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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 27, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-14170
NATIONAL BEVERAGE CORP.
(Exact name of registrant as specified in its charter)
Delaware 59-2605822
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One North University Drive, Ft. Lauderdale, FL 33324
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(Address of principal executive offices) (Zip Code)
(954) 581-0922
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Registrant's common stock outstanding as of March 2,
2001 was 18,153,178.
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NATIONAL BEVERAGE CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 27, 2001
INDEX
PART I - FINANCIAL INFORMATION
Page
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of January 27, 2001 and April 29, 2000 ........... 3
Condensed Consolidated Statements of Income for the three months and
nine months ended January 27, 2001 and January 29, 2000 ................................... 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended January 27, 2001 and January 29, 2000 ........................... 5
Notes to Condensed Consolidated Financial Statements ...................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................................ 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................................................... 14
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 27, 2001 AND APRIL 29, 2000
(In thousands, except share amounts)
(Unaudited)
January 27, April 29,
2001 2000
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ASSETS
Current assets:
Cash and equivalents $ 33,985 $ 38,482
Trade receivables - net of allowances of $468 ($534 at April 29, 2000) 35,468 39,116
Inventories 30,295 29,056
Deferred income taxes 1,574 1,465
Prepaid and other 5,283 5,554
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Total current assets 106,605 113,673
Property - net 61,934 62,430
Intangible assets - net 15,326 15,754
Other assets 5,105 5,897
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$ 188,970 $ 197,754
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,560 $ 37,199
Accrued liabilities 20,087 19,646
Income taxes payable 970 1,921
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Total current liabilities 45,617 58,766
Long-term debt 27,859 33,933
Deferred income taxes 7,983 8,011
Other liabilities 3,260 3,358
Commitments and contingencies
Shareholders' equity:
Preferred stock, 7% cumulative, $1 par value, aggregate liquidation
preference of $15,000 - 1,000,000 shares authorized; 150,000
shares issued; no shares outstanding 150 150
Common stock, $.01 par value - authorized 50,000,000 shares; issued
22,122,772 shares (22,117,332 shares at April 29, 2000) 221 221
Additional paid-in capital 15,584 15,556
Retained earnings 105,522 94,725
Treasury stock - at cost:
Preferred stock - 150,000 shares (5,100) (5,100)
Common stock - 3,972,634 shares (3,939,034 shares at April 29, 2000) (12,126) (11,866)
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Total shareholders' equity 104,251 93,686
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$ 188,970 $ 197,754
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See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 27, 2001 AND JANUARY 29, 2000
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
2001 2000 2001 2000
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Net sales $ 97,096 $ 83,130 $ 358,082 $ 318,326
Cost of sales 66,847 56,875 242,863 214,151
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Gross profit 30,249 26,255 115,219 104,175
Selling, general and administrative expenses 29,234 25,788 97,299 87,720
Interest expense 448 636 1,736 2,136
Other income - net 292 354 1,258 998
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Income before income taxes 859 185 17,442 15,317
Provision for income taxes 327 70 6,645 5,744
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Net income $ 532 $ 115 $ 10,797 $ 9,573
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Net income per share -
Basic $ .03 $ .01 $ .59 $ .52
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Diluted $ .03 $ .01 $ .58 $ .50
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Average common shares outstanding -
Basic 18,150 18,278 18,160 18,365
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Diluted 18,825 18,955 18,818 19,074
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See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 27, 2001 AND JANUARY 29, 2000
(In thousands)
(Unaudited)
2001 2000
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OPERATING ACTIVITIES:
Net income $ 10,797 $ 9,573
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,265 7,891
Deferred income tax provision (benefit) (137) 154
Loss on sale of property 43 12
Changes in:
Trade receivables 3,648 8,985
Inventories 2,238 716
Prepaid and other assets (601) (2,201)
Accounts payable (12,999) (6,380)
Other liabilities, net (1,648) (4,197)
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Net cash provided by operating activities 9,606 14,553
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INVESTING ACTIVITIES:
Property additions (3,698) (5,409)
Acquisitions, net of cash acquired (3,780) (5,200)
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Net cash used in investing activities (7,478) (10,609)
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FINANCING ACTIVITIES:
Debt borrowings 7,500 19,000
Debt repayments (13,883) (25,334)
Repurchase of common stock (260) (1,568)
Proceeds from stock options exercised 18 58
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Net cash used in financing activities (6,625) (7,844)
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NET DECREASE IN CASH AND EQUIVALENTS (4,497) (3,900)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 38,482 37,480
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CASH AND EQUIVALENTS - END OF PERIOD $ 33,985 $ 33,580
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OTHER CASH FLOW INFORMATION:
Interest paid $ 2,013 $ 2,339
Income taxes paid 7,826 6,857
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 27, 2001
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
National Beverage Corp. and its subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information. The financial statements do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. Except for the matters disclosed, however, there has been
no material change in the information disclosed in the notes to consolidated
financial statements for the fiscal year ended April 29, 2000. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Results for the interim
periods presented are not necessarily indicative of results which might be
expected for the entire fiscal year. Certain prior year amounts have been
reclassified to conform to the current year presentation.
2. INVENTORIES
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories at January 27, 2001 are comprised of finished goods of $15,542,000
and raw materials of $14,753,000. Inventories at April 29, 2000 are comprised of
finished goods of $15,377,000 and raw materials of $13,679,000.
3. PROPERTY
Property consists of the following:
(In thousands)
January 27, April 29,
2001 2000
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Land $ 10,625 $ 10,617
Buildings and improvements 34,795 34,416
Machinery and equipment 92,526 89,345
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Total 137,946 134,378
Less accumulated depreciation (76,012) (71,948)
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Property - net $ 61,934 $ 62,430
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Depreciation expense was $2,010,000 and $5,853,000 for the three and nine month
periods ended January 27, 2001, respectively, and $1,873,000 and $5,490,000 for
the three and nine month periods ended January 29, 2000, respectively.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 27, 2001
(UNAUDITED)
4. DEBT
Debt consists of the following:
(In thousands)
January 27, April 29,
2001 2000
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Senior Notes $ -- $ 8,333
Credit Facilities 7,500 5,000
Term Loan Facilities 20,050 20,600
Other 309 --
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Total $ 27,859 $ 33,933
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A subsidiary of National Beverage Corp. had outstanding 9.95% unsecured senior
notes in the original principal amount of $50 million (the "Senior Notes"), of
which the final annual principal installment of $8.3 million was paid on
November 1, 2000. Additionally, certain subsidiaries maintain unsecured
revolving credit facilities aggregating $48 million (the "Credit Facilities")
and unsecured term loan facilities ("Term Loan Facilities") with banks. The
Credit Facilities expire through December 9, 2002 and bear interest at 1/2%
below the banks' reference rate or 1% above LIBOR, at the subsidiaries'
election. The Term Loan Facilities are repayable in installments through July
31, 2004, and bear interest at the banks' reference rate or 1 1/4% above LIBOR,
at the subsidiaries' election. The Company intends to utilize its existing
long-term credit facilities to fund the next principal payment due on its Term
Loan Facilities.
Certain of the Company's debt agreements contain restrictions which require
subsidiaries to maintain certain financial ratios and minimum net worth, and
limit subsidiaries with respect to incurring additional indebtedness, paying
cash dividends and making certain loans, advances or other investments. These
restrictions are not expected to have a material adverse impact on the
operations of the Company. At January 27, 2001, net assets of these subsidiaries
totaling approximately $26 million were available for distribution and the
Company was in compliance with all loan covenants.
5. CAPITAL STOCK
During the nine months ended January 27, 2001, options for 5,440 shares were
exercised at prices ranging from $2.09 to $5.00 per share and options for
200,000 shares were granted at an exercise price of $7.38. At January 27, 2001,
options to purchase 1,286,656 shares at a weighted average exercise price of
$3.72 (ranging from $.13 to $9.88 per share) were outstanding and stock-based
awards to purchase 386,024 shares of common stock were available for grant.
During the nine months ended January 27, 2001, the Company purchased 33,600
shares of its common stock. Such shares are classified as treasury stock.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 27, 2001
(UNAUDITED)
6. ACQUISITION
In September 2000, the Company acquired certain operations and assets of
Beverage Canners International, Inc ("BCI"). The assets acquired include a
leased manufacturing facility, inventory, and the Ritz(R) and Crystal Bay(R)
brands. The BCI acquisition has been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
acquired based upon their estimated fair values at the date of acquisition.
Operating results of the acquired business, which are not material to
consolidated results, have been included in the consolidated statements of
income from the date of acquisition.
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PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
National Beverage Corp. (the "Company") is a holding company for various
subsidiaries that develop, manufacture, market and distribute a complete
portfolio of quality beverage products throughout the United States. The
Company's proprietary brands include Shasta(R), Faygo(R), Ritz(R) and Big
Shot(R), complete lines of multi-flavored and cola soft drinks. In addition, the
Company offers an assortment of premium "good-for-you" beverages geared toward
the health-conscious consumer, including Everfresh(R), Home Juice(R) and Mr.
Pure(R) 100% juice and juice-based products; and LaCROIX(R), Mt. Shasta(TM),
Crystal Bay(R) and ClearFruit(R) flavored and spring water products. The Company
also provides specialty products, including VooDoo Rain(TM), a line of
alternative beverages geared toward young consumers, and St. Nick's(TM) holiday
soft drinks. Substantially all of the Company's brands are produced in its
sixteen manufacturing facilities, which are strategically located throughout the
continental United States. The Company also develops and produces soft drinks
for retail grocery chains, warehouse clubs, mass-merchandisers and wholesalers
("allied brands") as well as soft drinks for other beverage companies.
The Company's strategy emphasizes the growth of its branded products by offering
a beverage portfolio of proprietary flavors; by supporting the franchise value
of regional brands; by developing and acquiring innovative products tailored
toward healthy lifestyles; and by appealing to the "quality-price" sensitivity
factor of the family consumer. In addition, the strength of its brands and
location of its manufacturing facilities distinguish the Company as a
single-source supplier of branded and allied branded beverages for national and
regional retailers that rely on the warehouse distribution system.
Various means are utilized by the Company to maintain its position as a
cost-effective producer of its beverage products. These include vertical
integration of the supply of raw materials for the manufacturing process, bulk
delivery to customer distribution centers, regionally targeted media promotions
and the use of multiple distribution systems. Management believes it is able to
offer retailers a higher profit margin on Company branded products and allied
brands than is typically available from those soft drink companies that utilize
the direct-store delivery method.
Beverage industry sales are seasonal with the highest volume typically realized
during the summer months. Additionally, the Company's operating results are
subject to numerous factors, including fluctuations in the costs of raw
materials, changes in consumer preference for beverage products and competitive
pricing in the marketplace. Management believes that brand recognition, quality,
customer service, availability and value are primary factors affecting the
Company's position in the marketplace.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 27, 2001 (THIRD QUARTER OF FISCAL 2001) COMPARED TO
THREE MONTHS ENDED JANUARY 29, 2000 (THIRD QUARTER OF FISCAL 2000)
Net sales for the three months ended January 27, 2001 increased approximately
$14.0 million, or 17%, over the three months ended January 29, 2000. This sales
increase was due to broad-based volume growth, an improvement in pricing of
branded products, and sales of Ritz and Crystal Bay brands recently acquired
from Beverage Canners International, Inc. ("BCI"). See Note 6 of Notes to
Condensed Consolidated Financial Statements.
Gross profit approximated 31.2% of net sales for the third quarter of fiscal
2001 and 31.6% of net sales for the third quarter of fiscal 2000. This change
was the result of increases in certain raw material costs, higher utility costs,
and costs related to the integration of operations acquired from BCI, which was
partially offset by the pricing improvement mentioned above.
Selling, general and administrative expenses increased $3.4 million for the
third quarter of fiscal 2001. This increase was primarily due to higher
distribution and selling costs related to increased volume, increases in fuel
costs, and incremental costs related to the acquired BCI operations.
Interest expense declined during the third quarter of fiscal 2001 compared to
the prior year due to a reduction in average debt outstanding. Other income
decreased to $292,000 primarily due to a decrease in interest income resulting
from lower average investment balances. See Note 4 of Notes to Condensed
Consolidated Financial Statements.
The Company's effective rate for income taxes, based upon estimated annual
income tax rates, approximated 38.1% of income before taxes for the third
quarter of fiscal 2001 and 37.8% for the third quarter of fiscal 2000. The
difference between the effective rate and the federal statutory rate of 35% was
primarily due to the effects of state income taxes and non-deductible expenses.
Net income amounted to $532,000 or $.03 per share for the three months ended
January 27, 2001, compared to $115,000 or $.01 per share for the three months
ended January 29, 2000.
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NINE MONTHS ENDED JANUARY 27, 2001 (FIRST NINE MONTHS OF FISCAL 2001) COMPARED
TO NINE MONTHS ENDED JANUARY 29, 2000 (FIRST NINE MONTHS OF FISCAL 2000)
Net sales for the nine months ended January 27, 2001 increased approximately
$39.8 million, or 12%, over the first nine months of the prior year. This sales
improvement was due to broad-based volume growth, an improvement in pricing of
branded products, increased distribution in the convenience channel, and sales
of newly acquired Ritz and Crystal Bay brands.
Gross profit approximated 32.2% of net sales for the first nine months of fiscal
2001 and 32.7% of net sales for the first nine months of fiscal 2000. This
change was primarily due to an increase in certain raw material costs, higher
utility costs, and costs related to the integration of operations acquired from
BCI.
Selling, general and administrative expenses increased $9.6 million for the
first nine months of fiscal 2001. This increase was primarily due to higher
distribution and selling costs related to increased volume, increases in fuel
costs, and incremental costs related to the acquired BCI operations.
Interest expense declined during the nine months ended January 27, 2001 compared
to the prior year due to a reduction in average debt outstanding. Other income,
primarily consisting of interest income, increased to $1.3 million due to higher
average investment balances and yields.
The effective rate for income taxes, based upon estimated annual income tax
rates, amounted to 38.1% and 37.5% of income before taxes for the first nine
months of fiscal 2001 and fiscal 2000, respectively. The difference between the
effective rate and the federal statutory rate of 35% was primarily due to the
effects of state income taxes and non-deductible expenses.
Net income increased to $10.8 million or $.59 per share for the nine months
ended January 27, 2001 from $9.6 million or $.52 per share for the nine months
ended January 29, 2000.
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
JANUARY 27, 2001 COMPARED TO APRIL 29, 2000
Management views earnings before interest expense, taxes, depreciation and
amortization ("EBITDA") as a key indicator of the Company's operating
performance and enterprise value, although not as a substitute for cash flow
from operations or operating income. During the nine months ended January 27,
2001, the Company generated EBITDA of $27.4 million as compared to EBITDA of
$25.3 million for the comparable period last year.
For the nine months ended January 27, 2001, net cash provided by operating
activities of $9.6 million was comprised of net income of $10.8 million and
non-cash charges of $8.2 million less cash used primarily for working capital
requirements of $9.4 million. Cash of $7.5 million was used for capital
expenditures and the BCI acquisition. At January 27, 2001, the Company's ratio
of current assets to current liabilities was 2.3 to 1 and working capital
amounted to $61.0 million.
The Company continually evaluates capital projects to expand capacity and
improve efficiency at its manufacturing facilities. The Company presently has no
material commitments for capital expenditures and expects that the capital
expenditures for fiscal 2001 will be comparable to fiscal 2000.
In January 1998, the Board of Directors authorized the Company to repurchase up
to 800,000 shares of its common stock and purchases to date aggregate 441,910
shares. During the nine months ended January 27, 2001 and January 29, 2000, the
Company purchased 33,600 shares and 188,980 shares, respectively, of its common
stock.
On November 1, 2000, a subsidiary of the Company paid the final annual principal
installment due on its $50 million Senior Notes. At January 27, 2001, certain
subsidiaries of the Company had outstanding long-term debt of $27.9 million.
Debt agreements contain restrictions which require these subsidiaries to
maintain certain financial ratios and minimum net worth, and limit the
subsidiaries with respect to incurring additional indebtedness, paying cash
dividends and making certain loans, advances or other investments. These
restrictions are not expected to have a material adverse impact on the
operations of the Company. At January 27, 2001, net assets of these subsidiaries
totaling approximately $26 million were available for distribution and the
Company was in compliance with all loan covenants. See Note 4 of Notes to
Condensed Consolidated Financial Statements.
Management believes that cash and equivalents, together with funds generated
from operations and borrowing capabilities, will be sufficient to meet the
Company's operating cash requirements, and the cash requirements of the parent
company, for the foreseeable future.
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CHANGES IN ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities" and statement No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities",
which are effective for fiscal years beginning after June 15, 2000. These
statements require that all derivatives be recorded on the balance sheet at
fair value. The Company believes that the implementation of these statements
will not materially affect its operating results or financial position.
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q (this "Form 10-Q"),
including statements under "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations," constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the 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 the Company's Strategic Alliance objective; success of the
Company in acquiring other beverage businesses; success of new product and
flavor introductions; fluctuations in the costs of raw materials; the Company's
ability to increase prices; continued retailer support for the Company's brands;
changes in consumer preferences; changes in business strategy or development
plans; government regulations; regional weather conditions; and other factors
referenced in this Form 10-Q. The Company disclaims an 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There are no material changes to the disclosures made on this matter in the
Company's Annual Report on Form 10-K for the fiscal year ended April 29, 2000.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: March 13, 2001
NATIONAL BEVERAGE CORP.
(Registrant)
By: \s\ Dean A. McCoy
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Dean A. McCoy
Senior Vice President - Controller
(On behalf of the Registrant and as
Principal Accounting Officer)
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