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 March 31, 2002
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Commission File Number 0-9286
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COCA-COLA BOTTLING CO. CONSOLIDATED
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(Exact name of registrant as specified in its charter)
Delaware 56-0950585
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4100 Coca-Cola Plaza, Charlotte, North Carolina 28211
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(Address of principal executive offices) (Zip Code)
(704) 557-4400
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(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 May 1, 2002
----- --------------------------
Common Stock, $1.00 Par Value 6,392,477
Class B Common Stock, $1.00 Par Value 2,380,852
PART I - FINANCIAL INFORMATION
Item l. Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
March 31, Dec. 30, April 1,
2002 2001 2001
---------- ---------- ----------
ASSETS
- ------
Current Assets:
- ---------------
Cash $ 9,172 $ 16,912 $ 7,955
Accounts receivable, trade, less allowance for
doubtful accounts of $2,064, $1,863 and $809 81,303 63,974 62,369
Accounts receivable from The Coca-Cola Company 15,475 3,935 7,788
Accounts receivable, other 6,385 5,253 6,195
Inventories 40,852 39,916 35,925
Prepaid expenses and other current assets 15,615 13,379 16,498
---------- ---------- ----------
Total current assets 168,802 143,369 136,730
---------- ---------- ----------
Property, plant and equipment, net 478,973 457,306 424,126
Leased property under capital leases, net 50,779 5,383 7,119
Investment in Piedmont Coca-Cola Bottling Partnership 60,203 59,316
Other assets 60,418 52,140 60,853
Franchise rights and goodwill, net 607,031 335,662 344,321
Other identifiable intangible assets, net 8,026 10,396 13,313
---------- ---------- ----------
Total $1,374,029 $1,064,459 $1,045,778
========== ========== ==========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
March 31, Dec. 30, April 1,
2002 2001 2001
------------- ------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
- --------------------
Portion of long-term debt payable within one year $ 147,431 $ 56,708 $ 57,317
Current portion of obligations under capital leases 5,715 1,489 2,454
Accounts payable, trade 35,476 28,370 24,410
Accounts payable to The Coca-Cola Company 4,817 7,925 4,018
Due to Piedmont Coca-Cola Bottling Partnership 24,682 18,958
Accrued compensation 7,817 17,350 7,137
Other accrued liabilities 68,257 49,169 49,040
Accrued interest payable 15,122 11,878 14,462
------------- ------------- -----------
Total current liabilities 284,635 197,571 177,796
Deferred income taxes 160,578 133,743 146,512
Pension and retiree benefit obligations 32,941 37,203 24,950
Other liabilities 60,510 57,770 50,673
Obligations under capital leases 41,811 935 1,991
Long-term debt 717,625 620,156 620,156
------------- ------------- -----------
Total liabilities 1,298,100 1,047,378 1,022,078
------------- ------------- -----------
Commitments and Contingencies (Note 13)
Minority interest in Piedmont Coca-Cola
Bottling Partnership 56,452
Stockholders' Equity:
- ---------------------
Common Stock, $1.00 par value:
Authorized - 30,000,000 shares;
Issued - 9,454,851, 9,454,651 and 9,454,651 shares 9,454 9,454 9,454
Class B Common Stock, $1.00 par value:
Authorized - 10,000,000 shares;
Issued - 3,008,966, 2,989,166 and 2,989,166 shares 3,009 2,989 2,989
Capital in excess of par value 89,559 91,004 97,569
Accumulated deficit (8,929) (12,307) (23,559)
Accumulated other comprehensive loss (12,362) (12,805) (1,499)
------------- ------------- -----------
80,731 78,335 84,954
Less-Treasury stock, at cost:
Common - 3,062,374 shares 60,845 60,845 60,845
Class B Common - 628,114 shares 409 409 409
------------- ------------- -----------
Total stockholders' equity 19,477 17,081 23,700
------------- ------------- -----------
Total $ 1,374,029 $ 1,064,459 $ 1,045,778
============= ============= ===========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
First Quarter
----------------------
2002 2001
--------- ---------
Net sales (includes sales to Piedmont of $13,987 in 2001) $ 283,198 $ 223,700
Cost of sales, excluding depreciation shown below
(includes $10,921 related to sales to Piedmont in 2001) 148,616 120,801
--------- ---------
Gross margin 134,582 102,899
Selling, general and administrative expenses,
excluding depreciation shown below 96,520 73,591
Depreciation expense 17,985 15,803
Amortization of goodwill and intangibles 687 3,720
--------- ---------
Income from operations 19,390 9,785
Interest expense 12,140 12,152
Other income (expense), net (899) (579)
Minority interest 759
--------- ---------
Income (loss) before income taxes 5,592 (2,946)
Federal and state income taxes (benefit) 2,214 (1,164)
--------- ---------
Net income (loss) $ 3,378 $ (1,782)
========= =========
Basic net income (loss) per share $ .39 $ (.20)
Diluted net income (loss) per share $ .38 $ (.20)
Weighted average number of common
shares outstanding 8,773 8,753
Weighted average number of common
shares outstanding-assuming dilution 8,857 8,753
Cash dividends per share
Common Stock $ .25 $ .25
Class B Common Stock $ .25 $ .25
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
In Thousands
Capital Accumulated
Class B in Other
Common Common Excess of Accum. Comprehensive Treasury
Stock Stock Par Value Deficit Loss Stock Total
----- ----- --------- ------- ---- ----- -----
Balance on
December 31, 2000 $ 9,454 $ 2,969 $ 99,020 $ (21,777) $ $(61,254) $ 28,412
Comprehensive loss:
Net loss (1,782) (1,782)
Proportionate share
of Piedmont's accum.
other comprehensive
loss at adoption of
SFAS 133, net of tax (924) (924)
Change in proportionate
share of Piedmont's
accum. other com-
prehensive loss, net of tax (575) (575)
---------
Total comprehensive loss (3,281)
Cash dividends paid (2,188) (2,188)
Issuance of Class B
Common Stock 20 737 757
--------- -------- --------- --------- ---------- -------- ---------
Balance on
April 1, 2001 $ 9,454 $ 2,989 $ 97,569 $ (23,559) $ (1,499) $(61,254) $ 23,700
========= ======== ========= ========= ========== ======== =========
Balance on
December 30, 2001 $ 9,454 $ 2,989 $ 91,004 $ (12,307) $ (12,805) $(61,254) $ 17,081
Comprehensive
income:
Net income 3,378 3,378
Change in fair market
value of cash flow
hedges, net of tax 14 14
Change in proportionate
share of Piedmont's
accum. other com-
prehensive loss, net of tax 429 429
---------
Total comprehensive
income 3,821
Cash dividends paid (2,193) (2,193)
Issuance of Class B
Common Stock 20 748 768
--------- -------- --------- --------- ---------- -------- ---------
Balance on
March 31, 2002 $ 9,454 $ 3,009 $ 89,559 $ (8,929) $ (12,362) $(61,254) $ 19,477
========= ======== ========= ========= ========== ======== =========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
First Quarter
-----------------------------
2002 2001
----------- ----------
Cash Flows from Operating Activities
- ------------------------------------
Net income (loss) $ 3,378 $ (1,782)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation expense 17,985 15,803
Amortization of goodwill and intangibles 687 3,720
Deferred income taxes (benefit) 2,214 (1,164)
Losses on sale of property, plant and equipment 702 524
Amortization of debt costs 186 213
Amortization of deferred gain related to terminated
interest rate swaps (482) (258)
Undistributed losses of Piedmont 935
Minority interest 759
(Increase) decrease in current assets less current liabilities (1,391) 9,103
Increase in other noncurrent assets (3,235) (184)
Decrease in other noncurrent liabilities (3,076) (13)
Other (3) 27
----------- ----------
Total adjustments 14,346 28,706
----------- ----------
Net cash provided by operating activities 17,724 26,924
----------- ----------
Cash Flows from Financing Activities
- ------------------------------------
Repayment of current portion of long-term debt (56,708) (1,776)
Proceeds from (repayment of) lines of credit, net 49,900 (12,900)
Cash dividends paid (2,193) (2,188)
Payments on capital lease obligations (471) (976)
Other 179 193
----------- ----------
Net cash used in financing activities (9,293) (17,647)
----------- ----------
Cash Flows from Investing Activities
- ------------------------------------
Additions to property, plant and equipment (7,716) (10,682)
Proceeds from the sale of property, plant and equipment 247 935
Acquisitions of companies, net (8,702)
----------- ----------
Net cash used in investing activities (16,171) (9,747)
----------- ----------
Net decrease in cash (7,740) (470)
Cash at beginning of period 16,912 8,425
----------- ----------
Cash at end of period $ 9,172 $ 7,955
=========== ==========
Significant non-cash investing and financing activities:
Issuance of Class B Common Stock in connection with stock award $ 768 $ 757
Capital lease obligations incurred 41,620
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.
All such adjustments are of a normal, recurring nature.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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 December 30, 2001 filed
with the Securities and Exchange Commission. See Note 14 for new accounting
pronouncements.
Certain prior year amounts have been reclassified to conform to current year
classifications.
2. 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 carbonated and
noncarbonated beverages primarily in portions of North Carolina and South
Carolina. Prior to January 2, 2002, the Company and The Coca-Cola Company,
through their respective subsidiaries, each beneficially owned 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.
On January 2, 2002, the Company purchased an additional 4.651% interest in
Piedmont from The Coca-Cola Company for $10.0 million, increasing the Company's
ownership in Piedmont to 54.651%. As a result of the increase in ownership, the
results of operations, financial position and cash flows of Piedmont have been
consolidated with those of the Company beginning in the first quarter of 2002.
The excess of the purchase price over the net book value of the interest of
Piedmont acquired was $4.4 million and has been recorded principally as an
addition to franchise rights. The Company's investment in Piedmont has been
accounted for using the equity method in 2001 and prior years.
The following financial information includes the 2002 unaudited consolidated
financial position and results of operations of the Company and includes the
2001 unaudited pro forma financial position and results of operations. The 2001
unaudited pro forma financial information reflects the consolidation of
Piedmont's financial position and results of operations with those of the
Company as if the additional purchase had occurred at the beginning of 2001.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Pro forma Pro forma
March 31, Dec. 30, April 1,
In Thousands 2002 2001 2001
- -------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash $ 9,172 $ 18,210 $ 9,022
Accounts receivable, trade, net 81,303 84,384 82,043
Accounts receivable from The Coca-Cola Company 15,475 5,004 10,302
Accounts receivable, other 6,385 7,603 8,417
Inventories 40,852 45,812 41,519
Prepaid expenses and other current assets 15,615 13,522 17,112
---------- ---------- ----------
Total current assets 168,802 174,535 168,415
---------- ---------- ----------
Property, plant and equipment 826,018 822,095 766,761
Less-Accumulated depreciation and amortization 347,045 332,942 310,556
---------- ---------- ----------
Property, plant and equipment, net 478,973 489,153 456,205
---------- ---------- ----------
Leased property under capital leases 60,761 20,424 21,019
Less-Accumulated amortization 9,982 10,109 8,030
---------- ---------- ----------
Leased property under capital leases, net 50,779 10,315 12,989
---------- ---------- ----------
Other assets 60,418 57,756 66,382
Franchise rights and goodwill 607,031 604,651 619,694
Other identifiable intangible assets 8,026 10,396 13,313
---------- ---------- ----------
Total $1,374,029 $1,346,806 $1,336,998
========== ========== ==========
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Pro forma Pro forma
March 31, Dec. 30, April 1,
In Thousands 2002 2001 2001
- -------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Portion of long-term debt payable within one year $ 147,431 $ 154,208 $ 57,317
Current portion of obligations under capital leases 5,715 2,466 3,883
Accounts payable, trade 35,476 34,214 31,903
Accounts payable to The Coca-Cola Company 4,817 8,193 4,100
Other accrued liabilities 68,257 57,593 58,921
Accrued compensation 7,817 17,350 7,273
Accrued interest payable 15,122 13,647 15,864
----------- ----------- -----------
Total current liabilities 284,635 287,671 179,261
----------- ----------- -----------
Deferred income taxes 160,578 157,739 171,102
Pension and retiree benefit obligations 32,941 37,203 24,950
Other liabilities 60,510 61,425 54,456
Obligations under capital leases 41,811 4,033 5,010
Long-term debt 717,625 727,657 825,156
----------- ----------- -----------
Total liabilities 1,298,100 1,275,728 1,259,935
----------- ----------- -----------
Minority interest in Piedmont 56,452 54,603 53,568
Stockholders' Equity:
Common Stock 9,454 9,454 9,454
Class B Common Stock 3,009 2,989 2,989
Capital in excess of par value 89,559 91,004 97,569
Accumulated deficit (8,929) (12,743) (23,764)
Accumulated other comprehensive loss (12,362) (12,975) (1,499)
----------- ----------- -----------
80,731 77,729 84,749
Less-Treasury stock, at cost:
Common 60,845 60,845 60,845
Class B Common 409 409 409
----------- ----------- -----------
Total stockholders' equity 19,477 16,475 23,495
----------- ----------- -----------
Total $ 1,374,029 $ 1,346,806 $ 1,336,998
=========== =========== ===========
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data) First Quarter
- -----------------------------------------------------------------------------------------------------------------
Pro forma
2002 2001
------------ ----------
Net sales $ 283,198 $ 270,328
Cost of sales 148,616 143,408
------------ ----------
Gross margin 134,582 126,920
Selling, general and administrative expenses 96,520 91,859
Depreciation expense 17,985 17,207
Amortization of goodwill and intangibles 687 5,849
------------ ----------
Income from operations 19,390 12,005
Interest expense 12,140 15,763
Other income (expense), net (899) (312)
Minority interest 759 (849)
------------ -----------
Income (loss) before income taxes 5,592 (3,221)
Federal and state income taxes (benefit) 2,214 (1,234)
------------ ----------
Net income (loss) $ 3,378 $ (1,987)
============ ==========
Basic net income (loss) per share $ .39 $ (.23)
============ ==========
Diluted net income (loss) per share $ .38 $ (.23)
============ ==========
Weighted average number of common 8,773 8,753
shares outstanding
Weighted average number of common 8,857 8,753
shares outstanding - assuming dilution
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
3. Inventories
Inventories were summarized as follows:
March 31, Dec. 30, April 1,
In Thousands 2002 2001 2001
- ---------------------------------------------------------------------------------------------------------------------------
Finished products $28,580 $23,637 $23,099
Manufacturing materials 7,229 11,893 8,905
Plastic pallets and other 5,043 4,386 3,921
------- ------- -------
Total inventories $40,852 $39,916 $35,925
======= ======= =======
4. Property, Plant and Equipment
The principal categories and estimated useful lives of property, plant and
equipment were as follows:
March 31, Dec. 30, April 1, Estimated
In Thousands 2002 2001 2001 Useful Lives
- --------------------------------------------------------------------------------------------------------------------------
Land $ 13,058 $ 11,158 $ 11,208
Buildings 114,773 95,338 96,300 10-50 years
Machinery and equipment 93,009 93,658 94,398 5-20 years
Transportation equipment 138,441 130,016 126,562 4-13 years
Furniture and fixtures 38,253 36,350 35,089 4-10 years
Vending equipment 356,415 334,975 287,807 6-13 years
Leasehold and land improvements 45,945 40,969 38,938 5-20 years
Software for internal use 22,302 21,850 16,392 3-7 years
Construction in progress 3,822 1,908 1,700
- --------------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment, at cost 826,018 766,222 708,394
Less: Accumulated depreciation and
amortization 347,045 308,916 284,268
- --------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net $ 478,973 $ 457,306 $ 424,126
- --------------------------------------------------------------------------------------------------------------------------
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Leased Property Under Capital Leases
March 31, Dec. 30, April 1, Estimated
In Thousands 2002 2001 2001 Useful Lives
- ----------------------------------------------------------------------------------------------------------------------
Leased property under capital leases $60,761 $ 12,265 $ 12,626 1-29 years
Less: Accumulated amortization 9,982 6,882 5,507
- ----------------------------------------------------------------------------------------------------------------------
Leased property under capital leases, net $50,779 $ 5,383 $ 7,119
- ----------------------------------------------------------------------------------------------------------------------
The Company recorded a capital lease of $41.6 million at the end of the first
quarter of 2002 related to its production/distribution center located in
Charlotte, North Carolina. As disclosed in the Company's 2001 Annual Report on
Form 10-K, this facility is leased from a related party. The lease obligation
was capitalized as a result of the Company's decision in the first quarter to
enter into renewal options that extend the expected term of this lease.
6. Franchise Rights and Goodwill
March 31, Dec. 30, April 1,
In Thousands 2002 2001 2001
- --------------------------------------------------------------------------------------------------------
Franchise rights $662,374 $353,388 $353,388
Goodwill 155,192 112,097 112,097
- --------------------------------------------------------------------------------------------------------
Franchise rights and goodwill 817,566 465,485 465,485
Less: Accumulated amortization 210,535 129,823 121,164
- --------------------------------------------------------------------------------------------------------
Franchise rights and goodwill, net $607,031 $335,662 $344,321
- --------------------------------------------------------------------------------------------------------
7. Other Identifiable Intangible Assets
The principal categories and estimated useful lives of identifiable intangible
assets were as follows:
March 31, Dec. 30, April 1, Estimated
In Thousands 2002 2001 2001 Useful Lives
- -----------------------------------------------------------------------------------------------------------------------
Customer lists $54,864 $54,864 $54,864 20 years
Other 16,316 16,316
- -----------------------------------------------------------------------------------------------------------------------
Other identifiable intangible assets 54,864 71,180 71,180
Less: Accumulated amortization 46,838 60,784 57,867
- -----------------------------------------------------------------------------------------------------------------------
Other identifiable intangible assets, net $ 8,026 $10,396 $13,313
- -----------------------------------------------------------------------------------------------------------------------
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
8. Long-Term Debt
Long-term debt was summarized as follows:
Interest Interest March 31, Dec. 30, April 1,
In Thousands Maturity Rate Paid 2002 2001 2001
- -----------------------------------------------------------------------------------------------------------------------------------
Lines of Credit 2002 2.40% Varies $ 19,900
Revolving Credit 2002 4.75% Varies 30,000
Term Loan Agreement 2004 2.39% Varies 85,000 $ 85,000 $ 85,000
Term Loan Agreement 2005 2.39% Varies 85,000 85,000 85,000
Term Loan Agreement* 2002 2.44% Varies 97,500
Term Loan Agreement* 2003 2.44% Varies 97,500
Medium-Term Notes 2002 47,000 47,000
Debentures 2007 6.85% Semi- 100,000 100,000 100,000
annually
Debentures 2009 7.20% Semi- 100,000 100,000 100,000
annually
Debentures 2009 6.38% Semi- 250,000 250,000 250,439
annually
Other notes payable 2002 - 5.75%- Varies 156 9,864 10,473
2006 10.00%
- -----------------------------------------------------------------------------------------------------------------------------
865,056 676,864 677,912
Less: Portion of long-term debt payable within one year 147,431 56,708 57,317
- -----------------------------------------------------------------------------------------------------------------------------
717,625 620,156 620,595
Fair market value of interest rate swaps (439)
- -----------------------------------------------------------------------------------------------------------------------------
Long-term debt $717,625 $620,156 $620,156
- -----------------------------------------------------------------------------------------------------------------------------
* Piedmont's outstanding debt.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
8. Long-Term Debt (cont.)
The Company borrows periodically under its available lines of credit. These
lines of credit, in the aggregate amount of $95 million at March 31, 2002, are
made available at the discretion of the three participating banks and may be
withdrawn at any time by such banks. On March 31, 2002, $19.9 million was
outstanding under these lines of credit. The Company intends to refinance
short-term maturities with currently available lines of credit.
The Company has a revolving credit facility for borrowings of up to $170 million
that matures in December 2002. The Company intends to negotiate a new revolving
credit facility to replace the current facility. The agreement contains
covenants which establish ratio requirements related to debt, interest expense
and cash flow. A facility fee of 1/8% per year on the banks' commitment is
payable quarterly. On March 31, 2002, $30.0 million was outstanding under this
facility.
After taking into account all of the interest rate hedging activities, the
Company had a weighted average interest rate of 5.4%, 5.7% and 6.7% for the debt
portfolio as of March 31, 2002, December 30, 2001 and April 1, 2001,
respectively. The Company's overall weighted average borrowing rate on its
long-term debt was 5.5% for the first quarter of 2002 compared to 6.8% for the
first quarter of 2001.
As of March 31, 2002, approximately 33% of the total debt portfolio was subject
to changes in short-term interest rates. The Company considers all floating rate
debt and fixed rate debt with a maturity of less than one year to be subject to
changes in short-term interest rates.
If average interest rates for the floating rate component of the Company's debt
portfolio increased by 1%, annual interest expense for the first quarter ended
March 31, 2002 would have increased by approximately $.6 million and net income
would have been reduced by approximately $.4 million.
With regards to the Company's $170 million term loan agreement that matures in
2004 and 2005, the Company must maintain its public debt ratings at investment
grade as determined by both Moody's and Standard & Poor's. If the Company's
public debt ratings fall below investment grade within 90 days after the public
announcement of certain designated events and such ratings stay below investment
grade for an additional 40 days, a trigger event resulting in a default occurs.
The Company does not anticipate a trigger event will occur.
Piedmont obtained a term loan with a group of banks on May 28, 1996 for $195
million with interest payable at a floating rate of LIBOR plus 0.50%. The loan
agreement matures in two equal installments of $97.5 million each on May 28,
2002 and May 28, 2003. The interest rate is subject to increase in the event
Piedmont's debt rating, as established by Standard & Poor's, declines, and is
subject to acceleration if Piedmont's debt rating falls below investment grade
for more that 40 days. Piedmont does not anticipate that its debt rating will
fall below investment grade. The loan agreement contains certain restrictions
which include limitations on additional borrowings, new liens and dispositions
of assets. The loan agreement also requires that The Coca-Cola Company continue
to maintain at least a 40% voting and equity interest in Piedmont and a 20%
interest in the Common Stock of the Company.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
8. Long-Term Debt
In January 1999, the Company filed an $800 million shelf registration for debt
and equity securities. The Company used this shelf registration to issue $250
million of long-term debentures in 1999. The Company currently has $550 million
available for use under this shelf registration.
The Company intends to refinance the $97.5 million of the Piedmont loan maturing
in May 2002 with currently available credit facilities which include its
revolving credit facility and $550 million of availability under its shelf
registration. The Company currently plans to loan $97.5 million to Piedmont to
repay the maturing debt in May 2002. It is anticipated that Piedmont will pay
the Company interest based on a spread over the Company's average cost of funds.
9. Derivative Financial Instruments
The Company uses interest rate hedging products to modify risk from interest
rate fluctuations in its underlying debt. The Company has historically used
derivative financial instruments from time to time to achieve a targeted
fixed/floating rate mix. This target is based upon anticipated cash flows from
operations relative to the Company's debt level and the potential impact of
increases in interest rates on the Company's overall financial condition.
The Company does not use derivative financial instruments for trading or other
speculative purposes nor does it use leveraged financial instruments. All of the
Company's outstanding interest rate swap agreements are LIBOR-based.
Derivative financial instruments were summarized as follows:
March 31, 2002 December 30, 2001 April 1, 2001
----------------------------------------------------------------
Notional Remaining Notional Remaining Notional Remaining
In Thousands Amount Term Amount Term Amount Term
- --------------------------------------------------------------------------------------------------
Interest rate swaps-floating $100,000 8.0 years
Interest rate swap - fixed $27,000 .7 years $27,000 .95 years
Interest rate swap - fixed 19,000 .7 years 19,000 .95 years
Interest rate swap - fixed* 40,000 .2 years
Interest rate swap - fixed* 90,000 1.2 years
* Piedmont's derivative financial instruments.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
10. Fair Values of Financial Instruments
The following methods and assumptions were used by the Company in estimating the
fair values of its financial instruments:
Cash, Accounts Receivable and Accounts Payable
The fair values of cash, accounts receivable and accounts payable approximate
carrying values due to the short maturity of these financial instruments.
Public Debt
The fair values of the Company's public debt are based on estimated market
prices.
Non-Public Variable Rate Long-Term Debt
The carrying amounts of the Company's variable rate borrowings approximate their
fair values.
Non-Public Fixed Rate Long-Term Debt
The fair values of the Company's fixed rate long-term borrowings are estimated
using discounted cash flow analyses based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
Derivative Financial Instruments
Fair values for the Company's interest rate swaps are based on current
settlement values.
The carrying amounts and fair values of the Company's long-term debt and
derivative financial instruments were as follows:
March 31, 2002 December 30, 2001 April 1, 2001
-----------------------------------------------------------------------------
Carrying Fair Carrying Fair Carrying Fair
In Thousands Amount Value Amount Value Amount Value
- ------------------------------------------------------------------------------------------------------------
Public debt $450,000 $441,990 $497,000 $493,993 $497,439 $494,473
Non-public variable rate
long-term debt 414,900 414,900 170,000 170,000 170,000 170,000
Non-public fixed rate
long-term debt 156 156 9,864 9,868 10,473 10,533
Interest rate swaps 4,056 4,056 (7) (7) (439) (439)
The fair values of the interest rate swaps at March 31, 2002 represent the
estimated amounts the Company would have paid upon termination of these
agreements. The fair values of the interest rate swaps at December 30, 2001 and
April 1, 2001 represent the estimated amounts the Company would have received
upon termination of these agreements.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
11. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash, net of effect
of consolidating Piedmont, were as follows:
First Quarter
-------------------------
In Thousands 2002 2001
- ----------------------------------------------------------------------------------------------
Accounts receivable, trade, net $ 3,081 $ 292
Accounts receivable, The Coca-Cola Company (10,470) (2,408)
Accounts receivable, other 1,218 2,052
Inventories 4,960 4,577
Prepaid expenses and other current assets (2,092) (2,472)
Accounts payable, trade 1,262 2,934
Accounts payable, The Coca-Cola Company (3,376) 216
Other accrued liabilities 10,665 3,718
Accrued compensation (8,765) (6,307)
Accrued interest payable 2,126 3,979
Due to Piedmont 2,522
---------- -----------
Increase (decrease) in current assets less current liabilities $ (1,391) $ 9,103
========== ===========
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
12. Earnings Per Share
The following table sets forth the computation of basic net income per share and
diluted net income per share:
First Quarter
-----------------
In Thousands (Except Per Share Data) 2002 2001
- -------------------------------------------------------------------------------
Numerator:
- ---------
Numerator for basic net income (loss) per share and diluted
net income (loss) per share $ 3,378 $(1,782)
Denominator:
- -----------
Denominator for basic net income (loss) per share -
weighted average common shares 8,773 8,753
Effect of dilutive securities - stock options 84 *
------- -------
Denominator for diluted net income (loss) per share -
adjusted weighted average common shares 8,857 8,753
======= =======
Basic net income (loss) per share $ .39 $ (.20)
======= =======
Diluted net income (loss) per share $ .38 $ (.20)
======= =======
*Antidilutive
13. Commitments and Contingencies
The Company has guaranteed a portion of the debt for two cooperatives in which
the Company is a member. The amounts guaranteed were $45.8 million, $37.4
million and $37.4 million as of March 31, 2002, December 30, 2001 and April 1,
2001, respectively.
The Company is involved in various claims and legal proceedings which have
arisen in the ordinary course of business. Although it is difficult to predict
the ultimate outcome of these cases, management believes, based on discussions
with legal counsel, that the ultimate disposition of these claims will not have
a material adverse effect on the financial condition, cash flows or results of
operations of the Company.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
14. New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations," ("SFAS No.
141") and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets," ("SFAS No. 142"). These standards require that all
business combinations be accounted for using the purchase method and that
goodwill and intangible assets with indefinite useful lives not be amortized but
instead be tested for impairment at least annually. These standards provide
guidelines for new disclosure requirements and outline the criteria for initial
recognition and measurement of intangibles, assignment of assets and liabilities
including goodwill to reporting units and goodwill impairment testing. The
provisions of SFAS No. 141 and SFAS No. 142 apply to all business combinations
consummated after June 30, 2001. The provisions of SFAS No. 142 for existing
goodwill and other intangible assets have been implemented effective the first
day of fiscal year 2002. The Company estimates the adoption of SFAS No. 142 will
reduce amortization expense in 2002 by approximately $21.0 million for the
Company and Piedmont on a combined basis. The Company has performed its initial
impairment analysis of its goodwill and intangible assets with indefinite useful
lives and concluded that there is no impairment at this time.
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS
No. 144"). SFAS No. 144 supersedes Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," but it retains many of the fundamental provisions of
that Statement. SFAS No. 144 also extends the reporting requirements to report
separately as discontinued operations, components of an entity that have either
been disposed of or classified as held for sale. The provisions of SFAS No. 144
have been adopted as of the beginning of fiscal year 2002. The adoption of SFAS
No. 144 did not have a material effect on the Company's operating results.
EITF No. 01-09 "Accounting for Consideration Given by a Vendor to a Customer or
Reseller of the Vendor's Products" was effective for the Company beginning
January 1, 2002, requiring certain expenses previously classified as selling,
general and administrative expenses to be reclassified as deductions from net
sales. Prior year results have been adjusted to reclassify these expenses as a
deduction to net sales for comparability with current year presentation. These
expenses relate to payments to customers for certain marketing programs. The
Company has reclassified $1.4 million and $5.2 million for the first quarter of
2002 and first quarter of 2001, respectively, related to these expenses.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction:
- ------------
Coca-Cola Bottling Co. Consolidated (the "Company") produces, markets and
distributes carbonated and noncarbonated beverages, primarily products of The
Coca-Cola Company, which include some of the most recognized and popular
beverage brands in the world. The Company is currently the second largest
bottler of products of The Coca-Cola Company in the United States, operating in
eleven states, primarily in the southeast. The Company also distributes several
other beverage brands. The Company's product offerings include carbonated soft
drinks, teas, juices, isotonics and bottled water. The Company is also a partner
with The Coca-Cola Company in Piedmont Coca-Cola Bottling Partnership
("Piedmont"), a partnership that operates additional bottling territory in
portions of North Carolina and South Carolina.
On January 2, 2002, the Company purchased an additional 4.651% interest in
Piedmont for $10.0 million from The Coca-Cola Company, increasing the Company's
ownership in Piedmont to 54.651%. As a result of the increase in ownership, the
results of operations, financial position and cash flows of Piedmont have been
consolidated with those of the Company beginning in the first quarter of 2002.
The Company's investment in Piedmont has been accounted for using the equity
method for 2001 and prior years.
Management's discussion and analysis should be read in conjunction with the
Company's consolidated unaudited financial statements and the accompanying
footnotes along with the cautionary statements at the end of this section.
Basis of Presentation
The statement of operations and statement of cash flows for the quarter ending
March 31, 2002 and the consolidated balance sheet as of March 31, 2002 include
the combined operations of the Company and Piedmont, reflecting the acquisition
of an additional interest in Piedmont as discussed above. Generally accepted
accounting principles require that results for the other periods presented,
including results of operations and cash flows for the quarter ended April 1,
2001 and the consolidated balance sheets as of December 30, 2001 and April 1,
2001, be presented on a historical basis with Piedmont accounted for as an
equity investment. The following management's discussion and analysis for the
first quarter of 2002 is based on the actual unaudited results for the first
quarter compared to the unaudited pro forma consolidated results for the Company
and Piedmont for the same period in the prior year. The 2001 unaudited pro forma
consolidated results for the Company and Piedmont are included in Note 2 to the
financial statements.
New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations," ("SFAS No.
141") and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets," ("SFAS No. 142").
These standards require that all business combinations be accounted for using
the purchase method and that goodwill and intangible assets with indefinite
useful lives not be amortized but instead be tested for impairment at least
annually. These standards provide guidelines for new disclosure requirements and
outline the criteria for initial recognition and measurement of intangibles,
assignment of assets and liabilities including goodwill to reporting units and
goodwill impairment testing. The provisions of SFAS No. 141 and SFAS No. 142
apply to all business combinations consummated after June 30, 2001. The
provisions of SFAS No. 142 for existing goodwill and other intangible assets
have been implemented effective the first day of fiscal year 2002. The Company
estimates the adoption of SFAS No. 142 will reduce amortization expense in 2002
by approximately $21.0 million for the Company and Piedmont on a combined basis.
The Company has performed its initial impairment analysis of its goodwill and
intangible assets with indefinite useful lives and has concluded that there is
no impairment at this time.
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS
No. 144"). SFAS No. 144 supersedes Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," but it retains many of the fundamental provisions of
that Statement. SFAS No. 144 also extends the reporting requirements to report
separately as discontinued operations, components of an entity that have either
been disposed of or classified as held for sale. The provisions of SFAS No. 144
have been adopted as of the beginning of fiscal year 2002. The adoption of SFAS
No. 144 did not have a material effect on the Company's operating results.
EITF No. 01-09 "Accounting for Consideration Given by a Vendor to a Customer or
Reseller of the Vendor's Products" was effective for the Company beginning
January 1, 2002, requiring certain expenses previously classified as selling,
general and administrative expenses to be reclassified as deductions from net
sales. Prior year results have been adjusted to reclassify these expenses as a
deduction to net sales for comparability with current year presentation. These
expenses relate to payments to customers for certain marketing programs. The
Company has reclassified $1.4 million and $5.2 million for the first quarter of
2002 and first quarter of 2001, respectively, related to these expenses.
Discussion of Critical Accounting Policies and Critical Accounting Estimates
In the ordinary course of business, the Company has made a number of estimates
and assumptions relating to the reporting of results of operations and financial
position in the preparation of its financial statements in conformity with
accounting principles generally accepted in the United States of America. Actual
results could differ significantly from those estimates under different
assumptions and conditions. The Company has included in its Annual Report on
Form 10-K for the year ended December 30, 2001 a discussion of the Company's
most critical accounting policies, which are those that are most important to
the portrayal of the Company's financial condition and results of operations and
require management's most difficult, subjective and complex judgments, often as
a result of the need to make estimates about the effect of matters that are
inherently uncertain. Except for the Company's adoption of SFAS No. 142 and SFAS
No. 144, the Company has not made any changes in any of these critical
accounting policies during the first quarter of 2002, nor has it made any
material changes in any of the critical accounting estimates underlying these
accounting policies during the first quarter of 2002.
Overview:
- --------
The following discussion presents management's analysis of the results of
operations for the first quarter of 2002 compared to the pro forma consolidated
results for the first quarter of 2001 and changes in financial condition from
April 1, 2001 and December 30, 2001 (on a pro forma consolidated basis) to March
31, 2002. The results for interim periods are not necessarily indicative of the
results to be expected for the year due to seasonal factors.
The Company reported net income of $3.4 million or $.39 per share for the first
quarter of 2002 compared with a net loss of $2.0 million or $.23 per share for
the same period in 2001. Operating results for the first quarter of 2002
included physical case volume growth of approximately 2.8% and approximately 1%
higher net revenue per case. Net income for the first quarter of 2002 was
favorably impacted by the adoption of SFAS No. 142 which resulted in a reduction
of amortization expense of $3.1 million, net of tax, or approximately $.36 per
share. Lower interest rates and reduced debt balances resulted in a decrease in
interest expense from the first quarter of 2001 of $3.6 million.
Results of Operations:
- ---------------------
The Company's operations for the first quarter reflected an increase in sales of
4.8% driven by an increase in physical case volume of 2.8%, a 1% increase in net
selling price per case, 16% higher contract sales to other bottlers and a 10%
increase in fountain sales. Gross margin as a percentage of sales increased to
47.5% in the first quarter of 2002 from 47.0% for the same period in 2001. The
improvement in gross margin primarily reflects higher pricing and a favorable
shift in package and channel mix.
The Company's carbonated soft drink volume grew by 1% in the first quarter of
2002 led by increases in the diet Coke and Mello Yello trademarks of 3% and 2%,
respectively. Also, the Company introduced Fanta flavors throughout its
territory during the quarter. The Company continues to experience significant
growth for its bottled water, Dasani, with volume increasing over 50% over the
first quarter of 2001. POWERade volume also increased by over 50% from the first
quarter of 2001. The Company expects to introduce additional new brands and
packaging in its territory during the balance of 2002.
Cost of sales on a per unit basis was relatively unchanged in the first quarter
of 2002 compared to the same period in 2001. Modest increases in raw material
costs were offset by a reduction in manufacturing labor and overhead costs.
Selling, general and administrative expenses for the first quarter of 2002
increased 5% from the first quarter of 2001. The increase was primarily
attributable to increases in employee compensation, cost of employee benefit
plans including costs related to the Company's pension plans and certain
expenses related to the closing of sales distribution facilities during the
quarter. Based on the performance of the Company's pension plan investments and
lower interest rates, pension expense will increase from approximately $2
million in fiscal year 2001 to approximately $6 million in fiscal year 2002. The
Company closed five sales distribution centers in the first quarter and will
close two additional distribution centers in the second quarter. The Company
believes that these distribution center closings will reduce overall costs and
improve asset productivity in the future. The Company will continue to
evaluate its distribution system in an effort to optimize the process of
distributing products to customers.
The Company relies extensively on advertising and sales promotion in the
marketing of its products. The Coca-Cola Company and other beverage companies
that supply concentrate, syrups and finished products to the Company make
substantial advertising expenditures to promote sales in the local territories
served by the Company. The Company also benefits from national advertising
programs conducted by The Coca-Cola Company and other beverage companies.
Certain of the marketing expenditures by The Coca-Cola Company and other
beverage companies are made pursuant to annual arrangements. Although The
Coca-Cola Company has advised the Company that it intends to provide marketing
funding support in 2002, it is not obligated to do so under the Company's master
bottle contract. Direct marketing funding support from The Coca-Cola Company and
other beverage companies in the first quarter of 2002 and 2001 was $17.0 million
and $16.1 million, respectively.
Depreciation expense increased approximately $.8 million for the first quarter
of 2002 compared to the first quarter of 2001. The increase in depreciation
expense was attributable primarily to the purchase during May 2001 of previously
leased equipment for approximately $49 million. The Company expects its capital
spending in 2002 will be comparable to the amount expended during 2001,
excluding the purchase of previously leased equipment as discussed above.
Interest expense of $12.1 million decreased by $3.6 million or 23% from the
first quarter of 2001. The decrease is attributable to lower average interest
rates on the Company's outstanding debt and lower debt balances. The Company's
outstanding debt declined to $865.1 million at March 31, 2002 from $882.5
million at April 1, 2001. Long-term debt at March 31, 2002 includes borrowings
used to finance the purchase of approximately $49 million of leased equipment
discussed above. The Company's overall weighted average interest rate decreased
from an average of 6.8% during the first quarter of 2001 to an average of 5.5%
during the first quarter of 2002.
The Company's effective income tax rates for the first quarter of 2002 and 2001
were 39.6% and 38.3%, respectively. The Company's first quarter 2002 effective
tax rate reflects expected fiscal year 2002 earnings. The Company's effective
income tax rate for the remainder of 2002 is dependent upon operating results
and may change if the results for the year are different from current
expectations.
Changes in Financial Condition:
- ------------------------------
Working capital decreased $2.7 million from December 30, 2001 and $105.0 million
from April 1, 2001 to March 31, 2002. A working capital deficit at March 31,
2002 of $115.8 million was due to the reclassification of $147.4 million of the
Company's debt which matures in the next twelve months. The significant changes
in the components of working capital from December 30, 2001 include decreases in
cash of $9.0 million and accrued compensation of $9.5 million offset by
increases in amounts receivable from The Coca-Cola Company of $10.5 million and
an increase in other accrued liabilities of $10.7 million.
Working capital decreased $105.0 million from April 1, 2001 to March 31, 2002
due primarily to an increase in the current portion of long-term debt of $90.1
million. The increase in the current maturities of long-term debt reflects the
reclassification of $97.5 million that matures in May 2002.
The Company recorded a capital lease of $41.6 million at the end of the first
quarter of 2002 related to its production/distribution center located in
Charlotte, North Carolina. As disclosed in the Company's 2001 Annual Report on
Form 10-K, this facility is leased from a related party. The lease obligation
was capitalized as a result of the Company's decision in the first quarter to
enter into renewal options that extend the expected term of this lease.
Capital expenditures in the first quarter of 2002 were $7.7 million compared to
$10.7 million in the first quarter of 2001. The Company anticipates that
additions to property, plant and equipment in 2002 will be in the range of $50
to $60 million and that such additions will be financed primarily through cash
flow from operations.
Total debt, as of March 31, 2002, decreased by $17.4 million from April 1, 2001
and $16.8 million from December 30, 2001. Long-term debt at March 31, 2002 and
December 30, 2001 includes borrowings used to finance the purchase of
approximately $49 million of leased equipment previously discussed.
As of March 31, 2002, the Company had $30.0 million outstanding under its $170
million revolving credit facility and $19.9 million outstanding under its lines
of credit. As of March 31, 2002, the Company's debt portfolio had a weighted
average interest rate of approximately 5.4% and approximately 33% of the total
portfolio of $865.1 million was subject to changes in short-term interest rates.
In January 1999, the Company filed an $800 million shelf registration for debt
and equity securities. The Company used this shelf registration to issue $250
million of long-term debentures in 1999. The Company currently has $550 million
available for use under this shelf registration. The Company intends to
refinance its short-term debt maturities with currently available lines of
credit and to negotiate a new revolving credit facility to replace the current
facility that matures in December 2002.
The Company currently intends to refinance $97.5 million of debt that matures at
Piedmont in May 2002 through its available credit facilities, which include its
revolving credit facility and unused capacity under its shelf registration. The
Company currently plans to loan $97.5 million to Piedmont to repay the maturing
debt in May 2002. It is anticipated that Piedmont will pay the Company interest
based on a spread over the Company's average cost of funds.
With regard to the Company's $170 million term loan agreement, the Company must
maintain its public debt ratings at investment grade as determined by both
Moody's and Standard & Poor's. If the Company's public debt ratings fall below
investment grade within 90 days after the public announcement of certain
designated events and such ratings stay below investment grade for an additional
40 days, a trigger event resulting in a default occurs. The Company does not
anticipate a trigger event will occur.
Sources of capital for the Company include operating cash flows, bank
borrowings, issuance of public or private debt and the issuance of equity
securities. Management believes that the Company, through these sources, has
sufficient financial resources available to maintain its current operations and
provide for its current capital expenditure and working capital requirements,
scheduled debt payments, interest and income tax liabilities and dividends for
stockholders. The amount and frequency of future
dividends will be determined by the Company's Board of Directors in light of the
earnings and financial condition of the Company at such time, and no assurance
can be given that dividends will be declared in the future.
FORWARD-LOOKING STATEMENTS
- --------------------------
This Quarterly Report to Stockholders on Form 10-Q, as well as information
included in future filings by the Company with the Securities and Exchange
Commission and information contained in written material, press releases and
oral statements issued by or on behalf of the Company, contains, or may contain,
several forward-looking management comments and other statements that reflect
management's current outlook for future periods. These statements include, among
others, statements relating to: the introduction of new brands and packaging
during the balance of 2002; cost savings and asset productivity improvements in
the future related to sales distribution facility closings; the effects of the
adoption of SFAS No. 142 and SFAS No. 144, anticipated increases in pension
expense, potential marketing support from The Coca-Cola Company, sufficiency of
financial resources, anticipated additions to property, plant and equipment and
that such additions will be financed primarily through cash flow from
operations, the amount and frequency of future dividends, refinancing of
short-term debt maturities, negotiation of a new revolving credit facility,
refinancing of certain debt at Piedmont, the anticipated loan by the Company to
Piedmont for $97.5 million, Piedmont's payment of interest to the Company,
management's belief that a trigger event will not occur under the Company's $170
million term loan agreement and management's belief that Piedmont's debt rating
will not fall below investment grade. These statements and expectations are
based on the current available competitive, financial and economic data along
with the Company's operating plans, and are subject to future events and
uncertainties. Among the events or uncertainties which could adversely affect
future periods are: lower than expected net pricing resulting from increased
marketplace competition, changes in how significant customers market our
products, an inability to meet performance requirements for expected levels of
marketing support payments from The Coca-Cola Company, reduced marketing and
advertising spending by The Coca-Cola Company or other beverage companies, an
inability to meet requirements under bottling contracts, the inability of our
aluminum can or PET bottle suppliers to meet our demand, material changes from
expectations in the cost of raw materials, higher than expected fuel prices and
unfavorable interest rate fluctuations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
4.1 Consent as of January 25, 2002, by and among Piedmont
Coca-Cola Bottling Partnership ("Piedmont"), General
Electric Capital Corporation, as Agent and Assignee
of LTCB Trust Company and other banks named in the
Loan Agreement dated as of May 28, 1996, related to
Piedmont's request to borrow up to $97.5 million from
the Company.
4.2 The Registrant, by signing this report, agrees to
furnish the Securities and Exchange Commission, upon
its request, a copy of any instrument which defines
the rights of holders of long-term debt of the
Registrant and its subsidiaries for which
consolidated financial statements are required to be
filed, and which authorizes a total amount of
securities not in excess of 10 percent of total
assets of the Registrant and its subsidiaries on a
consolidated basis.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on January 14, 2002
reporting pursuant to Item 5 thereof that it had purchased an
additional interest in Piedmont Coca-Cola Bottling Partnership from The
Coca-Cola Company. No financial statements were required to be filed as
a part of such Form 8-K.
On May 3, 2002, the Company filed a Current Report on Form 8-K relating
to the announcement of the Company's financial results for the period
ended March 31, 2002.
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: May 13, 2002 By: /s/ David V. Singer
-------------------------------------
David V. Singer
Principal Financial Officer of the
Registrant and
Executive Vice President and Chief
Financial Officer