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 SEPTEMBER 28, 1997
------------------
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 incorporation or (I.R.S. Employer
organization) Identification Number)
1900 REXFORD ROAD, CHARLOTTE, NORTH CAROLINA 28211
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(704) 551-4400
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 4, 1997
----- -------------------------------
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)
Sept. 28, Dec. 29, Sept. 29,
1997 1996 1996
------ ----- --------
ASSETS
- --------
Current Assets:
- ----------------
Cash $ 3,801 $ 2,941 $ 2,709
Accounts receivable, trade, less allowance for
doubtful accounts of $418, $410 and $413 52,834 50,918 27,800
Accounts receivable from The Coca-Cola Company 9,234 2,392 1,535
Due from Piedmont Coca-Cola Bottling Partnership 2,903 5,888
Accounts receivable, other 10,795 8,216 5,372
Inventories 36,772 30,787 32,780
Prepaid expenses and other current assets 10,498 9,453 7,732
---------- ----------- -----------
Total current assets 126,837 110,595 77,928
--------- --------- ----------
Property, plant and equipment, less accumulated
depreciation of $168,499, $161,615 and $158,301 250,572 190,073 189,706
Investment in Piedmont Coca-Cola Bottling Partnership 64,580 64,462 65,697
Other assets 44,434 33,802 34,299
Identifiable intangible assets, less accumulated
amortization of $102,849, $95,403 and $92,936 233,435 238,115 240,582
Excess of cost over fair value of net assets of
businesses acquired, less accumulated
amortization of $27,987, $26,269 and $25,697 63,631 65,349 65,922
---------- ---------- ----------
Total $783,489 $702,396 $674,134
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
Sept. 28, Dec. 29, Sept. 29,
1997 1996 1996
----------- ------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
- ------------------------
Portion of long-term debt payable within one year $ 12,030 $ 105 $ 105
Accounts payable and accrued liabilities 61,155 56,939 51,268
Accounts payable to The Coca-Cola Company 6,222 3,249 3,748
Due to Piedmont Coca-Cola Bottling Partnership 1,207
Accrued compensation 4,453 5,275 4,472
Accrued interest payable 8,997 11,112 7,576
---------- --------- ----------
Total current liabilities 92,857 76,680 68,376
Deferred income taxes 111,206 108,403 107,492
Deferred credits 11,092 12,096 11,189
Other liabilities 47,769 43,495 32,753
Long-term debt 508,689 439,453 405,353
-------- -------- --------
Total liabilities 771,613 680,127 625,163
-------- -------- --------
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, 10,107,359 and 10,090,859 shares 10,107 10,107 10,090
Class B Common Stock, $1 par value:
Authorized-10,000,000 shares; Issued-
1,947,914, 1,947,976 and 1,964,476 shares 1,948 1,948 1,965
Class C Common Stock, $1 par value:
Authorized-20,000,000 shares; Issued-None
Capital in excess of par value 105,165 111,439 113,762
Accumulated deficit (43,986) (59,868) (59,062)
Minimum pension liability adjustment (104) (104) (138)
----------- ----------- -----------
73,130 63,522 66,617
Less-Treasury stock, at cost:
Common-3,062,374, 2,641,490 and 2,132,800 shares 60,845 40,844 17,237
Class B Common-628,114 shares 409 409 409
------------ ------------ ------------
Total shareholders' equity 11,876 22,269 48,971
---------- ---------- ----------
Total $783,489 $702,396 $674,134
======== ======== ========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
Third Quarter Nine Months
------------------------------ ---------------------
1997 1996 1997 1996
---------- ----------- -------- --------
Net sales (includes sales to Piedmont of
$15,638, $18,134, $41,714 and $47,823) $ 219,079 $ 204,579 $ 605,648 $ 590,154
Cost of products sold, excluding depreciation
shown below (includes $11,966, $14,114,
$31,975 and $39,112 related to sales to
Piedmont) 124,966 114,641 338,809 332,535
---------- ---------- ---------- ----------
Gross margin 94,113 89,938 266,839 257,619
----------- ----------- ---------- ----------
Selling expenses 47,465 47,277 134,843 132,751
General and administrative expenses 14,503 13,879 43,283 40,722
Depreciation expense 8,526 7,137 24,947 21,199
Amortization of goodwill and intangibles 3,086 3,060 9,241 9,175
------------ ------------ ------------ --------
Income from operations 20,533 18,585 54,525 53,772
Interest expense 9,541 7,543 28,050 22,702
Other income (expense), net (440) (1,252) (1,225) (3,862)
------------- ------------- ------------ ---------
Income before income taxes 10,552 9,790 25,250 27,208
Federal and state income taxes 3,915 3,302 9,368 10,238
------------ ------------ ------------ ---------
Net income $ 6,637 $ 6,488 $ 15,882 $ 16,970
=========== =========== ========== ==========
Net income per share $ .79 $ .70 $ 1.89 $ 1.83
Cash dividends per share:
Common Stock $ .25 $ .25 $ .75 $ .75
Class B Common Stock $ .25 .25 $ .75 .75
Weighted average number of Common and
Class B Common shares outstanding 8,365 9,294 8,422 9,294
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
In Thousands
Capital Minimum
Class B in Pension
Common Common Excess of Accumulated Liability Treasury
Stock Stock Par Value Deficit Ajustment Stock
------ ------- --------- --------- ------------ -------
Balance on
December 31, 1995 $10,090 $ 1,965 $120,733 $ (76,032) $ (138) $ 17,646
Net income 16,970
Cash dividends (6,971)
paid: Common ------- -------- ---------- ---------- ---------- -------------
Balance on
September 29, 1996 $10,090 $ 1,965 $113,762 $ (59,062) $ (138) $ 17,646
======= ======= ======== ========== ========= ========
Balance on
December 29, 1996 $10,107 $ 1,948 $111,439 $ (59,868) $ (104) $ 41,253
Net income 15,882
Cash dividends
paid: Common (6,274)
Purchase of
Common Stock
20,001
-------- -------- ----------- ----------- ------------ ------
Balance on
September 28, 1997 $10,107 $ 1,948 $105,165 $ (43,986) $ (104) $ 61,254
======= ======= ======== ========== ========== ========
See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
Nine Months
-----------------------------
1997 1996
--------- -------
Cash Flows from Operating Activities
- ------------------------------------
Net income $ 15,882 $ 16,970
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation expense 24,947 21,199
Amortization of goodwill and intangibles 9,241 9,175
Deferred income taxes 2,803 10,238
Losses on sale of property, plant and equipment 997 1,737
Amortization of debt costs 455 396
Undistributed (earnings) losses of Piedmont Coca-Cola (118) (73)
Bottling Partnership
Increase in current assets less current liabilities (10,976) (19,578)
Increase in other noncurrent assets (9,207) (1,401)
Increase in other noncurrent liabilities 4,119 4,708
Other 3,015 3
-------- ---------
Total adjustments 25,276 26,404
-------- --------
Net cash provided by operating activities 41,158 43,374
-------- --------
Cash Flows from Financing Activities
- -------------------------------------
Proceeds from issuance of long-term debt 69,461
Increase (decrease) in current portion of long-term debt 11,925 (15)
Payments on long-term debt (226) (14,543)
Purchase of Common Stock (20,001)
Cash dividends paid (6,274) (6,971)
Other (2,015) (726)
-------- ----------
Net cash provided by (used in) financing activities 52,870 (22,255)
-------- --------
Cash Flows from Investing Activities
- -------------------------------------
Additions to property, plant and equipment (90,076) (21,402)
Proceeds from the sale of property, plant and equipment 742 558
Acquisitions of companies, net of cash acquired (3,834)
--------- ----------
Net cash used in investing activities (93,168) (20,844)
-------- --------
Net increase in cash 860 275
Cash at beginning of period 2,941 2,434
------------ ----------
Cash at end of period $ 3,801 $ 2,709
========= =========
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 29, 1996 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:
Third Quarter Nine Months
---------------- -----------------
In Thousands 1997 1996 1997 1996
- -------------------------------------------------------------------------------
Net sales $65,912 $60,659 $181,780 $170,838
Gross margin 27,998 26,273 79,944 72,523
Income from operations 3,105 2,958 9,024 6,685
Net income 362 1,880 236 146
3. Inventories
Inventories are summarized as follows:
Sept. 28, Dec. 29, Sept. 29,
In Thousands 1997 1996 1996
- -------------------------------------------------------------------------------
Finished products $21,164 $18,888 $19,883
Manufacturing materials 9,691 9,894 10,364
Plastic pallets and other 5,917 2,005 2,533
---------- ---------- ----------
Total inventories $36,772 $30,787 $32,780
======= ========= =========
The amounts included above for inventories valued by the LIFO method were
greater than replacement or current cost by approximately $2.1 million, $2.1
million and $840,000 on September 28, 1997, December 29, 1996 and September 29,
1996, 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 Sept. 28, Dec. 29, Sept. 29,
In Thousands Maturity Rate (V) Rate Paid 1997 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------
Lines of Credit 2001 5.63% - V Varies $ 25,200 $ 19,720 $ 9,620
5.65%
Revolving Credit 24,000
Term Loan Agreement 2004 - 6.33% V Varies 170,000 170,000 170,000
2005
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
annually
Other notes payable 2000 - 7.33% - F Varies 12,434 12,753 12,753
2001 10.00% ------- --------- --------
520,719 439,558 405,458
Less: Portion of long-term
debt payable within one year 12,030 105 105
- ---------------------------------------------------------------------------------------------------------------------------------
Long-term debt $508,689 $439,453 $405,353
- -----------------------------------------------------------------------------------------------------------------------------
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.
The Company previously had an arrangement under which it had the right to
sell an undivided interest in a designated pool of trade accounts receivable
up to a maximum of $40 million. This arrangement was suspended in the fourth
quarter of 1996. The Company had no trade accounts receivable outstanding as
of September 28, 1997 and December 29, 1996 under this arrangement. The
Company had sold $20 million of trade accounts receivable as of September
29, 1996.
On October 12, 1994, a $400 million shelf registration for debt and equity
securities filed with the Securities and Exchange Commission became
effective and the securities thereunder became available for issuance. On
November 1, 1995, the Company issued $100 million of 6.85% debentures due
2007 pursuant to such registration. The net proceeds from this issuance were
used principally for refinancing a portion of existing public indebtedness
with the remainder used to repay other bank debt.
On November 20, 1995, the Company entered into a $170 million term loan
agreement. This loan was used to repay two $60 million loans previously
entered into by the Company and other bank debt. On July 22, 1997, the
maturities under this agreement were extended such that $85 million matures
in 2004 and $85 million matures in 2005.
On July 1, 1997, the Company issued $100 million of 7.20% debentures due
2009 pursuant to the $400 million shelf registration filed in October 1994.
The proceeds from the issuance of the debentures were used to pay down
borrowings under the Company's lines of credit. The lines of credit had been
used primarily to fund the repurchase of shares of Common Stock and the
purchase of assets previously leased. The Company entered into floating rate
interest swap agreements in the third quarter of 1997 related to the $100
million of 7.20% debentures issued.
The Company has guaranteed a portion of the debt for two cooperatives in
which the Company is a member. The amounts guaranteed were $31.5 million,
$32.2 million and $32.5 million as of Sept. 28, 1997, December 29, 1996 and
Sept. 29, 1996, 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 the debt portfolio of
approximately 7.1%, 7.2% and 7.1% as of September 28, 1997, December 29,
1996 and September 29, 1996, respectively. The Company's overall weighted
average interest rate on its long-term debt decreased from an average of 7%
during the first nine months of 1996 to an average of 6.9% during the first
nine months of 1997. After taking into account the effect of all of the
interest rate swap activities, approximately 49%, 51% and 47% of the total
debt portfolio was subject to changes in short-term interest rates as of
Sept. 28, 1997, December 29, 1996 and Sept. 29, 1996, respectively.
A rate increase of 1% on the floating rate component of the Company's debt
would have increased interest expense for the first nine months of 1997 by
approximately $1.9 million and net income for the first nine months ended
September 28, 1997 would have been reduced by approximately $1.2 million.
Derivative financial instruments were as follows:
Sept. 28, 1997 December 29, 1996 Sept. 29, 1996
-------------------------------------------------------------------------------
Remaining Remaining Remaining
In Thousands Amount Term Amount Term Amount Term
----------------------------------------------------------------------------------------------------------------
Interest rate swaps-floating $ 60,000 6 years $ 60,000 6.75 years $60,000 7 years
Interest rate swaps-fixed 60,000 6 years 60,000 6.75 years 60,000 7 years
Interest rate swaps-floating 70,000 12 years
Interest rate swaps-floating 30,000 12 years
During July 1997, the Company entered into new floating rate interest swap
agreements related to $100 million of 7.20% debentures due 2009.
In addition, the Company entered into an interest rate cap agreement with a
notional amount of $35 million for the period from October 1, 1997 to July
3, 2000.
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:
Sept. 28, 1997 Sept. 29, 1996
------------------------------ -------------------------
Carrying Fair Carrying Fair
In Thousands Amount Value Amount Value
-----------------------------------------------------------------------------------------------------------------------
Balance Sheet Instruments
-------------------------
Public debt $313,085 $321,559 $213,085 $214,721
Non-public variable rate long-term
debt 195,200 195,200 179,620 179,620
Non-public fixed rate long-term debt 12,434 13,314 12,753 13,448
Off-Balance-Sheet Instruments
-----------------------------
Interest rate swaps (1,330) (4,872)
The fair values of the interest rate swaps represent the estimated amounts
the Company would have had to pay to terminate these agreements.
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash, net of effects
from acquisitions, were as follows:
Nine Months
-----------------------
In Thousands 1997 1996
- -----------------------------------------------------------------------------------------
Accounts receivable, trade, net $ (1,809) $ (15,702)
Accounts receivable from The Coca-Cola Company (6,842) 5,190
Due from Piedmont Coca-Cola Bottling Partnership 2,985 4,584
Accounts receivable, other (2,294) 4,120
Inventories (5,944) (4,791)
Prepaid expenses and other current assets (1,040) (797)
Accounts payable and accrued liabilities 3,940 (13,479)
Accounts payable to The Coca-Cola Company 2,973 113
Due to Piedmont Coca-Cola Bottling Partnership 1,207
Accrued compensation (830) (577)
Accrued interest payable (2,115) 554
---------- -----------
Increase in current assets less current liabilities $(10,976) $(19,578)
======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INTRODUCTION:
- -------------
The following discussion presents management's analysis of the results of
operations for the third quarter and first nine months of 1997 compared to the
third quarter and first nine months of 1996 and changes in financial condition
from September 29, 1996 and December 29, 1996 to September 28, 1997.
The Company reported net income of $6.6 million or $.79 per share for the third
quarter of 1997 compared with net income of $6.5 million or $.70 per share for
the same period in 1996. For the first nine months of 1997, net income was $15.9
million or $1.89 per share compared to net income of $17.0 million or $1.83 per
share for the first nine months of 1996.
Increased earnings per share in the third quarter and for the first nine months
of 1997 reflect the benefits of the Company's repurchase of approximately
930,000 shares of its Common Stock during late 1996 and early 1997.
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:
- -----------------------
Franchise net sales for the third quarter of 1997 increased by 10% from the
third quarter of 1996. The increase in franchise net sales for the third quarter
was attributable to successful holiday promotions during the July 4th and Labor
Day periods, strong marketing programs and more seasonable weather conditions.
Franchise net sales for the first nine months of 1997 increased approximately 5%
over the same period in 1997. The Company experienced franchise bottle and can
volume growth of 11% and 7% in the third quarter and first nine months of 1997
over comparable periods in 1996. The increase in sales volume was offset by a
2.0% decrease in net selling price per case for the third quarter and 2.4%
decrease for the first nine months of 1997 over the same periods in the prior
year. The decrease in net selling price per case is due to extremely competitive
market conditions.
Contract sales declined by $2.2 million and $10.8 million from the third quarter
and first nine months of 1996, respectively. A significant part of the reduction
in contract sales reflects lower sales to Piedmont Coca-Cola Bottling
Partnership, which is purchasing more of its product from South Atlantic
Canners, Inc. ("SAC"). SAC is a regional manufacturing cooperative for Coca-Cola
bottlers. The Company is a member of SAC.
The increase in franchise sales for the third quarter and first nine months was
due to strong sales growth across most sales channels. Also, the Company's
flagship brand, Coca-Cola classic showed solid growth during the first nine
months of 1997. Sprite continued its strong performance with
double-digit volume growth over comparable periods of 1996. The Company also
continued to have significant growth in non-carbonated products, including
POWERaDE and Cool from Nestea.
Gross margin on net franchise sales for the third quarter of 1997 increased by
approximately 6% from the third quarter of 1996. Gross margin for the first nine
months of 1997 increased by approximately 4% the same period in 1996. Gross
margin for both the third quarter and first nine months of 1997 was positively
impacted by a decline in cost of sales on a per unit basis. The reduction in
cost of sales was primarily attributable to lower costs for sweetener, cans and
PET bottles.
Selling expenses during the third quarter were flat compared with the same
quarter in 1996. Selling expenses for the first nine months of 1997 increased by
1.6% over the first nine months of 1996. Selling expenses were impacted by lower
net marketing program costs and a reduction in equipment lease expense. The
reduction in net marketing program costs was principally due to additional
funding from The Coca-Cola Company for support of cold drink activities.
General and administrative expenses in the third quarter increased by 4.5% from
the third quarter of 1996. General and administrative expenses for the first
nine months of 1997 increased by 6.3% over first nine month levels in 1996. The
increase in general and administrative was impacted by higher employment costs.
Depreciation expense increased 19% and 18% between the third quarter and first
nine months of 1997 and the comparable periods in 1996. This increase was due
primarily to depreciation expense on vending equipment that was previously
leased. The Company purchased $66.3 million of vending equipment leases in
January 1997. As a result of this transaction, lease expense declined by 19% for
the third quarter and 15% for the first nine months of 1997 from the same
periods in 1996.
Interest expense in 1997 increased 26% and 24% between the third quarter and
first nine months of 1997 and the comparable periods in 1996 due to several
transactions that increased outstanding long-term debt by more than $100 million
from September 29, 1996 to September 28, 1997. The Company repurchased
approximately 930,000 shares of its Common Stock in three separate transactions
between December 1996 and February 1997 for $43.6 million. The Company purchased
vending equipment previously leased for $66.3 million during January 1997.
Additionally, the Company suspended its arrangement to sell trade accounts
receivable in the fourth quarter of 1996. As of September 29, 1996 the Company
had sold $20 million of its trade accounts receivable under this program. The
Company's overall weighted average interest rate decreased from an average of 7%
during the first nine months of 1996 to an average of 6.9% during the first nine
months of 1997.
Other expense for the first nine months of 1997 decreased by $2.6 million over
the same period in 1996. This decrease in other expense is primarily due to the
suspension of the program to sell trade accounts receivable. The discount on the
sale of trade accounts receivable was included in other expense while the
program was active and totaled $1.5 million for the first nine months of 1996.
CHANGES IN FINANCIAL CONDITION:
- ------------------------------
Working capital did not change significantly from December 29, 1996 and
increased $24.4 million from September 29, 1996 to September 28, 1997.
The increase in working capital from September 29, 1996 was due principally to
increases in trade accounts receivable of $25.0 million, marketing receivables
from The Coca-Cola Company of $7.7 million, other accounts receivable of $5.4
million, offset partially by a $12 million increase in the current portion of
long-term debt and an increase of $10.0 million in accounts payable and accrued
expenses. The Company had sold trade accounts receivable of $20 million as of
September 29, 1996 under an agreement to sell up to $40 million of its trade
accounts receivable. The trade accounts receivable sales agreement was suspended
during the fourth quarter of 1996 and no trade accounts receivable had been sold
as of December 29, 1996 or September 28, 1997.
Capital expenditures in the first nine months of 1997, excluding the $66.3
million purchase of previously leased vending equipment, were $23.8 million as
compared to $21.4 million in the first nine months of 1996.
The Company entered into an agreement in April 1997 that will currently provide
up to $61 million for the leasing of equipment. This agreement has a favorable
cost structure and will be used to obtain the majority of the Company's capital
requirements for fleet and vending assets in 1997. As of September 28, 1997, the
Company had leased approximately $57 million of equipment under this agreement.
Long-term debt increased by $103.3 million from September 29, 1996 and increased
$69.2 million from December 29, 1996. The significant increase in long-term debt
is primarily due to the repurchase of approximately 930,000 shares of the
Company's Common Stock during December 1996 and the first quarter of 1997 for
$43.6 million; the buyout of vending equipment leases from Coca-Cola Financial
Corporation in January 1997 for approximately $66.3 million and the suspension
of the arrangement to sell trade accounts receivable.
During July 1997, the Company issued $100 million of twelve year debentures. The
proceeds from the issuance of the debentures were used to pay down borrowings
under the Company's lines of credit. The lines of credit had been used to fund
the repurchase of shares of Company stock and the purchase of assets previously
leased, as discussed above. The Company entered into floating rate interest swap
agreements on the $100 million of debentures issued. The Company also entered
into an Interest Rate Cap Agreement with a notional amount of $35 million for
the period from October 1, 1997 to July 3, 2000. Additionally , the Company
extended the maturity dates on its $170 million Term Loan Agreement by one year.
It is the Company's intent to renew any borrowings under its $170 million
revolving credit facility and the informal lines of credit as they mature and,
to the extent that any borrowings under the revolving credit facility, the
informal lines of credit and commercial paper program do not exceed the amount
available under the Company's $170 million revolving credit facility, they are
classified as noncurrent liabilities. As of September 28, 1997, the Company had
no amounts outstanding
under the revolving credit facility and had approximately $25.2 million
outstanding under the informal lines of credit.
As of September 28, 1997 the debt portfolio had a weighted average interest rate
of approximately 7.1% and approximately 49% of the total portfolio of $509
million was subject to changes in short-term interest rates.
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
------ ------------
27 Financial data schedule for period ended September 28, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)
Date: November 12, 1997 By: /s/ David V. Singer
------------------------------
David V. Singer
Principal Financial Officer of
the Registrant
and
Vice President - Chief
Financial Officer
5
9-MOS
DEC-28-1997
DEC-30-1997
SEP-28-1997
3,801
0
53,252
418
36,772
126,837
419,071
168,499
783,489
92,857
508,689
12,055
0
0
(179)
783,489
605,648
605,648
338,809
338,809
212,314
0
28,050
25,250
9,368
15,882
0
0
0
15,882
1.89
0
