<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
-----------------
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NUMBER
SEPTEMBER 30, 1996 0-28726
SEVEN-UP/RC BOTTLING COMPANY
OF
SOUTHERN CALIFORNIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4284699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3220 EAST 26TH STREET
VERNON, CALIFORNIA 90023
(Address of principal executive offices) (Zip code)
(213) 268-7779
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s)), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO .
--- ---
The number of shares outstanding of the Common Stock of the registrant on
September 30, 1996, the close of the period covered by this report, was
5,000,000.
================================================================================
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited condensed consolidated balance sheets as of
September 30, 1996 and December 31, 1995 2
Unaudited condensed consolidated statements of operations
for the 46 days ending September 30, 1996, the 46 days
ending August 15, 1996, and the three months ending
September 30, 1995 3
Unaudited condensed consolidated statements of operations
for the 46 days ending September 30, 1996, the eight
months and 15 days ending August 15, 1996, and the nine
months ending September 30, 1995 4
Unaudited condensed consolidated statements of cash flows
for the 46 days ending September 30, 1996, the eight
months and 15 days ending August 15, 1996, and the nine
months ending September 30, 1995 5
Unaudited condensed consolidated statements of stockholders'
equity (deficit) for the 46 days ending September 30, 1996,
the eight months and 15 days ending August 15, 1996, and the
nine months ending September 30, 1995 6
Notes to condensed consolidated financial statements
(unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
PART II. OTHER INFORMATION
Item 2. Change in Securities 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES
</TABLE>
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Unaudited Condensed Consolidated Balance Sheet
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ASSETS
Reorganized Predecessor
Company Company
------------- ------------
September 30, December 31,
1996 1995
------------- ------------
(Notes 2 & 3)
<S> <C> <C>
Current assets:
Cash $ 3,291 $ 6,013
Accounts receivable:
Trade, net 24,609 42,261
Other 5,049 9,386
Inventories:
Finished goods 15,486 18,749
Raw materials 6,244 6,198
Prepaids 1,626 2,908
------------- ------------
Total current assets 56,305 85,515
------------- ------------
Investment in joint venture - 1,422
Property, plant and equipment, net 33,551 79,945
Other assets:
Intangible and other assets 6,508 21,422
Debt issuance costs 99 3,829
------------- ------------
Total assets $ 96,463 $ 192,133
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 15,935 $ 29,141
Accrued expenses 33,296 34,371
Current portion of long-term debt 549 189,954
------------- ------------
Total current liabilities 49,780 253,466
------------- ------------
Long-term debt:
Revolving credit facilities 14,590 -
Term loan 527 -
Capital leases 2,580 -
------------- ------------
Total long-term debt 17,697 -
------------- ------------
Stockholders' equity (deficit):
Capital stock $0.01 par value, 6,000,000 and
1,000 shares authorized and 5,000,000 and
1,000 issued and outstanding, respectively - -
Additional paid-in capital 30,000 42,557
Retained deficit (1,014) (103,890)
------------- ------------
Total stockholders' equity (deficit) 28,986 (61,333)
------------- ------------
Total liabilities and stockholders' equity $ 96,463 $ 192,133
============= ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated balance sheets.
2
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Reorganized Predecessor
Company Company
----------- ------------------------------
8/16 - 9/30 7/1 - 8/15 7/1 - 9/30
1996 1996 1995
----------- ---------- ----------
(Notes 2 & 3)
<S> <C> <C> <C>
Net sales $33,518 $38,788 $106,035
Cost of goods sold 27,418 31,406 90,814
------- ------- --------
Gross profit 6,100 7,382 15,221
Administrative, marketing and general expenses 5,362 4,568 12,550
Depreciation and amortization 1,461 1,612 4,410
Restructure charges (Note 4) - - 2,646
------- ------- --------
Operating (loss) income (723) 1,202 (4,385)
Interest expense 267 2,216 5,842
Other income, net 4 31,817 35
------- ------- --------
(Loss) income before income taxes, reorganization
expenses and extraordinary items (986) 30,803 (10,192)
Reorganization expenses (Note 2) - 32,212 -
Provision for income taxes 28 300 -
------- ------- --------
Loss before extraordinary items (1,014) (1,709) (10,192)
Extraordinary items (Notes 2 & 3) - 77,749 -
------- ------- --------
Net (loss) income $(1,014) $76,040 $(10,192)
======= ======= ========
Loss per common share:
Net loss per common share $ (0.20) - -
======= ======= ========
Weighted average common shares outstanding 5,000 - -
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Unaudited Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Reorganized Predecessor
Company Company
------------- ----------------------
8/16 - 9/30 1/1 - 8/15 1/1 - 9/30
1996 1996 1995
------------- ---------- ----------
(Notes 2 & 3)
<S> <C> <C> <C>
Net sales $ 33,518 $ 202,844 $ 306,473
Cost of goods sold 27,418 164,320 260,698
------------- ---------- ----------
Gross profit 6,100 38,524 45,775
Administrative, marketing
and general expenses 5,362 28,011 36,111
Depreciation and amortization 1,461 10,399 13,398
Restructure charges (Note 4) -- 547 2,646
------------- ---------- ----------
Operating loss (723) (433) (6,380)
Interest expense 267 12,871 17,349
Other income, net (Note 2) 4 33,712 171
------------- ---------- ----------
(Loss) income before income taxes,
reorganization expenses and
extraordinary items (986) 20,408 (23,558)
Reorganization expenses (Note 2) -- 35,369 --
Provision for income taxes 28 345 --
------------- ---------- ----------
Loss before extraordinary items (1,014) (15,306) (23,558)
Extraordinary items (Notes 2 & 3) -- 77,239 --
------------- ---------- ----------
Net (loss) income $ (1,014) $ 61,933 $ (23,558)
============= ========== ==========
Loss per common share:
Net loss per common share $ (0.20) -- --
============= ========== ==========
Weighted average common shares
outstanding 5,000 -- --
============= ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Reorganized Predecessor
Company Company
----------- -------------------------
8/16 - 9/30 1/1 - 8/15 1/1 - 9/30
1996 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: (Notes 2 & 3)
Loss before extraordinary item $ (1,014) $(15,306) $(23,558)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,461 10,997 14,768
Equity in earnings of joint venture - (5) (77)
Gain on sales of fixed assets - (169) 6
Non cash reorganization expenses - 29,735 -
Disposition of capital lease - 1,192 -
Provision for doubtful accounts 100 783 565
Gain on sale of Puerto Rico - (31,715) -
Changes in assets and liabilities:
Accounts receivable 5,529 (1,671) 19,103
Inventories (5,156) 227 10,247
Prepaids and other (948) 1,877 (5,019)
Accounts payable (14,240) 11,505 (22,083)
Accrued expenses 887 10,924 2,754
-------- -------- --------
Net cash (used in) provided by
operating activities (13,381) 18,374 (3,294)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Puerto Rico - 71,626 -
Proceeds from sales of property, plant and equipment - 133 46
Cash additions to property, plant and equipment (746) (4,402) (3,020)
-------- -------- --------
Net cash (used in) provided by
investing activities (746) 67,357 (2,974)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) revolving loans 14,590 (30,290) 4,136
Payment to Senior Secured Note holders - (55,000) -
(Repayment of) proceeds from term loan (11) (2,852) 114
Payment of debt issuance costs - (88) (2)
Repayment of capital lease (37) (638) (602)
-------- -------- --------
Net cash provided by (used in)
financing activities 14,542 (88,868) 3,646
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 415 (3,137) (2,622)
CASH, beginning of period 2,876 6,013 6,982
-------- -------- --------
CASH, end of period $ 3,291 $ 2,876 $ 4,360
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash interest paid $ 257 $ 1,957 $ 11,912
======== ======== ========
Purchase of property, plant and equipment through
issuance of capital lease obligation $ - $ - $ 555
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Unaudited Condensed Consolidated Statement of Stockholders' Equity (Deficit)
(Amounts in thousands)
<TABLE>
<CAPTION>
Capital Stock Additional Total
----------------- Paid-in Retained Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
------ ------ ---------- --------- ----------------
<S> <C> <C> <C> <C> <C>
REORGANIZED (Notes 2 & 3)
August 16 to September 30, 1996
Balance, August 16, 1996 5,000 $ - $ 30,000 $ - $ 30,000
Net loss for the period - - - (1,014) (1,014)
----- ------ -------- --------- --------
Balance, September 30, 1996 5,000 $ - $ 30,000 $ (1,014) $ 28,986
===== ====== ======== ========= ========
PREDECESSOR
January 1 to August 15, 1996
Balance December 31, 1995 1 $ - $ 42,557 $(103,890) $ (61,333)
Reorganization 99 - (41,957) 41,957 -
New issue 4,900 - 29,400 - 29,400
Net income for the period - - - 61,933 61,933
----- ------ -------- --------- --------
Balance, August 15, 1996 5,000 $ - $ 30,000 $ - $ 30,000
===== ====== ======== ========= ========
PREDECESSOR
January 1 to September 30, 1995
Balance, December 31, 1994 1 $ - $ 42,557 $ (71,696) $(29,139)
Net loss for the period - - - (23,558) (23,558)
----- ------ -------- --------- --------
Balance, September 30, 1995 1 $ - $ 42,557 $ (95,254) $(52,697)
===== ====== ======== ========= ========
</TABLE>
These accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Presentation of Financial Information
-------------------------------------
The accompanying condensed consolidated financial statements include the
accounts of Seven-Up/RC Bottling Company of Southern California, Inc.
("Southern California") and Southern California's wholly-owned subsidiary,
Seven-Up/RC Bottling Company of Puerto Rico, Inc. ("Puerto Rico"). Except
as otherwise indicated, Southern California and Puerto Rico are referred to
collectively as the "Company". On May 13, 1996, Southern California and
its immediate holding company parent, Beverage Group Acquisition
Corporation, filed voluntary petitions for reorganization relief under
Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware. On August 15, 1996, the Plan was consummated and
Southern California emerged as a reorganized company from Chapter 11. Due
to the reorganization and implementation of fresh start reporting, the
Condensed Consolidated Financial Statements for the new Reorganized Company
(period starting August 16, 1996) are not comparable to that of Predecessor
Company. Predecessor Company included Southern California and Puerto Rico
through the date of disposition, June 30, 1996. Reorganized Company
includes the operations of Southern California subsequent to the
consummation date.
During interim periods, the Company follows the accounting policies set
forth in its Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Users of financial information produced for interim
periods are encouraged to refer to the footnotes contained in the Annual
Report on Form 10-K when reviewing interim financial results.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial condition, the
results of operations, cash flows, and stockholders' equity of the Company
for interim periods.
Certain reclassifications have been made to the 1995 financial statements
to conform to the 1996 presentation.
(2) Bankruptcy Filings
------------------
As a result of severe liquidity problems, on July 31, 1995, Southern
California suspended payments of interest on its $140,000,000, 11.5% Senior
Secured Notes due 1999 (the "Senior Secured Notes"). At the end of the
second quarter of 1995 through the first quarter of 1996, Southern
California was in violation of certain of its revolving credit facility
covenants, including tangible net-worth, interest coverage and fixed charge
coverage. At the request of Southern California, the revolving credit
lender executed forbearance agreements extending through May 15, 1996.
On November 9, 1995, Southern California announced that it had reached an
agreement in principle on the terms of a restructuring of the Senior
Secured Notes with an unofficial committee (the "Committee") of holders of
such notes. The agreement contemplated, among other things, (i) the
exchange of the Senior Secured Notes for approximately 98% of the equity of
Southern California, and (ii) the sale of Puerto Rico and the payment to
the holders of the Senior Secured Notes of the net proceeds from such sale.
On May 13, 1996, Southern California and its immediate holding company
parent, Beverage Group Acquisition Corporation ("BGAC"), filed voluntary
petitions for reorganization relief under Chapter 11 of the Bankruptcy Code
to implement the terms of the restructuring agreement with the Committee.
7
<PAGE>
On July 1, 1996, Southern California sold its wholly owned subsidiary,
Puerto Rico, for approximately $74 million which resulted in a net gain of
approximately $32 million. The proceeds from this sale were used to repay
holders of the Senior Secured Notes and reduce Southern California's
revolving credit facility.
On August 2, 1996 (the "Confirmation Date"), the U.S. Bankruptcy Court of
the District of Delaware, confirmed the Company's First Amended Joint Plan
of Reorganization (the "Reorganization"), and on August 16, 1996, the
Company emerged from bankruptcy. Pursuant to the Reorganization, on such
date certain indebtedness of the Company was canceled in exchange for cash
and new equity interests. The Company distributed to holders of its Senior
Secured Notes approximately $55 million in cash and equity securities
consisting of 5.0 million shares of common stock.
As a result of the bankruptcy filing and the resulting debtor-in-possession
working capital facility, Southern California wrote off $510,000 of debt
issuance costs related to its previous working capital facility. In
addition, in the third quarter Southern California realized an
extraordinary gain of $78 million relating to the discharge of the Senior
Secured Notes and related accrued interest in accordance with the
Reorganization.
Upon emerging from bankruptcy, the Company's $54 million Debtor-In-
Possession Revolving Credit Facility was canceled and replaced by a $35
million facility.
In accordance with the American Institute of Certified Public Accountants'
Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code," ("SOP 90-7") expenses resulting
from the Reorganization should be reported separately as reorganization
items in the Condensed Consolidated Statements of Operations, and are
summarized below:
<TABLE>
<CAPTION>
July 1, 1996 January 1, 1996
to to
August 15, 1996 August 15, 1996
--------------- ---------------
<S> <C> <C>
Adjustment of assets to fair market value $ 29,735 $ 29,735
Financial restructuring costs 2 ,477 5,634
--------------- ---------------
Total $ 32,212 $ 35,369
=============== ==============
</TABLE>
(3) Fresh Start Accounting
----------------------
As of August 15, 1996, the Company adopted Fresh Start Reporting in
accordance with SOP 90-7. Fresh Start Reporting resulted in material
changes to the Condensed Consolidated Balance Sheet, including valuation of
real, intangible and other assets and the valuation of equity based on the
appraised reorganization value of the ongoing business.
The reorganization value of $30 million (the approximate fair value) was
established based upon analysis by an independent valuation firm and
considered many factors and various valuation methods, including discounted
cash flows, selected comparable company multiples, selected acquisition
transaction multiples and other applicable ratios and valuation techniques
believed by management and its financial advisors to be representative of
the Company's business and industry.
The Reorganization and adoption of Fresh Start Reporting resulted in the
following adjustments to the Company's Condensed Consolidated Balance Sheet
for the period ending August 15, 1996.
8
<PAGE>
<TABLE>
<CAPTION>
Predecessor Reorganized
Company Company
----------- -----------
at Reorganization and at
August 15, Fresh Start Adjustments August 15,
----------- -------------------------- -----------
ASSETS 1996 Debit Credit 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
(Dollar amounts in thousands)
Total current assets $119,733 $ - $ 63,836/(f)/ $55,897
Property, plant and equipment, net 55,918 - 22,030/(a)/ 33,888
Other assets:
Intangible and other assets 14,038 - 6,414/(b)/ 7,624
Debt issuance costs 2,695 - 2,607/(c)/ 88
-------- -------- -------- -------
Total assets $192,384 $ - $ 94,887 $97,497
======== ======== ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 30,176 $ - $ - $30,176
Accrued expenses 57,087 23,465/(d)/ - 33,622
Current portion of long-term debt 544 - - 544
-------- -------- -------- -------
Total current liabilties 87,807 23,465 - 64,342
-------- -------- -------- -------
Long-term debt 151,991 148,836/(e),(f)/ - 3,155
-------- -------- -------- -------
Stockholders' equity (deficit):
Additional paid-in capital 42,557 41,957/(g)/ 29,400/(g)/ 30,000
Retained deficit (89,971) - 77,749/(h)/ -
12,222/(i)/
-------- -------- -------- -------
Total (deficit) equity (47,414) 41,957 119,371 30,000
-------- -------- -------- -------
Total liabilities and
stockholders' equity $192,384 $214,258 $119,371 $97,497
======== ======== ======== =======
</TABLE>
9
<PAGE>
Explanations of adjustment columns of the balance sheet are as follows:
(a) To adjust property and equipment to estimated current market value. The
market value of property and equipment has been determined by independent
third party appraisal.
(b) To primarily reflect the write-off of intangibles and adjust other assets
to current market value.
(c) To write-off remaining debt issuance costs for the Senior Secured Notes.
(d) To primarily reflect the cancellation of accrued interest related to the
Senior Secured Notes.
(e) To reflect the cancellation of the Senior Secured Notes.
(f) To reflect the paydown of the debtor-in-possession revolving credit
facility.
(g) To reflect the issuance of 5,000,000 shares of new common stock (par value
$0.01).
(h) To reflect the extraordinary gain resulting from the discharge of
indebtedness. This extraordinary gain is calculated below:
<TABLE>
<S> <C>
Historical carrying value of old debt securities $140,000
Historical carrying value of related accrued interest 24,756
Unamortized old deferred financing costs (2,607)
Market Value of consideration exchanged for old debt:
Plan securities (face value $29,400) (29,400)
Senior securities principal payment (55,000)
--------
Extraordinary gain $ 77,749
========
</TABLE>
(i) To reflect the elimination of stockholders' equity of the Predecessor
Company.
10
<PAGE>
The following Unaudited Pro Forma Condensed Financial Information for the
nine months ended September 30, 1996 and 1995, have been prepared giving
effect to the sale of Puerto Rico and the consummation of the
Reorganization including adjustments to interest, depreciation expense and
asset amortization. The Pro Forma financial information was prepared as if
the adjustments had occurred on January 1, 1996 and 1995, respectively.
This information does not purport to be indicative of the results which
would have been obtained had such transaction in fact had been completed as
of the date hereof and for the periods presented or that may be obtained in
the future.
Unaudited Pro Forma Financial Information (dollar amounts in thousands):
<TABLE>
<CAPTION>
Pro Forma Nine Months Ended
-------------------------------
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Total revenue $198,427 $247,119
Operating costs and expenses 197,323 251,903
-------- --------
Income (loss) before interest, other income, reorganization
expenses and income taxes 1,104 (4,784)
Interest, other income, income taxes and reorganization expenses 1,001 (4,210)
-------- --------
Net income (loss) $ 103 $ (8,994)
======== ========
</TABLE>
(4) Restructuring Charges
---------------------
During the second quarter of 1996, the Company recorded approximately
$547,000 of restructuring charges related to the termination of a capital
lease. Annual lease payments related to the terminated lease were
$1,328,000 in 1996, and $759,000 in 1997.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
On May 13, 1996, Southern California and its immediate holding company
parent, Beverage Group Acquisition Corporation, filed petition for
reorganization relief under Chapter 11 of the Bankruptcy Code. On August 2,
1996, the Bankruptcy Court confirmed the Plan and on August 15, 1996, the Plan
was consummated.
Due to the reorganization and implementation of fresh start reporting, the
Condensed Consolidated Financial Statements for the new Reorganized Company
(period starting August 16, 1996) are not comparable to those of Predecessor
Company. Predecessor Company included the operations of Southern California and
Puerto Rico, through the date of disposition, June 30, 1996. Reorganized Company
includes the operations of Southern California subsequent of the consummation
date.
The Company's primary measurement of unit volume is Direct Store Delivery
("DSD") cases. Case sales are defined as physical cases of beverages sold,
including both ready-to-serve premix and postmix fountain products that are sold
in bulk (tanks or boxes). Avalon (warehouse distribution) and Liquitrend
(contract manufacturing) are not combined in the Company's physical case sales,
but are included in net sales, cost of goods sold, and operating income.
Liquitrend's net sales fluctuate from year to year and generate gross margins
that are less than gross margins for DSD sales.
RESULTS OF OPERATIONS (UNAUDITED)
COMPARISON OF THE COMPANY'S THREE MONTHS ENDED SEPTEMBER 30, 1996, WITH THE
THREE MONTHS ENDED SEPTEMBER 30, 1995.
The table below sets forth sales for the three months ended September 30,
1996 and 1995. For purposes of analysis below, the operations of Predecessor
Company and Reorganized Company have been combined. As a result of the
Reorganization and recent restructuring resulting in the elimination and
downsizing of several product lines, the operations of Puerto Rico, Avalon and
Snapple DSD distribution have been eliminated to arrive at comparable sales.
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Consolidated net sales $72,306 $106,035
Less:
Puerto Rico - 21,295
Avalon - 8,027
Snapple DSD - 4,672
Snapple Liquitrend - 1,911
------- --------
Comparable sales $72,306 $ 70,130
======= ========
</TABLE>
Net sales decreased to $72,306,000 for the three months ending September
30, 1996, from $106,035,000 for the comparable 1995 period, or 31.8%. This
decrease is the result of (i) the sale of the Puerto Rico operations
($21,295,000 of the net sales decrease); (ii) reduced sales of Southern
California's Liquitrend division ($1,911,000 of the net sales decrease); (iii)
the elimination of Southern California's warehouse distribution product
division, Avalon ($8,027,000 of the net sales decrease); and (iv) the
elimination of a Snapple distribution agreement, Snapple DSD ($4,672,000 of the
net sales decrease).
12
<PAGE>
Net sales for Southern California's DSD product line increased to
$64,957,000 for the three months ending September 30, 1996, from $63,465,000 for
the comparable 1995 period, or 2.4%. This net sales increase would have been
10.5% excluding Snapple DSD eliminated in 1996 as a result of the termination of
a temporary distribution agreement in November 1995 ($4,672,000 in sales).
Liquitrend's net sales decreased to $7,349,000 for the three months ending
September 30, 1996, from $13,248,000 for the comparable 1995 period, or 44.5%.
This decrease is attributable to Southern California's previously announced
strategic decision to downsize this operation resulting in the elimination of
Snapple Liquitrend in 1995 ($1,911,000 in sales).
Cost of goods sold decreased to $58,824,000 for the three months ending
September 30, 1996 from $90,814,000 for the comparable 1995 period, or 35.2%. If
the Puerto Rico costs of goods sold in the 1995 period were eliminated, Southern
California cost of goods sold would have decreased by 20.1% period to period. As
a percent of sales, gross margin is Southern California improved to 10.4% from
7.9% for the comparable period. This improvement is primarily the result of
favorable product mix for DSD products in Southern California and reduced fixed
costs, such as warehouse expense and labor costs resulting from the third
quarter 1995 restructuring.
Administrative, marketing and general expenses decreased to $9,930,000 for
the three months ended September 30, 19996 from $12,550,000 for the three months
ended September 30, 1995, or 20.9%. With the elimination of Puerto Rico
operations from 1995 results, Southern California's expenses decreased 8.6%.
This decrease is the result of expense savings from Southern California's
workforce reduction in September 1996.
Interest expense decreased to $2,483,000 during the three months ending
September 30, 1996, from $5,842,000 for the comparable 1995 period, or 57.5%.
This decrease was the result of the elimination of accrued interest related to
the retired Senior Secured Notes retired as of the consummation date, the
elimination of interest expense related to Puerto Rico and a lower average
balance related to Southern California's revolver.
Other income for the three month period ending September 30, 1996, included
a $31,715,000 gain as a result of the sale of Puerto Rico.
For the reasons set forth above, 1996 net loss before income taxes and
extraordinary items (net of restructure and reorganization charges and the gain
from the sale of Puerto Rico) decreased to $1,898,000 from $7,546,000 for the
comparable 1995 period.
COMPARISON OF THE COMPANY'S NINE MONTHS ENDED SEPTEMBER 30, 1996, WITH THE NINE
MONTHS ENDED SEPTEMBER 30, 1995.
The table below sets forth sales for the nine months ended September 30,
1996 and 1995. For purposes of analysis below the operations of Predecessor
Company and Reorganized Company have been combined. As a result of the
Reorganization and recent restructuring resulting in the elimination and
downsizing of several product lines, the operations of Puerto Rico, Avalon and
Snapple DSD distribution have been eliminated to arrive at comparable sales.
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Consolidated net sales $236,362 $306,473
Less:
Puerto Rico 37,931 59,354
Avalon 1,564 20,781
Snapple DSD - 13,200
Snapple Liquitrend - 6,946
-------- --------
Comparable sales $196,867 $206,192
======== ========
</TABLE>
13
<PAGE>
Net sales decreased to $236,362,000 for the nine months ending September
30, 1996, from $306,473,000 for the comparable 1995 period, or 22.9%. This
decrease is the result of (i) the sale of the Puerto Rico operations
($21,423,000 of the net sales decrease); (ii) reduced sales of Southern
California's Liquitrend division ($6,946,000 of the net sales decrease); (iii)
the elimination of Southern California's warehouse distribution product
division, Avalon, ($19,217,000 of the net sales decrease); and (iv) the
elimination of a Snapple distribution agreement, Snapple DSD ($13,200,000 of the
net sales decrease).
Net sales for Southern California DSD product line decreased to
$172,390,000 from $177,390,000 or 2.7% for the nine months ending September 30,
1996 and 1995, respectively. This decrease is the direct result of the
termination of a temporary Snapple product distribution agreement for portions
of Southern California (13,200,000 in net sales). Excluding the impact on 1995
net sales for this distribution agreement termination, comparable net sales for
Southern California would have increased 5.5%.
Liquitrend contract packing net sales decreased to $24,268,000 for the nine
month period ending September 30, 1996, from $47,424,000 for the nine month
period ending September 30, 1995, or 48.8%. This net sales decrease is the
direct result of Southern California's previously announced strategic decision
to downsize this division resulting in the elimination of Snapple Liquitrend in
1995 ($6,946,000 in sales).
Costs of goods sold decreased to $191,738,000 for the nine months ending
September 30, 1996, from $260,698,000 for the comparable 1995 period, or 26.5%.
This decrease is primarily the result of the sale of Puerto Rico at the end of
the second quarter of 1996 (24.9% of the decrease) and reduced fixed costs in
Southern California, such as warehouse expense and labor costs that were
eliminated as a result of the third quarter 1995 restructuring.
Administrative, marketing and general expenses decreased to $33,373,000 for
the nine months ending September 30, 1996, from $36,111,000 for the comparable
1995 period or 7.6%. This decrease is primarily the result of the sale of Puerto
Rico (61.4% of the decrease) and the result of workforce reductions during the
third quarter of 1995 in Southern California.
Interest expense decreased to $13,138,000 for the nine months ending
September 30, 1996, from $17,349,000 for the comparable 1995 period, or 24.3%.
This decrease was the result of the discontinuance of accrued interest related
to the retirement of the Senior Secured Notes, the elimination of interest
expense during the third quarter for Puerto Rico, and lower average balance of
Southern California's working capital facility.
For the reasons set forth above, net loss before income taxes and
extraordinary items (net of restructuring and reorganization charges and the
gain from the sale of Puerto Rico) decreased to $12,293,000 for the nine months
ending September 30, 1996, from $23,558,000 for the comparable 1995 period.
LIQUIDITY AND CAPITAL RESOURCES
To facilitate comparison of cash flow activity for the first nine months of
1996 to the comparable 1995 period, Predecessor Company and Reorganized Company
have been combined.
Operating activities provided $4,993,000 in cash for the first nine months
of 1996 as compared to the first nine months of 1995 when operating activities
used $3,294,000 of cash. This change was primarily the result of the suspension
of interest payments related to the Senior Secured Notes.
During the first nine months of 1996, $66,611,000 was provided by investing
activities as compared to a use of $2,974,000 for the comparable 1995 period.
This change was primarily the result of the proceeds of approximately $74
million related to the sale of Puerto Rico in the second quarter of 1996 and an
increase in capital additions from $3,020,000 in the first nine months in 1995
to $5,148,000 in the first nine months of 1996 related to costs incurred in 1996
for the installation of a major management information system and a required
water reclamation project at the Vernon, California production facility in
Southern California.
14
<PAGE>
Upon consummation of the Plan, on August 15, 1996, Southern California
entered into a credit facility in the amount of $35 million, with GE Capital.
This facility will provide Southern California a revolving financing facility
for general corporate purposes, including working capital and capital
expenditures. Borrowings under this facility will be secured by substantially
all of Southern California's assets.
Southern California believes that cash available under its revolving
financing facility, and cash provided by future operations should enable it to
continue to pay its creditors in the ordinary course of business.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES
On August 16, 1996, Southern California emerged from bankruptcy
proceedings and the First Amended Joint Plan of Reorganization. On
such date, Southern California canceled its existing 11.5% Senior
Secured Notes and its equity securities, and distributed to the
holders of the Senior Secured Notes approximately $55 million in cash
and 5.0 million shares of new common stock, par value $0.01 per share.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated July 2, 1996
and August 15, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 14, 1996
Seven-Up/RC Bottling Company of
Southern California, Inc.
/s/ Richard D. Ferguson
-------------------------------------
Richard D. Ferguson
Executive Vice President
Chief Financial Officer
(Duly Authorized Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> AUG-16-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,291
<SECURITIES> 0
<RECEIVABLES> 24,609
<ALLOWANCES> 0
<INVENTORY> 21,730
<CURRENT-ASSETS> 56,305
<PP&E> 33,551
<DEPRECIATION> 0
<TOTAL-ASSETS> 96,463
<CURRENT-LIABILITIES> 49,780
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 28,986
<TOTAL-LIABILITY-AND-EQUITY> 96,463
<SALES> 33,518
<TOTAL-REVENUES> 33,518
<CGS> 27,418
<TOTAL-COSTS> 27,418
<OTHER-EXPENSES> 5,362
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 267
<INCOME-PRETAX> (986)
<INCOME-TAX> 28
<INCOME-CONTINUING> (1,014)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,014)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
