2019 ANNUAL REPORT
on Form 10K
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[✓] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended April 27, 2019
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to _________
Commission file number 1-14170
(Exact name of Registrant as specified in its charter)
Delaware
(State of incorporation)
59-2605822
(I.R.S. Employer Identification No.)
8100 SW Tenth Street, Suite 4000, Fort Lauderdale, Florida 33324
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (954) 581-0922
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01 per share
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ( ) No (✓)
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ( ) No (✓)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes (✓) No ( )
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes (✓) No ( )
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer (✓) Accelerated filer ( ) Non-accelerated filer ( ) Smaller reporting company ( ) Emerging growth company ( )
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ( ) No (✓)
The aggregate market value of the common stock held by non-affiliates of Registrant computed by reference to the closing sale
price of $98.87 on October 26, 2018 was approximately $1.2 billion.
The number of shares of Registrant’s common stock outstanding as of June 24, 2019 was 46,645,540.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2019 Annual Meeting of Shareholders are incorporated by reference in
Part III of this report.
TABLE OF CONTENTS
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and
Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
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SIGNATURES
38
PART I
ITEM 1.
BUSINESS
GENERAL
National Beverage Corp. innovatively refreshes America
with a distinctive portfolio of sparkling waters, juices,
energy drinks (“Power+ Brands”), and to a lesser extent,
carbonated soft drinks. We believe our creative product
designs, innovative packaging and imaginative flavors,
along with our corporate culture and philosophy, make
National Beverage unique as a stand-alone entity in the
beverage industry.
Points of differentiation include the following:
Healthy Transformation – We focus on developing
and delighting consumers with healthier beverages in
response to the global shift in consumer buying habits
and lifestyles. We are committed to tailoring the variety
and types of beverages in our portfolio to satisfy the
preferences of a diverse mix of consumers including
‘crossover consumers’ – a growing group desiring a
healthier alternative to artificially sweetened or high-
calorie beverages.
Flavor Innovation – Building on a rich tradition of flavor
and brand innovation with more than a 130-year history
of development with iconic brands such as Shasta®
and Faygo®, we have extended our flavor and essence
leadership and technical expertise to the sparkling water
category. Proprietary flavors and our naturally-essenced
beverages are developed and tested in-house and only
made commercially available after extensive concept
and sensory evaluation. Our variety of distinctive flavors
provides us a unique advantage with today’s consumers
who demand variety and refreshing beverage alternatives.
Innovation Ethic – We believe that innovative marketing,
packaging and consumer engagement is more effective
in today’s marketplace than traditional higher-cost
national advertising. In addition to our cost-effective
social media platforms, we utilize regionally-focused
marketing programs and in-store “brand ambassadors”
to interact and obtain feedback from our consumers. We
also believe the design of our packages and the overall
optical effect of their placement on the shelf (“shelf
marketing”) has become more important as millennials
and younger generations become increasingly influential
consumers, and are now influencing baby boomers and
older generations.
Creative Dynamics – In a beverage industry that is
dominated by the “cola giants”, we pride ourselves on
being smaller, faster and stronger. We believe we are able
to respond faster and more creatively to consumer trends
than competitors who are burdened by legacy production
and distribution complexity and costs. The ability to identify
consumer trends and create new product concepts to
lead the market defines our new product development
model. Speed to market with the appropriate concept,
unique flavor creation and trend-forward ‘better-for-
you’ ingredients continues to be our goal. Internal
development teams are responsible for concept creation,
packaging and design,
which allow for rapid ‘go
to market’ timing and
reduced
development
costs.
Presently, our primary
market focus is the United
and Canada.
States
Certain of our products
are also distributed on
a limited basis in other
countries and options
to expand distribution to
other regions are being
considered.
1
NATIONAL BEVERAGE CORP. NiCola® by LaCroix, an innovative sparkling water, captures
the ‘crossover’ cola consumers with its ‘innocent’ effect
of no calories, sodium, sweetener or any other ingredient
that the health-conscious consumer avoids. NiCola is
designed for those cola and diet cola consumers within
the $82 billion U.S. carbonated soft drink market that are
looking to continue to quench their cola-craving taste
without negative health consequences. In late fiscal year
2019, we introduced three new additions to our LaCroix
NiCola theme − Coconut Cola, Cubana (Mojito), and
Coffea Exotica (Sumatra coffee and cola).
Additional LaCroix themes are in development and feature
unique packaging, ground-breaking flavor concepts, and
a go-to-market strategy designed to maximize cultural
demographic concepts.
Shasta Sparkling
Shasta® Sparkling Water duplicates the iconic flavors that
have charmed loyal Shasta consumers over the past 130
years with the first genuine soft-drink alternative (SDA).
Shasta Sparkling is naturally-essenced without calories,
sodium and sweeteners. ‘Simply Natural and Smartly
Healthy,’ Shasta Sparkling complements a healthier
lifestyle with its eloquent design and packaging in tall
10.5 ounce cans with an industry-first “clean” label.
National Beverage Corp. is incorporated in Delaware
and began trading as a public company on the NASDAQ
Stock Market in 1991. In this report, the terms “we,”
“us,” “our,” “Company” and “National Beverage” mean
National Beverage Corp. and its subsidiaries unless
indicated otherwise.
BRANDS
Our brands consist of beverages geared to the active and
health-conscious consumer (“Power+ Brands”) including
sparkling waters, energy drinks, and juices. Our portfolio
of Power+ Brands includes LaCroix®, LaCroix Cúrate®,
LaCroix NiCola® and Shasta® Sparkling Water products;
Rip It® energy drinks and shots; and Everfresh®, Everfresh
Premier Varietals™ and Mr. Pure® 100% juice and juice-
based products. Additionally, we produce and distribute
carbonated soft drinks including Shasta® and Faygo®,
iconic brands whose consumer loyalty spans more than
130 years.
Power+ Brands –
LaCroix
LaCroix® Sparkling Water, our most significant brand, has
uniquely redefined the Sparkling Water category that is
rapidly becoming the alternative to traditional carbonated
soda. With zero calories, zero sweeteners and zero
sodium, the innocence of LaCroix has propelled it to the
top-selling domestic sparkling water. Naturally essenced,
LaCroix has gained the support of national retailers in
multiple channels, including mass-merchandisers, club
stores, drug stores, mainstream supermarkets and
natural and specialty food retailers.
LaCroix’s dynamic ‘theme’ LaCroix
Cúrate® (‘Cure Yourself’) celebrates
French sophistication with Spanish
zest and bold flavors. Cúrate
naturally refreshes in tall 12 oz.
consumer-favored cans. Eloquent
graphics, robust aroma, naturally
‘essenced’ and premium-priced,
Cúrate is an innovative addition to a
brand that is the healthy alternative
for today’s consumers.
2
NATIONAL BEVERAGE CORP. Everfresh and Mr. Pure
flavored
lemonades
Everfresh® and Mr. Pure® 100%
juice and juice drinks are available
in a variety of flavors, from such
classics as Orange, Cranberry
and
to
include Premium
exotics that
Papaya,
Pineapple Mango,
Peach Watermelon and Island
Punch.
Distributed primarily
the brands’
in
signature package is a hot-filled,
16 oz. glass bottle primarily for
single-serve consumption.
the Midwest,
Everfresh Premier Varietals™, a unique theme from
Everfresh, is positioned as a stand-alone brand for display
in the produce section of supermarkets. Everfresh
Premier Varietals is a premium line of natural apple juice
derived from a variety of apples specific to the taste of the
varietal, such as Granny Smith, McIntosh, Honey Crisp,
Golden Delicious, Fuji and Pink Lady.
Rip It
RIP IT® Energy Fuel continues as a “Mission Tradition®”
by proudly supporting
our troops at home and
abroad with 14 unique
flavors and six sugar-free
options. With its unique
positioning, Rip It also
continues to energize its
growing
fan base of
gamers and athletes.
Building on the flavor
tradition of original Rip It, a 2 oz. sugar-free shot version
in eight flavors is marketed through our distribution
system in displayable package configurations.
Carbonated Soft Drinks –
its 130th year, Shasta®
Celebrating
is recognized
as a bottling industry pioneer and innovator. Shasta
features multiple flavors, including products targeted
to the growing Hispanic and other ethnic markets, and
has earned consumer loyalty by delivering value and
convenience with such unique tastes as Raspberry
Crème, Tiki Punch, and California Dreamin’. More than
110 years old, Faygo® products are primarily distributed
east of the Mississippi River and include numerous
unique flavors including Red Pop®, Moon Mist®, and
Rock’n’Rye®.
We tailor our marketing and promotion programs by
geographic area; many of our carbonated soft drink
brands enjoy a regional identification that fosters long-
term consumer loyalty and makes them more competitive
as a consumer choice. In addition, products produced
locally may generate retailer-sponsored promotional
activities and receive media exposure through community
activities rather than costly national advertising.
In recent years we reformulated many of our brands to
reduce caloric content while still preserving their time-
tested flavor profiles. Our brands, optically and ingredient-
wise, are always a work in process. We continually strive
to make all our drinks healthier while maintaining their
iconic taste profiles.
PRODUCTION
Our philosophy emphasizes vertical integration; our
production model integrates the procurement of raw
materials and crafting flavors and concentrates with the
production of finished products. Our twelve strategically-
located production facilities are near major metropolitan
markets across the continental United States.
3
NATIONAL BEVERAGE CORP. The locations of our facilities enable us to efficiently
produce and distribute beverages to substantially all
geographic markets in the United States, including the
top 25 metropolitan statistical areas. Each facility is
generally equipped to produce both canned and bottled
beverage products in a variety of package sizes.
the
innovative and controlled vertical
We believe
integration of our production facilities provides an
advantage over certain of our competitors that rely on
independent third-party bottlers to manufacture and
market their products.
Since we control all national production, distribution
and marketing of our brands, we believe we can more
effectively manage quality control and consumer appeal
while responding quickly to changing market conditions.
By controlling our own
We craft a substantial portion of our flavors and
formulas
concentrates.
throughout our bottling network, we are able to produce
beverages in accordance with uniform quality standards
while innovating flavors to meet changing consumer
preferences. We believe the combination of a Company-
owned bottling network, together with uniform standards
for packaging, formulations and customer service,
provides us with a strategic advantage in servicing
national retailers and mass-merchandisers. We also
maintain research and development laboratories at
multiple locations. These laboratories continually test
products for compliance with our strict quality control
standards as well as conduct research for new products
and flavors.
merchandisers, wholesalers, drug stores and dollar
stores. We distribute our products to this channel
primarily through the warehouse distribution system and,
to a lesser extent, the direct-store delivery system.
Under the warehouse distribution system, products are
shipped from our production facilities to the retailer’s
centralized distribution centers and then distributed by
the retailer to each of its store locations with other goods.
This method allows our retail partners to further maximize
their assets by utilizing their ability to pick-up product at
our warehouses, thus lowering their/our product costs.
Products sold through the direct-store delivery system
are distributed directly to the customer’s retail outlets
by our direct-store delivery fleet and by independent
distributors.
We distribute our products
to the convenience channel
through our own direct-store
delivery fleet and those of
independent
distributors.
The convenience channel
convenience
consists of
stores, gas stations and
other
“up-and-
down-the-street” accounts.
Because of the higher retail
prices and margins
that
typically prevail, we have
developed packaging and
graphics specifically targeted
to this market.
smaller
DISTRIBUTION
To service a diverse customer
base that includes numerous
national retailers, as well as
thousands of smaller “up-and-
accounts,
down-the-street”
we utilize a hybrid distribution
system to deliver our products
through three primary distribution channels: take-home,
convenience and food-service.
The take-home distribution channel consists of national
regional grocery stores, club stores, mass-
and
to
Our
food-service division distributes products
independent, specialized distributors who sell
to
hospitals, schools, military bases, airlines, hotels and
food-service wholesalers. Also, our Company-owned
direct-store delivery fleet distributes products to certain
schools and other food-service customers.
Our take-home, convenience and food-service operations
use vending machines and glass-door coolers as
marketing and promotional tools for our brands. We
provide vending machines and coolers on a placement
or purchase basis to our customers. We believe vending
and cooler equipment expands on-site visual trial, thereby
increasing sales and enhancing brand awareness.
4
NATIONAL BEVERAGE CORP. SALES AND MARKETING
We sell and market our products through an internal sales
force as well as specialized broker networks. Our sales
force is organized to serve a specific market, focusing on
one or more geographic territories, distribution channels
or product lines. We believe this focus allows our sales
group to provide high level, responsive service and
support to our customers and markets.
Our marketing emphasizes programs designed to reach
consumers directly through innovative digital marketing,
digital social marketing, social media engagement,
sponsorships and creative content. We are focused on
increasing our digital presence and capabilities to further
enhance the consumer experience across our brands.
We may retain agencies to assist with social media
content creative and platform selection for our brands.
Additionally, we maintain and enhance consumer
brand recognition and loyalty through a combination of
participation in regional events, special event marketing,
endorsements, consumer coupon distribution and
product sampling. We also offer numerous promotional
programs to retail customers, including cooperative
advertising support, ‘BrandED’ ambassadors, in-store
promotional activities and other incentives. These
elements allow marketing and other consumer programs
to be tailored to meet local and regional demographics.
RAW MATERIALS
centralized
Our
group maintains
procurement
relationships with numerous suppliers of ingredients and
packaging. By consolidating the purchasing function for
our production facilities, we believe we are able to procure
more competitive arrangements with our suppliers,
thereby enhancing our ability to compete as an efficient
producer of beverages.
The products we produce and sell are made from
various materials including aluminum cans, glass and
plastic bottles, water, carbon dioxide, juice and flavor
concentrates, sweeteners, cartons and closures. We
craft a substantial portion of our flavors and concentrates
while purchasing the remaining raw materials from
multiple suppliers.
the materials and
ingredients
Substantially all of
we purchase are presently available
from several
suppliers, although strikes, weather conditions, utility
shortages, governmental control or regulations, national
emergencies, quality, price or supply fluctuations or other
events outside our control could adversely affect the
supply of specific materials. A significant portion of our
raw material purchases, including aluminum cans, plastic
bottles, high fructose corn syrup, corrugated packaging
and juice concentrates, are derived from commodities.
Therefore, pricing and availability tend to fluctuate
based upon worldwide commodity market conditions.
In certain cases, we may elect to enter into multi-year
agreements for the supply of these materials with one or
more suppliers, the terms of which may include variable
or fixed pricing, minimum purchase quantities and/or
the requirement to purchase all supplies for specified
locations. Additionally, we use derivative financial
instruments to partially mitigate our exposure to changes
in certain raw material costs.
SEASONALITY
Our operating results are
affected by numerous factors,
including fluctuations in costs
raw materials, holiday
of
and seasonal programming
and weather
conditions.
Beverage sales are seasonal
with higher volume realized
during
summer months
when outdoor activities are
more prevalent.
5
NATIONAL BEVERAGE CORP. COMPETITION
TRADEMARKS
While LaCroix® Sparkling Water is the brand of choice as
the number one sparkling water in 41 of the 52 Nielsen
metropolitan statistical areas, the beverage industry
is highly competitive and our competitive position may
vary by market area. Our products compete with many
varieties of liquid refreshment, including water products,
soft drinks, juices, fruit drinks, energy drinks and sports
drinks, as well as powdered drinks, coffees, teas, dairy-
based drinks, functional beverages and various other
nonalcoholic beverages. We compete with bottlers and
distributors of national, regional and private label products.
Several competitors, including those that dominate the
beverage industry, such as Nestlé S.A., PepsiCo and The
Coca-Cola Company, have greater financial resources
than we have and aggressive promotion of their products
may adversely affect sales of our brands.
Principal methods of competition in the beverage
industry are price and promotional activity, advertising
and marketing programs, point-of-sale merchandising,
retail space management, customer service, product
differentiation, packaging innovations and distribution
methods. We believe our Company differentiates
itself through novel methods of innovation, key brand
recognition, focused social media, innovative flavor
variety, attractive packaging, efficient distribution
methods, and, for some product lines, value pricing.
We own numerous trademarks for our brands that are
significant to our business. We intend to continue to
maintain all registrations of our significant trademarks and
use the trademarks in the operation of our businesses.
GOVERNMENTAL REGULATION
The production, distribution and sale of our products in
the United States are subject to the Federal Food, Drug
and Cosmetic Act; the Dietary Supplement Health and
Education Act of 1994; the Occupational Safety and
Health Act; the Lanham Act; various environmental
statutes; and various other federal, state and local
statutes regulating the production, transportation, sale,
safety, advertising, labeling and ingredients of such
products. We believe that we are in compliance, in all
material respects, with such existing legislation.
Certain states and localities require a deposit or tax
on the sale of certain beverages. These requirements
vary by each jurisdiction. Similar legislation has been
proposed in certain other states and localities, as well
as by Congress. We are unable to predict whether such
legislation will be enacted or what impact its enactment
would have on our business, financial condition or results
of operations.
All of our facilities in the United States are subject
to federal, state and local environmental laws and
regulations. Compliance with these provisions has
not had any material adverse effect on our financial or
competitive position. We believe our current practices
and procedures for the control and disposition of toxic
or hazardous substances comply in all material respects
with applicable law.
EMPLOYEES
As of April 27, 2019, we employed approximately 1,640
people, of which 380 are covered by collective bargaining
agreements. We believe we maintain good relations with
our employees.
6
NATIONAL BEVERAGE CORP. AVAILABLE INFORMATION
Our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, proxy statements
and amendments to those reports are available free of charge
on our website at www.nationalbeverage.com as soon as
reasonably practicable after such reports are electronically
filed with the Securities and Exchange Commission. In
addition, our Code of Ethics is available on our website.
The information on the Company’s website is not part of
this Annual Report on Form 10-K or any other report that
we file with, or furnish to, the Securities and Exchange
Commission.
ITEM 1A.
RISK FACTORS
In addition to other information in this Annual Report
on Form 10-K, the following risk factors should be
considered carefully in evaluating the Company’s
business. Our business, financial condition and results
of operations could be materially and adversely affected
by any of these risks. Additional risks and uncertainties,
including risks and uncertainties not presently known to
the Company, or that the Company currently deems
immaterial, may also impair our business and results
of operations.
Brand image and consumer preferences Our beverage
portfolio is comprised of a number of unique brands with
time-tested reputations and consumer loyalty that have
been built over time. Our investments in social media
and marketing as well as our strong commitment to
product quality are intended to have a favorable impact
on brand image and consumer preferences. Unfavorable
publicity, or allegations of quality issues, even if false or
unfounded, may tarnish our reputation and brand image
and cause consumers to choose other products. In
addition, if we do not adequately anticipate and react
to changing demographics, consumer trends, health
concerns and product preferences, our financial results
could be adversely affected.
Competition The beverage
is extremely
competitive. Our products compete with a broad range
of beverage products, most of which are manufactured
industry
and distributed by companies with substantially greater
financial, marketing and distribution resources. In
order to generate future revenues and profits, we must
continue to sell products that appeal to our customers
and consumers. Discounting and other actions by our
competitors could adversely affect our ability to sustain
revenues and profits.
Customer relationships Our retail customer base has
been consolidating over the last several years resulting
in fewer customers with increased purchasing power.
This increased purchasing power can limit our ability
to increase pricing for our products with certain of our
customers. Additionally, e-commerce transactions and
value stores are experiencing rapid growth. Our inability
to adapt to customer requirements could lead to a loss of
business and adversely affect our financial results.
Raw materials and energy The production of our
products is dependent on certain raw materials, including
aluminum, resin, corn, linerboard, water and fruit juice. In
addition, the production and distribution of our products
is dependent on energy sources, including natural gas,
fuel and electricity. These items are subject to price
volatility caused by numerous factors. Commodity price
increases ultimately result in a corresponding increase in
the cost of raw materials and energy. We may be limited
in our ability to pass these increases on to our customers
or may incur a loss in sales volume to the extent price
In addition, strikes, weather
increases are
taken.
conditions, governmental controls,
tariffs, national
emergencies, natural disasters, supply shortages or
other events could affect our continued supply and cost
of raw materials and energy. If raw materials or energy
costs increase, or the availability is limited, our financial
results could be adversely affected.
Governmental regulation Our business and properties
are subject to various federal, state and local laws and
regulations, including those governing the production,
packaging, quality, labeling and distribution of beverage
products. In addition, various governmental agencies
have enacted or are considering additional taxes on soft
drinks and other sweetened beverages. Compliance with
or changes in existing laws or regulations could require
material expenses and negatively affect our financial
results through lower sales or higher costs.
7
NATIONAL BEVERAGE CORP. Sustained increases in the cost of employee benefits
Our profitability is affected by the cost of medical and
retirement benefits provided to employees, including
employees covered under collective bargaining
agreements and multi-employer pension plans. In
recent years, we have experienced increases in these
costs. Although we seek to limit these cost increases,
continued upward pressure in these costs could reduce
our profitability.
Unfavorable weather conditions Unfavorable weather
conditions could have an adverse impact on our revenue
and profitability. Unusually cold or rainy weather may
temporarily reduce demand for our products and
contribute to lower sales, which could adversely affect
our profitability for such periods. Prolonged drought
conditions in the geographic regions in which we do
business could lead to restrictions on the use of water,
which could adversely affect our ability to produce and
distribute products.
Dependence on key personnel Our performance
significantly depends upon the continued contributions
of our executive officers and key employees, both
individually and as a group, and our ability to retain and
motivate them. Our officers and key personnel have
many years of experience with us and in our industry
and it may be difficult to replace them. If we lose key
personnel or are unable to recruit qualified personnel, our
operations and ability to manage our business may be
adversely affected.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
Michigan (2), Ohio, Texas, Utah and Washington. Two
production facilities, located in Maryland and Florida, are
leased subject to agreements that expire through 2020.
We believe our facilities are generally in good condition
and sufficient to meet our present needs.
The production of beverages is capital intensive but
is not characterized by rapid technological change.
The technological advances that have occurred have
generally been of an incremental cost-saving nature,
such as the industry’s conversion to lighter weight
containers or improved blending processes that enhance
ingredient yields. Although we are continually investing
in more efficient equipment, we are not aware of any
anticipated industry-wide changes in technology that
would adversely impact our current physical production
capacity or cost of production.
We own and lease trucks, vans and automobiles used
in the sale, delivery and distribution of our products.
In addition, we lease warehouse and office space,
transportation equipment, office equipment and certain
manufacturing equipment.
ITEM 3.
LEGAL PROCEEDINGS
The Company has been named a defendant in certain
legal proceedings, including derivative and class action
complaints. Company counsel has asserted various
meritorious defenses and is vigorously defending these
matters. Certain of these complaints include allegations
that the Company’s LaCroix branded products contain
synthetic ingredients and thereby violate specific state
consumer protection statutes and other laws. The
Company believes the litigation is without merit and will
not have a material adverse effect on the Company’s
financial position, cash flows or results of operations.
Our principal properties include twelve production facilities
located in ten states, which aggregate approximately two
million square feet. We own ten production facilities in
the following states: California (2), Georgia, Kansas,
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
8
NATIONAL BEVERAGE CORP. PART II
ITEM 5.
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”.
At June 14, 2019, there were approximately 27,500 holders of our Common Stock, the majority of which hold their
shares in the names of banks, brokers and other financial institutions.
The Company paid special cash dividends on Common Stock of $135.2 million ($2.90 per share) on January 29, 2019
and $69.9 million ($1.50 per share) on August 4, 2017.
Performance Graph
The following graph shows a comparison of the five-year cumulative returns of an investment of $100 cash on May 3,
2014, 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.
Comparison of 5 - Year Cumulative Total Return
among National Beverage Corp., the NASDAQ Composite Index, S&P 500 Index and a Peer Group
$550
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
5/3/2014
5/2/2015
4/30/2016
4/29/2017
4/28/2018
4/27/2019
National Beverage Corp.
NASDAQ Composite - Total Return
S&P 500 - Total Return
Peer Group
National Beverage Corp.
$ 100.00
$ 116.71
$ 243.31
$ 474.75
$ 488.79
$ 323.66
5/3/2014
5/2/2015
4/30/2016
4/29/2017
4/28/2018
4/27/2019
NASDAQ Composite – Total Return
100.00
122.81
118.58
152.01
180.85
S&P 500 – Total Return
Peer Group
100.00
100.00
114.38
123.98
114.50
182.37
135.02
212.98
154.19
202.45
208.87
173.21
298.97
9
NATIONAL BEVERAGE CORP. ITEM 6.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with “Item 7. Management’s Discussion and analysis
of Financial Condition and Results of Operations” and consolidated financial statements and notes thereto contained
in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
(In thousands, except per share and footnote amounts)
SUMMARY OF OPERATIONS
Fiscal Year Ended
April 27,
2019
April 28,
2018
April 29,
2017
April 30,
2016
May 2,
2015
Net sales
Cost of sales
Gross profit
$ 1,014,105
$ 975,734
$ 826,918
$ 704,785
$ 645,825
629,755
584,599
500,841
463,348
426,685
384,350
391,135
326,077
241,437
219,140
Selling, general and administrative expenses
204,415
186,947
163,600
148,384
145,157
Interest expense
Other (income) expense - net
Income before income taxes
Provision for income taxes
Net income
PER SHARE DATA
202
201
(4,144)
(1,502)
189
(537)
203
145
371
(1,101)
183,877
205,489
162,825
92,705
74,713
43,024
55,715
55,780
31,507
25,402
$ 140,853 $ 149,774 $ 107,045
$ 61,198 $ 49,311
Basic earnings per common share(1)
$ 3.02 $ 3.21 $ 2.30
$ 1.31 $ 1.06
Diluted earnings per common share(1)
Closing stock price
Dividends paid on common stock(2)
BALANCE SHEET DATA
Cash and equivalents(2)
Working capital(2)
3.00
57.50
2.90
3.19
89.78
1.50
2.29
88.59
1.50
1.31
46.74
-
1.05
22.42
-
$ 156,200 $ 189,864 $ 136,372
$ 105,577
$ 52,456
224,420
248,297
181,115
143,603
97,130
Property, plant and equipment - net
111,316
85,807
65,150
61,932
60,182
Total assets(2)
Long-term debt
Deferred income tax liability
Shareholders' equity(2)
452,193
458,832
353,983
301,044
243,402
-
-
-
-
10,000
15,987
14,502
12,087
10,020
10,897
331,609
331,440
245,618
206,152
147,782
Dividends paid on common stock(2)
135,247
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 $135.2 million ($2.90 per share) on January 29, 2019 and $69.9 million ($1.50
per share) on August 4, 2017 and January 27, 2017.
10
NATIONAL BEVERAGE CORP. ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
National Beverage Corp. innovatively refreshes America
with a distinctive portfolio of sparkling waters, juices,
energy drinks (“Power+ Brands”) and, to a lesser
extent, carbonated soft drinks. Our carbonated soft
drink brands continue to be modified as we endeavor
to make them more adaptable to changing consumer
preferences. We believe our creative product designs,
innovative packaging and imaginative flavors, along with
our corporate culture and philosophy, make National
Beverage unique as a stand-alone entity in the beverage
industry.
National Beverage Corp., in recent years, has transformed
to an innovative, healthier refreshment company. From
our corporate philosophy, development of products,
and marketing to manufacturing, we are converting
consumers to a ‘Better for You’ thirst quencher that
compassionately cares for their nutritional health. We are
committed to our quest to innovate for the joy, benefit
and enjoyment of our consumers’ healthier lifestyle!
Presently, National Beverage Corp. is uniquely positioned
in three distinctive ways:
(1) The retail grocery industry is in revolution. In prior
years, each retailer induced their consumer with a
proprietary brand (especially soft drinks), but today
understands that the well-informed, smart consumer
is demanding that retailers provide recognizable
brands that have earned their respective consumer
standing on their merits.
(2) The retail grocer today is in the most competitive-
indexed service
industry, without exception.
Innovation, plus the urgent time demands on the
consumer, is requiring quick, expedient shopping
and home delivery is even more of a current
shoppers’ choice. Retailers cannot carry slower-
moving items that home delivery will not support.
(3) The new consumer
the most competent/
is
knowledgeable product analyzer ever, and personal
mental/physical lifestyles demand that healthier
is their preferred choice. Calories must qualify as
worthy; sugar being enemy #1 in the life of the
Millennial and younger consumers.
Our strategy seeks the profitable growth of our products
by (i) developing healthier beverages in response to the
global shift in consumer buying habits and tailoring our
beverage portfolio to the preferences of a diverse mix
of ‘crossover consumers’ – a growing group desiring
a healthier alternative to artificially sweetened and
high-caloric beverages; (ii) emphasizing unique flavor
development and variety throughout our brands that
appeal to multiple demographic groups; (iii) maintaining
points of difference
innovative marketing,
through
packaging and consumer engagement and (iv) responding
faster and more creatively to changing consumer trends
that larger competitors who are burdened by legacy
production, distribution complexity and costs cannot
quickly comply with.
Presently, our primary market focus is the United States
and Canada. Certain of our products are also distributed
on a limited basis in other countries and options to expand
distribution to other regions are being considered. To
service a diverse customer base that includes numerous
national retailers, as well as thousands of smaller “up-
and-down-the-street” accounts, we utilize a hybrid
distribution system consisting of warehouse and direct-
store delivery. The warehouse delivery system allows our
retail partners to further maximize their assets by utilizing
their ability to pick up product at our warehouses, further
lowering their/our product costs.
National Beverage Corp. is incorporated in Delaware
and began trading as a public company on the NASDAQ
Stock Market in 1991. In this report, the terms “we,”
“us,” “our,” “Company” and “National Beverage” mean
National Beverage Corp. and its subsidiaries unless
indicated otherwise.
Our operating results are affected by numerous factors,
including fluctuations in the costs of raw materials, holiday
and seasonal programming and weather conditions.
While prior years witnessed more seasonality, higher
sales are realized during the summer when outdoor
activities are more prevalent.
11
NATIONAL BEVERAGE CORP. Our highly innovative business, where new beverages
are developed and produced for selective holidays
and ceremonial dates, should not be analyzed on the
common three-month (quarterly) periods, traditionally
found acceptable. Today, costly development projects
and seasonal weather periods plus promotional
packaging, make quarter-to-quarter comparisons
unworthy statistics and forces companies to decision
making for that purpose, not truly beneficial for investors
and shareholders alike.
Traditional and typical are not a part of an innovator’s
vocabulary.
RESULTS OF OPERATIONS
Net Sales Net sales for fiscal year ended April 27, 2019
(“Fiscal 2019”) increased 3.9% to $1,014 million compared
to $975.7 million for fiscal year ended April 28, 2018
(“Fiscal 2018”). Adjusted for private label carbonated soft
drinks no longer produced, net sales increased 6.2%. The
increase in sales resulted primarily from a 5.0% increase
in branded case volume and a higher average selling
price. Power+ Brands volume increased 8.9%; branded
carbonated soft drinks volume declined 3.0%.
Net sales for Fiscal 2018 increased 18.0% to $975.7
million compared to $826.9 million for the fiscal year
ended April 29, 2017 (“Fiscal 2017”). The increase in sales
resulted primarily from a 19.8% increase in branded case
volume and, to a lesser extent, a higher average selling
price. Power+ Brands volume increased 38.9%; branded
carbonated soft drinks volume declined 6.2%. The
Company concluded production of lower-margin, private-
label carbonated soft drinks in the third quarter of Fiscal
2018, allowing greater focus on brand equity appreciation.
Gross Profit Gross profit for Fiscal 2019 decreased 1.7%
to $384.4 million compared to $391.1 million for Fiscal
2018. The decrease in gross profit is due to increased
costs per case offset in part by volume growth in higher-
margin Power+ Brands. Cost of sales per case increased
7.7% primarily due to higher aluminum and manufacturing
costs. Manufacturing costs were temporarily impacted
by production disruptions as a result of capital projects
designed to increase production capacity and efficiency.
Gross margin declined to 37.9%.
12
Gross profit for Fiscal 2018 increased 20.0% to $391.1
million compared to $326.1 million for Fiscal 2017. The
increase in gross profit is due to increased volume and
growth in higher-margin Power+ Brands, offset in part by
increased cost of sales per case. Cost of sales per case
increased 1.0% primarily due to higher aluminum costs.
Gross margin expanded to 40.1%.
Shipping and handling costs are included in selling, general
and administrative expenses, the classification of which is
consistent with many beverage companies. However, our
gross margin may not be comparable to companies that
include shipping and handling costs in cost of sales. See
Note 1 of Notes to Consolidated Financial Statements.
Selling, General and Administrative Expenses Selling,
general and administrative expenses were $204.4 million
or 20.2% of net sales for Fiscal 2019, increasing $17.5
million from Fiscal 2018. Selling, general and administrative
expenses increased in total and as a percent of net sales
primarily due to increased shipping costs and marketing
spending increases.
Selling, general and administrative expenses were $186.9
million or 19.2% of net sales for Fiscal 2018, increasing
$23.3 million from Fiscal 2017. The increase was primarily
due to shipping and other volume-related expenses and
marketing spending increases. As a percent of net sales,
selling, general and administrative expenses decreased
primarily due to the leveraging effects of higher volume
on fixed costs.
Interest Expense and Other Expense (Income) - Net
Interest expense is comprised of fees related to maintaining
lines of credit. Interest expense was essentially flat for
all years presented. Other income is primarily interest
income of $4.1 million for Fiscal 2019, $1.6 million for
Fiscal 2018 and $.6 million for Fiscal 2017. The change
in interest income is due to changes in average invested
balances and increased return on investments.
Income Taxes Our effective tax rate was 23.4% for
Fiscal 2019, 27.1% for Fiscal 2018 and 34.3% for Fiscal
2017. The reduction in the effective tax rate was due to
the statutory rate decreases set forth in the Tax Cuts and
Jobs Act (the “Tax Act”) enacted into law on December 22,
2017. Under the Tax Act, the applicable federal statutory
rate was 21.0% for Fiscal 2019. Included in the effective
NATIONAL BEVERAGE CORP.
tax rate for Fiscal 2018 is a one-time adjustment reducing
income tax expense to remeasure previous deferred tax
liabilities of $4.3 million. The differences between the
effective rate and the federal statutory rate were primarily
due to the effects of state income taxes, and for Fiscal
2018 and Fiscal 2017, the domestic manufacturing
deduction. See Note 7 of Notes to Consolidated
Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Liquidity and Capital Resources At April 27, 2019,
we maintained $100 million unsecured revolving credit
facilities, under which no borrowings were outstanding
and $2.1 million was reserved for standby letters of credit.
Cash generated from operations is our principal source of
funds. We believe that existing capital 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.
We continually evaluate capital projects to expand our
production capacity, enhance packaging capabilities
or improve efficiencies at our production facilities.
Expenditures
for property, plant and equipment
amounted to $38.3 million for Fiscal 2019 primarily to
expand production capacity. We intend to continue
production capacity expansion projects in Fiscal 2020,
but expect capital expenditures will decline from Fiscal
2019 levels in the near term.
The Company paid special cash dividends on Common
Stock of $135.2 million ($2.90 per share) on January 29,
2019 and $69.9 million ($1.50 per share) on August 4,
2017 and January 27, 2017.
Pursuant to a management agreement, we incurred a
fee to Corporate Management Advisors, Inc. (“CMA”)
of $10.2 million for Fiscal 2019, $9.8 million for Fiscal
2018 and $8.3 million for Fiscal 2017. At April 27, 2019,
management fees payable to CMA were $2.4 million. See
Note 5 of Notes to Consolidated Financial Statements.
Cash Flows During Fiscal 2019, $139.4 million was
provided by operating activities, $38.3 million was
used in investing activities and $134.8 million was used
in financing activities. Cash provided by operating
activities decreased $15.3 million primarily due to lower
net income and increased working capital. Cash used
in investing activities increased due to increased capital
expenditures to support volume growth. Cash used in
financing activities includes the $135.2 million ($2.90 per
share) special cash dividend paid on January 29, 2019.
During Fiscal 2018, $154.7 million was provided by
operating activities, $31.9 million was used in investing
activities and $69.3 million was used in financing activities.
Cash provided by operating activities increased $40.5
million primarily due to increased earnings offset in part
by increased working capital. Cash used in investing
activities increased due to increased capital expenditures.
Spending on property, plant and equipment exceeded
depreciation expense, our typical investment level, in
order to support volume growth. Cash used in financing
activities includes the $69.9 million ($1.50 per share)
special cash dividend paid on August 4, 2017.
Financial Position During Fiscal 2019, our working
capital decreased to $224.4 million from $248.3 million at
April 29, 2018. The decrease in working capital resulted
from lower cash and equivalents due to the January
2019 cash dividend, primarily offset by higher inventory
and lower accounts payable. Trade receivables increased
$500,000 and days sales outstanding increased to 32.2
days from 31.4 days. Inventories increased $9.8 million
or 16.1% as a result of increased finished goods and raw
materials. Annual inventory turns decreased to 8.8 from
9.5 times. As of April 27, 2019, the current ratio was 3.3
to 1 compared to 3.4 to 1 at April 28, 2018.
During Fiscal 2018, our working capital increased to
$248.3 million from $181.1 million at April 29, 2017.
The increase in working capital resulted from higher
cash, trade receivables and inventory, partially offset by
higher accounts payable and accrued liabilities. Trade
receivables increased $13.0 million or 18.3% due to
increased sales, and days sales outstanding increased
to 31.4 days from 30.6 days. Inventories increased $7.6
million or 14.2% as a result of increased finished goods
and raw materials to support sales increases. Annual
inventory turns remained unchanged at 9.5 times. As of
April 28, 2018, the current ratio was 3.4 to 1 compared
to 3.1 to 1 at April 29, 2017.
13
NATIONAL BEVERAGE CORP.
CONTRACTUAL OBLIGATIONS
Contractual obligations at April 27, 2019 are payable as follows:
(In thousands)
Total
Less Than
1 Year
1 to 3 Years
3 to 5 Years
More Than
5 Years
Operating leases
$ 52,037
$ 16,105
$ 21,978
$ 12,251
$ 1,703
Purchase commitments
19,874
17,485
2,060
329
-
Total
$ 71,911
$ 33,590
$ 24,038
$ 12,580
$ 1,703
We contribute to certain pension plans under collective
bargaining agreements and to a discretionary profit
sharing plan. Annual contributions were $3.8 million for
Fiscal 2019, $3.4 million for Fiscal 2018 and $3.1 million
for Fiscal 2017. See Note 10 of Notes to Consolidated
Financial Statements.
We maintain self-insured and deductible programs for
certain liability, medical and workers’ compensation
exposures. Other long-term liabilities include known
claims and estimated incurred but not reported claims
not otherwise covered by insurance, based on actuarial
assumptions and historical claims experience.
Since the timing and amount of claim payments vary
significantly, we are not able to reasonably estimate
future payments for specific periods and therefore such
payments have not been included in the table above.
Standby letters of credit aggregating $2.1 million have
been issued in connection with our self-insurance
programs. These standby letters of credit expire through
June 2020 and are expected to be renewed.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that
have, or are reasonably likely to have, a current or future
material effect on our financial condition.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity
with United States generally accepted accounting
principles requires management to make estimates
and assumptions that affect the amounts reported in
14
the financial statements and accompanying notes.
Although these estimates are based on 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 comprise
the most significant estimates and assumptions used in
the preparation of our consolidated financial statements.
For these policies, we caution that future events rarely
develop exactly as estimated and the best estimates
routinely require adjustment.
Credit Risk We sell products to a variety of customers
and extend credit based on an evaluation of each
customer’s financial condition, generally without
requiring collateral. Exposure to credit losses 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
based on specific customer circumstances, credit
conditions and historical write-offs.
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 value based on the best
information available. Estimated fair value is generally
measured by discounting future cash flows. Goodwill
and intangible assets not subject to amortization are
evaluated for impairment annually or 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, is greater than its
fair value.
NATIONAL BEVERAGE CORP. 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
temporary differences between the tax bases of assets
or liabilities and their reported amounts in the financial
statements. Valuation allowances are established to
reduce the carrying amounts of deferred tax assets 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
historical claims experience.
Revenue Recognition We recognize revenue upon
delivery to our customers, based on written sales terms
that do not allow a right of return except in rare instances.
Our products are typically sold on credit, however smaller
direct-store delivery accounts may be sold on a cash
basis. Our credit terms normally require payment within
30 days of delivery and may allow discounts for early
payment. We estimate and reserve for bad debt exposure
based on our experience with past due accounts,
collectability and our analysis of customer data.
that
We offer various sales incentive arrangements to our
customers
require customer performance or
achievement of certain sales volume targets. Sales
incentives are accrued over the period of benefit or
expected sales. When the incentive is paid in advance,
the aggregate incentive is recorded as a prepaid and
amortized over the period of benefit. The recognition of
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
and actual amounts ultimately realized may vary from
accrued amounts. Such differences are recorded once
determined and have historically not been significant.
We adopted ASU 2014-09, Revenue from Contracts with
Customers, and its amendments on April 29, 2018. See
Note 1 to our consolidated financial statements.
FORWARD-LOOKING STATEMENTS
including, without
National Beverage and its representatives may make
written or oral statements relating to future events or
results relative to our financial, operational and business
performance, achievements, objectives and strategies.
These statements are “forward-looking” within the
meaning of the Private Securities Litigation Reform Act
of 1995 and include statements contained in this report
and other filings with the Securities and Exchange
Commission and in reports to our stockholders. Certain
limitation, statements
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 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 following: general economic and business
conditions, pricing of competitive products, success of
new product and flavor introductions, fluctuations in the
costs of raw materials and packaging supplies, ability
to pass along cost increases to our customers, labor
strikes or work stoppages or other interruptions in the
employment of labor, continued retailer support for our
products, changes in brand image, consumer preferences
and our success in creating products geared toward
consumers’ tastes, success in implementing business
strategies, changes in business strategy or development
plans, government regulations, taxes or fees imposed on
the sale of our products, unfavorable weather conditions,
litigation risks 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.
15
NATIONAL BEVERAGE CORP. ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodities We purchase various raw materials, including aluminum cans, plastic bottles, high fructose corn syrup,
corrugated packaging and juice concentrates, the 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. At times, we manage our exposure to this risk through the use of supplier pricing agreements that
enable us to establish all, or a portion of, the purchase prices for certain raw materials. Additionally, we use derivative
financial instruments to partially mitigate our exposure to changes in certain raw material costs. See Note 6 of Notes
to Consolidated Financial Statements.
Interest Rates At April 27, 2019, the Company had no borrowings outstanding. We had no debt-related interest rate
exposure during Fiscal 2019.
16
NATIONAL BEVERAGE CORP. ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
Current assets:
Cash and equivalents
Trade receivables - net
Inventories - net
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 - 200,000,000 shares authorized;
50,678,084 shares (2019) and 50,650,784 shares (2018) 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 - 4,032,544 shares
Total shareholders' equity
Total liabilities and shareholders' equity
See accompanying Notes to Consolidated Financial Statements.
April 27,
2019
April 28,
2018
$
156,200
$
189,864
84,841
70,702
9,714
321,457
111,316
13,145
1,615
4,660
84,360
60,920
17,823
352,967
85,807
13,145
1,615
5,298
$
452,193
$
458,832
$
66,202
$
30,433
402
97,037
15,987
7,560
74,853
29,718
99
104,670
14,502
8,220
150
150
507
37,065
313,430
(1,543)
(5,100)
(12,900)
331,609
$
452,193
$
507
36,358
307,824
4,601
(5,100)
(12,900)
331,440
458,832
17
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
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
Earnings per common share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
Fiscal Year Ended
April 27,
2019
April 28,
2018
April 29,
2017
$ 1,014,105
$
975,734 $
826,918
629,755
384,350
204,415
202
(4,144)
183,877
43,024
584,599
391,135
186,947
201
(1,502)
205,489
55,715
500,841
326,077
163,600
189
(537)
162,825
55,780
$
140,853
$
149,774 $
107,045
$
$
3.02
3.00
$
$
3.21 $
3.19 $
2.30
2.29
46,633
46,917
46,598
46,921
46,564
46,770
18
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income
Other comprehensive (loss) income, net of tax:
Cash flow hedges
Other
Total
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
Fiscal Year Ended
April 27,
2019
April 28,
2018
April 29,
2017
$
140,853
$
149,774 $
107,045
(6,318)
174
(6,144)
5,227
(22)
5,205
1,110
93
1,203
$
134,709
$
154,979 $
108,248
19
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
SERIES C PREFERRED STOCK
Beginning and end of year
SERIES D PREFERRED STOCK
COMMON STOCK
Beginning of year
Stock options exercised
End of year
ADDITIONAL PAID-IN CAPITAL
Beginning of year
Stock options exercised
Stock-based compensation
Stock-based tax benefits
End of year
RETAINED EARNINGS
Beginning of year
Net income
Common stock cash dividend
End of year
ACCUMULATED OTHER COMPREHENSIVE (LOSS)
INCOME
Beginning of year
Cash flow hedges
Other
End of year
Fiscal Year Ended
April 27, 2019
April 28, 2018
April 29, 2017
Shares
Amount
Shares
Amount
Shares
Amount
150 $
150
150 $
150
150 $
150
50,651
27
50,678
507
50,616
506
50,589
-
35
1
27
507
50,651
507
50,616
506
-
506
36,358
35,638
34,570
456
251
-
559
161
-
365
208
495
37,065
36,358
35,638
307,824
140,853
(135,247)
313,430
4,601
(6,318)
174
(1,543)
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)
TREASURY STOCK - SERIES C PREFERRED
Beginning and end of year
TREASURY STOCK - COMMON
Beginning and end of year
150
(5,100)
150
(5,100)
150
(5,100)
4,033
(12,900)
4,033
(12,900)
4,033
(12,900)
TOTAL SHAREHOLDERS’ EQUITY
$ 331,609
$ 331,440
$ 245,618
See accompanying Notes to Consolidated Financial Statements.
20
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Deferred income tax provision
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
Net cash provided by operating activities
INVESTING ACTIVITIES:
Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
FINANCING ACTIVITIES:
Dividends paid on common stock
Proceeds from stock options exercised
Net cash used in financing activities
Fiscal Year Ended
April 27,
2019
April 28,
2018
April 29,
2017
$
140,853
$
149,774 $
107,045
15,439
3,351
12
251
-
(481)
(9,782)
(2,806)
(8,651)
1,256
13,226
676
149
161
-
(13,041)
(7,565)
(5,437)
16,753
25
12,834
1,358
72
208
495
(10,273)
(5,433)
(2,205)
8,709
1,457
139,442
154,721
114,267
(38,333)
18
(38,315)
(31,974)
(14,015)
63
28
(31,911)
(13,987)
(135,247)
(69,878)
(69,850)
456
(134,791)
560
(69,318)
365
(69,485)
NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS
(33,664)
53,492
30,795
CASH AND EQUIVALENTS - BEGINNING OF YEAR
189,864
136,372
105,577
CASH AND EQUIVALENTS - END OF YEAR
$
156,200
$
189,864 $
136,372
OTHER CASH FLOW INFORMATION:
Interest paid
Income taxes paid
$
$
51
36,833
$
$
101 $
202
56,737 $
55,901
See accompanying Notes to Consolidated Financial Statements.
21
NATIONAL BEVERAGE CORP.
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
effect of stock options amounting to 284,000 shares in
Fiscal 2019, 323,000 shares in Fiscal 2018 and 206,000
shares in Fiscal 2017.
National Beverage Corp. innovatively develops, produces,
markets and sells a distinctive portfolio of sparkling
waters, juices, energy drinks and carbonated soft drinks
primarily in the United States and Canada. Incorporated
in Delaware in 1985, National Beverage Corp. is a holding
company for various operating subsidiaries. When used
in this report, the terms “we,” “us,” “our,” “Company” and
“National Beverage” mean National Beverage Corp. and
its subsidiaries.
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation The consolidated financial
statements have been prepared in accordance with
United States generally accepted accounting principles
(“GAAP”) and rules and regulations of the Securities
and Exchange Commission. The consolidated financial
statements include the accounts of National Beverage
Corp. and all subsidiaries. All significant intercompany
transactions and accounts have been eliminated. Our
fiscal year ends the Saturday closest to April 30 and, as a
result, an additional week is added every five or six years.
All fiscal years presented consisted of 52 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 of three months or less.
Derivative Financial Instruments We use derivative
financial instruments to partially mitigate our exposure to
changes in certain raw material costs. All derivative financial
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
by requiring high credit standards for counterparties and
frequent cash settlements. See Note 6.
Earnings Per Common Share Basic earnings per
common share
is computed by dividing earnings
available to common shareholders by the weighted
average number of common shares outstanding during
the period. Diluted earnings per common share is
calculated in a similar manner, but includes the dilutive
22
Fair Value The estimated fair values of derivative
financial instruments are calculated based on market
rates to settle the instruments. These values represent
the estimated amounts we would receive upon sale,
taking into consideration current market prices and credit
worthiness. See Note 6.
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 information available. Estimated fair
value is generally measured by discounting future cash
flows. Goodwill and intangible assets not subject to
amortization are evaluated for impairment annually or
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, is
greater than its fair value.
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
temporary differences between the tax bases of assets
or liabilities and their reported amounts in the financial
statements. Valuation allowances are established to
reduce the carrying amounts of deferred tax assets 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 historical claims
experience. At April 27, 2019 and April 28, 2018, other
liabilities included accruals of $5.7 million and $6.5 million,
respectively, for estimated non-current risk retention
exposures, of which $4.3 million and $5.0 million were
covered by insurance.
NATIONAL BEVERAGE CORP. Intangible Assets Intangible assets as of April 27,
2019 and April 28, 2018 consisted of non-amortizable
trademarks.
Inventories Inventories are stated at the lower of first-
in, first-out cost or market. Inventories at April 27, 2019
were comprised of finished goods of $48.7 million and
raw materials of $22.0 million. Inventories at April 28,
2018 were comprised of finished goods of $37.6 million
and raw materials of $23.3 million.
Marketing Costs We utilize a variety of marketing
programs, including cooperative advertising programs
with customers, to advertise and promote our products
to consumers. Marketing costs are expensed when
incurred, except for prepaid advertising and production
costs which are expensed when the advertising takes
place. Marketing costs, which are included in selling,
general and administrative expenses, totaled $55.3
million in Fiscal 2019, $49.7 million in Fiscal 2018 and
$44.9 million in Fiscal 2017.
New Accounting Pronouncements - adopted
issued Accounting
the FASB
In February 2018,
Standards Update 2018-02, “Reclassification of Certain
Tax Effects from Accumulated Other Comprehensive
Income” (“ASU 2018-02”). This update permits the
impact of lower corporate income tax rates related to
items classified in accumulated other comprehensive
income to be reclassified directly to retained earnings.
We adopted ASU 2018-02 effective for our third quarter
ended January 27, 2018. We elected not to reclassify
the income tax effects of the Tax Cuts and Jobs Act from
accumulated other comprehensive income to retained
earnings.
In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, “Revenue from Contracts with
Customers” (“ASU 2014-09”). ASU 2014-09 requires
an entity to recognize revenue in an amount that reflects
the consideration it expects to receive in exchange for
goods or services. We adopted the revenue recognition
standard as of April 29, 2018 using the modified
retrospective approach for all contracts at the date of
initial adoption. Upon adoption of the guidance, there
was no material impact to the Company’s consolidated
financial statements.
New Accounting Pronouncements – not yet adopted
In February 2016, the FASB issued Accounting Standards
(“ASU 2016-02”).
Update No. 2016-02, “Leases”
ASU 2016-02 requires the lease rights and obligations
arising from lease contracts, including existing and new
arrangements, to be recognized as assets and liabilities
on the balance sheet. In March 2018, the FASB approved
a new optional transition method that provided the option
to use the effective date as the date of initial application
on transition. We plan to elect this transition method, and
as a result, we intend to recognize the new accounting
standard prospectively as of the effective date. ASU
2016-02 is effective for our fiscal year beginning April
28, 2019. While we are substantially complete with
the process of quantifying the impacts that will result
from applying the new guidance, our assessment will
be finalized during the first quarter of fiscal year 2020.
We anticipate that the impact of adopting ASU 2016-02
will result in the recognition in our Consolidated Balance
Sheet of right to use assets, and liabilities for operating
lease obligations approximating 10% of total assets,
subject to completion of our assessment. We do not
expect the new standard to have a material impact on
the Company’s consolidated statement of income. As
the impact of this standard is non-cash in nature, we
do not anticipate its adoption having an impact on the
Company’s consolidated statement of cash flows.
In August 2017, the FASB issued Accounting Standards
Update 2017-12, “Targeted Improvements to Accounting
for Hedge Activities” (“ASU 2017-12”). This amendment
simplifies the application of hedge accounting and
enables companies to better portray the economics of
risk management activities in their financial statements.
ASU 2017-12 is effective for our fiscal year beginning
April 28, 2019. We are currently evaluating the potential
impact of adopting this guidance on our consolidated
financial statements.
Property, Plant and Equipment Property, plant and
equipment are recorded at cost. Additions, replacements
and betterments are capitalized, while maintenance and
repairs that do not extend the useful life of an asset are
expensed as incurred. Depreciation is recorded using the
straight-line method over estimated useful lives of 5 to 30
years for buildings and improvements and 3 to 15 years
for machinery and equipment. Leasehold improvements
are amortized using the straight-line method over the
23
NATIONAL BEVERAGE CORP.
shorter of the remaining lease term or the estimated
useful life of the improvement. When assets are retired
or otherwise disposed, the cost and accumulated
depreciation are removed from the respective accounts
and any related gain or loss is recognized.
Revenue Recognition We recognize revenue upon
delivery to our customers, based on written sales terms
that do not allow a right of return except in rare instances.
Our products are typically sold on credit, however smaller
accounts are sold on a cash basis. Our credit terms
typically require payment within 30 days of delivery and
may allow discounts for early payment. We estimate and
reserve for bad debt exposure based on our experience
with past due accounts, collectability and our analysis of
customer data.
that
We offer various sales incentive arrangements to our
customers
require customer performance or
achievement of certain sales volume targets. Sales
incentives are accrued over the period of benefit or
expected sales volume. When the incentive is paid in
advance, the aggregate incentive is recorded as a prepaid
and amortized over the period of benefit. The recognition
of 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
and actual amounts ultimately realized may vary from
accrued amounts. Such differences are recorded once
determined and have historically not been significant. We
adopted ASU 2014-09, Revenue from Contracts with
Customers, and its amendments on April 29, 2018 using
the modified retrospective approach, with no material
impact to the 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
accumulate revenues by product classification and,
therefore, it is impractical to present such information.
Shipping and Handling Costs Shipping and handling
costs are reported in selling, general and administrative
expenses in the accompanying consolidated statements
24
of income. Such costs aggregated $72.4 million in Fiscal
2019, $63.3 million in Fiscal 2018 and $50.0 million in
Fiscal 2017. Although our classification is consistent with
many beverage companies, our gross margin may not
be comparable to companies that include shipping and
handling costs in cost of sales.
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 9.
Trade Receivables We record trade receivables at net
realizable value, which includes an estimated allowance
for doubtful accounts. We extend credit based on
an evaluation of each customer’s financial condition,
generally without requiring collateral. Exposure to credit
losses 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 based on our experience with past due accounts,
collectability and our analysis of customer data. Activity
in the allowance for doubtful accounts was as follows:
(In thousands)
Fiscal
2019
Fiscal
2018
Fiscal
2017
Balance at beginning of year
$ 452
$ 468
$ 484
Net charge to expense
Net charge-off
87
(23)
34
(50)
74
(90)
Balance at end of year
$ 516
$ 452
$ 468
As of April 27, 2019 and April 28, 2018, 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.
Use of Estimates
The preparation of financial
statements in conformity with United States 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 management’s knowledge of current events
and anticipated future actions, actual results may vary
from reported amounts.
NATIONAL BEVERAGE CORP.
2. PROPERTY, PLANT AND EQUIPMENT
of the Credit Facilities was reserved for standby letters of
credit and $97.9 million was available for borrowings.
Property, plant and equipment as of April 27, 2019 and
April 28, 2018 consisted of the following:
(In thousands)
Land
2019
2018
$ 9,835
$ 9,500
Buildings and improvements
58,291
56,947
Machinery and equipment
222,243
194,241
Total
290,369
260,688
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 27, 2019, we were in compliance with
all loan covenants.
Less accumulated depreciation
(179,053)
(174,881)
Property, plant and equipment – net $111,316
$ 85,807
5. CAPITAL STOCK AND TRANSACTIONS WITH
RELATED PARTIES
Depreciation expense was $12.8 million for Fiscal 2019,
$11.1 million for Fiscal 2018 and $10.7 million for Fiscal
2017.
The Company paid a special cash dividend on Common
Stock of $135.2 million ($2.90 per share) on January 29,
2019 and $69.9 million ($1.50 per share) on August 4,
2017 and January 27, 2017.
3. ACCRUED LIABILITIES
Accrued liabilities as of April 27, 2019 and April 28, 2018
consisted of the following:
(In thousands)
2019
2018
Accrued compensation
$ 9,506
$ 9,790
Accrued promotions
Accrued freight
Accrued Insurance
Other
Total
4. DEBT
6,449
4,387
3,780
6,311
7,011
5,984
2,256
4,677
$30,433
$29,718
At April 27, 2019, a subsidiary of the Company
maintained unsecured revolving credit facilities with
banks aggregating $100 million (the “Credit Facilities”).
The Credit Facilities expire from October 3, 2020 to
June 18, 2021 and any borrowings would currently bear
interest at .9% above one-month LIBOR. There were no
borrowings outstanding under the Credit Facilities at April
27, 2019 or April 28, 2018. At April 27, 2019, $2.1 million
The Company is authorized under its stock buyback
program to repurchase 1.6 million shares of Common
Stock. As of April 27, 2019, 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.
The Company is a party to a management agreement
with Corporate Management Advisors, Inc. (“CMA”), a
corporation owned by our Chairman and Chief Executive
Officer. This agreement was originated in 1991 for the
efficient use of management of two public companies at
the time. In 1994, one of those public entities, through
a merger, no longer was managed in this manner.
Under the terms of the agreement, CMA provides,
subject to the direction and supervision of the Board of
Directors of the Company, (i) senior corporate functions
(including supervision of the Company’s financial, legal,
executive recruitment, internal audit and information
systems departments) as well as the services of a Chief
Executive Officer and Chief Financial Officer, and (ii)
services in connection with acquisitions, dispositions
and financings by the Company, including identifying
and profiling acquisition candidates, negotiating and
structuring potential transactions and arranging financing
for any such transaction. CMA, through its personnel,
also provides, to the extent possible, the stimulus and
creativity to develop an innovative and dynamic persona
25
NATIONAL BEVERAGE CORP.
for the Company, its products and corporate image.
In order to fulfill its obligations under the management
agreement, CMA employs numerous individuals, who,
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 since the inception of this
agreement, no incentive compensation has been paid.
We incurred management fees to CMA of $10.2 million
for Fiscal 2019, $9.8 million for Fiscal 2018 and $8.3
million for Fiscal 2017. Included in accounts payable
were amounts due CMA of $2.4 million at April 27, 2019
and $2.4 million at April 28, 2018.
6. DERIVATIVE FINANCIAL INSTRUMENTS
From time to time, we enter into aluminum swap
contracts to partially mitigate our exposure to changes
in the cost of aluminum cans. Such financial instruments
are designated and accounted
for as cash flow
hedges. Accordingly, gains or losses attributable to the
effective portion of the cash flow hedges are reported
in Accumulated Other Comprehensive Income (Loss)
(“AOCI”) and reclassified into cost of sales in the period
in which the hedged transaction affects earnings. The
ineffective portion of the change in fair value of our cash
flow hedge was immaterial. The following summarizes the
gains (losses) recognized in the Consolidated Statements
of Income and AOCI relative to the cash flow hedges for
Fiscal 2019, Fiscal 2018 and Fiscal 2017:
(In thousands)
Recognized in AOCI-
Fiscal
2019
Fiscal
2018
Fiscal
2017
(Loss) gain before income
taxes
Less income tax (benefit)
provision
$ (6,138) $ 9,498 $ (984)
(1,468)
3,085
(365)
Net
(4,670)
6,413
(619)
Reclassified from AOCI to
cost of sales-
Gain (loss) before income
taxes
Less income tax provision
(benefit)
2,100
2,569 (2,749)
452
1,383 (1,020)
Net
1,648
1,186 (1,729)
Net change to AOCI
$ (6,318) $ 5,227 $ 1,110
As of April 27, 2019, the notional amount of our
outstanding aluminum swap contracts was $41.5 million
and, assuming no change in the commodity prices, $2.0
million of unrealized loss before tax will be reclassified
from AOCI and recognized in cost of sales over the next
12 months. See Note 1.
As of April 27, 2019, the fair value of the derivative liability
was $2.0 million, which was included in accrued liabilities.
As of April 28, 2018, the fair value of the derivative asset
was $6.2 million, which was included in prepaid and
other assets. Such valuation does not entail a significant
amount of judgment and the inputs that are significant to
the fair value measurement are Level 2 as defined by the
fair value hierarchy as they are observable market based
inputs or unobservable inputs that are corroborated by
market data.
7. INCOME TAXES
The provision for income taxes consisted of the following:
(In thousands)
Current
Deferred
Fiscal
2019
Fiscal
2018
Fiscal
2017
$ 39,673 $ 55,039 $ 54,422
3,351 676 1,358
Total $ 43,024 $ 55,715 $ 55,780
26
NATIONAL BEVERAGE CORP.
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 to
reduce the carrying amounts of deferred tax assets
when it is deemed more likely than not that the benefit
of deferred tax assets will not be realized. Deferred tax
assets and liabilities as of April 27, 2019 and April 28,
2018 consisted of the following:
(In thousands)
Deferred tax assets:
2019
2018
A reconciliation of the changes in the gross amount of
unrecognized tax benefits, which amounts are included
in other liabilities in the accompanying consolidated
balance sheets, is as follows:
(In thousands)
Fiscal
2019
Fiscal
2018
Fiscal
2017
Beginning balance
$1,733
$1,743
$1,678
Increases due to current
period tax positions
Decreases due to lapse of
statute of limitations and
audit resolutions
139
204
150
(4)
(214)
(85)
Accrued expenses and other
$ 3,705
$ 2,900
Ending balance
$1,868
$1,733 $1,743
Inventory and amortizable assets
265
331
Total deferred tax assets
3,970
3,231
Deferred tax liabilities:
Property
18,505
14,858
Intangibles and other
1,452
2,875
Total deferred tax liabilities
19,957
17,733
Net deferred tax liabilities
$ 15,987
$ 14,502
The reconciliation of the statutory federal income tax rate
to our effective tax rate is as follows:
Statutory federal income
tax rate
State income taxes,
net of federal benefit
Domestic manufacturing
deduction benefit
Remeasurement of
deferred taxes
Other differences
Fiscal
2019
Fiscal
2018
Fiscal
2017
21.0% 30.4% 35.0%
2.9
2.4
2.2
-
-
(2.4)
(3.0)
(2.9)
(.5)
(.4)
-
.1
Effective income tax rate 23.4% 27.1% 34.3%
As of April 27, 2019, the gross amount of unrecognized tax
benefits was $1.9 million and $116,000 was recognized
as tax expense in Fiscal 2019. If we were to prevail on all
uncertain tax positions, the net effect would be to reduce
our tax expense by approximately $1.5 million.
We recognize accrued interest and penalties related to
unrecognized tax benefits in income tax expense. As
of April 27, 2019, unrecognized tax benefits included
accrued interest of $253,000, of which approximately
$15,000 was recognized as tax expense in Fiscal 2019.
On December 22, 2017, the Tax Cuts and Jobs Act
(the “Tax Act”) was enacted into law. The Tax Act made
changes to the U.S. tax code, including reducing the U.S.
federal tax rate from 35% to 21% effective January 1,
2018. The phasing in of the lower corporate income tax
rate results in a blended federal statutory rate of 30.4%
for our fiscal 2018, compared with the previous 35%
rate. Included in the effective tax rate for Fiscal 2018 is
a one-time adjustment reducing income tax expense to
remeasure previous deferred tax liabilities of $4.3 million.
We file annual income tax returns in the United States and
in various state and local jurisdictions. A number of years
may elapse before an uncertain tax position, for which we
have unrecognized tax benefits, is resolved. While it is
often difficult to predict the final outcome or the timing of
resolution of any particular uncertain tax position, we believe
that our unrecognized tax benefits reflect the most probable
outcome. We adjust these unrecognized tax benefits, as
well as the related interest, in light of changing facts and
circumstances. The resolution of any particular uncertain
tax position could require the use of cash and an adjustment
to our provision for income taxes in the period of resolution.
Federal income tax returns for fiscal years subsequent to
2016 are subject to examination. Generally, the income
tax returns for the various state jurisdictions are subject to
examination for fiscal years ending after fiscal 2012.
27
NATIONAL BEVERAGE CORP. 8. LEGAL PROCEEDINGS
The Company has been named a defendant in certain
legal proceedings, including derivative and class action
complaints. Company counsel has asserted various
meritorious defenses and is vigorously defending these
matters. Certain of these complaints include allegations
that the Company’s LaCroix branded products contain
synthetic ingredients and thereby violate specific state
consumer protection statutes and other laws. The
Company believes the litigation is without merit and will
not have a material adverse effect on the Company’s
financial position, cash flows or results of operations.
9. STOCK-BASED COMPENSATION
Our stock-based compensation program is a broad-
based program designed to attract and retain personnel
while also aligning participants’ interests with the interests
of the shareholders.
The 1991 Omnibus Incentive Plan (the “Omnibus Plan”)
provides for compensatory awards consisting of (i) stock
options or stock awards for up to 4,800,000 shares of
common stock, (ii) stock appreciation rights, dividend
equivalents, other stock-based awards in amounts up to
4,800,000 shares of common stock and (iii) performance
awards consisting of any combination of the above. The
Omnibus Plan is designed to provide an incentive to
officers and certain other key employees and consultants
by making available to them an opportunity to acquire a
proprietary interest or to increase 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 1,680,000 during any year. Awards may
be granted for no cash consideration or such minimal
cash consideration as may be required by law. Options
generally have an exercise price equal to the fair market
value of our common stock on the date of grant, vest
over a five-year period and expire after ten years.
The Special Stock Option Plan provides for the issuance
of stock options to purchase up to an aggregate of
1,800,000 shares of common stock. Options may be
granted for such consideration as determined by the
Board of Directors. The vesting schedule and exercise
price of these options are tied to the recipient’s ownership
28
level of common stock and the terms generally allow for
the reduction in exercise price upon each vesting period.
Also, the Board of Directors authorized the issuance of
options to purchase up to 50,000 shares of common
stock to be issued at the direction of the Chairman.
The Key Employee Equity Partnership Program (“KEEP
Program”) provides for the granting of stock 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 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 event of the sale
of shares used to acquire such options. Options are
granted at an initial exercise price of 60% of the purchase
price paid for the shares acquired and the exercise price
reduces to the stock par value at the end of the six-year
vesting period.
We account for stock options under the fair value method
of accounting using a Black-Scholes valuation model
to estimate the stock option fair value at date of grant.
The fair value of stock options is amortized to expense
over the vesting period. Stock options for 9,000 shares
were granted in Fiscal 2019, 500 shares in Fiscal 2018
and no shares in Fiscal 2017. The weighted average
Black-Scholes fair value assumptions for stock options
granted are as follows: weighted average expected life of
8.0 years for Fiscal 2019 and 8.0 years for Fiscal 2018;
weighted average expected volatility of 21.7% for Fiscal
2019 and 23.8% for Fiscal 2018; weighted average risk
free interest rates of 2.6% for Fiscal 2019 and 2.4% for
Fiscal 2018; and expected dividend yield of 1.6% for
Fiscal 2019 and 1.6% for Fiscal 2018. The expected
life of stock options was estimated based on historical
experience. The expected volatility was estimated based
on historical stock prices for a period consistent with
the expected life of stock options. The risk free interest
rate was based on the U.S. Treasury constant maturity
interest rate whose term is consistent with the expected
life of stock options. There were no forfeitures estimated
in Fiscal 2019 and Fiscal 2018.
NATIONAL BEVERAGE CORP. The following is a summary of stock option activity for
Fiscal 2019:
10. PENSION PLANS
Number
of Shares Price(a)
Options outstanding, beginning of year
344,945
$10.84
Granted
Exercised
9,000
40.03
(27,300)
16.70
Cancelled
(4,200)
14.17
Options outstanding, end of year
322,445
11.14
Options exercisable, end of year
230,259
9.16
(a) Weighted average exercise price.
Stock-based compensation expense was $251,000 for
Fiscal 2019, $161,000 for Fiscal 2018 and $208,000 for
Fiscal 2017. The total fair value of shares vested was
$127,000 for Fiscal 2019, $140,000 for Fiscal 2018 and
$362,000 for Fiscal 2017.
The total intrinsic value for stock options exercised was
$2.2 million for Fiscal 2019, $3.0 million for Fiscal 2018 and
$1.5 million for Fiscal 2017. Net cash proceeds from the
exercise of stock options were $456,000 for Fiscal 2019,
$560,000 for Fiscal 2018 and $365,000 for Fiscal 2017.
Stock based income tax benefits aggregated $443,000
for Fiscal 2019, $886,000 for Fiscal 2018 and $495 million
for Fiscal 2017. The weighted average fair value for stock
options granted was $63.71 for Fiscal 2019.
As of April 27, 2019, unrecognized compensation expense
related to the unvested portion of our stock options was
$591,000, which is expected to be recognized over a
weighted average period of 4.6 years. The weighted
average remaining contractual term and the aggregate
intrinsic value for options outstanding as of April 27,
2019 was 3.3 years and $14.9 million, respectively. The
weighted average remaining contractual term and the
aggregate intrinsic value for options exercisable as of April
28, 2018 was 4.4 years and $27.3 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 27, 2019, no shares have been issued under
the plan.
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 $3.8 million for Fiscal 2019, $3.4 million for Fiscal
2018 and $3.1 million for Fiscal 2017.
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 financial
position, cash flows 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 2019 and
Fiscal 2018 is for the plans’ years ending December 31,
2017 and 2016, respectively.
29
NATIONAL BEVERAGE CORP. Pension Fund
Central States, Southeast and Southwest
Areas Pension Plan (EIN no. 36-6044243)
(the “CSSS Fund”)
Western Conference of Teamsters Pension
Trust Fund (EIN no. 91-6145047)
(the “WCT Fund”)
PPA Zone Status
Fiscal
2019
Fiscal
2018
FIP/RP
Status
Surcharge
Imposed
Red
Red
Implemented
Yes
Green
Green
Not applicable
No
For the plan years ended December 31, 2017 and
December 31, 2016, the Company was not listed in 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)
Pension Fund
CSSS Fund
WCT Fund
Other multi-employer
pension funds
Fiscal
2019
Fiscal
2018
Fiscal
2017
$1,465
$1,370
$1,262
769
222
619
228
477
201
Total
$2,456
$2,217
$1,940
Our minimum lease payments under non-cancelable
operating leases as of April 27, 2019 were as follows:
(In thousands)
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Thereafter
Total minimum lease payments
$ 16,105
12,084
9,894
7,741
4,510
1,703
$ 52,037
We enter into various agreements with suppliers for
the purchase of raw materials, the terms of which may
include variable or fixed pricing and minimum purchase
quantities. As of April 27, 2019, we had purchase
commitments for raw materials of $ 12.7 million through
2022.
11. COMMITMENTS AND CONTINGENCIES
As of April 27, 2019, we had purchase commitments for
plant and equipment of $ 7.1 million for Fiscal 2020.
From time to time, we are a party to various litigation
matters and claims arising in the ordinary course of
business. We do not expect the ultimate disposition of
such matters to have a material adverse effect on our
consolidated financial position or results of operations.
We lease buildings, machinery and equipment under
various non-cancelable operating lease agreements
expiring at various dates through 2029. Certain of 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 $18.2 million for Fiscal 2019, $13.3 million for
Fiscal 2018 and $12.0 million for Fiscal 2017.
30
NATIONAL BEVERAGE CORP. 12. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
FISCAL 2019
Net sales
Gross profit
Net income
Earnings per common share – basic
$292,590
115,694
48,830
$ 1.05
$260,709
103,524
41,077
$ .88
$220,892
$239,914
80,554
84,578
24,811
26,135
$ .53
$ .56
Earnings per common share – diluted
$ 1.04
$ .88
$ .53
$ .56
FISCAL 2018
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
96,080
91,193
99,359
38,272
$ .82
$ .82
33,980
41,080
36,442
$ .73
$ .88
$ .78
$ .72
$ .88
$ .78
31
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
27, 2019 and April 28, 2018, and the related consolidated
statements of income, comprehensive income, shareholders’
equity and cash flows for each of the three years in the period
ended April 27, 2019, and the related notes (collectively, the
financial statements). We also have audited the Company’s
internal control over financial reporting as of April 27, 2019,
based on criteria established in Internal Control — Integrated
Framework
the Committee of Sponsoring
Organizations of the Treadway Commission in 2013.
issued by
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company as of April 27, 2019 and April 28, 2018,
and the results of its operations and its cash flows for each
of the years in the three-year period ended April 27, 2019,
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 27, 2019,
based on criteria established in Internal Control — Integrated
the Committee of Sponsoring
Framework
Organizations of the Treadway Commission in 2013.
issued by
for maintaining effective
Basis for Opinions
The Company’s management is responsible for these
internal
financial statements,
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
32
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 26, 2019
NATIONAL BEVERAGE CORP.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Annual
Report on Form 10-K, we carried out an evaluation,
under the supervision and with the participation of the
Company’s management, including our Chief Executive
Officer and Principal Financial Officer, of the effectiveness
of the design and operation of our “disclosure controls
and procedures” (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934, as amended (the
“Exchange Act”)). Based upon that evaluation, the
Chief Executive Officer and Principal Financial Officer
concluded that our disclosure controls and procedures
were effective to ensure information required to be
disclosed by us in reports we file or submit under the
Exchange Act is (1) recorded, processed, summarized
and reported within the time periods specified in SEC
rules and forms and (2) accumulated and communicated
to our management, including our Chief Executive Officer
and Principal Financial Officer, to allow timely decisions
regarding required disclosure.
Report on Internal Control over Financial Reporting
Our management is responsible for establishing and
maintaining adequate internal control over financial
reporting, as such term is defined in Rule 13a-15(f) of
the Exchange Act. Under the supervision and with the
participation of our management, including our Chief
Executive Officer and Principal Financial Officer, we
conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the
framework in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations
of the Treadway Commission in 2013. Based on
that evaluation, our management concluded that our
internal control over financial reporting was effective as
of April 27, 2019.
that
there are
recognizes
Management
inherent
limitations in the effectiveness of any internal control over
financial reporting, including the possibility of human error
and the circumvention or overriding of internal control.
Accordingly, even effective internal control over financial
reporting can provide only reasonable assurance with
respect to financial statement preparation. Further,
because of changes in conditions, the effectiveness of
internal control may vary over time.
independent
RSM US LLP, an
registered public
accounting firm, has audited the consolidated financial
statements included in this Annual Report on Form 10-K
and, as part of their audit, has issued their report, included
herein, on the effectiveness of our internal control over
financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over
financial reporting during the quarter ended April 27,
2019 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
ITEM 9B.
OTHER INFORMATION
Not applicable.
33
NATIONAL BEVERAGE CORP.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 will be included
under the captions “Executive Compensation and Other
Information” and “Compensation Committee Interlocks
and Insider Participation” in the Company’s 2019 Proxy
Statement and is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by Item 12 will be included
under the captions “Security Ownership” and “Equity
Compensation Plan Information” in the Company’s 2019
Proxy Statement and is incorporated herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 will be included under
the captions “Certain Relationships and Related Party
Transactions” and “Information Regarding Meetings and
Committees of the Board” in the Company’s 2019 Proxy
Statement and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 will be included under
the caption “Independent Auditors” in the Company’s
2019 Proxy Statement and is incorporated herein by
reference.
The information required by Item 10 will be included under
the captions “Election of Directors”, “Information as to
Nominees and Other Directors”, “Information Regarding
Meetings and Committees of the Board” and “Section
16(a) Beneficial Ownership Reporting Compliance” in the
Company’s 2019 Proxy Statement and is incorporated
herein by reference.
The following table sets forth certain information with
respect to the officers of the Registrant as of April 27, 2019:
Name
Age Position with Company
Nick A. Caporella(1)
83
Chairman of the Board and
Chief Executive Officer
Joseph G. Caporella(2)
59
President
George R. Bracken(3)
73
Executive Vice President –
Finance
(1) Mr. Nick A. Caporella has served as Chairman of the Board, Chief
Executive Officer and Director since the Company’s inception
in 1985. Also, he serves as Chairman of the Nominating
Committee. Since 1992, Mr. Caporella’s services have been
provided to the Company by Corporate Management Advisors,
Inc., a company he owns.
(2) Mr. Joseph G. Caporella has served as President since
September 2002 and, prior to that, as Executive Vice President
and Corporate Secretary since January 1991. Also, he has
served as a Director since January 1987. Joseph G. Caporella
is the son of Nick A. Caporella.
(3) Mr. George R. Bracken has served as Executive Vice President
- Finance since July 2012. Previously, he served as Senior Vice
President – Finance from October 2000 to July 2012 and Vice
President and Treasurer from October 1996 to October 2000.
Since 1992, Mr. Bracken’s services have been provided to the
Company by Corporate Management Advisors, Inc.
All officers serve until their successors are chosen and
may be removed at any time by the Board of Directors.
Officers are normally appointed each year at the first
meeting of the Board of Directors after the Annual
Meeting of Shareholders.
34
NATIONAL BEVERAGE CORP. PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
1.
Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Page
17
18
19
20
21
22
32
2.
3.
Financial Statement Schedules
Not applicable
Exhibits
See Exhibit Index which follows.
35
NATIONAL BEVERAGE CORP.
EXHIBIT INDEX
Exhibit
No.
Description
3.1
Restated Certificate of Incorporation(1)
3.2
Amended and Restated By-Laws(2)
3.3
Certificate of Designation of the Special Series D Preferred Stock of the Company(3)
10.1
Management Agreement between the Company and Corporate Management Advisors, Inc.(4)*
10.2
National Beverage Corp. Investment and Profit Sharing Plan(5)*
10.3
National Beverage Corp. 1991 Omnibus Incentive Plan(4)*
10.4
National Beverage Corp. 1991 Stock Purchase Plan(4)*
10.5
Amendment No. 1 to the National Beverage Corp. Omnibus Incentive Plan(6)*
10.6
National Beverage Corp. Special Stock Option Plan(7)*
10.7
Amendment No. 2 to the National Beverage Corp. Omnibus Incentive Plan(8)*
10.8
National Beverage Corp. Key Employee Equity Partnership Program(8)*
10.9
Second Amended and Restated Credit Agreement, dated June 30, 2008, between NewBevCo, Inc.
and lender therein(9)
10.10
Amendment to National Beverage Corp. Special Stock Option Plan(10)*
10.11
Amendment to National Beverage Corp. Key Employee Equity Partnership Program(10)*
10.12
First Amendment to Second Amended and Restated Credit Agreement, dated January 16, 2013,
between NewBevCo, Inc. and lender therein(11)
10.13
Credit Agreement, dated June 18, 2015, between NewBevCo, Inc. and lender therein(12)
10.14
10.15
10.16
Second Amendment to Second Amended and Restated Credit Agreement, dated July 7, 2015,
between NewBevCo, Inc. and lender therein(12)
Third Amendment to Second Amended and Restated Credit Agreement, dated June 29, 2017,
between NewBevCo, Inc. and lender therein(13)
Amended and Restated Credit Agreement dated October 4, 2017 between NewBevCo.
and lender therein(14)
10.17
Credit Facility Renewal Agreement, dated April 26, 2018 between NewBevCo and lender therein(15)
36
NATIONAL BEVERAGE CORP. Exhibit
No.
Description
21
23
Subsidiaries of Registrant(16)
Consent of Independent Registered Public Accounting Firm(16)
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(16)
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(16)
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(16)
32.2
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(16)
101
The following financial information from National Beverage Corp.’s Annual Report on Form 10-K for
the fiscal year ended April 27, 2019 is formatted in XBRL (eXtensible Business Reporting Language):
(i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements
of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated
Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements.
* Indicates management contract or compensatory plan or arrangement.
(1) Previously filed with the Securities and Exchange Commission as an exhibit to Schedule 14C Information Statement dated June 26, 2018 and
is incorporated herein by reference.
(2) Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated July 23, 2018 and is
incorporated herein by reference.
(3) Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated January 31, 2013 and is
incorporated herein by reference.
(4) Previously filed with the Securities and Exchange Commission as an exhibit to Amendment No. 1 to Form S-1 Registration Statement (File No.
33-38986) on July 26, 1991 and is incorporated herein by reference.
(5) Previously filed with the Securities and Exchange Commission as an exhibit to the Form S-1 Registration Statement (File No. 33-38986) on
February 19, 1991 and is incorporated herein by reference.
(6) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 27,
1996 and is incorporated herein by reference.
(7) Previously filed with the Securities and Exchange Commission as an exhibit to Registration Statement on Form S-8 (File No. 33-95308) on
August 1, 1995 and is incorporated herein by reference.
(8) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended May 3,
1997 and is incorporated herein by reference.
(9) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended
January 29, 2011 and is incorporated herein by reference.
(10) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended
January 31, 2009 and is incorporated herein by reference.
(11) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended
January 26, 2013 and is incorporated herein by reference.
(12) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended
August 1, 2015 and is incorporated herein by reference.
(13) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 29,
2017 and is incorporated herein by reference.
(14) Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended
October 28, 2017 and is incorporated herein by reference.
(15) Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 28,
2018 and is incorporated herein by reference.
(16) Filed herewith.
37
NATIONAL BEVERAGE CORP. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NATIONAL BEVERAGE CORP.
By: /s/ George R. Bracken
George R. Bracken
Executive Vice President – Finance
(Principal Financial Officer)
Date: June 26, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on June 26, 2019.
/s/ Nick A. Caporella
Nick A. Caporella
Chairman of the Board and
Chief Executive Officer
/s/ Joseph G. Caporella
Joseph G. Caporella
President and Director
/s/ George R. Bracken
George R. Bracken
Executive Vice President – Finance
(Principal Financial Officer)
/s/ Cecil D. Conlee
Cecil D. Conlee
Director
/s/ Samuel C. Hathorn, Jr.
Samuel C. Hathorn, Jr.
Director
/s/ Stanley M. Sheridan
Stanley M. Sheridan
Director
38
NATIONAL BEVERAGE CORP.
Exhibit 21
SUBSIDIARIES OF REGISTRANT
Name of Subsidiary
BevCo Sales, Inc.
Beverage Corporation International, Inc.
Big Shot Beverages, Inc.
Everfresh Beverages, Inc.
Faygo Beverages, Inc.
LaCroix Beverages, Inc.
National Beverage Vending Company
National Retail Brands, Inc.
NewBevCo, Inc.
NutraFizz Products Corp.
PACO, Inc.
Shasta Beverages, Inc.
Shasta Beverages International, Inc.
Shasta Sales, Inc.
Shasta Sweetener Corp.
Shasta West, Inc.
Sundance Beverage Company
Jurisdiction of Incorporation
Percentage of
Voting Stock Owned
Delaware
Delaware
Delaware
Delaware
Michigan
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
39
NATIONAL BEVERAGE CORP. Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement No. 333-97415 on Form S-8 of National
Beverage Corp. of our report dated June 26, 2019 related to the consolidated financial statements and the effectiveness
of internal control over financial reporting of National Beverage Corp. which appears in this Annual Report on Form
10-K of National Beverage Corp. for the year ended April 27, 2019.
/s/ RSM US LLP
Fort Lauderdale, Florida
June 26, 2019
40
NATIONAL BEVERAGE CORP. Exhibit 31.1
CERTIFICATION
I, Nick A. Caporella, certify that:
1. I have reviewed this annual report on Form 10-K of National Beverage Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: June 26, 2019
/s/ Nick A. Caporella
Nick A. Caporella
Chairman of the Board and
Chief Executive Officer
41
NATIONAL BEVERAGE CORP. Exhibit 31.2
CERTIFICATION
I, George R. Bracken, certify that:
1. I have reviewed this annual report on Form 10-K of National Beverage Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: June 26, 2019
/s/ George R. Bracken
George R. Bracken
Executive Vice President - Finance
(Principal Financial Officer)
42
NATIONAL BEVERAGE CORP. Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of National Beverage Corp. (the “Company”) on Form 10-K for the period ended
April 27, 2019 (the “Report”), I, Nick A. Caporella, Chairman of the Board and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
that to my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date: June 26, 2019
/s/ Nick A. Caporella
Nick A. Caporella
Chairman of the Board and
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of National Beverage Corp. (the “Company”) on Form 10-K for the period ended
April 27, 2019 (the “Report”), I, George R. Bracken, Executive Vice President - Finance of the Company, certify,
pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to
my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of
operations of the Company.
Date: June 26, 2019
/s/ George R. Bracken
George R. Bracken
Executive Vice President – Finance
(Principal Financial Officer)
43
NATIONAL BEVERAGE CORP. 2019 ANNUAL REPORT CORPORATE DATA
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
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 4, 2019 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
DIRECTORS
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
8100 Southwest Tenth Street, Fort Lauderdale, Florida 33324
954.581.0922
www.nationalbeverage.com