UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended January 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 0-9286
COCA-COLA BOTTLING CO. CONSOLIDATED
(Exact name of Registrant as specified in its charter)
DELAWARE 56-0950585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1900 REXFORD ROAD
CHARLOTTE, NORTH CAROLINA 282LL
(Address of principal executive offices)
(Zip Code)
(704) 551-4400
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $l.00 par value
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements,
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
State the aggregate market value of voting stock held by non-affiliates of the
Registrant.
MARKET VALUE AS OF MARCH 25, 1994
Common Stock, $l par value $208,357,000
Class B Common Stock, $l par value *
* No market exists for the shares of Class B Common Stock, which is neither
registered under Section 12 of the Act nor subject to Section 15(d) of the Act.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF MARCH 25, 1994
Common Stock, $1 Par Value 7,958,059
Class B Common Stock, $1 Par Value 1,336,362
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement to be filed pursuant to Section 14 of the Exchange Act with respect
to the 1994 Annual Meeting of Shareholders.......................................................... Part III, Items 10-13
PART I
ITEM 1 -- BUSINESS
INTRODUCTION AND RECENT DEVELOPMENTS
Coca-Cola Bottling Co. Consolidated ("the Company"), a Delaware
corporation, is engaged in the production, marketing and distribution of
carbonated soft drinks, primarily products of The Coca-Cola Company, Atlanta,
Georgia ("The
Coca-Cola Company"). The Company has been in the soft drink manufacturing
business since 1902.
Prior to 1984, the Company's business was concentrated in North Carolina.
In 1984, the Company undertook a major expansion program, primarily through
acquisitions. The following information summarizes significant acquisitions from
1984 through 1993, as well as other major developments.
On July 16, 1984, the Company acquired Federal Coca-Cola Bottling Company
of Columbus, Georgia; on October 19, 1984, it acquired the Pageland Coca-Cola
Bottling Works; and on December 31, 1984, it acquired the Waycross-Douglas
Bottling Company.
On February 8, 1985, the Company acquired the bottling subsidiaries of
Wometco Coca-Cola Bottling Company which gave the Company franchise rights to
produce, market and distribute soft drink products principally in parts of
Tennessee, Virginia and Alabama.
On January 9, 1986, the Company acquired eight bottlers of Coca-Cola
located in South Georgia, known collectively as the Haley Group. Additionally,
on February 24, 1986, the Company acquired the bottling operations of Panama
City
Coca-Cola Bottling Company and Quincy Coca-Cola Bottling Company, each of which
is located in Florida. On March 3, 1986, the Company sold Waycross-Douglas
Coca-Cola Bottling Company and McRae Coca-Cola Bottling Company.
In June 1987, the Company sold 1,355,033 shares of newly issued Common
Stock and 269,158 shares of Class B Common Stock to The Coca-Cola Company. The
proceeds from the sale were used to repay debt. On July 15, 1987, the Company
sold its Canadian subsidiary located in Vancouver, British Columbia. Net
proceeds from the sale were used to repay debt.
On January 27, 1989, the Company acquired all of the outstanding capital
stock of The Coca-Cola Bottling Company of West Virginia, Inc. from The
Coca-Cola Company in exchange for 1.1 million shares of the Company's Common
Stock and approximately $4 million in cash, as adjusted. Following this
transaction, The Coca-Cola Company now owns approximately a 30% economic
interest and a 23% voting interest in the Company. The acquired West Virginia
franchise areas include warehouses in Bluefield, Charleston, Craigsville, Logan,
Clarksburg, Morgantown, Huntington and Parkersburg, West
Virginia and Pikeville, Kentucky.
On January 27, 1989, the Company executed new Bottle Contracts, Allied
Bottle Contracts and a Supplementary Agreement with The Coca-Cola Company, as
further detailed below in Item 1.
On April 20, 1990, the Company acquired all of the outstanding capital
stock of Coca-Cola Bottling Works of Jackson, Incorporated and Jackson Coca-Cola
Bottling Company, Inc. (collectively "Jackson") in Jackson, Tennessee pursuant
to a merger of Jackson into a wholly owned subsidiary of the Company.
On December 20, 1991, the Company acquired all of the outstanding capital
stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately
$15.2 million in cash and Company debt. In connection with this acquisition,
Sunbelt repaid approximately $202.5 million of its outstanding indebtedness with
funds supplied by the Company. In connection with the Sunbelt acquisition, total
assets acquired were approximately $304 million.
On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont
Coca-Cola Bottling Partnership
("Piedmont") to distribute and market soft drink products primarily in certain
portions of North Carolina and South Carolina. The Company and The Coca-Cola
Company, through their respective subsidiaries, each beneficially own a 50%
interest in Piedmont. The Company provides substantially all of the soft drink
products for Piedmont and manages the operations of Piedmont pursuant to a
Management Agreement. The term of the Management Agreement is 25 years, subject
to early termination in the event of a "Change in Control" as defined therein, a
termination of the Partnership or a material default by either party. The
Partnership has an initial term of 25 years subject to early termination as a
result of any Dissolving Event, as defined in the Partnership Agreement. Each
Partner's Partnership Interest is subject to certain limitations on transfers,
rights of first refusal and other purchase rights upon the occurrence of certain
events. Subsidiaries of the Company made an initial capital contribution to
Piedmont of $70 million in the aggregate. The capital contribution made by such
subsidiaries was composed of approximately $21.7 million in cash and of bottling
operations and certain assets used in connection with the
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Company's Wilson, NC and Greenville and Beaufort, SC territories. The cash
contributed to Piedmont by the Company's subsidiaries was provided from the
Company's available credit facilities. The Company sold other territories to
Piedmont for an aggregate purchase price of approximately $118 million. Proceeds
from the sale of territories to Piedmont, net of the Company's cash
contribution, totaled approximately $96 million and were used to reduce the
Company's long-term debt.
The Company considers acquisition opportunities for additional territories
on an ongoing basis. To achieve its goals, further purchases and sales of
franchise rights and entities possessing such rights and other related
transactions designed to facilitate such purchases and sales may occur.
GENERAL
In its soft drink operations, the Company holds franchises under which it
produces and markets, in certain regions, carbonated soft drink products of The
Coca-Cola Company, including Coca-Cola, Coca-Cola classic, caffeine free
Coca-Cola classic, diet Coke, caffeine free diet Coke, cherry Coke, TAB, Sprite,
diet Sprite, Mello Yello, diet Mello Yello, Mr. PiBB, Minute Maid orange and
diet Minute Maid orange sodas. The Company also distributes and markets PowerAde
in certain of its markets. The Company produces and markets Dr Pepper in most of
its regions. Various other products, including Welch's flavors, Seagrams'
products, Barq's Root Beer and Sundrop are produced and marketed in one or more
of the Company's regions under franchise agreements with the companies that
manufacture the concentrate for those beverages. In addition, the Company also
produces soft drinks for other bottlers of Coca-Cola.
The Company's principal soft drink is Coca-Cola classic. During the last
three fiscal years, sales of products under the trademark Coca-Cola have
accounted for more than half of the Company's soft drink sales. In total, the
products of The Coca-Cola Company accounted for approximately 85% of the
Company's soft drink sales during fiscal 1993.
FRANCHISES
The Company's franchises from The Coca-Cola Company entitle the Company to
produce and market The Coca-Cola Company's soft drinks in bottles, cans and five
gallon pressurized premix containers. The Company is one of many companies
holding such franchises from The Coca-Cola Company. The Coca-Cola Company is the
sole owner of the secret formulas pursuant to which the primary components
(either concentrates or syrups) of its soft drinks are manufactured. The
concentrates, when mixed with water and sweetener, produce syrup which, when
mixed with carbonated water, produce the soft drinks known as "Coca-Cola,"
"Coca-Cola classic" or "Coke." Similar processes are used to produce the other
soft drinks marketed and distributed by the Company. With limited exceptions,
the Company purchases concentrates and syrups from The Coca-Cola Company and
natural sweeteners from other sources. No royalty or other compensation is paid
under the franchise agreements to The Coca-Cola Company for the Company's right
to use in its territories the trade names and trademarks "Coca-Cola," "Coca-Cola
classic" and "Coke" and associated patents, copyrights, designs and labels, all
of which are owned by The Coca-Cola Company.
BOTTLE CONTRACTS. The Company is party to bottle contracts with The
Coca-Cola Company (the "Bottle Contracts") which provide that the Company will
purchase its entire requirement of concentrates and syrups for Coca-Cola,
Coca-Cola classic, caffeine free Coca-Cola classic, cherry Coke, diet Coke,
caffeine free diet Coke and diet cherry Coke (together, the "Coca-Cola Trademark
Beverages") from The Coca-Cola Company. The Company has the exclusive right to
distribute
Coca-Cola Trademark Beverages for sale in its territories in authorized
containers of the nature currently used by the Company, which include cans and
returnable and non-returnable bottles. The Coca-Cola Company may determine from
time to time what containers of this type to authorize for use by the Company.
The price The Coca-Cola Company may charge for syrup or concentrate under
the Bottle Contracts is set by The
Coca-Cola Company from time to time. Except as provided in the Supplementary
Agreement described below, there are no limitations on prices for concentrate or
syrup. Consequently, the prices at which the Company purchases concentrates and
syrup under the Bottle Contracts may vary materially from the prices it has paid
during the periods covered by the financial information included in this report.
Under the Bottle Contracts, the Company is obligated to maintain such
plant, equipment, staff and distribution facilities as are required for the
manufacture, packaging and distribution of the Coca-Cola Trademark Beverages in
authorized containers, and in sufficient quantities to satisfy fully the demand
for these beverages in its territories; to undertake adequate quality control
measures and maintain sanitation standards prescribed by The Coca-Cola Company;
to develop, to stimulate, and to satisfy fully the demand for Coca-Cola
Trademark Beverages and to use all approved means, and to spend such funds on
advertising and other forms of marketing, as may be reasonably required to meet
that objective; and to maintain such sound
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financial capacity as may be reasonably necessary to assure performance by the
Company and its affiliates of their obligations to The Coca-Cola Company.
The Bottle Contracts require the Company to submit to The Coca-Cola Company
each year its plans for marketing, management and advertising with respect to
the Coca-Cola Trademark Beverages for the ensuing year. Such plans must
demonstrate that the Company has the financial capacity to perform its duties
and obligations to The Coca-Cola Company under the Bottle Contracts. The Company
must obtain The Coca-Cola Company's approval of those plans, which approval may
not be unreasonably withheld, and if the Company carries out its plan in all
material respects, it will have satisfied its contractual obligations. Failure
to carry out such plans in all material respects would constitute an event of
default that, if not cured within 120 days of notice of such failure, would give
The Coca-Cola Company the right to terminate the Bottle Contracts. If the
Company at any time fails to carry out a plan in all material respects with
respect to any geographic segment (as defined by The Coca-Cola Company) of its
territory, and if that failure is not cured within six months of notice of such
failure, The Coca-Cola Company may reduce the territory covered by the
applicable Bottle Contract by eliminating the portion of the territory with
respect to which the failure has occurred.
The Coca-Cola Company has no obligation under the Bottle Contracts to
participate with the Company in expenditures for advertising and marketing. As
it has in the past, The Coca-Cola Company may contribute to such expenditures
and undertake independent advertising and marketing activities, as well as
cooperative advertising and sales promotion programs which require mutual
cooperation and financial support of the Company. The future levels of marketing
support and promotional funds provided by The Coca-Cola Company may vary
materially from the levels provided during the periods covered by the financial
information included in this report.
The Coca-Cola Company has the right to reformulate any of the Coca-Cola
Trademark Beverages and to discontinue any of the Coca-Cola Trademark Beverages,
subject to certain limitations, so long as all Coca-Cola Trademark Beverages are
not discontinued. The Coca-Cola Company may also introduce new beverages under
the trademarks "Coca-Cola" or "Coke" or any modification thereof, and in that
event the Company would be obligated to manufacture, package, distribute and
sell the new beverages with the same duties as exist under the Bottle Contracts
with respect to Coca-Cola Trademark Beverages.
If the Company acquires the right to manufacture and sell Coca-Cola
Trademark Beverages in any additional territory, such territory automatically
will be deemed to be included in the territories covered by the existing Bottle
Contracts, and any existing agreement with respect to the acquired territory
automatically shall be amended to conform to the terms of the existing Bottle
Contracts. In addition, if the Company acquires control, directly or indirectly,
of any bottler of Coca-Cola Trademark Beverages, or any party controlling a
bottler of Coca-Cola Trademark Beverages, the Company must cause the acquired
bottler to amend its franchises for the Coca-Cola Trademark Beverages to conform
to the terms of the Bottle Contracts.
The Bottle Contracts are perpetual, subject to termination by The Coca-Cola
Company in the event of default by the Company. Events of default by the Company
include (1) the Company's insolvency, bankruptcy, dissolution, receivership or
similar conditions; (2) the Company's disposition of any interest in the
securities of any bottling subsidiary; (3) termination of any agreement
regarding the manufacture, packaging, distribution or sale of Coca-Cola
Trademark Beverages between The Coca-Cola Company and any person that controls
the Company; (4) any material breach of any obligation occurring under the
Bottle Contracts (including, without limitation, failure to make timely payment
for any syrup or concentrate or of any other debt owing to The Coca-Cola
Company, failure to meet sanitary or quality control standards, failure to
comply strictly with manufacturing standards and instructions, failure to carry
out an approved plan as described above, and failure to cure a violation of the
terms regarding imitation products), that remains uncured for 120 days after
notice by The Coca-Cola Company; or (5) disposition of voting securities of any
subsidiary without the consent of The Coca-Cola Company. In addition, upon
termination of the Bottle Contracts for any reason, The Coca-Cola Company, at
its discretion, may also terminate any other agreements with the Company
regarding the manufacture, packaging, distribution, sale or promotion of soft
drinks, including the Allied Bottle Contracts described elsewhere herein.
The Company is prohibited from assigning, transferring or pledging its
Bottle Contracts, or any interest therein, whether voluntarily or by operation
of law, without the prior consent of The Coca-Cola Company. Moreover, the
Company may not enter into any contract or other arrangement to manage or
participate in the management of any other Coca-Cola bottler without the prior
consent of The Coca-Cola Company.
The Coca-Cola Company may automatically amend the Bottle Contracts if 80%
of the domestic bottlers who are parties to agreements with The Coca-Cola
Company containing substantially the same terms as the Bottle Contracts, which
bottlers
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purchased for their own account 80% of the syrup and equivalent gallons of
concentrate for Coca-Cola Trademark Beverages purchased for the account of all
such bottlers, agree that their bottle contracts shall be likewise amended.
SUPPLEMENTARY AGREEMENT. The Company and The Coca-Cola Company are also
parties to a Supplementary Agreement (the "Supplementary Agreement") that
modifies some of the provisions of the Bottle Contracts. The Supplementary
Agreement provides that The Coca-Cola Company will exercise good faith and fair
dealing in its relationship with the Company under the Bottle Contracts; offer
marketing support and exercise its rights under the Bottle Contracts in a manner
consistent with its dealings with comparable bottlers; offer to the Company any
written amendment to the Bottle Contracts (except amendments dealing with
transfer of ownership) which it offers to any other bottler in the United
States; and, subject to certain limited exceptions, sell syrups and concentrates
to the Company at prices no greater than those charged to other bottlers which
are parties to contracts substantially similar to the Bottle Contracts.
The Supplementary Agreement permits transfers of the Company's capital
stock that would otherwise be limited by the Bottle Contracts.
ALLIED BOTTLE CONTRACTS. Other contracts with The Coca-Cola Company (the
"Allied Bottle Contracts") grant similar exclusive rights to the Company with
respect to the distribution of Sprite, Mr. PiBB, Mello Yello, diet Mello Yello,
Fanta, TAB, diet Sprite, sugar free Mr. PiBB, Fresca, Minute Maid orange and
diet Minute Maid orange sodas (the "Allied Beverages") for sale in authorized
containers in its territories. These contracts contain provisions that are
similar to those of the Bottle Contracts with respect to pricing, authorized
containers, planning, quality control, trademark and transfer restrictions and
related matters. Each Allied Bottle Contract has a term of ten years and is
renewable by the Company for an additional ten years at the end of each ten year
period, but is subject to termination in the event of (1) the Company's
insolvency, bankruptcy, dissolution, receivership or similar condition; (2)
termination of the Company's Bottle Contract covering the same territory by
either party for any reason; and (3) any material breach of any obligation of
the Company under the Allied Bottle Contract that remains uncured for 120 days
after notice by The Coca-Cola Company.
POST-MIX RIGHTS. The Company also has the non-exclusive right to sell
Coca-Cola and other fountain syrups ("post-mix syrup") of The Coca-Cola Company.
OTHER BOTTLING AGREEMENTS. The bottling agreements from most other soft
drink franchisors are similar to those described above in that they are
renewable at the option of the Company and the franchisors at prices
unilaterally fixed by the franchisors. They also contain similar restrictions on
the use of trademarks, approved bottles, cans and labels and sale of imitations
or substitutes as well as termination for cause provisions. Sales of soft drinks
by the Company under these agreements represented approximately 15% of the
Company's sales for fiscal 1993.
The territories covered by the Allied Bottle Contracts and by bottling
agreements for products of franchisors other than The Coca-Cola Company in most
cases correspond with the territories covered by the Bottle Contracts. The
variations do not have a material effect on the business of the Company taken as
a whole.
MARKETS AND PRODUCTION AND DISTRIBUTION FACILITIES
As of March 15, 1994, the Company held franchises covering the majority of
central, northern and western North Carolina, and portions of Alabama,
Mississippi, Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania,
Georgia and Florida. The total population within the Company's Coca-Cola
franchise area is approximately 11.5 million.
As of March 15, 1994, the Company operated in six principal geographical
regions. Certain information regarding each of these markets follows:
1. NORTH CAROLINA. This region includes the majority of central and western
North Carolina, including Raleigh, Greensboro, Winston-Salem, High Point,
Hickory, Asheville, Fayetteville and Charlotte and the surrounding areas. The
region has an estimated population of 5.1 million. Production/distribution
facilities are located in Charlotte and eighteen other distribution facilities
are located in the region.
2. SOUTH ALABAMA. This region includes a portion of southwestern Alabama,
including the area surrounding Mobile, and a portion of southeastern
Mississippi. The region has an estimated population of 800,000. A
production/distribution facility is located in Mobile, and five other
distribution facilities are located in the region.
3. SOUTH GEORGIA. This region includes a small portion of eastern Alabama,
a portion of southwestern Georgia surrounding Columbus, Georgia, in which a
distribution facility is located, and a portion of the Florida Panhandle,
including Panama
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City and Quincy. Four other distribution facilities are located in the region.
This region has an estimated population of 900,000.
4. MIDDLE TENNESSEE. This region includes a portion of central Tennessee,
including areas surrounding Nashville, and a small portion of southern Kentucky.
The region has an estimated population of 1.5 million. A production/distribution
facility is located in Nashville and seven other distribution facilities are
located in the region.
5. WESTERN VIRGINIA. This region includes most of southwestern Virginia,
including areas surrounding Roanoke, a portion of the southern Piedmont of
Virginia, a portion of northeastern Tennessee and a portion of southeastern West
Virginia. The region has an estimated population of 1.4 million. A
production/distribution facility is located in Roanoke and seven other
distribution facilities are located in the region.
6. WEST VIRGINIA. This region includes most of the state of West Virginia,
a portion of eastern Kentucky, a portion of eastern Ohio and a portion of
southwestern Pennsylvania. The region has an estimated population of 1.8
million. There are eleven distribution facilities located in the region.
The Company owns 100% of the operations in each of the regions listed.
The Company sold the majority of its South Carolina franchise territory to
Piedmont in July 1993. Pursuant to a management agreement, the Company produces
substantially all of the soft drink products for Piedmont.
During the past several years, the Company has made an effort to
concentrate its soft drink production into fewer facilities for efficiency.
Since May 1984, four major production centers have been closed, one in the North
Carolina region, one in the Western Virginia region and two in the South Georgia
region. A new production center in Roanoke became fully operational in December
1985. As a result of the Sunbelt acquisition, the Company acquired a production
center in Morganton, North Carolina. This production center was closed in April
1992. Additional changes in the number and location of production and
distribution facilities may be desirable in the future in response to changing
market conditions and changes in the Company's franchise territories.
In addition to producing bottled and canned soft drinks for their own
franchise territories, each production facility also produces some products for
sale by other Coca-Cola bottlers. With the exception of the Company's production
of soft drink products for Piedmont, this contract production is currently not
material in the Company's production centers.
RAW MATERIALS
In addition to concentrates obtained by the Company from The Coca-Cola
Company and other concentrate companies for use in its soft drink manufacturing,
the Company also purchases sweeteners, carbon dioxide, glass and plastic
bottles, cans, closures, pre-mix containers and other packaging materials as
well as equipment for the production, distribution and marketing of soft drinks.
Except for sweetener and plastic bottles, the Company purchases its raw
materials from multiple suppliers.
The Company purchases substantially all of its plastic bottles (20 ounce,
one liter, two liter and three liter sizes) from manufacturing plants which are
owned and operated by two cooperatives of southern Coca-Cola bottlers, including
the Company. The Company joined the southwest cooperative in February 1985
following its acquisition of the bottling subsidiaries of Wometco Coca-Cola
Bottling Company. The Company joined the southeast cooperative in 1984.
None of the materials or supplies used by the Company is in short supply,
although the supply of specific materials could be adversely affected by
strikes, weather conditions, governmental controls or national emergency
conditions.
MARKETING
The Company's soft drink products are sold and distributed directly by its
employees to retail stores and other outlets, including food markets,
institutional accounts and vending machine outlets. During 1993, approximately
75% of the Company's total sales were made in the take-home channel through
supermarkets, convenience stores and other retail outlets. The remaining sales
were made in the cold drink channel, primarily through dispensing machines,
owned either by the Company, retail outlets or third party vending companies.
New product introductions, packaging changes and sales promotions have been
major competitive techniques in the soft drink industry in recent years and have
required and are expected to continue to require substantial expenditures. New
product introductions in recent years include: caffeine free Coca-Cola classic;
caffeine free diet Coke; cherry Coke; diet Mello Yello; Minute Maid orange; diet
Minute Maid orange; and PowerAde. New product introductions have entailed
increased
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operating costs for the Company resulting from special marketing efforts,
obsolescence of replaced items and occasionally higher raw materials costs.
After several new package introductions in recent years, the Company now
sells its soft drink products in a variety of returnable and non-returnable
bottles, both glass and plastic, and in cans, in varying proportions from market
to market. There may be as many as eight or more different packages for
Coca-Cola classic, in addition to pre-mix containers and post-mix syrup
packages, within a single geographical area. Excluding post-mix syrup sales,
physical unit sales of soft drinks during fiscal year 1993 were approximately
52% cans, 45% non-returnable bottles, 2% pre-mix and 1% returnable bottles.
Advertising in various media, primarily television and radio, is relied
upon extensively in the marketing of the Company's soft drinks. The Coca-Cola
Company and Dr Pepper Company have joined the Company in making substantial
expenditures in cooperative advertising in the Company's marketing areas. The
Company also benefits from national ad-vertising programs conducted by The
Coca-Cola Company and Dr Pepper Company. In addition, the Company expends
substantial funds on its own behalf for extensive local sales promotions of the
Company's soft drink products. These expenses are partially offset by marketing
funds which the concentrate companies provide to the Company in support of a
variety of marketing programs, such as price promotions, merchandising programs
and point-of-sale displays.
The substantial outlays which the Company makes for advertising are
generally regarded as necessary to maintain or increase sales volume, and any
curtailment of the funding provided by The Coca-Cola Company for advertising or
marketing programs which benefit the Company could have a materially adverse
effect on the business of the Company.
SEASONALITY
A larger than average percentage of the Company's total sales occurs during
peak periods, which are normally May, June, July and August. The Company has
adequate production capacity to meet sales demands during these peak periods.
COMPETITION
The soft drink industry is highly competitive. The Company's competitors
include several large soft drink manufacturers engaged in the distribution of
nationally advertised products, as well as similar companies which market
lesser-known soft drinks in limited geographical areas and manufacturers of
chain store private brand soft drinks. In each region in which the Company
operates, between 75% and 95% of carbonated soft drink sales in bottles, cans
and pre-mix containers are accounted for by the Company and its principal
competition, which in each region includes the local bottler of Pepsi-Cola and,
in some regions, also includes the local bottler of Royal Crown products. The
Company's carbonated soft drink products also compete with, among others,
noncarbonated soft drinks and citrus and noncitrus fruit drinks.
The principal methods of competition in the soft drink industry are
point-of-sale merchandising, new product introductions, packaging changes, price
promotions, quality of distribution and advertising.
GOVERNMENT REGULATION
The production and marketing of beverages are subject to the rules and
regulations of the United States Food and Drug Administration ("FDA") and other
federal, state and local health agencies. The FDA also regulates the labeling of
containers.
No reformulation of the Company's products is presently required by any
rule or regulation, but there can be no assurance that future government
regulations will not require reformulation of the Company's products.
From time to time, legislation has been proposed in Congress and by certain
state and local governments which would prohibit the sale of soft drink products
in non-returnable bottles and cans or require a mandatory deposit as a means of
encouraging the return of such containers in an attempt to reduce solid waste
and litter.
Soft drink and similar-type taxes have been in place in North Carolina,
South Carolina, West Virginia and Tennessee for several years. Similar tax
legislation was recently enacted in Ohio, beginning in February 1993. To the
Company's knowledge, legislation has not been proposed or enacted to increase
the tax in any of these states.
ENVIRONMENTAL REMEDIATION
The Company does not currently have any material capital expenditure
commitments for environmental remediation for any of its properties.
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EMPLOYEES
As of March 15, 1994, the Company had a total of approximately 5,000
full-time employees, of whom approximately 450 were union members.
ITEM 2 -- PROPERTIES
The principal properties of the Company include its corporate headquarters,
its four production facilities and its 57 distribution centers, all of which are
owned by the Company except for its corporate headquarters, two
production/distribution facilities and nine distribution centers.
On November 30, 1992, the Company and the owner of the Company's Snyder
Production Center in Charlotte, North Carolina agreed to the early termination
of the Company's lease. Harrison Limited Partnership One purchased the property
contemporaneously with the termination of the lease, and the Company and
Harrison Limited Partnership One entered into an agreement under which the
Company leased the property for a ten-year term beginning on December 1, 1992.
The annual base rent the Company is obligated to pay under the lease agreement
is subject to adjustment for increases in the Consumer Price Index and for
increases or decreases in interest rates based on LIBOR.
On June 1, 1993, Beacon Investment Corporation, a North Carolina
corporation of which J. Frank Harrison, III is sole shareholder, purchased the
office building located on Rexford Road in Charlotte, North Carolina, in which
the Company leases its executive offices. Contemporaneously, the Company entered
into a ten-year lease commencing June 1, 1993 with Beacon Investment Corporation
for office space within the building.
The Company also leases its 297,500 square-foot production/distribution
facility in Nashville, Tennessee. The lease requires monthly payments through
2002. The Company's other real estate leases are not material. The Company owns
and operates two soft drink production facilities apart from the leased
facilities described above. The current percentage utilization of the Company's
production centers as of March 15, 1994 is approximately as indicated below:
PRODUCTION FACILITIES
PERCENTAGE
LOCATION UTILIZATION*
Charlotte, North Carolina................................................................ 86%
Mobile, Alabama.......................................................................... 77%
Nashville, Tennessee..................................................................... 67%
Roanoke, Virginia........................................................................ 98%
* Estimated 1994 production divided by capacity (based on 80 hours of operations
per week). Because of the seasonality of the Company's soft drink business,
the Company uses considerably more of its capacity for production during peak
periods, normally May, June, July and August.
Of the production facilities described above, the Roanoke production
facility is subject to an encumbrance as follows:
The Roanoke production facilities, constructed at a cost of approximately
$24 million, are subject to a deed of trust securing the payment of an aggregate
of $2.8 million principal amount industrial development bonds which will be
released upon payment of the bonds, as scheduled, in October 1994.
Bottled and canned soft drinks are transported to distribution centers for
storage pending sale. The number of centers by market area as of March 15, 1994
is as follows:
DISTRIBUTION CENTERS
NUMBER OF
REGION CENTERS
North Carolina............................................................................ 19
South Alabama............................................................................. 6
South Georgia............................................................................. 5
Middle Tennessee.......................................................................... 8
Western Virginia.......................................................................... 8
West Virginia............................................................................. 11
7
The Company's distribution facilities are all in good condition and are
adequate for the Company's operations as presently conducted.
The Company also operates approximately 2,400 vehicles in the sale and
distribution of its soft drink products, of which approximately 1,200 are
delivery trucks. In addition, the Company owns or leases approximately 100,000
soft drink dispensing and vending machines.
ITEM 3 -- LEGAL PROCEEDINGS
On February 11, 1991, a Complaint was filed against the Company and two
Company employees in the matter of JEFF HALLUMS V. COCA-COLA BOTTLING CO.
CONSOLIDATED, ET AL., File No. 8108 in the Chancery Court for Wilson County,
Tennessee as previously reported in the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1993. This suit by a visually handicapped
former truck driver for Coca-Cola Bottling Company of Nashville, Inc., a wholly
owned subsidiary of the Company, alleges liability under various Tennessee
common law misrepresentation principles and under the employee discrimination
provision of the Tennessee Human Rights Act. Plaintiff was terminated because he
did not meet federal standards for commercial truck drivers. Plaintiff seeks
damages in the amount of $750,000. On October 13, 1993, the Tennessee Court of
Appeals, on an interlocutory appeal, reversed the trial court's denial of the
Company's motion for summary judgment with respect to plaintiff's handicap
discrimination claim. The appellate court remanded the case for trial of
plaintiff's common law tort claims. On February 28, 1994, the Tennessee Supreme
Court denied plaintiff's application for permission to appeal, leaving the order
of the Court of Appeals intact. Plaintiff's suit is now limited to common law
tort claims in the trial court. The Company does not believe it has liability
and is defending the case vigorously.
On March 4, 1993, a Complaint was filed against the Company, the
predecessor bottling company for the Laurel, Mississippi territory and other
unnamed parties in the matter of MRS. ELSIE LANGLEY, ADMINISTRATRIX OF THE
ESTATE OF WALTER
LANGLEY V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., Cause No. 93-3-30 in the
Circuit Court of the Second Judicial District for Jones County, Mississippi.
This suit by the testatrix spouse of a deceased former employee of the
predecessor bottler alleges misrepresentation and fraud in connection with the
severance package offered to employees terminated by the predecessor bottler in
connection with the acquisition of the Laurel franchise subsidiary of the
Company. Plaintiff claims that the former employee was led to believe that the
severance package was to include continuation of health insurance by the
Company. Plaintiff seeks damages in an amount up to $18 million in compensatory
and punitive damages. The Company does not believe it has liability and is
defending the case vigorously.
The Company has owned and operated production, distribution and warehouse
facilities for many years and has acquired certain facilities that have been in
operation for many years. Federal and state authorities have adopted various
laws relating to environmental matters in recent years that have caused or will
cause the Company to incur costs related to environmental conditions presently
existing at its facilities and could possibly, prior to remediation, subject the
Company to fines for temporary failure to meet certain technical requirements.
Furthermore, the Company anticipates that future federal and state legislation
or regulations will impact the Company and its operations in various ways.
However, the Company is not currently aware of any pending or threatened
proceeding pursuant to which fines may be imposed upon the Company.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended January 2, 1994.
8
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Shareholders to be
filed.
The following is a list of names and ages of all the executive officers of
the Registrant as of March 1, 1994, indicating all positions and offices with
the Registrant held by each such person. All officers have served in their
present capacities for the past five years except as otherwise stated.
J. FRANK HARRISON, JR., age 63, is Chairman of the Board of Directors of
the Company and has served the Company in that capacity since 1977. Mr.
Harrison, Jr. served as Chief Executive Officer of the Company from August 1980
until April 1983. He has previously served the Company as Vice Chairman of the
Board of Directors. He has been a Director of the Company since 1973. Mr.
Harrison, Jr. presently is a Director of Dixie Yarns, Inc. Mr. Harrison, Jr. is
Chairman of the Executive Committee and the Finance Committee and is a member of
the Compensation Committee.
J. FRANK HARRISON, III, age 39, is a Vice Chairman of the Board of
Directors of the Company, a position to which he was elected in November 1987.
He was first employed by the Company in 1977, and has served as a Division Sales
Manager and as a Vice President of the Company. Mr. Harrison, III is a Director
of Wachovia Bank & Trust Co., N.A., Southern Region Board. He is Chairman of the
Compensation Committee and is a member of the Executive Committee, the Audit
Committee and the Finance Committee.
REID M. HENSON, age 54, has served as a Vice Chairman of the Board of
Directors of the Company since 1983. Prior to that time, Mr. Henson served as a
consultant for JTL Corporation, a management company, and later as President of
JTL Corporation. He has been a Director of the Company since 1979, is Chairman
of the Audit Committee and is a member of the Executive Committee, the Pension
Committee and the Finance Committee.
JAMES L. MOORE, JR., age 51, is President and Chief Executive Officer of
the Company. Prior to his election as President and Chief Executive Officer in
March 1987, he served as Vice President and later as President and Chief
Executive Officer of Atlantic Soft Drink Co., a soft drink bottling subsidiary
of Grand Metropolitan USA. Since February 1991, Mr. Moore has served as a
Director of Park Meridian Bank. Mr. Moore has been a Director of the Company
since March 1987. He is a member of the Executive Committee and is Chairman of
the Pension Committee.
DAVID V. SINGER, age 38, is Vice President and Chief Financial Officer. In
addition to his Finance duties, Mr. Singer has overall responsibility for the
Company's Purchasing/Materials Management function as well as the Distribution,
Fleet and Transport function. He served as Vice President, Chief Financial
Officer and Treasurer from October 1987 through May 1992; prior to that he was
Vice President and Treasurer. Prior to joining the Company in March 1986, Mr.
Singer was a Vice President of Corporate Banking for Mellon Bank, N.A.
MILES C. AKINS, age 43, is Vice President, Cold Drink Market, a position he
has held since October 1993. He was Vice President, Division Manager of the
Tennessee Division from 1989-1993. From 1987 through 1988, he was General
Manager of the Nashville, TN sales center. From 1985 through 1986, he was Trade
Development Director of the Tennessee Division. Prior to joining the Company in
1985, he was a Regional Trade Development Manager for Coca-Cola USA.
STEVEN D. CALDWELL, age 44, joined the Company in April 1987 as Vice
President, Business Systems and Services. Since May 1992, Mr. Caldwell has had
overall responsibility for the Company's manufacturing function as well as
Business Systems and Services. Prior to joining the Company, he was Director of
MIS at Atlantic Soft Drink Co., a soft drink bottling subsidiary of Grand
Metropolitan USA for four years.
WILLIAM B. ELMORE, age 38, is Vice President, Regional Manager for the
Virginia/West Virginia/Georgia/Tennessee Division, a position he has held since
November 1991. He was Vice President, Division Manager of the West Virginia
Division from 1989-1991. He was Senior Director, Corporate Marketing from
1988-1989. Preceding that, he held various positions in sales and marketing in
the Charlotte Division from 1985-1988. Before joining the Company in 1985, he
was employed by Coca-Cola USA for seven years where he held several positions in
their field sales organization.
NORMAN C. GEORGE, age 38, is Vice President, Regional Manager for the
Carolinas South Region, a position he has held since November 1991. He served as
Vice President, Division Manager of the Southern Division from 1988-1991. He
served as Vice President, Division Manager of the Alabama Division from
1986-1988. From 1982-1986, he served as Director of Sales and Operations in the
Northern Division. Prior to joining the Company in 1982, he was Sales Manager of
the Dallas-Fort Worth Dr Pepper Bottling Company in Irving, Texas.
9
BRENDA B. JACKSON, age 33, is Vice President and Treasurer, a position she
has held since January 1993. From February 1992 until her promotion, she served
as Assistant Treasurer. Mrs. Jackson joined the Company in March 1989 as
Director of Finance.
C. RAY MAYHALL, age 46, is Vice President, Regional Manager for the
Carolinas North Region, a position he has held since November 1991. He served as
Vice President, Division Manager of Northern Division from 1989-1991. Before
joining the Company in 1989, he was Vice President, Sales and Marketing of
Florida Coca-Cola Bottling Company, a position he had held since 1987. Prior to
1987, he was Division Manager of the Central Florida Division of Florida
Coca-Cola Bottling Company for six years.
ROBERT D. PETTUS, JR., age 49, is Vice President, Human Resources, a
position he has held since September 1984. Prior to joining the Company, he was
Director, Employee Relations for the Texize Division of Morton-Thiokol for seven
years.
JAMES B. STUART, age 51, joined the Company in October 1990 as Vice
President, Marketing. Mr. Stuart had been Senior Vice President, Sales and
Marketing with JTL Corporation from 1980 until such company was acquired by The
Coca-Cola Company in 1986. From 1987 until joining the Company in 1990, Mr.
Stuart formed his own marketing company, serving a number of clients inside and
outside the soft drink industry. During this period, he worked almost
exclusively with the International Business Sector of The Coca-Cola Company.
STEVEN D. WESTPHAL, age 39, is Vice President and Controller of the
Company, a position he has held since November 1987. Prior to joining the
Company, he was Vice President-Finance for Joyce Beverages, an independent
bottler, beginning in January 1985. Prior to working for Joyce Beverages, he was
Director of Corporate Planning for Mid-Atlantic Coca-Cola Bottling Company, Inc.
from December 1981 to December 1984.
10
PART II
ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company has two classes of common stock outstanding, Common Stock and
Class B Common Stock. The Common Stock is traded in the over-the-counter market
and is quoted on the NASDAQ National Market System under the symbol COKE. The
table below sets forth for the periods indicated the high and low reported sales
prices per share of Common Stock. There is no established public trading market
for the Class B Common Stock. Shares of Class B Common Stock are convertible on
a share-for-share basis into shares of Common Stock.
FISCAL YEAR
1993
HIGH LOW
First quarter.............................................................................. $ 20 1/4 $ 17
Second quarter............................................................................. 27 3/4 17 3/4
Third quarter.............................................................................. 35 1/2 26 1/4
Fourth quarter............................................................................. 41 1/2 33 1/4
1992
HIGH LOW
First quarter.............................................................................. $ 20 3/4 $ 17 1/2
Second quarter............................................................................. 20 1/4 17 1/2
Third quarter.............................................................................. 19 16 1/2
Fourth quarter............................................................................. 18 15 1/4
The quarterly dividends declared by the Company per share of Common Stock
and Class B Common Stock for the fiscal years ended January 2, 1994 and January
3, 1993 are presented below.
FISCAL YEAR
1993 1992
COMMON CLASS B COMMON CLASS B
First quarter......................................................................... $ .22 $ .13 $ .22 $ .13
Second quarter........................................................................ .22 .13 .22 .13
Third quarter......................................................................... .22 .13 .22 .13
Fourth quarter........................................................................ .22 .13 .22 .13
Total cash dividends declared per share............................................... $ .88 $ .52 $ .88 $ .52
Total cash dividends declared (in thousands).......................................... $6,970 $ 695 $6,903 $ 695
Dividends on the Class B Common Stock are permitted to equal, but not
exceed, dividends on the Common Stock. At its December 8, 1993 meeting, the
Board of Directors stated its intention to increase and equalize dividends on
the Company's two classes of stock, subject to the Company's overall financial
condition.
On February 8, 1994, the Board of Directors declared an increase in the
first quarter 1994 dividends. Shareholders of record as of February 24, 1994
received $.25 per share on both their Common Stock and Class B Common Stock
shares, payable on March 10, 1994.
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.
Pursuant to the Company's Certificate of Incorporation, no cash dividend or
dividend of property or stock other than stock of the Company may be declared
and paid, per share, on the Class B Common Stock unless a dividend of an amount
greater than or equal to such cash or property or stock has been declared and
paid on the Common Stock. Reference should be made to Article Fourth of the
Company's Certificate of Incorporation for additional provisions relating to the
relative dividend rights of holders of Common Stock and Class B Common Stock.
The number of shareholders of record of the Common Stock and Class B Common
Stock, as of March 15, 1994, was 1,166 and 15, respectively.
ITEM 6 -- SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data concerning
the Company for the five years ended January 2, 1994. The data for the five
years ended January 2, 1994 is unaudited but is derived from audited statements
of the Company. This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" set forth in Item 7 hereof and is qualified in its entirety by
reference to the more detailed financial statements and notes contained in Item
8 hereof. This information should also be read in conjunction with the
"Introduction and Recent Developments" section in Item 1 hereof which details
the Company's significant acquisitions and divestitures since 1984.
11
COCA COLA BOTTLING CO. CONSOLIDATED
SELECTED FINANCIAL DATA*
IN THOUSANDS (EXCEPT PER SHARE DATA)
FISCAL YEAR
SUMMARY OF OPERATIONS 1993 1992 1991 1990 1989
Net sales....................................................... $686,960 $ 655,778 $464,733 $436,086 $388,876
Cost of products sold........................................... 396,077 372,865 262,887 245,890 224,925
Selling expenses................................................ 144,411 151,382 107,266 95,934 83,094
General and administrative expenses............................. 51,125 47,154 37,995 35,008 29,567
Depreciation expense............................................ 23,284 22,217 18,785 18,814 17,448
Amortization of goodwill and intangibles........................ 14,784 18,326 10,884 10,700 10,077
Total costs and expenses........................................ 629,681 611,944 437,817 406,346 365,111
Income from operations.......................................... 57,279 43,834 26,916 29,740 23,765
Interest expense................................................ 30,994 36,862 21,556 24,087 24,703
Other expense, net.............................................. 2,270 2,121 2,404 3,448 1,536
Income (loss) before income taxes, extraordinary items and
effect of accounting changes.................................. 24,015 4,851 2,956 2,205 (2,474)
Federal and state income taxes.................................. 9,182 2,768 20 1,976 475
Income (loss) before extraordinary items and effect of
accounting changes............................................ 14,833 2,083 2,936 229 (2,949)
Extraordinary (charge) credit................................... 1,975 (6,239)
Effect of accounting changes.................................... (116,199)
Net income (loss)............................................... 14,833 (114,116) 2,936 2,204 (9,188)
Preferred stock dividends....................................... 4,195 728 448
Net income (loss) applicable to common shareholders............. $ 14,833 $(118,311) $ 2,208 $ 1,756 $ (9,188)
Income (loss) per share:
Income (loss) before extraordinary items and effect of
accounting changes, less preferred stock dividends......... $ 1.60 $ (.23) $ .24 $ (.02) $ (.32)
Extraordinary (charge) credit................................. .21 (.69)
Effect of accounting changes.................................. (12.66)
Net income (loss) applicable to common shareholders........... $ 1.60 $ (12.89) $ .24 $ .19 $ (1.01)
Cash dividends per share:
Common........................................................ $ .88 $ .88 $ .88 $ .88 $ .88
Class B Common................................................ $ .52 $ .52 $ .52 $ .52 $ .52
YEAR-END FINANCIAL POSITION
Total assets.................................................... $648,449 $ 785,871 $785,196 $467,972 $450,108
Long-term debt.................................................. 434,358 555,126 479,414 237,564 229,952
Redeemable preferred stock...................................... 7,280 7,280
Shareholders' equity............................................ 29,629 25,806 205,426 160,815 166,656
OTHER INFORMATION
Weighted average number of Common and Class B Common shares
outstanding................................................... 9,258 9,181 9,181 9,181 9,103
* Various acquisitions have been consummated during this five year period, most
of which were not significant enough to require a report on Form 8-K. See Note
2 to the consolidated financial statements for information concerning the
Sunbelt acquisition in December 1991 and Note 3 for information concerning the
Company's investment in Piedmont Coca-Cola Bottling Partnership. During 1992,
the Company changed its method of accounting for income taxes and for
postretirement benefits other than pensions, as described in Notes 11 and 14.
12
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Coca-Cola Bottling Co. Consolidated ("the Company") is engaged in the
production, marketing and distribution of soft drinks, primarily products of The
Coca-Cola Company. Since 1984, the Company has expanded its franchise territory
throughout the Southeast, primarily through acquisitions.
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 of The Coca-Cola Company and other third party licensors, primarily in
certain portions of North Carolina and South Carolina. The Company provides
substantially all of the soft drink products to Piedmont and manages the
business of Piedmont pursuant to a management agreement. The Company and The
Coca-Cola Company, through their respective subsidiaries, each beneficially own
a 50% interest in Piedmont. Subsidiaries of the Company made an initial capital
contribution to Piedmont of $70 million in the aggregate. The Company's capital
contribution was composed of approximately $21.7 million in cash and of bottling
operations and certain assets used in connection with the Company's Wilson, NC
and Greenville and Beaufort, SC territories. The cash contributed to Piedmont by
the Company's subsidiaries was provided from the Company's available credit
facilities. The Company sold other territories to Piedmont for an aggregate
purchase price of approximately $118 million. Proceeds from the sale of
territories to Piedmont, net of the Company's cash contribution, totaled
approximately $96 million and were used to reduce the Company's long-term debt.
The Company is accounting for its investment in Piedmont using the equity method
of accounting.
On December 20, 1991, the Company acquired all of the outstanding capital
stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately
$15.2 million in cash and Company debt. In addition, the majority of the Sunbelt
indebtedness as of December 20, 1991 was refinanced by the Company. The Company
borrowed $152.5 million under a $230 million bridge facility provided by
Coca-Cola Financial Corporation ("CCFC"), a wholly owned subsidiary of The
Coca-Cola Company. The Company also issued $50 million of Series B
Nonconvertible Preferred Stock to CCFC. The acquisition did not have a
significant impact on 1991 operations.
In the first quarter of 1992, $133 million of seven-and ten-year medium
term notes were issued, the Company entered into a $60 million five-year term
loan and the existing revolving credit agreement was increased by $30 million to
a total commitment of $170 million. These transactions enabled the Company to
repay the $230 million bridge facility obtained from CCFC. The Series B
Nonconvertible Preferred Stock was redeemed in October 1992 using funds from a
three-year bank term loan.
RESULTS OF OPERATIONS
1993 COMPARED TO 1992
The Company reported net income applicable to common shareholders of $14.8
million or $1.60 per share for fiscal 1993. This compares with 1992's net loss
applicable to common shareholders of $2.1 million or $.23 per share before the
effect of accounting changes related to the adoption of SFAS 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions," and SFAS 109,
"Accounting for Income Taxes." For 1992, the reported net loss applicable to
common shareholders was $118.3 million or $12.89 per share. The 1992 results
included $116.2 million of noncash charges associated with the adoption of SFAS
109 and SFAS 106.
The record 1993 results were due to increased net selling prices, slightly
higher volume, lower packaging costs, lower financing costs, a lower effective
tax rate and the formation of Piedmont. The reduction of one work-week in fiscal
1993 and the formation of Piedmont on July 2, 1993 make reported results less
comparable.
Reported net sales increased by approximately 5% from 1992 to 1993. On a
comparable franchise territory and fiscal period basis, net franchise sales for
1993 increased by more than 4%, reflecting higher net selling prices and
slightly higher case volume. Sales to other bottlers increased by $58.8 million
in 1993 primarily due to the sale of soft drink products to Piedmont. Pursuant
to the management agreement with Piedmont, soft drink products are sold to
Piedmont at cost.
Gross margin as reported increased by approximately 3%. When adjusted for
comparable franchise territory and fiscal days, franchise gross margin increased
by approximately 11% due to increased net selling prices and lower packaging
costs. Management believes that overall packaging costs will continue to decline
in 1994. Sweetener costs are expected to increase significantly in 1994.
13
Selling expenses decreased by 4.6% and declined as a percentage of net
sales due primarily to reductions in operating costs resulting from the
elimination of expenses associated with territories sold to Piedmont.
General and administrative expenses increased by 8.4% as a result of
increased employment costs. A special Company contribution to the 401(k) Savings
Plan of approximately $750,000 was included in 1993 expense. The Board of
Directors authorized this award in recognition of the employees' contribution to
the significant improvement in the Company's financial performance.
Depreciation expense increased by 4.8% during 1993. The sale and
contribution of certain fixed assets to Piedmont and normal retirements were
more than offset by additions to property, plant and equipment.
Amortization of goodwill and intangibles declined 19.3% primarily due to
the sale and contribution of franchise territories to Piedmont.
Financing costs declined in 1993 as compared to 1992 due to lower interest
rates and a reduction in long-term debt primarily resulting from the use of
proceeds from the sale of territories to Piedmont. During the fourth quarter of
1992, the Company redeemed all outstanding shares of preferred stock. Dividends
of $4.2 million were paid in 1992 on these preferred shares.
Reported income tax expense differs from the amount computed at the
statutory rate primarily due to amortization of certain nondeductible goodwill,
state income taxes and the effect of the change in statutory rates on the
deferred tax liability as of the beginning of the year. As a result of the
enactment of the Omnibus Budget Reconciliation Act of 1993, the Company recorded
an additional income tax charge of approximately $2.1 million to reflect the
change in the maximum federal corporate tax rate from 34% to 35%. Due to the
Company's restructuring related to the formation of Piedmont and a significant
increase in profitability, the Company reduced a valuation allowance that had
been recorded due to restrictions on the use of certain net operating losses.
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. SFAS 112 is effective for
fiscal years beginning after December 15, 1993. Any accrual required to be
recorded by SFAS 112 must be recognized initially as the effect of a change in
accounting principle. The Company intends to adopt the provisions of SFAS 112 in
the first quarter of 1994, effective January 3, 1994. The adoption of SFAS 112
will require an estimated one-time, after-tax charge between $1.5 million and
$2.5 million.
1992 COMPARED TO 1991
The Company reported a net loss, excluding the effect of accounting
changes, of $2.1 million or $.23 per share for 1992 as compared to net income
applicable to common shareholders of $2.2 million or $.24 per share in 1991. For
1992, the Company's reported net loss applicable to common shareholders was
$118.3 million or $12.89 per share.
The results for 1992 included noncash charges of $116.2 million related to
the Company's adoption of SFAS 109 and SFAS 106. The 1991 results reflected a
reduction in income tax expense of approximately $2 million due to a settlement
with the Internal Revenue Service relating to the deductibility of franchise
amortization.
Primarily as a result of the Sunbelt acquisition, net sales for 1992 as
compared to 1991 increased by 41.1%, gross margin increased by 40.2% and income
from operations increased by 62.9%. In 1992, the Company recorded certain one-
time transition costs associated with the Sunbelt acquisition.
Excluding Sunbelt, net sales for the Company were $485.1 million in 1992,
an increase of $20.4 million or 4.4% from 1991 net sales of $464.7 million. This
increase resulted principally from growth above industry averages in equivalent
case sales volume and three extra working days in fiscal 1992.
Excluding the results of Sunbelt, gross margin increased in 1992 by $10.9
million or 5.4% primarily due to continued improvements in manufacturing
productivity, declining raw material costs and modest growth in equivalent case
sales.
Selling expenses for the Company, excluding Sunbelt, increased in 1992 by
$2.2 million or 2.0%, principally as a result of wage rate increases.
Excluding the results of Sunbelt, general and administrative costs
increased in 1992 by $4.0 million or 10.5%. This increase was principally
associated with wage rate increases and additional staff to support the growth
of the Company.
14
Interest expense for the Company, excluding Sunbelt, in 1992 was $18.8
million as compared to $21.6 million in 1991. The decrease was primarily due to
a continued overall reduction in average interest rates.
Income tax expense in 1992 was $2.8 million compared to $20,000 in 1991. In
1992, the Company adopted SFAS 109. As a result, the Company recorded a charge
of approximately $109.1 million or $11.88 per share. This charge resulted
primarily from a difference between the financial statement basis and the tax
basis of intangible assets related to the Sunbelt acquisition.
The Company also adopted SFAS 106 in 1992, changing to the accrual method
of accounting for postretirement benefits other than pensions. A pretax charge
of $11.6 million ($7.1 million after taxes or $.77 per share) was recorded as
the effect of this accounting change.
In connection with the acquisition of Coca-Cola Bottling Works of Jackson,
Incorporated and Jackson Coca-Cola Bottling Company, Inc. (collectively
"Jackson") in 1990 and the Sunbelt acquisition in 1991, the Company issued
preferred stock. All outstanding shares of preferred stock were redeemed in the
fourth quarter of 1992. Preferred dividends of $4.2 million and $.7 million were
paid in 1992 and 1991, respectively.
FINANCIAL CONDITION
Working capital decreased from a deficit of $16.8 million on January 3,
1993 to a deficit of $23.5 million on January 2, 1994. The decrease in working
capital was primarily due to the sale and contribution of assets to Piedmont and
a reduction in the Company's sale of trade accounts receivable. The working
capital deficit is a result of the Company's sale of its trade accounts
receivable of $33 million and $40 million as of January 2, 1994 and January 3,
1993, respectively. The Company used the proceeds from the sale of its trade
accounts receivable to reduce its outstanding bank loans.
Additions to property, plant and equipment of $28.8 million more than
offset normal retirements and the sale and contribution of certain fixed assets
to Piedmont.
The initial capital contribution made to Piedmont by the Company was $70
million. The Company's share of Piedmont's loss for the period since July 2,
1993 reduced this investment from $70 million to $68.4 million.
Identifiable intangible assets declined from January 3, 1993 to January 2,
1994 primarily as a result of the sale and contribution of certain franchise
territories to Piedmont. As a result of the formation of Piedmont, the Company
will use net operating losses of Sunbelt to offset taxable gains resulting from
the sale of certain assets to Piedmont. A valuation allowance had previously
been recorded for these net operating losses due to restrictions on their use.
The use of the net operating losses resulted in a reduction of the Company's
deferred income tax liability and a corresponding reduction in recorded
franchise value of approximately $36 million.
Other liabilities declined by $6.5 million from January 3, 1993 to January
2, 1994 primarily due to the assumption by Piedmont of postretirement benefit
obligations for certain former employees of Sunbelt.
The Company's long-term debt decreased by $121 million due to the use of
the net sale proceeds of approximately $96 million from the Piedmont transaction
and cash provided by operations.
Shareholders' equity increased overall by $3.8 million during 1993. An
adjustment, net of income taxes, of $5.6 million was charged directly to
shareholders' equity. This adjustment represented the excess of accumulated
pension benefit obligations over plan assets and was primarily a result of
changes in certain actuarial assumptions.
The issuance of new shares of Common Stock increased shareholders' equity
by $2.3 million. On April 9, 1993, the Company acquired all of the outstanding
stock of Whirl-i-Bird, Inc. in exchange for 80,000 shares of the Company's
Common Stock valued at $1.6 million based on the closing market price of $20 per
share on March 17, 1993. On June 25, 1993, the Company issued 33,464 shares of
its Common Stock to The Coca-Cola Company at a price of $20 per share. These
shares were issued pursuant to a Stock Rights and Restrictions Agreement dated
January 27, 1989 that provided The Coca-Cola Company a preemptive right to
purchase a percentage of any newly issued shares of any class as necessary to
allow it to maintain ownership of both 29.67% of the outstanding shares of
common stock of all classes and 22.59% of the total votes of all outstanding
shares of all classes.
LIQUIDITY AND CAPITAL RESOURCES
On March 17, 1992, the Company entered into a revolving credit agreement
totaling $170 million that eliminated the term loan portion of the facility and
extended the revolving credit maturity date to March 1997. The agreement
contains
15
several covenants that establish minimum ratio requirements related to debt and
cash flow. A commitment fee of 1/5% per year on the average daily unused amount
of the banks' commitment is payable quarterly. On January 2, 1994, there were no
borrowings outstanding under the revolving credit facility.
The Company borrows from time to time under informal lines of credit from
various banks. On January 2, 1994, the Company had $175 million available under
these lines, of which $18 million was outstanding. Loans under these lines are
made at the sole discretion of the banks at rates negotiated at the time of
borrowing.
A $100 million commercial paper program was established in January 1990 for
general corporate purposes. On January 2, 1994, there were no borrowings
outstanding under this program.
It is the Company's intent to renew any borrowings under the 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.
On February 12, 1990, a $200 million shelf registration for debt securities
filed with the Securities and Exchange Commission became effective and available
for the issuance of medium-term notes ("MTNs"). As of February 19, 1992, all
$200 million of MTNs had been issued for terms of seven, eight and ten years.
On June 28, 1990, the Company entered into an eight-year, $60 million loan
agreement. The Company amended the agreement in October 1993, extending the
maturity date to October 28, 2001.
On February 20, 1992, the Company entered into a five-year, $60 million
loan agreement. The proceeds from the loan agreement were used to repay portions
of a bridge facility from Coca-Cola Financial Corporation and other senior debt.
In October 1993, the Company amended the agreement, extending the maturity date
to October 28, 2000.
On June 26, 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. On January 2,
1994, the Company had sold $33 million of its trade accounts receivable and used
the proceeds to reduce its outstanding bank loans. It is the Company's intent to
continue to sell its trade accounts receivable in the future.
On October 30, 1992, the Company entered into a three-year, $50 million
loan agreement. This agreement was amended November 30, 1992 to increase the
facility by $25 million to a total of $75 million. The proceeds from the loan
agreement were used primarily to redeem the Company's outstanding preferred
stock.
As of January 2, 1994, the Company was in compliance with the covenants
contained in its various borrowing agreements. None of these covenants is
presently expected to constrain the Company.
The Company actively manages its interest rate risk using a variety of rate
hedging agreements. As of January 2, 1994, approximately 43% of the total debt
portfolio was subject to changes in short-term interest rates.
During 1993, the Company spent $28.8 million for capital additions compared
to $32.9 million in 1992. The higher spending in 1992 was attributable primarily
to building improvements in the Sunbelt locations.
As a result of the Company's tax loss carryforward position, leasing has
continued to be used to lower the Company's overall cost for certain capital
equipment purchases. Total lease expense in 1993 was $17.3 million as compared
to $17.8 million in 1992. The Company plans to lease the majority of its vending
requirements in 1994.
In February 1994, the Board of Directors approved an increase in the
dividend for the first quarter. The first quarter 1994 dividend, payable on
March 10, 1994, was increased for Common and Class B Common shareholders from
$.22 per share and $.13 per share, respectively, to $.25 per share per quarter
for both classes of stock. If the Company continues to pay quarterly dividends
of $.25 per share for both classes of common stock, annual dividend payments
will increase from $7.7 million in 1993 to $9.3 million in 1994.
At the end of 1993, the Company had no material commitments for the
purchase of capital assets other than those related to normal replacement of
equipment.
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.
16
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
COCA-COLA BOTTLING CO. CONSOLIDATED
CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS (EXCEPT PER SHARE DATA)
FISCAL YEAR
1993 1992 1991
NET SALES (includes sales to Piedmont of $42,183 in 1993)................................ $686,960 $ 655,778 $464,733
Cost of products sold (includes $38,944 related to sales
to Piedmont in 1993)................................................................... 396,077 372,865 262,887
GROSS MARGIN............................................................................. 290,883 282,913 201,846
Selling expenses......................................................................... 144,411 151,382 107,266
General and administrative expenses...................................................... 51,125 47,154 37,995
Depreciation expense..................................................................... 23,284 22,217 18,785
Amortization of goodwill and intangibles................................................. 14,784 18,326 10,884
INCOME FROM OPERATIONS................................................................... 57,279 43,834 26,916
Interest expense......................................................................... 30,994 36,862 21,556
Other expense, net....................................................................... 2,270 2,121 2,404
Income before income taxes and effect of accounting changes.............................. 24,015 4,851 2,956
Federal and state income taxes:
Current................................................................................ 1,921 48 45
Deferred............................................................................... 7,261 2,720 (25)
Total federal and state income taxes..................................................... 9,182 2,768 20
Income before effect of accounting changes............................................... 14,833 2,083 2,936
Effect of accounting changes............................................................. (116,199)
Net income (loss)........................................................................ 14,833 (114,116) 2,936
Preferred stock dividends................................................................ 4,195 728
NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS...................................... $ 14,833 $(118,311) $ 2,208
Income (loss) per share:
Income (loss) before effect of accounting changes,
less preferred stock dividends...................................................... $ 1.60 $ (.23) $ .24
Effect of accounting changes........................................................... (12.66)
NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS.................................... $ 1.60 $ (12.89) $ .24
Cash dividends per share:
Common Stock........................................................................... $ .88 $ .88 $ .88
Class B Common Stock................................................................... .52 .52 .52
Weighted average number of Common and Class B
Common shares outstanding.............................................................. 9,258 9,181 9,181
See Accompanying Notes to Consolidated Financial Statements.
17
COCA-COLA BOTTLING CO. CONSOLIDATED
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS (EXCEPT SHARE DATA)
JAN. 2, JAN. 3,
1994 1993
ASSETS
CURRENT ASSETS:
Cash............................................................................................... $ 1,262 $ 1,414
Accounts receivable, trade, less allowance for doubtful accounts of $425 and $400.................. 4,960 3,796
Accounts receivable from The Coca-Cola Company..................................................... 6,698 4,054
Due from Piedmont Coca-Cola Bottling Partnership................................................... 2,454
Accounts receivable, other......................................................................... 10,758 10,036
Inventories........................................................................................ 27,533 26,635
Prepaid expenses and other current assets.......................................................... 4,734 3,311
Total current assets............................................................................. 58,399 49,246
PROPERTY, PLANT AND EQUIPMENT, at cost............................................................. 297,561 293,476
Less -- Accumulated depreciation and amortization.................................................. 134,546 122,799
Property, plant and equipment, net............................................................... 163,015 170,677
INVESTMENT IN PIEDMONT COCA-COLA BOTTLING PARTNERSHIP.............................................. 68,400
OTHER ASSETS....................................................................................... 18,700 20,527
IDENTIFIABLE INTANGIBLE ASSETS, less accumulated amortization of $65,803 and $59,787............... 267,715 470,910
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED, less accumulated amortization
of $19,399 and $17,108........................................................................... 72,220 74,511
Total............................................................................................ $648,449 $785,871
See Accompanying Notes to Consolidated Financial Statements.
18
JAN. 2, JAN. 3,
1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Portion of long-term debt payable within one year.................................................. $ 711 $ 1,178
Accounts payable and accrued liabilities........................................................... 69,232 52,073
Accounts payable to The Coca-Cola Company.......................................................... 1,876 1,796
Accrued interest payable........................................................................... 10,108 11,042
Total current liabilities........................................................................ 81,927 66,089
DEFERRED INCOME TAXES.............................................................................. 80,065 109,906
OTHER LIABILITIES.................................................................................. 22,470 28,944
SENIOR LONG-TERM DEBT.............................................................................. 434,358 555,126
Total liabilities................................................................................ 618,820 760,065
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 and 9,977,395 shares... 10,090 9,977
Class B Common Stock, $1 par value: Authorized-10,000,000 shares; Issued-1,964,476 shares.......... 1,965 1,965
Class C Common Stock, $1 par value: Authorized-20,000,000 shares; Issued-None
Capital in excess of par value..................................................................... 139,322 144,831
Accumulated deficit................................................................................ (98,488) (113,321)
Minimum pension liability adjustment............................................................... (5,614)
47,275 43,452
Less-Treasury stock, at cost:
Common-2,132,800 shares.......................................................................... 17,237 17,237
Class B Common-628,114 shares.................................................................... 409 409
Total shareholders' equity....................................................................... 29,629 25,806
Total............................................................................................ $648,449 $785,871
See Accompanying Notes to Consolidated Financial Statements.
19
COCA-COLA BOTTLING CO. CONSOLIDATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
FISCAL YEAR
1993 1992 1991
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)....................................................................... $ 14,833 $(114,116) $ 2,936
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Effect of accounting changes.......................................................... 116,199
Depreciation expense.................................................................. 23,284 22,217 18,785
Amortization of goodwill and intangibles.............................................. 14,784 18,326 10,884
Deferred income taxes................................................................. 7,261 2,720 (25)
Losses on sale of property, plant and equipment....................................... 1,148 574 278
Amortization of debt costs............................................................ 511 676 720
Undistributed loss of Piedmont Coca-Cola
Bottling Partnership............................................................... 1,600
(Increase) decrease in current assets less current
liabilities........................................................................ (30) 4,218 7,945
Increase in other noncurrent assets................................................... (3,571) (4,351) (826)
Increase (decrease) in other noncurrent liabilities................................... (25) (7,049) 3,138
Other................................................................................. 25 33 756
Total adjustments....................................................................... 44,987 153,563 41,655
Net cash provided by operating activities............................................... 59,820 39,447 44,591
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt............................................ 80,109
Payments on long-term debt.............................................................. (120,768) (4,397) (35,132)
Issuance of common stock................................................................ 2,269
Issuance of preferred stock............................................................. 50,000
Redemption of preferred stock and redeemable
preferred stock....................................................................... (60,991)
Cash dividends paid..................................................................... (7,665) (11,793) (14,925)
Other................................................................................... (1,376) 4,695 (74)
Net cash provided by (used in) financing activities..................................... (127,540) 7,623 (131)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment.............................................. (28,786) (32,887) (24,360)
Proceeds from the sale of property, plant and equipment................................. 1,908 2,931 2,338
Acquisitions of companies, net of cash acquired......................................... (1,488) (16,699) (24,614)
Net proceeds from sale and contribution of assets to Piedmont Coca-Cola Bottling
Partnership........................................................................... 95,934
Net cash provided by (used in) investing activities..................................... 67,568 (46,655) (46,636)
NET INCREASE (DECREASE) IN CASH......................................................... (152) 415 (2,176)
CASH AT BEGINNING OF YEAR............................................................... 1,414 999 3,175
CASH AT END OF YEAR..................................................................... $ 1,262 $ 1,414 $ 999
See Accompanying Notes to Consolidated Financial Statements.
20
COCA-COLA BOTTLING CO. CONSOLIDATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
IN THOUSANDS
CLASS CAPITAL MINIMUM
B IN EXCESS PENSION
PREFERRED COMMON COMMON OF PAR ACCUMULATED LIABILITY TREASURY
STOCK STOCK STOCK VALUE DEFICIT ADJUSTMENT STOCK
Balance on December 30, 1990.............. $ 9,976 $1,966 $ 167,314 $ (795) $ 17,646
Net income................................ 2,936
Cash dividends declared:
Common.................................. (6,615) (982)
Preferred............................... (364) (364)
Issuance of Preferred Stock............... $ 50,000
Balance on December 29, 1991.............. 50,000 9,976 1,966 160,335 795 17,646
Net loss.................................. (114,116)
Cash dividends declared:
Common.................................. (7,598)
Preferred............................... (4,195)
Redemption of Preferred Stock............. (50,000)
Premium on Preferred Stock
redeemed................................ (3,711)
Conversion of Class B Common Stock into
Common Stock............................ 1 (1 )
Balance on January 3, 1993................ 0 9,977 1,965 144,831 (113,321) 17,646
Net income................................ 14,833
Cash dividends declared:
Common.................................. (7,665)
Issuance of Common Stock.................. 113 2,156
Minimum pension liability
adjustment.............................. $ (5,614)
BALANCE ON JANUARY 2, 1994................ $ 0 $10,090 $1,965 $ 139,322 $ (98,488) $ (5,614) $ 17,646
See Accompanying Notes to Consolidated Financial Statements.
21
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Coca-Cola Bottling Co. Consolidated ("the Company") is engaged in the
production, marketing and distribution of soft drinks, primarily products of The
Coca-Cola Company.
The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The fiscal years presented are the 52-week period ended January 2, 1994,
the 53-week period ended January 3, 1993 and the 52-week period ended December
29, 1991.
Certain prior year amounts have been reclassified to conform to current
year classifications.
The Company's more significant accounting policies are as follows:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, cash in banks and cash
equivalents, which are highly liquid debt instruments with maturities of less
than 90 days.
INVENTORIES
Inventories are stated at the lower of cost, primarily determined on the
last-in, first-out basis, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over the estimated useful lives of the assets.
Additions and major replacements or betterments are added to the assets at cost.
Maintenance and repair costs and minor replacements are charged to expense when
incurred. When assets are replaced or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts, and the gain or loss, if
any, is reflected in income.
INVESTMENT IN PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
The Company beneficially owns a 50% interest in Piedmont Coca-Cola Bottling
Partnership ("Piedmont"). The Company accounts for its interest in Piedmont
using the equity method of accounting.
With respect to Piedmont, sales of soft drink products at cost, management
fee revenue and the Company's share of Piedmont's results from operations are
included in "Net sales." See Note 3 for additional information.
INCOME TAXES
The Company provides deferred income taxes for the tax effects of temporary
differences between the financial reporting and income tax bases of the
Company's assets and liabilities.
BENEFIT PLANS
The Company has a noncontributory pension plan covering substantially all
nonunion employees and one noncontributory pension plan covering certain union
employees. Costs of the plans are charged to current operations and consist of
several components of net periodic pension cost based on various actuarial
assumptions regarding future experience of the plans. In addition, certain other
union employees are covered by plans provided by their respective union
organizations. The Company expenses amounts as paid in accordance with union
agreements. The Company recognizes the cost of postretirement benefits, which
consist principally of medical benefits, during employees' periods of active
service.
INTANGIBLE ASSETS
Identifiable intangible assets resulting from the acquisition of Coca-Cola
bottling franchises are being amortized on a straight-line basis over periods
ranging from four to forty years.
22
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED
The excess of cost over fair value of net assets of businesses acquired is
being amortized on a straight-line basis over forty years.
PER SHARE AMOUNTS
Per share amounts are calculated based on the weighted average number of
Common and Class B Common shares outstanding.
POSTEMPLOYMENT BENEFITS
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. Postemployment benefits
encompass various types of employer-provided benefits including, but not limited
to, the following: workers' compensation, disability-related benefits and
severance benefits. SFAS 112 is effective for fiscal years beginning after
December 15, 1993, although earlier adoption is permitted. Any accrual required
to be recorded by SFAS 112 must be recognized initially as the effect of a
change in accounting principle. The Company intends to adopt the provisions of
SFAS 112 in the first quarter of 1994, effective January 3, 1994.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Costs associated with interest rate swaps, forward interest rate agreements
and interest rate caps are recorded over the lives of the agreements as an
adjustment to interest expense.
2. ACQUISITIONS
On December 20, 1991, the Company acquired all of the outstanding capital
stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately
$15.2 million. Approximately $4.4 million of the purchase price was paid in cash
to The Coca-Cola Company and one of its affiliates (former shareholders of
Sunbelt) and the balance of the purchase price was paid to the remaining
shareholders through the issuance of Company debt. Funds used for the cash
portion of the acquisition were obtained from the Company's existing lines of
credit. Total assets acquired as a result of the Sunbelt acquisition were
approximately $304 million. The acquisition was accounted for under the purchase
method of accounting.
The following unaudited pro forma combined summary results of operations
for the year ended December 29, 1991 gives effect to the acquisition as though
it had occurred at the beginning of the period presented. The pro forma earnings
are not necessarily indicative of the results of operations had the acquisition
actually occurred at the beginning of the period presented, nor are they
necessarily indicative of the results of future operations.
UNAUDITED,
IN THOUSANDS (EXCEPT PER SHARE DATA) PRO FORMA
YEAR ENDED DECEMBER 29, 1991
Net sales....................................................................................................... $632,717
Costs and expenses.............................................................................................. 589,588
Income from operations.......................................................................................... 43,129
Net loss........................................................................................................ (645)
Preferred dividends............................................................................................. 4,728
Net loss applicable to common shareholders...................................................................... (5,373)
Net loss applicable to common shareholders, per share........................................................... $ (.59)
23
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENT IN 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 certain portions of North Carolina and South Carolina. The
Company and The Coca-Cola Company, through their respective subsidiaries, each
beneficially own a 50% interest in Piedmont. The Company provides substantially
all of the soft drink products for Piedmont and manages the operations of
Piedmont pursuant to a management agreement.
Subsidiaries of the Company made an initial capital contribution to
Piedmont of $70 million in the aggregate. The capital contribution made by such
subsidiaries was composed of approximately $21.7 million in cash and of bottling
operations and certain assets used in connection with the Company's Wilson, NC
and Greenville and Beaufort, SC territories. The cash contributed to Piedmont by
the Company's subsidiaries was provided from the Company's available credit
facilities. The Company sold other territories to Piedmont for an aggregate
purchase price of approximately $118 million. Proceeds from the sale of
territories to Piedmont, net of the Company's cash contribution, totaled
approximately $96 million and were used to reduce the Company's long-term debt.
Summarized financial information for Piedmont is as follows:
IN THOUSANDS JAN. 2, 1994
Current assets................................................................................................... $ 18,408
Noncurrent assets................................................................................................ 362,923
Total assets..................................................................................................... $381,331
Current liabilities.............................................................................................. $ 9,867
Noncurrent liabilities........................................................................................... 234,664
Total liabilities................................................................................................ 244,531
Partners' equity................................................................................................. 136,800
Total liabilities and partners' equity........................................................................... $381,331
Company equity investment........................................................................................ $ 68,400
FOR THE
PERIOD
JULY 2, 1993
THROUGH
JANUARY 2,
IN THOUSANDS 1994
Net sales........................................................................................................ $ 91,259
Cost of products sold............................................................................................ 52,535
Gross margin..................................................................................................... 38,724
Income from operations........................................................................................... 1,209
Net loss......................................................................................................... $ (3,200)
Company equity in loss........................................................................................... $ (1,600)
24
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. INVENTORIES
Inventories are summarized as follows:
IN THOUSANDS JAN. 2, 1994 JAN. 3, 1993
Finished products.................................................................................. $ 16,622 $ 17,134
Manufacturing materials............................................................................ 9,498 8,163
Used bottles and cases............................................................................. 1,413 1,338
Total inventories.................................................................................. $ 27,533 $ 26,635
The amounts included above for inventories valued by the LIFO method were
greater than replacement or current cost by approximately $2.5 million and $2.6
million on January 2, 1994 and January 3, 1993, respectively, as a result of
inventory premiums associated with certain acquisitions.
5. PROPERTY, PLANT AND EQUIPMENT
The principal categories and estimated useful lives of property, plant and
equipment were as follows:
JAN. 2, JAN. 3, ESTIMATED
IN THOUSANDS 1994 1993 USEFUL LIVES
Land.................................................................... $ 10,851 $ 12,101
Buildings............................................................... 60,907 62,394 10-50 years
Machinery and equipment................................................. 65,945 66,804 5-20 years
Transportation equipment................................................ 33,246 32,125 4-10 years
Furniture and fixtures.................................................. 18,437 17,744 7-10 years
Vending equipment....................................................... 89,280 85,900 6-13 years
Leasehold and land improvements......................................... 12,619 12,953 5-20 years
Construction in progress................................................ 6,276 3,455
Total property, plant and equipment, at cost............................ $297,561 $293,476
The slight increase in property, plant and equipment resulted from capital
additions in 1993 exceeding normal retirements and the sale and contribution of
certain fixed assets to Piedmont.
6. IDENTIFIABLE INTANGIBLE ASSETS
The principal categories and estimated useful lives of identifiable
intangible assets, net of accumulated amortization, were as follows:
JAN. 2, JAN. 3, ESTIMATED
IN THOUSANDS 1994 1993 USEFUL LIVES
Franchise rights........................................................... $230,205 $430,058 40 years
Customer lists............................................................. 30,858 33,587 20-23 years
Advertising savings........................................................ 5,792 6,309 7-23 years
Other...................................................................... 860 956 4-18 years
Total identifiable intangible assets....................................... $267,715 $470,910
The decrease in identifiable intangible assets resulted primarily from the
sale and contribution of certain franchise
territories to Piedmont.
25
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. LONG-TERM DEBT
Long-term debt is summarized as follows:
FIXED(F)
OR
INTEREST VARIABLE(V) INTEREST JAN. 2, JAN. 3,
IN THOUSANDS MATURITY RATE RATE PAID 1994 1993
Lines of Credit..................................... 1997 3.50% V Varies $ 18,335 $ 94,301
Revolving Credit.................................... 1997
V Varies 40,000
Term Loan Agreement................................. 1995 3.77% V Monthly 75,000 75,000
Term Loan Agreement................................. 2000 4.00% V Semi- 60,000 60,000
annually
Term Loan Agreement................................. 2001 4.00% V Semi- 60,000 60,000
annually
Medium-Term Notes................................... 1998 3.93% V Quarterly 10,000 10,000
Medium-Term Notes................................... 1999 7.99% F Semi- 66,500 66,500
annually
Medium-Term Notes................................... 2000 10.05% F Semi- 57,000 57,000
annually
Medium-Term Notes................................... 2002 8.56% F Semi- 66,500 66,500
annually
Notes acquired in
Sunbelt acquisition............................... 2001 8.00% F Quarterly 5,442 6,000
Other notes payable................................. 1994- 6.85%- F Varies 16,217 16,984
2001 12.00%
Capital leases...................................... 1994- 8.00%- F Monthly 75 4,019
1995 12.00%
435,069 556,304
Less: Portion of long-term debt payable within one
year.............................................. 711 1,178
Senior long-term debt...............................
$434,358 $555,126
The principal maturities of long-term debt outstanding on January 2, 1994
were as follows:
IN THOUSANDS
1995.............................................................................................................. $ 75,229
1996.............................................................................................................. 120
1997.............................................................................................................. 18,490
1998.............................................................................................................. 12,050
Thereafter........................................................................................................ 328,469
Total long-term debt.............................................................................................. $434,358
On March 17, 1992, the Company entered into a revolving credit agreement
totaling $170 million which eliminated the term loan portion of the facility and
extended the revolving credit maturity date to March 1997. The agreement
contains several covenants which establish minimum ratio requirements related to
debt and cash flow. A commitment fee of 1/5% per year on the average daily
unused amount of the banks' commitment is payable quarterly. There were no
borrowings outstanding under this facility as of January 2, 1994.
A $100 million commercial paper program was established in January 1990 for
general corporate purposes. On
January 2, 1994, there were no borrowings outstanding under this program.
26
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company borrows from time to time under informal lines of credit from
various banks. On January 2, 1994, the Company had $175 million of credit
available under these lines, of which $18.3 million was outstanding. Loans under
these lines are made at the sole discretion of the banks at rates negotiated at
the time of borrowing. It is the Company's intent to renew such borrowings as
they mature. To the extent that these borrowings, the borrowings under the
revolving credit facility described above, and outstanding commercial paper do
not exceed the amount available under the Company's $170 million revolving
credit facility, they are classified as noncurrent liabilities.
On February 12, 1990, a $200 million shelf registration for debt securities
filed with the Securities and Exchange Commission became effective and available
for the issuance of medium-term notes ("MTNs"). As of December 30, 1990, $67
million of eight-and ten-year MTNs had been issued. On February 19, 1992, the
Company issued $133 million of seven-and ten-year MTNs, the proceeds of which
were used to repay a portion of a bridge facility from Coca-Cola Financial
Corporation ("CCFC"). As of February 19, 1992, all $200 million of MTNs had been
issued for terms of seven, eight and ten years.
On June 28, 1990, the Company entered into an eight-year, $60 million loan
agreement. On October 28, 1993, the Company amended the agreement, extending the
term loan maturity date to October 28, 2001.
On February 20, 1992, the Company entered into a five-year, $60 million
loan agreement. The proceeds from the loan agreement were used to repay portions
of a bridge facility from CCFC and other senior debt. On October 28, 1993, the
Company amended the agreement, extending the term loan maturity date to October
28, 2000.
On June 26, 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. As of January 2,
1994, the Company had sold $33 million of its trade accounts receivable and used
the proceeds to reduce its outstanding bank loans. It is the Company's current
intent to continue to sell its trade accounts receivable in the future. The
discount on sales of trade accounts receivable was $1.4 million in 1993, $1.6
million in 1992 and $1.8 million in 1991 and is included in "Other expense,
net."
On October 30, 1992, the Company entered into a three-year, $50 million
loan agreement, amended November 30, 1992 to increase the facility by $25
million for a total of $75 million. The proceeds from the loan agreement were
used primarily to redeem the Company's outstanding preferred stock.
As of January 2, 1994, the Company was in compliance with the covenants
covering all of its various borrowing agreements. None of these covenants is
presently expected to constrain the Company.
8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company actively manages its interest rate risk using a variety of rate
hedging mechanisms. The Company has entered into a series of hedging
transactions that resulted in a weighted average interest rate of 6.7% for the
debt portfolio as of January 2, 1994. Approximately 43% of the total debt
portfolio was subject to changes in short-term interest rates on January 2,
1994. The Company's overall weighted average borrowing rate on its long-term
debt declined from an average of 6.6% in 1992 to an average of 5.9% in 1993.
Off-balance-sheet financial instruments on January 2, 1994 are summarized
as follows:
REMAINING
DESCRIPTION IN THOUSANDS TERM
Interest rate swaps -- floating................................................................... $221,600 7-10 years
Interest rate swaps -- fixed...................................................................... 368,000 1-10 years
Interest rate caps................................................................................ 110,000 1.5 years
Financial guarantee............................................................................... 13,094 7 years
FINANCIAL GUARANTEES
The Company guarantees a portion of the debt for one cooperative from which
the Company purchases plastic bottles. See Note 15 to the consolidated financial
statements for additional information concerning this financial guarantee.
27
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CREDIT RISK
The Company is exposed to credit loss in the event of nonperformance by the
other parties to the various off-balance-sheet financial transactions as
disclosed above. The Company does not anticipate nonperformance by the other
parties. The Company has entered into these off-balance-sheet financial
transactions with numerous counterparties during the year. The financial
instruments outstanding on January 2, 1994 as disclosed above were with eight
different commercial or investment banks. It is the Company's belief that this
does not represent any material concentration of credit risk.
COLLATERAL
In accordance with standard market practice, no collateral has been given
or received by the Company in connection with the off-balance-sheet financial
instruments described above. The Company does not anticipate nonperformance by
the counterparties.
9. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating the fair values of its financial instruments:
PUBLICLY TRADED DEBT
The fair value of the Company's publicly traded debt is estimated based on
quoted market prices.
NON-TRADED VARIABLE RATE LONG-TERM DEBT
The carrying amounts of the Company's variable rate borrowings approximate
their fair value.
NON-TRADED 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.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Fair values for the Company's off-balance-sheet interest rate swaps are
based on current settlement values; fair value of the interest rate caps is
negligible.
The carrying amounts and fair values of the Company's financial instruments
on January 2, 1994 were as follows:
IN THOUSANDS CARRYING AMOUNT FAIR VALUE
Balance Sheet Instruments
Publicly traded debt.......................................................................... $ 200,000 $ 225,223
Non-traded variable rate long-term debt....................................................... 213,335 213,335
Non-traded fixed rate long-term debt.......................................................... 21,659 23,367
Off-Balance-Sheet Instruments
Interest rate swaps........................................................................... 7,478
The fair value of the interest rate swaps represents the estimated amount
the Company would have had to pay to terminate these agreements on January 2,
1994.
28
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. LEASE COMMITMENTS
The Company has entered into various fleet operating lease agreements,
principally for route delivery trucks and over the road tractors, and various
vending operating lease agreements.
Operating lease payments are charged to expense as incurred. Such rental
expenses included in the consolidated statements of operations were $17.3
million, $17.8 million and $13.0 million for 1993, 1992 and 1991, respectively.
The following is a summary of future minimum lease payments for all
operating leases as of January 2, 1994:
IN THOUSANDS
1994............................................................................................................... $18,710
1995............................................................................................................... 16,982
1996............................................................................................................... 15,149
1997............................................................................................................... 12,496
1998............................................................................................................... 11,551
Thereafter......................................................................................................... 22,308
Total minimum lease payments....................................................................................... $97,196
11. INCOME TAXES
The Company adopted SFAS 109, "Accounting for Income Taxes," in 1992 with a
charge of $109.1 million recorded as an "Effect of accounting change." The
provision for income taxes for 1993 and 1992 has been calculated under the
requirements of SFAS 109. The income tax provision for 1991 was calculated under
the deferred method.
The provision for income taxes consisted of the following:
FISCAL YEAR
IN THOUSANDS 1993 1992 1991
Current:
Federal........................................................................................ $ 1,921 $45
State.......................................................................................... $ 48
1,921 48 45
Deferred:
Federal........................................................................................ (27,748) 2,227 (25 )
State.......................................................................................... (3,662) 493
Benefit of acquired loss carryforwards used to reduce franchise value.......................... 35,599
Benefit of minimum pension liability adjustment................................................ 3,072
7,261 2,720 (25 )
Income tax expense............................................................................... $ 9,182 $2,768 $20
The Company made income tax payments for alternative minimum tax of
approximately $1.9 million during 1993.
29
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred taxes are recorded based upon differences between the financial
statement and tax bases of assets and liabilities and available tax credit
carryforwards. Temporary differences and carryforwards that comprised a
significant part of deferred tax assets and liabilities on January 2, 1994 and
January 3, 1993 were as follows:
JAN. 2, JAN. 3,
IN THOUSANDS 1994 1993
Intangibles.......................................................................................... $102,680 $ 162,111
Depreciation......................................................................................... 21,971 20,639
Investment in Piedmont............................................................................... 19,030
Other................................................................................................ 9,154 10,903
Gross deferred income tax liabilities................................................................ 152,835 193,653
Net operating loss carryforwards..................................................................... (52,682) (92,266)
Other................................................................................................ (17,713) (20,543)
Gross deferred income tax assets..................................................................... (70,395) (112,809)
Deferred tax assets valuation allowance.............................................................. 29,934
Benefit of minimum pension liability adjustment...................................................... (3,072)
Deferred income tax liability........................................................................ $ 79,368 $ 110,778
Net current deferred tax assets of $.7 million were included in prepaid
expenses and other current assets on January 2, 1994. Current deferred income
taxes of $.9 million were included in accounts payable and accrued liabilities
on January 3, 1993.
Reported income tax expense is reconciled to the amount computed on the
basis of income before income taxes and effect of accounting changes at the
statutory rate as follows:
FISCAL YEAR
IN THOUSANDS 1993 1992 1991
Statutory expense............................................................................... $ 8,405 $1,649 $1,005
Amortization of franchise and goodwill assets................................................... 364 353 815
State income taxes, net of federal benefit...................................................... 1,185 373
Effect of change in statutory tax rates......................................................... 2,100
Adjustment of valuation allowance............................................................... (3,216)
Change in estimate of deductibility of franchise amortization................................... (2,014)
Other........................................................................................... 344 393 214
Income tax expense.............................................................................. $ 9,182 $2,768 $ 20
The Company had $3.0 million of investment tax credits available to reduce
future income tax payments for federal income tax purposes on January 2, 1994.
These credits expire in varying amounts through 2001.
On January 2, 1994, the Company had $129 million and $166 million of
federal and state net operating losses available to reduce future income taxes.
The net operating loss carryforwards expire in varying amounts through 2007.
A valuation allowance of $29.9 million was recorded against certain income
tax assets on January 3, 1993, primarily due to restrictions on the use of
acquired net operating losses. The Company sold certain assets during the year
which allowed utilization of these restricted net operating losses. The
realization of the benefit from these net operating loss carryforwards resulted
in a reduction of recorded franchise values of $35.6 million. Due to the
Company's restructuring related to the formation of Piedmont and a significant
increase in profitability, no valuation allowance is considered necessary on
January 2, 1994.
The Omnibus Budget Reconciliation Act of 1993 increased the maximum federal
income tax rate from 34% to 35% effective January 1, 1993. This increase
resulted in additional income tax expense of $2.1 million for the year ended
January 2, 1994.
30
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. REDEEMABLE PREFERRED STOCK
On April 20, 1990, the Company acquired all of the outstanding capital
stock of Coca-Cola Bottling Works of Jackson, Incorporated and Jackson Coca-Cola
Bottling Company, Inc. in Jackson, Tennessee. In connection with this
acquisition, the Company issued 20,800 shares of its Series A Nonconvertible
Preferred Stock, $100 par value. On November 30, 1992, the Company redeemed all
outstanding shares of this preferred stock. Preferred dividends of $728,000 were
paid in both 1992 and 1991 on these preferred shares.
13. CAPITAL TRANSACTIONS
On April 9, 1993, the Company acquired all of the outstanding stock of
Whirl-i-Bird, Inc. in exchange for 80,000 shares, valued at $1.6 million, of the
Company's Common Stock (based on the closing market price of $20 per share on
March 17, 1993). Whirl-i-Bird, Inc. had previously leased a helicopter to the
Company from time to time and was wholly owned by J. Frank Harrison, Jr.
On June 25, 1993, the Company issued 33,464 shares of its Common Stock to
The Coca-Cola Company at a price of $20 per share. These shares were issued
pursuant to a Stock Rights and Restrictions Agreement dated January 27, 1989
that provided The Coca-Cola Company a preemptive right to purchase a percentage
of any newly issued shares of any class as necessary to allow it to maintain
ownership of both 29.67% of the outstanding shares of common stock of all
classes and 22.59% of the total votes of all outstanding shares of all classes.
On December 20, 1991, the Company issued 25,000 shares of its Series B
Nonconvertible Preferred Stock to Coca-Cola Financial Corporation for a total of
$50 million. These funds were used by the Company to repay certain indebtedness
of Sunbelt. On October 30, 1992, the Company redeemed the $50 million of Series
B Nonconvertible Preferred Stock. The preferred stock was refinanced using a $50
million three-year bank term loan. Dividends of $3.5 million were paid in 1992
on these preferred shares.
On January 27, 1989, J. Frank Harrison, III, J. Frank Harrison, Jr. and
Reid M. Henson, Co-Trustee, entered into a Voting Agreement with The Coca-Cola
Company respecting all shares of Common Stock and Class B Common Stock of the
Company which they hold or as to which, in the case of J. Frank Harrison, III
and J. Frank Harrison, Jr., they had the right to vote or, as to Reid M. Henson,
he had the right to vote as Co-Trustee of certain trusts (the "Voting
Agreement"). Pursuant to the Voting Agreement, J. Frank Harrison, III, J. Frank
Harrison, Jr. and Reid M. Henson, Co-Trustee, agreed to vote their shares of
Common Stock and Class B Common Stock for a nominee (and any successor or
replacement nominee) of The Coca-Cola Company for election to the Board of
Directors of the Company. An irrevocable proxy was granted to J. Frank Harrison,
III, for life and thereafter to J. Frank Harrison, Jr. by The Coca-Cola Company
with respect to all shares of Class B Common Stock and Common Stock held by it
during the term of the Voting Agreement (the "Irrevocable Proxy").
The Irrevocable Proxy covers voting on the election of directors and any
other matters on which holders of Common Stock or Class B Common Stock are
entitled to vote; however, the Irrevocable Proxy does not cover voting with
respect to any merger, consolidation, sale of all or substantially all of the
Company's assets, any other corporate reorganization or other similar corporate
transaction involving the Company in which Messrs. Harrison, III and Harrison,
Jr. would not exercise voting control over, or The Coca-Cola Company would not
have an equity interest in, the resulting entity.
The Coca-Cola Company agreed in the Voting Agreement to support the control
of the Company by the Harrison family, provided that Messrs. Harrison, III and
Harrison, Jr. or either of them are actively involved in the Company's
management.
Dividends on the Class B Common Stock are permitted to equal, but not
exceed, dividends on the Common Stock. Shareholders with Class B Common Stock
are entitled to 20 votes per share compared to one vote per share on the Common
Stock.
On March 8, 1989, the Company granted J. Frank Harrison, Jr. an option for
the purchase of 100,000 shares of Common Stock exercisable at the closing market
price of the stock on the day of grant. The closing market price of the stock on
March 8, 1989 was $27.00 per share. The option is exercisable, in whole or in
part, at any time at the election of Mr. Harrison, Jr. over a period of 15 years
from the date of grant. None of this option has been exercised.
31
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On August 9, 1989, the Company granted J. Frank Harrison, III an option for
the purchase of 150,000 shares of Common Stock exercisable at the closing market
price of the stock on the day of grant. The closing market price of the stock on
August 9, 1989 was $29.75 per share. The option may be exercised, in whole or in
part, during a period of 15 years beginning on the date of grant. The option is
currently exercisable with respect to 112,500 shares and is exercisable with
respect to an additional 7,500 shares annually. None of this option has been
exercised.
14. BENEFIT PLANS
Pension plan expense related to the Company-sponsored pension plans for the
years ended January 2, 1994, January 3, 1993 and December 29, 1991 was
$2,484,000, $812,000 and $874,000, respectively, including the pro rata share of
past service costs, which are being amortized over 30 years. In addition,
certain employees are covered by pension plans administered by unions. Expense
associated with the union plans was $736,000, $709,000 and $668,000 for the
years ended January 2, 1994, January 3, 1993 and December 29, 1991,
respectively.
Retirement benefits under the Company's principal pension plan are based on
the employee's length of service, average compensation over the five consecutive
years which gives the highest average compensation and the average of the Social
Security taxable wage base during the 35-year period before a participant
reaches Social Security retirement age. Contributions to the plan are based on
the projected unit credit actuarial funding method and are limited to the
amounts that are currently deductible for tax purposes.
The following table sets forth the status of the Company-sponsored plans as
of January 2, 1994 and January 3, 1993:
JAN. 2, JAN. 3,
IN THOUSANDS 1994 1993
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $40,310 and $31,874..................... $ 43,507 $ 32,533
Projected benefit obligation for service rendered to date.............................................. $(48,456) $(34,734)
Plan assets at fair market value....................................................................... 40,423 33,534
Projected benefit obligation in excess of plan assets.................................................. (8,033) (1,200)
Unrecognized net loss.................................................................................. 12,695 6,346
Unrecognized prior service cost........................................................................ 42 32
Unrecognized net asset being amortized
over 7 years......................................................................................... (349) (158)
Additional minimum pension liability................................................................... (8,686)
Prepaid pension cost (liability)....................................................................... $ (4,331) $ 5,020
Under the requirements of Statement of Financial Accounting Standards No.
87, "Employers' Accounting for Pensions," an additional minimum pension
liability for certain plans, representing the excess of accumulated benefits
over plan assets, was recognized as of January 2, 1994. The increase in
liabilities was charged directly to shareholders' equity. The minimum pension
liability adjustment, net of income taxes, was $5.6 million.
Net periodic pension cost for the Company-sponsored pension plans included
the following components:
FISCAL YEAR
IN THOUSANDS 1993 1992 1991
Service cost-benefits earned.................................................................. $ 1,693 $ 1,141 $ 593
Interest cost on projected benefit obligation................................................. 3,310 2,658 1,749
Actual return on plan assets.................................................................. (3,965) (836) (2,572)
Net amortization and deferral................................................................. 1,446 (2,151) 1,104
Net periodic pension cost..................................................................... $ 2,484 $ 812 $ 874
32
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The actuarial assumptions that were used for the Company's principal
pension plan calculations were as follows:
1993 1992
Weighted average discount rate used in determining the actuarial present value of the projected benefit
obligation.................................................................................................. 7.5 % 9.0 %
Weighted average expected long-term rate of return on plan assets............................................. 9.0 % 10.0%
Weighted average rate of compensation increase................................................................ 4.0 % 4.0 %
The Company provides a 401(k) Savings Plan for substantially all of its
nonunion employees. Under provisions of the Savings Plan, an employee is vested
with respect to Company contributions upon the earlier of two consecutive years
of service while participating in the Savings Plan or after five years of
service with the Company. The total cost for this benefit in 1993, 1992 and 1991
was $1,491,000, $603,000 and $478,000, respectively. The increase in this cost
in 1993 resulted primarily from a special award of approximately $750,000. The
Board of Directors authorized this award in recognition of the employees'
contribution to the significant improvement in the Company's financial
performance.
During 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions" ("SFAS 106"). Under SFAS 106, the Company recognizes the
cost of postretirement benefits, which consist principally of medical benefits,
during employees' periods of active service. Prior to 1992, the Company
accounted for the cost of such benefits when the benefits were paid. The Company
does not pre-fund these benefits and has the right to modify or terminate
certain of these plans in the future.
The accumulated postretirement benefit obligation as of December 30, 1991,
which represented the portion of the expected cost of postretirement benefits
attributable to employee service prior to that date, of $7.1 million (net of
income taxes of $4.5 million) was charged to 1992 operations and appears in the
consolidated statement of operations within the caption "Effect of accounting
changes." In addition, the accumulated postretirement benefit obligation of $4.8
million relating to the Sunbelt operations was recorded as part of the purchase
price of Sunbelt.
Postretirement benefit expense was $1.5 million and $1.6 million in 1993
and 1992, respectively. The components of expense were as follows:
FISCAL YEAR
IN THOUSANDS 1993 1992
Service cost-benefits earned............................................................................... $ 238 $ 231
Interest cost on projected benefit obligation.............................................................. 1,223 1,348
Net postretirement benefit cost............................................................................ $1,461 $1,579
The accumulated postretirement benefit obligation was comprised of the
following components:
JAN. 2, JAN. 3,
IN THOUSANDS 1994 1993
Retirees................................................................................................ $ 8,576 $13,255
Active plan participants................................................................................ 4,253 2,792
Accrued postretirement benefit obligation............................................................... $12,829 $16,047
The decrease in the accrued postretirement benefit obligation from 1992 to
1993 resulted from the assumption of postretirement benefit obligations for
certain Sunbelt retirees by Piedmont, offset by postretirement benefit expense
accrued in 1993.
Future postretirement benefit costs were estimated assuming medical costs
would decline over a five-year period from a 10% increase beginning January 1,
1993 to 6%, and then decline to a 5.5% increase thereafter. A 1% increase in
this annual trend rate would have increased the accumulated postretirement
benefit obligation on January 2, 1994 by approximately $1.7 million and
postretirement benefit expense in 1993 would have increased by approximately
$200,000. The weighted average discount rate used to estimate the accumulated
postretirement benefit obligation was 7.5% and 9.0% as of January 2, 1994 and
January 3, 1993, respectively.
33
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. SFAS 112 is effective for
fiscal years beginning after December 15, 1993. Any accrual required to be
recorded by SFAS 112 must be recognized initially as the effect of a change in
accounting principle. The Company intends to adopt the provisions of SFAS 112 in
the first quarter of 1994, effective January 3, 1994. The adoption of SFAS 112
will require an estimated one-time, after-tax charge between $1.5 million and
$2.5 million.
15. RELATED PARTY TRANSACTIONS
The Company's business consists primarily of the production, marketing and
distribution of soft drink products of The Coca-Cola Company, which is the sole
owner of the secret formulas under which the primary components (either
concentrates or syrups) of its soft drink products are manufactured.
Accordingly, the Company purchases substantially all of its requirements of
concentrates and syrups from The Coca-Cola Company in the ordinary course of its
business. The Company paid The Coca-Cola Company approximately $158 million,
$140 million and $106 million in 1993, 1992 and 1991, respectively, for
sweetener, syrup, concentrate and other miscellaneous purchases. Additionally,
the Company engages in a variety of marketing programs, local media advertising
and similar arrangements to promote the sale of products of The Coca-Cola
Company in territories operated by the Company. Total direct marketing support
provided to the Company by The Coca-Cola Company was approximately $28 million,
$32 million and $24 million in 1993, 1992 and 1991, respectively. In addition,
the Company paid approximately $13 million, $14 million and $10 million in 1993,
1992 and 1991, respectively, for local media and marketing program expense
pursuant to cooperative advertising and cooperative marketing arrangements with
The Coca-Cola Company.
On April 9, 1993, the Company acquired all of the outstanding stock of
Whirl-i-Bird, Inc. in exchange for 80,000 shares, valued at $1.6 million, of the
Company's Common Stock (based on the closing market price of $20 per share on
March 17, 1993). Whirl-i-Bird, Inc. had previously leased a helicopter to the
Company from time to time and was wholly owned by J. Frank Harrison, Jr.
On June 25, 1993, the Company issued 33,464 shares of its Common Stock to
The Coca-Cola Company at a price of $20 per share. These shares were issued
pursuant to a Stock Rights and Restrictions Agreement dated January 27, 1989
that provided The Coca-Cola Company a preemptive right to purchase a percentage
of any newly issued shares of any class as necessary to allow it to maintain
ownership of both 29.67% of the outstanding shares of common stock of all
classes and 22.59% of the total votes of all outstanding shares of all classes.
On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont
Coca-Cola Bottling Partnership ("Piedmont"). The Company and The Coca-Cola
Company, through their respective subsidiaries, each beneficially own a 50%
interest in Piedmont. The Company provides substantially all of the soft drink
products for Piedmont and manages the operations of Piedmont pursuant to a
management agreement. The Company sold product to Piedmont during the six months
ended January 2, 1994, at cost, totaling $38.9 million. The Company earned $4.8
million pursuant to its management agreement with Piedmont. Also, the Company
subleased various fleet and vending equipment to Piedmont during 1993, at cost.
These sublease rentals amounted to approximately $400,000.
On December 20, 1991, the Company acquired all of the outstanding capital
stock of Sunbelt for approximately $15.2 million. Approximately $4.4 million of
the purchase price was paid in cash to The Coca-Cola Company and one of its
affiliates (former shareholders of Sunbelt).
In connection with the acquisition of Sunbelt, the Company entered into an
agreement providing for a $230 million bridge facility with CCFC. On December
20, 1991, the Company borrowed $152.5 million under this agreement to repay
certain indebtedness of Sunbelt. The Company also issued $50 million of Series B
Nonconvertible Preferred Stock to CCFC. During the first quarter of 1992, the
Company refinanced the $230 million bridge facility from CCFC. Interest paid to
CCFC in 1992 under the bridge facility agreement amounted to $1.6 million. On
October 30, 1992, the Company redeemed the $50 million of Series B
Nonconvertible Preferred Stock held by CCFC. The preferred stock was refinanced
using a $50 million three-year bank term loan. Dividends paid to CCFC in 1992 on
these preferred shares totaled $3.5 million.
34
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On November 30, 1992, the Company and the owner of the Company's Snyder
Production Center in Charlotte, North Carolina agreed to the early termination
of the Company's lease. Harrison Limited Partnership One purchased the property
contemporaneously with the termination of the lease, and the Company and
Harrison Limited Partnership One entered into an agreement pursuant to which the
Company leased the property for a ten-year term beginning on December 1, 1992. A
North Carolina corporation owned entirely by J. Frank Harrison, Jr. serves as
sole general partner of the limited partnership. The sole limited partner of
this limited partnership is a trust as to which J. Frank Harrison, III and Reid
M. Henson are co-trustees. The annual base rent the Company is obligated to pay
for its lease of the Snyder Production Center is approximately $1.9 million. The
base rent is subject to adjustment for increases in the Consumer Price Index and
for increases or decreases in interest rates, using LIBOR as the measurement
device. Rent expense under this lease totaled $1,947,000 and $162,000 in 1993
and 1992, respectively.
On June 1, 1993, the Company entered into a ten-year lease agreement with
Beacon Investment Corporation related to the Company's headquarters office
building. Beacon Investment Corporation's sole shareholder is J. Frank Harrison,
III. The annual base rent the Company is obligated to pay under this lease is
approximately $1.2 million. The base rent is subject to adjustment for increases
in the Consumer Price Index and for increases or decreases in interest rates,
using LIBOR as the measurement device. Rent expense under this lease totaled
$738,000 in 1993.
The Company is a shareholder in two entities from which it purchases
substantially all its requirements for plastic bottles. Purchases from these
entities were approximately $47 million, $46 million and $31 million in 1993,
1992 and 1991, respectively. In connection with its participation in one of
these cooperatives, the Company has guaranteed a portion of the cooperative's
debt. On January 2, 1994, such guarantee amounted to approximately $13.1
million.
16. LITIGATION
On February 11, 1991, a Complaint was filed against the Company and two
Company employees in the matter of JEFF HALLUMS V. COCA-COLA BOTTLING CO.
CONSOLIDATED, ET AL., File No. 8108 in the Chancery Court for Wilson County,
Tennessee as previously reported in the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1993. This suit by a visually handicapped
former truck driver for Coca-Cola Bottling Company of Nashville, Inc., a wholly
owned subsidiary of the Company, alleges liability under various Tennessee
common law misrepresentation principles and under the employee discrimination
provision of the Tennessee Human Rights Act. Plaintiff was terminated because he
did not meet federal standards for commercial truck drivers. Plaintiff seeks
damages in the amount of $750,000. On October 13, 1993, the Tennessee Court of
Appeals, on an interlocutory appeal, reversed the trial court's denial of the
Company's motion for summary judgment with respect to plaintiff's handicap
discrimination claim. The appellate court remanded the case for trial of
plaintiff's common law tort claims. On February 28, 1994, the Tennessee Supreme
Court denied plaintiff's application for permission to appeal, leaving the order
of the Court of Appeals intact. Plaintiff's suit is now limited to common law
tort claims in the trial court. The Company does not believe it has liability
and is defending the case vigorously.
On March 4, 1993, a Complaint was filed against the Company, the
predecessor bottling company for the Laurel, Mississippi territory and other
unnamed parties in the matter of MRS. ELSIE LANGLEY, ADMINISTRATRIX OF THE
ESTATE OF WALTER LANGLEY V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., Cause
No. 93-3-30 in the Circuit Court of the Second Judicial District for Jones
County, Mississippi. This suit by the testatrix spouse of a deceased former
employee of the predecessor bottler alleges misrepresentation and fraud in
connection with the severance package offered to employees terminated by the
predecessor bottler in connection with the acquisition of the Laurel franchise
subsidiary of the Company. Plaintiff claims that the former employee was led to
believe that the severance package was to include continuation of health
insurance by the Company. Plaintiff seeks damages in an amount up to $18 million
in compensatory and punitive damages. The Company does not believe it has
liability and is defending the case vigorously.
35
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Changes in current assets and current liabilities affecting cash, net of
effects from acquisitions and divestitures of companies and effects of
accounting changes, are as follows:
FISCAL YEAR
IN THOUSANDS 1993 1992 1991
Accounts receivable, trade, net............................................................... $(9,319) $ 7,762 $ 2,429
Due from Piedmont............................................................................. (2,454)
Accounts receivable, other.................................................................... (3,524) (3,034) 1,157
Inventories................................................................................... (2,939) 5,841 (6,018)
Prepaid expenses and other assets............................................................. (1,688) 3,690 (34)
Portion of long-term debt payable within one year............................................. (793) (3,699) 3,655
Accounts payable and accrued liabilities...................................................... 20,687 (6,342) 6,756
Decrease (increase)........................................................................... $ (30) $ 4,218 $ 7,945
Cash payments during the year were as follows:
FISCAL YEAR
IN THOUSANDS 1993 1992 1991
Interest..................................................................................... $31,417 $31,917 $20,126
Income taxes (refunds)....................................................................... 2,900 (25) (294)
36
COCA-COLA BOTTLING CO. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
Set forth below are unaudited quarterly financial data for the fiscal years
ended January 2, 1994 and January 3, 1993. Third quarter 1993 results have been
reclassified to conform to current classifications.
IN THOUSANDS (EXCEPT PER SHARE DATA) QUARTER
YEAR ENDED JANUARY 2, 1994 1 2 3 4
Net sales.................................................................... $154,267 $194,506 $182,149 $156,038
Gross margin................................................................. 69,842 85,635 73,391 62,015
Income before income taxes................................................... 2,568 10,647 8,507 2,293
Net income applicable to common shareholders................................. 1,349 6,035 5,716 1,733
Per share:
Net income applicable to common
shareholders............................................................ .15 .65 .62 .18
Weighted average number of
common shares outstanding.................................................. 9,181 9,261 9,294 9,294
IN THOUSANDS (EXCEPT PER SHARE DATA) QUARTER
YEAR ENDED JANUARY 3, 1993 1 2 3 4
Net sales................................................................... $ 148,113 $173,896 $170,851 $162,918
Gross margin................................................................ 64,709 74,090 72,434 71,680
Income (loss) before effect of
accounting changes, less
preferred stock dividends................................................. (2,297) 465 (196) (84)
Effect of accounting changes................................................ (116,199)
Net income (loss) applicable to
common shareholders....................................................... (118,496) 465 (196) (84)
Per share:
Income (loss) before effect
of accounting changes,
less preferred stock dividends......................................... (.25) .05 (.02) (.01)
Effect of accounting changes.............................................. (12.66)
Net income (loss) applicable
to common shareholders................................................. (12.91) .05 (.02) (.01)
Weighted average number of
common shares outstanding................................................. 9,181 9,181 9,181 9,181
37
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF COCA-COLA BOTTLING CO. CONSOLIDATED
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) (1) and (2) of this filing present fairly, in all
material respects, the financial position of Coca-Cola Bottling Co. Consolidated
and its subsidiaries at January 2, 1994 and January 3, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended January 2, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
During 1992 the Company changed its method of accounting for income taxes
and for postretirement benefits other than pensions, as described in Notes 11
and 14.
PRICE WATERHOUSE
Charlotte, North Carolina
February 18, 1994
38
The financial statement schedules required by Regulation S-X are set forth
in response to Item 14 below.
The supplementary data required by Item 302 of Regulation S-K is set forth
in Note 18 to the financial statements.
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
39
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
For information with respect to the executive officers of the Company, see
"Executive Officers of the Registrant" at the end of Part I of this Report. For
information with respect to the Directors of the Company, see the "Election of
Directors" and "Certain Transactions" sections of the Proxy Statement for the
1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission, which is incorporated herein by reference. For information with
respect to Section 16 reports for directors and executive officers of the
Company, see the "Election of Directors -- Beneficial Ownership of Management"
section of the Proxy Statement for the 1994 Annual Meeting of Shareholders.
ITEM 11 -- EXECUTIVE COMPENSATION
For information with respect to executive compensation, see the "Executive
Compensation" section of the Proxy Statement for the 1994 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission, which is
incorporated herein by reference (other than the subsections entitled "Report of
the Compensation Committee on Annual Compensation of Executive Officers" and
"Common Stock Performance," which are specifically excluded from such
incorporation).
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information with respect to security ownership of certain beneficial
owners and management, see the "Principal Shareholders" and "Election of
Directors -- Beneficial Ownership of Management" sections of the Proxy Statement
for the 1994 Annual Meeting of Shareholders to be filed with the Securities and
Exchange Commission, which is incorporated herein by reference.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information with respect to certain relationships and related
transactions, see the "Certain Transactions" and "Compensation Committee
Interlocks and Insider Participation" sections of the Proxy Statement for the
1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission, which are incorporated herein by reference.
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. List of Documents filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following financial statement schedules are filed as part
of this report following this Item 14. The Report of Independent
Accountants with respect to the financial statement schedules is
included in Item 8 above.
Schedule V -- Property, Plant and Equipment
Schedule VI -- Property, Plant and Equipment -- Accumulated Depreciation
and Amortization
Schedule VIII -- Valuation and Qualifying Accounts and Reserves
Schedule IX -- Short-term Borrowings
Schedule X -- Supplementary Statement of Operations Information
Schedule XI -- Identifiable Intangible Assets
All other financial statements and schedules not listed have
been omitted because the required information is included in the
consolidated financial statements or the notes thereto, or is not
applicable or required.
40
3. Listing of Exhibits:
(i) Exhibits Incorporated by Reference:
(3.1) The Company's Bylaws.
(3.2) The Company's Certificate of Incorporation, with all amendments.
(4.1) Specimen of Common Stock Certificate.
(4.2) Credit Agreement dated as of March 17, 1992 among the Company and NationsBank of North Carolina, as Agent, and other
banks named therein.
(4.3) Amendment No. 1 to Amended and Restated Revolving Credit and Reimbursement Agreement, dated as of March 27, 1992
between the Company and NationsBank of North Carolina.
(4.4) Specimen Fixed Rate Note under the Company's Medium-Term Note Program, pursuant to which it may issue, from time to
time, up to $200 million aggregate principal amount of its Medium-Term Notes, Series A.
(4.5) Specimen Floating Rate Note under the Company's Medium-Term Note Program, pursuant to which it may issue, from time
to time, up to $200 million aggregate principal amount of its Medium-Term Notes, Series A.
(4.6) Indenture dated as of October 15, 1989 between the Company and Manufacturers Hanover Trust Company of California, as
Trustee, in connection with the Company's $200 million shelf registration of its Medium-Term Notes, Series A, due
from nine months to 30 years from date of issue.
(4.7) Selling Agency Agreement, dated as of February 14, 1990, between the Company and Salomon Brothers and Goldman Sachs,
as Agents, in connection with the Company's $200 million Medium-Term Notes, Series A, due from nine months to 30
years from date of issue.
(4.8) Commercial Paper Agreement, dated as of December 13, 1989, between the Company and Goldman Sachs Money Markets,
Inc., as co-agent.
(4.9) Form of Debenture issued by the Company to two shareholders of Sunbelt Coca-Cola Bottling Company, Inc. dated as of
December 19, 1991.
(4.10) Commercial Paper Dealer Agreement, dated as of February 11, 1993, between the Company and Citicorp Securities
Markets, Inc., as co-agent.
(4.11) 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.
(10.1) Employment Agreement of James L. Moore, Jr. dated as of March 16, 1987.
(10.2) Stock Rights and Restrictions Agreement by and between Coca-Cola Bottling Co. Consolidated and The
Coca-Cola Company dated January 27, 1989.
(10.3) Description and examples of bottling franchise agreements between the Company and The Coca-Cola Company.
(10.4) Lease, dated as of December 11, 1974, by and between the Company and the Ragland Corporation, related to the
production/distribution facility in Nashville, Tennessee.
(10.5) Amendment to Lease Agreement designated as Exhibit 10.4.
(10.6) Second Amendment to Lease Agreement designated as Exhibit 10.4.
(10.7) Master Lease Agreement, beginning on May 31, 1988, with Schedules 1 through 3, between the Company and General
Electric Capital Corporation covering various vehicles.
(10.8) Lease Agreement, dated as of July 17, 1988, between the Company and GE Capital Fleet Services covering various
vehicles.
(10.9) Master Motor Vehicle Lease Agreement, dated as of December 15, 1988, with Schedule 4 between the Company and
Citicorp North America, Inc. covering various vehicles.
(10.10) Master Lease Agreement, beginning on April 12, 1989, with Schedule 1, between the Company and Citicorp North
America, Inc. covering various equipment.
(10.11) Supplemental Savings Incentive Plan, dated as of April 1, 1990 between certain Eligible Employees of the Company and
the Company.
(10.12) Description and example of Deferred Compensation Agreement, dated as of October 1, 1987, between Eligible Employees
of the Company and the Company under the Officer's Split-Dollar Life Insurance Plan.
(10.13) Schedules 2 through 6 of a Master Lease Agreement, beginning on April 12, 1989, between the Company and Citicorp
North America, Inc. covering various forklifts and vending machines.
(10.14) Schedule 7 of a Master Lease Agreement, beginning on April 12, 1989, between the Company and Citicorp North America,
Inc. covering various vending machines.
(10.15) Consolidated/Sunbelt Acquisition Agreement, dated as of December 19, 1991, by and among the Company and the
shareholders of Sunbelt Coca-Cola Bottling Company, Inc.
41
(10.16) Officer Retention Plan, dated as of January 1, 1991, between certain Eligible Officers of the Company and the
Company.
(10.17) Schedule 14 of a Master Motor Vehicle Lease Agreement, beginning on November 14, 1988, between the Company and
Citicorp North America, Inc. covering various vehicles.
(10.18) Schedules 8 and 9 of a Master Lease Agreement, beginning on April 12, 1989, between the Company and Citicorp North
America, Inc. covering various vending machines.
(10.19) Acquisition Agreement, by and among Sunbelt Coca-Cola Bottling Company, Inc., Sunbelt Carolina Acquisition Company,
Inc., certain of the common stockholders of Coca-Cola Bottling Co. Affiliated, Inc., and the stockholders of TRNH,
Inc., dated as of November 7, 1989.
(10.20) Amendment Number One to the Sunbelt/Affiliated Acquisition Agreement, dated as of December 29, 1989, between Sunbelt
Coca-Cola Bottling Company, Inc., Sunbelt Carolina Acquisition Company, Inc., certain of the common stockholders of
Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc.
(10.21) Amendment Number Two to the Sunbelt/Affiliated Acquisition Agreement, dated as of December 29, 1989, between Sunbelt
Coca-Cola Bottling Company, Inc., Sunbelt Carolina Acquisition Company, Inc., certain of the common stockholders of
Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc.
(10.22) Amendment Number Three to the Sunbelt/Affiliated Acquisition Agreement, dated as of December 29, 1989, between
Sunbelt Coca-Cola Bottling Company, Inc., Sunbelt Carolina Acquisition Company, Inc., certain of the common
stockholders of Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc.
(10.23) Master Lease Agreement, dated as of January 7, 1992 between the Company and Signet Leasing and Financial
Corporation, and Schedules 1 through 4, covering various vehicles.
(10.24) Schedule No. 1, dated as of March 16, 1992, of a Master Lease Agreement between the Company and Citicorp North
America, Inc. covering various vending machines.
(10.25) Schedule No. 2, dated as of April 27, 1992, of a Master Lease Agreement between the Company and Citicorp North
America, Inc. covering various vending machines.
(10.26) Schedule No. 3, dated as of June 8, 1992, of a Master Lease Agreement between the Company and Citicorp North
America, Inc. covering various vending machines.
(10.27) Schedule No. 4, dated as of July 13, 1992, of a Master Lease Agreement between the Company and Citicorp North
America, Inc. covering various vending machines.
(10.28) Amended Schedules No. 1, 2 and 4 of a Master Lease Agreement, dated as of January 7, 1992 between the Company and
Signet Leasing and Financial Corporation, covering various vehicles.
(10.29) Schedules No. 1A, 5, 6, 7 and 8 of a Master Lease Agreement, dated as of January 7, 1992 between the Company and
Signet Leasing and Financial Corporation, covering various vehicles and forklifts.
(10.30) Master Equipment Lease, dated as of February 9, 1993, between the Company and Coca-Cola Financial Corporation
covering various vending machines.
(10.31) Lease Agreement, dated as of November 30, 1992, between the Company and Harrison Limited Partnership One, related to
the Snyder Production Center in Charlotte, North Carolina.
(10.32) Motor Vehicle Lease Agreement No. 790855, dated as of December 31, 1992, between the Company and Citicorp Leasing,
Inc. covering various vehicles.
(10.33) Schedules 1 through 5 of the Motor Vehicle Lease Agreement No. 790855, beginning on December 31, 1992, between the
Company and Citicorp Leasing, Inc. covering various vehicles.
(10.34) Amended and Restated Leasing Schedules No. 1, 3, 5, 6, 8, 9, 11, 12 and 13 of a Master Motor Vehicle Lease
Agreement, dated as of November 14, 1988, between the Company and Citicorp North America, Inc. covering various
vehicles.
(10.35) Termination and Release Agreement dated as of March 27, 1992 by and among Sunbelt Coca-Cola Bottling Company,
Coca-Cola Bottling Co. Affiliated, Inc., the agent for holders of certain debentures of Sunbelt issued pursuant to a
certain Indenture dated as of January 11, 1990, as amended, and Wilmington Trust Company which acted as trustee
under the Indenture.
(10.36) Schedule 10 of a Master Lease Agreement, dated as of January 7, 1992 between the Company and Signet Leasing and
Financial Corporation covering various forklifts.
(10.37) Schedule No. 5, dated as of August 10, 1992, of a Master Lease Agreement between the Company and Citicorp Leasing,
Inc. covering various vending machines.
(10.38) Schedule No. 6, dated as of September 17, 1992, of a Master Lease Agreement between the Company and Citicorp
Leasing, Inc. covering various vending machines.
(10.39) Schedule No. 7, dated as of December 7, 1992, of a Master Lease Agreement between the Company and Citicorp Leasing,
Inc. covering various vending machines.
(10.40) Schedule No. 8, dated as of January 4, 1993, of a Master Lease Agreement between the Company and Citicorp Leasing,
Inc. covering various vending machines.
(10.41) Schedule No. 9, dated as of March 4, 1993, of a Master Lease Agreement between the Company and Citicorp Leasing,
Inc. covering various vending machines.
42
(10.42) Lease Funding No. 1, dated April 30, 1993, of a Master Equipment Lease between the Company and
Coca-Cola Financial Corporation covering various vending machines.
(10.43) Amended and Restated Schedule No. 7, dated April 27, 1993, of Motor Vehicle Lease Agreement No. 743918 between the
Company and Citicorp North America, Inc. covering various vehicles.
(10.44) Reorganization Plan and Agreement by and among Coca-Cola Bottling Co. Consolidated, Chopper Acquisitions, Inc.,
Whirl-i-Bird, Inc. and J. Frank Harrison, Jr.
(10.45) Partnership Agreement of Carolina Coca-Cola Bottling Partnership, dated as of July 2, 1993, by and among Carolina
Coca-Cola Bottling Investments, Inc., Coca-Cola Ventures, Inc., Coca-Cola Bottling Co. Affiliated, Inc.,
Fayetteville Coca-Cola Bottling Company and Palmetto Bottling Company.
(10.46) Asset Purchase Agreement, dated as of July 2, 1993, by and among Carolina Coca-Cola Bottling Partnership, Coca-Cola
Bottling Co. Affiliated, Inc. and Coca-Cola Bottling Co. Consolidated.
(10.47) Asset Purchase Agreement, dated as of July 2, 1993, by and among Carolina Coca-Cola Bottling Partnership,
Fayetteville Coca-Cola Bottling Company and Coca-Cola Bottling Co. Consolidated.
(10.48) Asset Purchase Agreement, dated as of July 2, 1993, by and among Carolina Coca-Cola Bottling Partnership, Palmetto
Bottling Company and Coca-Cola Bottling Co. Consolidated.
(10.49) Definition and Adjustment Agreement, dated July 2, 1993, by and among Carolina Coca-Cola Bottling Partnership,
Coca-Cola Ventures, Inc., Coca-Cola Bottling Co. Consolidated, CCBC of Wilmington, Inc., Carolina Coca-Cola Bottling
Investments, Inc., The Coca-Cola Company, Carolina Coca-Cola Holding Company, The Coastal Coca-Cola Bottling
Company, Eastern Carolina Coca-Cola Bottling Company, Inc., Coca-Cola Bottling Co. Affiliated, Inc., Fayetteville
Coca-Cola Bottling Company and Palmetto Bottling Company.
(10.50) Management Agreement, dated as of July 2, 1993, by and among Coca-Cola Bottling Co. Consolidated, Carolina Coca-Cola
Bottling Partnership, CCBC of Wilmington, Inc., Carolina Coca-Cola Bottling Investments, Inc., Coca-Cola Ventures,
Inc. and Palmetto Bottling Company.
(10.51) Post-Retirement Medical and Life Insurance Benefit Reimbursement Agreement, dated July 2, 1993, by and between
Carolina Coca-Cola Bottling Partnership and Coca-Cola Bottling Co. Consolidated.
(10.52) Aiken Asset Purchase Agreement, dated as of August 6, 1993 by and among Carolina Coca-Cola Bottling Partnership,
Palmetto Bottling Company and Coca-Cola Bottling Co. Consolidated.
(10.53) Aiken Definition and Adjustment Agreement, dated as of August 6, 1993, by and among Carolina Coca-Cola Bottling
Partnership, Coca-Cola Ventures, Inc., Coca-Cola Bottling Co. Consolidated, Carolina Coca-Cola Bottling Investments,
Inc., The Coca-Cola Company and Palmetto Bottling Company.
(10.54) Lease Agreement, dated as of June 1, 1993, between the Company and Beacon Investment Corporation, related to the
Company's corporate headquarters in Charlotte, North Carolina.
(10.55) Lease Funding No. 2, dated as of June 1, 1993, of a Master Equipment Lease between the Company and
Coca-Cola Financial Corporation covering various vending machines.
(10.56) Lease Funding No. 3, dated as of July 12, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
(10.57) Schedule No. 12 of a Master Lease Agreement, dated as of April 1, 1993, between the Company and Signet Leasing and
Financial Corporation covering various vehicles.
(10.58) Schedule No. 13 of a Master Lease Agreement, dated as of April 1, 1993, between the Company and Signet Leasing and
Financial Corporation covering various vehicles.
(10.59) Amended and Restated Guaranty Agreement, dated as of July 15, 1993 re: Southeastern Container, Inc.
(10.60) Lease Funding No. 4, dated as of August 24, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
(10.61) Lease Funding No. 5, dated as of September 30, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
(10.62) Schedule No. 11 of a Master Lease Agreement, dated as of July 1, 1993, between the Company and Signet Leasing and
Financial Corporation covering various vehicles.
(10.63) Schedule No. 14 of a Master Lease Agreement, dated as of July 1, 1993, between the Company and Signet Leasing and
Financial Corporation covering various vehicles.
(10.64) Schedule No. 15 of a Master Lease Agreement, dated as of July 1, 1993, between the Company and Signet Leasing and
Financial Corporation covering various vehicles.
(10.65) Lease Funding No. 6, dated as of November 1, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
(ii) Other Exhibits:
(10.66) Lease Funding No. 7, dated as of November 17, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
(10.67) Lease Funding No. 8, dated as of December 30, 1993, of a Master Equipment Lease between the Company and Coca-Cola
Financial Corporation covering various vending machines.
43
(10.68) Description of the Company's Bonus Plan for officers.
(10.69) Master Lease Agreement, dated as of February 18, 1992, between the Company and Citicorp Leasing, Inc. covering
various equipment.
(21.1) List of subsidiaries.
(23.1) Accountants Consent to Incorporation by Reference into Form S-3 (Registration No. 33-4325) and Form S-3
(Registration No. 33-31784).
(99.1) Information, financial statements and exhibits required by Form 11-K with respect to the Coca-Cola Bottling Co.
Consolidated Savings Plan.*
* To be supplied by amendment.
B. Reports on Form 8-K
There were no Current Reports on Form 8-K filed by the Company during
the fourth quarter of 1993.
D. Audited Financial Statements of Piedmont Coca-Cola Bottling Partnership
44
SCHEDULE V
COCA-COLA BOTTLING CO. CONSOLIDATED
PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
BALANCE AT DISPOSITION RETIREMENTS
DEPR. BEGINNING OF ADDITIONS OTHER OF OR
DESCRIPTION METHOD YEAR AT COST ADDITIONS (1) SUBSIDIARIES (2) SALES
YEAR ENDED JANUARY 2, 1994
Land.............................. STL $ 12,101 $ 164 $ (1,384) $ 30
Buildings......................... STL 62,394 3,773 $ 17 (5,207) 70
Machinery and Equipment........... STL 66,804 2,924 (1) (97) 3,685
Transportation Equipment.......... STL 32,125 5,423 1,884 (4,406) 1,780
Furniture and Fixtures............ STL 17,744 2,400 (5) (564) 1,138
Vending Equipment................. 200 and STL 85,900 8,111 (1,044) 3,687
Leasehold & Land
Improvements.................... STL 12,953 1,170 4 (562) 946
Construction in Progress.......... 3,455 4,821 (2,000)
$293,476 $28,786 $ (101) $(13,264) $11,336
YEAR ENDED JANUARY 3, 1993
Land.............................. STL $ 12,424 $ 748 $ (1,046) $ $ 25
Buildings......................... STL 64,291 3,867 (5,591) 173
Machinery and Equipment........... STL 66,995 9,118 (6,063) 3,246
Transportation Equipment.......... STL 30,468 3,911 631 2,885
Furniture and Fixtures............ STL 15,810 4,623 (1,372) 1,317
Vending Equipment................. 200 and STL 92,394 8,679 (9,957) 5,216
Leasehold & Land
Improvements.................... STL 11,068 1,213 674 2
Construction in Progress.......... 728 728 1,999
$294,178 $32,887 $ (20,725) $ $12,864
YEAR ENDED DECEMBER 29, 1991
Land.............................. STL $ 8,221 $ 561 $ 4,555 $ $ 913
Buildings......................... STL 49,920 5,973 9,425 1,027
Machinery and Equipment........... STL 57,770 6,939 7,445 5,159
Transportation Equipment.......... STL 24,668 1,580 6,467 2,247
Furniture and Fixtures............ STL 12,523 1,703 1,909 325
Vending Equipment................. 200 and STL 75,835 7,515 11,473 2,429
Leasehold & Land
Improvements.................... STL 9,737 1,184 266 119
Construction in Progress.......... 1,793 (1,095) 30
$240,467 $24,360 $ 41,570 $ $12,219
BALANCE
AT END OF
DESCRIPTION YEAR
YEAR ENDED JANUARY 2, 1994
Land.............................. $ 10,851
Buildings......................... 60,907
Machinery and Equipment........... 65,945
Transportation Equipment.......... 33,246
Furniture and Fixtures............ 18,437
Vending Equipment................. 89,280
Leasehold & Land
Improvements.................... 12,619
Construction in Progress.......... 6,276
$ 297,561
YEAR ENDED JANUARY 3, 1993
Land.............................. $ 12,101
Buildings......................... 62,394
Machinery and Equipment........... 66,804
Transportation Equipment.......... 32,125
Furniture and Fixtures............ 17,744
Vending Equipment................. 85,900
Leasehold & Land
Improvements.................... 12,953
Construction in Progress.......... 3,455
$ 293,476
YEAR ENDED DECEMBER 29, 1991
Land.............................. $ 12,424
Buildings......................... 64,291
Machinery and Equipment........... 66,995
Transportation Equipment.......... 30,468
Furniture and Fixtures............ 15,810
Vending Equipment................. 92,394
Leasehold & Land
Improvements.................... 11,068
Construction in Progress.......... 728
$ 294,178
(1) Arising from business combinations, transfers and reclassifications.
(2) Includes sale and contribution of assets to Piedmont Coca-Cola Bottling
Partnership.
45
SCHEDULE VI
COCA-COLA BOTTLING CO. CONSOLIDATED
PROPERTY, PLANT AND EQUIPMENT
ACCUMULATED DEPRECIATION AND AMORTIZATION
(IN THOUSANDS)
BALANCE AT DISPOSITION RETIREMENTS
DEPR. BEGINNING OF ADDITIONS OTHER OF OR
DESCRIPTION METHOD YEAR AT COST ADDITIONS (1) SUBSIDIARIES (2) SALES
YEAR ENDED JANUARY 2, 1994
Buildings......................... STL $ 13,121 $ 1,522 $ 7 $ (110) $ 10
Machinery and Equipment........... STL 24,336 5,687 (32) 1,972
Transportation Equipment.......... STL 17,404 4,407 14 (1,587) 1,528
Furniture and Fixtures............ STL 9,561 2,189 (21) (117) 1,115
Vending Equipment................. 200 and STL 52,795 8,390 (1,160) 2,798
Leasehold & Land
Improvements.................... STL 5,582 1,089 (162) 946
$122,799 $23,284 $ 0 $ (3,168) $ 8,369
YEAR ENDED JANUARY 3, 1993
Buildings......................... STL $ 11,780 $ 1,493 $ (68) $ $ 84
Machinery and Equipment........... STL 20,190 5,650 (11) 1,493
Transportation Equipment.......... STL 14,883 4,411 70 1,960
Furniture and Fixtures............ STL 8,781 1,979 1,199
Vending Equipment................. 200 and STL 49,779 7,605 28 4,617
Leasehold & Land
Improvements.................... STL 4,523 1,079 (19) 1
$109,936 $22,217 $ 0 $ $ 9,354
YEAR ENDED DECEMBER 29, 1991
Buildings......................... STL $ 10,200 $ 1,639 $ 10 $ $ 69
Machinery and Equipment........... STL 20,686 4,008 327 4,831
Transportation Equipment.......... STL 14,309 2,720 1 2,147
Furniture and Fixtures............ STL 7,391 1,686 296
Vending Equipment................. 200 and STL 44,094 7,940 (430) 1,825
Leasehold & Land
Improvements.................... STL 3,644 792 92 5
$100,324 $18,785 $ 0 $ $ 9,173
BALANCE
AT END OF
DESCRIPTION YEAR
YEAR ENDED JANUARY 2, 1994
Buildings......................... $ 14,530
Machinery and Equipment........... 28,019
Transportation Equipment.......... 18,710
Furniture and Fixtures............ 10,497
Vending Equipment................. 57,227
Leasehold & Land
Improvements.................... 5,563
$ 134,546
YEAR ENDED JANUARY 3, 1993
Buildings......................... $ 13,121
Machinery and Equipment........... 24,336
Transportation Equipment.......... 17,404
Furniture and Fixtures............ 9,561
Vending Equipment................. 52,795
Leasehold & Land
Improvements.................... 5,582
$ 122,799
YEAR ENDED DECEMBER 29, 1991
Buildings......................... $ 11,780
Machinery and Equipment........... 20,190
Transportation Equipment.......... 14,883
Furniture and Fixtures............ 8,781
Vending Equipment................. 49,779
Leasehold & Land
Improvements.................... 4,523
$ 109,936
(1) Arising from business combinations, transfers and reclassifications.
(2) Includes sale and contribution of assets to Piedmont Coca-Cola Bottling
Partnership.
46
SCHEDULE VIII
COCA-COLA BOTTLING CO. CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING COSTS AND
DESCRIPTION OF YEAR EXPENSES OTHER (1) DEDUCTIONS
Allowance for doubtful accounts:
Fiscal year ended January 2, 1994................................. $ 400 $ 443 $ (20) $ 398
Fiscal year ended January 3, 1993................................. $ 1,104 $ 118 $ 822
Fiscal year ended December 29, 1991............................... $ 502 $ 244 $ 454 $ 96
Deferred tax assets valuation allowance:
Fiscal year ended January 2, 1994................................. $ 29,934 $ (26,718) $3,216
Fiscal year ended January 3, 1993................................. $ 29,934
BALANCE
AT END OF
DESCRIPTION YEAR
Allowance for doubtful accounts:
Fiscal year ended January 2, 1994................................. $ 425
Fiscal year ended January 3, 1993................................. $ 400
Fiscal year ended December 29, 1991............................... $ 1,104
Deferred tax assets valuation allowance:
Fiscal year ended January 2, 1994................................. $
Fiscal year ended January 3, 1993................................. $29,934
(1) Arising from business combinations and divestitures.
47
SCHEDULE IX
COCA-COLA BOTTLING CO. CONSOLIDATED
SHORT-TERM BORROWINGS
(IN THOUSANDS)
WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AT AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE PERIOD PERIOD PERIOD
FISCAL YEAR ENDED JANUARY 2, 1994:
Notes Payable (1).............................................. $ 18,335 3.50 % $ 125,200 $71,850 3.26%
Commercial Paper (2)........................................... -- -- 27,000 7,678 3.39%
Notes Payable (3).............................................. -- -- 40,000 23,077 4.04%
FISCAL YEAR ENDED JANUARY 3, 1993:
Notes Payable (1).............................................. $ 94,301 3.95 % $ 149,999 $98,685 4.09%
Commercial Paper (2)........................................... -- -- 51,660 1,238 4.65%
Notes Payable (3).............................................. 40,000 5.62 % 85,000 47,226 5.46%
FISCAL YEAR ENDED DECEMBER 29, 1991:
Notes Payable (1).............................................. $ 28,120 5.10 % $ 57,410 $44,464 6.43%
Commercial Paper (2)........................................... -- -- 11,845 741 6.55%
Notes Payable (3).............................................. 85,000 5.25 % 85,000 75,687 7.56%
(1) These short-term notes payable are classified as noncurrent debt in the
Company's consolidated balance sheets because they are backed by a revolving
credit agreement.
(2) There were no outstanding commercial paper borrowings on January 2, 1994,
January 3, 1993 and December 29, 1991. These borrowings, when utilized, are
classified as noncurrent debt in the Company's consolidated balance sheets
because they are backed by a revolving credit agreement.
(3) These short-term notes payable are outstanding under the Company's revolving
credit agreement.
48
SCHEDULE X
COCA-COLA BOTTLING CO. CONSOLIDATED
SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION
(IN THOUSANDS)
Supplementary statement of operations information is set forth in the
following tabulation. All amounts have been charged directly to expense
accounts.
FISCAL YEAR
DESCRIPTION 1993 1992 1991
Maintenance and repairs...................................................................... $19,394 $17,603 $13,076
Amortization of goodwill and intangibles..................................................... 14,784 18,326 10,884
Taxes other than payroll, income and soft drink taxes........................................ 5,022 5,547 4,241
Soft drink taxes............................................................................. 11,355 12,686 6,267
Advertising costs............................................................................ 9,365 8,730 7,409
49
SCHEDULE XI
COCA-COLA BOTTLING CO. CONSOLIDATED
IDENTIFIABLE INTANGIBLE ASSETS
(IN THOUSANDS)
BALANCE AT ADDITIONS AMORTIZATION
USEFUL BEGINNING ARISING FROM SALES OF CHARGED TO
DESCRIPTION LIFE OF YEAR ACQUISITIONS (1) SUBSIDIARIES (2) EXPENSE
YEAR ENDED JANUARY 2, 1994
Franchise rights......................... 40 yrs. $ 430,058 $190,836 $ 9,017
Customer lists........................... 20-23 yrs. 33,587 2,729
Advertising savings...................... 7-23 yrs. 6,309 517
Other.................................... 4-18 yrs. 956 96
$ 470,910 $190,836 $ 12,359
YEAR ENDED JANUARY 3, 1993
Franchise rights......................... 40 yrs. $ 404,109 $ 37,396 $ 11,447
Customer lists........................... 20-23 yrs. 36,316 2,729
Advertising savings...................... 7-23 yrs. 6,899 590
Other.................................... 4-18 yrs. 1,091 135
$ 448,415 $ 37,396 $ 14,901
YEAR ENDED DECEMBER 29, 1991
Franchise rights......................... 40 yrs. $ 152,722 $255,592 $ 4,205
Customer lists........................... 20-23 yrs. 39,043 2,727
Advertising savings...................... 7-23 yrs. 7,502 603
Other.................................... 4-18 yrs. 1,229 138
$ 200,496 $255,592 $ 7,673
BALANCE
AT END OF
DESCRIPTION YEAR
YEAR ENDED JANUARY 2, 1994
Franchise rights......................... $ 230,205
Customer lists........................... 30,858
Advertising savings...................... 5,792
Other.................................... 860
$ 267,715
YEAR ENDED JANUARY 3, 1993
Franchise rights......................... $ 430,058
Customer lists........................... 33,587
Advertising savings...................... 6,309
Other.................................... 956
$ 470,910
YEAR ENDED DECEMBER 29, 1991
Franchise rights......................... $ 404,109
Customer lists........................... 36,316
Advertising savings...................... 6,899
Other.................................... 1,091
$ 448,415
(1) Includes purchase accounting adjustments in the allocation of the purchase
price of the various acquisitions.
(2) Includes sale and contribution of franchise rights to Piedmont Coca-Cola
Bottling Partnership.
50
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE PARTNERS
OF PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of cash flows and of partners' equity
present fairly, in all material respects, the financial position of Piedmont
Coca-Cola Bottling Partnership and its subsidiary at January 2, 1994, and the
results of their operations and their cash flows for the period July 2, 1993
through January 2, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
Charlotte, North Carolina
February 18, 1994
51
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
CONSOLIDATED BALANCE SHEET
IN THOUSANDS
JAN. 2,
1994
ASSETS
CURRENT ASSETS:
Cash.............................................................................................................. $ 411
Accounts receivable, trade, less allowance for doubtful accounts of $200.......................................... 11,651
Accounts receivable from The Coca-Cola Company.................................................................... 1,264
Accounts receivable, other........................................................................................ 1,036
Inventories....................................................................................................... 3,468
Prepaid expenses and other current assets......................................................................... 578
Total current assets............................................................................................ 18,408
PROPERTY, PLANT AND EQUIPMENT, at cost............................................................................ 27,968
Less -- Accumulated depreciation and amortization................................................................. 1,526
Property, plant and equipment, net.............................................................................. 26,442
OTHER ASSETS...................................................................................................... 1,107
IDENTIFIABLE INTANGIBLE ASSETS, less accumulated amortization of $3,742........................................... 300,415
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED, less accumulated
amortization of $366............................................................................................ 34,959
Total........................................................................................................... $381,331
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities.......................................................................... $ 6,076
Accounts payable to The Coca-Cola Company......................................................................... 665
Due to Coca-Cola Bottling Co. Consolidated........................................................................ 2,454
Accrued interest payable.......................................................................................... 672
Total current liabilities....................................................................................... 9,867
DEFERRED INCOME TAXES............................................................................................. 35,359
OTHER LIABILITIES................................................................................................. 9,305
SENIOR LONG-TERM DEBT............................................................................................. 190,000
Total liabilities............................................................................................... 244,531
PARTNERS' EQUITY:
Partner's investment-The Coca-Cola Company........................................................................ 68,400
Partner's investment-Coca-Cola Bottling Co. Consolidated.......................................................... 68,400
Total partners' equity.......................................................................................... 136,800
Total........................................................................................................... $381,331
See Accompanying Notes to Consolidated Financial Statements.
52
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 2, 1993 THROUGH JANUARY 2, 1994
IN THOUSANDS
NET SALES.......................................................................................................... $91,259
Cost of products sold (includes purchases from
Coca-Cola Bottling Co. Consolidated of $38,944).................................................................. 52,535
GROSS MARGIN....................................................................................................... 38,724
Selling expenses................................................................................................... 24,222
General and administrative expenses................................................................................ 7,629
Depreciation expense............................................................................................... 1,556
Amortization of goodwill and intangibles........................................................................... 4,108
INCOME FROM OPERATIONS............................................................................................. 1,209
Interest expense................................................................................................... 4,276
Other income, net.................................................................................................. 127
Loss before income taxes........................................................................................... (2,940)
Income taxes....................................................................................................... 260
Net loss........................................................................................................... $(3,200)
See Accompanying Notes to Consolidated Financial Statements.
53
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
IN THOUSANDS
THE COCA-COLA COCA-COLA BOTTLING
COMPANY CO. CONSOLIDATED
Balance, July 2, 1993...................................................................... $ 0 $ 0
Investment of partners..................................................................... 70,000 70,000
Net loss................................................................................... (1,600) (1,600)
BALANCE, JANUARY 2, 1994................................................................... $68,400 $ 68,400
See Accompanying Notes to Consolidated Financial Statements.
54
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 2, 1993 THROUGH JANUARY 2, 1994
IN THOUSANDS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................................................................... $ (3,200)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense........................................................................................... 1,556
Amortization of goodwill and intangibles....................................................................... 4,108
Deferred income taxes.......................................................................................... (425)
Amortization of debt costs..................................................................................... 14
Increase in current assets less current liabilities............................................................ (447)
Increase in other noncurrent assets............................................................................ (949)
Increase in other noncurrent liabilities....................................................................... 1,437
Other.......................................................................................................... (69)
Total adjustments................................................................................................ 5,225
Net cash provided by operating activities........................................................................ 2,025
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt..................................................................... 190,000
Other............................................................................................................ (12)
Net cash provided by financing activities........................................................................ 189,988
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment....................................................................... (4,566)
Proceeds from the sale of property, plant and equipment.......................................................... 1,208
Cash investment of partners...................................................................................... 91,746
Acquisition of bottling territories, net of cash................................................................. (279,990)
Net cash used in investing activities............................................................................ (191,602)
NET INCREASE IN CASH............................................................................................. 411
CASH AT BEGINNING OF PERIOD...................................................................................... 0
CASH AT END OF PERIOD............................................................................................ $ 411
See Accompanying Notes to Consolidated Financial Statements.
55
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Piedmont Coca-Cola Bottling Partnership ("Piedmont") is engaged in the
marketing and distribution of soft drinks, primarily products of The Coca-Cola
Company.
The consolidated financial statements include the accounts of Piedmont and
its wholly owned subsidiary. All significant intercompany accounts and
transactions have been eliminated.
The fiscal period presented is the 26-week period from July 2, 1993 (date
of inception) through January 2, 1994.
The Company's more significant accounting policies are as follows:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, cash in banks and cash
equivalents, which are highly liquid debt instruments with maturities of less
than 90 days.
INVENTORIES
Inventories are stated at the lower of cost, primarily determined on the
first-in, first-out basis, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over the estimated useful lives of the assets.
Additions and major replacements or betterments are added to the assets at cost.
Maintenance and repair costs and minor replacements are charged to expense when
incurred. When assets are replaced or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts, and the gain or loss, if
any, is reflected in income.
INCOME TAXES
Piedmont provides deferred income taxes for the tax effects of temporary
differences between the financial reporting and income tax bases of the assets
and liabilities of CCBC of Wilmington, Inc., a corporation wholly owned by
Piedmont.
BENEFIT PLANS
Piedmont leases all of its active employees from Coca-Cola Bottling Co.
Consolidated ("Consolidated"). Benefit plans of Consolidated cover these
employees. Piedmont assumed the postretirement benefit obligation on July 2,
1993 for certain retired employees of the bottling operations which were sold or
contributed by Consolidated and The Coca-Cola Company. Piedmont adopted the
provisions of Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" upon its formation
on July 2, 1993.
INTANGIBLE ASSETS
Identifiable intangible assets resulting from the acquisition of Coca-Cola
bottling franchises are being amortized on a straight-line basis over forty
years.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED
The excess of cost over fair value of net assets of businesses acquired is
being amortized on a straight-line basis over forty years.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Costs associated with interest rate swaps and forward interest rate
agreements are recorded over the lives of the agreements as an adjustment to
interest expense.
56
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FORMATION OF PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
On July 2, 1993, Consolidated and The Coca-Cola Company formed Piedmont
Coca-Cola Bottling Partnership ("Piedmont") to distribute and market soft drink
products primarily in certain portions of North Carolina and South Carolina.
Consolidated and The Coca-Cola Company, through their respective subsidiaries,
each beneficially own a 50% interest in Piedmont. Consolidated provides
substantially all of the soft drink products for Piedmont and manages the
operations of Piedmont pursuant to a management agreement.
Subsidiaries of Consolidated and The Coca-Cola Company each made an initial
capital contribution to Piedmont of $70 million in the aggregate. The capital
contribution made by Consolidated's subsidiaries was composed of approximately
$21.7 million in cash and of bottling operations and certain assets used in
connection with Consolidated's Wilson, NC and Greenville and Beaufort, SC
territories. Consolidated sold other territories to Piedmont for an aggregate
purchase price of approximately $118 million. The Coca-Cola Company sold
territories to Piedmont for an aggregate purchase price of approximately $160.5
million. Assets acquired and contributed from Consolidated and The Coca-Cola
Company totaled $385.0 million and related liabilities aggregated $58.1 million.
The acquisition of bottling territories was accounted for under the purchase
method of accounting.
3. INVENTORIES
Inventories are summarized as follows:
IN THOUSANDS JAN. 2, 1994
Finished products............................................................................................... $ 3,271
Used bottles and cases.......................................................................................... 197
Total inventories............................................................................................... $ 3,468
4. PROPERTY, PLANT AND EQUIPMENT
The principal categories and estimated useful lives of property, plant and
equipment were as follows:
ESTIMATED
IN THOUSANDS JAN. 2, 1994 USEFUL LIVES
Land.............................................................................................. $ 2,323
Buildings......................................................................................... 10,601 10-50 years
Machinery and equipment........................................................................... 154 5-20 years
Transportation equipment.......................................................................... 5,571 4-10 years
Furniture and fixtures............................................................................ 804 7-10 years
Vending equipment................................................................................. 7,889 6-13 years
Leasehold and land improvements................................................................... 490 5-20 years
Construction in progress.......................................................................... 136
Total property, plant and equipment, at cost...................................................... $27,968
57
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LONG-TERM DEBT
Long-term debt is summarized as follows:
FIXED (F)
OR
INTEREST VARIABLE (V) INTEREST
IN THOUSANDS MATURITY RATE RATE PAID
Revolving Credit...................................................... 1998 3.73% V Varies
Less: Portion of long-term debt payable within one year...............
Senior long-term debt.................................................
JAN. 2,
IN THOUSANDS 1994
Revolving Credit...................................................... $190,000
Less: Portion of long-term debt payable within one year............... 0
Senior long-term debt................................................. $190,000
On August 31, 1993, Piedmont entered into a revolving credit agreement
totaling $215 million with a maturity date of August 31, 1998. A facility fee of
approximately 1/5% per year on the banks' total commitment is payable annually.
The agreement contains several covenants which establish minimum ratio
requirements related to debt and cash flow. As of January 2, 1994, Piedmont was
in compliance with the covenants covering its revolving credit agreement and
none of these covenants is presently expected to constrain Piedmont.
The $190 million in revolving credit loans as of January 2, 1994 is
outstanding under Piedmont's $215 million revolving credit facility. It is
Piedmont's intent to renew these borrowings as they mature. To the extent that
these borrowings do not exceed the amount available under the $215 million
revolving credit agreement, they are classified as noncurrent liabilities.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Piedmont actively manages its interest rate risk using a variety of rate
hedging mechanisms. Piedmont entered into hedging transactions that resulted in
a weighted average interest rate of 4.9% for its outstanding long-term debt as
of January 2, 1994. Approximately 21% of the outstanding long-term debt was
subject to changes in short-term interest rates. Piedmont's overall weighted
average borrowing rate on its long-term debt was 4.9% in 1993.
Off-balance-sheet financial instruments on January 2, 1994 are summarized
as follows:
REMAINING
DESCRIPTION IN THOUSANDS TERM
Interest rate swaps -- fixed....................................................................... $125,000 3-5 years
Forward rate agreements............................................................................ 25,000 1 year
CREDIT RISK
Piedmont is exposed to credit loss in the event of nonperformance by the
other parties to the various off-balance-sheet financial instruments as
disclosed above. Piedmont does not anticipate nonperformance by the other
parties. Piedmont has entered into these off-balance-sheet financial
transactions with numerous counterparties during the year. The financial
instruments outstanding on January 2, 1994 as disclosed above are with three
different commercial banks. It is Piedmont's belief that this does not represent
any material concentration of credit risk.
COLLATERAL
In accordance with standard market practice, no collateral has been given
or received by Piedmont in connection with these off-balance-sheet financial
instruments described above. Piedmont does not anticipate nonperformance by the
counterparties.
58
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating the fair
values of Piedmont's financial instruments:
NON-TRADED VARIABLE RATE LONG-TERM DEBT
The carrying amounts of Piedmont's variable rate borrowings approximate
their fair value.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Fair values for Piedmont's off-balance-sheet instruments (interest rate
swaps and forward rate agreements) are based on current settlement values.
The carrying amounts and fair values of Piedmont's financial instruments on
January 2, 1994 were as follows:
FAIR
IN THOUSANDS CARRYING AMOUNT VALUE
Balance Sheet Instruments
Non-traded variable rate long-term debt....................................................... $ 190,000 $190,000
Off-Balance-Sheet Instruments
Interest rate swaps........................................................................... 151
Forward rate agreements....................................................................... 21
The fair values of the interest rate swaps and forward rate agreements
represent the estimated amounts Piedmont would have received or would have had
to pay, respectively, to terminate the agreements on January 2, 1994.
8. LEASE COMMITMENTS
On July 2, 1993, Piedmont entered into certain sublease agreements with
Consolidated for various fleet and vending equipment. Rent expense incurred for
the six months ended January 2, 1994 under these sublease agreements totaled
$380,000.
Operating lease payments are charged to expense as incurred. Total rental
expense included in the statement of operations for the six months ended January
2, 1994 amounted to $730,000.
The following is a summary of future minimum lease payments for all
operating leases as of January 2, 1994:
IN THOUSANDS
1994............................................................................................................... $ 2,047
1995............................................................................................................... 1,951
1996............................................................................................................... 1,865
1997............................................................................................................... 1,535
1998............................................................................................................... 1,526
Thereafter......................................................................................................... 4,010
Total minimum lease payments....................................................................................... $12,934
9. INCOME TAXES
Piedmont owns all of the outstanding stock of CCBC of Wilmington, Inc.
("Wilmington"), a corporation under U.S. tax law. Partnerships are generally not
taxable entities under federal and state law; accordingly, Piedmont has not
provided for federal or state income taxes except for income taxes provided on
the results of operations of Wilmington. Each partner reports its share of the
profits and losses of Piedmont on its income tax return.
All income tax expense recorded in the accompanying consolidated statement
of operations and the deferred income tax liability reflected in the
accompanying consolidated balance sheet relate to the operations of Wilmington.
The tax provision for Wilmington was calculated under the requirements of SFAS
109, "Accounting for Income Taxes."
Pretax income for Wilmington for the period July 2, 1993 through January 2,
1994 was approximately $160,000.
59
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes consisted of the following:
FOR THE PERIOD JULY 2, 1993
IN THOUSANDS THROUGH JANUARY 2, 1994
Current:
Federal.......................................................................................... $ 525
State............................................................................................ 160
685
Deferred:
Federal.......................................................................................... (350)
State............................................................................................ (75)
(425)
Income tax expense................................................................................. $ 260
Wilmington made income tax payments of approximately $260,000 during 1993.
Deferred taxes are recorded based upon differences between the financial
statement and tax bases of assets and liabilities. Temporary differences that
comprise a significant part of deferred tax assets and liabilities on January 2,
1994 were as follows:
IN THOUSANDS JAN. 2, 1994
Intangibles...................................................................................................... $ 35,540
Other............................................................................................................ 1,548
Gross deferred income tax liabilities............................................................................ 37,088
Postretirement benefits payable.................................................................................. (1,662)
Gross deferred income tax assets................................................................................. (1,662)
Deferred income tax liability.................................................................................... $ 35,426
Current deferred income taxes of $67,000 are included in accounts payable
and accrued liabilities.
Reported income tax expense is reconciled to the amount computed on the
basis of income before income taxes at the statutory rate as follows:
FOR THE PERIOD JULY 2, 1993
IN THOUSANDS THROUGH JANUARY 2, 1994
Statutory expense.................................................................................. $ 55
Amortization of goodwill........................................................................... 128
State income taxes, net of federal benefit......................................................... 7
Other.............................................................................................. 70
Income tax expense................................................................................. $ 260
60
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. BENEFIT PLANS
Pursuant to the management agreement with Consolidated, Piedmont leases its
active employees from Consolidated. These employees participate in
Consolidated's benefit plans. Piedmont reimburses Consolidated for the actual
costs of payroll and benefit expenses.
On July 2, 1993, Piedmont assumed the postretirement benefit obligation for
certain retired employees of the bottling operations which were sold or
contributed by Consolidated and The Coca-Cola Company. Postretirement benefit
expense, which consisted entirely of interest cost on the projected benefit
obligation, was $340,000 for the six month period ended January 2, 1994. The
accumulated postretirement benefit obligation for these former employees as of
January 2, 1994 was approximately $8.0 million.
Future postretirement benefit costs were estimated assuming medical costs
would decline over a five-year period from a 10% increase beginning January 1,
1993 to 6%, and then decline to a 5.5% increase thereafter. A 1% increase in
this annual trend rate would have increased the accumulated postretirement
benefit obligation on January 2, 1994 by approximately $800,000 and
postretirement benefit expense in the six month period ended January 2, 1994
would have increased by approximately $34,000. The weighted average discount
rate used to estimate the postretirement benefit obligation was 7.5%.
11. RELATED PARTY TRANSACTIONS
On July 2, 1993, Consolidated and The Coca-Cola Company formed Piedmont.
Consolidated and The Coca-Cola Company, through their respective subsidiaries,
each beneficially own a 50% interest in Piedmont. Consolidated provides
substantially all of the soft drink products for Piedmont and manages the
operations of Piedmont pursuant to a management agreement.
Subsidiaries of Consolidated and The Coca-Cola Company each made an initial
capital contribution to Piedmont of $70 million in the aggregate. The capital
contribution made by Consolidated's subsidiaries was composed of approximately
$21.7 million in cash and of bottling operations and certain assets used in
connection with the Wilson, NC and Greenville and Beaufort, SC territories.
Consolidated also sold other territories to Piedmont for an aggregate purchase
price of approximately $118 million. The Coca-Cola Company sold territories to
Piedmont for an aggregate purchase price of approximately $160.5 million.
In conjunction with its formation on July 2, 1993, Piedmont recorded notes
with Consolidated and The Coca-Cola Company for net amounts of approximately
$85.2 million and $93.1 million, respectively. In addition, Piedmont executed an
additional note payable for approximately $11.1 million to Consolidated on
August 6, 1993 in conjunction with its purchase of the Aiken, SC territory. The
interest rate on these notes was approximately 3.6%. These notes were repaid on
August 31, 1993 when Piedmont secured its own bank financing. Interest paid to
Consolidated and The Coca-Cola Company on these notes was approximately $528,000
and $547,000, respectively.
Piedmont's business consists primarily of the marketing and distribution of
soft drink products of The Coca-Cola Company, which is the sole owner of the
secret formulas under which the primary components (either concentrates or
syrups) of its soft drink products are manufactured. Piedmont engages in
arrangements to promote the sale of products of The
Coca-Cola Company in its territories. Total direct marketing support provided to
Piedmont by The Coca-Cola Company for the six month period ended January 2, 1994
was approximately $3.6 million. In addition, Piedmont paid approximately $1.6
million for local media and marketing program expense pursuant to cooperative
advertising and cooperative marketing arrangements with The Coca-Cola Company
for the six month period ended January 2, 1994. For the six month period ended
January 2, 1994, Piedmont purchased approximately $2.1 million of finished soft
drink products, principally post-mix syrup, from The Coca-Cola Company.
Pursuant to the management agreement with Consolidated, Piedmont purchased,
at cost, $38.9 million of soft drink products from Consolidated during the six
month period ended January 2, 1994. Piedmont recorded management fees to
Consolidated of $4.8 million during the six month period ended January 2, 1994.
Piedmont subleased various fleet and vending equipment from Consolidated during
1993, at Consolidated's cost. These sublease rentals amounted to $380,000. In
addition, Piedmont reimbursed Consolidated, at cost, for certain operating
expenses initially paid by Consolidated on Piedmont's behalf.
61
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Changes in current assets and current liabilities affecting cash were as
follows:
FOR THE PERIOD JULY 2, 1993
IN THOUSANDS THROUGH JANUARY 2, 1994
Accounts receivable, trade, net.................................................................... $ 4,037
Accounts receivable, other......................................................................... (1,472)
Inventories........................................................................................ 1,249
Prepaid expenses and other assets.................................................................. 519
Accounts payable and accrued liabilities........................................................... (7,234)
Due to Consolidated................................................................................ 2,454
Decrease (increase)................................................................................ $ (447)
Cash payments during the period were as follows:
FOR THE PERIOD JULY 2, 1993
IN THOUSANDS THROUGH JANUARY 2, 1994
Interest........................................................................................... $ 3,591
Income taxes....................................................................................... 260
62
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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 31, 1994
By: /s/ JAMES L. MOORE, JR.
JAMES L. MOORE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ J. FRANK HARRISON, JR. Chairman of the Board and Director March 31, 1994
J. FRANK HARRISON, JR.
By: /s/ JAMES L. MOORE, JR. President and Chief Executive Officer and March 31, 1994
Director
JAMES L. MOORE, JR.
By: /s/ REID M. HENSON Vice Chairman of the Board and Director March 31, 1994
REID M. HENSON
By: /s/ JAMES V. JOHNSON Director March 31, 1994
JAMES V. JOHNSON
By: /s/ J. FRANK HARRISON, III Vice Chairman of the Board and Director March 31, 1994
J. FRANK HARRISON, III
By: /s/ HERBERT L. OAKES Director March 31, 1994
HERBERT L. OAKES
By: /s/ JOHN M. BELK Director March 31, 1994
JOHN M. BELK
By: /s/ JOHN W. MURREY, III Director March 31, 1994
JOHN W. MURREY, III
By: /s/ H. REID JONES Director March 31, 1994
H. REID JONES
By: /s/ DAVID L. KENNEDY, JR. Director March 31, 1994
DAVID L. KENNEDY, JR.
63
By: /s/ DAVID V. SINGER Vice President and Chief Financial Officer March 31, 1994
DAVID V. SINGER
By: /s/ STEVEN D. WESTPHAL Vice President and Chief Accounting Officer March 31, 1994
STEVEN D. WESTPHAL
64
EXHIBIT INDEX
Page Number or
Exhibit Incorporation
Number Description by Reference to
3.1 The Company's Bylaws. Exhibit 3. to the
Company's Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1987.
3.2 The Company's Certificate of Exhibit 3.2 to the
Incorporation with all amendments. Company's Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1990.
4.1 Specimen of Common Stock Certificate. Exhibit 4.1 to the
Company's Registra-
tion Statement
(No. 2-97822) on
Form S-1.
4.2 Credit Agreement dated as of March 17, Exhibit 4.01 to the
1992 among the Company and NationsBank Company's Quarterly
of North Carolina, as Agent, and other Report on Form 10-Q
banks named therein. for the quarter
ended March 29, 1992
4.3 Amendment No. 1 to Amended and Restated Exhibit 4.02 to the
Revolving Credit and Reimbursement Company's Quarterly
Agreement, dated as of March 27, 1992 Report on Form 10-Q
between the Company and NationsBank of for the quarter ended
North Carolina. March 29, 1992.
4.4 Specimen Fixed Rate Note under the Exhibit 4.1 to the
Company's Medium-Term Note Program, Company's Current
pursuant to which it may issue, from Report on Form 8-K
time to time, up to $200 million dated February 14,
aggregate principal amount of its 1990.
Medium-Term Notes, Series A.
4.5 Specimen Floating Rate Note under the Exhibit 4.2 to the
Company's Medium-Term Note Program, Company's Current
pursuant to which it may issue, from Report on Form 8-K
time to time, up to $200 million dated February 14,
aggregate principal amount of its 1990.
Medium-Term Notes, Series A.
4.6 Indenture dated as of October 15, 1989 Exhibit 4. to the
between the Company and Manufacturers Company's Registra-
Hanover Trust Company of California, as tion Statement (No.
Trustee, in connection with the Company's 33-31784) on Form
$200 million shelf registration of its S-3 as filed on
Medium-Term Notes, Series A, due from February 14, 1990.
nine months to 30 years from date of issue.
4.7 Selling Agency Agreement, dated as of Exhibit 1.2 to the
February 14, 1990, between the Company Company's Registra-
and Salomon Brothers and Goldman Sachs, tion Statement (No.
as Agents, in connection with the 33-31784) on Form
Company's $200 million Medium-Term Notes, S-3 as filed on
Series A, due from nine months to 30 February 14, 1990.
years from date of issue.
4.8 Commercial Paper Agreement, dated as of Exhibit 4.8 to the
December 13, 1989, between the Company Company's Annual
and Goldman Sachs Money Markets, Inc., Report on Form 10-K
as co-agent. for the fiscal year
ended December 31,
1989.
4.9 Form of Debenture issued by the Company Exhibit 4.04 to the
to two shareholders of Sunbelt Coca-Cola Company's Current
Bottling Company, Inc. dated as of Report on Form 8-K
December 19, 1991. dated December 19,
1991.
4.10 Commercial Paper Dealer Agreement, Exhibit 4.14 to the
dated as of February 11, 1993, between Company's Annual
the Company and Citicorp Securities Report on Form 10-K
Markets, Inc., as co-agent. for the fiscal year
ended January 3, 1993.
4.11 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 state-
ments 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 sub-
sidiaries on a consolidated basis.
10.1 Employment Agreement of James L. Moore, Exhibit 10.2 to the
Jr. dated as of March 16, 1987. Company's Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1986.
10.2 Stock Rights and Restrictions Agreement Exhibit 28.01 to the
by and between Coca-Cola Bottling Co. Company's Current
Consolidated and The Coca-Cola Company Report on Form 8-K
dated January 27, 1989. dated January 27,
1989.
10.3 Description and examples of bottling Exhibit 10.20 to the
franchise agreements between the Company Company's Annual
and The Coca-Cola Company. Report on Form 10-K
for the fiscal year
ended December 31,
1988.
10.4 Lease, dated as of December 11, 1974, by Exhibit 19.6 to the
and between the Company and the Ragland Company's Annual
Corporation, related to the production/ Report on Form 10-K
distribution facility in Nashville, for the fiscal year
Tennessee. ended December 31,
1988.
10.5 Amendment to Lease Agreement designated Exhibit 19.7 to the
as Exhibit 10.4. Company's Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1988.
10.6 Second Amendment to Lease Agreement Exhibit 19.8 to the
designated as Exhibit 10.4. Company's Annual
Report on Form 10-K
for the fiscal year
ended December 31,
1988.
10.7 Master Lease Agreement, beginning on Exhibit 19.3 to the
May 31, 1988, with Schedules 1 through Company's Quarterly
3, between the Company and General Report on Form 10-Q
Electric Capital Corporation covering for the quarter ended
various vehicles. March 31, 1990.
10.8 Lease Agreement, dated as of July 17, Exhibit 19.4 to the
1988, between the Company and GE Capital Company's Quarterly
Fleet Services covering various vehicles. Report on Form 10-Q
for the quarter ended
March 31, 1990.
10.9 Master Motor Vehicle Lease Agreement, Exhibit 19.5 to the
dated as of December 15, 1988, with Company's Quarterly
Schedule 4 between the Company and Report on Form 10-Q
Citicorp North America, Inc. covering for the quarter ended
various vehicles. March 31, 1990.
10.10 Master Lease Agreement, beginning on Exhibit 19.6 to the
April 12, 1989, with Schedule 1, between Company's Quarterly
the Company and Citicorp North America, Report on Form 10-Q
Inc. covering various equipment. for the quarter ended
March 31, 1990.
10.11 Supplemental Savings Incentive Plan, Exhibit 10.36 to the
dated as of April 1, 1990 between certain Company's Annual
Eligible Employees of the Company and Report on Form 10-K
the Company. for the fiscal year
ended December 30,
1990.
10.12 Description and example of Deferred Exhibit 19.1 to the
Compensation Agreement, dated as of Company's Annual
October 1, 1987, between Eligible Report on Form 10-K
Employees of the Company and the Company for the fiscal year
under the Officer's Split-Dollar Life ended December 30,
Insurance Plan. 1990.
10.13 Schedules 2 through 6 of a Master Lease Exhibit 10.39 to the
Agreement, beginning on April 12, 1989, Company's Quarterly
between the Company and Citicorp North Report on Form 10-Q
America, Inc. covering various forklifts for the quarter ended
and vending machines. June 30, 1991.
10.14 Schedule 7 of a Master Lease Agreement, Exhibit 10.41 to the
beginning on April 12, 1989, between the Company's Quarterly
Company and Citicorp North America, Inc. Report on Form 10-Q
covering various vending machines. for the quarter ended
September 29, 1991.
10.15 Consolidated/Sunbelt Acquisition Exhibit 2.01 to the
Agreement, dated as of December 19, 1991, Company's Current
by and among the Company and the share- Report on Form 8-K
holders of Sunbelt Coca-Cola Bottling dated December 19,
Company, Inc. 1991.
10.16 Officer Retention Plan, dated as of Exhibit 10.47 to the
January 1, 1991, between certain Eligible Company's Annual
Officers of the Company and the Company. Report on Form 10-K
for the fiscal year
ended December 29,
1991.
10.17 Schedule 14 of a Master Motor Vehicle Exhibit 10.48 to the
Lease Agreement, beginning on Company's Annual
December 15, 1988, between the Company Report on Form 10-K
and Citicorp North America, Inc. covering for the fiscal year
various vehicles. ended December 29,
1991.
10.18 Schedules 8 and 9 of a Master Lease Exhibit 10.49 to the
Agreement, beginning on April 12, 1989, Company's Annual
between the Company and Citicorp North Report on Form 10-K
America, Inc. covering various vending for the fiscal year
machines. ended December 29,
1991.
10.19 Acquisition Agreement, by and among Exhibit 10.50 to the
Sunbelt Coca-Cola Bottling Company, Inc., Company's Annual
Sunbelt Carolina Acquisition Company, Report on Form 10-K
Inc., certain of the common stockholders for the fiscal year
of Coca-Cola Bottling Co. Affiliated, ended December 29,
Inc., and the stockholders of TRNH, Inc., 1991.
dated as of November 7, 1989.
10.20 Amendment Number One to the Sunbelt/ Exhibit 10.04 to the
Affiliated Acquisition Agreement, dated Company's Quarterly
as of December 29, 1989, between Sunbelt Report on Form 10-Q
Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended
Carolina Acquisition Company, Inc., March 29, 1992.
certain of the common stockholders of
Coca-Cola Bottling Co. Affiliated, Inc.
and the stockholders of TRNH, Inc.
10.21 Amendment Number Two to the Sunbelt/ Exhibit 10.05 to the
Affiliated Acquisition Agreement, dated Company's Quarterly
as of December 29, 1989, between Sunbelt Report on Form 10-Q
Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended
Carolina Acquisition Company, Inc., March 29, 1992.
certain of the common stockholders of
Coca-Cola Bottling Co. Affiliated, Inc.
and the stockholders of TRNH, Inc.
10.22 Amendment Number Three to the Sunbelt/ Exhibit 10.06 to the
Affiliated Acquisition Agreement, dated Company's Quarterly
as of December 29, 1989, between Sunbelt Report on Form 10-Q
Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended
Carolina Acquisition Company, Inc., March 29, 1992.
certain of the common stockholders of
Coca-Cola Bottling Co. Affiliated, Inc.
and the stockholders of TRNH, Inc.
10.23 Master Lease Agreement, dated as of Exhibit 10.01 to the
January 7, 1992 between the Company and Company's Quarterly
Signet Leasing and Financial Corporation, Report on Form 10-Q
and Schedules 1 through 4, covering for the quarter ended
various vehicles. March 29, 1992.
10.24 Schedule No. 1, dated as of March 16, Exhibit 10.02 to the
1992, of a Master Lease Agreement between Company's Quarterly
the Company and Citicorp North America, Report on Form 10-Q
Inc. covering various vending machines. for the quarter ended
March 29, 1992.
10.25 Schedule No. 2, dated as of April 27, Exhibit 10.03 to the
1992, of a Master Lease Agreement between Company's Quarterly
the Company and Citicorp North America, Report on Form 10-Q
Inc. covering various vending machines. for the quarter ended
March 29, 1992.
10.26 Schedule No. 3, dated as of June 8, Exhibit 10.07 to the
1992, of a Master Lease Agreement Company's Quarterly
between the Company and Citicorp North Report on Form 10-Q
America, Inc. covering various vending for the quarter ended
machines. June 28, 1992.
10.27 Schedule No. 4, dated as of July 13, Exhibit 10.08 to the
1992, of a Master Lease Agreement between Company's Quarterly
the Company and Citicorp North America, Report on Form 10-Q
Inc. covering various vending machines. for the quarter ended
June 28, 1992.
10.28 Amended Schedules No. 1, 2 and 4 of a Exhibit 10.09 to the
Master Lease Agreement, dated as of Company's Quarterly
January 7, 1992 between the Company and Report on Form 10-Q
Signet Leasing and Financial Corporation, for the quarter ended
covering various vehicles. September 27, 1992.
10.29 Schedules No. 1A, 5, 6, 7 and 8 of a Exhibit 10.10 to the
Master Lease Agreement, dated as of Company's Quarterly
January 7, 1992 between the Company and Report on Form 10-Q
Signet Leasing and Financial Corporation, for the quarter ended
covering various vehicles and forklifts. September 27, 1992.
10.30 Master Equipment Lease, dated as of Exhibit 10.37 to the
February 9, 1993, between the Company Company's Annual
and Coca-Cola Financial Corporation Report on Form 10-K
covering various vending machines. for the fiscal year
ended January 3, 1993.
10.31 Lease Agreement, dated as of November 30, Exhibit 10.38 to the
1992, between the Company and Harrison Company's Annual
Limited Partnership One, related to the Report on Form 10-K
Snyder Production Center in Charlotte, for the fiscal year
North Carolina. ended January 3, 1993.
10.32 Motor Vehicle Lease Agreement No. 790855, Exhibit 10.39 to the
dated as of December 31, 1992, between Company's Annual
the Company and Citicorp Leasing, Inc. Report on Form 10-K
covering various vehicles. for the fiscal year
ended January 3, 1993.
10.33 Schedules 1 through 5 of the Motor Exhibit 10.40 to the
Vehicle Lease Agreement No. 790855, Company's Annual
beginning on December 31, 1992, between Report on Form 10-K
the Company and Citicorp Leasing, Inc. for the fiscal year
covering various vehicles. ended January 3, 1993.
10.34 Amended and Restated Leasing Schedules Exhibit 10.41 to the
No. 1, 3, 5, 6, 8, 9, 11, 12 and 13 of a Company's Annual
Master Motor Vehicle Lease Agreement, Report on Form 10-K
dated as of November 14, 1988, between for the fiscal year
the Company and Citicorp North America, ended January 3, 1993.
Inc. covering various vehicles.
10.35 Termination and Release Agreement dated Exhibit 10.43 to the
as of March 27, 1992 by and among Sunbelt Company's Annual
Coca-Cola Bottling Company, Coca-Cola Report on Form 10-K
Bottling Co. Affiliated, Inc., the agent for the fiscal year
for holders of certain debentures of ended January 3, 1993.
Sunbelt issued pursuant to a certain
Indenture dated as of January 11, 1990,
as amended, and Wilmington Trust Company
which acted as trustee under the
Indenture.
10.36 Schedule 10 of a Master Lease Agreement, Exhibit 10.45 to the
dated as of January 7, 1992 between the Company's Annual
Company and Signet Leasing and Financial Report on Form 10-K
Corporation covering various forklifts. for the fiscal year
ended January 3, 1993.
10.37 Schedule No. 5, dated as of August 10, Exhibit 10.46 to the
1992, of a Master Lease Agreement between Company's Annual
the Company and Citicorp Leasing, Inc. Report on Form 10-K
covering various vending machines. for the fiscal year
ended January 3, 1993.
10.38 Schedule No. 6, dated as of September 17, Exhibit 10.47 to the
1992, of a Master Lease Agreement between Company's Annual
the Company and Citicorp Leasing, Inc. Report on Form 10-K
covering various vending machines. for the fiscal year
ended January 3, 1993.
10.39 Schedule No. 7, dated as of December 7, Exhibit 10.48 to the
1992, of a Master Lease Agreement Company's Annual
between the Company and Citicorp Leasing, Report on Form 10-K
Inc. covering various vending machines. for the fiscal year
ended January 3, 1993.
10.40 Schedule No. 8, dated as of January 4, Exhibit 10.49 to the
1993, of a Master Lease Agreement between Company's Annual
the Company and Citicorp Leasing, Inc. Report on Form 10-K
covering various vending machines. for the fiscal year
ended January 3, 1993.
10.41 Schedule No. 9, dated as of March 4, Exhibit 10.50 to the
1993, of a Master Lease Agreement between Company's Annual
the Company and Citicorp Leasing, Inc. Report on Form 10-K
covering various vending machines. for the fiscal year
ended January 3, 1993.
10.42 Lease Funding No. 1, dated April 30, Exhibit 10.01 to the
1993, of a Master Equipment Lease Company's Quarterly
between the Company and Coca-Cola Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vending machines. April 4, 1993.
10.43 Amended and Restated Amendment No. 7, Exhibit 10.02 to the
dated April 27, 1993, of Motor Vehicle Company's Quarterly
Lease Agreement No. 743918 between the Report on Form 10-Q
Company and Citicorp North America, Inc. for the quarter ended
covering various vehicles. April 4, 1993.
10.44 Reorganization Plan and Agreement by and Exhibit 10.03 to the
among Coca-Cola Bottling Co. Company's Quarterly
Consolidated, Chopper Acquisitions, Report on Form 10-Q
Inc., Whirl-i-Bird, Inc. and J. Frank for the quarter ended
Harrison, Jr. April 4, 1993.
10.45 Partnership Agreement of Carolina Exhibit 2.01 to the
Coca-Cola Bottling Partnership, dated as Company's Current
of July 2, 1993, by and among Carolina Report on Form 8-K
Coca-Cola Bottling Investments, Inc., dated July 2, 1993.
Coca-Cola Ventures, Inc., Coca-Cola
Bottling Co. Affiliated, Inc.,
Fayetteville Coca-Cola Bottling
Company and Palmetto Bottling Company.
10.46 Asset Purchase Agreement, dated as of Exhibit 2.02 to the
July 2, 1993, by and among Carolina Company's Current
Coca-Cola Bottling Partnership, Coca- Report on Form 8-K
Cola Bottling Co. Affiliated, Inc. and dated July 2, 1993.
Coca-Cola Bottling Co. Consolidated.
10.47 Asset Purchase Agreement, dated as of Exhibit 2.03 to the
July 2, 1993, by and among Carolina Company's Current
Coca-Cola Bottling Partnership, Report on Form 8-K
Fayetteville Coca-Cola Bottling Company dated July 2, 1993.
and Coca-Cola Bottling Co. Consolidated.
10.48 Asset Purchase Agreement, dated as of Exhibit 2.04 to the
July 2, 1993, by and among Carolina Company's Current
Coca-Cola Bottling Partnership, Palmetto Report on Form 8-K
Bottling Company and Coca-Cola Bottling dated July 2, 1993.
Co. Consolidated.
10.49 Definition and Adjustment Agreement, Exhibit 2.05 to the
dated July 2, 1993, by and among Carolina Company's Current
Coca-Cola Bottling Partnership, Coca-Cola Report on Form 8-K
Ventures, Inc., Coca-Cola Bottling Co. dated July 2, 1993.
Consolidated, CCBC of Wilmington, Inc.,
Carolina Coca-Cola Bottling Investments,
Inc., The Coca-Cola Company, Carolina
Coca-Cola Holding Company, The Coastal
Coca-Cola Bottling Company, Eastern
Carolina Coca-Cola Bottling Company,
Inc., Coca-Cola Bottling Co. Affiliated,
Inc., Fayetteville Coca-Cola Bottling
Company and Palmetto Bottling Company.
10.50 Management Agreement, dated as of July 2, Exhibit 10.01 to the
1993, by and among Coca-Cola Bottling Co. Company's Current
Consolidated, Carolina Coca-Cola Bottling Report on Form 8-K
Partnership, CCBC of Wilmington, Inc., dated July 2, 1993.
Carolina Coca-Cola Bottling Investments,
Inc., Coca-Cola Ventures, Inc. and
Palmetto Bottling Company.
10.51 Post-Retirement Medical and Life Exhibit 10.02 to the
Insurance Benefit Reimbursement Agree- Company's Current
ment, dated July 2, 1993, by and between Report on Form 8-K
Carolina Coca-Cola Bottling Partnership dated July 2, 1993.
and Coca-Cola Bottling Co. Consolidated.
10.52 Aiken Asset Purchase Agreement, dated as Exhibit 2.01 to the
of August 6, 1993 by and among Carolina Company's Quarterly
Coca-Cola Bottling Partnership, Palmetto Report on Form 10-Q
Bottling Company and Coca-Cola Bottling for the quarter ended
Co. Consolidated. July 4, 1993.
10.53 Aiken Definition and Adjustment Agree- Exhibit 2.02 to the
ment, dated as of August 6, 1993, by and Company's Quarterly
among Carolina Coca-Cola Bottling Report on Form 10-Q
Partnership, Coca-Cola Ventures, Inc., for the quarter ended
Coca-Cola Bottling Co. Consolidated, July 4, 1993.
Carolina Coca-Cola Bottling Investments,
Inc., The Coca-Cola Company and Palmetto
Bottling Company.
10.54 Lease Agreement, dated as of June 1, Exhibit 10.01 to the
1993, between the Company and Beacon Company's Quarterly
Investment Corporation, related to the Report on Form 10-Q
Company's corporate headquarters in for the quarter ended
Charlotte, North Carolina. July 4, 1993.
10.55 Lease Funding No. 2, dated as of June 1, Exhibit 10.02 to the
1993, of a Master Equipment Lease between Company's Quarterly
the Company and Coca-Cola Financial Report on Form 10-Q
Corporation covering various vending for the quarter ended
machines. July 4, 1993.
10.56 Lease Funding No. 3, dated as of July 12, Exhibit 10.03 to the
1993, of a Master Equipment Lease between Company's Quarterly
the Company and Coca-Cola Financial Report on Form 10-Q
Corporation covering various vending for the quarter ended
machines. July 4, 1993.
10.57 Schedule No. 12 of a Master Lease Agree- Exhibit 10.04 to the
ment, dated as of April 1, 1993, between Company's Quarterly
the Company and Signet Leasing and Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vehicles. July 4, 1993.
10.58 Schedule No. 13 of a Master Lease Agree- Exhibit 10.05 to the
ment, dated as of April 1, 1993, between Company's Quarterly
the Company and Signet Leasing and Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vehicles. July 4, 1993.
10.59 Amended and Restated Guaranty Agreement, Exhibit 10.06 to the
dated as of July 15, 1993 re: Company's Quarterly
Southeastern Container, Inc. Report on Form 10-Q
for the quarter ended
July 4, 1993.
10.60 Lease Funding No. 4, dated as of August Exhibit 10.01 to the
24, 1993, of a Master Equipment Lease Company's Quarterly
between the Company and Coca-Cola Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vending machines. October 3, 1993.
10.61 Lease Funding No. 5, dated as of Exhibit 10.02 to the
September 30, 1993, of a Master Equip- Company's Quarterly
ment Lease between the Company and Report on Form 10-Q
Coca-Cola Financial Corporation covering for the quarter ended
various vending machines. October 3, 1993.
10.62 Schedule No. 11 of a Master Lease Agree- Exhibit 10.03 to the
ment, dated as of July 1, 1993, between Company's Quarterly
the Company and Signet Leasing and Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vehicles. October 3, 1993.
10.63 Schedule No. 14 of a Master Lease Agree- Exhibit 10.04 to the
ment, dated as of July 1, 1993, between Company's Quarterly
the Company and Signet Leasing and Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vehicles. October 3, 1993.
10.64 Schedule No. 15 of a Master Lease Agree- Exhibit 10.05 to the
ment, dated as of July 1, 1993, between Company's Quarterly
the Company and Signet Leasing and Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vehicles. October 3, 1993.
10.65 Lease Funding No. 6, dated as of Exhibit 10.06 to the
November 1, 1993, of a Master Equipment Company's Quarterly
Lease between the Company and Coca-Cola Report on Form 10-Q
Financial Corporation covering various for the quarter ended
vending machines. October 3, 1993.
10.66 Lease Funding No. 7, dated as of Exhibit included in
November 17, 1993, of a Master Equipment this filing.
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.67 Lease Funding No. 8, dated as of Exhibit included in
December 30, 1993, of a Master Equipment this filing.
Lease between the Company and Coca-Cola
Financial Corporation covering various
vending machines.
10.68 Description of the Company's Bonus Plan Exhibit included in
for officers. this filing.
10.69 Master Lease Agreement, dated as of Exhibit included in
February 18, 1992, between the Company this filing.
and Citicorp Leasing, Inc. covering
various equipment.
21.1 List of subsidiaries. Exhibit included in
this filing.
23.1 Accountants Consent to Incorporation Exhibit included in
by Reference into Forms S-3 (Registration this filing.
No. 33-4325 and 33-31784).
99.1 Information, financial statements and To be supplied
exhibits required by Form 11-K with by amendment.
respect to the Coca-Cola Bottling Co.
Consolidated Savings Plan.
EXHIBIT 10.66
TREASURY BOND: 5.59%
RENTAL FACTOR: 2.98926
LEASE FUNDING NO: 7
LEASE SUPPLEMENT TO
MASTER EQUIPMENT LEASE (the "Master Lease")
BETWEEN
COCA-COLA FINANCIAL CORPORATION ("Lessor")
AND
COCA-COLA BOTTLING CO. CONSOLIDATED ("Lessee")
DATED: FEBRUARY 9, 1993
Lease Supplement Date: November __, 1993.
1. Term
The "Initial Term" shall commence on the 17TH day of
November, 1993 (the "Lease Commencement Date") and will continue
for a term of one hundred eight months (108) months ending on
November 17TH, 2002.
2. Rent
(a) BASIC RENT: As Basic Rent hereunder, Lessee shall pay
an aggregate rental charge of $228,737.52 payable in thirty six
(36) quarterly installments of $6,353.82 each, beginning on
February 17th, 1994 and continuing on the same day of each month
thereafter during the Initial Term, with the final such
installment being due and payable on November 17, 2002.
(b) INTERIM RENT: Lessee shall pay Lessor Interim Rent on
all payments made by Lessor for Equipment from the date of
Lessor's payment, if paid prior to the Lease Commencement Date,
until the Lease Commencement Date. Interim Rent shall be
calculated from the date of such payment on the basis of a rate
which shall be the lesser of (i) a daily rate of ______ per
dollar so paid by Lessor, (which rate is based on the rate
implied by the Basic Rent amount set forth above), or (ii) a per
annum rate applied to the amount so paid by Lessor equal to the
"Prime Rate" as published in The Wall Street Journal on the last
business day prior to the date of such payment by Lessor.
Interim Rent shall be payable in full on the Lease Commencement
Date.
(c) SUPPLEMENTAL RENT: In addition to Basic Rent and
Interim Rent, Lessee shall pay Lessor all Supplemental Rent
provided for in the Master Lease including, without limitation,
all applicable sales and use taxes.
3. Location of the Equipment
The location(s) of the Equipment leased is (are) set forth
on Exhibit "A" attached hereto.
4. Equipment Leased
The Equipment leased is described on each equipment invoice and
installation notification subject to this Lease Supplement. The
supporting equipment invoices, installation notifications and
equipment serial numbers are summarized on Exhibit "A" attached
hereto.
5. Stipulated Loss Value
The "Stipulated Loss Value" of each item of Equipment, as of
any particular date of computation, shall be determined with
reference to Exhibit "B" attached hereto by multiplying the
original cost of such item of Equipment as stated on Exhibit "A"
hereto by the percentage set forth opposite the applicable month
number on Exhibit "B" hereto. For this purpose the applicable
month number means the number of months or partial months elapsed
since the Lease Commencement Date. If only a portion of an item
of Equipment is affected by any event causing calculation of
"Stipulated Loss Value" as specified in the Master Lease, and the
cost of such portion of the Equipment cannot be readily
determined from the original cost of such item set forth on
Exhibit A, then the Stipulated Loss Value for such portion of the
Equipment shall be as reasonably calculated by Lessor, with
written notice of such amount being sent to Lessee by Lessor.
6. Lease
This Lease Supplement is executed and delivered under and
pursuant to the terms of the Master Lease, and this Lease
Supplement shall be deemed to be a part of, and shall be governed
by the terms and conditions of the Master Lease. For purposes of
this Lease Supplement, capitalized terms which are used herein
but which are not otherwise defined herein shall have the
meanings ascribed to such terms in the Master Lease.
IN WITNESS WHEREOF, Lessee has caused this Lease Supplement
to be duly executed and delivered by its duly authorized officer,
this 17th day of November, 1993.
LESSEE: COCA-COLA BOTTLING CO. CONSOLIDATED
_______________________________
By: Brenda B. Jackson
Title: Vice President & Treasurer
[CORPORATE SEAL]
Accepted in Atlanta, Georgia, this 17th day of November, 1993.
LESSOR:
COCA-COLA FINANCIAL CORPORATION
By: ________________________
Title: Vice President
EXHIBIT 10.67
TREASURY BOND: 5.64%
RENTAL FACTOR: 2.99630
LEASE FUNDING NO: 8
LEASE SUPPLEMENT TO
MASTER EQUIPMENT LEASE (the "Master Lease")
BETWEEN
COCA-COLA FINANCIAL CORPORATION ("Lessor")
AND
COCA-COLA BOTTLING CO. CONSOLIDATED ("Lessee")
DATED: FEBRUARY 9, 1993
Lease Supplement Date: December 30, 1993.
1. Term
The "Initial Term" shall commence on the 30TH day of
December, 1993 (the "Lease Commencement Date") and will continue
for a term of one hundred eight months (108) months ending on
November 30TH, 2002.
2. Rent
(a) BASIC RENT: As Basic Rent hereunder, Lessee shall pay
an aggregate rental charge of $2,993,626.08 payable in thirty six
(36) quarterly installments of $83,156.28 each, beginning on
February 28th, 1994 and continuing every third month thereafter
during the Initial Term, with the final such installment being
due and payable on November 30th, 2002.
(b) INTERIM RENT: Lessee shall pay Lessor Interim Rent on
all payments made by Lessor for Equipment from the date of
Lessor's payment, if paid prior to the Lease Commencement Date,
until the Lease Commencement Date. Interim Rent shall be
calculated from the date of such payment on the basis of a rate
which shall be the lesser of (i) a daily rate of ______ per
dollar so paid by Lessor, (which rate is based on the rate
implied by the Basic Rent amount set forth above), or (ii) a per
annum rate applied to the amount so paid by Lessor equal to the
"Prime Rate" as published in The Wall Street Journal on the last
business day prior to the date of such payment by Lessor.
Interim Rent shall be payable in full on the Lease Commencement
Date.
(c) SUPPLEMENTAL RENT: In addition to Basic Rent and
Interim Rent, Lessee shall pay Lessor all Supplemental Rent
provided for in the Master Lease including, without limitation,
all applicable sales and use taxes.
3. Location of the Equipment
The location(s) of the Equipment leased is (are) set forth
on Exhibit "A" attached hereto.
4. Equipment Leased
The Equipment leased is described on each equipment invoice and
installation notification subject to this Lease Supplement. The
supporting equipment invoices, installation notifications and
equipment serial numbers are summarized on Exhibit "A" attached
hereto.
5. Stipulated Loss Value
The "Stipulated Loss Value" of each item of Equipment, as of
any particular date of computation, shall be determined with
reference to Exhibit "B" attached hereto by multiplying the
original cost of such item of Equipment as stated on Exhibit "A"
hereto by the percentage set forth opposite the applicable month
number on Exhibit "B" hereto. For this purpose the applicable
month number means the number of months or partial months elapsed
since the Lease Commencement Date. If only a portion of an item
of Equipment is affected by any event causing calculation of
"Stipulated Loss Value" as specified in the Master Lease, and the
cost of such portion of the Equipment cannot be readily
determined from the original cost of such item set forth on
Exhibit A, then the Stipulated Loss Value for such portion of the
Equipment shall be as reasonably calculated by Lessor, with
written notice of such amount being sent to Lessee by Lessor.
6. Lease
This Lease Supplement is executed and delivered under and
pursuant to the terms of the Master Lease, and this Lease
Supplement shall be deemed to be a part of, and shall be governed
by the terms and conditions of the Master Lease. For purposes of
this Lease Supplement, capitalized terms which are used herein
but which are not otherwise defined herein shall have the
meanings ascribed to such terms in the Master Lease.
IN WITNESS WHEREOF, Lessee has caused this Lease Supplement
to be duly executed and delivered by its duly authorized officer,
this ____ day of December, 1993.
LESSEE: COCA-COLA BOTTLING CO. CONSOLIDATED
_______________________________
By: Brenda B. Jackson
Title: _______________________
[CORPORATE SEAL]
Accepted in Atlanta, Georgia, this 30th day of December, 1993.
LESSOR:
COCA-COLA FINANCIAL CORPORATION
By: ________________________
Title: Vice President
EXHIBIT 10.68
COCA-COLA BOTTLING CO. CONSOLIDATED
1994 ANNUAL BONUS PLAN
PURPOSE
_________________________________________________________________
The purpose of the bonus plan is to provide additional incentive
to officers and employees of the Company in key positions.
PLAN ADMINISTRATION
_________________________________________________________________
The plan will be administered by the Compensation Committee as
elected by the Board of Directors. The Committee is authorized
to establish new guidelines for administration of the plan,
delegate certain tasks to management, make determinations and
interpretations under the plan, and to make awards pursuant to
the plan. All determinations and interpretations of the
Committee will be binding upon the Company and each participant.
PLAN GUIDELINES
_________________________________________________________________
ELIGIBILITY: The Compensation Committee is authorized to grant
cash awards to any officer, including officers who are directors
and to other employees of the Company and its affiliates in key
positions.
PARTICIPATION: Management will recommend annually key positions
which should qualify for awards under the plan. The Compensation
Committee has full and final authority in its discretion to
select the key positions eligible for awards. Management will
inform individuals in selected key positions of their
participation in the plan.
_________________________________________________________________
QUALIFICATIONS AND AMOUNT OF AWARDS:
1. Participants will qualify for awards under the plan based
on:
(a) Corporate goals set for the fiscal year.
(b) Division/Manufacturing Center goals or individual goals
set for the fiscal year.
(c) The Compensation Committee may, in its sole discretion,
amend or eliminate any individual award.
2. The gross amount of the award will be specified as a
percentage of base salary of the participant and will
be determined on the following basis:
Goal Achievement* Amount of Award
(in percent) (as a % of max.)
89.0 or less 0
89.1 - 94 80
94.1 - 97 90
97.1 - 100 100
100.1 - 105 110
105.1 - 110 120
*For 1994 this applies to all performance indicators except Free
Cash Flow. Calculation of free cash flow component will be as
follows:
For achievement in excess of target, the award will be 100%
+ percent over target multiplied by the weightage factor for
Free Cash Flow.
For achievement under target, the award will be the
percentage of goal attained multiplied by the weightage
factor.
For example, if Free Cash Flow actual results were 101% of
goal, and the weightage factor was 30%, the award would be
30% X 1.10. If achievement were 95% of goal, award would be
30% X 0.95. Likewise for performance of 80% of goal, the
award would be 30% X 0.80.
3. The total cash award to the participant will be computed as
follows:
Gross Cash Award = Base Salary X approved bonus % X the
indexed performance factor X overall goal achievement
factor.
4. The Compensation Committee will review and approve all awards.
The Committee has full and final authority in its discretion
to determine the actual gross amount to be paid to
participants. The gross amount will be subject to all local,
state and federal minimum tax withholding requirements.
5. Participant must be an employee of the Company on the date
of payment to qualify for an award. Any participant who leaves
the employ of the Company, voluntarily or involuntarily,
prior to the payment date, is ineligible for any bonus. An
employee who assumes a key position during the fiscal year
may be eligible for a pro-rated award at the option of the
Compensation Committee, provided the participant has been
employed a minimum of three (3) months during the calendar
year.
6. Awards under the bonus program will not be made if any
material aspects of the bottle contracts with The Coca-Cola
Company are violated.
PAYMENT DATE: Awards shall be paid upon notification from the
Company's independent auditors of the final results of operations
for the fiscal year. The Compensation Committee is authorized to
establish an earlier payment date based on unaudited preliminary
results.
SPECIAL AWARD PROVISION: Management may wish to recognize
outstanding performances by individuals who may or may not be in
eligible positions to receive an award. Management may recommend
awards for such individuals, and the Compensation Committee is
authorized to make such awards.
AMENDMENTS, MODIFICATIONS AND TERMINATION
The Compensation Committee is authorized to amend, modify or
terminate the plan retroactively at any time, in part or in
whole.
APPROVED PERFORMANCE CRITERIA FOR
COMPENSATION COMMITTEE TO CONSIDER
IN AWARDING 1994 BONUS PAYMENTS
CORPORATE GOALS
WEIGHTAGE
PERFORMANCE INDICATOR FACTOR GOAL**
1. Cash Flow:
Operating Cash Flow (A) 28 Approved Budget
Free Cash Flow (B) 28 Approved Budget
2. Net Income* 10 Approved Budget
3. Unit Volume 10 Approved Budget
4. Nielsen Market Share 14 Positive
Share Swing
5. Cold Drink Plan 10 Completion
Of Plan
NOTES:
1. A. Operating cash flow is defined as income from operations
before depreciation and amortization of goodwill and
intangibles.
B. Free cash flow is defined as the net cash available for
debt paydown after considering non-cash charges, capital
expenditures, taxes and adjustments for changes in
assets and liabilities, but before payment of cash
dividends. Specifically excluded would be acquisitions
and capital expenditures made because of acquisitions.
Specifically excluded from operating cash flow are
gains/losses from:
- Sales of franchise territories.
- Sales of real estate
- Sales of other assets
- Other items as defined by the Compensation
Committee.
NOTE: *Before preferred dividends.
**It should be noted that none of the goals reflect the
possibility of a Joint Venture or acquisitions. Should
these events occur the goals would need to be
recalculated.
2. Net Income is defined as the after-tax reported earnings of
the Company.
3. Unit Volume is defined as bottle, can and pre-mix cases,
converted to 8 oz. cases.
4. The following items will be considered for exclusions by the
Committee:
- Unusual or extraordinary events of more than $50,000
- Impact of non-budgeted acquisitions made after January 1,
1994.
- Adjustments required to implement unbudgeted changes in
accounting principles (i.e., FASB rulings regarding
health care benefits for retirees, deferred taxes, etc.).
- Unbudgeted changes in depreciation and amortization
schedules.
- Premiums paid or received due to the retirement or
refinancing of debt or hedging vehicles.
5. Bonus program will not be in force if any material aspects
of the Bottle Contracts with TCCC are violated.
6. For purposes of determining 1994 incentive compensation,
accounting practices and principles used to calculate
"actual" results will be consistent with those used in
calculating the budget.
EXHIBIT 10.69
Duplicate Original
MASTER LEASE AGREEMENT NO. 788100
LESSOR: CITICORP LEASING, INC. (herein called "Lessor")
ADDRESS: 450 Mamaroneck Avenue
Harrison, New York 10528
LESSEE: COCA-COLA BOTTLING CO. CONSOLIDATED (herein called "Lessee")
ADDRESS: 1900 Rexford Road
Charlotte, North Carolina 28211
STATE OF INCORPORATION: Delaware
1. LEASE. Lessor hereby agrees to lease to Lessee and Lessee hereby
agrees to lease from Lessor, subject to the terms of this Master Lease
Agreement (the "Agreement"), the personal property (herein called
"Equipment") described in any leasing schedule (herein called "Leasing
Schedule") executed by the parties hereto pursuant to this Agreement.
2. TERM AND RENT. Lessee shall pay as rent for use of Equipment
aggregate rental payments equal to the sum of all the rental payments
(including advance rents) ("Rent") for the lease term ("Lease Term") all as
set forth on each Leasing Schedule. In addition, and notwithstanding
anything else contained herein or in any Leasing Schedule, Lessee shall pay
as interim rent ("Interim Rent") an amount equal to the lesser of the
implicit lease rate (calculated on a basis which includes, in the
discounted cash flow stream, the Stipulated Loss Value for the last rental
period) or Citibank's Base Rate on the Original Cost of Equipment delivered
pursuant to the relevant Leasing Schedule from the weighted average date of
delivery to Lessee to and including the Commencement Date (as defined in
each Leasing Schedule; Interim Rent shall be due and payable on the
Commencement Date. For purposes hereof, the Base Rate shall be the rate of
interest announced publicly by Citibank N.A. in New York, New York, from
time to time, as Citibank's base rate. The Base Rate shall be computed on
the basis of a three hundred sixty (360) day year for the actual number of
days elapsed; changes in such rate shall take effect immediately. To the
extent permitted by applicable law, Lessee will pay on demand, as a late
charge, an amount equal to ten percent (10%) of each installment of Rent
and any other sums payable hereunder which remain overdue for more than ten
(10) days. All payments provided for herein shall be payable at the office
of the Lessor at the address set forth above, or at any place designated by
Lessor. For any item of Equipment, the term Original Equipment Cost shall
mean the amount set forth on Schedule A to the applicable Leasing Schedule
as the Equipment Cost plus the applicable freight and other charges listed
therein. This Agreement is a net lease and Lessee shall not be entitled to
any abatement or reduction of
Rent or any setoff against Rent, by reason of any past, present or
future claims of any nature by Lessee against Lessor or any other reason.
All Rent and other amounts payable by Lessee hereunder shall be payable in
all events in the manner and at the times herein provided unless Lessee's
obligations in respect thereof have been terminated pursuant to the express
provisions of this Agreement.
3. DISCLAIMER OF WARRANTIES. Lessee has made the selection of each
item of Equipment based upon its own judgment and expressly disclaims any
reliance upon any statements or representations made by Lessor. LESSOR
MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO
ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR
CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH WARRANTIES. LESSOR SHALL
NOT BE RESPONSIBLE FOR ANY REPAIRS, MAINTENANCE, SERVICE DEFECTS IN THE
EQUIPMENT OR THE OPERATION OF THE EQUIPMENT. Lessor agrees that Lessee
shall be entitled to the benefit of any manufacturer's warranties on the
Equipment to the extent permitted by applicable law.
4(a). TITLE. Lessee acknowledges that the owner of Equipment with
respect to a Leasing Schedule ("Owner") shall be the party (i) that owns
such Equipment at the time of commencement of the Lease Term; and (ii)
which is either (A) the Lessor; (B) the party to which Lessor has assigned
its interest in the Leasing Schedule and its right to acquire the related
Equipment; or (C) the party from which Lessor has leased such Equipment.
Lessor shall notify Lessee in writing prior to the commencement of the
Lease Term as set forth in the Schedule of the identity of Owner. No
right, title or interest in any Equipment shall pass to Lessee other than,
conditioned upon Lessee's compliance with and fulfillment of the terms and
conditions of this Agreement, the right to possess and use the Equipment
for the full Lease Term. Lessee agrees not to sell, assign, sublet,
pledge, hypothecate, or otherwise encumber any interest in this Agreement
or the Equipment and agrees to keep the same free from any lien,
encumbrance or right of distraint or any other claim which may be asserted
by any third party. Lessee shall immediately notify Lessor in writing of
any tax or other liens attaching to the Equipment.
4(b). IDENTIFICATION; PERSONAL PROPERTY. Lessor may require plates
or markings to be affixed to or placed on the Equipment indicating Lessor's
and Owner's interests. Lessor and Lessee hereby confirm their intent that
the Equipment always remain and be deemed personal property even though
said Equipment may hereafter become attached or affixed to realty. Lessee
shall obtain all such waivers as Lessor may reasonably require to
acknowledge Owner's title to and assure Owner's right to remove the
Equipment.
5(a). COMPLIANCE WITH LAWS; PAYMENT OF TAXES; GENERAL
INDEMNIFICATION. (i) Lessee shall comply with all laws, regulations and
orders relating
to, and shall pay promptly to Lessor when due, or where
permitted by law, to the appropriate authorities when due for Owner's
account, all taxes, fees and assessments, including but not limited to all
license and registration fees and all sales, use, property, gross receipts,
excise, transaction, ad valorem, privilege, intangible, stamp or other
taxes, duties, imposts or charges, together with any fines, penalties or
interest thereon, now or hereafter imposed by any governmental body or
agency upon any of the Equipment or the use, possession, ownership,
leasing, operation, delivery or return thereof, (excluding, however, any
taxes based on the net income of Owner), and shall hold Lessor harmless
against actual or asserted violations thereof and shall pay all costs and
expenses of any character in connection therewith or arising therefrom.
Lessee agrees that at Lessor's request, Lessee shall produce such records
as may be required to evidence Lessee's direct payments to the proper
taxing authorities. Any fees, taxes or other lawful charges paid by Lessor
upon failure of Lessee to make such payments shall at Lessor's option
become immediately due and payable from Lessee to Lessor. Notwithstanding
the foregoing, any fines, penalties or interest imposed on late payments
when payment was timely made by Lessee to Lessor shall be borne by Lessor.
(ii) Lessee hereby agrees to indemnify, reimburse, protect, save and hold
Lessor and Owner harmless from and against any and all claims, losses,
liabilities, damages, penalties, actions and suits (including reasonable
legal costs and expenses incurred in connection therewith), suffered or
incurred by Lessor or Owner which result from, arise in any manner out of,
or relate to, the selection, manufacture, purchase, acceptance, rejection,
ownership, acquisition, maintenance, delivery, installation,
transportation, modification, possession, condition, use (including patent,
trademark or copyright infringement), operation, return of, or defect in,
the Equipment.
5(b). ASSUMPTIONS; WARRANTIES AND REPRESENTATIONS; SPECIAL FEDERAL
TAX INDEMNIFICATION.
(i) ASSUMPTIONS. This Agreement is being entered into and all Rent
is computed on the assumption that (A) for Federal income tax purposes
Owner will be treated as the owner and lessor of the Equipment described in
any Leasing Schedule hereto, and (B) Owner will have for Federal income tax
purposes, an effective marginal rate of tax equal to thirty-four percent
(34%) in this and all succeeding years and (C) the Recovery Deductions (as
defined below) shall be determined with respect to each item of Equipment
in accordance with the half-year convention pursuant to Section 168(d) of
the Code. For purposes hereof the term "Owner" shall include any
affiliated group within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code") of which Owner is a member if
consolidated income tax returns are filed for such affiliated group for
Federal income tax purposes.
(ii) WARRANTIES AND REPRESENTATIONS. Lessee hereby represents and
warrants that (A) Owner will be entitled to cost recovery deductions
("Recovery Deductions") with respect to each item of Equipment on its
Original Equipment Cost determined in accordance with the depreciation
method set forth in Section 168(b) of the Code applicable to property with
the recovery period set forth with respect to such item on Schedule A to
the applicable Leasing Schedule, beginning in its taxable year which
includes the date such Equipment is placed in service as evidenced by the
Delivery and Acceptance Certificate provided by Lessee to Lessor in
connection with such Equipment; (B) For each item of Equipment its recovery
period within the meaning of Section 168(c) of the
Code is set forth on
Schedule A to the applicable Leasing Schedule; and (C) Owner shall be
entitled to claim such Recovery Deductions as Owner shall determine in its
sole discretion under the Code in effect on the date hereof, subject always
to the limitations imposed thereunder. Lessor agrees that the sole remedy
available to Lessor for any inaccuracy in the representations or any breach
of the warranties set forth in this Paragraph shall be the right to
Additional Rent (as hereinafter defined).
(iii) SPECIAL FEDERAL TAX INDEMNIFICATION. In the event that Owner
shall lose, shall suffer a disallowance of, shall suffer a delay in
claiming, shall not have the right to claim or shall be required to
recapture all or any portion of the Recovery Deductions for any reason
including but not limited to (A) the inaccuracy of any of the
representations or warranties of Lessee set forth in this Agreement or in
any document made or delivered by Lessee (or any officer, agent or employee
thereof) to Lessor or Owner; (B) the noncompliance or breach by Lessee of
any provision of this Agreement; (C) the use of the Equipment or any item
thereof by Lessee, any person related to it or any persons acquiring use or
possession of such Equipment from or through Lessee; or (D) any other act
or omission of Lessee, any person related to it or any person acquiring
possession of the Equipment from or through Lessee (any of the foregoing
events being a "Tax Loss"), then the Rent set forth on the applicable
Leasing Schedule, beginning as of and with the rental payment date
immediately following written notice by Lessor to Lessee that a Tax Loss
has occurred, shall be increased by such amount of additional rent
("Additional Rent") as will, after giving effect to (1) such Tax Loss and
any interest, penalties and additions to tax payable as a result of such
Tax Loss and (2) all income taxes required to be paid by Owner as a result
of the receipt of such Additional Rent, in the reasonable opinion of Owner,
provide Owner the same after-tax yield and after-tax cash flow ("Net
Economic Benefit") (computed on the same assumptions, bases and
methodology, including tax rates, as were originally used by Owner in
calculating the Rent) as would have been realized by Owner had such Tax
Loss not occurred. With respect to a Tax Loss occurring after the
expiration of the applicable Lease Term, Lessee shall pay such total amount
of Additional Rent as is required to provide Owner its Net Economic Benefit
within thirty (30) days of Lessor's written demand therefor. In the event
that the Rent payable hereunder is revised as described above, the
Stipulated Loss Values set forth in the Rider to the applicable Leasing
Schedule shall be adjusted accordingly. Upon Lessee's request, Lessor
shall provide Lessee with a written statement describing in reasonable
detail any Tax Loss hereunder and the computation of the amounts payable by
Lessee.
(iv) EXCLUSIONS. Notwithstanding the foregoing, Owner shall be
responsible, and shall not be entitled to any payment with respect to any
Tax Loss to the extent such Tax
Loss is due to one or more of the following
events: (A) A voluntary transfer or other voluntary disposition by Owner
or any involuntary transfer resulting from the bankruptcy of Owner of any
interest in the Equipment unless such transfer or disposition is made in
connection with a default by Lessee hereunder; (B) The failure of Owner to
claim in a timely or proper manner the Recovery Deductions; (C) The
application to Owner of Sections 465(a), 55 or 57(a) of the Code or any
other similar provision which limits the availability in whole or in part
of the Recovery Deductions based on the identity of Owner or any activity
of Owner that is unrelated to the transactions contemplated by the
Agreement; (D) The foreclosure of any person holding through Owner a lien
on the Equipment, which foreclosure results solely from an act of Owner;
(E) Any Event of Loss (as hereinafter defined) whereby Lessee is required
under this Agreement to pay, and shall have paid in full, the Stipulated
Loss Value of the Equipment; or (F) Any amendment to or modification of the
provisions of any Federal income tax law including, without limitation, the
Code, the Treasury Regulations, Internal Revenue Service Revenue Procedures
or Revenue Rulings, guidelines, or other published administrative or
judicial interpretations of the foregoing that shall be enacted, adopted,
published or decided after the date hereof; or in the event of any change
in the Federal income tax law relating to the rate of Federal income tax
imposed on corporations.
(v) CONTEST. In the event a claim for additional taxes with respect
to this Agreement shall be made at any time by the Internal Revenue Service
which, if successful, would require Lessee to indemnify or make a payment
to Lessor pursuant to Paragraph 5(b)(iii) hereof, Lessor agrees to take
such actions in connection with contesting such claim as Lessee shall
reasonably request in writing from time to time, provided, however, that
(A) within thirty days after notice by Lessor to Lessee of such claim,
Lessee shall request that such claim be contested; (B) prior to taking such
claim, Lessee shall have furnished Lessor with an opinion reasonably
satisfactory to Lessor from tax counsel satisfactory to Lessor, to the
effect that there is a reasonable basis in law and in fact in favor of
contesting such claim; (C) Lessee shall have indemnified Lessor in a manner
satisfactory to Lessor for any liability or loss which Lessor may incur as
the result of contesting such claim and shall have agreed to pay Lessor on
demand an amount which, on an after-tax basis, shall be equal to all costs
and expenses which Lessor may incur in connection with contesting such
claim, including, without limitation, reasonable attorney's and
accountant's fees and disbursements, and the amount of any interest or
penalty which may ultimately be payable as a result of such claim; and (D)
Lessor shall control all proceedings taken in connection with any such
contest and shall not be required to pursue such contest beyond the
administrative level. In the case of any such claim by the Internal
Revenue Service referred to above, Lessor agrees to promptly notify Lessee
in writing of such claim and agrees not to make payment of the tax claimed
for at least thirty days after the giving of such notice and agrees to give
to Lessee any relevant information relating to such claims which may be
particularly within the knowledge of Lessor and otherwise to cooperate with
Lessee in good faith in order to contest any such claim effectively. In
the event a claim is contested, the Additional Rent, if any, payable by
Lessee shall commence upon final determination that any Tax Loss has
occurred.
(vi) CAPITAL EXPENDITURES. To the extent that all or part of the
cost of any improvement or addition to, or any expenditure by the Lessee
with respect to any item of Equipment ("Capital Expenditure"), made by
Lessee pursuant to the terms of this Agreement or otherwise, is required to
be included in the gross income of Owner for Federal income tax purposes,
then the Rent under the applicable Leasing Schedule, beginning as of and
with the next succeeding rental payment date after the date on which Lessee
is required to furnish written notice to Lessor, as hereinbelow provided,
shall be increased by such amount as shall, in the reasonable opinion of
Owner, after taking into account any present or future tax benefits that
Owner reasonably anticipates it will derive from the Capital Expenditure by
reason of such inclusion, provide Owner with the same Net Economic Benefit
as would have been realized by Owner if the Capital Expenditure had not
been includible in Owner's gross income. Notwithstanding the foregoing, if
the Lease Term shall have then expired, Lessee shall pay to Lessor the
amounts hereby required within thirty (30) days after Lessor's written
demand therefor. Lessee shall within fifteen (15) days after making any
Capital Expenditure give written notice thereof to Lessor describing the
Capital Expenditure in reasonable detail.
6. INSTALLATION AND DELIVERY. The Lessee agrees to provide a
suitable installation environment for the Equipment as specified in the
applicable manufacturer's manual, if any, and, except as otherwise
specified by manufacturer, to furnish all labor required for unpacking and
placing each item of Equipment in the desired location. Lessee shall be
responsible for any delivery, rigging, destination charges and other
amounts charged by manufacturer or vendor with respect to the Equipment.
7. USE; INSPECTION. Lessee shall cause the Equipment to be operated
and maintained in accordance with the applicable manufacturer's manual or
instructions by qualified and duly authorized personnel only, in accordance
with all applicable laws, ordinances and regulations, and for business
purposes only. All operating and maintenance costs with respect to the
Equipment shall be borne by Lessee. Lessee shall not (a) use, operate or
locate the Equipment, or allow the Equipment to be used, operated or
located (i) in any area excluded from coverage by any insurance required
under this Agreement or (ii) outside the United States in such manner as
will adversely impact Owner's right to claim the maximum Recovery
Deductions otherwise available under the Code; (b) abandon the Equipment;
or (c) alter the Equipment, except as permitted herein. Lessor shall have
the right from time to time during normal business hours to enter upon
Lessee's premises or elsewhere for the purpose of confirming the existence,
condition or proper maintenance of the Equipment. Upon Lessor's request,
Lessee shall notify Lessor as to the location of any or all Equipment.
Provided no Event of Default (as hereinafter set forth) has occurred and is
continuing, Lessee shall be entitled to quiet enjoyment and peaceful
possession of the Equipment.
8. EVENTS OF DEFAULT. An "Event of Default" shall occur hereunder if
Lessee (a) fails to pay any installment of Rent when due and such failure
shall continue unremedied for a period of five (5) business days after
notice from Lessor; or (b) fails to pay any other payment required
hereunder or under any Leasing Schedule when due and such failure shall
continue unremedied for a period of ten (10) business days after notice
from Lessor; or (c) fails to perform or observe any other covenant,
condition or obligation hereunder or breaches any representation or
provision contained herein or in any other document furnished to Lessor in
connection herewith, and such failure or breach shall continue unremedied
for a period of ten (10) days after notice from Lessor; or (d) except as
otherwise provided in Paragraph 19, without Lessor's consent, attempts to
remove, sell, transfer, encumber or part with possession of or sublet any
item of Equipment; or (e) shall become insolvent or make an assignment for
the benefit of creditors or a trustee or receiver shall be appointed for
Lessee or for a substantial part of its property, or bankruptcy,
reorganization or insolvency proceedings shall be instituted by or against
Lessee; (f) shall be in default of its obligations under that certain
Credit Agreement dated as of June 30, 1988 with Mellon Bank N.A., as agent
(the "Credit Agreement"), or under any agreement replacing, renewing,
amending, modifying or substituting said Agreement; provided, however, that
if such default under said Credit Agreement shall be cured by the Lessee,
or be waived by the parties thereto, default under this Subsection (f)
shall be deemed likewise to have been thereupon cured or waived; or (g)
shall be in default of its obligations under that certain Motor Vehicle
Lease Agreement dated November 14, 1988 and that certain Master Lease
Agreement dated April 12, 1989 with Citicorp North America, Inc.
9. REMEDIES. Upon the occurrence of any Event of Default Lessor may,
in its sole discretion, do any one or more of the following: (a) upon
notice to Lessee terminate this Agreement, with respect to any or all
Leasing Schedules; (b) declare all sums due and to become due hereunder for
the full Lease Term of any or all Leasing Schedules (including any renewal
or purchase options which Lessee has exercised) immediately due and
payable; (c) demand that Lessee return the Equipment subject to any or all
Leasing Schedules to Lessor in accordance with Paragraph 13 hereof; (d)
enter upon the premises where the Equipment is located and take immediate
possession of and remove the same, all without liability on the part of
Lessor or its agents for such entry or for property or other damage; (e)
sell any or all of the Equipment subject to the Leasing Schedules at
private or public sale, with or without notice to Lessee or advertisement,
or otherwise dispose of, hold, use, operate, lease to others or keep idle
such Equipment, all free and clear of any rights of Lessee and without any
duty to account to Lessee for such action or inaction or for any proceeds
with respect thereto; (f) by notice to Lessee demand Lessee pay to Lessor
(as liquidated damages for loss of a bargain and not as a penalty) on the
date specified in such notice ("Notice Date") an amount (plus interest
thereon, at the same per annum rate charged by the Internal Revenue Service
for the late payment of tax, from the Notice Date to the date of payment)
equal to the aggregate of the Stipulated Loss Values (as set forth in the
Riders to the Leasing Schedules) in effect for the rental periods
immediately preceding the Notice Date, plus all due and unpaid Rent and
other payments through and
including the Notice Date; (g) terminate any
obligations it may have to lease additional equipment to Lessee; or (h)
exercise any other right or remedy which may be available to it under the
Uniform Commercial Code or any other law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the breach
hereof or to rescind this Agreement as to any or all Equipment. In
addition, Lessee shall be liable for all legal fees and other costs and
expenses in connection with, arising or resulting from any Event of Default
or the exercise of Lessor's remedies hereunder, including placing any
Equipment in the condition required by Paragraph 13 hereof.
Notwithstanding any other provision of this Paragraph, Lessor agrees that
in the event Lessor sells or otherwise disposes of Equipment pursuant to
this Paragraph, the proceeds of such sale or other disposition, net of all
cost and expenses incurred in connection therewith (including reasonable
attorneys' fees) shall be applied toward the reduction of Lessor's damages
hereunder, including liquidated damages. No remedy referred to in this
Paragraph is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity. To the extent permitted by applicable law,
Lessee hereby waives any rights now or hereafter conferred by statute or
otherwise which may require Lessor to use, sell, lease or otherwise dispose
of any Equipment in mitigation of Lessor's damages as set forth in this
Paragraph or which may otherwise limit or modify any of Lessor's rights or
remedies under this Paragraph.
10. NOTICE. Any notices or demands required to be given herein shall
be given to the parties in writing and delivered by first class United
States mail at the addresses herein set forth, or to such other addresses
as the parties may hereafter substitute by written notice given in the
manner prescribed in this Paragraph. Any such notices mailed to such
addresses shall be effective two (2) days after deposit in the United
States mails, duly addressed and with postage prepaid.
11. REPAIRS, LOSS AND DAMAGE. Lessee at its own cost and expense,
shall keep all Equipment in good repair, condition and working order and
shall furnish all parts and servicing required therefor. Lessee shall not,
without the prior written consent of Lessor, affix or install any
accessory, equipment or device on any Equipment if such will impair the
originally intended function or use of such Equipment. All additions,
repairs, parts, supplies, accessories, equipment and devices furnished,
attached or affixed to any Equipment which are not readily removable, shall
be made only in compliance with applicable law (including Internal Revenue
Service guidelines) and shall become the property of Owner and part of the
Equipment for all purposes hereof. Lessee shall give Lessor prompt notice
of any damage to or loss of the Equipment or of any occurrence arising from
the possession, use or operation of the Equipment resulting in bodily
injury, death or damage to property. In the event that any item of
Equipment shall become lost, stolen, destroyed, worn out or damaged beyond
repair for any reason, or in the event of any condemnation, confiscation,
theft, seizure or requisition of such Equipment ("Event of Loss"), Lessee
shall promptly notify Lessor and pay to Lessor, on the rental payment date
immediately following such Event of Loss ("Loss Payment Date"), the greater
of (a) the Fair
Market Value (as hereinafter defined) of such Equipment
calculated as of the rental payment date immediately prior to such Event of
Loss or (b) the Stipulated Loss Value (as set forth in the Rider to the
applicable Leasing Schedule) calculated for the rental period immediately
preceding the Loss Payment Date, plus any and all Rent and other payments
due but unpaid as of the day immediately preceding the Loss Payment Date,
whereupon the Lease Term for such Equipment shall terminate and Lessor
shall cause Owner to transfer to Lessee, without recourse or warranty, on
an as-is, where-is basis, all of Owner's right, title and interest in such
Equipment. Notwithstanding anything else contained herein, Lessee shall
have the option, upon three (3) days, written notice to Lessor, to transfer
to Lessor on the date payment is required, free and clear title to an item
of Equipment of like kind ("Substitute Equipment") of the Equipment which
suffered such Event of Loss. Said Substitute Equipment shall be subject to
the same terms, provisions and conditions of this Agreement as if
originally subject hereto from the first day of the term hereof and shall
be approved by Lessor.
12. INSURANCE. Lessee agrees that it shall bear all risk of loss,
damage to or destruction of the Equipment. Lessee shall obtain or cause to
be obtained and maintain for the entire term of this Agreement, at its own
expense (a) public liability insurance; and (b) property insurance covering
loss of or damage to the Equipment, including "extended coverage" and
insurance covering loss by fire, theft, vandalism, mischief, collision and
such other risks as are customarily insured against on the type of
equipment leased hereunder and by businesses principally engaged in the use
or lease of similar equipment, in such amounts, in such form and with such
insurers as shall be satisfactory to Lessor, provided, however, that the
amount of such property insurance shall be the greater of the full
replacement value of the Equipment or the applicable Stipulated Loss Value.
Notwithstanding anything else contained herein, Lessor hereby consents and
permits Lessee to self-insure for property damage to the Equipment. The
public liability insurance policy shall name Lessee as an insured and
Lessor and Owner as additional insured and the property insurance policy
shall name Lessor and Owner as loss payees as their interests may appear
and both policies shall contain a clause requiring the insurer to give
Lessor at least thirty (30) days prior written notice of any alteration in
the terms or the cancellation thereof. Lessee shall furnish to Lessor a
certificate of insurance or other evidence satisfactory to Lessor that such
insurance coverage is in effect, provided, however, that Lessor shall be
under no duty either to ascertain the existence of or to examine such
insurance policies or to advise Lessee in the event such insurance coverage
does not comply with the requirements hereof. If Lessee fails to insure
the Equipment as required, Lessor shall have the right but not the
obligation to obtain such insurance, and the cost of the insurance shall be
for the account of Lessee, due as part of the next due rental payment.
13. RETURN OF EQUIPMENT. Except as otherwise provided in this
Agreement, upon the expiration of the Lease Term provided in each Leasing
Schedule or upon demand of Lessor as set forth in Paragraph 9, Lessee, at
its own risk and expense, shall immediately return the Equipment described
in such Leasing Schedule(s) to Lessor in the same condition
as when
delivered, ordinary wear and tear excepted, at such location as Lessor
shall designate. Lessee's return obligations shall include, but shall not
be limited to, any additional return provisions, if any, described on the
applicable Leasing Schedule.
14. PURCHASE OPTION. Provided no Event of Default has occurred and
is continuing and provided this Agreement with respect to the applicable
Leasing Schedule shall not have previously terminated, Lessee shall have
the option, exercisable by written notice to Lessor received by Lessor at
least ninety (90) days but not more than one hundred eighty (180) days
before the expiration of the Lease Term of such Leasing Schedule, to
purchase on the day following the last day of such Term ("Purchase Date"),
all but not less than all the Equipment subject to this Agreement for a
purchase price equal to the Fair Market Value (as hereinafter defined) of
such Equipment, calculated as of the Purchase Date. "Fair Market Value"
means the value determined by an independent appraiser selected by Lessor
and approved by Lessee which shall pay the cost of appraisal. Provided
Lessee has exercised such option, Lessee shall pay to Lessor on the
Purchase Date the aforementioned purchase price in cash, together with all
sales and other taxes applicable to the transfer of the Equipment and any
other amounts as may then be due and owing hereunder, whereupon Lessor
shall cause said Equipment to be transferred to Lessee without recourse or
warranty on an as-is, where-is basis. In the event that Lessee fails to
exercise its option to purchase the Equipment as set forth herein, Lessee
shall return the Equipment to Lessor in accordance with the provisions of
Paragraph 13 hereof. Upon request by Lessor, Lessee shall act as agent for
Lessor in remarketing the Equipment to a third party.
15. LESSEE REPRESENTATIONS. Lessee represents, warrants and
covenants that: (a) Lessee is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
incorporation, as set forth above, and is duly authorized and empowered to
execute and deliver this Agreement and any other document required or
necessary to be delivered pursuant to this Agreement, and to fulfill and
comply with the terms, conditions and provisions hereof and thereof; each
such agreement, document, instrument or certificate has been (or will be at
the time of its delivery) duly authorized, executed and delivered and
constitutes or will constitute (at the time of its delivery) a valid, legal
and binding obligation of Lessee, enforceable in accordance with its terms
subject only to laws relating to bankruptcy or creditors' rights in
general; (b) neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor the fulfillment
of or compliance with the terms and provisions hereof will conflict with or
result in a breach of any of the terms, conditions or provisions of the
certificate of incorporation or the by-laws of Lessee or of any bond,
debenture, note, mortgage, indenture, agreement or other instrument to
which Lessee is now a party or by which it or its property is bound, or
constitute (with the giving of notice or the passage of time, or both) a
default thereunder; (c) neither the execution and delivery by Lessee of
this Agreement nor the consummation of the transactions herein contemplated
nor the fulfillment of or compliance with the terms and provisions hereof
will conflict with or result in a breach of any of the
terms, conditions or
provisions of any law, regulation, order, injunction or decree of any
court binding upon Lessee; (d) no registration with, or consent, approval
or other authorization or order by any court, administrative agency or
other governmental authority of the United States of America or any state
thereof is or will be required in connection with the execution, delivery,
performance or consummation by Lessee of the transactions contemplated by
this Agreement, except such as has been obtained, given or accomplished.
16. FINANCIAL REPORTS. Upon request of Lessor, Lessee shall deliver
to Lessor (a) within ninety (90) days of the close of each fiscal year of
Lessee, its consolidated balance sheet and profit and loss statement (or if
not available its parent's), certified to by a recognized firm of public
accountants; and (b) within ninety (90) days after the close of each fiscal
year of any guarantor of Lessee's obligations hereunder, the consolidated
balance sheet and profit and loss statement of such guarantor (if
available), certified to by a recognized firm of public accountants; and
(c) within forty-five (45) days of the close of each fiscal quarter of
Lessee, its quarterly financial report (or if not available its parent's),
in form satisfactory to Lessor.
17. FURTHER ASSURANCES. Lessee will promptly execute and deliver to
Lessor such further documents and take such further action as Lessor may
request in order to more effectively carry out the intent and purpose of
this Agreement. Lessor or Owner may at their option complete and file with
such authorities and at such locations as each may deem appropriate,
Uniform Commercial Code financing statements signed by Lessor or Owner
only, relating to the Agreement and the Equipment.
18. ASSIGNMENT BY LESSOR. Lessee acknowledges that Lessor may sell
and assign all or part of its interests in the Equipment and/or Leasing
Schedules. (a) In the event Lessor sells and assigns its interest in
Equipment and the Leasing Schedule related thereto prior to the
commencement of the applicable Lease Term, Lessee agrees that UPON NOTICE
OF SUCH ASSIGNMENT IT SHALL PAY DIRECTLY TO ASSIGNEE (UNLESS OTHERWISE
DIRECTED BY ASSIGNEE) WITHOUT ABATEMENT, DEDUCTION OR SETOFF ALL AMOUNTS
WHICH BECOME DUE HEREUNDER AND FURTHER AGREES THAT IT WILL NOT ASSERT
AGAINST ASSIGNEE ANY DEFENSE, COUNTERCLAIM OR SETOFF FOR ANY REASON
WHATSOEVER IN ANY ACTION FOR RENT OR POSSESSION BROUGHT BY ASSIGNEE. Upon
any such assignment and except as may otherwise be provided therein; (i)
assignee shall have and be entitled to any and all rights and remedies of
Lessor hereunder; (ii) all references in the Agreement to Lessor and Owner
shall mean assignee; and (iii) assignee shall not be chargeable with any
obligations or liabilities of Lessor hereunder. Such assignment shall not
diminish any of Lessee's rights hereunder. (b) In the event that Lessor
assigns all or part of a Leasing Schedule after the commencement of the
applicable Lease Term, then Lessee agrees that UPON NOTICE OF SUCH
ASSIGNMENT IT SHALL PAY DIRECTLY TO ASSIGNEE (UNLESS OTHERWISE DIRECTED BY
LESSOR) WITHOUT ABATEMENT, DEDUCTION OR SETOFF ALL AMOUNTS WHICH BECOME DUE
HEREUNDER AND FURTHER AGREES THAT IT WILL NOT ASSERT AGAINST ASSIGNEE ANY
DEFENSE, COUNTERCLAIM OR SETOFF FOR ANY REASON WHATSOEVER IN ANY ACTION FOR
RENT OR POSSESSION BROUGHT BY ASSIGNEE. Upon any such assignment and
except as may otherwise be provided therein; (i) assignee shall have and be
entitled to any and all rights and remedies of Lessor hereunder; (ii) all
references in the Agreement to Lessor shall include assignee; and (iii)
assignee shall not be chargeable with any obligations or liabilities of
Lessor hereunder. Such assignment shall not diminish any of Lessee's
rights hereunder.
19. ASSIGNMENT BY LESSEE. Lessee may, without the further consent of
Lessor, assign or sublet its interest in Equipment and the Leasing Schedule
related thereto; provided, however, notwithstanding any such assignment or
sublease, Lessee shall remain responsible for all obligations of Lessee
under this Lease and Lessor shall not be obligated to give any notices due
Lessee hereunder to any assignee or sublessee of Lessee. Lessor shall look
solely to Lessee for performance of all obligations of Lessee hereunder.
Any assignee or sublessee of Lessee pursuant to this Paragraph 19 shall
acquire its interest subject to any and all claims and liabilities which
Lessor has against Lessee hereunder. Lessee shall notify Lessor in writing
of any assignment or sublease made pursuant to the terms hereof within ten
(10) days of such assignment.
20. NON-CANCELLABLE LEASE; LESSEE'S OBLIGATIONS UNCONDITIONAL;
SURVIVAL OF COVENANTS. This Agreement cannot be cancelled or terminated
except as expressly provided herein. Lessee's obligations to pay all Rent
and any other amounts owing hereunder shall be absolute and unconditional.
All obligations of Lessee (including, without limitation, those set forth
in Paragraph 5 hereof) shall survive the expiration or termination of this
Agreement to the extent required for their full observances and
performance.
21. EFFECT OF WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Lessor, any right, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise of any other right, power or
privilege. Any waiver, permit, consent or approval of any kind or
character on the part of Lessor under this Agreement must be in writing
specifically set forth and signed by Lessor.
22. MISCELLANEOUS. This Agreement may not be amended except by a
writing signed by the parties hereto and shall be binding upon and inure to
the benefit of the parties, their permitted successors and assigns. Any
provision of this Agreement which is unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Time is of the essence with respect
to this
Agreement. The captions in this Agreement are for convenience only and
shall not define or limit any of the terms hereof.
Executed this 18 day of February, 1992.
By execution hereof, the signer hereby certifies that (s)he has read this
Agreement and is duly authorized to execute this Agreement on behalf of
Lessee.
LESSOR: CITICORP LEASING, INC.
By: Joseph M. Gallagher
Name: Joseph M. Gallagher
Title: V.P.
LESSEE: COCA-COLA BOTTLING CO.
CONSOLIDATED
By: David V. Singer
Name: David V. Singer
Title: Vice President and C.F.O
EXHIBIT 21.1
LIST OF SUBSIDIARIES
STATE/DATE PERCENT
INVESTMENT IN INCORPORATION OWNED BY OWNERSHIP
Columbus Coca-Cola Delaware Consolidated 100%
Bottling Company 7/10/84
Coca-Cola Bottling Co. Delaware Consolidated 100%
of Nashville, Inc. 2/5/85
Coca-Cola Bottling Co. Delaware Consolidated 100%
of Roanoke, Inc. 2/5/85
Coca-Cola Bottling Co. Alabama Consolidated 100%
of Mobile, Inc. 7/29/85
Panama City Coca-Cola Florida Columbus CCBC, Inc. 100%
Bottling Company 10/5/31
Case Advertising, Inc. Delaware Consolidated 100%
2/19/88
C C Beverage Packing, Delaware Consolidated 100%
Inc. 3/15/88
Tennessee Soft Drink Tennessee CCBC of 100%
Production Company 12/22/88 Nashville, Inc.
The Coca-Cola Bottling West Virginia Consolidated 100%
Company of West 12/28/92
Virginia, Inc.
Jackson Acquisitions, Delaware Consolidated 100%
Inc. 1/24/90
CCBCC, Inc. Delaware Consolidated 100%
12/20/93
Sunbelt Coca-Cola Delaware Consolidated 100%
Bottling Company, Inc. 7/24/80
Palmetto Bottling South Carolina Sunbelt 100%
Company 5/03/05
Fayetteville Coca- North Carolina Sunbelt 100%
Cola Bottling Company 5/29/11
Coca-Cola Bottling Co. Delaware Sunbelt 100%
Affiliated, Inc. 4/18/35
Metrolina Bottling Delaware Consolidated 100%
Company 5/21/93
LIST OF SUBSIDIARIES (cont.)
STATE/DATE PERCENT
INVESTMENT IN INCORPORATION OWNED BY OWNERSHIP
COBC, Inc. Delaware Columbus Coca-Cola 100%
11/23/93 Bottling Company
ECBC, Inc. Delaware Fayetteville Coca-Cola 100%
11/23/93 Bottling Company
MOBC, Inc. Delaware Coca-Cola Bottling 100%
11/23/93 Co. of Mobile, Inc.
NABC, Inc. Delaware Coca-Cola Bottling Co. 100%
11/23/93 of Nashville, Inc.
PCBC, Inc. Delaware Panama City Coca-Cola 100%
11/23/93 Bottling Company
ROBC, Inc. Delaware Coca-Cola Bottling Co. 100%
11/23/93 of Roanoke, Inc.
WCBC, Inc. Delaware Coca-Cola Bottling Co. 100%
11/23/93 Affiliated, Inc.
WVBC, Inc. Delaware The Coca-Cola Bottling 100%
11/23/93 Company of West
Virginia, Inc.
Coca-Cola Ventures, Delaware Fayetteville Coca-Cola 33%
Inc. 6/17/93 Bottling Company
Coca-Cola Bottling Co. 67%
Affiliated, Inc.
CCBCC Services, Inc. Tennessee Coca-Cola Bottling Co. 100%
7/1/85 of Nashville, Inc.
Whirl-i-Bird, Inc. Tennessee Consolidated 100%
11/3/86
Exhibit 23.1
Consent Of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-4325)
and Registration Statement on Form S-3 (No. 33-31784) of our report dated
February 18, 1994 appearing in this filing of Coca-Cola Bottling Co.
Consolidated's annual report on Form 10-K for the fiscal year ended January 2,
1994. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
PRICE WATERHOUSE
Charlotte, North Caorlina
March 30, 1994
