Part 1 - Excel Sheet Prepare Ratios

Ratios for National Beverage Corp. concerning liquidity, solvency, profitability, DuPont, and stock performance as of April 30, 2016 and prior statement information. For each area, you should calculate the ratios we discussed in class and provide an analysis of the ratios calculated.I include historical stock price information and outstanding common share information below.

Part 2 - Separate Word Document Analyses

Word Analyses Document with the following headings and prepare you analyses like that shown in "Example Analysis" (See Black Tab labeled Example Analysis) below for each ratio prepared.

1.Short Term Ratios Analyses

2.Long Term Ratios Analyses

3.Profitability Ratios Analyses

4.Explanation of DuPont Theory

This are does not require any analyses of ratios since most of these should already have been analyzed with the Profitability Ratios

Therefore I want you to Explain the DuPont Theory with a minimum of two hundred words to prove you understand what the DuPont Theory is all about

5.Stock Ratios Analyses

6.Vertical and Horizontal Analyses

1.Explain why not all the Fiscal Years Ended listed for National Beverage below do not fall on the last day of April.

2.For the Vertical and Horizontal Analyses only, explain several notable Ratios (you do not have to explain all of them) that have the most meaning to prove the analysis you are trying to make about the company.

Futur B ckon s 2013 n A ti o n A l B e v e r A Annual report tAst So . . . our eforts Our passion is fueled proportionat ely to the joy of all those we refresh and make happy. We are Team National! + Cup-Fillers Content - Yes . . . $480 million Dividen ds FY '13 FY '09 Shareholder (Cup) Total Dividen Appreciation ds $287 million Appreciati on $193 million $ 6 7 5 m i l l i o n $482 million We are expertS at being . . . COURA GE ROBU ST PASSI ON IMAGI NE RIS K DETERMI NED DILIGE NT INNOVA TE DRIVE NOVEL DARI NG EXECU TE TRE AT Y O U R SE L F TO A N E W WAY . . . F E E L GRE AT B E I N G THERE - CA RE E N O U G H TO - TE ACH IT TO S O M EO N E . . . ! COuRa CHaRaCTE R PassION! oUr branDS anD US - there is a place that really gets the juices flowing - shifting tides and water coves - lots of boats, some loaded with lobster traps - others with the 'old man of the sea' being the only soul aboard! this is where my creative, passion, humility and nostalgia get 'caffeinated'! this place is my greenhouse - in which the process of reflecting on lovely people, unique soft drink brands and a most wonderful company . . . flourishes! our only limitation here at national beverage is our imagination! think of it, what a wonderful thing to say about a business . . . and our good fortune to be part of it. Association - a great surrounding always prompts a nice feeling. Feeling good is one of the most compelling things we humans seek the most. We are in a business that does just that - makes people feel good. try that feeling on for kicks! it's our brands that create good feelings and team national is the owner and shepherd of these brands. brands that are purchased and consumed for the celebrations they create . . . are good - brands that are a celebration and 'wellness' inspired are . . . great! a brand that is all natural - no calories - great quenching - zestfully refreshing is more about feeling good than thirst quenching. all people like to think that they are doing the right thing for themselves and when they consume LaCroix . . . they know they are. team national is an expert at satisfying emotional needs. We practice on our consumers with every ounce we produce; it follows through with our caring for employees and shareholders. Caring is core to our culture and philosophy! our brands are emotionally connected to us - much care and love is devoted to them. We have converted ingredients, tweaked taste, reduced calories and, today, from nearly 100% typical carbonated soft drinks in 1996, we now have 47% of our total revenues in non-carbs, sparkling waters, functional beverages, juices and juice drinks. We are listening ... \"Our only limitation here at National Beverage is our imagination!\" Emotionally lnfrangible{ '' One emotional connection Forever. ...12.eeber, I cal/I.notsee or kf,ar l'm a winner or loser - Your choice. u ...rgou ustset cka - aviual Sbt>v. ( :!JJ,1, With mycharm on - Place me in a parade. ...il1a1 11ie optical heaufi#JI - I t.fon. 'f .see I will last forever - Love my life. .../ eeit COftSfaftf ltealtlt & beau care. II Place me in right places I have no eyes or ears. ...Dovi 'tleave e alone -fle lp e to ove I will All -Ways make you happy. ...Please be u guanfravi avigel fOf , eVerYDaY iS gaMe DaY . . . our caring culture was our original charter and the purpose of our birth. the goals we set are rigorously executed. that performance is converted into statistics or financial results. our success or failure is a daily endeavor. the standards we measure by are not so easy to achieve. rigorous, stress-filled, disciplined focus is the capsule in which our caring is contained. our aggressiveness is only exceeded by one thing . . . creativity! natural as breathing; instinctive as seeing; purposeful as a heartbeat . . . that's our creativity! What better natural talent to possess if one is going to be a soft drink company! between FY2004 and FY2012, our shareholders received more than 100% of their earnings! as fiduciaries, we had the responsibility to safeguard tax savings, on their behalf, and we exercised prudence. Caring has no limits . . . 50 CentS MaYbe; neVer a QUarter . . . eartbeat . . . that's \"Natural our creativity!\" as breathing; instinctive as it would be extremely hard to imagine a public company more committed to their shareholders than this one! one of its most passionate, most dedicated, most determined shareholders and, i might add (largest), is writing this to you. Managing a business today is not as much fun and requires a more compelling set of 'smarts' than ever before. a mindset has overshadowed our champion - america - and the america that once nurtured someone to 'work hard', achieve and excel has been thwarted! Unsettleable - unsustainable debt - a result of many ills - entitlement outflow more than incoming. Just think, if this occurred in a typical public company, its stock would trash - aSap! but isn't america a citizen-owned public company? public companies are often faced with the decision - good for the 'stock' this quarter versus good for the company's future! Here at national beverage, the choice is easy. poor choices made = no Future! Missing an epS quarterly target these (market jittery) days is akin to biting into a chili pepper filled with ex-Lax! in our earnings release on July 11, 2013, we stated that, \"this fiscal year 2014, our performance will demand a rare form of excellence. our past being the ultimate barometer, certainly we have what it takes to do - just that! \" Well, after witnessing disclosures of other soft drink companies and major retailers, our previous statement in July's release should now be modified: \"this fiscal year 2014, all of the significant soft drink companies domiciled in north america will require a rare form of excellence to report similar results as reported in 2013! our past being the ultimate barometer, certainly we have what it takes to do - just that! Look at us in July 2014 and judge us then!\" Deal? tHe FUtUre beCKonS . . . our FY2012 proxy was well received. this really is an understatement! So . . . it goes without saying - we were challenged to exceed ourselves with our FY2013 proxy. Hope you find it as compelling to peruse as we - to create! Shareholder (Cup) FY '13 national beverage is advantaged in a changing soft drink world - smaller is better, agile is great! our flagship brand, Shasta, began as a California mineral water company. it is in transformation to rethink its origin - maybe a sparkling mineral water for its birthday in FY2014 . . . after all, one has to do something big for its 125th . . . right? FY '09 our everfresh Varietals, rip it Functionals and new LaCroix themes, plus our re-introduced Spree, are additions for FY2014. We hope you'll enjoy them. the Crate and Jardin themes of LaCroix are a touch of class! total Dividen appreciation + ds $480 million Dividen ds $287 million appreciati on $193 the Future beckons to all - in all $67 million 5 walks of life: soft drinks, law, $48 wellness, cab drivers - all of life's 2 human force . . . it says, \"Hey fellow worrier, lend a hand, do what you do better . . . and if you do it, others will see and also be inspired to try harder!\" if we all do better, life for all should be better; america will get better and this world will have to be better. remember: 'good is never enough - when better is available!' million million the Future beckons all americans to deliberate and have the courage to Do the right thing - for america's future. as we at national beverage take our fiduciary responsibilities very seriously - americans must also do the same! our future at national beverage is optically tastefully charismatic and fnancially sound! stimulating - respectfully, nick a. Caporella Chairman & Chief executive officer p.S. Cast a spell; Make it effervescence - name it: national beverage Corp THE BEsT Wa TO PREDICT THE FUTURE So . . . Is T O INVENT IT P a s si eMbraCe Our W MirrOrel Our ln e S TOuCh Ourpi ri F la v Cheer Our FuTur e 1 beck ons Cheer Our Each and every fiber of our being - dedicates itself in richness and taste to product innovation. We are to NaTiONaL beVeraGe COrP. flavor - what bees are to honey! if surely there was ever a honey of a beverage 2 annual report 2013 - it's everfresh Varietals - they titillate your tast e uds! Faygo Grapefruit + Lime = 60/40. What does that mean? 60% greatness - 40% ditto! if mundane circumstances are bothering you - rip it out of your life with a rip it! We innovate across our family of b euphoric brands . . . hip hip hooray! 3FuTure beckons energiz ed TOuC Passion . . . is individualistic spirit! Ours is to be quite unique in all that we do . . . Most excitingly - our Creativity! See . . . When others are just lacing up - we are enjoying the results of our futuristic neurons . . . a one-of-a-kind LaCroix Jardin! Direct from a supple, French garden formulated to make you deliciously content. and our all-natural Spree . . . Wow! Flip on the creative switch and look out . . . as they say - Vive La Difrence! NaTiONaL beVera 4 annual report 2013 Our FuTur e be ck o n 5 inspire d al l N at u Top the Ride - Excite with Spree MirrO Our 'Wellness' and 'Longevity' are no longer just 'catchy' words . . . americans are working far into their 70s and professionals are serving in key positions into their 80s.While the mindset varies for the purpose of working longer than their previous generations . . . individuals in their 70s may require a boost of nutrients + energy to maintain the pace. Team NaTiONaL beVeraGe COrP. National has everfresh fortified juices and great-tasting rip it - \"for good morning and charge the day\" beverages! We at National beverage are focused on americans who want to stay engaged longer - stay productive longer - feel better longer! 6 annual report 2013 For exotic Tastebuds FuTure be ck o n 7 Nutrition Facts Serving Size 1 Can Amount Per Serving Calories 0 % Daily Value* Total Fat 0g 0% Sodium 0mg 0% Total Carb 0g 0% Sugars 0g Protein 0g INGREDIENTS: CARBONATED WATER, NATURAL FLAVOR. el at ed Not a significant source of other nutrients *Percent Daily Values are based on a 2,000 calorie diet. Smarter Is better eMbra 'If you can't win, make the winner break a record!' Did that harddriving father have a profound influence on the son whose passion is relentless? Discipline is to philosophy - what fuel is to an engine! Our goals are realized by the combining of creative and NaTiONaL beVeraGe COrP. execution, but the timing of completion is the degree of passion! (Secret) When the passion meter fell below 10 - we created a little brew to drive it up again. Now we sell it - rip it Shots! (No longer a secret, for certain!) When it comes to energy . . . We Mega rip it! Our 8 annual report 2013 FuTure be ck o n 9 Zone in Unleash Your Mega-Mite building braNDS that band One Philosophy, One Goal, One Standard . . . Boundless Great Taste! brands that ignite loyalty - must c ontinuous ly demand of themselves . . . i t 's the only measure that guarantees - excellence! NaTiONaL beV 10 annual report 2013 national Beverage 11 becko n corp. 'Our character and corporate soul . . . demand that we profoundly engage with Masterful Brilliance - have that reflected in the outcome of all that we do! Our competency is ignited by innovation - the spirit of which is All- Fi Team, Our Products, n Our Results, Our a Character . . . n Our Life!' ci al r 2013evi Ways Professional! Our Selected Financial Data (In thousands, except per share and footnote amounts) April 27, 2013 Fiscal Year April 28,Ended April 30, 2012 2011 $662,007 444,757 $628,886 415,629 217,250 May 1, 2010 May 2, 2009 $600,193 381,539 $593,465 396,450 $575,177 405,322 213,257 218,654 197,015 169,855 146,223 403 (173) 146,169 107 (85) 155,885 99 (20) 145,159 120 (351) 131,918 107 967 70,451 23,531 66,896 22,903 62,650 21,896 51,385 18,532 38,797 14,055 $ 46,920 $ 43,993 $ 40,754 $ 32,853 $ 24,742 $ $ .95 .95 14.68 $ .88 .88 13.92 2.30 $ $ $ 35,626 69,818 56,729 222,988 14,214 121,636 $ 7,372 30,930 55,337 182,810 14,548 80,336 106,314 SUMM A RY OF OPER ATIONS: Net sales Cost of sales Gross profit Selling, general and administrative expenses Interest expense Other (expense) incomenet Income before income taxes Provision for income taxes Net income PER SH A RE DATA: Basic earnings per common share(1) Diluted earnings per common share(1) Closing stock price Dividends paid on common stock(2) 1.01 1.01 14.57 2.55 .71 .71 11.60 1.35 .54 .54 10.47 BA L A NCE SHEE T DATA: Cash and equivalents(2) Working capital(2) Property, plant and equipmentnet Total assets(2) Long-term debt Deferred income tax liability Shareholders' equity(2) Dividends paid on common stock(2) $ 18,267 67,504 57,307 208,642 50,000 14,327 70,316 118,139 $ 68,566 92,898 53,401 240,359 15,597 141,572 62,295 $ 84,140 117,840 56,141 265,682 16,517 170,012 NatioNal Beverage Corp. Basic earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share includes the dilutive effect of stock options. The Company paid special cash dividends on Common Stock of $118.1 million ($2.55 per share) on December 27, 2012, $106.3 million ($2.30 per share) on February 14, 2011 and $62.3 million ($1.35 per share) on January 22, 2010. 12 annual report 2013 Futur e b e 13 c k Management's Discussion and analysis of Financial Condition and results of operations OVERVI E W National Beverage Corp. is an acknowledged leader in the development, manufacturing, marketing and sale of a diverse portfolio of flavored beverage products. Our primary market focus is the United States, but our products are also distributed in Canada, Mexico, the Caribbean, Latin America, the Pacific Rim, Asia, Europe and the Middle East. A holding company for various operating subsidiaries, National Beverage Corp. was incorporated in Delaware in 1985 and began trading as a public company on the NASDAQ Stock Market in 1991. In this report, the terms \"we,\" \"us,\" \"our,\" \"Company\" and \"National Beverage\" mean National Beverage Corp. and its subsidiaries unless indicated otherwise. Our brands consist of (i) carbonated soft drinks delivery fleet plus the direct-store delivery systems of independent distributors and wholesalers. We consider ourselves to be a leader in the development and sale of flavored beverage products. Our carbonated soft drink flavor development spans over 100 years originating with our flagship brands, Shasta and Faygo, and includes our Ritz and Big Shot brands along with St. Nick's holiday soft drinks. Our portfolio of products we refer to as Power+ Brands are targeted to consumers seeking healthier and functional alternatives to complement their active lifestyles, and include LaCroix, Crystal Bay and Clear Fruit flavored, sparkling and spring water products; Rip It energy drinks and shots; Mega Sport sotonic sports drinks; Everfresh , Home Juice and Mr. Pure 100% juice and juice- in a variety of flavors as well as regular, diet and based products and Ohana fruit-flavored non- reduced-calorie options, and (ii) beverages geared toward the active and health-conscious consumer (\"Power+ Brands\"), including energy drinks and shots, juices, sparkling waters and enhanced beverages. In addition, we produce soft drinks for certain retailers (\"Allied Brands\") that endorse the concept (\"Strategic Alliance\") of having our brands and the Allied Brands marketed to produce the effect of enhanced growth of both. We employ a philosophy that emphasizes vertical integration; our vertically-integrated manufacturing model unites the procurement of raw materials and production of concentrates with the manufacture of finished products in our twelve manufacturing facilities. To service a diverse customer base that includes numerous national retailers as well as hundreds of smaller \"up-anddown-the-street\" accounts, we have developed a hybrid distribution system that promotes and utilizes customers' warehouse distribution facilities and our own direct-store carbonated fruit drinks, lemonades and teas. Our strategy emphasizes the growth of our products by (i) offering a beverage portfolio of proprietary flavors with distinctive packaging and broad demographic appeal, (ii) supporting the franchise value of regional brands, (iii) appealing to the \"quality-value\" expectations of the family consumer, (iv) responding to demographic trends by developing innovative products designed to expand distribution in higher-margin channels, and (v) expanding our focus on healthier and functional beverages tailored toward healthy, active lifestyles. The majority of our sales are seasonal with the highest volume typically realized during the summer months. As a result, our operating results from one fiscal quarter to the next may not be comparable. Additionally, our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, changes in consumer preference for beverage products, competitive pricing in the marketplace and weather conditions. RE SULT S OF OPER ATIONS Net Sales Net sales for the fiscal year ended April 27, 2013 (\"Fiscal 2013\") increased 5.3% to $662.0 million as compared to $628.9 million for the fiscal year ended April 28, 2012 (\"Fiscal 2012\"). This sales improvement is due to case volume growth of our Power+ Brands of 5.4% and growth of carbonated soft drinks, which includes Allied Brands, of 6.4%. Average net selling price per case decreased .8% primarily due to changes in product mix. Net sales for the fiscal year ended April 28, 2012 increased 4.8% to $628.9 million as compared to $600.2 million for the fiscal year ended April 30, 2011 (\"Fiscal 2011\"). This sales improvement is due to case volume growth of 9.9% for our Power+ Brands and 1.4% for carbonated soft drinks. In addition, our unit pricing increased 1.3% due to price increases implemented to offset higher raw material costs. Gross Profit Gross profit was 32.8% of net sales for Fiscal 2013, which represents a 1.1% margin decline compared to Fiscal 2012. The gross margin decline is primarily due to product mix changes. Cost of sales increased .8% on a per case basis. Gross profit was 33.9% of net sales for Fiscal 2012, which represents a 2.5% margin decline compared to Fiscal 2011. During Fiscal 2011, we benefited from sales of certain high margin products to overseas locations. These sales were impacted during Fiscal 2012 and, accordingly, gross margins returned to more normalized levels. The gross margin decline is also due to higher raw material costs and changes in product mix. Cost of sales increased 5.3% on a per case basis. Shipping and handling costs are included in selling, general and administrative expenses, the classification of which is consistent with many beverage companies. However, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. See Note 1 of Notes to Consolidated Financial Statements. Selling, General and Administrative Expenses Selling, general and administrative expenses were $146.2 million or 22.1% of net sales for Fiscal 2013 compared to $146.2 million or 23.2% of net sales for Fiscal 2012. Fiscal 2013 expenses reflect higher shipping and handling costs due to increased case volume, offset by reduced marketing and administrative expenses. Selling, general and administrative expenses were $146.2 million or 23.2% of net sales for Fiscal 2012 compared to $155.9 million or 26.0% of net sales for Fiscal 2011. The decline in expenses is due to a decrease in marketing and administrative expenses. Interest Expense and Other ExpenseNet Interest expense is comprised of interest on borrowings and fees related to maintaining lines of credit. The Company paid a special cash dividend of $118.1 million ($2.55 per common share) on December 27, 2012 from available cash and borrowings under our credit facilities. Accordingly, interest expense increased to $403,000 in Fiscal 2013 from $107,000 in Fiscal 2012 and $99,000 in Fiscal 2011. Other expense is net of interest income of $37,000 for Fiscal 2013, $69,000 for Fiscal 2012 and $140,000 for Fiscal 2011. The decline in interest income for Fiscal 2013 and Fiscal 2012 is due to lower average invested balances and investment yields. effective tax rate was approximately 33.4% for Fiscal 2013, 34.2% for Fiscal 2012 and 34.9% for Fiscal 2011. The difference between the effective rate and the federal statutory Income Taxes Our NatioNal Beverage 14 annual report 2013 b e c k rate of 35% was primarily due to the effects of state income taxes and the manufacturing deduction. See Note 8 of Notes to Consolidated Financial Statements. LI Q UI DI T Y A ND FIN A NCI A L CO ND I TI O N Liquidity and Capital Resources Our principal source of funds is cash generated from operations and borrowings available under our credit facilities. At April 27, 2013, we maintained $100 million unsecured revolving credit facilities, of which $50 million of borrowings were outstanding and $2.3 million was used for standby letters of credit. We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months. See Note 4 of Notes to Consolidated Financial Statements. We continually evaluate capital projects to expand our production capacity, enhance packaging capabilities or improve efficiencies at our manufacturing facilities. Expenditures for property, plant and equipment amounted to $9.7 million for Fiscal 2013. There were no material capital expenditure commitments at April 27, 2013. On January 25, 2013, the Company sold 400,000 shares of Special Series D Preferred Stock, par value $1 per share for an aggregate purchase price of $20 million. See Note 5 of Notes to Consolidated Financial Statements. The Company paid special cash dividends on common stock of $118.1 million ($2.55 per share) on December 27, 2012, $106.3 million ($2.30 per share) on February 14, 2011 and $62.3 million ($1.35 per share) on January 22, 2010. Pursuant to a management agreement, we incurred a fee to Corporate Management Advisors, Inc. (\"CMA\") of approximately $6.6 million for Fiscal 2013, $6.3 million for Fiscal 2012 and $6.0 million for Fiscal 2011. At April 27, 2013, management fees payable to CMA were $3.1 million. See Note 5 of Notes to Consolidated Financial Statements. Cash Flows Cash flow was significantly impacted during Fiscal 2013 and Fiscal 2011 by the payment of two special cash dividends aggregating $224.5 million. During Fiscal 2013, $40.3 million was provided by operating activities, which was offset by $9.6 million used in investing activities and $48.0 million used in financing activities. Cash provided by operating activities increased $2.6 million primarily due to increased earnings. Cash used in financing activities increased $48.4 million due to the special dividend payment of $118.1 million in Fiscal 2013, partially offset by $19.7 million in proceeds from the issuance of Special Series D Preferred Stock and $50.0 million in net borrowings under credit facilities. During Fiscal 2012, $37.7 million was provided by operating activities, which was offset by $9.9 million used in investing activities. Cash provided by operating activities decreased $17.6 million primarily due to increases in trade receivables and inventories as well as a decline in accrued liabilities. Cash used in investing activities decreased $1.5 million due to lower capital expenditures. Financial Position During Fiscal 2013, our working capital decreased $2.3 million to $67.5 million due to a decline in cash resulting from the payment of the special cash dividend. Trade receivables increased $2.5 million, which represents an increase in days sales outstanding from approximately 33.9 days to 34.7 days, and inventories decreased $1.6 million, which represents an improvement in annual inventory turns from 11.0 to 11.2 times. Accounts payable decreased $10.6 million due to the timing of payments to vendors at the end of the year. At April 27, 2013, the current ratio was 2.1 to 1, as compared to 1.9 to 1 at April 28, 2012. During Fiscal 2012, our working capital increased $38.9 million to $69.8 million due to cash provided by operating activities. Trade receivables increased $5.7 million, which represents an increase in days sales outstanding from approximately 33.4 days to 33.9 days, and inventories increased $7.5 million, which represents a reduction in annual inventory turns from 11.7 to 11 times. These increases are primarily due to the commencement of a new Strategic Alliance agreement in the latter part of Fiscal 2012. The increase in inventory is also due to higher raw material costs and quantity increases related to anticipated sales growth. Prepaid and other assets decreased $4.0 million due to a decline in the fair value of derivative assets. See Note 6 of Notes to Consolidated Financial Statements. At April 28, 2012, the current ratio was 1.9 to 1, as compared to 1.4 to 1 at April 30, 2011. CONTR ACTUA L OBLI G ATI ONS Contractual obligations at April 27, 2013 are payable as follows: (In thousands) Long-term debt Operating leases Purchase commitments Less Than Total1 Year 1 to 3 Years More 3 to 5Than 5 YearsYears $ 50,000$ 20,4354,742 54,12848,123 $50,000 6,439 6,005 $ 4,997 $ 4,257 $52,865 $124,563 $62,444 $4,997 $4,257 Total As of April 27, 2013, we guaranteed the residual value of certain leased equipment in the amount of $5.9 million. If the proceeds from the sale of such equipment are less than the balance required by the lease when the lease terminates July 31, 2013, the Company shall be required to pay the difference up to such guaranteed amount. The Company expects to have no loss on such guarantee. We contribute to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan. Total contributions were $2.6 million for Fiscal 2013, $2.5 million for Fiscal 2012 and $2.5 million for Fiscal 2011. See Note 10 of Notes to Consolidated Financial Statements. We maintain self-insured and deductible programs for certain liability, medical and workers' compensation exposures. Other long-term liabilities include known claims and estimated incurred but not reported claims not otherwise covered by insurance, based on actuarial assumptions and historical claims experience. Since the timing and amount of claim payments vary significantly, we are not able to reasonably estimate future payments for the specific periods indicated in the table above. Standby letters of credit aggregating $2.3 million have been issued in connection with our self-insurance programs. These standby letters of credit expire through June 2014 and are expected to be renewed. 16 annual report 2013 NatioNal Beverage Corp. b e c k OFF- BAL ANCE SHEE T ARR ANG E MEN T S We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition. CRI T I CA L ACCO UNT I NG P O LICI E S The preparation of financial statements in conformity with 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 actions it may undertake in the future, they may ultimately differ from actual results. We believe that the critical accounting policies described in the following paragraphs comprise the most significant estimates and assumptions used in the preparation of our consolidated financial statements. For these policies, we caution that future events rarely develop exactly as estimated and the best estimates routinely require adjustment. Credit Risk We sell products to a variety of customers and 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 specific customer circumstances, credit conditions and historical write-offs. 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 market 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 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. 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. Sales Incentives We offer various sales incentive arrangements to our customers that require customer performance or achievement of certain sales volume targets. In those circumstances when the incentive is paid in advance, we amortize the amount paid over the period of benefit or contractual sales volume. When the incentive is paid in arrears, we accrue the expected amount to be paid over the period of benefit or expected sales volume. 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. FORWA RD - LOOK ING S TATEMENT S National Beverage and its representatives may make written or oral statements relating to future events or results relative to our financial, operational and business performance, achievements, objectives and strategies. These statements are \"forward- looking\" within the meaning of the Private Securities Litigation Reform Act of 1995 and include statements contained in this report, filings with the Securities and Exchange Commission and other reports or communications to our stockholders. Certain statements including, without limitation, statements containing the words \"believes,\" \"anticipates,\" \"intends,\" \"plans,\" \"expects,\" and \"estimates\" constitute \"forward-looking statements\" and involve known and unknown risk, uncertainties and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, pricing of competitive products, success in acquiring other beverage businesses, success of new product and flavor introductions, fluctuations in the costs of raw materials and packaging supplies, ability to pass along cost increases to our customers, labor strikes or work stoppages or other interruptions in the employment of labor, continued retailer support for our products, changes in consumer preferences and our success in creating products geared toward consumers' tastes, success in implementing business strategies, changes in business strategy or development plans, government regulations, taxes or fees imposed on the sale of our products, unseasonably cold or wet weather conditions and other factors referenced in this report, filings with the Securities and Exchange Commission and other reports or communications to our stockholders. We disclaim an obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained herein to reflect future events or developments. QUA NTITATI V E A ND QUA LITATI V E DI SC LO SU RE S A BOUT M A RK E T RISK Commodities We purchase various raw materials, including aluminum cans, plastic bottles, high fructose corn syrup, corrugated packaging and juice concentrates, the prices of which fluctuate based on commodity market conditions. Our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. At times, we manage our exposure to this risk through the use of supplier pricing agreements that enable us to establish the purchase prices for certain commodities. Additionally, we use derivative financial instruments to partially mitigate our exposure to changes in certain raw material costs. At April 27, 2013, the Company had $50 million in borrowings outstanding under its credit facilities with a weighted average interest rate of 1.1%. Interest rate hedging products are not currently used to mitigate risk from interest fluctuations. If the interest rate on our debt changed by 100 basis points (1%), our interest expense for Fiscal 2013 would have changed by approximately $200,000. Interest Rates NatioNal Beverage C 18 annual report 2013 b e c k Consolidated Balance Sheets (In thousands, except share data) April 27, 2013 April 28, 2012 $ 18,267 64,069 39,234 3,665 5,706 $ 35,626 61,591 40,862 3,550 4,425 130,941 57,307 13,145 1,615 5,634 146,054 56,729 13,145 1,615 5,445 $ 208,642 $222,988 $ 44,261 19,142 34 $ 54,875 21,279 82 63,437 50,000 14,327 10,562 76,236 14,214 10,902 150 150 400 A S SE T S Current assets: Cash and equivalents Trade receivablesnet Inventories Deferred income taxesnet Prepaid and other assets Total current assets Property, plant and equipmentnet Goodwill Intangible assets Other assets Total assets LI A BI L I T I E S A ND SH A REH O LDER S' EQUI T Y Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxesnet Other liabilities Shareholders' equity: Preferred stock, $1 par value1,000,000 shares authorized Series C150,000 shares issued Series D400,000 shares issued (2013), aggregate liquidation preference of $20,000 Common stock, $.01 par value75,000,000 shares authorized; 50,361,799 shares (2013) and 50,321,559 shares (2012) issued Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stockat cost: Series C preferred stock150,000 Total shareholders' equity Total liabilities and shareholders' equity See accompanying Notes to Consolidated Financial Statements. 504 50,398 37,828 (964) 503 30,425 109,200 (642) (5,100) (12,900) (5,100) (12,900) 70,316 121,636 $ 208,642 $222,988 Futur e 21 (In thousands, except per share amounts) Fiscal Year April 27, Ended April 28, 2013 2012 April 30, 2011 Net sales Cost of sales $662,007 444,757 $628,886 415,629 $600,193 381,539 217,250 146,223 403 173 213,257 146,169 107 85 218,654 155,885 99 20 Income before income taxes Provision for income taxes 70,451 23,531 66,896 22,903 62,650 21,896 Net income Less preferred dividends 46,920 (153) 43,993 40,754 Gross profit Selling, general and administrative expenses Interest expense Other expensenet Earnings available to common shareholders $ 46,767 $ 43,993 $ 40,754 Earnings per common share: Basic Diluted $ $ $ $ $ $ Weighted average common shares outstanding: Basic Diluted NatioNal Beverage Corp. See accompanying Notes to Consolidated Financial Statements. 20 annual report 2013 1.01 1.01 46,310 46,482 .95 .95 46,267 46,448 .88 .88 46,188 46,373 b e c k Consolidated Statements of Comprehensive income (In thousands) Net income Other comprehensive (loss) income, net of tax: Cash flow hedges Other Total Comprehensive income See accompanying Notes to Consolidated Financial Statements. Fiscal Year April 27, Ended April 28, 2013 2012 April 30, 2011 $46,920 $40,754 $43,993 (295) (27) (3,063) (330) 2,748 (322) (3,393) 2,748 $46,598 $40,600 $43,502 Futur e 25 April 27, 2013 (In thousands) Shares Amount Fiscal Year April 28, 2012 Ended Shares April 30, 2011 Amount Shares Amount SERI E S C PREFERR ED S TOCK 150 Beginning and end of year $ 150 150 $ 150 150 $ 150 SERI E S D PREFERRED S TOCK Beginning of year Series D preferred stock issued 400 400 End of year 400 400 Beginning of year Stock options exercised 50,322 40 503 1 50,262 60 503 50,189 73 502 1 End of year 50,362 504 50,322 503 50,262 503 COMMON S TOCK A D DI T I O NAL PAID - IN C API T AL Beginning of year Series D preferred stock issued Stock options exercised Stock-based compensation Stock-based tax benefits 30,425 19,304 238 230 201 29,725 115 290 295 28,150 208 446 921 End of year 50,398 30,425 29,725 109,200 46,920 (118,139) (153) 65,207 43,993 130,767 40,754 (106,314) 37,828 109,200 65,207 RE TA INED E A RNI NGS Beginning of year Net income Common stock cash dividends Preferred stock cash dividends End of year ACCUMUL ATED OTHER COMPREHENSI VE (LOSS) INCOMEof year Beginning Cash flow hedges Other (642) (295) (27) 2,751 (3,063) (330) 3 2,748 End of year (964) (642) 2,751 TRE A SURY S TO CKSERIE S C PREFERRED Beginning and end of year 150 (5,100) 150 (5,100) 150 (5,100) 4,033 (12,900) 4,033 (12,900) 4,033 (12,900) TRE A SURY S TOCK COMMON NatioNal Beverage Corp. Beginning and end of year TOTAL SHAREHO LD ER S' EQUI T Y See accompanying Notes to Consolidated Financial Statements. 22 annual report 2013 $ 70,316 $121,636 $ 80,336 b e c k Consolidated Statements of Cash Flows (In thousands) Fiscal Year April 27, Ended April 28, 2013 2012 April 30, 2011 OPER ATING ACTI V I TIE S: Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Deferred income tax provision (benefit) Loss on disposal of property, net Stock-based compensation Changes in assets and liabilities: Trade receivables Inventories Prepaid and other assets Accounts payable Accrued and other Net cash provided by operating activities $ 46,920 $43,993 $ 40,754 11,002 172 63 230 10,651 (477) 7 290 11,356 (694) 82 446 (2,478) 1,628 (2,466) (10,614) (4,193) (5,679) (7,509) (2,239) 5,618 (6,959) (2,078) 1,319 (1,215) 829 4,503 40,264 37,696 55,302 IN V E S TING ACTI V I TIE S: Additions to property, plant and equipment Proceeds from sale of property, plant and equipment (9,693) 77 (9,905) 53 (11,389) 77 Net cash used in investing activities (9,616) (9,852) (11,312) FIN A NCING ACTI V I TIE S: (118,139) (12) 50,000 19,704 239 201 115 295 (106,314) 209 921 Net cash (used in) provided by financing activities (48,007) 410 (105,184) NE T ( DECRE A SE) I NCRE A SE IN CA SH A ND EQUI VA LENT CA SHSA ND EQUI VA LENT S BEGI NNI NG OF Y E A R (17,359) 35,626 28,254 7,372 (61,194) 68,566 Dividends paid on common stock Dividends paid on preferred stock Borrowings under credit facilities, net Proceeds from issuance of preferred stock, net Proceeds from stock options exercised Stock-based tax benefits CA SH AND EQ UI V ALENT S END OF Y E AR $ 18,267 $35,626 $ 7,372 $ $ $ 101 20,816 OTHER CA SH FLOW I NFO RM ATI ON: Interest paid Income taxes paid See accompanying Notes to Consolidated Financial Statements. 341 24,327 95 23,127 Futur e 27 National Beverage Corp. develops, manufactures, markets and sells a diverse portfolio of flavored beverage products primarily in North America. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various operating subsidiaries. When used in this report, the terms \"we,\" \"us,\" \"our,\" \"Company\" and \"National Beverage\" mean National Beverage Corp. and its subsidiaries. 1. SIG NI FIC A NT ACCO UNT I NG P OLIC I E S 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 or six years. Fiscal 2013, Fiscal 2012 and Fiscal 2011 consisted of 52 weeks. 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 6. 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, which amounted to 172,000 shares in Fiscal 2013, 181,000 shares in Fiscal 2012 and 185,000 shares in Fiscal 2011. Options to purchase 291,000 shares in Fiscal 2011 were not included in the calculation of diluted earnings per common share because these options were anti-dilutive. Fair Value The fair values of our cash and cash comprised of cash and highly liquid securities (consisting primarily of short-term money-market investments) with an original maturity of three months or less. equivalents, trade receivables and accounts payable approximate their carrying amounts due to their short-term nature. The fair value of our long-term debt approximates its carrying value due to its variable interest rate and lack of prepayment penalty. The estimated fair values of our 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 6. Derivative Financial Instruments We use derivative Impairment of Long-Lived Assets All long-lived Cash and Equivalents Cash and equivalents are financial instruments to partially mitigate our exposure to changes in certain 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 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 NatioNal Bever 24 Notes to Consolidated Financial Statements annual report 2013 b e c k recoverable. An impaired asset is written down to its estimated fair market value based on the best information available. Estimated fair market 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 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. 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. Intangible Assets Intangible assets as of April 27, 2013 and April 28, 2012 consisted of nonamortizable trademarks. Inventories Inventories are stated at the lower of first-in, first-out cost or market. Inventories at April 27, 2013 were comprised of finished goods of $23.2 million and raw materials of $16.0 million. Inventories at April 28, 2012 were comprised of finished goods of $24.4 million and raw materials of $16.5 million. 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 $44.6 million in Fiscal 2013, $45.8 million in Fiscal 2012 and $52.9 million in Fiscal 2011. 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 7 to 30 years for buildings and improvements, and 3 to 15 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 Revenue from product sales is recognized when title and risk of loss pass to the customer, which generally occurs upon delivery. Our policy is not to allow the return of products once they have been accepted by the customer. Notes to Consolidated Financial Statements (continued) However, on occasion, we have accepted returns or issued credit to customers, primarily for damaged goods. The amounts have been immaterial and, accordingly, we do not provide a specific valuation allowance for sales returns. consistent with many beverage companies, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. Sales Incentives We offer various sales incentive for stock-based compensation awards is recognized over the vesting period based on the grant-date fair value estimated using the BlackScholes model. See Note 9. arrangements to our customers that require customer performance or achievement of certain sales volume targets. In those circumstances when the incentive is paid in advance, we amortize the amount paid over the period of benefit or contractual sales volume. When the incentive is paid in arrears, we accrue the expected amount to be paid over the period of benefit or expected sales volume. 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. Segment Reporting We operate as a 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 Costs Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying statements of income. Such costs aggregated $44.2 million in Fiscal 2013, $41.8 million in Fiscal 2012 and $41.3 million in Fiscal 2011. Although our classification is Stock-Based Compensation Compensation expense Trade Receivables We record trade receivables at net realizable value, which includes an appropriate 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 specific customer circumstances, credit conditions and historical write-offs. Activity in the allowance for doubtful accounts was as follows: Fiscal 2013 Fiscal 2012 Fiscal 2011 Balance at beginning of year Net charge to expense Net charge-off $399 96 (41) $452 4 (57) $509 67 (124) Balance at end of year $454 $399 $452 (In thousands) As of April 27, 2013 and April 28, 2012, we did not have any customer that comprised more than 10% of trade receivables. No one customer accounted for more than 10% of net sales during any of the last three fiscal years. Use of Estimates The preparation of financial statements in conformity with generally accepted NatioNal Bevera Futur e 31 26 annual report 2013 b e c k accounting principles requires management to 4 . 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. 2 . PRO PERT Y, PL A NT A ND EQ UI PMENT Property, plant and equipment as of April 27, 2013 and April 28, 2012 consisted of the following: 2013 (In thousands) Land Buildings and improvements Machinery and Totalequipment Less accumulated depreciation Property, plant and equipmentnet $ 9,779 49,391 141,314 200,484 (143,177) $ 57,307 2012 $ 9,779 48,363 136,019 194,161 (137,432) $ 56,729 Depreciation expense was $9.0 million for Fiscal 2013, $8.5 million for Fiscal 2012 and $9.3 million for Fiscal 2011. 3 . ACCRUED LI A BI LI T I E S Accrued liabilities as of April 27, 2013 and April 28, 2012 consisted of the following: 2013 2012 Accrued compensation Accrued promotions Accrued insurance Other $ 8,051 3,912 1,451 5,728 $ 9,252 5,450 1,621 4,956 Total $19,142 $21,279 (In thousands) DEBT At April 27, 2013, a subsidiary of the Company maintained unsecured revolving credit facilities with banks aggregating $100 million (the \"Credit Facilities\"). The Credit Facilities expire from November 22, 2015 to April 30, 2016 and current borrowings bear interest at .9% above one-month LIBOR (1.1% at April 27, 2013). At April 27, 2013, borrowings outstanding under the Credit Facilities were $50 million, $2.3 million of the Credit Facilities were used for standby letters of credit and $47.7 million were available for borrowings. The Credit Facilities require the subsidiary to maintain certain financial ratios, principally debt to net worth and debt to EBITDA (as defined in the Credit Facilities), and contain other restrictions, none of which are expected to have a material effect on our operations or financial position. At April 27, 2013, we were in compliance with all loan covenants. 5. . CA PITA L S TOCK A ND TR A NS AC TI O NS W ITH REL ATED PA RTI E S The Company paid special cash dividends on common stock of $118.1 million ($2.55 per share) on December 27, 2012, $106.3 million ($2.30 per share) on February 14, 2011 and $62.3 million ($1.35 per share) on January 22, 2010. On January 25, 2013, the Company sold 400,000 shares of Special Series D Preferred Stock, par value $1 per share (\"Series D Preferred\") for an aggregate purchase price of $20 million. Series D Preferred has a liquidation preference of $50 per share and accrues dividends on this amount at an annual rate of 3% through April 30, 2014 and, thereafter, at an annual rate equal to 370 basis points above the 3-Month LIBOR. Dividends are cumulative and payable quarterly. Unpaid dividends at April 27, 2013 were $141,000. The Series D Preferred is nonvoting and is redeemable at the option of the Company beginning May 1, 2014 at $50 per share. The net proceeds of $19.7 million were used to repay borrowings under the Credit Facilities. In addition, the Company has 150,000 shares of Series C Preferred Stock, par value $1 per share, which are held as treasury stock and, therefore, such shares have no liquidation value. In April 2012, the Board of Directors authorized an increase in the Company's Stock Buyback Program from 800,000 to 1.6 million shares of common stock. As of April 27, 2013, 502,060 shares were purchased under the program and 1,097,940 shares were available for purchase. There were no shares purchased during the last three fiscal years. The Company is a party to a management agreement with Corporate Management Advisors, Inc. (\"CMA\"), a corporation owned by our Chairman and Chief Executive Officer. This agreement was originated in 1991 for the efficient use of management of two public companies at the time. In 1994, one of those public entities, through a merger, no longer was managed in this manner. Under the terms of the agreement, CMA provides, subject to the direction and supervision of the Board of Directors of the Company, (i) senior corporate functions (including supervision of the Company's financial, legal, executive recruitment, internal audit and management information systems departments) as well as the services of a Chief Executive Officer and Chief Financial Officer, and (ii) services in connection with acquisitions, dispositions and financings by the Company, including identifying and profiling acquisition candidates, negotiating and structuring potential transactions and arranging financing for any such transaction. CMA, through its personnel, also provides, to the extent possible, the stimulus and creativity to develop an innovative and dynamic persona for the Company, its products and corporate image. In order to fulfill its obligations under the management agreement, CMA employs numerous individuals, whom, acting as a unit, provide management, administrative and creative functions for the Company. The management agreement provides that the Company will pay CMA an annual base fee equal to one percent of the consolidated net sales of the Company, and further provides that the Compensation and Stock Option Committee and the Board of Directors may from time to time award additional incentive compensation to CMA. The Board of Directors on numerous occasions contemplated incentive compensation and, while shareholder value has increased over 2000% since the inception of this agreement, no incentive compensation has been paid. We incurred management fees to CMA of $6.6 million for Fiscal 2013, $6.3 million for Fiscal 2012 and $6.0 million for Fiscal 2011. Included in accounts payable were amounts due CMA of $3.1 million at April 27, 2013 and $3.0 million at April 28, 2012. 6. . DERIV ATIV E FI NANCI AL INS TRUMENTS We have entered into various aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum cans through April 2014. The financial instruments were designated and accounted for as a cash flow hedge. Accordingly, NatioNal Bever 28 annual report 2013 b e c k gains or losses attributable to the effective portion of the cash flow hedge are reported in Accumulated Other Comprehensive Income (\"AOCI\") and reclassified into earnings through cost of sales in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of our cash flow hedge was immaterial. The following summarizes the gains (losses) recognized in the Consolidated Statements of Income and AOCI relative to the cash flow hedge for Fiscal 2013, Fiscal 2012 and Fiscal 2011: (In thousands) Recognized in AOCI (Loss) gain before income taxes Less income tax (benefit) provision Net Reclassified from AOCI to cost of sales (Loss) gain before 8. . I NCOME TA X E S income taxes Less income tax (benefit) provision Net Net change to AOCI Fiscal 2013 Fiscal 2012 Fiscal 2011 As of April 27, 2013 and April 28, 2012, the fair value of the derivative liability was $964,000 and $503,000, respectively, which was included in accrued liabilities. Such valuation does not entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level 2 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data. 7. OTHER E X PENSE Other expense (income) consisted of the following: Fiscal 2013 Fiscal 2012 Fiscal 2011 Interest income Loss on disposal of property, net Other $ (37) $(69) $(140) 63 147 7 147 82 78 Total $173 $ 85 $ 20 (In thousands) $(2,521) $(4,484) $3,650 (935) (1,642) 1,299 (1,586) (2,842) 2,351 (2,060) 290 (617) (769) 69 (220) (1,291) 221 (397) $ (295) $(3,063) $2,748 As of April 27, 2013, the notional amount of our outstanding aluminum swap contracts was $21.0 million and, assuming no change in the commodity prices, $964,000 of unrealized net loss (before tax) will be reclassified from AOCI and recognized in earnings over the next twelve months. See Note 1. The provision (benefit) for income taxes consisted of the following: (In thousands) Fiscal 2013 Fiscal 2012 Fiscal 2011 Current Deferred $23,359 172 $23,380 $22,590 (477) (694) Total $23,531 $22,903 $21,896 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 As of April 27, 2013, the gross amount of established to reduce the carrying amounts of deferred unrecognized tax benefits was $4.3 million, of which tax assets when it is deemed, more likely than not, that the $126,000 was recognized as tax benefit in Fiscal benefit of deferred tax assets will not be realized. Deferred tax 2013. If we were to prevail on all uncertain tax assets and liabilities as of April 27, 2013 and April 28, 2012 positions, the net effect would be to reduce our consisted of the following: tax expense by approximately $3.5 million. A 2013 2012 $ 5,241 355 $ 5,173 450 5,596 5,623 16,159 99 16,186 101 16,258 16,287 Net deferred tax liabilities $10,662 Current deferred tax assetsnet Noncurrent deferred tax liabilitiesnet (In thousands) Deferred tax assets: Accrued expenses and other Inventory and amortizable assets Fiscal 2013 Fiscal 2012 Fiscal 2011 $4,548 $4,687 $3,997 415 408 857 $10,664 Beginning balance Increases due to current period tax positions Decreases due to lapse of statute of limitations (614) (547) (167) $ 3,665 $ 3,550 Ending balance $4,349 $14,327 $14,214 Total deferred tax assets Deferred tax liabilities: Property Intangibles and other Total deferred tax liabilities The reconciliation of the statutory federal income tax rate to our effective tax rate is as follows: Statutory federal income tax rate State income taxes, net of federal benefit Manufacturing deduction benefit Other differences Effective income tax rate reconciliation of the changes in the gross amount of unrecognized tax benefits, which amounts are included in other liabilities in the accompanying consolidated balance sheets, is as follows: Fiscal 2013 Fiscal 2012 Fiscal 2011 35.0% 35.0% 35.0% 1.6 2.7 2.4 (3.1) (.1) (3.1) (.4) (3.0) .5 33.4% 34.2% 34.9% (In thousands) $4,548 $4,687 We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of April 27, 2013, unrecognized tax benefits included accrued interest of $514,000, of which approximately $26,000 was recognized as a tax benefit in Fiscal 2013. We file annual income tax returns in the United States and in various state and local jurisdictions. A number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our unrecognized tax benefits reflect the most probable outcome. We adjust these unrecognized tax benefits, as well as the related interest, in light of changing facts and circumstances. The resolution NatioNal Bever 30 annual report 2013 b e c k Notes to Consolidated Financial Statements (continued) of any particular uncertain tax position could require the use of cash and an adjustment to our provision for income taxes in the period of resolution. Federal income tax returns for fiscal years subsequent to 2009 are subject to examination. Generally, the income tax returns for the various state jurisdictions are subject to examination for fiscal years ending after fiscal 2009. 9. S TOCK- BA SED C OM PENS A T IO N Our stock-based compensation program is a broad- based program designed to attract and retain employees while also aligning employees' interests with the interests of the stockholders. The 1991 Omnibus Incentive Plan (the \"Omnibus Plan\") provides for compensatory awards consisting of (i) stock options or stock awards for up to 4,800,000 shares of common stock, (ii) stock appreciation rights, dividend equivalents, other stock-based awards in amounts up to 4,800,000 shares of common stock and (iii) performance awards consisting of any combination of the above. The Omnibus Plan is designed to provide an incentive to officers and certain other key employees and consultants by making available to them an opportunity to acquire a proprietary interest or to increase such interest in National Beverage. The number of shares or options which may be issued under stock-based awards to an individual is limited to 1,680,000 during any year. Awards may be granted for no cash consideration or such minimal cash consideration as may be required by law. Options generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest over a five-year period and expire after ten years. The Special Stock Option Plan provides for the issuance of stock options to purchase up to an aggregate of 1,800,000 shares of common stock. Options may be granted for such consideration as determined by the Board of Directors. The vesting schedule and exercise price of these options are tied to the recipient's ownership level of common stock and the terms generally allow for the reduction in exercise price upon each vesting period. Also, the Board of Directors authorized the issuance of options to purchase up to 50,000 shares of common stock to be issued at the direction of the Chairman. The Key Employee Equity Partnership Program (\"KEEP Program\") provides for the granting of stock options to