SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
February 27, 2003
COCA-COLA BOTTLING CO. CONSOLIDATED
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
0-9286 (Commission File Number) |
56-0950585 (IRS Employer Identification No.) |
| 4100 Coca-Cola Plaza, Charlotte, North Carolina (Address of principal executive offices) |
28211 (Zip Code) | |||
(704) 557-4400
(Registrant’s telephone number, including area code)
Item 5. Other Events
The Registrant issued a press release on February 27, 2003 covering the results of the fiscal year 2002.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
| (a) | Financial Statements. Not applicable. |
| (b) | Pro Forma Financial Information. Not applicable. |
| (c) | Exhibits. The following exhibit is filed herewith: |
| 99.1 | Press release issued on February 27, 2003. |
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: March 3, 2003 |
BY: |
/s/ David V. Singer | ||||||
| David V. Singer | ||||||||
| Principal Financial Officer of the Registrant and Executive Vice President and Chief Financial Officer | ||||||||
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
EXHIBITS
CURRENT REPORT
ON
FORM 8-K
| Date of Event Reported: February 27, 2003 |
Commission File No: 0-9286 |
COCA-COLA BOTTLING CO. CONSOLIDATED
EXHIBIT INDEX
| Exhibit No. |
Exhibit Description | |
| 99.1 |
Press release issued on February 27, 2003. |
Exhibit 99.1
Coca-Cola Bottling Co. Consolidated, 4100 Coca-Cola Plaza, Charlotte, NC 28211
News Release
|
|
Media Contact: |
Lauren C. Steele VP Corporate Affairs 704-557-4551 | ||
| Investor Contact: |
David V. Singer Executive VP & CFO 704-557-4604 |
| FOR IMMEDIATE RELEASE February 27, 2003 |
Symbol: COKE Quoted: The Nasdaq Stock Market (National Market) |
Coca-Cola Bottling Co. Consolidated Reports 2002 Results
| • | Physical case volume grew 3.4% |
| • | Net income was $22.8 million or $2.58/share, more than double the prior year |
| • | Debt was reduced by $64 million |
CHARLOTTE, NC — Coca-Cola Bottling Co. Consolidated today announced it earned $22.8 million or $2.58 per share in 2002. This represents a $13.4 million or $1.50 per share improvement over net income of $9.5 million or $1.08 per share in 2001. Net income in 2002 reflects a $7.5 million after tax reduction in amortization expense associated with the adoption of SFAS No. 142 and net income in 2001 benefited from a favorable income tax settlement. Excluding the tax settlement in 2001 and had SFAS No. 142 been in effect during both years, the comparable growth in net income and earnings per share would have been 62% and 60%, respectively.
When viewed on a comparable basis, the Company’s net sales for 2002 increased by 4.8%. This increase primarily resulted from bottle/can volume growth of 3.4% and increased contract sales. Net pricing was relatively flat for the year, reflecting a modest price increase on many packages offset by strategic price decreases in certain channels and a shift in package mix toward the popular Fridgepack™ twelve pack can package. Operating cash flow, defined as income from operations before amortization and depreciation expense, was up approximately 5% in 2002. For the fourth quarter of 2002, volume and net sales were down by approximately 3% and 1%, respectively, reflecting abnormally cold and wet weather. Most notably, a December ice storm resulted in a multi-day loss of power to over one million households and businesses in the Company’s North Carolina and South Carolina franchise territories impacting volume, particularly in the highest margin cold drink and immediate consumption channels. Fourth quarter net income benefited from a reversal of accrued retirement benefits for our former Chairman, the late J. Frank Harrison, Jr., and was negatively impacted by the cost of early termination of debt. The retired debt was refinanced with a portion of the proceeds from the Company’s November 2002 issuance of $150 million in 10 year senior notes with a coupon of 5%. The net effect of these two items was an increase in net income of approximately $1 million in the fourth quarter.
J. Frank Harrison, III, Chairman and CEO, said, “The Company’s performance in 2002 was quite strong. Despite the fourth quarter impact of the December ice storm, the Company reported record volume, net
sales, operating profit and net income in 2002.” Mr. Harrison also said that 2002 represented the third consecutive year of strong free cash flow, which enabled the Company to reduce debt by $64 million and fund the acquisition of an additional 5% interest in Piedmont Coca-Cola Bottling Partnership, the Company’s partnership with The Coca-Cola Company. This acquisition increased the Company’s ownership interest in Piedmont to approximately 55%, resulting in Piedmont’s financial results being consolidated with the Company’s beginning in the first quarter of 2002. Over the past three years, the Company has reduced its debt and lease obligations by approximately $200 million, or about 20%, when viewed on a comparable basis as if Piedmont had been consolidated throughout this period. These results are attributable to having excellent people, a very focused strategy and consistent execution coupled with ongoing innovation. The growth in our industry has become increasingly driven by new brands and packages and the Company’s strategy is centered around innovation. During 2002 the Company introduced more than 70 new brand/package combinations, led by various package sizes of Vanilla Coke, Fanta flavors, and Minute Maid’s Lemonade and Fruit Punch. Furthermore, the Company embarked on a major restructuring of its distribution network geared toward improving efficiency and effectiveness in the distribution of an expanding product mix.
William B. Elmore, President and COO, said, “I am very encouraged by the Company’s results in 2002, especially in the face of major changes to our distribution system. During 2002 the Company closed approximately 10% of its distribution facilities, folding their operations into existing facilities. In addition, the Company converted distribution systems for more than half of its sales from conventional delivery to a pre-sell system. While these changes position the Company to become more productive while handling a more complex product mix, they are disruptive and expensive during the transition period. The combination of turnover, training, severance cost and asset write-downs associated with these distribution changes which occurred throughout 2002 reduced net income by approximately $3.5 million.” Mr. Elmore added, “Despite these disruptions our people did an excellent job of executing the introduction of Vanilla Coke and Fanta Flavors, which together helped us drive growth in our carbonated soft drink business for the second consecutive year. In addition, Dasani water continues to deliver profitable growth, up more than 40% in volume with solid profit margins.”
Forward-looking statements.
Included in this news release and other information that we make publicly available from time to time are several forward-looking management comments and other statements that reflect management’s current outlook for future periods. These expectations are based on currently 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, an inability to meet requirements under bottling contracts, an inability to meet performance requirements for expected levels of marketing support payments from The Coca-Cola Company, material changes from expectations in the cost of raw materials, the inability of our aluminum can or PET bottle suppliers to meet our demand, higher than expected fuel prices and unfavorable interest rate fluctuations. The forward-looking statements in this news release should be read in conjunction with the detailed cautionary statements found on pages 23 and 24 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2001.
—Enjoy Coca-Cola—
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS
In Thousands (Except Per Share Data)
| Fiscal Year |
||||||||||||
| Unaudited |
||||||||||||
| 2002 |
2001* |
2001** |
||||||||||
| Net sales |
$ |
1,246,591 |
|
$ |
1,189,577 |
|
$ |
989,188 |
| |||
| Cost of sales |
|
667,260 |
|
|
641,494 |
|
|
544,528 |
| |||
| Gross margin |
|
579,331 |
|
|
548,083 |
|
|
444,660 |
| |||
| Selling, general and administrative expenses |
|
404,194 |
|
|
381,257 |
|
|
304,565 |
| |||
| Depreciation expense |
|
76,075 |
|
|
71,542 |
|
|
66,134 |
| |||
| Amortization of goodwill and intangibles |
|
2,796 |
|
|
23,810 |
|
|
15,296 |
| |||
| Income from operations |
|
96,266 |
|
|
71,474 |
|
|
58,665 |
| |||
| Interest expense |
|
49,120 |
|
|
57,802 |
|
|
44,322 |
| |||
| Other income (expense), net |
|
(3,084 |
) |
|
(2,313 |
) |
|
(2,647 |
) | |||
| Minority interest |
|
5,992 |
|
|
378 |
|
||||||
| Income before income taxes |
|
38,070 |
|
|
10,981 |
|
|
11,696 |
| |||
| Federal and state income taxes |
|
15,247 |
|
|
1,947 |
|
|
2,226 |
| |||
| Net income |
$ |
22,823 |
|
$ |
9,034 |
|
$ |
9,470 |
| |||
| Basic net income per share |
$ |
2.58 |
|
$ |
1.03 |
|
$ |
1.08 |
| |||
| Diluted net income per share |
$ |
2.56 |
|
$ |
1.02 |
|
$ |
1.07 |
| |||
| Weighted average number of common shares outstanding |
|
8,861 |
|
|
8,753 |
|
|
8,753 |
| |||
| Weighted average number of common shares outstanding – assuming dilution |
|
8,921 |
|
|
8,821 |
|
|
8,821 |
| |||
| Income from operations |
$ |
96,266 |
|
$ |
71,474 |
|
$ |
58,665 |
| |||
| Amortization of goodwill and intangibles |
|
2,796 |
|
|
23,810 |
|
|
15,296 |
| |||
| Depreciation expense |
|
76,075 |
|
|
71,542 |
|
|
66,134 |
| |||
| Operating cash flow |
$ |
175,137 |
|
$ |
166,826 |
|
$ |
140,095 |
| |||
| * | Certain prior year amounts have been reclassified to conform to current year classifications and reflects the consolidation of Piedmont’s results of operations with those of the Company as if the additional purchase had occurred at the beginning of 2001. |
| ** | Certain prior year amounts have been reclassified to conform to current year classifications. |
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS
In Thousands
| Unaudited | |||||||||
| Dec. 29, 2002 |
Dec. 30, 2001* |
Dec. 30, 2001** | |||||||
| ASSETS |
|||||||||
| Current Assets: |
|||||||||
| Cash |
$ |
18,193 |
$ |
18,210 |
$ |
16,912 | |||
| Accounts receivable, trade, net |
|
79,548 |
|
84,384 |
|
63,974 | |||
| Accounts receivable from The Coca-Cola Company |
|
12,992 |
|
5,004 |
|
3,935 | |||
| Accounts receivable, other |
|
17,001 |
|
7,603 |
|
5,253 | |||
| Inventories |
|
38,648 |
|
45,812 |
|
39,916 | |||
| Prepaid expenses and other current assets |
|
4,588 |
|
3,211 |
|
3,068 | |||
| Total current assets |
|
170,970 |
|
164,224 |
|
133,058 | |||
| Property, plant and equipment |
|
842,994 |
|
822,096 |
|
766,222 | |||
| Less-Accumulated depreciation and amortization |
|
376,154 |
|
332,942 |
|
308,916 | |||
| Property, plant and equipment, net |
|
466,840 |
|
489,154 |
|
457,306 | |||
| Leased property under capital leases |
|
47,618 |
|
20,424 |
|
12,265 | |||
| Less-Accumulated amortization |
|
2,995 |
|
10,109 |
|
6,882 | |||
| Leased property under capital leases, net |
|
44,623 |
|
10,315 |
|
5,383 | |||
| Investment in Piedmont Coca-Cola Bottling Partnership |
|
60,203 | |||||||
| Other assets |
|
58,167 |
|
68,067 |
|
62,451 | |||
| Franchise rights and goodwill |
|
606,128 |
|
604,650 |
|
335,662 | |||
| Other identifiable intangible assets |
|
6,797 |
|
10,396 |
|
10,396 | |||
| Total |
$ |
1,353,525 |
$ |
1,346,806 |
$ |
1,064,459 | |||
| * | Certain prior year amounts have been reclassified to conform to current year classifications and reflects the consolidation of Piedmont’s financial position with that of the Company as if the additional purchase had occurred at the beginning of 2001. |
| ** | Certain prior year amounts have been reclassified to conform to current year classifications. |
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS
In Thousands
| Unaudited |
||||||||||||
| Dec. 29, 2002 |
Dec. 30, 2001* |
Dec. 30, 2001** |
||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
| Current Liabilities |
||||||||||||
| Portion of long-term debt payable within one year |
$ |
31 |
|
$ |
154,208 |
|
$ |
56,708 |
| |||
| Current portion of obligations under capital leases |
|
3,960 |
|
|
2,466 |
|
|
1,489 |
| |||
| Accounts payable, trade |
|
38,303 |
|
|
34,214 |
|
|
28,370 |
| |||
| Accounts payable to The Coca-Cola Company |
|
9,823 |
|
|
8,193 |
|
|
7,925 |
| |||
| Due to Piedmont Coca-Cola Bottling Partnership |
|
24,682 |
| |||||||||
| Other accrued liabilities |
|
72,647 |
|
|
56,998 |
|
|
49,169 |
| |||
| Accrued compensation |
|
20,462 |
|
|
17,946 |
|
|
17,350 |
| |||
| Accrued interest payable |
|
10,649 |
|
|
13,646 |
|
|
11,878 |
| |||
| Total current liabilities |
|
155,875 |
|
|
287,671 |
|
|
197,571 |
| |||
| Deferred income taxes |
|
155,964 |
|
|
157,739 |
|
|
133,743 |
| |||
| Pension and postretirement benefit obligations |
|
37,227 |
|
|
34,862 |
|
|
37,203 |
| |||
| Other liabilities |
|
58,261 |
|
|
63,767 |
|
|
57,770 |
| |||
| Obligations under capital leases |
|
42,066 |
|
|
4,033 |
|
|
935 |
| |||
| Long-term debt |
|
807,725 |
|
|
727,656 |
|
|
620,156 |
| |||
| Total liabilities |
|
1,257,118 |
|
|
1,275,728 |
|
|
1,047,378 |
| |||
| Minority interest |
|
63,540 |
|
|
54,603 |
|
||||||
| Stockholders’ Equity: |
||||||||||||
| Common Stock |
|
9,704 |
|
|
9,454 |
|
|
9,454 |
| |||
| Class B Common Stock |
|
3,009 |
|
|
2,989 |
|
|
2,989 |
| |||
| Capital in excess of par value |
|
95,986 |
|
|
91,004 |
|
|
91,004 |
| |||
| Retained earnings (accumulated deficit) |
|
6,043 |
|
|
(12,743 |
) |
|
(12,307 |
) | |||
| Accumulated other comprehensive loss |
|
(20,621 |
) |
|
(12,975 |
) |
|
(12,805 |
) | |||
|
|
94,121 |
|
|
77,729 |
|
|
78,335 |
| ||||
| Less-Treasury stock, at cost: |
||||||||||||
| Common |
|
60,845 |
|
|
60,845 |
|
|
60,845 |
| |||
| Class B Common |
|
409 |
|
|
409 |
|
|
409 |
| |||
| Total stockholders’ equity |
|
32,867 |
|
|
16,475 |
|
|
17,081 |
| |||
| Total |
$ |
1,353,525 |
|
$ |
1,346,806 |
|
$ |
1,064,459 |
| |||
| * | Certain prior year amounts have been reclassified to conform to current year classifications and reflects the consolidation of Piedmont’s financial position with that of the Company as if the additional purchase had occurred at the beginning of 2001. |
| ** | Certain prior year amounts have been reclassified to conform to current year classifications. |