National Beverage Corp. Annual Report 2002

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FY2002 Annual Report · National Beverage Corp.

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Good Thoughts,

Good Words,

Good Deeds,

Good Habits,

Good Character,

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Great Destiny!

Join Us...

National Beverage Corp.
2002 Annual Report

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The Choice of

Choices!

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Isn’t it wonderful to bring

happiness and fond

memories to someone?

(Feels great just

thinking about it!)

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Good Thoughts

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Certainly, no one knows what kind of

thoughts are in another’s mind…but kindness

and charity cannot exist without first thinking
good thoughts. So…having the discipline
and tenacity to manage one’s mind is a

prerequisite for getting superior results…and

as Team National knows—“Why accept good

when excellent is available!”

Get Well…Happy Birthday…Great Game…

Cheers…Welcome Home…Enjoy the Picnic…

Happy Holidays…Congratulations…are just a
few good thoughts that our wonderful soft
drinks are associated with…and for good
reason. Good thoughts went into giving them
the heritage, the delicious taste and always…

the great value!

G.T.

Excellent growth capacity…

debt/equity ratio is .09

Five-year compounded EPS growth

rate of 9.4%

16 beverage plants strategically

located in the USA

Our thoughts are to be…

The Very Best At What We Do…Always!

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Facts

Consistent and stable business strategy

Single line of business—beverage

Fun consumer products

Respected, proven philosophy

Excellent financial position

Experienced, committed management team

Consistent and certifiable operating results

Over a century of brand awareness

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I’ll tell you how I did

it…but I’m sure

you’ll do it better—

smarter—faster!

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Good Words

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“What a great job!”

“We’re so glad you’re part of our team!”

Being able to communicate our good
thoughts into good words…then creating the
positive atmosphere in which to produce

great products…is what we do every day at

National Beverage. Whether we are developing

exciting new flavors, inspiring innovative ideas

or praising our team members for a job well
done, good words are essential in motivating
the human spirit.

G.W. (cid:2)

Brand growth was almost twice that

of the industry

Net working capital exceeded debt

by $59.2 million

Revenues per employee exceeded the

industry by 41%

National Beverage is proud to add fun

and excitement to family traditions celebrated

throughout the year. You can count on us to

continue producing the finest products…which
in turn generates smiles and good words
all across America.

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True caring and

kindness,

plus a loving heart…

is genuine

compassion!

Positively!

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Good Deeds

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At National Beverage, our good deeds
show our genuine concern for those in need.

Since 1994, St. Nick’s holiday promotion

dedicates a portion of its proceeds to support

St. Jude Children’s Research Hospital and

City of Hope National Medical Center in their

treatment of cancer and other life-threatening

diseases of the precious children for which

they care. Reaching out and giving back is

an important part of National Beverage

family values.

G.D. (cid:2)

G.D. (cid:2)
G.D. (cid:2)

Payroll and benefits exceeded

$80 million

No restructuring charges…ever!

16 years of increased employee

benefits

As the ’ole saying goes…’charity begins at
home’…and to this point, our daily good deeds
begin by growing people, with special caring

and mentoring…and consistently providing

challenging opportunities.

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Sound principles

make life’s journey…

a smoother road…

paved with Pride!

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Good Habits

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If one compares results using the highest

standard possible and has the ability to modify

their actions to achieve these results…then they

have what it takes to do it again and again

and again.

Good habits are repetitious thoughts and
actions that are routinely used to get the results

envisioned.

Team National does not believe that practice

makes perfect…they believe that perfect practice

makes perfect…especially if you are filling

products at the rate of 1,500 per minute.

G.H. (cid:2)
G.H. (cid:2)
G.H. (cid:2)

Net sales grew to $502.8 million

EBITDA was $39.4 million

EPS climbed to $.91 per share

Great philosophy, great people, great

products, great income statement, great

balance sheet…now, we apply these to much

opportunity, and challenge ourselves to outwit,

outsell and out-innovate our competition.

Well, we call that a good great habit.

Dynamics

Over the past seven years:

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Investor cash flow = net income plus depreciation and amortization minus
net capital expenditures

EBITDA = income before income taxes plus interest expense, depreciation
and amortization

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Ethics—Scruples—Morals

God—Country—Family

Faith—Trust—Honor…

The Right Stuff!

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Good Character

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The ultimate is to put it all together…thoughts,

words, deeds, habits…and produce, through

sound philosophy and high standards…
a good character.

In a way, every package, every flavor and

every soft drink is a good character within
itself…and to make them great characters, we

need consumers who demand more than just a

thirst quencher. Now, add a maturing process

(like 100 years or more) and you can create

some great soft drink characters.

G.C.

Shareholders’ equity grew to

$125.7 million

Operating income reached

$26.8 million

Net income increased to

$16.6 million

Our strong commitment to excellence and

quality, plus these great soft drinks in our family

of beverages…Our Destiny!

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Value Stats

Stock Price

$46.15

Coca-Cola Bottling Co. Consol.

$29.62

Pepsi Bottling Group

$21.37

Coca-Cola Enterprises

$16.48

Cott Corp.

$14.34

PepsiAmericas

$11.85
National Beverage

Based on closing stock prices as of August 16, 2002.
Source: Multex Investor

Price/
Earnings
Ratio

20.1x

24.5x

49.8x

24.6x

18.6x

13.6x

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Good Deeds

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Good Character

Good Wo rd s

G o o d T h o u g h t s

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G r e a t D e s t i n y ! !

Good Habits

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‘Good Bytes’
‘Good Bytes’

FY2002…Breaking News!

If I could define a ‘feeling’…one that I experienced more than any other throughout most of
FY2002, it was that ‘pain-in-the-gut ’ anxiety when reading or hearing…Breaking News. These
words have conditioned us to feel bad, stressed and to expect more ugliness!

Time to turn off the bad—and tune in the good.

Personally speaking, if possible, my goals in the future would include buying a newspaper

publishing company, along with a TV station, that only carries good programming and reports
all good news. You could then be watching a very nice program and suddenly flashing across the
screen are the words…‘Good Bytes.’ Wow…one would begin to perk up and instantly become
relaxed (again conditioned). “Tranquilized with goodness again,” would be our thoughts as we
smiled. Channel 00 on TV and the back page of the newspaper would be used to cover all the
other ‘stuff ’—Better, right ?

This annual report was designed to show the real personality of Team National and portray

the unique character of our Company. If detailed financial information and other data on our
business are of interest…everything is contained within this annual report. Should anyone want
to know if the officers of the Company and I have signed statements swearing that all of the facts
that we are aware of are truly reflected, the answer is yes—16 times in 16 years…every year,
so help me.

So…from here on, I am going to share some…‘Good Bytes.’

National Beverage is a multi-system distribution Company that manufactures and produces

all of the beverages that you see contained herein. We also market and sell everything that is
manufactured.

From the original thoughts that our ‘idea’ people create to the ‘secret ’ formulas of our chemists,

and then on to our brand managers’ analysis with focus groups…Team National does some
things no other organization in the world does.

First, members of Team National are handpicked by the handpicked ones before them…and

each is cared for in a very special way. They are mentored with a motivating philosophy that
creates, within each one, an extreme amount of passion for what they do. We market, sell and
manufacture Shasta, Faygo, Everfresh, LaCroix, Ritz, Ohana, Crystal Bay, Big Shot and Mr. Pure
beverages. No other can make this statement.

This is, no doubt, one very large—could even be described as a ‘Huge…Good Byte!’

Second, our marketing and sales people are phenomenal. Recently, during a severe wind

storm in San Francisco…the siding of a historic skyscraper was blown away…dramatically
revealing a 1950’s Shasta painting covering the entire side of the building. The media quickly
dubbed this ‘miracle art.’ Our innovative marketing team immediately developed a soft drink
label, and the nostalgic Shasta 12oz. package you see in this annual report was…reborn.
Shasta sales are growing significantly and this 1889 brand, together with our 1907 Faygo brand,
remain our flagships.

I would also say this is a ‘Big…Good Byte!’

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Third, our arsenal to equip ourselves and compete in the marketplace is the finest to be found.

Our Company has a mature and seasoned management team…a rare combination of youthful
energy and dynamics…with titanium stability and valued wisdom.

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National Beverage has a strong balance sheet with tremendous leverage possibilities. In the
current economic atmosphere, this is our second most powerful asset. While interest rates may
be at their lowest, credit covenants are tough. Our robust cash position and cash generating
capability are offsets to those rugged bank requirements. Our prowess for growth opportunities
has never been keener. We are on the ‘scent ’ as they say!

Our single most powerful asset is our Philosophy, Passion, Smarts Quotient. We have the

philosophy that defines why we do things…the passion that drives how we do things…and the
smarts (knowledge/experience) that dictates when we do things. Other organizations may make
similar statements, but remember, we are a player in an industry that is controlled by giants and
yet, year after year, increased revenues and profits are reflected with NO financial engineering…
NONE! No restructuring charges ever since the Company was founded. This is quite a statement
to make…regardless of size; after all, we were operating in the same conditions everyone else
was who suffered reduced revenues or heavy losses…and worse, bad acquisition write-offs!
The foregoing statement is very profound when one understands that the last six operations
we acquired were companies that needed significant PPS Quotient, in that, they were all
turnaround situations.

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This is a ‘Priceless…Good Byte!’

So…now the future…

One could think that if we play with the giants and do better than okay in that competitive
atmosphere…and our fun-flavored, great-tasting soft drinks are growing in the face of declining
colas…AND we continue to create dynamics when employing our winning philosophy…
we have a Great Destiny! Surely, some may ponder and question this last statement…but it is
endowed with the same smart logic we must instinctively use…to live our lives safe and happy.

Our goal continues to be…‘The Best At What We Do…Always!’

To our faithful shareholders, our great board members, our customers, suppliers and loyal
consumers…and you—each and every one of you, Team National, thank you all for being
a part of this wonderful Company!

Nick A. Caporella
Chairman and Chief Executive Officer

P.S.

‘Hang on to your principles…

for they bond to the soles of your feet!’

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Financial Review

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . 19

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Report of Independent Certified Public Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

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National Beverage Corp.

Selected Financial Data

(In thousands, except per share amounts)

Statement of Income Data:
Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Interest expense

Other income—net

Income before income taxes

Provision for income taxes

Net income

Net income per share (1):

Basic

Diluted

Balance Sheet Data:
Working capital

Property—net

Total assets

Long-term debt

Deferred income taxes

Shareholders’ equity

Fiscal Year Ended

April 27,
2002

April 28,
2001

April 29,
2000

May 1,
1999

May 2,
1998

$502,778

$480,415

$426,269

$402,108

$400,749

339,041

323,743

286,245

268,844

275,083

163,737

136,925

857

867

26,822

10,270

156,672

140,024

133,264

125,666

131,852

120,104

110,246

102,195

2,110

1,506

24,216

9,236

2,789

4,754

21,885

8,302

3,304

1,323

21,037

7,868

4,175

1,633

20,929

7,827

$ 16,552

$ 14,980

$ 13,583

$ 13,169

$ 13,102

.91

.87

.82

.80

.74

.71

.68

.71

.68

$ 70,164

$ 62,444

$ 54,907

$ 57,504

$ 50,398

60,658

205,685

10,981

12,072

62,215

62,430

56,103

55,945

203,868

197,754

180,404

182,327

24,136

10,208

33,933

8,011

93,686

40,267

8,344

82,005

41,600

8,332

69,980

125,677

108,488

(1)Basic net income per share is computed by dividing earnings applicable to common shares by the weighted-average number of

shares outstanding. Diluted net income per share includes the dilutive effect of stock options.

National Beverage Corp.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations

General Overview

National Beverage Corp. (the “Company”) is a holding

company for various operating subsidiaries that

develop, manufacture, market and distribute a com-

plete portfolio of quality beverage products throughout

the United States. The Company’s brands emphasize

distinctive flavor variety, including its flagship brands
Shasta(cid:2) and Faygo(cid:2), complete lines of multi-flavored
and cola soft drinks. In addition, the Company offers

an assortment of premium beverages geared toward
the health-conscious consumer, including Everfresh(cid:2),
Home Juice(cid:2) and Mr. Pure(cid:2) 100% juice and juice-
based products; and LaCROIX(cid:2), Mt. Shasta(cid:3), Crystal
Bay(cid:2) and ClearFruit(cid:2) flavored and spring water prod-
ucts. The Company also produces specialty products,
including VooDoo Rain(cid:2), a line of alternative beverages
geared toward young consumers, Ohana(cid:2) fruit-
flavored drinks and St. Nick’s(cid:2) holiday soft drinks.
Substantially all of the Company’s brands are pro-

duced in its sixteen manufacturing facilities, which are

strategically located in major metropolitan markets

throughout the continental United States. The Company

also develops and produces soft drinks for retail grocery

chains, warehouse clubs, mass-merchandisers and

wholesalers (“allied brands”) as well as soft drinks for

other beverage companies.

The Company’s strategy emphasizes the growth of

its branded products by offering a diverse beverage

portfolio of proprietary flavors; by supporting the

franchise value of regional brands; by developing and

acquiring innovative products tailored toward healthy

lifestyles; and by appealing to the “quality-price”

sensitivity factor of the family consumer. Management

believes that the “regional share dynamics” of its

brands have a consumer loyalty within local markets

that generates more aggressive retailer sponsored

manufacturing functions with national and regional

retailers marketing/sales expertise to maximize sales

for branded and allied branded products. These

“Strategic Alliances” provide for retailer promotional

support for the Company’s brands and nationally

integrated manufacturing and distribution services for

the retailer’s allied brands.

Over the last several years, the Company has

focused on increasing penetration of its brands in the

convenience channel through company-owned and

independent distributors. The convenience channel is

composed of convenience stores, gas stations and

other smaller “up-and-down-the-street” accounts.

Because of the higher retail prices and margins that

typically prevail, the Company has undertaken specific

measures to expand its distribution in this channel.

These include the development of products specifically

targeted to this market, such as VooDoo Rain,

ClearFruit, Everfresh, Home Juice and Mr. Pure, and
the acquisition of the Ritz(cid:2) and Crystal Bay brands
in fiscal 2001. Also, the Company has created pro-

prietary and specialized packaging for these products

with graphics specifically designed for the discrimi-

nating consumer. Management intends to continue its

focus on enhancing growth in the convenience channel

through both specialized packaging and innovative

product development.

Beverage industry sales are seasonal with the

highest volume typically realized during the summer

months. Additionally, the Company’s operating results

are subject to numerous factors, including fluctuations

in the costs of raw materials, changes in consumer

preference for beverage products and competitive

pricing in the marketplace.

Results of Operations

promotional activities.

Net Sales:

The Company occupies a unique position in the

Net sales for fiscal 2002 increased approximately

industry as a vertically integrated national company

$22.4 million, or 4.7%, to $502.8 million. This sales

delivering branded and allied brands through a hybrid

growth was due primarily to increased pricing in

distribution network to multiple beverage channels. As

certain markets, increased volume of the Company’s

part of its sales and marketing strategy, the Company

branded soft drinks, and sales of the Ritz and Crystal

enters into long-term contractual relationships that join

Bay brands acquired in September 2000. This improve-

the expertise of Company sales, marketing and

ment was partially offset by changes in product mix

National Beverage Corp.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

and the elimination of certain low margin allied

$1.4 million for fiscal 2000. The decline in interest

branded business.

income is due to a reduction in investment yields. In

Net sales for fiscal 2001 increased approximately

addition, other income for fiscal 2000 includes a gain

$54.1 million, or 12.7%, to $480.4 million. This

of $3.4 million from the sale of a residual interest in

increase was due primarily to volume growth in the

an operating lease.

Company’s flavored carbonated soft drinks, increased

pricing of the Company’s proprietary brands, and

sales of the Ritz and Crystal Bay brands acquired in

September 2000. This improvement was partially

offset by declines related to product mix.

Gross Profit:

Income Taxes:

The Company’s effective tax rate was approximately

38.3% for fiscal 2002, 38.1% for fiscal 2001, and

37.9% for fiscal 2000. The difference between the

effective rate and the federal statutory rate of 35% was

primarily due to the effects of state income taxes and

Gross profit for fiscal 2002, which approximated

other nondeductible expenses. See Note 8 of Notes

32.6% of net sales, increased 4.5%, to $163.7 million.

to Consolidated Financial Statements.

Gross profit was favorably affected by the improved

pricing mentioned above and the effect of volume

Capital Resources

growth on fixed manufacturing costs, partially offset by

increased costs and changes in product mix.

Gross profit approximated 32.6% and 32.8% of

net sales in fiscal 2001 and fiscal 2000, respectively.

This change in gross profit reflects increased distrib-

ution in the convenience channel which was offset

by changes in product mix and increased utility and

labor costs.

The Company’s current sources of capital are cash

flow from operations and borrowings under existing

credit facilities. The Company maintains unsecured

revolving credit facilities aggregating $45 million of

which approximately $43 million was available for

future borrowings at April 27, 2002. Management

believes that existing capital resources are sufficient

to meet the Company’s and the parent company’s

Selling, General and Administrative Expenses:

capital requirements for the foreseeable future.

Selling, general and administrative expenses for fiscal

Management views earnings before interest expense,

2002 were $136.9 million or 27.2% of net sales as

taxes, depreciation and amortization (“EBITDA”) as a

compared to $131.9 million or 27.4% of net sales for

key indicator of the Company’s operating performance

fiscal 2001. The dollar increase was primarily due to

and enterprise value, although not as a substitute for

higher distribution and selling costs related to increased

cash flow from operations or operating income. The

sales volume. The decline as a percent of net sales

Company’s EBITDA increased 3.6% to $39.4 million

reflects the effect of higher volume on fixed expenses.

for fiscal 2002 from $38.1 million for the prior year.

Selling, general and administrative expenses for

Management believes that EBITDA is sufficient to

fiscal 2001 increased $11.7 million, or 9.8%, to

support additional growth and debt capacity.

$131.9 million. This increase was due to higher dis-

tribution and selling costs related to increased sales

Summary of Cash Flow

volume, higher fuel costs, and integration costs related

to the BCI acquisition.

The Company’s principal source of cash during fiscal

2002 was $23.4 million provided by operating

Interest Expense and Other Income–Net:

activities. The Company’s primary uses of cash were

Fiscal 2002 and 2001 interest expense decreased

net debt repayments of $13.2 million and capital

$1.3 million and $.7 million, respectively, due to a

expenditures of $7.2 million.

reduction in average outstanding debt and interest rates.

Net cash provided by operating activities increased

Other income includes interest income of $1.1 million

to $23.4 million for fiscal 2002 from $21.5 million

for fiscal 2002, $1.6 million for fiscal 2001, and

last year largely due to an increase in net income and

National Beverage Corp.

favorable changes in working capital. Net cash used

respectively, of common stock. Since January 1998,

in investing activities declined to $7.1 million from

the Company has purchased 465,810 shares of its

$10.0 million reflecting $4.0 million expended for

common stock.

acquisitions in fiscal 2001. Net cash used in financing

Pursuant to a management agreement, the Company

activities increased $2.9 million for fiscal 2002 as a

incurred a fee to Corporate Management Advisors,

result of an increase in debt repayments.

Inc. (“CMA”) of approximately $5.0 million for fiscal

Financial Condition

During fiscal 2002, the Company’s working capital

improved to $70.2 million from $62.4 million primarily

due to cash generated from operations, an increase

in current assets, and a reduction in accounts payable.

2002, $4.8 million for fiscal 2001, and $4.3 million

for fiscal 2000. At April 27, 2002, the Company

owed $1.3 million to CMA for unpaid fees. See Note 7

of Notes to Consolidated Financial Statements.

Changes in Accounting Standards

Trade receivables and accrued liabilities increased

The Company adopted Statement of Financial Account-

as a result of the sales growth while the decline in

ing Standards (“SFAS”) No. 133 “Accounting for

accounts payable is related to the timing of certain

Derivative Instruments and Hedging Activities” in the

raw material payments. At April 27, 2002, the current

first quarter of fiscal 2002. The adoption of SFAS

ratio was 2.3 to 1 compared to 2.1 to 1 for the prior

No. 133 did not have a material impact on the

year. The debt-to-equity ratio improved to .1 to 1 from

Company’s financial position or operating results and

.2 to 1 reflecting a reduction in debt and an increase

has not resulted in significant changes to its financial

in retained earnings.

Liquidity

The Company continually evaluates capital projects

designed to expand capacity and improve efficiency

at its manufacturing facilities. The Company presently

has no material commitments for capital expenditures

and expects that fiscal 2003 capital expenditures will

be comparable to fiscal 2002.

Debt agreements require subsidiaries to maintain

certain financial ratios and contain other restrictions,

none of which are expected to have a material

impact on the operations or financial position of the

Company. At April 27, 2002, retained earnings of

approximately $28 million were restricted from distri-

bution and the Company was in compliance with all

loan covenants. See Note 6 of Notes to Consolidated

Financial Statements.

In January 1998, the Board of Directors authorized

the Company to repurchase up to 800,000 shares

of its common stock. In fiscal 2002 and 2001, the

Company purchased 23,900 shares and 33,600 shares,

risk management practices. Also, in the first quarter

of fiscal 2002, the Company adopted SFAS No. 142

“Goodwill and Other Intangible Assets.” The adop-

tion of SFAS No. 142 did not materially impact the

Company’s financial position or operating results. See

Note 4 of Notes to Consolidated Financial Statements.

In the fourth quarter of fiscal 2002, the Company

adopted the Emerging Issues Task Force (“EITF”) 01-9

“Accounting for Consideration Given by a Vendor to

a Customer or Reseller of the Vendor’s Products.” The

adoption of EITF 01-9 did not materially impact the

Company’s operating results.

In October 2001, the Financial Accounting Stan-

dards Board issued SFAS No. 144 “Accounting for

the Impairment or Disposal of Long-Lived Assets.” This

statement supersedes SFAS No. 121 “Accounting for

the Impairment of Long-Lived Assets and for Long-Lived

Assets to Be Disposed of ” and addresses financial

accounting and reporting for the impairment or disposal

of long-lived assets. SFAS No. 144 is effective for the

Company’s fiscal year beginning April 28, 2002. The

Company does not expect that the adoption of this

statement will materially impact its financial position

or its operating results.

National Beverage Corp.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

In May 2002, the Board issued SFAS No. 145

Impairment of Long-Lived Assets

“Rescission of FASB Statements No. 4, 44, and 64,

All long-lived assets, excluding goodwill and intangible

Amendment of FASB Statement No. 13, and Technical

assets not subject to amortization, are evaluated for

Corrections” which rescinds the automatic treatment of

impairment on the basis of undiscounted cash flows

gains or losses from extinguishment of debt as extraor-

whenever events or changes in circumstances indicate

dinary. SFAS No. 145 also requires sale-leaseback

that the carrying amount of an asset may not be

accounting for certain lease modifications and makes

recoverable. An impaired asset is written down to its

various technical corrections to existing pronounce-

estimated fair market value based on the best informa-

ments. The provisions of SFAS No. 145 related to the

tion available. Estimated fair market value is generally

rescission of FASB No. 4 are effective for fiscal years

measured by discounting future cash flows. Goodwill

beginning after May 15, 2002 with all other provisions

and intangible assets not subject to amortization are

effective for transactions occurring after May 15,

evaluated for impairment annually or sooner in accord-

2002, with early adoption encouraged.

ance with SFAS No. 142 and an impairment loss

is recognized if the carrying amount is greater than

Critical Accounting Policies

its fair value.

The preparation of financial statements requires esti-

Income Taxes

mates and assumptions that affect the reporting of

The Company’s effective income tax rate and the tax

assets, liabilities, revenues and expenses, and the

bases of its assets and liabilities are based on man-

disclosure of contingent assets and liabilities. Certain

agement’s estimate of taxes which will ultimately be

of the Company’s accounting policies are critical to

payable. Deferred taxes are recorded to give recog-

understanding its financial statements because their

nition to temporary differences between the tax bases

application places significant demands on manage-

of assets or liabilities and their reported amounts in the

ment’s judgment, with financial reporting results relying

financial statements. Valuation allowances are estab-

on estimates of matters that are inherently uncertain.

lished when it is deemed, more likely than not, that the

Management believes that the critical accounting

benefit of deferred tax assets will not be realized.

policies described in the following paragraphs affect

the most significant estimates and assumptions used

in the preparation of its consolidated financial state-

ments. For these policies, we caution that future events

rarely develop exactly as estimated, and the best

estimates routinely require adjustment.

Credit Risk

The Company sells products to a variety of customers

and extends credit based on an evaluation of the

customer’s financial condition, generally without

requiring collateral. Exposure to losses on receivables

varies by customer principally due to the financial

condition of each customer. The Company monitors

its exposure to credit losses and maintains allowances

for anticipated losses.

Insurance Programs

The Company maintains self-insured and deductible

programs for certain liability, medical and workers’

compensation exposures. The Company accrues for

known claims and estimated incurred but not reported

claims not otherwise covered by insurance, based on

actuarial assumptions and historical claims experience.

Forward-Looking Statements

The Company and its representatives may from time to

time make written or oral statements that are “forward-

looking” within the meaning of the Private Securities

Litigation Reform Act of 1995, including statements

contained in this Annual Report, filings with the

National Beverage Corp.

Securities and Exchange Commission and other

reports to the Company’s stockholders. Certain

statements, including, without limitation, statements

containing the words “believes,” “anticipates,” “intends,”

“expects,” and “estimates” constitute “forward-looking

Quantitative and Qualitative Disclosures
About Market Risk

The principal market risks to which the Company is

exposed are commodity prices and interest rates.

statements” and involve known and unknown risk,

Commodities

uncertainties and other factors that may cause the

The Company purchases various raw materials that

actual results, performance or achievements of the

fluctuate based on commodity market conditions. These

Company to be materially different from any future

include aluminum cans, high fructose corn syrup, and

results, performance or achievements expressed or

various juice concentrates. The Company’s ability to

implied by such forward-looking statements. Such

recover increased costs through higher pricing may

factors include, but are not limited to, the following:

be limited by the competitive environment in which

general economic and business conditions; pricing

it operates.

of competitive products; success of the Company’s

Strategic Alliance objective; success in acquiring other

beverage businesses; success of new product and

flavor introductions; fluctuations in the costs of raw

materials; the Company’s ability to increase prices;

continued retailer support for the Company’s products;

changes in consumer preferences; success of imple-

menting business strategies; changes in business

strategy or development plans; government regulations;

regional weather conditions; and other factors refer-

enced in this Annual Report. The Company disclaims

an obligation to update any such factors or to publicly

announce the results of any revisions to any forward-

looking statements contained herein to reflect future

events or developments.

Interest Rates

At the end of fiscal 2002, the Company had $10.9 mil-

lion of floating-rate term-debt outstanding. If the interest

rate changed by 100 basis points (1%), interest

expense for fiscal 2002 would have changed by

approximately $160,000. Because of its limited expo-

sure to interest rate movements, the Company does

not currently utilize interest rate swaps or other interest

rate hedging products.

The Company’s investment portfolio consists prima-

rily of short-term money market instruments, the yields

of which fluctuate based largely on short-term Treasury

rates. If the yield of these instruments had changed by

100 basis points (1%), interest income for fiscal 2002

would have changed by approximately $360,000.

National Beverage Corp.

Consolidated Balance Sheets
As of April 27, 2002 and April 28, 2001

(In thousands, except share amounts)

Assets
Current assets:

Cash and equivalents

Trade receivables—net of allowances of $593 (2002) and $559 (2001)

Inventories

Deferred income taxes

Prepaid and other

Total current assets

Property—net

Goodwill

Intangible assets—net

Other assets

Liabilities and Shareholders’ Equity
Current liabilities:

Accounts payable

Accrued liabilities

Income taxes payable

Total current liabilities

Long-term debt

Deferred income taxes

Other liabilities

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

Common stock, $.01 par value —authorized 50,000,000 shares;

issued 22,209,312 shares (2002) and 22,134,612 shares (2001);

outstanding 18,212,778 shares (2002) and 18,161,978 shares (2001)

Additional paid-in capital

Retained earnings

Treasury stock—at cost:

Preferred stock—150,000 shares

Common stock—3,996,534 shares (2002) and 3,972,634 shares (2001)

Total shareholders’ equity

See accompanying Notes to Consolidated Financial Statements.

National Beverage Corp.

2002

2001

$ 42,646

$ 39,625

42,955

31,040

1,616

5,621

41,068

31,747

1,333

6,518

123,878

120,291

60,658

13,145

2,043

5,961

62,215

13,145

2,114

6,103

$205,685

$203,868

$ 30,819

$ 37,651

21,020

1,875

53,714

10,981

12,072

3,241

20,131

57,847

24,136

10,208

3,189

150

222

221

16,526

15,638

126,257

109,705

(5,100)

(12,378)

(12,126)

125,677

108,488

$205,685

$203,868

Consolidated Statements of Income
For the Fiscal Years Ended April 27, 2002, April 28, 2001 and April 29, 2000

(In thousands, except per share amounts)

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Interest expense

Other income —net

Income before income taxes

Provision for income taxes

Net income

Net income per share—

Basic

Diluted

Average common shares outstanding—

Basic

Diluted

See accompanying Notes to Consolidated Financial Statements.

2002

2001

2000

$502,778

$480,415

$426,269

339,041

323,743

286,245

163,737

136,925

156,672

140,024

131,852

120,104

857

867

26,822

10,270

2,110

1,506

24,216

9,236

2,789

4,754

21,885

8,302

$ 16,552

$ 14,980

$ 13,583

.91

.87

.82

.80

.74

.71

18,212

18,992

18,160

18,840

18,321

19,018

National Beverage Corp.

(In thous share ats)
(In thousands, except share amounts)

Preferred Stock
Beginning and end of year

Common Stock
Beginning of year

Additional Paid-In Capital
Beginning of year

Stock options exercised

End of year

Retained Earnings
Beginning of year

Net income

End of year

Treasury Stock—Preferred
Beginning and end of year

Treasury Stock—Common
Beginning of year

Consolidated Statements of Shareholders’ Equity
For the Fiscal Years Ended April 27, 2002, April 28, 2001 and April 29, 2000

2002

2001

2000

Amount

150,000

150

150,000

150

150,000

150

22,134,612

221

22,117,332

221

22,062,012

Stock options exercised

74,700

17,280

—

55,320

End of year

22,209,312

222

22,134,612

221

22,117,332

15,638

888

16,526

109,705

16,552

126,257

15,556

15,638

94,725

14,980

109,705

221

—

221

15,304

252

15,556

81,142

13,583

94,725

(9,712)

(2,154)

150,000

(5,100)

150,000

(5,100)

150,000

(5,100)

Purchase of common stock

23,900

(252)

33,600

(260)

265,980

3,972,634

(12,126)

3,939,034

(11,866)

3,673,054

End of year

3,996,534

(12,378)

3,972,634

(12,126)

3,939,034

(11,866)

Total Shareholders’ Equity

$125,677

$108,488

$ 93,686

See accompanying Notes to Consolidated Financial Statements.

National Beverage Corp.

Consolidated Statements of Cash Flows
For the Fiscal Years Ended April 27, 2002, April 28, 2001 and April 29, 2000

(In thousands)

Operating Activities:
Net income

Adjustments to reconcile net income to net cash

provided by (used in) operating activities:

Depreciation and amortization

Deferred income tax provision

Loss (gain) on sale of assets

Changes in assets and liabilities, net of acquisitions:

Trade receivables

Inventories

Prepaid and other assets

Accounts payable

Other liabilities, net

Net cash provided by operating activities

Investing Activities:
Property additions

Proceeds from sale of assets

Acquisitions, net of cash acquired

Net cash used in investing activities

Financing Activities:
Debt borrowings

Debt repayments

Borrowings (payments) on line of credit, net

Purchase of common stock

Proceeds from stock options exercised

Net cash used in financing activities

Net Increase in Cash and Equivalents
Cash and Equivalents—Beginning of Year

Cash and Equivalents—End of Year

Other Cash Flow Information:
Interest paid

Income taxes paid

See accompanying Notes to Consolidated Financial Statements.

2002

2001

2000

$ 16,552

$ 14,980

$ 13,583

11,750

11,739

10,163

1,581

203

2,329

582

(3,364)

(1,887)

(1,948)

707

(2,180)

(6,832)

3,463

786

(4,002)

(2,604)

(677)

(1,934)

(3,441)

2,809

1,926

23,357

21,467

19,647

(7,162)

(6,049)

(8,559)

—

3,557

(3,979)

(5,258)

(7,090)

(10,000)

(10,260)

—

(9,155)

(4,000)

(252)

161

—

(9,106)

(1,000)

(260)

4,000

(8,334)

(2,000)

(2,154)

103

(13,246)

(10,324)

(8,385)

3,021

39,625

1,143

1,002

38,482

37,480

$ 42,646

$ 39,625

$ 38,482

935

$ 2,450

$ 2,867

6,671

10,616

7,366

National Beverage Corp.

Notes to Consolidated Financial Statements

1. Significant Accounting Policies

Organization

National Beverage Corp. (the “Company”) is a holding

company for various subsidiaries that develop, manu-

facture, market and distribute a complete portfolio

of cola and multi-flavored soft drinks, juice drinks,

water and specialty beverages. Substantially all of the

Company’s brands are produced in its sixteen man-

ufacturing facilities, which are strategically located in

major metropolitan markets across the continental

United States.

Basis of Presentation

“Goodwill and Other Intangible Assets.” The adop-

tion of SFAS No. 142 did not materially impact the

Company’s financial position or operating results.

See Note 4.

In the fourth quarter of fiscal 2002, the Company

adopted the Emerging Issues Task Force (“EITF”) 01-9

“Accounting for Consideration Given by a Vendor to

a Customer or Reseller of the Vendor’s Products.” The

adoption of EITF 01-9 did not materially impact the

Company’s operating results.

In October 2001, the Financial Accounting Stand-

ards Board issued SFAS No. 144 “Accounting for

the Impairment or Disposal of Long-Lived Assets.” This

The consolidated financial statements include the

statement supersedes SFAS No. 121 “Accounting for

accounts of the Company and its wholly-owned sub-

the Impairment of Long-Lived Assets and for Long-

sidiaries. All significant intercompany balances have

Lived Assets to Be Disposed of ” and addresses finan-

been eliminated. The Company’s fiscal year ends

cial accounting and reporting for the impairment or

the Saturday closest to April 30th. The preparation

disposal of long-lived assets. SFAS No. 144 is effective

of financial statements in conformity with generally

for the Company’s fiscal year beginning April 28,

accepted accounting principles requires management

2002. The Company does not expect that the adoption

to make estimates and assumptions that affect the

of this statement will materially impact its financial

amounts reported in the financial statements and

position or its operating results.

accompanying notes. Although these estimates are

In May 2002, the Board issued SFAS No. 145

based on management’s knowledge of current events

“Rescission of FASB Statements No. 4, 44, and 64,

and actions it may undertake in the future, they may

Amendment of FASB Statement No. 13, and Technical

ultimately differ from actual results. Certain prior year

Corrections” which rescinds the automatic treatment of

amounts have been reclassified to conform to the

gains or losses from extinguishment of debt as extraor-

fiscal 2002 presentation.

Cash and Equivalents

Cash and equivalents are comprised of cash and highly

liquid securities (consisting primarily of short-term

money-market investments) with an original maturity

or redemption option of three months or less.

dinary. SFAS No. 145 also requires sale-leaseback

accounting for certain lease modifications and makes

various technical corrections to existing pronounce-

ments. The provisions of SFAS No. 145 related to the

rescission of FASB No. 4 are effective for fiscal years

beginning after May 15, 2002 with all other provisions

effective for transactions occurring after May 15, 2002,

Changes in Accounting Standards

with early adoption encouraged.

The Company adopted Statement of Financial

Accounting Standards (“SFAS”) No. 133 “Accounting

for Derivative Instruments and Hedging Activities”

in the first quarter of fiscal 2002. The adoption of

SFAS No. 133 did not have a material impact on the

Company’s financial position or operating results and

has not resulted in significant changes to its financial

risk management practices. Also, in the first quarter

of fiscal 2002, the Company adopted SFAS No. 142

Credit Risk

The Company sells products to a variety of customers

and extends credit based on an evaluation of the cus-

tomer’s financial condition, generally without requiring

collateral. Exposure to losses on receivables varies by

customer principally due to the financial condition of

each customer. The Company monitors its exposure to

credit losses and maintains allowances for anticipated

losses. At April 27, 2002 and April 28, 2001, the

National Beverage Corp.

Company did not have any customers that comprised

financial statements. Valuation allowances are estab-

more than 10% of trade receivables. No one customer

lished when it is deemed, more likely than not, that the

accounted for more than 10% of net sales for fiscal

benefit of deferred tax assets will not be realized.

2002, 2001 or 2000.

Customer Contracts

Insurance Programs

The Company maintains self-insured and deductible

The Company incurs certain costs related to long-term

programs for certain liability, medical and workers’

contractual relationships with national and regional

compensation exposures. The Company accrues for

retailers to manufacture and market Company and

known claims and estimated incurred but not reported

retailer branded products. These costs are deferred

claims not otherwise covered by insurance, based on

and amortized based on the contractual unit volume

actuarial assumptions and historical claims experience.

or the straight-line method over the lesser of the period

of benefit or the non-cancelable period of the contract.

It is the Company’s policy to periodically review and

evaluate the future benefits associated with these costs

to determine that deferral and amortization is justified.

Of these costs, amounts associated with remaining

periods of one year or less are included in other cur-

rent assets and all other amounts are included in other

Inventories

Inventories are stated at the lower of first-in, first-out

cost or market. Inventories at April 27, 2002 are

comprised of finished goods of $17,531,000 and raw

materials of $13,509,000. Inventories at April 28,

2001 are comprised of finished goods of $17,721,000

and raw materials of $14,026,000.

assets. Advertising costs are expensed as incurred.

Net Income Per Share

Impairment of Long-Lived Assets

All long-lived assets, excluding goodwill and intangible

assets not subject to amortization, are evaluated for

impairment on the basis of undiscounted cash flows

Basic net income per share is computed by dividing

net income by the weighted-average number of

common shares outstanding. Diluted net income per

share includes the dilutive effect of stock options.

whenever events or changes in circumstances indicate

Property

that the carrying amount of an asset may not be

Property is recorded at cost. Depreciation is computed

recoverable. An impaired asset is written down to its

by the straight-line method over estimated useful lives

estimated fair market value based on the best informa-

of 7 to 30 years for buildings and improvements, and

tion available. Estimated fair market value is generally

3 to 15 years for machinery and equipment. When

measured by discounting future cash flows. Goodwill

assets are retired or otherwise disposed, the cost

and intangible assets not subject to amortization are

and accumulated depreciation are removed from the

evaluated for impairment annually or sooner in accord-

respective accounts and any related gain or loss is

ance with SFAS No. 142 and an impairment loss is

recognized. Maintenance and repair costs are

recognized if the carrying amount is greater than its

charged to expense as incurred, and renewals and

fair value.

Income Taxes

improvements that extend the useful lives of assets

are capitalized.

The Company’s effective income tax rate and the tax

Revenue Recognition

bases of its assets and liabilities are based on man-

Revenue from product sales is recognized by the

agement’s estimate of taxes which will ultimately be

Company when title and risk of loss passes to the

payable. Deferred taxes are recorded to give recog-

customer, which generally occurs upon delivery.

nition to temporary differences between the tax bases

of assets or liabilities and their reported amounts in the

National Beverage Corp.

Notes to Consolidated Financial Statements (continued)

Segment Reporting

3. Property

The Company operates in a single operating segment

for purposes of presenting financial information and

evaluating performance. As such, the accompanying

Property at April 27, 2002 and April 28, 2001

consisted of the following:

consolidated financial statements present financial

(In thousands)

information in a format that is consistent with the

Land

internal financial information used by management.

Shipping and Handling Costs

Buildings and improvements

Machinery and equipment

Shipping and handling costs are reported in “Selling,

Total

2002

2001

$ 10,625

35,437

98,195

35,088

94,356

144,257

140,069

general and administrative expenses” in the accompa-

Less accumulated depreciation

(83,599)

(77,854)

nying statements of income. Such costs aggregated

Property—net

$ 60,658

$ 62,215

$39.7 million in fiscal 2002, $37.0 million in fiscal

2001, and $31.2 million in fiscal 2000.

2. Acquisitions

In September 2000, the Company acquired certain

operations and assets of Beverage Canners International,

Inc., a Miami-based producer and distributor of car-

bonated soft drinks and sparkling waters. The assets

acquired included a leased manufacturing facility,
inventory and the Ritz(cid:2) and Crystal Bay (cid:2) brands. The
acquisition has been accounted for using the purchase

Depreciation expense was $8,444,000 for fiscal

2002, $7,996,000 for fiscal 2001, and $6,966,000

for fiscal 2000. Other income for the fourth quarter of

fiscal 2000 includes a gain of $3.4 million from the

sale of a residual interest in an operating lease.

4. Intangible Assets

In accordance with SFAS No. 142 adopted in the first

quarter of fiscal 2002, the Company discontinued the

amortization of goodwill and certain intangible assets

method of accounting and, accordingly, the purchase

that were determined to have an indefinite life. Had

price has been allocated to the assets acquired based

the Company applied the non-amortization provisions

upon their estimated fair values at the date of acqui-

of SFAS No. 142 at the beginning of fiscal 2001, net

sition. Operating results of the acquired business, which

income would have increased by $361,000 (approxi-

are not material to consolidated results, have been

mately $.02 per share). Intangible assets at April 27,

included in the consolidated statements of income from

2002 and April 28, 2001 consisted of the following:

the date of acquisition.

In May 1999, the Company acquired the operations

and assets of Home Juice, a Chicago-based producer

and distributor of premium juice and juice products.

The assets acquired included a manufacturing facility,
receivables, inventory and the Mr. Pure(cid:2) and Home
Juice (cid:2) trademarks. The operating results of Home Juice,
which are not material to consolidated results, have

(In thousands)

2002

2001

Unamortized trademarks

$ 1,587

$ 1,601

Amortizable distribution rights

Less accumulated amortization

Net

855

(399)

456

855

(342)

513

Amortization expense related to intangible assets

been included in the consolidated statements of income

was $57,000 and $144,000 for fiscal 2002 and fiscal

from the date of acquisition. The acquisition has been

2001, respectively.

accounted for using the purchase method and, accord-

ingly, the purchase price has been allocated to the

assets acquired based upon their estimated fair values

at the date of acquisition.

National Beverage Corp.

5. Accrued Liabilities

Accrued liabilities at April 27, 2002 and April 28,

2001 consisted of the following:

The long-term portion of debt at April 27, 2002

matures as follows: $10,381,000 in fiscal 2004 and

$600,000 in fiscal 2005.

The fair value of debt has been estimated using

(In thousands)

Accrued promotions

Accrued compensation

Other accrued liabilities

Total

6. Debt

2002

2001

discounted cash flow models incorporating discount

$ 7,307

$ 5,951

5,487

8,226

5,595

8,585

$21,020

$20,131

rates based on current market interest rates for similar

types of instruments. At April 27, 2002 and April 28,

2001, the difference between the estimated fair value

and the carrying value of debt instruments was

not material.

7. Capital Stock and Transactions with

Long-term debt at April 27, 2002 and April 28, 2001

Related Parties

consisted of the following:

(In thousands)

Credit Facilities

Term Loan Facilities

Other

Total

2002

2001

the Company to repurchase up to 800,000 shares

In January 1998, the Board of Directors authorized

— $ 4,000

of its common stock. In fiscal 2002 and 2001, the

10,900

19,900

236

Company purchased 23,900 shares and 33,600

shares, respectively, of common stock on the open

$10,981

$24,136

market. Such shares are classified as treasury stock.

The Company is a party to a management agree-

Certain subsidiaries of the Company maintain

ment with Corporate Management Advisors, Inc.

unsecured revolving credit facilities aggregating

(“CMA”), a corporation owned by the Company’s

$45 million (the “Credit Facilities”) and unsecured

Chairman and Chief Executive Officer. Under the agree-

term loan facilities (“Term Loan Facilities”) with banks.

ment, the employees of CMA provide the Company

The Credit Facilities expire through December 10, 2003

with corporate finance, strategic planning, business

and bear interest at 1⁄2 % below the banks’ reference

development and other management services for an

rate or 1% above LIBOR, at the subsidiaries’ election.

annual base fee equal to one percent of consolidated

The Term Loan Facilities are repayable in installments

net sales, plus incentive compensation based on certain

through July 31, 2004, and bear interest at the banks’

factors to be determined by the Compensation Com-

reference rate or 11⁄4 % above LIBOR, at the sub-

mittee of the Company’s Board of Directors. The

sidiaries’ election. The Company intends to utilize its

Company incurred fees to CMA of $5.0 million,

existing long-term Credit Facilities to fund the current

$4.8 million, and $4.3 million for fiscal 2002, 2001

principal payments due on its Term Loan Facilities.

and 2000, respectively. No incentive compensation

Debt agreements require subsidiaries to maintain

has been incurred or approved under the management

certain financial ratios and contain other restrictions,

agreement since its inception. Included in accounts

none of which are expected to have a material impact

payable in the accompanying consolidated balance

on the operations or financial position of the Company.

sheets at April 27, 2002 and April 28, 2001 were

At April 27, 2002, retained earnings of approximately

amounts due CMA of $1,258,000 and $430,000,

$28 million were restricted from distribution and the

respectively.

Company was in compliance with all loan covenants.

National Beverage Corp.

Notes to Consolidated Financial Statements (continued)

8. Income Taxes

9. Leases

The provision for income taxes consisted of the following:

Future minimum rental commitments for non-cancelable

(In thousands)

2002

2001

2000

operating leases at April 27, 2002 are as follows:

Current

Deferred

Total

$ 8,689

$6,907

$7,720

1,581

2,329

582

$10,270

$9,236

$8,302

The reconciliation of the statutory federal income tax

rate to the Company’s effective tax rate is as follows:

(In thousands)

Fiscal 2003

Fiscal 2004

Fiscal 2005

Fiscal 2006

Fiscal 2007

Thereafter

$ 5,166

3,995

2,421

1,026

926

298

2002

2001

2000

Total minimum lease payments

$13,832

Statutory federal income

tax rate

35.0% 35.0% 35.0%

State income taxes, net of

federal benefit

Goodwill and other

permanent differences

Other, net

2.6

2.5

2.4

—

(.3)

Rental expense was $9,415,000 for fiscal 2002,

$10,164,000 for fiscal 2001, and $8,179,000 for

fiscal 2000.

10. Incentive and Retirement Plans

Effective income tax rate

38.3% 38.1% 37.9%

The Company’s 1991 Omnibus Incentive Plan (the

“Omnibus Plan”) provides for compensatory awards

Deferred taxes are recorded to give recognition to

consisting of (i) stock options or stock awards for up

temporary differences between the tax bases of assets

to 2,000,000 shares of common stock of the Company,

or liabilities and their reported amounts in the financial

(ii) stock appreciation rights, dividend equivalents,

statements. Valuation allowances are established when

other stock-based awards in amounts up to 2,000,000

it is deemed, more likely than not, that the benefit of

shares of common stock of the Company and (iii) per-

deferred tax assets will not be realized. The Company’s

formance awards consisting of any combination of

deferred tax assets and liabilities as of April 27, 2002

the above. The Omnibus Plan is designed to provide

and April 28, 2001 consisted of the following:

an incentive to the officers (including those who are

(In thousands)

Deferred tax assets:

2002

2001

Accrued expenses and other

$ 1,857

$ 3,477

Inventory and amortizable assets

452

522

Total deferred tax assets

2,309

3,999

Deferred tax liabilities:

Property and intangibles

12,765

12,874

Net deferred tax liabilities

$10,456

$ 8,875

also directors) and certain other key employees and

consultants of the Company by making available to

them an opportunity to acquire a proprietary interest

or to increase such interest in the Company. The number

of shares or options which may be issued under stock

based awards to an individual is limited to 700,000

during any year. Awards may be granted for no cash

consideration or such minimal cash consideration as

may be required by law. Options generally vest over

a five-year period and expire after ten years.

National Beverage Corp.

Pursuant to a Special Stock Option plan, the

the participant. The options are granted at an initial

Company has authorized the issuance of options to

exercise price of 60% of the purchase price paid

purchase up to an aggregate of 500,000 shares

for the shares acquired and reduces to the par value

of common stock. Options may be granted for such

of the Company’s stock at the end of the six-year vesting

consideration as determined by the Board or a

period. The difference between the exercise price and

Committee of the Board. The Company also author-

the fair market value of the stock on date of grant is

ized the issuance of options to purchase up to

amortized over the vesting period.

50,000 shares of common stock to be issued at the

On October 26, 2001, the Company’s stockholders

direction of the Chairman.

approved an amendment to the Company’s Omnibus

In March 1997, the Company’s Board of Directors

Incentive Plan and Special Stock Option Plan to increase

adopted the Key Employee Equity Partnership Program

the number of shares available for award by 600,000

(“KEEP”), which provides for the granting of stock

and 100,000 shares, respectively.

options to purchase up to 100,000 shares of common

The Company’s 1991 Stock Purchase Plan (the

stock to key employees, consultants, directors and

“Stock Purchase Plan”) provides for the purchase of

officers of the Company. Participants who purchase

up to 640,000 shares of common stock by employees

shares of the Company’s stock in the open market

of the Company who (i) have been employed by the

receive grants of stock options equal to 50% of the

Company for at least two years, (ii) are not part-time

number of shares purchased, up to a maximum of

employees of the Company and (iii) are not owners

6,000 shares in any two-year period. Options under

of five percent (5%) or more of the common stock

the KEEP program are automatically forfeited in the

of the Company. As of April 27, 2002, no shares have

event of the sale of shares originally acquired by

been issued under the Stock Purchase Plan.

The following is a summary of stock option activity:

2002

2001

2000

(Options in thousands)

Price

Weighted-

Average

Exercise

Weighted-

Average

Exercise

Weighted-

Average

Exercise

Price

Options outstanding at beginning of year

1,274

$3.71

1,122

$ 3.28

1,191

$3.29

Options granted

Options exercised

Options canceled

Options outstanding at end of year

Options exercisable at end of year

Options available for grant at end of year

(257)

(110)

996

751

1,155

8.84

.84

6.45

208

(17)

(39)

7.26

2.65

10.61

(55)

(22)

4.61

1,274

3.71

1,122

5.24

2.28

7.08

3.28

954

387

921

586

Weighted-average fair value of options granted

$7.88

$ 5.04

$6.46

National Beverage Corp.

Notes to Consolidated Financial Statements (continued)

The following is a summary of stock options outstanding at April 27, 2002:

(Options in thousands)

Range of Exercise Price

$2.09

$2.25–$4.95

$5.00

$5.06–$8.54

$9.00–$9.88

Options Outstanding

Options Exercisable

Weighted-
Average
Remaining
Contractual
Life

2 years

4 years

8 years

Weighted-
Average
Exercise
Price

$2.09

2.63

5.00

7.02

9.45

4.61

392

135

144

156

169

996

Weighted-
Average
Exercise
Price

$2.09

2.53

5.00

6.87

9.88

3.49

392

127

144

751

The option price range for all options outstanding

interest rates of approximately 5% for fiscal 2002,

at the end of the fiscal year was $2.09 to $9.88 for

5% for 2001 and 6% for 2000; and no dividend pay-

2002, $.13 to $9.88 for 2001, and $.13 to $13.50

ments. Had compensation cost for the Company’s

for 2000. The option price range for options exercised

option plans been determined and recorded consistent

during the fiscal year was $.13 to $5.00 for 2002,

with the Black-Scholes option-pricing model in accord-

$2.09 to $5.00 for 2001, and $.63 to $5.00 for

ance with SFAS 123, the Company’s net income and

2000. During fiscal 2002, approximately $727,000

earnings per share for fiscal 2002, 2001 and 2000

of accrued compensation and tax benefits related to

would have been reduced on a pro forma basis by less

stock options exercised was recorded to additional

than $200,000 ($.01 per share) for each year.

paid-in capital.

The Company contributes to various defined con-

The Company applies Accounting Principles Board

tribution retirement plans (which cover employees

Opinion No. 25, “Accounting for Stock Issued to

under various collective bargaining agreements) and

Employees” (“APB 25”), and related interpretations,

discretionary profit sharing plans (which cover all

in accounting for stock-based awards to employees.

non-union employees). Contributions were $1.7 million

Under APB 25, the Company generally recognizes

for fiscal 2002, $1.5 million for fiscal 2001, and

no compensation expense with respect to such awards

$1.3 million for fiscal 2000.

unless the exercise price of options granted is less

than the market price on the date of grant.

11. Commitments and Contingencies

Pro forma information regarding net income and

earnings per share is required by Statement of Financial

Accounting Standards No. 123 “Accounting and

Disclosure of Stock-Based Compensation” (“SFAS 123”)

for awards granted after December 15, 1994, as if

the Company had accounted for its stock-based

awards to employees under the fair value method of

SFAS 123. The fair value of stock option grants was

estimated using a Black-Scholes option-pricing model

with the following assumptions used for grants: expected

life of 10 years; volatility factor of 43% for fiscal

2002, 45% for 2001, and 46% for 2000; risk-free

From time to time, the Company is a party to various

litigation matters arising in the ordinary course of

business. In the opinion of management, the ultimate

disposition of such matters 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.

National Beverage Corp.

12. Quarterly Financial Data (Unaudited)

(In thousands, except per share amounts)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal 2002

Net sales

Gross profit

Net income

Net income per common share:

Basic

Diluted

Fiscal 2001

Net sales

Gross profit

Net income

Net income per common share:

Basic

Diluted

$ 152,385

$ 124,124

$100,409

$ 125,860

50,126

7,616

39,980

3,589

32,587

930

41,044

4,417

.42

.40

.20

.19

.05

.24

.23

$140,226

$120,760

$ 97,096

$122,333

46,053

6,950

38,917

3,315

30,249

532

41,453

4,183

.38

.37

.18

.03

.23

.22

Report of Independent Certified Public Accountants

To the Board of Directors and

Shareholders of National Beverage Corp.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,

shareholders’ equity and cash flows present fairly, in all material respects, the financial position of National Beverage

Corp. and its subsidiaries at April 27, 2002 and April 28, 2001, and the results of their operations and their cash

flows for each of the three years in the period ended April 27, 2002, in conformity with accounting principles

generally accepted in the United States of America. These financial statements are the responsibility of the Company’s

management; our responsibility is to express an opinion on these financial statements based on our audits. We

conducted our audits of these statements in accordance with auditing standards generally accepted in the United

States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and

significant estimates made by management, and evaluating the overall financial statement presentation. We believe

that our audits provide a reasonable basis for our opinion.

As described in Note 4 to the consolidated financial statements, the Company adopted the provisions of Statement

of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” effective April 29, 2001.

PricewaterhouseCoopers LLP

Miami, Florida

July 23, 2002

National Beverage Corp.

Market Information

The common stock of the Company, par value $.01 per

Excluding beneficial owners of the Company’s

share, (“the Common Stock”) is listed on the American

Common Stock whose securities are held in the names

Stock Exchange (“AMEX”) under the symbol “FIZ.” The

of various dealers and/or clearing agencies, there

following table shows the range of high and low sale

were approximately 1,000 shareholders of record at

prices per share of the Common Stock as reported by

July 19, 2002, according to records maintained by

the AMEX for the fiscal quarters indicated:

the Company’s transfer agent.

Fiscal 2002

Fiscal 2001

High

Low

High

Low

First Quarter

$10.35

$ 8.90

$ 9.75

$7.63

Second Quarter

$10.94

$ 9.66

$ 8.13

$6.69

Third Quarter

$13.34

$10.30

$10.25

$6.63

Fourth Quarter

$14.40

$12.35

$10.00

$7.94

The Company has not paid any cash dividends

with respect to its Common Stock during the last three

fiscal years and the Company’s Board of Directors

has no present plans for declaring any such cash

dividends. See Note 6 of Notes to Consolidated

Financial Statements for certain restrictions on the

payment of dividends.

National Beverage Corp.

(cid:2)

Corporate Data

(cid:2)

Directors

Nick A. Caporella
Chairman of the Board
& Chief Executive Officer
National Beverage Corp.

Joseph G. Caporella
Executive Vice President
National Beverage Corp.

Samuel C. Hathorn, Jr.*
President
Trendmaker Development Co.

S. Lee Kling*
Chairman of the Board
The Kling Company

Joseph P. Klock, Jr., Esq.*
Chairman and Managing Partner
Steel, Hector & Davis

*Member Audit Committee

Corporate Management

Nick A. Caporella
Chairman of the Board
& Chief Executive Officer

Joseph G. Caporella
Executive Vice President

George R. Bracken
Senior Vice President–Finance

Dean A. McCoy
Senior Vice President–Controller

Raymond J. Notarantonio
Executive Director–IT

John S. Bartley
Director–Internal Audit

Brent R. Bott
Director–Consumer Marketing

Gregory J. Kwederis
Director–Beverage Analyst

Janet M. McCabe
Director–Insurance

Lawrence P. Parent
Director–Credit Management

John S. Shaub
Director–Tax

Subsidiary Management

Subsidiaries

Stock Listing

National Beverage Corp.’s Common
Stock is listed on the American Stock
Exchange–ticker symbol FIZ.

Registrar and
Transfer Agent

Mellon Investor Services LLC
85 Challenger Rd.
Overpeck Centre
Ridgefield Park, NJ 07667
800-756-3353

Independent Auditors

PricewaterhouseCoopers LLP
Miami, FL

Thanks

A very special thanks to our wonderful
National Beverage Team for a great
year. This entire Annual Report reflects
people, products and results that are
truly…Ours!

To all those members of the National
Beverage Family who appeared in this
Annual Report…Thanks!

Mike Bahr
Nina Blasquez
Austin and Spencer Bott
Eugene Bristol
Joe Caporella
Al Chittaro
Greg Cook
Roberto Diaz
Ed Grant
Jessica Keene
Ed Knecht
Joe Okabe
Jeanette Owens
Roberto Pavon
Nick Perez
Shirley Raff

Page 4
Page 2
Page 7
Page 10
Page 14
Page 11
Page 3
Page 10
Page 8
Page 6
Inside Front Cover
Page 4
Page 9
Page 10
Page 5
Page 6

BevCo Sales, Inc.
Beverage Corporation International, Inc.
Everfresh Beverages, Inc.
Faygo Beverages, Inc.
Home Juice Corp.
National Retail Brands, Inc.
NewBevCo, Inc.
PACO, Inc.
PETCO, Inc.
Shasta Beverages, Inc.
Shasta Beverages International, Inc.
Shasta Midwest, Inc.
Shasta Northwest, Inc.
Shasta Sales, Inc.
Shasta Sweetener Corp.
Shasta West, Inc.
Winnsboro Beverage Packers, Inc.

Corporate Offices

One North University Drive
Fort Lauderdale, FL 33324
954-581-0922

Annual Meeting

The Annual Meeting of Shareholders
will be held on Friday, September 27,
2002 at 2:00 p.m. local time at the
Hyatt Regency Orlando International
Airport, 9300 Airport Boulevard,
Orlando, Florida 32827.

Financial and Other
Information

Copies of National Beverage Corp.’s
Annual Report, Annual Report on
Forms 10-K and supplemental quarterly
financial data are available free of
charge. Requests should be directed
to the Company at P.O. Box 16720,
Fort Lauderdale, FL 33318. Attention:
Shareholder Relations.

Earnings and other financial results,
corporate news and other Company
information are available on
National Beverage’s website at
www.nationalbeverage.com.

Edward F. Knecht
President
Shasta Sweetener Corp.
PACO, Inc.

Sanford E. Salzberg
President
Shasta Northwest, Inc.

Stanley M. Sheridan
President
Faygo Beverages, Inc.

Michael J. Bahr
Executive Vice President
Shasta West, Inc.

Alan D. Domzalski
Executive Vice President
Everfresh Beverages, Inc.

Brian M. Gaggin
Executive Vice President
National Retail Brands, Inc.

James M. Lee
Executive Vice President
Beverage Corporation International, Inc.

Charles A. Maier
Executive Vice President
Foodservice
Shasta Sales, Inc.

Michael J. Perez
Executive Vice President
Shasta Midwest, Inc.

William R. Phillips
Executive Vice President
National BevPak

Dennis L. Thompson
Executive Vice President
BevCo Sales, Inc.

John F. Hlebica
Vice President
Shasta Beverages International, Inc.

Worth B. Shuman, III
Vice President
Military Sales

Gregory L. Kimbrough
General Manager
PETCO, Inc.

Martin J. Rose
General Manager
Shasta Vending

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(cid:2)

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National Beverage Corp.
One North University Drive
Fort Lauderdale, FL 33324