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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-14170
NATIONAL BEVERAGE CORP.
(Exact name of registrant as specified in its charter)
Delaware 59-2605822
------------ ----------------
(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)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ( X ) No ( )
The number of shares of Registrant's common stock outstanding as of March 9,
1998 was 18,488,488.
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NATIONAL BEVERAGE CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1998
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of January 31, 1998 and May 3, 1997...................................... 3
Condensed Consolidated Statements of Income for the three months and nine
months ended January 31, 1998 and January 25, 1997.......................... 4
Condensed Consolidated Statement of Shareholders' Equity
for the nine months ended January 31, 1998.................................. 5
Condensed Consolidated Statements of Cash Flows
for the nine months ended
January 31, 1998 and January 25, 1997....................................... 6
Notes to Condensed Consolidated Financial Statements........................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............................. 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 17
Item 6. Exhibits and Reports on Form 8-K........................................ 17
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 31, 1998 AND MAY 3, 1997
(In thousands, except share amounts)
================================================================================
(Unaudited)
January 31, May 3,
1998 1997
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 30,189 $ 37,257
Trade receivables (net of allowance of $563 at
January 31, 1998 and $608 at May 3, 1997) 25,838 27,344
Inventories 22,684 23,590
Deferred income taxes 1,926 1,759
Prepaid expenses and other current assets 5,560 6,214
--------- ---------
Total current assets 86,197 96,164
PROPERTY - NET 53,017 55,436
INTANGIBLE ASSETS - NET 15,106 15,503
OTHER ASSETS 3,749 3,794
--------- ---------
TOTAL $ 158,069 $ 170,897
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 21,074 $ 28,544
Accrued liabilities 15,659 17,880
Income taxes payable 1,492 1,391
Current portion of long-term debt 442 725
--------- ---------
Total current liabilities 38,667 48,540
LONG-TERM DEBT 41,600 55,026
DEFERRED INCOME TAXES 7,522 7,245
ACCRUED INSURANCE - NONCURRENT 3,273 3,383
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, 7% cumulative,
$1 par value, aggregate liquidation
preference of $15,000 (1,000,000
shares authorized; 150,000 shares
issued; no shares outstanding) 150 150
Common stock, $.01 par value (Authorized:
50,000,000 shares; Issued:
22,019,212 shares in January 1998
and 21,990,492 shares in May 1997;
Outstanding: 18,488,488 shares in
January 1998 and 18,459,768 shares
in May 1997) 220 220
Additional paid-in capital 15,089 14,943
Retained earnings 65,029 54,871
Treasury stock - at cost:
Preferred stock (150,000 shares) (5,100) (5,100)
Common stock (3,530,724 shares) (8,381) (8,381)
--------- ---------
Total shareholders' equity 67,007 56,703
--------- ---------
TOTAL $ 158,069 $ 170,897
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 31, 1998 AND JANUARY 25, 1997
(In thousands, except per share amounts)
================================================================================
(Unaudited)
Three Months Ended Nine Months Ended
1998 1997 1998 1997
--------- --------- --------- ---------
Net sales $ 78,673 $ 75,113 $ 294,919 $ 280,285
Cost of sales 55,320 53,232 202,359 198,707
--------- --------- --------- ---------
Gross profit 23,353 21,881 92,560 81,578
Selling, general and administrative
expenses 21,295 19,912 74,299 65,307
Interest expense 955 1,118 3,225 3,834
Other income - net (381) (145) (1,191) (745)
--------- --------- --------- ---------
Income before income taxes 1,484 996 16,227 13,182
Provision for income taxes 555 368 6,069 4,877
--------- --------- --------- ---------
Net income $ 929 $ 628 $ 10,158 $ 8,305
========= ========= ========= =========
Earnings per common share -
Basic $ 0.05 $ 0.03 $ 0.55 $ 0.45
========= ========= ========= =========
Diluted $ 0.05 $ 0.03 $ 0.53 $ 0.44
========= ========= ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 1998
(In thousands, except share amounts)
================================================================================
(Unaudited)
Shares Amount
---------- ---------
PREFERRED STOCK
Beginning and end of period 150,000 $ 150
========== =========
COMMON STOCK
Beginning of period 21,990,492 $ 220
Stock options exercised 28,720 0
---------- ---------
End of period 22,019,212 $ 220
========== =========
ADDITIONAL PAID-IN CAPITAL
Beginning of period $ 14,943
Stock options exercised 146
---------
End of period $ 15,089
=========
RETAINED EARNINGS
Beginning of period $ 54,871
Net income 10,158
---------
End of period $ 65,029
=========
TREASURY STOCK-PREFERRED
Beginning and end of period 150,000 $ (5,100)
========== =========
TREASURY STOCK-COMMON
Beginning and end of period 3,530,724 $ (8,381)
========== =========
TOTAL SHAREHOLDERS' EQUITY $ 67,007
=========
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 1998 AND JANUARY 25, 1997
(IN THOUSANDS)
================================================================================
(Unaudited)
1998 1997
-------- --------
OPERATING ACTIVITIES:
Net income $ 10,158 $ 8,305
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,661 5,576
Deferred income tax provision 110 1,029
Loss on sale of property 55 73
Changes in:
Trade receivables 1,506 741
Inventories 906 (285)
Prepaid expenses and other current assets (2,145) (1,700)
Accounts payable (7,470) (5,886)
Other liabilities (755) (2,929)
-------- --------
Net cash provided by operating activities 9,026 4,924
-------- --------
INVESTING ACTIVITIES:
Property additions (2,642) (4,220)
Proceeds from disposal of property 196 387
Other, net -- 152
-------- --------
Net cash used in investing activities (2,446) (3,681)
-------- --------
FINANCING ACTIVITIES:
Debt borrowings 8,300 20,200
Debt repayments (22,009) (33,400)
Repurchase of common stock -- (1,205)
Proceeds from stock options exercised 61 38
-------- --------
Net cash used in financing activities (13,648) (14,367)
-------- --------
NET DECREASE IN CASH AND EQUIVALENTS (7,068) (13,124)
CASH AND EQUIVALENTS-BEGINNING OF YEAR 37,257 35,231
-------- --------
CASH AND EQUIVALENTS-END OF PERIOD $ 30,189 $ 22,107
======== ========
OTHER CASH FLOW INFORMATION:
Interest paid $ 3,436 $ 4,118
Income taxes paid 4,430 2,861
See accompanying Notes to Condensed Consolidated Financial Statements.
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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998
(UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
National Beverage Corp. and its subsidiaries ("NBC" or the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information. The financial statements do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. Except for the matters disclosed, however, there has been
no material change in the information disclosed in the notes to consolidated
financial statements for the fiscal year ended May 3, 1997. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Results for the interim
periods presented are not necessarily indicative of results which might be
expected for the entire fiscal year. Certain prior year amounts have been
reclassified to conform to the current year presentation.
2. INVENTORIES
Inventories, which are stated at the lower of first-in, first-out cost or
market, are comprised of the following:
(In thousands)
January 31, 1998 May 3, 1997
---------------- --------------
Finished goods $10,954 $12,189
Raw materials and packaging supplies 11,730 11,401
------- -------
Total $22,684 $23,590
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3. PROPERTY
Property consists of the following:
(In thousands)
January 31, 1998 May 3, 1997
---------------- -----------
Land $ 8,897 $ 8,897
Buildings and improvements 31,325 31,213
Machinery and equipment 73,523 71,972
--------- ---------
Total 113,745 112,082
Less accumulated depreciation (60,728) (56,646)
--------- ---------
Property-net $ 53,017 $ 55,436
========= =========
Depreciation expense was $1,613,000 and $4,810,000 for the three and nine month
periods ended January 31, 1998, respectively, and $1,511,000 and $4,545,000 for
the three and nine month periods ended January 25, 1997, respectively.
4. DEBT
Debt consists of the following:
(In thousands)
January 31, 1998 May 3, 1997
---------------- -----------
Senior Notes (see below) $ 25,000 $ 33,333
Credit Facilities (see below) 0 13,000
Term Loan Facility (see below) 16,600 8,300
Other (including capital leases) 442 1,118
-------- ---------
Total 42,042 55,751
Less current portion (442) (725)
-------- ---------
Long-term portion $ 41,600 $ 55,026
======== =========
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 through August 31, 1999, and
bear interest at 1/2% below the banks' reference rate or 1% above LIBOR,
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at the subsidiary's election. The Term Loan Facility is repayable in
installments from May 1999 through November 1999, 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
January 31, 1998, net assets of the subsidiary totaling approximately $48
million were restricted from distribution. The Company was in compliance with
all loan covenants and restrictions, and such restrictions are not expected to
have a material adverse impact on the operations of the Company.
5. 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 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
shareholder, 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 shareholders. On November 29, 1993, plaintiff filed a motion
for an order preliminary 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,
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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.
6. CAPITAL STOCK
In June 1996, the Company repurchased 100,000 shares of its common stock on the
open market. Such shares have been classified as held in treasury.
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. Average shares
outstanding, stock option data, and per share data presented in these financial
statements have been adjusted for the effects of the stock dividend.
During the nine months ended January 31, 1998, options for 28,720 shares were
exercised at prices ranging from $.63 to $5.00 per share. At January 31, 1998,
options to purchase 1,118,026 shares at a weighted average exercise price of
$2.44 (ranging from $.13 to $10.00 per share) were outstanding and stock-based
awards to purchase 508,214 shares of common stock were available for grant.
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7. EARNINGS PER COMMON SHARE
Earnings per common share is calculated pursuant to Statement of Financial
Accounting Standards No. 128 ("SFAS No. 128") which was adopted effective for
the fiscal period ended January 31, 1998. Earnings per share for prior periods
have been restated to give effect for the application of SFAS No. 128. The
following data show the amounts used in computing earnings per common share:
(In thousands, except per share data)
Three Months Ended Nine Months Ended
1998 1997 1998 1997
-------- ------- ------- -------
Net income $ 929 $ 628 $10,158 $ 8,305
======== ======= ======= =======
Weighted average shares outstanding 18,486 18,452 18,473 18,271
Dilutive stock options 822 802 850 770
-------- ------- ------- -------
Weighted average shares outstanding
and dilutive potential stock 19,308 19,254 19,323 19,041
======== ======= ======= =======
Earnings per common share-
Basic $ .05 $ .03 $ .55 $ .45
======== ======= ======= =======
Diluted $ .05 $ .03 $ .53 $ .44
======== ======= ======= =======
8. CHANGES IN ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS
130") and No. 131 "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 130 establishes standards for reporting and
display of comprehensive income and its components. SFAS 131 specifies revised
guidelines for determining an entity's operating segments and the type and level
of financial information to be disclosed. SFAS 130 and SFAS 131 are effective
for fiscal years beginning after December 15, 1997. The Company has not yet
determined the impact of the implementation of SFAS 130 and SFAS 131.
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PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
National Beverage Corp. and its subsidiaries ("NBC" or the "Company") develop,
manufacture, market and distribute a full line of beverage products: Shasta (r),
Faygo (r) and Big Shot (r) , multi-favored and cola soft drinks; Everfresh (r),
a full line of 100% juice and juice-enriched products; LaCROIX (r) , a Sante (r)
, Spree (r) and nuAnce (r) , flavored carbonated and spring water products; and
specialty items, St. Nick's (tm) and Creepy Coolers (tm). Substantially all of
NBC's brands are produced in its fourteen manufacturing facilities which are
strategically located throughout the continental United States. NBC also
develops and produces soft drinks for retail grocery chains, warehouse clubs,
mass merchandisers and wholesalers ("allied brands") as well as soft drinks for
other beverage companies.
The Company 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.
The Company's strategies include increasing its brand 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"). 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.
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. During the 1996 and 1997 fiscal years, 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
Three Months Ended January 31, 1998 (third quarter of fiscal 1998) compared to
Three Months Ended January 25, 1997 (third quarter of fiscal 1997)
- --------------------------------------------------------------------------------
Net sales for the quarter ended January 31, 1998 increased approximately $3.6
million, or 4.7 %, over the third quarter of the prior year. This increase was
attributable to an increase in volume and average net selling prices of the
Company's brands due to favorable changes in package and product mix and the
effects of Strategic Alliances. As part of the Company's Strategic Alliance
program, sales of branded products are supported by expanded in-store
advertising and merchandising which had the effect of increasing volume and net
selling prices. These increases were partially offset by reduced sales of
certain low-margin products.
Gross profit increased to approximately 29.7% of net sales for the third quarter
of fiscal 1998 from 29.1% of net sales for the third quarter of fiscal 1997.
This increase was due to higher selling prices and favorable changes in product
mix as noted 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 increases in raw material costs to materially impact the results
of operations for the remainder of fiscal 1998.
Selling, general and administrative expenses increased approximately $1.4
million to 27.1% of net sales for the third quarter of fiscal 1998 from 26.5% of
net sales for the third quarter of fiscal 1997. This increase is primarily due
to higher marketing and advertising costs, including expanded in-store
advertising and other merchandising programs related to Strategic Alliances, and
increased costs associated with the addition of marketing and direct sales
personnel.
Interest expense declined during the third quarter of fiscal 1998 compared to
the prior year due to a reduction in debt outstanding and a lower weighted
average interest rate. See Note 4 of Notes to Condensed Consolidated Financial
Statements.
Other income increased during the third quarter of fiscal 1998 compared to the
prior year primarily due to increased interest income on higher average cash
balances.
The effective rate for income taxes, based upon estimated annual income tax
rates, approximated 37% of income before taxes for both the third quarter of
fiscal 1998 and fiscal 1997. The difference between the effective rate and the
federal statutory rate of 35% included amortization of non-deductible goodwill
and other intangibles, state income taxes and other non-deductible expenses.
Net income increased 47.9% to $929 thousand, or $.05 per share, for the quarter
ended January 31, 1998, from $628 thousand, or $.03 per share, for the quarter
ended January 25, 1997.
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Nine Months Ended January 31, 1998 (first nine months of fiscal 1998) compared
to Nine Months Ended January 25, 1997 (first nine months of fiscal 1997)
- --------------------------------------------------------------------------------
Net sales for the nine months ended January 31, 1998 increased approximately
$14.6 million, or 5.2%, over the first nine months of the prior year. This was
primarily the result of volume and price increases for the Company's brands,
expansion of manufacturing services and the effects of the Strategic Alliance
program.
Gross profit increased to 31.4% of net sales for the first nine months of fiscal
1998 from 29.1% of net sales for the first nine months of fiscal 1997. This
increase was due to the factors which contributed to the gross profit
improvement for the third quarter of fiscal 1998 discussed above.
Selling, general and administrative expenses increased approximately $9 million
to 25.2% of net sales for the first nine months of fiscal 1998 from 23.3% of net
sales for the first nine months of fiscal 1997. This increase was primarily due
to the increased marketing and other merchandising programs noted above, as well
as new regionally targeted advertising focused on the Company's brands. Also
contributing to the increase were higher selling costs, related principally to
an increase in marketing and direct sales personnel.
Interest expense declined during the first nine months of fiscal 1998 compared
to the prior year due to a reduction in debt outstanding and a lower weighted
average interest rate. See Note 4 of Notes to Condensed Consolidated Financial
Statements.
Other income increased during the first nine months of fiscal 1998 compared to
the prior year primarily due to increased interest income on higher average cash
balances.
The effective rate for income taxes, based upon estimated annual income tax
rates, approximated 37% of income before taxes for both the first nine months of
fiscal 1998 and fiscal 1997. The difference between the effective rate and the
federal statutory rate of 35% included amortization of non-deductible goodwill
and other intangibles, state income taxes and other non-deductible expenses.
Net income increased 22.3% to $10.2 million, or $.53 per share (diluted), for
the nine months ended January 31, 1998, from $8.3 million, or $.44 per share
(diluted), for the nine months ended January 25, 1997.
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
January 31, 1998 compared to May 3, 1997
- ----------------------------------------------------
Management views earnings before interest expense, taxes, depreciation and
amortization ("EBITDA") as a key indicator of the Company's operating
performance and enterprise value, although not as a substitute for cash flow
from operations or operating income. During the nine months ended January 31,
1998, the Company generated EBITDA of $26.1 million, which represents a 15.6%
increase from EBITDA of $22.6 million for the same period last year. EBITDA for
the twelve month period ended January 31, 1998 was $33.2 million, representing a
14.8% increase over EBITDA of $29.0 million for the prior twelve month period.
For the nine months ended January 31, 1998, net cash provided by operating
activities of $9.0 million was comprised of net income of $10.2 million plus
non-cash charges of $6.8 million less cash used for seasonal working capital
requirements of $8.0 million. Cash of $2.4 million was used for net capital
expenditures and cash of $13.7 million was used for net debt repayments. At
January 31, 1998, the Company's ratio of current assets to current liabilities
was 2.2 to 1 and the Company had approximately $33 million available under its
credit agreements.
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, but, at the present time, has no material commitments for capital
expenditures requiring cash outlays.
On January 23, 1998, the Company announced that its Board of Directors
authorized the Company to repurchase up to 800,000 shares of its common stock.
The Company expects to make such purchases from existing cash balances from time
to time through open market purchases, block trades and/or privately negotiated
transactions.
At January 31, 1998, the Company had outstanding long-term debt of $41.6
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
January 31, 1998, net assets of the subsidiary of approximately $48 million were
restricted from distribution. Cash balances of the Registrant, when combined
with funds available from its subsidiary, provide sufficient liquidity to allow
the Registrant to meet its current and expected cash obligations. The Company
was in compliance with all loan covenants and restrictions at January 31, 1998,
and such restrictions are not expected to have a material adverse impact on the
operations of the Company. See Note 4 of Notes to Condensed Consolidated
Financial Statements.
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CHANGES IN ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS
130") and No. 131 "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 130 establishes standards for reporting and
display of comprehensive income and its components. SFAS 131 specifies revised
guidelines for determining an entity's operating segments and the type and level
of financial information to be disclosed. SFAS 130 and SFAS 131 are effective
for fiscal years beginning after December 15, 1997. The Company has not yet
determined the impact of the implementation of SFAS 130 and SFAS 131.
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q (this "Form 10-Q"),
including statements under "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations," constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to, the
following: general economic and business conditions; competition; success of the
Company's Strategic Alliance objective; fluctuations in the costs of raw
materials; continued retailer support of the Company's brands; changes in
consumer preferences; changes in business strategy or development plans;
government regulations; regional weather conditions; and other factors
referenced in this Form 10-Q. The Company 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.
16
17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 5 of Notes to Condensed Consolidated Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description
----------- ---------------
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K: None
17
18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: March 17, 1998
NATIONAL BEVERAGE CORP.
(Registrant)
By: \s\ Dean A. McCoy
------------------------
Dean A. McCoy
Vice President - Controller
(On behalf of the Registrant and as
Principal Accounting Officer)
18
5
1,000
9-MOS
MAY-02-1998
JAN-31-1998
30,189
0
26,401
563
22,684
86,197
113,745
60,728
158,069
38,667
41,600
0
150
220
66,637
158,069
294,919
294,919
202,359
202,359
0
0
3,225
16,227
6,069
10,158
0
0
0
10,158
.55
.53
