================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2002
SPARKLING SPRING WATER GROUP LIMITED
19 Fielding Avenue, Dartmouth, Nova Scotia, Canada B3B 1C9
-----------------------------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F]
Form 20-F X Form 40-F
----- -----
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3 - 2(b) under the Securities Exchange Act of
1934.]
Yes No X
----- -----
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sparkling Spring Water Group Limited
By: /s/ David M. Arnold
-------------------------------------
Name: David M. Arnold
Title: Vice President Finance
Date: May 31, 2002
================================================================================
Sparkling Spring Water Group Limited
Quarterly Report On Form 6 - K
For The Quarter Ended March 31, 2002
INDEX
Page
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2002
and December 31, 2001.............................................. 1
Consolidated Statements of Operations for the three months
ended March 31, 2002 and 2001...................................... 2
Consolidated Statements of Cash Flows for the three months
ended March 31, 2002 and 2001..................................... 3
Notes to Consolidated Financial Statements......................... 4
Item 2. Management's Discussion And Analysis Of
Financial Condition And Results Of Operations...................... 7
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
March 31, December 31,
2002 2001
----------- ------------
ASSETS (Unaudited)
Current
Cash and cash equivalents $ 43 $ 287
Accounts receivable 11,497 11,639
Inventories [note 4] 1,622 1,508
Prepaid expenses 1,921 1,964
-------- --------
Total current assets 15,083 15,398
Fixed assets 41,109 41,266
Goodwill and deferred charges 46,946 47,322
Other assets 888 1,872
-------- --------
Total assets $104,026 $105,858
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIENCY)
Current
Accounts payable and accrued liabilities $ 10,963 $ 8,419
Income tax payable 281 377
Customer deposits 6,480 6,684
Unearned revenue 3,457 3,772
Current portion of long-term debt 3,984 5,723
-------- --------
Total current liabilities 25,165 24,975
-------- --------
Obligations under capital leases and other debt 2,678 2,858
Obligations under non-compete agreements 113 126
Senior bank debt [note 7] 26,326 27,617
Subordinated notes payable 81,105 81,105
-------- --------
Total long-term liabilities 110,222 111,706
-------- --------
Shareholder's equity (deficiency)
Capital Stock
Issued and outstanding:
Class D common shares - 1,383,328 5,504 5,517
Class E common shares - 5,860 156 157
-------- --------
5,660 5,674
Additional paid-in capital 1,809 1,809
Cumulative translation adjustment (6,813) (6,425)
Deficit (32,017) (31,881)
-------- --------
Total shareholder's equity (deficiency) (31,361) (30,823)
-------- --------
Total liabilities and
shareholder's equity (deficiency) $104,026 $105,858
======== ========
See accompanying notes
1
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands of U.S. dollars) Three Three
Months Ended Months Ended
March 31, March 31,
2002 2001
------------ ------------
Revenue:
Water $11,595 $11,304
Rental 3,959 3,643
Other 2,023 2,126
------- -------
Total revenue 17,577 17,073
------- -------
Cost of sales:
Water 2,077 2,220
Other 668 694
------- -------
Total cost of sales 2,745 2,914
------- -------
Gross profit 14,832 14,159
Expenses:
Selling, delivery and administrative 9,288 9,704
Integration and restructuring expenses [note 8] -- 115
Depreciation 2,564 2,391
Amortization 8 464
------- -------
Operating profit 2,972 1,485
Interest and related expenses 2,915 2,999
------- -------
Income (loss) before income taxes 57 (1,514)
Provision for income taxes (193) (180)
------- -------
Net loss (136) (1,694)
Other comprehensive loss:
Foreign currency translation adjustment (388) (1,877)
------- -------
Comprehensive loss $ (524) $(3,571)
======= =======
Basic and diluted loss per share $ (0.10) $ (1.22)
======= =======
See accompanying notes
2
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Three
(in thousands of U.S. dollars) Months Ended Months Ended
March 31, March 31,
2002 2001
------------ ------------
OPERATING ACTIVITIES
Net loss $ (136) $(1,694)
Items not requiring cash
Depreciation 2,564 2,391
Amortization 8 464
Amortization of deferred financing costs 115 114
------- -------
2,551 1,275
Net change in non-cash working capital balances 1,998 2,344
------- -------
Cash provided by operating activities 4,549 3,619
------- -------
INVESTING ACTIVITIES
Purchase of fixed assets, net (2,773) (2,960)
------- -------
FINANCING ACTIVITIES
Repayment of long-term debt (3,001) (1,002)
Decrease (increase) in loan to parent company 996 (150)
Increase in deferred charges (37) --
Increase in other assets (12) --
Increase in other liabilities -- 130
------- -------
Cash used in financing activities (2,054) (1,022)
------- -------
Effect of foreign currency translation on cash 34 (141)
------- -------
Decrease in cash and cash equivalents during the period (244) (504)
Cash and cash equivalents, beginning of period 287 556
------- -------
Cash and cash equivalents, end of period $ 43 $ 52
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest paid $ 522 $ 544
======= =======
Income taxes paid $ 275 $ 551
======= =======
See accompanying notes
3
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 2002
(Unaudited)
1. Basis of Presentation
Sparkling Spring Water Group Limited ("Sparkling Spring" or the
"Company") is incorporated under the laws of the Province of Nova Scotia, Canada
and provides bottled water to home and office markets in British Columbia,
Alberta and the Maritime provinces of Canada, England, Scotland and the Pacific
Northwestern United States.
The Company uses the U.S. dollar as its reporting currency. Balance
sheet accounts of all non-U.S. entities which are considered to be
self-sustaining are translated into U.S. dollars at the exchange rates in effect
at the balance sheet date. Income statement accounts of all non-U.S. entities
are translated into U.S. dollars at average exchange rates prevailing during the
period. Gains and losses on translation are included in a separate component of
shareholder's equity titled "cumulative translation adjustment".
The accompanying unaudited consolidated financial statements have been
prepared on a historical cost basis by management in accordance with United
States generally accepted accounting principles for interim financial
information. Accordingly, they do not include all information and notes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the unaudited interim consolidated financial
statements of the Company reflect all adjustments necessary to present fairly
the financial position of the Company, the results of its operations and the
changes in its cash flows for the interim periods presented. All such
adjustments are of a normal recurring nature.
The accompanying consolidated financial statements should be read in
conjunction with the Audited Financial Statements for the year ended December
31, 2001 and the notes thereto contained in the Company's Annual Report on Form
20-F filed with the Securities and Exchange Commission.
2. Seasonal Nature of Business
Operating results for the three month period ended March 31, 2002 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2002 due to the seasonal nature of the business. This
seasonality results from a combination of higher unit sales of the Company's
products in the second and third quarters and the accounting for such
administrative and other overhead costs including but not limited to
depreciation, amortization and interest expense which are not significantly
impacted by business seasonality.
3. Change in Accounting Principles
Commencing in the fourth quarter of 2001, amounts received in advance
for water cooler rental leases have been deferred and recognized as revenue over
the period of the lease. In prior periods, the Company recorded revenue from
water cooler rentals when billed. The new method of accounting for water cooler
leases was adopted to more appropriately match the revenues earned from water
cooler leases to the period to which the lease relates.
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests. The Company adopted the new rules as of January 1, 2002. As a
result, the Company no longer amortizes goodwill. While the Company is currently
evaluating the provisions of the new rules related to impairment testing, it
does not expect, as of March 31, 2002, that such tests will result in any
material effect on its results of operations or financial position.
4
The following unaudited pro forma information presents a summary of the
net loss and basic and diluted loss per share as if the Company had changed its
method of accounting for water cooler rental leases and adopted SFAS No. 142 on
January 1, 2001.
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
2002 2001
-------- --------
(thousands of dollars except per share amounts)
NET LOSS
Net loss as reported $ (136) $(1,694)
Add back: Goodwill amortization -- 358
Add back: Impact of change in accounting
principle for water cooler rental leases -- 255
------- -------
Adjusted net loss $ (136) $(1,081)
======= =======
BASIC AND DILUTED LOSS PER SHARE
Basic and diluted loss per share as reported $ (0.10) $ (1.22)
Add back: Goodwill amortization -- 0.26
Add back: Impact of change in accounting
principle for water cooler rental leases -- 0.18
------- -------
Adjusted basic and diluted loss per share $ (0.10) $ (0.78)
======= =======
4. Inventories
Inventories consist of the following (thousands of dollars):
March 31, 2002 December 31, 2001
-------------- -----------------
(unaudited)
Packaging materials $ 375 $ 268
Coolers not yet in service 334 318
Goods for resale 511 554
Cooler parts 322 262
Other 80 106
------ ------
$1,622 $1,508
====== ======
5. Earnings Per Share
The weighted average number of shares used to calculate basic and
diluted loss per share is 1,389,188 for the three months ended March 31, 2002
and 2001. The effect of the exercise of outstanding options and warrants has not
been included in the computation of earnings per share as the effect would not
be dilutive.
6. Acquisitions
On May 31, 2001, the Company purchased the home and office bottled
water assets of CC Beverage (US) Corporation (CC Beverage) for approximately
$4.9 million. CC Beverage operates primarily in the north Washington State USA
market.
On November 15, 2001, the Company purchased the assets of the home and
office bottled water division of Canada's Choice for approximately $1.3 million.
Canada's Choice operated in the Calgary and Edmonton Alberta, Canada markets.
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the acquisitions of the home and office
assets of CC Beverage and Canada's Choice had
5
occurred at January 1, 2001. In addition, the pro forma information reflects the
impact of the Customer Service Agreement with Sparkling Spring Water Holdings
Limited ("Holdings"), whereby effective July 1, 2001, the home and office
customers of Polaris Water Company Inc. (a subsidiary of Holdings) are managed
by Sparkling Spring and the home and office customers of Sparkling Springs's
Cullyspring Water Co., Inc. subsidiary are managed by Holdings.
Three Months Three Months
Ended Ended
(thousands of dollars except per share amounts) March 31, 2002 March 31, 2001
-------------- --------------
Total revenue $17,577 $17,080
Net loss (136) (1,719)
Basic loss per share (0.10) (1.24)
7. Senior Bank Debt
The Company has available a $35.5 million multi-currency facility that
provides for a $15 million operating line (the "Operating Line Facility") which
is renewable annually by April 30th, an $8.5 million acquisition line maturing
April 30, 2006 (the "Acquisition Facility") and a $12 million term loan maturing
October 31, 2005 (the "Term Loan Facility") which was available for the Company
to repurchase, at its discretion, certain of the Company's outstanding 11.5%
Senior Subordinated Notes due 2007 (the "Notes"). In March, 2002, the Operating
Line Facility was renewed to April 30, 2003. The Acquisition Facility will be
reduced by varying amounts annually through April 30, 2006. The Term Loan
Facility will be reduced by $3.0 million on October 31, 2002 and varying amounts
annually thereafter to October 31, 2005. The Company has pledged as collateral a
first priority security interest granted in favor of the lenders over
substantially all of the assets of the Company and its subsidiaries. Sparkling
Spring's obligations under the facility rank senior to the payment of the Notes.
8. Integration and Restructuring Expenses
In the three months ended March 31, 2001, the Company incurred costs of
approximately $115,000 to consolidate its administrative operations in England
and Scotland to one facility in Scotland. The costs incurred related to
training, conversion of computer systems and relocation of staff.
9. Summary of Business Segments
The Company's business segments derive substantially all their revenues
from the sale of bottled water and the rental of water coolers. The Company has
identified three primary business segments: Canada, the United Kingdom and the
United States.
Segment detail is summarized as follows:
Three Three
(thousands of dollars) Months Ended Months Ended
March 31, 2002 March 31, 2001
-------------- --------------
Revenue:
Canada $ 8,689 $ 7,542
United Kingdom 5,924 5,795
United States 2,964 3,736
------- -------
$17,577 $17,073
======= =======
Net income before depreciation, amortization,
integration and restructuring expenses,
interest and income taxes:
Canada $ 2,716 $ 1,884
United Kingdom 2,153 1,820
United States 987 1,098
Unallocated corporate overhead (312) (347)
------- -------
$ 5,544 $ 4,455
======= =======
Average Exchange Rates:
Canadian Dollar $0.6271 $0.6547
U.K. Pounds Sterling $1.4260 $1.4582
6
10. Comparative Figures
Certain of the comparative figures have been reclassified to conform
with the presentation adopted in the current period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying consolidated
financial statements.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
statement of operations and other data of the Company as a percentage of
revenue.
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
-------------- --------------
Revenue 100% 100%
Cost of sales 15.6 17.1
---- ----
Gross profit 84.4 82.9
Selling, delivery and administrative 52.9 56.8
Integration and restructuring charges -- 0.7
---- ----
EBITDA 31.5 25.4
Depreciation and amortization 14.6 16.7
---- ----
Operating profit 16.9 8.7
Interest and related expenses 16.6 17.6
---- ----
Income (loss) before income taxes 0.3 (8.9)
Provision for income taxes (1.1) (1.0)
---- ----
Net loss (0.8) (9.9)
==== ====
THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2001
REVENUE. Revenue increased $0.5 million or 3.0%, to $17.6 million in
the first quarter of 2002 compared to $17.1 million in the first quarter of
2001. The increase was due to the effects of our acquisitions of the home and
office assets of CC Beverage (US) Corporation and Canada's Choice completed
during May and November 2001, respectively, and from internal growth from
increased volume in our existing home and office delivery business. The increase
was partially offset by a decrease in reported revenues of $0.5 million as a
result of unfavorable foreign currency translations to U.S. dollars due to
declines in the exchange rates of the British pound sterling and Canadian dollar
relative to the U.S. dollar. The Company's water cooler rental
7
and customer location base was 205,400 as at March 31, 2002 compared to 207,000
as at December 31, 2001 and 181,600 as at March 31, 2001.
COST OF SALES. Cost of sales decreased $0.2 million or 5.8% to $2.7
million in the first quarter of 2002 compared to $2.9 million in the first
quarter of 2001. Cost of sales as a percentage of revenue decreased from 17.1%
in the first quarter of 2001 to 15.6% in the first quarter of 2002 due to an
increase in the percentage of revenues derived from sales of the Company's
higher margin home and office water and cooler rental revenues and a decrease in
the Company's revenues from lower margin products.
SELLING, DELIVERY AND ADMINISTRATIVE EXPENSES. Selling, delivery and
administrative expenses decreased $0.4 million, or 4.3%, to $9.3 million in the
first quarter of 2002 compared to $9.7 million in the first quarter of 2001.
Selling, delivery and administrative expenses as a percentage of revenue
decreased to 52.9% in the first quarter of 2002 from 56.8% in the first quarter
of 2001. The 2002 period benefited from the absorption of approximately $0.3
million of our executive and administrative expenses by Sparkling Spring Water
Holdings Limited.
EBITDA. EBITDA increased by $1.2 million, or 27.8%, to $5.5 million in
the first quarter of 2002 from $4.3 million in the first quarter of 2001, as a
result of increased revenues combined with decreases in cost of sales and
selling, delivery and administrative expenses as a percentage of revenues. The
increase in EBITDA in the first quarter of 2002 was reduced by $0.2 million due
to significant decreases in the exchanges rates of the British pound sterling
and Canadian dollar relative to the U.S. dollar compared to the first quarter of
2001. As a percentage of revenue, EBITDA increased to 31.5% in the first quarter
of 2002 from 25.4% in the first quarter of 2001.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased $0.3 million, or 9.9%, to $2.6 million in the first quarter of 2002
from $2.9 million in the first quarter of 2001. Due to the recent accounting
standards affecting amortization of goodwill and our write-off in 2001 of the
remaining value of non-competition agreements associated with certain of our
acquisitions, amortization became an insignificant component of depreciation and
amortization in the first quarter of 2002; amortization expense in the first
quarter of 2001 was $0.5 million. Partially offsetting this decrease was a $0.2
million increase in depreciation of fixed assets as a result of the acquisitions
we completed in 2000 and 2001 and our capital expenditure program.
INTEREST AND RELATED EXPENSES. Interest and related expenses decreased
$0.1 million, or 2.8%, to $2.9 million in the first quarter of 2002 from $3.0
million in the first quarter of 2001. The decrease was the result of lower
average borrowing rates on our variable rate debt and repurchases of our senior
subordinated notes in 2001.
NET LOSS. Net loss was $0.1 million in the first quarter of 2002
compared to a net loss of $1.7 million in the first quarter of 2001. The
decrease in net loss was due principally to the increased EBITDA and reduction
in amortization expense in the first quarter of 2002 compared to the first
quarter of 2001.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have funded our capital and operating requirements
with a combination of cash flow from operations, borrowings under bank credit
facilities, the issuance of senior subordinated notes and the sale of capital
stock. We have utilized these sources of funds for operations, and to make
acquisitions, fund capital expenditures and service debt.
Net cash provided by operating activities was $4.5 million in the first
quarter of 2002 and $3.6 million in the first quarter of 2001. The increase from
the first quarter of 2001 was primarily due to a $1.2 million increase in EBITDA
which was partially offset by an increase of $0.3 million in our working capital
requirements compared to the first quarter of 2001.
8
Net capital expenditures were $2.8 million in the first quarter of 2002
and $3.0 million in the first quarter of 2001. Our capital expenditures involve
the purchase of fixed assets, such as water bottles, water coolers, delivery
trucks, bottling machines and the building of facilities. We expect that our net
capital expenditures will total approximately $8.1 million in 2002.
We believe that existing cash balances, cash generated from operations
and available borrowings under our existing credit facility will be sufficient
to finance our working capital and capital expenditure requirements for at least
the next twelve months. However, if we elect to pursue acquisition opportunities
or expand our existing operations more rapidly than we anticipate, our cash
needs may significantly increase. In that case, we may require additional
financing within that period. We cannot assure you that additional financing
will be available on satisfactory terms or at all.
SENIOR CREDIT FACILITY
Our senior credit facility consists of a $15 million operating line
which is renewable annually by April 30th, an $8.5 million acquisition facility
that matures on April 30, 2006 and a $12 million term loan that matures on
October 31, 2005. The term loan facility was used by us to repurchase certain of
our outstanding senior subordinated notes. Our operating line facility has been
renewed to April 30, 2003. Our payment obligations under the senior credit
facility are secured by a first priority security interest over substantially
all of the assets of us and our subsidiaries. As of March 31, 2002, we had
approximately $7.2 million in direct borrowings and $2.4 million in letters of
credit outstanding under the operating line facility, $8.5 million outstanding
under the acquisition facility and $11.9 million outstanding under the term
loan. In addition, we had $1.6 million in borrowings outstanding under other
local credit facilities secured by the letters of credit outstanding under our
senior credit facility. The acquisition facility is required to be reduced by
varying amounts annually through April 30, 2006. The term loan is required to be
reduced by $3.0 million on October 31, 2002, and by varying amounts annually
thereafter to October 31, 2005.
At March 31, 2002, we had $5.4 million available to borrow under the
operating line facility, $1.5 million available under the acquisition loan
facility (no amount available at April 30, 2002 when the facility was reduced
from $10 million to $8.5 million) and $0.8 million available in the aggregate
under other local credit facilities secured by letters of credit under our
senior credit facility. Amounts outstanding under the senior credit facility
bear interest at specified rates based on the Canadian prime rate, U.S. prime
rate, U.S. base rate, Sterling LIBOR and U.S. LIBOR.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests. We adopted the new rules as of January 1, 2002. As a result,
we no longer amortize goodwill; amortization of goodwill for the three months
ended March 31, 2001 was $358,000. While we are currently evaluating the
provisions of the new rules related to impairment testing, we do not expect, as
of March 31, 2002, that such tests will result in any material effect on our
results of operations or financial position.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. We are required to adopt SFAS
No. 143 as of January 1, 2003. The adoption of this Statement is not expected to
have a material impact on our financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which supercedes FASB No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". This new Statement also supercedes certain aspects of
Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations
- -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring
9
Events and Transactions", with regard to reporting the effects of a disposal of
a segment of a business. The new rule requires operating losses from
discontinued operations to be reported in future periods, as incurred. In
addition, businesses below the operating segment level may qualify for
discontinued operations treatment. We adopted the provisions of the Statement as
of January 1, 2002. Adoption of the Statement will primarily affect us if and
when qualifying future business dispositions occur.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements included in this Report that do not relate to present or
historical conditions are "forward looking statements" within the meaning of the
Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995
(the "1995 Reform Act"). Additional oral or written forward-looking statements
may be made by the Company from time to time, and such statements may be
included in documents other than this Report that are filed with the SEC. Such
forward-looking statements involve risks and uncertainties that could cause
results or outcomes to differ materially from those expressed in such
forward-looking statements. Forward-looking statements in this Report and
elsewhere may include, without limitation, statements relating to the Company's
plans, strategies, objectives, expectations, intentions and adequacy of
resources and are intended to be made pursuant to the safe harbor provisions of
the 1995 Reform Act. Words such as "believes," "forecasts," "intends,"
"possible," "expects," "estimates," "anticipates," or "plans" and similar
expressions are intended to identify forward-looking statements. Investors are
cautioned that such forward-looking statements involve risks and uncertainties
including, without limitation, the following: (i) the Company's plans,
strategies, objectives, expectations and intentions are subject to change at any
time at the discretion of the Company; (ii) the Company's ability to expand by
acquisitions is dependent upon, and may be limited by, the availability of
suitable acquisition candidates and the availability of financing therefor on
suitable terms; (iii) the Company's ability to obtain financing will be affected
by restrictions contained in the Indenture and the Company's other existing and
future financing arrangements; (iv) the Company's proposed expansion strategy
will be substantially dependent upon the Company's ability to hire and retain
skilled management, financial, marketing and other personnel; (v) the Company's
plans and results of operations will be affected by the Company's ability to
successfully manage growth (including assimilating the employees and operations
of acquired companies into the Company and monitoring operations, controlling
costs and maintaining effective quality and inventory controls); (vi) the market
for attractive acquisitions in the bottled water industry is becoming
increasingly competitive, which could make the Company's acquisition strategy
more difficult to achieve; (vii) the Company's operations are subject to the
jurisdiction of various governmental and regulatory agencies which regulate the
quality of drinking water and other products and failure by the Company to
comply with existing and future laws and regulations could subject the Company
to significant penalties, stop workage orders or impose additional costs on the
Company; (viii) any interruption in the availability of water to the Company
from municipal sources and local natural springs could have a material adverse
affect on the Company's operations until suitable replacement sources are
located; (ix) risks associated with currency fluctuations; (x) risks associated
with an increase in costs required to produce and deliver the Company's products
to its customers and (xi) other risks and uncertainties indicated from time to
time in the Company's filings with the SEC.
10