01—Abstract
Summary
Summary of the 10-K filed March 31, 1997. Cited figures are marked; the original filing is the authoritative source.
Hansen Natural Corporation, a Delaware holding company based in Anaheim, California, reported net sales of $35.6 milliona for fiscal 1996, up 4.6% from $34.0 million in 1995, and net income of $357,000 ($0.04 per share), compared with a net loss of $1.35 million in 1995.
Gross profit rose to $13.9 millionb, or 39.1% of net sales, from 35.7% a year earlier, driven by lower aluminum can and raw material costs and a shift toward fruit juice Smoothies. Soda sales fell 12.2% and ready-to-drink iced tea, lemonade and juice cocktail sales fell about 27%. Operations are concentrated in California, where retail chain, specialty and club stores account for approximately 77.8% of sales, and three customers accounted for 26.1%, 12.7% and 8.4% of 1996 sales.
The balance sheet shows total assets of $16.1 millionc and shareholders' equity of $8.8 million at December 31, 1996. The most significant near-term issue is a $4.0 million note payable to ERLY Industries due July 27, 1997, which was reclassified to current liabilities and produced a working capital deficit of $2,707,471. Management says it expects to refinance the note, citing a signed financing proposal from a bank, but states there can be no assurance of completion or acceptable terms.
Management also believes existing cash, operations and its $3 milliond revolving line of credit will meet working capital needs through December 31, 1997, subject to refinancing the ERLY note. The company has not paid dividends since inception.
Its Hansen's trademark is licensed from a trust, and the filing discloses an ongoing lawsuit against ERLY Industries seeking damages, with the damages phase continued to later in 1997. The company had 43 employees as of March 3, 1997.
02—Key points
Key Highlights
- Net sales were $35.6 million in 1996, up 4.6% from $34.0 million in 1995.
- Net income was $357,000, or $0.04 per share, versus a net loss of $1.35 million in 1995.
- Gross profit margin improved to 39.1% from 35.7%, mainly on lower aluminum can and raw material costs.
- Soda net sales decreased 12.2%, and ready-to-drink iced tea, lemonade and juice cocktail sales decreased approximately 27%.
- Fruit juice Smoothies drove sales growth, and the company plans to expand national distribution of its bottled Smoothies in 1997.
- A $4.0 million ERLY Industries note due July 27, 1997 created a working capital deficit of $2,707,471; management expects to refinance it but gives no assurance.
- Three customers accounted for 26.1%, 12.7% and 8.4% of 1996 sales, and retail chain, specialty and club stores represented about 77.8% of sales.
03—Questions
Frequently Asked Questions
How did Hansen Natural perform financially in 1996?
Net sales rose 4.6% to $35.6 million, and the company reported net income of $357,000 ($0.04 per share), compared with a net loss of $1.35 million in 1995. Gross profit increased to $13.9 million, and operating income was $677,000 versus an operating loss of $1.3 million the prior year.
What is the main financing risk facing the company?
The $4.0 million note payable to ERLY Industries is due July 27, 1997 and was reclassified to current liabilities, resulting in a working capital deficit of $2,707,471. Management is pursuing refinancing and says it has a signed financing proposal from a bank, but there is no assurance the refinancing will be completed or occur on acceptable terms.
Which products drove sales and which declined?
Fruit juice Smoothies were the main growth driver. Soda net sales declined 12.2%, and ready-to-drink iced teas, lemonades and juice cocktails declined about 27%, reflecting competition, lost distribution and the discontinuation of Equator-R products in cans.
How concentrated is the company's customer base and geography?
The business is concentrated in California, where sales outside California were 15.6% of 1996 aggregate sales. Three customers accounted for 26.1%, 12.7% and 8.4% of sales, and the company states that a decision by any of them to reduce purchases could have a material adverse effect.
Does the company pay dividends, and what is its trading status?
No dividends have been paid since inception, and none are anticipated in the foreseeable future. The common stock is quoted on the Nasdaq Small-Cap Market under the symbol HANS, with 9,122,868 shares outstanding as of March 3, 1997.
04—Continue