XML 49 R19.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Policies)

12 Months Ended

Apr. 28, 2018

Basis of Accounting, Policy [Policy Text Block]

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

six

years. All fiscal years consisted of

weeks.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Equivalents

Cash and equivalents are comprised of cash and highly liquid securities (consisting primarily of short-term money-market investments) with an original maturity of

three

months or less.

Derivatives, Policy [Policy Text Block]

Derivative Financial Instruments

We use derivative financial instruments to partially mitigate our exposure to changes in raw material costs. All derivative financial instruments are recorded at fair value in our Consolidated Balance Sheets. We do

not

use derivative financial instruments 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. See Note

Earnings Per Share, Policy [Policy Text Block]

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

323,000

shares in Fiscal

2018,

206,000

shares in Fiscal

2017

and

219,000

shares in Fiscal

2016.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value

The estimated fair values of derivative financial instruments are calculated based on market rates to settle the instruments. These values represent the estimated amounts we would receive upon sale, taking into consideration current market prices and credit worthiness. See Note

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

All long-lived assets, excluding goodwill and intangible assets

not

subject to amortization, are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. An impaired asset is written down to its estimated fair market value based on the best information available. Estimated fair value is generally measured by discounting future cash flows. Goodwill and intangible assets

not

subject to amortization are evaluated for impairment annually or sooner if we believe such assets

may

be impaired. An impairment loss is recognized if the carrying amount or, for goodwill, the carrying amount of its reporting unit, is greater than its fair value.

Income Tax, Policy [Policy Text Block]

Income Taxes

Our 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.

Liability Reserve Estimate, Policy [Policy Text Block]

Insurance Programs

We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Accordingly, we accrue for known claims and estimated incurred but

not

reported claims

not

otherwise covered by insurance based on actuarial assumptions and historical claims experience. At

April 28, 2018

and

April 29, 2017,

other liabilities included accruals of

$6.5

million and

$6.9

million, respectively, for estimated non-current risk retention exposures, of which

$5.0

million and

$5.4

million were covered by insurance.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets as of

April 28, 2018

and

April 29, 2017

consisted of non-amortizable trademarks.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of

first

-in,

first

-out cost or market. Inventories at

April 28, 2018

were comprised of finished goods of

$37.6

million and raw materials of

$23.3

million. Inventories at

April 29, 2017

were comprised of finished goods of

$35.0

million and raw materials of

$18.4

million.

Advertising Costs, Policy [Policy Text Block]

Marketing Costs

We are involved in a variety of marketing programs, including cooperative advertising programs with customers, to advertise and promote our products to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs which are expensed when the advertising takes place. Marketing costs, which are included in selling, general and administrative expenses, totaled

$49.7

million in Fiscal

2018,

$44.9

million in Fiscal

2017

and

$38.8

million in Fiscal

2016.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

- adopted

March 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

No.

2016

09,

“Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (“ASU

2016

09”

). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes and forfeitures, as well as classification of certain items in the statement of cash flows. The Company adopted ASU

2016

effective

April 30, 2017

and elected to apply the cash flow guidance retrospectively; therefore, cash flow from operating activities increased and cash flow from financing activities decreased by

495

thousand and

1.5

million for the

twelve

months ended

April 29, 2017

and

April 30, 2016,

respectively. The Company also elected to continue to estimate the number of awards that are expected to vest using the forfeiture option. The adoption of ASU

2016

reduced the Company’s income tax expense by

$886

thousand for the

twelve

months ended

April 28, 2018.

November 2015,

the FASB issued Accounting Standards Update

No.

2015

17,

“Balance Sheet Classification of Deferred Taxes” (“ASU

2015

17”

). ASU

2015

requires companies to classify all deferred tax liabilities and assets as noncurrent on the balance sheet. We adopted ASU

2015

effective for our fiscal year beginning

April 30, 2017,

electing to apply it retrospectively to all periods presented. As a result,

$3.9

million of deferred taxes was reclassified from current to non-current on the consolidated balance sheet as of

April 29, 2017.

February 2018,

the FASB issued Accounting Standards Update

2018

02,

“Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU

2018

02”

). This update permits the impact of lower corporate income tax rates related to items classified in accumulated other comprehensive income to be reclassified directly to retained earnings. We adopted ASU

2018

effective for our

third

quarter ended

January 27, 2018.

We elected

not

to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

New Accounting Pronouncements

–

not

yet adopted

May 2014,

the FASB issued Accounting Standards Update

No.

2014

09,

“Revenue from Contracts with Customers” (“ASU

2014

09”

). ASU

2014

requires an entity to recognize revenue in an amount that reflects the consideration it expects to receive in exchange for goods or services. On

August 12, 2015,

the FASB issued ASU

2015

which deferred the effective date of ASU

2014

one

year and is effective for our fiscal year beginning

April 29, 2018.

Management has completed its evaluation and adoption is

not

expected to have a material impact on our financial position, results of operations or cash flows. Disclosure requirements under the new guidance have been significantly expanded.

February 2016,

the FASB issued Accounting Standards Update

No.

2016

02,

“Leases” (“ASU

2016

02”

). ASU

2016

requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU

2016

is effective for our fiscal year beginning

April 28, 2019.

We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

August 2017,

the FASB issued Accounting Standards Update

2017

12,

“Targeted Improvements to Accounting for Hedge Activities” (“ASU

2017

12”

). This amendment simplifies the application of hedge accounting and enables companies to better portray the economics of risk management activities in their financial statements. ASU

2017

is effective for our fiscal year beginning

April 28, 2019.

We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment are 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

years for buildings and improvements and

years for machinery and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvement. When assets are retired or otherwise disposed, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

We recognize revenue upon delivery to our customers, based on written sales terms that do

not

allow a right of return except in rare instances. Our products are typically sold on credit, however smaller accounts are sold on a cash basis. Our credit terms typically require payment within

days of delivery and

may

allow discounts for early payment. We estimate and reserve for bad debt exposure based on our experience with past due accounts, collectability and our analysis of customer data.

We offer various sales incentive arrangements to our customers that require customer performance or achievement of certain sales volume targets. Sales incentives are accrued over the period of benefit or expected sales volume. When the incentive is paid in advance, the aggregate incentive is recorded as a prepaid and amortized over the period of benefit. The recognition of these incentives involves the use of judgment related to performance and sales volume estimates that are made based on historical experience and other factors. Sales incentives are accounted for as a reduction of sales and actual amounts ultimately realized

may

vary from accrued amounts. Such differences are recorded once determined and have historically

not

been significant. We will adopt ASU

2014

09,

Revenue from Contracts with Customers

, and its amendments on

April 29, 2018

using the modified retrospective approach, with

anticipated material impact to the consolidated financial statements.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

We operate as

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. We do

not

accumulate revenues by product classification and, therefore, it is impractical to present such information.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling Costs

Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying consolidated statements of income. Such costs aggregated

$63.3

million in Fiscal

2018,

$50.0

million in Fiscal

2017

and

$44.6

million in Fiscal

2016.

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.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

Compensation expense for stock-based compensation awards is recognized over the vesting period based on the grant-date fair value estimated using the Black-Scholes model. See Note

Receivables, Policy [Policy Text Block]

Trade Receivables

We record trade receivables at net realizable value, which includes an estimated allowance for doubtful accounts. We extend credit based on an evaluation of each customer’s financial condition, generally without requiring collateral. Exposure to credit losses varies by customer principally due to the financial condition of each customer. We monitor our exposure to credit losses and maintain allowances for anticipated losses based on our experience with past due accounts, collectability and our analysis of customer data. Activity in the allowance for doubtful accounts was as follows:

	(In thousands)
	Fiscal 2018			Fiscal 2017			Fiscal 2016
Balance at beginning of year	$	468		$	484		$	330
Net charge to expense		34			74			232
Net charge-off		(50	)		(90	)		(78	)
Balance at end of year	$	452		$	468		$	484

As of

April 28, 2018

and

April 29, 2017,

we did

not

have any customer that comprised more than

10%

of trade receivables.

one

customer accounted for more than

10%

of net sales during any of the last

three

fiscal years.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

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 anticipated future actions, actual results

may

vary from reported amounts.