01—Abstract
Summary
Summary of the 10-K filed March 31, 1998. Cited figures are marked; the original filing is the authoritative source.
Hansen Natural Corporation, a Corona, California-based holding company whose operating business is conducted through Hansen Beverage Company, reported net sales of $43.06 milliona for fiscal 1997, up 21.1% from $35.57 million in 1996.
Gross profit rose to $17.83 millionb, with gross margin improving to 41.4% from 39.1%, driven by product mix shifts toward fruit juice Smoothies and the new energy drink launched in April 1997, along with raw material cost reductions. Net income was $1.25 million, or $0.13 per diluted share, compared with $357,166 in 1996, and the company remains focused on expanding distribution outside California, where sales were $11.2 million, or 23.6% of total sales. The balance sheet strengthened over the year.
Shareholders' equity reached $9.96 millionc, working capital was $2.49 million versus a deficit of $2.71 million a year earlier, and the $4 million ERLY note was retired in November 1997 using a term loan from Comerica Bank-California. Long-term debt stood at $3.41 million at year-end, and operating cash flow improved to $1.32 million. Two customers accounted for 29% and 11% of 1997 sales, a concentration the filing identifies as a material risk.
The company also curtailed its United Kingdom operations and is deregistering that subsidiary. The company has never paid dividends and does not expect to.
Its common stock trades on the Nasdaq Small-Cap Market under the symbol HANS, and insiders Rodney Sacks and Hilton Schlosberg together control a large share of the voting stock. Management also noted an unresolved appeal in the ERLY litigation and a reserve taken against barter advertising credits.
02—Key points
Key Highlights
- Net sales rose 21.1% to $43.06 million in 1997 from $35.57 million in 1996.
- Gross margin improved to 41.4% from 39.1%, attributed to product mix and cost reductions.
- Net income was $1.25 million ($0.13 diluted EPS), up from $357,166 in 1996.
- Sales outside California reached $11.2 million, or 23.6% of total sales, versus 15.6% in 1996.
- Working capital turned positive at $2.49 million after the $4 million ERLY note was refinanced with a Comerica term loan.
- Two customers represented 29% and 11% of 1997 sales, a concentration the filing flags as a material risk.
- The company will not pay dividends in the foreseeable future and its stock trades on the Nasdaq Small-Cap Market as HANS.
03—Questions
Frequently Asked Questions
How did Hansen Natural perform financially in 1997?
Net sales grew 21.1% to $43.06 million, gross profit rose to $17.83 million, and net income reached $1.25 million, or $0.13 per diluted share, compared with $357,166 in 1996.
What drove the improvement in results?
The filing attributes the sales increase primarily to fruit juice Smoothies, apple juice, and the energy drink introduced in April 1997. Gross margin gains came from product mix changes and cost reductions in raw materials and packaging, partly offset by higher selling, general and administrative expenses.
What are the main customer and concentration risks?
Retail chain, specialty and club stores accounted for about 72% of sales, and two customers accounted for 29% and 11% of 1997 sales. The filing states that a decision by either to reduce purchases or stop carrying the products could materially affect financial condition and results.
How is the company's debt position?
The $4 million ERLY note was paid in November 1997 using a Comerica Bank term loan. At year-end, long-term debt was $3.41 million, the revolving credit line of up to $3 million had no outstanding balance, and the line was renewable on May 1, 1998.
Does the company pay dividends or face significant pending litigation?
Hansen has never paid dividends and does not expect to in the foreseeable future. Its litigation with ERLY Industries is on appeal after the court found HBC suffered no damages, and the ultimate outcome cannot presently be predicted.
04—Continue