UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1994
Commission File Number 0-9286
COCA-COLA BOTTLING CO. CONSOLIDATED
(Exact name of registrant as specified in its charter)
Delaware 56-0950585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1900 Rexford Road, Charlotte, North Carolina 282ll
(Address of principal executive offices) (Zip Code)
(704) 551-4400
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date.
Class Outstanding at August 5, 1994
Common Stock, $1 Par Value 7,958,059
Class B Common Stock, $1 Par Value 1,336,362
PART I - FINANCIAL INFORMATION
Item l. Financial Statements.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands of Dollars
July 3, Jan. 2, July 4,
1994 1994 1993
ASSETS
Current Assets:
Cash $ 2,098 $ 1,262 $ 1,932
Accounts receivable, trade, less
allowance for doubtful accounts
of $436, $425 and $601 16,380 4,960 13,113
Accounts receivable from
The Coca-Cola Company 4,614 6,698 3,103
Due from Piedmont Coca-Cola
Bottling Partnership 3,225 2,454
Accounts receivable, other 8,204 10,758 12,725
Notes receivable from Piedmont
Coca-Cola Bottling Partnership 106,974
Inventories 34,686 27,533 29,878
Prepaid expenses and other
current assets 6,639 4,734 5,309
Total current assets 75,846 58,399 173,034
Property, plant and equipment,
at cost 312,122 297,561 288,067
Less - accumulated depreciation
and amortization 135,367 134,546 127,526
Property, plant and equipment,
net 176,755 163,015 160,541
Investment in Piedmont Coca-Cola
Bottling Partnership 67,995 68,400 70,000
Other assets 19,302 18,700 19,758
Identifiable intangible assets,
less accumulated amortization of
$70,733, $65,803 and $61,512 262,785 267,715 292,071
Excess of cost over fair value
of net assets of businesses
acquired, less accumulated
amortization of $20,544, $19,399
and $18,253 71,075 72,220 73,365
Total $673,758 $648,449 $788,769
See Accompanying Notes to Consolidated Financial Statements
LIABILITIES AND SHAREHOLDERS' EQUITY
July 3, Jan. 2, July 4,
1994 1994 1993
Current Liabilities:
Portion of long-term debt payable
within one year $ 861 $ 711 $ 1,239
Note payable to Piedmont Coca-Cola
Bottling Partnership 21,746
Accounts payable and accrued
liabilities 63,005 69,232 53,281
Accounts payable to The Coca-Cola
Company 7,727 1,876 5,977
Accrued interest payable 10,340 10,108 12,224
Total current liabilities 81,933 81,927 94,467
Deferred income taxes 84,566 80,065 86,467
Other liabilities 22,166 22,470 20,893
Senior long-term debt 454,112 434,358 555,299
Total liabilities 642,777 618,820 757,126
Shareholders' Equity:
Convertible Preferred Stock, $100 par
value: Authorized-50,000 shares;
Issued-None
Nonconvertible Preferred Stock, $100
par value: Authorized-50,000 shares;
Issued-None
Preferred Stock, $.01 par value:
Authorized-20,000,000 shares;
Issued-None
Common Stock, $1 par value:
Authorized-30,000,000 shares;
Issued-10,090,859 shares 10,090 10,090 10,090
Class B Common Stock, $1 par value:
Authorized-10,000,000 shares;
Issued-1,964,476 shares 1,965 1,965 1,965
Class C Common Stock, $1 par value:
Authorized-20,000,000 shares;
Issued-None
Capital in excess of par value 134,675 139,322 143,171
Accumulated deficit (92,489) (98,488) (105,937)
Minimum pension liability adjustment (5,614) (5,614)
48,627 47,275 49,289
Less-Treasury stock, at cost:
Common-2,132,800 shares 17,237 17,237 17,237
Class B Common-628,114 shares 409 409 409
Total shareholders' equity 30,981 29,629 31,643
Total $673,758 $648,449 $788,769
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
Second Quarter First Half
1994 1993 1994 1993
Net sales (includes sales to
Piedmont of $24,247 and
$44,811 in 1994) $ 200,692 $ 194,506 $ 364,509 $ 348,773
Cost of products sold,
excluding depreciation shown
below (includes $21,201 and
$40,106 related to sales to
Piedmont in 1994) 118,941 108,871 216,425 193,296
Gross margin 81,751 85,635 148,084 155,477
Selling expenses 39,310 41,379 73,949 77,361
General and administrative
expenses 13,508 13,949 26,167 26,428
Depreciation expense 5,991 6,008 11,764 11,648
Amortization of goodwill
and intangibles 3,081 4,322 6,154 8,622
Income from operations 19,861 19,977 30,050 31,418
Interest expense 7,833 8,235 15,359 16,503
Other expense, net 273 1,095 287 1,700
Income before income taxes and
effect of accounting change 11,755 10,647 14,404 13,215
Federal and state income taxes 5,055 4,612 6,194 5,831
Income before effect of
accounting change 6,700 6,035 8,210 7,384
Effect of accounting change (2,211)
Net income $ 6,700 $ 6,035 $ 5,999 $ 7,384
Income per share:
Income before effect of
accounting change $ .72 $ .65 $ .88 $ .80
Effect of accounting change (.24)
Net income $ .72 $ .65 $ .64 $ .80
Cash dividends per share:
Common Stock $ .25 $ .22 $ .50 $ .44
Class B Common Stock .25 .13 .50 .26
Weighted average number of
Common and Class B Common
shares outstanding 9,294 9,261 9,294 9,221
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
In Thousands of Dollars
Capital Minimum
Class B in Pension
Common Common Excess of Accumulated Liability Treasury
Stock Stock Par Value Deficit Adjustment Stock
Balance on
January 3,
1993 $ 9,977 $ 1,965 $ 144,831 $ (113,321) $ 17,646
Net income 7,384
Cash dividends
declared:
Common (3,816)
Issuance of
Common Stock 113 2,156
Balance on
July 4, 1993 $10,090 $ 1,965 $ 143,171 $ (105,937) $ 17,646
Balance on
January 2,
1994 $10,090 $ 1,965 $ l39,322 $ (98,488) $ (5,614) $ 17,646
Net income 5,999
Cash dividends
declared:
Common (4,647)
Balance on
July 3, 1994 $10,090 $ 1,965 $ 134,675 $ (92,489) $ (5,614) $ 17,646
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands of Dollars
First Half
1994 1993
Cash Flows from Operating Activities
Net income $ 5,999 $ 7,384
Adjustments to reconcile net income to net
cash provided by operating activities:
Effect of accounting change 2,211
Depreciation expense 11,764 11,648
Amortization of goodwill and intangibles 6,154 8,622
Deferred income taxes 6,170 5,815
(Gains) losses on sale of property, plant
and equipment (367) 876
Amortization of debt costs 228 267
Undistributed loss of Piedmont Coca-Cola
Bottling Partnership 405
Increase in current assets less current
liabilities (20,085) (16,704)
Decrease (increase) in other noncurrent
assets (870) 520
Decrease in other noncurrent liabilities (189) (549)
Other 420 (190)
Total adjustments 5,841 10,305
Net cash provided by operating
activities 11,840 17,689
Cash Flows from Financing Activities
Proceeds from the issuance of long-term debt 19,810 3,743
Repayments of long-term debt (56) (3,570)
Issuance of Common Stock 2,269
Cash dividends paid (4,647) (3,816)
Other (556) (2,509)
Net cash provided by (used in) financing
activities 14,551 (3,883)
Cash Flows from Investing Activities
Additions to property, plant and equipment (27,831) (12,264)
Proceeds from the sale of property, plant
and equipment 2,276 550
Acquisition of companies, net of cash
acquired (1,574)
Net cash used in investing activities (25,555) (13,288)
Net increase in cash 836 518
Cash at beginning of period 1,262 1,414
Cash at end of period $ 2,098 $ 1,932
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
1. Accounting Policies
The consolidated financial statements include the accounts of
Coca-Cola Bottling Co. Consolidated and its wholly owned
subsidiaries ("the Company"). All significant intercompany
accounts and transactions have been eliminated.
The information contained in the financial statements is
unaudited. The statements reflect all adjustments which, in
the opinion of management, are necessary for a fair statement
of the results for the interim periods presented. Except for
the accounting change discussed in Note 2, all such adjustments
are of a normal, recurring nature.
The accounting policies followed in the presentation of interim
financial results are the same as those followed on an annual
basis. These policies are presented in Note 1 to the
consolidated financial statements included in the Company's
Annual Report on Form 10-K for the year ended January 2, 1994
filed with the Securities and Exchange Commission.
Certain prior year amounts have been reclassified to conform to
current year classifications.
2. Accounting Change
In November 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" ("SFAS
112"). SFAS 112 requires the accrual, during the years that
employees render service, of the expected cost of providing
postemployment benefits if certain criteria are met. The
Company adopted the provisions of SFAS 112 in the first quarter
of 1994, effective January 3, 1994. As a result, the Company
recorded a one-time, after-tax charge of $2.2 million. This
charge appears within the caption "Effect of accounting
change."
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
3. Summarized Income Statement Data of Piedmont Coca-Cola
Bottling Partnership
On July 2, 1993, the Company and The Coca-Cola Company formed
Piedmont Coca-Cola Bottling Partnership ("Piedmont") to
distribute and market soft drink products primarily in portions
of North Carolina and South Carolina. The Company and The
Coca-Cola Company, through their respective subsidiaries, each
beneficially own a 50% interest in Piedmont. The Company
provides substantially all of the soft drink products for
Piedmont and manages the operations of Piedmont pursuant to a
management agreement. Summarized income statement data for
Piedmont is as follows:
Second Quarter First Half
In Thousands 1994 1994
Net sales $ 53,672 $ 97,633
Gross margin 22,605 41,779
Income from operations 2,806 3,821
Net income (loss) 482 (810)
4. Inventories
Inventories are summarized as follows:
July 3, Jan. 2, July 4,
In Thousands 1994 1994 1993
Finished products $20,687 $16,622 $19,478
Manufacturing materials 11,978 9,498 9,542
Used bottles and cases 2,021 1,413 858
Total inventories $34,686 $27,533 $29,878
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Long-Term Debt
Long-term debt is summarized as follows:
Fixed(F) or
Interest Variable Interest July 3, Jan. 2, July 4,
In Thousands Maturity Rate (V) Rate Paid 1994 1994 1993
Lines of Credit 1997 4.46% - V Varies $108,170 $ 18,335 $ 93,615
4.58%
Commercial Paper 1997 4.47% V Varies 4,999 4,987
Revolving Credit 40,000
Term Loan Agreement 75,000 75,000
Term Loan Agreement 2000 4.00% V Semi- 60,000 60,000 60,000
annually
Term Loan Agreement 2001 3.94% V Semi- 60,000 60,000 60,000
annually
Medium-Term Notes 1998 5.11% V Quarterly 10,000 10,000 10,000
Medium-Term Notes 1999 7.99% F Semi- 66,500 66,500 66,500
annually
Medium-Term Notes 2000 10.05% F Semi- 57,000 57,000 57,000
annually
Medium-Term Notes 2002 8.56% F Semi- 66,500 66,500 66,500
annually
Notes acquired in
Sunbelt acquisition 2001 8.00% F Quarterly 5,417 5,442 5,441
Capital leases and
other notes payable 1994 - 6.85% - F Varies 16,387 16,292 17,495
2001 12.00%
454,973 435,069 556,538
Less: Portion of
long-term debt
payable within
one year 861 711 1,239
Senior long-term debt $454,112 $434,358 $555,299
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Long-Term Debt (cont.)
As of July 3, 1994, the Company was in compliance with all of the covenants of
its various borrowing agreements.
It is the Company's intent to renew its lines of credit, commercial
paper borrowings and borrowings under the revolving credit facility as they
mature and, to the extent that these borrowings do not exceed the amount
available under the Company's $170 million revolving credit facility,
they are classified as noncurrent liabilities.
A $100 million commercial paper program was established in January 1990 with
funds to be used for general corporate purposes. On July 3, 1994,
approximately $5 million was outstanding under this program.
In June 1992, the Company entered into a three-year arrangement under which it
has the right to sell an undivided interest in a designated pool of trade
accounts receivable for up to a maximum of $40 million. The Company
had sold trade receivables of $37 million, $33 million and $36.5 million
as of July 3, 1994, January 2, 1994 and July 4, 1993, respectively.
6. Financial Instruments with Off-Balance-Sheet Risk
The Company actively manages its interest rate risk using a variety of
rate hedging mechanisms to minimize exposure to and reduce risk from
interest rate fluctuations in the ordinary course of the Company's business.
The Company does not attempt to protect itself completely from all
interest rate movements but attempts to offset large interest rate
movements and reduce their impact within the most reasonable risk and cost
profile. The Company has entered into interest rate hedging transactions that
resulted in weighted average interest rates for the debt portfolio of
approximately 6.6%, 6.7% and 5.5% as of July 3, 1994, January 2, 1994 and
July 4, 1993, respectively. Including the effect of hedging activities,
approximately 45%, 43% and 40% of the total debt portfolio was
subject to changes in short-term interest rates as of July 3, 1994,
January 2, 1994 and July 4, 1993, respectively.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Financial Instruments with Off-Balance-Sheet Risk (cont.)
Off-balance-sheet financial instruments were as follows:
July 3, 1994 January 2, 1994 July 4, 1993
Remaining Remaining Remaining
In Thousands Amount Term Amount Term Amount Term
Interest swaps-
floating $221,600 6-9 years $221,600 7-10 years $161,600 7-10 years
Interest swaps-
fixed 265,000 2-9 years 368,000 1-10 years 268,000 1-4 years
Interest caps 110,000 1 year 110,000 1.5 years 110,000 2 years
Financial
guarantee 20,000 7 years 13,094 7 years 16,961 8 years
The Company routinely monitors both interest rate and counterparty
credit risk. Mark-to-market valuations of positions and underlying debt
are performed on an ongoing basis. Sensitivity analyses are performed to
review the impact on the Company's financial position and coverages of various
likely increases in interest rates as well as the impact of unlikely rate
movements.
7. Income Taxes
Reported income tax expense differs from the amount computed at the statutory
rate due to amortization of nondeductible goodwill, state income taxes,
nondeductible premiums on officers' life insurance and other nondeductible
expenses.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
8. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash, net of
effects from acquisitions and divestitures and effect of accounting
change, are as follows:
First Half
In Thousands 1994 1993
Accounts receivable, trade, net $(11,420) $(17,039)
Due from Piedmont (771)
Accounts receivable, other 4,638 (1,896)
Inventories (7,153) (5,436)
Prepaid expenses and other current assets (1,905) (2,250)
Portion of long-term debt payable within
one year 150 (264)
Accounts payable and accrued liabilities (3,856) 8,999
Accrued interest payable 232 1,182
Increase $(20,085) $(16,704)
Cash payments during the period were as follows:
First Half
In Thousands 1994 1993
Interest $ 15,127 $ 15,054
Income taxes 53 1,067
Noncash items related to the formation of Piedmont on
July 2, 1993 were as follows:
In Thousands
Notes receivable for assets sold to Piedmont $106,974
Assets contributed to Piedmont 48,254
Capital contribution - note payable to Piedmont 21,746
Assumption of Company liabilities by Piedmont 4,800
The $107.0 million notes receivable and the $21.7 million note payable were
funded when Piedmont secured its bank financing on August 31, 1993.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Introduction:
The following discussion presents management's analysis of the results of
operations for the first six months of 1994 compared to the first six months
of 1993 and changes in financial condition from July 4, 1993 and January 2,
1994 to July 3, 1994.
On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont
Coca-Cola Bottling Partnership ("Piedmont") to distribute and market soft
drink products primarily in certain portions of North Carolina and South
Carolina. The Company provides substantially all of the soft drink products to
Piedmont and manages the business of Piedmont pursuant to a management
agreement. The Company and The Coca-Cola Company, through their respective
subsidiaries, each beneficially own a 50% interest in Piedmont. Subsidiaries of
the Company made an initial capital contribution to Piedmont of $70 million in
the aggregate. The Company's capital contribution was composed of approximately
$21.7 million in cash and of bottling operations and certain assets used in
connection with the Company's Wilson, North Carolina and Greenville and
Beaufort, South Carolina territories. The Company sold other territories to
Piedmont for an aggregate purchase price of approximately $118 million. Assets
were sold or contributed at their approximate carrying values. Proceeds from
the sale of territories to Piedmont, net of the Company's cash contribution,
totaled approximately $96 million and were used to reduce the Company's
long-term debt. The Company is accounting for its investment in Piedmont using
the equity method of accounting.
The Company reported net income of $6.7 million or $.72 per share for the
second quarter of 1994 compared with $6.0 million or $.65 per share for the
same period in 1993. For the first six months of 1994, the Company reported
income before the effect of an accounting change of $8.2 million or $.88 per
share as compared to net income of $7.4 million or $.80 per share in the first
six months of 1993. These earnings for the second quarter and first half of
1994 represent improvements of 11% and 11.2%, respectively, over the same
periods of 1993.
A one-time, after-tax noncash charge of $2.2 million or $.24 per share was
recorded in the first quarter of 1994 due to the adoption of Statement of
F i n a n cial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" ("SFAS 112"). The Company does not expect any
significant impact on the results of future operations due to the adoption of
this accounting standard.
On June 1, 1994, the Company executed an agreement with South Atlantic
Canners, Inc. ("SAC"), a cooperative located in Bishopville, South Carolina.
SAC will significantly expand its
operations by adding two PET bottling lines.
The Company will oversee the installation of the new lines and will manage
day-to-day operations pursuant to a 10-year management agreement. These new
bottling lines will supply a portion of the Company's volume requirements for
PET product. On July 22, 1994, the Company guaranteed expansion financing for
SAC of up to $15 million.
The results for interim periods are not necessarily indicative of the results
to be expected for the year due to seasonal factors.
Result of Operations:
Due to the formation of Piedmont on July 2, 1993, results of operations for
the second quarter and first half of 1994 are not directly comparable to the
1993 periods.
Excluding the results of the branches sold or contributed to Piedmont from
1993 results, franchise net sales increased by slightly more than 6% and 6.5%
for the second quarter and first half of 1994, respectively. The increase in
franchise net sales was primarily due to increases in volume. The
introduction of certain New Age beverages, such as Nestea and PowerAde,
contributed approximately 1.8% of the first half 1994 franchise sales
increase. Average net selling prices were slightly higher than those of the
1993 periods, sustaining the increases realized in 1993 versus 1992. Sales to
other bottlers increased over the same periods in 1993 primarily due to the
sale of finished products to Piedmont. Soft drink products are sold to
Piedmont at cost.
In the second quarter and first half of 1994, total gross margin decreased by
4.5% and 4.8%, respectively. When the results are adjusted to reflect
comparable territories, gross margin on a per-unit basis was essentially
unchanged. Cost of goods sold as a percentage of net sales was slightly
higher as increases in the costs of ingredients were partially offset by lower
packaging costs.
Excluding the results of the branches sold or contributed to Piedmont from
1993 results, selling expenses increased approximately 14% and 13% in the
second quarter and first half of 1994, respectively. Higher employment costs
resulted from normal wage rate adjustments, the volume increases discussed
previously and planned increases in certain sales and operations functions to
improve customer service and reduce turnover. Expenses associated with the
introduction of New Age beverages also increased 1994 expenses. General and
administrative expenses for the comparable franchise territories were slightly
lower on a per-unit basis than for the 1993 periods.
Amortization of goodwill and intangibles declined 29% for both the second
quarter and first half of 1994, reflecting the sale and contribution of
franchise territories to Piedmont.
Interest expense declined approximately 5% from the second quarter of 1993 to
the second quarter of 1994 and approximately 7% between the first-half
periods. This decline was due primarily to the decrease of more than $100
million in outstanding debt between the end of the second quarter of 1993 and
the end of the same period in 1994, offset by increases in short-term rates on
the Company's floating rate debt. Proceeds from the sale of territories to
Piedmont, net of the Company's cash contribution, were used to reduce the
Company's long-term debt.
The decline in "other expense, net" was due primarily to a first quarter 1994
gain on the sale of an idle production facility. This facility was acquired
in the 1991 Sunbelt acquisition and was closed in April 1992. For the first
half of 1994, gains of approximately $.4 million on sales of property, plant
and equipment were included in "other expense, net." Losses of approximately
$.9 million on sales of property, plant and equipment were included in "other
expense, net" for the first half of 1993.
The estimated annual effective tax rate for federal and state income taxes was
43% for both the second quarter and the first half of 1994. The difference
between the effective rate and the statutory rate was due to amortization of
n o ndeductible goodwill, state income taxes, nondeductible premiums on
officers' life insurance and other nondeductible expenses. The estimated
annual effective tax rate for the first half of 1993 was 44%.
Changes in Financial Condition:
Working capital increased $17.4 million from January 2, 1994 and decreased
$84.7 million from July 4, 1993 to July 3, 1994. On July 4, 1993, the Company
had notes receivable from Piedmont of $107.0 million and a note payable to
Piedmont of $21.7 million. These notes were settled when Piedmont secured
its bank financing on August 31, 1993. Excluding the effect of these notes
receivable from and payable to Piedmont, working capital increased $.6 million
from July 4, 1993. The increase from January 2, 1994 was primarily due to
seasonality and resulted principally from increases in trade accounts
receivable and inventories. Inventory balances of raw materials and finished
products increased in order to support Piedmont's inventory requirements. The
increase in trade accounts receivable resulted primarily from increases in net
sales.
Capital expenditures in 1994 will be higher than in 1993. The Company is
p u r c hasing rather than leasing new vehicles and is making certain
manufacturing improvements needed to produce new packages. Equipment
additions to serve the Cold Drink market have also increased the 1994
expenditures over the 1993 levels.
The Company actively manages its interest rate risk using a variety of rate
hedging mechanisms. As of July 3, 1994, the debt portfolio had a weighted
average interest rate of approximately 6.6% and
approximately 45% of the total portfolio was subject to changes in short-term
interest rates. The Company routinely monitors both interest rate and
counterparty credit risk. Mark-to-market valuations of positions and
underlying debt are performed on an ongoing basis. Sensitivity analyses are
performed to review the impact on the Company's financial position and
coverages of various likely increases in interest rates as well as the impact
of unlikely rate movements. As a result of increases in short-term interest
rates, the Company expects that interest expense in the second half of 1994
will increase versus interest expense in the first half of 1994.
Long-term debt increased $19.8 million from January 2, 1994 due primarily to a
seasonal increase in working capital. As of July 3, 1994, the Company was in
compliance with all of the covenants of its various borrowing agreements.
It is the Company's intent to renew any borrowings under its $170 million
revolving credit facility and the informal lines of credit as they mature and,
to the extent that any borrowings under the revolving credit facility, the
informal lines of credit and commercial paper program do not exceed the amount
available under the Company's $170 million revolving credit facility, they are
classified as noncurrent liabilities. As of July 3, 1994, the Company had no
balances outstanding under the revolving credit facility, $108.2 million
outstanding under the informal lines of credit and $5.0 million outstanding
under the commercial paper program. The Company had sold trade accounts
receivable of $37 million as of July 3, 1994 compared to $33 million and $36.5
million on January 2, 1994 and July 4, 1993, respectively.
In February 1994, the Board of Directors approved an increase in the dividend
for the first quarter of 1994. Quarterly dividends were increased to $.25 per
share on both the Common and Class B Common shares outstanding. This dividend
rate was maintained in the second quarter of 1994. If the Company continues
to pay quarterly dividends of $.25 per share on both classes of common stock,
annual dividend payments will total approximately $9.3 million in 1994.
Management believes that the Company, through the generation of cash flow from
operations and the utilization of unused borrowing capacity, has sufficient
financial resources available to maintain its current operations and provide
for its current capital expenditure requirements. The Company considers the
acquisition of additional franchise territories on an ongoing basis.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 11, 1991, a Complaint was filed against the Company and two
Company employees in the matter of Jeff Hallums v. Coca-Cola Bottling Co.
Consolidated, et al., File No. 8108 in the Chancery Court for Wilson County,
Tennessee as previously reported in the Company's Annual Report on Form 10-K
for the fiscal year ended January 2, 1994. This suit by a visually
handicapped former truck driver for Coca-Cola Bottling Company of Nashville,
Inc., a wholly owned subsidiary of the Company, alleged liability under
various Tennessee common law misrepresentation principles and under the
employee discrimination provision of the Tennessee Human Rights Act.
Plaintiff was terminated because he did not meet federal standards for
commercial truck drivers. Plaintiff sought damages in the amount of $750,000.
As previously reported, the Tennessee Court of Appeals, on an interlocutory
appeal, reversed the trial court's denial of the Company's motion for summary
judgment with respect to plaintiff's handicap discrimination claim on October
13, 1993 and remanded the case for trial of plaintiff's common law tort
claims. The plaintiff's application for permission to appeal the appellate
court's ruling was denied by the Tennessee Supreme Court on February 28, 1994.
The Company subsequently settled this suit on the basis of the Company's
agreement to pay only the outstanding court costs in the matter. The suit was
dismissed, with prejudice, under an Order entered June 10, 1994 by the
Chancery Court for Wilson County, Tennessee.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of the Company's shareholders was held on May 18, 1994.
(c) The meeting was held to consider and vote upon (i) fixing the number of the
Company's directors at ten and (ii) electing three directors, each for a
term of three years or until his successor shall be elected and shall
qualify. The votes cast on the question of fixing the number of directors
at ten are summarized as follows:
FOR AGAINST ABSTAIN TOTAL VOTES
33,450,903 16,872 29,720 33,497,495
The votes cast with respect to each director are summarized as follows:
DIRECTOR NAME FOR ABSTAIN TOTAL VOTES
John W. Murrey, III 33,388,294 109,201 33,497,495
H. W. McKay Belk 33,385,599 111,896 33,497,495
H. Reid Jones 33,388,378 109,117 33,497,495
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
10.1 Lease Funding No. 94002, dated as of April 25, 1994, of a
Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
10.2 Lease Funding No. 94003, dated as of May 12, 1994, of a
Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
10.3 Lease Funding No. 94004, dated as of June 3, 1994, of a
Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
10.4 Lease Funding No. 94005, dated as of June 22, 1994, of a
Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
10.5 Lease Funding No. 94006, dated as of July 8, 1994, of a
Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
10.6 Management Agreement, dated as of June 1, 1994, by and among
Coca-Cola Bottling Co. Consolidated and South Atlantic
Canners, Inc.
10.7 Guaranty Agreement, dated as of July 22, 1994, between
Coca-Cola Bottling Co. Consolidated and Wachovia Bank of
North Carolina, N.A.
(b) Reports on Form 8-K
A report on Form 8-K, dated May 18, 1994, was filed on May 24, 1994,
under Item 5 of Form 8-K, providing press releases describing the
election of a new director to the Board of Directors and a change in the
titles of certain executive officers of the Company.
SIGNATURES
Pursuant to the requirements 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.
COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)
Date: August 12, 1994 By: /s/ David V. Singer
David V. Singer
Principal Financial Officer
of the Registrant
and
Vice President - Chief Financial
Officer