<PAGE>
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 30,
1994
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 numbers: 33-56292-01 and 33-56292
DR PEPPER BOTTLING HOLDINGS, INC.
DR PEPPER BOTTLING COMPANY OF TEXAS
- - - ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-2275754
Texas 75-2008278
- - - -------------------------------- --------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
2304 Century Center Blvd.
Irving, Texas 75062
(214) 579-1024
- - - ---------------------------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices)
- - - ---------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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 number of shares outstanding of each of the issuers' classes of common
stock as of September 30, 1994 was as follows: 13,642,168 shares of Class
A Common Stock, par value $.01 per share, of Dr Pepper Bottling Holdings,
Inc., and 100 shares of Common Stock, par value $.01 per share, of Dr
Pepper Bottling Company of Texas.
<PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 22
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
September 30, 1994 and December 31, 1993
(In thousands)
ASSETS
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
------------- ------------
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 14,738 $ 16,955
Accounts receivable
Trade, less allowance for doubtful
accounts of $515 in September 1994 and
$305 in December 1993 22,906 20,156
Other 3,827 3,109
Inventories 16,430 9,806
Prepaid expenses 5,656 3,421
-------- --------
Total current assets 63,557 53,447
Property, plant and equipment, net 65,482 64,523
Other assets at amortized cost:
Goodwill and other intangible assets 112,722 116,668
Debt issuance costs 9,942 11,225
-------- --------
Total assets $251,703 $245,863
======== ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
September 30, 1994 and December 31, 1993
(In thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 32,226 $ 26,311
Accrued expenses 17,165 13,877
Current maturities of long-term debt and
obligations under capital leases (note 7) 12,721 12,885
-------- --------
Total current liabilities 62,112 53,073
Long-term debt and obligations under capital
leases, less current maturities (note 7) 298,548 306,149
Cumulative redeemable senior exchangeable
preferred stock, $.01 par value. Authorized
2,150 shares; issued and outstanding 1,392
shares in 1994 and 1,283 shares in 1993;
aggregate liquidation preference $34,799
(note 10) 32,498 29,635
Stockholders' deficit (notes 3 and 11):
Class A common stock, $.01 par value.
Authorized 20,000 shares; issued and
outstanding 13,642 in 1994 and 1993 136 136
Additional paid-in capital 14,383 14,383
Consideration to continuing predecessor
shareholders in excess of book value (33,948) (33,948)
Deficit (122,026) (123,565)
--------- ---------
Total stockholders' deficit (141,455) (142,994)
--------- ---------
Total liabilities and stockholders'
deficit $ 251,703 $ 245,863
========= =========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Three Months and Nine Months
Ended September 30, 1994 and 1993
(In thousands, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $91,232 $86,682 $252,002 $237,695
Cost of sales (note 12) 59,994 55,714 161,185 148,727
-------- -------- -------- --------
Gross profit 31,238 30,968 90,817 88,968
Operating expenses:
Marketing expenses 1,938 1,897 5,413 5,320
Administrative and general expenses 16,886 16,791 48,033 45,850
Depreciation (note 12) 1,440 1,427 4,248 3,870
Amortization of intangible assets 1,289 1,467 3,946 4,283
-------- -------- -------- --------
Total operating expenses 21,553 21,582 61,640 59,323
-------- -------- -------- --------
Operating profit 9,685 9,386 29,177 29,645
Other expense (income):
Interest expense 5,556 5,950 16,717 18,144
Amortization of deferred debt
issuance costs 428 425 1,283 1,178
Loss (gain) from disposition of
assets (7) (15) (8) 36
Bond accretion 2,379 2,126 6,939 5,155
Other (102) (45) (260) (2,605)
-------- -------- -------- --------
Total other expense 8,254 8,441 24,671 21,908
-------- -------- -------- --------
Income before provision of income taxes 1,431 945 4,506 7,737
Provision for income taxes 35 105
-------- -------- -------- --------
Net income before dividends on
subsidiary's preferred stock and
extraordinary item 1,396 945 4,401 7,737
<PAGE>
Dividends on subsidiary's preferred stock
5,806
-------- -------- -------- --------
Net income (loss) before extraordinary
item 1,396 945 4,401 1,931
Extraordinary item - loss on
recapitalization 11 (32,309)
-------- -------- -------- --------
Net income (loss) $ 1,396 $ 956 $ 4,401 ($30,378)
======== ======== ======== ========
Net income (loss) per common share before
extraordinary item 0.03 0.01 0.11 0.05
Extraordinary item per share (2.37)
-------- -------- -------- --------
Net income (loss) per common share
(note 14) $0.03 $0.01 $0.11 ($2.32)
======== ======== ======== ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Deficit
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Consideration
to continuing
Predecessor
Additional stockholders
Common Stock paid-in in excess of
------------------
Shares Amount capital Deficit book value Totals
------- ------- ---------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 13,642 $136 $14,383 ($123,565) ($33,948) ($142,994)
Accretion of preferred stock (note 10) (47) (47)
Preferred stock dividend (882) (882)
Net income 912 912
-------- -------- -------- -------- -------- --------
Balance at March 31, 1994 13,642 136 14,383 (123,582) (33,948) (143,011)
Accretion of preferred stock (note 10) (47) (47)
Preferred stock dividend (907) (907)
Net income 2,093 2,093
-------- -------- -------- -------- -------- --------
Balance at June 30, 1994 13,642 136 14,383 (122,443) (33,948) (141,872)
Accretion of preferred stock (note 10) (48) (48)
Preferred stock dividend (931) (931)
Net income 1,396 1,396
-------- -------- -------- -------- -------- --------
Balance at September 30, 1994 13,642 $136 $14,383 ($122,026) ($33,948) ($141,455)
======== ======== ======== ======== ======== ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Months Ending September 30, 1994 and 1993
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
September 30, September 30,
1994 1993
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $4,401 ($31,599)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Loss on recapitalization 32,309
Depreciation of property, plant and equipment 6,821 6,500
Amortization of other assets 5,229 5,460
Subsidiary's preferred stock dividends 3,650
Accretion of discount on discount notes 6,939 5,155
Loss (gain) on sale of assets (8) 36
Changes in assets and liabilities:
Accounts receivable (3,467) (1,094)
Inventories (6,624) (3,637)
Prepaid assets (2,235) (928)
Accounts payable 5,915 1,722
Accrued expenses 3,288 4,875
-------- --------
Total adjustments 15,858 54,048
-------- --------
Net cash provided by operating
activities 20,259 22,449
Cash flows from investing activities:
Additions to property, plant and equipment (8,052) (6,552)
Proceeds from sale of property, plant and
equipment 280 607
Cash paid for acquisition, net of cash acquired (9,051)
-------- --------
Net cash used in investing
activities (7,772) (14,996)
Cash flows from financing activities:
Debt issued 287,798
Deferred debt costs (11,965)
Payment of long-term debt (14,704) (183,967)
Payment of costs related to recapitalization (27,656)
Preferred stock issued 27,553
Preferred stock retired (88,144)
Payment of dividends on subsidiary's preferred
stock 1,221
Common stock issued 278
Warrant issued 2,250
-------- --------
Net cash provided (used) in
financing activities (14,704) 7,368
<PAGE>
Net increase in cash and cash equivalents (2,217) 14,821
Cash and cash equivalents at beginning of year 16,955 8,008
-------- --------
Cash and cash equivalents at end of period $14,738 $22,829
======== ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Consolidated Condensed Balance Sheets
September 30, 1994 and December 31, 1993
(In thousands)
ASSETS
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
------------- ------------
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 14,714 $ 16,930
Accounts receivable
Trade, less allowance for doubtful
accounts of $515 in September 1994 and
$305 in December 1993 22,906 20,156
Other 4,118 3,417
Inventories 16,430 9,806
Prepaid expenses 5,655 3,420
-------- --------
Total current assets 63,823 53,729
Property, plant and equipment, net 65,482 64,523
Other assets at amortized cost:
Goodwill and other intangible assets 112,722 116,668
Debt issuance costs 7,217 8,255
-------- --------
Total assets $249,244 $243,175
======== ========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Consolidated Condensed Balance Sheets
September 30, 1994 and December 31, 1993
(In thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
September 30,
1994 December 31,
(Unaudited) 1993
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 32,226 $ 26,311
Accrued expenses 17,165 13,876
Current maturities of long-term debt and
obligations under capital leases 12,721 12,885
-------- --------
Total current liabilities 62,112 53,072
Long-term debt and obligations under capital
leases, less current maturities 213,156 227,696
Stockholders' deficit:
Common stock, $.01 par value. Authorized
11,000 shares; issued and outstanding .1
shares in 1994 and 1993. 1 1
Additional paid-in capital (note 2) 110,227 110,227
Consideration to continuing predecessor
shareholders in excess of book value (33,948) (33,948)
Deficit (102,304) (113,873)
--------- ---------
Total stockholders' deficit (26,024) (37,593)
--------- ---------
Total liabilities and stockholders'
deficit $ 249,244 $ 243,175
========= =========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Statements of Operations
For the Three Months and Nine Months
Ended September 30, 1994 and 1993
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $91,233 $86,682 $252,002 $237,695
Cost of sales 59,994 55,714 161,185 148,727
-------- -------- -------- --------
Gross profit 31,239 30,968 90,817 88,968
Operating expenses:
Marketing expenses 1,938 1,897 5,413 5,320
Administrative and general
expenses 16,886 16,791 48,033 45,850
Depreciation 1,440 1,427 4,248 3,870
Amortization of intangible
assets 1,289 1,467 3,946 4,283
-------- -------- -------- --------
Total operating expenses 21,553 21,582 61,640 59,323
-------- -------- -------- --------
Operating profit 9,686 9,386 29,177 29,645
Other expense (income):
Interest expense 5,557 5,950 16,717 18,137
Amortization of deferred debt
issuance costs 346 344 1,038 987
Loss (gain) from disposition of
assets (7) (15) (8) 36
Other (95) (43) (244) (2,601)
-------- -------- -------- --------
Total other expense 5,801 6,236 17,503 16,559
-------- -------- -------- --------
Income before provision of income taxes 3,885 3,150 11,674 13,086
Provision for income taxes 35 105
------- -------- ----- --------
Net Income before extraordinary item 3,850 3,150 11,569 13,086
<PAGE>
Extraordinary item - loss on
recapitalization 11 (32,309)
-------- -------- -------- --------
Net Income (loss) $3,850 $3,161 $11,569 ($19,223)
======== ======== ======== =========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Statement of Stockholders' Deficit
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Consideration
to continuing
Predecessor
Additional stockholders
Common Stock paid-in in excess of
------------------
Shares Amount capital Deficit book value Totals
------- ------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 0.1 $1 $110,227 ($113,873) ($33,948) ($37,593)
Net income 3,239 3,239
------ ------ -------- -------- -------- --------
Balance at March 31, 1994 0.1 1 110,227 (110,634) (33,948) (34,354)
Net income 4,480 4,480
------ ------ -------- -------- -------- --------
Balance at June 30, 1994 0.1 1 110,227 (106,154) (33,948) (29,874)
Net income 3,850 3,850
------ ------ -------- -------- -------- --------
Balance at September 30, 1994 0.1 $1 $110,227 ($102,304) ($33,948) ($26,024)
====== ====== ======== ======== ======== =======
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Statements of Cash Flows
For the Nine Months Ending September 30, 1994 and 1993
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
September 30, September 30,
1994 1993
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $11,569 ($19,223)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Loss on recapitalization 32,309
Depreciation of property, plant and equipment 6,821 6,500
Amortization of other assets 4,984 5,270
Loss (gain) on sale of assets (8) 36
Changes in assets and liabilities:
Accounts receivable (3,451) (1,688)
Inventories (6,624) (3,637)
Prepaid assets (2,235) (645)
Accounts payable 5,915 1,722
Accrued expenses 3,289 4,875
-------- --------
Total adjustments 8,691 44,742
-------- --------
Net cash provided by operating
activities 20,260 25,519
Cash flows from investing activities:
Additions to property, plant and equipment (8,052) (6,552)
Proceeds from sale of property, plant and
equipment 280 607
Cash paid for acquisition, net of cash acquired (9,051)
-------- --------
Net cash used in investing
activities (7,772) (14,996)
Cash flows from financing activities:
Debt issued 216,685
Deferred debt costs (8,725)
Payment of long-term debt (14,704) (183,967)
Payment of costs related to recapitalization (27,656)
Preferred stock retired (88,144)
Additions to paid-in-capital related to
recapitalization 98,236
Payment of preferred stock dividend (2,156)
-------- --------
Net cash provided (used) in
financing activities (14,704) 4,273
-------- --------
<PAGE>
Net increase in cash and cash equivalents (2,216) 14,796
Cash and cash equivalents at beginning of year 16,930 8,008
-------- --------
Cash and cash equivalents at end of period $14,714 $22,804
======== ========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
Unaudited
September 30, 1994
1. GENERAL
-------
The accompanying consolidated balance sheets of Dr Pepper
Bottling Holdings, Inc. ("Holdings") and its wholly owned
subsidiary, Dr Pepper Bottling Company of Texas (the "Company" or
"Subsidiary"), as of September 30, 1994, the related consolidated
condensed statements of operations for the three months and nine
months ended September 30, 1994 and 1993, the related
consolidated condensed statements of stockholders' deficit for
the nine months ended September 30, 1994, and the related
consolidated condensed statements of cash flows for the nine
months ended September 30, 1994 and 1993 are unaudited but, in
the opinion of the Company and Holdings, reflect all adjustments,
which are of a normal recurring nature, necessary for a fair
presentation. Such financial statements are for interim periods
and do not include all detail normally provided in annual
financial statements and should be read in conjunction with the
financial statements of the Company and Holdings, and notes
thereto, included in the Prospectus of the Company and Holdings,
dated April 18, 1994, relating to the Company's 10 1/4%
Senior Notes due 2000 (the "Senior Notes") and Holdings' 11 5/8%
Senior Discount Notes due 2003 (the "Discount Notes"), filed with
the Securities and Exchange Commission (File Nos. 33-56292 and
33-56292-01, respectively) (the "Prospectus").
Effective October 28, 1988, Holdings acquired all of the
outstanding common stock of the Company (the "Acquisition") in a
business combination accounted for as a purchase. As Holdings is
essentially a holding company whose principal asset is its
investment in the Company, all purchase adjustments have been
recorded on the books of the Company. To the extent that the
Acquisition included new investors, the Company adjusted
property, plant and equipment to their estimated fair values as
of the Acquisition date and retired related accumulated
depreciation.
Holdings, through its subsidiary, is principally engaged in
producing, marketing and distributing carbonated soft drinks in
Dallas/Fort Worth, Houston, Waco, and Galveston. Soft drink
operations are conducted pursuant to franchise agreements with
companies owning the rights to soft drink formulae.
<PAGE>
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) Cash Equivalents
Cash equivalents consist of highly liquid debt instruments with
original maturities of three months or less.
(b) Inventories
Inventories are stated at the lower of first-in, first-out (FIFO)
cost or market.
(c) Property, Plant and Equipment
Property, plant and equipment are stated at cost. For financial
reporting purposes, depreciation is provided on the
straight-line method over the estimated useful lives of the
assets.
Maintenance and repairs are charged to operations as incurred;
renewals and betterments are capitalized and depreciated. The
cost and accumulated depreciation of assets sold or disposed of
are removed from the accounts. Resultant profit or loss on such
transactions is credited or charged to earnings.
(d) Intangible Assets
Excess of cost over fair market value of net assets of acquired
business and costs of franchises are being amortized on a
straight-line basis over 10 to 40 years.
(e) Other Assets
Debt issuance costs incurred in connection with acquisitions and
the recapitalization plan described below are deferred and will
be amortized by the interest method over the terms of the related
debt agreements (7 to 25 years). Covenants not to compete are
amortized over the terms of the agreements (5 to 10 years).
(f) Marketing Expense
Marketing costs include costs of advertising, marketing and
promotional programs. Prepaid advertising consists of various
marketing, media and advertising prepayments; these assets are
expensed in the year used. Marketing costs, other than
prepayments, are expensed in the year incurred.
3. RECAPITALIZATION PLAN
---------------------
During the first quarter of 1993, the Company and Holdings
completed a recapitalization plan (the "Recapitalization
<PAGE>
<PAGE>
Plan") the purpose of which plan was to reduce the aggregate
amount of interest expense and preferred stock dividend
requirements. The Company recorded an extraordinary loss of
approximately $32 million in connection with the early retirement
of a total of $192.2 million principal payment amount of notes
and debentures. The aggregate purchase price (including costs to
extinguish the debt) of such indebtedness was $223.8 million,
financed principally through newly issued debt and preferred
stock. The Recapitalization Plan is described in more detail in
notes 5, 6, 8, 9, and 10.
4. BUSINESS ACQUIRED
-----------------
On April 13, 1993, pursuing its operating strategy of acquiring
contiguous bottling territories, the Company acquired all of the
operating assets of Dr Pepper Bottling Company of Galveston, Inc.
for $9 million in cash and $1 million payable over five years
under a non-competition agreement.
5. 1993 BANK CREDIT AGREEMENT
--------------------------
Pursuant to the Recapitalization Plan, on February 18, 1993, the
Company entered into a credit agreement (the "1993 Bank Credit
Agreement") with certain banks providing for (i) a term loan
facility in the aggregate amount of $100 million and (ii) a
revolving line of credit facility in the aggregate amount of $25
million.
On March 22, 1993, as contemplated by the Recapitalization Plan,
the Company borrowed $91.7 million under the term loan facility
of the 1993 Bank Credit Agreement to redeem all of the then
outstanding Senior Exchangeable Preferred Stock of the Company.
As of September 30, 1994, the Company had no balance outstanding
on the revolving line of credit facility of the 1993 Bank Credit
Agreement. The facilities mature September 30, 1999.
The 1993 Bank Credit Agreement contains customary restrictive
covenants and requires the Company, among other things, to
satisfy certain financial ratios and restrict investments,
capital expenditures, additional debt and payments of dividends.
Amounts owed under the 1993 Bank Credit Agreement are the direct
obligations of the Company and are unconditionally guaranteed by
Holdings.
6. SALE/LEASEBACK
--------------
As part of the Recapitalization Plan, on February 18, 1993, the
Company entered into an amendment to the lease agreement entered
into by the Company on September 30, 1989, in connection with the
sale/leaseback of its Irving and
<PAGE>
<PAGE>
Houston, Texas production facilities. The amendment to the lease
agreement modified certain covenants contained therein, increased
rent by $500,000 per annum, and eliminated the consumer price
index adjustment to the rent scheduled to be effected on July 1,
1994. In connection with the amendment, Donaldson Lufkin &
Jenrette Securities Corporation ("DLJ") obtained the right to
sell the note (the "Landlord Note") held by the lender to the
landlord under the lease agreement.
The Landlord Note was sold on October 19, 1993 at a price of
$17,698,500 (the "Sales Price") plus accrued interest of $95,985.
DLJ received a commission of $176,985 in connection with such
sale (1% of the Sales Price) and reimbursement of $94,472 for
expenses incurred in connection with such sale, both of which
were paid out of the proceeds from such sale. The remaining
proceeds from such sale in excess of the principal amount of the
Landlord Note plus accrued interest ($1,227,043) were paid to the
Company and reflected as a reduction of the loss on
recapitalization of debt.
The present value of the increased rent payments was added to
long term debt on the Company's and Holdings' balance sheets.
7. LONG-TERM DEBT
--------------
Long-term debt at September 30, 1994 and December 31, 1993 is
summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
Sept. 30, Dec. 31,
1994 1993
---------- ----------
<S> <C> <C>
Facility borrowing under 1993
Bank Credit Agreement $ 72,069 $ 86,111
Sale/leaseback borrowings,
due in monthly installments
of $333,167 through June 2014 27,101 27,475
Capital lease obligations 5 51
Senior notes,
due February 15, 2000 125,000 125,000
Discount notes,
due February 15, 2003 85,392 78,453
Covenant not to compete;
liability at present value
of payments 1,702 1,944
-------- --------
$311,619 $319,034
Less current portion 12,721 12,885
-------- --------
$298,548 $306,149
<PAGE>
<PAGE>
</TABLE>
8. SENIOR NOTES
------------
As contemplated by the Recapitalization Plan, on February 18,
1993, the Company issued and sold $125,000,000 aggregate
principal amount of Senior Notes. The Senior Notes bear interest
at a rate of 10 1/4% per annum, payable semi-annually on February
15 and August 15 of each year, commencing August 15, 1993. The
Senior Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after February 16, 1998, at
101.708% of the principal amount thereof, plus accrued interest,
if any, if redeemed during the twelve-month period beginning
February 16, 1998, and thereafter at 100% of the principal amount
thereof, plus accrued interest, if any, until maturity. In the
event of a change in control of the Company or Holdings, the
Company will be obligated to make an offer to purchase all
outstanding Senior Notes at a redemption price of 101% of the
principal amount thereof plus accrued and unpaid interest to the
date of repurchase.
During October 1994, the Company purchased $3.5 million aggregate
principal amount of its outstanding Senior Notes at an aggregate
purchase price (excluding commissions) of $3.6 million. The
purchase price was funded from cash on hand.
Under the terms of the indenture governing the Senior Notes,
dividend payments on capital stock are restricted to the sum of
(i) 50% of net income (or in the case of a net loss, 100% of the
net loss) plus (ii) the proceeds from the issuance of capital
stock, warrants or options plus (iii) $7.5 million.
9. DISCOUNT NOTES
--------------
As contemplated by the Recapitalization Plan, on February 18,
1993, Holdings issued and sold $125,000,000 aggregate principal
amount of Discount Notes. The Discount Notes were issued at a
substantial discount from their principal amount. Commencing
February 16, 1998, interest will accrue until maturity on the
Discount Notes at a rate of 11 5/8% per annum. Interest on the
Discount Notes is payable semi-annually on February 15 and August
15 of each year, commencing August 15, 1998. The Discount Notes
are redeemable, in whole or in part, at the option of Holdings,
on or after February 16, 1998, at amounts decreasing from
104.359% of the principal amount thereof, plus accrued interest,
at February 16, 1998 to 100% of the principal amount thereof,
plus accrued interest, at February 16, 2001, until maturity. In
the event of a change in control of Holdings, Holdings will be
obligated to make an offer to purchase all outstanding Discount
Notes at a redemption price of 101% of the accreted value thereof
on any repurchase date prior to February 16, 1998, or 101% of the
<PAGE>
<PAGE>
principal amount thereof plus accrued and unpaid interest to any
repurchase date on or after February 16, 1998.
Under the terms of the indenture governing the Discount Notes,
dividend payments on capital stock are restricted to the sum of
(i) 50% of net income (or in the case of a net loss, 100% of the
net loss) plus (ii) the proceeds from the issuance of capital
stock, warrants or options plus (iii) $7.5 million.
10. HOLDINGS PREFERRED STOCK AND WARRANT
------------------------------------
As part of the Recapitalization Plan, Holdings sold, for an
aggregate purchase price of $30 million, 1,200,000 shares of
redeemable senior cumulative exchangeable preferred stock, par
value $.01 per share, of Holdings (the "Preferred Stock") and a
warrant to purchase up to 15% of the common stock of Holdings on
a fully diluted basis. The Company redeemed all of the
outstanding Senior Exchangeable Preferred Stock of the Company,
in accordance with the Recapitalization Plan.
Each share of Preferred Stock has a liquidation preference of
$25.00 per share, plus accrued and unpaid dividends. Dividends
are payable quarterly at the rate of $2.75 per annum per share.
Dividends on the Preferred Stock are cumulative and, at the
option of Holdings, may be paid through the issuance of
additional shares of Preferred Stock on each dividend payment
date through April 1, 1998. The Preferred Stock is optionally
redeemable, in whole or in part, at $25.00 per share, plus
accrued and unpaid dividends thereon on or after April 1, 1998,
provided that Holdings is also entitled to optionally redeem
Preferred Stock with all or a portion of the proceeds from an
initial offering of Holdings common stock consummated on or
before the third anniversary of the issuance of the Preferred
Stock.
On each of April 1, 2005 and 2006, Holdings is required to redeem
25% of the number of shares of Preferred Stock that is
outstanding as of March 31, 2005, at $25.00 per share. On April
1, 2007, Holdings must redeem the remaining shares of Preferred
Stock then outstanding at $25.00 per share. Shares redeemed by
Holdings prior to the mandatory redemption dates are credited
toward the mandatory redemption requirements on a pro rata basis.
The Preferred Stock is exchangeable, in whole or in part, at the
option of Holdings on any dividend payment date for 11% Junior
Subordinated Exchange Debentures due 2006 of Holdings (the
"Holdings Exchange Debentures"). Each share of Preferred Stock
will be exchanged for $25.00 in principal amount of Holdings
Exchange Debentures in denominations of $1,000 or integral
multiples thereof.
<PAGE>
<PAGE>
Differences between the carrying value of the Preferred Stock and
redemption price ($25.00 per share) will be recognized through
adjustments in the carrying value prior to the mandatory
redemption dates.
Upon the occurrence of a change in control, at the election of
the holders of the Preferred Stock, Holdings will be required to
purchase for cash all shares of Preferred Stock at $25.25 per
share, plus accrued and unpaid dividends to the date of
repurchase.
11. HOLDINGS COMMON STOCK
---------------------
On November 1, 1993, pursuant to Holdings' Certificate of
Incorporation, each share of Class B common stock outstanding was
automatically converted to Class A common stock.
12. DEPRECIATION EXPENSES
---------------------
Depreciation expenses included in cost of goods sold and in
administrative and general expenses are as follows:
<TABLE>
<CAPTION>
(In thousands) (In thousands)
Three Mos. Ended Nine Mos. Ended
-------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cost of goods sold $ 878 $ 901 $2,573 $2,630
Administrative and
general expenses 1,440 1,427 4,248 3,870
------ ------ ------ ------
Total depreciation $2,318 $2,328 $6,821 $6,500
</TABLE>
13. CHANGE IN ACCOUNTING PRINCIPLES - ACCOUNTING FOR INCOME TAXES
-------------------------------------------------------------
(DOLLAR AMOUNTS IN THOUSANDS)
-----------------------------
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". Statement 109 requires a change from the
deferred method of accounting for income taxes of APB Opinion 11
to the asset and liability method of accounting for income taxes.
Under the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
<PAGE>
<PAGE>
Pursuant to the deferred method under APB Opinion 11, which was
applied in 1992 and prior years, deferred income taxes are
recognized for income and expense items that are reported in
different years for financial reporting purposes and income tax
purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes are not
adjusted for subsequent changes in tax rates.
Effective January 1, 1993, Holdings adopted Statement 109 and the
cumulative effect of the change in accounting for income taxes
was immaterial.
The tax effect of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities as of December 31, 1993 are presented below:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards $ 34,431
Obligations under capital leases 8,974
Other 1,961
--------
Total gross deferred tax assets $ 45,366
Less valuation allowance ( 37,904)
--------
Net deferred tax assets 7,462
--------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation ( 3,879)
Intangible assets due to differences in
amortization ( 3,583)
--------
Total gross deferred liabilities ( 7,462)
--------
Net deferred tax assets (liabilities) $ -
========
</TABLE>
For federal income tax purposes, the predecessor tax basis of
assets and liabilities was retained following the Acquisition.
At December 31, 1993, the Company has net operating loss
carryforwards of approximately $98,000 which are available to
offset future federal taxable income, if any, through 2008. At
December 31, 1993, there were approximately $82,000 of net
operating loss carryforwards available to offset future
alternative minimum taxable income for federal income tax
purposes. Net operating losses may not offset more than 90% of
the Company's alternative minimum taxable income.
The valuation allowance increased $18,160 at December 31, 1993 as
compared to January 1, 1993 when FAS 109 was adopted by Holdings.
The increase is primarily related to an increase in net operating
loss carryforwards during 1993.
<PAGE>
<PAGE>
If the Company undergoes a more-than-50% ownership change within
the meaning of section 382(g) of the Internal Revenue Code, then
the Company will be limited in the use of its pre-ownership
change net operating losses to offset future taxable income. A
similar limitation would apply to any pre-ownership change tax
credits. Also, to the extent that the taxable income of the
company for any future year exceeds the sum of any net operating
losses arising after the date of the ownership change plus the
amount of the annual limitation on the pre-ownership change net
operating losses, the Company would be required to pay federal
income tax on such excess.
Although a more-than-50% ownership change within the meaning of
section 382(g) of the Internal Revenue Code occurred with respect
to the Company in October of 1988, the Company has determined
that the annual limitation under section 382 of the Code on its
pre-October 1988 net operating losses should be adequate to
permit the full use of those net operating losses against future
taxable income of the Company. Furthermore, although there can
be no assurance that the Internal Revenue Service would not take
a different position, the Company believes that a more-than-50%
ownership change within the meaning of section 382(g) of the
Internal Revenue Code has not occurred with respect to the
Company after October 1988.
14. LOSS PER COMMON SHARE
---------------------
The net income (loss) per share is computed by dividing net
income (loss), adjusted for dividends on Holdings' preferred
stock and accretion of preferred stock for the difference between
the carrying value and liquidation preference, by the weighted
average number of common shares outstanding during each period.
<TABLE>
<CAPTION>
(In thousands) (In thousands)
Three Mos. Ended Nine Mos. Ended
-------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,396 $ 956 $ 4,401 $(30,378)
Preferred stock
dividends (951) (836) (2,720) (1,221)
Accretion of
preferred stock ( 49) -- (143) --
------- ------- ------- --------
$ 396 $ 120 $ 1,538 $(31,599)
Common shares
outstanding 13,642 13,642 13,642 13,642
Profit (loss) per
common share $ .03 $ .01 $ .11 $ (2.32)
======= ======= ======= ========
</TABLE>
<PAGE>
<PAGE>
15. NEW ACCOUNTING STANDARDS
------------------------
In December 1990, the Financial Accounting Standards Board issued
Statement 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("Statement 106") which is effective for
fiscal years beginning after December 15, 1992. The Company and
Holdings do not provide postretirement benefits and, therefore,
the provisions of Statement 106 are not applicable.
In November 1992, the Financial Accounting Standards Board issued
Statement 112, "Employers' Accounting for Postemployment
Benefits" ("Statement 112") which is effective for fiscal years
beginning after December 15, 1993. The Company and Holdings do
not provide postemployment benefits and, therefore, the
provisions of Statement 112 are not applicable.
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1994
GENERAL
-------
Case sales, the Company's primary measure of unit volume, refers to
physical cases of beverages sold, including both premix
(ready-to-serve products which are sold in tanks and converted to case
sales on the basis of four cases per tank) and post-mix products
(fountain syrups to which water and carbonation must be added and
which are converted to case sales on the basis of one case per
gallon.)
Franchise case sales represent sales to retailers only. Contract case
sales comprise sales, primarily of product in cans, to unaffiliated
bottling companies that hold soft drink franchises and to a wholesaler
of private label branded soft drink products. Contract sales may
fluctuate significantly from year to year, and are made at relatively
low prices and gross profit margins (historically representing
approximately 16% of contract sales revenues) due to the competition
for such sales, and are not a primary focus of management in
determining the Company's business strategy. As a result, management
believes that changes in franchise sales more accurately measure
growth than changes in total net sales.
The primary asset of Holdings is the common stock of the Company.
Holdings conducts no business other than holding the common stock of
the Company. As a result, net sales, cost of sales, operating
expenses and operating profit are the same for the Company and
Holdings.
RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 1994
--------------------- -------------------------------------
COMPARED TO THREE MONTHS ENDED
------------------------------
SEPTEMBER 30, 1993
------------------
Net sales, excluding contract sales, for the three months ended
September 30, 1994 increased to $85.0 million compared to $79.9
million for the same period in 1993. The increase was due to a 4.7%
increase in franchise case sales, with growth attributable to strong
results from Dr Pepper and 7UP brands. Contract sales revenue for the
three months ended September 30, 1994 decreased 8.2% from the same
period in 1993 due to a reduction in regular contract sales which was
partially offset by increased private label contract sales. As a
result of the foregoing, net sales for the three months ended
September 30, 1994 increased 5.2% to $91.2 million compared to $86.7
million for the same period in 1993.
<PAGE>
<PAGE>
Cost of sales for the three months ended September 30, 1994 increased
to $60.0 million compared to $55.7 million for the same period in
1993. The increase was due primarily to an increase in franchise case
sales as well as increases in the prices paid by the Company for
certain raw materials, primarily concentrate, sweetener, and plastic
bottles. These increased costs were partially offset by reduced cost
of aluminum cans. As a percentage of net sales, cost of sales for the
three months ended September 30, 1994 increased to 65.8% from 64.3%
for the same period in 1993.
Marketing expenses for the three months ended September 30, 1994 were
$1.9 million, unchanged from the same period in 1993. Marketing
expenses represented approximately 2.0% of net sales in each period.
Administrative and general expenses for the three months ended
September 30, 1994 increased to $16.9 million compared to $16.8
million for the same period in 1993. Depreciation expense for the
three months ended September 30, 1994 was $1.4 million, unchanged from
the same period in 1993. Amortization of intangible assets decreased
to $1.3 million from $1.5 million for the same period in 1993.
As a result of the above factors, operating profit for the three
months ended September 30, 1994 increased to $9.7 million, or 10.6% of
net sales, compared to $9.4 million, or 10.8% of net sales, for the
same period in 1993.
Interest expense for the Company for the three months ended September
30, 1994 decreased to $5.6 million from $6.0 million for the same
period in 1993 due to reduction of debt.
Amortization of the Company's deferred debt issuance costs for the
three months ended September 30, 1994 was $.3 million, unchanged from
the same period in 1993.
As a result of the above factors, the Company's income before
extraordinary item for the three months ended September 30, 1994 was
$3.9 million compared to $3.2 million for the same period in 1993.
Holdings' amortization of deferred debt issuance costs for the three
months ended September 30, 1994 was $.4 million, unchanged from the
same period in 1993.
Interest expense (including bond accretion on the Discount Notes) for
Holdings for the three months ended September 30, 1994 decreased to
$7.9 million from $8.1 million for the same period in 1993. The
decrease was due to lower indebtedness.
<PAGE>
<PAGE>
As a result of the above factors, Holdings generated net income of
$1.4 million for the three months ended September 30, 1994 compared to
$1.0 million for the same period in 1993.
RESULTS OF OPERATIONS -- NINE MONTHS ENDED SEPTEMBER 30, 1994
--------------------- ------------------------------------
COMPARED TO NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, 1993
------------------
Net sales, excluding contract sales, for the nine months ended
September 30, 1994 increased to $233.3 million compared to $218.8
million for the same period in 1993. The increase was due to an 7.3%
increase in franchise case sales, with growth attributable to the
acquisition of the franchise territory of Dr Pepper Bottling Company
of Galveston, Inc. ("Dr Pepper-Galveston") on April 13, 1993 (the
"Galveston Acquisition") and to strong results from Dr Pepper and 7UP
brands. Contract sales revenue for the nine months ended September
30, 1994 decreased 1.0% from the same period in 1993 due to a
reduction in regular contract sales partially offset by lower margin
private label contract sales volume. As a result of the foregoing,
net sales for the nine months ended September 30, 1994 increased 6.0%
to $252.0 million compared to $237.7 million for the same period in
1993.
Cost of sales for the nine months ended September 30, 1994 increased
to $161.2 million compared to $148.7 million for the same period in
1993. The increase was due primarily to an increase in franchise case
sales as well as increases in the prices paid by the Company for
certain raw materials, primarily concentrate, sweetener, and plastic
bottles. These increases in costs were partially offset by reduced
cost of aluminum cans. As a percentage of net sales, cost of sales
for the nine months ended September 30, 1994 increased to 64.0% from
62.6% for the same period in 1993.
Marketing expenses for the nine months ended September 30, 1994
increased to $5.4 million compared to $5.3 million for the same period
in 1993. Marketing expenses represented approximately 2.0% of net
sales in each period.
Administrative and general expenses for the nine months ended
September 30, 1994 increased to $48.0 million compared to $45.9
million for the same period in 1993. The increase was due primarily
to an increase of $1.3 million in labor and employee benefit expenses,
an increase of $.3 million in fleet expenses under a full service
lease arrangement, and an increase of $.5 million in full service
commissions. Depreciation expense for the nine months ended September
30, 1994 was $4.2 million compared to $3.9 million for the same period
in 1993. Amortization of intangible assets was $3.9 million compared
to $4.3 million for the same period in 1993.
As a result of the above factors, operating profit for the nine months
ended September 30, 1994 decreased to $29.2 million, or
<PAGE>
<PAGE>
11.6% of net sales, compared to $29.6 million, or 12.5% of net sales,
for the same period in 1993.
Interest expense for the Company for the nine months ended September
30, 1994 decreased to $16.7 million from $18.1 million for the same
period in 1993 due to reduction of debt.
Amortization of the Company's deferred debt issuance costs for the
nine months ended September 30, 1994 was $1.0 million, unchanged from
the same period in 1993.
Other income for the Company for the nine months ended September 30,
1994 was $.2 million compared to $2.6 million for the same period in
1993. The 1993 amount included $2.5 million paid to the Company in
settlement of its 1988 lawsuit against Del Monte Corporation for their
refusal to consent to the acquisition of the Company by Holdings and
the subsequent termination of the Company's license to produce and
distribute Hawaiian Punch products.
As a result of the above factors, the Company's income before income
taxes for the nine months ended September 30, 1994 was $11.7 million
compared to an income of $13.1 million for the same period in 1993.
Income tax expenses for the nine months ended September 30, 1994 was
$.1 million. Net income before extraordinary item for the nine months
ended September 30, 1994 was $11.6 million compared to an income of
$13.1 million for the mine months ended September 30, 1994.
Holdings' amortization of deferred debt issuance costs for the nine
months ended September 30, 1994 increased to $1.3 million compared to
$1.2 million for the same period in 1993.
Interest expense (including bond accretion on the Discount Notes) for
Holdings for the nine months ended September 30, 1994 increased to
$23.7 million from $23.3 million for the same period in 1993. The
increase was due to higher indebtedness initially, as a result of the
Recapitalization Plan, and to higher interest rates on bank debt.
As a result of the above factors, Holdings generated income before
dividends on the Company's Senior Exchangeable Preferred Stock (the
"Old Preferred Stock") and extraordinary item of $4.4 million for the
nine months ended September 30, 1994, compared to $7.7 million for the
same period in 1993. The net income before extraordinary item for
Holdings of $1.9 million for the nine months ended September 30, 1993
reflects charges of $5.8 million relating to dividends on the
Company's Old Preferred Stock. The Old Preferred Stock was classified
as a minority interest for purposes of the financial statements of
Holdings. Extraordinary loss for the nine months ended September 30,
1993 amounted to $32.3 million, due to transactions contemplated by
the Recapitalization Plan. There was no extraordinary item for the
<PAGE>
<PAGE>
nine months ended September 30, 1994. Holdings generated net income
of $4.4 million for the nine months ended September 30, 1994, compared
to a net loss of $30.4 million for the same period in 1993.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Holdings conducts business through the Company and has no material
operations of its own. The primary asset of Holdings is the common
stock of the Company. Accordingly, Holdings is dependent on the cash
flow of the Company to meet its obligations. Holdings has no material
obligations other than those under the Discount Notes, the Preferred
Stock and any exchange debentures of Holdings into which such stock
becomes exchangeable, and certain contingent obligations under
Holdings' guarantee of the Company's obligations under the 1993 Bank
Credit Agreement. Holdings, though, is not expected to have any
material need for cash until interest on the Discount Notes becomes
payable in cash beginning August 15, 1998. The Discount Notes will
mature in 2003. The 1993 Bank Credit Agreement and the Senior Notes
indenture impose significant restrictions on the payment of dividends
and the making of loans by the Company to Holdings. However, the
Senior Notes indenture allows the Company to pay dividends to Holdings
in accordance with a specified formula if, after giving effect
thereto, no event of default, or an event that with the passage of
time or the giving of notice, or both, would constitute an event of
default under the Senior Notes indenture shall have occurred and be
continuing. In addition, the 1993 Bank Credit Agreement allows the
Company to pay dividends to Holdings in an amount necessary to make
cash interest payments on the Discount Notes, provided that no event
of default exists or would be created under the 1993 Bank Credit
Agreement.
The Company remains highly leveraged following the consummation of the
transactions contemplated by the Recapitalization Plan. The Company's
principal use of funds in the future will be the payment of principal
and interest under the 1993 Bank Credit Agreement and the Senior
Notes. As of September 30, 1994, approximately $75.7 million was
outstanding under the term loan facility of the 1993 Bank Credit
Agreement. The Company will be required to repay the principal under
such term loan facility as follows: $3.6 million during the last
three months of 1994, $13.8 million in 1995, $15.5 million in 1996,
$17.2 million in each of 1997 and 1998 and $4.8 million in 1999,
subject to reduction for mandatory and optional prepayments. In
addition, the Company will be required to further retire the principal
amount outstanding under the 1993 Bank Credit Agreement with Excess
Cash Flow (as defined in the 1993 Bank Credit Agreement). It is
expected that the Company's primary sources of financing for its
future business activities will be funds from operations, together
with additional borrowings under the revolving line of credit facility
of the 1993 Bank Credit Agreement. Such
<PAGE>
<PAGE>
revolving line of credit facility provides for revolving loans in an
aggregate amount of up to $25 million with a $5 million sublimit for
the issuance of letters of credit. The revolving line of credit
facility of the 1993 Bank Credit Agreement will mature in 1999.
During October 1994, the Company purchased $3.5 million aggregate
principal amount of its outstanding Senior Notes at an aggregate
purchase price (excluding commissions) of $3.6 million. The purchase
price was funded from cash on hand.
Because the obligations under the 1993 Bank Credit Agreement bear
interest at floating rates, the Company will be sensitive to changes
in prevailing interest rates. As required by the 1993 Bank Credit
Agreement, the Company entered into interest rate protection
arrangements, expiring September 28, 1996, in an aggregate notional
amount equal to $45 million, subject to reduction by $2 million at the
end of each quarter starting with the quarter ending June 30, 1994.
The Company had working capital of $1.7 million at September 30, 1994
compared to working capital of $0.7 million at December 31, 1993.
Based on the Company's anticipated operating results, management
believes that the Company's future operating activities will generate
sufficient cash flows to repay borrowings under the term loan facility
of the 1993 Bank Credit Agreement as they become due and payable.
However, based on such anticipated operating results, management does
not expect that the Company's future operating activities will
generate sufficient cash flows to repay the Senior Notes and the
Discount Notes at their respective maturities. Accordingly, the
Company and Holdings expect that they will be required to refinance
all or substantially all of the Senior Notes and the Discount Notes at
their respective maturities or sell equity or assets to fund the
repayment of all or substantially all of the Senior Notes and the
Discount Notes at their respective maturities, or effect a combination
of the foregoing. While the Company and Holdings believe that they
will be able to refinance the Senior Notes and the Discount Notes at
or prior to their respective maturities, or raise sufficient funds
through equity or asset sales to repay such indebtedness, or effect a
combination of the foregoing, there can be no assurance that such will
be the case.
The 1993 Bank Credit Agreement contains numerous financial and
operating covenants and prohibitions that impose limitations on the
liquidity of the Company, including requirements that the Company
satisfy certain financial ratios and maintain certain specified levels
of net worth, and limitations on the incurrence of additional
indebtedness. The indentures governing the Senior Notes and the
Discount Notes also contain covenants that impose limitations on the
liquidity of the Company and Holdings, including a limitation on the
incurrence of additional indebtedness. The ability of the Company and
Holdings to meet
<PAGE>
<PAGE>
their debt service requirements and to comply with such covenants will
be dependent upon future operating performance and financial results
of the Company, which will be subject to financial, economic,
competitive and other factors affecting the Company, many of which are
beyond its control.
Management anticipates expansion related capital expenditures in 1995
to service volume growth at several locations. During 1993 capital
expenditures net of assets acquired in the Galveston Acquisition
totaled $8.3 million. The Company anticipates that capital
expenditures will total approximately $7.5 million to $8.0 million for
each of the years 1994 through 1996.
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 - Financial Data Schedule of Dr Pepper Bottling
Holdings, Inc. and Subsidiary
27.2 - Financial Data Schedule of Dr Pepper Bottling
Company of Texas
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months
ended September 30, 1994.
<PAGE>
<PAGE>
SIGNATURE
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.
DR PEPPER BOTTLING HOLDINGS, INC.
Date: 11/14/94 /s/ Jim L. Turner
-------------- ------------------------------
Jim L. Turner
Chairman of the Board/President
Date: 11/14/94 /s/ C. Marvin Montgomery
-------------- ------------------------------
C. Marvin Montgomery
Vice President - Finance and
Chief Financial Officer
<PAGE>
<PAGE>
SIGNATURE
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.
DR PEPPER BOTTLING COMPANY OF TEXAS
Date: 11/14/94 /s/ Jim L. Turner
-------------- ------------------------------
Jim L. Turner
Chairman of the Board/President
Date: 11/14/94 /s/ C. Marvin Montgomery
-------------- ------------------------------
C. Marvin Montgomery
Vice President - Finance and
Chief Financial Officer
DAFS03...:\65\42265\0001\0231\FRMN0994.J60
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified in
its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> SEP-30-1994
<CASH> 14,738
<SECURITIES> 0
<RECEIVABLES> 23,421
<ALLOWANCES> 515
<INVENTORY> 16,430
<CURRENT-ASSETS> 63,557
<PP&E> 127,791
<DEPRECIATION> 62,309
<TOTAL-ASSETS> 251,703
<CURRENT-LIABILITIES> 62,112
<BONDS> 298,548
0
32,498
<COMMON> 136
<OTHER-SE> (141,319)
<TOTAL-LIABILITY-AND-EQUITY> 251,703
<SALES> 252,002
<TOTAL-REVENUES> 252,002
<CGS> 161,185
<TOTAL-COSTS> 166,598
<OTHER-EXPENSES> 56,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,000
<INCOME-PRETAX> 4,506
<INCOME-TAX> 105
<INCOME-CONTINUING> 4,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,401
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified in its
entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
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0
0
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<PAGE>
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