UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
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Commission File Number 0-9286
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COCA-COLA BOTTLING CO. CONSOLIDATED
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(Exact name of registrant as specified in its charter)
Delaware 56-0950585
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(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
1900 Rexford Road, Charlotte, North Carolina 28211
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(Address of principal executive offices) (Zip Code)
(704) 551-4400
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 1, 1998
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Common Stock, $1 Par Value 7,045,047
Class B Common Stock, $1 Par Value 1,319,800
PART I - FINANCIAL INFORMATION
Item l. Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
March 29, Dec. 28, March 30,
1998 1997 1997
----------- ---------- ----------
ASSETS
- ------
Current Assets:
- ---------------
Cash $ 5,177 $ 4,427 $ 3,557
Accounts receivable, trade, less allowance for
doubtful accounts of $512, $513 and $416 52,599 55,258 47,193
Accounts receivable from The Coca-Cola Company 11,594 4,690 6,333
Due from Piedmont Coca-Cola Bottling Partnership 1,931 2,009 4,613
Accounts receivable, other 5,983 8,776 7,009
Inventories 40,154 38,738 32,770
Prepaid expenses and other current assets 13,414 12,674 9,645
----------- ---------- ----------
Total current assets 130,852 126,572 111,120
----------- ---------- ----------
Property, plant and equipment, less accumulated
depreciation of $182,197, $175,766 and $166,615 251,663 250,904 251,980
Investment in Piedmont Coca-Cola Bottling Partnership 61,601 63,326 63,645
Other assets 45,525 43,138 35,464
Identifiable intangible assets, less accumulated
amortization of $107,937, $105,334 and $97,870 259,620 231,034 238,348
Excess of cost over fair value of net assets of
businesses acquired, less accumulated
amortization of $29,132, $28,560 and $26,842 62,486 63,059 64,777
----------- ---------- ----------
Total $811,747 $778,033 $765,334
=========== ========== ==========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
March 29, Dec. 28, March 30,
1998 1997 1997
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LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
- --------------------
Portion of long-term debt payable within one year $ 72,733 $ 12,000 $ 135
Accounts payable and accrued liabilities 65,609 71,583 59,017
Accounts payable to The Coca-Cola Company 7,639 4,108 2,215
Accrued compensation 3,297 5,075 3,060
Accrued interest payable 9,515 14,038 7,521
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Total current liabilities 158,793 106,804 71,948
Deferred income taxes 110,142 111,594 107,512
Deferred credits 6,545 7,139 9,381
Other liabilities 56,275 49,434 46,464
Long-term debt 475,272 493,789 529,749
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Total liabilities 807,027 768,760 765,054
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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-10,107,421, 10,107,421 and 10,107,359 shares 10,107 10,107 10,107
Class B Common Stock, $1 par value:
Authorized-10,000,000 shares;
Issued-1,947,914, 1,947,914 and 1,947,976 shares 1,948 1,948 1,948
Class C Common Stock, $1 par value:
Authorized-20,000,000 shares; Issued-None
Capital in excess of par value 100,983 103,074 109,347
Accumulated deficit (47,064) (44,602) (59,764)
Minimum pension liability adjustment (104)
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65,974 70,527 61,534
Less-Treasury stock, at cost:
Common - 3,062,374 shares 60,845 60,845 60,845
Class B Common - 628,114 shares 409 409 409
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Total shareholders' equity 4,720 9,273 280
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Total $811,747 $778,033 $765,334
========== ========= ===========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
In Thousands
Capital Minimum
Class B in Pension
Common Common Excess of Accumulated Liability Treasury
Stock Stock Par Value Deficit Adjustment Stock
---------- --------- --------- ----------- ---------- ---------
Balance on
December 29, 1996 $ 10,107 $ 1,948 $111,439 $ (59,868) $ (104) $ 41,253
Net income 104
Cash dividends
paid: Common (2,092)
Purchase of
Common Stock 20,001
---------- --------- --------- ----------- ---------- ---------
Balance on
March 30, 1997 $ 10,107 $ 1,948 $109,347 $ (59,764) $ (104) $ 61,254
========== ========= ========= =========== ========== =========
Balance on
December 28, 1997 $ 10,107 $ 1,948 $103,074 $ (44,602) $ - $ 61,254
Net loss (2,462)
Cash dividends
paid: Common (2,091)
---------- --------- --------- ----------- ---------- ---------
Balance on
March 29, 1998 $ 10,107 $ 1,948 $100,983 $ (47,064) $ - $ 61,254
========== ========= ========= =========== ========== =========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
First Quarter
---------------------------------
1998 1997
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Net sales (includes sales to Piedmont of $12,203 and
$10,591) $ 203,331 $ 178,395
Cost of sales, excluding depreciation shown below
(includes $10,835 and $8,603 related to sales to Piedmont) 118,397 99,450
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Gross margin 84,934 78,945
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Selling expenses, excluding depreciation shown below 50,698 44,064
General and administrative expenses 15,781 13,988
Depreciation expense 8,734 8,133
Amortization of goodwill and intangibles 3,221 3,064
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Income from operations 6,500 9,696
Interest expense 9,258 9,124
Other income (expense), net (1,157) (407)
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Income (loss) before income taxes (3,915) 165
Income taxes (benefit) (1,453) 61
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Net income (loss) $ (2,462) $ 104
========= =========
Basic net income (loss) per share $ (.29) $ .01
Diluted net income (loss) per share $ (.29) $ .01
Weighted average number of common
shares outstanding 8,365 8,535
Weighted average number of common
shares outstanding - assuming dilution 8,493 8,624
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
First Quarter
1998 1997
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Cash Flows from Operating Activities
- ------------------------------------
Net income (loss) $ (2,462) $ 104
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation expense 8,734 8,133
Amortization of goodwill and intangibles 3,221 3,064
Deferred income taxes (benefit) (1,453) 61
Losses on sale of property, plant and equipment 729 298
Amortization of debt costs 149 141
Undistributed losses of Piedmont Coca-Cola Bottling
Partnership 1,725 817
Increase in current assets less current liabilities (11,402) (7,829)
Increase in other noncurrent assets (2,556) (1,017)
Increase in other noncurrent liabilities 6,248 2,461
Other 3
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Total adjustments 5,398 6,129
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Net cash provided by operating activities 2,936 6,233
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Cash Flows from Financing Activities
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Proceeds from the issuance of long-term debt 90,521
Increase in current portion of long-term debt 60,733 30
Payments on long-term debt (18,517) (226)
Purchase of Common Stock (20,001)
Cash dividends paid (2,091) (2,092)
Other (11)
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Net cash provided by financing activities 40,114 68,232
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Cash Flows from Investing Activities
- ------------------------------------
Additions to property, plant and equipment (8,906) (70,339)
Proceeds from the sale of property, plant and equipment 10 1
Acquisition of companies, net of cash acquired (33,404) (3,511)
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Net cash used in investing activities (42,300) (73,849)
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Net increase in cash 750 616
Cash at beginning of period 4,427 2,941
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Cash at end of period $ 5,177 $ 3,557
========== ===========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
1. Accounting Policies
The consolidated financial statements include the accounts of Coca-Cola Bottling
Co. Consolidated and its majority owned subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated.
The information contained in the financial statements is unaudited. The
statements reflect all adjustments which, in the opinion of management, are
necessary for a fair statement of the results for the interim periods presented.
All such adjustments are of a normal, recurring nature.
The accounting policies followed in the presentation of interim financial
results are the same as those followed on an annual basis. These policies are
presented in Note 1 to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 28, 1997 filed
with the Securities and Exchange Commission.
Certain prior year amounts have been reclassified to conform to current year
classifications.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
2. Summarized Income Statement Data of Piedmont Coca-Cola Bottling Partnership
On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola
Bottling Partnership ("Piedmont") to distribute and market soft drink products
primarily in portions of North Carolina and South Carolina. The Company and The
Coca-Cola Company, through their respective subsidiaries, each beneficially own
a 50% interest in Piedmont. The Company provides a portion of the soft drink
products to Piedmont at cost and receives a fee for managing the business of
Piedmont pursuant to a management agreement. Summarized income statement data
for Piedmont is as follows:
First Quarter
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In Thousands 1998 1997
- --------------------------------------------------------------------------------
Net sales $ 57,358 $ 52,831
Gross margin 24,725 23,728
Income (loss) from operations (219) 1,384
Net loss (3,450) (1,634)
3. Inventories
Inventories are summarized as follows:
Mar. 29, Dec. 28, Mar. 30,
In Thousands 1998 1997 1997
- --------------------------------------------------------------------------------
Finished products $24,066 $21,542 $18,068
Manufacturing materials 12,684 14,171 8,824
Plastic pallets and other 3,404 3,025 5,878
Total inventories $40,154 $38,738 $32,770
Substantially all merchandise inventories are valued by the LIFO method. The
amounts included above for inventories valued by the LIFO method were greater
than replacement or current cost by approximately $2.7 million, $2.8 million and
$2.1 million on March 29, 1998, December 28, 1997 and March 30, 1997,
respectively, as a result of inventory premiums associated with certain
acquisitions.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
4. Long-Term Debt
Long-term debt is summarized as follows:
Fixed(F) or
Interest Variable Interest Mar. 29, Dec. 28, Mar. 30,
In Thousands Maturity Rate (V) Rate Paid 1998 1997 1997
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Lines of Credit 2002 5.63% V Varies $ 20,400 $10,300 $134,250
Term Loan Agreement 2004 6.33% V Varies 85,000 85,000 170,000
Term Loan Agreement 2005 6.33% V Varies 85,000 85,000
Medium-Term Notes 1998 6.28% V Quarterly 10,000 10,000 10,000
Medium-Term Notes 1998 10.05% F Semi- 2,000 2,000 2,000
annually
Medium-Term Notes 1999 7.99% F Semi- 28,585 28,585 28,585
annually
Medium-Term Notes 2000 10.00% F Semi- 25,500 25,500 25,500
annually
Medium-Term Notes 2002 8.56% F Semi- 47,000 47,000 47,000
annually
Debentures 2007 6.85% F Semi- 100,000 100,000 100,000
annually
Debentures 2009 7.20% F Semi- 100,000 100,000
annually
Other notes payable 1998 - 6.50% - F Varies 44,520 12,404 12,549
2001 10.00% -------- -------- -------
548,005 505,789 529,884
Less: Portion of long-
term debt payable
within one year 72,733 12,000 135
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Long-term debt $475,272 $493,789 $529,749
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Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
4. Long-Term Debt (cont.)
It is the Company's intent to renew its lines of credit and borrowings under
the revolving credit facility as they mature. To the extent that these
borrowings do not exceed the amount available under the Company's $170
million revolving credit facility, they are classified as noncurrent
liabilities.
On October 12, 1994, a $400 million shelf registration for debt and equity
securities filed with the Securities and Exchange Commission became
effective and the securities thereunder became available for issuance. On
November 1, 1995, the Company issued $100 million of 6.85% debentures due
2007 pursuant to such registration. In July 1997, the Company issued $100
million of 7.20% debentures due 2009. The net proceeds from these issuances
were used for refinancing a portion of existing public debt with the
remainder used to repay other debt.
On November 20, 1995, the Company entered into a $170 million term loan
agreement with $85 million maturing in July 2004 and $85 million maturing in
July 2005. This loan was used to repay two $60 million loans previously
entered into by the Company and other bank debt.
The Company has guaranteed a portion of the debt for two cooperatives in
which the Company is a member. The amounts guaranteed were $30.3 million,
$31.1 million and $31.8 million as of March 29, 1998, December 28, 1997 and
March 30, 1997, respectively.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Derivative Financial Instruments
The Company uses derivative financial instruments to modify risk from
interest rate fluctuations in its underlying debt. The Company has
historically altered its fixed/floating interest rate mix based upon
anticipated operating cash flows of the Company relative to its debt level
and the Company's ability to absorb increases in interest rates. These
derivative financial instruments are not used for trading purposes.
The Company had weighted average interest rates for its debt portfolio of
approximately 7.1%, 7.1% and 6.9% as of March 29, 1998, December 28, 1997
and March 30, 1997, respectively. The Company's overall weighted average
interest rate on its long-term debt increased from an average of 6.9% during
the first quarter of 1997 to an average of 7.1% during the first quarter of
1998. After taking into account the effect of all of the interest rate swap
activities, approximately 21%, 50% and 59% of the total debt portfolio was
subject to changes in short-term interest rates as of March 29, 1998,
December 28, 1997 and March 30, 1997, respectively.
A rate increase of 1% on the floating rate component of the Company's debt
would have increased interest expense for the first quarter of 1998 by
approximately $2.7 million and the net loss for the first quarter ended
March 29, 1998 would have been increased by approximately $1.7 million.
The Company currently has three interest rate swap agreements, including a
new fixed rate interest swap for $50 million added in the first quarter of
1998.
Derivative financial instruments were as follows:
March 29, 1998 December 28, 1997 March 30, 1997
----------------------------------------------------------------------------------
Remaining Remaining Remaining
In Thousands Amount Term Amount Term Amount Term
- -------------------------------------------------------------------------------------------------------------------------
Interest rate swaps-floating $ 60,000 5.5 years $ 60,000 5.75 years $ 60,000 6.5 years
Interest rate swaps-floating 100,000 11.5 years
Interest rate swaps-fixed 60,000 5.5 years 60,000 5.75 years 60,000 6.5 years
Interest rate swaps-fixed 50,000 7.0 years
In January 1998, the Company terminated two floating rate interest swaps
with a total notional amount of $100 million. The gain of $6.5 million
resulting from this termination will be amortized over 11.5 years, the
remaining term of the initial swap agreements.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
5. Derivative Financial Instruments (cont.)
The carrying amounts and fair values of the Company's balance sheet and
off-balance-sheet instruments were as follows:
March 29, 1998 December 28, 1997 March 30, 1997
---------------------- ---------------------- ----------------------
Carrying Fair Carrying Fair Carrying Fair
In Thousands Amount Value Amount Value Amount Value
- ----------------------------------------------------------------------------------------------------------------------------
Balance Sheet Instruments
- -------------------------
Public debt $313,085 $326,544 $313,085 $327,486 $213,085 $213,908
Non-public variable rate long-term
term debt 190,400 190,400 180,300 180,300 304,250 304,250
Non-public fixed rate long-term
debt 44,520 45,456 12,404 13,297 12,549 13,141
Off-Balance-Sheet Instruments
- -----------------------------
Interest rate swaps (2,450) 1,854 (3,879)
Interest rate cap 41 80
The fair values of the interest rate swaps at March 29, 1998 and March 30,
1997 represent the estimated amounts the Company would have had to pay to
terminate these agreements. The fair values of the interest rate cap and the
fair value of the interest rate swap at December 28, 1997 represents the
estimated amounts the Company would have received upon termination of these
agreements.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash, net of effect
of acquisition, were as follows:
First Quarter
------------------------------
In Thousands 1998 1997
- ----------------------------------------------------------------------------------------------------------------
Accounts receivable, trade, net $ 3,286 $ 3,725
Accounts receivable, The Coca-Cola Company (6,904) (3,173)
Due from Piedmont Coca-Cola Bottling Partnership 78 1,275
Accounts receivable, other 2,820 439
Inventories (1,228) (1,983)
Prepaid expenses and other current assets (518) (192)
Accounts payable and accrued liabilities (6,146) (1,081)
Accounts payable, The Coca-Cola Company 3,531 (1,034)
Accrued compensation (1,798) (2,214)
Accrued interest payable (4,523) (3,591)
--------- ----------
Increase in current assets less current liabilities $(11,402) $ (7,829)
========= ==========
7. Acquisition
On January 21, 1998, the Company purchased the franchise rights and operating
assets of a Coca-Cola bottler located in Florence, Alabama for $33.6 million.
The bottling territory covers portions of northwest Alabama and south central
Tennessee and is contiguous to the Company's Tennessee bottling territory. The
Company issued notes payable to the seller for approximately $32.1 million and
used the Company's existing lines of credit to fund the cash portion of the
acquisition. A portion of the notes payable issued is due on July 15, 1998 with
the remaining notes payable due on January 31, 1999. The interest rate for the
notes payable issued is 6.5%.
The acquisition was accounted for using the purchase method of accounting.
Accordingly, the Company's financial statements reflect the operating results
since the acquisition date.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction:
- -------------
The following discussion presents management's analysis of the results of
operations for the first three months of 1998 compared to the first three months
of 1997 and changes in financial condition from March 30, 1997 and December 28,
1997 to March 29, 1998.
The Company reported a net loss of $2.5 million or $.29 per share for the first
quarter of 1998 compared with net income of $.1 million or $.01 per share for
the same period in 1997. The decrease in earnings from the prior year was due to
several factors including an extremely competitive pricing environment,
increases in the cost of packaging and ingredients and increased selling
expenses, primarily related to employment costs. The Company has continued to
make significant investments in the form of both capital expenditures and
personnel to support its growth initiatives. Expenses related to these ongoing
investments are recognized ratably throughout the year, while the revenue
generated from the additional investments tends to be more seasonal, with
significantly more revenue generated in the second and third quarters of each
fiscal year. In January 1998, the Company purchased the franchise rights and
operating assets of a Coca-Cola bottler located in Florence, Alabama for $33.6
million. This bottling territory covers portions of northwest Alabama and south
central Tennessee and is contiguous to the Company's Tennessee bottling
territory.
The results for interim periods are not necessarily indicative of the results to
be expected for the year due to seasonal factors.
Results of Operations:
- ----------------------
The quarter was highlighted by strong volume growth across both the Company's
core brands and newer brands. Net sales for the first quarter of 1998 increased
almost 14% from the first quarter of 1997. Franchise equivalent volume grew by
12% in the first quarter, driven by a special promotion with a key retailer,
focused marketing initiatives, lower pricing and the additional cold drink
equipment the Company has placed over the past 12 months. The increased volume
was offset by a 2% per unit decrease in net selling prices and an increase of
almost 2% per unit in cost of sales. The sales volume growth was broad-based
across all significant channels. In addition, the Company posted a 16% increase
in fountain volume.
Sprite continued its strong growth with another double-digit volume increase
over the first quarter of the prior year. Sales volume of Surge, a product
introduced throughout the Company's franchise territory in the fourth quarter of
1997 and the first quarter of 1998, continues to exceed initial expectations.
The Company's non-carbonated beverages experienced tremendous growth with a
volume increase in excess of 100% over the same period in the prior year.
Selling expenses for the first quarter of 1998 increased 15% over the first
quarter of 1997. Selling expenses increased due to increased employment costs
reflecting additional sales personnel added to support the Company's growth and
key customer initiatives, higher sales commission costs related to the sales
volume increase, increased marketing costs and increased expenses related to
sales development programs.
General and administrative expenses increased by 13% primarily due to higher
employment costs associated with additional administrative personnel and wage
increases necessary to compete in highly competitive labor markets.
Depreciation expense increased 7% between the first quarter of 1997 and the
first quarter of 1998. This increase was due primarily to depreciation expense
on new capital investments in 1997 that totaled approximately $100 million.
Depreciation expense is recognized on a straight-line basis throughout the year
while the revenue generated by these assets tends to be more seasonal, with the
majority of the revenue coming in the second and third quarters.
Interest expense of $9.3 million was relatively unchanged from the first quarter
of 1997. The Company's overall weighted average interest rate increased from an
average of 6.9% during the first quarter of 1997 to an average of 7.1% during
the first quarter of 1998.
Other income (expense), net for the first quarter 1998 was $750,000 higher than
the first quarter of 1997 primarily due to increased losses on disposals of cold
drink equipment. Over the past several years, the Company has increased
significantly its cold drink asset base.
Changes in Financial Condition:
- -------------------------------
Working capital decreased $47.7 million from December 28, 1997 and decreased
$67.1 million from March 30, 1997 to March 29, 1998. The decrease from December
28, 1997 is primarily attributable to an increase in the current portion of
long-term debt of $60.7 million, offset by decreases in accounts payable and
accruals of $6.0 million and a decrease in accrued interest of $4.5 million. The
increase in the current portion of long-term debt is attributable to the
maturing of $28.6 million of the Company's Medium-Term Notes in the first
quarter of 1999 and additional debt related to the acquisition of a Coca-Cola
bottler in northwest Alabama in January 1998. Working capital decreased by $67.1
million from March 30, 1997 due to an increase in the current portion of
long-term debt of $72.6 million. The $72.6 million increase in the current
portion of long-term debt reflects the increases discussed above as well as an
additional $12 million of Medium-Term Notes that mature in the second quarter of
1998. Some of the other significant changes in working capital from the first
quarter of 1997 to the first quarter of 1998 included an increase in trade
accounts receivable of $5.4 million, an increase in accounts receivable from The
Coca-Cola Company of $5.3 million and an increase of $7.4 million in
inventories. The increase in trade accounts receivable is due to the significant
increase in sales volume over the prior year. The increase in inventories is
also due to the significant increase in sales volume as well as an increase in
the number of stockkeeping units, such as Surge, 20 pack cans and 15 pack 20 oz
bottles. Other decreases in working capital were due to an increase of $6.6
million in accounts payable and accruals and a $5.4 million increase in amounts
payable to The Coca-Cola Company.
Capital expenditures in the first quarter of 1998 were $8.9 million compared to
$4.0 million in the first quarter of 1997. Capital expenditures for the first
quarter of 1997 of $4.0 million exclude the purchase of $66.3 million of
previously leased equipment completed during the quarter.
Long-term debt decreased by $54.5 million from March 30, 1997 and decreased
$18.5 million from December 28, 1997. The decrease from March 30, 1997 is due
primarily to the reclassification of $40.6 million of the Company's Medium-Term
Notes to current liabilities as of March 29, 1998. The decrease from December
28, 1997 to March 29, 1998 is primarily attributable to the reclassification of
$28.6 million of Medium-Term Notes to current liabilities offset partially by
additional borrowings to fund working capital requirements. The Company
currently intends to use its informal lines of credit to refinance the
Medium-Term Notes as they come due.
It is the Company's intent to renew any borrowings under its $170 million
revolving credit facility and the informal lines of credit as they mature and,
to the extent that any borrowings under the revolving credit facility and the
informal lines of credit do not exceed the amount available under the Company's
$170 million revolving credit facility, they are classified as noncurrent
liabilities. As of March 29, 1998, the Company had no outstanding balances under
the revolving credit facility and $20.4 million outstanding under the informal
lines of credit.
As of March 29, 1998 the debt portfolio had a weighted average interest rate of
7.1% and approximately 21% of the total portfolio of $548 million was subject to
changes in short-term interest rates.
Other liabilities increased from December 28, 1997 to March 29, 1998 by $6.8
million primarily due to a $6.5 gain which resulted from the termination of two
interest rate swaps in January 1998. The $6.5 million gain will be amortized
over 11.5 years, the remaining term of the initial swap agreements.
Management believes that the Company, through the generation of cash flow from
operations and the utilization of unused borrowing capacity, has sufficient
financial resources available to maintain its current operations and provide for
its current capital expenditure requirements. The Company considers the
acquisition of additional franchise territories on an ongoing basis.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
10.1 Coca-Cola Bottling Co. Consolidated Director Deferral Plan.
27 Financial data schedule for period ended March 29, 1998.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)
Date: May 12, 1998 By: /s/ David V. Singer
----------------------------------
David V. Singer
Principal Financial Officer of the Registrant
and
Vice President - Chief Financial Officer
COCA-COLA BOTTLING CO. CONSOLIDATED
DIRECTOR DEFERRAL PLAN
1. NAME AND EFFECTIVE DATE:
This plan shall be known as the "Coca-Cola Bottling Co. Consolidated
Director Deferral Plan" (the "Plan"). The Plan shall be effective as of January
1, 1998.
2. PURPOSE AND INTENT:
Coca-Cola Bottling Co. Consolidated (the "Company") establishes this
Plan effective January 1, 1998 for the purpose of providing the nonemployee
members of its Board of Directors with the opportunity to defer payment of the
director fees payable with respect to a year in accordance with the terms and
provisions set forth herein. It is the intent of the Company that amounts
deferred under the Plan by a director shall not be taxable to the director for
income tax purposes until the time actually received by the director. The
provisions of the Plan shall be construed and interpreted to effectuate such
intent.
3. DEFINITIONS:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Account" means the account established and maintained on the books
of the Company to record a Participant's interest under the Plan attributable to
amounts credited to the Participant pursuant to paragraph 5(c) below, as
adjusted from time to time pursuant to the terms of the Plan.
(b) "Beneficiary" means the person(s) or entity(ies) designated by the
Participant to receive the Participant's benefits under the Plan in the event of
the Participant's death. Designation of a Participant's Beneficiary shall be
made on such forms and pursuant to such procedures as determined by the Plan
Administrator from time to time. If a Participant fails to designate a
Beneficiary or if the designated Beneficiary fails to survive the Participant,
then the Beneficiary shall be the Participant's surviving spouse, and if there
is no surviving spouse, then the Participant's estate.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
(e) "Compensation Committee" means the committee of individuals who are
serving from time to time as the members of the Compensation Committee of the
Board of Directors of the Company.
(f) "Fees" means both (i) the annual retainer fee and (ii) any meetings
fees payable to a Nonemployee Director under the Company's compensation policies
for directors in effect from time to time.
(g) "Nonemployee Director" means an individual who is a member of the
Board of Directors of the Company, but who is not an employee of the Company.
(h) "Participant" means a Nonemployee Director who has elected to
participate in the Plan as provided in paragraph 5(b) below.
(i) "Plan Administrator" means the person or entity designated by the
Compensation Committee as the Plan Administrator for purposes of the Plan.
(j) "Plan Year" means the twelve (12) month period beginning January 1
and ending December 31.
(k) "Single Sum Value" of the Account of a Participant who is receiving
annual installments pursuant to paragraph 5(h) means the single sum present
value of the installments determined as of the relevant determination date using
for such purpose as the discount rate the same rate that was used in calculating
the amount of the installments pursuant to paragraph 5(g) below.
4. ADMINISTRATION:
The Plan Administrator shall be responsible for administering the Plan.
The Plan Administrator shall have all of the powers necessary to enable it to
properly carry out its duties under the Plan. Not in limitation of the
foregoing, the Plan Administrator shall have the power to construe and interpret
the Plan and to determine all questions that shall arise thereunder. The Plan
Administrator shall have such other and further specified duties, powers,
authority and discretion as are elsewhere in the Plan either expressly or by
necessary implication conferred upon it. The Plan Administrator may appoint such
agents as it may deem necessary for the effective performance of its duties, and
may delegate to such agents such powers and duties as the Plan Administrator may
deem expedient or appropriate that are not inconsistent with the intent of the
Plan. The decision of the Plan Administrator upon all matters within its scope
of authority shall be final and conclusive on all persons, except to the extent
otherwise provided by law.
5. OPERATION:
(a) Eligibility. Each Nonemployee Director shall be eligible to
participate in the Plan.
(b) Elections to Defer. A Nonemployee Director may become a Participant
in the Plan by irrevocably electing, on a form provided by the Plan
Administrator, to defer the Fees payable for a Plan Year to the Nonemployee
Director. In order to be effective, a Nonemployee Director's election to defer
must be executed and returned to the Plan Administrator on or before the date
2
specified by the Plan Administrator for such purpose. Such election must
normally be made prior to the beginning of the Plan Year to which the election
relates. However, the Plan Administrator, in its sole and exclusive discretion,
may determine that in certain circumstances an election may be made during a
Plan Year if such determination is not inconsistent with the intent of the Plan
expressed in paragraph 2 above.
(c) Establishment of Accounts. The Company shall establish and maintain
on its books an Account for each Participant. Each Account shall be designated
by the name of the Participant for whom established. The amount of Fees deferred
by a Participant shall be credited to the Participant's Account as of the date
such Fees would have otherwise been paid to the Participant.
(d) Periodic Account Adjustments for Deemed Investments.
(i) Deemed Investment. The Plan Administrator shall from time
to time designate one or more investment vehicle(s) in which the
Accounts of Participants shall be deemed to be invested. The investment
vehicle(s) may be designated by reference to the investments available
under other plans sponsored by the Company. Each Participant shall
designate the investment vehicle(s) in which his or her Account shall
be deemed to be invested according to the procedures developed by the
Plan Administrator. The Company shall be under no obligation to acquire
or invest in any of the deemed investment vehicle(s) under this
subparagraph, and any acquisition of or investment in a deemed
investment vehicle by the Company shall be made in the name of the
Company and shall remain the sole property of the Company.
(ii) Periodic Account Adjustments. Each Account shall be
adjusted from time to time at such intervals as determined by the Plan
Administrator. The amount of the adjustment shall equal the amount that
each Participant's Account would have earned (or lost) for the period
since the last adjustment had the Account actually been invested in the
deemed investment vehicle(s) designated by the Participant for such
period pursuant to paragraph 5(d)(i).
(e) Methods of Payment.
(i) Termination Prior to Age 65. If a Participant terminates
service with the Company as a member of the Board of Directors of the
Company prior to having attained age 65, then the Participant's Account
shall be paid in a single cash payment in accordance with paragraph
5(f) below.
(ii) Termination At and After Age 65. If a Participant
terminates service with the Company as a member of the Board of
Directors of the Company after having attained age 65, then the
Participant's Account shall be paid in either a single cash payment (in
accordance with paragraph 5(f) below) or ten (10) annual installments
(in accordance with paragraph 5(g) below) pursuant to the Participant's
election. Such election shall be irrevocable and shall be made at the
time the Participant first elects to defer Fees under the
3
Plan (or at such other time as determined by the Plan Administrator not
inconsistent with the intent of the Plan expressed in paragraph 2
above).
(f) Single Cash Payment. If a Participant to whom the single cash
payment method applies terminates services with the Company as a member of the
Board of Directors of the Company, such Participant's Account determined as of
the date of such termination of services shall be paid to the Participant (or
Beneficiary in case of death) as soon as practicable after such termination of
service. Notwithstanding the foregoing, at the time a Participant first elects
to defer Fees under the Plan (or at such other time as determined by the Plan
Administrator not inconsistent with the intent of the Plan expressed in
paragraph 2 above), the Participant may elect to have the payment of the
Participant's Account deferred until the date the Participant attains age 65,
provided that the Participant terminates service after having attained at least
age 60 (i.e., the deferral to age 65 will not apply if the Participant
terminates service prior to age 60). Such election shall be irrevocable and
shall be made in such forms and pursuant to such procedures as established by
the Plan Administrator from time to time.
(g) Annual Installments. If a Participant to whom the annual
installments method applies terminates service with the Company as a member of
the Board of Directors of the Company, the amount of such annual installments
shall be calculated and paid to the Participant (or Beneficiary in the case of
death) pursuant to the provisions of this paragraph 5(g). The first installment
shall be paid as soon as administratively practicable following such termination
of service, and each subsequent installment shall be paid on or about the
anniversary of the first installment payment. The amount of the annual
installments shall be calculated, based on the balance in the Participant's
Account determined as of the date of such termination of services, as ten (10)
equal annual installments amortized over the payment period using an eight
percent (8%) interest rate. If a Participant who has selected the annual
installments method dies before any or all of the annual installments have been
paid, such remaining annual installments shall be paid to the Participant's
Beneficiary at such time as they would have otherwise been paid to the
Participant had the Participant not died.
(h) Other Payment Provisions. Subject to the provisions of paragraph
5(i) and paragraph 6 below, a Participant shall not be paid any portion of the
Participant's Account prior to the Participant's termination of services as a
member of the Board of Directors of the Company. Any payment hereunder shall be
subject to applicable payroll and withholding taxes. In the event any amount
becomes payable under the provisions of the Plan to a Participant, beneficiary
or other person who is a minor or an incompetent, whether or not declared
incompetent by a court, such amount may be paid directly to the minor or
incompetent person or to such person's fiduciary (or attorney-in-fact in the
case of an incompetent) as the Plan Administrator, in its sole discretion, may
decide, and the Plan Administrator shall not be liable to any person for any
such decision or any payment pursuant thereto.
(i) Withdrawals on Account of an Unforeseeable Emergency. A Participant
who is in active service as a member of the Board of Directors of the Company
may, in the Plan Administrator's sole discretion, receive a refund of all or any
part of the amounts previously
4
credited to the Participant's Account in the case of an "unforeseeable
emergency". A Participant requesting a payment pursuant to this subparagraph (i)
shall have the burden of proof of establishing, to the Plan Administrator's
satisfaction, the existence of such "unforeseeable emergency", and the amount of
the payment needed to satisfy the same. In that regard, the Participant shall
provide the Plan Administrator with such financial data and information as the
Plan Administrator may request. If the Plan Administrator determines that a
payment should be made to a Participant under this subparagraph (i), such
payment shall be made within a reasonable time after the Plan Administrator's
determination of the existence of such "unforeseeable emergency" and the amount
of payment so needed. As used herein, the term "unforeseeable emergency" means a
severe financial hardship to a Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that shall
constitute an "unforeseeable emergency" shall depend upon the facts of each
case, but, in any case, payment may not be made to the extent that such hardship
is or may be relieved (i) through reimbursement or compensation by insurance or
otherwise, or (ii) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship.
Examples of what are not considered to be "unforeseeable emergencies" include
the need to send a Participant's child to college or the desire to purchase a
home. Withdrawals of amounts because of an "unforeseeable emergency" shall not
exceed an amount reasonably needed to satisfy the emergency need.
(j) Statements of Account. Each Participant shall receive an annual
statement of the Participant's Account balance.
6. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN:
The Board of Directors shall have the right and power at any time and
from time to time to amend the Plan in whole or in part and at any time to
terminate the Plan; provided, however, that no such amendment or termination
shall reduce the amount actually credited to a Participant's Account under the
Plan on the date of such amendment or termination, or further defer the due
dates for the payment of such amounts, without the consent of the affected
Participant. Notwithstanding the provisions of paragraph 5(e) and 5(g), in
connection with any termination of the Plan the Board of Directors shall have
the authority to cause the Accounts of all Participants to be paid in a single
sum payment as of a date determined by the Board of Directors or to otherwise
accelerate the payment of all Accounts in such manner as the Board of Directors
shall determine in its discretion. In that regard, upon any termination of the
Plan the amount of any payment to a Participant (or beneficiary of a deceased
Participant) who is receiving annual installments pursuant to paragraph 5(g)
shall be the Single Sum Value of the Participant's Account determined as of the
selected determination date.
7. CLAIMS PROCEDURES:
(a) General. In the event that a Claimant has a Claim under the Plan,
such Claim shall be made by the Claimant's filing a notice thereof with the Plan
Administrator within ninety (90) days after such Claimant first has knowledge of
such Claim. Each Claimant who has submitted a
5
Claim to the Plan Administrator shall be afforded a reasonable opportunity to
state such Claimant's position and to present evidence and other material
relevant to the Claim to the Plan Administrator for its consideration in
rendering its decision with respect thereto. The Plan Administrator shall render
its decision in writing within ninety (90) days after the Claim is referred to
it, unless special circumstances require an extension of such time within which
to render such decision, in which event such decision shall be rendered no later
than one hundred eighty (180) days after the Claim is referred to it. A copy of
such written decision shall be furnished to the Claimant.
(b) Notice of Decision of Plan Administrator. Each Claimant whose Claim
has been denied by the Plan Administrator shall be provided written notice
thereof, which notice shall set forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of the Plan
upon which such denial is based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect such Claim and an explanation of
why such material or information is necessary; and
(iv) an explanation of the procedure hereunder for review of
such Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Administrator. Each such Claimant shall
be afforded a reasonable opportunity for a full and fair review of the decision
of the Plan Administrator denying the Claim. Such review shall be by the
Compensation Committee. Such appeal shall be made within ninety (90) days after
the Claimant received the written decision of the Plan Administrator and shall
be made by the written request of the Claimant or such Claimant's duly
authorized representative of the Compensation Committee. In the event of appeal,
the Claimant or such Claimant's duly authorized representative may review
pertinent documents and submit issues and comments in writing to the
Compensation Committee. The Compensation Committee shall review the following:
(i) the initial proceedings of the Plan Administrator with
respect to such Claim;
(ii) such issues and comments as were submitted in writing by
the Claimant or the Claimant's duly authorized representative; and
(iii) such other material and information as the Compensation
Committee, in its sole discretion, deems advisable for a full and fair
review of the decision of the Plan Administrator.
6
The Compensation Committee may approve, disapprove or modify the decision of the
Plan Administrator, in whole or in part, or may take such other action with
respect to such appeal as it deems appropriate. The decision of the Compensation
Committee with respect to such appeal shall be made promptly, and in no event
later than sixty (60) days after receipt of such appeal, unless special
circumstances require an extension of such time within which to render such
decision, in which event such decision shall be rendered as soon as possible and
in no event later than one hundred twenty (120) days following receipt of such
appeal. The decision of the Compensation Committee shall be in writing and in a
manner calculated to be understood by the Claimant and shall include specific
reasons for such decision and set forth specific references to the pertinent
provisions of the Plan upon which such decision is based. The Claimant shall be
furnished a copy of the written decision of the Compensation Committee. Such
decision shall be final and conclusive upon all persons interested therein,
except to the extent otherwise provided by applicable law.
8. APPLICABLE LAW:
The Plan shall be construed, administered, regulated and governed in
all respects under and by the laws of the United States to the extent
applicable, and to the extent such laws are not applicable, by the laws of the
state of North Carolina.
9. MISCELLANEOUS:
A Participant's rights and interests under the Plan may not be assigned
or transferred by the Participant. The Plan shall be an unsecured, unfunded
arrangement. To the extent the Participant acquires a right to receive payments
from the Company under the Plan, such right shall be no greater than the right
of any unsecured general creditor of the Company. Nothing contained herein shall
be deemed to create a trust of any kind or any fiduciary relationship between
the Company and any Participant. The Plan shall be binding on the Company and
any successor in interest of the Company.
IN WITNESS WHEREOF, this instrument has been executed by an authorized
officer of the Company as of the 18 day of December, 1997.
COCA-COLA BOTTLING
CO. CONSOLIDATED
By: /s/ Robert D. Pettus, Jr.
---------------------------
Name:Robert D. Pettus, Jr.
--------------------------
Title: Executive Vice-President and
-----------------------------
Assistant to the Chairman
5
3-Mos
JAN-03-1999
DEC-29-1997
MAR-29-1998
5,177
0
53,111
512
40,154
130,852
433,860
182,197
811,747
158,793
475,272
12,055
0
0
(7,335)
811,747
203,331
203,331
118,397
118,397
78,434
0
9,258
(3,915)
(1,453)
(2,462)
0
0
0
(2,462)
(0.29)
(0.29)
