<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
-----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- ----------------------
Commission file number 33-69274
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 75-1494591
---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1999 BRYAN STREET, SUITE 3300, DALLAS, TEXAS 75201
---------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (214) 969-1910
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
----- -----
The aggregate market value of the voting stock held by non-affiliates of
the registrant, as of August 1, 1996 was $0.00.
As of August 1, 1996, 100,000 shares of the Company's Common Stock, par
value $.10 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--JUNE 30, 1996 AND DECEMBER 31, 1995
(Amounts in Thousands Except Share Data)
JUN. 30, DEC. 31,
1996 1995
---------- ---------
CURRENT ASSETS:
Cash and cash equivalents $3,366 $3,053
Receivables-
Trade accounts, net of allowances
for doubtful accounts of $550 as of
June 30, 1996 and $543 as of December 31, 1995 21,027 17,620
Other 7,960 4,434
---------- ---------
28,987 22,054
Inventories 14,352 11,303
Prepaid expenses and other 2,467 999
Net deferred tax asset 2,317 788
---------- ---------
Total current assets 51,489 38,197
---------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 5,796 5,893
Buildings and improvements 29,029 27,181
Vending machines, machinery and equipment 68,562 63,092
Furniture and fixtures 3,741 3,641
Vehicles 16,748 15,235
---------- ---------
123,876 115,042
Less-Accumulated depreciation (77,679) (73,909)
---------- ---------
Property, plant and equipment, net 46,197 41,133
OTHER ASSETS:
Franchise rights and goodwill, net of accumulated
amortization of $37,611 as of June 30,
1996 and $35,613 as of December 31, 1995 121,471 123,473
Deferred financing costs, covenants not to compete
and other, net of accumulated amortization of
$5,260 as of June 30, 1996 and $4,861 as of
December 31, 1995 14,600 11,834
Net deferred tax asset 7,823 10,012
---------- ---------
Total other assets 143,894 145,319
---------- ---------
Total assets $241,580 $224,649
---------- ---------
---------- ---------
The accompanying notes are an integral part of these consolidated balance
sheets.
2
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THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--JUNE 30, 1996 AND DECEMBER 31, 1995
(Amounts in Thousands Except Share Data)
JUN. 30, DEC. 31,
1996 1995
---------- ---------
CURRENT LIABILITIES:
Accounts payable $21,632 $16,087
Accrued payroll 1,914 2,068
Accrued interest 1,681 3,451
Other accrued liabilities 1,930 1,424
Current maturities of long-term debt 12,056 15,264
---------- ---------
Total current liabilities 39,213 38,294
---------- ---------
LONG-TERM DEBT, net of current maturities 249,667 246,243
OTHER LIABILITIES 13,387 9,337
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT:
Common stock, $.10 par value; 250,000 shares
authorized: 100,000 shares issued and outstanding 10 10
Additional paid-in capital 26,223 26,223
Retained deficit (86,920) (95,458)
---------- ---------
Total stockholder's deficit (60,687) (69,225)
---------- ---------
Total liabilities and stockholder's deficit $241,580 $224,649
---------- ---------
---------- ---------
The accompanying notes are an integral part of these consolidated balance
sheets.
3
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THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995
(Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET REVENUES $67,164 $61,828 $123,959 $114,937
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of goods sold (exclusive of
depreciation shown below) 35,800 33,284 65,068 61,136
Selling, general and administrative 17,802 16,295 35,675 32,444
Depreciation and amortization 3,365 3,063 6,640 6,221
---------- ---------- ---------- ----------
56,967 52,642 107,383 99,801
---------- ---------- ---------- ----------
Operating income 10,197 9,186 16,576 15,136
INTEREST:
Interest on debt (5,261) (5,666) (10,496) (11,920)
Deferred financing cost (146) (340) (301) (659)
Interest income 37 43 87 80
---------- ---------- ---------- ----------
(5,370) (5,963) (10,710) (12,499)
Equity in earnings of unconsolidated
subsidiary 2,616 570 3,582 570
---------- ---------- ---------- ----------
Income before income taxes
and extraordinary item 7,443 3,793 9,448 3,207
Benefit (provision) for income taxes (630) 10,377 (910) 10,377
---------- ---------- ---------- ----------
Income before extraordinary item 6,813 14,170 8,538 13,584
Extraordinary item, net of income tax
benefit of $423 - (787) - (787)
---------- ---------- ---------- ----------
Net income 6,813 13,383 8,538 12,797
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
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THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(Amounts in Thousands)
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,538 $12,797
Ajustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 6,640 6,221
Extraordinary item - 1,210
Change in deferred taxes 660 (10,800)
Amortization of deferred financing costs 301 659
Deferred compensation 790 725
Earnings of unconsolidated subsidiary (3,582) (570)
Change in assets and liabilities, excluding
effects of extraordinary item:
Receivables (6,933) (4,004)
Inventories (3,082) (1,106)
Prepaid expenses and other (1,468) (140)
Payables 5,545 1,613
Accrued expenses (1,418) 2,221
---------- ----------
Net cash provided by operating activities 5,991 8,826
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (8,990) (5,362)
Other noncurrent assets acquired (164) (280)
---------- ----------
Net cash used in investing activities (9,154) (5,642)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving
credit facility 7,550 3,800
Retirement of long-term debt - (121,122)
Proceeds from issuance of long-term debt, net - 117,869
Payments on long-term debt (4,074) (2,456)
---------- ----------
Net cash provided (used) by financing
activities 3,476 (1,909)
---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 313 1,275
CASH AND CASH EQUIVALENTS, beginning of period 3,053 3,076
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $3,366 $4,351
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated statements.
5
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THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(1) BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements of The
Coca-Cola Bottling Group (Southwest), Inc., a Nevada corporation (the
"Company") and its wholly owned subsidiaries have been prepared in
accordance with generally accepted accounting principles for interim
financial information and reflect, in the opinion of management, all
adjustments which are normal and recurring in nature, necessary for a fair
presentation of financial position, results of operations, and changes in
cash flows at June 30, 1996 and for all periods presented. These interim
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the consolidated
financial statements of the Company included in Form 10-K for the fiscal
year ended December 31, 1995. The results of operations for the period
ended June 30, 1996 are not necessarily indicative of results to be
expected for the entire year ending December 31, 1996.
(2) INVENTORY:
Inventories consist of the following (in thousands):
Jun. 30, Dec. 31,
1996 1995
----------- ----------
Raw materials $ 3,097 $ 2,004
Returnable shells, vending equipment
not in service and supplies 1,648 1,625
Finished goods 9,607 7,674
----------- ----------
$ 14,352 $ 11,303
----------- ----------
----------- ----------
6
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(3) INVESTMENT IN UNCONSOLIDATED SUBSIDIARY:
Summarized financial information for Texas Bottling Group, Inc.
("TBG") as of June 30, 1996 and December 31, 1995, is as follows (in
thousands):
Jun. 30 Dec. 31
1996 1995
--------- ---------
Current assets $ 51,154 $ 41,357
Noncurrent assets 211,716 218,189
Current Liabilities 40,064 38,314
Long-term debt 209,250 215,500
Other liabilities 3,383 2,922
Postretirement benefit obligation 6,123 6,003
Stockholders' earnings (deficit) 4,050 (3,223)
FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1995:
1996 1995
--------- --------
Net sales 109,070 103,866
Cost of goods sold 58,224 55,863
Net income before income taxes
and extraordinary item 8,773 6,171
Net income 7,273 18,860
The Company's equity in 1996 net income resulted in the Company
recording income from TBG of $3,582,000.
In connection with the grant of a Dr Pepper franchise to TBG's
subsidiary, Coca-Cola Bottling Company of the Southwest ("CCBSW"), in
1984 and the acquisition of certain assets of Dr Pepper Bottling Company of
San Antonio by CCBSW, the United States Federal Trade Commission ("FTC")
filed a lawsuit against CCBSW asserting violation of the Federal Trade
Commission Act and the Clayton Act. During 1991, an administrative law
judge dismissed the FTC lawsuit, on September 28, 1994, the FTC announced
its decision reversing the administrative law judge and issued an order
requiring CCBSW to divest its Dr Pepper franchise in Bexar County and
nine surrounding counties in Texas within twelve months and to obtain FTC
consent before acquiring any carbonated soft drink business for ten years
from the effective date of the order. CCBSW appealed the FTC decision to
the 5th Circuit Court of Appeals, and on June 10, 1996, the Court of
Appeals reversed and vacated the FTC decision. The Court
7
<PAGE>
of Appeals ruled that the FTC had applied the wrong legal standard and
remanded the case to the FTC for further proceedings consistent with the
new standard, noting that CCBSW had made a "strong" argument that the
previous findings already established the legality of CCBSW's receipt of
the licenses. CCBSW will continue to defend its Dr Pepper licenses in the
San Antonio area and related businesses through any further proceedings.
Management of the Company does not believe that CCBSW has violated any laws
and does not believe that the FTC lawsuit will have a material adverse
effect on CCBSW or the Company.
(4) INCOME TAXES:
The Company's benefit (provision) for income taxes for the periods
ended June 30, 1996 and 1995, is as follows (in thousands):
1996 1995
------- --------
Current (250) -
Deferred (660) 10,800
------- --------
$ (910) $10,800
-------- --------
(5) COMMITMENTS, CONTINGENCIES, AND RELATED PARTIES:
The Company is a member of a soft drink canning cooperative and owns
approximately 4% (qualifying shares) at June 30, 1996. The Company
had purchases of $540,000 and $363,000 for the periods ended June 30,
1996 and 1995 from this cooperative.
The Company's transactions with TBG included purchases of
approximately $8,376,000 and $421,000 and sales of approximately
$5,814,000 and $442,000 for the periods ended June 30, 1996 and 1995.
The Company had purchases from Western Container Corporation, a
plastic bottle manufacturer of which the Company's subsidiaries are
shareholders, of $4,743,000 and $4,436,000 for the periods ended June 30,
1996 and 1995.
(6) On August 1, 1996, the Company received a dividend from TBG in the
amount of $4.1 million and paid a dividend to the Company's
shareholder in the amount of $6.4 million.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Unit growth of soft drink sales is measured in equivalent case sales
which convert all wholesale bottle, can and pre-mix unit sales into a value
of equivalent cases of 192 ounces each. Unit sales of post-mix and contract
bottling are not generally included in discussions concerning unit sales
volume as post-mix sales are essentially sales of syrup and not of packaged
products, and contract bottling is done as capacity permits and does not
represent licensed products for the franchised territory. However, all
references to net revenues and gross profit include volumes for post-mix and
contract sales.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
NET REVENUES. Net revenues for the Company increased by 8.6% or
approximately $5.3 million to $67.2 million in 1996. Soft drink net revenues
increased 8.8% primarily as a result of a 9% increase in equivalent case
sales in 1996 versus 1995. Net revenues for post-mix as a percentage of
total net revenues increased to 12.4% in 1996, as compared to 11.7% in 1995.
Net revenues for Automated & Custom Food Services, Inc. increased in 1996 by
approximately 7.8% over 1995.
GROSS PROFIT. Gross profit increased by 9.9% from $28.5 million to $31.4
million, primarily as a result of the increase in revenues resulting from the
increase in equivalent case sales noted above. Gross profit as a percentage
of net revenues for the period ended June 30, 1996 was 46.7% compared to
46.2% for the period ended June 30, 1995. Reductions in raw material costs
for aluminum cans, sweetener and PET bottles accounted for the improved
margin percentage in 1996.
SELLING, GENERAL & ADMINISTRATIVE. Selling, general and administrative
expenses increased 9.2% or approximately $1.5 million in 1996. Selling,
general and administrative expense as a percentage of net revenues increased
to 26.5% in 1996 from 26.4% in 1995. Higher labor costs associated with the
increased equivalent case sales volume, labor and expenses associated with a
significant vending machine placement initiative and several facility repair
projects accounted for most of the percentage increase.
OPERATING INCOME. As a result of the above, offset by a $0.3 million
increase in depreciation and amortization, operating income for the period
ended June 30, 1996 increased to $10.2 million, or 15.2% of net revenue,
compared to $9.2 million or 14.9% of net revenue for the same period in 1995.
9
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INTEREST EXPENSE. Net interest expense decreased by approximately $0.6
million in 1996 due primarily to reductions in short term interest rates
between years and lower debt levels as a result of scheduled payments.
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY. The Company recognized
equity in the earnings of TBG in 1996 of $2.6 million as compared to $0.6
million in 1995. TBG recorded net income of approximately $5.3 million in
1996 compared to net income of approximately $17.9 million in 1995. TBG's
operating income increased by $0.8 million or 7.9% in 1996 over the same
period in 1995.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
NET REVENUES. Net Revenues for the Company increased by 7.8% or
approximately $9.0 million to $124.0 million in 1996. Soft drink net
revenues increased 8.2% primarily as a result of a 7.9% increase in
equivalent case sales in 1996 versus 1995. Net revenues for post-mix as a
percentage of total net revenues increased to 12.0% in 1996, as compared to
11.4% in 1995. Net revenues for Automated & Custom Food Services, Inc.
increased in 1996 by approximately 6.9% over 1995.
GROSS PROFIT. Gross Profit increased by 9.5% from $53.8 million to $58.9
million, primarily as a result of the increase in revenues resulting from the
increase in equivalent case sales noted above. Gross profit as a percentage
of net revenues for the period ended June 30, 1996 was 47.5% compared to
46.8% for the period ended June 30, 1995. Reductions in raw material costs
for aluminum cans, sweetener and PET bottles accounted for the improved
margin percentage in 1996.
SELLING, GENERAL & ADMINISTRATIVE. Selling, general and administrative
expenses increased 10% or approximately $3.2 million in 1996. Selling,
general and administrative expense as a percentage of net revenues increased
to 28.8% in 1996 from 28.2% in 1995. Higher labor costs associated with the
increased equivalent case sales volume, labor and expenses associated with a
significant vending machine placement initiative and several facility repair
projects accounted for most of the percentage increase.
OPERATING INCOME. As a result of the above, offset by a $0.4 million
increase in depreciation and amortization, operating income for the period
ended June 30, 1996 increased to $16.6 million, or 13.4% of net revenue,
compared to $15.1 million or 13.2% of net revenue for the same period in 1995.
INTEREST EXPENSE. Net interest expense decreased by approximately $1.8
million in 1996 due primarily to reductions in borrowing costs associated
with refinancing activities in April 1995 discussed below, lower short term
rates and reductions in debt levels as a result of scheduled payments.
10
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EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY. The Company recognized
equity in the earnings of TBG in 1996 of $3.6 million as compared to $0.6
million in 1996. TBG recorded net income of approximately $7.3 million in
1996 compared to net income of approximately $18.9 million in 1995. TBG's
operating income increased by $0.8 million or 4.6% in 1996 over the same
period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996, cash provided by operating
activities was $6.0 million, generated primarily by net income plus
depreciation and amortization. Investing activities used $9.2 million
primarily for additions to property, plant and equipment while financing
activities provided $3.5 million primarily from $7.6 million drawn under the
revolving credit facility, net of term loan repayments.
The term loan entered into in 1995 provides for mandatory annual
prepayment based on excess cash flow as defined for each calendar year. The
prepayment for 1995 paid in the second quarter of 1996 was approximately $2
million. Based on the Company's anticipated operating results, management
believes the Company's future operating activities will generate sufficient
cash flows to repay borrowings under the 1995 Bank Agreement.
On May 1, 1996, the Company received consents from its senior bank
lenders which limited the amount of mandatory annual prepayment for the
calender year 1995 to a maximum of $2 million and limited the amount of
excess cash flow to be prepaid in 1996 to 75% of the excess cash flow as
defined. In addition, a consent was obtained to change the definition of
capital expenditures to allow the use of certain market development funds
received in connection with the Company's new Sprite franchise to be used for
capital expenditures without being counted as capital expenditures for
covenant calculation purposes.
In connection with the 1995 Bank Agreement the Company has entered into
an interest rate cap agreement which caps the three month LIBOR rate at 9% on
a notional principal amount of $60 million for four years. The Company has
no interest rate exposure under the agreement other than the initial purchase
cost of $0.6 million.
The Company will continue to evaluate the realizability of its deferred
tax asset in relation to future taxable income and adjust the valuation
allowance accordingly. At June 30, 1996, the Company recognized provision
for income taxes of $0.9 million of which $0.7 million represents deferred
taxes.
On August 1, 1996, the Company received a dividend from TBG in the amount
of $4.1 million and paid a dividend to the Company's shareholder in the
amount of $6.4 million to shareholders of record on July 19, 1996.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On June 10, 1996, the United States Court of Appeals for the Fifth
Circuit (the "5th Circuit Court") reversed and vacated the September 28, 1994
decision of the Federal Trade Commission ("FTC"), in which the FTC had
ordered the divesture of Dr Pepper licenses for a ten-county area around and
including San Antonio, Texas held by Coca-Cola Bottling Company of the
Southwest ("San Antonio Coke"), a wholly-owned subsidiary of Texas Bottling
Group, Inc., the unconsolidated subsidiary of the Registrant. The Court of
Appeals ruled that the FTC had applied the wrong legal standard, noting that
San Antonio Coke had made a strong argument that the previous findings
already established the legality of San Antonio Coke's receipt of the
licenses. The FTC has not sought rehearing before the 5th Circuit Court.
San Antonio Coke filed the appeal in 1994 following FTC action reversing
an Administrative Law Judge's dismissal of the FTC complaint filed in 1988.
The FTC had complained about the 1984 transactions in which the Dr Pepper
Company issued franchises to San Antonio Coke to manufacture and distribute
Dr Pepper products in Bexar and nine adjoining Texas counties, alleging
anti-competitive potential and violations of the Clayton Antitrust Act and
the Federal Trade Commission Act.
San Antonio Coke will continue to defend its Dr Pepper licenses in the
San Antonio area and related businesses through any further proceedings
required by the 5th Circuit Court's remanding the case. Additional
background information on this proceeding is set forth in the Registrant's
annual report on Form 10-K for the year ending December 31, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 30, 1996, by written consent in lieu of the annual meeting of
shareholders, the sole shareholder of Registrant elected Edmund M. Hoffman
and Robert K. Hoffman to serve as the Directors of the Registrant.
ITEM 5. OTHER INFORMATION.
On August 1, 1996, the Registrant paid a dividend of $6.35 million to its
sole shareholder, CCBG Corporation, a Nevada corporation.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. DESCRIPTION OF EXHIBIT
---------- -------------------------
10.1 Consent letter dated May 1, 1996 providing for adjustments
to the Loan Agreement dated April 4, 1995, executed by and
among The Coca-Cola Bottling Group (Southwest), Inc., Texas
Commerce Bank National Association, as Agent, First Bank
National Association, as Collateral Agent, and certain other
financial institutions therein listed.
(b) Reports on Form 8-K
A current report on Form 8-K was filed with the Securities
and Exchange Commission on June 21, 1996 reporting the
June 10, 1996 decision of the Fifth Circuit Court of Appeals
vacating and remanding the prior decision of the Federal
Trade Commission against San Antonio Coke. See Part II,
Item 1 above.
13
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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.
The Coca-Cola Bottling Group (Southwest), Inc.
(Registrant)
Date AUGUST 9, 1996 By: /s/ Charles F. Stephenson
---------------- ------------------------------
Charles F. Stephenson
President and Chief Financial Officer
(duly authorized officer and Principal
Financial Officer)
14
<PAGE>
INDEX TO EXHIBITS
Exhibit SEQUENTIALLY
No. NUMBERED PAGE
- -------- --------------
DESCRIPTION OF EXHIBIT
-------------------------
10.1 Consent letter dated May 1, 1996 providing for adjustments to the
Loan Agreement dated April 4, 1995, executed by and
among The Coca-Cola Bottling Group (Southwest), Inc., Texas Commerce
Bank National Association, as Agent, First Bank National
Association, as Collateral Agent, and certain other financial
institutions therein listed.
<PAGE>
EXHIBIT 10.1
May 1, 1996
The Coca-Cola Bottling Group (Southwest), Inc.
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Attention: Mr. Charles F. Stephenson
RE: Loan Agreement ("LOAN AGREEMENT") dated April 4, 1995 executed by
and among The Coca-Cola Bottling Group (Southwest), Inc. ("CCBG"),
Texas Commerce Bank National Association, as Agent, First Bank
National Association, as Collateral Agent, and certain other
financial institutions therein listed
Gentlemen:
This letter will confirm the consent of the undersigned to each of the
following:
1. For purposes of calculating the Fixed Charge Coverage Ratio, the
Adjusted Fixed Charge Coverage Ratio and the Alternate Fixed Charge
Coverage Ratio, Cash Capital Expenditures shall be reduced by the
aggregate amount provided, during the applicable period, to CCBG by
The Coca-Cola Company for the development of the SPRITE brand;
provided, however, that such reduction shall not exceed, in the
aggregate from and after the date hereof, the sum of $3,250,000. To
the extent the same SPRITE development funds are included in the
Consolidated Net Income of any Person, such SPRITE development funds
shall not be included in the calculation of Cash Flow or Total Cash
Flow.
2. The payment required under Section 3.2(b) of the Loan Agreement with
respect to Excess Cash Flow for the fiscal year 1995 shall not
exceed $2,000,000 and the Excess Cash Flow Percentage for the fiscal
year 1996 shall be 75%.
Terms used herein with their initial letters capitalized shall have the
meanings ascribed to such terms in the Loan Agreement.
<PAGE>
Page 2
EXECUTED effective as of the date first set forth above.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Agent and as a Lender
By: /s/ John C. Sarvadi
-----------------------
Name: John C. Sarvadi
-----------------------
Title: Vice President
-----------------------
<PAGE>
Page 3
FIRST BANK NATIONAL ASSOCIATION,
as Collateral Agent and as a Lender
By: /s/ David A. Druxler
------------------------
Name: DAVID A. DRUXLER
------------------------
Title: VICE PRESIDENT
------------------------
<PAGE>
Page 4
TRUST COMPANY BANK
By: /s/ Jennifer L. McClure
---------------------------
Name: JENNIFER L. McCLURE
---------------------------
Title: BANKING OFFICER
---------------------------
By: /s/ Brian K. Peters
---------------------------
Name: BRIAN K. PETERS
---------------------------
Title: VICE PRESIDENT
---------------------------
<PAGE>
Page 5
ABN AMRO BANK N.V.
By: /s/ Larry Kelley
--------------------
Name: Larry Kelley
--------------------
Title: Group Vice President
---------------------------
By: /s/ Steven L. Hipsman
-------------------------
Name: Steven Hipsman
----------------------
Title: Vice President
----------------------
<PAGE>
Page 6
CIBC, INC.
By: /s/ Roger Colden
-----------------------
Name: Roger Colden
-----------------------
Title: Director
-----------------------
<PAGE>
Page 7
CITIBANK, N.A.
By: /s/ David L. Harris
-----------------------
Name: DAVID L. HARRIS
-----------------------
Title: Vice President
-----------------------
<PAGE>
Page 8
THE BANK OF NOVA SCOTIA
By: /s/ P. M. Brown
--------------------
Name: P. M. Brown
--------------------
Title: Relationship Manager
---------------------------
<PAGE>
Page 9
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By: /s/ Robert A. Kilgannon
----------------------------
Name: Robert A. Kilgannon
----------------------------
Title: SVP
----------------------------
<PAGE>
Page 10
CREDIT SUISSE
By: /s/ Jan Kofol
------------------
Name: JAN KOFOL
------------------
Title: MEMBER OF SENIOR MANAGEMENT
----------------------------------
By: /s/ Kristinn R. Kristinsson
----------------------------------
Name: KRISTINN R. KRISTINSSON
----------------------------------
Title: ASSOCIATE
----------------------------------
<PAGE>
Page 11
HARRIS TRUST AND SAVINGS BANK
By: /s/ R. Michael Newton
-------------------------
Name: R. Michael Newton
-------------------------
Title: Vice President
-------------------------
<PAGE>
Page 12
MELLON BANK, N.A.
By: /s/ Clifford A. Mull
-------------------------
Name: Clifford A. Mull
-------------------------
Title: Assistant Vice President
--------------------------------
<PAGE>
Page 13
NBD BANK
By: /s/ William J. McCafferry
-----------------------------
Name: William J. McCafferry
-----------------------------
Title: Second Vice President
-----------------------------
<PAGE>
Page 14
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By: /s/ Satoru Otsubo
----------------------
Name: Satoru Otsubo
----------------------
Title: Joint General Manager
----------------------------
<PAGE>
Page 15
The undersigned confirms receipt of and agreement to the foregoing.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC., a Nevada corporation
By: /s/ Charles F. Stephenson
-------------------------------
Charles F. Stephenson,
President
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
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0
0
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