==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
----------
X Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 33-69832
ALL-AMERICAN BOTTLING CORPORATION
BROWNE BOTTLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-1317652
(State or other jurisdiction 73-1311569
of incorporation or organization) (IRS Employer Identification No.)
Colcord Building
15 North Robinson, Suite 100
Oklahoma City, Oklahoma 73102
(Address of Principal Executive Office)
(405) 232-1158
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed 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 each 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 .
As of May 1, 1996 Browne Bottling Company had 192,244 shares of common
stock outstanding for which there is no public market; and All-American Bottling
Corporation had 100,000 shares of common stock outstanding, all of which are
held by Browne Bottling Company.
==============================================================================<PAGE>
<PAGE>
All-American Bottling Corporation
Browne Bottling Company
INDEX
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
as of March 31, 1996 and December 31, 1995
(unaudited)
Consolidated Statements of Operations
for the three months ended March 31, 1996
and 1995 (unaudited)
Consolidated Statements of Changes in Stockholder's
Equity for the three months ended March 31, 1996
and for the year ended December 31, 1995 (unaudited)
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 (unaudited)
Notes to Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Part II Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I
ITEM 1. Financial Statements
BROWNE BOTTLING COMPANY
Consolidated Balance Sheets (in thousands)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Trade accounts receivable $ 11,944 $ 11,415
Franchise companies receivable 2,605 2,392
Other receivables 1,324 1,674
Allowance for doubtful accounts (515) (583)
Inventories - ingredients and packaging 3,021 4,021
Inventories - finished goods 5,786 6,083
Inventories - other 291 271
Inventories - pallets at deposit value 344 334
Prepaid expenses 862 648
Deferred tax asset 781 781
----------- -----------
Total current assets 26,443 27,036
----------- -----------
Plant and equipment, at cost:
Land 1,335 1,335
Buildings and improvements 6,961 6,814
Machinery and equipment 10,614 10,722
Vehicles 7,947 7,831
Vending equipment 9,525 6,618
Furniture and fixtures 512 434
Computer equipment 1,491 1,590
Returnable containers 2,355 2,366
Construction in progress 519 1,007
----------- -----------
41,259 38,717
Less - Accumulated depreciation (27,891) (25,240)
----------- -----------
Net plant and equipment 13,368 13,477
----------- -----------
Intangible assets:
Franchises 45,471 38,702
Goodwill 18,104 15,556
Other intangibles 2,877 2,951
----------- -----------
66,452 57,209
Less - Accumulated amortization (13,804) (12,405)
----------- -----------
Net intangible assets 52,648 44,804
----------- -----------
Other assets 828 987
----------- -----------
Total assets $ 93,287 $ 86,304
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Consolidated Balance Sheets (in thousands)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
----------- -----------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 2,106 $ 2,913
Current portion of long-term debt 810 3,397
Current portion of obligations under
capital lease 262 250
Current portion of deferred compensation
and non-compete agreements 71 71
Trade accounts payable 12,798 14,276
Accrued compensation and payroll taxes 2,017 2,065
Accrued interest payable 2,326 814
Accrued insurance reserves 881 908
Accrued pension liability 599 687
Other liabilities 1,830 2,181
----------- -----------
Total current liabilities 23,700 27,562
----------- -----------
Long-term debt, net of current maturities 57,418 51,404
----------- -----------
Obligations under capital leases, net 939 1,001
----------- -----------
Deferred compensation and non-compete
agreements, net 613 903
----------- -----------
Other non-current liabilities 44 43
----------- -----------
Deferred tax liability 12,121 10,817
----------- -----------
Stock warrants 856 856
----------- -----------
Stockholder's equity:
Preferred stock - Series B, $.01 par
value, 1,000 shares authorized issued
and outstanding; (liquidation preference
of $1,000 per share) - -
Common stock, $.01 par value, 220,295 shares
authorized, and 192,244 shares issued and
outstanding 2 2
Common stock, non-voting, $.01 par value,
5,263 shares authorized, none outstanding - -
Additional paid-in capital 26,542 26,542
Deficit (28,948) (32,826)
----------- -----------
Total stockholders' equity (deficit) (2,404) (6,282)
----------- -----------
Total liabilities and stockholders' equity $ 93,287 $ 86,304
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Unaudited Consolidated Statements of Operations (in thousands)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
----------- -----------
<S> <C> <C>
Revenues, net of discounts and allowances
($16,344 and $14,488 in 1995 and 1996,
respectively) $ 38,007 $ 33,533
Cost of sales 24,565 22,286
----------- -----------
Gross Profit 13,442 11,247
Operating expenses:
Plant and occupancy 1,501 1,543
Loading and shipping 1,075 1,029
Transport 233 227
Fleet service 207 185
Selling and delivery 6,707 6,173
Vending 612 572
Fountain 5 5
Advertising 708 517
General and administrative 1,909 1,709
Amortization of intangibles 573 555
----------- -----------
Total operating expenses 13,530 12,515
----------- -----------
Loss from operations (88) (1,268)
Loss on disposals (278) (1,926)
Interest expense - cash (1,855) (1,862)
Interest expense - non-cash (335) (30)
Other income 138 14
----------- -----------
Loss before income tax benefit (2,418) (5,072)
Income tax benefit 596 1,194
----------- -----------
Net loss $ (1,822) $ (3,878)
=========== ===========
Loss per common share and common share
equivalent:
Primary and fully diluted:
Net loss $ (9.48) $ (20.17)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands)
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Preferred Additional Retained
Shares, Common Stock Paid-in Earnings
Series B Shares Amount Capital (Deficit) Total
--------- ------- ------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,000 192,244 $ 2 $26,542 $(29,035) $ (2,491)
Net income 87 87
--------- ------- ------ --------- --------- ---------
Balance, December 31, 1995 1,000 192,244 2 26,542 (28,948) (2,404)
Net loss (unaudited) (3,878) (3,878)
--------- ------- ------ --------- --------- ---------
Balance, March 31, 1996 1,000 192,244 $ 2 $26,542 $(32,826) $ (6,282)
========= ======= ====== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Unaudited Consolidated Statements of Cash Flows (in thousands)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,822) $ (3,878)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 1,326 1,285
Loss on disposal of assets and franchises 278 1,926
Deferred taxes (619) (1,305)
Deferred compensation - 215
Changes in assets and liabilities, net of
effect of acquisitions and dispositions:
Decrease (increase) in accounts receivable 696 524
Decrease (increase) in inventories 858 (1,597)
Increase (decrease) in accounts payable (1,498) 1,170
(Decrease) in accrued interest (1,037) (1,512)
Increase (decrease) in overdraft (2,185) 807
Other 87 192
----------- -----------
Net cash provided (used) by operating
activities (3,916) (2,173)
----------- -----------
Cash flows from investing activities:
Capital expenditures (312) (806)
Proceeds from sale of fixed assets and
franchises 3,907 7,185
Payment for purchase of territories and
related fixed assets, net of cash
acquired - (670)
----------- -----------
Net cash provided by investing
activities 3,595 5,709
---------- -----------
Cash flows from financing activities:
Proceeds from issuance of debt 1,026 2,976
Principal payments on debt (787) (867)
Borrowings on revolver note 46,868 39,969
Payments on revolver note (46,733) (45,514)
Financing costs paid - (100)
---------- -----------
Net cash provided (used) by financing
activities: 374 (3,536)
---------- -----------
Net increase in cash 53 -
Cash at beginning of period - -
---------- -----------
Cash at end of period $ 53 $ -
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Unaudited Consolidated Statements of Cash Flows (in thousands)
- - --------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
----------- -----------
<S> <C> <C>
Cash paid during the period for interest $ 3,210 $ 3,401
=========== ===========
Cash paid during the period for income
taxes $ 67 $ 123
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROWNE BOTTLING COMPANY
Notes to Unaudited Consolidated Financial Statements
- - --------------------------------------------------------------------------------
1. NATURE OF BUSINESS
All-American Bottling Corporation (the "Company") is a wholly-owned
subsidiary of Browne Bottling Company ("BBC"). BBC has no independent
operations and its only material asset is its investment in the Company.
The Company is an independent bottler and distributor of soft drinks and
other beverage products, including flavored and premium waters, brewed
teas, natural sodas and sparkling juices. The Company's largest markets
in terms of franchise case sales volume are the metropolitan areas of
Milwaukee, Louisville, Nashville and Oklahoma City. The Company has
franchise agreements covering various territories for brands such as RC
Cola, Diet Rite Cola, Seven-Up, Dr Pepper, Sunkist, Canada Dry, Dad's Root
Beer, Crush, A&W Root Beer, Big Red, Sundrop, Snapple, Mistic, Clearly
Canadian, Evian and Yoo-Hoo.
2. BASIS OF PRESENTATION
The interim financial statements included herein have been prepared by BBC
without audit, pursuant to the rules and regulations promulgated by the
Securities and Exchange Commission (the "Commission"). Certain
information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting
principles, have been omitted pursuant to Commission rules and
regulations; nevertheless, BBC believes that the disclosures are adequate
to make the information presented not misleading. These condensed
financial statements should be read in conjunction with BBC's audited
financial statements and the notes thereto included in BBC's Annual Report
on Form 10-K for the year ended December 31, 1995 filed with the
Commission. In the opinion of management, the accompanying interim
financial statements contain all material adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial
position, the results of operations, cash flows and stockholders' equity
of BBC for the three month periods ended March 31, 1995 and 1996. The
results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full fiscal year.
The accompanying financial statements include the accounts of BBC and its
wholly-owned subsidiary, the Company. All significant intercompany
balances and transactions have been eliminated.
In August 1993, the Company issued $45 million principal amount of 13%
Senior Secured Notes (the "Senior Notes"), which indebtedness has been
fully and unconditionally guaranteed by BBC. The separate financial
statements of the Company have not been included because the assets,
liabilities, earnings and equity of the Company are substantially
equivalent to the assets, liabilities, earnings and equity of BBC on a
consolidated basis and therefore are not considered material.
3. EARNINGS PER SHARE
Primary and fully diluted earnings per common share (EPS) are based upon
the weighted average number of shares of common stock outstanding plus the
common stock equivalents which would arise from the exercise of warrants,
unless such items would be anti-dilutive. Fully diluted earnings per
common share assume the conversion of common stock equivalents which would
arise from the exercise of warrants, unless such items would be anti-
dilutive. Primary and fully diluted earnings per share are the same for
all periods presented.
Weighted average number of shares used in computing loss per common share
and common share equivalent for both primary and fully diluted were
192,244 for 1995 and 1996.
4. ASSET SALES AND PURCHASES
On March 23, 1996, the Company sold assets in St. Paul, Duluth and
Rochester, Minnesota and North and South Dakota to an unrelated party for
proceeds of approximately $5.6 million, resulting in a loss on sale of
approximately $2.9 million. The assets sold included warehouse inventory
in St. Paul, selected warehouse equipment, vendors and visicoolers, and
franchise and distributor agreements. Sale proceeds included $5.4 million
in cash paid at closing which was used to reduce the balance on the
Company's Senior Credit Facility, and a receivable of $200,000 due
September 23, 1996, subject to certain adjustments as defined in the asset
purchase agreement.
During the three months ended March 31, 1996, the Company also sold
franchise and distribution rights in Madison, Wisconsin, Pulaski,
Tennessee and Roanoke, Virginia for combined net sale proceeds of
approximately $2.4 million, and recognized gains totaling approximately
$1.1 million. Sale proceeds included $1.8 million in cash paid at closing
which was used to reduce the balance on the Company's Senior Credit
Facility and a $608,000 note payable with interest due monthly and
principal due based on purchases made from the Company with any remaining
balance due March 1, 2001.
In January 1996, the Company acquired the franchise and distribution
rights, accounts receivable, inventory, and fixed assets of an unrelated
bottler in LaCrosse, Wisconsin. The purchase price was approximately $1.0
million and was financed primarily through borrowings under the Company's
Senior Credit Facility.
5. SUPPLEMENTAL FINANCIAL INFORMATION
The following table sets forth information concerning case sales and per
case results for the three month periods ended March 31, 1995 and 1996.
<TABLE>
(CAPTION>
Three Months Ended March 31,
1995 1996
---------------- ----------------
Cases % Cases %
----- ---- ----- ----
($000's, except percent data)
<S> <C> <C> <C> <C>
DSD Sales................. 4,865 4,164
Distributor Sales......... 407 466
----- -----
Total Franchise...... 5,272 88% 4,630 88%
Contract Sales............ 692 12% 608 12%
----- ---- ----- ----
Total Case Sales..... 5,964 100% 5,238 100%
Produced.................. 5,412 91% 4,887 93%
Purchased................. 557 9% 475 9%
Inventory - (Inc.)/Dec.... (5) (124) -2%
----- ---- ----- ----
Total Case Sales..... 5,964 100% 5,238 100%
</TABLE>
<TABLE>
<CAPTION>
Per Per
Aggregate Case Aggregate Case
--------- ---- --------- ----
($000's, except per case and per share data)
<S> <C> <C> <C> <C>
Franchise Sales........... $34,777 $6.60 $30,615 $6.61
Contract Sales............ 3,230 4.67 2,918 4.80
------- -------
Net Sales............ 38,007 6.37 33,533 6.40
Cost of Goods Sold........ 24,565 4.12 22,286 4.25
------- ----- ------- -----
Gross Profit......... 13,442 $2.25 11,247 $2.15
Admin.,Marketing & General 13,530 12,515
------- -------
Operating loss............ (88) (1,268)
Interest Expense.......... (2,190) (1,892)
Other Non-operating
(including gain [loss] on
sale and other income)... (140) (1,912)
------- -------
Loss Before Income Tax Benefit.(2,418) (5,072)
Income Tax Benefit........ 596 1,194
------- -------
Net Loss.................. $(1,822) $(3,878)
======= =======
EPS....................... $ (9.48) $(20.17)
EBITDA (a)................ $ 1,323 $ 27
</TABLE>
(a) EBITDA consists of net income (loss) before (a) income taxes, (b) interest
expense, (c) depreciation, (d) amortization, (e) gain (loss) on asset sales, (f)
other non-cash charges, and (g) extraordinary gains. EBITDA should not be
considered as an alternative to, or more meaningful than, operating income or
cash flow as an indicator of the Company's operating performance.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
All-American Bottling Corporation (the "Company") is an independent bottler
and distributor of soft drinks and other beverage products operating in 6
states. The Company is a wholly-owned subsidiary of Browne Bottling Company
("BBC"). The Company's soft drink product portfolio includes such well-known
national brands as RC Cola, Diet Rite Cola, Seven-Up, Dr Pepper, Sunkist,
Canada Dry, Dad's Root Beer, Crush and A&W Root Beer, as well as leading
regional brands such as Big Red and Sundrop. Other beverages distributed by
the Company include Snapple, Mistic, Clearly Canadian, Evian and other waters
and are commonly referred to as "alternative beverages". The Company's largest
markets in terms of franchise case sales volume are the metropolitan areas of
Milwaukee, Louisville, Nashville and Oklahoma City.
In August 1993, BBC and the Company completed a recapitalization plan
designed to enhance the Company's financial flexibility. As part of the
recapitalization plan, the Company issued $45.0 million principal amount of 13%
Senior Secured Notes due 2001 (the "Senior Notes"), guaranteed by BBC, and
entered into a new senior secured credit facility (the "Senior Credit Facility")
providing for borrowing availability of up to $20.0 million, subject to borrow-
ing base limitations (65% of eligible inventories and 85% of eligible accounts
receivable).
The Company's primary measurement of unit volume is franchise and contract
case sales. Franchise case sales represent sales of products in the Company's
franchise territories, while contract case sales consist of product sold under
contract manufacturing arrangements to private label or other bottlers. Pro-
duced product consists of product manufactured by the Company in its own
facilities and purchased product is finished product purchased from other
bottlers and suppliers. EBITDA consists of net income (loss) before income
taxes, interest expense, depreciation, amortization, gain (loss) on asset sales
and other non-cash charges and extraordinary gains. EBITDA should not be con-
sidered as an alternative to, or more meaningful than, operating income or cash
flow, as determined in accordance with generally accepted accounting principles,
as an indicator of the Company's operating performance or liquidity.
RESULTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 VS. THREE MONTHS ENDED MARCH 31, 1995
The following discussion addresses the results of operations for the three
months ended March 31, 1996 ( the "Current Quarter") as compared to the three
months ended March 31, 1995 (the "Prior Quarter").
Net sales for the Current Quarter were $33.5 million compared to $38.0
million for the Prior Quarter, a $4.5 million or 11.8% decrease. Franchise case
sales were 4.6 million cases for the Current Quarter compared to 5.3 million
cases for the Prior Quarter, a decrease of 642,000 cases or 12.2%. This
decrease in franchise cases is attributable to volume losses in Minnesota,
Wisconsin and Tennessee. Franchise case sales in Minnesota were 350,000 cases
for the Current Quarter as compared to 562,000 cases for the Prior Quarter, a
decline of 212,000 cases or 37.7%. This volume decline is attributable to a
limited distribution system in Minnesota in anticipation of the sale of this
territory which was completed on March 23, 1996. In Wisconsin, franchise case
sales for the Current Quarter were 1.4 million cases as compared to 1.5 million
cases for the Prior Quarter, a decrease of 94,000 cases or 6.4%. This decrease
is primarily related to declines in the sales of can packages of RC Cola
products due to the territory sales described in Note 4 above. Tennessee
franchise case sales for the Current Quarter were 800,000 cases as compared to
1.0 million cases for the Prior Quarter, a decline of 242,000 cases or 23.2%.
This decrease is primarily related to declines in the sales of can packages of
RC Cola products in response to price increases implemented in Tennessee. For
the Prior Quarter, heavy promotional activity in Tennessee resulted in volume
increases at lower average net selling prices compared to the first quarter of
1996. The average net selling price for franchise sales for the Company
increased to $6.61 for the Current Quarter as compared to $6.60 for the Prior
Quarter.
Contract case sales declined only slightly to 608,000 cases for the Current
Quarter from 692,000 cases for the Prior Quarter. This decline was in the
Oshkosh, Wisconsin production facility and is primarily attributable to the
Company acquiring the LaCrosse, Wisconsin bottler in January 1996 which had
formerly been a contract bottling customer. The average net selling price for
contract cases increased to $4.80 for the Current Quarter as compared to $4.67
for the Prior Quarter.
On a company-wide basis the net selling price for all cases increased to
$6.40 for the Current Quarter as compared to $6.37 for the Prior Quarter, a .5%
increase, due to increases in both franchise and contract per case selling
prices.
Cost of goods sold decreased $2.2 million or 9.3% for the Current Quarter
1996 as compared to the Prior Quarter primarily due to the volume decrease
partially offset by an increase in the price of extracts and purchased finished
goods. The Current Quarter per case cost of extracts averaged a 5.8% increase
over the Prior Quarter. The Current Quarter per case cost of purchased finished
goods averaged an increase of 3.4% over the Prior Quarter. Gross profit for the
Current Quarter was $11.2 million as compared to $13.4 million for the Prior
Quarter, a decrease of $2.2 million or 16.3% due to both volume declines and an
increase in the per case cost of goods. Gross margin as a percentage of sales
was 33.5% for the Current Quarter as compared to 35.4% for the Prior Quarter.
The decline in the gross margin percentage is due to the increased per case cost
of goods.
Administrative, marketing and general expenses declined $1.0 million or
7.5% for the Current Quarter as compared to the Prior Quarter due to overall
decreases in all categories of expenses as a result of the decreased volume of
the Company and the sale of certain operations.
The loss on disposal of $1.9 million realized for the Current Quarter is
the aggregation of the loss of $2.9 million recognized on the St. Paul,
Minnesota sale offset by gains on the sales of territories in Roanoke, Virginia,
Madison, Wisconsin, and Pulaski, Tennessee. See Note 4 above.
Interest expense was $1.9 million for the Current Quarter as compared to
$2.2 million for the Prior Quarter. Cash interest expense remained constant,
however, noncash interest declined due to the repurchase of the Senior
Subordinated Notes in July 1995.
Other income decreased to $14,000 for the Current Quarter from $138,000 for
the Prior Quarter primarily due to a decline in trade discounts taken in the
Current Quarter.
Net loss for the Current Quarter was $3.8 million as compared to a net loss
for the Prior Quarter of $1.8 million. The increase in the net loss results
from a combination of the decline in gross margin and the loss on disposals
discussed in Note 4 above.
EBITDA was $27,000 for the Current Quarter as compared to $1.3 million for
the Prior Quarter. The decrease in EBITDA is attributable to the decline in the
volume and resulting gross margin partially offset by the reduction in operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
For the Current Quarter, the Company's operating activities used cash of
approximately $2.1 million compared to cash used of $3.9 million for the Prior
Quarter. The net cash used of $2.1 million by operating activities in the
Current Quarter resulted primarily from $1.8 million cash used from operations,
a significant decrease in accrued interest and a significant increase in
inventory levels partially offset by increases in accounts payable and the cash
overdraft. The net cash used of $3.9 million by operating activities in the
Prior Quarter resulted primarily from $837,000 cash used from operations, a
significant decrease in accrued interest, accounts payable and cash overdraft
partially offset by decreases in accounts receivable and inventory levels.
At March 31, 1996 the Company had working capital (excluding cash, cash
equivalents and the current portion of long-term debt and other obligations) of
$6.1 million compared to $8.4 million at March 31, 1995. The decrease in
working capital is due primarily to the decline in trade receivables and an
increase in accounts payable at March 31, 1996 as compared to March 31, 1995.
The Company's working capital needs have historically been funded from opera-
tions and, on a seasonal basis, from borrowings under its revolving credit
facility.
During the Current Quarter investing activities provided net cash of $5.7
million as compared to $3.6 million for the Prior Quarter. The increase is due
primarily to the $5.4 million in cash received on the sale of St. Paul as well
as the proceeds from the sales of the other locations as described in Note 4
above. For the Prior Quarter the proceeds from sales resulted from the sale of
the Rockford, Illinois territory.
Financing activities used cash of $3.5 million in the Current Quarter due
to the application of the proceeds from the sales described above to reduce the
revolving credit facility by $5.5 million offset by proceeds from the issuance
of debt of $2.9 million. Debt issued consists primarily of unsecured demand
notes issued to Stephen B. Browne and entities affiliated with him. At March
31, 1996 such debt had a remaining balance of $2.8 million and was subsequently
reduced to $1.1 million on April 15, 1996. These unsecured loans are made at
the same interest rates charged under the Company's Senior Credit Facility.
At March 31, 1996, the Company's borrowing base was $17.7 million, and the
Company had borrowings of $8.2 million outstanding under the Senior Credit
Facility, with an additional $198,000 of letters of credit issued thereto and
$9.3 million of unused credit availability thereunder.
The Company's earnings before income taxes and fixed charges were
insufficient to cover its fixed charges by $1.3 million for the Current Quarter.
EBITDA (as defined) and cash interest expense for the Current Quarter were
$27,000 and $1.9 million, respectively. EBITDA is presented not as an
alternative to operating income (as determined in accordance with generally
accepted accounting principles) as an indicator of the Company's operating
performance or to cash flow from operating activities (as determined in
accordance with generally accepted accounting principles) as a measure of its
liquidity, but rather to provide additional information related to the debt
service ability of the Company. If the Company were to experience a
deterioration in operating results, the Company's ability to generate sufficient
cash to cover its interest expense would be reduced, and the Company would be-
come unable to meet its interest obligations.
The Company's long-term debt (including current maturities thereof and
amounts payable under non-compete and deferred compensation agreements) was
approximately $57.0 million as of March 31, 1996, and scheduled principal
payments are estimated to be approximately $3.7 million during the twelve months
ending March 31, 1997. Of this $3.7 million, approximately $2.8 million
represents the unsecured demand notes from Stephen B. Browne and his affiliated
entities described above and approximately $660,000 represents financing with
original terms of 18 months or less from trade suppliers to finance 1995 capital
expenditures. Repayment of the $660,000 is based upon surcharges for product
purchases from these trade suppliers. The Company must make certain capital
expenditures on an annual basis in order to maintain its business and assets and
compete effectively. The Company expects to spend approximately $2.5 million on
capital expenditures prior to December 31, 1996. To the extent that require-
ments for debt service and capital expenditures are in excess of cash flow from
operations, the Company will need to finance such requirements with additional
indebtedness or defer capital expenditures.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K dated April 10, 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.
ALL-AMERICAN BOTTLING CORPORATION
Date: May 13, 1996 By: STEPHEN B. BROWNE
------------------------
Stephen B. Browne
President, Chief Executive
Officer and Chairman
of the Board
Date: May 13, 1996 By: STEPHEN R. KERR
-------------------------
Stephen R. Kerr
Vice President and Chief
Financial Officer
BROWNE BOTTLING COMPANY
Date: May 13, 1996 By: STEPHEN B. BROWNE
------------------------
Stephen B. Browne
President, Chief Executive
Officer and Chairman
of the Board
Date: May 13, 1996 By: STEPHEN R. KERR
-------------------------
Stephen R. Kerr
Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Method of Filing
- - ------- ----------------
<S> <C> <C>
27. Financial Data Schedule Filed herewith electronically
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000825811
<NAME> ALL-AMERICAN BOTTLING CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> (2913)
<SECURITIES> 0
<RECEIVABLES> 11415
<ALLOWANCES> 583
<INVENTORY> 10709
<CURRENT-ASSETS> 27036
<PP&E> 38717
<DEPRECIATION> 25240
<TOTAL-ASSETS> 86304
<CURRENT-LIABILITIES> 27562
<BONDS> 53308
0
0
<COMMON> 2
<OTHER-SE> (6284)
<TOTAL-LIABILITY-AND-EQUITY> 86304
<SALES> 33533
<TOTAL-REVENUES> 33533
<CGS> 22286
<TOTAL-COSTS> 22286
<OTHER-EXPENSES> 12515
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1892
<INCOME-PRETAX> (5072)
<INCOME-TAX> (1194)
<INCOME-CONTINUING> (3878)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3878)
<EPS-PRIMARY> (20.17)
<EPS-DILUTED> (20.17)
</TABLE>
