National Beverage Corp.
Annual Report 2004

Plain-text annual report

National Beverage Corp. 2004 annual report Occasion to... ...Dream ...Celebrate ...Reminisce Any occasion is an occasion for us to... flavor it great! There is a magical refuge—a ‘phenomenal’ mental place…that exists somewhere between counting your blessings and disappointment. If your character is such that you shift between these two emotional states—without frequently stopping at that unique, in-between comfort zone—you’re pegged… a striver and an achiever. Maybe the ever-present conditions that hone awareness of all considera- tions…make it tremendously impossible to ease up, even if our accomplishment results in breaking a record or achieving the highest earnings ever. Unfortunately… no correlation may be available between achievement and recognition, as is often the case in the present public-company climate. Although this keeps us quite concerned, determination holds us firmly committed…to striving and achieving our goals. FY ’04 was a very good year for us at National Beverage Corp.! The revenues and earnings were the highest ever, our flavor segment continued to outperform g n i t n e v n I e r u t u f the declining cola market, we became debt-free and our market capitalization also set a new high. We agonized long and hard over many external opportu- nities, but they could not justly meet our criteria…so we repaid our share- holders a large portion of their retained earnings…in a one-time cash payment. Our core brands Shasta and Faygo e h t outpaced the industry growth by a healthy multiple and media/market spending was up significantly. Much excitement was also generated concern- ing new television commercials, with one showing during the World Series event. We made great strides in new product development and are presently using the more acceptable sweetener substitute, Splenda(cid:1), almost exclusively. We have a backlog of new flavors in the pipeline and the energy segment has been jolted with our new…Rip It… kick a _ _ energy beverage. We were able to attract some excel- lent new management this year and, as page two—national beverage corp. of this writing, Team National seems quite healthy and robust. Pride abounds like never before! A recent example— upon meeting with three of National’s top-rung executives in Virginia, I was overwhelmed with pride as I listened to these energy-packed, dynamic-looking and sounding…sales experts. We are a very fortunate company indeed! (I think I just may have been nudged…into the count your blessings state.) While understanding that there is no y a d o t perfect plan, no perfect business and no perfect life…many intelligent and logi- cal humans…try to circumvent reality with drive and determination—thus a new record! More profoundly…others, as portrayed within these pages, find exceptional peace and contentment in that magical mental place—rewarding them with the vision of who they truly are and what they genuinely desire. That—is the…ultimate blessing! P.S. Have fun, smile and, for certain… Do yourself a flavor! Joseph G. Caporella President Nick A. Caporella Chairman & Chief Executive Officer 4 FY 2004 Results: 0 0 2 equity in April 2004 • Net income of $18.7 million was the highest in our history • Shareholders received a distribution of 23% of their • Market capitalization reached an all-time high • Return on tangible equity—15.7% Shareholder Values Five-Year Summary Shareholders’ Equity Year-End Market Capitalization +100% +127% f o s t h g i l h g i h Financial Highlights (dollars in millions except per share amounts) Net Sales Net Income Net Income per Share—Basic Working Capital Current Ratio Total Assets Total Equity Fiscal Year Ended 5/1/2004(1) 5/3/2003 $ 512.1 $500.4 18.7 .51 65.0 17.6 .48 79.8 2.1x 2.4x 199.9 125.4 218.2 143.3 (1) In April 2004, the Company paid a special ‘one-time’ cash dividend of $1.00 per share, aggregating $38.4 million. Five-Year Growth Data: FY2004 compared to FY1999 • Branded case volume increased 65% • Net sales improved 27% • Net income improved 42% • Working capital improved $46 million (before cash dividend) • All debt eliminated • Market capitalization more than doubled • Cash dividend of $38.4 million paid April 2004 Occasion to... t n e m h s e r f e r s u o i c i l e d h t i w Our creative and dynamic team is proud that National Beverage is a leader in the soft-drink beverage industry. Through innovative practices and flavor technology, our organization has come to be known as the ‘one-stop beverage shop’: • Vertical integration—from the initial purchase of quality ingredients to the ultimate consumption of our brands by our consumers, we control all aspects of our beverages’ life cycle • Low-cost producer—ownership of our plants not only provides efficiencies, but affords us total control over quality and customer service • Regional brand dynamics—consumers are loyal and actively seek our brands in their local markets…time-tested brands they have ‘grown up with’ • Hybrid distribution network—our customized distribution system meets the needs of a wide variety of customers, ranging from the small ‘mom and pop’ to the ‘mega’ chain store • Flavors—we have been dubbed the ‘King of Flavors’, ‘America’s Flavor Choice’, ‘The Flavor Company’…we’re known for such unique and deli- cious flavors as Raspberry Crème, Kiwi Strawberry, Peach-Plum-Pear and Mandarin Orange Mango Our diligence, perseverance and strong work ethic produce the best brands America has to offer. Our multi-flavored carbonated soft-drink lines have provided delicious refreshment to loyal consumers for over a century— Shasta–since 1889, Faygo–since 1907, Big Shot–since 1935 and Ritz– since 1962. We complement these carbonated lines with healthy alter- natives: Everfresh and Mr. Pure juices; Frutika nectars; LaCroix sparkling and pure spring waters; Mt. Shasta spring and pure drinking waters; Crystal Bay, ClearFruit and ClearFruit Lite flavored waters; and the latest introduction to the energy drink categories—Rip It and Rip It Lite. Uniqueness…Quality…Innovation…soaring to new heights! Reaching New page four—national beverage corp. s t h g i e H Occasion to... page six—national beverage corp. of Flavor... y s a t n a f e h T The challenge for any business is to create an environment that encourages and stimulates innovation…new ideas…favorable new thoughts with regard to its business potential and growth. Such a culture is the cornerstone of National Beverage. ‘Dreaming’ up new thirst-quenching products, new flavors, new packages—or creating entirely new and different ‘better-for-you’ beverages is the foundation of our vision. Isn’t it funny how certain aromas trigger fond memories…and revisiting special places creates that original, wonderful feeling once again? National Beverage invites your participation aboard our…fantasy of flavor. Our flavor experts have the creativity and expertise to continually develop new and exciting flavors—flavors that put the ‘fiz’ in celebrations and provoke heart- warming smiles. A simple walk in the park or a bite of fresh fruit may inspire our research team to dream up unique flavors worthy of our faithful consumers. New carbonated soft-drink flavors brought to market in recent months include French Vanilla Cola, Diet Cola with Lime, St. Nick’s Holiday Punch, Diet Chocolate Cream Pie and Diet Key Lime Pie. White Grape, Cranberry-Apple, Peach Watermelon, Cran- Raspberry, Piña Colada, Raspberry Lemonade and Strawberry Watermelon are among our latest juice and flavored water offerings. Consumers are searching for tantalizing variety, fun and flavor along with quality/ value products, enthusiastically consuming more diet sodas and juices, benefiting from still and sparkling waters, and enjoying more non-carbonated drinks than ever before in our nation’s history—challenging National Beverage’s innovative skills—and creating the perfect…daydream! Occasion to... How is it possible for one company to keep innovating and pioneering refreshing ideas every single day for over a century? The National Beverage team is resourceful and passionate to take on this challenge and is proud of our track record of inventiveness. From the beginning, our company has thrived on experimentation and originality. Our early brand initiatives changed the complexion of the soft- drink beverage industry in America. For instance, long ago we were the first to introduce diet flavors and soft drinks in steel cans and we pioneered the warehouse distribution method on a national level. We ventured outside the norm by formulating soft drinks with corn-derived fructose sweeteners and were the first to use those sweeteners in aluminum cans. Today National Beverage is known for such innovative brand and pack- aging initiatives as Shasta Shortz 8-oz. cans just for kids; the Shasta and Ritz lines of exotic flavors and Frutika nectars targeted to Hispanic mar- kets; and our fruit-flavored waters, ClearFruit and Crystal Bay. As part of the trend for consumers to prefer healthier diet products, we began using Splenda(cid:1) in our Crystal Bay, ClearFruit and Shasta diet beverages. Shasta will be one of the first national soft-drink brands to use the widely-preferred Splenda(cid:1) in substantially all its diet line. We’re particularly excited about our newest introduction, Rip It— an energy fuel that has no rival in taste, size and boost. Also, keep watching for Oooh! Shasta, a beautifully packaged 0-calorie, 0-carb, 0-caffeine, high-quality beverage just for the health-conscious consumer. At National Beverage, ‘to chill’ is to be composed in finding new opportunities, to be self-assured in offering new, exciting, great-tasting flavors, to be steadfast in our pursuit of quality and consistency in all of our beverages and to be unruffled by the challenge of competition. We love to be first and to be flavorfully cool—it’s the National Beverage way! Over A Century page eight—national beverage corp. l o o c y r e v . . . n o i t a v o n n I f o The measurement of success during a lifetime is an ever-changing and elusive process. When attempting to evaluate the status of ‘success’, it’s important to reflect on all the opportunities that have presented themselves and the results that were attained by them. Opportunities to provide family happiness, to advance a career, to embrace benevolent causes and to provide security for the future…are all significant life events to which each and every one of us aspires. National Beverage has dramatically expanded our beverage portfolio to offer a richer, fuller variety of wholesome beverages and a complete ‘beverage basket’ of brands. A diverse, changing, multi-channel, multi-dimensional landscape is a perfect opportunity for flexible, quick-to-market companies such as ours to fulfill shifting con- sumer tastes. The Culture ofE x p e c t a t i o n The core goal of our business philosophy is to accept only the very best in all phases of our operations. We offer faith and trust to our consumers and customers and the security of a quality beverage…every time. Through innovation and determi- nation, we have provided a safe future for the families of our employees…and through our prudent business practices, we have also provided a sound investment for our shareholders. It was with deep gratification that we returned a significant portion of their earnings to our loyal shareholders in 2004. Occasion to... Team National is a large family founded on the principles of ‘good is never enough… when better is available’. Our team has the utmost respect for our customers, for new and lifelong consumers of our brands, for the environment, for our shareholders and for each other. The power of imagination and a culture of expectation allow each of us at National Beverage the freedom and the occasion to soar, to daydream, to chill, and most impor- tantly…to reflect on our ‘future’. National Beverage appreciates the exceptional position that we occupy in the hearts of our Team, in the community, in the industry, and with our shareholders. We promise to never stop reflecting on our past experiences in order to always meet…expectations. Occasion to... Imagine Imagine Shasta Ritz Crystal Bay Mr. Pure ClearFruit Everfresh Big Shot Faygo LaCroix Rip it Frutika 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(2): Basic Diluted Balance Sheet Data: Working capital Property—net Total assets Long-term debt Deferred income taxes Shareholders’ equity (1) Cash dividends per share(1) Fiscal Year Ended May 1, 2004 May 3, 2003(3) April 27, 2002 April 28, 2001 April 29, 2000 $ 512,061 $500,430 $502,778 $ 480,415 $426,269 343,316 335,457 339,041 323,743 286,245 168,745 139,058 132 544 30,099 11,408 164,973 136,902 163,737 136,925 316 706 28,461 10,872 857 867 26,822 10,270 156,672 131,852 2,110 1,506 24,216 9,236 140,024 120,104 2,789 4,754 21,885 8,302 $ 18,691 $ 17,589 $ 16,552 $ 14,980 $ 13,583 $ $ .51 .49 $ .48 .46 $ .45 .44 $ .41 .40 .37 .36 $ 64,967 $ 79,785 $ 70,164 $ 62,444 $ 54,907 59,535 199,891 — 14,930 125,376 $ 1.00 60,432 60,658 62,215 62,430 218,195 205,685 203,868 197,754 300 14,843 10,981 12,072 24,136 10,208 33,933 8,011 143,292 125,677 108,488 93,686 (1) In April 2004, the Company paid a special “one-time” cash dividend of $1.00 per share, aggregating $38.4 million. (2) 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. Share amounts have been adjusted for the 100% stock dividend distributed on March 22, 2004. (3) Fiscal 2003 consisted of 53 weeks. page fourteen—national beverage corp. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview National Beverage Corp. develops, manufactures, markets and distributes a complete portfolio of quality non-alcoholic beverage products through- Beverage industry sales are seasonal with the highest volume typically realized during the summer months. Additionally, our operating results are subject to numerous factors, including fluctuations in the costs of raw materials, changes in consumer preference for beverage products and out the United States. Incorporated in Delaware in 1985, National Beverage competitive pricing in the marketplace. Corp. is a holding company for various operating subsidiaries. When used in this report, the terms “we,” “us,” “our,” “Company” and “National Results of Operations Beverage” mean National Beverage Corp. and its subsidiaries. Our lines of multi-flavored soft drinks, including those of our flagship brands, Shasta(cid:1) and Faygo(cid:1), emphasize distinctive flavor variety. In addi- tion, we offer an assortment of premium beverages geared to the health- conscious consumer, including Everfresh(cid:1), Home Juice(cid:1), and Mr. Pure(cid:1) 100% juice and juice-based products; and LaCROIX(cid:1), Mt. Shasta(cid:2), Crystal Bay(cid:1) and ClearFruit(cid:1) flavored and spring water products. We also pro- duce specialty products, including Rip It(cid:2), an energy drink geared toward young consumers, Ohana(cid:1) fruit-flavored drinks and St. Nick’s(cid:1) holiday soft drinks. Substantially all of our brands are produced in 14 manufactur- ing facilities that are strategically located in major metropolitan markets throughout the continental United States. To a lesser extent, we develop and produce soft drinks for retail grocery chains, warehouse clubs, mass- merchandisers and wholesalers (“allied brands”) as well as soft drinks for other beverage companies. Our strategy emphasizes the growth of our products by offering a branded beverage portfolio of proprietary flavors; by supporting the franchise value of regional brands and expanding those brands with new packaging and broader demographic emphasis; by developing and acquiring innovative products tailored toward healthy lifestyles; and by appealing to the “quality-price” expectations of the family consumer. We believe that the “regional share dynamics” of our brands perpetuate consumer loyalty within local regional markets, resulting in more aggressive retailer sponsored promotional activities. Over the last several years, we have focused on increasing penetration of our brands in the convenience channel through Company-owned and independent distributors. The convenience channel is composed of con- venience stores, gas stations and other smaller “up-and-down-the-street” accounts. Because of the higher retail prices and margins that typically prevail, we have undertaken specific measures to expand distribution in this channel. These include development of products specifically targeted to this market, such as ClearFruit, Everfresh, Mr. Pure, Crystal Bay, and Net Sales Net sales for fiscal 2004 increased approximately $11.6 million, or 2.3%, to $512.1 million. This sales growth was due primarily to increased volume of National Beverage’s branded soft drinks and favorable changes in product mix. This improvement was partially offset by a decline in lower margin allied branded business. Net sales for fiscal 2003 were relatively flat when compared to fiscal 2002. Beginning in the latter part of fiscal 2002, we implemented a strategy to grow our branded portfolio of products with less emphasis placed on lower margin allied branded soft drink products. During fiscal 2003, growth of our flagship soft drink brands, Shasta and Faygo, mitigated the reduction in our allied branded business. Fiscal 2004 and fiscal 2002 consisted of 52 weeks while fiscal 2003 consisted of 53 weeks. Gross Profit Gross profit, approximating 33.0% of net sales for both fiscal 2004 and 2003, increased $3.8 million in fiscal 2004. An increase in higher margin business and a reduction in certain fixed manufacturing costs were partially offset by increases in certain raw material costs. Gross profit approximated 33.0% of net sales for fiscal 2003 and 32.6% for fiscal 2002. This improvement was due to an increase in higher margin business and a reduction in fixed manufacturing costs related to the phase-out of two less efficient leased production facilities. These improve- ments were partially offset by increases in certain raw material costs. Selling, General and Administrative Expenses Selling, general and administrative expenses for fiscal 2004 were $139.1 million or 27.2% of net sales compared to $136.9 million or 27.4% of net sales for fiscal 2003. Due to the effect of higher volume, selling, general and administrative expenses as a percent of sales marginally declined, partially offset by higher marketing costs related to new prod- Rip It. Additionally, we have created proprietary and specialized packag- uct introductions. ing for these products with distinctive graphics. We intend to continue our focus on enhancing growth in the convenience channel through both specialized packaging and innovative product development. Selling, general and administrative expenses increased as a percentage of net sales to 27.4% for fiscal 2003 compared to 27.2% of net sales for fiscal 2002. The increase as a percentage of net sales was due to higher selling and distribution expenses related to changes in product and distribution mix. page fifteen—national beverage corp. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Interest Expense and Other Income—Net The increase in trade receivables is due to the effect of higher sales volume Fiscal 2004 and 2003 interest expense decreased $184,000 and $541,000 and change in terms with certain customers. The increase in prepaid and compared to the previous year, respectively, due to a reduction in average other is due to a reclassification from noncurrent assets and an increase in outstanding debt and interest rates. Other income includes interest income income tax refund receivables. At May 1, 2004, the current ratio was 2.1 of $603,000 for fiscal 2004, $816,000 for fiscal 2003, and $1.1 million to 1 compared to 2.4 to 1 for the prior year. for fiscal 2002. The decline in interest income is due to a reduction in During fiscal 2003, our working capital increased $9.6 million to investment yields and increased investments in tax-exempt securities. $79.8 million from $70.2 million primarily due to cash generated from Income Taxes Our effective tax rate was approximately 37.9% for fiscal 2004, 38.2% for fiscal 2003, and 38.3% for fiscal 2002. The difference between the effective rate and the federal statutory rate of 35% was primarily due to the effects of state income taxes, nondeductible expenses, and nontaxable operations. The decrease in inventory is related to a reduction in allied branded inventory and the decrease in prepaid and other is partly due to a decline in income tax refund receivables. The accounts payable increase was related to the timing of certain vendor payments. At May 3, 2003, the current ratio was 2.4 to 1 compared to 2.3 to 1 for the prior year. interest income. See Note 7 of Notes to Consolidated Financial Statements. Liquidity Liquidity and Financial Condition Capital Resources Our current sources of capital are cash flow from operations and borrow- ings under existing credit facilities. The Company maintains unsecured revolving credit facilities aggregating $45 million of which approximately $42 million was available for future borrowings at May 1, 2004. We believe that existing capital resources are sufficient to meet our capital requirements and those of the parent company for the foreseeable future. Cash Flows We continually evaluate capital projects designed to expand capacity and improve efficiency at our manufacturing facilities. During fiscal 2004, management initiated programs intended to improve plant efficiency and, as a result, the Company expects that fiscal 2005 capital expenditures will be higher than fiscal 2004. In January 1998, the Board of Directors authorized the purchase of up to 800,000 shares of National Beverage common stock. In fiscal 2004 and 2003, we purchased 18,000 shares and 18,250 shares, respectively, and aggregate shares purchased since January 1998 were 502,060. Pursuant to a management agreement, we incurred a fee to Corporate Management Advisors, Inc. (“CMA”) of approximately $5.1 million for During fiscal 2004, cash of $21.3 million was generated from operating fiscal 2004, $5.0 million for fiscal 2003, and $5.0 million for fiscal 2002. activities, which was offset by $8.1 million used for investing activities and At May 1, 2004, we owed $1.3 million to CMA for unpaid fees. See $39.2 million used for financing activities. Cash provided by operating Note 6 of Notes to Consolidated Financial Statements. activities for fiscal 2004 decreased $14.7 million due to an increase in working capital requirements. Cash used in investing activities decreased Contractual Obligations $551,000 due to lower property additions. Cash used in financing activities increased $29.5 million due to a cash dividend paid in April 2004, which was partially offset by a reduction in net debt repayments. During fiscal 2003, cash of $36.0 million was generated from operat- ing activities, which was partially offset by $8.6 million used for investing activities and $9.7 million used for financing activities. Cash provided by operating activities for fiscal 2003 increased $12.6 million compared to fiscal 2002 primarily due to an increase in cash provided by net income and a reduction in net working capital requirements. Cash used in invest- ing activities increased $1.5 million due to an increase in property additions while cash used in financing activities decreased $3.6 million primarily due to a reduction in net debt repayments. Financial Position During fiscal 2004, our working capital decreased $14.8 million to $65.0 million from $79.8 million primarily due to the cash dividend payment. Long-term contractual obligations at May 1, 2004 are payable as follows: (In thousands) Total 2005 2006– 2007 2008– 2009 Thereafter Operating leases $14,575 $5,236 $6,415 $2,442 $482 The Company has contractual obligations relative to the purchase of certain raw materials, which do not require minimum purchase quantities. A significant portion of raw material purchases consist of aluminum cans. Critical Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial state- ments and accompanying notes. Although these estimates are based on page sixteen—national beverage corp. management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. We believe that the critical accounting policies described in the following paragraphs affect the most significant estimates and assumptions used in the prepara- tion of our consolidated financial statements. For these policies, we caution that future events rarely develop exactly as estimated, and the best esti- mates routinely require adjustment. Credit Risk We sell products to a variety of customers and extend 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. We monitor our exposure to credit losses and maintain allowances for anticipated losses. 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 whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair market value based on the best infor- mation available. Estimated fair market value is generally measured by discounting future cash flows. Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner in accord- ance with SFAS No. 142. An impairment loss is recognized if the carrying amount, or for goodwill, the carrying amount of its reporting unit, is greater than its fair value. Income Taxes Our effective income tax rate and the tax bases of assets and liabilities are based on estimates of taxes which will ultimately be payable. Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established when it is deemed, more likely than not, that the benefit of deferred tax assets will not be realized. Insurance Programs We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Accordingly, we accrue for known claims and estimated incurred but not reported claims not other- wise covered by insurance, based on actuarial assumptions and historical claims experience. Forward-Looking Statements National Beverage 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 Securities and Exchange Commission and other reports to our stockholders. Certain statements including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “expects,” and “estimates” constitute “forward- looking statements” and involve known and unknown risk, uncertainties and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such factors include, but are not limited to, the fol- lowing: general economic and business conditions; pricing of competitive products; success in acquiring other beverage businesses; success of new product and flavor introductions; fluctuations in the costs of raw materials and the ability to pass along any cost increases to our customers; our ability to increase prices for our products; continued retailer support for our products; changes in consumer preferences; success of implementing business strategies; changes in business strategy or development plans; government regulations; regional weather conditions; and other factors referenced in this Annual Report. We disclaim 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. Quantitative and Qualitative Disclosures About Market Risk Commodities We purchase various raw materials, including aluminum cans, plastic bottles, high fructose corn syrup, and various juice concentrates, prices of which fluctuate based on commodity market conditions. Our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. Interest Rates We had no outstanding debt at the end of fiscal 2004, which eliminated our exposure to interest rate movements. Our investment portfolio is comprised of highly liquid securities con- sisting primarily 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 2004 would have changed by approximately $500,000. page seventeen—national beverage corp. Consolidated Balance Sheets As of May 1, 2004 and May 3, 2003 (In thousands, except share amounts) Assets Current assets: Cash and equivalents Trade receivables—net of allowances of $608 (2004) and $562 (2003) Inventories Deferred income taxes—net 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 Current maturities of long-term debt Total current liabilities Long-term debt Deferred income taxes—net Other liabilities Shareholders’ equity: 2004 2003 $ 34,365 $ 60,334 48,776 29,754 1,622 6,969 41,031 28,695 1,678 4,685 121,486 136,423 59,535 13,145 1,948 3,777 60,432 13,145 2,011 6,184 $ 199,891 $ 218,195 $ 37,138 $ 34,969 17,429 1,952 — 56,519 — 14,930 3,066 18,657 1,862 1,150 56,638 300 14,843 3,122 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 40,894,440 shares (2004) and 22,250,202 shares (2003); outstanding 36,861,656 shares (2004) and 18,235,418 shares (2003) Additional paid-in capital Retained earnings (1) Treasury stock—at cost: Preferred stock—150,000 shares Common stock—4,032,784 shares (2004) and 4,014,784 shares (2003) Total shareholders’ equity (1) Reflects a $38.4 million cash dividend paid in April 2004. See accompanying Notes to Consolidated Financial Statements. 409 18,646 124,171 223 16,818 143,846 (5,100) (5,100) (12,900) (12,645) 125,376 143,292 $ 199,891 $ 218,195 page eighteen—national beverage corp. Consolidated Statements of Income For the Fiscal Years Ended May 1, 2004, May 3, 2003 and April 27, 2002 (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. 2004 2003 2002 $512,061 $500,430 $502,778 343,316 335,457 339,041 168,745 139,058 132 544 30,099 11,408 164,973 136,902 163,737 136,925 316 706 28,461 10,872 857 867 26,822 10,270 $ 18,691 $ 17,589 $ 16,552 $ $ .51 .49 $ $ .48 .46 $ $ .45 .44 36,937 38,166 36,800 38,120 36,425 37,984 page nineteen—national beverage corp. Consolidated Statements of Shareholders’ Equity For the Fiscal Years Ended May 1, 2004, May 3, 2003 and April 27, 2002 (In thousands, except share amounts) Preferred Stock 2004 2003 2002 Shares Amount Shares Amount Shares Amount Beginning and end of year 150,000 $ 150 150,000 $ 150 150,000 $ 150 Common Stock Beginning of year Stock options exercised 100% stock dividend End of year Additional Paid-In Capital Beginning of year Stock options exercised 100% stock dividend End of year Retained Earnings Beginning of year Net income Cash dividends paid End of year Treasury Stock—Preferred Beginning and end of year Treasury Stock—Common Beginning of year Purchase of stock End of year Total Shareholders’ Equity See accompanying Notes to Consolidated Financial Statements. 22,250,202 223 22,209,312 222 22,134,612 338,510 18,305,728 40,894,440 3 183 409 40,890 — 1 — 74,700 — 22,250,202 223 22,209,312 16,818 2,011 (183) 18,646 143,846 18,691 (38,366) 124,171 16,526 292 — 16,818 126,257 17,589 — 143,846 221 1 — 222 15,638 888 — 16,526 109,705 16,552 — 126,257 150,000 (5,100) 150,000 (5,100) 150,000 (5,100) 4,014,784 (12,645) 3,996,534 (12,378) 3,972,634 (12,126) 18,000 (255) 18,250 (267) 23,900 (252) 4,032,784 (12,900) 4,014,784 (12,645) 3,996,534 (12,378) $125,376 $143,292 $125,677 page twenty—national beverage corp. Consolidated Statements of Cash Flows For the Fiscal Years Ended May 1, 2004, May 3, 2003 and April 27, 2002 (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 on sale of assets Changes in assets and liabilities: Trade receivables Inventories Prepaid and other assets Accounts payable Accrued and other liabilities, net Net cash provided by operating activities Investing Activities: Property additions Proceeds from sale of assets Net cash used in investing activities Financing Activities: Debt repayments Payment on line of credit Common stock cash dividend Purchase of common stock Proceeds from stock options exercised Net cash used in financing activities Net Increase (Decrease) 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. 2004 2003 2002 $ 18,691 $ 17,589 $ 16,552 11,394 143 59 (7,745) (1,059) (2,297) 2,169 11,319 2,709 110 11,750 1,581 203 1,924 2,345 (1,887) 707 (1,834) (2,180) 4,150 (6,832) (34) (2,324) 3,463 21,321 35,988 23,357 (8,696) (8,936) (7,162) 623 312 72 (8,073) (8,624) (7,090) (1,450) (9,531) (9,155) — — (4,000) (38,366) (255) 854 — (267) 122 — (252) 161 (39,217) (9,676) (13,246) (25,969) 17,688 3,021 60,334 42,646 39,625 $ 34,365 $60,334 $42,646 $ 133 $ 336 $ 935 11,049 7,863 6,671 page twenty-one—national beverage corp. Notes to Consolidated Financial Statements 1. Significant Accounting Policies Organization National Beverage Corp. develops, manufactures, markets and distributes a complete portfolio of multi-flavored soft drinks, juice drinks, water and specialty beverages throughout the United States. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various oper- carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair market value based on the best infor- mation available. Estimated fair market value is generally measured by discounting future cash flows. Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner in accordance with SFAS No. 142. An impairment loss is recognized if the carrying amount, or for goodwill, the carrying amount of its reporting ating subsidiaries. When used in this report, the terms “we,” “us,” “our,” unit, is greater than its fair value. “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries. Basis of Presentation The consolidated financial statements include the accounts of the Company and all subsidiaries. All significant intercompany balances have been elimi- nated. Our fiscal year ends the Saturday closest to April 30th and, as a result, a 53rd week is added every five or six years. Fiscal 2004 and fiscal 2002 consist of 52 weeks while fiscal 2003 consists of 53 weeks. 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. Changes in Accounting Standards Income Taxes Our effective income tax rate and the tax bases of assets and liabilities are based on estimates of taxes which will ultimately be payable. Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established when it is deemed, more likely than not, that the benefit of deferred tax assets will not be realized. Insurance Programs We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Accordingly, we accrue for known claims and estimated incurred but not reported claims not otherwise covered by insurance, based on actuarial assumptions and Management has reviewed the current changes in accounting standards historical claims experience. and does not expect any of these changes to have a material impact on Inventories the Company. Credit Risk We sell products to a variety of customers and extend credit based on an evaluation of the customer’s financial condition, generally without Inventories are stated at the lower of first-in, first-out cost or market. Inventories at May 1, 2004 are comprised of finished goods of $16,349,000 and raw materials of $13,405,000. Inventories at May 3, 2003 are com- prised of finished goods of $16,288,000 and raw materials of $12,407,000. requiring collateral. Exposure to losses on receivables varies by customer Marketing Costs principally due to the financial condition of each customer. We monitor our exposure to credit losses and maintain allowances for anticipated losses. At May 1, 2004 and May 3, 2003, we did not have any customer that comprised more than 10% of trade receivables. No one customer accounted for more than 10% of net sales during any of the last three fiscal years. Fair Value of Financial Instruments We are involved in a variety of marketing programs, including cooperative advertising programs with customers, which advertise and promote our products to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs of future media adver- tising. Total marketing costs, which are included in selling, general and administrative expenses, were $41.2 million in fiscal 2004, $39.4 million in fiscal 2003, and $40.3 million in fiscal 2002. The fair values of financial instruments are estimated based on market rates. Net Income Per Share The carrying amounts of financial instruments reflected in the balance sheets approximate their fair values. 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 whenever events or changes in circumstances indicate that the Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding. Included in average common shares outstanding are shares of common stock that option holders have elected to defer physical delivery following the exercise of stock options. Diluted net income per share also includes the dilutive effect of stock options, which amounted to 1,229,000 shares (2004), 1,320,000 shares (2003), and 1,559,000 shares (2002). page twenty-two—national beverage corp. Property We apply Statement of Financial Accounting Standards No. 123, Property is recorded at cost. Depreciation is computed by the straight-line “Accounting and Disclosure of Stock-Based Compensation” (“SFAS 123”) method over estimated useful lives of 7 to 30 years for buildings and for awards granted to non-employees after December 15, 1994. The fair improvements, and 3 to 15 years for machinery and equipment. When value of option grants was estimated using the Black-Scholes option-pricing assets are retired or otherwise disposed, the cost and accumulated depre- model with the following assumptions: expected life of 10 years; volatility ciation are removed from the respective accounts and any related gain factor of 41% for fiscal 2004, 42% for 2003, and 43% for 2002; risk-free or loss is recognized. Maintenance and repair costs are charged to expense interest rates of approximately 4% for fiscal 2004, 4% for 2003, and as incurred, and renewals and improvements that extend the useful lives 5% for 2002; and no dividend payments. of assets are capitalized. Revenue Recognition Revenue from product sales is recognized when title and risk of loss passes to the customer, which generally occurs upon delivery. Sales Incentives We offer various sales incentive arrangements to our customers, which are accounted for as a reduction of revenue. Many of these arrangements are based on annual and quarterly volume targets that are recorded based on expected amounts to be paid. Under certain arrangements, advanced payments are made to customers, which are deferred and amortized based on the contractual unit volume or the straight-line method over the lesser of the period of benefit or the non-cancelable period of the contract. It is our policy to periodically review and evaluate the future benefits asso- ciated with these costs to determine that deferral and amortization is Had compensation cost for options granted to employees been recorded using the Black-Scholes option-pricing model, net income and basic and diluted earnings per share for each of the last three fiscal years would have been reduced on a pro forma basis by less than $200,000 and $.01 per share. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on manage- ment’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. 2. Property justified. Unamortized costs associated with remaining periods of one year Property at May 1, 2004 and May 3, 2003 consisted of the following: or less are included in prepaid and other, while all other amounts are included in other assets. Segment Reporting We operate as a single operating segment for purposes of presenting (In thousands) Land Buildings and improvements Machinery and equipment financial information and evaluating performance. As such, the accompa- Total nying consolidated financial statements present financial information in Less accumulated depreciation a format that is consistent with the internal financial information used Property—net 2004 2003 $ 10,187 $ 10,625 37,693 108,989 36,331 102,832 156,869 149,788 (97,334) (89,356) $ 59,535 $ 60,432 by management. Shipping and Handling Costs Depreciation expense was $8,911,000 for fiscal 2004, $8,740,000 for fiscal 2003, and $8,444,000 for fiscal 2002. Shipping and handling costs are reported in selling, general and adminis- trative expenses in the accompanying statements of income. Such costs aggregated $41.4 million in fiscal 2004, $40.6 million in fiscal 2003, and 3. Intangible Assets $39.7 million in fiscal 2002. Stock-Based Compensation We apply Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations, in accounting for stock-based awards to employees. Under APB 25, we gen- erally recognize no compensation expense with respect to such awards unless the exercise price of options granted is less than the market price on the date of grant. Intangible assets at May 1, 2004 and May 3, 2003 consisted of the following: (In thousands) Nonamortizable trademarks Amortizable distribution rights and other Less accumulated amortization Net Total—net 2004 2003 $ 1,587 $ 1,587 882 (521) 361 882 (458) 424 $ 1,948 $ 2,011 page twenty-three—national beverage corp. Notes to Consolidated Financial Statements (continued) Amortization expense related to intangible assets was $63,000 for fiscal In January 1998, the Board of Directors authorized the purchase of up 2004, $59,000 for fiscal 2003, and $57,000 for fiscal 2002. to 800,000 shares of National Beverage common stock. In fiscal 2004 4. Accrued Liabilities Accrued liabilities at May 1, 2004 and May 3, 2003 consisted of the and 2003, we purchased 18,000 shares and 18,250 shares, respectively, and aggregate shares purchased since January 1998 were 502,060. Such shares are classified as treasury stock. National Beverage is a party to a management agreement with Corpo- rate Management Advisors, Inc. (“CMA”), a corporation owned by the 2004 2003 Company’s Chairman and Chief Executive Officer. Under the agreement, $ 5,539 $ 5,063 the employees of CMA provide our Company with corporate finance, 5,490 6,400 6,881 6,713 strategic planning, business development and other management services for an annual base fee equal to one percent of consolidated net sales, $17,429 $18,657 plus incentive compensation based on certain factors to be determined by the Compensation Committee of our Company’s Board of Directors. We incurred fees to CMA of $5.1 million for fiscal 2004, $5.0 million for fiscal 2003, and $5.0 million for fiscal 2002. No incentive compensation has been incurred or approved under the management agreement since its inception. Included in accounts payable at May 1, 2004 and May 3, 2003 were amounts due CMA of $1.3 million. 7. Income Taxes A subsidiary maintains unsecured revolving credit facilities aggregating $45 million (the “Credit Facilities”) with banks. The Credit Facilities expire through February 1, 2006 and bear interest at 1⁄2% below the banks’ refer- ence rate or 1% above LIBOR, at the subsidiary’s election. At May 1, 2004, there was no outstanding debt under the Credit Facilities and approximately $42 million was available for future borrowings. On April 27, 2004, following: (In thousands) Accrued compensation Accrued promotions Other accrued liabilities Total 5. Debt the Company repaid the outstanding balance under a term loan facility, The provision for income taxes consisted of the following: which had $1,450,000 outstanding at May 3, 2003, with interest at 11⁄4% above LIBOR. The Credit Facilities require the subsidiary to maintain certain financial ratios and contain other restrictions, none of which are expected to have a material impact on our operations or financial position. At May 1, 2004, retained earnings of approximately $25 million were restricted from distribution. 6. Capital Stock and Transactions with Related Parties (In thousands) Current Deferred Total 2004 2003 2002 $11,265 $ 8,163 $ 8,689 143 2,709 1,581 $11,408 $10,872 $10,270 The reconciliation of the statutory federal income tax rate to our effective tax rate is as follows: 2004 2003 2002 Statutory federal income tax rate 35.0% 35.0% 35.0% On March 22, 2004, the Company distributed a 100% stock dividend to State income taxes, net of federal benefit Permanent differences Effective income tax rate 3.0 (.1) 2.9 .3 2.6 .7 37.9% 38.2% 38.3% Deferred taxes are recorded to give recognition to temporary differ- ences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established when it is deemed, more likely than not, that the benefit of deferred tax shareholders of record on March 8, 2004. As a result of the stock dividend, approximately $183,000, representing the par value of the shares issued, was reclassified from additional paid-in capital to common stock. Average shares outstanding, stock option data and per share data presented in these financial statements have been adjusted retroactively for the effects of the stock dividend. On April 30, 2004, the Company paid a special “one-time” cash divi- dend of $1.00 per share to shareholders of record on March 26, 2004, including holders of deferred shares and vested stock options. page twenty-four—national beverage corp. assets will not be realized. Our deferred tax assets and liabilities as of of the six-year vesting period. The difference between the exercise price May 1, 2004 and May 3, 2003 consisted of the following: and the fair market value of the stock on date of grant is amortized over 2004 2003 the vesting period. (In thousands) Deferred tax assets: Accrued expenses and other Inventory and amortizable assets Total deferred tax assets Deferred tax liabilities: Property Intangibles and other Total deferred tax liabilities Net deferred tax liabilities Current deferred tax assets—net Noncurrent deferred tax liabilities—net $ 3,074 $ 2,428 388 3,462 14,861 1,909 16,770 415 2,843 14,684 1,324 16,008 $13,308 $ 13,165 $ 1,622 $ 1,678 $14,930 $14,843 The 1991 Stock Purchase Plan provides for the purchase of up to 1,280,000 shares of common stock by employees who (i) have been employed by our Company for at least two years, (ii) are not part-time employees and (iii) are not owners of five percent or more of National Beverage common stock. As of May 1, 2004, no shares have been issued under the plan. The following is a summary of stock option activity: (Shares in thousands) Outstanding at 2004 2003 2002 Shares Price(1) Shares Price(1) Shares Price(1) beginning of year 1,869 $ 2.17 1,993 $2.30 2,548 $ 1.86 Options granted Options exercised Options canceled 15 (748) (103) Outstanding at year-end 1,033 5.33 1.14 2.19 2.82 1 (82) (43) 4.21 1.48 2.33 179 (513) (221) 1,869 2.17 1,993 4.42 .42 3.23 2.30 Exercisable at year-end 817 $2.74 1,629 $2.03 1,501 $ 1.75 Available for grant 8. Incentive and Retirement Plans The 1991 Omnibus Incentive Plan (the “Omnibus Plan”) provides for compensatory awards consisting of (i) stock options or stock awards for up to 4,000,000 shares of common stock, (ii) stock appreciation rights, dividend equivalents, other stock-based awards in amounts up to 4,000,000 at year-end 2,459 2,351 2,309 shares of common stock and (iii) performance awards consisting of any Weighted average fair value combination of the above. The Omnibus Plan is designed to provide an of options granted $5.37 $4.59 $3.94 incentive to the officers (including those who are also directors) and certain (1) Reflects weighted average exercise price except where noted. other key employees and consultants of our Company by making avail- able to them an opportunity to acquire a proprietary interest or to increase The following is a summary of stock options outstanding at May 1, 2004: such interest in National Beverage. The number of shares or options which may be issued under stock-based awards to an individual is limited to 1,400,000 during any year. Awards may be granted for no cash considera- tion or such minimal cash consideration as may be required by law. Options generally vest over a five-year period and expire after ten years. Pursuant to a Special Stock Option Plan, National Beverage has author- ized the issuance of options to purchase up to an aggregate of 1,000,000 shares of common stock. Options may be granted for such consideration (Shares in thousands) Options Outstanding Options Exercisable Range of Exercise Price $ .01 –$ 1.32 $2.27–$2.87 $3.20–$3.69 $4.26–$6.82 Remaining Exercise Life(1) Shares Price(2) Shares 4 years 7 years 8 years 9 years 248 416 194 175 6 years 1,033 $ .95 2.62 3.67 4.98 2.82 226 319 112 160 817 Exercise Price(2) $ .95 2.56 3.69 4.94 2.74 as determined by the Board of Directors. National Beverage also author- (1) Reflects weighted average remaining contractual life. ized the issuance of options to purchase up to 100,000 shares of common (2) Reflects weighted average exercise price. stock to be issued at the direction of the Chairman. The Key Employee Equity Partnership Program (“KEEP Program”) pro- vides for the granting of stock options to purchase up to 200,000 shares of common stock to key employees, consultants, directors and officers of During fiscal 2004, 2003 and 2002, approximately $1,160,000, $171,000, and $727,000, respectively, of accrued compensation and tax benefits related to stock options exercised was credited to additional the Company. Participants who purchase shares of stock in the open market paid-in capital. receive grants of stock options equal to 50% of the number of shares purchased, up to a maximum of 12,000 shares in any two-year period. Options under the KEEP Program are automatically forfeited in the event of the sale of shares originally acquired by the participant. The options are We contribute to various defined contribution retirement plans (for employees under various collective bargaining agreements) and discretion- ary profit sharing plans (for non-union employees). Contributions were $2.2 million for fiscal 2004, $2.2 million for fiscal 2003, and $2.1 million granted at an initial exercise price of 60% of the purchase price paid for for fiscal 2002. the shares acquired and reduces to the par value of the stock at the end page twenty-five—national beverage corp. Notes to Consolidated Financial Statements (continued) 9. Commitments and Contingencies Future minimum rental commitments for non-cancelable operating leases at May 1, 2004 are as follows: (In thousands) Fiscal 2005 Fiscal 2006 Fiscal 2007 Fiscal 2008 Fiscal 2009 Thereafter Total minimum lease payments 10. Quarterly Financial Data (Unaudited) $ 5,236 3,812 2,603 1,410 1,032 482 $14,575 Rental expense was $8,828,000 for fiscal 2004, $8,934,000 for fiscal 2003, and $9,415,000 for fiscal 2002. The Company has contractual obligations relative to the purchase of certain raw materials, which do not require minimum purchase quantities. A significant portion of raw material purchases consist of aluminum cans. From time to time, we are a party to various litigation matters arising in the ordinary course of business. In our opinion, the ultimate disposition of such matters will not have a material adverse effect on our consoli- dated financial position or results of operations. (In thousands, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2004 Net sales Gross profit Net income Net income per share—basic Net income per share—diluted Fiscal 2003(1) Net sales Gross profit Net income Net income per share—basic Net income per share—diluted (1) Fiscal 2003 fourth quarter consisted of fourteen weeks while other quarters consisted of thirteen weeks. $145,665 $129,373 $107,026 $129,997 48,628 8,450 $ $ .23 .22 42,342 4,021 $ $ .11 .11 35,164 1,356 $ $ .04 .04 42,611 4,864 .13 .13 $ $ $ 142,877 $ 127,348 $ 100,500 $ 129,705 47,473 8,051 $ $ .22 .21 41,261 3,843 .10 .10 $ $ 32,950 1,089 $ $ .03 .03 43,289 4,606 $ $ .13 .12 page twenty-six—national beverage corp. Report of Independent Registered Certified Public Accounting Firm 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 May 1, 2004 and May 3, 2003, and the results of their operations and their cash flows for each of the three years in the period ended May 1, 2004, 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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. PricewaterhouseCoopers LLP Miami, Florida July 30, 2004 page twenty-seven—national beverage corp. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of National Beverage Corp., par value $.01 per share, (“the Common Stock”) is listed on the American Stock Exchange (“AMEX”) under the symbol “FIZ.” The following table shows the range of high and low sale prices per share of the Common Stock as reported by the AMEX for the fiscal quarters indicated: First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2004 Fiscal 2003 High Low High Low $ 7.70 $6.75 $8.60 $6.40 $ 7.69 $6.98 $ 7.18 $5.50 $ 8.37 $7.43 $7.85 $ 7.15 $11.60 $8.05 $7.65 $6.90 Excluding beneficial owners of our Common Stock whose securities are held in the names of various dealers and/or clearing agencies, there were approximately 800 shareholders of record at July 19, 2004, according to records main- tained by our transfer agent. The stock prices shown above have been restated to reflect the 100% stock dividend distributed on March 22, 2004 to shareholders of record on March 8, 2004. On April 30, 2004, the Company paid a special “one-time” cash dividend of $1.00 per share. Currently, the Board of Directors has no plans to declare additional cash dividends. See Note 5 of Notes to Consolidated Financial Statements for certain restrictions on the payment of dividends. page twenty-eight—national beverage corp. Corporate Data Directors Subsidiary Management Subsidiaries BevCo Sales, Inc. Beverage Corporation International, Inc. Big Shot Beverages, Inc. Everfresh Beverages, Inc. Faygo Beverages, Inc. Home Juice Corp. National Retail Brands, Inc. NewBevCo, Inc. PACO, Inc. Shasta, Inc. Shasta Beverages, Inc. Shasta Beverages International, Inc. Shasta Midwest, Inc. Shasta Northwest, Inc. Shasta Sales, Inc. Shasta Sweetener Corp. Shasta West, Inc. Sundance Beverage Company 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, October 1, 2004 at 2:00 p.m. local time at the Hyatt Regency Orlando Inter- national Airport, 9300 Airport Boulevard, Orlando, FL 32827. Nick A. Caporella Chairman of the Board & Chief Executive Officer National Beverage Corp. Joseph G. Caporella 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 President Edward F. Knecht Executive Vice President— Procurement George R. Bracken Senior Vice President—Finance Dean A. McCoy Senior Vice President— Chief Accounting Officer Raymond J. Notarantonio Executive Director—IT John S. Bartley Director—Internal Audit Brent R. Bott Director—Consumer Marketing H. Don Hatcher Director—Insurance Gregory J. Kwederis Director—Beverage Analyst Lawrence P. Parent Director—Credit Management Edward F. Knecht President Shasta Sweetener Corp. PACO, Inc. William R. Phillips President National BevPak Sanford E. Salzberg President Shasta, Inc. Michael J. Bahr Executive Vice President Shasta West, Inc. Alan A. Chittaro Executive Vice President Faygo Beverages, Inc. Alan D. Domzalski Executive Vice President Everfresh Beverages, Inc. Brian M. Gaggin Executive Vice President National Retail Brands, Inc. Harold S. Jackson Executive Vice President Shasta Northwest, Inc. Charles A. Maier Executive Vice President Foodservice Shasta Sales, Inc. Michael J. Perez Executive Vice President Shasta Midwest, Inc. 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 Andrew F. Stallone Vice President Beverage Corporation International, Inc. Martin J. Rose General Manager Shasta Vending Financial and Other Information Copies of National Beverage Corp.’s Annual Report, Annual Report on Form 10-K and supplemental quarterly financial data are avail- able free of charge on our web- site or contact our Shareholder Relations department at the Company’s corporate address or at 888-4-NBCFIZ. Earnings and other financial results, corporate news and other Company information are available on National Beverage’s website at www.nationalbeverage.com. Stock Exchange Listing Common Stock is listed on the American Stock Exchange— symbol FIZ. Transfer Agent and Registrar Mellon Investor Services LLC P.O. Box 3315 South Hackensack, NJ 07606 800-756-3353 www.melloninvestor.com Independent Auditors PricewaterhouseCoopers LLP Miami, FL m o c . s r o n n o c - n a r r u c . w w w / . c n I , s r o n n o C & n a r r u C y b d e n g i s e D One North University Drive, Fort Lauderdale, Florida 33324 • 954-581-0922 • www.nationalbeverage.com 

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