Data Provided by Refinitiv. Minimum 15 minutes delayed.
News Release
Feb 26, 2009 (GlobeNewswire via COMTEX News Network) --
Fourth Quarter: A Transitional Quarter
2008 Fourth Quarter Highlights:
* Profitability impacted by $118.2 million of termination obligations
as a result of distributor transitions
* Revenue comparison impacted by 2007 fourth quarter announcement of
price increase for Monster Energy(r) brand energy drinks in
16-ounce cans and Java Monster(tm) non-carbonated dairy based
coffee drinks, effective January 1, 2008
CORONA, Calif., Feb. 26, 2009 (GLOBE NEWSWIRE) -- Hansen Natural Corporation (Nasdaq:HANS) today reported financial results for the three- and twelve-months ended December 31, 2008. The results for the fourth quarter and full fiscal year were impacted by the transition of certain of the Company's distribution arrangements to newly appointed distributors, including Coca-Cola bottlers and Anheuser-Busch distributors, and by continuing start-up costs in Europe.
As a result of the distributor transitions, the Company incurred termination obligations amounting to $118.2 million and $0.2 million during the fourth quarters ended December 31, 2008 and 2007, respectively, and $118.1 million and $15.3 million during the years ended December 31, 2008 and 2007, respectively, relating to the termination of certain of its prior distributors. Such termination costs have been expensed in full and are included in operating expenses for the fourth quarters and years ended December 31, 2008 and 2007, respectively.
Pursuant to new distribution agreements entered into with certain distributors, the Company recorded a net amount of $113.3 million in the 2008 fourth quarter, consisting of amounts received or to be received from such distributors relating to the costs of terminating the Company's prior distributors, compared to $0.1 million payable in the 2007 fourth quarter; and for the years ended December 31, 2008 and 2007, the Company recorded corresponding amounts received or receivable of $113.0 million and $21.0 million, respectively. Such amounts have been accounted for as deferred revenue and will be recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally 20 years. Additionally, in the fourth quarter ended December 31, 2008, the Company recognized $12.8 million of deferred revenue, of which $11.6 million related to the acceleration of deferred revenue balances associated with certain of its prior distributors who were terminated in the fourth quarter of 2008. Deferred revenue recognized in the fourth quarter of 2007 was $0.5 million.
In connection with the Company's special investigation of stock option grants and granting practices, related litigation and other related matters, the Company incurred/(received) professional service fees, net of insurance proceeds, of ($1.2) million and $9.8 million for the fourth quarter and year ended December 31, 2007. No significant amounts were recorded for the fourth quarter and year ended December 31, 2008.
The following table summarizes the identified items discussed above for the three- and twelve-months ended December 31, 2008 and 2007:
Three-Months Ended Twelve-Months Ended
December 31, December 31,
------------------------ ------------------------
Balance Sheet Items
(in thousands): 2008 2007 2008 2007
------------------ ----------- ----------- ----------- -----------
Included in
Deferred Revenue:
------------------
Amounts received
or receivable
from certain
distributors
pursuant to new
distribution
agreements $113,323 $ (107) $112,963 $ 21,029
Income Statement
Items
(in thousands):
----------------
Included in
Net Sales:
Deferred revenue
related to
termination of
prior
distributors $ 12,792 $ 526 $ 14,331 $ 1,916
Included in
Operating
Expenses:
Termination costs
to prior
distributors (1) $118,177 $ 244 $118,134 $ 15,266
Professional
service fees (net
of insurance
proceeds)
associated with
the review of
stock option
grants and
granting
practices,
related
litigation and
other related
matters $ -- $ (1,240)(2) $ (202) $ 9,760 (2)
(1) Includes Canada and Mexico
(2) Net of $1.7 million and $2.5 million insurance reimbursements for
the fourth quarter and year ended December 31, 2007, respectively
Gross sales for the 2008 fourth quarter increased 4.4 percent to $289.6 million from $277.3 million a year earlier. Net sales for the 2008 fourth quarter increased 3.1 percent to $254.4 million from net sales of $246.6 million in the same quarter last year. Both gross and net sales for the fourth quarter ended December 31, 2007 were positively impacted by a price increase announced during the fourth quarter of 2007 for all Monster Energy(r) brand energy drinks in 16-ounce cans and our Java Monster(tm) line of non-carbonated dairy based coffee drinks, effective January 1, 2008. The Company estimates that approximately 7 to 8 percent of gross sales for the 2007 fourth quarter were attributable to purchases made by customers in advance of such price increase.
Gross profit as a percentage of net sales was 54.4 percent for the fourth quarter ended December 31, 2008, compared with 51.0 percent for the 2007 fourth quarter.
Operating expenses for the 2008 fourth quarter increased to $177.6 million from $61.5 million in the same quarter last year. This increase is primarily the result of $118.2 million in termination obligations to prior distributors in the quarter ended December 31, 2008 compared to $0.2 million in the prior 2007 fourth quarter. Excluding the termination obligations, operating expenses for the 2008 fourth quarter would have been $59.5 million.
Distribution costs as a percentage of net sales were 4.9 percent for the fourth quarter of 2008, compared with 5.4 percent in the same quarter last year.
Selling expenses as a percentage of net sales for the 2008 fourth quarter were 10.4 percent, compared with 11.4 percent in the same quarter a year ago. Sponsorship expenditures and merchandise display costs were lower than in the comparable quarter last year.
General and administrative expenses for the 2008 fourth quarter were $138.8 million, which includes $118.2 million in termination obligations to prior distributors, compared with $20.0 million for the comparable quarter last year. Excluding the termination obligations, general and administrative expenses for the 2008 fourth quarter would have been $20.7 million. Stock based compensation (a non-cash item) was $4.1 million in the fourth quarter of 2008, compared with $3.9 million in the prior year period.
Operating loss for the 2008 fourth quarter was ($39.2) million compared to operating income of $64.3 million a year ago and net loss for the fourth quarter of 2008 was ($23.4) million or ($0.25) per diluted share, compared with net income of $45.1 million, or $0.45 per diluted share last year. Both the operating loss and net loss for the 2008 fourth quarter were directly impacted by the termination obligations of $118.2 million to prior distributors. Excluding the termination obligations, operating profit for the 2008 fourth quarter would have been $79.0 million.
Net sales for the Company's DSD segment were $231.9 million for the 2008 fourth quarter, an increase of approximately 3.5 percent from $224.2 million for the same period in 2007. Both gross and net sales for the 2007 fourth quarter were positively impacted by the announcement in the fourth quarter of 2007 of a price increase for Monster Energy(r) brand energy drinks in 16-ounce cans and Java Monster(tm) non-carbonated dairy based coffee drinks, effective January 1, 2008.
Gross sales to customers outside the United States, after the inclusion of sales to certain military customers, were $16.9 million in the 2008 fourth quarter, compared with $15.3 million in the corresponding quarter in 2007.
For the 2008 fiscal year, gross sales increased 15.3 percent to $1,182.9 million from $1,025.8 million a year earlier. Net sales for the year ended December 31, 2008 increased 14.3 percent to $1,033.8 million from $904.5 million a year ago.
Gross profit as a percentage of net sales was 52.1 percent for the year ended December 31, 2008, compared with 51.7 percent for 2007.
Operating expenses for the year ended December 31, 2008, increased to $375.2 million from $237.0 million for 2007. The increase in operating expenses is primarily the result of $118.1 million in termination obligations to prior distributors for the year ended December 31, 2008. Such termination costs were $15.3 million in fiscal 2007. Excluding the termination obligations, operating expenses for the year ended December 31, 2008 would have been $257.1 million.
Operating income decreased 29.2 percent to $163.6 million from $231.0 million a year ago. Net income for the year ended December 31, 2008 decreased 27.7 percent to $108.0 million, or $1.11 per diluted share, compared with $149.4 million, or $1.51 per diluted share, last year. Both operating income and net income for the 2008 fiscal year were directly impacted by the termination obligations of $118.1 million to prior distributors. Excluding the termination obligations, operating income for the year ended December 31, 2008 would have been $281.7 million.
Rodney C. Sacks, chairman and chief executive officer, attributed the record revenues to continued strong sales of Monster Energy(r) drinks, which grew in excess of the category and achieved further gains in market share. In addition, the Company commenced with the launch of its Monster Hitman(tm) energy shooters in the fourth quarter of 2008.
"We are gratified with the continued strong performance of the Monster Energy(r) brand in the current challenging economic environment. We continue to believe that the moderating growth in the energy drink segment appears, in part, to be due to the existing macro-economic environment as well as the resulting decline in store traffic and discretionary spending," added Sacks.
Sacks said that the Company's realignment of its Monster Energy(r) distribution arrangements in selected territories of the United States and Canada to Coca-Cola Enterprises, Inc. ("CCE"), other Coca-Cola bottlers and new Anheuser-Busch distributors in the United States and Canada was implemented as planned during the fourth quarter of 2008 and the first quarter of 2009, respectively. Distribution of Monster Energy(r) brand energy drinks in the United Kingdom by CCE was delayed until January 2009. Distribution of Monster Energy(r) brand energy drinks in France, Monaco, Belgium, Holland and Luxembourg commenced in February 2009. Distribution of Monster Energy(r) brand energy drinks in certain regions of Mexico was successfully transitioned to Comercializadora Eloro, S.A., a subsidiary of Grupo Jumex, in the first quarter of 2009. Sacks also noted that the fourth quarter was impacted not only by the accounting treatment for the transitions, but also by operational issues involved with the scale of the changes.
Auction Rate Securities
At December 31, 2008 the Company held auction rate securities with a face value of $112.5 million. The Company determined that an impairment of $14.9 million had occurred at December 31, 2008, of which $14.4 million was deemed temporary and $0.5 million was deemed other than temporary. Included in other comprehensive loss is $5.3 million and $8.7 million net of taxes for the three- and twelve-months ended December 31, 2008. Included in interest and other income, net is $0.5 million for both the three- and twelve-month periods ended December 31, 2008. The auction rate securities will continue to accrue interest at their contractual rates until their respective auctions succeed or they are redeemed.
Investor Conference Call
The Company will host an investor conference call on February 26, 2009 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.hansens.com and www.opencompany.info. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on both websites.
Hansen Natural Corporation
Based in Corona, California, Hansen Natural Corporation markets and distributes Hansen's(r) natural sodas, sparkling beverages, apple juice and juice blends, fruit juice smoothies, multi-vitamin juice drinks in aseptic packaging, iced teas, energy drinks, Junior Juice(r) juices and water beverages, Blue Sky(r) brand beverages, Monster Energy(r) brand energy drinks, Monster Hitman(tm) energy shooters, Java Monster(tm) brand non-carbonated dairy based coffee drinks, Lost(r) Energy(tm) brand energy drinks, Joker Mad Energy(tm) brand energy drinks and Rumba(r), Samba and Tango brand energy juices. For more information visit www.hansens.com and www.monsterenergy.com.
Note Regarding Use of Non-GAAP Measures
Gross sales, although used internally by management as an indicator of operating performance, should not be considered as an alternative to net sales, which is determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies as gross sales has been defined by our internal reporting requirements. However, gross sales are used by management to monitor operating performance including sales performance of particular products, salesperson performance, product growth or declines and our overall performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. Management believes the presentation of gross sales allows a more comprehensive presentation of our operating performance. Gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from customers.
Caution Concerning Forward-Looking Statements
Certain statements made in this announcement may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability. Management cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein. Such risks and uncertainties include, but are not limited to, the following: the current uncertainty and volatility in the national and global economy; actual performance of the parties under the new distribution agreements; potential disruptions arising out of the transition of certain territories to new distributors; changes in sales levels by existing distributors; unanticipated costs incurred in connection with the termination of existing distribution agreements or the transition to new distributors; changes in consumer preferences; changes in demand due to both domestic and international economic conditions; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities; product distribution and placement decisions by retailers; political, legislative or other governmental actions or events in one or more regions in which we operate. For a more detailed discussion of these and other risks that could affect our operating results, see the Company's reports filed with the Securities and Exchange Commission. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION
FOR THE THREE-AND TWELVE-MONTHS ENDED DECEMBER 31, 2008 AND 2007
(In Thousands, Except Per Share Amounts) (Unaudited)
---------------------------------------------------------------------
Three-Months Ended Twelve-Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Gross sales, net of
discounts and
returns *(1) $ 289,593 $ 277,299 $1,182,876 $1,025,795
Less: Promotional and
other allowances** 35,220 30,661 149,096 121,330
---------- ---------- ---------- ----------
Net sales (1) 254,373 246,638 1,033,780 904,465
Cost of sales 115,948 120,897 494,986 436,452
---------- ---------- ---------- ----------
Gross profit (1) 138,425 125,741 538,794 468,013
Gross profit margin as
a percentage of
net sales 54.4% 51.0% 52.1% 51.7%
Operating expenses (2),
(3),(4) 177,643 61,467 375,203 237,027
Operating expenses as
a percentage of
net sales 69.8% 24.9% 36.3% 26.2%
---------- ---------- ---------- ----------
Operating (loss)
income (1),(2),(3) (39,218) 64,274 163,591 230,986
Operating (loss) income
as a percentage of
net sales (15.4%) 26.1% 15.8% 25.5%
Interest and other
income, net (4) 1,380 3,331 9,886 8,770
---------- ---------- ---------- ----------
(Loss) income before
provision for income
taxes (1),(2),(3) (37,838) 67,605 173,477 239,756
(Benefit) Provision
for income taxes (14,390) 22,505 65,445 90,350
---------- ---------- ---------- ----------
Net (loss) income $ (23,448) $ 45,100 $ 108,032 $ 149,406
========== ========== ========== ==========
Net (loss) income as a
percentage of
net sales (9.2%) 18.3% 10.5% 16.5%
Net (loss) income per
common share:
Basic $ (0.25) $ 0.49 $ 1.17 $ 1.64
========== ========== ========== ==========
Diluted $ (0.25) $ 0.45 $ 1.11 $ 1.51
========== ========== ========== ==========
Weighted average number
of shares of common
stock and common stock
equivalents:
Basic 91,518 92,925 92,515 91,178
========== ========== ========== ==========
Diluted 91,518 99,512 97,530 98,874
========== ========== ========== ==========
Case sales (in
thousands)
(in 192-ounce case
equivalents) 23,650 25,657 102,659 98,453
Average net sales
price per case $ 10.76 $ 9.61 $ 10.07 $ 9.19
---------------------------------------------------------------------
(1) Includes $12.8 million and $0.5 million for the three-months
ended December 31, 2008 and 2007, respectively, and
$14.3 million and $1.9 million for the twelve-months ended
December 31, 2008 and 2007, respectively, related to the
recognition of deferred revenue attributable to new and/or
amended distribution agreements entered into with certain
distributors.
(2) Includes $118.2 million and $0.2 million for the three-months
ended December 31, 2008 and 2007, respectively, and
$118.1 million and $15.3 million for the twelve-months ended
December 31, 2008 and 2007, respectively, related to the costs
associated with terminating existing distributors.
(3) Includes $0.0 million and ($1.2) million for the three-months
ended December 31, 2008 and 2007, respectively, and ($0.2)
million and $9.8 million for the twelve-months ended
December 31, 2008 and 2007, respectively, related to
professional service fees, net of insurance proceeds in
connection with the Company's special investigation of stock
option grants and granting practices, related litigation and
other related matters.
(4) The Company has reclassified $0.3 million of operating expenses
for the three-months ended December 31, 2007 in order to conform
to the current period presentation.
* Gross sales, although used internally by management as an
indicator of operating performance, should not be considered as
an alternative to net sales, which is determined in accordance
with accounting principles generally accepted in the United
States of America ("GAAP"), and should not be used alone as an
indicator of operating performance in place of net sales.
Additionally, gross sales may not be comparable to similarly
titled measures used by other companies as gross sales has been
defined by our internal reporting requirements. However, gross
sales are used by management to monitor operating performance
including sales performance of particular products, salesperson
performance, product growth or declines and our overall
performance. The use of gross sales allows evaluation of sales
performance before the effect of any promotional items, which can
mask certain performance issues. Management believes the
presentation of gross sales allows a more comprehensive
presentation of our operating performance. Gross sales may not be
realized in the form of cash receipts as promotional payments and
allowances may be deducted from payments received from customers.
** Although the expenditures described in this line item are
determined in accordance with GAAP and meet GAAP requirements,
the disclosure thereof does not conform with GAAP presentation
requirements. Additionally, the presentation of promotional and
other allowances may not be comparable to similar items presented
by other companies. The presentation of promotional and other
allowances facilitates an evaluation of the impact thereof on the
determination of net sales and illustrates the spending levels
incurred to secure such sales. Promotional and other allowances
constitute a material portion of our marketing activities.
HANSEN NATURAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND DECEMBER 31, 2007
(In Thousands, Except Par Value) (Unaudited)
---------------------------------------------------------------------
Dec 31, Dec 31,
2008 2007
---------- ----------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 256,801 $ 12,440
Short-term investments 29,145 63,125
Trade accounts receivable, net 45,233 76,123
Distributor receivables 90,722 5,374
Inventories 116,326 98,140
Prepaid expenses and other current assets 8,379 3,755
Prepaid income taxes 4,977 --
Deferred income taxes 9,741 11,192
---------- ----------
Total current assets 561,324 270,149
INVESTMENTS 89,567 227,085
PROPERTY AND EQUIPMENT, net 14,389 8,567
DEFERRED INCOME TAXES 65,748 14,006
INTANGIBLES, net 28,365 24,066
OTHER ASSETS 2,444 730
---------- ----------
$ 761,837 $ 544,603
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 64,787 $ 56,766
Accrued liabilities 12,524 9,019
Accrued distributor terminations 102,282 4,312
Accrued compensation 6,782 5,827
Current portion of debt 959 663
Income taxes payable -- 6,294
---------- ----------
Total current liabilities 187,334 82,881
DEFERRED REVENUE 138,187 39,555
STOCKHOLDERS' EQUITY:
Common stock - $0.005 par value; 120,000
shares authorized; 96,851 shares issued and
90,328 outstanding as of December 31, 2008;
95,849 shares issued and 93,191 outstanding
as of December 31, 2007 484 479
Additional paid-in capital 117,106 96,749
Retained earnings 461,680 353,648
Accumulated other comprehensive loss (10,825) (47)
Common stock in treasury, at cost; 6,523 and
2,658 shares as of December 31, 2008 and
2007, respectively (132,129) (28,662)
---------- ----------
Total stockholders' equity 436,316 422,167
---------- ----------
$ 761,837 $ 544,603
========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Hansen Natural Corporation
Hansen Natural Corporation
Rodney C. Sacks, Chairman and Chief Executive Officer
(951) 739-6200
Hilton H. Schlosberg, Vice Chairman
(951) 739-6200
PondelWilkinson Inc.
Roger S. Pondel
Judy Lin Sfetcu
(310) 279-5980
(C) Copyright 2009 GlobeNewswire, Inc. All rights reserved.
News Provided by COMTEX