<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 June 30, 1995
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
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(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
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(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices)
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(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 June 30, 1995 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 3
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
June 30, 1995 and December 31, 1994
(In thousands)
ASSETS
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 14,755 $ 7,794
Accounts receivable:
Trade, less allowance for doubtful
accounts of $487 in June 1995 and $371 in
December 1994 25,987 24,479
Other 4,748 3,463
Inventories 13,285 12,183
Prepaid expenses 6,425 5,671
-------- --------
Total current assets 65,200 53,590
Property, plant and equipment, net 65,709 65,946
Other assets at amortized cost:
Goodwill and other intangible assets 110,925 111,149
Debt issuance costs 8,659 9,514
-------- --------
Total assets $250,493 $240,199
======== ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
June 30, 1995 and December 31, 1994
(In thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 29,108 $ 34,285
Accrued expenses 26,797 14,935
Current maturities of long-term debt and
obligations under capital leases (note 7) 15,255 14,448
-------- --------
Total current liabilities 71,160 63,668
Long-term debt and obligations under capital
leases, less current maturities (note 7) 284,796 287,099
Cumulative redeemable senior exchangeable
preferred stock, $.01 par value. Authorized
2,150 shares; issued and outstanding 1,510
shares in 1995 and 1,430 shares in 1994;
aggregate liquidation preference $37,750
(note 10) 35,591 33,502
Stockholders' deficit (notes 3 and 11):
Class A common stock, $.01 par value.
Authorized 20,000 shares; issued and
outstanding 13,642 in 1995 and 1994 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 (121,625) (124,641)
--------- ---------
Total stockholders' deficit (141,054) (144,070)
--------- ---------
Total liabilities and stockholders'
deficit $ 250,493 $ 240,199
========= =========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Operations
For the Six Months
Ended June 30, 1995 and 1994
(In thousands, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- --------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $96,346 $86,776 $177,636 $160,769
Cost of sales (note 12) 63,169 55,546 113,283 101,191
------- ------- -------- --------
Gross profit 33,177 31,230 64,353 59,578
Operating expenses:
Marketing expenses 2,283 1,993 4,113 3,474
Administrative and general
expenses 17,105 16,153 33,110 31,147
Depreciation (note 12) 1,447 1,440 2,869 2,808
Amortization of intangible
assets 1,319 1,288 2,641 2,657
------- ------- -------- --------
Total operating expenses 22,154 20,874 42,733 40,086
------- ------- -------- --------
Operating profit 11,023 10,356 21,620 19,492
Other expense (income):
Interest expense 5,271 5,587 10,634 11,161
Amortization of deferred debt
issuance costs 428 428 856 856
Gain from disposition of
assets 5 4 (1)
Bond accretion 2,589 2,312 5,106 4,560
Other (138) (99) (213) (160)
------- ------- -------- --------
Total other expense 8,155 8,228 16,387 16,416
------- ------- -------- --------
Income before provision of
income taxes 2,868 2,128 5,233 3,076
Provision for income taxes 128 35 128 70
------- ------- -------- --------
Net income 2,740 2,093 5,105 3,006
======= ======= ======== ========
Net income per common share
(note 14) $0.12 $0.08 $0.22 $0.08
===== ===== ===== ======
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed 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, 1994 13,642 $136 $14,383 ($124,641) ($33,948) ($144,070)
Accretion of preferred stock (note 10) (48) (48)
Preferred stock dividend (983) (983)
Net income 2,365 2,365
------- ------- -------- --------- -------- ---------
Balance at March 31, 1995 13,642 136 $14,383 ($123,307) ($33,948) ($142,736)
======= ======= ======== ========= ======== =========
Accretion of preferred stock (note 10) (48) (48)
Preferred stock dividend (1,010) (1,010)
Net income 2,740 2,740
------- ------- -------- --------- -------- ---------
Balance at June 30, 1995 13,642 136 $14,383 ($121,625) ($33,948) ($141,054)
======= ======= ======== ========= ======== =========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,105 $ 3,006
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and equipment 4,601 4,503
Amortization of other assets 3,497 3,512
Accretion of discount on discount notes 5,106 4,560
Gain (loss) on sale of assets 4 (1)
Changes in assets and liabilities:
Accounts receivable (2,793) (6,433)
Inventories (1,102) (3,912)
Prepaid assets (754) (1,672)
Accounts payable (5,178) 9,800
Accrued expenses 11,863 5,763
------- -------
Total adjustments 15,243 16,110
------- -------
Net cash provided by operating
activities 20,348 19,116
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired (2,500)
Additions to property, plant and equipment (4,357) (6,920)
Proceeds from sale of property, plant and
equipment 72 485
------- -------
Net cash used in investing activities (6,785) (6,435)
Cash flows from financing activities:
Payment of long-term debt (6,602) (10,924)
Proceeds from borrowings under credit agreement 5,000
Purchase of senior notes (5,000)
------- -------
Net cash used in financing activities (6,602) (10,924)
Net increase in cash and cash equivalents 6,961 1,757
Cash and cash equivalents at beginning of year 7,794 16,955
------- -------
Cash and cash equivalents at end of period $14,755 $18,712
======= =======
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Condensed Balance Sheets
June 30, 1995 and December 31, 1994
(In thousands)
ASSETS
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 14,730 $ 7,769
Accounts receivable:
Trade, less allowance for doubtful
accounts of $487 in June 1995 and $371 in
December 1994 25,987 24,479
Other 4,423 3,748
Inventories 13,285 12,183
Prepaid expenses 7,020 5,671
-------- --------
Total current assets 65,445 53,850
Property, plant and equipment, net 65,709 65,946
Other assets at amortized cost:
Goodwill and other intangible assets 110,925 111,149
Debt issuance costs 6,179 6,871
-------- --------
Total assets $248,258 $237,816
======== ========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Condensed Balance Sheets
June 30, 1995 and December 31, 1994
(In thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 29,108 $ 34,285
Accrued expenses 26,797 14,935
Current maturities of long-term debt and
obligations under capital leases 15,255 14,448
-------- --------
Total current liabilities 71,160 63,668
Long-term debt and obligations under capital
leases, less current maturities 191,851 199,261
Stockholders' deficit:
Common stock, $.01 par value. Authorized
11,000 shares; issued and outstanding .1
shares in 1995 and 1994 1 1
Additional paid-in capital 110,227 110,227
Consideration to continuing predecessor
shareholders in excess of book value (33,948) (33,948)
Deficit (91,033) (101,393)
--------- ---------
Total stockholders' deficit (14,753) (25,113)
--------- ---------
Total liabilities and stockholders'
deficit $ 248,258 $ 237,816
========= =========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING OF TEXAS
Condensed Statements of Operations
For the Six Months
Ended June 30, 1995 and 1994
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- --------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $96,346 $86,776 $177,636 $160,769
Cost of sales 63,169 55,546 113,283 101,191
------- ------- -------- --------
Gross profit 33,177 31,230 64,353 59,578
Operating expenses:
Marketing expenses 2,283 1,993 4,113 3,474
Administrative and general
expenses 17,105 16,153 33,110 31,147
Depreciation 1,447 1,440 2,869 2,808
Amortization of intangible
assets 1,319 1,288 2,641 2,657
------- ------- -------- --------
Total operating expenses 22,154 20,874 42,733 40,086
------- ------- -------- --------
Operating profit 11,023 10,356 21,620 19,492
Other expense (income):
Interest expense 5,271 5,587 10,634 11,161
Amortization of deferred debt
issuance costs 346 346 692 692
Gain from disposition of
assets 5 4 (1)
Other (130) (92) (198) (149)
------- ------- ------- --------
Total other expense 5,492 5,841 11,132 11,703
------- ------- ------- --------
Income before provision of
income taxes 5,531 4,515 10,488 7,789
Provision for income taxes 128 35 128 70
------- ------- -------- --------
Net income 5,403 4,480 10,360 7,719
======= ======= ======= ========
<PAGE>
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Condensed 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, 1994 0.1 $1 $110,227 ($101,393) ($33,948) ($25,113)
Net income 4,957 4,957
------ ------ -------- --------- -------- --------
Balance at March 31, 1995 0.1 $1 $110,227 ($ 96,436) ($33,948) ($20,156)
====== ====== ======== ========= ======== ========
Net income 5,403 5,403
------ ------ -------- --------- -------- --------
Balance at June 30, 1995 0.1 $1 $110,227 ($ 91,033) ($33,948) ($14,753)
====== ====== ======== ========= ======== ========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING COMPANY OF TEXAS
Condensed Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
June 30, June 30,
1995 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $10,360 $ 7,719
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and equipment 4,601 4,503
Amortization of other assets 3,333 3,349
Gain (loss) on sale of assets 4 (1)
Changes in assets and liabilities:
Accounts receivable (2,778) (6,433)
Inventories (1,102) (3,912)
Prepaid assets (754) (1,672)
Accounts payable (5,178) 9,800
Accrued expenses 11,862 5,763
------- --------
Total adjustments 9,988 11,397
------- --------
Net cash provided by operating
activities 20,348 19,116
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired (2,500)
Additions to property, plant and equipment (4,357) (6,920)
Proceeds from sale of property, plant and
equipment 72 485
------- --------
Net cash used in investing
activities (6,785) (6,435)
Cash flows from financing activities:
Payment of long-term debt (6,602) (10,924)
Proceeds from borrowings under credit agreement 5,000
Purchase of senior notes (5,000)
------- --------
Net cash used in financing
activities (6,602) (10,924)
------- --------
Net increase in cash and cash equivalents 6,961 1,757
Cash and cash equivalents at beginning of year 7,769 16,930
------- --------
Cash and cash equivalents at end of period $ 14,730 $ 18,687
======== ========
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
Unaudited
June 30, 1995
1. GENERAL
-------
The accompanying consolidated condensed 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 June 30, 1995, and December 31,
1994, the related consolidated condensed statements of operations
for the three months and six months ended June 30, 1995 and 1994,
the related consolidated condensed statements of stockholders'
deficit for the six months ended June 30, 1995, and the related
consolidated condensed statements of cash flows for the six
months ended June 30, 1995 and 1994 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 May 9, 1995, 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.
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.
<PAGE>
<PAGE>
(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 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. BUSINESSES 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.
On June 15, 1995, the Company acquired the stock of Big Red
Distributing, Inc., which held franchises to distribute certain
soft drink products in the Waco, Texas area, for $2.5 million in
cash.
<PAGE>
<PAGE>
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 December 31, 1994, the Company had no balance outstanding
on the revolving line of credit facility of the 1993 Bank Credit
Agreement. The facilities mature December 31, 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 June 28, 1989, in connection with the
sale/leaseback of its Irving and 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.
<PAGE>
<PAGE>
7. LONG-TERM DEBT
--------------
Long-term debt at June 30, 1995 and December 31, 1994 is
summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
June 30, Dec. 31,
1995 1994
---------- ----------
<S> <C> <C>
Facility A borrowing under 1993
Bank Credit Agreement $ 61,797 $ 68,069
Facility B borrowing under 1993
Bank Credit Agreement 5,000
Sale/leaseback borrowings,
due in monthly installments
of $333,167 through June 2014 26,849 27,019
Capital lease obligations 4
Senior notes,
due February 15, 2000 112,000 117,000
Discount notes,
due February 15, 2003 90,944 87,838
Covenant not to compete;
liability at present value
of payments 1,461 1,617
-------- --------
$300,051 $301,547
Less current portion 15,255 14,448
-------- --------
$284,796 $287,099
======== ========
</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 1994, the Company purchased $8.0 million aggregate
principal amount of its outstanding Senior Notes at an aggregate
purchase price of $8.2 million. The purchase price was funded
from cash on hand. In January 1995, the Company used the
revolving line of credit facility to purchase an additional $5.0
million of its Senior Notes for $5.1 million.
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.
<PAGE>
<PAGE>
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 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
<PAGE>
<PAGE>
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.
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 sales and in operating
expenses are as follows:
<TABLE>
<CAPTION>
(In thousands) (In thousands)
Three Mos. Ended Six Mos. Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cost of sales $ 840 $ 845 $1,732 $1,695
Operating expenses 1,447 1,440 2,869 2,808
------ ------ ------ ------
Total depreciation $2,287 $2,285 $4,601 $4,503
====== ====== ====== ======
</TABLE>
13. CHANGE IN ACCOUNTING PRINCIPLES - ACCOUNTING FOR INCOME TAXES
-------------------------------------------------------------
(DOLLAR AMOUNTS IN THOUSANDS)
-----------------------------
Under the asset and liability method of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
(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>
Income tax expense attributable to income from continuing
operations was $140 for the year ended December 31, 1994, and
differed from the amount computed by applying the U.S. federal
income tax rate of 34 percent to pretax income from continuing
operations as a result of the following:
<TABLE>
<CAPTION>
1994
----------
<S> <C>
Computed "expected tax expense $ 997
Changes in income taxes resulting from
utilization of net operating loss
carry-forward (1,340)
Amortization of goodwill 65
Alternative minimum tax 140
Other 178
-------
Total income tax expense $ 140
=======
</TABLE>
The tax effect of temporary differences that gave rise to
significant portions of the deferred tax assets and deferred tax
liabilities as of December 31, 1994 are presented below:
<TABLE>
<CAPTION>
Deferred tax assets: 1994
-----------
<S> <C>
Net operating loss carryforwards $ 28,784
Obligations under capital leases 8,605
Other 2,457
--------
Total gross deferred tax assets $ 39,846
Less valuation allowance (32,112)
--------
Net deferred tax assets 7,734
--------
Deferred tax liabilities:
Plant and equipment, principally due
to differences in depreciation (3,586)
Intangible assets due to differences
in amortization (4,148)
--------
Total gross deferred liabilities (7,734)
--------
Net deferred tax liabilities $ -
========
</TABLE>
For federal income tax purposes, the predecessor tax basis of
assets and liabilities was retained following the Acquisition.
At December 31, 1994, the Company had net operating loss
carryforwards of approximately $84,658 which are available to
offset future federal taxable income, if any, through 2008. At
December 31, 1994, there were approximately $64,973 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 for deferred tax assets as of December
31, 1994 was $32,112. The net change in the total valuation
allowance for the year ended December 31, 1994 was a decrease of
$5,792. The change was primarily related to a change in net
operating loss carryforwards during 1994.
Income taxes paid for the year ended December 31, 1994 totaled
$105,000.
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 the 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
<PAGE>
<PAGE>
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. NET INCOME PER COMMON SHARE
---------------------------
The net income per common share is computed by dividing net
income, 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 Six Mos. Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net income $ 2,740 $ 2,093 $ 5,105 $ 3,006
Preferred stock dividends (1,010) (907) (1,993) (1,789)
Accretion of preferred stock (48) (47) (96) (94)
------- ------- ------- -------
$ 1,682 $ 1,139 $ 3,016 $ 1,123
Common shares outstanding 13,642 13,642 13,642 13,642
Net income per common stock $ .12 $ .08 $ .22 $ .08
======= ======= ======= =======
</TABLE>
<PAGE>
<PAGE>
DR PEPPER BOTTLING HOLDINGS, INC. AND SUBSIDIARY
Management's Discussion and Analysis
of Financial Condition and Results of Operations
June 30, 1995
GENERAL
-------
The Company's primary measurement of unit volume is case sales. Case
sales refers to physical cases of beverages sold, including both
premix products (ready-to-serve beverages which are sold in tanks and
converted to case sales on the basis of four cases per tank) and
postmix products (fountain syrups to which carbonated water must be
added and which are converted to case sales on the basis of one case
per gallon.)
Franchise case sales represent primarily sales of the Company's
branded products to retailers only. Contract case sales are comprised
of sales, primarily of products in cans, to unaffiliated bottling
companies that hold soft drink franchises and to a wholesaler of
private label brand 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 net 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 JUNE 30, 1995
--------------------- --------------------------------
COMPARED TO THREE MONTHS ENDED JUNE 30,
---------------------------------------
1994
----
Net sales, excluding contract net sales, for the three months ended
June 30, 1995, increased to $90.2 million compared to $79.3 million
for the same period in 1994. The increase was due to a 7.3% increase
in franchise case sales attributable to the addition of Arizona Iced
Tea and above average growth in Dr Pepper, Squirt, Country Time, Yoo-
Hoo, Sunkist and Evian. Contract net sales for the three months ended
June 30, 1995 decreased 17.8% from the same period in 1994 due to a
decrease in both regular contract sales and private label contract
sales. As a result of the foregoing, net sales for the three months
ended June 30, 1995 increased 11.0% to $96.3 million compared to $86.8
million for the same period in 1994.
Cost of sales for the three months ended June 30, 1995 increased to
$63.2 million compared to $55.5 million for the same period in 1994.
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, cans, and plastic bottles. These
increased costs were partially offset by reduced cost of sweetener.
As a percentage of net sales, cost of sales for the three months ended
June 30, 1995 increased to 65.6% from 64.0% for the same period in
1994.
Marketing expenses for the three months ended June 30, 1995 were $2.3
million, compared to $2.0 million for the same period in 1994.
Marketing expenses represented approximately 2% of net sales in each
period.
<PAGE>
<PAGE>
Administrative and general expenses for the three months ended June
30, 1995 increased to $17.1 million compared to $16.2 million for the
same period in 1994. The increase was due primarily to an increase of
$.3 million in labor and employee benefit expenses, an increase of $.1
million in fleet expenses under a full service lease arrangement, an
increase of $50,000 in auto insurance, an increase of $.1 million in
full service commissions, an increase of $.l million in breakage and
shrinkage, an increase of $.1 million in pallet expense and an
increase of $.2 million in other expenses. Depreciation expense for
the three months ended June 30, 1995 was $1.4 million, unchanged from
the same period in 1994. Amortization of intangible assets for the
three months ended June 30, 1995 was $1.3 million, unchanged from the
same period in 1994.
As a result of the above factors, operating profit for the three
months ended June 30, 1995 increased to $11.0 million, or 11.4% of net
sales, compared to $10.4 million, or 11.9% of net sales, for the same
period in 1994.
Interest expense for the Company for the three months ended June 30,
1995 decreased to $5.3 million from $5.6 million for the same period
in 1994 due to reduction of debt.
Amortization of the Company's deferred debt issuance costs for the
three months ended June 30, 1995 was $.3 million, unchanged from the
same period in 1994.
As a result of the above factors, the Company's income before
provision for income taxes for the three months ended June 30, 1995
was $5.5 million compared to $4.5 million for the same period in 1994.
The provision for income taxes increased to $.l million from $35,000
for the same period in 1994. Net income of the Company for the three
months ended June 30, 1995 increased to $5.4 million from $4.5 million
for the same period in 1994.
Interest expense (including bond accretion on the Discount Notes) for
Holdings for the three months ended June 30, 1995 was $7.9 million,
unchanged from the same period in 1994.
Holdings' amortization of deferred debt issuance costs for the three
months ended June 30, 1995 was $.4 million, unchanged from the same
period in 1994.
As a result of the above factors, Holdings generated a net income
after provision for income taxes of $2.7 million for the three months
ended June 30, 1995 compared to $2.1 million for the same period in
1994.
RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 1995 COMPARED
--------------------- ---------------------------------------
TO SIX MONTHS ENDED JUNE 30, 1994
---------------------------------
Net sales, excluding contract net sales, for the six months ended June
30, 1995 increased to $166.6 million compared to $148.3 million for
the same period in 1994. The increase was due to a 5.1% increase in
franchise case sales attributable to the addition of Arizona Iced Tea
and above average growth in Dr Pepper, Canada Dry, Sunkist and Evian.
Contract net sales for the six months ended June 30, 1995 decreased
12.0% from the same period in 1994 due to a decrease in both regular
contract sales and private label contract sales. As a result of the
foregoing, net sales for the six months ended June 30, 1995 increased
10.5% to $177.6 million compared to $160.8 million for the same period
in 1994.
Cost of sales for the six months ended June 30, 1995 increased to
$113.3 million compared to $101.2 million for the same period in 1994.
The increase was due primarily to an increase in franchise case sales
as well as increases
<PAGE>
<PAGE>
in the prices paid by the Company for certain raw materials, primarily
concentrate, cans, and plastic bottles. These increased costs were
partially offset by reduced cost of sweetener. As a percentage of net
sales, cost of sales for the six months ended June 30, 1995 increased
to 63.8% from 62.9% for the same period in 1994.
Marketing expenses for the six months ended June 30, 1995 were $4.1
million, compared to $3.5 million for the same period in 1994.
Marketing expenses represented approximately 2% of net sales in each
period.
Administrative and general expenses for the six months ended June 30,
1995 increased to $33.1 million compared to $31.1 million for the same
period in 1994. The increase was due primarily to an increase of $.8
million in labor and employee benefit expenses, an increase of $.2
million in fleet expenses under a full service lease arrangement, an
increase of $.1 in auto insurance, an increase of $.2 million in full
service commissions, an increase of $.2 million in breakage and
shrinkage, an increase of $.1 million in pallet expense, an increase
of $.1 million in materials and supplies, and an increase of $.3
million in other expenses. Depreciation expense for the six months
ended June 30, 1995 increased to $2.9 million compared to $2.8 million
for the same period in 1994. Amortization of intangible assets for
the six months ended June 30, 1995 was $2.6 million, unchanged from
the same period in 1994.
As a result of the above factors, operating profit for the six months
ended June 30, 1995 increased to $21.6 million, or l2.2% of net sales,
compared to $19.5 million, or 12.1% of net sales, for the same period
in 1994.
Interest expense for the Company for the six months ended June 30,
1995 decreased to $10.6 million from $11.2 million for the same period
in 1994 due to reduction of debt.
Amortization of the Company's deferred debt issuance costs for the six
months ended June 30, 1995 was $.7 million, unchanged from the same
period in 1994.
As a result of the above factors, the Company's income before
provision for income taxes for the six months ended June 30, 1995 was
$10.5 million compared to $7.8 million for the same period in 1994.
The provision for income taxes increased to $.1 million from $70,000
for the same period in 1994. Net income of the Company for the six
months ended June 30, 1995 increased to $10.4 million from $7.8
million for the same period in 1994.
Interest expense (including bond accretion on the Discount Notes) for
Holdings for the six months ended June 30, 1995 was $15.7 million,
unchanged from the same period in 1994.
Holdings' amortization of deferred debt issuance costs for the six
months ended June 30, 1995 was $.9 million, unchanged from the same
period in 1994.
As a result of the above factors, Holdings generated a net income $5.1
million after provision of income taxes for the six months ended June
30, 1995 compared to $3.0 million for the same period in 1994.
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
<PAGE>
<PAGE>
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 June 30, 1995, approximately $61.8 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: $7.6 million during the last six
months of 1995, $15.5 million in 1996, $17.2 million in each of 1997
and 1998 and $4.3 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
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 1994, the Company purchased $8.0 million aggregate principal
amount of its outstanding Senior Notes at an aggregate purchase price
of $8.1 million. The purchase price was funded from cash on hand. In
January 1995 the company used its revolving line of credit to purchase
an additional $5.0 million of its Senior Notes for $5.1 million.
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 June 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 negative working capital of $5.7 million at June 30,
1995 compared to negative working capital of $9.8 million at December
31, 1994.
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
<PAGE>
<PAGE>
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 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
and 1996 to service volume growth at several locations. During 1994
capital expenditures totaled $10.8 million. The Company anticipates
that capital expenditures will total approximately $9.0 million to
$10.0 million for each of the years 1995 through 1997.
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.112 - Second Amendment to Amended and Restated
Credit Agreement, dated as of July 14, 1995,
among Dr Pepper Bottling Company of Texas and
Texas Commerce Bank National Association, as
Agent
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 June 30, 1995.
<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: August 14, 1995 /s/ Jim L. Turner
----------------- ------------------------------
Jim L. Turner
Chairman of the Board/President
Date: August 14, 1995 /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: August 14, 1995 /s/ Jim L. Turner
----------------- ------------------------------
Jim L. Turner
Chairman of the Board/President
Date: August 14, 1995 /s/ C. Marvin Montgomery
----------------- ------------------------------
C. Marvin Montgomery
Vice President - Finance and
Chief Financial Officer
<PAGE>
<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>
<CIK> 0000843396
<NAME> DR PEPPER
BOTTLING
HOLDINGS, INC.
AND SUBSIDIARY
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 14,755
<SECURITIES> 0
<RECEIVABLES> 26,474
<ALLOWANCES> 487
<INVENTORY> 13,285
<CURRENT-ASSETS> 65,200
<PP&E> 132,048
<DEPRECIATION> 66,339
<TOTAL-ASSETS> 250,493
<CURRENT-LIABILITIES> 71,160
<BONDS> 284,796
0
35,591
<COMMON> 136
<OTHER-SE> (141,190)
<TOTAL-LIABILITY-AND-EQUITY> 250,493
<SALES> 177,636
<TOTAL-REVENUES> 177,636
<CGS> 113,283
<TOTAL-COSTS> 117,396
<OTHER-EXPENSES> 38,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,596
<INCOME-PRETAX> 5,233
<INCOME-TAX> 128
<INCOME-CONTINUING> 5,105
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,105
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.19
<PAGE>
<PAGE>
</TABLE>
<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>
<CIK> 0000843397
<NAME> DR PEPPER
BOTTLING COMPANY
OF TEXAS
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 14,730
<SECURITIES> 0
<RECEIVABLES> 26,474
<ALLOWANCES> 487
<INVENTORY> 13,285
<CURRENT-ASSETS> 65,445
<PP&E> 132,048
<DEPRECIATION> 66,339
<TOTAL-ASSETS> 248,258
<CURRENT-LIABILITIES> 71,160
<BONDS> 191,852
0
0
<COMMON> 0
<OTHER-SE> (14,753)
<TOTAL-LIABILITY-AND-EQUITY> 248,258
<SALES> 177,636
<TOTAL-REVENUES> 177,636
<CGS> 113,283
<TOTAL-COSTS> 117,396
<OTHER-EXPENSES> 38,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,326
<INCOME-PRETAX> 10,488
<INCOME-TAX> 128
<INCOME-CONTINUING> 10,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
<PAGE>
<PAGE>
</TABLE>
<PAGE>
Exhibit 10.112
--------------
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
---------------------------------------------------------
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of the 14th day of July, 1995 (the "Amendment"),
is among Dr Pepper Bottling Company of Texas, a Texas corporation (the
"Borrower"), Texas Commerce Bank National Association, a national
banking association ("TCB") and each other lender listed on the
signature pages hereof (each individually, including, without
limitation, TCB, a "Lender" and collectively, the "Lenders") and Texas
Commerce Bank National Association as agent for the Lenders (in its
capacity as agent, the "Agent").
WITNESSETH
----------
WHEREAS, on February 18, 1993, the Borrower, TCB as the
Agent and the Lenders entered into an Amended and Restated Credit
Agreement (as amended by that certain First Amendment to Amended and
Restated Credit Agreement dated as of July 29, 1994, the "Credit
Agreement") pursuant to which the Borrower, the Agent and the Lenders
amended and restated (i) a Credit Agreement dated as of October 28,
1988, as amended, among the Borrower, TCB as agent and the other
lenders signatory thereto and (ii) a Credit Agreement dated as of
January 18, 1989, as amended, among the Borrower, TCB as agent and the
other lenders signatory thereto;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
made available to the Borrower loans pursuant to an advance term loan
facility of up to $100,000,000 and letters of credit and a revolving
credit facility of up to $25,000,000;
WHEREAS, the Borrower desires to acquire the assets of
Corsicana Dr Pepper Bottling Company, Inc. (such transaction
hereinafter referred to as the "Acquisition") and has requested the
consent of the Lenders to the Acquisition as required under the Credit
Agreement;
WHEREAS, the Borrower desires to amend the Credit Agreement
to provide for an increase in the Maximum Amount of Capital
Expenditures permitted under the Credit Agreement to $10,000,000 in
1995 and every year thereafter to and including 1999;
<PAGE>
<PAGE>
WHEREAS, the Borrower desires to amend the Credit Agreement
to provide that Mandatory Prepayments thereunder are required only
when the net proceeds derived from the sale of any individual parcel
or piece of Property exceed $500,000 or when the aggregate net
proceeds of all sales of Property exceed $500,000 in any given fiscal
year; and
WHEREAS, the Borrower, the Agent and the Lenders have
agreed, upon the terms and conditions specified herein, to amend the
Credit Agreement to permit the foregoing amendments and the Lenders
have agreed, upon certain conditions, to consent to the Acquisition.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Agent and the Lenders hereby agree as
follows:
1. All capitalized terms which are defined in the Credit
Agreement and not otherwise defined herein shall have the same meaning
herein as in the Credit Agreement.
2. All references to Section and Subsection numbers in
this Amendment shall be references to the corresponding Section or
Subsection of the Credit Agreement.
3. On and after the date hereof, each reference in the
Credit Agreement to "this Agreement," "hereunder," "herein," or words
of like import shall mean and be a reference to the Credit Agreement,
as amended hereby.
4. This Amendment, when properly executed and delivered by
each of the Lenders signatory hereto, shall constitute the consent and
approval of such Lenders to the Acquisition as required by Section
9.03(g)(iii) of the Credit Agreement; provided, however, that the
aggregate purchase price paid by Borrower for the assets to be
acquired pursuant to the Acquisition shall not exceed $10,000,000.00,
excluding working capital expenses and all costs properly
characterized, under generally accepted accounting principles, as
transaction costs related to the Acquisition.
5. Section 9.07 of the Credit Agreement is hereby amended
by deleting the table set forth in such Section and replacing it with
the following table:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Maximum Amount
----------- --------------
<S> <C>
1993 $ 7,000,000
1994 $ 7,000,000
1995 $10,000,000
1996 $10,000,000
1997 $10,000,000
1998 $10,000,000
1999 $10,000,000
</TABLE>
6. Subsection 4.03(d) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"Subject to the provisions of Section 8.06 hereof and the
proviso contained in this Subsection 4.03(d), promptly after
receipt thereof, the Borrower will pay to the Agent as a
prepayment of the Facility A Notes 100% of the Net Proceeds
received by the Borrower from the sale, lease, assignment or
other disposition of Property of the Borrower permitted
under this Agreement, including without limitation, an
actual or constructive loss of Property, an agreed or
compromised loss of Property, or the taking of any Property
under the power of eminent domain (except the Net Proceeds
from a disposition in the ordinary course of business by the
Borrower of Property described in clauses (a) and (b) of
Section 9.05), and upon receipt thereof the Agent will
release any Lien covering such Property created in its favor
pursuant to any Loan Document; provided, however, that
-------- -------
Borrower shall not be required to pay to the Agent the Net
Proceeds of any such sale, lease, assignment or other
disposition of Property if the amount of Net Proceeds
derived from each such sale is equal to or less than
$500,000 unless the aggregate amount of the Net Proceeds of
each such sale, lease, assignment or other disposition of
Property occurring in any Fiscal Year exceeds $500,000.
7. By its execution and delivery hereof, the Borrower
represents and warrants the following:
(a) As of the date hereof and after giving effect to the
amendments contemplated herein, (i) the representations and warranties
contained in Article VII of the Credit Agreement, as amended by this
Amendment, and the Loan Documents to which the
<PAGE>
<PAGE>
Borrower is a party, are true and correct on and as of the date hereof
as though made by the Borrower on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date) and the Borrower hereby agrees to be bound by such
representations and warranties and (ii) no event has occurred and is
continuing which constitutes a Default or an Event of Default; and
(b) The execution and delivery of this Amendment shall in
no way release, diminish, impair, reduce or otherwise adversely affect
the obligations of the Borrower under the Credit Agreement, as amended
by this Amendment, and under the Notes, as each may be further amended
or otherwise modified from time to time and under the other Loan
Documents to which the Borrower is a party, as each may be further
amended or otherwise modified from time to time. The Borrower
acknowledges and confirms that the indebtedness secured by the Loan
Documents includes, in addition to the indebtedness therein described,
the obligations of the Borrower under the Credit Agreement, as amended
by this Amendment, and the Notes, as each may be further amended or
otherwise modified from time to time.
8. By its execution and delivery hereof, the Borrower
hereby covenants and agrees, consistent with Section 8.09 of the
Credit Agreement, to execute and deliver to the Agent, at the
Borrower's sole cost and expense and concurrently with the closing of
the Acquisition, any and all deeds of trust, mortgages and other
documents and instruments, and any such further action, necessary to
create in favor of the Lenders a first and prior Lien on any and all
interests in real property acquired by the Borrower pursuant to the
Acquisition, and to execute and deliver to the Agent, at the
Borrower's sole cost and expense, any and all documents and
instruments, and take such further action, necessary to create in
favor of the Lenders such other Liens or security interests in
property acquired by the Borrower pursuant to the Acquisition, as is
required under the Credit Agreement.
9. This Amendment shall become effective when and only
when (a) each Lender shall have executed a counterpart of this
Amendment and (b) the Agent shall have received each of the following
(and fifteen original counterparts or copies, as the case may be, to
provide an original counterpart or photocopy to each Lender):
(i) Counterparts of this Agreement executed by the
Borrower;
<PAGE>
<PAGE>
(ii) Resolutions of the Board of Directors of the Borrower
approving and authorizing the execution, delivery, and performance by
the Borrower of this Amendment and any and all documents and
agreements executed in connection herewith by the Borrower; and
(iii) Such other documents and agreements as the Agent may
reasonably request.
10. The Credit Agreement, as amended by this Amendment, is
hereby ratified and confirmed and all of the rights and powers created
thereby or thereunder shall be and remain in full force and effect.
11. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy
of the Lenders under the Credit Agreement, as amended by this
Amendment, or under the Notes and the other Loan Documents to which
the Borrower is a party, as each may be amended or modified from time
to time, nor constitute a waiver of any other provision of the Credit
Agreement, as amended by this Amendment, or the Notes and the other
Loan Documents to which the Borrower is a party, as each may be
amended or modified from time to time.
12. The Borrower agrees to do, execute, acknowledge and
deliver all and every such further acts and instruments as the Agent
may request for the better assuring and confirming unto the Agent all
and singular the rights granted or intended to be granted hereby or
hereunder.
13. Pursuant to Section 11.04 of the Credit Agreement, the
Borrower agrees to pay on demand all costs and expenses of the Agent
in connection with the preparation, reproduction, execution and
delivery of this Amendment and the other instruments and documents to
be delivered hereunder (including, without limitation, the reasonable
fees and out of pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under the Credit Agreement as hereby amended). In
addition, the Borrower shall pay any and all stamp and other taxes and
fees payable or determined to be payable in connection with the
execution and delivery, filing or recording of this Amendment and the
other instruments and documents to be delivered hereunder, and agrees
to save the Agent harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to
pay such taxes or fees.
<PAGE>
<PAGE>
14. THIS AMENDMENT SHALL DE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND SHALL BE BINDING
UPON THE BORROWER, THE AGENT AND THE LENDERS AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.
15. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute but one and
the same instrument.
16. THIS WRITTEN AMENDMENT, THE NOTES, THE CREDIT AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT DE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Amendment as of the day
and year first above written.
BORROWER:
--------
DR PEPPER BOTTLING COMPANY OF TEXAS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGENT:
-----
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, AGENT
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
LENDERS:
-------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, for its own account
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., NEW YORK BRANCH
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
FIRST INTERSTATE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CIBC, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BANQUE PARIBAS, HOUSTON AGENCY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
<PAGE>
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BANQUE PARIBAS
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HARRIS TRUST AND SAVINGS BANK
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NATIONSBANK OF NORTH CAROLINA, N.A.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CONSENT AND ACKNOWLEDGEMENT:
DR PEPPER BOTTLING HOLDINGS, INC.
hereby affirms that it has
read and does understand this
Amendment to the Credit Agreement
and does hereby consent to and
agree with this Amendment.
<PAGE>
<PAGE>
By:____________________________
Title:_________________________
Date:__________________________
<PAGE>
