UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2003.
or
[ ]
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: 333-74589
NATIONAL WINE & SPIRITS, INC.
(Exact name of registrant as specified in its charter)
| Indiana | 35-206449 | |
|
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
| 700 W. Morris Street, P. O. Box 1602, Indianapolis, Indiana | 46206 | |
| (Address of principal executive offices) | (Zip Code) | |
| (317) 636-6092 | ||
|
(Registrant's telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares of Common Stock, $.01 par value, of National Wine & Spirits, Inc. outstanding as of August 13, 2003 was 5,330,521, of which 104,520 were voting stock.
NATIONAL WINE & SPIRITS, INC.
Quarterly Report
For the period ended June 30, 2003
INDEX
| PART I. | FINANCIAL INFORMATION | |
| Item 1. | Financial Statements | |
| Condensed Consolidated Balance Sheets (unaudited) June 30, 2003 and March 31, 2003 |
2 | |
| Condensed Consolidated Statements of Operations (unaudited) Three Months Ended June 30, 2003 and 2002 |
3 | |
| Condensed Consolidated Statements of Cash Flows (unaudited) Three Months Ended June 30, 2003 and 2002 |
4 | |
| Notes to Condensed Consolidated Financial Statements | 5 | |
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
10 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 21 |
| Item 4. | Controls and Procedures. | 21 |
| PART II. | OTHER INFORMATION | |
| Item 1. | Legal Proceedings | 22 |
| Item 4. | Submission of Matters to a Vote of Security Holders | 22 |
| Item 5. | Other Events | 22 |
| Item 6. | Exhibits and Reports on Form 8-K | 22 |
| Signature | 23 |
– 1 –
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
NATIONAL WINE & SPIRITS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| June 30, 2003 (unaudited) |
March 31, 2003 (Note 1) | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 788 | $ | 5,820 | ||||
| Accounts receivable: | ||||||||
| Trade, less allowance for doubtful accounts | 36,403 | 31,888 | ||||||
| Vendor, less allowance for doubtful accounts | 5,973 | 11,369 | ||||||
| Inventory | 74,277 | 82,982 | ||||||
| Prepaid expenses | 5,847 | 4,301 | ||||||
| Total current assets | 123,288 | 136,360 | ||||||
| Property and equipment, net | 35,261 | 36,498 | ||||||
| Other assets: | ||||||||
| Intangible assets, net of amortization | 17,335 | 18,328 | ||||||
| Investment in Commonwealth Wine & Spirits, LLC | 5,674 | 5,637 | ||||||
| Cash surrender value of life insurance | 3,878 | 3,815 | ||||||
| Goodwill | 1,246 | 1,246 | ||||||
| Deferred pension costs | 715 | 715 | ||||||
| Deposits and other | 596 | 596 | ||||||
| Notes receivable | 418 | 513 | ||||||
| Total other assets | 29,862 | 30,850 | ||||||
| Total assets | $ | 188,411 | $ | 203,708 | ||||
| Liabilities And Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 39,667 | $ | 39,550 | ||||
| Accrued payroll and payroll taxes | 5,036 | 7,486 | ||||||
| Excise taxes payable | 3,580 | 4,503 | ||||||
| Other accrued expenses | 16,528 | 13,638 | ||||||
| Total current liabilities | 64,811 | 65,177 | ||||||
| Deferred pension liability | 3,005 | 3,005 | ||||||
| Distribution rights obligations | 8,933 | 9,369 | ||||||
| Long-term debt | 86,657 | 98,303 | ||||||
| Total liabilities | 163,406 | 175,854 | ||||||
| Stockholders' equity: | ||||||||
| Voting common stock, $.01 par value. 200,000 shares | ||||||||
| authorized, 104,520 shares issued and outstanding | 1 | 1 | ||||||
| Nonvoting common stock, $.01 par value 20,000,000 shares | ||||||||
| authorized, 5,226,001 shares issued and outstanding shares | 53 | 53 | ||||||
| Additional paid-in capital | 25,009 | 25,009 | ||||||
| Retained earnings | 2,232 | 5,081 | ||||||
| Accumulated other comprehensive income-unrecognized net pension loss | (2,290 | ) | (2,290 | ) | ||||
| Total stockholders' equity | 25,005 | 27,854 | ||||||
| Total liabilities and stockholders' equity | $ | 188,411 | $ | 203,708 | ||||
See accompanying notes.
– 2 –
NATIONAL WINE & SPIRITS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, 2003 | June 30, 2002 | |||||||
| Net product sales | $ | 137,910 | $ | 177,201 | ||||
| Distribution fees | 6,124 | 5,531 | ||||||
| Total revenue | 144,034 | 182,732 | ||||||
| Cost of products sold | 109,149 | 139,569 | ||||||
| Gross profit | 34,885 | 43,163 | ||||||
| Selling, general and administrative expenses: | ||||||||
| Warehouse and delivery | 9,254 | 9,877 | ||||||
| Selling | 14,898 | 14,895 | ||||||
| Administrative | 9,176 | 11,358 | ||||||
| 33,328 | 36,130 | |||||||
| Income from operations | 1,557 | 7,033 | ||||||
| Interest expense: | ||||||||
| Related parties | (44 | ) | (50 | ) | ||||
| Third parties | (2,386 | ) | (2,769 | ) | ||||
| Gain from repurchase of long term debt | 700 | --- | ||||||
| (1,730 | ) | (2,819 | ) | |||||
| Other income: | ||||||||
| Interest income | 11 | 50 | ||||||
| Rental and other income | 26 | 111 | ||||||
| Equity in income of Commonwealth Wine & Spirits, LLC | 97 | 179 | ||||||
| Equity in losses of eSkye Solutions, Inc. | --- | (160 | ) | |||||
| Total other income | 134 | 180 | ||||||
| Net income (loss) | $ | (39 | ) | $ | 4,394 | |||
See accompanying notes.
– 3 –
NATIONAL WINE & SPIRITS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, 2003 | June 30, 2002 | |||||||
| Operating activities: | ||||||||
| Net income (loss) | $ | (39 | ) | $ | 4,394 | |||
| Adjustments to reconcile net income (loss) to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation of property and equipment | 1,595 | 1,646 | ||||||
| Amortization of intangible assets | 781 | 595 | ||||||
| Equity in losses of eSkye Solutions, Inc. | --- | 160 | ||||||
| Equity in earnings of Commonwealth Wine & Spirits, LLC | (97 | ) | (179 | ) | ||||
| Provision for bad debt expense | 129 | 127 | ||||||
| (Gain) loss on repurchase of long term debt | (700 | ) | --- | |||||
| Gain on sales of assets | (273 | ) | (26 | ) | ||||
| Increase in cash surrender value of life insurance | (63 | ) | (68 | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 969 | (10,088 | ) | |||||
| Inventories | 8,705 | (2,996 | ) | |||||
| Prepaid expenses | (1,546 | ) | 831 | |||||
| Deposits and other | 3 | (1 | ) | |||||
| Accounts payable | 117 | (324 | ) | |||||
| Accrued expenses and taxes | (483 | ) | 1,774 | |||||
| Net cash and cash equivalents provided (used) by operating activities | 9,098 | (4,155 | ) | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (384 | ) | (1,279 | ) | ||||
| Purchases of intangible assets | (56 | ) | --- | |||||
| Proceeds from sale of property and equipment | 82 | 26 | ||||||
| Distributions from Commonwealth Wine & Spirits, LLC | 60 | 528 | ||||||
| Collections on notes receivable | 95 | 86 | ||||||
| Net cash and cash equivalents used by investing activities | (203 | ) | (639 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from line of credit borrowings | 18,200 | 10,750 | ||||||
| Principal payments on line of credit borrowings | (20,200 | ) | (10,750 | ) | ||||
| Principal payments on long-term debt, including purchases of senior | (8,681 | ) | --- | |||||
| notes | ||||||||
| Proceeds of borrowings from stockholder | --- | 50 | ||||||
| Payments of distribution rights obligations | (436 | ) | --- | |||||
| Receipts on notes receivable from stockholders and others | --- | (30 | ) | |||||
| Distributions to stockholders | (2,810 | ) | --- | |||||
| Net cash and cash equivalents provided (used) by financing activities | (13,927 | ) | 20 | |||||
| Net decrease in cash and cash equivalents | (5,032 | ) | (4,774 | ) | ||||
| Cash and cash equivalents, beginning of period | 5,820 | 11,735 | ||||||
| Cash and cash equivalents, end of period | $ | 788 | $ | 6,961 | ||||
See accompanying notes.
– 4 –
NATIONAL WINE & SPIRITS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business and Principles of Consolidation
National Wine & Spirits, Inc. (“NWS” or the “Company”), an S-Corporation, is a holding company which operates primarily in the wine and liquor wholesale distribution business. Based in Indianapolis, National Wine & Spirits Corporation (“NWSC”) is a wholesale distributor of liquor and wines throughout Indiana and also operates a division for the distribution of cigars and accessories. Based in Chicago, NWS-Illinois, LLC (“NWS-LLC”) is a wholesale distributor of liquor, wines, and beer throughout Illinois. NWS Michigan, Inc. (“NWSM”) and National Wine & Spirits, LLC (“NWSM-LLC”) are distributors of liquor and non-alcoholic products throughout Michigan. NWSM distributes products as an Authorized Distribution Agent (“ADA”) for the State of Michigan and derives revenue from distribution fees. Accordingly, NWSM’s results represent the entire “All Other” segment as described in Note 7. Based in Connecticut, U.S. Beverage, LLC (“USB”) distributes and markets import and craft beer along with malt based products throughout the United States.
The consolidated financial statements include the accounts of NWS, NWSC, NWS-LLC, NWSM, NWSM-LLC, and USB, all of which NWS wholly owns or owns 100% of the voting stock. All significant intercompany accounts and transactions have been eliminated from the consolidated financial statements. Substantially all revenues result from the sale of liquor, beer and wine or distribution fees therefrom. NWS performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending March 31, 2004.
There were no amounts included in comprehensive income (loss) for the three-month period ended June 30, 2003 other than net income (loss).
The balance sheet at March 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
– 5 –
NATIONAL WINE & SPIRITS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain amounts from prior year’s financial statements have been reclassified to conform to the current year presentation. The Consolidated Balance Sheet has been reclassified to include additional disclosure relating to accounts receivable vendor and distribution rights obligations.
2. Inventory
Inventory is comprised of the following:
| June 30, 2003 |
March 31, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Inventory at FIFO | $ | 84,940,000 | $ | 93,895,000 | ||||
| Less: LIFO reserve | 10,663,000 | 10,913,000 | ||||||
| $ | 74,227,000 | $ | 82,982,000 | |||||
During the quarter ended June 30, 2003, certain inventory quantities were reduced, which resulted in a partial liquidation of a LIFO inventory layer carried at a cost which prevailed in a prior year. For the quarter ended June 30, 2003, the effect of the liquidation was to decrease the cost of products sold and decrease the net loss by $300,000.
3. Supplemental Cash Flow Information
Cash paid for interest during the three-month period ended June 30, 2003 and June 30, 2002 was $519,000 and $39,000, respectively.
– 6 –
NATIONAL WINE & SPIRITS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Debt
Long-term debt is comprised of the following:
| June 30, 2003 |
March 31, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Senior notes payable (A) | $ | 80,329,000 | $ | 89,975,000 | ||||
| Bank revolving line of credit (B) | 2,000,000 | 4,000,000 | ||||||
| Notes payable to stockholders | 4,328,000 | 4,328,000 | ||||||
| 86,657,000 | 98,303,000 | |||||||
| Less: current maturities | --- | --- | ||||||
| $ | 86,657,000 | $ | 98,303,000 | |||||
| (A) |
On January 25, 1999, the Company issued $110,000,000 of unsecured senior notes
with a maturity of January 15, 2009. Interest on the senior notes is 10.125% and
is payable semiannually. These senior notes are guaranteed by the Company’s
subsidiaries. The guarantors are either wholly owned or the Company owns 100% of
the voting stock and there are no non-guarantor subsidiaries. The guarantees are
full, unconditional and joint and several. NWS is a holding company and has no
independent assets or operations. |
The bond indenture restricts the ability of the Company and its subsidiaries to incur
additional indebtedness, pay dividends, engage in mergers or consolidations, make capital
expenditures and otherwise restricts corporate activities. |
On or after January 15, 2004, the Company may redeem some or all of the senior notes at any
time at stated redemption prices plus accrued interest and liquidated damages.
Notwithstanding the foregoing, during the first 36 months after January 20, 1999, the
Company may redeem up to 33% of the aggregate principal amount of the senior notes at a
redemption price of 110.125%, plus accrued interest and liquidated damages, with the net
cash proceeds of one or more public offerings of common stock of the Company. |
The Company purchased $9,646,000 of its senior notes on the open market in the quarter ended
June 30, 2003. The notes were purchased for $8,681,000 plus accrued interest of $305,000.
Related unamortized issuance costs of $265,000 were written off due to the purchase of the
senior notes. The net gain on the purchase of $700,000 is included in interest expense. |
| (B) |
On March 31, 2003, NWS entered into a credit agreement with LaSalle Bank
National Association, as lender and agent, and National City Bank of Indiana,
that provides a revolving line of credit for borrowings of up to $40 million,
including standby or commercial letters of credit of up to $5 million, through
April 1, 2008. Line of credit borrowings are collateralized by and based upon
eligible accounts receivable and inventories, as defined, and are guaranteed by
NWS’ subsidiaries. Interest is payable monthly at the LIBOR rate or the
higher of the prime lending rate or the federal funds rate, plus a margin
percentage. As of June 30, 2003, the applicable interest rate on the revolving
line of credit was 4.25%. Commercial letters of credit of $4.5 million were
issued for the self insured portion of NWS’ casualty insurance
policies. |
– 7 –
NATIONAL WINE & SPIRITS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
In addition, the agreement places restrictions on the Company and its subsidiaries regarding
additional indebtedness, dividends, mergers or consolidations and capital expenditures.
Further, the Company must maintain certain interest coverage and funded debt coverage
ratios, with which the Company was in compliance at June 30, 2003. |
5. Commitments
The Company has future obligations for guaranteed minimum royalty payments related to certain distribution contracts. Existing agreements require minimum royalty payments of approximately $2,700,000 for fiscal year 2004. Because the Company believes that actual royalty payments will exceed the guaranteed minimum, royalty payments are recorded in cost of sales as royalties become payable.
6. Intangible Assets
Intangible assets consist of the following:
| June 30, 2003 |
March 31, 2003 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Intangible Assets Subject to Amortization |
Weighted Average Life |
Gross Carrying Amount |
Accumulated Amortization |
Gross Carrying Amount |
Accumulated Amortization | ||||||||||||
| Distribution rights | 7 | $ | 15,730,000 | $ | 2,330,000 | $ | 15,676,000 | $ | 1,683,000 | ||||||||
| Loan acquisition costs | 10 | 4,251,000 | 1,816,000 | 4,716,000 | 1,890,000 | ||||||||||||
| Non-compete agreements | 5 | 200,000 | 162,000 | 200,000 | 153,000 | ||||||||||||
| Total | 7 | $ | 20,181,000 | $ | 4,308,000 | $ | 20,592,000 | $ | 3,726,000 | ||||||||
| Intangible Assets Not Subject to Amortization |
Carrying Amount |
Carrying Amount |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Distribution rights | $ | 1,462,000 | $ | 1,462,000 | |||||||||||||
– 8 –
NATIONAL WINE & SPIRITS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Segment Reporting
The Company’s reportable segments are business units that engage in product sales and all other activities. The majority of the all other activities relate to distribution fee operations. The Company evaluates performance and allocates resources based on these segments. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 1.
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, 2003 | June 30, 2002 | |||||||
| Revenue from external customers | ||||||||
| Product sales | $ | 137,910,000 | $ | 177,201,000 | ||||
| All other | 6,124,000 | 5,531,000 | ||||||
| Segment income (loss) | ||||||||
| Product sales | (85,000 | ) | 4,900,000 | |||||
| All other | 46,000 | (506,000 | ) | |||||
| Segment assets | ||||||||
| Product sales | 177,242,000 | 200,197,000 | ||||||
| All other | 11,169,000 | 10,072,000 | ||||||
8. Litigation
The Company is a party to various lawsuits and claims arising in the normal course of business. While the ultimate resolution of lawsuits or claims against the Company cannot be predicted with certainty, management is vigorously defending all claims and does not expect that these matters will have a material adverse effect on the financial position or results of operations of the Company.
9. Management Services Agreement
NWS-LLC entered into a management services agreement with a nationwide wholesaler of wine and spirits during the year ended March 31, 2003. As part of that agreement, NWS-LLC recorded approximately $2,529,000 as a reduction of operating expenses during the three months ended June 30, 2003 relating to the management services agreement.
– 9 –
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
This Form 10-Q, including, but not limited to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology, such as “may,” “intend,” “will,” “expect,” “anticipate,” “should,” “plans to,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. In particular, any statement, express or implied, concerning future operating results or the ability to generate revenues, income or cash flow to service the Company’s debt are forward-looking statements. Although the Company believes that the expectations will prove to have been correct, all forward-looking statements are expressly qualified by such cautionary statements, and the Company undertakes no obligation to update such forward-looking statements.
Overview
National Wine & Spirits, Inc. (the “Company”) is one of the largest distributors of wine and spirits in the United States. Substantially all of the Company’s current operations are in Illinois, Indiana, Michigan, Kentucky, and from U.S. Beverage, L.L.C. (USB), the Company’s national import, craft and specialty beer marketing and distribution business. The Company’s reported revenues include net product sales in Illinois, Indiana, Michigan, and from USB, with distribution fees from the Michigan distribution operation.
EBITDA is used throughout this Item as a financial indicator. Each reference to EBITDA herein is qualified by reference to, and should be read in conjunction with this paragraph and the following two paragraphs and the reconciliation below. EBITDA, as used herein, is defined as net income plus interest expense, depreciation and amortization. EBITDA should not be construed as an alternative to income or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.
EBITDA is a non-GAAP financial measure within the meaning of Regulation G. EBITDA is presented because it is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of debt service capability. Management uses EBITDA to set targets and monitor and assess financial performance. EBITDA is not intended to represent cash flows for the periods presented, nor has it been presented as an alternative to net income as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance and cash flow prepared in accordance with generally accepted accounting principles.
– 10 –
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The most comparable GAAP measure for EBITDA is net income (loss). Following is a reconciliation between net income (loss) and EBITDA for the three months ended June 30, 2003 and 2002.
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, 2003 | June 30, 2002 | |||||||
| (in thousands) | ||||||||
| Net Income (loss) | $ | (39 | ) | $ | 4,394 | |||
| Interest expense | 1,730 | 2,819 | ||||||
| Depreciation | 1,595 | 1,646 | ||||||
| Amortization | 781 | 595 | ||||||
| EBITDA | $ | 4,067 | $ | 9,454 | ||||
The EBITDA information reflected herein may not be comparable to similarly titled measures used by other companies.
For the three months ended June 30, 2003, the Company’s EBITDA was $4.1 million, as compared to $9.5 million for the prior year’s comparable quarter. Net loss was $0.05 million for the three months ended June 30, 2003, versus net income of $4.4 million for the prior year's comparable quarter, primarily resulting from the decline the Company’s Illinois sales volume. The Company’s case volume and revenue from its Indiana, Michigan, and USB divisions remained stable for the three months ended June 30, 2003, as compared to the prior year’s comparable quarter. USB introduced Seagram Smooth, a malt based product that competes in the ready to drink market sector and, during the quarter ended June 30, 2003, USB incurred significant brand promotion and advertising expenses relating to the Seagram Smooth introduction and other seasonal brand investments. The Company has made significant progress in its evaluation and resizing of its Illinois operation during the quarter ended June 30, 2003. As the Company’s Illinois volume was decreasing during the quarter, certain wage and operating costs were incurred, while the benefits from the resizing will be experienced going forward. The Company believes that a more efficient Illinois organization has been formed and that it will benefit financially from any incremental volume with the reduced cost structure. In addition, as a result of this more efficient structure, the Company believes its Illinois operations present a viable and attractive alternative to suppliers in the Illinois market that could result in increased revenues.
– 11 –
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company repurchased approximately $9.6 million of its senior notes on the open market during the quarter ended June 30, 2003, resulting in approximately $80.3 million outstanding of the original $110 million senior notes that were originally issued. By reducing the Company’s interest expense through open market repurchases of senior notes, aggressive cost reduction initiatives in its Illinois business, and stable to increasing earnings and cash flow from Indiana, Michigan, and USB businesses, the Company expects to maintain adequate earnings and cash flow to fund working capital and debt service needs for the year ending March 31, 2004. Continuing efforts are also being made to replace lost revenue in Illinois.
The Company was notified on July 8, 2003 that it had been selected as the exclusive distributor of Schieffelin & Somerset (“S&S”) spirits and wine brands in Indiana. NWS Indiana does not currently distribute the majority of S&S products, and brands added to the Indiana portfolio include Johnnie Walker Scotch, Hennessy Cognac, Tanqueray Gin, and Moet champagnes, among others. The distribution agreement extends for five years.
The Company’s Illinois business has been negotiating with several new suppliers and has become the exclusive distributor of the wine brands of W.J. Deutsch & Sons in Illinois. The primary brand for this vendor is Yellow Tail, an Australian wine that is one of the fastest growing labels in the United States.
Results of Operations
The following table includes information regarding total cases shipped by NWS during the three months ended June 30, 2003 compared with the comparable periods ended June 30, 2002:
| Three Months Ended June 30 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 | 2002 | Percent Change | |||||||||
| (Cases in thousands) | |||||||||||
| Wine (product sales operations) | 552 | 745 | (25 | .9)% | |||||||
| Spirits (product sales operations) | 565 | 864 | (34 | .6)% | |||||||
| Spirits (distribution fee operations) | 685 | 648 | 5 | .7% | |||||||
| Total wine and spirits | 1,802 | 2,257 | (20 | .2)% | |||||||
| Other (including USB sales) | 3,401 | 2,079 | 63 | .6% | |||||||
| Total | 5,203 | 4,336 | 20 | .0% | |||||||
– 12 –
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Fiscal 2003 Compared with Fiscal 2002
Revenue
Total product revenue decreased $39.3 million to $137.9 million for the three months ended June 30, 2003 versus $177.2 million for the prior year’s comparable quarter. The revenue decrease for the quarter ended June 30, 2003 as compared to the prior year’s comparable quarter was primarily due to the reduced sales volume in the Company’s Illinois business. The Company’s Illinois business does not represent certain vendors due to distribution rights that were terminated during the last fiscal quarter of the year ended March 31, 2003. The loss of these distribution rights will continue to cause negative comparative revenue figures for the remainder of fiscal 2004. Product sales in the Company’s other divisions were up due to increased USB volume on existing brands and new product introductions. Fee revenue for the quarter ended June 30, 2003 increased 10.7% from the comparable prior annual period due to the addition of S&S brands being represented in the Company’s Michigan business. The Company commenced distribution and brokerage of the S&S brands during the quarter ended June 30, 2003, and expects to show positive distribution fee revenue for the remainder of the fiscal year, as compared to the prior fiscal year periods.
Gross Profit
Gross margin on product sales decreased $8.9 million for the three months ended June 30, 2003 versus the prior year’s comparable quarter. The sales volume decline in the Company’s Illinois business was primarily responsible for the drop in gross margin dollars during the three months ended June 30, 2003, as compared to the prior year’s comparable quarter. Gross profit percentage on product sales of 20.8% was slightly below the prior year’s quarterly period of 21.2% due to USB receiving commissions in lieu of recording sales and cost of sales from Seagram cooler sales during the June 2002 quarterly period when the brands were in transition from Pernod Ricard to USB. The Company’s Illinois business was able to increase gross margin percentage slightly for the current quarterly period, as compared to the prior year’s quarterly period, on the reduced sales volume. Gross margin dollars for the Company’s other product markets were up from the prior year’s quarterly period due to the increased USB and Michigan sales volume.
Operating Expenses
Total operating expenses decreased $2.8 million for the three months ended June 30, 2003 to $33.3 million. Aggressive cost reduction initiatives in the Company’s Illinois business were primarily responsible for the reduction in operating expenses during the three months ended June 30, 2003 as compared to the prior year’s comparable period. Although the Company’s USB division incurred significant product introduction and seasonal brand promotional expenses during the quarter ended June 30, 2003, they were offset by the cost reductions from the Illinois business.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Warehouse and delivery expenses were reduced by $0.6 million during the three months ended June 30, 2003 as compared to the prior year’s comparable period due to reductions in personnel and operations in the Company’s Illinois business. Warehouse and delivery expenses for the Company’s other divisions had only modest increases over the prior year’s comparable period since the increased USB volume is brokerage revenue and not shipped or handled by Company personnel.
Selling expenses remained stable from the prior year’s comparable period, however, this was the result of significant cost reductions in the Company’s Illinois business, which were offset by additional advertising and brand promotion expenses incurred by the Company’s USB division during the three months ended June 30, 2003. The additional expenditures by the Company’s USB division were the result of a product launch during the quarter ended June 30, 2003 and seasonal brand promotional activities for existing brands.
Administrative expense decreased $2.2 million for the three months ended June 30, 2003 as compared to the prior year’s comparable period. The decrease was primarily the result of payments of approximately $2.5 million received from Glazer’s Wholesale Drug Company (“Glazer”) as part of a management services agreement with Glazer for the Company’s Illinois division. Cost reductions for wages and related costs by the Company’s Illinois business were offset by increased costs for professional fees and health care across all divisions.
Income From Operations
Operating income of $1.6 million for the three months ended June 30, 2003, was $5.5 million lower than the prior year’s comparable period. The decline in revenue and resulting decrease in operating income from the Company’s Illinois business was primarily responsible for the decrease in operating income.
Interest Expense
Interest expense declined $1.1 million to $1.7 million for the three months ended June 30, 2003 as compared to the prior year’s comparable period. Gains from the discounted repurchases of the Company’s senior notes and reduced long term debt levels were primarily responsible for the decreased expense. The Company repurchased $9.6 million of its senior notes on the open market during the quarter ended June 30, 2003 at 90% of face value and expensed associated unamortized debt issuance costs resulting in a $0.7 million gain. The Company’s long-term debt at June 30, 2003 of $86.7 million was $23.2 million lower than the June 30, 2002 balance, resulting in reduced interest expense during the quarter ended June 30, 2003.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Other Income
Other income remained stable with the prior year’s comparable period due to reduced rental income and decreased income from the Company’s equity in earnings from Commonwealth Wine & Spirits, LLC. The reductions were offset by the losses from the investment in eSkye Solutions, Inc. that were incurred during the prior year’s comparable quarter but not during the current year’s quarterly period.
Net Loss
Net income declined from $4.4 million during the prior year’s quarter to a net loss of approximately $0.05 million for the three months ended June 30, 2003. The net loss from the Company’s Illinois business, which was not offset by other divisions, was primarily responsible for the drop in net income during the three months ended June 30, 2003, as compared to the prior year’s comparable quarter.
EBITDA
For financial analysis purposes only, the Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter ended June 30, 2003 was $4.1 million as compared to $9.5 million for the prior year’s comparable reporting period. EBITDA should not be construed as an alternative to operating income or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.
Liquidity and Capital Resources
The Company’s primary cash requirements have been to fund accounts receivable and inventories for the product markets in Illinois, Indiana, Michigan, and its U.S. Beverage operations. The Company has historically satisfied its cash requirements principally through cash flow from operations, trade terms, bank borrowings and existing cash balances.
At June 30, 2003, the Company had $2.0 million of outstanding advances on its $40.0 million revolving line of credit facility along with $4.5 million of letters of credit outstanding, resulting in availability of $33.5 million. The line of credit borrowings are collateralized by and based upon eligible accounts receivable and inventories, as defined, and are guaranteed by the Company’s subsidiaries. Interest is payable monthly at the LIBOR rate or the higher of the prime lending rate or the federal funds rate, plus a margin percentage. The Company’s revolver rate of interest was 4.25% at June 30, 2003. The Company anticipates that the collateral base for the revolving credit facility will provide adequate availability to fund operations and working capital needs during fiscal 2004.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company generated $9.1 million in net cash from operating activities for the three months ended June 30, 2003, as compared to cash used of $4.2 million for the prior year’s comparable period. This $13.3 million variance was primarily due to the Illinois business’ net reductions in inventories, receivables, and payment of current liabilities. The Company’s net proceeds from the reduction of Illinois working capital was approximately $15.4 million for the three months ended June 30, 2003. Cash provided by net income (loss) and adjustments for depreciation and amortization were $2.3 million for the three months ended June 30, 2003, as compared to $6.6 million for the prior year’s comparable period.
Net cash used by investing activities was $0.2 million for the three months ended June 30, 2003, a decrease of $0.4 million from the comparable prior year’s period. The decreased use of cash, as compared to the prior year’s comparable period, was primarily due to reduced capital expenditures of $0.9 million. The Company reduced its capital expenditures during the first fiscal quarter of fiscal 2004 due to the reduction in the Illinois business. The Company intends to continue the reduced level of capital expenditures during fiscal 2004 at maintenance levels between $2.0 million and $2.5 million.
Net cash used by financing activities increased by $13.9 million for the three months ended June 30, 2003 as compared to the prior year’s comparable period. Purchases of the Company’s senior notes in the open market and stockholder distributions for federal income tax estimates were primarily responsible for the increased use of funds by financing activities. The Company purchased $9.6 million of its senior notes at approximately 90% of face, plus accrued interest, during the three months ended June 30, 2003. The Company may continue to selectively pursue repurchase opportunities in the open market during fiscal 2004. The revolving credit facility allows up to $30 million of debt repurchases subsequent to March 31, 2003, if after giving effect to the purchase, there is $15 million of availability under the $40 million revolving credit facility. Outstanding advances on the revolving credit facility were $2.0 million at June 30, 2003, which was used for working capital needs. The Company will utilize the positive cash flow from the downsizing of Illinois operations, existing cash, and its credit facility to fund operations and possible additional senior note repurchases during fiscal 2004. The Company’s distributions to stockholders increased by $2.8 million for the three months ended June 30, 2003, as compared to the prior year’s comparable period. Stockholder distributions during the quarter ended June 30, 2003 were used by the stockholders for income tax estimates. The Company expects stockholder distributions to be reduced during fiscal 2004 due to reduced tax liabilities. Stockholder distributions other than for tax liabilities are limited by the revolving credit facility and indenture.
Total assets decreased to $188.4 million at June 30, 2003, a $15.3 million decrease from March 31, 2003. The decrease in assets was primarily due to the collection of supplier receivables, and inventory reduction related to the terminated supplier distribution rights in Illinois. Cash balances decreased $5.0 million during the three months ended June 30, 2003 due to funding of open market senior note repurchases and stockholder distributions. Trade accounts receivable balances at June 30, 2003 were $4.5 million higher than the March 31, 2003 balances, primarily from the increased USB sales volume, which more than offset the reduction of Illinois accounts receivable balances. Total debt of $86.7 million at June 30, 2003 as compared to March 31, 2003 decreased due to the Company’s repurchase of $9.6 million of its senior notes on the open market and repayment of $2.0 million of the revolving credit facility. Equity decreased to $25.0 million at June 30, 2003 as compared to March 31, 2003 due to the stockholder distributions of $2.8 million.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company expects to maintain adequate cash balances and revolving credit facility availability to satisfy the Company’s anticipated working capital and debt service requirements during fiscal 2004.
Inflation
Inflation has not had a significant impact on the Company’s operations but there can be no assurance that inflation will not have a negative effect on the Company’s financial condition, results of operations or debt service capabilities in the future.
Environmental Matters
The Company currently owns and leases a number of properties, and historically it has owned and/or leased others. Under applicable environmental laws, the Company may be responsible for remediation of environmental conditions relating to the presence of certain hazardous substances on such properties. The liability imposed by such laws is often joint and several without regard for whether the property owner or operator knew of, or was responsible for, the presence of such hazardous substances. In addition, the presence of such hazardous substances, or the failure to properly remediate such substances, may adversely affect the property owner’s ability to borrow using the real estate as collateral and to transfer its interest in the real estate. Although the Company is not aware of the presence of hazardous substances requiring remediation, there can be no assurance that releases unknown to the Company have not occurred. Except for blending and bottling of a few of the Company’s private label brands, the Company does not manufacture any of the wine or spirit products it sells and believes that it has conducted its business in substantial compliance with applicable environmental laws and regulations. Compliance with environmental laws has not had a material effect upon NWS’ capital expenditures, earnings or competitive position.
Critical Accounting Policies
The Company’s consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the reporting periods.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company continually evaluates its accounting policies and estimates it uses to prepare the consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
The Company believes its critical accounting policies and estimates, as reviewed and discussed with the Audit Committee of the Board of Directors, include accounting for impairment of long-lived assets, accounts receivable valuation, inventory valuation, vendor allowances, and pensions.
Impairment of Long-lived Assets. The Company evaluates long-lived assets and intangibles subject to amortization whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review of recoverability, the Company estimates future cash flows expected to result from the use of the asset and its eventual disposition. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s subjective judgments. The time periods for estimating future cash flows is often lengthy, which increases the sensitivity to assumptions made. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets can vary within a wide range of outcomes. The Company considers the probability of possible outcomes in determining the best estimate of future cash flows.
Receivables and Credit Policies. The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and creates an allowance for doubtful accounts based on the credit worthiness of specific accounts and an estimate of other uncollectible accounts based on historical performance.
Vendor Allowances Received. The Company records vendor allowances and discounts in accordance with EITF 02-16: Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor. The Company receives allowances from vendors as a result of purchasing and promoting their products. Vendor allowances provided as a reimbursement of specific, incremental, and identifiable costs incurred to promote a vendor’s products are recorded as an expense reduction when the cost is incurred. All other vendor allowances, including vendor allowances received in excess of the Company’s cost to promote a vendor’s product, or vendor allowances directly related to purchase of a vendor’s product are initially deferred. The deferred amounts are then recorded as a reduction of cost of goods sold when the related product is sold.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Defined Benefit Pension Plan. The most significant element in determining the Company’s pension income (cost) in accordance with SFAS No. 87 is the expected return on plan assets. In 2003, the Company assumed that the expected long-term rate of return on plan assets would be 8.5%. The assumed long-term rate of return on assets is applied to a calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension income (cost). The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pension income (cost). Over the long term, the Company’s pension plan assets have earned in excess of 9.5%. However, the plan assets have lost an average of 14.9% per year during the last two years. Should this trend continue, the Company would be required to reconsider its assumed expected rate of return on plan assets. If the Company were to lower this rate, future pension cost would increase.
At the end of each year, the Company determines the discount rate to be used to calculate the present value of plan liabilities. The discount rate is an estimate of the current interest rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, the Company uses the preceding November’s Moody’s AA Corporate Bond Index rounded down to the nearest ¼ of a percentage point. At March 31, 2003, the Company determined this rate to be 6.5%, a decrease of 50 basis points from the rate used at March 31, 2002. Changes in discount rates over the past three years have not materially affected pension income (cost), and the net effect of changes in the discount rate, as well as the net effect of other changes in actuarial assumptions and experience, have been deferred, in accordance with SFAS No. 87.
The significant declines in the financial markets over the past two years coupled with the decline in interest rates have caused the Company’s accumulated pension obligation to exceed the fair value of the related plan assets. As a result, for fiscal 2003 the Company recorded an increase to accrued pension liability and a non-cash charge to equity of approximately $1.1 million. This charge may be reversed in future periods if market conditions improve or interest rates rise.
For the year ended March 31, 2003, the Company recognized consolidated pretax pension cost of $0.5 million, up from $0.3 million in 2002. The Company currently expects that the consolidated pension cost for 2004 will not be materially different from 2003. The Company’s required minimum amount of 2004 contributions will not exceed actual contributions made in 2003. However, the Company may elect to increase the level of contributions in 2004 over 2003 levels based on a number of factors, including performance of pension investments, changes in interest rates, and changes in workforce compensation.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Recently Issued Accounting Pronouncements
In April 2002 the Financial Accounting Standards Board issued Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions as well as addresses the classifications of gains and losses on debt extinguishment. Accordingly, the Company classified its gains from repurchases of its long-term debt in interest expense on the Consolidated Statement of Income.
The Company adopted the Emerging Issues Task Force Issue 02-16: Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor for arrangements either modified or created after December 31, 2002. This statement reached a consensus that cash consideration represents a reimbursement of costs incurred by the customer to sell the vendor’s products and should be characterized as a reduction of that cost when recognized in the customer’s income statement if the cash consideration represents a reimbursement of a specific, incremental, identifiable cost incurred by the customer in selling the vendor’s products or services. If the amount of cash consideration paid by the vendor exceeds the cost being reimbursed, that excess amount should be characterized in the customer’s statement of operations as a reduction of cost of sales when recognized in the customer’s statement of operations.
The Company has reviewed its accounting policies and methods and concluded that the recording of cash consideration received from vendors were recorded in accordance with the statement.
Accordingly, the Company receives allowances from vendors as a result of purchasing and promoting their products. Vendor allowances provided as a reimbursement of specific, incremental and identifiable costs incurred to promote a vendor’s products are recorded as an expense reduction when the cost is incurred. All other vendor allowances, including vendor allowances received in excess of the Company’s cost to promote a vendor’s product, or vendor allowances directly related to purchase of a vendor’s product are initially deferred. The deferred amounts are then recorded as a reduction of cost of goods sold when the related product is sold.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46) Consolidation of Variable Interest Entities. The term “variable interest” is defined in FIN 46 as “contractual, ownership or other pecuniary interest in an entity that change with changes in the entity’s net asset value.” Variable interest are investments or other interest that will absorb a portion of an entity’s expected losses if they occur or receive portions of the entity’s expected residual returns if they occur. The Company does not expect the recognition provisions of FIN 46 to have a material impact on the Company’s financial position or results of operations.
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 establishes standards on the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The provisions of SFAS 150 are effective for financial instruments entered into or modified after May 31, 2003 and to all instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The adoption of SFAS 150 will not have a material impact on the Company’s results of operations or financial position.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company uses long-term debt as a primary source of capital in its business. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for the Company’s long-term fixed-rate debt and other types of long-term debt at June 30, 2003:
| 2003 | 2004 | 2005 | 2006 | 2007 | Thereafter | Total | Fair Value | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed | $ --- | $ --- | $ --- | $ --- | $ --- | $ | 80,329,000 | $ | 80,329,000 | $71,493,000 | ||||||||||||||||
| Avg. Rate | --- | --- | --- | --- | --- | 10.125% | 10.125% | |||||||||||||||||||
| Variable | $ --- | $ --- | $ --- | $ --- | $ --- | $ | 6,328,000 | $ | 6,328,000 | $ 6,328,000 | ||||||||||||||||
| Avg. Rate | --- | --- | --- | --- | --- | 4.08% | 4.08% | |||||||||||||||||||
The Company is exposed to fluctuations in interest rate risk as a result of its variable rate debt. The Company’s objectives in managing its exposure to changes in interest rates are to limit the effect of interest rate changes on earnings and cash flows and to minimize the amount of borrowings under the Company’s revolving line of credit. This approach to managing interest rate risk does not consider the changes in the Company’s competitive environment indirectly related to changes in interest rates and management’s responses to these changes.
Item 4. Controls and Procedures
As of June 30, 2003, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, Chief Financial Officer, and the Company’s Corporate Controller, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer, Chief Financial Officer, and the Company’s Corporate Controller concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. No changes in the Company’s internal control over financial reporting occurred during the quarter ended June 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to various lawsuits and claims arising in the normal course of business. While the ultimate resolution of lawsuits or claims against the Company cannot be predicted with certainty, management is vigorously defending all claims and does not expect that these matters will have a material adverse effect on the financial position or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
The stockholders of National Wine & Spirits, Inc. voted unanimously, via written consent, to remove Martin H. Bart from the Board of Directors effective April 1, 2003.
Item 5. Other Events
In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, National Wine & Spirits, Inc. is identifying in Exhibit 99 to this quarterly report important factors that could cause the Company’s actual results to differ materially from those projected in forward-looking statements of the Company made by, or on behalf of, the Company.
Item 6. Exhibits
| (a) | Exhibits | |
| (10) | Amendment No. 1 to Credit Agreement by and among National Wine & Spirits, Inc. and the financial institutions named therein, dated as of June 30, 2003 |
| (31) | Section 302 Certification |
| (99) | Exhibit 99 - Forward-Looking Statements |
| (b) | Reports on Form 8-K | Item. |
| Form 8-K dated July 2, 2003 | Item 5 |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 13, 2003.
|
NATIONAL WINE & SPIRITS, INC. By: /s/ James E. LaCrosse James E. LaCrosse, Chairman, President, Chief Executive Officer, and Chief Financial Officer |
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