends paid on common stock | - | (135,247 | ) | (69,878 | ) | - | (280,003 | ) | (279,876 | ) | ||||||||||||||
Proceeds from stock options exercised | 740 | 456 | 560 | 311 | 335 | 491 | ||||||||||||||||||
Repurchase of common stock | (6,233 | ) | - | - | ||||||||||||||||||||
Net cash used in financing activities | (5,493 | ) | (134,791 | ) | (69,318 | ) | (29,689 | ) | (249,668 | ) | (279,385 | ) | ||||||||||||
Net Increase (Decrease) in Cash and Equivalents | 148,318 | (33,664 | ) | 53,492 | 110,024 | (145,539 | ) | (110,929 | ) | |||||||||||||||
Cash and Equivalents - Beginning of Year | 156,200 | 189,864 | 136,372 | 48,050 | 193,589 | 304,518 | ||||||||||||||||||
Cash and Equivalents - End of Year | $ | 304,518 | $ | 156,200 | $ | 189,864 | $ | 158,074 | $ | 48,050 | $ | 193,589 | ||||||||||||
Other Cash Flow Information: | ||||||||||||||||||||||||
Interest paid | $ | 51 | $ | 51 | $ | 101 | $ | 315 | $ | 371 | $ | 148 | ||||||||||||
Income taxes paid | $ | 29,364 | $ | 36,833 | $ | 56,737 | $ | 37,831 | $ | 51,958 | $ | 63,357 |
|
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
National Beverage Corp. develops, produces, markets and sells a distinctive portfolio of sparkling waters, juices, energy drinks and carbonated soft drinks primarily in the United States and Canada. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various operating subsidiaries. When used in this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries.
1. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) and rules and regulations of the Securities and Exchange Commission. The consolidated financial statements include the accounts of National Beverage Corp. and all subsidiaries. All significant intercompany transactions and accounts have been eliminated. Our fiscal year ends the Saturday closest to April 30 and, as a result, an additional week is added every five or six years. The fiscal year ended May 2, 2020April 29, 2023 (Fiscal 20202023) consisted of 53 weeks. The fiscal year ended, April 27, 201930, 2022 (Fiscal 20192022) and the fiscal year ended April 28, 2018May 1, 2021 (Fiscal 20182021) bothall consisted of 52 weeks.
Cash and Equivalents
Cash and equivalents are comprised of cash and highly liquid securities (consisting primarily of bank deposits and short-term government money-market investments).
Derivative Financial Instruments
Derivative financial instruments which are used to partially mitigate our exposure to changes in certain raw material costs. All derivative financial instrumentscosts are recorded at fair value in our Consolidated Balance Sheets.value. Derivative financial instruments are not used for trading or speculative purposes. Credit risk related to derivative financial instruments is managed by requiring high credit standards for counterparties and frequent cash settlements. The estimated fair values of derivative financial instruments are calculated based on market rates to settle the instruments.
Earnings Per Common Share
Basic earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share is calculated in a similar manner, but includes the dilutive effect of stock options amounting to 200,000261,000 shares in Fiscal 2020,2023, 284,000276,000 shares in Fiscal 2019,2022, and 323,000340,000 shares in Fiscal 2018.2021.
Fair Value of Financial Instruments
The estimated fair values of derivative financial instruments are calculated based on market rates to settle the instruments. These values represent the estimated amounts we would receive upon sale, taking into consideration current market prices and credit worthiness.
Impairment of Long-Lived Assets
All long-lived assets, excluding goodwill and intangible assets not subject to amortization, are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair market value based on the best information available. Estimated fair value is generally measured by discounting future cash flows. Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner if management believes such assets may be impaired. An impairment lossimpaired asset is recognized if the carrying amount or, for goodwill, the carrying amount ofwritten down to its reporting unit, is greater than itsestimated fair value.market value based on discounted future cash flows.
Income Taxes
The Company’s effective income tax rate is based on estimates of taxes which will ultimately be payable. Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established to reduce the carrying amounts of deferred tax assets when it is deemed, more likely than not, that the benefit of deferred tax assets will not be realized.
Insurance Programs
The Company maintains self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Accordingly, the Company accrues for known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience. At May 2, 2020,April 29, 2023, and April 27, 2019,30, 2022, other liabilities included accruals of $5.5 million and $5.7$5.9 million, respectively, for estimated non-current risk retention exposures, of which $4.3$4.1 million and $4.6 million, respectively, was covered by insurance at both dates and included as a component of non-current other assets.
Intangible Assets
Intangible Assets as ofassets at May 2, 2020April 29, 2023 and April 27, 201930, 2022 consisted of non-amortizable acquired trademarks.
Inventories
Inventories
Inventories are stated at the lower of first-in, first-out cost or market. Adjustments, if required, to reduce the cost of inventory to market (net realizable value) are made for estimated excess, obsolete or impaired balances. Inventories at May 2, 2020April 29, 2023 were comprised of finished goods of $39.1$54.3 million and raw materials of $24.4$39.2 million. Inventories at April 27, 201930, 2022 were comprised of finished goods of $48.7$58.6 million and raw materials of $22.0$44.7 million.
Marketing Costs
The Company utilizes a variety of marketing programs, including cooperative advertising programs with customers, to advertise and promote our products to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs, which are expensed when the advertising takes place. Marketing costs, which are included in selling, general and administrative expenses, totaled $54.8$44.1 million in Fiscal 2020,2023, $55.3$47.6 million in Fiscal 20192022 and $49.7$43.4 million in Fiscal 2018.2021.
New Accounting Pronouncements – Adopted
In February 2016, the FASB issued ASU No.2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which expands strategies that qualify for hedge accounting, changes how many hedging relationships are presented in the financial statements, and simplifies the application of hedge accounting in certain situations. Effective for Fiscal 2020, the Company adopted the amendments to Topic 815 which did not have a material impact on the Company’s consolidated financial statements.
Effective for Fiscal 2020, the Company adopted Accounting Standards Update No.2016-02, Leases (Topic 842) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after April 27, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under ASC 840, "Leases." Topic 840.
The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to April 28, 2019. The Company also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
Under Topic 842, the Company determines if an arrangement is a lease at inception. Right of use assets (ROU) and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most leases do not provide an implicit rate, the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company assesses these options using a threshold of reasonably certain, which is a high threshold and, therefore, the majority of the Company's leases do not include renewal periods or purchase options in the measurement of the right of use asset and the associated lease liability. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Additions, replacements and betterments are capitalized, while maintenance and repairs that do not extend the useful life of an asset are expensed as incurred. Depreciation is recorded using the straight-line method over estimated useful lives of 5 to 30 years for buildings and improvements and 3 to 15 years for machinery and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvement. When assets are retired or otherwise disposed, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized.
Revenue Recognition
Revenue is recognized upon delivery to our customers, based on written sales terms that do not allow a right of return except in rare instances. Our products are typically sold on credit; however smaller direct store-store delivery accounts may be sold on a cash basis. Our credit terms normally require payment within 30 days of delivery and may allow discounts for early payment. The Company estimates and reserves for bad debt exposure based on our experience with past due accounts, collectability and our analysis of customer data.
Various sales incentive arrangements are offered to our customers that require customer performance or achievement of certain sales volume targets. Sales incentives are accrued over the period of benefit or expected sales. When the incentive is paid in advance, the aggregate incentive is recorded as a prepaid and amortized over the period of benefit. The recognition of these incentives involves the use of judgment related to performance and sales volume estimates that are made based on historical experience and other factors. Sales incentives are accounted for as a reduction of sales and actual amounts ultimately realized may vary from accrued amounts. Such differences are recorded once determined and have historically not been significant.
Segment Reporting
The Company operates as a single operating segment for purposes of presenting financial information and evaluating performance. As such, the accompanying consolidated financial statements present financial information in a format that is consistent with the internal financial information used by management. The Company does not accumulate revenues by product classification and, therefore, it is impractical to present such information.
Shipping and Handling Costs
Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying consolidated statements of income. Such costs aggregated $69.8$86.8 million in Fiscal 2020,2023, $72.4$87.7 million in Fiscal 20192022 and $63.3$75.5 million in Fiscal 2018.2021. Although our classification is consistent with many beverage companies, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales.
Trade Receivables
Trade receivables are recorded at net realizable value, which includes an estimated allowance for doubtful accounts. The Company extends credit based on an evaluation of each customer’s financial condition, generally without requiring collateral. Exposure to credit losses varies by customer principally due to the financial condition of each customer. The Company continually monitors our exposure to credit losses and maintains allowances for anticipated losses based on our experience with past due accounts, collectability and our analysis of customer data. Actual future losses from uncollectible accounts could differ from the Company’s estimate. Changes in the allowance for doubtful accounts waswere as follows:
(In thousands) | (In thousands) | |||||||||||||||||||||||
Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | |||||||||||||||||||
Balance at beginning of year | $ | 516 | $ | 452 | $ | 468 | $ | 559 | $ | 1,140 | $ | 1,350 | ||||||||||||
Net charge to expense | 893 | 87 | 34 | |||||||||||||||||||||
Net charge (credit) to expense | 11 | (581 | ) | (138 | ) | |||||||||||||||||||
Net charge-off | (59 | ) | (23 | ) | (50 | ) | (47 | ) | - | (72 | ) | |||||||||||||
Balance at end of year | $ | 1,350 | $ | 516 | $ | 452 | $ | 523 | $ | 559 | $ | 1,140 |
At 32
As of May 2, 2020,April 29, 2023 and April 27, 2019,30, 2022, the Company had no customer that comprised more than 10% of trade receivables. No customer accounted for more than 10% of net sales during any of the last three fiscal years.
Use of Estimates
The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management'smanagement’s knowledge of current events and anticipated future actions, actual results may vary from reported amounts.
2. | PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment as ofat May 2, 2020April 29, 2023 and April 27, 201930, 2022 consisted of the following:
(In thousands) | (In thousands) | |||||||||||||||
2020 | 2019 | 2023 | 2022 | |||||||||||||
Land | $ | 9,835 | $ | 9,835 | $ | 9,835 | $ | 9,835 | ||||||||
Buildings and improvements | 59,618 | 58,291 | 70,615 | 65,697 | ||||||||||||
Machinery and equipment | 238,300 | 222,243 | 289,567 | 277,163 | ||||||||||||
Total | 307,753 | 290,369 | 370,017 | 352,695 | ||||||||||||
Less accumulated depreciation | (187,126 | ) | (179,053 | ) | (221,594 | ) | (208,437 | ) | ||||||||
Property, plant and equipment – net | $ | 120,627 | $ | 111,316 | $ | 148,423 | $ | 144,258 |
Depreciation expense was $14.4$17.7 million for Fiscal 2020,2023, $12.8$15.8 million for Fiscal 20192022 and $11.1$14.8 million for Fiscal 2018.2021.
3. | ACCRUED LIABILITIES |
Accrued liabilities as ofat May 2, 2020April 29, 2023 and April 27, 201930, 2022 consisted of the following:
(In thousands) | (In thousands) | |||||||||||||||
2020 | 2019 | 2023 | 2022 | |||||||||||||
Accrued compensation | $ | 11,348 | $ | 9,506 | $ | 13,036 | $ | 12,079 | ||||||||
Accrued promotions | 9,061 | 6,449 | 15,865 | 10,826 | ||||||||||||
Accrued freight | 3,443 | 4,387 | 2,819 | 3,729 | ||||||||||||
Accrued insurance | 2,934 | 3,780 | 2,498 | 2,778 | ||||||||||||
Recycling deposits | 5,688 | 1,150 | 5,123 | 5,497 | ||||||||||||
Other | 10,002 | 5,161 | 7,977 | 4,181 | ||||||||||||
Total | $ | 42,476 | $ | 30,433 | $ | 47,318 | $ | 39,090 |
4. LEASES The Company has entered into various non-cancelable operating lease agreements for certain of our offices, buildings, machinery and equipment expiring at various dates through January 2029. The Company does not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally do not contain material residual value guarantees or material restrictive covenants. Operating lease cost The following is a summary of future minimum lease payments and related liabilities for all non-cancelable operating leases Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Fiscal 2025 Thereafter Total minimum lease payments including interest Less: Amounts representing interest Present value of minimum lease payments Less: Current portion of lease liabilities Non-Current portion of operating lease liabilities Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Thereafter Total minimum lease payments Fiscal 2024 Fiscal 2025 Fiscal 2026 Fiscal 2027 Fiscal 2028 Thereafter Total minimum lease payments including interest Less: Amounts representing interest Present value of minimum lease payments Less: Current portion of operating lease liabilities Non-current portion of operating lease liabilities 5. DEBT At On December 21, 2021, a subsidiary of the Company entered into an unsecured revolving term loan facility with a national bank aggregating $50 million (the “Loan Facility”). Since closing the Loan Facility, $50 million was borrowed and $30 million remained outstanding at April 30, 2022. There were no borrowings outstanding under the Loan Facility at April 29, 2023. The Loan Facility expires December 31, 2023 and borrowings bear interest at .95% above the adjusted daily SOFR. The Credit Facilities and Loan Facility require the subsidiary to maintain certain financial ratios, including debt to net worth and debt to EBITDA (as defined in the Credit Facilities), and contain other restrictions, none of which are expected to have a material effect on our operations or financial position. At 6. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES The Company paid a special cash dividend on Common Stock of The Company is a party to a management agreement with Corporate Management Advisors, Inc. (CMA), a corporation owned by our Chairman and Chief Executive Officer. This agreement was originated in 1991 for the efficient use of management of two public companies at the time. In 1994, one of those public entities, through a merger, no longer was managed in this manner. Under the terms of the agreement, CMA provides, subject to the direction and supervision of the Board of Directors of the Company, (i) senior corporate functions (including supervision of the Company’s financial, legal, executive recruitment, internal audit and information systems departments) as well as the services of a Chief Executive Officer and Chief Financial Officer, and (ii) services in connection with acquisitions, dispositions and financings by the Company, including identifying and profiling acquisition candidates, negotiating and structuring potential transactions and arranging financing for any such transaction. CMA, through its personnel, also provides, to the extent possible, the stimulus and creativity to develop an innovative and dynamic persona for the Company, its products and corporate image. In order to fulfill its obligations under the management agreement, CMA employs numerous individuals, who, acting as a unit, provide management, administrative and creative functions for the Company. CMA and the Company are joint owners of a corporate aircraft and pursuant to a joint ownership agreement, each party agreed to pay certain expenses associated with the use of the aircraft. During the past three years, the The management agreement provides that the Company will pay CMA an annual base fee equal to one percent of the consolidated net sales of the Company, and further provides that the Compensation and Stock Option Committee and the Board of Directors may from time to time award additional incentive compensation to CMA or its personnel. The Board of Directors on 7. DERIVATIVE FINANCIAL INSTRUMENTS From time to time, the Company enters into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum cans. Such financial instruments are designated and accounted for as cash flow hedges. Accordingly, gains or losses (In thousands) Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2020 2019 2018 2023 2022 2021 Recognized in AOCI- (Loss) gain before income taxes Less income tax (benefit) provision Net Reclassified from AOCI to cost of sales- Gain (loss) before income taxes Less income tax provision (benefit) (Loss) gain before income taxes Less income tax (benefit) provision Net Net change to AOCI At 8. INCOME TAXES The provision for income taxes consisted of the following: (In thousands) (In thousands) Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2020 2019 2018 2023 2022 2021 Current Deferred Total Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established to reduce the carrying amounts of deferred tax assets when it is deemed more likely than not that the benefit of deferred tax assets will not be realized. Deferred tax assets and liabilities (In thousands) (In thousands) 2020 2019 2023 2022 Deferred tax assets: Accrued expenses and other Inventory and amortizable assets Total deferred tax assets Deferred tax liabilities: Property Intangibles and other Total deferred tax liabilities Net deferred tax liabilities The reconciliation of the statutory federal income tax rate to our effective tax rate is as follows: Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2020 2019 2018 2023 2022 2021 Statutory federal income tax rate State income taxes, net of federal benefit Domestic manufacturing deduction benefit Re-measurement of deferred taxes Other differences Effective income tax rate At (In thousands) Fiscal Fiscal Fiscal (In thousands) 2020 2019 2018 2023 2022 2021 Beginning balance Increases due to current period tax positions Decreases due to lapse of statute of limitations and audit resolutions Ending balance Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Annual income tax returns are filed in the United States and in various state and local jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, are resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax 9. LEGAL PROCEEDINGS The Company has been named in certain legal proceedings, including those containing 10. STOCK-BASED COMPENSATION Our stock-based compensation program is a broad-based program designed to attract and retain personnel while also aligning participants’ interests with the interests of the shareholders. The 1991 Omnibus Incentive Plan (the Omnibus Plan) provides for compensatory awards consisting of (i) stock options or stock awards for up to The Special Stock Option Plan provides for the issuance of stock options to purchase up to an aggregate of The Key Employee Equity Partnership Program (KEEP Program) provides for the granting of stock options to purchase up to Stock options are accounted for under the fair value method of accounting using a Black-Scholes valuation model to estimate the stock option fair value at date of grant. The fair value of stock options is amortized to expense over the vesting period. Stock options for The following is a summary of stock option activity for Fiscal Number of Shares Price (a) Number of Shares Price (a) Options outstanding, beginning of year Granted Exercised Cancelled Options outstanding, end of year Options exercisable, end of year (a) Weighted average exercise price. Stock-based compensation expense was $677,000 for Fiscal 2023, $695,000 for Fiscal 2022 and $462,000 for Fiscal 2021. The total intrinsic value for stock options exercised was 11. PENSION PLANS The Company contributes to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan. Annual contributions (including contributions to multi-employer plans reflected below) were The Company participates in three multi-employer defined benefit pension plans with respect to certain collective bargaining agreements. If the Company chooses to stop participating in the multi-employer plan or if other employers choose to withdraw to the extent that a mass withdrawal occurs, the Company could be required to pay the plan a withdrawal liability based on the underfunded status of the plan. Summarized below is certain information regarding the Company’s participation in significant multi-employer pension plans including the financial improvement plan or rehabilitation plan status (“FIP/RP Status”) and the zone status under the Pension Protection Act (“PPA”). The most recent PPA zone status available in Fiscal Pension Fund Fiscal Fiscal FIP/RP Status Surcharge Imposed Central States, Southeast and Southwest Areas Pension Plan (EIN no. 36-6044243) (the Red Red Implemented Yes Western Conference of Teamsters Pension Trust Fund (EIN no. 91-6145047) (the Green Green Not applicable For the plan years ended December 31, The Company’s contributions for all multi-employer pension plans for the last three (In thousands) (In thousands) Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Pension Fund 2020 2019 2018 2023 2022 2021 CSSS Fund Other multi-employer pension funds Total 12. COMMITMENTS AND CONTINGENCIES The Company enters into various agreements with suppliers for the purchase of raw materials, the terms of which may include variable or fixed pricing and minimum purchase quantities. (In thousands, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2020 Net sales Gross profit Net income Earnings per common share – basic Earnings per common share – diluted Fiscal 2019 Net sales Gross profit Net income Earnings per common share – basic Earnings per common share – diluted Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of National Beverage Corp. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of National Beverage Corp. and subsidiaries (the Company) as of In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of Basis for Opinions The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's financial statements and an opinion on the company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical AuditMatters /s/ RSM US LLP We have served as the Company's auditor since 2006. Fort Lauderdale, Florida ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on that evaluation, our management concluded that our internal control over financial reporting was effective Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time. RSM US LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended Not applicable. ITEM 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 will be included under the captions “Election of Directors”, “Information as to Nominees and Other Directors”, “Information Regarding Meetings and Committees of the Board” and The following table sets forth certain information with respect to the officers of the Registrant Name Age Position with Company Nick A. Caporella(1) 87 Chairman of the Board and Chief Executive Officer Joseph G. Caporella(2) 62 President George R. Bracken(3) 78 Executive Vice President – Finance (1) Mr. Nick A. Caporella has served as Chairman of the Board, Chief Executive Officer and Director since the Company’s inception in 1985. Also, he serves as Chairman of the Nominating Committee. Since 1992, Mr. Caporella’s services have been provided to the Company by Corporate Management Advisors, Inc., a company he owns. (2) Mr. Joseph G. Caporella has served as President since September 2002 and, prior to that, as Executive Vice President and Secretary since January 1991. Also, he has served as a Director since January 1987. Joseph G. Caporella is the son of Nick A. Caporella. (3) Mr. George R. Bracken has served as Executive Vice President - Finance since July 2012. Previously, he served as Senior Vice President – Finance from October 2000 to July 2012 and Vice President and Treasurer from October 1996 to October 2000. Since 1992, Mr. Bracken’s services have been provided to the Company by Corporate Management Advisors, Inc. EXECUTIVE COMPENSATION The information required by Item 11 will be included under the captions “Executive Compensation and Other Information” and “Compensation Committee Interlocks and Insider Participation” in the Company’s SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 will be included under the captions “Security Ownership” and “Equity Compensation Plan Information” in the Company’s CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE The information required by Item 13 will be included under the captions “Certain Relationships and Related Party Transactions” and “Information Regarding Meetings and Committees of the Board” in the Company’s PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 will be included under the caption “Independent Auditors” in the Company’s EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this report: Page 1. Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) 2. Financial Statement Schedules NA 3. Exhibits See Exhibit Index which follows. Form 10-K Summary None. EXHIBIT INDEX Description Consent of Independent Registered Public Accounting Firm 31.1 31.2 32.1 101 The following financial information from National Beverage Corp.’s Annual Report on Form 10-K for the fiscal year ended 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Indicates management contract or compensatory plan or arrangement. (1) Previously filed with the Securities and Exchange Commission as an exhibit to Schedule 14C Information Statement dated June 26, 2018 and is incorporated herein by reference. (2) Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated July 23, 2018 and is incorporated herein by reference. (3) Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated January 31, 2013 and is incorporated herein by reference. (4) Previously filed with the Securities and Exchange Commission as an exhibit to Amendment No. 1 to Form S-1 Registration Statement (File No. 33-38986) on July 26, 1991 and is incorporated herein by reference. (5) Previously filed with the Securities and Exchange Commission as an exhibit to the Form S-1 Registration Statement (File No. 33-38986) on February 19, 1991 and is incorporated herein by reference (6) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 27, 1996 and is incorporated herein by reference. (7) Previously filed with the Securities and Exchange Commission as an exhibit to Registration Statement on Form S-8 (File No. 33-95308) on August 1, 1995 and is incorporated herein by reference. (8) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended May 3, 1997 and is incorporated herein by reference. (9) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 29, 2011 and is incorporated herein by reference. (10) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 31, 2009 and is incorporated herein by reference. (11) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 28, 2018 and is incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 29, 2022 and is incorporated herein by reference. (13) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended October 29, 2022 and is incorporated herein by reference. (14) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended May 2, 2020 and is incorporated herein by refernce. (15) Filed herewith Pursuant to the requirements of Section 13 or 15(d) 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. NATIONAL BEVERAGE CORP. By: /s/ George R. Bracken George R. Bracken Executive Vice President – Finance (Principal Financial Officer) Date: Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on /s/ Nick A. Caporella /s/ Cecil D. Conlee Nick A. Caporella Cecil D. Conlee Chairman of the Board and Director Chief Executive Officer /s/ Joseph G. Caporella /s/ Samuel C. Hathorn, Jr. Joseph G. Caporella Samuel C. Hathorn, Jr. President and Director Director /s/ George R. Bracken /s/ Stanley M. Sheridan George R. Bracken Stanley M. Sheridan Executive Vice President – Finance Director (Principal Financial Officer) 4. Leasesforwas $14.4 million in Fiscal 20202023, under Topic$14.5 million in Fiscal 8422022 was $15.1 million.and $14.6 million in Fiscal 2021. The weighted-average remaining lease term and weighted average discount rate of operating leases was 4.34.34 years and 3.38%3.30%, respectively, as ofat May 2, 2020.April 29, 2023 and 4.0 years and 3.08%, respectively, at April 30, 2022. Net cash provided by operations was impacted by $12.1$14.3 million for operating leases for the year ended April 29, 2023, $14.7 million for the year ended April 30, 2022 and $14.1 million for the year ended May 2, 2020.1, 2021. as of May 2, 2020: (In thousands) $ 14,206 13,276 8,975 7,361 4,475 4,101 52,394 (3,255 ) 49,139 (16,980 ) $ 32,159 Under the prior accounting guidance of ASC 840, operating lease expense was $18.2 million and $13.3 million for Fiscal years 2019 and 2018, respectively. Minimum lease payments under non-cancelable operating leases as ofat April 27, 2019 29, 2023:were as follows: (In thousands) $ 16,105 12,084 9,894 7,741 4,510 1,703 $ 52,037 (In thousands) $ 12,798 9,864 8,039 7,105 3,199 3,669 44,674 (3,147 ) 41,527 (11,745 ) $ 29,782 5. DEBTMay 2, 2020,April 29, 2023, a subsidiary of the Company maintained unsecured revolving credit facilities with banks aggregating $100 million (the Credit Facilities). The Credit Facilities expire from October 3, 202028, 2024 to June 18, 2021May 30, 2025 and any borrowings would currently bear interest at .9%1.05% above one-month LIBOR.the Secured Overnight Financing Rate (SOFR). There were no borrowings outstanding under the Credit Facilities at May 2, 2020April 29, 2023 or April 27, 2019.30, 2022. At May 2, 2020,April 29, 2023, $3.42.2 million of the Credit Facilities was reserved for standby letters of credit and $96.6$97.8 million was available for borrowings.May 2, 2020,April 29, 2023, the Company was in compliance with all loan covenants.346. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIESThe Board of Directors has authorized the Company to repurchase up to 1.6 million shares of common stock. During Fiscal 2020, the Company purchased an aggregate 154,512 shares for a cost of $6.2 million. As of May 2, 2020, 656,572 shares were purchased under the program and 943,428 shares were available for repurchase.$135.2approximately $280 million ($2.90 per share) on each of December 29, 2021 and January 29, 20192021 and $69.9 million ($1.50at $3.00 per share) on August 4, 2017. No dividends were declared or paid in Fiscal year 2020.share.Company'sjoint operating costs have averaged approximately $.8 million$800 thousand per year and the Company’s lease buy-down payments and financing costsfor its ownership interest have averaged approximately $.8 million$350 thousand per year. In conjunction with an inquiry by the Securities and Exchange Commission, the Company is in the process of reviewing the aircraft usage to ensure that expenses may be properly allocated. This review is not expected to have a material effect on the Company's consolidated financial statements, but could result in adjustments between CMA and the Company or modify other disclosures.numerousvarious occasions contemplated incentive compensation to CMA, however, since the inception of this agreement, no incentive compensation has been paid. We incurred management fees to CMA of $10.0$11.7 million for Fiscal 2020,2023, $10.2$11.4 million for Fiscal 2019,2022 and $9.8$10.7 million for Fiscal 2018.2021. Included in accounts payablecurrent liabilities were amounts due CMA of $2.6 million at May 2, 2020 and $2.4$2.9 million at April 27, 2019. 29, 2023 and $4.0 million at April 30, 2022.35327. DERIVATIVE FINANCIAL INSTRUMENTSattributable to the effective portion of the cash flow hedges are reported in Accumulated Other Comprehensive Income (Loss)accumulated other comprehensive income (loss) (AOCI) and reclassified into cost of sales in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of our cash flow hedge was immaterial. The following summarizes the gains (losses) recognized in the Consolidated Statementsconsolidated statements of Incomeincome and AOCI relative to the cash flow hedges for Fiscal 2020, Fiscal 2019 and Fiscal 2018:AOCI: (In thousands) $ (9,613 ) $ (6,138 ) $ 9,498 $ (21,100 ) $ 15,105 $ 12,973 (2,299 ) (1,468 ) 3,085 (5,047 ) 3,613 3,103 (7,314 ) (4,670 ) 6,413 (16,053 ) 11,492 9,870 (4,786 ) 2,100 2,569 (1,145 ) 452 1,383 (7,785 ) 10,001 2,550 (1,862 ) 2,391 610 (3,641 ) 1,648 1,186 (5,923 ) 7,610 1,940 $ (3,673 ) $ (6,318 ) $ 5,227 $ (10,130 ) $ 3,882 $ 7,930 As ofMay 2, 2020,April 29, 2023, the notional amount of our outstanding aluminum swap contracts was $49.3$60.9 million and, assuming no change in the commodity prices, $6.7$4.6 million of unrealized loss before tax will be reclassified from AOCI and recognized in cost of salesearnings over the next 12 months.As of May 2, 2020, andAt April 27, 2019,29, 2023, the fair value of the derivative liability was $6.9$4.6 million, and $2.0 million, respectively, which was included as a componentin accrued liabilities. At April 30, 2022, the fair value of accrued liabilities.the derivative asset was $8.8 million, which was included in prepaid and other assets. Such valuation does not entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level 2 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.8. INCOME TAXES $ 40,647 $ 39,673 $ 55,039 $ 48,287 $ 42,555 $ 51,520 (1,164 ) 3,351 676 (4,009 ) 6,529 2,471 $ 39,483 $ 43,024 $ 55,715 $ 44,278 $ 49,084 $ 53,991 36as ofat May 2, 2020April 29, 2023 and April 27, 201930, 2022 consisted of the following: $ 4,930 $ 3,705 $ 4,671 $ 3,306 565 265 545 325 5,495 3,970 5,216 3,631 18,872 18,505 23,715 23,863 1,446 1,452 1,315 3,591 20,318 19,957 25,030 27,454 $ 14,823 $ 15,987 $ 19,814 $ 23,823 21.0 % 21.0 % 30.4 % 21.0 % 21.0 % 21.0 % 2.9 2.9 2.4 2.9 2.9 2.9 - - (2.4 ) - - (2.9 ) (.6 ) (.5 ) (.4 ) ( .2 ) (.3 ) (.2 ) 23.3 % 23.4 % 27.1 % 23.7 % 23.6 % 23.7 % AsMay 2, 2020,April 29, 2023, the gross amount of unrecognized tax benefits was $2.0$2.1 million and $91,000$6 thousand was recognized as tax expense in Fiscal 2020.2023. If the Company iswere to prevail on all uncertain tax positions, the net effect would be to reduce our tax expense by approximately $1.6$1.7 million. A reconciliation of the changes in the gross amount of unrecognized tax benefits, which amounts are included in other liabilities in the accompanying consolidated balance sheets, is as follows: $ 1,868 $ 1,733 $ 1,743 $ 2,079 $ 2,055 $ 1,974 120 139 204 75 114 150 (14 ) (4 ) (214 ) (58 ) (90 ) (69 ) $ 1,974 $ 1,868 $ 1,733 $ 2,096 $ 2,079 $ 2,055 As ofAt May 2, 2020,April 29, 2023, unrecognized tax benefits included accrued interest of $267,000,$249 thousand of which approximately $15,000$1 thousand was recognized as tax expense in Fiscal 2020.2023.37On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Tax Act made changes to the U.S. tax code, including reducing the U.S. federal tax rate from 35% to 21% effective January 1, 2018. The phasing in of the lower corporate income tax rate results in a blended federal statutory rate of 30.4% for our Fiscal 2018, compared with the previous 35% rate. Included in the effective tax rate for Fiscal 2018 is a one-time adjustment reducing income tax expense to remeasure previous deferred tax liabilities of $4.3 million.position, Thepositions, the Company believes that unrecognized tax benefits reflect the most probable outcome. The Company adjusts these unrecognized tax benefits, as well as the related interest, in light of changing facts and circumstances. The resolution of any particular uncertain tax position could require the use of cash and an adjustment to our provision for income taxes in the period of resolution. Federal income tax returns for fiscal years subsequent to 2016Fiscal 2017 are subject to examination. Generally, the income tax returns for the various state jurisdictions are subject to examination for fiscal years ending after fiscal 2013.Fiscal 2016.9. LEGAL PROCEEDINGSderivative and class action allegations. One complaint alleges the Company’s LaCroix branded products contain synthetic ingredients and therefore violate state consumer protection statutes and other laws. A similar consumer complaint was voluntarily dismissed during Fiscal 2020 along with a full written retraction of all claims by the plaintiff and counsel. The Company is vigorously defending all legal proceedings and believes litigation will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.10. STOCK-BASED COMPENSATION4,800,0009,600,000 shares of common stock, (ii) stock appreciation rights, dividend equivalents, other stock-based awards in amounts up to 4,800,0009,600,000 shares of common stock and (iii) performance awards consisting of any combination of the above. The Omnibus Plan is designed to provide an incentive to officers and certain other key employees and consultants by making available to them an opportunity to acquire a proprietary interest or to increase such interest in National Beverage. The number of shares or options which may be issued under stock-based awards to an individual is limited to 1,680,0003,360,000 during any year. Awards may be granted for no cash consideration or such minimal cash consideration as may be required by law. Options generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest over a five-year period and expire after ten years.3835
1,800,0003,600,000 shares of common stock. Options may be granted for such consideration as determined by the Board of Directors. The vesting schedule and exercise price of these options are tied to the recipient’s ownership level of common stock and the terms generally allow for the reduction in exercise price upon each vesting period. Also, the Board of Directors authorized the issuance of options to purchase up to 50,000100,000 shares of common stock to be issued at the direction of the Chairman.240,000480,000 shares of common stock to key employees, consultants, directors and officers. Participants who purchase shares of stock in the open market receive grants of stock options equal to 50% of the number of shares purchased, up to a maximum of 6,00012,000 shares in any two-year period. Options under the KEEP Program are forfeited in the event of the sale of shares used to acquire such options. Options are granted at an initial exercise price of 60% of the purchase price paid for the shares acquired and the exercise price reduces to the stock par value at the end of the six-year vesting period.9,00030,000 shares were granted in Fiscal 20192022 and 500266,500 shares in Fiscal 2018.2021. No stock options were issued duringgranted in Fiscal 2020.2023. The weighted average Black-Scholes fair value assumptions for stock options granted arewere as follows: weighted average expected life of 8.06.5 years for Fiscal 20192022 and 8.07.2 years for Fiscal 2018;2021; weighted average expected volatility of 21.7%20.74% for Fiscal 20192022 and 23.8%19.36% for Fiscal 2018;2021; weighted average risk free interest rates of 2.6%.82% for Fiscal 20192022 and 2.4%3.85% for Fiscal 2018;2021; and expected dividend yield of 1.6%2.48% for Fiscal 20192022 and 1.6%1.3% for Fiscal 2018.2021. The expected life of stock options was estimated based on historical experience. The expected volatility was estimated based on historical stock prices for a period consistent with the expected life of stock options. The risk free interest rate was based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of stock options. There were no forfeitures estimated in Fiscal 2019 and Fiscal 2018.2020:2023: 322,445 $ 11.14 536,600 $ 18.97 - - - - (125,100 ) 5.92 (15,300 ) 20.35 (2,800 ) 17.59 - - 194,545 14.01 521,300 18.13 183,145 13.00 336,520 11.90 3936
Stock-based compensation expense was $126,000 for Fiscal 2020, $251,000 for Fiscal 2019, and $161,000 for Fiscal 2018. The total fair value of shares vested was $768,000 for Fiscal 2020, $127,000 for Fiscal 2019, and $140,000 for Fiscal 2018.$4.9$360,000 for Fiscal 2023, $1.4 million for Fiscal 2020,2022 $2.2and $1.9 million for Fiscal 2019, $3.0 million for Fiscal 2018.2021. Net cash proceeds from the exercise of stock options were $740,000$311,000 for Fiscal 2020,2023, $456,000$335,000 for Fiscal 2019,2022 $560,000and $491,000 for Fiscal 2018.2021. Stock based income tax benefits aggregated $974,000$67,000 for Fiscal 2020,2023, $443,000$283,000 for Fiscal 2019,2022 and $886,000$382,000 for Fiscal 2018. The weighted average fair value for stock options granted was $63.71 for Fiscal 2020.2021.As ofAt May 2, 2020,April 29, 2023, unrecognized compensation expense related to the unvested portion of stock options was $465,000,$2.3 million, which is expected to be recognized over a remaining weighted average period of 4.55.4 years. The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding as ofat May 2, 2020April 29, 2023 was 3.73.1 years and $7.0$16.0 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options exercisable as ofat April 27, 201930, 2022 was 3.34.2 years and $14.9$10.8 million, respectively.PENSION PLANS$3.6 million for Fiscal 2020,$3.8 million for Fiscal 2019,2023, and $3.4$4.0 million for Fiscal 2018.2022 and $3.7 million for Fiscal 2021.20202023 and Fiscal 20192022 is for the plans’ years ending December 31, 2021 31,2018and 2017,2020, respectively. PPA Zone Status 20202023 20192022 CSSS Fund)“CSSS Fund”) Red Implemented YesWCT Fund)“WCT Fund”) Green NotNo applicable No4020182021 and December 31, 2017,2020, the Company was not listed in the Form 5500 Annual Returns as providing more than 5% of the total contributions for the above plans. The collective bargaining agreements for employees in the CSSS Fund and the WCT Fund expire on October 18, 20212026 and May 14, 2021,2024, respectively.Fiscalfiscal years are as follow: $ 1,424 $ 1,465 $ 1,370 $ 1,601 $ 1,462 $ 1,469 WCT Fund 799 769 619 768 817 746 185 222 228 197 181 166 $ 2,408 $ 2,456 $ 2,217 $ 2,566 $ 2,460 $ 2,381 COMMITMENTS AND CONTINGENCIESAs ofAt May 2, 2020April 29, 2023, the Company had purchase commitments for raw materials of $22.6$14.0 million through 2023.2024.As ofAt May 2, 2020,April 29, 2023, the Company had purchase commitments for plant and equipment of $5.1$5.5 million anticipated to be completed in theFiscal 20212024. fiscal year. 413813. QUARTERLY FINANCIAL DATA (UNAUDITED) $ 263,568 $ 251,611 $ 222,814 $ 262,401 96,574 92,814 82,095 98,657 34,542 32,654 26,563 36,213 $ .74 $ .70 $ .57 $ .78 $ .74 $ .70 $ .57 $ .77 $ 292,590 $ 260,709 $ 220,892 $ 239,914 115,694 103,524 80,554 84,578 48,830 41,077 24,811 26,135 $ 1.05 $ .88 $ .53 $ .56 $ 1.04 $ .88 $ .53 $ .56 42May 2, 2020April 29, 2023 and April 27, 2019,30, 2022, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended May 2, 2020,April 29, 2023, and the related notes (collectively, the financial statements). We also have audited the Company’s internal control over financial reporting as of May 2, 2020,April 29, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.May 2, 2020April 29, 2023 and April 27, 2019,30, 2022, and the results of its operations and its cash flows for each of the three years in the three-year period ended May 2, 2020,April 29, 2023, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 2, 2020,April 29, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.The criticalCritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication ofWe determined that there are no critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.matters.Self-Insurance AccrualsAs described in Note 1 to the consolidated financial statements, the Company maintains self-insured and deductible programs for workers’ compensation exposures. The Company accrues for known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience. While a third party actuary is employed to advise the Company, estimating workers’ compensation exposure is inherently uncertain, as estimates are generally derived using a variety of actuarial estimation techniques that are dependent upon assumptions and expectations about future events, many of which are difficult to quantify. As of May 2, 2020 and April 27, 2019, other liabilities included accruals of $5.5 million and $5.7 million, respectively, for estimated non-current risk retention exposures, of which $4.3 million was covered by insurance at both dates.We identified the evaluation of the Company’s self-insurance accruals as a critical audit matter due to the significant judgments made by management in estimating the workers’ compensation liability. Auditing management’s judgments used in estimating the value of the workers’ compensation liability involved a high degree of auditor judgment and increased audit effort, including the use of our actuarial specialist.Our audit procedures related to the Company’s self-insurance accrual assessment included the following, among others:●We obtained an understanding of the relevant controls related to the Company’s workers’ compensation liability, and tested such controls for design and operating effectiveness, including controls related to management’s review of the significant assumptions .●We tested the underlying data, including historical claims and payroll data, which served as the basis for the assumptions used by the third party actuary in the actuarial analysis, to test that the inputs to the actuarial estimates were accurate and complete.●We compared payments made in the current year for prior year claims to prior year recorded reserves.●With the assistance of our actuarial specialist, we evaluated the propriety of the reserving techniques utilized for the workers’ compensation exposures.July 1, 2020June 28, 2023 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESAs ofAt the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to ensure information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.as of May 2, 2020.at April 29, 2023.May 2, 2020April 29, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.“Section 16(a) Beneficial Ownership Reporting“Reporting Compliance” in the Company’s 20202023 Proxy Statement and is incorporated herein by reference.as of May 2, 2020:at April 29, 2023: 84 59 75All officers serve until their successors are chosen and may be removed at any time by the Board of Directors. Officers are normally appointed each year at the first meeting of the Board of Directors after the annual meeting of shareholders.shareholders and may be removed at any time by the Board of Directors.ITEM 11. EXECUTIVE COMPENSATION20202023 Proxy Statement and is incorporated herein by reference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS20202023 Proxy Statement and is incorporated herein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE20202023 Proxy Statement and is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES20202023 Proxy Statement and is incorporated herein by reference. 2422 2523 2624 2725 2826 2927 432.Financial Statement SchedulesNA39 3.
ExhibitNo. 10.1721 2123Subsidiaries of Registrant (16)23(16)(15) 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (16)(15) May 2, 2020April 29, 2023 is formatted in iXBRL (Inline eXtensibleInline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements. Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 26, 2013 and is incorporated herein by reference.(12)Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended August 1, 2015 and is incorporated herein by reference.(13)Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 29, 2017 and is incorporated herein by reference.(14)Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended October 28, 2017 and is incorporated herein by reference.(15)(16)(12)By: July 1, 2020June 28, 2023 July 1, 2020.June 28, 2023. 5046