National Beverage Corp. 2018 Annual Report
Chairman’s Communique
Over the past five years...
U.S. sparkling water
sales grew by
$1.4B
Source: The Wall Street Journal - August 12, 2018
The War on Sugar’s Biggest Casualty: Global Prices
While U.S. soda sales
declined by
$1.2B
June 20, 2018
revenue reached $1 Billion
Last Three Fiscal Years Ended April 2018:
Shareholder Value (Stock Price + Dividend) Quadrupled
Year-Over-Year Operating Profit grew by Double Digits in each quarter
EPS increased 202%
$349 Million Net Cash provided by Operating Activities
BevNet Magazine Chooses LaCroix Brand of the Year –
Combination of flavor, cool designs, consumer outreach + accessibility
Good Morning America devotes primetime to LaCroix’s Popularity + Essence
Beverage Marketing Corporation selects National Beverage as
Company of the Year
Jimmy Fallon – The Tonight Show NBC . . . Cultural Phenomenon –
LaCroix and its Essence
LaCroix has the greatest growth potential household penetration:
# of family members consuming different flavors = ++ conversion opportunity
Approximately 500 million cups of coffee consumed in America daily –
LaCroix first to combine Sparkling Water + Coffee Essence
LaCroix Themes (Cúrate, NiCola) have more consumer appeal due to
Innovative Colors, Unique Essences and Sensorial Experiences
Financial Facts
Brand Facts
Industry Facts
“Wonder is the Beginning of . . . Wisdom!”
Socrates
So clear, crisp and simple he said to me . . . “Nick, our revenues hit
One Billion Dollars yesterday!” June 20, 2018
As I reflect back, my thoughts swiftly flashed over many tough times, but
on June 20th they all became quite unimportant.
During those arduous early years, I had set a goal that became a huge silent
stimulator – the vision to grow our Company to $1 Billion organically without
buying any revenues. On June 20, 2018, we nearly made it, all except
approximately $180 million relating to the purchase of Shasta and Faygo.
Our fiscal year ended April 2018 marks the fourth year of double-digit
growth and we have chronicled the significant events of FY2018 on the
FIZZ Innovator.
While there is much to write about National Beverage Corp., I am going to
focus on what each and every investor wants to know. What is going to
sustain the growth of LaCroix? How is Shasta Sparkling Water SDA (Soft
Drink Alternative) doing? Why is the future of FIZZ more exciting than its
past?
So, here we go . . .
LaCroix is the ultimate game changer in the world of sparkling water. The
Millennials have set the pace and GenZ is following their lead choosing
LaCroix as their favorite craving. Viral marketing – by the consumers, for
the consumers – is the most genuine form of advertising and distinguishes
LaCroix from its impersonators.
I just saw a recent YouTube video showing two kids stocking a refrigerator
with LaCroix, with the older one telling the younger one how it’s done!
Good stuff – viral marketing.
The Ultimate, Absolute, Complete, Soft Drink Alternative –
Shasta Sparkling Water was conceptualized, created and designed as a
healthy alternative – harmless, without any sweetener, sodium or calories
– and still provides the fizzy fun of a ball game, a picnic and a family outing.
Leveraging the brand equity in core Brand Shasta, which stands for family,
fun and now fitness, the new Shasta Sparkling Water will thrive on the
same brand attributes.
Nostalgic, classic, traditional flavorings that consumers grew up on, but
have had to reduce for health reasons, are now available as Shasta SDA
without the health risk. Our exclusive in-store brand introduction technique,
BrandED, has confirmed consumer demand from all ages of this soft drink
alternative providing flavor profiles like our original Shasta Cola, Draft Root
Beer, Big Black Cherry, California Orange and Lemon Lime Splash. We have
witnessed a mother’s joy of having her children enjoy Shasta Sparkling
Water while bringing some home to her diabetic mother who introduced
her to the original Shasta soft drinks. Joy again . . .
Shasta SDA is also a soft drink alternative for the hospital, health and
congregate care community which appears on the trays in a special 8oz.
serving size.
What makes our future brighter than the past?
Once in a lifetime or once in a career, an event of a magnitude so significant
occurs that it has the potential of changing an industry – maybe the world.
That’s LaCroix . . . Awesome!
LaCroix – look at it again. La La, do you feel it, sense it? It lures you into
being refreshed by just thinking of the name . . . LaCroix. That name has
inspired a cult and has created an awareness that leaves each and every
consumer with that special feeling of . . . the Joy of LaCroix. It became the
symbol of authenticity, healthy hydration and the smart way to live. Divine
destiny defined our efforts. Intrigued by the name and vision of what could
be, and helped through the use of masterful techniques that included the
use of colors and reflections of sensorial caring, we created the stimulant
that the cult embraced. Today, it is the symbol of the way to be, the way
to live and what we want for those who we genuinely care for. It is our
LaCroix now.
LaCroix and its various themes are a visionary’s daydream. Included with
this Annual Report is a box of the latest LaCroix NiCola offerings. As I stare
at these cans before me, nothing so exciting and imaginable has ever been
produced thus far, so I hope you will be as delighted as we certainly are for
you to try them. Our wish . . . to have all new themes captivate more and
more LaCroix enthusiasts. Our mission . . . to entrepreneur this wonder
of a brand and have it become the ultimate obsession that truly defines a
generation that guided America’s conscience – the LaCroix way!
No one can predict or adequately quantify the upside potential of LaCroix.
The concept and use of exotic themes are only limited by the wonderment
of our dreams.
America . . . its life is undergoing many changes – as is our industry.
Principled, seasoned business leaders know that the pendulum of balance
is always at work. Brands LaCroix and Shasta SDA are infants. Our LaCroix
brand status allows it to ‘stand’ while Shasta SDA is still ‘crawling’. The
world needs and awaits both, but the present matrix of market measurement
affirms that LaCroix is a brand. In the past, the FTC used 40 million 192oz.
cases as a qualifier for brand status – certainly many did not qualify under
this measurement.
LaCroix will soon surpass Diet Coke and Diet Pepsi at the grocery channel,
and this does not include Mexico and Canada. Brand LaCroix is #1 in 42 of
52 total markets in the U.S., measured/accepted by Nielsen, and is climbing
hourly in the remaining ten markets.
The life of LaCroix has just begun and its potential is – the world – not yet
calculable. These circumstances position LaCroix in a special place. The
ownership of National Beverage and its shareholders add to the uniqueness
of valuation of this company.
I have not given up on the plan that was previously discussed – longevity
reward for shareholders that register their stock in their name and get
rewarded for their loyalty through more company distributions.
The opportunities, advantages and financial prospects should be strengthened
by a more harmonious, less volatile stock that is not under pressure to react
abnormally. The current status may not allow our loyal investors to be
protected from the ‘whims’ of self-serving opportunists. There are ways to
have this happen – either the ‘long’ way or by a swifter transformation. The
heart of our control shareholder has proven that his partner shareholders
(long-term) are near and dear to his heart. We are working to remedy this
current status. FIZZ is a very valuable enterprise and we want to treat our
consumers and shareholders alike – super healthy, naturally!
All shareholders want to see their company more than exceed their growth
expectations. National Beverage continues its healthy growth momentum
with ‘0’ calories, ‘0’ sodium and ‘0’ sweetener – the Innocent way. This
heightened thrust will propel FIZZ to accelerate its dominant leadership . . .
in the movement to make America healthier!
Yes, we will . . .
Nick A. Caporella
Chairman and Chief Executive Officer
FINANCIAL
REVIEW
SELECTED FINANCIAL DATA
(In thousands, except per share and footnote amounts)
SUMMARY OF OPERATIONS
Net sales
Cost of sales
Fiscal Year Ended
April 28,
2018
April 29,
2017
April 30,
2016
April 30,
2015
May 3,
2014(4)
$ 975,734 $ 826,918 $ 704,785 $ 645,825 $ 641,135
584,599
500,841
463,348
426,685
423,480
Gross profit
Selling, general and administrative expenses
391,135
326,077
241,437
219,140
217,655
186,947
163,600
148,384
145,157
153,220
Interest expense
Other (income) expense - net
Income before income taxes
Provision for income taxes
Net income
PER SHARE DATA
201
(1,502)
189
(537)
203
145
205,489
162,825
55,715
55,780
92,705
31,507
371
(1,101)
74,713
25,402
660
666
63,109
19,474
$ 149,774 $ 107,045 $ 61,198 $ 49,311 $ 43,635
Basic earnings per common share(1)
$ 3.21 $ 2.30 $ 1.31 $ 1.06 $ .93
Diluted earnings per common share(1)
Closing stock price
Dividends paid on common stock(2)
3.19
89.78
1.50
2.29
88.59
1.50
1.31
46.74
—
1.05
22.42
—
.92
19.21
—
BALANCE SHEET DATA
Cash and equivalents(2)
Working capital(2)(3)
$ 189,864 $ 136,372 $ 105,577 $ 52,456 $ 29,932
248,297
181,115
143,603
97,130
60,182
75,933
59,494
Property, plant and equipment - net
85,807
65,150
61,932
Total assets(2)(3)
Long-term debt
Deferred income tax liability (3)
Shareholders' equity(2)
Dividends paid on common stock(2)
458,832
353,983
301,044
243,402
220,156
—
—
—
14,502
12,087
10,020
10,000
10,897
30,000
11,188
331,440
245,618
206,152
147,782
106,201
69,878
69,850
—
—
—
(1) Basic earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number
of common shares outstanding. Diluted earnings per common share includes the dilutive effect of stock options.
(2) The Company paid special cash dividends on Common Stock of $69.9 million ($1.50 per share) on August 4, 2017 and January 27, 2017.
(3) Deferred taxes have been reclassified from current assets to non-current liabilities in accordance with ASU 2015-17. See Note 1 of
Notes to Consolidated Financial Statements.
(4) Fiscal 2014 consisted of 53 weeks.
2
NATIONAL BEVERAGE CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
As the cornerstone relative to the lead-in paragraph
emphasizing National Beverage’s uniqueness:
National Beverage Corp. innovatively refreshes America
Many believe that if you put good in –
with a distinctive portfolio of sparkling waters, juices
Great comes out . . .
and, to a lesser degree, energy drinks. Over the past
We believe that if we put excellent in –
few years, our carbonated soft drink brands continue
You get magical out!
to be modified as we endeavor to make them more
Presently, National Beverage Corp. is uniquely
adaptable to our consumers. We believe our ingenious
positioned in three distinctive ways:
product designs, innovative packaging and imaginative
(1) The retail grocery industry is in revolution.
flavors, along with our corporate culture and philosophy,
Yesteryear, each retailer induced their consumer with
make National Beverage unique as a stand-alone entity
a proprietary brand (especially soft drinks), but today
in the beverage industry.
January 1986 found our infant company in possession
of a month-old, typical soda pop manufacturer whose
understands that the well-informed, smart consumer is
demanding that retailers provide recognizable brands
that have earned their respective consumer standing
acquisition cost had not yet been determined. One, at
on their merits.
the time, could have described it as a ‘Hail Mary’ attempt
(2) The retail grocer today is in the most competitive-
to thwart another corporate 1980’s raider takeover.
indexed service industry, without exception. Innovation,
January 2018 ushered in a corporate marvel of
plus the urgent time demands on the consumer, is
focus that we believe not only defies the beverage
requiring quick, expedient shopping and home delivery
giants’ power and might, but finds that its creativity and
is even more of a current shoppers’ choice. Retailers
innovation transformed the entire soft drink industry!
cannot carry slower-moving items that home delivery
We primarily employ the warehouse delivery system,
will not support.
which due to the bricks and mortar costs to all retailers,
(3) The new Millennial consumer is the most
allows our retail partners to further maximize assets by
competent/knowledgeable product analyzer ever, and
utilizing their ability to pick up product at our warehouses,
personal mental/physical lifestyles demand that healthier
thus further lowering their/our product costs.
is their preferred choice. Calories must qualify as worthy;
Within the final quarter of FY2018, with the exception
sugar being enemy #1 in the life of the Millennial.
of the warehouse delivery system, National Beverage
Our strategy seeks the profitable growth of our
Corp. has completed its transformation from that typical
products by (i) developing healthier beverages in
soda pop manufacturer of January 1986 to the master
response to the global shift in consumer buying habits
innovator of this healthier refreshment company! From
and tailoring our beverage portfolio to the preferences
our corporate philosophy, development of products,
of a diverse mix of ‘crossover consumers’ – a growing
marketing to manufacturing, we are converting
group desiring a healthier alternative to artificially
consumers to a ‘Better for You’ thirst quencher that
sweetened and high-caloric beverages; (ii) emphasizing
compassionately cares for their nutritional health. We
are in our infancy and have only begun in our quest
unique flavor development and variety throughout our
brands that appeal to multiple demographic groups;
to innovate for the joy, benefit and enjoyment of our
(iii) maintaining points of difference through innovative
consumers’ healthier lifestyle!
marketing, packaging and consumer engagement and
3
NATIONAL BEVERAGE CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(iv) responding faster and more creatively to changing
RESULTS OF OPERATIONS
consumer trends that larger competitors who are
burdened by legacy production, distribution complexity
and costs cannot quickly comply with.
Net Sales Net sales for fiscal year ended April 28,
2018 (“Fiscal 2018”) increased 18.0% to $975.7 million
Presently, our primary market focus is the United
compared to $826.9 million for fiscal year ended April
States and Canada. Certain of our products are also
29, 2017 (“Fiscal 2017”). The increase in sales resulted
distributed on a limited basis in other countries and
primarily from a 19.8% increase in branded case volume
options to expand distribution to other regions are
and, to a lesser extent, a higher average selling price.
being considered. To service a diverse customer
Power+ Brands volume increased 38.9%; branded
base that includes numerous national retailers, as well
carbonated soft drinks volume declined by 6.2%. The
as thousands of smaller “up-and-down-the-street”
Company discontinued its lower-margin, private-label
accounts, we utilize a hybrid distribution system to
carbonated soft drink business in the third quarter of
deliver our products primarily through the warehouse
Fiscal 2018, allowing future performance to be more
delivery system and distributors.
focused on brand equity appreciation.
National Beverage Corp. is incorporated in Delaware
Net sales for Fiscal 2017 increased 17.3% to $826.9
and began trading as a public company on the NASDAQ
million compared to $704.8 million for the fiscal year
Stock Market in 1991. In this report, the terms “we,”
ended April 30, 2016 (“Fiscal 2016”). The increase in
“us,” “our,” “Company” and “National Beverage” mean
sales resulted primarily from a 16.6% increase in case
National Beverage Corp. and its subsidiaries unless
volume and, to a lesser extent, a higher average selling
indicated otherwise.
price. Power+ Brands volume increased 42.6%; branded
Our operating results are affected by numerous
carbonated soft drinks volume was flat.
factors, including fluctuations in the costs of raw
materials, holiday and seasonal programming and
weather conditions. While yesteryear witnessed more
Gross Profit Gross profit for Fiscal 2018 increased
20.0% to $391.1 million compared to $326.1 million
seasonality, higher sales are realized during the summer
for Fiscal 2017. The increase in gross profit is due to
when outdoor activities are more prevalent.
increased volume and growth in higher margin Power+
Our highly innovative business, where new beverages
Brands, offset in part by increased cost of sales per
are developed and produced for selective holidays
case. Cost of sales per case increased 1.0% primarily
and ceremonial dates, should not be analyzed on the
due to higher aluminum costs. Gross margin expanded
common three-month (quarterly) periods, traditionally
to 40.1%.
found acceptable. Today, costly development projects
Gross profit for Fiscal 2017 increased 35.1% to
and seasonal weather periods plus promotional
$326.1 million compared to $241.4 million for Fiscal
packaging, make quarter-to-quarter comparisons
2016. The increase in gross profit was due to increased
unworthy statistics and forces companies to decision
volume, growth in higher margin Power+ Brands and a
making for that purpose, not truly beneficial for investors
and shareholders alike.
decline in cost of sales per case of 5.7%. The decrease
in cost of sales per case was due to favorable product
Traditional and typical are not a part of an innovator’s
mix changes and lower raw material costs. Gross margin
vocabulary.
4
expanded to 39.4%.
NATIONAL BEVERAGE CORP. Shipping and handling costs are included in selling,
general and administrative expenses, the classification
Income Taxes Our effective tax rate was 27.1% for
Fiscal 2018, 34.3% for Fiscal 2017 and 34% for Fiscal
of which is consistent with many beverage companies.
2016. The reduction in the effective tax rate was due to
However, our gross margin may not be comparable to
the statutory rate decreases set forth in the Tax Cuts and
companies that include shipping and handling costs
Jobs Act (the “Tax Act”) enacted into law on December
in cost of sales. See Note 1 of Notes to Consolidated
22, 2017. Under the Tax Act, the applicable federal
Financial Statements.
statutory rate was 30.4% for Fiscal 2018. Included
in the effective tax rate for Fiscal 2018 is a one-time
Selling, General and Administrative Expenses
Selling, general and administrative expenses were
adjustment reducing income tax expense to remeasure
previous deferred tax liabilities of $4.3 million. In all years,
$186.9 million or 19.2% of net sales for Fiscal 2018,
the difference between the effective rate and the federal
increasing $23.3 million from Fiscal 2017. The increase
statutory rate was due to the effects of state income
was primarily due to shipping and other volume-related
taxes, the domestic manufacturing deduction and
expenses and marketing spending increases. As a
share-based payment awards. The applicable federal
percent of net sales, selling, general and administrative
statutory rate under the Tax Act will be reduced to 21%
expenses decreased primarily due to the leveraging
for fiscal 2019. See Note 7 of Notes to Consolidated
effects of higher volume on fixed costs.
Financial Statements.
Selling, general and administrative expenses were
$163.6 million or 19.8% of net sales for Fiscal 2017
LIQUIDITY AND FINANCIAL CONDITION
compared to $148.4 million or 21.1% of net sales for
Fiscal 2016. The increase was primarily due to shipping
and other volume-related expenses and marketing
Liquidity and Capital Resources Our principal source
of funds is cash generated from operations. At April
spending increases. As a percent of net sales, selling,
28, 2018, we maintained $100 million unsecured
general and administrative expenses decreased primarily
revolving credit facilities, under which no borrowings
due to the leveraging effects of higher volume on fixed
were outstanding and $2.1 million was reserved for
costs and growth of products distributed by customer
standby letters of credit. We believe that existing capital
pick-up.
Interest Expense and Other Expense (Income) - Net
Interest expense is comprised of fees related to
resources will be sufficient to meet our liquidity and
capital requirements for the next twelve months.
See Note 4 of Notes to Consolidated Financial
Statements.
maintaining lines of credit and, for part of Fiscal 2016,
We continually evaluate capital projects to expand
interest on borrowings. Interest expense was essentially
our production capacity, enhance packaging capabilities
flat for all years presented. Other expense is net of
or improve efficiencies at our production facilities.
interest income of $1.6 million for Fiscal 2018, $.6
Expenditures for property, plant and equipment
million for Fiscal 2017 and $.1 million for Fiscal 2016.
The change in interest income is due to changes in
amounted to $32.0 million for Fiscal 2018 primarily to
expand production capacity. The Company expects
average invested balances and increased return on
capital expenditures to increase in Fiscal 2019 to support
investments.
volume growth.
5
NATIONAL BEVERAGE CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company paid special cash dividends on
Common Stock of $69.9 million ($1.50 per share)
Financial Position During Fiscal 2018, our working
capital increased to $248.3 million from $181.1 million
on both August 4, 2017 and January 27, 2017. The
at April 29, 2017. The increase in working capital
Company has announced it plans to develop a program
resulted from higher cash, trade receivables and
to increase distribution to shareholders based on the
inventory, partially offset by higher accounts payable
length of time they have owned their shares.
and accrued liabilities. Trade receivables increased
Pursuant to a management agreement, we incurred
$13.0 million or 18.3% due to increased sales, and days
a fee to Corporate Management Advisors, Inc. (“CMA”)
sales outstanding increased to 31.4 days from 30.6
of $9.8 million for Fiscal 2018, $8.3 million for Fiscal
days. Inventories increased $7.6 million or 14.2% as
2017 and $7.0 million for Fiscal 2016. At April 28,
a result of increased finished goods and raw materials
2018, management fees payable to CMA were $2.4
to support sales increases. Annual inventory turns
million. See Note 5 of Notes to Consolidated Financial
remained unchanged at 9.5 times. As of April 28, 2018,
Statements.
the current ratio was 3.4 to 1 compared to 3.1 to 1 at
April 29, 2017.
Cash Flows During Fiscal 2018, $154.7 million was
provided by operating activities, $31.9 million was used
During Fiscal 2017, our working capital increased
to $181.1 million from $143.6 million at April 30, 2016.
in investing activities and $69.3 million was used in
The increase in working capital resulted from higher
financing activities. Cash provided by operating activities
cash, trade receivables and inventory, partially offset by
increased $40.5 million primarily due to increased
higher accounts payable and accrued liabilities. Trade
earnings offset in part by increased working capital.
receivables increased $10.3 million or 17% due to
Cash used in investing activities increased due to
increased sales while days sales outstanding improved
increased capital expenditures. Spending on property,
to 30.6 days from 31.0 days. Inventories increased
plant and equipment exceeded depreciation expense,
$5.4 million as a result of higher finished goods levels
our typical investment level, in order to support volume
to support sales increases. Annual inventory turns
growth. Cash used in financing activities includes the
remained unchanged at 9.5 times. At April 29, 2017,
$69.9 million ($1.50 per share) special cash dividend
the current ratio was 3.1 to 1 compared to 2.9 to 1 at
paid on August 4, 2017.
April 30, 2016.
During Fiscal 2017, $114.3 million was provided by
operating activities, $14.0 million was used in investing
activities and $69.5 million was used in financing
activities. Cash provided by operating activities increased
$33.8 million primarily due to increased earnings and
favorable changes in working capital. Cash used in
investing activities increased $2.0 million reflecting
higher capital expenditures and lower proceeds from
the sale of property. Cash used in financing activities
includes the $69.9 million ($1.50 per share) special
cash dividend paid on January 27, 2017.
6
NATIONAL BEVERAGE CORP. CONTRACTUAL OBLIGATIONS
Contractual obligations at April 28, 2018 are payable as follows:
(In thousands)
Operating leases
Purchase commitments
Total
Total
Less Than
1 Year
1 to 3
Years
3 to 5
Years
More Than
5 Years
$
$
28,448
$
9,182
$
12,856
$
4,879
$
1,531
15,875
11,287
3,540
1,048
—
44,323
$
20,469
$
16,396
$
5,927
$
1,531
We contribute to certain pension plans under collective
CRITICAL ACCOUNTING POLICIES
bargaining agreements and to a discretionary profit
sharing plan.
The preparation of financial statements in conformity
Annual contributions were $3.4 million for Fiscal
with generally accepted accounting principles requires
2018, $3.1 million for Fiscal 2017 and $2.9 million
management to make estimates and assumptions that
for Fiscal 2016. See Note 9 of Notes to Consolidated
affect the amounts reported in the financial statements
Financial Statements.
and accompanying notes. Although these estimates
We maintain self-insured and deductible programs
are based on management’s knowledge of current
for certain liability, medical and workers’ compensation
events and actions it may undertake in the future, they
exposures. Other long-term liabilities include known
may ultimately differ from actual results. We believe
claims and estimated incurred but not reported claims
that the critical accounting policies described in the
not otherwise covered by insurance, based on actuarial
following paragraphs comprise the most significant
assumptions and historical claims experience. Since the
estimates and assumptions used in the preparation
timing and amount of claim payments vary significantly,
of our consolidated financial statements. For these
we are not able to reasonably estimate future payments
policies, we caution that future events rarely develop
for specific periods and therefore such payments have
exactly as estimated and the best estimates routinely
not been included in the table above. Standby letters
require adjustment.
of credit aggregating $2.1 million have been issued in
connection with our self-insurance programs. These
standby letters of credit expire through March 2019
Credit Risk We sell products to a variety of customers
and extend credit based on an evaluation of each
and are expected to be renewed.
customer’s financial condition, generally without
OFF-BALANCE SHEET ARRANGEMENTS
by customer principally due to the financial condition
requiring collateral. Exposure to credit losses varies
We do not have any off-balance sheet arrangements
that have, or are reasonably likely to have, a current or
losses and maintain allowances for anticipated losses
based on specific customer circumstances, credit
future material effect on our financial condition.
conditions and historical write-offs.
of each customer. We monitor our exposure to credit
7
NATIONAL BEVERAGE CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Impairment of Long-Lived Assets All long-lived
assets, excluding goodwill and intangible assets not
however smaller direct-store delivery accounts may be
sold on a cash basis. Our credit terms typically require
subject to amortization, are evaluated for impairment
payment within 30 days of delivery and may allow
on the basis of undiscounted cash flows whenever
discounts for early payment. We estimate and reserve
events or changes in circumstances indicate that the
for bad debt exposure based on our experience with
carrying amount of an asset may not be recoverable.
past due accounts, collectability and our analysis of
An impaired asset is written down to its estimated fair
customer data.
value based on the best information available. Estimated
We offer various sales incentive arrangements to
fair value is generally measured by discounting future
our customers that require customer performance or
cash flows. Goodwill and intangible assets not subject
achievement of certain sales volume targets. Sales
to amortization are evaluated for impairment annually
incentives are accrued over the period of benefit or
or sooner if we believe such assets may be impaired.
expected sales. When the incentive is paid in advance,
An impairment loss is recognized if the carrying amount
the aggregate incentive is recorded as a prepaid and
or, for goodwill, the carrying amount of its reporting unit,
amortized over the period of benefit. The recognition of
is greater than its fair value.
Income Taxes Our effective income tax rate is based
on estimates of taxes which will ultimately be payable.
these incentives involves the use of judgment related to
performance and sales volume estimates that are made
based on historical experience and other factors. Sales
incentives are accounted for as a reduction of sales
Deferred taxes are recorded to give recognition to
and actual amounts ultimately realized may vary from
temporary differences between the tax bases of assets
accrued amounts. Such differences are recorded once
or liabilities and their reported amounts in the financial
determined and have historically not been significant.
statements. Valuation allowances are established to
We will adopt ASU 2014-09, Revenue from Contracts
reduce the carrying amounts of deferred tax assets
with Customers, and its amendments on April 29, 2018.
when it is deemed, more likely than not, that the benefit
See Note 1 to our consolidated financial statements
of deferred tax assets will not be realized.
for additional information on revenue recognition and
the transition to the new revenue recognition guidance.
Insurance Programs We maintain self-insured and
deductible programs for certain liability, medical and
workers’ compensation exposures. Accordingly, we
FORWARD-LOOKING STATEMENTS
accrue for known claims and estimated incurred but
National Beverage and its representatives may make
not reported claims not otherwise covered by insurance
written or oral statements relating to future events or
based on actuarial assumptions and historical claims
results relative to our financial, operational and business
experience.
performance, achievements, objectives and strategies.
These statements are “forward-looking” within the
Revenue Recognition We recognize revenue upon
delivery to our customers, based on written sales
meaning of the Private Securities Litigation Reform Act
of 1995 and include statements contained in this report,
terms that do not allow a right of return except in rare
filings with the Securities and Exchange Commission
instances. Our products are typically sold on credit,
and in reports to our stockholders. Certain statements
8
NATIONAL BEVERAGE CORP. including, without limitation, statements containing
the words “believes,” “anticipates,” “intends,” “plans,”
“expects,” and “estimates” constitute “forward-looking
statements” and involve known and unknown risk,
uncertainties and other factors that may cause the
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Commodities We purchase various raw materials,
including aluminum cans, plastic bottles, high
actual results, performance or achievements of our
fructose corn syrup, corrugated packaging and juice
Company to be materially different from any future
concentrates, the prices of which fluctuate based on
results, performance or achievements expressed or
commodity market conditions. Our ability to recover
implied by such forward-looking statements. Such
increased costs through higher pricing may be limited
factors include, but are not limited to, the following:
by the competitive environment in which we operate.
general economic and business conditions, pricing of
At times, we manage our exposure to this risk through
competitive products, success of new product and
the use of supplier pricing agreements that enable us
flavor introductions, fluctuations in the costs of raw
to establish all, or a portion of, the purchase prices for
materials and packaging supplies, ability to pass along
certain raw materials. Additionally, we use derivative
cost increases to our customers, labor strikes or work
financial instruments to partially mitigate our exposure
stoppages or other interruptions in the employment
to changes in certain raw material costs.
of labor, continued retailer support for our products,
changes in brand image, consumer preferences and our
success in creating products geared toward consumers’
Interest Rates At April 28, 2018, the Company had
no borrowings outstanding. We had no debt-related
tastes, success in implementing business strategies,
interest rate exposure during Fiscal 2018.
changes in business strategy or development plans,
government regulations, taxes or fees imposed on the
sale of our products, unfavorable weather conditions
and other factors referenced in this report, filings with
the Securities and Exchange Commission and other
reports to our stockholders. 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.
9
NATIONAL BEVERAGE CORP. CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
Current assets:
Cash and equivalents
Trade receivables - net
Inventories
Prepaid and other assets
Total current assets
Property, plant and equipment - net
Goodwill
Intangible assets
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued liabilities
Income taxes payable
Total current liabilities
Deferred income taxes - net
Other liabilities
Shareholders' equity:
Preferred stock, $1 par value - 1,000,000 shares authorized
Series C - 150,000 shares issued
Common stock, $.01 par value - 75,000,000 shares authorized;
50,650,784 shares (2018) and 50,616,134 shares (2017) issued
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock - at cost:
Series C preferred stock - 150,000 shares
Common stock - 4,032,784 shares
Total shareholders' equity
Total liabilities and shareholders' equity
See accompanying Notes to Consolidated Financial Statements.
10
April 28,
2018
April 29,
2017
$
189,864
$
136,372
84,360
60,920
17,823
71,319
53,355
7,275
352,967
268,321
85,807
13,145
1,615
5,298
65,150
13,145
1,615
5,752
$
458,832
$
353,983
$
74,853
$
58,100
29,718
29,017
99
104,670
14,502
8,220
150
507
36,358
307,824
4,601
89
87,206
12,087
9,072
150
506
35,638
227,928
(604)
(5,100)
(12,900)
(5,100)
(12,900)
331,440
245,618
$
458,832
$
353,983
NATIONAL BEVERAGE CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Interest expense
Other (income) expense - net
Income before income taxes
Provision for income taxes
Net income
Less preferred dividends and accretion
Earnings available to common shareholders
Earnings per common share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
Fiscal Year Ended
April 28,
2018
April 29,
2017
April 30,
2016
$
975,734
$
826,918
$
704,785
584,599
391,135
186,947
201
(1,502)
205,489
55,715
149,774
-
149,774
500,841
326,077
163,600
189
(537)
162,825
55,780
463,348
241,437
148,384
203
145
92,705
31,507
$
$
107,045
$
61,198
-
(238)
107,045
$
60,960
3.21 $
3.19 $
2.30 $
2.29 $
1.31
1.31
46,598
46,921
46,564
46,770
46,452
46,671
$
$
$
$
11
NATIONAL BEVERAGE CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income
Other comprehensive income (loss), net of tax:
Cash flow hedges
Other
Total
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
Fiscal Year Ended
April 28,
2018
April 29,
2017
April 30,
2016
$
149,774 $
107,045 $
61,198
5,227
(22)
5,205
1,110
93
1,203
783
(66)
717
$
154,979 $
108,248 $
61,915
12
NATIONAL BEVERAGE CORP. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Fiscal Year Ended
April 28, 2018
April 29, 2017
April 30, 2016
(In thousands)
Shares
Amount
Shares
Amount
Shares
Amount
SERIES C PREFERRED STOCK
Beginning and end of year
150 $
150
150 $
150
150 $
150
SERIES D PREFERRED STOCK
Beginning of year
Series D preferred redeemed
End of year
COMMON STOCK
Beginning of year
—
—
—
—
—
—
—
—
—
—
—
—
120
(120)
-
50,616
506
50,589
506
50,418
Stock options exercised
35
1
27
-
171
End of year
50,651
507
50,616
506
50,589
ADDITIONAL PAID-IN CAPITAL
Beginning of year
Series D preferred redeemed
Stock options exercised
Stock-based compensation
Stock-based tax benefits
End of year
RETAINED EARNINGS
Beginning of year
Net income
Common stock cash dividend
Preferred stock dividends & accretion
End of year
ACCUMULATED OTHER
COMPREHENSIVE INCOME (LOSS)
Beginning of year
Cash flow hedges
Other
End of year
35,638
34,570
—
559
161
—
—
365
208
495
36,358
35,638
227,928
149,774
(69,878)
—
307,824
(604)
5,227
(22)
4,601
190,733
107,045
(69,850)
—
227,928
(1,807)
1,110
93
(604)
120
(120)
-
504
2
506
37,759
(5,791)
846
228
1,528
34,570
129,773
61,198
—
(238)
190,733
(2,524)
783
(66)
(1,807)
TREASURY STOCK - SERIES C PREFERRED
Beginning and end of year
150
(5,100)
150
(5,100)
150
(5,100)
TREASURY STOCK - COMMON
Beginning and end of year
4,033
(12,900)
4,033
(12,900)
4,033
(12,900)
TOTAL SHAREHOLDERS’ EQUITY
$ 331,440
$ 245,618
$ 206,152
See accompanying Notes to Consolidated Financial Statements.
13
NATIONAL BEVERAGE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(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 (benefit)
Loss on disposal of property, net
Stock-based compensation
Stock-based tax benefits
Changes in assets and liabilities:
Trade receivables
Inventories
Prepaid and other assets
Accounts payable
Accrued and other liabilities
Fiscal Year Ended
April 28,
2018
April 29,
2017
April 30,
2016
$
149,774 $
107,045 $
61,198
13,226
676
149
161
—
12,834
1,358
72
208
495
(13,041)
(10,273)
(7,565)
(5,437)
16,753
25
(5,433)
(2,205)
8,709
1,457
12,056
(1,299)
129
228
1,528
(1,095)
(4,998)
(485)
4,495
8,726
Net cash provided by operating activities
154,721
114,267
80,483
INVESTING ACTIVITIES
Additions to property, plant and equipment
(31,974)
(14,015)
(12,140)
Proceeds from sale of property, plant and equipment
63
28
116
Net cash used in investing activities
FINANCING ACTIVITIES
Dividends paid on common stock
Dividends paid on preferred stock
Repayments under credit facilities, net
Redemption of preferred 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.
14
(31,911)
(13,987)
(12,024)
(69,878)
(69,850)
—
—
—
560
(69,318)
53,492
136,372
—
—
—
365
(69,485)
30,795
105,577
—
(186)
(10,000)
(6,000)
848
(15,338)
53,121
52,456
$
$
$
189,864 $
136,372 $
105,577
101 $
202 $
116
56,737 $
55,901 $
29,473
NATIONAL BEVERAGE CORP.
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
National Beverage Corp. innovatively develops,
produces, markets and sells a distinctive portfolio of
Earnings Per Common Share Basic earnings per
common share is computed by dividing earnings
sparkling waters, juices, energy drinks and carbonated
available to common shareholders by the weighted
soft drinks primarily in the United States and Canada.
average number of common shares outstanding during
Incorporated in Delaware in 1985, National Beverage
the period. Diluted earnings per common share is
Corp. is a holding company for various operating
calculated in a similar manner, but includes the dilutive
subsidiaries. When used in this report, the terms “we,”
effect of stock options amounting to 323,000 shares in
“us,” “our,” “Company” and “National Beverage” mean
Fiscal 2018, 206,000 shares in Fiscal 2017 and 219,000
National Beverage Corp. and its subsidiaries.
shares in Fiscal 2016.
1. SIGNIFICANT ACCOUNTING POLICIES
Fair Value The estimated fair values of derivative
financial instruments are calculated based on market
Basis of Presentation The consolidated financial
statements have been prepared in accordance with
rates to settle the instruments. These values represent
the estimated amounts we would receive upon sale,
United States generally accepted accounting principles
taking into consideration current market prices and
(“GAAP”) and rules and regulations of the Securities
credit worthiness. See Note 6.
and Exchange Commission. The consolidated financial
statements include the accounts of National Beverage
Corp. and all subsidiaries. All significant intercompany
Impairment of Long-Lived Assets All long-lived
assets, excluding goodwill and intangible assets not
transactions and accounts have been eliminated. Our
subject to amortization, are evaluated for impairment on
fiscal year ends the Saturday closest to April 30 and,
the basis of undiscounted cash flows whenever events
as a result, an additional week is added every five or six
or changes in circumstances indicate that the carrying
years. All fiscal years presented consisted of 52 weeks.
amount of an asset may not be recoverable. An impaired
Cash and Equivalents Cash and equivalents are
comprised of cash and highly liquid securities (consisting
asset is written down to its estimated fair market value
based on the best information available. Estimated fair
value is generally measured by discounting future cash
primarily of short-term money-market investments) with
flows. Goodwill and intangible assets not subject to
an original maturity of three months or less.
amortization are evaluated for impairment annually or
Derivative Financial Instruments We use derivative
financial instruments to partially mitigate our exposure
sooner if we believe such assets may be impaired. An
impairment loss is recognized if the carrying amount or,
for goodwill, the carrying amount of its reporting unit,
to changes in raw material costs. All derivative financial
is greater than its fair value.
instruments are recorded at fair value in our Consolidated
Balance Sheets. We do not use derivative financial
instruments for trading or speculative purposes. Credit
risk related to derivative financial instruments is managed
Income Taxes Our effective income tax rate is based
on estimates of taxes which will ultimately be payable.
Deferred taxes are recorded to give recognition to
by requiring high credit standards for counterparties
temporary differences between the tax bases of assets
and frequent cash settlements. See Note 6.
or liabilities and their reported amounts in the financial
15
NATIONAL BEVERAGE CORP.
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
statements. Valuation allowances are established to
reduce the carrying amounts of deferred tax assets
New Accounting Pronouncements - adopted
In March 2016, the Financial Accounting Standards
when it is deemed, more likely than not, that the benefit
Board (“FASB”) issued Accounting Standards Update
of deferred tax assets will not be realized.
No. 2016-09, “Compensation-Stock Compensation:
Insurance Programs We maintain self-insured and
deductible programs for certain liability, medical and
Improvements to Employee Share-Based Payment
Accounting” (“ASU 2016-09”). The updated guidance
simplifies and changes how companies account for
workers’ compensation exposures. Accordingly, we
certain aspects of share-based payment awards to
accrue for known claims and estimated incurred but
employees, including accounting for income taxes and
not reported claims not otherwise covered by insurance
forfeitures, as well as classification of certain items in the
based on actuarial assumptions and historical claims
statement of cash flows. The Company adopted ASU
experience. At April 28, 2018 and April 29, 2017, other
2016-09 effective April 30, 2017 and elected to apply
liabilities included accruals of $6.5 million and $6.9
the cash flow guidance retrospectively; therefore, cash
million, respectively, for estimated non-current risk
flow from operating activities increased and cash flow
retention exposures, of which $5.0 million and $5.4
from financing activities decreased by $495 thousand
million were covered by insurance.
and $1.5 million for the twelve months ended April 29,
Intangible Assets Intangible assets as of April 28,
2018 and April 29, 2017 consisted of non-amortizable
trademarks.
Inventories Inventories are stated at the lower of
first-in, first-out cost or market. Inventories at April 28,
2017 and April 30, 2016, respectively. The Company
also elected to continue to estimate the number of
awards that are expected to vest using the forfeiture
option. The adoption of ASU 2016-09 reduced the
Company’s income tax expense by $886 thousand for
the twelve months ended April 28, 2018.
In November 2015, the FASB issued Accounting
2018 were comprised of finished goods of $37.6 million
Standards Update No. 2015-17, “Balance Sheet
and raw materials of $23.3 million. Inventories at April
Classification of Deferred Taxes” (“ASU 2015-17”).
29, 2017 were comprised of finished goods of $35.0
ASU 2015-17 requires companies to classify all deferred
million and raw materials of $18.4 million.
tax liabilities and assets as noncurrent on the balance
sheet. We adopted ASU 2015-17 effective for our
Marketing Costs We are involved in a variety of
marketing programs, including cooperative advertising
fiscal year beginning April 30, 2017, electing to apply
it retrospectively to all periods presented. As a result,
programs with customers, to advertise and promote
$3.9 million of deferred taxes was reclassified from
our products to consumers. Marketing costs are
current to non-current on the consolidated balance
expensed when incurred, except for prepaid advertising
sheet as of April 29, 2017.
and production costs which are expensed when the
In February 2018, the FASB issued Accounting
advertising takes place. Marketing costs, which are
included in selling, general and administrative expenses,
Standards Update 2018-02, “Reclassification of Certain
Tax Effects from Accumulated Other Comprehensive
totaled $49.7 million in Fiscal 2018, $44.9 million in
Income” (“ASU 2018-02”). This update permits the
Fiscal 2017 and $38.8 million in Fiscal 2016.
impact of lower corporate income tax rates related to
16
NATIONAL BEVERAGE CORP. items classified in accumulated other comprehensive
financial statements. ASU 2017-12 is effective for our
income to be reclassified directly to retained earnings.
fiscal year beginning April 28, 2019. We are currently
We adopted ASU 2018-02 effective for our third quarter
evaluating the potential impact of adopting this guidance
ended January 27, 2018. We elected not to reclassify
on our consolidated financial statements.
the income tax effects of the Tax Cuts and Jobs Act
from accumulated other comprehensive income to
retained earnings.
Property, Plant and Equipment Property, plant and
equipment are recorded at cost. Additions, replacements
and betterments are capitalized, while maintenance and
New Accounting Pronouncements - not yet adopted
In May 2014, the FASB issued Accounting Standards
repairs that do not extend the useful life of an asset are
expensed as incurred. Depreciation is recorded using
Update No. 2014-09, “Revenue from Contracts with
the straight-line method over estimated useful lives of
Customers” (“ASU 2014-09”). ASU 2014-09 requires
5 to 30 years for buildings and improvements and 3
an entity to recognize revenue in an amount that reflects
to 15 years for machinery and equipment. Leasehold
the consideration it expects to receive in exchange for
improvements are amortized using the straight-line
goods or services. On August 12, 2015, the FASB issued
method over the shorter of the remaining lease term
ASU 2015-14 which deferred the effective date of ASU
or the estimated useful life of the improvement. When
2014-09 by one year and is effective for our fiscal year
assets are retired or otherwise disposed, the cost
beginning April 29, 2018. Management has completed
and accumulated depreciation are removed from the
its evaluation and adoption is not expected to have
respective accounts and any related gain or loss is
a material impact on our financial position, results of
recognized.
operations or cash flows. Disclosure requirements under
the new guidance have been significantly expanded.
In February 2016, the FASB issued Accounting
Revenue Recognition We recognize revenue upon
delivery to our customers, based on written sales
Standards Update No. 2016-02, “Leases” (“ASU
terms that do not allow a right of return except in rare
2016-02”). ASU 2016-02 requires the lease rights
instances. Our products are typically sold on credit,
and obligations arising from lease contracts, including
however smaller accounts are sold on a cash basis. Our
existing and new arrangements, to be recognized as
credit terms typically require payment within 30 days of
assets and liabilities on the balance sheet. ASU 2016-
delivery and may allow discounts for early payment. We
02 is effective for our fiscal year beginning April 28,
estimate and reserve for bad debt exposure based on
2019. We are currently evaluating the potential impact
our experience with past due accounts, collectability
of adopting this guidance on our consolidated financial
and our analysis of customer data.
statements.
We offer various sales incentive arrangements to
In August 2017, the FASB issued Accounting
our customers that require customer performance or
Standards Update 2017-12, “Targeted Improvements
achievement of certain sales volume targets. Sales
to Accounting for Hedge Activities” (“ASU 2017-12”).
This amendment simplifies the application of hedge
incentives are accrued over the period of benefit or
expected sales volume. When the incentive is paid
accounting and enables companies to better portray
in advance, the aggregate incentive is recorded as
the economics of risk management activities in their
a prepaid and amortized over the period of benefit.
17
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The recognition of these incentives involves the use
of judgment related to performance and sales volume
Trade Receivables We record trade receivables at net
realizable value, which includes an estimated allowance
estimates that are made based on historical experience
for doubtful accounts. We extend credit based on
and other factors. Sales incentives are accounted for as a
an evaluation of each customer’s financial condition,
reduction of sales and actual amounts ultimately realized
generally without requiring collateral. Exposure to credit
may vary from accrued amounts. Such differences are
losses varies by customer principally due to the financial
recorded once determined and have historically not
condition of each customer. We monitor our exposure
been significant. We will adopt ASU 2014-09, Revenue
to credit losses and maintain allowances for anticipated
from Contracts with Customers, and its amendments
losses based on our experience with past due accounts,
on April 29, 2018 using the modified retrospective
collectability and our analysis of customer data. Activity
approach, with no anticipated material impact to the
in the allowance for doubtful accounts was as follows:
consolidated financial statements.
Segment Reporting We operate as a single operating
segment for purposes of presenting financial information
and evaluating performance. As such, the accompanying
consolidated financial statements present financial
information in a format that is consistent with the internal
financial information used by management. We do not
(In thousands)
Fiscal
2018
Fiscal
2017
Fiscal
2016
Balance at beginning of year $ 468 $ 484 $ 330
Net charge to expense
Net charge-off
34
(50)
74
(90)
232
(78)
Balance at end of year
$ 452 $ 468 $ 484
accumulate revenues by product classification and,
As of April 28, 2018 and April 29, 2017, we did not
therefore, it is impractical to present such information.
have any customer that comprised more than 10%
Shipping and Handling Costs Shipping and handling
costs are reported in selling, general and administrative
expenses in the accompanying consolidated statements
of income. Such costs aggregated $63.3 million in Fiscal
2018, $50.0 million in Fiscal 2017 and $44.6 million in
of trade receivables. No one customer accounted for
more than 10% of net sales during any of the last three
fiscal years.
Use of Estimates The preparation of financial
statements in conformity with United States generally
Fiscal 2016. Although our classification is consistent
accepted accounting principles requires management
with many beverage companies, our gross margin may
to make estimates and assumptions that affect the
not be comparable to companies that include shipping
amounts reported in the financial statements and
and handling costs in cost of sales.
accompanying notes. Although these estimates are
Stock-Based Compensation Compensation expense
for stock-based compensation awards is recognized
over the vesting period based on the grant-date fair value
estimated using the Black-Scholes model. See Note 8.
based on management’s knowledge of current events
and anticipated future actions, actual results may vary
from reported amounts.
18
NATIONAL BEVERAGE CORP. 2. PROPERTY, PLANT AND EQUIPMENT
at April 28, 2018 or April 29, 2017. At April 28, 2018,
$2.1 million of the Credit Facilities was reserved for
Property, plant and equipment as of April 28, 2018 and
standby letters of credit and $97.9 million was available
April 29, 2017 consisted of the following:
for borrowings.
(In thousands)
Land
2018
2017
$ 9,500 $ 9,500
Buildings and improvements
56,947
51,157
Machinery and equipment
194,241
172,257
Total
260,688
232,914
Less accumulated depreciation
(174,881)
(167,764)
Property, plant and
equipment – net
$ 85,807 $ 65,150
Depreciation expense was $11.1 million for Fiscal
2018, $10.7 million for Fiscal 2017 and $10.1 million
for Fiscal 2016.
The Credit Facilities require the subsidiary to maintain
certain financial ratios, including debt to net worth and
debt to EBITDA (as defined in the Credit Facilities), and
contain other restrictions, none of which are expected
to have a material effect on our operations or financial
position. At April 28, 2018, we were in compliance with
all loan covenants.
5. CAPITAL STOCK AND TRANSACTIONS
WITH RELATED PARTIES
The Company paid a special cash dividend on Common
Stock of $69.9 million ($1.50 per share) on August 4,
3. ACCRUED LIABILITIES
2017 and January 27, 2017.
On January 25, 2013, the Company sold 400,000
Accrued liabilities as of April 28, 2018 and April 29,
shares of Special Series D Preferred Stock, par value
2017 consisted of the following:
$1 per share (“Series D Preferred”) for an aggregate
(In thousands)
2018
2017
Company redeemed the final remaining 120,000 shares
Accrued compensation
$ 9,790 $ 9,967
of Series D Preferred for an aggregate price of $6 million
purchase price of $20 million. On April 29, 2016, the
Accrued promotions
Accrued freight
Other
Total
4. DEBT
7,011
5,984
6,933
8,403
2,279
8,368
plus accrued dividends. In addition, the Company has
150,000 shares of Series C Preferred Stock, par value
$1 per share, which are held as treasury stock.
$ 29,718 $ 29,017
The Company is authorized under its stock buyback
program to repurchase 1.6 million shares of Common
Stock. As of April 28, 2018, 502,060 shares were
purchased under the program and 1,097,940 shares
At April 28, 2018, a subsidiary of the Company
were available for purchase. No shares of Common
maintained unsecured revolving credit facilities with
Stock have been repurchased during the last three
banks aggregating $100 million (the “Credit Facilities”).
fiscal years.
The Credit Facilities expire from October 3, 2020 to
June 18, 2021 and any borrowings would currently bear
The Company is a party to a management agreement
with Corporate Management Advisors, Inc. (“CMA”), a
interest at .9% above one-month LIBOR. There were
corporation owned by our Chairman and Chief Executive
no borrowings outstanding under the Credit Facilities
Officer. This agreement was originated in 1991 for the
19
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
efficient use of management of two public companies at
6. DERIVATIVE FINANCIAL INSTRUMENTS
the time. In 1994, one of those public entities, through
a merger, no longer was managed in this manner.
From time to time, we enter into aluminum swap
Under the terms of the agreement, CMA provides,
contracts to partially mitigate our exposure to changes
subject to the direction and supervision of the Board of
in the cost of aluminum cans. Such financial instruments
Directors of the Company, (i) senior corporate functions
are designated and accounted for as a cash flow
(including supervision of the Company’s financial, legal,
hedge. Accordingly, gains or losses attributable to the
executive recruitment, internal audit and information
effective portion of the cash flow hedge are reported
systems departments) as well as the services of a Chief
in Accumulated Other Comprehensive Income (Loss)
Executive Officer and Chief Financial Officer, and (ii)
(“AOCI”) and reclassified into cost of sales in the period
services in connection with acquisitions, dispositions
in which the hedged transaction affects earnings. The
and financings by the Company, including identifying
ineffective portion of the change in fair value of our cash
and profiling acquisition candidates, negotiating and
flow hedge was immaterial. The following summarizes
structuring potential transactions and arranging financing
the gains (losses) recognized in the Consolidated
for any such transaction. CMA, through its personnel,
Statements of Income and AOCI relative to the cash
also provides, to the extent possible, the stimulus and
flow hedge for Fiscal 2018, Fiscal 2017 and Fiscal 2016:
creativity to develop an innovative and dynamic persona
for the Company, its products and corporate image.
In order to fulfill its obligations under the management
agreement, CMA employs numerous individuals, whom,
acting as a unit, provide management, administrative and
creative functions for the Company. The management
agreement provides that the Company will pay CMA an
annual base fee equal to one percent of the consolidated
net sales of the Company, and further provides that
the Compensation and Stock Option Committee
and the Board of Directors may from time to time
award additional incentive compensation to CMA or
its personnel. The Board of Directors on numerous
occasions contemplated incentive compensation and,
while shareholder value has increased over $4.8 billion
(In thousands)
Recognized in AOCI-
Gain (loss) before income
taxes
Less income tax provision
(benefit)
Net
Reclassified from AOCI to
cost of sales-
Gain (loss) before income
taxes
Less income tax provision
(benefit)
Net
Net change to AOCI
Fiscal
2018
Fiscal
2017
Fiscal
2016
$ 9,498
$ (984) $ (5,743)
3,085
6,413
(365)
(2,131)
(619)
(3,612)
2,569 (2,749) (6,987)
1,383 (1,020) (2,592)
1,186 (1,729) (4,395)
$ 5,227 $ 1,110 $ 783
(or 11,000%) since the inception of this agreement, no
As of April 28, 2018, the notional amount of our
incentive compensation has been paid. We incurred
outstanding aluminum swap contracts was $37.5
management fees to CMA of $9.8 million for Fiscal 2018,
million and, assuming no change in the commodity
$8.3 million for Fiscal 2017 and $7.0 million for Fiscal
2016. Included in accounts payable were amounts due
prices, $6.2 million of unrealized gain before tax will
be reclassified from AOCI and recognized in earnings
CMA of $2.4 million at April 28, 2018 and $2.1 million
over the next 12 months. See Note 1.
at April 29, 2017.
20
NATIONAL BEVERAGE CORP. As of April 28, 2018, the fair value of the derivative
(In thousands)
asset was $6.2 million, which was included in prepaid
Deferred tax assets:
2018
2017
and other assets. As of April 29, 2017, the fair value
Accrued expenses and other
$ 2,900 $ 4,740
of the derivative asset, derivative liability and derivative
Inventory and amortizable assets
331
538
long-term liability was $602 thousand, $848 thousand
Total deferred tax assets
3,231
5,278
and $476 thousand, which was included in prepaid
Deferred tax liabilities:
and other assets, accrued liabilities and other liabilities,
Property
respectively. Such valuation does not entail a significant
Intangibles and other
amount of judgment and the inputs that are significant
Total deferred tax liabilities
14,858
15,157
2,875
2,208
17,733
17,365
to the fair value measurement are Level 2 as defined
Net deferred tax liabilities
$ 14,502 $ 12,087
by the fair value hierarchy as they are observable
market based inputs or unobservable inputs that are
The reconciliation of the statutory federal income tax
corroborated by market data.
rate to our effective tax rate is as follows:
7. INCOME TAXES
The provision (benefit) for income taxes consisted of
the following:
(In thousands)
Current
Deferred
Total
Fiscal
2018
Fiscal
2017
Fiscal
2016
$ 55,039 $ 54,422 $ 32,806
Statutory federal income
tax rate
State income taxes,
net of federal benefit
Domestic manufacturing
deduction benefit
Remeasurement of
deferred taxes
Fiscal
2018
Fiscal
2017
Fiscal
2016
30.4% 35.0% 35.0%
2.4
2.2
2.2
(2.4)
(3.0)
(3.0)
(2.9)
(.4)
-
.1
-
(.2)
676
1,358
(1,299)
Other differences
$ 55,715 $ 55,780 $ 31,507
Effective income tax rate
27.1% 34.3% 34.0%
Deferred taxes are recorded to give recognition to
As of April 28, 2018, the gross amount of unrecognized
temporary differences between the tax bases of assets
tax benefits was $1.7 million and $191 thousand was
or liabilities and their reported amounts in the financial
recognized as a tax expense in Fiscal 2018. If we were
statements. Valuation allowances are established to
to prevail on all uncertain tax positions, the net effect
reduce the carrying amounts of deferred tax assets
would be to reduce our tax expense by approximately
when it is deemed more likely than not that the benefit
$1.4 million. A reconciliation of the changes in the gross
of deferred tax assets will not be realized. Deferred tax
amount of unrecognized tax benefits, which amounts
assets and liabilities as of April 28, 2018 and April 29,
are included in other liabilities in the accompanying
2017 consisted of the following:
consolidated balance sheets, is as follows:
21
NATIONAL BEVERAGE CORP.
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands)
Fiscal
2018
Fiscal
2017
Fiscal
2016
Beginning balance
$ 1,743 $ 1,678 $ 1,801
Federal income tax returns for fiscal years subsequent to
2015 are subject to examination. Generally, the income
tax returns for the various state jurisdictions are subject
Increases due to current
period tax positions
Decreases due to lapse of
statute of limitations and
audit resolutions
204
150
145
to examination for fiscal years ending after fiscal 2011.
(214)
(85)
(268)
8. STOCK-BASED COMPENSATION
Ending balance
$ 1,733 $ 1,743 $ 1,678
Our stock-based compensation program is a broad-
based program designed to attract and retain personnel
We recognize accrued interest and penalties related
while also aligning participants’ interests with the
to unrecognized tax benefits in income tax expense. As
interests of the shareholders.
of April 28, 2018, unrecognized tax benefits included
The 1991 Omnibus Incentive Plan (the “Omnibus
accrued interest of $238 thousand.
Plan”) provides for compensatory awards consisting of
On December 22, 2017, the Tax Cuts and Jobs
(i) stock options or stock awards for up to 4,800,000
Act (the “Tax Act”) was enacted into law. The Tax Act
shares of common stock, (ii) stock appreciation rights,
makes changes to the U.S. tax code, including reducing
dividend equivalents, other stock-based awards in
the U.S. federal tax rate from 35% to 21% effective
amounts up to 4,800,000 shares of common stock and
January 1, 2018. The phasing in of the lower corporate
(iii) performance awards consisting of any combination of
income tax rate results in a blended federal statutory
the above. The Omnibus Plan is designed to provide an
rate of 30.4% for our fiscal 2018, compared with the
incentive to officers and certain other key employees and
previous 35% rate. The federal statutory tax rate will be
consultants by making available to them an opportunity
reduced to 21% in subsequent fiscal years. Included
to acquire a proprietary interest or to increase such
in the effective tax rate for Fiscal 2018 is a one-time
interest in National Beverage. The number of shares or
adjustment reducing income tax expense to remeasure
options which may be issued under stock-based awards
previous deferred tax liabilities of $4.3 million.
to an individual is limited to 1,680,000 during any year.
We file annual income tax returns in the United States
Awards may be granted for no cash consideration or
and in various state and local jurisdictions. A number of
such minimal cash consideration as may be required
years may elapse before an uncertain tax position, for
by law. Options generally have an exercise price equal
which we have unrecognized tax benefits, is resolved.
to the fair market value of our common stock on the
While it is often difficult to predict the final outcome
date of grant, vest over a five-year period and expire
or the timing of resolution of any particular uncertain
after ten years.
tax position, we believe that our unrecognized tax
The Special Stock Option Plan provides for the
benefits reflect the most probable outcome. We adjust
issuance of stock options to purchase up to an
these unrecognized tax benefits, as well as the related
aggregate of 1,800,000 shares of common stock.
interest, in light of changing facts and circumstances.
The resolution of any particular uncertain tax position
Options may be granted for such consideration as
determined by the Board of Directors. The vesting
could require the use of cash and an adjustment to our
schedule and exercise price of these options are tied to
provision for income taxes in the period of resolution.
the recipient’s ownership level of common stock and the
22
NATIONAL BEVERAGE CORP. terms generally allow for the reduction in exercise price
risk free interest rate was based on the U.S. Treasury
upon each vesting period. Also, the Board of Directors
constant maturity interest rate whose term is consistent
authorized the issuance of options to purchase up to
with the expected life of stock options. There were no
50,000 shares of common stock to be issued at the
forfeitures estimated in Fiscal 2018 and Fiscal 2016.
direction of the Chairman.
The Key Employee Equity Partnership Program
The following is a summary of stock option activity for
(“KEEP Program”) provides for the granting of stock
Fiscal 2018:
options to purchase up to 240,000 shares of common
stock to key employees, consultants, directors and
officers. Participants who purchase shares of stock
in the open market receive grants of stock options
Options outstanding,
beginning of year
equal to 50% of the number of shares purchased, up
to a maximum of 6,000 shares in any two-year period.
Options under the KEEP Program are forfeited in the
Granted
Exercised
Canceled
Number
of Shares
Price(a)
$ 383,595 $ 11.47
500
(34,650)
(4,500)
29.61
16.15
17.59
10.84
8.49
event of the sale of shares used to acquire such options.
Options outstanding, end of year
344,945
Options are granted at an initial exercise price of 60%
Options exercisable, end of year
209,579
of the purchase price paid for the shares acquired and
the exercise price reduces to the stock par value at the
(a) Weighted average exercise price.
end of the six-year vesting period.
Stock-based compensation expense was $161
We account for stock options under the fair value
thousand for Fiscal 2018, $208 thousand for Fiscal 2017
method of accounting using a Black-Scholes valuation
and $228 thousand for Fiscal 2016. The total fair value
model to estimate the stock option fair value at date of
of shares vested was $140 thousand for Fiscal 2018,
grant. The fair value of stock options is amortized to
$362 thousand for Fiscal 2017 and $652 thousand for
expense over the vesting period. Stock options granted
Fiscal 2016. The total intrinsic value for stock options
were 500 shares in Fiscal 2018, no shares in Fiscal 2017
exercised was $3.0 million for Fiscal 2018, $1.5 million
and 3,500 shares in Fiscal 2016. The weighted average
for Fiscal 2017 and $5.2 million for Fiscal 2016. Net
Black-Scholes fair value assumptions for stock options
cash proceeds from the exercise of stock options were
granted are as follows: weighted average expected life
$560 thousand for Fiscal 2018, $365 thousand for Fiscal
of 8.0 years for Fiscal 2018 and 8.0 years for Fiscal
2017 and $848 thousand for Fiscal 2016. Stock based
2016; weighted average expected volatility of 23.8%
income tax benefits aggregated $886 thousand for
for Fiscal 2018 and 29.0% for Fiscal 2016; weighted
Fiscal 2018, $495 thousand for Fiscal 2017 and $1.5
average risk free interest rates of 2.4% for Fiscal 2018
million for Fiscal 2016. The weighted average fair value
and 2.1% for Fiscal 2016; and expected dividend yield
for stock options granted was $44.50 for Fiscal 2018.
of 1.6% for Fiscal 2018 and 3.3% for Fiscal 2016. The
As of April 28, 2018, unrecognized compensation
expected life of stock options was estimated based
on historical experience. The expected volatility was
expense related to the unvested portion of our stock
options was $268 thousand, which is expected to be
estimated based on historical stock prices for a period
recognized over a weighted average period of 3.3 years.
consistent with the expected life of stock options. The
The weighted average remaining contractual term and
23
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the aggregate intrinsic value for options outstanding as of April 28, 2018 was 4.4 years and $27.3 million,
respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options
exercisable as of April 28, 2018 was 3.5 years and $17 million, respectively.
We have a stock purchase plan which provides for the purchase of up to 1,536,000 shares of common
stock by employees who (i) have been employed for at least two years, (ii) are not part-time employees and
(iii) are not owners of five percent or more of our common stock. As of April 28, 2018, no shares have been
issued under the plan.
9. PENSION PLANS
The Company contributes to certain pension plans under collective bargaining agreements and to a discretionary
profit sharing plan. Annual contributions (including contributions to multi-employer plans reflected below) were
$3.4 million for Fiscal 2018, $3.1 million for Fiscal 2017 and $2.9 million for Fiscal 2016.
The Company participates in three multi-employer defined benefit pension plans with respect to certain
collective bargaining agreements. If the Company chooses to stop participating in the multi-employer plan or
if other employers choose to withdraw to the extent that a mass withdrawal occurs, the Company could be
required to pay the plan a withdrawal liability based on the underfunded status of the plan. During Fiscal 2017,
a subsidiary of the Company reached a settlement with respect to a notification of withdrawal liability by one of
the multi-employer pension plans not considered significant. The settlement did not have a material effect on
its financial position or results of operations.
Summarized below is certain information regarding the Company’s participation in significant multi-employer
pension plans including the financial improvement plan or rehabilitation plan status (“FIP/RP Status”) and the
zone status under the Pension Protection Act (“PPA”). The most recent PPA zone status available in Fiscal 2018
and Fiscal 2017 is for the plans’ years ending December 31, 2016 and 2015, respectively.
Pension Fund
Central States, Southeast and Southwest Areas Pension
Plan (EIN no. 36-044243) (the “CSSS Fund”)
PPA Zone Status
Fiscal
2018
Fiscal
2017
FIP/RP
Status
Surcharge
Imposed
Red
Red
Implemented
Yes
Western Conference of Teamsters Pension Trust Fund
(EIN no. 91-6145047) (the “WCT Fund”)
Green
Green
Not
Applicable
No
24
NATIONAL BEVERAGE CORP. For the plan years ended December 31, 2016 and
Our minimum lease payments under non-cancelable
December 31, 2015, the Company was not listed in
operating leases as of April 28, 2018 were as follows:
the Form 5500 Annual Returns as providing more than
5% of the total contributions for the above plans. The
collective bargaining agreements for employees in the
CSSS Fund and the WCT Fund expire on October 18,
2021 and May 14, 2021, respectively.
The Company’s contributions for all multi-employer
pension plans for the last three fiscal years are as follow:
(In thousands)
Fiscal 2019
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Thereafter
$ 9,182
7,615
5,241
3,223
1,656
1,531
Total minimum lease payments
$ 28,448
(In thousands)
Pension Fund
CSSS Fund
WCT Fund
Other multi-employer
pension funds
Total
Fiscal
2018
Fiscal
2017
Fiscal
2016
We enter into various agreements with suppliers
$ 1,370 $ 1,262 $ 1,172
for the purchase of raw materials, the terms of which
619
477
485
may include variable or fixed pricing and minimum
228
201
448
$ 2,217 $ 1,940 $ 2,105
purchase quantities. As of April 28, 2018, we had
purchase commitments for raw materials of $11.2
million through 2022.
As of April 28, 2018, we had purchase commitments
for plant and equipment of $4.7 million for Fiscal 2019.
10. COMMITMENTS AND CONTINGENCIES
From time to time, we are a party to various litigation
matters and claims arising in the ordinary course of
We lease buildings, machinery and equipment under
business. We do not expect the ultimate disposition of
various non-cancelable operating lease agreements
such matters to have a material adverse effect on our
expiring at various dates through 2029. Certain of
consolidated financial position or results of operations.
these leases contain scheduled rent increases and/or
renewal options. Contractual rent increases are taken
into account when calculating the minimum lease
payment and recognized on a straight-line basis over
the lease term. Rent expense under operating lease
agreements totaled $13.3 million for Fiscal 2018, $12.0
million for Fiscal 2017 and $9.2 million for Fiscal 2016.
25
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
FISCAL 2018
Net sales
Gross profit
Net income
Earnings per common share – basic
Earnings per common share – diluted
FISCAL 2017
Net sales
Gross profit
Net income
Earnings per common share – basic
Earnings per common share – diluted
$ 259,832 $ 244,119 $ 227,477 $ 244,306
104,503
38,272
96,080
33,980
91,193
41,080
99,359
36,442
$ .82
$ .73
$ .88
$ .78
$ .82
$ .72
$ .88
$ .78
$ 217,108 $ 203,180 $ 194,564 $ 212,066
85,494
28,995
78,717
24,604
75,920
24,285
85,946
29,161
$ .62 $ .53 $ .52 $ .63
$ .62 $ .53 $ .52 $ .62
26
NATIONAL BEVERAGE CORP. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of National Beverage Corp.
Opinions on the Financial Statements and Internal Control Over
Financial Reporting
We have audited the accompanying consolidated balance sheets
of National Beverage Corp. (the Company) as of April 28, 2018 and
April 29, 2017, and the related consolidated statements of income,
comprehensive income, stockholders’ equity and cash flows for each
of the three years in the period ended April 28, 2018, and the related
notes (collectively, the financial statements). We also have audited
the Company’s internal control over financial reporting as of April 28,
2018, based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission in 2013.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company
as of April 28, 2018 and April 29, 2017, and the results of their
operations and their cash flows for each of the years in the three-
year period ended April 28, 2018, in conformity with accounting
principles generally accepted in the United States of America. Also
in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of April 28,
2018, based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission in 2013.
Basis for Opinions
The Company’s management is responsible for these financial
statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Company’s financial
statements and an opinion on the company’s internal control over
financial reporting based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with U.S. federal securities
laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the financial statements included performing
procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control Over
Financial Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ RSM US LLP
We have served as the Company’s auditor since 2006.
Fort Lauderdale, Florida
June 27, 2018
27
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, (“Common Stock”) is listed on The
NASDAQ Global Select Market under the symbol “FIZZ”. The following table shows the range of high and low
prices per share of the Common Stock for the fiscal quarters indicated:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year Ended
April 28, 2018
April 29, 2017
High
Low
High
Low
$ 110.64
$ 81.65
$ 64.73
$ 46.50
129.82
113.70
114.77
91.50
93.01
83.78
58.30
54.65
92.85
39.14
44.21
48.81
At June 6, 2018 there were approximately 28,000 holders of our Common Stock, the majority of which hold
their shares in the names of various dealers and/or clearing agencies.
The Company paid special cash dividends on Common Stock of $69.9 million ($1.50 per share) on both
August 4, 2017 (Fiscal 2018) and January 27, 2017 (Fiscal 2017).
The Company is authorized under its stock buyback program to repurchase 1.6 million shares of Common
Stock. As of April 28, 2018, 502,060 shares were purchased under the program and 1,097,940 shares were
available for purchase. No shares of Common Stock have been repurchased during the last three fiscal years.
28
NATIONAL BEVERAGE CORP. PERFORMANCE GRAPH
The following graph shows a comparison of the five-year cumulative returns of an investment of $100 cash on
April 27, 2013, assuming reinvestment of dividends, in (i) Common Stock, (ii) the NASDAQ Composite Index,
(iii) the S&P 500 Index, and (iv) a Company-constructed peer group consisting of Coca-Cola Bottling Company
Consolidated and Cott Corporation. Based on the cumulative total return below, an investment in our Common
Stock on April 27, 2013 provided a compounded annual return of approximately 45% as of April 28, 2018.
4/27/2013
5/3/2014
5/2/2015
4/30/2016
4/29/2017
4/28/2018
National Beverage Corp
$ 100.00
$ 131.85
$ 153.88
$ 320.80
$ 625.93
$ 644.46
NASDAQ Composite –Total Return
100.00
127.40
156.45
151.07
193.65
230.40
S&P 500 – Total Return
100.00
121.43
138.89
139.05
163.96
187.24
Peer Group
100.00
97.62
121.03
178.03
207.92
197.64
29
NATIONAL BEVERAGE CORP.
SUBSIDIARIES
BevCo Sales, Inc.
Beverage Corporation Intl., Inc.
Big Shot Beverages, Inc.
Everfresh Beverages, Inc.
Faygo Beverages, Inc.
LaCroix Beverages, Inc.
National Beverage Vending Co.
National Retail Brands, Inc.
NewBevCo, Inc.
NutraFizz Products Corp.
PACO, Inc.
Shasta Beverages, Inc.
Shasta Beverages Intl., Inc.
Shasta Sales, Inc.
Shasta Sweetener Corp.
Shasta West, Inc.
Sundance Beverage Company
CORPORATE OFFICES
8100 Southwest Tenth Street
Fort Lauderdale, FL 33324
954-581-0922
ANNUAL MEETING
The Annual Meeting of
Shareholders will be held on
Friday, October 5, 2018 at
2:00 p.m. local time at the
Hyatt Regency Orlando
International Airport Hotel,
9300 Jeff Fuqua Boulevard,
Orlando, FL 32827.
FINANCIAL AND OTHER
INFORMATION
A copy of National Beverage
Corp.’s Annual Report, Annual
Report on Form 10-K, and other
financial information can be found
on the company’s website
(www.nationalbeverage.com) or
may be obtained without charge
by writing or calling:
National Beverage Corp.
Shareholder Relations,
8100 Southwest Tenth Street,
Fort Lauderdale, FL 33324.
Telephone: 877-NBC-FIZZ
(877-622-3499).
STOCK EXCHANGE LISTING
Common Stock is listed on
The NASDAQ Global Select
Market – symbol FIZZ.
TRANSFER AGENT AND
REGISTRAR
Computershare
462 South 4th Street
Suite 1600
Louisville, KY 40202
888-313-1476
www.computershare.com/investor
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
RSM US LLP
Fort Lauderdale, FL
CORPORATE DATA
DIRECTORS
SUBSIDIARY MANAGEMENT
Alan A. Chittaro
President
Faygo Beverages
Michael J. Bahr
Executive Vice President
Shasta West
James C.T. Bolton
Executive Vice President
PACO
Alan D. Domzalski
Executive Vice President
Sundance Beverages
James H. Erwin III
Executive Vice President
LaCroix Beverages
Stephen E. Flis
Executive Vice President
Shasta Sweetener
Arthur D. Hanrehan
Executive Vice President
National BevPak
James M. Jones
Executive Vice President
Foodservice Division
Tammera K. Atkins
Vice President
Rip It Energy Fuel
John F. Hlebica
Vice President
International Division
Nick A. Caporella
Chairman of the Board &
Chief Executive Officer
National Beverage Corp.
Joseph G. Caporella
President
National Beverage Corp.
Cecil D. Conlee*
Founder & Chairman
The Conlee Company
Samuel C. Hathorn, Jr.*
Retired Chief Executive Officer
Trendmaker Development Co.
Stanley M. Sheridan*
Retired President
Faygo Beverages, Inc.
*Member Audit Committee
CORPORATE MANAGEMENT
Nick A. Caporella
Chairman of the Board &
Chief Executive Officer
Joseph G. Caporella
President
George R. Bracken
Executive Vice President-
Finance
Timothy C. Barker
Executive Director-
Strategic IT
Brent R. Bott
Executive Director-
Consumer Marketing
Gregory J. Kwederis
Executive Director-
Beverage Analyst
Dominic H. Angelina
Director-Internal Audit
Richard S. Berkes
Director-Risk Management
Glenn G. Bryan
Director-Tax
Michael M. King
Special Corporate Counsel
Remembering
Gregory P. Cook
June 7, 1957 – July 27, 2018
God saw you getting tired
And a cure was not to be,
So he put his arms around you,
And whispered, “Come to Me.”
With tearful eyes we watched you,
And saw you pass away.
Although we loved you dearly,
We could not make you stay.
A golden heart stopped beating,
Hard working hands to rest,
God broke our hearts to prove to us,
He only takes the Best!
Greg was truly a one-of-a-kind character.
Not many have attained the pinnacle achieved by him.
His devoted sense of loyalty made him
“The Most Unforgettable Person to Come Our Way.”
Team National
“Only when the mind wills itself
“Only when the mind wills itself
beyond its human boundaries...
beyond its human boundaries...
does one’s vision create the
does one’s vision create the
ultimate reality!”
ultimate reality!”
NAC
NAC
8100 Southwest Tenth Street, Fort Lauderdale, Florida 33324
954.581.0922
www.nationalbeverage.com