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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MAY 3, 1997
[ ] 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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One North University Drive, Ft. Lauderdale, FL 33324
(Address of principal executive offices) (Zip Code)
(954) 581-0922
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
value $.01 per share
(Title of class)
Securities registered pursuant to Section 12(g) of the Act: None
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 ( )
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant computed by reference to the closing price on July 28, 1997 was
approximately $40,349,000.
The number of shares of Registrant's common stock outstanding as of July 28,
1997 was 18,465,628.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be filed on or before September 2, 1997 are incorporated by
reference into Part III of this report.
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PART I
ITEM 1. BUSINESS
GENERAL
National Beverage Corp. ("NBC") develops, manufactures, markets and distributes
its full line of branded cola and multi-flavored soft drinks, juice products and
bottled water under the brand names Shasta(r), Faygo(r), Everfresh(r), La
CROIX(r), Big Shot(r), nuance(r), Body Works(r), `a Sante'(r), Spree(r), Creepy
Coolers(tm) and St. Nick's(tm). Substantially all of the Company's brands are
produced in its fourteen manufacturing facilities which are strategically
located throughout the continental United States. NBC also produces branded soft
drinks for retail grocery chains, warehouse clubs, mass merchandisers and
wholesalers ("allied brands") as well as soft drinks for other beverage
companies. NBC and its consolidated subsidiaries are referred to herein as the
"Company".
Various strategies, including vertical integration of the supply of raw
materials for the manufacturing process, bulk delivery to customer distribution
centers, decentralized sales-marketing efforts, regional, in lieu of national,
media promotion, and multiple distribution systems, are utilized by the Company
to maintain its position as a cost-effective producer of its soft drink
products. The Company believes the retailer is offered a higher profit margin on
Company branded products than is typically available from the sale of nationally
distributed products.
PRODUCTS
The Company's principal branded soft drink products, Shasta and Faygo, have been
developed and marketed throughout the United States for over a combined 200
years. Established over 100 years ago and distributed nationally, Shasta is the
largest of the Company's brands and includes approximately 50 flavors as well as
bottled spring water. Currently celebrating its 90th anniversary, Faygo products
are primarily distributed east of the Mississippi River and include over 45
flavors. In addition, the Company produces Big Shot, a regional multi-flavored
soft drink line established in 1935; Everfresh, a full line of juice products
distributed primarily in the Midwest and certain eastern markets; LaCROIX, a
sparkling and still water product line sold mainly in the Midwest and by
airlines; nuance, a new age beverage product; Body Works, an isotonic sports
drink; `a Sante', a domestic sparkling mineral water; and Spree, an all natural
carbonated soft drink.
Although cola drinks account for approximately 58% of the domestic soft drink
grocery channel volume, the Company's "fantasy of flavors" strategy emphasizes
its non-cola products. As a result, colas account for only 25% of the Company's
total branded volume. The Company believes it is well-suited to compete in the
flavor category due to the long established brand awareness of Shasta and Faygo,
which are synonymous with flavor, along with its continued innovative
"flavor-enhancement" philosophy. Additionally, NBC's structure permits regional
manufacturing of products targeted toward specific demographics that may be
unattractive for the national competitors to create and produce efficiently.
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The Company continually develops new flavors and packaging for its brands. A
variety of package sizes, including 18-pack and 24-pack "suitcases" of 12-ounce
cans, single-serve 20 ounce plastic bottles, 24 ounce single-serve Everfresh
juice bottles targeted toward the convenience store channel, and one, two and
three liter "family size" bottles are produced by the Company's fourteen
manufacturing facilities. Additionally, the Company sponsors special holiday
promotions including Creepy Coolers for Halloween and St. Nick's, which features
traditional cola and special Christmas flavors and colors. During the fiscal
year ended May 3, 1997 ("fiscal 1997"), the Company introduced, among other
flavors, Shasta Strawberry-Watermelon, Faygo Honeydew Mist, Big Shot Lime-Lemon
Twist and Everfresh Lemon Tea and Cherry Lemonade.
During the fiscal year ended April 27, 1996 ("fiscal 1996"), the Company
completed the acquisition of Everfresh, a regional juice and juice added
beverage line, and during fiscal 1997, the Company concluded the acquisition of
LaCROIX, a sparkling and still water product line.
MANUFACTURING
The Company's fourteen bottling plants are strategically located across the
continental United States, enabling the Company to cost effectively manufacture
and distribute beverages to most geographic markets. Each facility is generally
equipped to produce canned and bottled beverage products in a variety of package
sizes in each regional market. From time to time, the Company will shift
manufacturing equipment among its facilities to increase cost efficiencies or
maximize the utilization of equipment.
The Company believes that ownership of its bottling facilities provides an
advantage over many of its competitors that rely upon independent third party
bottlers to manufacture and market their products. Since the Company controls
the national manufacture, distribution and marketing of its brands, the Company
believes it can more effectively manage product quality and customer service and
respond quickly to changing market conditions.
The Company manufactures a majority of its flavor concentrates at its own
facilities which are then distributed throughout its bottling network for use in
manufacturing products. Utilizing the same formulas throughout its own bottling
plants, the Company seeks to ensure that all products are manufactured in
accordance with uniform standards and specifications. The Company also maintains
research and development labs at multiple locations. These labs test the
Company's flavors as well as conduct research for new products and flavors.
DISTRIBUTION
The Company's products are sold primarily through the "take-home" channel as
well as the convenience, food service and vending distribution channels. The
take-home channel consists of grocery, warehouse club, mass merchandiser,
wholesaler and discount stores.
The Company distributes its products primarily through the warehouse
distribution centers of its customers and through a direct-store delivery system
in certain geographic markets. Shasta is primarily sold through the warehouse
distribution system; the product is shipped from the Company's manufacturing
facility to the retailer's centralized distribution centers and then
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shipped by the retailer to each of its retail outlet locations with other
consumer goods. Faygo, Big Shot, Everfresh, and LaCROIX are mainly distributed
directly to the customer's retail outlets through the Company's bulk delivery
and direct-store-delivery fleet and independent distributors.
The Company also provides distribution to the convenience store and retail gas
station market. The Company uses its own direct-store-delivery fleet or that of
independent distributors to service this channel. Faygo, Big Shot, Everfresh and
LaCROIX are the Company's principal brands that are distributed to this market
segment. The Company has placed an emphasis on increasing distribution through
this higher-margin channel.
The Company's food service division is responsible for sales to hospitals,
schools, military bases, airlines, hotels and food service wholesalers. The
Company's food service division primarily distributes Shasta, Everfresh and
LaCROIX products.
Each of the Company's take-home, convenience and food service operations uses
vending machines and visi-coolers as marketing and promotional tools for the
Company's brands. The Company provides Shasta, Faygo, Big Shot and Everfresh
machines and coolers on a placement or purchase basis to its customers and
vending operators. The Company believes that the vending market provides not
only increased beverage sales but also the enhancement of brand awareness and
development of brand loyalty.
SALES and MARKETING
The Company sells and markets its products through an internal sales network, as
well as selected broker networks. The Company currently employs over two hundred
sales representatives. Each sales company is established to serve a specific
market segment, focusing either on geographic territories, distribution channels
or product line segments. This focus allows each sales group to provide high
level, responsive service and support to the customers and markets that it
serves.
The Company's sales and marketing program is directed toward maintaining and
enhancing consumer brand recognition and loyalty, and typically utilizes a
combination of regional advertising, special event marketing, diversified
packaging and consumer coupon distribution. The Company retains advertising
agencies to assist with media advertising programs for its brands. The Company
also offers numerous promotional programs to its retail customers, including
cooperative advertising support, in-store offers and volume incentives. The
Company believes these elements allow it to tailor marketing and advertising
programs for demographic and economic lifestyles to meet local and regional
requirements. In addition, the Company seeks to maintain points of difference
between its brands and those of its competitors by combining high product
quality, flavor innovation and unique packaging designs with a value pricing
strategy.
The Company's "regional share dynamics" strategy emphasizes the acquisition and
support of brands that have a significant regional presence. The Company
believes that these types of
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products are less subject to attack by the larger national brands because of the
strong, regional consumer loyalty developed over time and because of their
relatively small national market share. Additionally, brands that have regional
consumer recognition do not require costly mass media advertising and are
effectively promoted by the Company's regionally targeted marketing programs and
retailer-based sales incentives.
Beginning in the latter part of fiscal 1996, the Company commenced entering into
long-term contractual relationships which join its sales and marketing and
manufacturing expertise with national and regional retailer sales and marketing
expertise. These "Strategic Alliances" provide for retailer promotional support
for the Company's brands through in-store and point-of-sale advertising, and
provide nationally integrated manufacturing and distribution services for the
retailer's own branded products.
RAW MATERIALS
The Company maintains relationships with several suppliers of raw materials and
packaging goods, and utilizes a centralized procurement division to purchase raw
materials and packaging supplies. By consolidating the purchasing function for
its fourteen bottling facilities, the Company believes it is able to procure
more competitive arrangements with its suppliers, allowing it to compete as a
low-cost producer of soft drinks.
Products produced and sold by the Company are made from various materials,
including sweeteners, juice concentrates, carbon dioxide, water, glass, resin
used in plastic bottles, aluminum, paper, cartons and caps. Most of the
Company's low-calorie soft drink products use aspartame. The Company
manufactures a majority of its own flavor concentrates and purchases the
remainder of its raw materials from multiple suppliers. In the ordinary course
of its business, the Company enters into commitments for the supply of certain
raw materials, none of which are material to the Company's financial position.
All of the materials or ingredients used by the Company are presently available,
although the supply of specific materials could be adversely affected by
strikes, weather conditions, governmental controls, national emergencies or
other events outside the Company's control. Additionally, pricing and
availability of certain of the Company's raw materials are based on commodities,
primarily aluminum, resin, corn, linerboard and juice concentrates, which tend
to fluctuate based upon world-wide market conditions.
SEASONALITY
Soft drink sales are seasonal with the highest volume typically realized during
the summer months. The Company has sufficient production capacity to meet
seasonal increases without maintaining significant quantities of inventory in
anticipation of periods of peak demand. The volume of sales may be affected by
weather conditions.
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COMPETITION
The production and sale of non-alcoholic beverages is highly competitive and the
Company's competitive position varies in each of its market areas. The Company
is not considered dominant in any market. Products produced and marketed by the
Company compete with national soft drinks delivered directly to the retail
customers by franchised bottlers, local and regional soft drink products
(including other warehouse and retailer brands) and other beverages, including
water, juice and juice-based drinks, "new age" beverage products, sports drinks,
coffee and tea. Several competitors, including the two that dominate the soft
drink industry, PepsiCo, Inc. and The Coca-Cola Company, have greater financial
resources than the Company. Competition is based upon taste, quality, price,
availability, promotion, packaging, advertising and service to the customer.
Price competition by national brand soft drink companies as well as other
regional soft drink producers has been intense over recent years and the Company
expects that such competitive conditions will continue.
TRADEMARKS
The Company maintains various registered trademarks for its proprietary brands
in the United States and abroad, which are significant to the business of the
Company. The Company intends to continue to maintain all registrations of its
significant trademarks and continue to use the trademarks in the operation of
its businesses.
GOVERNMENTAL REGULATION
The production, distribution and sale in the United States of the Company's
products are subject to the Federal Food, Drug and Cosmetic Act; 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. Certain states and localities prohibit, or may in the future
enact legislation to prohibit, the sale of certain beverages unless a deposit or
tax is charged for containers. The Company believes that it is in compliance in
all material respects with such existing legislation.
All of the Company's facilities in the United States are subject to federal,
state and local environmental laws and regulations. Compliance with these
provisions has not had, and the Company does not expect such compliance to have,
any material adverse effect on the Company's financial or competitive position.
EMPLOYEES
As of May 3, 1997, the Company employed approximately 1,200 people, of which 400
are in professional, technical, managerial, sales, administrative, and clerical
job classifications and 800 are production/hourly employees. Of the Company's
hourly employees, approximately 300 are covered by collective bargaining
agreements which expire through 2001. Management of the Company believes that
the Company's relations with its employees are good.
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ITEM 2. PROPERTIES
The principal properties of the Company include fourteen production and
warehouse facilities located in twelve states which, in the aggregate, comprise
approximately two million square feet. Eleven facilities are owned by the
Company and are located in the following states: Ohio, Michigan (2), Georgia,
California (2), Texas, Kansas, Arizona, Utah and Washington. Three production
facilities, located in Louisiana, Maryland and Florida, are leased subject to
agreements which expire through 2000. The Company believes its facilities are
generally in good condition and sufficient to meet its present needs.
The production of soft drinks is capital intensive but is not characterized by
rapid technological change. The technological advances which have occurred have
generally been of an incremental cost-saving nature, such as the industry's
conversion to lower-weight can lids. The Company is not aware of any anticipated
industry-wide improvements in technology which would adversely impact the
Company's current physical production capacity or cost of production.
At May 3, 1997, the Company operated 190 vehicles that include delivery trucks,
other trucks, vans and automobiles used in the sale and distribution of soft
drink products. In addition, the Company leases office space, transportation
equipment, office equipment, data processing equipment and some plant equipment.
ITEM 3. LEGAL PROCEEDINGS
Albert H. Kahn v. Nick A. Caporella, et al., Civil Action No. 11890 was filed in
December 1990 by a shareholder of Burnup & Sims Inc. ("BSI"), now MasTec, Inc.,
in the Court of Chancery of the State of Delaware in and for New Castle County
against NBC, the members of the Board of Directors of BSI and against BSI. In
May 1993, plaintiff amended its class action and shareholder derivative
complaint (the "Amended Complaint"). The class action claims allege, among other
things, that the Board of Directors of BSI, and NBC, as its largest shareholder,
breached their respective fiduciary duties in approving (i) the dividend by BSI
of its shares of NBC common stock (the "Distribution") and (ii) the exchange of
certain shares of BSI's common stock held by NBC for certain indebtedness of NBC
held by BSI (the "Exchange"; the Distribution and the Exchange are hereafter
referred to as the "1991 Transaction"), in allegedly placing the interests of
NBC ahead of the interests of other shareholders of BSI. The derivative action
claims allege, among other things, that the Board of Directors of BSI breached
their fiduciary duties by approving executive officer compensation arrangements,
by financing NBC's operations on a current basis, and by permitting the
interests of BSI to be subordinated to those of NBC. In the lawsuit, plaintiff
seeks to rescind the 1991 Transaction and to recover unspecified damages. The
defendants, including the Company, have moved to dismiss the actions for failure
to make a demand and state a claim upon which relief can be granted. The motion
is still pending.
In November 1993, plaintiff filed a class action and derivative complaint, Civil
Action No. 13248 (the "1993 Complaint") against the Company, BSI, the members of
the Board of Directors of BSI, and certain other defendants (referred to as
"Other Defendants"). In December 1993,
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plaintiff amended the 1993 Complaint (the "1993 Amended Complaint"). The 1993
Amended Complaint alleges, among other things, that the Board of Directors of
BSI, and NBC, as BSI's largest stockholder, breached their respective fiduciary
duties by approving an agreement dated October 15, 1993, as amended, between BSI
and the Other Defendants (the "Acquisition Agreement") and the exchange of
3,153,847 shares of BSI common stock owned by the Company for certain
indebtedness owed to BSI by the Company (the "Redemption") which, according to
the allegations of the 1993 Complaint, benefits the President and Chief
Executive Officer of NBC at the expense of BSI's stockholders. On November 29,
1993, plaintiff filed a motion for an order preliminarily and permanently
enjoining the transactions under the Acquisition Agreement and the Redemption.
On March 7, 1994, the court heard oral arguments with respect to plaintiff's
motion to enjoin the transactions, and on March 10, 1994, the court denied
plaintiff's request for injunctive relief finding that plaintiff had not
established a likelihood of success on the merits and that, in any event, the
equities did not favor the imposition of injunctive relief.
The Company believes that the allegations in the complaint, the Amended
Complaint, the 1993 Complaint and the 1993 Amended Complaint are without merit,
and intends to vigorously defend these actions.
The Company is a defendant in various other lawsuits arising in the ordinary
course of business.
In the opinion of management, the ultimate disposition of the foregoing lawsuits
will not have a material adverse effect on the Company's consolidated financial
position or result of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were voted upon during the fourth quarter of fiscal 1997.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock, par value $.01 per share, began trading on the
American Stock Exchange ("AMEX") under the symbol "FIZ" on January 15, 1996.
Previously, the common stock traded on the NASDAQ Stock Market ("NASDAQ") under
the symbol "POPS". The high and low closing quotations of the Company's common
stock for each quarter of the last two fiscal years, as reported by AMEX and
NASDAQ, are set forth below:
1997 1996
High Low High Low
------ ------ ------ ------
First Quarter $ 7 7/16 $4 3/4 $7 $5 1/2
Second Quarter 10 1/16 6 11/16 7 1/4 5 3/4
Third Quarter 9 7 1/2 6 5/8 5
Fourth Quarter 12 5/8 7 5/8 9 13/16 6 1/2
On October 25, 1996, the Company paid a 100% stock dividend to its shareholders
of record on September 9, 1996, effected as a 2 for 1 stock split. All share
quotations shown above have been restated to reflect this split.
At July 28, 1997, there were 1,223 stockholders of record of the Company's
common stock.
The Company has not paid any cash dividends with respect to its common stock
during the last three fiscal years and the Company's Board of Directors has no
present plans for declaring any such cash dividends. See Note 4 of Notes to
Consolidated Financial Statements for certain restrictions of the payment of
dividends.
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ITEM 6. SELECTED FINANCIAL DATA
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
(In thousands, except per share and footnote amounts)
(1)
FISCAL YEAR ENDED
-----------------
May 3, 1997 Apr 27, 1996 Apr 29, 1995 Apr 30, 1994 May 1, 1993
----------- ------------ ------------ ------------ -----------
STATEMENT OF INCOME DATA:
Net sales $385,427 $350,431 $348,732 $347,727 $332,579
Cost of sales 275,453 261,859 261,720 258,207 247,312
-------- -------- -------- -------- --------
Gross profit 109,974 88,572 87,012 89,520 85,267
Selling, general and
administrative expenses 88,921 70,029 68,563 66,775 63,660
Other charges(2) -- -- -- 9,119 --
Interest expense 4,951 4,969 5,226 7,710 8,334
Other income-net 871 950 877 243 448
Provision for income taxes 6,280 5,520 5,499 2,666 5,631
-------- -------- -------- -------- --------
Income for continuing
operations $ 10,693 $ 9,004 $ 8,601 $ 3,493 $ 8,090
======== ======== ======== ======== ========
Income from continuing
operations per share(3) $ 0.56 $ 0.44 $ 0.41 $ 0.13 $ 0.38
BALANCE SHEET DATA (At end of period):
Working capital $ 47,624 $ 43,580 $ 33,260 $ 30,910 $ 29,761
Property-net 55,436 56,226 52,075 54,250 55,316
Total assets 170,897 177,560 162,558 162,583 158,923
Long-term debt (excluding
current portion) 55,026 62,568 43,185 51,699 70,360
Deferred income taxes 7,245 6,805 6,435 7,337 7,870
Shareholders' equity 56,703 47,052 43,871 36,236 18,944
(1) Certain prior year amounts have been reclassified to conform to the fiscal
1997 presentation. Fiscal 1997 consists of 53 weeks.
(2) Other charges includes a $1,200,000 provision for legal claims and related
expenses, $3,468,000 of expenses associated with category development, and
$4,451,000 of costs related to compliance with the Nutrition Labeling and
Education Act.
(3) Income from continuing operations per share is computed based upon
earnings applicable to common shares and the weighted average common and
common equivalent shares outstanding. For periods prior to fiscal 1997,
earnings applicable to common shares is comprised of net income minus
preferred dividends, plus, for 1993 and 1994, NBC's equity in the
preferred stock dividends received by BSI. Per share amounts are adjusted
for the 2 for 1 stock split distributed on October 25, 1996 and 4 for 1
stock split distributed on November 9, 1994.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL OVERVIEW
National Beverage's strategy emphasizes the growth of its branded products by
offering a beverage portfolio of proprietary, unique 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.
Beginning in the latter part of fiscal 1996, the Company strengthened its brand
equity and awareness through greater retailer sponsorship by entering into
long-term alliances with national and regional retailers to supply both Company
branded and allied branded soft drinks ("Strategic Alliances"). During the past
several years, the consolidation of smaller, less competitive retail outlets
into larger and highly price-sensitive, "mega-retail" businesses has occurred,
increasing the retailers' need for a single-source, high-quality,
service-oriented manufacturer of beverage products. Through its Strategic
Alliances, the Company has joined with these retailers to produce, manufacture,
market and sell its brands and allied brands. These alliances provide additional
opportunities for the Company to increase sales during promotional activity
periods and reduce costs by bulk shipments directly to the retailers'store
locations. The retailer also attains greater cost efficiencies by shipping
branded and allied branded products together, thus decreasing costs through the
elimination of partial shipments. The retailer is able to enhance distribution
center inventory management and quality control by contracting with only one
national supplier, which can provide consistent packaging, flavor and quality
throughout the continental United States. In addition, innovation in product
design and a greater variety of package alternatives have increased the
retailers' reliance on a manufacturer of recognized branded products which is
sensitive to these design and packaging changes. Accordingly, the Company
believes that the strength of its regional brands and the location of its
manufacturing facilities position it as one of the leading single-source
suppliers of high-quality, high-value soft drinks, such as Shasta and Faygo, as
well as allied branded soft drinks, in multiple flavors and packaging throughout
the continental United States. It is the Company's intention to continue to seek
additional Strategic Alliances.
The Company intends to continue its "regional share dynamics" strategy by
acquiring brands and expanding its product line in response to changes in
lifestyles and demographics. Most recently, the Company successfully added
Everfresh and LaCROIX products to its portfolio of regional brands. These
acquisitions also expanded the Company's product line to juice and additional
water products. The Company plans to grow its revenues and brands by acquiring
other regional beverage businesses that meet its strategic and financial
objectives.
Industry soft drink 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.
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RESULTS OF OPERATIONS
Net Sales:
Net sales for fiscal 1997 increased 10% to $385.4 million from $350.4 million
for fiscal 1996. This growth was primarily the result of a 9% increase in
branded case volume due to increased sales to Strategic Alliance partners and
the addition of the Everfresh and LaCROIX brands to the Company's product line.
Additionally, net unit selling price improved, despite the continuing intense
pricing and promotional activity within the industry, as a result of favorable
changes in package and product mix. As part of the Company's Strategic Alliance
program, sales of products are supported by in-store advertising and other
promotions, which also had the effect of increasing both net sales and selling
expenses. These increases were partially offset by reduced sales of certain
low-margin products.
Net sales for fiscal 1996 increased to $350.4 million from $348.7 million for
fiscal 1995. During this period, competitive pressure resulting from intense
promotional activity by the major cola companies competing for market share and
the sponsorship of private label by store-brand owners, along with significant
increases in the price of certain raw materials and packaging in fiscal 1995 and
the beginning of fiscal 1996, had a significant impact on the beverage industry
as a whole. The Company elected to maintain profit margins notwithstanding the
competitive pricing and promotional activity in the industry and chose to pass
cost increases on to its customers. As a result, while case volume increased in
the fourth quarter of fiscal 1996 by approximately 8% including the early
effects of the new Strategic Alliances and a small impact from the Everfresh
acquisition, annual case volume declined approximately 7%, principally
representing a loss of low-margin products.
Gross Profit:
Gross profit increased to 28% of net sales for fiscal 1997 from 25% of net sales
for fiscal 1996. This increase was primarily due to increased sales of juice and
other higher margin products, and the effects of the increased case volume and
higher selling price noted above. Additionally, a reduction in the cost of raw
materials contributed to higher gross profit margins.
Gross profit approximated 25% of net sales for fiscal 1996 and 1995, reflecting
the Company's election to maintain level profit margins as described above.
The Company believes that inflationary trends do not have a significant impact
on operating results since fluctuations in raw material costs are typically
influenced more by commodity market conditions than inflation. Although there
can be no assurances as to future predictability, the Company does not expect
any significant increases in raw material costs in fiscal 1998 and has generally
been successful in passing through cost increases to maintain profit margins.
Selling, General and Administrative Expenses:
As a percentage of net sales, selling, general, and administrative expenses
approximated 23%, 20% and 20% for fiscal 1997, 1996 and 1995, respectively. The
fiscal 1997 increase was primarily due to costs related to additional in-store
and point of sale programs, additional marketing expense, and increases in
certain administrative costs.
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Interest Expense and Other Income-Net:
Fiscal 1997 interest expense of $5.0 million is relatively unchanged as compared
to the prior year. During fiscal 1996, the Company made the initial principal
payment of $8.3 million on its senior indebtedness, resulting in a 5% decrease
in interest expense for fiscal year 1996 as compared to fiscal 1995.
Other income, which is comprised principally of interest income, approximated
$.9 million, $1.0 million and $.9 million for fiscal years 1997, 1996, and 1995,
respectively.
Income Taxes:
The Company's effective tax rate was 37% in fiscal 1997, 38% in fiscal 1996, and
39% in fiscal 1995. The variance was primarily due to the effects of state
income taxes and nondeductible items. See Note 7 of Notes to Consolidated
Financial Statements.
Earnings Applicable to Common Shares and Earnings Per Share:
In February 1996, the Company purchased all of the National Beverage Corp.
preferred stock held by its single holder. The repurchase of the Company's
preferred stock eliminated annual dividend payments of approximately $1.1
million. While not affecting net income, this purchase increased earnings
applicable to common shares and earnings per common share. See Note 12 of Notes
to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company views earnings before interest expense, taxes, depreciation and
amortization ("EBITDA") as a key indicator of the Company's financial condition
and enterprise value. For fiscal 1997, the Company generated EBITDA of $29.7
million, which represents an increase of 12% from the prior year. The Company
believes that its EBITDA is sufficient to support both additional growth and
additional debt capacity.
The Company's cash position increased approximately $2 million to $37.3 million
during fiscal 1997. Cash provided by operations of $16.6 million was comprised
of net income of $10.7 million plus non-cash charges of $10.9 million less cash
used for other working capital requirements of $4.8 million. Cash of $5.7
million was used in investing activities, principally for capital expenditures.
Cash of $8.9 million was used by financing activities, principally by net debt
repayments of $7.7 million. The Company's ratio of current assets to current
liabilities approximated 2.0 to 1 and 1.8 to 1 at May 3, 1997 and April 27,
1996, respectively, and working capital increased to $47.6 million from $43.6
million for those same periods.
At May 3, 1997, the Company had credit lines of approximately $43 million, of
which $13 million was drawn. The Company believes that its cash and equivalents,
together with funds generated from operations and borrowing capabilities, will
be sufficient to meet its operating cash requirements in the foreseeable future.
The Company is evaluating various capital projects to expand capacity at certain
manufacturing facilities. Presently, however, the Company has no material
commitments for capital expenditures and expects that fiscal 1998 capital
expenditures will be comparable to or slightly higher than fiscal 1997.
15
16
At May 3, 1997, the Company had outstanding long-term debt of $55 million.
Certain debt agreements contain restrictions which require a subsidiary to
maintain certain financial ratios and minimum net worth, and limit the
subsidiary with respect to incurring certain additional indebtedness, paying
cash dividends and making certain loans, advances or other investments. At May
3, 1997, net assets of the subsidiary totaling approximately $43 million were
restricted from distribution. Cash balances of NBC, when combined with funds
available from its subsidiary, provide sufficient liquidity to allow NBC to meet
its current and expected cash obligations. The Company was in compliance with
all loan covenants and restrictions at May 3, 1997 and such restrictions are not
expected to have a material adverse impact on the operations of the Company. See
Note 4 of Notes to Consolidated Financial Statements.
Pursuant to a management agreement, the Company incurred a fee to Corporate
Management Advisers, Inc. of approximately $3.8 million for fiscal 1997 and $3.5
million for each of fiscal years 1996 and 1995. Payments under the management
agreement did not materially impact the liquidity of the Company. See Note 6 of
Notes to Consolidated Financial Statements.
CHANGES IN ACCOUNTING STANDARDS
In fiscal 1997, the Company adopted Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("SFAS 121"). The adoption of SFAS 121, which standardizes the accounting
practices for the recognition and measurement of impairment losses on certain
long-lived assets, did not have a material impact on the Company's results of
operations or financial position.
Additionally, the Company adopted Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 123 "Accounting and Disclosure of
Stock-Based Compensation." See Note 9 of Notes to Consolidated Financial
Statements.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"), which
establishes standards for computing and presenting earnings per share. SFAS 128
is required to be adopted for periods ending after December 15, 1997, including
interim periods. In addition to the Company's current presentation of net income
per share, SFAS 128 will require the Company to present diluted net income per
share, which includes the dilutive effect of stock options. The Company does not
believe the additional disclosure of diluted net income per share will
materially differ from its present earnings per share disclosure.
FORWARD LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K (this "Form 10-K"),
including statements under "Item 1. Business" and "Item 7. 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 express or
implied by such forward-looking
16
17
statements. Such factors include, but are not limited to, the following: general
economic and business conditions; competition; success of the Company's
Strategic Alliance objective; success of the Company in acquiring other beverage
businesses; fluctuations in the costs of raw materials; 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-K. The Company will not
undertake and specifically declines any obligation to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
17
18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MAY 3, 1997 AND APRIL 27, 1996
(In thousands, except share amounts)
================================================================================
1997 1996
--------- ---------
ASSETS
- ------
CURRENT ASSETS:
Cash and equivalents $ 37,257 $ 35,231
Trade receivables (net of allowance of $608 in 1997 and $694 in 1996) 27,344 33,726
Inventories 23,590 22,977
Deferred income taxes 1,759 3,630
Prepaid and other 6,214 6,056
--------- ---------
Total current assets 96,164 101,620
PROPERTY - NET 55,436 56,226
INTANGIBLE ASSETS - NET 15,503 15,207
OTHER ASSETS 3,794 4,507
--------- ---------
TOTAL $ 170,897 $ 177,560
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 28,544 $ 38,201
Accrued liabilities 17,880 17,534
Income taxes payable 1,391 1,376
Current portion of long-term debt 725 929
--------- ---------
Total current liabilities 48,540 58,040
LONG-TERM DEBT 55,026 62,568
DEFERRED INCOME TAXES 7,245 6,805
ACCRUED INSURANCE - NONCURRENT PORTION 3,383 3,095
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: 21,990,492 shares in 1997 and 12,741,488 shares in 1996;
Outstanding: 18,459,768 shares in 1997 and 9,310,764 shares in 1996) 220 127
Additional paid-in capital 14,943 14,873
Retained earnings 54,871 44,178
Treasury stock - at cost:
Preferred stock (150,000 shares) (5,100) (5,100)
Common stock (3,530,724 shares in 1997 and 3,430,724 shares in 1996) (8,381) (7,176)
--------- ---------
Total shareholders' equity 56,703 47,052
--------- ---------
TOTAL $ 170,897 $ 177,560
========= =========
See accompanying Notes to Consolidated Financial Statements.
18
19
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED MAY 3, 1997, APRIL 27, 1996, AND APRIL 29, 1995
(In thousands, except per share and footnote amounts)
===============================================================================
1997 1996 1995
--------- --------- ---------
Net sales $ 385,427 $ 350,431 $ 348,732
Cost of sales 275,453 261,859 261,720
--------- --------- ---------
Gross profit 109,974 88,572 87,012
Selling, general and administrative expenses 88,921 70,029 68,563
Interest expense 4,951 4,969 5,226
Other income - net (871) (950) (877)
--------- --------- ---------
Income before income taxes 16,973 14,524 14,100
Provision for income taxes 6,280 5,520 5,499
--------- --------- ---------
Net income $ 10,693 $ 9,004 $ 8,601
========= ========= =========
Components of earnings per share: (a)
Income from continuing operations $ 0.56 $ 0.44 $ 0.41
Purchase of preferred shares -- 0.41 --
--------- --------- ---------
$ 0.56 $ 0.85 $ 0.41
========= ========= =========
Average shares outstanding 19,109 18,606 18,598
(a) - Earnings per share is computed from earnings applicable to common
shares, which, for periods prior to fiscal 1997, consists of net income
less preferred dividends and, for 1996, $7,600,000 which represents the
difference of the carrying value of the Company's preferred stock over
its purchase price (see Note 12). Earnings applicable to common shares
was $10,693,000, $15,816,000 and $7,551,000 for the years ended May 3,
1997, April 27, 1996 and April 29, 1995, respectively.
See accompanying Notes to Consolidated Financial Statements.
19
20
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED MAY 3, 1997, APRIL 27, 1996, AND APRIL 29, 1995
(In thousands, except share amounts)
================================================================================
1997 1996 1995
----------------------- ---------------------- --------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
PREFERRED STOCK
Beginning and end of year 150,000 $ 150 150,000 $ 150 150,000 $ 150
=========== -------- =========== ------- ========== -------
COMMON STOCK
Beginning of year 12,741,488 127 12,731,088 127 3,178,272 32
Stock options exercised 23,800 1 10,400 -- 4,500 --
2 for 1 stock split 9,225,204 92 -- -- -- --
4 for 1 stock split -- -- -- -- 9,548,316 95
----------- -------- ----------- ------- ---------- -------
End of year 21,990,492 220 12,741,488 127 12,731,088 127
=========== -------- =========== ------- ========== -------
ADDITIONAL PAID-IN CAPITAL
Beginning of year 14,873 14,808 14,819
Stock options exercised 162 65 84
2 for 1 stock split (92) -- --
4 for 1 stock split -- -- (95)
-------- ------- -------
End of year 14,943 14,873 14,808
-------- ------- -------
RETAINED EARNINGS
Beginning of year 44,178 35,962 28,411
Net income 10,693 9,004 8,601
Preferred stock dividends -- (788) (1,050)
-------- ------- -------
End of year 54,871 44,178 35,962
-------- ------- -------
TREASURY STOCK-PREFERRED
Beginning of year 150,000 (5,100) -- -- -- --
Preferred shares purchased -- -- 150,000 (5,100) -- --
----------- -------- ----------- ------- ---------- -------
End of year 150,000 (5,100) 150,000 (5,100) -- --
=========== -------- =========== ------- ========== -------
TREASURY STOCK-COMMON
Beginning of year 3,430,724 (7,176) 3,430,724 (7,176) 857,681 (7,176)
Purchase of common stock 100,000 (1,205) -- -- -- --
4 for 1 stock split -- -- -- -- 2,573,043 --
----------- -------- ----------- ------- ---------- -------
End of year 3,530,724 (8,381) 3,430,724 (7,176) 3,430,724 (7,176)
=========== -------- =========== ------- ========== -------
TOTAL SHAREHOLDERS' EQUITY $ 56,703 $47,052 $43,871
======== ======= =======
See accompanying Notes to Consolidated Financial Statements.
20
21
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MAY 3, 1997, APRIL 27, 1996, AND APRIL 29, 1995
(In thousands)
===============================================================================
1997 1996 1995
-------- -------- --------
OPERATING ACTIVITIES:
Net income $ 10,693 $ 9,004 $ 8,601
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 7,784 7,148 7,408
Deferred income tax provision 2,991 1,000 363
Loss on sale of property 120 27 9
Changes in:
Trade receivables 7,144 (1,318) (2,360)
Inventories 1,369 763 1,621
Prepaid and other assets (1,531) (666) (2,821)
Accounts payable (9,633) 2,252 (2,921)
Other liabilities, net (2,335) (3,641) (970)
-------- -------- --------
Net cash provided by operating activities 16,602 14,569 8,930
-------- -------- --------
INVESTING ACTIVITIES:
Property additions (6,285) (5,119) (4,747)
Proceeds from sale of property 461 27 74
Acquisitions, net of cash acquired 145 (11,378) --
-------- -------- --------
Net cash used in investing activities (5,679) (16,470) (4,673)
-------- -------- --------
FINANCING ACTIVITIES:
Debt borrowings 33,200 29,784 4,010
Debt repayments (40,946) (19,217) (7,124)
Preferred stock dividends paid -- (1,838) (263)
Purchase of preferred stock -- (5,100) --
Purchase of common stock (1,205) -- --
Proceeds from stock options exercised 54 16 14
-------- -------- --------
Net cash provided by (used in) financing activities (8,897) 3,645 (3,363)
-------- -------- --------
NET INCREASE IN CASH AND EQUIVALENTS 2,026 1,744 894
CASH AND EQUIVALENTS - BEGINNING OF YEAR 35,231 33,487 32,593
-------- -------- --------
CASH AND EQUIVALENTS - END OF YEAR $ 37,257 $ 35,231 $ 33,487
======== ======== ========
OTHER CASH FLOW INFORMATION:
Interest paid $ 5,069 $ 5,085 $ 5,258
Income taxes paid 4,227 4,863 4,276
Non-cash investing and financing activities are described in Notes 5 and 6.
See accompanying Notes to Consolidated Financial Statements.
21
22
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
National Beverage Corp. ("NBC") develops, manufactures, markets and distributes
its full line of branded cola and multi-flavored soft drinks, juice products,
and bottled water under the brand names Shasta, Faygo, Everfresh, LaCROIX, Big
Shot, nuance, Body Works, `a Sante', Spree, Creepy Coolers and St. Nick's.
Substantially all of the Company's brands are produced in the Company's fourteen
manufacturing facilities which are strategically located throughout the
continental United States. NBC also produces branded soft drinks for retail
grocery chains, warehouse clubs, mass merchandisers and wholesalers as well as
soft drinks for other beverage companies. NBC and its consolidated subsidiaries
are referred to herein as the "Company".
The consolidated financial statements include National Beverage Corp. and its
wholly-owned subsidiaries. All material intercompany balances have been
eliminated.
The preparation of financial statements in conformity with 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's knowledge of current events
and actions it may undertake in the future, they may ultimately differ from
actual results.
The fiscal year of the Company ends the Saturday closest to April 30th. Fiscal
1997 consists of 53 weeks while fiscal 1996 and fiscal 1995 consist of 52 weeks.
Revenue from product sales is recognized by the Company when title and risk of
loss passes to the customer, which generally occurs upon shipment.
Cash and equivalents are comprised of cash and highly liquid securities
(consisting primarily of short-term money-market investments) with an original
maturity or redemption option of three months or less.
The Company sells products to a variety of customers and extends credit based on
an evaluation of the customer's financial condition, generally without requiring
collateral. Exposure to losses on receivables varies by customer principally due
to the financial condition of each customer. The Company monitors exposure to
credit losses and maintains allowances for anticipated losses. No one customer
accounted for more than 10% of net sales for fiscal 1997. For fiscal 1996 and
1995, sales to one customer accounted for approximately 14% and 13% of the
Company's net sales, respectively, and accounted for approximately 14% of trade
receivables at both May 3, 1997 and April 27, 1996. Sales to another customer
accounted for approximately 12% of the Company's net sales for each of fiscal
1996 and 1995, and accounted for approximately 10% and 12% of trade receivables
at May 3, 1997 and April 27, 1996, respectively.
22
23
The Company incurs certain costs related to long-term contractual relationships
with national and large regional retailers to manufacture and jointly market
Company and retailer branded products. These costs are deferred and amortized
based on the contractual unit volume or the straight-line method over the lesser
of the period of benefit or the non-cancelable period of the contract. It is the
Company's policy to periodically review and evaluate the future benefits
associated with these costs to determine that deferral and amortization is
justified. Of these costs, amounts associated with contracts expiring within one
year are included in other current assets and all other amounts are included in
other assets. All other marketing and advertising costs are expensed as
incurred.
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories at May 3, 1997 and April 27, 1996 are comprised of the following:
(In thousands)
1997 1996
----- -----
Finished goods $12,189 $11,225
Raw materials 11,401 11,752
------- -------
Total $23,590 $22,977
======= =======
Property is recorded at cost. Depreciation is computed by the straight-line
method over estimated useful lives as follows: buildings and improvements, 7 to
25 years; machinery and equipment, 3 to 15 years. When assets are retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
the respective accounts and any related gain or loss is recognized. Maintenance
and repair costs are charged to expense as incurred, and renewals and
improvements that extend the useful lives of assets are capitalized.
The Company provides deferred income taxes based on the difference between the
financial statement and tax bases of assets and liabilities. A valuation
allowance is established when it is deemed, more likely than not, that the
benefit of deferred tax assets will not be realized.
Intangible assets consist of goodwill, trademarks, formulas and customer lists
at costs assigned at the date of acquisition and are amortized on a
straight-line basis over estimated useful lives ranging from 10 to 40 years.
23
24
Intangible assets at May 3, 1997 and April 27, 1996 consist of the following:
(In thousands)
1997 1996
----- ------
Goodwill $ 15,309 $ 14,609
Other 4,880 4,780
-------- --------
Total 20,189 19,389
Less accumulated amortization (4,686) (4,182)
-------- --------
Net $ 15,503 $ 15,207
======== ========
The Company periodically evaluates its non-current assets on a non-discounted
cash flow basis to assess recoverability. If the estimated future cash flow
associated with an asset is projected to be less than the carrying amount of the
asset, a write-down to fair value measured by discounted estimated future cash
flows would be recorded.
In fiscal 1997, the Company adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS 121"). SFAS 121, which standardizes the
accounting practices for the recognition and measurement of impairment losses on
certain long-lived assets, did not have a material impact on results of
operations or financial position.
The Company maintains deductible programs for certain casualty, medical and
workers' compensation exposures. The Company accrues for known claims and
estimated incurred but not reported claims not otherwise covered by insurance.
Earnings per common share is computed based upon earnings applicable to common
shares and the weighted average common and common equivalent shares outstanding.
For periods prior to fiscal 1997, earnings applicable to common shares is
comprised of net income less preferred stock dividends and, for fiscal 1996, the
difference of the carrying value of the preferred stock over its purchase price.
See Note 12. Weighted average common and common equivalent shares used in per
share computations after giving effect to stock splits, are 19,109,000 for
fiscal 1997, 18,606,000 for fiscal 1996, and 18,598,000 for fiscal 1995.
Certain prior year amounts have been reclassified to conform to the fiscal 1997
presentation.
24
25
2. PROPERTY
Property at May 3, 1997 and April 27, 1996 consists of the following:
(In thousands)
1997 1996
----- -----
Land $ 8,897 $ 9,959
Building and improvements 31,213 30,654
Machinery and equipment 71,972 69,501
--------- ---------
Total 112,082 110,114
Less accumulated depreciation (56,646) (53,888)
--------- ---------
Property - Net $ 55,436 $ 56,226
========= =========
Depreciation expense was $6,266,000 for fiscal 1997, $6,437,000 for fiscal 1996
and $6,839,000 for fiscal 1995.
3. ACCRUED LIABILITIES
Accrued liabilities at May 3, 1997 and April 27, 1996 consist of the following:
(In thousands)
1997 1996
----- -----
Accrued promotions $ 3,981 $ 2,704
Accrued compensation 3,648 2,961
Container deposits 1,114 3,017
Other accrued liabilities 9,137 8,852
--------- ---------
$ 17,880 $ 17,534
========= =========
25
26
4. DEBT
Debt at May 3, 1997 and April 27, 1996 consists of the following:
(In thousands)
1997 1996
----- -----
Senior Notes (see below) $ 33,333 $ 41,667
Credit Facilities (see below) 13,000 17,783
Term Loan Facility (see below) 8,300 2,000
Other (including capital leases) 1,118 2,047
--------- ---------
Total 55,751 63,497
Less current portion (725) (929)
--------- ---------
Long-term portion $ 55,026 $ 62,568
========= =========
A subsidiary of NBC has outstanding 9.95% unsecured senior notes in the original
principal amount of $50 million (the "Senior Notes") payable in annual principal
installments of $8.3 million through November 1, 2000. Additionally, the
subsidiary has $35 million unsecured revolving credit facilities (the "Credit
Facilities") and a $16.6 million unsecured term loan facility ("Term Loan
Facility") with banks. The Credit Facilities expire August 31, 1998, and bear
interest at 1/2% below the bank's reference rate or 1% above LIBOR, at the
subsidiary's election. The Term Loan Facility is repayable in installments from
February 1998 through November 1998, and bears interest at the bank's reference
rate or 1 1/4% above LIBOR, at the subsidiary's election. The Company intends to
utilize its existing long-term credit facilities to fund the next principal
payment due on its Senior Notes.
Certain of the Company's debt agreements contain restrictions which require the
subsidiary to maintain certain financial ratios and minimum net worth, and limit
the subsidiary with respect to incurring certain additional indebtedness, paying
cash dividends and making certain loans, advances or other investments. At May
3, 1997, net assets of the subsidiary totaling approximately $43 million were
restricted from distribution. The Company was in compliance with all loan
covenants and restrictions; such restrictions are not expected to have a
material adverse impact on the operations of the Company.
26
27
The long-term portion of debt at May 3, 1997, matures as follows:
(In thousands)
Fiscal 1999 $ 38,360
Fiscal 2000 8,333
Fiscal 2001 8,333
--------
Total $ 55,026
========
5. ACQUISITIONS
In March 1996, the Company acquired certain of the United States assets of
Everfresh Beverages, Inc. ("Everfresh"), a manufacturer of a variety of juice
products. The acquisition of these assets, which include a beverage
manufacturing facility, the Everfresh, Sundance and Rich n' Ready trademarks,
receivables and inventory, has been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
purchased based upon the fair values at the date of acquisition. In October
1996, the Company concluded the acquisition of substantially all of the assets
of Winterbrook Corporation, which has as its principal product the LaCROIX
sparkling and still water product line. The operating results of Everfresh and
Winterbrook have been included in the consolidated statement of income from the
dates of acquisition.
Net cash expended for acquired assets and indebtedness in fiscal year 1996 was
$11.4 million, comprised of assets purchased of $14.4 million (including
goodwill and other intangibles of $3.7 million) less liabilities assumed of $3.0
million.
6. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES
On October 25, 1996, the Company paid a 100% stock dividend to its shareholders
of record on September 9, 1996, effected as a 2 for 1 stock split. As a result
of the stock split, approximately $92,000, representing the par value of the
shares issued, was reclassified from additional paid-in capital to common stock.
On November 9, 1994, the Company distributed three shares of common stock for
each share outstanding to shareholders of record on October 24, 1994 pursuant to
a 4 for 1 stock split effected as a stock dividend. As a result of the stock
split, approximately $95,000, representing the par value of the shares issued,
was reclassified from additional paid-in capital to common stock. Average shares
outstanding, stock option data and per share data presented in these financial
statements have been adjusted retroactively for the effects of the stock splits.
The Company accrued preferred stock dividends of $788,000 and $1,050,000 in
fiscal years 1996 and 1995, respectively. Preferred stock dividends paid in
fiscal year 1996 include $1,050,000 of dividends accrued in fiscal 1995. In
February 1996, the Company purchased all of its outstanding preferred stock for
$5,100,000, which has been classified as held in treasury. See Note 12.
27
28
In June 1996, the Company purchased 100,000 shares of common stock on the open
market. Such shares are classified as held in treasury.
Since May 1, 1992, the Company has been party to a management agreement with
Corporate Management Advisers, Inc. ("CMA"), a corporation owned by the
Company's Chairman and Chief Executive Officer. Under the agreement, the
employees of CMA provide the Company and its subsidiaries with corporate
finance, strategic planning, business development and other management services
for an annual base fee equal to one percent of consolidated net sales, plus
incentive compensation based on certain factors to be determined by the
Compensation Committee of the Company's Board of Directors. The Company incurred
a fee to CMA of $3,854,000 for fiscal 1997, $3,504,000 for fiscal 1996, and
$3,487,000 for fiscal 1995. No incentive compensation has been incurred or
approved under the management agreement since its inception. The management
agreement, pursuant to its terms, currently expires on December 31, 1997.
Included in accounts payable in the accompanying consolidated balance sheets at
May 3, 1997 and at April 27, 1996 were amounts due CMA of $1,001,000 and
$708,000, respectively.
7. INCOME TAXES
The provision for income taxes (principally federal) consists of the following:
(In thousands)
1997 1996 1995
------ ------ ------
Current $3,289 $4,520 $5,136
Deferred 2,991 1,000 363
------ ------- ------
Total $6,280 $5,520 $5,499
====== ====== ======
In the following table, the statutory federal income tax rate is reconciled to
the Company's effective tax rates:
1997 1996 1995
----- ----- -----
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes 1.7 2.2 2.3
Goodwill and other permanent differences .9 .9 .6
Other, net (.6) (.1) 1.1
---- ---- ----
Effective income tax rate 37.0% 38.0% 39.0%
==== ==== ====
28
29
The following table is a summary of the significant components of the Company's
deferred tax assets and liabilities as of May 3, 1997 and April 27, 1996:
(In thousands)
1997 1996
------ ------
Deferred tax assets:
Accrued expenses $ 3,699 $ 4,575
Property and intangibles 588 339
Capital loss carryforward 826 833
Valuation allowance (826) (833)
------- -------
Total deferred tax assets 4,287 4,914
Deferred tax liabilities:
Property and intangibles 9,773 8,089
------- -------
Net deferred tax liabilities $ 5,486 $ 3,175
======= =======
Capital loss carryforwards, including accrued expenses, total $2,359,000 and
$2,379,000 for fiscal 1997 and 1996, respectively, and expire at various dates,
the earliest of which is April 1999. A valuation allowance has been recorded to
offset the deferred tax assets resulting from capital losses since management
deems it is more likely than not that the related deferred tax assets will not
be realized.
8. LEASES
Future minimum rental commitments for noncancelable operating and capital leases
at May 3, 1997 are as follows:
(In thousands)
Operating Capital
--------- -------
1998 $ 3,278 $207
1999 2,579 61
2000 2,198 -
2001 1,893 -
2002 1,764 -
------- ----
Total minimum lease payments $11,712 268
=======
Less: Amounts representing interest (17)
----
Present value of future minimum lease payments under capital leases $251
====
29
30
Rental expense was $3,907,000 for fiscal 1997, $3,132,000 for fiscal 1996, and
$2,116,000 for fiscal 1995.
9. INCENTIVE AND RETIREMENT PLANS
Long-term incentive compensation for executives is administered through the
Company's 1991 Omnibus Incentive Plan (the "Omnibus Plan"), which provides for
compensatory awards consisting of (i) stock options or stock awards for up to
1,400,000 shares of common stock of the Company, (ii) stock appreciation rights,
dividend equivalents, other stock-based awards in amounts up to 1,400,000 shares
of common stock of the Company and (iii) performance awards consisting of any
combination of the above. The Omnibus Plan is designed to provide an incentive
to the officers (including those who are also directors) and certain other key
employees of the Company by making available to them an opportunity to acquire a
proprietary interest or to increase such interest in the Company. The number of
shares which may be issued under stock based awards to an individual is limited
to 700,000 during any year. Awards may be granted for no cash consideration or
such minimal cash consideration as may be required by law. Options generally
vest over a five year period and expire after ten years.
In addition, pursuant to a Special Stock Option plan, the Company has authorized
the issuance of options to purchase up to an aggregate of 240,000 shares of
common stock. Options may be granted for such consideration as determined by the
Board or a Committee of the Board. The Company has also authorized on an annual
basis the issuance of options to purchase up to 25,000 shares of common stock to
be issued at the direction and discretion of the Chairman.
30
31
The following is a summary of stock option activity:
1997
-----------------
Weighted
Average
Exercise 1996 1995
Shares Price Shares Shares
--------- -------- -------- ---------
Options outstanding at beginning of year 965,900 $1.82 883,200 363,600
Options granted 192,700 5.00 174,100 555,600
Options exercised (38,240) 1.41 (20,800) (36,000)
Options canceled -- -- (70,600) --
--------- ------- -------
Options outstanding at end of year 1,120,360 2.38 965,900 883,200
========= ======= =======
Options exercisable at end of year 479,340 361,600 276,400
Options available for grant at end of year 449,600 642,300 745,800
The following is a summary of stock options outstanding at May 3, 1997:
Options Outstanding Options Exercisable
------------------------------- ---------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise Price Life Shares Price Shares Price
- ------------------ ---------- ----------- --------- ------- ---------
$.13 5 years 56,000 $ .13 56,000 $ .13
$ .38-$.63 5 years 89,600 .51 89,600 .51
$1.25 5 years 56,000 1.25 56,000 1.25
$1.97-$2.56 7 years 726,060 2.18 277,740 2.15
$5.00 9 years 192,700 5.00 - -
--------- -------
1,120,360 2.38 479,340 1.50
========= =======
The option price range for all options outstanding at the end of the fiscal year
was $.13 to $5.00 for 1997, $.13 to $2.56 for 1996 and $.13 to $2.25 for 1995.
The option price range for options exercised during the fiscal year was $.63 to
$2.38 for 1997, $.63 to $2.10 for 1996 and $.13 to $1.25 for 1995. The weighted
average fair value of options granted during the fiscal year was $3.61 for 1997
and $1.71 for 1996.
31
32
As permitted under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123, "Accounting and Disclosure of Stock-Based
Compensation" ("SFAS 123"), the Company has elected to follow Accounting
Principles Board Opinion NO. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and related interpretations, in accounting for stock-based awards to
employees. Under APB 25, the Company generally recognizes no compensation
expense with respect to such awards, unless the exercise price of options
granted is less than the market price on the date of grant.
Pro forma information regarding net income and earnings per share is required by
SFAS 123 for awards granted after December 15, 1994, as if the Company had
accounted for its stock-based awards to employees under the fair value method of
SFAS 123. The fair value of the Company's stock option grants to employees was
estimated using a Black-Scholes option pricing model with the following
assumptions used for grants: expected life of 10 years; volatility factor of
53%, risk free interest rates of 6.06% and 6.84% for fiscal 1997 and 1996,
respectively; and no dividend payments. The Black-Scholes option valuation model
was developed for use in estimating the fair value of traded options which have
no vesting restrictions and are fully transferable. In addition, the
Black-Scholes model requires the input of highly subjective assumptions
including the expected stock price volatility and the expected holding period of
options. Because the Company's stock options granted to employees have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models may not
necessarily provide a reliable single measure of the fair value of its stock
option grants to employees.
Had compensation cost for the Company's options plans been determined and
recorded consistent with the Black-Scholes option pricing model in accordance
with SFAS 123, the Company's net income and earnings per share for both fiscal
1997 and 1996 would have been reduced on a pro forma basis by less than
$100,000, or $.01 per share.
The fiscal 1997 and 1996 pro forma effect on net income and earnings per share
is not necessarily indicative of the pro forma effect in the future years
because it does not take into consideration pro forma compensation expense
related to grants made prior to fiscal 1996. In addition, the Company
anticipates granting additional options in future years.
In March 1997, the Company's Board of Directors adopted the Key Employee Equity
Partnership Program ("KEEP"), which provides for the granting of stock options
to key employees and officers of the Company. Participants who purchase shares
of the Company's stock in the open market receive grants of stock options equal
to 50% of the number of shares purchased, up to a maximum of 6,000 shares in any
two-year period. Options under the KEEP program are automatically forfeited in
the event of the sale of shares originally acquired by the participant. The
options are granted at an initial exercise price of 60% of the purchase price
paid for the shares acquired and reduces to the par value of the Company's stock
at the end of the six-year vesting period. No options were granted as of May 3,
1997. The Company does not expect the impact of the KEEP program to be material
to its financial position or results of operations.
32
33
The Company's 1991 Stock Purchase Plan (the "Stock Purchase Plan") adopted on
January 20, 1991 provides for the purchase of up to 640,000 shares of common
stock by employees of the Company who (1) have been employed by the Company for
two years, (2) are not part-time employees of the Company and (3) are not owners
of five percent (5%) or more of the common stock of the Company. As of May 3,
1997, no shares have been issued under the Stock Purchase Plan.
The Company contributes to various defined contribution retirement plans (which
cover employees under various collective bargaining agreements) and
discretionary profit sharing plans (which cover all non-union employees).
Contributions were $1,095,000 for fiscal 1997, $1,173,000 for fiscal 1996 and
$1,118,000 for fiscal 1995.
10. FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of May 3, 1997. Such amounts have not been comprehensively
reviewed or updated since that date and, therefore, may not represent current
estimates of fair value.
The fair value of debt has been estimated using discounted cash-flow models
incorporating discount rates based on current market interest rates for similar
types of instruments or quoted market prices, when applicable. At May 3, 1997
and April 27, 1996, the difference between the estimated fair value and the
carrying value of debt instruments was not material.
11. COMMITMENTS AND CONTINGENCIES
Albert H. Kahn v. Nick A. Caporella, et al., Civil Action No. 11890 was filed in
December 1990 by a shareholder of Burnup & Sims Inc. ("BSI"), now MasTec, Inc.,
in the Court of Chancery of the State of Delaware in and for New Castle County
against NBC, the members of the Board of Directors of BSI and against BSI. In
May 1993, plaintiff amended its class action and shareholder derivative
complaint (the "Amended Complaint"). The class action claims allege, among other
things, that the Board of Directors of BSI, and NBC, as its largest shareholder,
breached their respective fiduciary duties in approving (i) the dividend by BSI
of its shares of NBC common stock (the "Distribution") and (ii) the exchange of
certain shares of BSI's common stock held by NBC for certain indebtedness of NBC
held by BSI (the "Exchange"; the Distribution and the Exchange are hereafter
referred to as the "1991 Transaction"), in allegedly placing the interests of
NBC ahead of the interests of other shareholders of BSI. The derivative action
claims allege, among other things, that the Board of Directors of BSI breached
their fiduciary duties by approving executive officer compensation arrangements,
by financing NBC's operations on a current basis, and by permitting the
interests of BSI to be subordinated to those of NBC. In the lawsuit, plaintiff
seeks to rescind the 1991 Transaction and to recover unspecified damages. The
defendants, including the Company, have moved to dismiss the
33
34
actions for failure to make a demand and state a claim upon which relief can be
granted. The motion is still pending.
In November 1993, plaintiff filed a class action and derivative complaint, Civil
Action No. 13248 (The "1993 Complaint") against the Company, BSI, the members of
the Board of Directors of BSI, and certain other defendants (referred to as
"Other Defendants"). In December 1993, plaintiff amended the 1993 Complaint (the
"1993 Amended Complaint"). The 1993 Amended Complaint alleges, among other
things, that the Board of Directors of BSI, and NBC, as BSI's largest
stockholder, breached their respective fiduciary duties by approving an
agreement dated October 15, 1993, as amended, between BSI and the Other
Defendants (the "Acquisition Agreement") and the exchange of 3,153,847 shares of
BSI common stock owned by the Company for certain indebtedness owed to BSI by
the Company (the "Redemption") which, according to the allegations of the 1993
Complaint, benefits the President and Chief Executive Officer of NBC at the
expense of BSI's stockholders. On November 29, 1993, plaintiff filed a motion
for an order preliminarily and permanently enjoining the transactions under the
Acquisition Agreement and the Redemption. On March 7, 1994, the court heard oral
arguments with respect to plaintiff's motion to enjoin the transactions, and on
March 10, 1994, the court denied plaintiff's request for injunctive relief
finding that plaintiff had not established a likelihood of success on the merits
and that, in any event, the equities did not favor the imposition of injunctive
relief.
The Company believes that the allegations in the complaint, the Amended
Complaint, the 1993 Complaint and the 1993 Amended Complaint are without merit,
and intends to vigorously defend these actions.
The Company is a defendant in various other lawsuits arising in the ordinary
course of business.
In the opinion of management, the ultimate disposition of the foregoing lawsuits
will not have a material adverse effect on the Company's consolidated financial
position or results of operations.
In the ordinary course of its business, the Company enters into commitments for
the supply of certain raw materials, none of which are material to the Company's
financial position.
12. EARNINGS PER SHARE
For periods prior to fiscal 1997, earnings applicable to common shares is
comprised of net income less preferred dividends and, for fiscal 1996, a
non-recurring, non-cash component of $7.6 million arising from the Company's
purchase of all of its outstanding preferred stock. This amount represents the
difference of the carrying value of the preferred stock over its purchase price.
The accounting treatment of the realized discount on the preferred stock
purchase is based upon the SEC staff's interpretation of generally accepted
accounting principles relating to such transactions.
34
35
The following table provides a breakdown of the components of earnings
applicable to common shares and earnings per share for each of the fiscal years
ended May 3, 1997, April 27, 1996 and April 29, 1995:
(In thousands, except per share amounts)
1997 1996 1995
------ ------ ------
Income from continuing operations $10,693 $ 9,004 $ 8,601
Preferred dividends -- (788) (1,050)
------- -------- --------
10,693 8,216 7,551
Difference of carrying value of preferred
shares over cost of shares purchased -- 7,600 --
------- -------- --------
Earnings applicable to common shares $10,693 $ 15,816 $ 7,551
======= ======== ========
Components of earnings per common
shares arising from:
Income from continuing operations $ . 56 $ .44 $ .41
Purchase of preferred shares -- .41 --
------- -------- --------
$ .56 $ .85 $ .41
======= ======== ========
Average shares outstanding 19,109 18,606 18,598
======= ======== ========
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which
establishes standards for computing and presenting earnings per share. SFAS 128
is required to be adopted for periods ending after December 15, 1997, including
interim periods. In addition to the Company's current presentation of net income
per share, SFAS 128 will require the Company to present diluted net income per
share, which includes the dilutive effect of stock options. The Company does not
believe the additional disclosure of diluted net income per share will
materially differ from its present earnings per share disclosures.
35
36
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- ------- ------- ---------
1997
Net sales $110,204 $94,968 $75,113 $105,142
Gross profit 32,293 27,404 21,881 28,396
Net income 5,050 2,627 628 2,388
Earnings per common share $ .27 $ .14 $ .03 $ .12
1996
Net sales $101,660 $84,564 $67,245 $ 96,962
Gross profit 25,401 21,248 16,608 25,315
Net income 4,375 2,181 440 2,008
Components of earnings per common share:
Income from continuing operations $ .22 $ .10 $ .01 $ .11
Purchase of preferred shares* -- -- -- .41
-------- ------- ------- --------
$ .22 $ .10 $ .01 $ .52
======== ======= ======= ========
* Fourth quarter earnings per share includes the difference of the
carrying value of the Company's preferred stock over its purchase
price. See Note 12.
36
37
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and Board of Directors
National Beverage Corp.:
We have audited the accompanying consolidated balance sheets of National
Beverage Corp. and subsidiaries as of May 3, 1997 and April 27, 1996, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended May 3, 1997. Our audits also
included the financial statement schedules for each of the three years in the
period ended May 3, 1997 listed in Item 14(a)2 herein. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of National Beverage
Corp. and subsidiaries as of May 3, 1997 and April 27, 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended May 3, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Miami, Florida
July 31, 1997
37
38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
38
39
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning directors and the nominees for director of NBC is
included under the caption "Election of Directors" and "Information as to
Nominees and Other Directorships" in NBC's Proxy Statement for the Annual
Meeting of Shareholders to be filed on or before September 2, 1997, and is
hereby incorporated by reference.
The following table sets forth certain information with respect to the officers
of the Registrant as of May 3, 1997.
Name Age Position with Company
Nick A. Caporella (1) 61 Chairman of the Board,
Chief Executive Officer,
President and Chief
Financial Officer
Joseph G. Caporella (2) 37 Executive Vice President
and Secretary
George R. Bracken (3) 52 Vice President and Treasurer
Dean A. McCoy (4) 40 Vice President - Controller
Keith R. Brockman (5) 41 Director of Taxes
(1) Mr. Nick A. Caporella has served as Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, and Director since the Company's inception
in 1985. Mr. Caporella also serves as Chairman of the Nominating Committee.
Prior to March 11, 1994, Mr. Caporella served as President and Chief
Executive Officer (since 1976) and Chairman of the Board (since 1989) of
Burnup & Sims Inc. Since January 1, 1992, Mr. Caporella's services are
provided to the Company by Corporate Management Advisers, Inc., a company
which he owns.
(2) Mr. Joseph G. Caporella has served as Executive Vice President and Secretary
since January 1991 and Director since January 1987. From January 1990 to
January 1991, he served as Executive Vice President of BevCo Sales, Inc., a
wholly-owned subsidiary of the Company. Joseph G. Caporella is the son of
Nick A. Caporella.
(3) Mr. George R. Bracken was named Vice President and Treasurer in October
1996. Since 1994, Mr. Bracken's services have been provided to the
Company by Corporate Management Advisers, Inc. Prior to that date, Mr.
Bracken served as Vice President & Treasurer of Burnup & Sims Inc.
39
40
(4) Mr. Dean A. McCoy was named Vice President - Controller in July 1993 and,
prior to that, served as Controller since joining the Company in December
1991. Prior to joining the Company, Mr. McCoy served as Controller of Steego
Corporation since December 1988.
(5) Mr. Keith R. Brockman has served as Director of Taxes since joining the
Company in July 1991. Prior to joining the Company, Mr. Brockman served as
Director of Taxes of Milton Roy Company since January 1988.
All officers serve until their successors are chosen and may be removed at any
time by the Board of Directors. Officers are normally elected each year at the
first meeting of the Board of Directors after the annual meeting of
shareholders.
40
41
ITEM 11. EXECUTIVE COMPENSATION
National Beverage Corp. 1997 Proxy Statement, which will be filed
on or before September 2, 1997, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
National Beverage Corp. 1997 Proxy Statement, which will be filed
on or before September 2, 1997, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
National Beverage Corp. 1997 Proxy Statement, which will be filed
on or before September 2, 1997, is incorporated herein by
reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements Page
The following consolidated financial statements of
National Beverage Corp. and subsidiaries are included herein:
Consolidated Balance Sheets 18
Consolidated Statements of Income 19
Consolidated Statements of Shareholders' Equity 20
Consolidated Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22
Report of Independent Accountants 37
2. Financial Statement Schedules
The following are included herein:
Schedule I - Condensed Financial Information of Registrant 47
Schedule II - Valuation and Qualifying Accounts 51
Schedules other than those listed above have been omitted since they
are either not applicable, not required or the information is
included elsewhere herein.
3. Exhibits
See Index to Exhibits which follows.
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ended May 3, 1997.
41
42
EXHIBIT INDEX
Exhibit No. Description
3.1 Restated Certificate of Incorporation (1)
3.2 Amended and Restated By-Laws (1)
10.1 Management Agreement between the Company and Corporate
Management Advisers, Inc. (2)
10.2 National Beverage Corp. Investment and Profit Sharing
Plan (1)
10.3 National Beverage Corp. 1991 Omnibus Incentive Plan (2)
10.4 National Beverage Corp. 1991 Stock Purchase Plan (2)
10.5 Note Purchase Agreement, dated June 5, 1992, among
NewBevCo, Inc. and Purchasers (3)
10.6 Credit Agreement, dated as of September 23, 1993, between
NewBevCo, Inc. and the lender therein (4)
10.7 Agreement, dated March 11, 1994, between Burnup & Sims
Inc. and National Beverage Corp. (5)
10.8 First Amendment to Credit Agreement, dated November 10,
1994, between NewBevCo and lender therein (6)
10.9 Second Amendment to Credit Agreement, dated November 21,
1995, between NewBevCo and lender therein (7)
10.10 Third Amendment to Credit Agreement, dated February 29,
1996, between NewBevCo and lender therein (8)
10.11 Fourth Amendment to Credit Agreement, dated April 24,
1996, between NewBevCo and lender therein (8)
10.12 Fifth Amendment to Credit Agreement, dated November 14,
1996, between NewBevCo and lender therein (9)
10.13 Term Loan Credit Agreement, dated February 29, 1996,
between NewBevCo and lender therein (8)
42
43
10.14 Letter Modification to Term Loan Credit Agreement dated
April 24, 1996, between NewBevCo and lender therein (8)
10.15 Term Note dated February 18, 1997, between NewBevco and
lender therein (11)
10.16 First Amendment to Term Loan Credit Agreement dated
February 18, 1997, between NewBevco and lender therein
(11)
10.17 Asset Purchase Agreement of Everfresh Beverages, Inc. (8)
10.18 Amendment No. 1 to the National Beverage Corp. Omnibus
Incentive Plan (8)
10.19 Special Stock Option Plan (10)
10.20 Amendment No. 2 to the National Beverage Corp. Omnibus
Incentive Plan (11)
10.21 Key Employee Equity Partnership Program (11)
21.1 Subsidiaries of Registrant (11)
23.1 Consent of Independent Accountants (11)
27.0 Financial Data Schedule (for SEC use only)(11)
(1) 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.
(2) 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.
(3) 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, 1992 and is
incorporated herein by reference.
(4) Previously filed with the Securities and Exchange Commission as an exhibit
to Quarterly Report on Form 10-Q for the fiscal period ended October 30,
1993 and is incorporated herein by reference.
(5) 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,
1994 and is incorporated herein by reference.
43
44
(6) 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,
1994 and is incorporated herein by reference.
(7) Previously filed with the Securities and Exchange Commission as an exhibit
to Quarterly Report on Form 10-Q for the fiscal period ended January 27,
1996 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 April 27, 1996 and
is incorporated herein by reference.
(9) Previously filed with the Securities and Exchange Commission as an exhibit
to Quarterly Report of Form 10-Q for the fiscal period ended January 25,
1997 and is incorporated herein by reference.
(10) 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.
(11) Filed herein.
44
45
SIGNATURES
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.
(Registrant)
\s\ Dean A. McCoy Date: July 31, 1997
- -------------------------------------------------
Dean A. McCoy
Vice President - Controller
(Principal Accounting Officer)
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 and on the dates indicated.
\s\ Nick A. Caporella Date: July 31, 1997
- -------------------------------------------------
Nick A. Caporella
President and Chief Executive Officer and
Chairman of the Board (Principal Executive and
Financial Officer)
45
46
\s\ Joseph G. Caporella Date: July 31, 1997
- ----------------------------------------
Joseph G. Caporella
Executive Vice President and Secretary
\s\ S. Lee Kling Date: July 31, 1997
- ----------------------------------------
S. Lee Kling
Director
\s\ Joseph P. Klock, Jr. Date: July 31, 1997
- ----------------------------------------
Joseph P. Klock, Jr.
Director
46
47
Schedule I
NATIONAL BEVERAGE CORP. (PARENT COMPANY)
CONDENSED BALANCE SHEETS
AS OF MAY 3, 1997 AND APRIL 27, 1996
(In thousands, except share amounts)
===============================================================================
1997 1996
-------- -------
ASSETS
- ------
CURRENT ASSETS:
Cash and equivalents $ 219 $ 620
Deferred and refundable income taxes 3,150 4,009
-------- --------
Total current assets 3,369 4,629
INVESTMENT IN SUBSIDIARIES - NET 64,197 52,734
-------- --------
TOTAL $ 67,566 $ 57,363
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,227 $ 2,129
Income taxes payable 1,391 1,377
-------- --------
Total current liabilities 3,618 3,506
DEFERRED INCOME TAXES 7,245 6,805
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: 21,990,492 shares in 1997 and 12,741,488 shares in 1996;
Outstanding: 18,459,768 shares in 1997 and 9,310,764 shares in 1996) 220 127
Additional paid-in capital 14,943 14,873
Retained earnings 54,871 44,178
Treasury stock-at cost:
Preferred stock (150,000 shares) (5,100) (5,100)
Common stock (3,530,724 shares in 1997 and 3,430,724 shares in 1996) (8,381) (7,176)
-------- --------
Total shareholders' equity 56,703 47,052
-------- --------
TOTAL $ 67,566 $ 57,363
======== ========
See accompanying Notes to Condensed Financial Statements.
47
48
Schedule I
(Continued)
NATIONAL BEVERAGE CORP. (PARENT COMPANY)
CONDENSED STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED MAY 3, 1997, APRIL 27, 1996, AND APRIL 29, 1995
(In thousands, except per share amounts)
================================================================================
1997 1996 1995
---- ---- ----
Equity in Pre-tax Earnings of Consolidated Subsidiaries $16,973 $14,581 $14,164
Interest Expense, Net -- 57 64
------- ------- -------
Income Before Income Taxes 16,973 14,524 14,100
Provision for Income Taxes 6,280 5,520 5,499
------- ------- -------
Net Income $10,693 $ 9,004 $ 8,601
======= ======= =======
Components of Earnings Per Share (a):
Income From Continuing Operations $ 0.56 $ 0.44 $ 0.41
Purchase of Preferred Shares - 0.41 --
------- ------- -------
$ 0.56 $ 0.85 $ 0.41
======= ======= =======
Average Shares Outstanding 19,109 18,606 18,598
(a) - Earnings per share is computed from earnings applicable to common
shares, which, for periods prior to fiscal 1997, consists of net income
less preferred dividends and, for 1996, $7,600,000 which represents the
difference of the carrying value of the Company's preferred stock over
its purchase price (see Note 12 of Notes to Consolidated Financial
Statements). Earnings applicable to common shares was $10,693,000,
$15,816,000, and $7,551,000 for the years ended May 3, 1997, April 27,
1996, and April 29, 1995, respectively.
See accompanying Notes to Condensed Financial Statements.
48
49
Schedule I
(Continued)
NATIONAL BEVERAGE CORP. (PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED MAY 3, 1997, APRIL 27, 1996, AND APRIL 29, 1995
(In thousands)
===============================================================================
1997 1996 1995
------- ------- -------
OPERATING ACTIVITIES:
Net income $ 10,693 $ 9,004 $ 8,601
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Deferred income tax provision 2,991 1,000 363
Undistributed equity in net income of
consolidated subsidiaries (10,693) (9,041) (8,510)
Changes in accounts payable and accrued liabilities 98 (300) 461
-------- ------- -------
Net cash provided by operating activities 3,089 663 915
-------- ------- -------
FINANCING ACTIVITIES:
Advances from (to) subsidiaries (2,339) 7,278 (637)
Debt repayments -- (703) --
Purchase of common stock (1,205) -- --
Preferred stock dividends paid -- (1,838) (263)
Purchase of preferred stock -- (5,100) --
Proceeds from stock options exercised 54 16 14
-------- ------- -------
Net cash used in financing activities (3,490) (347) (886)
-------- ------- -------
NET INCREASE (DECREASE) IN CASH
AND EQUIVALENTS (401) 316 29
CASH AND EQUIVALENTS - BEGINNING OF YEAR 620 304 275
-------- ------- -------
CASH AND EQUIVALENTS - END OF YEAR $ 219 $ 620 $ 304
======== ======= =======
Non-cash financing activities are described in Note 6 of Notes to the
Consolidated Financial Statements.
See accompanying Notes to Condensed Financial Statements.
49
50
Schedule I
(Continued)
NATIONAL BEVERAGE CORP. (PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
The accompanying parent company financial statements of National Beverage Corp.
("NBC") should be read in conjunction with the consolidated financial statements
of NBC and its consolidated subsidiaries (the "Company").
1. Basis of Presentation
NBC is a holding company for various wholly-owned subsidiaries which are
engaged in the manufacture and distribution of soft drinks and other
beverages. NBC's investments in its wholly-owned subsidiaries are reported
in these parent company financial statements using the equity method of
accounting.
2. Long-Term Debt
No long-term debt was outstanding at May 3, 1997 or at April 27, 1996.
A subsidiary of NBC has unsecured senior notes and bank credit facilities
outstanding. See Note 4 of Notes to Consolidated Financial Statements.
Certain of these debt agreements contain restrictions which, among other
things, limit the subsidiary from paying cash dividends to the parent. As
of May 3, 1997, net assets of the subsidiary totaling approximately $43
million were restricted from distribution.
3. Capital Stock and Transactions with Related Parties
See Note 6 of Notes to Consolidated Financial Statements for information
related to capital stock and transactions with related parties.
4. Commitments and Contingencies
See Note 11 of Notes to the Consolidated Financial Statements for
information related to legal proceedings.
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Schedule II
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Fiscal Years Ended May 3, 1997, April 27, 1996, and April 29, 1995
(In thousands)
Balance at Additions Charged Deductions: Balance
Beginning (Credited) to Net (Charge-offs) at end of
Description of Period Expenses Recoveries Period
- -------------- ------------- ---------------- ----------------- ----------
Year Ended May 3, 1997:
Allowance for doubtful
accounts receivable $694 $ 51 $(137) $608
==== ==== ===== ====
Year Ended April 27, 1996:
Allowance for doubtful
accounts receivable $708 $(31) $ 17 $694
==== ==== ===== ====
Year Ended April 29, 1995:
Allowance for doubtful
accounts receivable $828 $ 93 $(213) $708
==== ==== ===== ====
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