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 29, 1996
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 Identification Number)
incorporation or organization)
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 5, 1996
Common Stock, $1 Par Value 7,958,059
Class B Common Stock, $1 Par Value 1,336,362
<PAGE>
PART I - FINANCIAL INFORMATION
Item l. Financial Statements
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
<TABLE>
<CAPTION>
Sept. 29, Dec. 31, Oct. 1,
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 2,709 $ 2,434 $ 2,723
Accounts receivable, trade, less allowance for
doubtful accounts of $413, $406 and $401 27,800 12,098 11,180
Accounts receivable from The Coca-Cola Company 1,535 6,725 6,337
Due from Piedmont Coca-Cola Bottling Partnership 4,584 1,457
Accounts receivable, other 5,372 9,492 4,577
Inventories 32,780 27,989 33,447
Prepaid expenses and other current assets 7,732 6,935 5,538
---------- ---------- ---------
Total current assets 77,928 70,257 65,259
---------- ---------- ---------
Property, plant and equipment, less accumulated
depreciation of $158,301, $153,602 and $152,271 189,706 191,800 189,118
Investment in Piedmont Coca-Cola Bottling Partnership 65,697 65,624 66,629
Other assets 34,299 33,268 24,258
Identifiable intangible assets, less accumulated
amortization of $92,936, $85,535 and $83,068 240,582 247,983 250,450
Excess of cost over fair value of net assets of
businesses acquired, less accumulated
amortization of $25,697, $23,980 and $23,407 65,922 67,639 68,212
---------- ---------- ---------
Total $674,134 $676,571 $663,926
========== ========== =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands (Except Share Data)
<TABLE>
<CAPTION>
Sept. 29, Dec. 31, Oct. 1,
1996 1995 1995
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Portion of long-term debt payable within one year $ 105 $ 120 $ 174
Accounts payable and accrued liabilities 52,031 65,510 52,812
Accounts payable to The Coca-Cola Company 3,748 3,636 3,470
Due to Piedmont Coca-Cola Bottling Partnership 1,207
Accrued compensation 4,472 5,049 3,464
Accrued interest payable 6,813 6,259 4,886
-------- -------- --------
Total current liabilities 68,376 80,574 64,806
Deferred income taxes 107,492 97,252 99,269
Other liabilities 43,942 39,877 38,364
Long-term debt 405,353 419,896 419,827
-------- -------- --------
Total liabilities 625,163 637,599 622,266
-------- -------- --------
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 shares 10,090 10,090 10,090
Class B Common Stock, $1 par value:
Authorized-10,000,000 shares;
Issued-1,964,476 shares 1,965 1,965 1,965
Class C Common Stock, $1 par value:
Authorized-20,000,000 shares; Issued-None
Capital in excess of par value 113,762 120,733 123,057
Accumulated deficit (59,062) (76,032) (71,902)
Minimum pension liability adjustment (138) (138) (3,904)
-------- --------- --------
66,617 56,618 59,306
Less-Treasury stock, at cost:
Common-2,132,800 shares 17,237 17,237 17,237
Class B Common-628,114 shares 409 409 409
-------- --------- --------
Total shareholders' equity 48,971 38,972 41,660
-------- --------- --------
Total $674,134 $676,571 $663,926
======== ========= ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
<TABLE>
<CAPTION>
Third Quarter Nine Months
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales (includes sales to Piedmont of $18,134, $19,355
$47,823 and $55,664) $ 204,579 $ 203,559 $ 590,154 $ 582,412
Cost of products sold, excluding depreciation shown
below (includes $14,114, $16,715, $39,112 and
$48,599 related to sales to Piedmont) 114,641 120,832 332,535 340,477
--------- --------- --------- --------
Gross margin 89,938 82,727 257,619 241,935
--------- --------- --------- --------
Selling expenses 47,277 41,831 132,751 119,918
General and administrative expenses 13,879 13,868 40,722 40,839
Depreciation expense 7,137 6,786 21,199 19,756
Amortization of goodwill and intangibles 3,060 3,058 9,175 9,173
--------- --------- --------- ---------
Income from operations 18,585 17,184 53,772 52,249
Interest expense 7,543 8,312 22,702 25,205
Other income (expense), net (1,252) (1,099) (3,862) (2,656)
--------- --------- --------- ---------
Income before income taxes 9,790 7,773 27,208 24,388
Federal and state income taxes 3,302 3,134 10,238 9,738
--------- --------- --------- ---------
Net income $ 6,488 $ 4,639 $ 16,970 $ 14,650
========= ========= ========= =========
Net income per share $ .70 $ .50 $ 1.83 $ 1.58
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 9,294 9,294 9,294 9,294
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
In Thousands
<TABLE>
<CAPTION>
Capital Minimum
Class B in Pension
Common Common Excess of Accumulated Liability Treasury
Stock Stock Par Value Deficit Adjustment Stock
<S> <C> <C> <C> <C> <C> <C>
Balance on
January 1, 1995 $10,090 $ 1,965 $130,028 $ (86,552) $ (3,904) $ 17,646
Net income 14,650
Cash dividends
paid:
Common (6,971)
Balance on
October 1, 1995 $10,090 $ 1,965 $123,057 $ (71,902) $ (3,904) $ 17,646
======= ======= ======== ========= ======== ========
Balance on
December 31, 1995 $10,090 $ 1,965 $120,733 $ (76,032) $ (138) $ 17,646
Net income 16,970
Cash dividends
paid:
Common (6,971)
Balance on
September 29, 1996 $10,090 $ 1,965 $113,762 $ (59,062) $ (138) $ 17,646
======= ======= ======== ========= ======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
<TABLE>
<CAPTION>
Nine Months
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 16,970 $ 14,650
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation expense 21,199 19,756
Amortization of goodwill and intangibles 9,175 9,173
Deferred income taxes 10,238 9,738
Losses on sale of property, plant and equipment 1,737 1,037
Amortization of debt costs 396 344
Undistributed (earnings) losses of Piedmont Coca-Cola (73) 1,100
Bottling Partnership
Increase in current assets less current liabilities (19,593) (13,886)
Increase in other noncurrent assets (1,401) (1,076)
Increase in other noncurrent liabilities 4,708 2,746
Other 3 132
-------- --------
Total adjustments 26,389 29,064
-------- --------
Net cash provided by operating activities 43,359 43,714
-------- --------
Cash Flows from Financing Activities
Payments on long-term debt (14,543) (13,144)
Cash dividends paid (6,971) (6,971)
Other (726) 1,721
-------- --------
Net cash used in financing activities (22,240) (18,394)
-------- --------
Cash Flows from Investing Activities
Additions to property, plant and equipment (21,402) (26,304)
Proceeds from the sale of property, plant and equipment 558 1,895
-------- --------
Net cash used in investing activities (20,844) (24,409)
-------- --------
Net increase in cash 275 911
Cash at beginning of period 2,434 1,812
-------- --------
Cash at end of period $ 2,709 $ 2,723
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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 31, 1995 filed
with the Securities and Exchange Commission.
Certain prior year amounts have been reclassified to conform to current year
classifications.
<PAGE>
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:
<TABLE>
<CAPTION>
Third Quarter Nine Months
In Thousands 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $60,659 $59,396 $170,838 $163,856
Gross margin 26,273 23,627 72,523 66,337
Income from operations 2,958 1,777 6,685 5,312
Net income (loss) 1,880 (758) 146 (2,200)
</TABLE>
3. Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
Sept. 29, Dec. 31, Oct. 1,
In Thousands 1996 1995 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finished products $19,883 $17,809 $20,429
Manufacturing materials 10,364 8,809 11,585
Plastic pallets and other 2,533 1,371 1,433
--------- --------- ---------
Total inventories $32,780 $27,989 $33,447
======= ======= =======
</TABLE>
<PAGE>
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
4. Long-Term Debt
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
Fixed(F) or
Interest Variable Interest Sept. 29, Dec. 31, Oct. 1,
In Thousands Maturity Rate (V) Rate Paid 1996 1995 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lines of Credit 2000 5.37% V Varies $ 9,620 $ 22,590 $ 85,601
Term Loan Agreement 2002- 6.39% V Varies 170,000 170,000 120,000
2003
Medium-Term Notes 1998 6.13% 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 66,500
annually
Medium-Term Notes 2000 10.00% F Semi- 25,500 25,500 55,000
annually
Medium-Term Notes 2002 8.56% F Semi- 47,000 47,000 66,500
annually
Debentures 2007 6.85% F Semi- 100,000 100,000
annually
Notes acquired in
Sunbelt acquisition 2001 8.00% F Quarterly 177 217 217
Capital leases and 2000 - 6.85% - F Varies 12,576 14,124 14,183
other notes payable 2001 10.00%
-------- -------- --------
405,458 420,016 420,001
Less: Portion of long-
term debt payable
within one year 105 120 174
- ---------------------------------------------------------------------------------------------------------------------------------
Long-term debt $405,353 $419,896 $419,827
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
4. Long-Term Debt (cont.)
As of September 29, 1996, the Company was in compliance with all of the
covenants of its various borrowing agreements.
It is the Company's intent to renew its lines of credit, commercial paper
borrowings 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.
A $100 million commercial paper program was established in January 1990 with
funds to be used for general corporate purposes. There were no balances
outstanding under this program on September 29, 1996, December 31, 1995 or
October 1, 1995.
In June 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 up to a maximum of $40 million. This arrangement has
been amended to extend it to June 1998 on terms substantially similar to
those previously in place. The Company had sold trade receivables of $20
million as of September 29, 1996 and $35 million as of December 31, 1995 and
October 1, 1995.
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 loan agreement
with $85 million maturing in November 2002 and $85 million maturing in
November 2003. 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 $32.5 million,
$35.2 million and $34 million as of September 29, 1996, December 31, 1995
and October 1, 1995, respectively.
<PAGE>
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 7.3% as of September 29, 1996, December 31,
1995 and October 1, 1995, respectively. The Company's overall weighted
average interest rate on its long-term debt decreased from an average of
7.4% during the first nine months of 1995 to an average of 7.0% during the
first nine months of 1996. After taking into account the effect of all of
the interest rate swap activities, approximately 47%, 48% and 53% of the
total debt portfolio was subject to changes in short-term interest rates as
of September 29, 1996, December 31, 1995 and October 1, 1995, 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 1996 by
approximately $1.4 million and net income for the first nine months ended
September 29, 1996 would have been reduced by approximately $.9 million.
The Company currently has two interest rate swap agreements. There were no
new derivative financial instruments, nor activity with current financial
instruments, during the third quarter or first nine months of 1996.
Derivative financial instruments were as follows:
<TABLE>
<CAPTION>
Sept. 29, 1996 December 31, 1995 Oct. 1, 1995
------------------------------------------------------------------------------------
Remaining Remaining Remaining
In Thousands Amount Term Amount Term Amount Term
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps-floating $ 60,000 7 years $ 60,000 8 years $ 60,000 8 years
Interest rate swaps-fixed 60,000 7 years 60,000 8 years 60,000 8 years
</TABLE>
<PAGE>
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:
<TABLE>
<CAPTION>
September 29, 1996 December 31, 1995
----------------------------- -----------------------------
Carrying Fair Carrying Fair
In Thousands Amount Value Amount Value
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance Sheet Instruments
Public debt $213,085 $214,721 $213,085 $228,103
Non-public variable rate long-term
debt 179,620 179,620 192,590 192,590
Non-public fixed rate long-term debt 12,753 13,448 14,341 16,189
Off-Balance-Sheet Instruments
Interest rate swaps (4,872) (4,725)
</TABLE>
The fair values of the interest rate swaps represent the estimated amounts
the Company would have had to pay to terminate these agreements.
<PAGE>
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 were as
follows:
<TABLE>
<CAPTION>
Nine Months
In Thousands 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable, trade, net $ (15,702) $ (3,424)
Due from Piedmont Coca-Cola Bottling Partnership 4,584 (74)
Accounts receivable, other 9,310 832
Inventories (4,791) (1,576)
Prepaid expenses and other current assets (797) (484)
Portion of long-term debt payable within one year (15) (126)
Accounts payable and accrued liabilities (13,366) (1,863)
Due to Piedmont Coca-Cola Bottling Partnership 1,207
Accrued compensation (577) (782)
Accrued interest payable 554 (6,389)
---------- -----------
Increase in current assets less current liabilities $(19,593) $ (13,886)
========= ==========
</TABLE>
<PAGE>
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 1996 compared to the
third quarter and first nine months of 1995 and changes in financial condition
from October 1, 1995 and December 31, 1995 to September 29, 1996.
The Company reported net income of $6.5 million or $.70 per share for the third
quarter of 1996 compared with net income of $4.6 million or $.50 per share for
the same period in 1995. For the first nine months of 1996, net income was $17.0
million or $1.83 per share compared to net income of $14.7 million or $1.58 per
share for the first nine months of 1995.
Increased profits in the third quarter and for the first nine months of 1996
were driven by favorable trends in costs of certain raw materials and packaging
materials, lower interest costs and a reduced effective income tax rate. Cost of
sales on a per unit basis declined due to decreases in the costs of aluminum
cans, PET bottles and sweetener.
Strong cash flow from operations has allowed the Company to reduce its long-term
debt by over $14 million and reduce its sale of trade accounts receivable by $15
million from levels at December 31, 1995 and October 1, 1995. The reductions in
long-term debt and in the sale of trade accounts receivable have favorably
impacted third quarter results through the reduction of interest expense.
Interest expense for the first nine months of 1996 was 10% lower than in the
first nine months of 1995.
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:
Net franchise sales for the first nine months of 1996 increased by approximately
4% from the same period in 1995. This increase is on top of a 9% increase in the
same period in the prior year resulting in an average two year growth rate of
over 6.5%. The increase in net franchise sales in 1996 reflects a 3% increase
in volume and a 1% increase in net selling price.
Gross margin on net sales for the third quarter and first nine months of 1996
increased 8.7% and 6.5%, respectively, over the comparable periods in 1995. The
increase in gross margin is attributable to increased volume, small increases in
selling prices and reductions in the cost of certain raw materials and packaging
materials, primarily aluminum cans, PET bottles and sweetener.
<PAGE>
Contract sales declined by $3.4 million and $12.5 million from the third quarter
and first nine months of 1995, respectively. Approximately 25% of the reduction
in contract sales reflects lower sales to other Coca-Cola bottlers on which the
Company generates a modest profit margin. The rest 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., an independent
bottling cooperative. Sales to Piedmont are at the Company's cost.
The Company's flagship brands, Coca-Cola Classic and diet Coke, continue to
enjoy strong growth with increased volume of over 3% in the first nine months of
1996. Sprite has experienced significant growth with increased volume of 21%
over the first nine months of 1995. The new proprietary Sprite 20 ounce PET
bottle, introduced throughout the Company's franchise territory, and an ongoing
Under-the-Crown promotion has contributed to this increase. Mello Yello also had
strong growth in the first nine months of 1996 with volume up 12% over the same
period in 1995.
For the third quarter of 1996, selling expenses increased 13% over the same
quarter in 1995. Selling expenses for the first nine months of 1996 increased by
11% over the first nine months of 1995. The increased selling expenses are due
primarily to higher employment costs, increased expenses related to sales
development programs and special marketing costs related to the 1996 Olympic
Games. The increase in sales development program expense is related primarily to
growth in food store volume. The higher employment costs are attributable to
increased volume and the Company's efforts to improve employee retention in
certain key market areas of its franchise territory.
General and administrative expenses in the third quarter and for the first nine
months of 1996 were consistent with the same periods in 1995. Depreciation
expense increased 5% between the third quarter of 1996 and the third quarter of
1995. Depreciation expense for the first nine months of 1996 increased 7.3% over
the same period in 1995. The increase in depreciation expense is due to
significant capital expenditures during 1995 for manufacturing equipment
necessary for the introduction of new packages.
Interest expense decreased 10% in the first nine months of 1996 from the first
nine months of 1995. This reduction in interest expense is due to reduced
long-term debt balances resulting from operating cash flow and lower interest
rates as a result of the early retirement of some of the Company's Medium-Term
Notes in the fourth quarter of 1995. Outstanding long-term debt decreased
approximately $14 million from October 1, 1995 to September 29, 1996. The
Company's overall weighted average interest rate decreased from an average of
7.4% during the first nine months of 1995 to an average of 7.0% during the
first nine months of 1996.
Other expense for the first nine months of 1996 increased by $1.2 million over
the same period in 1995. This increase is primarily attributable to losses on
the sale of certain production equipment.
The effective income tax rates for the third quarter and first nine months of
1996 were 34% and 38%, respectively, compared to 40% in the corresponding
periods in 1995. The decrease is due to the reduced impact of non-deductible
items and income tax planning strategies utilized by the Company.
<PAGE>
Changes in Financial Condition:
Working capital increased $19.9 million from December 31, 1995 and $9.1 million
from October 1, 1995 to September 29, 1996. The Company used cash flow from
operations to reduce the sale of trade accounts receivable by $15 million during
the third quarter. The increase in working capital from December 31, 1995 is
attributable to the reduction in the amount of trade accounts receivable sold
and reductions of certain accrued liabilities. The increase from October 1, 1995
was due principally to the increase in trade accounts receivable discussed
above, offset partially by a reduction in amounts receivable from The Coca-Cola
Company. The Company had sold trade accounts receivable of $20 million as of
September 29, 1996 and $35 million as of December 31, 1995 and October 1, 1995
under its arrangement to sell up to $40 million of its trade accounts
receivable.
Capital expenditures in the first nine months of 1996 were $21.4 million as
compared to $26.3 million in the first nine months of 1995. Expenditures for
1996 capital additions are expected to be lower than expenditures for 1995 due
to reduced capital requirements for production equipment.
Long-term debt decreased $14 million from October 1, 1995 and December 31, 1995.
Long-term debt has decreased due to repayments of debt from operating cash flow.
On November 1, 1995, the Company issued $100 million of 6.85% debentures due
2007 pursuant to a $400 million shelf registration filed in 1994 with the
Securities and Exchange Commission. The net proceeds from this issuance were
used to repurchase $87 million of the Company's Medium Term Notes due between
1997 and 2002 and to repay other outstanding borrowings. As of September 29,
1996, the Company was in compliance with all of the covenants of its
various borrowing agreements.
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 29, 1996, the Company had
no amounts outstanding under the revolving credit facility or the commercial
paper program and had approximately $9.6 million outstanding under the informal
lines of credit.
As of September 29, 1996 the debt portfolio had a weighted average interest rate
of approximately 7.1% and approximately 47% of the total portfolio of $405
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.
<PAGE>
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 29, 1996.
<PAGE>
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, 1996 By: /s/ David V. Singer
---------------------------------------------
David V. Singer
Principal Financial Officer of the Registrant
and
Vice President - Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements as of and for the nine months ended September 29, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000317540
<NAME> COCA-COLA BOTTLING CO. CONSOLIDATED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 2,709
<SECURITIES> 0
<RECEIVABLES> 28,213
<ALLOWANCES> 413
<INVENTORY> 32,780
<CURRENT-ASSETS> 77,928
<PP&E> 348,007
<DEPRECIATION> 158,301
<TOTAL-ASSETS> 674,134
<CURRENT-LIABILITIES> 68,376
<BONDS> 405,353
0
0
<COMMON> 12,055
<OTHER-SE> 36,916
<TOTAL-LIABILITY-AND-EQUITY> 674,134
<SALES> 590,154
<TOTAL-REVENUES> 590,154
<CGS> 332,535
<TOTAL-COSTS> 332,535
<OTHER-EXPENSES> 203,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,702
<INCOME-PRETAX> 27,208
<INCOME-TAX> 10,238
<INCOME-CONTINUING> 16,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,970
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 0
</TABLE>
