-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TahOEb9amJAd6gM8DcFGdtIrLkxMnAMXIK5ml/rMKbMe5aZHW34Y6humv8y6egJ+ 14hvxhiQStxtKKtLa2mr6A== 0000081057-97-000001.txt : 19970401 0000081057-97-000001.hdr.sgml : 19970401 ACCESSION NUMBER: 0000081057-97-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLE CAR BEVERAGE CORP CENTRAL INDEX KEY: 0000081057 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 520880815 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14784 FILM NUMBER: 97569855 BUSINESS ADDRESS: STREET 1: 717 17TH ST STREET 2: STE 1475 CITY: DENVER STATE: CO ZIP: 80202-3314 BUSINESS PHONE: 3032989038 MAIL ADDRESS: STREET 1: 717 17TH ST STREET 2: STE 1475 CITY: DENVER STATE: CO ZIP: 80202-3314 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN INTERNATIONAL INC DATE OF NAME CHANGE: 19890810 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN ENERGY CORP DATE OF NAME CHANGE: 19840815 FORMER COMPANY: FORMER CONFORMED NAME: PUBLISHING COMPUTER SERVICE INC DATE OF NAME CHANGE: 19810817 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [ X ] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1996 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ----------- ----------- Commission file number 0-14784 ------------------------ Cable Car Beverage Corporation ------------------------------------------------------ Exact name of Registrant as specified in its charter) DELAWARE 52-0880815 ------------------------------- ----------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 717 17th Street, Suite 1475, Denver, Colorado 80202 ---------------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 298-9038 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered None None --------- ---------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value -------------------------------------------------------------------- (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- -------- The aggregate market value of equity securities held by non- affiliates of the Registrant on March 25, 1997 was approximately $18,730,000. As of March 25, 1997 there were 8,905,324 shares of common stock outstanding. -1- CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- 1996 FORM 10-K ANNUAL REPORT ---------------------------- Table of Contents ----------------- Page PART I Item 1.Business 3 Item 2.Properties 6 Item 3.Legal Proceedings 6 Item 4.Submission of Matters to a Vote of Security Holders 6 PART II Item 5.Market for the Registrant's Common Stock and Related Stockholder Matters 7 Item 6.Selected Financial Data 7 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 8.Financial Statements and Supplementary Data 11 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 12 PART III Item 10.Directors and Executive Officers of the Registrant 13 Item 11.Executive Compensation 13 Item 12.Security Ownership of Certain Beneficial Owners and Management 13 Item 13.Certain Relationships and Related Transactions 13 PART IV Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K 14 -2- PART I ITEM 1. BUSINESS. GENERAL ------- Cable Car Beverage Corporation, (the "Company") was incorporated under the laws of Delaware on April 1, 1968. The Company's business consists of marketing its line of proprietary soft drinks and waters throughout the United States and in Canada. As discussed in more detail below, the Company's product line consists of Stewart's brand soft drinks, JAVA COLA, Fountain Classics Seltzer, San Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters. During 1996, the Company began marketing two new Stewart's flavors (Stewart's Classic Key Lime and Cherries N' Cream) as well as a new line of carbonated, coffee-flavored cola under the name of JAVA COLA. Proprietary Products Marketing: General: The Company initially entered its current business of marketing beverages on August 27, 1987 when it acquired, through its subsidiary Old San Francisco Seltzer, Inc. ("SFS"), the assets and business of Old San Francisco, Inc. ("Old SF"), a California corporation that marketed a product line of flavored seltzers. The Company added to its line of beverages when, on July 11, 1989, it entered into a licensing agreement with Stewart's Restaurants, Inc. ("Stewart's"), a New Jersey based franchiser of Stewart's Drive-In Root Beer Stands, pursuant to which the Company has the exclusive right to produce and market Stewart's brand beverages for the entire United States. Pursuant to an addendum to the Stewart's licensing agreement dated April 11, 1994, the Company was granted the exclusive rights for Canada, and once the Company achieves cumulative sales of 4,000,000 cases, the license becomes worldwide provided the Company maintains annual sales of 1,000,000 cases. The agreement provides for a sliding scale royalty with a minimum annual royalty of $50,000. For the year ended December 31, 1996, the royalty payments exceeded the minimum royalty due and the Company expects the same in future years. Termination of the agreement may occur if the Company's annual sales of Stewart's Root Beer are less than 500,000 cases for each year. On December 1, 1993, the Company entered into a separate licensing agreement with Stewart's, whereby the Company has the exclusive right to market Stewart's brand beverages as a fountain product in 15 states. The agreement provided for a one time licensing fee of $29,250 and payment of a sliding scale royalty. The Company is marketing the Stewart's fountain product through its wholly-owned subsidiary, Fountain Classics, Inc. ("FCI"). On November 22, 1989, the Company acquired the assets and business of Aspen Mineral Water Corporation ("Aspen"), a Colorado corporation that marketed a sparkling water. Currently, the Company markets a line of -3- non-carbonated fruit flavored beverages under the brand name of Aspen. The Company also markets a non-carbonated spring water under the Aspen name. Proprietary Products: The Company's proprietary product line currently consists of Stewart's premium soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Classic Key Lime, and Cherries N' Cream), JAVA COLA, San Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters. Stewart's products are packaged in original and diet and are sweetened using non-sugar sweeteners - fructose in the original line and NutraSweet brand sweetener in the diet line. JAVA COLA is a unique coffee-flavored cola made with real coffee and is sold in four different flavors: Original, Diet, Mocha and Vanilla. San Francisco Seltzer is a naturally flavored soft drink which contains no sodium or preservatives and is available in regular and diet flavors that are sweetened with fructose and NutraSweet, respectively. Aspen Mountain Spring Water is a non-carbonated water. Aspen flavored waters are non-carbonated, fruit flavored beverages. For the years ended December 31, 1996 and 1995, the Stewart's brand accounted for approximately 98% and 96% of the Company's proprietary brand sales, respectively. The Company anticipates that the Stewart's brand will continue to account for a significant portion of sales for the year ending December 31, 1997. Marketing and Distribution: The brand products business consists of both sales of concentrate to regional soft drink bottlers and the sale of finished goods to distributors. Where the Company sells concentrate to bottlers, the bottlers produce finished goods and sell through their own distribution network. When the Company sells finished goods directly to distributors, the Company has product produced for it by contract manufacturers. The Company does not directly manufacture any of the products it sells. The Company's products are retailed primarily in grocery, convenience and liquor stores and food service accounts. Consumer marketing consists of newspaper, magazine, outdoor and radio advertising, along with in-store product demonstrations and point of sale promotions. The Company presently sells product to numerous bottlers and distributors in the United States and Canada. Competition: The soft drink business is extremely competitive and there are numerous competing products. Most competitors are larger and have greater financial resources than the Company. The Company's principal means for competing within this category are its product line and flavors and through its advertising, packaging and promotions. Trademarks: The Company owns the trademark "San Francisco Seltzer" which was registered with the United States Patent and Trademark Office on March 1, 1988. The Company also owns the trademark "Fountain Classics" which is used on the Stewart's Premium Sodas line of products. The "Fountain Classics" trademark was registered with the United States Patent and Trademark Office on June 18, 1991. The Company owns the trademark "Aspen" which was registered on May 31, 1994 with the United States Patent and Trademark Office. The foregoing trademarks are registered for a 10-year period and may be extended thereafter for additional 10-year periods subject to compliance with federal statutory and regulatory provisions. Management is of the view that its trademarks -4- are of significant importance to its operations and loss of such trademarks could adversely affect the Company to an indeterminable extent. The Company is taking appropriate steps to protect its trademarks. Stewart's Restaurants, Inc. owns the trademark "Stewart's" which is registered with the United States Patent and Trademark Office. The Company has an exclusive trademark license agreement with Stewart's Restaurants. (See "Proprietary Products Marketing - General".) Wholesale Distribution - Divested on June 7, 1993 General: From 1987 until 1993, the Company was also engaged in the business of wholesale distribution of beverages through its former subsidiary, Sheya Brothers Specialty Beverages, Inc. ("SBSB"). On June 7, 1993, SBSB was merged into AMCON Distributing Company ("AMCON"), a then privately-held, Omaha-based wholesale distributor. In connection with the merger of SBSB into AMCON, the Company received 306,143 shares of common stock of AMCON. Pursuant to the Agreement and Plan of Merger with AMCON, on July 31, 1995, the Company distributed 266,469 AMCON shares to shareholders of the Company on a prorata basis. As of December 31, 1996, the Company holds 39,674 shares of AMCON. Seasonality: Due to the seasonality of the beverage industry, the Company's sales volumes are normally at their highest in the second and third calendar quarters. Prospective Products and Acquisition Activities: The Company continues to develop line extensions under its various brand names, primarily by adding new packages and flavors. As described above, the Company introduced the following new products during 1996: Stewart's Classic Key Lime and Cherries N' Cream. The Company intends to continue expanding into beverage products, through both internal development and acquisition, that are compatible with its existing brands and can be sold through the Company's existing bottling and distribution network. Major Customers: For the year ended December 31, 1996, two customers, K.O. Lester - Lebanon, TN and Mid-State Beverage Company - New Brunswick, NJ, accounted for approxiamtely 14% and 18% of the Company's net sales, respectively. For the year ended December 31, 1995, the same two customers each accounted for approximately 20% of the Company's net sales. -5- Company Employees: As of December 31, 1996, the Company had 17 employees. In addition, the Company has used certain consultants on an "as needed" basis. ITEM 2. PROPERTIES. The Company is currently leasing, through September 1997, approximately 3,024 square feet of office space at 717 17th Street, Denver, Colorado 80202, at an annual cost of $28,350. ITEM 3. LEGAL PROCEEDINGS. The Company and its subsidiaries are not parties to, nor are any of their properties subject to, any pending legal proceedings which are expected to have any materially adverse effect on the Company's results of operations or financial position. Additionally, to the best of management's knowledge, no material legal proceeding is contemplated or has been threatened against the Company and its subsidiaries. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to a vote of all security holders during the quarter ended December 31, 1996. -6- PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock trades on the NASDAQ Small-Cap Market under the symbol DRNK. The following table reflects the range of the high and low bid prices per share of the Company's Common Stock as reported by NASDAQ through December 31, 1996. These quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark- downs or commissions and may not necessarily represent market transactions. As of March 25, 1997, the Company had approximately 1,100 holders of record of its shares and the Company is informed that approximately 3,000 additional persons hold shares beneficially.
COMMON STOCK ----------------- High Low ---- --- Year Ended December 31, 1996: December 1996 Quarter $2.84 $2.00 September 1996 Quarter 2.56 1.44 June 1996 Quarter 1.84 1.25 March 1996 Quarter 1.88 1.44 Year Ended December 31, 1995: December 1995 Quarter $1.66 $1.19 September 1995 Quarter 1.81 1.38 June 1995 Quarter 2.00 1.09 March 1995 Quarter 1.41 1.00
The Company has never declared or paid a cash dividend on its common stock and does not anticipate a change in this policy in the foreseeable future. The Board of Directors currently intends to retain earnings to finance the acquisition and development of new products, expansion of markets and for other corporate purposes. ITEM 6. SELECTED FINANCIAL DATA. The following data, insofar as they relate to the consolidated statement of operations for the years ended December 31, 1996, 1995 and 1994; and the balance sheet as of December 31, 1996 and 1995, have been derived from the consolidated financial statements appearing in Part IV of this Form 10-K. The consolidated statement of operations data for the six-months ended December 31, 1993 and the fiscal years ended June 30, 1993 and 1992; and the consolidated balance sheet data as of December 31, 1994 and 1993, and June 30, 1993 and 1992 have been derived from the historical consolidated financial statements of the Company for such periods. -7- The following table data should be read in conjunction with the consolidated financial statements and notes thereto, and management's commentary thereon contained in Item 7 of this report.
YEAR ENDED DECEMBER 31, ----------------------- 1996 1995 1994 ---- ---- ---- STATEMENT OF OPERATIONS DATA: Revenue $ 18,872,556 $12,843,620 $8,322,301 =========== ========== ========= Net income (loss) $ 1,257,132 $ 882,600 $ 721,695 =========== ========== ========= Net income (loss) per common share: $ .14 $ .10 $ .09 =========== ========== ========= Weighted average common and common equivalent shares outstanding 9,255,479 8,915,666 8,318,909 ========== ========== ========== BALANCE SHEET DATA: Total assets $ 7,141,782 $ 5,360,700 $ 4,448,832 =========== ========== =========== Long-term debt $ 0 $ 0 $ 5,970 =========== ========== ========== Stockholders' equity $ 5,982,046 $ 4,402,421 $ 3,944,778 =========== ========== ==========
SIX-MONTHS ENDED DECEMBER 31, (1) YEAR ENDED JUNE 30, ------------ ------------------- 1993 1993 1992 ---- ---- ---- STATEMENT OF OPERATIONS DATA: (CONT.) Revenue $ 3,030,982 $ 15,537,997 $ 14,838,598 ========= ========== =========== Net income (loss) $ 143,449 $ (348,176) $ (22,384) ========= ========= =========== Net income (loss) per common share: $ .02 $ (.05) $ ========= ========== ========== Weighted average common and common equivalent shares outstanding 7,796,799 7,640,780 7,057,416 =========== ========== ========== BALANCE SHEET DATA: Total assets $ 3,920,799 $ 4,054,120 $ 5,266,381 ========== ========== ========= Long-term debt $ 10,099 $ 2,817 $ 108,476 ========== ========== ========= Stockholders' equity $ 3,096,886 $ 2,953,347 $ 3,066,613 ========== ========== ==========
(1) In 1993, the Company elected to change its fiscal year end from June 30 to December 31. -8- ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS The Company's future operating results are subject to a number of uncertainties, including the ability of the Company to market its beverage products and to develop and introduce new products, and the number, quantity and marketing forces behind products introduced by competitors. The Company expects the level of competition in the beverage industry to become even more intense and large beverage companies with greater resources have a competitive advantage over the Company. In addition, general economic conditions, the cost of raw materials and general conditions in the beverage business may have an impact on the Company's future operations. There can be no assurance the Company will continue to be successful nor that it will not encounter difficulties in retaining its current market niche due to a variety of factors such as market acceptance, costs of manufacturing and marketing, and competition in the beverage industry, all of which are largely beyond the Company's ability to reasonably predict, much less control. GENERAL The Company entered into the business of non-alcoholic beverage marketing in fiscal 1988 when it acquired the assets and business of Old San Francisco Seltzer, Inc. Since that time, the Company added Stewart's Root Beer and Aspen Sparkling Mountain Spring Water to the proprietary brands that it markets nationally and has continued to grow its line of Stewart's soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Key Lime and Cherries N' Cream). Stewart's soft drinks are currently sold in over 43 states and Canada. In December 1993, the Company entered into a licensing agreement with Stewart's Restaurants, Inc., whereby the Company has the exclusive right to sell Stewart's brand beverages as a fountain product in 15 states. FINANCIAL CONDITION The Company's current ratio at December 31, 1996 is 5.0 to 1 as compared to 4.0 to 1 at December 31, 1995. Stockholders' equity at December 31, 1996 increased by $1,579,625 principally from net income of $1,257,132 for the year ended December 31, 1996 and the exercise of options of $322,493 which includes a tax benefit. LIQUIDITY AND CAPITAL RESOURCES For the year ended December 31, 1996, cash increased by $832,538. Operating activities provided cash of $773,658 primarily from net income of $1,257,132 and increases in accrued income taxes and other current liabilities of $116,998 and $239,209, respectively. These increases in cash were partially offset by increases in accounts receivable and inventory of $317,848 and $622,639, respectively and a decrease in -9- accounts payable. Investing activities used cash of $257,653, primarily from the purchase of short-term investments and the acquisition of property and equipment. Financing activities generated $316,533, primarily from the exercise of stock options. Working capital increased $1,758,644 to a ratio of 5.0 to 1. For the comparable twelve month period ended December 31, 1995, investing and financing activities generated $14,004 and $365,653, respectively and operating activities used $384,124 for a net decrease in cash of $4,467. The Company intends to utilize cash from operations to meet its ongoing obligations. The Company has also maintained a bank line of credit in the amount of $500,000 which it may utilize from time to time to meet seasonal cash needs. Management does not expect liquidity problems during 1997 assuming the Company can maintain or exceed its current sales volume, and expenses as a percentage of sales remain relatively constant. RESULTS OF OPERATIONS Comparison of the year ended December 31, 1996 to the comparable ----------------------------------------------------------------- twelve month period ended December 31, 1995: - -------------------------------------------- The Company had net income of $1,257,132 for the year ended December 31, 1996 versus net income of $882,600 for the comparable twelve month period ended December 31, 1995. This represents an increase in net income for 1996 of $374,532 or 42%. Revenue from the sale of products increased to $18,872,556 in 1996 from $12,843,620 in 1995. This increase of $6,028,936 or 47% was due primarily to the general expansion of the Company's customer base and from the introduction of two new Stewart's brand flavors: Key Lime and Cherries N' Cream. Cost of goods sold was $4,051,774 greater in 1996 than in 1995 due to higher revenue. The cost of goods sold as a percentage of sales, however, decreased from 75% to 72% primarily due to increased unit sales price on certain Stewart's brand packages which was intended to offset increasing material costs over the last two years. General and administrative expense increased $297,221 from 1995 to 1996, and remained relatively constant as a percentage of total revenue at 6%. The increase in general and administrative expense in 1996 was primarily the result of the addition of 4 new employees, increased cost related to professional services, and an increase in bad debt expense. Selling expense increased $593,358 from 1995 to 1996, and remained relatively constant as a percentage of total revenue at 11%. The increased selling expense in 1996 was primarily the result of increased promotional spending and expenses related to development and introduction of two new Stewart's flavors and the JAVA COLA line. -10- Comparison of the year ended December 31, 1995 to the comparable ---------------------------------------------------------------- twelve month period ended December 31, 1994: - -------------------------------------------- The Company had net income of $882,600 for the year ended December 31, 1995 versus net income of $721,695 for the comparable twelve month period ended December 31, 1994. Revenue from the sale of products increased to $12,843,620 in 1995 from $8,322,301 in 1994. This increase of $4,521,319 or 54% was due primarily to an expanded customer base for the Stewart's brand products. Cost of goods sold was $3,588,613 greater in 1995 than in 1994 due to higher revenue. The cost of goods sold as a percentage of sales, however, increased from 73% to 75% primarily due to increased costs of certain raw materials which were not passed on to its customers through increased sales prices. General and administrative expense increased $100,188 from 1994 to 1995, but decreased as a percentage of total revenue from 9% to 6%. This percentage decrease is primarily a result of increased sales with nominal increases in corporate overhead. Selling expense increased $595,535 from 1994 to 1995, and increased as a percentage of sales from 10% to 11%. The increase is primarily due to increased promotional expenses used to introduce new brands and products, and the addition of two new sales representatives during 1995. Net income was impacted in the year 1995 by two non-recurring and unrelated items: a write-down of an investment and the recording of a deferred income tax benefit. During the third quarter 1995, the Company wrote-down its investment in AMCON Distributing Company, Inc. to the market price of AMCON common stock as reported by NASDAQ on August 4, 1995, the date upon which the stock was initially included on NASDAQ. The write-down resulted in a charge of $848,342. During the third quarter of 1995, the Company recorded an income tax benefit of $936,440 which primarily represents the future tax benefits associated with the Company's net operating loss carryforwards. The Company recorded the tax benefit based on management's determination in the third quarter of 1995 that it was more likely than not that the Company would utilize its future income tax benefits. ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See financial statements listed in the index on page F1. -11- ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. -12- PART III Information required in items 10, 11, 12 and 13 of Part III will be included in the Company's Proxy Statement for the Annual Meeting of Stockholders and will be filed in not more than 120 days after the Company's fiscal year end. -13- PART IV ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as a part of this report: Financial Statements and Financial Statement Schedules ------------------------------------------------------ The financial statements and financial statement schedules filed with this report are listed in the Index to Financial Statements appearing on page F1. Exhibits -------- The documents listed below have been filed as exhibits to this report: Exhibit Number Exhibits -------------- -------- (3)-A Certificate of Incorporation, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (3)-B Certificate of Amendment - July 20, 1989, changing name * (3)-C Bylaws, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (10)-G Stewart's Master Agreement - Stewart's Restaurants, Inc. as amended by Addendum, dated April 11, 1994 and incorporated by reference from Form 10-K dated May 4, 1994 (10)-S Employment Agreement with executive, Samuel M. Simpson (21) Subsidiaries of the Company (Filed as Exhibit (22) with and incorporated by reference to the current Form 10-K, Note 1 to the Consolidated Financial Statements.) * Incorporated by reference to Form S-1 filed September 25, 1989, SEC file #33-30480. (b) Reports on Form 8-K None. -14- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. (Registrant) CABLE CAR BEVERAGE CORPORATION (Date) March 27, 1997 BY:(Signature) /s/Samuel M. Simpson (Name and Title) Samuel M. Simpson President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. BY:(Signature) /s/Samuel M. Simpson (Name and Title) Samuel M. Simpson Chairman of the Board & President (Date) March 27, 1997 BY:(Signature) /s/James P. McCloskey (Name and Title) James P. McCloskey Director (Date) March 27, 1997 BY:(Signature) /s/William H. Rutter (Name and Title) William H. Rutter Director (Date) March 27, 1997 BY:(Signature) /s/Myron D. Stadler (Name and Title) Myron D. Stadler Chief Accounting Officer (Date) March 27, 1997 -15- CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- INDEX TO FINANCIAL STATEMENTS ----------------------------- PAGE ---- Report of independent accountants F2 Consolidated balance sheet at December 31, 1996, and 1995 F3 Consolidated statement of operations for the years ended December 31, 1996, 1995 and 1994 F4 Consolidated statement of cash flows for the years ended December 31, 1996, 1995 and 1994 F5 Consolidated statement of changes in stockholders' equity for the years ended December 31, 1996, 1995 and 1994 F6 Notes to consolidated financial statements F7 No financial statement schedules are required. F-1 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Stockholders of Cable Car Beverage Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of cash flows and of changes in stockholders' equity present fairly, in all material respects, the financial position of Cable Car Beverage Corporation and its subsidiaries (the "Company") at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Denver, Colorado March 14, 1997 F-2 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- CONSOLIDATED BALANCE SHEET --------------------------
December 31, December 31, 1996 1995 ------------ ------------ ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 1,408,729 $ 576,191 Short-term investments 195,042 Accounts receivable, net of allowance for doubtful accounts of $100,743 at December 31, 1996 and $55,949 at December 31, 1995 1,336,094 1,063,040 Inventories 2,430,896 1,808,257 Prepaid expenses and other current assets 23,582 40,394 --------- --------- Deferred income tax assets 394,029 340,389 Total Current Assets 5,788,372 3,828,271 PROPERTY AND EQUIPMENT, NET Property and equipment, less accumulated depreciation of $144,441 at December 31, 1996 and $99,231 at December 31, 1995 130,778 116,466 OTHER ASSETS: Goodwill and other intangibles, less accumulated amortization of $387,168 at December 31, 1996 and $347,007 at December 31, 1995 591,265 631,426 Investment in AMCON Distributing Company 99,185 99,185 Other assets 58,603 72,498 Deferred income tax assets 473,579 612,854 --------- -------- $ 7,141,782 $ 5,360,700 ========= ========= LIABILITIES AND STOCKHOLDERS' - ---------------------------- EQUITY - ------ CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 231,408 $ 380,198 Accrued Income taxes 146,140 29,142 Other current liabilities 782,188 542,979 Current portion of long-term debt 5,960 ---------- --------- Total Current Liabilities 1,159,736 958,279 ========== ========= COMMITMENTS: (See Note 8) STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 25,000,000 shares authorized; 8,981,681 issued at December 31, 1996 and 8,658,349 shares issued at December 31, 1995 89,817 86,584 Additional paid-in capital 9,822,137 9,502,877 Accumulated deficit (3,901,273) (5,158,405) Less - 76,357 common shares in treasury (28,635) (28,635) --------- --------- 5,982,046 4,402,421 --------- --------- $ 7,141,782 $ 5,360,700
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS F-3 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 1995 1994 ----------- ----------- ------------ REVENUE: Sales $ 18,872,556 $ 12,843,620 $ 8,322,301 COST AND EXPENSES: Cost of goods sold 13,670,934 9,619,160 6,030,547 General and admini- strative 1,108,329 811,108 710,920 Selling and distri- bution 1,993,580 1,400,222 804,687 Depreciation and amortization 88,460 66,388 57,485 ---------- ---------- --------- 16,861,303 11,896,878 7,603,639 ---------- ---------- --------- INCOME FROM OPERATIONS 2,011,253 946,742 718,662 ---------- ---------- --------- OTHER INCOME AND (EXPENSES): Interest income and other 52,775 51,405 20,479 Interest expense (350) (1,114) (2,346) Loss on AMCON stock (848,342) --------- -------- -------- INCOME BEFORE INCOME TAXES 2,063,678 148,691 736,795 PROVISION (BENEFIT) FOR INCOME TAXES 806,546 (733,909) 15,100 --------- -------- -------- NET INCOME $ 1,257,132 $ 882,600 $ 721,695 ========== ========= ======== NET INCOME PER COMMON SHARE $ 0.14 $ 0.10 $ 0.09 ========== ========= ========= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES 9,255,479 8,915,666 8,318,909 ========== ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS F-4 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996 1995 1994 --------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,257,132 $ 882,600 $ 721,695 Adjustment to reconcile net income to net cash from operating activities: Loss on investment in AMCON 848,342 Depreciation and amortization 88,460 66,388 57,486 Provision for loss on accounts receivable 44,794 (3,662) 32,111 Deferred income tax assets 85,635 (953,243) Change in current assets and liabilities: Accounts receivable (317,848) (401,554) (163,477) Inventories (622,639) (1,209,320) (99,703) Prepaid expenses and other current assets 16,812 (8,020) (21,359) Other assets 13,895 (68,677) 10,246 Accounts payable and accrued liabilities (148,790) 276,714 (269,146) Accrued income taxes 116,998 26,042 3,100 Other current liabilities 239,209 160,266 69,316 --------- -------- -------- NET CASH FROM (USED IN) OPERATING ACTIVITIES 773,658 (384,124) 340,269 CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for short-term investments (195,042) (151,876) Proceeds from short-term investments 151,876 Equipment acquisitions (62,611) (97,872) (24,276) Other (40,000) (12,500) -------- ------- ------- NET CASH FROM (USED IN) INVESTING ACTIVITIES (257,653) 14,004 (188,652) -------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt (5,960) (8,796) (11,339) Proceeds from issuance of stock 182,498 374,449 67,197 Tax benefit associated stock options 139,995 -------- -------- ------- NET CASH FROM FINANCING ACTIVITIES 316,533 365,653 55,858 -------- -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 832,538 (4,467) 207,475 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 576,191 580,658 373,183 -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,408,729 $ 576,191 $ 580,658 =========== ========= ========= SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: Property dividend of investment in AMCON stock $ 799,407 Conversion of debt to equity $ 59,000 Capital lease obligations $ 7,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS F-5 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK ADDITIONAL NUMBER OF PAID-IN SHARES AMOUNT CAPITAL Balance, December 31, 1993 7,873,156 $ 78,732 $ 9,010,082 Exercise of stock options and warrants, net 131,462 1,315 65,882 Conversion of debt to equity 100,000 1,000 58,000 Issuance of stock to retire warrants 50,000 500 (500) Net income -------- ----- ------- Balance, December 31, 1994 8,154,618 81,547 9,133,464 Exercise of stock options and warrants, net 503,731 5,037 369,413 Dividend of AMCON stock Net income -------- ------ ------- Balance, December 31, 1995 8,658,349 86,584 9,502,877 Exercise of stock options 323,332 3,233 179,265 Tax benefit associated stock options 139,995 Net income -------- ------- ------- BALANCE, December 31, 1996 8,981,681 $ 89,817 $ 9,822,137 ========= ======== =========
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
ACCUMU- TREASURY STOCK LATED NUMBER OF DEFICIT SHARES AMOUNT Balance, December 31, 1993 (5,963,293) 76,357 $(28,635) Exercise of stock options and warrants, net Conversion of debt to equity Issuance of stock to retire warrants Net income 721,695 --------- ------ ------ Balance, December 31, 1994 (5,241,598) 76,357 (28,635) Exercise of stock options and warrants, net Dividend of AMCON stock (799,407) Net income 882,600 --------- ------ ------ Balance, December 31, 1995 (5,158,405) 76,357 (28,635) Exercise of stock options Tax benefit associated stock options Net income 1,257,132 --------- ------- ------- BALANCE, December 31, 1996 $ (3,901,273) $76,357 $(28,635) ========== ====== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS F-6 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES ----------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ NOTE 1 - ORGANIZATION AND OPERATIONS AND SUMMARY OF SIGNIFICANT - ---------------------------------------------------------------- ACCOUNTING POLICIES: - -------------------- Organization and operations - Cable Car Beverage Corporation (the - ---------------------------- "Company"), formerly Great Eastern International, Inc., was incorporated under the laws of Delaware on April 1, 1968. Since 1987, the Company's primary business has been the marketing and distribution of beverages and it has been engaged in the food and beverage business since 1986. Summary of significant accounting policies: - ------------------------------------------- PRINCIPLES OF CONSOLIDATION - The Company's consolidated financial statements include the accounts of its wholly-owned subsidiaries Old San Francisco Seltzer, Inc. ("SFS") and Fountain Classics, Inc. ("FCI"). All significant intercompany accounts and transactions have been eliminated. REVENUE RECOGNITION - Revenue from beverage finished product and concentrate sales are recorded at the time of receipt and acceptance by the customer. CONCENTRATION OF CREDIT RISK - The Company's customers consist primarily of beverage distributors. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable, short-term investments and cash equivalents. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers. The Company's sales to major customers are discussed in Note 9. INVENTORIES - Inventories are recorded at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. PROPERTY AND EQUIPMENT - Property and equipment, primarily consisting of furniture and office equipment, is stated at cost and is generally depreciated on a straight-line method over the estimated useful lives of the respective depreciable assets of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. GOODWILL - Goodwill is recorded for the excess of the purchase price over the fair value of net tangible assets acquired. Goodwill is amortized on a straight-line basis over a 25-year period. The recoverability of goodwill is assessed quarterly, based on undiscounted projected cash flows. Impairment is recognized when a permanent diminution in value occurs. NET INCOME PER COMMON SHARE - Net income per common share is computed under the treasury stock method using the weighted average number of common shares and dilutive common stock equivalent shares outstanding during the year. F-7 CASH EQUIVALENTS - Generally, only highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents. Cash equivalents included in cash and cash equivalents at December 31, 1996 and 1995 are certificates of deposit which aggregated approximately $135,429 and $318,694, respectively. Cash equivalents are carried at cost which approximates fair value. The Company has a cash investment policy which generally restricts investments to ensure preservation of principal and maintenance of liquidity. SHORT-TERM INVESTMENTS - Short-term investments are stated at an amortized cost of $195,042 which, at December 31, 1996, approximates market value. SIGNIFICANT ESTIMATES - Certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amounts of revenue and expenses are made by management in the preparation of financial statements in conformity with generally accepted accounting principles. Actual results could differ from these estimates. NOTE 2 - MERGER OF SHEYA BROTHERS SPECIALTY BEVERAGES, INC. AND - --------------------------------------------------------------- INVESTMENT IN AMCON STOCK: - -------------------------- On June 7, 1993, the Company merged its wholly-owned subsidiary, Sheya Brothers Specialty Beverages, Inc. ("SBSB"), into AMCON Distributing Company ("AMCON"), a then privately held, Omaha-based wholesale distributor. In exchange for the net assets of SBSB, the Company received 12.5% of the issued and outstanding common stock of AMCON. As part of the transaction, the Company agreed to distribute a minimum of two-thirds of the AMCON shares to its shareholders, representing approximately an 8% ownership interest in AMCON. During the third quarter of 1995, the Company wrote-down its investment in the market price of AMCON common stock as reported by NASDAQ on August 4, 1995, the date upon which the stock was initially included on NASDAQ, which resulted in a charge of $848,342. The Company then distributed 266,469 shares of AMCON common stock as a dividend to the Company's shareholders of record as of July 5, 1995. This distribution of 266,469 shares of AMCON represented 87% of the Company's holdings in AMCON. At December 31, 1996, the Company continued to hold 39,674 shares of AMCON common stock. NOTE 3 - INVENTORIES: - -------------------- Inventories consist of the following:
December 31, December 31, 1996 1995 ------------ ------------ Finished Goods $ 1,330,990 $ 1,009,223 Raw Materials 1,099,906 799,034 ----------- ---------- $ 2,430,896 $ 1,808,257 =========== ===========
F-8 NOTE 4 - OTHER CURRENT LIABILITIES: - ----------------------------------- Other current liabilities consist of the following:
December 31, December 31, 1996 1995 ----------- ------------ Commitments for marketing and promotional programs $ 397,474 $ 218,621 Unbilled inventory receipts 64,521 106,808 Bonuses 141,800 75,000 Travel and entertainment 36,186 53,500 Other, individually not material 142,207 89,050 -------- -------- $ 782,188 $ 542,979
NOTE 5 - LINE OF CREDIT: - ------------------------ During 1996, the Company extended for one year its $500,000 revolving line of credit collateralized by the Company's accounts receivable and inventory. No borrowings were outstanding under the line as of December 31, 1996. Borrowings made under the agreement bear interest at a variable rate of one point over prime. The line of credit agreement also includes certain financial and other covenants. The agreement is currently scheduled to expire in June 1997. NOTE 6 - INCOME TAXES: - ---------------------- The Company's net deferred income tax asset consists of the following:
December 31, December 31, 1996 1995 ------------ ------------ Net operating loss carryforwards $ 621,000 $ 742,000 Accrued liabilities and reserves 170,000 145,000 Other, net 39,000 45,000 Allowance for doubtful accounts 38,000 21,000 ---------- --------- $ 868,000 $ 953,000 F-9 The net operating loss carryforwards are subject to certain annual utilization limits. Previously, the Company had recorded a valuation allowance equal to the deferred income tax assets due to management's uncertainty about the likelihood that the Company would fully utilize these benefits. However, it was determined by the Company during 1995 that, based upon the Company's recent and expected future operating results, it was then more likely than not that the Company would realize its future income tax benefits. Based on this determination, the Company released the valuation allowance and provided an income tax benefit of $936,440 during 1995. As of December 31, 1996, the Company has net operating loss carryforwards of approximately $1,634,000 which expire from 2000 through 2005. Pursuant to Section 382 of the Internal Revenue Code, the Company is limited in the amount of net operating loss carryforwards it may use each year to offset taxable income. The Company's consolidated Section 382 annual limitation is approximately $343,000. The provision (benefit) for income taxes is comprised of the following:
Year Ended Year Ended Year Ended December 31, 1996 December 31, 1995 December 31, 1994 ----------------- ----------------- ----------------- Current $ 721,000 $ 219,000 $ 15,100 Deferred 86,000 (953,000) 0 ---------- ---------- -------- $ 807,000 $ (734,000) $ 15,100
The provision for income taxes differs from the amount computed by applying the U.S. federal income tax rate of 34% to pretax earnings as follows:
Year Year Year Ended Ended Ended December 31, December 31, December 31, 1996 1995 1994 ------------- ------------- ------------- Income before income taxes $ 2,063,678 $ 148,691 $ 737,000 U.S. federal income tax at statutory rate $ 702,000 $ 50,600 $ 251,000 Differences: State income taxes, net of federal tax benefit 43,000 5,200 Loss on dividend of AMCON stock 318,100 Increase (decrease) in unrecognized net operating losses and future deductions (1,139,000) (271,000) Non-deductible items and other, net 62,000 31,100 35,100 ------- --------- ------- Provision for income taxes $ 807,000 $ (734,000) $ 15,100 ======= ========= =======
F-10 NOTE 7 - STOCK OPTIONS: The Company, on a discretionary basis, grants non-qualified stock options to directors, key employees, and consultants to purchase common stock of the Company. Stock options are granted at an exercise price not less than the fair market value of the common stock on the date of grant and generally vest over four or five years. The expiration period generally occurs between three to six years. The following table summarizes stock option activity for 1994, 1995 and 1996:
Shares Weighted Average Exercise Price --------- ------------------- Outstanding at December 31, 1993 1,224,996 $ .85 Granted during 1994 100,000 .75 Exercised during 1994 (110,000) .45 Forfeited during 1994 (15,000) .75 --------- ------------- Outstanding at December 31, 1994 1,199,996 .88 Granted during 1995 312,500 1.23 Exercised during 1995 (101,666) .70 Forfeited during 1995 (275,000) .75 --------- ------------- Outstanding at December 31, 1995 1,135,830 1.02 Granted during 1996 190,000 2.00 Exercised during 1996 (323,332) .56 Forfeited during 1996 (99,998) 2.37 --------- ------------- Outstanding at December 31, 1996 902,500 1.24 ========= =============
The weighted average fair values of options granted during 1996 and 1995 were $.448 and $.685, respectively. F-11 The following table summarizes information about stock options as of December 31, 1996:
Options Outstanding Options Exercisable ------------------------ ----------------------- Weighted Avg. Weighted Remaining Average Range of Number Contractual Number Exercise Exercise Prices Outstanding Life Exercisable Price - --------------- -------------------------- ------------------------ $0.70 - 0.75 215,000 2.86 years 215,000 0.70 $1.10 225,000 3.08 years 205,800 1.10 $1.25 272,500 3.65 years 184,300 1.25 $2.00 190,000 4.31 years --------- ----------- -------- ----- 902,500 3.46 YEARS 605,100 1.00 ========= =========== ======== =====
The Company applies APB 25 in accounting for its stock compensation plans, and no compensation expense has been recognized in the financial statements for options granted to employees and directors. Had compensation expense for the Company's stock option plan been determined based on the fair values at the grant dates for awards under the plan consistent with the method of accounting prescribed by FASB Statement 123, the Company's net income and income per share would have been decreased to the pro forma amounts indicated below for the years ended December 31:
1996 1995 ------------ ------------- Net income: As reported $ 1,257,132 $ 882,600 Pro forma 1,221,278 805,378 Net income per share: As reported $ 0.14 $ 0.10 Pro forma 0.13 0.09
In accordance with the guidance provided under SFAS 123, the fair value of each option grant is estimated using the Black-Scholes option- pricing model with the following weighted-average assumptions: dividend yield of zero; expected volatility of 47% in 1996 and 36% in 1995; risk- free interest rate of 5.83% in 1996 and 5.59% in 1995; and an expected term of five years. The risk-free interest rate used in the calculation in the yield on the grant date of the U.S. Treasury Strip with a maturity equal to the expected term of the option. F-12 NOTE 8 - COMMITMENTS: - --------------------- The Company has commitments to lease office space through September 30, 1997. Rental expense of $41,339, $39,139 and $37,901 has been recognized for the years ended December 31, 1996, 1995 and 1994, respectively. At December 31, 1996, the minimum annual rental commitments under noncancellable operating leases were approximately $28,350 through September 1997. The Company has outstanding commitments to purchase raw materials (primarily glass) which aggregate approximately $2.6 million at December 31, 1996. The Company has a licensing agreement with Stewart's Restaurants, Inc. which provides for a sliding-scale royalty with a minimum annual royalty of $50,000. NOTE 9 - MAJOR CUSTOMERS: - ------------------------- Two customers accounted for approximately 18% and 14% individually of the Company's net sales for the year ended December 31, 1996. Two customers each accounted for approximately 20% of net sales for the years ended December 31, 1995 and 1994. NOTE 10 - QUARTERLY INFORMATION (UNAUDITED) 1 - --------------------------------------------- The following interim financial information represents the 1996 and 1995 consolidated results of operations on a quarterly basis:
Per Common Pretax Share Gross Income Net Net Quarter Ended Revene Profit (loss) Income Income - -------------- --------- ---------- --------- ----------- ------ December 31, 1996 $ 4,275,088 $ 1,153,903 $ 339,092 $ 208,610 $.02 September 30, 1996 5,664,924 1,579,016 758,762 445,115 .05 June 30, 1996 5,249,735 1,482,795 675,506 430,051 .05 March 31, 1996 3,682,809 985,908 290,318 173,356 .02 December 31, 1995 $ 3,214,852 $ 699,116 $ 120,515 $ 102,054 $.01 September 30, 1995 4,286,294 1,060,199 (502,320) 355,763 .04 June 30, 1995 3,453,111 957,094 397,313 322,001 .04 March 31, 1995 1,889,363 508,051 133,182 102,782 .01
1The Unaudited Quarterly Information for 1995 was not reviewed by the Company's independent accountants in accordance with standards established for such reviews. F-13 EX-27 2
5 YEAR DEC-31-1996 DEC-31-1996 1,408,729 99,185 1,436,837 100,743 2,430,896 5,788,372 275,219 144,441 7,141,782 1,159,736 0 0 0 8,981,681 0 7,141,782 18,872,556 18,872,556 13,670,934 16,861,303 0 0 350 2,063,678 806,543 0 0 0 0 1,257,132 .14 .14
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