NATIONAL BEVERAGE CORP.
2021 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 May 1, 2021
[ ] 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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. [✓]
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 $39.15 on October 31, 2020 was approximately $912 million.
The number of shares of Registrant’s common stock outstanding as of June 29, 2021 was 93,307,746.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2021 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 Disclosure 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
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
ITEM 16.
Form 10-K Summary
SIGNATURES
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PART I
ITEM 1.
BUSINESS
GENERAL
National Beverage Corp. innovatively refreshes America
with a distinctive portfolio of sparkling waters, juices,
energy drinks 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.
Creative Innovations – 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 made commercially available
only 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.
that
Innovation Ethic – We believe
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 with 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 dominated
by the “cola giants”, we pride ourselves on being able
to respond faster and more creatively to consumer
trends than competitors burdened by legacy production
and distribution complexity and costs. The ability to
identify consumer trends and create new market-
leading concepts define 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
for concept
teams are responsible
development
creation, packaging and design, which allow for rapid
‘go to market’ timing and reduced development costs.
1
NATIONAL BEVERAGE CORP.
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.
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®,
and LaCroix NiCola® sparkling water products; Clear
Fruit®; 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 (“CSDs”) 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, LaCroix leads the premium domestic
sparkling water category. 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.
2
In Fiscal 2020, LaCroix launched three new naturally-
essenced flavors of LaCroix: Hi-Biscus is a unique flavor
that adds the delicate essence of the hibiscus flower
to sparkling water, the enticing savor of LimonCello
instantly transports fans to the Italian Riviera and the
refreshing taste of Pastèque captures the lusciousness
of a sweet picnic watermelon.
During the fourth quarter of Fiscal 2021, LaCroix
launched its innovative new trio of Beach Plum, Black
Razzberry and Guava São Paulo. Beach Plum excites
the imagination and inspires dreams of summer with the
delectable coolness of the luscious fruit native to the east
coast of the U.S.; the sweet twist of Black Razzberry
makes taste buds sing with decadent, smooth and
irresistible fruit flavor; and consumers savor the sweet
tropical delicacy and vibrant essence of Guava São
Paulo.
These innovative new varieties are part of the LaCroix
family of 30 refreshingly innocent flavors.
LaCroix’s dynamic ‘theme’ LaCroix Cúrate® (‘Cure
Yourself’) celebrates French sophistication with
Spanish zest and bold flavor pairings. Cúrate naturally
refreshes in tall, sleek 12 oz.
consumer-friendly cans. Eloquent
graphics, robust aroma, naturally
‘essenced’ and premium-priced,
Cúrate is an attractive alternative
for today’s consumers.
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 $83 billion U.S. carbonated soft
drink market that are looking to continue to quench
their cola-craving
taste without negative health
consequences. Our LaCroix NiCola theme includes
traditional La Cola along with Coconut Cola, Cubana
(Mojito), and Coffea Exotica (Sumatra coffee and cola).
Additional LaCroix themes are in development that
feature unique packaging and ground-breaking flavor
concepts designed to capitalize on LaCroix brand loyalty
and growth of the sparkling water category.
NATIONAL BEVERAGE CORP. Everfresh and Mr. Pure
CARBONATED SOFT DRINKS –
Everfresh® and Mr. Pure®
100% juice and juice drinks
are available in a variety of
flavors, from such classics
Cranberry
as
lemonades
and
to exotics that include Premium Papaya, Pineapple
Mango, Peach Watermelon and Island Punch. The
brands’ signature package is a hot-filled, 16 oz. glass
bottle designed for single-serve consumption.
Orange,
flavored
Everfresh Premier VarietalsTM, 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 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.
Clear Fruit
Clear Fruit® is a crisp, clear,
non-carbonated water beverage
enhanced with fruit flavors. Clear
Fruit is available in 14 delicious
flavors,
consumer
favorites Cherry Blast, Strawberry
Watermelon, and Fruit Punch.
Clear Fruit is available in 20-ounce and 16.9-ounce
bottles with consumer-favored sports caps.
including
Rip It
RIP IT® Energy Fuel is
“Real Energy for Real
People” with 14 unique
flavors and six sugar-
free options. Building
on the flavor tradition
of original Rip It, a 2 oz.
sugar-free shot version
in eight flavors is marketed in displayable package
configurations. RIP IT proudly supports military and
first responder heroes at home and abroad with such
energetic flavors as Tribute, Citrus X, Cherry Lime and
Power.
Shasta® has been recognized
as a bottling industry pioneer
and innovator for more than
130 years. Shasta
features
multiple flavors and has earned
consumer loyalty by delivering
value and convenience with
such unique tastes as Raspberry Crème, Tiki Punch,
and California Dreamin’.
With more than 110 years of
brand history, Faygo® products
include numerous unique flavors
such as Red Pop®, Moon Mist®,
and Rock’n’Rye®. Faygo
is
celebrated in the Midwest as
“The One True Pop.”
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 often
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 continually evolving. We always
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
production
strategically-located
facilities are near major metropolitan
markets across
the continental
United States. The locations of our
3
NATIONAL BEVERAGE CORP.
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.
We believe the innovative and
controlled vertical 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.
We craft a substantial portion of our flavors and
concentrates. By controlling our own
formulas
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.
DISTRIBUTION
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 to deliver our products
through three primary distribution channels: take-
home, convenience and food-service.
The take-home distribution channel consists of national
and regional grocery stores, club stores, mass-
merchandisers, wholesalers, e-commerce stores, 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.
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
consists of convenience stores, gas stations and other
smaller “up-and-down-the-street” accounts. Because of
the higher retail prices and margins that typically prevail,
we have developed packaging and graphics specifically
targeted to this market.
to
food-service division distributes products
Our
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 select
schools and food-service locations.
take-home, convenience and
Our
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 procurement group maintains
Our
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.
Substantially all of the materials
and ingredients 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 of raw materials, holiday
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
GOVERNMENTAL REGULATION
While LaCroix Sparkling Water
is the brand of choice as the
number one premium domestic
sparkling water throughout the
United States,
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 innovation, key brand recognition,
focused social media, innovative flavor variety, attractive
packaging, efficient distribution methods, and, for some
product lines, value pricing.
TRADEMARKS
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.
6
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; 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
or may be proposed in other states or localities or
by Congress. We are unable to predict whether such
legislation will be enacted but believe its enactment
would not have a material adverse impact 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.
HUMAN CAPITAL
As of May 1, 2021, we employed approximately
1,550 people, of which 368 are covered by collective
bargaining agreements. These collective bargaining
agreements generally address working conditions,
as well as wage rates and benefits, and expire over
varying terms over the next several years. We believe
these agreements can be renegotiated on terms
satisfactory to us as they expire, and we believe we
maintain good relationships with our employees and
their representative organizations.
We support a culture of diversity and inclusion
that mirrors the markets we serve. We take a
comprehensive view of diversity and inclusion across
NATIONAL BEVERAGE CORP.
different races, ethnicities, religions and expressions
of gender and sexual identity. Approximately 56
percent and 23 percent of our employee base identify
as persons of color or female, respectively.
Our compensation programs are designed
to
ensure we attract and retain talent while maintaining
alignment with market compensation. We utilize a
mix of short-term incentive programs throughout
the organization and provide long-term incentive
programs
to more senior employees generally
through stock-based compensation programs. We
offer competitive employee benefits that are effective
in attracting and retaining talent and are designed to
support the physical, mental and financial health of our
employees. Our employee benefits program includes
comprehensive health, dental, life and disability, and
retirement benefits.
Our operating philosophy emphasizes the health and
safety of our employees. Our operations personnel,
supplemented by risk management professionals,
review all aspects of employee tasks and work
environment to minimize risk. We strive to achieve an
injury-free work environment in our operations. Key
to these efforts are data analysis and preventative
actions. We measure and benchmark lost time
incident rate, a reliable indication of total recordable
injuries rate and severity, and use a risk reduction
process that thoroughly analyzes injuries and near
misses.
During the ongoing COVID-19 pandemic, we have
taken extraordinary measures to safeguard the well-
being of our employees. These measures include
enhanced and comprehensive sanitation procedures,
physical distancing, and health protocols, remote
working
technology
enhancements, and temporary financial incentives
for employees working diligently to manufacture and
distribute beverages for their communities.
for most office employees,
SUSTAINABILITY
National Beverage Corp. is dedicated to sustainable
operations and responsible business initiatives. All
our beverage products are produced in the U.S.,
providing thousands of jobs in local communities
and boasting a lower carbon footprint than imported
brands. In addition, the majority of our products are
delivered through the warehouse distribution system
which provides more efficient and lower greenhouse
gas emissions than direct-store delivery competitors.
Water is critical to our business and we periodically
conduct water quality assessments on a variety of
measurements. All of our packaging is recyclable and
we continually focus on reducing packaging content.
More than 80% of our products are in aluminum cans,
which generally contain approximately 73% recycled
material. Each of our facilities have programs in place
designed to minimize the use of water, energy, and
other natural resources.
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, results
of operations and cash flows 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 financial results.
7
NATIONAL BEVERAGE CORP. Brand image and consumer preferences Our
beverage portfolio is comprised of a number of unique
brands with 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.
industry
is extremely
Competition The beverage
competitive. Our products compete with a broad range
of beverage products, most of which are manufactured
and distributed by companies with substantially
greater financial, marketing and distribution resources.
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 many 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 increases are taken. In addition,
strikes, weather 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 their 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 changes in corporate
tax laws as well as 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.
Sustained increases in the cost of employee benefits
Our profitability is affected by the cost of medical,
statutory and other 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, certain of which are self-insured.
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.
8
NATIONAL BEVERAGE CORP. COVID-19 pandemic The magnitude and duration of
the current COVID-19 pandemic is uncertain, rapidly
changing and may be impacted by events beyond
our control. Such events could include disruptions in
our manufacturing operations or supply arrangements
caused by
loss or disruption of essential
manufacturing materials, supplies and services,
transportation resources, workforce availability, or
other manufacturing and distribution capability. Such
events could adversely impact our business and
financial results.
the
Dependence on
technology and
information
third-party service providers We use information
technology and third-party service providers to support
our business processes and activities. Continuity
of business applications and services may in the
future be disrupted by events such as infection by
viruses or malware or other cybersecurity breaches
or attacks; issues with systems’ maintenance or
security; power outages; hardware or software failures;
telecommunication failures; natural disasters; and other
catastrophic occurrences. If our controls, disaster
recovery and business continuity plans or those of our
third party providers do not effectively respond to or
resolve the issues related to any such disruptions in a
timely manner, our sales, financial condition and results
of operations may be adversely affected.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
that expire through 2025. 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
that
enhance ingredient yields. 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.
improved blending processes
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 in certain legal
proceedings, including those containing derivative and
class action allegations. The Company is vigorously
defending all legal proceedings and believes litigation
will not have a material adverse effect on the Company’s
financial position, cash flows or results of operations.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
in
located
Our principal properties include twelve production
facilities
ten states, which aggregate
approximately two million square feet. We own ten
production facilities in the following states: California
(2), Georgia, Kansas, Michigan (2), Ohio, Texas, Utah
and Washington. Two production facilities, located in
Florida and Maryland , are leased subject to agreements
9
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, 2021, there were approximately 38,700 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 $279.9 million ($3.00 per share) on
January 29, 2021; $135.2 million ($1.45 per share) on January 29, 2019; and $69.9 million ($.75 per share) on
August 4, 2017 and January 27, 2017.
On February 5, 2021, the Company’s board of directors declared a one-for-one stock split in the form of a stock
dividend. This dividend was distributed on February 19, 2021 to shareholders of record on February 16, 2021.
Share information and earnings per share have been retroactively adjusted to reflect the stock split.
Our Board of Directors has authorized a program to repurchase 3.2 million shares of our common stock of which
approximately 1.9 million shares remain available and authorized for repurchases.
Performance Graph
The following graph shows a comparison of the five-year cumulative returns of an investment of $100 cash on
April 30, 2016, assuming reinvestment of dividends, of our Common Stock with the NASDAQ Composite Index,
the S&P 500 Index and the Dow Jones US Soft Drinks Index.
among National Beverage Corp., the NASDAQ Composite Index, Dow Jones US Soft Drinks Index and S&P 500 Index
Comparison of 5 - Year Cumulative Total Return
$350
$300
$250
$200
$150
$100
$50
$0
4/30/2016
4/29/2017
4/28/2018
4/27/2019
5/02/2020
5/01/2021
National Beverage Corp
.
NASDAQ Composite - Total Return
Dow Jones US Soft Drinks Index
S&P 500 Index - Total Return
Total Returns Index For
National Beverage Corp.
4/30/2016
4/29/2017
4/28/2018
4/27/2019
5/02/2020
5/01/2021
$ 100.00
$ 195.12
$ 200.89
$ 133.02
$ 115.83
$ 239.16
NASDAQ Composite - Total Return
Dow Jones US Soft Drinks Index
S&P 500 Index - Total Return
100.00
100.00
100.00
128.18
105.09
117.92
152.51
106.23
134.66
176.14
127.82
151.27
188.37
129.51
148.62
308.02
157.61
223.20
10
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
May 1,
2021
May 2,
2020 (3)
April 27,
2019
April 28,
2018
April 29,
2017
Net sales
Cost of sales
Gross profit
$ 1,072,210 $ 1,000,394 $ 1,014,105 $
975,734 $
826,918
650,594
630,254
629,755
584,599
500,841
421,616
370,140
384,350
391,135
326,077
Selling, general and administrative expenses
193,791
204,394
204,415
186,947
163,600
Interest expense
Other income - net
220
(532)
202
202
201
(3,911)
(4,144)
(1,502)
189
(537)
Income before income taxes
228,137
169,455
183,877
205,489
162,825
Provision for income taxes
53,991
39,483
43,024
55,715
55,780
Net income
PER SHARE DATA
$
174,146 $
129,972 $
140,853 $
149,774 $
107,045
Basic earnings per common share (1)
$
1.87 $
1.39 $
1.51 $
1.61 $
Diluted earnings per common share (1)
Closing stock price
Dividends paid on common stock (2)
1.86
48.59
3.00
1.39
25.04
-
1.50
28.75
1.45
1.60
44.89
.75
1.15
1.15
44.30
.75
BALANCE SHEET DATA
Cash and equivalents (2)
Working capital (2)
$
193,589 $
304,518 $
156,200 $
189,864 $
136,372
217,748
319,024
224,420
248,297
181,115
Property, plant and equipment - net
131,027
120,627
111,316
85,807
65,150
Total assets (2)
Long-term lease obligations
Deferred income tax liability
Shareholders’ equity (2)
557,237
648,646
452,193
458,832
353,983
28,837
32,159
-
-
-
17,294
14,823
15,987
14,502
12,087
355,997
452,337
331,609
331,440
245,618
Dividends paid on common stock (2)
279,876
-
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 of $279.9 million ($3.00 per share) on January 29, 2021, $135.2 million ($1.45 per share) on
January 29, 2019 and $69.9 million ($.75 per share) on August 4, 2017 and January 27, 2017.
(3) Fiscal 2020 consisted of 53 weeks, all other periods consisted of 52 weeks.
11
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. 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!
National Beverage Corp. is uniquely positioned in three
distinctive ways:
(1) The retail 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) Retail today is in the most competitively-indexed
service industry, without exception. Innovation, plus
the urgent time demands on the consumer, requires
quick, expedient shopping. 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 is the most competent/
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 through innovative
marketing, packaging and consumer engagement, and
(iv) responding faster and more creatively to changing
consumer trends than larger competitors who are
burdened by
legacy production and distribution
complexity and costs.
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.
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
12
NATIONAL BEVERAGE CORP. found acceptable. Today, costly development projects
and seasonal weather periods plus promotional
packaging often make quarter-to-quarter comparisons
unworthy statistics that force companies to decision
making that is, not truly beneficial for investors and
shareholders alike.
Traditional and typical are not a part of an innovator’s
vocabulary.
RESULTS OF OPERATIONS
The
the
following section generally discusses
fiscal years ended May 1, 2021 (Fiscal 2021) and
May 2, 2020 (Fiscal 2020) items and year-to-year
comparisons between Fiscal 2021 and Fiscal 2020.
Discussions of fiscal year ended April 27, 2019
(Fiscal 2019) items and year-to-year comparisons
between Fiscal 2020 and Fiscal 2019 can be found in
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Part II, Item 7
of our Annual Report on Form 10-K for the year ended
May 2, 2020, which is available free of charge on our
website at www. nationalbeverage.com. Fiscal 2021
and Fiscal 2019 consisted of 52 weeks while Fiscal
2020 consisted of 53 weeks.
Net Sales Net sales for Fiscal 2021 increased 7.2%
to $1,072 million compared to $1,000 million for Fiscal
2020 (which contained 53 weeks). The increase in sales
resulted from a 7.1% increase in branded case volume
and a minor increase in average selling price per case
due primarily to changes in product mix. Power+ Brands
volume increased 10.2% and branded carbonated soft
drinks volume increased 1.0%.
Gross Profit Gross profit for Fiscal 2021 was $421.6
million compared to $370.1 million for Fiscal 2020. The
change in gross profit is due to increased volume and
growth in higher margin Power+ Brands coupled with
a 3.7% reduction in cost per case. The cost per case
decline resulted primarily from increased volume and
lower raw material costs. Gross margin was 39.3% for
Fiscal 2021 compared to 37.0% in Fiscal 2020.
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 the Consolidated
Financial Statements.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were
$193.8 million for Fiscal 2021, decreasing $10.6 million
from Fiscal 2020. Selling, general and administrative
expenses reflect reduced marketing and selling costs,
partially offset by increased shipping and handling
costs. As a percent of net sales, selling, general and
administrative costs decreased to 18.1% in Fiscal 2021
from 20.4% in Fiscal 2020.
Other Income - Net Other income - net is primarily
interest income of $.6 million for Fiscal 2021 and
$3.9 million for Fiscal 2020. The change in interest
income is due to lower investment yields and reduced
average investment balances.
Income Taxes Our effective tax rate was 23.7% for
Fiscal 2021 and 23.3% for Fiscal 2020. The differences
between the effective rate and the federal statutory rate
were primarily due to the effects of state income taxes.
LIQUIDITY AND FINANCIAL CONDITION
Liquidity and Capital Resources At May 1, 2021,
we maintained $100 million unsecured revolving credit
facilities, under which no borrowings were outstanding
and $2.5 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 5 of Notes to the
Consolidated Financial Statements.
for property, plant and equipment
Expenditures
amounted to $25.3 million for Fiscal 2021 primarily
for capital projects to expand our production capacity,
enhance packaging capabilities or improve efficiencies
at our production facilities. We intend to continue
production capacity and efficiency
improvement
projects in Fiscal 2022 and expect capital expenditures
to be comparable to Fiscal 2021.
13
NATIONAL BEVERAGE CORP. The Company paid special cash dividends on
Common Stock of $279.9 million ($3.00 per share) on
January 29, 2021.
The Board of Directors has authorized the Company to
repurchase up to 3.2 million shares of common stock.
During Fiscal 2021, the Company did not repurchase
any shares. As of May 1, 2021, 1,313,144 shares had
been purchased under the program and 1,886,856
shares were available for repurchase.
Pursuant to a management agreement, we incurred a
fee to Corporate Management Advisors, Inc. (CMA) of
$10.7 million for Fiscal 2021 and $10.0 million for Fiscal
2020. At May 1, 2021, management fees payable to
CMA were $2.6 million. See Note 6 of Notes to the
Consolidated Financial Statements.
Cash Flows During Fiscal 2021, $193.8 million was
provided by operating activities, $25.3 million was used
in investing activities and $279.4 million was used in
financing activities. Cash provided by operating activities
increased $16.1 million primarily due to increased
net income offset in part by increased working capital
requirements. Cash used in investing activities increased
in order to support
due to capital expenditures
production efficiencies and volume growth. Cash used
in financing activities primarily consists of the $279.9
million ($3.00 per share) special cash dividend paid on
January 29, 2021.
Financial Position During Fiscal 2021, our working
capital declined to $219.8 million from $319.0 million at
May 2, 2020. The decrease in working capital resulted
from lower cash and equivalents due to the January 2021
cash dividend and higher accounts payable, partially
offset by increased inventories and prepaid expenses.
Trade receivables increased slightly and days sales
outstanding was 30.1 days at May 1, 2021 compared
to 29.5 days at May 2, 2020. Inventories increased $8.0
million or 12.6% as a result of increases in finished goods
and raw materials while annual inventory turns increased
to 9.6 from 9.4 times. As of May 1, 2021, the current
ratio was 2.5 to 1 compared to 3.3 to 1 at May 2, 2020.
CONTRACTUAL OBLIGATIONS
Contractual obligations at May 1, 2021 are payable as follows:
(In thousands)
Operating leases
Purchase commitments
Total
Total
$ 46,614
19,976
$ 66,590
1 Year
or less
$ 15,729
19,706
$ 35,435
2 to 3
Years
$ 18,286
270
$ 18,556
3 to 5
Years
$ 8,288
-
$ 8,288
More Than
5 Years
$ 4,311
-
$ 4,311
We contribute to certain pension plans under collective
bargaining agreements and to a discretionary profit
sharing plan. Annual contributions were $3.7 million
for Fiscal 2021, $3.6 million for Fiscal 2020 and
$3.8 million for Fiscal 2019. See Note 11 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 $2.5
million have been issued in connection with our self-
insurance programs. These standby letters of credit
expire through April 2022 and are expected to be
renewed.
OFF-BALANCE SHEET ARRANGEMENTS AND
ESTIMATES
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.
14
NATIONAL BEVERAGE CORP. 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.
We offer various sales incentive arrangements to our
customers that 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.
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
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 our experience with past due accounts,
collectability and our analysis of customer data.
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.
Income Taxes The Company’s 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
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.
Interest Rates At May 1, 2021, the Company had
no borrowings outstanding. We had no debt-related
interest rate exposure during Fiscal 2021.
FORWARD-LOOKING STATEMENTS
“plans,”
“intends,”
National Beverage Corp. 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 statements including, without
limitation, statements containing the words “believes,”
“anticipates,”
“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 and availability 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 demand and 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
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.
16
NATIONAL BEVERAGE CORP. ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts and par value)
ASSETS
Current assets:
Cash and equivalents
Trade receivables - net
Inventory
Prepaid and other assets
Total current assets
Property, plant and equipment - net
Right of use assets - net
Goodwill
Intangible assets
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued liabilities
Short-term lease obligations
Income taxes payable
Total current liabilities
Deferred income taxes - net
Operating lease liability - non current
Other liabilities
Total liabilities
Commitments and contingencies
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;
101,675,858 and 101,606,368 shares issued, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock - at cost:
Series C preferred stock - 150,000 shares
Common stock - 8,374,112 shares
Total shareholders' equity
Total liabilities and shareholders' equity
The accompanying notes are an integral part of these consolidated financial statements
May 1,
2021
May 2,
2020
$
193,589 $
86,442
71,480
13,431
364,942
131,027
41,676
13,145
1,615
4,832
557,237 $
88,754 $
43,551
14,800
89
147,194
17,294
28,837
7,915
$
$
304,518
84,921
63,482
7,791
460,712
120,627
47,884
13,145
1,615
4,663
648,646
74,369
42,476
16,980
7,863
141,688
14,823
32,159
7,639
201,240
196,309
150
150
1,016
1,016
38,375
337,672
3,017
(5,100)
(19,133)
355,997
557,237 $
$
37,422
443,402
(5,420)
(5,100)
(19,133)
452,337
648,646
17
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income - net
Income before income taxes
Provision for income taxes
Net income
Earnings per common share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements
Fiscal Year Ended
May 1,
2021
May 2,
2020
April 27,
2019
$ 1,072,210 $ 1,000,394 $ 1,014,105
650,594
421,616
193,791
227,825
312
228,137
53,991
630,254
370,140
204,394
165,746
3,709
169,455
39,483
629,755
384,350
204,415
179,935
3,942
183,877
43,024
$
174,146 $
129,972 $
140,853
$
$
1.87 $
1.86 $
1.39 $
1.39 $
1.51
1.50
93,280
93,620
93,256
93,656
93,266
93,834
18
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income
Other comprehensive income, net of tax:
Cash flow hedges
Other
Total
Comprehensive income
The accompanying notes are an integral part of these consolidated financial statements
Fiscal Year Ended
May 1,
2021
May 2,
2020
April 27,
2019
$
174,146 $
129,972
$
140,853
7,930
507
8,437
(3,673)
(204)
(3,877)
(6,318)
174
(6,144)
$
182,583 $
126,095
$
134,709
19
NATIONAL BEVERAGE CORP. NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
SERIES C PREFERRED STOCK
Fiscal Year Ended
May 1, 2021
May 2, 2020
April 27, 2019
Shares
Amount
Shares
Amount
Shares
Amount
Beginning and end of year
150 $
150
150 $
150
150 $
150
COMMON STOCK
Beginning of year
Stock options exercised
End of year
ADDITIONAL PAID-IN CAPITAL
Beginning of year
Stock options exercised
Stock-based compensation
End of year
RETAINED EARNINGS
Beginning of year
Net income
Common stock cash dividend
End of year
ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS)
Beginning of year
Cash flow hedges
Other
End of year
101,606
1,016 101,356
1,014 101,302
1,014
70
-
250
2
54
-
101,676
1,016 101,606
1,016 101,356
1,014
37,422
491
462
38,375
443,402
174,146
(279,876)
337,672
(5,420)
7,930
507
3,017
36,557
740
125
37,422
313,430
129,972
-
443,402
(1,543)
(3,673)
(204)
(5,420)
35,850
456
251
36,557
307,824
140,853
(135,247)
313,430
4,601
(6,318)
174
(1,543)
TREASURY STOCK - SERIES C PREFERRED
Beginning and end of year
150
(5,100)
150
(5,100)
150
(5,100)
TREASURY STOCK - COMMON
Beginning of year
8,374
(19,133)
8,065
(12,900)
8,065
(12,900)
Repurchase of common stock
-
-
309
(6,233)
-
-
End of year
8,374
(19,133)
8,374
(19,133)
8,065
(12,900)
TOTAL SHAREHOLDERS' EQUITY
$ 355,997
$ 452,337
$ 331,608
The accompanying notes are an integral part of these consolidated financial statements
20
NATIONAL BEVERAGE CORP.
15,439
3,351
12
251
-
(481)
(9,782)
-
(2,806)
(8,651)
1,256
-
NATIONAL BEVERAGE CORP.
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
Fiscal Year Ended
May 1,
2021
May 2,
2020
April 27,
2019
$
174,146
$
129,972
$
140,853
18,097
17,234
(132)
114
462
11
206
125
Amortization of operating right of use assets
13,060
13,351
Changes in assets and liabilities:
Trade receivables
Inventories
Operating lease right of use assets
Prepaid and other assets
Accounts payable
Accrued and other liabilities
Operating lease liabilities
(1,521)
(7,998)
(11,092)
35
14,385
(4,524)
(1,262)
(80)
7,220
(5,368)
(5,633)
8,168
19,215
(6,729)
Net cash provided by operating activities
193,770
177,692
139,442
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
Repurchase of common stock
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
CASH AND EQUIVALENTS - BEGINNING OF YEAR
CASH AND EQUIVALENTS - END OF YEAR
OTHER CASH FLOW INFORMATION:
Interest paid
Income taxes paid
The accompanying notes are an integral part of these consolidated financial statements
(25,308)
(23,890)
(38,333)
(6)
9
18
(25,314)
(23,881)
(38,315)
(279,876)
-
(135,247)
491
-
(279,385)
(110,929)
304,518
740
(6,233)
(5,493)
148,318
156,200
456
(134,791)
(33,664)
189,864
193,589
$
304,518
$
156,200
148 $
51 $
51
63,357 $
29,364 $
36,833
$
$
$
21
NATIONAL BEVERAGE CORP.
NATIONAL BEVERAGE CORP. AND
SUBSIDIARIES
Notes to Consolidated Financial Statements
National Beverage Corp. 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. The fiscal year ended May 1, 2021 (Fiscal
2021) and fiscal year ended April 27, 2019 (Fiscal
2019) consisted of 52 weeks. The fiscal year ended
May 2, 2020 (Fiscal 2020) consisted of 53 weeks.
Reclassification On February 5, 2021, the Company’s
board of directors declared a one-for-one stock split
in the form of a stock dividend. This dividend was
distributed on February 19, 2021 to shareholders of
record on February 16, 2021. Share information and
earnings per share have been retroactively adjusted
to reflect the stock split. Certain reclassifications have
been made to prior period balances in order to conform
to the current period’s presentation.
Derivative Financial Instruments Derivative financial
instruments are used 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. Derivative financial
instruments are not used for trading or speculative
purposes. Credit risk related to derivative financial
instruments is managed by requiring high credit
standards
frequent cash
settlements.
for counterparties and
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
effect of stock options amounting to 340,000 shares
in Fiscal 2021, 400,000 shares in Fiscal 2020, and
568,000 shares in Fiscal 2019.
Fair Value of Financial Instruments 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.
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 management believes
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.
Cash and Equivalents Cash and equivalents are
comprised of cash and highly
liquid securities
(consisting primarily of bank deposits and short-term
government money-market investments).
Income Taxes The Company’s effective income tax rate
is based on estimates of taxes which will ultimately be
payable. Deferred taxes are recorded to give recognition
22
NATIONAL BEVERAGE CORP. 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 The Company maintains self-
insured and deductible programs for certain liability,
medical and workers’ compensation exposures.
Accordingly, the Company accrues for known claims and
estimated incurred but not reported claims not otherwise
covered by insurance based on actuarial assumptions
and historical claims experience. At May 1, 2021, and
May 2, 2020, other liabilities included accruals of $5.9
million and $5.5 million, respectively, for estimated non-
current risk retention exposures, of which $4.5 million,
was covered by insurance at both dates and included
as a component of non-current other assets.
Intangible Assets Intangible Assets as of May 1, 2021
and May 2, 2020 consisted of non-amortizable acquired
trademarks.
Inventories Inventories are stated at the lower of first-
in, first-out cost or market. Adjustments, if required, to
reduce the cost of inventory to market (net realizable
value) are made for estimated excess, obsolete or
impaired balances. Inventories at May 1, 2021 were
comprised of finished goods of $43.3 million and raw
materials of $28.2 million. Inventories at May 2, 2020
were comprised of finished goods of $39.1 million and
raw materials of $24.4 million.
Marketing Costs The Company utilizes 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 $43.4 million in Fiscal 2021, $54.8 million in
Fiscal 2020 and $55.3 million in Fiscal 2019.
Property, Plant and Equipment Property, plant and
equipment is 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 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 Revenue is recognized 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. The Company estimates and reserves for bad
debt exposure based on our experience with past due
accounts, collectability and our analysis of customer data.
Various sales incentive arrangements are offered to
our customers that 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.
Segment Reporting The Company operates 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. The
Company does not accumulate revenues by product
classification and, therefore, it is impractical to present
such information.
23
NATIONAL BEVERAGE CORP. Shipping and Handling Costs Shipping and handling
costs are reported in selling, general and administrative
expenses in the accompanying consolidated statements
of income. Such costs aggregated $75.5 million in Fiscal
2021, $69.8 million in Fiscal 2020 and $72.4 million in
Fiscal 2019. 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.
Trade Receivables Trade receivables are recorded at
net realizable value, which includes an estimated
allowance for doubtful accounts. The Company extends
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. The
Company continually monitors our exposure to credit
losses and maintains allowances for anticipated losses
based on our experience with past due accounts,
collectability and our analysis of customer data. Actual
future losses from uncollectible accounts could differ
from
the
allowance for doubtful accounts was as follows:
the Company’s estimate. Changes
in
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of May 1, 2021 and
May 2, 2020 consisted of the following:
(In thousands)
Land
2021
2020
$
9,835 $
9,835
Buildings and improvements
62,346
59,618
Machinery and equipment
257,119
238,300
Total
329,300
307,753
Less accumulated depreciation
(198,273)
(187,126)
Property, plant and equipment - net $ 131,027 $ 120,627
Depreciation expense was $14.8 million for Fiscal
2021, $14.4 million for Fiscal 2020 and $12.8 million
for Fiscal 2019.
3. ACCRUED LIABILITIES
Accrued liabilities as of May 1, 2021 and May 2, 2020
consisted of the following:
(In thousands)
Fiscal
2021
Fiscal
2020
Fiscal
2019
(In thousands)
2021
2020
Accrued compensation
$
11,826 $
11,348
Accrued promotions
Accrued freight
Accrued insurance
Recycling deposits
Other
Total
13,361
3,653
2,519
7,522
4,670
9,061
3,443
2,934
5,688
10,002
$
43,551 $
42,476
Balance at beginning of year $ 1,350 $
516 $
452
Net (credit) charge to expense
Net charge-off
(138)
(72)
893
(59)
87
(23)
Balance at end of year
$ 1,140 $ 1,350 $
516
As of May 1, 2021 and May 2, 2020, the Company
had no customer that comprised more than 10% of
trade receivables. No customer accounted for more
than 10% of net sales during any of the last three fiscal
years.
in conformity with GAAP
Use of Estimates The preparation of our financial
requires
statements
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.
24
NATIONAL BEVERAGE CORP.
4. LEASES
5. DEBT
The Company has entered into various non-cancelable
operating lease agreements for certain of our offices,
buildings, machinery and equipment expiring at various
dates through January 2029. The Company does not
assume renewals in our determination of the lease
term unless the renewals are deemed to be reasonably
assured at lease commencement. Lease agreements
generally do not contain material residual value
guarantees or material restrictive covenants. Operating
lease cost for Fiscal 2021 was $13.1 million. The
weighted-average remaining lease term and weighted-
average discount rate of operating leases was 3.06
years and 3.38%, respectively as of May 1, 2021.
Net cash provided by operations was impacted by
$11.1 million for operating leases for the year ended
May 1, 2021.
The following is a summary of future minimum lease
payments and related liabilities for all non-cancelable
operating leases as of May 1, 2021:
At May 1, 2021, a subsidiary of the Company
maintained unsecured revolving credit facilities with
banks aggregating $100 million (the Credit Facilities).
The Credit Facilities expire from October 28, 2022 to
April 30, 2023 and any borrowings would currently bear
interest at 1.0% above one-month LIBOR. There were
no borrowings outstanding under the Credit Facilities
at May 1, 2021 or May 2, 2020. At May 1, 2021, $2.5
million of the Credit Facilities was reserved for standby
letters of credit and $97.5 million was available for
borrowings.
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 May 1, 2021, the Company was in
compliance with all loan covenants.
6. CAPITAL STOCK AND TRANSACTIONS WITH
$ 15,729
RELATED PARTIES
(In thousands)
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Thereafter
Total minimum lease payments including
interest
Less: Amounts representing interest
10,290
7,996
5,108
3,180
4,311
46,614
(2,977)
Present value of minimum lease payments
43,637
Less: Current portion of lease liabilities
(14,800)
Non-Current portion of operating lease
liabilities
$ 28,837
The Board of Directors has authorized the Company
to repurchase up to 3.2 million shares of common
stock. During Fiscal 2020, the Company purchased an
aggregate 309,024 shares for a cost of $6.2 million.
As of May 1, 2021, 1,313,144 shares were purchased
under the program and 1,886,856 shares were available
for repurchase.
The Company paid a special cash dividend on
Common Stock of $279.9 million on January 29, 2021
($3.00 per share), $135.2 million ($1.45 per share) on
January 29, 2019, and $69.9 million ($.75 per share)
on August 4, 2017 and January 27, 2017.
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.
25
NATIONAL BEVERAGE CORP. 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 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.
CMA and the Company are joint owners of a corporate
aircraft and pursuant to a joint ownership agreement,
each party agreed to pay certain expenses associated
with the use of the aircraft. During the past three years,
the joint operating costs have averaged approximately
$1.0 million per year and the Company’s lease payments
for its ownership interest have averaged approximately
$.6 million per year. In conjunction with an inquiry by
the Securities and Exchange Commission (the “SEC”)
for the fiscal years 2015 through 2020, the Company
initiated a review to determine that the aircraft usage
costs were properly classified in accordance with SEC
standards. For purposes of settling these proceedings
the Company has volunteered an offer of settlement. The
offer, if approved by the SEC, will require an immaterial
payment that has been accrued at May 1, 2021.
that
The management agreement provides
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 to CMA, however, since the
inception of this agreement, no incentive compensation
has been paid. We incurred management fees to
CMA of $10.7 million for Fiscal 2021, $10.0 million
for Fiscal 2020, and $10.2 million for Fiscal 2019.
Amounts due CMA were $3.8 million at May 1, 2021,
which includes $1.2 million for costs reimbursable
under the management agreement, and $2.6 million at
May 2, 2020.
7. DERIVATIVE FINANCIAL INSTRUMENTS
From time to time, the Company enters 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
following
summarizes the gains (losses) recognized in the
consolidated statements of income and AOCI for Fiscal
2021, Fiscal 2020 and Fiscal 2019:
immaterial. The
(In thousands)
Recognized in AOCI-
Fiscal
2021
Fiscal
2020
Fiscal
2019
Gain (loss) before income
taxes
Less income tax provision
(benefit)
$ 12,973 $ (9,613) $ (6,138)
3,103
(2,299)
(1,468)
Net
9,870
(7,314)
(4,670)
Reclassified from AOCI to
cost of sales-
Gain (loss) before income
taxes
Less income tax provision
(benefit)
2,550
(4,786)
2,100
610
(1,145)
452
Net
1,940
(3,641)
1,648
Net change to AOCI
$ 7,930 $ (3,673) $ (6,318)
As of May 1, 2021, the notional amount of our
outstanding aluminum swap contracts was $6.2 million
and, assuming no change in the commodity prices, $3.6
million of unrealized gain before tax will be reclassified
from AOCI and recognized in earnings over the next 12
months.
26
NATIONAL BEVERAGE CORP. As of May 1, 2021, the fair value of the derivative asset
was $3.6 million, which was included in prepaid and
other assets. As of May 2, 2020, the fair value of the
derivative liability was $6.9 million, which was included
as a component of accrued liabilities. 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.
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
Other differences
Fiscal
2021
Fiscal
2020
Fiscal
2019
21.0% 21.0% 30.4%
2.9
(.2)
2.9
2.4
(.6)
(.5)
Effective income tax rate
23.7% 23.3% 23.4%
8.
INCOME TAXES
The provision for income taxes consisted of the
following:
(In thousands)
Current
Deferred
Total
Fiscal
2021
Fiscal
2020
Fiscal
2019
$ 51,520 $ 40,647 $ 39,673
2,471
(1,164)
3,351
$ 53,991 $ 39,483 $ 43,024
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 May 1, 2021 and May 2, 2020
consisted of the following:
(In thousands)
Deferred tax assets:
2021
2020
Accrued expenses and other
$
3,347 $
4,930
Inventory and amortizable
assets
Total deferred tax assets
Deferred tax liabilities:
544
565
3,891
5,495
Property
18,814
18,872
Intangibles and other
2,371
1,446
Total deferred tax liabilities
21,185
20,318
Net deferred tax liabilities
$ 17,294 $
14,823
As of May 1, 2021, the gross amount of unrecognized
tax benefits was $2.0 million and $53,000 was
recognized as tax expense in Fiscal 2021. If the Company
is to prevail on all uncertain tax positions, the net effect
would be to reduce our tax expense by approximately
$1.7 million. 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
2021
Fiscal
2020
Fiscal
2019
Beginning balance
$ 1,974 $ 1,868 $ 1,733
Increases due to current
period tax positions
Decreases due to lapse of
statute of limitations and
audit resolutions
150
120
139
(69)
(14)
(4)
Ending balance
$ 2,055 $ 1,974 $ 1,868
Accrued interest and penalties related to unrecognized
tax benefits are recognized as a component of income
tax expense. As of May 1, 2021, unrecognized tax
benefits included accrued interest of $258,000, of
which approximately $9,000 was recognized as tax
expense in Fiscal 2021.
Annual income tax returns are filed in the United States
and in various state and local jurisdictions. A number
of years may elapse before an uncertain tax position,
for which the Company has unrecognized tax benefits,
are resolved. While it is often difficult to predict the final
outcome or the timing of resolution of any particular
uncertain tax positions, the Company believes that
unrecognized tax benefits reflect the most probable
27
NATIONAL BEVERAGE CORP. outcome. The Company adjusts 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 years subsequent to Fiscal 2016
are subject to examination. Generally, the income tax
returns for the various state jurisdictions are subject to
examination for years ending after Fiscal 2014.
9. LEGAL PROCEEDINGS
The Company has been named in certain legal
proceedings, including those containing derivative and
class action allegations. The Company is vigorously
defending all legal proceedings and believes litigation
will not have a material adverse effect on the Company’s
financial position, cash flows or results of operations.
10. 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 9,600,000 shares of
common stock, (ii) stock appreciation rights, dividend
equivalents, other stock-based awards in amounts up to
9,600,000 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 3,360,000 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 3,600,000 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 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 100,000 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 480,000 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 12,000 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.
fair value assumptions
Stock options are accounted for 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 266,500 shares were granted in Fiscal 2021, and
18,000 shares in Fiscal 2019. No stock options were
issued during Fiscal 2020. The weighted average
for stock
Black-Scholes
options granted are as follows: weighted average
expected life of 7.2 years for Fiscal 2021 and 8.0
years for Fiscal 2019; weighted average expected
volatility of 19.36% for Fiscal 2021 and 21.7% for
Fiscal 2019; weighted average risk free interest
rates of 3.85% for Fiscal 2021 and 2.6% for Fiscal
2019; and expected dividend yield of 1.3% for Fiscal
2021 and 1.6% for Fiscal 2019. The expected life
of stock options was estimated based on historical
experience. The expected volatility was estimated
for a period
based on historical stock prices
28
NATIONAL BEVERAGE CORP. 11. PENSION PLANS
The Company contributes to certain pension plans
under collective bargaining agreements and to a
discretionary profit sharing plan. Annual contributions
(including contributions
to multi-employer plans
reflected below) were $3.7 million for Fiscal 2021, $3.6
million for Fiscal 2020 and $3.8 million for Fiscal 2019.
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.
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
2021 and Fiscal 2020 is for the plans’ years ending
December 31, 2019 and 2018, respectively.
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.
The following is a summary of stock option activity for
Fiscal 2021:
Options outstanding, beginning
of year
Granted
Exercised
Cancelled
Number
of Shares
Price (a)
389,090
$
7.01
266,500
31.27
(69,490)
(25,000)
6.99
5.46
Options outstanding, end of year
561,100
17.74
Options exercisable, end of year
285,700
7.46
(a) Weighted average exercise price.
Stock-based compensation expense was $462,000 for
Fiscal 2021, $126,000 for Fiscal 2020 and $251,000
for Fiscal 2019.
The total intrinsic value for stock options exercised
was $1.9 million for Fiscal 2021, $4.9 million for
Fiscal 2020, and $2.2 million for Fiscal 2019. Net
cash proceeds from the exercise of stock options
were $486,000 for Fiscal 2021, $740,000 for Fiscal
2020, and $456,000 for Fiscal 2019. Stock based
income tax benefits aggregated $382,000 for Fiscal
2021, $974,000 for Fiscal 2020, and $443,000 for
Fiscal 2019. The weighted average fair value for stock
options granted was $13.01 for Fiscal 2021.
As of May 1, 2021, unrecognized compensation
expense related to the unvested portion of stock
options was $490,000, which is expected to be
recognized over a weighted average period of 4.1
years. The weighted average remaining contractual
term and the aggregate intrinsic value for options
outstanding as of May 1, 2021 was 4.9 years and
$16.9 million, respectively. The weighted average
remaining contractual term and the aggregate intrinsic
value for options exercisable as of May 2, 2020 was
3.7 years and $7.0 million, respectively.
29
NATIONAL BEVERAGE CORP. Pension Fund
Central States, Southeast and Southwest
Areas Pension Plan (EIN no. 36-6044243) (the “CSSS Fund”)
PPA Zone Status
Fiscal
2021
Fiscal
2020
FIP/RP
Status
Surcharge
Imposed
Red
Red
Implemented
Yes
Western Conference of Teamsters Pension
Trust Fund (EIN no. 91-6145047) (the “WCT Fund”)
Green
Green
Not
applicable
No
For the plan years ended December 31, 2019 and December 31, 2018, 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
Total
Fiscal
2021
Fiscal
2020
Fiscal
2019
$
$
1,469
746
166
2,381
$
$
1,424
799
185
2,408
$
$
1,465
769
222
2,456
12. COMMITMENTS AND CONTINGENCIES
The Company enters 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 May 1, 2021, the Company had
purchase commitments for raw materials of $20.0 million through 2023.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
FISCAL 2021
Net sales
Gross profit
Net income
Earnings per common share – basic
Earnings per common share – diluted
FISCAL 2020
Net sales
Gross profit
Net income
Earnings per common share – basic
Earnings per common share – diluted
30
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 293,367
$ 271,809
$ 245,931
$ 261,103
117,218
51,164
.55
.54
$
$
108,049
47,164
.51
.51
$
$
95,664
36,687
.39
.39
$
$
100,685
39,131
.42
.42
$
$
$ 263,568
$ 251,611
$ 222,814
$ 262,401
96,574
34,542
.37
.37
$
$
92,814
32,654
.35
.35
$
$
82,095
26,563
.28
.28
$
$
98,657
36,213
.39
.39
$
$
NATIONAL BEVERAGE CORP. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of National Beverage Corp
Opinions on the Financial Statements and Internal
Control over Financial Reporting
We have audited the accompanying consolidated
(the
balance sheets of National Beverage Corp.
Company) as of May 1, 2021 and May 2, 2020,
and the related consolidated statements of income,
comprehensive
income, shareholders’ equity and
cash flows for each of the three years in the period
ended May 1, 2021, and the related notes (collectively,
the financial statements). We also have audited the
Company’s internal control over financial reporting
as of May 1, 2021, based on criteria established in
Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the
Treadway Commission in 2013.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of the Company as of May 1, 2021 and
May 2, 2020, and the results of its operations and its
cash flows for each of the years in the three-year period
ended May 1, 2021, 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 May 1, 2021, based on criteria
established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations
of the Treadway Commission in 2013.
Basis for Opinions
The Company’s management is responsible for these
financial statements, for maintaining effective internal
control over financial reporting, and for its assessment
of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s
financial statements and an opinion on the company’s
internal control over financial reporting based on our
audits. We are a public accounting firm registered
with
the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required
to be independent with respect to the Company in
accordance with U.S. federal securities laws and the
applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable
assurance about whether the financial statements
are free of material misstatement, whether due to
error or fraud, and whether effective internal control
over financial reporting was maintained in all material
respects.
the financial statements
Our audits of
included
performing procedures to assess the risks of material
misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond
to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and
significant estimates made by management, as well
as evaluating the overall presentation of the financial
statements. Our audit of internal control over financial
reporting included obtaining an understanding of
internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits
also included performing such other procedures as
we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for
our opinions.
Definition and Limitations of Internal Control over
Financial Reporting
A company’s internal control over financial reporting is
a process designed to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
in accordance with generally accepted
purposes
accounting principles. A company’s internal control
over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of
31
NATIONAL BEVERAGE CORP. 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.
actuarial estimation techniques that are dependent
upon assumptions and expectations about
future
events, many of which are difficult to quantify. As of
May 1, 2021 and May 2, 2020, other liabilities included
accruals of $5.9 million and $5.5 million, respectively, for
estimated non-current risk retention exposures, of which
$4.5 million and $4.3 million was covered by insurance
at May 1, 2021 and May 2, 2020, respectively.
We identified the evaluation of the Company’s self-
insurance accruals as a critical audit matter due to
the significant judgments made by management in
estimating the workers’ compensation liability. Auditing
management’s judgments used in estimating the value
of the workers’ compensation liability involved a high
degree of auditor judgment and increased audit effort,
including the use of our actuarial specialist.
Our audit procedures related to the Company’s self-
insurance accrual assessment included the following,
among others:
Critical Audit Matters
The critical audit matters communicated below are
matters arising from the current period audit of the
financial statements
that were communicated or
required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved
our especially challenging, subjective, or complex
judgments. The communication of critical audit
matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters
or on the accounts or disclosures to which they relate.
Self-Insurance Accruals
As described in Note 1 to the consolidated financial
statements,
the Company maintains self-insured
and deductible programs for workers’ compensation
exposures. The Company accrues for known claims and
estimated incurred but not reported claims not otherwise
covered by insurance based on actuarial assumptions
and historical claims experience. While a third party
actuary is employed to advise the Company, estimating
workers’ compensation exposure is inherently uncertain,
as estimates are generally derived using a variety of
32
to
related
• We obtained an understanding of the relevant
controls
the Company’s workers’
compensation liability, and tested such controls
for design and operating effectiveness, including
controls related to management’s review of the
significant assumptions.
• We tested the underlying data, including historical
claims and payroll data, which served as the basis
for the assumptions used by the third party actuary
in the actuarial analysis, to test that the inputs to the
actuarial estimates were accurate and complete.
• We compared payments made in the current year
for prior year claims to prior year recorded reserves.
• With the assistance of our actuarial specialist, we
evaluated the propriety of the reserving techniques
utilized for the workers’ compensation exposures.
/s/ RSM US LLP
We have served as the Company’s auditor since 2006.
Fort Lauderdale, Florida
June 30, 2021
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 May 1, 2021.
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
to financial
statement preparation. Further, because of changes
in conditions, the effectiveness of internal control may
vary over time.
respect
independent registered public
RSM US LLP, an
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 year ended May 1, 2021
that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
ITEM 9B.
OTHER INFORMATION
Not applicable.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN
JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
33
NATIONAL BEVERAGE CORP. PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE COMPENSATION
information
required by
The
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 2021 Proxy
Statement and is incorporated herein by reference.
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 2021 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
May 1, 2021:
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Name
Age Position with Company
Nick A. Caporella (1)
85 Chairman of the Board and
Chief Executive Officer
Joseph G. Caporella (2) 60
President
The information required by Item 12 will be included
under the captions “Security Ownership” and “Equity
Compensation Plan Information” in the Company’s
2021 Proxy Statement and is incorporated herein by
reference.
George R. Bracken (3)
76
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 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
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTION, 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 2021 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 2021 Proxy Statement and is incorporated
herein by reference.
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
2.
3.
Financial Statement Schedules
Exhibits
See Exhibit Index which follows.
Page
17
17
18
19
20
21
22
31
NA
ITEM 16.
FORM 10-K SUMMARY
Not applicable
35
NATIONAL BEVERAGE CORP.
EXHIBIT INDEX
Exhibit
No.
Description
3.1
3.2
3.3
4
Restated Certificate of Incorporation (1)
Amended and Restated By-Laws (2)
Certificate of Designation of the Special Series D Preferred Stock of the Company (3)
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 (15)
10.1 Management Agreement between the Company and Corporate Management Advisors, Inc.(4) *
10.2
10.3
10.4
10.5
National Beverage Corp. Investment and Profit Sharing Plan (5) *
National Beverage Corp. 1991 Omnibus Incentive Plan (4) *
National Beverage Corp. 1991 Stock Purchase Plan (4) *
Amendment No. 1 to the National Beverage Corp. Omnibus Incentive Plan (6) *
10.6
National Beverage Corp. Special Stock Option Plan (7) *
10.7
10.8
10.9
Amendment No. 2 to the National Beverage Corp. Omnibus Incentive Plan (8) *
National Beverage Corp. Key Employee Equity Partnership Program (8) *
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 Second Amendment to Second Amended and Restated Credit Agreement, dated July 7, 2015, between
NewBevCo, Inc. and lender therein (12)
10.14 Third Amendment to Second Amended and Restated Credit Agreement, dated June 29, 2017, between
NewBevCo, Inc. and lender therein (13)
10.15 Credit Facility Amended Agreement dated October 28, 2020 between NewBevCo, Inc. and lender
therein (14)
10.16 Fourth Amendment to Second Amended Credit Agreement dated October 30, 2020 between
NewBevCo, Inc and lender therein (14)
21
23
31.1
31.2
Subsidiaries of Registrant (16)
Consent of Independent Registered Public Accounting Firm (16)
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (16)
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)
36
NATIONAL BEVERAGE CORP. Exhibit
No.
Description
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 May 1, 2021 is formatted as inline 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.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
Indicates management contract or compensatory plan or arrangement.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q
for the fiscal period ended January 30, 2021 and is incorporated herein by reference.
Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K
for the fiscal year ended May 2, 2020 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 30, 2021
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 30, 2021.
/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
SIGNIFICANT SUBSIDIARIES OF REGISTRANT
Name of
Subsidiary
Jurisdiction of
Incorporation
Percentage of
Voting Stock Owned
BevCo Sales, Inc.
Delaware
Beverage Corporation International, Inc.
Delaware
Big Shot Beverages, Inc.
Everfresh Beverages, Inc.
Faygo Beverages, Inc.
LaCroix Beverages, Inc.
National Beverage Vending Company
National Retail Brands, Inc.
NewBevCo, Inc.
PACO, Inc.
Shasta Beverages, Inc.
Shasta Beverages International, Inc.
Shasta Sales, Inc.
Shasta Sweetener Corp.
Shasta West, Inc.
Sundance Beverage Company
Delaware
Delaware
Michigan
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%
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 30, 2021, relating 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 May 1, 2021.
/s/ RSM US LLP
Fort Lauderdale, Florida
June 30, 2021
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 30, 2021
/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 30, 2021
/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 May 1, 2021 (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 30, 2021
/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 May 1, 2021 (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 30, 2021
/s/ George R. Bracken
George R. Bracken
Executive Vice President – Finance
(Principal Financial Officer)
43
NATIONAL BEVERAGE CORP.
2021 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
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 1, 2021 at
2:00 p.m. local time at the
Renaissance Fort Lauderdale-
Plantation Hotel,
1230 South Pine Island Road,
Plantation, Florida 33324.
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 President and
Chief Executive Officer
Trendmaker Homes, Inc.
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
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
Iris V. Jackson
Director-Financial Reporting
Julio C. Marrero
Director-IT
Michael M. King
Special Corporate Counsel
8100 Southwest Tenth Street, Fort Lauderdale, Florida 33324
954.581.0922 • www.nationalbeverage.com