[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended October 31, 2014.
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
State or other jurisdiction of
incorporation or organization
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03-0366218
I.R.S. Employer Identification Number
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1050 Buckingham St., Watertown, CT 06795
(Address of principal executive offices and zip code) |
Title of each class
Common Stock, par value $.001 per share
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Name of exchange on which registered
NYSE MKT
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Table of Contents
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Page
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Part I
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||||
Item 1.
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Business
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4
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Item 1A.
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Risk Factors
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12
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Item 1B.
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Unresolved Staff Comments
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19
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Item 2.
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Properties
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19
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Item 3.
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Legal Proceedings
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20
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Item 4.
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Mine Safety Disclosure
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20
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Part II
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||||
Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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21
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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22
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Item 8.
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Financial Statements and Supplementary Data
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29
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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29
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Item 9A.
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Controls and Procedures
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29
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Item 9B.
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Other Information
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30
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Part III
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||||
Item 10.
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Directors, Executive Officers and Corporate Governance
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31
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Item 11.
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Executive Compensation
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31
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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31
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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32
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Item 14.
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Principal Accountant Fees and Services
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32
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Part IV
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||||
Item 15.
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Exhibits and Financial Statement Schedules
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33
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Signatures
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·
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charges related to any potential acquisition from which we may withdraw;
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·
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diversion of our management’s time, attention, and resources;
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·
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decreased utilization during the integration process;
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·
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integration into our business of new personnel, or loss of key acquired personnel;
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·
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increased costs to improve or coordinate managerial, operational, financial, and administrative systems, including compliance with the Sarbanes-Oxley Act of 2002;
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·
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dilutive issuances of equity securities, including convertible debt securities;
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·
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the assumption of legal liabilities;
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|
·
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amortization of acquired intangible assets;
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·
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potential write-offs related to the impairment of goodwill;
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·
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difficulties in integrating diverse corporate cultures; and
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·
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additional conflicts of interest.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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|
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None.
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ITEM 2.
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PROPERTIES.
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ITEM 3.
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LEGAL PROCEEDINGS.
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None.
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ITEM 4.
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MINE SAFETY DISCLOSURE
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None.
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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High
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Low
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|||||||
First Quarter
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$ | 1.14 | $ | .83 | ||||
Second Quarter
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$ | 1.42 | $ | .83 | ||||
Third Quarter
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$ | .90 | $ | .76 | ||||
Fourth Quarter
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$ | .87 | $ | .71 |
High
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Low
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|||||||
First Quarter
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$ | 1.11 | $ | .93 | ||||
Second Quarter
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$ | 1.10 | $ | .94 | ||||
Third Quarter
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$ | .97 | $ | .86 | ||||
Fourth Quarter
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$ | .91 | $ | .84 |
Issuer Purchases of Equity Securities
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||||||||||||||||
Total Number of Shares
Purchased
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Average Price Paid
per Share (1)
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Total Number of Shares as Part of a Publicly Announced
Program (2)
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Maximum Expenditure that May Yet be used for Purchases Under the
Program (2)
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|||||||||||||
August 1-31
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2,000 | $ | .87 | 2,000 | $ | 470,031 | ||||||||||
September 1-30
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- | - | - | 470,031 | ||||||||||||
October 1-31
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- | - | - | 470,031 | ||||||||||||
Total
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2,000 | $ | .87 | 2,000 |
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(1)
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Includes transaction costs.
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(2)
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On May 14, 2012 we announced a program to repurchase up to $500,000 of our common stock. There is no expiration date for the plan to repurchase additional shares and the dollar limit may not be reached.
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ITEM 7.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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§
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Business Overview
—
a brief description of fiscal year 2014.
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§
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Results of Operations
— an analysis of our consolidated results of operations for the two years presented in our consolidated financial statements.
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§
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Liquidity and Capital Resources
— an analysis of cash flows, sources and uses of cash, and contractual obligations and a discussion of factors affecting our future cash flow.
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§
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Critical Accounting Policies
— a discussion of accounting policies that require critical judgments and estimates. Our significant accounting policies, including the critical accounting policies discussed in this section, are summarized in the notes to the accompanying consolidated financial statements.
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Product Line
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2014
(in 000’s $)
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2013
(in 000’s $)
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Difference
(in 000’s $)
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% Diff.
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||||||||||||
Water
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$ | 27,759 | $ | 29,211 | $ | (1,452 | ) | (5 | %) | |||||||
Coffee
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14,585 | 16,034 | (1,449 | ) | (9 | %) | ||||||||||
Refreshment
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11,213 | 11,578 | (365 | ) | (3 | %) | ||||||||||
Equipment Rental
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7,995 | 8,175 | (180 | ) | (2 | %) | ||||||||||
Office Products
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11,106 | 3,625 | 7,481 | 206 | % | |||||||||||
Other
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2,497 | 2,358 | 139 | 6 | % | |||||||||||
Total
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$ | 75,155 | $ | 70,981 | $ | 4,174 | 6 | % |
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·
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Route sales costs decreased 2%, or $315,000, to $14,500,000 in fiscal year 2014 from $14,815,000 in fiscal year 2013, primarily related to lower labor and vehicle lease costs. Included as a component of route sales costs are total direct distribution related costs which decreased $335,000, or 2%, to $13,806,000 in fiscal year 2014 from $14,141,000 in fiscal year 2013, primarily as a result of lower labor and vehicle lease costs;
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·
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Selling costs increased 11%, or $485,000, to $5,059,000 in fiscal year 2014 from $4,574,000 in fiscal year 2013. The higher costs were attributable to increasing staff and travel to support the growth of the Company’s office products business
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·
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Administrative costs increased 48,000, or 1%, to $12,844,000 in fiscal year 2014 from $12,796,000 in fiscal year 2013. The decrease was mostly attributable to lower labor costs in support of our IT infrastructure.
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·
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Macroeconomic conditions including the general economic conditions, limitations on accessing capital, and other developments in equity and credit markets
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·
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Industry and market considerations including any deterioration in the environment in which we operate, an increased competitive environment, a decline in market-dependent multiples or metrics, a change in the market for our products or services, or a regulatory or political development
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·
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Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows
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·
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Overall financial performance including negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods
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·
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Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; or litigation
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·
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Whether a sustained, material decrease in share price had occurred.
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Payment due by Period (2)
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||||||||||||||||||||
Contractual Obligations
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Total
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2015
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2016-2017 | 2018-2019 |
After 2020
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|||||||||||||||
Debt
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$ | 19,072,000 | $ | 2,131,000 | $ | 3,142,000 | $ | 13,799,000 | $ | - | ||||||||||
Interest on Debt (1)
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5,364,000 | 1,412,000 | 2,679,000 | 1,273,000 | - | |||||||||||||||
Operating Leases
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11,289,000 | 3,502,000 | 5,025,000 | 2,225,000 | 537,000 | |||||||||||||||
Total
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$ | 35,725,000 | $ | 7,045,000 | $ | 10,846,000 | $ | 17,297,000 | $ | 537,000 |
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(1)
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Interest based on 75% of outstanding senior debt at the hedged interest rate discussed above, 25% of outstanding senior debt at a variable rate of 2.65% and subordinated debt at a rate of 12%.
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(2)
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Customer deposits have been excluded from the table. Deposit balances vary from period to period with water sales but future increases and decreases in the balances are not accurately predictable. Deposits are excluded because, net of periodic additions and reductions, it is probable that a customer deposit balance will always be outstanding as long as the business operates.
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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ITEM 9A.
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CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures
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|
·
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pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
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·
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provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
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|
·
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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
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ITEM 11.
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EXECUTIVE COMPENSATION.
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
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(a)
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(b)
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(c)
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Plan Category
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Number of Securities to be issued upon exercise of outstanding options, warrants and rights
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Weighted-average exercise price of outstanding options, warrants and rights
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Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)).
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Equity compensation plans approved by security holders
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247,750
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$2.07
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500,000
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Equity compensation plans not approved by security holders
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-0-
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-
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-0-
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Total
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247,750
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$2.07
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500,000
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
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ITEM 14.
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PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
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a)
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The following documents are filed as part of this report:
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3.1
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Certificate of Incorporation
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S-4
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September 6, 2000
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Exhibit B to Appendix A
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|||
3.2
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Certificate of Amendment to Certificate of Incorporation
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8-K
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October 19, 2000
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4.2
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|||
3.3
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Amended and Restated By-Laws as adopted March 29, 2010
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8-K
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April 2, 2010
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3.2
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|||
3.4
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Certificate of Ownership and Merger of Crystal Rock Holdings, Inc. with and into Vermont Pure Holdings, Ltd.
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8-K
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April 30, 2010
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3.1
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|||
4.1
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Registration Rights Agreement with Peter K. Baker, Henry E. Baker, John B. Baker and Ross Rapaport
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8-K
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October 19, 2000
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4.6
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|||
10.1*
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1998 Incentive and Non-Statutory Stock Option Plan, as amended
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14A
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February 28, 2003
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A
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|||
10.2*
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2004 Stock Incentive Plan
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14A
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March 1, 2004
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B
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|||
10.3*
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Employment Agreement dated May 2, 2007 with Peter K. Baker
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8-K
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May 2, 2007
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10.1
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|||
10.4*
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Employment Agreement dated May 2, 2007 with Bruce S. MacDonald
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8-K
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May 2, 2007
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10.3
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|||
10.5*
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Employment Agreement dated May 2, 2007 with John B. Baker
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8-K
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May 2, 2007
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10.2
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|||
10.6
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Lease of Buildings and Grounds in Watertown, Connecticut from the Baker’s Grandchildren Trust
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S-4
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September 6, 2000
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10.22
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10.7
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First Amendment to the Lease of Buildings and Grounds in Watertown, Connecticut from the Baker’s Grandchildren Trust
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10-Q
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September 14, 2007
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10.4
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|||
10.8
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Amended and Restated Credit Agreement dated April 5, 2010 with Bank of America.
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8-K
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April 9, 2010
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10.1
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|||
10.9
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Form of Amended and Restated Term Note dated April 5, 2010 to Bank of America.
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8-K
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April 9, 2010
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10.2
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|||
10.10
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Form of Amended and Restated Subordination and Pledge Agreement dated April 5, 2010 between Henry E. Baker and Bank of America.
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8-K
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April 9, 2010
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10.3
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|||
10.11
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Form of Amended and Restated Subordination and Pledge Agreement dated April 5, 2010 between John B. Baker and Peter K. Baker and Bank of America.
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8-K
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April 9, 2010
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10.4
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|||
10.12
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Form of Amended and Restated Promissory Note dated April 5, 2010 issued to Henry E. Baker, John B. Baker and Peter K. Baker
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8-K
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April 9, 2010
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10.5
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|||
10.13
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Form of Indemnification Agreement dated November 2, 2005 with each of Henry E. Baker, John B. Baker, Peter K. Baker, Phillip Davidowitz,David Jurasek, Bruce S. MacDonald and Ross S. Rapaport
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10-K
|
January 30, 2006
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10.21
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|||
10.14
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Form of Indemnification Agreement dated November 2, 2005 with each of John M. Lapides and Martin A. Dytrych and dated February 15, 2012 for Lori J. Schafer
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10-K
|
January 30, 2006
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10.22
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|||
10.15
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Financial Assistance Agreement with Connecticut Innovations dated August 20, 2007
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10-K
|
January 29, 2008
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10.30
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|||
10.16*
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Amendment No. 1 to Employment Agreement with Peter K. Baker dated September 10, 2009.
|
10-Q
|
September 14, 2009
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10.1
|
|||
10.17*
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Amendment No. 1 to Employment Agreement with John B. Baker dated September 10, 2009.
|
10-Q
|
September 14, 2009
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10.2
|
|||
10.18
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Letter of Waiver and Consent dated September 15, 2010 signed by Martin Dytrych, Henry Baker, Peter Baker, and John Baker.
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8-K
|
October 1,2010
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10.1
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|||
10.19**
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First Amendment to the Credit Agreement dated September 28, 2010 with Bank of America.
|
8-K
|
October 1,2010
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10.2
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|||
10.20
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Letter from Henry E., Peter K., and John B. Baker and Ross S. Rapaport, as trustee, to Bank America, as agreed to, to amend Subordination Agreements.
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8-K
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October 1,2010
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10.3
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|||
10.21
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Lease of Building and Land in Stamford, Connecticut from Henry E. Baker dated September 30, 2010.
|
8-K
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October 1,2010
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10.4
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|||
10.22*
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Amendment No. 2 to Employment Agreement with Peter K. Baker dated October 19, 2011.
|
10-K
|
January 27, 2012
|
10.24
|
|||
10.23*
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Amendment No. 2 to Employment Agreement with John B. Baker dated October 19, 2011.
|
10-K
|
January 27, 2012
|
10.25
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|||
10.24**
|
Second Amendment to the Credit Agreement with Bank of America dated May 14, 2012.
|
10-Q
|
June 14, 2012
|
10.1
|
10.25**
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Third Amendment to the Credit Agreement with Bank of America dated March 13, 2013
|
10-Q
|
March 18,2013
|
10.1
|
|||
10.26
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Amendment of Second Amended and Restated Subordinated Note and Subordinated Note to Henry Baker dated March 13, 2013
|
10-Q
|
March 18, 2013
|
10.2
|
|||
10.27
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Amendment of Subordinated Note to Peter and John Baker dated March 13, 2013
|
10-Q
|
March 18, 2013
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10.3
|
|||
10.28
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Second Amended and Restated Term Note to Bank of America dated March 13, 2013
|
10-Q
|
March 18, 2013
|
10.4
|
|||
10.29
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Letter of Waiver and Consent dated December 21, 2012 signed by Martin Dytrych, Henry Baker, Peter Baker, and John Baker
|
8-K
|
December 28, 2012
|
10.1
|
|||
10.30
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Letter of Waiver and Consent From Bank of America dated December 21, 2012 signed by Donald Bates and Bruce MacDonald
|
8-K
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December 28, 2012
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10.2
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|||
10.31
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Agreement of Purchase and Sale between the Company and Universal Business Equipment Corp.
|
10-K
|
January 28, 2014
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10.32
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|||
10.32
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Crystal Rock Holdings, Inc. 2014 Stock Incentive Program
|
14A
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February 28, 2014
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A
|
|||
10.33** |
Fourth Amendment to the Credit Agreement with Bank of America dated September 30, 2013
|
X | |||||
10.34** |
Fifth Amendment to the Credit Agreement with Bank of America dated January 14, 2015
|
X | |||||
21.1
|
Subsidiary
|
X
|
|||||
23.1
|
Consent of Wolf & Company, P.C.
|
X
|
|||||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|||||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
|||||
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|||||
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|||||
101
|
Interactive Data Files regarding (a) our Consolidated Balance Sheets as of October 31, 2012 and October 31, 2011, (b) our Consolidated Statements of Income for the years ended October 31, 2012 and 2011, (c) Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the years ended October 31, 2012 and 2011 (d) our Consolidated Statements of Cash Flows for the years ended October 31, 2012 and 2011, and (e) the Notes to such Consolidated Financial Statements.
|
X
|
CRYSTAL ROCK HOLDINGS, INC. | |
Dated: January 27, 2015 | By: /s/ Peter K. Baker |
Peter K. Baker, Chief Executive Officer |
Name | Title | Date | ||
/s/ Ross S. Rapaport
Ross S. Rapaport |
Chairman of the Board of Directors |
January 27, 2015
|
||
/s/ John B. Baker
John B. Baker |
Executive Vice President and Director | January 27, 2015 | ||
/s/ Peter K. Baker
Peter K. Baker |
Chief Executive Officer and Director | January 27, 2015 | ||
/s/ Martin A. Dytrych
Martin A. Dytrych |
Director | January 27, 2015 | ||
/s/ John M. Lapides
John M. Lapides |
Director
|
January 27, 2015 | ||
/s/ Lori J. Schafer
Lori J. Schafer |
Director | January 27, 2015 | ||
/s/ Bruce S. MacDonald
Bruce S. MacDonald |
Chief Financial Officer, Chief Accounting Officer and Secretary | January 27, 2015 |
Exhibit
Number
|
Description |
10.33 |
Fourth Amendment to the Credit Agreement with Bank of America dated September 30, 2013
|
10.34 |
Fifth Amendment to the Credit Agreement with Bank of America dated January 14, 2015
|
21.1 | Subsidiary |
23.1 | Consent of Wolf & Company, P.C. |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
CRYSTAL ROCK HOLDINGS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
Fiscal Year Ended October 31,
|
||||||||
2014
|
2013
|
|||||||
NET SALES
|
$ | 75,154,714 | $ | 70,980,512 | ||||
COST OF GOODS SOLD
|
39,301,334 | 34,266,303 | ||||||
GROSS PROFIT
|
35,853,380 | 36,714,209 | ||||||
OPERATING EXPENSES:
|
||||||||
Selling, general and administrative expenses
|
32,403,265 | 32,184,917 | ||||||
Advertising expenses
|
750,206 | 772,775 | ||||||
Amortization
|
1,001,914 | 998,942 | ||||||
Loss (gain) on disposal of property and equipment
|
331 | (32,293 | ) | |||||
TOTAL OPERATING EXPENSES
|
34,155,716 | 33,924,341 | ||||||
INCOME FROM OPERATIONS
|
1,697,664 | 2,789,868 | ||||||
OTHER EXPENSE:
|
||||||||
Interest
|
1,498,203 | 1,867,190 | ||||||
Loss on derivatives
|
- | 5,578 | ||||||
TOTAL OTHER EXPENSE
|
1,498,203 | 1,872,768 | ||||||
INCOME BEFORE INCOME TAXES
|
199,461 | 917,100 | ||||||
INCOME TAX EXPENSE
|
44,720 | 345,689 | ||||||
NET INCOME
|
$ | 154,741 | $ | 571,411 | ||||
NET INCOME PER SHARE - BASIC
|
$ | 0.01 | $ | 0.03 | ||||
NET INCOME PER SHARE - DILUTED
|
$ | 0.01 | $ | 0.03 | ||||
WEIGHTED AVERAGE SHARES USED IN COMPUTATION - BASIC
|
21,360,104 | 21,372,111 | ||||||
WEIGHTED AVERAGE SHARES USED IN COMPUTATION - DILUTED
|
21,360,104 | 21,372,111 |
CRYSTAL ROCK HOLDINGS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||
Fiscal Year ended October 31,
|
||||||||
2014
|
2013
|
|||||||
NET INCOME
|
$ | 154,741 | $ | 571,411 | ||||
OTHER COMPREHENSIVE INCOME, NET OF TAX:
|
||||||||
Cash Flow Hedges:
|
||||||||
Amortization of loss on derivative undesignated as cash flow hedge
|
- | 15,066 | ||||||
Unrealized gain on derivatives designated as cash flow hedges
|
9,683 | 34,450 | ||||||
Other Comprehensive Income, net of tax
|
9,683 | 49,516 | ||||||
TOTAL COMPREHENSIVE INCOME
|
$ | 164,424 | $ | 620,927 |
CRYSTAL ROCK HOLDINGS, INC. AND SUBSIDIARY
|
||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Common
|
Additional
|
Treasury
|
Other
|
|||||||||||||||||||||||||||||
Shares
|
Stock
|
Paid in
|
Treasury
|
Stock
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||||
Issued
|
Par Value
|
Capital
|
Shares
|
Amount
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||||||||
Balance, October 31, 2012
|
21,960,229 | $ | 21,960 | $ | 58,462,497 | 579,498 | $ | (878,560 | ) | $ | (53,735,401 | ) | $ | (76,309 | ) | $ | 3,794,187 | |||||||||||||||
Shares repurchased
|
16,320 | (16,431 | ) | (16,431 | ) | |||||||||||||||||||||||||||
Comprehensive Income
|
571,411 | 49,516 | 620,927 | |||||||||||||||||||||||||||||
Balance, October 31, 2013
|
21,960,229 | $ | 21,960 | $ | 58,462,497 | 595,818 | $ | (894,991 | ) | $ | (53,163,990 | ) | $ | (26,793 | ) | $ | 4,398,683 | |||||||||||||||
Non cash share-based compensation
|
4,209 | 4,209 | ||||||||||||||||||||||||||||||
Shares repurchased
|
6,000 | (5,369 | ) | (5,369 | ) | |||||||||||||||||||||||||||
Comprehensive Income
|
154,741 | 9,683 | 164,424 | |||||||||||||||||||||||||||||
Balance, October 31, 2014
|
21,960,229 | $ | 21,960 | $ | 58,466,706 | 601,818 | $ | (900,360 | ) | $ | (53,009,249 | ) | $ | (17,110 | ) | $ | 4,561,947 |
|
1.
|
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
3.
|
MERGERS AND ACQUISITIONS
|
Fiscal Year 2014
|
Esio
|
DS Waters
|
Acqua Fresca
|
Total
|
||||||||||||
Month Acquired
|
April
|
June
|
September
|
|||||||||||||
Cash
|
$ | 30,000 | $ | 219,632 | $ | 105,325 | $ | 354,957 | ||||||||
Deposits
|
- | - | 6,000 | 6,000 | ||||||||||||
Debt
|
60,000 | - | - | 60,000 | ||||||||||||
Purchase Price
|
$ | 90,000 | $ | 219,632 | $ | 111,325 | $ | 420,957 | ||||||||
Fiscal Year 2013
|
Ralan
|
Health Waters
|
Universal
|
Total
|
||||||||||||
Month Acquired
|
May
|
June
|
October
|
|||||||||||||
Cash
|
$ | 60,000 | $ | 25,929 | $ | 812,722 | $ | 898,651 | ||||||||
Working Capital
|
- | - | 1,441,879 | 1,441,879 | ||||||||||||
Debt
|
18,750 | - | - | 18,750 | ||||||||||||
Purchase Price
|
$ | 78,750 | $ | 25,929 | $ | 2,254,601 | $ | 2,359,280 |
2014
|
2013
|
|||||||
Property and Equipment, net
|
$ | 71,328 | $ | 128,460 | ||||
Other Intangible Assets, net
|
349,629 | 2,230,820 | ||||||
Purchase Price
|
$ | 420,957 | $ | 2,359,280 |
2014
|
2013
|
|||||||
Net Sales
|
$ | 75,575,356 | $ | 77,341,912 | ||||
Net Income
|
$ | 227,619 | $ | 544,076 | ||||
Net Income Per Share-Diluted
|
$ | .01 | $ | .03 | ||||
Weighted Average Common Shares Outstanding-Diluted
|
21,360,104 | 21,372,111 |
|
4.
|
ACCOUNTS RECEIVABLE
|
2014 | 2015 | |||||||
Balance, beginning of year
|
$ | 360,734 | $ | 447,302 | ||||
Provision
|
253,071 | 247,688 | ||||||
Write-offs
|
(340,459 | ) | (334,256 | ) | ||||
Balance, end of year
|
$ | 273,346 | $ | 360,734 |
|
5.
|
INVENTORIES
|
October 31,
|
October 31,
|
|||||||
2014 | 2013 | |||||||
Finished Goods | $ | 2,219,351 | $ | 2,365,586 | ||||
Raw Materials | 221,013 | 185,007 | ||||||
Total Inventories | $ | 2,440,364 | $ | 2,550,593 |
|
6.
|
OTHER CURRENT ASSETS
|
2014
|
2013
|
|||||||
Notes Receivable - Current
|
$ | 14,117 | $ | 8,367 | ||||
Prepaid Insurance
|
281,070 | 283,155 | ||||||
Prepaid Software
|
2,828 | 107,416 | ||||||
Prepaid Property Taxes
|
114,042 | 187,629 | ||||||
Prepaid Fees
|
46,100 | 46,100 | ||||||
Prepaid Income Taxes
|
50,468 | 61,153 | ||||||
Security Deposits
|
164,794 | 78,068 | ||||||
Miscellaneous
|
195,953 | 97,983 | ||||||
Total Other Current Assets
|
$ | 869,372 | $ | 869,871 |
|
7.
|
PROPERTY AND EQUIPMENT, NET
|
Useful Life
|
2014
|
2013
|
|||||||
Leasehold improvements | Shorter of useful life of asset or lease term | $ | 2,055,484 | $ | 1,984,723 | ||||
Machinery and equipment
|
3 - 10 yrs.
|
21,936,322 | 21,925,151 | ||||||
Bottles, racks and vehicles
|
3 - 7 yrs.
|
4,889,271 | 4,620,964 | ||||||
Furniture, fixtures and office equipment
|
3 - 7 yrs.
|
3,138,198 | 2,952,416 | ||||||
Construction in progress
|
126 | 112,747 | |||||||
Property and equipment before accumulated depreciation | 32,019,401 | 31,596,001 | |||||||
Less accumulated depreciation
|
24,930,781 | 24,151,132 | |||||||
Property and equipment, net of accumulated depreciation | $ | 7,088,620 | $ | 7,444,869 |
|
8.
|
EQUIPMENT RENTAL
|
2014
|
2013
|
|||||||
Original Cost
|
$ | 2,701,664 | $ | 2,938,195 | ||||
Accumulated Depreciation
|
2,120,537 | 2,316,613 | ||||||
Carrying Cost
|
$ | 581,127 | $ | 621,582 |
|
9.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
October 31, 2014
|
October 31, 2013
|
|||||||||||||||||||||||
Gross Carrying
Amount
|
Accumulated
Amortization
|
Wgt. Avg. Amort.
Years
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Wgt. Avg. Amort.
Years
|
|||||||||||||||||||
Amortized Intangible Assets:
|
||||||||||||||||||||||||
Covenants Not to Compete
|
$ | 2,526,488 | $ | 2,296,369 | 3.04 | $ | 2,501,488 | $ | 2,149,155 | 3.15 | ||||||||||||||
Customer Lists
|
10,261,635 | 8,006,107 | 3.78 | 9,937,006 | 7,163,740 | 4.19 | ||||||||||||||||||
Other Identifiable Intangibles
|
548,311 | 250,534 | 24.96 | 548,311 | 238,201 | 25.85 | ||||||||||||||||||
Total
|
$ | 13,336,434 | $ | 10,553,010 | $ | 12,986,805 | $ | 9,551,096 |
|
Estimated amortization expense for the next five years is as follows:
|
Fiscal Year Ending October 31,
|
||||
2015
|
$ | 725,000 | ||
2016
|
604,000 | |||
2017
|
595,000 | |||
2018
|
497,000 | |||
2019
|
72,000 |
|
10.
|
OTHER ASSETS
|
|
11.
|
ACCRUED EXPENSES
|
2014
|
2013
|
|||||||
Payroll and Vacation
|
$ | 1,416,837 | $ | 1,387,664 | ||||
Interest
|
315,588 | 315,154 | ||||||
Health Insurance
|
265,352 | 259,612 | ||||||
Accounting and Legal
|
315,967 | 133,487 | ||||||
Miscellaneous
|
246,193 | 282,047 | ||||||
Total
|
$ | 2,559,937 | $ | 2,377,964 |
|
12.
|
DEBT
|
|
Annual Maturities
|
|
Annual maturities of debt as of October 31, 2014 are summarized as follows:
|
Senior
|
Subordinated
|
Note payable
|
Total
|
|||||||||||||
Fiscal year ending October 31,
|
||||||||||||||||
2015
|
$ | 1,571,000 | $ | - | $ | 60,000 | $ | 1,631,000 | ||||||||
2016
|
2,071,000 | - | - | 2,071,000 | ||||||||||||
2017
|
1,571,000 | - | - | 1,571,000 | ||||||||||||
2018
|
3,799,000 | 10,000,000 | - | 13,799,000 | ||||||||||||
Total Debt
|
$ | 9,012,000 | $ | 10,000,000 | $ | 60,000 | $ | 19,072,000 |
|
13.
|
ON-BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
Before-Tax
|
Tax Benefit
(Expense)
|
Net-of-Tax
|
||||||||||
Fiscal Year Ended October 31, 2013
|
||||||||||||
Loss on interest rate swap
|
$ | (49,304 | ) | $ | 19,723 | $ | (29,581 | ) | ||||
Amortization of loss on derivative undesignated as cash flow hedge
|
25,110 | (10,044 | ) | 15,066 | ||||||||
Reclassification adjustment for loss in income
|
106,719 | (42,688 | ) | 64,031 | ||||||||
Net unrealized gain
|
$ | 82,525 | $ | (33,009 | ) | $ | 49,516 | |||||
Fiscal Year Ended October 31, 2014
|
||||||||||||
Loss on interest rate swap
|
$ | (20,609 | ) | $ | 8,243 | $ | (12,366 | ) | ||||
Reclassification adjustment for loss in income
|
36,748 | (14,699 | ) | 22,049 | ||||||||
Net unrealized gain
|
$ | 16,139 | $ | (6,456 | ) | $ | 9,683 |
|
14.
|
FAIR VALUES OF ASSETS AND LIABILITIES
|
|
Fair Value Hierarchy
|
|
The Company’s assets and liabilities measured at fair value on a recurring basis are as follows:
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
Liabilities:
|
||||||||||||
October 31, 2014
|
||||||||||||
Unrealized loss on derivatives
|
$ | - | $ | 28,516 | $ | - | ||||||
October 31, 2013
|
||||||||||||
Unrealized loss on derivatives
|
$ | - | $ | 44,655 | $ | - |
|
§
|
In the “float” model, the rate reflects where the market expects LIBOR to be in for the respective period and is based on the Eurodollar futures market.
|
|
§
|
The discount factor is a function of the volatility of LIBOR.
|
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
Fiscal Year Ending October 31,
|
||||
2015
|
$ | 3,502,000 | ||
2016
|
3,161,000 | |||
2017
|
1,864,000 | |||
2018
|
1,339,000 | |||
2019
|
886,000 | |||
Thereafter
|
537,000 | |||
Total
|
$ | 11,289,000 |
|
16.
|
STOCK BASED COMPENSATION
|
Outstanding Options
(Shares)
|
Weighted Average
Exercise Price
|
|||||||
Balance at October 31, 2012
|
269,500 | $ | 2.48 | |||||
Expired
|
(58,000 | ) | 4.09 | |||||
Granted
|
51,250 | 2.87 | ||||||
Balance at October 31, 2013
|
262,750 | 2.09 | ||||||
Expired
|
(10,000 | ) | 3.28 | |||||
Forfeited
|
(5,000 | ) | .90 | |||||
Balance at October 31, 2014
|
247,750 | 2.07 |
Exercise
Price
Range
|
Outstanding
Options
(Shares)
|
Weighted Average Remaining
Contractual
Life
|
Weighted
Average
Exercise Price
|
Intrinsic
Value
|
||||||||||||||
$ | .90 | 46,250 | 8.92 | $ | 0.90 | $ | - | |||||||||||
$ | 1.87 - $2.36 | 201,500 | .22 | 2.33 | - | |||||||||||||
247,750 | 1.84 | $ | 2.07 | $ | - |
|
17.
|
REPURCHASE OF COMMON STOCK
|
|
18.
|
INCOME TAXES
|
2014
|
2013
|
|||||||
Current:
|
||||||||
Federal
|
$ | 208,255 | $ | 359,990 | ||||
State
|
115,507 | 32,948 | ||||||
Total current
|
$ | 323,762 | $ | 392,938 | ||||
Deferred:
|
||||||||
Federal
|
$ | (200,259 | ) | $ | (39,713 | ) | ||
State
|
(78,783 | ) | (7,536 | ) | ||||
Total deferred
|
(279,042 | ) | (47,249 | ) | ||||
Total income tax expense
|
$ | 44,720 | $ | 345,689 |
2014
|
2013
|
|||||||
Deferred tax assets:
|
||||||||
Allowance for doubtful accounts
|
$ | 103,871 | $ | 137,079 | ||||
Accrued compensation
|
242,852 | 224,598 | ||||||
Accruals and reserves
|
(652 | ) | (8,946 | ) | ||||
Charitable Contributions
|
50,555 | 66,555 | ||||||
Interest rate swaps
|
11,406 | 17,862 | ||||||
State Credits and NOLs
|
25,285 | - | ||||||
Subtotal
|
433,317 | 437,148 | ||||||
Valuation allowance
|
- | - | ||||||
Total deferred tax assets
|
433,317 | 437,148 | ||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
(1,966,991 | ) | (2,382,713 | ) | ||||
Amortization
|
(2,182,012 | ) | (2,042,707 | ) | ||||
Total deferred tax liabilities
|
(4,149,003 | ) | (4,425,420 | ) | ||||
Net deferred tax liability
|
$ | (3,715,686 | ) | $ | (3,988,272 | ) |
2014
|
2013
|
|||||||
Income tax expense computed at the statutory rate
|
$ | 67,817 | $ | 311,814 | ||||
State income taxes (benefit) expense, net of federal benefit
|
(44,569 | ) | 16,772 | |||||
Other differences
|
21,472 | 17,104 | ||||||
Income tax (benefit) expense
|
$ | 44,720 | $ | 345,689 |
|
19.
|
NET INCOME PER SHARE AND WEIGHTED AVERAGE SHARES
|
2014
|
2013
|
|||||||
Net Income (Loss)
|
$ | 154,741 | $ | 571,411 | ||||
Denominator:
|
||||||||
Basic Weighted Average Shares Outstanding
|
21,360,104 | 21,372,111 | ||||||
Effect of Stock Options
|
- | - | ||||||
Diluted Weighted Average Shares Outstanding
|
21,360,104 | 21,372,111 | ||||||
Basic Net Income (Loss) Per Share
|
$ | .01 | $ | .03 | ||||
Diluted Net Income (Loss) Per Share
|
$ | .01 | $ | .03 |
|
20.
|
RETIREMENT PLAN
|
|
21.
|
RELATED PARTY TRANSACTIONS
|
|
Name:
|
Bruce S. MacDonald
|
|
Title:
|
Chief Financial Officer
|
|
Name:
|
Bruce S. MacDonald
|
|
Title:
|
Chief Financial Officer
|
|
Name:
|
Donald K. Bates
|
|
Title:
|
Sr. Portfolio Management Officer
|
|
Name:
|
Peter K. Baker
|
|
Title:
|
Chief Executive Officer
|
|
Name:
|
Peter K. Baker
|
|
Title:
|
Manager and Chief Executive Officer
|
|
Name:
|
Donald K. Bates
|
|
Title:
|
Sr. Portfolio Management Officer
|
|
1. I have reviewed this Annual Report on Form 10-K of Crystal Rock Holdings, Inc.;
|
|
|
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
|
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
|
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: January 27, 2015
|
/s/ Peter K. Baker
|
Chief Executive Officer
|
|
|
1. I have reviewed this Annual Report on Form 10-K of Crystal Rock Holdings, Inc.;
|
|
|
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
|
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
|
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: January 27, 2015
|
/s/ Bruce S MacDonald
|
Chief Financial Officer
|
|
(principal financial officer)
|