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 OCTOBER 1, 1995
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 Identification Number)
incorporation or organization)
1900 REXFORD ROAD, CHARLOTTE, NORTH CAROLINA 28211
(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 November 3, 1995
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 (Except Share Data)
Oct. 1, Jan. 1, Oct. 2,
1995 1995 1994
ASSETS
Current Assets:
Cash $ 2,723 $ 1,812 $ 2,200
Accounts receivable, trade, less allowance for
doubtful accounts of $401, $400 and $419 11,180 7,756 7,522
Accounts receivable from The Coca-Cola Company 6,337 4,514 5,991
Due from Piedmont Coca-Cola Bottling Partnership 1,457 1,383 1,907
Accounts receivable, other 4,577 7,232 6,583
Inventories 33,447 31,871 30,320
Prepaid expenses and other current assets 5,538 5,054 5,269
Total current assets 65,259 59,622 59,792
Property, plant and equipment, less accumulated
depreciation of $152,271, $141,419 and $138,022 189,118 185,633 179,008
Investment in Piedmont Coca-Cola Bottling Partnership 66,629 67,729 68,801
Other assets 24,258 23,394 22,369
Identifiable intangible assets, less accumulated
amortization of $83,068, $75,667 and $73,200 250,450 257,851 260,318
Excess of cost over fair value of net assets of
businesses acquired, less accumulated
amortization of $23,407, $21,689 and $21,117 68,212 69,930 70,502
Total $663,926 $664,159 $660,790
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
Oct. 1, Jan. 1, Oct. 2,
1995 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Portion of long-term debt payable within one year $ 174 $ 300 $ 376
Accounts payable and accrued liabilities 52,812 59,413 51,634
Accounts payable to The Coca-Cola Company 3,470 2,930 1,993
Accrued compensation 3,464 4,246 3,314
Accrued interest payable 4,886 11,275 5,593
Total current liabilities 64,806 78,164 62,910
Deferred income taxes 99,269 89,531 88,302
Other liabilities 38,364 29,512 21,630
Long-term debt 419,827 432,971 454,392
Total liabilities 622,266 630,178 627,234
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 123,057 130,028 132,351
Accumulated deficit (71,902) (86,552) (87,590)
Minimum pension liability adjustment (3,904) (3,904) (5,614)
59,306 51,627 51,202
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 41,660 33,981 33,556
Total $663,926 $664,159 $660,790
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
Third Quarter Nine Months
1995 1994 1995 1994
Net sales (includes sales to Piedmont of
$19,355, $23,121, $55,664 and $67,932) $ 203,559 $ 188,418 $ 582,412 $ 552,927
Cost of products sold, excluding depreciation
shown below (includes $16,715, $19,679,
$48,599 and $59,785 related to sales to
Piedmont) 120,832 112,554 340,477 328,979
Gross margin 82,727 75,864 241,935 223,948
Selling expenses 41,831 37,524 119,918 111,473
General and administrative expenses 13,868 13,565 40,839 39,732
Depreciation expense 6,786 5,895 19,756 17,659
Amortization of goodwill and intangibles 3,058 3,081 9,173 9,235
Income from operations 17,184 15,799 52,249 45,849
Interest expense 8,312 7,999 25,205 23,358
Other income (expense), net (1,099) 761 (2,656) 474
Income before income taxes and effect of
accounting change 7,773 8,561 24,388 22,965
Federal and state income taxes 3,134 3,662 9,738 9,856
Income before effect of accounting change 4,639 4,899 14,650 13,109
Effect of accounting change (2,211)
Net income $ 4,639 $ 4,899 $ 14,650 $ 10,898
Income per share:
Income before effect of accounting change $ .50 $ .53 $ 1.58 $ 1.41
Effect of accounting change (.24)
Net income $ .50 $ .53 $ 1.58 $ 1.17
Cash dividends per share:
Common Stock $ .25 $ .25 $ .75 $ .75
Class B Common Stock .25 .25 .75 .75
Weighted average number of Common and
Class B Common shares outstanding 9,294 9,294 9,294 9,294
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
In Thousands
Capital Minimum
Class B in Pension
Common Common Excess of Accumulated Liability Treasury
Stock Stock Par Value Deficit Adjustment Stock
Balance on
January 2, 1994 $10,090 $ 1,965 $139,322 $ (98,488) $ (5,614) $ 17,646
Net income 10,898
Cash dividends
declared (6,971)
Balance on
October 2, 1994 $10,090 $ 1,965 $132,351 $ (87,590) $ (5,614) $ 17,646
Balance on
January 1, 1995 $10,090 $ 1,965 $130,028 $ (86,552) $ (3,904) $ 17,646
Net income 14,650
Cash dividends
declared (6,971)
Balance on
October 1, 1995 $10,090 $ 1,965 $123,057 $ (71,902) $ (3,904) $ 17,646
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
Nine Months
1995 1994
Cash Flows from Operating Activities
Net income $14,650 $10,898
Adjustments to reconcile net income to net cash provided
by operating activities:
Effect of accounting change 2,211
Depreciation expense 19,756 17,659
Amortization of goodwill and intangibles 9,173 9,235
Deferred income taxes 9,738 9,856
(Gains) losses on sale of property, plant and equipment 1,037 (1,432)
Amortization of debt costs 344 341
Undistributed (earnings) loss of Piedmont Coca-Cola Bottling
Partnership 1,100 (401)
Increase in current assets less current liabilities (18,084) (24,361)
Increase in other noncurrent assets (1,076) (2,353)
Increase (decrease) in other noncurrent liabilities 6,944 (301)
Other 132 490
Total adjustments 29,064 10,944
Net cash provided by operating activities 43,714 21,842
Cash Flows from Financing Activities
Proceeds from the issuance of long-term debt 21,246
Payments on long-term debt (13,144) (1,213)
Cash dividends paid (6,971) (6,971)
Other 1,721 (1,260)
Net cash provided by (used in) financing activities (18,394) 11,802
Cash Flows from Investing Activities
Additions to property, plant and equipment (26,304) (36,748)
Proceeds from the sale of property, plant and equipment 1,895 4,042
Net cash used in investing activities (24,409) (32,706)
Net increase in cash 911 938
Cash at beginning of period 1,812 1,262
Cash at end of period $ 2,723 $ 2,200
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 majority 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 1, 1995 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 a portion of the soft drink products to
Piedmont at cost and receives a fee for managing the business of
Piedmont pursuant to a management agreement. Summarized income statement
data for Piedmont is as follows:
Third Quarter Nine Months
In Thousands 1995 1994 1995 1994
Net sales $ 59,396 $ 51,837 $ 163,856 $ 149,470
Gross margin 23,627 22,534 66,337 64,313
Income from operations 1,777 2,576 5,312 6,397
Net income (loss) (758) 1,612 (2,200) 802
4. Inventories
Inventories are summarized as follows:
Oct. 1, Jan. 1, Oct. 2,
In Thousands 1995 1995 1994
Finished products $20,429 $17,621 $18,272
Manufacturing materials 11,585 12,638 10,444
Used bottles and cases 1,433 1,612 1,604
Total inventories $33,447 $31,871 $30,320
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 Oct. 1, Jan. 1, Oct. 2,
In Thousands Maturity Rate (V) Rate Paid 1995 1995 1994
Lines of Credit 1997 5.93% - V Varies $ 85,601 $ 93,420 $114,601
6.83%
Term Loan Agreement 2000 6.38% V Semi- 60,000 60,000 60,000
annually
Term Loan Agreement 2001 6.39% V Semi- 60,000 60,000 60,000
annually
Medium-Term Notes 1998 6.39% 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 10.00% 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 217 5,327 5,421
Capital leases and
other notes payable 1995 - 6.85% - F Varies 14,183 14,524 14,746
2001 12.00%
420,001 433,271 454,768
Less: Portion of long-
term debt payable
within one year 174 300 376
Long-term debt $419,827 $432,971 $454,392
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Long-Term Debt (cont.)
As of October 1, 1995, 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. 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. There
were no balances outstanding under this program on October 1, 1995,
January 1, 1995 or October 2, 1994.
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 $35 million
as of October 1, 1995, January 1, 1995 and October 2, 1994. This
arrangement has been amended to extend the arrangement to June 1998
on terms substantially similar to those previously in place.
On October 12, 1994, a $400 million shelf registration for debt and
equity securities filed with the Securities and Exchange Commission
became effective and the securities thereunder became available for
issuance. On November 1, 1995, the Company issued $100 million of
6.85% debentures due 2007 pursuant to such registration. The net
proceeds from this issuance will be used principally for refinancing
of existing indebtedness with the remainder to be used for general
corporate purposes. As of November 10, 1995, $36.3 million of
medium-term notes due 1999 with a coupon rate of 7.99% and $26
million of medium-term notes due 2000 with a coupon rate of 10.00%
had been repurchased.
The Company has guaranteed a portion of the debt for two
cooperatives in which the Company is a member. The amounts
guaranteed were $34 million, $31 million and $27 million as of
October 1, 1995, January 1, 1995 and October 2, 1994, respectively.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Derivative Financial Instruments
The Company uses derivative financial instruments to cost
effectively modify risk from interest rate fluctuations in its
underlying debt. The Company has historically altered its
fixed/floating interest rate mix based upon anticipated operating
cash flows of the Company relative to its debt level and the
Company's ability to absorb increases in interest rates. These
derivative financial instruments are not used for trading purposes.
The Company has entered into interest rate swaps that resulted in
weighted average interest rates for the debt portfolio of
approximately 7.3%, 7.0% and 6.6% as of October 1, 1995, January 1,
1995 and October 2, 1994, respectively. The Company's overall
weighted average interest rate on its long-term debt increased from
an average of 6.6% during the first nine months of 1994 to an
average of 7.4% during the first nine months of 1995. After taking
into account the effect of all of the interest rate swap activities,
approximately 53%, 47% and 55% of the total debt portfolio was
subject to changes in short-term interest rates as of October 1,
1995, January 1, 1995 and October 2, 1994, respectively.
A rate increase of 1% would have increased interest expense for the
first nine months of 1995 by approximately $1.7 million and net
income for the nine months ended October 1, 1995 would have been
reduced by approximately $1 million. Interest coverage as of October
1, 1995 would have been 3.0 times (versus 3.2 times) if interest
rates had increased by 1%.
Derivative financial instruments were as follows:
Oct. 1, 1995 Jan. 1, 1995 Oct. 2,1994
Remaining Remaining Remaining
In Thousands Amount Term Amount Term Amount Term
Interest rate swaps-floating $ 60,000 8 years $221,600 6-9 years $221,600 6-9 years
Interest rate swaps-fixed 60,000 8 years 215,000 1-9 years 215,000 1-9 years
Interest rate caps - - 110,000 .5 year 110,000 1 year
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Derivative Financial Instruments (cont.)
The table below summarizes interest rate swap activity.
Third Quarter Nine Months
In Thousands 1995 1995
Total swaps, beginning of period $ 383,600 $ 436,600
New swaps - 25,000
Terminated swaps (263,600) (341,600)
Expired swaps - -
Total swaps, end of period $ 120,000 $ 120,000
Deferred gains on terminated interest rate swap contracts were $6.2
million, $4.2 million and $4.4 million on October 1, 1995, January
1, 1995 and October 2, 1994, respectively.
The carrying amounts and fair values of the Company's balance sheet
and off-balance-sheet instruments were as follows:
Oct. 1, 1995 Jan. 1, 1995
Carrying Fair Carrying Fair
In Thousands Amount Value Amount Value
Balance Sheet Instruments
Public debt $200,000 $217,209 $200,000 $201,119
Non-public variable
rate long-term debt 205,601 205,601 213,420 213,420
Non-public fixed
rate long-term debt 14,400 15,190 19,851 19,030
Off-Balance-Sheet Instruments
Interest rate swaps (5,102) (11,123)
The fair values of the interest rate swaps represent the estimated
amounts the Company would have had to pay to terminate these
agreements.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
7. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash, net of
the effect of an accounting change, were as follows:
Nine Months
In Thousands 1995 1994
Accounts receivable, trade, net $ (3,424) $ (2,562)
Due from Piedmont Coca-Cola Bottling Partnership (74) 547
Accounts receivable, other 832 4,882
Inventories (1,576) (2,787)
Prepaid expenses and other current assets (484) (1,944)
Portion of long-term debt payable within one year (126) (335)
Accounts payable and accrued liabilities (6,061) (18,755)
Accrued compensation (782) 1,108
Accrued interest payable (6,389) (4,515)
Increase in current assets less current liabilities $ (18,084) $ (24,361)
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 third quarter and first nine months of 1995
compared to the third quarter and first nine months of 1994 and changes
in financial condition from October 2, 1994 and January 1, 1995 to
October 1, 1995.
The Company reported net income of $4.6 million or $.50 per share for
the third quarter of 1995 compared with net income of $4.9 million or
$.53 per share for the same period in 1994. For the first nine months of
1995, net income was $14.7 million or $1.58 per share compared with net
income of $10.9 million or $1.17 per share for the first nine months of
1994. In the first quarter of 1994, the Company recorded a one-time,
after-tax noncash charge of $2.2 million or $.24 per share related to
the adoption of Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits."
The results for interim periods are not necessarily indicative of the
results to be expected for the year due to seasonal factors.
Results of Operations
For the third quarter of 1995, net franchise sales increased
approximately 13% over the same quarter in 1994, reflecting higher net
selling prices and a volume increase of slightly more than 9%. Net
franchise sales for the first nine months of 1995 increased
approximately 9% over the 1994 period. This increase was due principally
to increased net selling prices but also reflected a volume increase of
almost 4%. Selling prices were increased in early 1995 in order to cover
the anticipated increased cost of raw materials, primarily aluminum
cans.
In the third quarter of 1995, gross margin on net franchise sales
increased by approximately 10.5% over the same period in 1994. As a
percentage of net franchise sales, gross margin was 46.6%, a slight
decrease from the same measurement for the 1994 period. For the first
nine months of 1995, gross margin on net franchise sales increased
approximately 8.5% over the comparable 1994 period and was slightly
lower as a percentage of net franchise sales. Cost of goods sold related
to net franchise sales increased due to increases in packaging costs,
but selling price increases more than offset the increased cost of goods
sold. Although the cost of cans increased during the first nine months
of 1995, agreements currently in place with suppliers ensure that the
cost of cans will not increase further this year and may decline from
current pricing if aluminum ingot prices decrease below a specified
level. Effective November 7, 1995, the Company entered into a can supply
agreement with a major can supplier. This agreement, which has an
initial term of five years commencing January 1, 1996, will effectively
place upper and lower limits on the cost of cans for certain production
facilities which the Company owns or manages (approximately 70% of the
Company's total can requirements) during such period. The Company
intends to conclude similar agreements with one or more suppliers with
respect to the remainder of its can requirements. Plastic bottles have
also contributed to the increase in cost of goods sold. Average resin prices
increased more than 10% during the first nine months of 1995 as compared
with the first nine months of 1994.
For the third quarter of 1995, selling expenses increased almost 11.5%
over the comparable 1994 period. Selling expenses increased 7.6% for the
first nine months of 1995 as compared to the first nine months of 1994.
As a percentage of net sales, selling expenses increased from 19.9% in
the third quarter of 1994 to 20.5% in the third quarter of 1995 and from
20.2% during the first nine months of 1994 to 20.6% during the first
nine months of 1995. Selling expenses related to net franchise sales
increased approximately 14% and 10% over the 1994 third quarter and nine
month periods, respectively, due primarily to higher employment costs
and increased expenses related to sales development programs and
marketing costs. During the third quarter of 1995, selling expenses also
increased due to a number of under the crown promotions. The impact of
these promotions is reflected in the third quarter volume increase. The
Company has begun a multi-year program to increase volume of certain
carbonated beverage products of The Coca-Cola Company through various
marketing efforts.
General and administrative expenses increased 2.8% for the first nine
months of 1995 over the same 1994 period due to increased employment
costs. The increased employment costs were partially offset by
reductions in other general and administrative expenses. As a percentage
of net sales, general and administrative expenses declined for both the
first nine months and third quarter of 1995 as compared to the same
periods in 1994.
Depreciation expense increased approximately 11.9% between the first
nine months of 1994 and the first nine months of 1995. The third quarter
1995 depreciation expense increased 15.1% over the comparable 1994
period. These increases reflect the high level of capital expenditures
during 1994 and the timing of placing assets in service. During 1994,
certain capital improvements were made at the manufacturing facilities
to produce new packages.
Interest expense increased 7.9% from the first nine months of 1994 to
the first nine months of 1995 due to higher short-term interest rates.
During the third quarter of 1995, interest expense increased 3.9% over
the same period in 1994. Outstanding long-term debt decreased
approximately $35 million from October 2, 1994 to October 1, 1995. The
Company's weighted average interest rate increased from an average of
6.6% during the first nine months of 1994 to an average of 7.4% during
the first nine months of 1995.
The change in "other income (expense), net" between the first nine
months of 1994 and the first nine months of 1995 was due primarily to a
third quarter 1994 gain of approximately $1.3 million on the sale of one
of the Company's aircraft and a first quarter 1994 gain on the sale of
an idle production facility. For the first nine months of 1995, losses
of approximately $1.0 million on sales of property, plant and equipment
were included in "other income (expense), net." Gains of approximately
$1.4 million on sales of property, plant and equipment were included in
"other income (expense), net" for the first nine months of 1994. In
addition, the discount on sales of trade accounts receivable increased
almost $.6 million from the first nine months of 1994 to the first nine
months of 1995 due to higher short-term rates associated with this
arrangement.
Changes in Financial Condition
Working capital increased $19.0 million from January 1, 1995 and $3.6
million from October 2, 1994 to October 1, 1995. The increase from
January 1, 1995 was due principally to scheduled payments of accrued
interest and seasonal increases in trade accounts receivable and
inventories. The increased cost of cans and bottles also contributed to
the higher inventory balances. The increase in working capital from
October 2, 1994 was due to volume related increases in accounts
receivable and inventories as well as increased costs of items held in
inventory.
Capital expenditures in the first nine months of 1995 were $26.3 million
compared to $36.7 million in the first nine months of 1994. Expenditures
for 1995 capital additions are expected to be significantly lower than
expenditures for 1994 capital additions. In 1995, the Company resumed
its vehicle leasing program. Additions to the Company's fleet were
purchased rather than leased during 1994.
Long-term debt decreased approximately $35 million from October 2, 1994
and more than $13 million from January 1, 1995. During this period, cash
flow has exceeded dividend, capital expenditure and working capital
requirements. As of October 1, 1995, 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 October 1, 1995, the Company had no amounts
outstanding under the revolving credit facility or the commercial paper
program and had approximately $86 million outstanding under the informal
lines of credit. The Company had sold trade accounts receivable of $35
million as of October 1, 1995, January 1, 1995 and October 2, 1994.
The Company uses derivative financial instruments to modify risk from
interest rate fluctuations. Derivative financial instruments are not
used for trading purposes. As of October 1, 1995, the debt portfolio had
a weighted average interest rate of approximately 7.3% and approximately
53% of the total portfolio of $420 million was subject to changes in
short-term interest rates.
On October 12, 1994, a $400 million shelf registration for debt and
equity securities filed with the Securities and Exchange Commission
became effective and the securities thereunder became available for
issuance. On November 1, 1995, the Company issued $100 million of 6.85%
debentures due 2007 pursuant to such registration. The net proceeds from
this issuance will be used principally for refinancing of existing
indebtedness with the remainder to be used for general corporate
purposes. As of November 10, 1995, $36.3 million of medium-term notes
due 1999 with a coupon rate of 7.99% and $26 million of medium-term
notes due 2000 with a coupon rate of 10.00% had been repurchased. These
refinancing activities extend the Company's debt maturities and reduce
future interest expense. In the fourth quarter of 1995, the Company
expects to record an extraordinary charge related to the premuium
associated with the debt repurchases.
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
1.1 Underwriting Agreement, dated November 1,
1995, among the Company, Citicorp Securities,
Inc. and Salomon Brothers Inc.
4.1 Form of the Company's 6.85% Debentures Due
2007.
10.1 Lease Funding No. 95008, dated as of July
18, 1995, of a Master Equipment Lease
between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.2 Lease Funding No. 95009, dated as of August
14, 1995, of a Master Equipment Lease
between the Company and Coca-Cola Financial
Corporation covering various vending
machines.
10.3 Lease Funding No. 95010, dated as of
September 8, 1995, of a Master Equipment
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.4 Lease Schedule No. 012, dated as of June
21, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.5 Lease Schedule No. 013, dated as of June 21,
1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.6 Lease Schedule No. 014, dated as of July
27, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.7 Lease Schedule No. 015, dated as of August
7, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.8 Lease Schedule No. 016, dated as of August
24, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.9 Lease Schedule No. 017, dated as of August
24, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.10 Lease Schedule No. 18-Revised, dated as of August
29, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.11 Lease Schedule No. 019, dated as of August
7, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
Item 6. Exhibits and Reports on Form 8-K (Cont.)
10.12 Lease Schedule No. 020, dated as of August
7, 1995, of a Lease Agreement dated as of
December 15, 1994 between the Company and
BA Leasing & Capital Corporation covering
various vehicles.
10.13 Lease Funding No. 95011, dated as of
September 15, 1995, of a Master Equipment
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.14 Lease Funding No. 95012, dated as of
October 10, 1995, of a Master Equipment
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.15 Lease Funding No. 95013, dated as of
October 18, 1995, of a Master Equipment
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.16 Can Supply Agreement, dated November 7,
1995, between the Company and American
National Can Company.
27 Financial data schedule for period ended
October 1, 1995.
(b) Reports on Form 8-K
None.
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: November 14, 1995 By: /s/ David V. Singer
David V. Singer
Principal Financial Officer of the Registrant
and
Vice President - Chief Financial Officer