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Excrept from filing document 2024-04-27

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
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 believe our portfolio satisfies the preferences of a diverse mix of consumers including crossover consumers a growing group desiring healthier alternatives to artificially sweetened or high calorie beverages
Creative Innovations Building on a rich tradition of flavor and brand innovation with more than a 135 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 with a unique advantage with today s consumers who demand variety and refreshing beverage alternatives
Innovation Ethic We believe that innovative marketing packaging and consumer engagement is more effective in today s marketplace than traditional higher cost national advertising In addition to our cost effective social media platforms we utilize regionally focused marketing programs and in store brand ambassadors to interact 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 defines our new product development model Speed to market with the appropriate concept unique flavor creation and trend forward better for you ingredients continues to be our goal Internal development teams are responsible for concept creation packaging and design which allow for rapid go to market timing and reduced development costs We strive to provide retailers and consumers with the most innovative flavors and packaging in the industry Two of our LaCroix distinctive variety packs as well as Zero Sugar Shasta and three new flavors of Rip It were recently honored as top recipients of the International Davey Awards for creativity 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
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 In 2024 Newsweek once again named LaCroix as one of The Most Trusted Brands in America based on a survey of U S shoppers Additionally the classic flavor of LaCroix Lime claimed the top spot in the sparkling water category in the 2024 AllRecipes Golden Cart Awards Renowned for their culinary expertise the All Recipes Allstars praised the fresh flavor of LaCroix Lime as super thirst quenching
Continual flavor and packaging innovations for LaCroix in recent years include the newest LaCroix flavor Mojito Mojito launched in the third quarter of the fiscal year ended April 27 2024 Fiscal 2024 brings the sensory feel of paradise to consumers Mojito joins the most recent addition of Cherry Blossom a botanical twist of sweet and just a kiss of tart
Other successful LaCroix recent additions include Beach Plum with its delectable coolness of the luscious fruit native to the east coast of the U S Black Razzberry s decadent smooth and irresistible fruit flavor the sweet tropical delicacy of Guava São Paulo Hi Biscus a unique flavor that adds the delicate essence of the hibiscus flower to sparkling water the enticing savor of LimonCello which instantly transports fans to the Italian Riviera and the refreshing taste of Pastèque which captures the lusciousness of a sweet picnic watermelon
LaCroix s dynamic theme LaCroix Cúrate Cure Yourself celebrates French sophistication with Spanish zest and bold flavor pairings Packaged in sleek 12 oz tall cans popular flavors include Cerise Limón which pairs sweet cherry with tangy lime for a tasteful infusion that tickles the senses Piña Fraise an aromatic combination of pineapple and ripe strawberries that creates a tropical blend delight and Múre Pepino which combines sweet and sour blackberry notes with crisp cucumber to create a sensory and taste sensation
Everfresh and Mr Pure 100 juice and juice drinks are available in a variety of flavors from such classics as Orange Cranberry and flavored lemonades to exotics that include 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
Everfresh Premier Varietals a unique theme from Everfresh is positioned as a stand alone brand for display in the produce section of supermarkets Everfresh Premier Varietals is a premium line of 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 is a crisp clear non carbonated water beverage enhanced with fruit flavors Clear Fruit is available in 13 delicious flavors including 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
RIP It Energy Fuel offers Flavors for All with 19 unique flavors and four sugar free options In addition to all time consumer favorites Tribute Citrus X Cherry Lime and Power newly launched Re Energizzed Rip It flavors include Skr eech In with its luscious strawberry peach taste and the exotic and mysterious flavor of Dragon Fire These newest additions join pineapple YOLO watermelon flavored Melon Hi and the sweet and wild cotton candy experience of Can D Man Building on the flavor tradition of original Rip It a 2 oz sugar free shot version in six flavors is marketed in displayable package configurations RIP It proudly supports military and first responder heroes at home and abroad
Many of our carbonated soft drink brands enjoy a regional identification that we believe 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
Our philosophy emphasizes vertical integration our production model integrates the procurement of raw materials and crafting flavors and concentrates with the production of finished products Our twelve strategically located production facilities are near major metropolitan markets across the continental United States The locations of our facilities enable us to efficiently produce and distribute beverages to substantially all geographic markets in the United States including the top 25 metropolitan statistical areas Each facility is generally equipped to produce both canned and bottled beverage products in a variety of package sizes
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 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
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
Our take home convenience and food service operations use vending machines and glass door coolers as marketing and promotional tools for our brands We provide vending machines and coolers on a placement or purchase basis to our customers We believe vending and cooler equipment expands on site visual trial thereby increasing sales and enhancing brand awareness
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 periodically 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 Additionally the Company s MerchMx representatives work to develop a rapport with store managers for the purpose of optimizing shelf space building displays placing point of sale materials and expanding distribution
Our centralized procurement group maintains relationships with numerous suppliers of ingredients and packaging By consolidating the purchasing function for our production facilities we believe we 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 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
Competitive factors in the beverage industry include 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
The production distribution and sale of our products in the United States are subject to the Federal Food Drug and Cosmetic Act the Dietary Supplement Health and Education Act of 1994 the Occupational Safety and Health Act the Clean Air Act the Clean Water Act the Comprehensive Environmental Response Compensation and Liability Act the Resource Conservation and Recovery 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
As of April 27 2024 we employed approximately 1 559 people of which 392 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 different races ethnicities religions and gender identity Approximately 62 percent and 24 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 profit sharing 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
National Beverage Corp adheres to responsible business practices and continually strives to improve the sustainability of its operations 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 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 systems Additionally we are undertaking measures to reduce our carbon footprint which include transitioning from LP gas to electric powered forklifts and purchasing electricity from renewable sources
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 has programs in place designed to minimize the use of water energy and other natural resources
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
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 financial position results of operations and cash flows
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 position could be adversely affected
Competition The beverage industry is extremely 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 position
Raw materials and energy sources 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 diesel fuel carbon dioxide and electricity These items are subject to supply chain disruptions and 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 price increases on to our customers or may incur a loss in sales volume to the extent we increase prices Strikes weather conditions including conditions caused by climate change governmental controls tariffs national emergencies natural disasters supply shortages or other events could also 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 position 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 and those governing environmental laws and regulations 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 Continuing concern over environmental social and governance matters including climate change is expected to continue to result in new or increased legal and regulatory requirements to reduce emissions to mitigate the potential effects of greenhouse gases to limit or impose additional costs on commercial water use due to local water scarcity concerns or to expand mandatory reporting of certain environmental social and governance metrics Compliance with or future changes in existing laws or regulations could require material expenses and or capital expenditures and negatively affect our financial position
Sustained increases in the cost of employee wages and benefits Our profitability is affected by the cost of employee wages as well as health insurance and other benefits provided to employees including employees covered under collective bargaining agreements and multi employer pension plans Competition in the labor marketplace for qualified employees has led to increased costs such as higher wages and benefit costs in order to recruit and retain employees A prolonged labor shortage or inflation in labor costs could adversely impact our financial results
Unfavorable weather conditions changing weather patterns and natural disasters Unfavorable weather conditions in the geographic regions in which the Company or its suppliers operate 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 Additionally hurricanes earthquakes floods or other natural disasters may damage our physical facilities or those of our suppliers or customers
Climate change may increase the frequency or severity of weather related events Climate change may also have a negative effect on agricultural production resulting in decreased availability or less favorable pricing for certain commodities utilized in certain of our products In addition any perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change could lead to adverse publicity which could result in reduced demand for our products damage to our reputation or increase the risk of litigation
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
Future cyber incidents and dependence on information technology and third party service providers We depend on information systems and technology including public websites and cloud based services for many activities important to our business including communications within our Company interfacing with customers and consumers ordering and managing inventory managing and operating our facilities protecting confidential information including personal data we collect maintaining accurate financial records and complying with regulatory financial reporting legal and tax requirements Our business has in the past and could in the future be negatively affected by system shutdowns degraded systems performance systems disruptions or security incidents These disruptions or incidents may be caused by cyberattacks and other cyber incidents network or power outages software equipment or telecommunications failures the unintentional or malicious actions of employees or contractors natural disasters fires or other catastrophic events
Although the cyber incidents and other systems disruptions that we have experienced to date have not had a material effect on our business such incidents or disruptions could have a material adverse effect on us in the future If we are unable to timely respond to or resolve the issues related to such incidents and disruptions such issues could have a material adverse effect on our business financial condition results of operations cash flows and the timeliness with which we report our internal and external operating results
In addition the Company has established response procedures to address cyber events that do occur Our incident response plan coordinates the activities we take to prepare for detect respond to and recover from cybersecurity incidents and includes a contractual relationship with an external and cybersecurity response team We also maintain insurance coverage that subject to its terms and conditions is intended to reimburse certain costs associated with cyber incidents and information systems failures
During Fiscal 2024 there were no identified cybersecurity risks or threats including as a result of previous cybersecurity incidents that had or were reasonably likely to have a material effect on our business strategy results of operations or financial condition We continue to monitor potential cybersecurity threats and incorporate findings into our risk management strategies See Item 1A Risk Factors for a discussion of cybersecurity risks
Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks The Audit Committee oversees management s implementation of our cybersecurity risk management program and receives periodic reports from management on our cybersecurity risk management Our management team led by our Director of Information Technology who has 30 years of Information Technology leadership experience is responsible for assessing identifying and managing material cybersecurity risks to our business
Our principal properties include twelve production facilities located in ten states which aggregate approximately two million square feet We own ten production facilities in the following states California 2 Georgia Kansas Michigan 2 Ohio Texas Utah and Washington Two production facilities located in Maryland and Florida are leased subject to agreements 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 improved blending processes 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
The Company has been named in certain legal proceedings including those containing 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
On June 12 2024 the Company s board of directors declared a special cash dividend of 3 25 per share The special cash dividend will be paid on or before July 24 2024 to shareholders of record on June 24 2024 The Company paid special cash dividends of 279 9 million 3 00 per share on January 29 2021 and December 29 2021 respectively
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 into 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
The majority of our brands are geared to the active and health conscious consumer including sparkling waters energy drinks and juices Our portfolio of Power Brands includes LaCroix LaCroix Cúrate and LaCroix NiCola sparkling water products Clear Fruit non carbonated water beverages enhanced with fruit flavor Rip It energy drinks and shots and Everfresh Everfresh Premier Varietals and Mr Pure 100 juice and juice based products Additionally we produce and distribute carbonated soft drinks including Shasta and Faygo iconic brands whose consumer loyalty spans more than 135 years
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 beverages are also distributed on a limited basis in other countries and options to expand distribution to other regions are being pursued 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 beverages at our warehouses further lowering their our product costs
Our operating results are affected by numerous factors including fluctuations in the costs of raw materials supply chain disruptions holiday and seasonal programming and weather conditions Beverage sales are seasonal with higher sales volume realized during the summer months when outdoor activities are more prevalent See Item 1A Risk Factors in Part I of this report for additional information about risks and uncertainties facing our Company Also see Note 14 Restatements for certain cash flow restatements Management believes these corrections did not in any way limit investment opportunities during these periods
The following section generally discusses the fiscal years ended April 27 2024 Fiscal 2024 and April 29 2023 Fiscal 2023 results and year to year comparisons between Fiscal 2024 and Fiscal 2023 Discussions of fiscal year ended April 30 2022 Fiscal 2022 results and year to year comparisons between Fiscal 2023 and Fiscal 2022 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 April 29 2023 which is available free of charge on our website at www nationalbeverage com
Net sales for Fiscal 2024 increased 1 6 to 1 191 7 million compared to 1 172 9 million for Fiscal 2023 The increase in sales resulted from a 1 8 increase in average selling price per case partially offset by a 0 2 decline in case volume The volume decline primarily impacted Power Brands partially offset by an increase in carbonated soft drink brands
Gross profit for Fiscal 2024 increased to 428 5 million compared to 396 8 million for Fiscal 2023 The increase in gross profit was primarily due to the increased average selling price per case and a decline in packaging costs The cost of sales per case decreased 1 7 and gross margin increased to 36 0 compared to 33 8 for Fiscal 2023
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 Significant Accounting Policies of Notes to the Consolidated Financial Statements
Selling general and administrative expenses for Fiscal 2024 decreased 0 2 million to 209 9 million from 210 1 million for Fiscal 2023 The decrease was primarily due to a decrease in shipping costs partially offset by an increase in marketing and selling costs As a percentage of net sales selling general and administrative expenses decreased to 17 6 compared to 17 9 in Fiscal 2023
Our principal sources of liquidity are our existing cash and cash equivalents cash generated from operations and borrowing capacity available under our revolving credit facilities At April 27 2024 we had 327 0 million in cash and cash equivalents and maintained unsecured revolving credit facilities totaling 150 million under which no borrowings were outstanding and 2 2 million was reserved for standby letters of credit We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months See Note 5 Debt of Notes to the Consolidated Financial Statements
Pursuant to a management agreement we incurred fees to Corporate Management Advisors Inc CMA of 11 9 million and 11 7 million for Fiscal 2024 and Fiscal 2023 respectively At April 27 2024 and April 29 2023 current liabilities included amounts due to CMA of 3 0 million and 2 9 million respectively See Note 6 Capital Stock and Transactions with Related Parties of Notes to the Consolidated Financial Statements
The Company s cash position increased 169 0 million for Fiscal 2024 compared to an increase of 110 0 million for Fiscal 2023 Net cash provided by operating activities for Fiscal 2024 was 197 9 million compared to 161 7 million for Fiscal 2023 For Fiscal 2024 cash flow provided by operating activities was principally provided by an increase in operating income a reduction in working capital other than cash an increase in net interest income partially offset by an increase in tax and lease payments
Net cash used in investing activities for Fiscal 2024 reflects capital expenditures of 30 2 million compared to capital expenditures of 22 0 million for Fiscal 2023 Expenditures for property plant and equipment in Fiscal 2024 were primarily for capital projects to expand our capacity enhance sustainability and packaging capabilities and improve efficiencies at our production facilities We intend to continue such projects in Fiscal 2025 and anticipate Fiscal 2025 capital expenditures to be comparable to Fiscal 2024
During Fiscal 2024 our working capital increased 176 9 million to 398 9 million The increase in working capital primarily resulted from increased cash and cash equivalents generated by operations of 169 0 million and other net working capital increases of 7 9 million Trade receivables decreased 2 1 million and days sales outstanding was 31 5 days at April 27 2024 compared to 33 3 days at April 29 2023 Inventories decreased 9 0 million as a result of the reduced quantities of finished goods and raw materials Annual inventory turns increased to 8 6 times from 7 9 times At April 27 2024 the current ratio was 3 9 to 1 compared to 2 5 to 1 at April 29 2023
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 2 million have been issued in connection with our self insurance programs These standby letters of credit expire through March 2025 and are expected to be renewed
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
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 credit losses based on our experience with past due accounts collectability and our analysis of customer data
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 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 written down to its estimated fair value based on discounted future cash flows
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 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
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 credit losses 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 asset 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
See Note 1 Significant Accounting Policies Recently Issued Accounting Pronouncements of Notes to the Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company s consolidated financial position results of operations or liquidity
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 intends plans expects estimates may will should could and similar expressions 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 technology failures or cyberattacks on our technology systems or our effective response to technology failures or cyberattacks on our customers suppliers or other third parties technology systems government regulations taxes or fees imposed on the sale of our products unfavorable weather conditions changing weather patterns and natural disasters climate change or legislative or regulatory responses to such change and other factors referenced in this report filings with the Securities and Exchange Commission and other reports to our stockholders We disclaim any 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
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
At April 27 2024 the Company had no borrowings outstanding We are also subject to interest rate risk related to our investment in highly liquid short duration investment securities which are considered cash equivalents These investments are managed with the guidelines of the Company s investment policy Our policy requires investments to be investment grade within the primary objective of minimizing the risk of principal loss In addition our policy limits the amount of exposure to any one issue
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
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 April 27 2024 Fiscal 2024 April 29 2023 Fiscal 2023 and April 30 2022 Fiscal 2022 and all consisted of 52 weeks The fiscal year ending May 3 2025 Fiscal 2025 will consist of 53 weeks
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 preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes Although these estimates are based on management s knowledge of current events and anticipated future actions actual results may vary from reported amounts
The carrying values of the Company s financial instruments including cash and cash equivalents accounts receivable accounts payable and accrued liabilities approximate fair value due to the relatively short maturity of the respective instruments Derivative financial instruments which are used to partially mitigate our exposure to changes in certain raw material costs are recorded at fair value 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 for counterparties and frequent cash settlements The estimated fair values of derivative financial instruments are calculated based on market rates to settle the instruments See Note 7 Derivative Financial Instruments
Trade receivables are recorded at net realizable value which includes an estimated allowance for credit losses 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 credit 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 Company s estimate
Inventories are stated at the lower of first in first out cost or net realizable value Adjustments if required to reduce the cost of inventory to net realizable value are made for estimated excess obsolete or impaired balances Inventories at April 27 2024 were comprised of finished goods of 50 3 million and raw materials of 34 3 million Inventories at April 29 2023 were comprised of finished goods of 54 3 million and raw materials of 39 2 million
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
Determining a lease The Company assesses contracts at inception to determine whether an arrangement is or includes a lease which conveys the Company s right to control the use of an identified asset for a period of time in exchange for consideration Operating lease right of use assets and associated liabilities are recognized at the commencement date and initially measured based on the present value of lease payments over the defined lease term
Allocating lease and non lease components The Company has elected the practical expedient to not separate lease and non lease components for certain classes of underlying assets The Company has equipment and vehicle lease agreements which generally have the lease and associated non lease components accounted for as a single lease component The Company has real estate lease agreements with lease and non lease components which are accounted for separately where applicable
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 Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner if management believes such assets may be impaired An impaired asset is written down to its estimated fair value based on discounted future cash flows
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 April 27 2024 and April 29 2023 other liabilities included accruals of 5 5 million and 5 5 million respectively for estimated non current risk retention exposures of which 4 0 million and 4 1 million respectively was covered by insurance at both dates and included as a component of non current other assets
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 credit losses 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 asset 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
Shipping and handling costs are reported in selling general and administrative expenses in the accompanying consolidated statements of income Shipping and handling costs were 77 8 million 86 8 million and 87 7 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively 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
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 were 50 0 million 44 1 million and 47 6 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively
Income taxes are accounted for under the asset and liability method Deferred tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and the future tax consequences attributable to operating losses and tax credit carryforwards if applicable The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date
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 201 000 261 000 and 276 000 shares in Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively The weighted average number of antidilutive stock options excluded from the calculation of diluted earnings per share was immaterial for Fiscal 2024
In December 2023 the Financial Accounting Standards Board FASB issued Accounting Standards Update ASU 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures which requires disclosure of specific categories in the rate reconciliation including additional information for reconciling items that meet a quantitative threshold and specific disaggregation of income taxes paid and tax expense The amendment is effective for annual periods beginning after December 15 2024 Early adoption is permitted The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and does not expect a material impact upon adoption
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures which requires additional disclosure of significant segment expenses included in the reported measure of segment profit or loss and regularly provided to the Chief Operating Decision Maker This standard does not change how an entity identifies its operating segments or applies quantitative thresholds to determine its reportable segments The standard is effective for fiscal years beginning after December 15 2023 including interim periods within those fiscal years beginning after December 15 2024 Early adoption is permitted The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and does not expect a material impact upon adoption
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 July 2035 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 was 15 9 million 14 4 million and 14 5 million in Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively As of April 27 2024 the weighted average remaining lease term and weighted average discount rate of operating leases were 4 80 years and 4 30 respectively As of April 29 2023 the weighted average remaining lease term and weighted average discount rate of operating leases were 4 34 years and 3 30 respectively Cash paid for amounts included in the measurement of operating lease liabilities were 15 4 million 14 3 million and 14 7 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively
At April 27 2024 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 2024 to May 30 2025 and any borrowings would currently bear interest at 1 05 above the Secured Overnight Financing Rate SOFR There were no borrowings outstanding under the Credit Facilities at April 27 2024 or April 29 2023 At April 27 2024 2 2 million of the Credit Facilities was reserved for standby letters of credit and 97 8 million was available for borrowings
On December 21 2021 a subsidiary of the Company entered into an unsecured revolving term loan facility with a national bank aggregating 50 million the Loan Facility There were no borrowings outstanding under the Loan Facility at April 27 2024 or April 29 2023 The Loan Facility expires December 31 2025 and borrowings would bear interest at 1 05 above the adjusted daily SOFR
The Credit Facilities and Loan Facility require the subsidiary to maintain certain financial ratios including debt to net worth and debt to EBITDA as defined in the credit agreements and contain other restrictions none of which are expected to have a material effect on our operations or financial position At April 27 2024 the subsidiary was in compliance with all loan covenants
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 was no longer managed in this manner
Under the terms of the agreement CMA provides subject to the direction and supervision of the Board of Directors of the Company i senior corporate functions including supervision of the Company s financial legal executive recruitment internal audit and information systems departments as well as the services of a Chief Executive Officer and Chief Financial Officer and ii services in connection with acquisitions dispositions and financings by the Company including identifying and profiling acquisition candidates negotiating and structuring potential transactions and arranging financing for any such transaction CMA through its personnel also provides to the extent possible the stimulus and creativity to develop an innovative and dynamic persona 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 1 million per year In Fiscal 2022 the Company paid 0 4 million to acquire its ownership interest from the lessor and lease payments ended
The management agreement provides that the Company will pay CMA an annual base fee equal to one percent of the consolidated net sales of the Company and further provides that the Compensation and Stock Option Committee and the Board of Directors may from time to time award additional incentive compensation to CMA or its personnel The Board of Directors on various 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 11 9 million 11 7 million and 11 4 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively At April 27 2024 and April 29 2023 current liabilities included amounts due to CMA of 3 0 million and 2 9 million respectively
From time to time the Company enters into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum containers 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 hedge 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 following summarizes the gains losses recognized in the Consolidated Statements of Income and AOCI
As of April 27 2024 the fair value of the derivative asset was 5 7 million which was included in prepaid and other assets As of April 29 2023 the fair value of the derivative liability which was included in accrued liabilities was 4 6 million 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
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 at April 27 2024 and April 29 2023 consisted of the following
At April 27 2024 the gross amount of unrecognized tax benefits was 2 1 million During Fiscal 2024 the income tax expense recognized related to uncertain tax positions was immaterial If the Company were to prevail on all uncertain tax positions the net effect would be to reduce our income 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
Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense At April 27 2024 unrecognized tax benefits included accrued interest of 0 3 million During Fiscal 2024 the interest and penalties related to uncertain tax positions recognized in income tax expense was immaterial
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 position the Company believes that unrecognized tax benefits reflect the most probable 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 2018 are subject to examination Generally the income tax returns for the various state jurisdictions are subject to examination for years ending after Fiscal 2017
The Company has been named in certain legal proceedings including those containing 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
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 the terms generally allow for the reduction in exercise price upon each vesting period and the options generally expire after ten years 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 the exercise price reduces to the par value of the common stock at the end of the six year vesting period and the options generally expire after ten years
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 The Company estimates expected forfeitures based upon historical experience No stock options were granted in Fiscal 2024 or Fiscal 2023 In Fiscal 2022 stock options for 30 000 shares were granted with a weighted average grant date fair value of 6 91 The weighted average Black Scholes fair value assumptions for stock options granted in Fiscal 2022 were as follows weighted average expected life of 6 5 years weighted average expected volatility of 20 74 weighted average risk free interest rate of 82 and expected dividend yield of 2 48 The expected life of stock options was estimated based on historical experience The expected volatility was estimated based on historical stock prices for a period consistent with the expected life of stock options The risk free interest rate was based on the U S Treasury constant maturity interest rate whose term is consistent with the expected life of stock options
Stock based compensation expense was 0 9 million 0 7 million 0 7 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively The total income tax benefits related to stock based compensation were 1 7 million 0 2 million and 0 4 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively Stock based income tax benefits realized from stock option exercises aggregated 1 5 million 0 1 million and 0 3 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively
At April 27 2024 unrecognized compensation expense related to the unvested portion of stock options was 1 4 million which is expected to be recognized over a remaining weighted average period of 1 6 years The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding at April 27 2024 was 5 4 years and 5 5 million respectively The weighted average remaining contractual term and the aggregate intrinsic value for options exercisable at April 27 2024 was 4 7 years and 3 3 million respectively
The Company contributes to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan Annual contributions including contributions to multi employer plans reflected below were 3 8 million 3 8 million and 4 0 million for Fiscal 2024 Fiscal 2023 and Fiscal 2022 respectively
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 2024 and Fiscal 2023 is for the plans years ending December 31 2022 and 2021 respectively
For the plan years ended December 31 2022 and December 31 2021 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 agreement for employees in the CSSS Fund expires on October 18 2026 The collective bargaining agreement for employees in the WCT Fund expired on May 14 2024 and is currently being negotiated
The Company identified corrections required to be made to its consolidated statements of cash flows for Fiscal 2023 and Fiscal 2022 and all quarterly periods within each of the three year period ended April 27 2024 as the controls did not operate at a level precise enough to detect errors in certain calculations within the Consolidated Statements of Cash Flows and the presentation of right of use assets obtained in exchange for lease liabilities as supplemental non cash items These corrections do not impact the overall financial statements and Net Cash Provided By Operating Activities These corrections do not impact the Company s overall cash position its consolidated balance sheets its consolidated statements of income its consolidated statements of comprehensive income or its consolidated statements of changes in stockholders equity as of or for Fiscal 2023 Fiscal 2022 and all quarterly periods within each of the three year period ended April 27 2024
We have audited the accompanying consolidated balance sheets of National Beverage Corp and subsidiaries the Company as of April 27 2024 and April 29 2023 and the related consolidated statements of income comprehensive income shareholders equity and cash flows for each of the three years in the period ended April 27 2024 and the related notes collectively the financial statements In our opinion the financial statements present fairly in all material respects the financial position of the Company as of April 27 2024 and April 29 2023 and the results of its operations and its cash flows for each of the three years in the period ended April 27 2024 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of April 27 2024 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 Our report dated June 26 2024 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of April 27 2024 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits 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 We believe that our audits provide a reasonable basis for our opinion
Critical audit matters 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 We determined that there are no critical audit matters
Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a 15 e and 15 d 15 e under the Exchange Act as of April 27 2024 Based on that evaluation our chief executive officer and our principal financial officer concluded that these disclosure controls and procedures were not effective due to the material weakness described below Notwithstanding the identified material weakness the Company s management including our chief executive officer and principal financial officer has concluded the Company s consolidated financial statements included in this Form 10 K present fairly in all material respects the Company s financial condition results of operations and cash flows at and for the periods presented in accordance with U S generally accepted accounting principles
The Company s Management is responsible for establishing and maintaining adequate internal control over financial reporting Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP
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
Management assessed the effectiveness of our internal control over financial reporting as of April 29 2023 and April 30 2022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework 2013 Based on this assessment management concluded at the time the respective 10 Qs and 10 Ks were filed that our internal control over financial reporting was effective based on those criteria Subsequent to that assessment management identified a material weakness in internal controls as described below
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis Management identified a material weakness in our internal financial reporting controls over the review of the Consolidated Statements of Cash Flows including operating lease disclosures and presentation at January 27 2024 October 28 2023 and July 29 2023 and for Fiscal 2023 Fiscal 2022 The controls did not operate at a level precise enough to detect errors in certain calculations within the Consolidated Statements of Cash Flows and the presentation of right of use assets obtained in exchange for lease liabilities as supplemental non cash items
The Company s management has implemented additional review procedures to enhance our internal control over financial reporting with respect to reporting cash flows These procedures include the hiring of additional financial professions to review the calculations underlying the cash flow presentation enhanced procedures for assuring that right of use assets are reported on a timely basis by subsidiary personnel and additional quarter end reviews of operating lease liabilities Management believes that implementation of these procedures will remediate the internal control weakness over financial reporting but will continue to monitor the applicable controls for a sufficient period of time to determine that these controls are operating effectively
Except as described above there has been no change in our internal control over financial reporting as defined in Rules 13a 15 f and 15d 15 f under the Exchange Act that has materially affected or is reasonably likely to materially affect our internal control over financial reporting Notwithstanding the identified material weakness described above management believes that the consolidated financial statements included present fairly in all material respects our consolidated financial position results of operations and cash flows for the period presented
We have audited National Beverage Corp s the Company internal control over financial reporting as of April 27 2024 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 because of the effect of the material weakness described below on the achievement of the objectives of the control criteria the Company has not maintained effective internal control over financial reporting as of April 27 2024 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated balance sheets of the Company as of April 27 2024 and April 29 2023 and the related consolidated statements of income comprehensive income shareholders equity and cash flows for each of the three years in the period ended April 27 2024 and the related notes collectively the financial statements of the Company and our report dated June 26 2024 expressed an unqualified opinion
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company s annual or interim financial statements will not be prevented or detected on a timely basis The following material weakness has been identified and included in management s assessment The Company has ineffective financial reporting controls over the review of the statement of cash flows including operating lease disclosures and presentation The controls also did not operate at a level precise enough to detect other errors in calculations and formulas and as a result did not detect differences between classifications within the statement of cash flows and the presentation of right of use assets obtained in exchange for lease liabilities as supplemental non cash items This material weakness was considered in determining the nature timing and extent of audit tests applied in our audit of the 2024 financial statements and this report does not affect our report dated June 26 2024 on those financial statements
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit 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 audit also included performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The information required by Item 10 will be included under the captions Election of Directors Information as to Nominees and Other Directors Information Regarding Meetings and Committees of the Board and Reporting Compliance in the Company s 2024 Proxy Statement and is incorporated herein by reference
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
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

Company Name	NATIONAL BEVERAGE CORP Vist SEC web-site
Category	BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS
Trading Symbol	FIZZ