NATIONAL BEVERAGE CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) April 27, April 29, 2024 2023 Assets Current assets: Cash and cash equivalents $ 327,047 $ 158,074 Trade receivables, net 102,837 104,918 Inventories 84,603 93,578 Prepaid and other assets 22,385 9,835 Total current assets 536,872 366,405 Property, plant and equipment, net 159,730 148,423 Operating lease right-of-use assets 53,498 39,506 Goodwill 13,145 13,145 Intangible assets 1,615 1,615 Other assets 5,293 5,248 Total assets $ 770,153 $ 574,342 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 78,283 $ 85,106 Accrued liabilities 46,565 47,318 Operating lease liabilities 13,079 11,745 Income taxes payable - 152 Total current liabilities 137,927 144,321 Deferred income taxes, net 23,247 19,814 Operating lease liabilities 41,688 29,782 Other liabilities 7,779 7,938 Total liabilities 210,641 201,855 Commitments and contingencies Shareholders' equity: Preferred stock, $ 1 par value - 1,000,000 shares authorized Series C - 150,000 shares issued 150 150 Common stock, $ .01 par value - 200,000,000 shares authorized; 101,942,658 and 101,727,658 shares issued, respectively 1,019 1,017 Additional paid-in capital 42,588 40,393 Retained earnings 535,077 358,345 Accumulated other comprehensive income (loss) 4,911 ( 3,185 ) Treasury stock - at cost: Series C preferred stock - 150,000 shares ( 5,100 ) ( 5,100 ) Common stock - 8,374,112 shares ( 19,133 ) ( 19,133 ) Total shareholders' equity 559,512 372,487 Total liabilities and shareholders' equity $ 770,153 $ 574,342 The accompanying notes are an integral part of these consolidated financial statements. 18 Table of Contents NATIONAL BEVERAGE CORP. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Fiscal Year Ended April 27, April 29, April 30, 2024 2023 2022 Net sales $ 1,191,694 $ 1,172,932 $ 1,138,013 Cost of sales 763,243 776,143 720,208 Gross profit 428,451 396,789 417,805 Selling, general and administrative expenses 209,941 210,105 209,949 Operating income 218,510 186,684 207,856 Other income (expense), net 11,338 ( 242 ) ( 260 ) Income before income taxes 229,848 186,442 207,596 Provision for income taxes 53,116 44,278 49,084 Net income $ 176,732 $ 142,164 $ 158,512 Earnings per common share: Basic $ 1.89 $ 1.52 $ 1.70 Diluted $ 1.89 $ 1.52 $ 1.69 Weighted average common shares outstanding: Basic 93,429 93,347 93,323 Diluted 93,630 93,608 93,599 The accompanying notes are an integral part of these consolidated financial statements. 19 Table of Contents NATIONAL BEVERAGE CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Fiscal Year Ended April 27, April 29, April 30, 2024 2023 2022 Net income $ 176,732 $ 142,164 $ 158,512 Other comprehensive income (loss), net of tax: Cash flow hedges 7,910 ( 10,130 ) 3,882 Other 186 27 19 Total 8,096 ( 10,103 ) 3,901 Comprehensive income $ 184,828 $ 132,061 $ 162,413 The accompanying notes are an integral part of these consolidated financial statements. 20 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands) Fiscal Year Ended April 27, 2024 April 29, 2023 April 30, 2022 Shares Amount Shares Amount Shares Amount Series C Preferred Stock Beginning and end of year 150 $ 150 150 $ 150 150 $ 150 Common Stock Beginning of year 101,727 1,017 101,712 1,017 101,676 1,016 Stock options exercised 215 2 15 - 36 1 End of year 101,942 1,019 101,727 1,017 101,712 1,017 Additional Paid-In Capital Beginning of year 40,393 39,405 38,375 Stock options exercised 1,314 311 335 Stock-based compensation expense 881 677 695 End of year 42,588 40,393 39,405 Retained Earnings Beginning of year 358,345 216,181 337,672 Net income 176,732 142,164 158,512 Common stock cash dividend - - ( 280,003 ) End of year 535,077 358,345 216,181 Accumulated Other Comprehensive Income (Loss) Beginning of year ( 3,185 ) 6,918 3,017 Cash flow hedges 7,910 ( 10,130 ) 3,882 Other 186 27 19 End of year 4,911 ( 3,185 ) 6,918 Treasury Stock - Series C Preferred Beginning and end of year 150 ( 5,100 ) 150 ( 5,100 ) 150 ( 5,100 ) Treasury Stock - Common Beginning and end of year 8,374 ( 19,133 ) 8,374 ( 19,133 ) 8,374 ( 19,133 ) Repurchase of common stock - - - - - - 8,374 ( 19,133 ) 8,374 ( 19,133 ) 8,374 ( 19,133 ) Total Shareholders' Equity $ 559,512 $ 372,487 $ 239,438 The accompanying notes are an integral part of these consolidated financial statements. 21 Table of Contents NATIONAL BEVERAGE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended April 27, April 29, April 30, 2024 2023 2022 (As Restated) (As Restated) Operating Activities: Net income $ 176,732 $ 142,164 $ 158,512 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,161 20,041 18,544 Deferred income taxes 907 ( 821 ) 5,326 Loss (gain) on disposal of property, plant and equipment, net 12 141 ( 7 ) Stock-based compensation expense 881 677 695 Non-cash operating lease expense 14,039 13,240 13,258 Changes in assets and liabilities: Trade receivables 2,081 ( 11,326 ) ( 7,150 ) Inventories 8,975 9,740 ( 31,838 ) Prepaid and other assets ( 8,151 ) 8,275 ( 13,797 ) Accounts payable ( 6,823 ) ( 10,193 ) 6,545 Accrued and other liabilities 3,885 2,941 ( 3,731 ) Operating lease liabilities ( 14,792 ) ( 13,214 ) ( 13,224 ) Net cash provided by operating activities 197,907 161,665 133,133 Investing Activities: Purchases to property, plant and equipment ( 30,300 ) ( 21,979 ) ( 29,015 ) Proceeds from sale of property, plant and equipment 52 27 11 Net cash used in investing activities ( 30,248 ) ( 21,952 ) ( 29,004 ) Financing Activities: Borrowing under Loan Facility - - 50,000 Repayments under Loan Facility - ( 30,000 ) ( 20,000 ) Dividends paid on common stock - - ( 280,003 ) Proceeds from exercises of stock options 1,314 311 335 Net cash provided by (used in) financing activities 1,314 ( 29,689 ) ( 249,668 ) Net Increase (Decrease) in Cash and Equivalents 168,973 110,024 ( 145,539 ) Cash and Cash Equivalents - Beginning of Year 158,074 48,050 193,589 Cash and Cash Equivalents - End of Year $ 327,047 $ 158,074 $ 48,050 Supplemental Cash Flow Information: Interest paid $ 228 $ 315 $ 371 Income taxes paid $ 55,971 $ 37,831 $ 51,958 Non-Cash Activities: Right-of- use assets obtained in exchange for lease liabilities $ 28,039 $ 23,495 $ 6,054 The accompanying notes are an integral part of these consolidated financial statements. 22 Table of Contents 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 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. 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. Use of Estimates 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. Fair Value of Financial Instruments 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. Cash and Cash Equivalents Cash and cash equivalents are comprised of cash and highly liquid securities (consisting primarily of bank deposits and short-term government money-market investments). Trade Receivables, Net 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. 23 Table of Contents Changes in the allowance for credit losses were as follows: (In thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022 Balance at beginning of year $ 523 $ 559 $ 1,140 Net charge (credit) to expense 427 11 ( 581 ) Net charge-off ( 82 ) ( 47 ) - Balance at end of year $ 868 $ 523 $ 559 At April 27, 2024 and April 29, 2023, no customer 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. Inventories 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, Net 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. Leases The Company leases office and warehouse space, machinery and other equipment under noncancelable operating lease agreements and also leases certain warehouse space under lease agreements. The Company uses the following policies and assumptions to evaluate its leases: ● 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. ● Calculating the discount rate: The Company calculates the discount rate based on the discount rate implicit in the lease, or if the implicit rate is not readily determinable from the lease, then the Company calculates an incremental borrowing rate. ● Recognizing leases: The Company does not recognize leases with a contractual term of less than 12 months on its consolidated balance sheets. Lease expense for these short-term leases is expensed on a straight-line basis over the lease term. ● Rent increases or escalation clauses: Certain leases contain scheduled rent increases or escalation clauses, which can be based on the Consumer Price Index or other rates. The Company assesses each contract individually and applies the appropriate variable payments based on the terms of the agreement. ● Renewal options and/or purchase options: The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. ● Residual value guarantees, restrictions or covenants: The Company’s lease agreements do not contain material residual value guarantees, restrictions or covenants. 24 Table of Contents Intangible Assets Intangible assets at April 27, 2024 and April 29, 2023 consisted of non-amortizable acquired trademarks. 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. 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. 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 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 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 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. 25 Table of Contents Shipping and Handling Costs 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. 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, were $ 50.0 million, $ 44.1 million and $ 47.6 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. Income Taxes 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. A valuation allowance will be provided against deferred tax assets if the Company determines it is more likely than not such assets will not ultimately be realized. 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 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. Recently Issued Accounting Pronouncements 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. 2. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net at April 27, 2024 and April 29, 2023 consisted of the following: (In thousands) 2024 2023 Land $ 9,835 $ 9,835 Buildings and improvements 71,754 70,615 Machinery and equipment 314,079 289,567 Total 395,668 370,017 Less: accumulated depreciation ( 235,938 ) ( 221,594 ) Property, plant and equipment, net $ 159,730 $ 148,423 Depreciation expense was $ 18.9 million, $ 17.7 million and $ 15.8 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. 26 Table of Contents 3. ACCRUED LIABILITIES Accrued liabilities at April 27, 2024 and April 29, 2023 consisted of the following: (In thousands) 2024 2023 Accrued promotions $ 18,826 $ 15,865 Accrued compensation 13,920 13,036 Recycling deposits 5,743 5,123 Accrued insurance 2,687 2,498 Accrued freight 2,262 2,819 Other 3,127 7,977 Total $ 46,565 $ 47,318 4. LEASES 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. The following is a summary of future minimum lease payments and related liabilities for all non-cancelable operating leases at April 27, 2024: (In thousands) Fiscal 2025 $ 15,068 Fiscal 2026 13,382 Fiscal 2027 11,847 Fiscal 2028 6,946 Fiscal 2029 5,770 Thereafter 8,156 Total minimum lease payments including interest 61,168 Less: Amounts representing interest ( 6,401 ) Present value of minimum lease payments 54,767 Less: Current portion of operating lease liabilities ( 13,079 ) Non-current portion of operating lease liabilities $ 41,688 27 Table of Contents 5. DEBT 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. 6. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES The Company paid a special cash dividend on Common Stock of approximately $ 280 million on each of December 29, 2021 and January 29, 2021 at $ 3.00 per share. See Note 13 – Subsequent Event for cash dividend declared subsequent to year end. 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. 28 Table of Contents 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 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: (In thousands) Fiscal Fiscal Fiscal 2024 2023 2022 Recognized in AOCI- (Loss) gain before income taxes $ ( 425 ) $ ( 21,100 ) $ 15,105 Less: income tax (benefit) provision ( 111 ) ( 5,047 ) 3,613 Net ( 314 ) ( 16,053 ) 11,492 Reclassified from AOCI to cost of sales- (Loss) gain before income taxes ( 10,805 ) ( 7,785 ) 10,001 Less: income tax (benefit) provision ( 2,581 ) ( 1,862 ) 2,391 Net ( 8,224 ) ( 5,923 ) 7,610 Net change to AOCI $ 7,910 $ ( 10,130 ) $ 3,882 As of April 27, 2024, the total notional amount of our outstanding aluminum swap contracts was $ 52.4 million and, assuming no change in the commodity prices, $ 5.7 million of unrealized gain before tax will be reclassified from AOCI and recognized into earnings over the next 12 months. 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. 8. INCOME TAXES The provision for income taxes consisted of the following: (In thousands) Fiscal Fiscal Fiscal 2024 2023 2022 Current $ 49,683 $ 48,287 $ 42,555 Deferred 3,433 ( 4,009 ) 6,529 Total $ 53,116 $ 44,278 $ 49,084 29 Table of Contents 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: (In thousands) 2024 2023 Deferred tax assets: Accrued expenses and other $ 3,923 $ 4,671 Inventory and amortizable assets 575 545 Total deferred tax assets 4,498 5,216 Deferred tax liabilities: Property 25,002 23,715 Intangibles and other 2,743 1,315 Total deferred tax liabilities 27,745 25,030 Deferred tax liabilities, net $ 23,247 $ 19,814 The reconciliation of the statutory federal income tax rate to our effective tax rate is as follows: Fiscal Fiscal Fiscal 2024 2023 2022 Statutory federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 2.8 2.9 2.9 Other differences ( 0.7 ) (0.2 ) (0.3 ) Effective income tax rate 23.1 % 23.7 % 23.6 % 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: (In thousands) 2024 2023 2022 Beginning balance $ 2,096 $ 2,079 $ 2,055 Increases due to current period tax positions 60 75 114 Decreases due to lapse of statute of limitations and audit resolutions ( 26 ) ( 58 ) ( 90 ) Ending balance $ 2,130 $ 2,096 $ 2,079 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. 9. LEGAL PROCEEDINGS 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. 30 Table of Contents 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, 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. The following is a summary of stock option activity for Fiscal 2024: Number of Shares Price (a) Options outstanding, beginning of year 521,300 $ 18.13 Granted - - Exercised ( 215,000 ) $ 6.12 Forfeited or cancelled ( 6,400 ) $ 31.49 Options outstanding, end of year 299,900 $ 25.48 Options vested and exercisable, end of year 164,580 $ 23.40 (a) Weighted average exercise price. 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. 31 Table of Contents The total intrinsic value for stock options exercised was $ 9.1 million, $ 0.4 million and $ 1.4 million for Fiscal 2024, Fiscal 2023 and 2022, respectively. Cash proceeds from the exercise of stock options were $ 1.3 million, $ 0.3 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. 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 $ 3.8 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. PPA Zone Status Pension Fund Fiscal 2024 Fiscal 2023 FIP/RP Status Surcharge Imposed Central States, Southeast and Southwest Areas Pension Plan (EIN no. 36 - 6044243 ) (the “CSSS Fund”) 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, 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’s contributions for all multi-employer pension plans for the last three fiscal years are as follow: (In millions) Fiscal Fiscal Fiscal Pension Fund 2024 2023 2022 CSSS Fund $ 1.6 $ 1.6 $ 1.5 WCT Fund 0.8 0.8 0.8 Other multi-employer pension funds 0.2 0.2 0.2 Total $ 2.6 $ 2.6 $ 2.5 32 Table of Contents 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. At April 27, 2024, the Company had purchase commitments for raw materials of $ 35.4 million through 2026. At April 27, 2024, the Company had purchase commitments for plant and equipment of $ 3.7 million anticipated to be completed in Fiscal 2025. 13. SUBSEQUENT EVENT 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 . 33 Table of Contents 14. RESTATEMENT 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. A summary of the impact on the consolidated statement of cash flows is as follows (in thousands): Fiscal Year Ended April 29, 2023 Fiscal Year Ended April 30, 2022 Operating Activities: As Reported Adjustments As Restated As Reported Adjustments As Restated Operating lease right-of-use asset $ ( 23,495 ) $ 23,495 $ - $ ( 6,054 ) $ 6,054 $ - Prepaid and other assets 15,472 ( 7,197 ) 8,275 ( 5,084 ) ( 8,713 ) ( 13,797 ) Accrued and other liabilities ( 4,256 ) 7,197 2,941 ( 12,444 ) 8,713 ( 3,731 ) Operating lease liabilities 10,281 ( 23,495 ) ( 13,214 ) ( 7,170 ) ( 6,054 ) ( 13,224 ) Net cash provided by operating activities 161,665 - 161,665 133,133 - 133,133 Right-of- use assets obtained in exchange for lease liabilities $ - $ 23,495 23,495 $ - $ 6,054 $ 6,054 Three Months Ended July 29, 2023 Six Months Ended October 28, 2023 Nine Months Ended January 27, 2024 Operating Activities: As Reported Adjustments As Restated As Reported Adjustments As Restated As Reported Adjustments As Restated Operating lease right-of-use asset $ ( 3,589 ) $ 3,589 $ - $ ( 11,877 ) $ 11,877 $ - $ ( 27,905 ) $ 27,905 $ - Prepaid and other assets 1,475 84 1,559 ( 600 ) ( 5,817 ) ( 6,417 ) ( 3,186 ) ( 8,600 ) ( 11,786 ) Accrued and other liabilities 9,562 ( 84 ) 9,478 ( 4,205 ) 5,817 1,612 ( 7,485 ) 8,600 1,115 Operating lease liabilities 287 ( 3,589 ) ( 3,329 ) 3,586 ( 11,877 ) ( 8,291 ) 16,629 ( 27,905 ) ( 11,276 ) Net cash provided by operating activities 70,143 - 70,143 102,059 - 102,059 137,465 - 137,465 Right-of-use assets obtained in exchange for lease liabilities $ - $ 3,589 $ 3,589 $ - $ 11,877 $ 11,877 $ - $ 27,905 $ 27,905 Three Months Ended July 30, 2022 Six Months Ended October 29, 2022 Nine Months Ended January 28, 2023 Operating Activities: As Reported Adjustments As Restated As Reported Adjustments As Restated As Reported Adjustments As Restated Operating lease right-of-use asset $ ( 12,468 ) $ 12,468 $ - $ ( 16,132 ) $ 16,132 $ - $ ( 19,539 ) $ 19,539 $ - Prepaid and other assets 11,656 53 11,709 3,187 ( 770 ) 2,417 1,832 2,264 4,096 Accrued and other liabilities ( 344 ) ( 53 ) ( 397 ) ( 1,566 ) 770 ( 796 ) 5,271 ( 2,264 ) 3,007 Operating lease liabilities 9,310 ( 12,468 ) ( 3,158 ) 9,597 ( 16,132 ) ( 6,535 ) 9,633 ( 19,539 ) ( 9,906 ) Net cash provided by operating activities 40,617 - 40,617 82,238 - 82,238 112,253 - 112,253 Right-of-use assets obtained in exchange for lease liabilities $ - $ 12,468 $ 12,468 $ - $ 16,132 $ 16,132 $ - $ 19,539 $ 19,539 Three Months Ended July 31, 2021 Six Months Ended October 30, 2021 Nine Months Ended January 29, 2022 Operating Activities: As Reported Adjustments As Restated As Reported Adjustments As Restated As Reported Adjustments As Restated Operating lease right-of-use asset $ ( 924 ) $ 924 $ - $ ( 1,594 ) $ 1,594 $ - $ ( 5,827 ) $ 5,827 $ - Prepaid and other assets ( 106 ) 1,506 1,400 510 ( 2,472 ) ( 1,962 ) ( 4,730 ) ( 2,489 ) ( 7,219 ) Accrued and other liabilities 12,509 ( 1,506 ) 11,003 ( 9,545 ) 2,472 ( 7,073 ) ( 7,724 ) 2,489 ( 5,235 ) Operating lease liabilities ( 2,192 ) ( 924 ) ( 3,116 ) ( 5,093 ) ( 1,594 ) ( 6,687 ) ( 4,250 ) ( 5,827 ) ( 10,077 ) Net cash provided by operating activities 56,658 - 56,658 85,964 - 85,964 92,552 - 92,552 Right-of-use assets obtained in exchange for lease liabilities $ - $ 924 $ 924 $ - $ 1,594 $ 1,594 $ - $ 5,827 $ 5,827 34 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of National Beverage Corp. Opinion on the Financial Statements 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. Emphasis of Matter As discussed in Note 14 to the financial statements, the 2023 and 2022 financial statements have been restated to correct misstatements. Basis for Opinion 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 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. /s/ RSM US LLP We have served as the Company's auditor since 2006. Fort Lauderdale, Florida June 26, 2024 35 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.