1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 1, 1997
or
[x] 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 December 9,
1997 was 18,484,488.
2
NATIONAL BEVERAGE CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 1, 1997
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of November 1, 1997 and May 3, 1997 ...................................... 3
Condensed Consolidated Statements of Income
for the three months and six months
ended November 1, 1997 and October 26, 1996 ................................. 4
Condensed Consolidated Statement of Shareholders' Equity
for the six months ended November 1, 1997 ................................... 5
Condensed Consolidated Statements of Cash Flows for the six months ended
November 1, 1997 and October 26, 1996 ....................................... 6
Notes to Condensed Consolidated Financial Statements ........................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ....................... 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................................... 16
Item 4. Submission of Matters to a Vote of Security Holders ................. 16
Item 6. Exhibits and Reports on Form 8-K .................................... 16
2
3
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 1, 1997 AND MAY 3, 1997
(In thousands, except share amounts)
================================================================================
(Unaudited)
November 1, May 3,
1997 1997
--------- ---------
ASSETS
- ------
CURRENT ASSETS:
Cash and equivalents $ 30,235 $ 37,257
Trade receivables (net of allowance of $641 at November 1, 1997
and $608 at May 3, 1997) 32,389 27,344
Inventories 22,146 23,590
Deferred income taxes 1,864 1,759
Prepaid expenses and other current assets 5,272 6,214
--------- ---------
Total current assets 91,906 96,164
PROPERTY - NET 53,724 55,436
INTANGIBLE ASSETS - NET 15,238 15,503
OTHER ASSETS 3,813 3,794
--------- ---------
TOTAL $ 164,681 $ 170,897
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 23,522 $ 28,544
Accrued liabilities 18,807 17,880
Income taxes payable 3,032 1,391
Current portion of long-term debt 491 725
--------- ---------
Total current liabilities 45,852 48,540
LONG-TERM DEBT 41,933 55,026
DEFERRED INCOME TAXES 7,423 7,245
ACCRUED INSURANCE - NONCURRENT 3,477 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:
22,002,552 shares in November 1997 and 21,990,492 shares in May 1997;
Outstanding: 18,471,828 shares in November 1997 and 18,459,768 shares
in May 1997) 220 220
Additional paid-in capital 15,007 14,943
Retained earnings 64,100 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 65,996 56,703
--------- ---------
TOTAL $ 164,681 $ 170,897
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
3
4
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 1, 1997 AND OCTOBER 26, 1996
(In thousands, except per share amounts)
================================================================================
(Unaudited)
Three Months Ended Six Months Ended
1997 1996 1997 1996
--------- --------- --------- ---------
Net sales $ 100,044 $ 94,968 $ 216,246 $ 205,172
Cost of sales 69,125 67,564 147,039 145,475
--------- --------- --------- ---------
Gross profit 30,919 27,404 69,207 59,697
Selling, general and administrative expenses 24,987 22,199 53,004 45,395
Interest expense 1,152 1,268 2,270 2,716
Other income - net (427) (233) (810) (600)
--------- --------- --------- ---------
Income before income taxes 5,207 4,170 14,743 12,186
Provision for income taxes 1,948 1,543 5,514 4,509
--------- --------- --------- ---------
Net income $ 3,259 $ 2,627 $ 9,229 $ 7,677
========= ========= ========= =========
Earnings per common share $ 0.17 $ 0.14 $ 0.48 $ 0.41
========= ========= ========= =========
Average shares outstanding 19,323 19,010 19,331 18,935
See accompanying Notes to Condensed Consolidated Financial Statements.
4
5
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED NOVEMBER 1, 1997
(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 12,060 0
---------- ----------
End of period 22,002,552 $ 220
========== ==========
ADDITIONAL PAID-IN CAPITAL
Beginning of period $ 14,943
Stock options exercised 64
----------
End of period $ 15,007
==========
RETAINED EARNINGS
Beginning of period $ 54,871
Net income 9,229
----------
End of period $ 64,100
==========
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 $ 65,996
==========
See accompanying Notes to Condensed Consolidated Financial Statements.
5
6
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 1, 1997 AND OCTOBER 26, 1996
(In thousands)
================================================================================
(Unaudited)
1997 1996
-------- --------
OPERATING ACTIVITIES:
Net income $ 9,229 $ 7,677
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 4,512 3,722
Deferred income tax provision 73 1,240
Loss on sale of property 69 26
Changes in:
Trade receivables (5,045) 4,942
Inventories 1,444 (2,390)
Prepaid expenses and other current assets (1,517) (342)
Accounts payable (5,022) (12,930)
Other liabilities 4,095 (573)
-------- --------
Net cash provided by operating activities 7,838 1,372
-------- --------
INVESTING ACTIVITIES:
Property additions (1,630) (2,892)
Other, net 76 220
-------- --------
Net cash used in investing activities (1,554) (2,672)
-------- --------
FINANCING ACTIVITIES:
Debt borrowings 8,300 12,700
Debt repayments (21,627) (18,289)
Repurchase of common stock 0 (1,205)
Proceeds from stock options exercised 21 34
-------- --------
Net cash used in financing activities (13,306) (6,760)
-------- --------
NET DECREASE IN CASH AND EQUIVALENTS (7,022) (8,060)
CASH AND EQUIVALENTS-BEGINNING OF YEAR 37,257 35,231
-------- --------
CASH AND EQUIVALENTS-END OF PERIOD $ 30,235 $ 27,171
======== ========
OTHER CASH FLOW INFORMATION:
Interest paid $ 3,216 $ 2,743
Income taxes paid 2,408 2,144
See accompanying Notes to Condensed Consolidated Financial Statements.
6
7
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 1, 1997
(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)
November 1, 1997 May 3, 1997
---------------- -----------
Finished goods $10,213 $12,189
Raw materials and packaging supplies 11,933 11,401
------- -------
Total $22,146 $23,590
======= =======
7
8
3. PROPERTY
Property consists of the following:
(In thousands)
November 1, 1997 May 3, 1997
---------------- -----------
Land $ 8,897 $ 8,897
Buildings and improvements 31,215 31,213
Machinery and equipment 72,913 71,972
--------- ---------
Total 113,025 112,082
Less accumulated depreciation (59,301) (56,646)
--------- ---------
Property-net $ 53,724 $ 55,436
========= =========
Depreciation expense was $1,586,000 and $3,197,000 for the three and six month
periods ended November 1, 1997, respectively, and $1,519,000 and $3,034,000 for
the three and six month periods ended October 26, 1996, respectively.
4. DEBT
Debt consists of the following:
(In thousands)
November 1, 1997 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) 824 1,118
-------- --------
Total 42,424 55,751
Less current portion (491) (725)
-------- --------
Long-term portion $ 41,933 $ 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, 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,
8
9
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
November 1, 1997, net assets of the subsidiary totaling approximately $48
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.
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,
9
10
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 six months ended November 1, 1997, there were 12,060 option shares
exercised at an exercise price ranging from $.63 to $5.00 per share. At November
1, 1997, options to purchase 1,107,360 shares at a weighted average exercise
price of $2.29 (ranging from $.13 to $5.00 per share) were outstanding and
stock-based awards to purchase 515,540 shares of common stock were available for
grant.
7. 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.
10
11
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.
11
12
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 1, 1997 (SECOND QUARTER OF FISCAL 1998) COMPARED TO
THREE MONTHS ENDED OCTOBER 26, 1996 (SECOND QUARTER OF FISCAL 1997)
- --------------------------------------------------------------------------------
Net sales for the quarter ended November 1, 1997 increased approximately $5.1
million, or 5.3%, over the second quarter of the prior year. This increase is
attributable to volume growth of the Company's brands, further expansion of
manufacturing services for certain customers, and an increase in net selling
prices due to 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.
Gross profit increased to approximately 30.9% of net sales for the second
quarter of fiscal 1998 from 28.9% of net sales for the second quarter of fiscal
1997. This increase is due to the higher selling prices noted above and
favorable changes in product mix. 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 that increases in raw material costs will materially
impact the results of operations for the remainder of fiscal 1998.
Selling, general and administrative expenses increased approximately $2.8
million to 25.0% of net sales for the second quarter of fiscal 1998 from 23.4%
of net sales for the second quarter of fiscal 1997. This increase is primarily
due to higher marketing and advertising costs, including expanded in-store and
other promotional programs related to the Company's contractual commitments with
its Strategic Alliance partners noted above. Marketing expenditures for the
second quarter of fiscal 1998 also included increased radio and television
advertising focused on the Detroit and New Orleans markets.
Interest expense declined during the second quarter 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.
The effective rate for income taxes, based upon estimated annual income tax
rates, approximated 37% of income before taxes for both the second quarter of
fiscal 1998 and fiscal 1997. The difference between the effective rate and the
federal statutory rate of 35% includes amortization of non-deductible goodwill
and other intangibles, state income taxes and other non-deductible expenses.
Net income increased 24.1% to $3.3 million or $.17 per share for the quarter
ended November 1, 1997 from $2.6 million or $.14 per share for the quarter ended
October 26, 1996.
12
13
SIX MONTHS ENDED NOVEMBER 1, 1997 (FIRST SIX MONTHS OF FISCAL 1998) COMPARED TO
SIX MONTHS ENDED OCTOBER 26, 1996 (FIRST SIX MONTHS OF FISCAL 1997)
- --------------------------------------------------------------------------------
Net sales for the six months ended November 1, 1997 increased approximately
$11.1 million, or 5.4%, over the first six months of the prior year. This is
primarily the result of volume and price increases for the Company's brands,
further expansion of manufacturing services for certain customers, and the
effects of the Strategic Alliance program discussed above.
Gross profit increased to approximately 32% of net sales for the first six
months of fiscal 1998 from 29.1% of net sales for the first six months of fiscal
1997. This increase is due to the factors which contributed to the gross profit
improvement for the second quarter of fiscal 1998 discussed above.
Selling, general and administrative expenses increased approximately $7.6
million to 24.5% of net sales for the first six months of fiscal 1998 from 22.1%
of net sales for the first six months of fiscal 1997. This increase is primarily
due to the increased marketing and other promotional programs noted above, as
well as new regionally targeted advertising focused on the Company's brands.
Also contributing to the increase were higher shipping and selling costs,
related principally to the increase in volume of the Company's brands.
Interest expense declined during the six months 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.
The effective rate for income taxes, based upon estimated annual income tax
rates, approximated 37% of income before taxes for both the first six months of
fiscal 1998 and fiscal 1997. The difference between the effective rate and the
federal statutory rate of 35% includes amortization of non-deductible goodwill
and other intangibles, state income taxes and other non-deductible expenses.
Net income increased 20.2% to $9.2 million or $.48 per share for the six months
ended November 1, 1997, from $7.7 million or $.41 per share for the six months
ended October 26, 1996.
13
14
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
NOVEMBER 1, 1997 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 six months ended November 1,
1997, the Company generated EBITDA of $21.5 million, which represents a 15.6%
increase from EBITDA of $18.6 million for the same period last year. EBITDA for
the twelve month period ended November 1, 1997 was $32.6 million, representing
a 14.1% increase over EBITDA of $28.6 million for the prior twelve month period.
For the six months ended November 1, 1997, cash provided by operating activities
of $7.8 million was comprised of net income of $9.2 million plus non-cash
charges of $4.7 million less cash used for seasonal working capital requirements
of $6.1 million. Cash of $1.6 million was used in investing activities,
principally for capital expenditures, and cash of $13.3 million was used for net
debt repayments. At November 1, 1997, the Company's ratio of current assets to
current liabilities was 2.0 to 1 and the Company had approximately $34 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; although, at the present time, the Company has no material
commitments for capital expenditures requiring cash outlays.
At November 1, 1997, the Company had outstanding long-term debt of $41.9
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
November 1, 1997, 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 November 1, 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 Condensed Consolidated
Financial Statements.
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 of 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,
14
15
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.
15
16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 5 of Notes to Condensed Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on October 17, 1997 ("the
Annual Meeting"), Mr. Joseph G. Caporella was re-elected to the Board of
Directors for a three-year term; 17,428,971 votes were cast for his election
and 9,360 votes were withheld. Also at the Annual Meeting, Mr. Samuel C.
Hathorn, Jr. was elected to the Board of Directors for a three-year term;
17,426,171 votes were cast for his election and 12,160 votes were withheld.
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
16
17
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: December 16, 1997
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)
17
5
1,000
6-MOS
MAY-02-1998
NOV-01-1997
30,235
0
32,830
441
22,146
91,906
113,025
59,301
164,681
45,852
41,933
0
150
220
65,626
164,681
216,246
216,246
147,039
147,039
0
0
2,270
14,743
5,514
9,229
0
0
0
9,229
.48
0
