UNITED STATES 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 29, 1997 Commission File Number 0-9286 COCA-COLA BOTTLING CO. CONSOLIDATED (Exact name of registrant as specified in its charter) DELAWARE 56-0950585 (State or other jurisdiction of incorporation or (I.R.S. Employer organization) Identification Number) 1900 REXFORD ROAD, CHARLOTTE, NORTH CAROLINA 28211 (Address of principal executive offices) (Zip Code) (704) 551-4400 (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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 4, 1997 ----- ----------------------------- Common Stock, $1 Par Value 7,045,047 Class B Common Stock, $1 Par Value 1,319,800
PART I - FINANCIAL INFORMATION Item l. Financial Statements Coca-Cola Bottling Co. Consolidated CONSOLIDATED BALANCE SHEETS (UNAUDITED) In Thousands (Except Share Data) <TABLE> <CAPTION> June 29, Dec. 29, June 30, 1997 1996 1996 <S> <C> <C> <C> ASSETS Current Assets: Cash $ 3,733 $ 2,941 $ 3,593 Accounts receivable, trade, less allowance for doubtful accounts of $420, $410 and $432 52,097 50,918 17,988 Accounts receivable from The Coca-Cola Company 7,758 2,392 2,673 Due from Piedmont Coca-Cola Bottling Partnership 3,531 5,888 3,466 Accounts receivable, other 10,522 8,216 5,531 Inventories 37,265 30,787 36,795 Prepaid expenses and other current assets 9,732 9,453 8,249 -------- -------- -------- Total current assets 124,638 110,595 78,295 -------- -------- -------- Property, plant and equipment, less accumulated depreciation of $170,982, $161,615 and $153,947 251,409 190,073 190,728 Investment in Piedmont Coca-Cola Bottling Partnership 64,399 64,462 64,757 Other assets 40,321 33,802 33,688 Identifiable intangible assets, less accumulated amortization of $100,365, $95,403 and $90,469 235,890 238,115 243,049 Excess of cost over fair value of net assets of businesses acquired, less accumulated amortization of $27,415, $26,269 and $25,124 64,204 65,349 66,495 -------- -------- -------- Total $780,861 $702,396 $677,012 ======== ======== ======== </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED BALANCE SHEETS (UNAUDITED) In Thousands (Except Share Data) <TABLE> <CAPTION> June 29, Dec. 29, June 30, 1997 1996 1996 <S> <C> <C> <C> LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Portion of long-term debt payable within one year $ 12,135 $ 105 $ 100 Accounts payable and accrued liabilities 55,302 56,939 54,495 Accounts payable to The Coca-Cola Company 6,795 3,249 3,174 Accrued compensation 3,801 5,275 3,768 Accrued interest payable 11,097 11,112 8,212 --------- --------- --------- Total current liabilities 89,130 76,680 69,749 Deferred income taxes 109,667 108,403 104,189 Deferred credits 11,751 12,096 10,223 Other liabilities 47,135 43,495 32,825 Long-term debt 515,847 439,453 415,219 --------- --------- --------- Total liabilities 773,530 680,127 632,205 --------- --------- --------- Shareholders' Equity: Convertible Preferred Stock, $100 par value: Authorized-50,000 shares; Issued-None Nonconvertible Preferred Stock, $100 par value: Authorized-50,000 shares; Issued-None Preferred Stock, $.01 par value: Authorized-20,000,000 shares; Issued-None Common Stock, $1 par value: Authorized-30,000,000 shares; Issued- 10,107,421, 10,107,359 and 10,090,859 shares 10,107 10,107 10,090 Class B Common Stock, $1 par value: Authorized-10,000,000 shares; Issued- 1,947,914, 1,947,976 and 1,964,476 shares 1,948 1,948 1,965 Class C Common Stock, $1 par value: Authorized-20,000,000 shares; Issued-None Capital in excess of par value 107,257 111,439 116,086 Accumulated deficit (50,623) (59,868) (65,550) Minimum pension liability adjustment (104) (104) (138) --------- --------- --------- 68,585 63,522 62,453 Less-Treasury stock, at cost: Common-3,062,374, 2,641,490 and 2,132,800 shares 60,845 40,844 17,237 Class B Common-628,114 shares 409 409 409 --------- --------- --------- Total shareholders' equity 7,331 22,269 44,807 --------- --------- --------- Total $ 780,861 $ 702,396 $ 677,012 ========= ========= ========= </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) In Thousands (Except Per Share Data) <TABLE> <CAPTION> Second Quarter First Half 1997 1996 1997 1996 ----------- ----------- -------- --------- <S> <C> <C> <C> <C> Net sales (includes sales to Piedmont of $15,485, $17,614, $26,076 and $29,689) $ 208,174 $ 213,579 $ 386,569 $ 385,575 Cost of sales, excluding depreciation shown below (includes $11,407, $14,414, $20,010 and $24,998 related to sales to Piedmont) 114,393 119,626 213,843 217,894 --------- --------- --------- --------- Gross margin 93,781 93,953 172,726 167,681 --------- --------- --------- --------- Selling expenses 43,314 44,748 87,378 85,474 General and administrative expenses 14,792 14,135 28,780 26,843 Depreciation expense 8,288 7,055 16,421 14,062 Amortization of goodwill and intangibles 3,091 3,058 6,155 6,115 --------- --------- --------- --------- Income from operations 24,296 24,957 33,992 35,187 Interest expense 9,385 7,466 18,509 15,159 Other income (expense), net (378) (1,628) (785) (2,610) --------- --------- --------- --------- Income before income taxes 14,533 15,863 14,698 17,418 Federal and state income taxes 5,392 6,318 5,453 6,936 --------- --------- --------- --------- Net income $ 9,141 $ 9,545 $ 9,245 $ 10,482 ========= ========= ========= ========= Net income per share $ 1.09 $ 1.03 $ 1.09 $ 1.13 Cash dividends per share: Common Stock $ .25 $ .25 $ .50 $ .50 Class B Common Stock .25 .25 .50 .50 Weighted average number of Common and Class B Common shares outstanding 8,365 9,294 8,450 9,294 </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) In Thousands <TABLE> <CAPTION> Capital Minimum Class in Pension Common Common Excess of Accumulated Liability Treasury Stock Stock Par Value Deficit Adjustment Stock <S> <C> <C> <C> <C> <C> <C> Balance on December 31, 1995 $ 10,090 $ 1,965 $120,733 $(76,032) $ (138) $ 17,646 Net income 10,482 Cash dividends paid: Common (4,647) -------- -------- -------- -------- -------- ------- Balance on June 30, 1996 $ 10,090 $ 1,965 $116,086 $(65,550) $ (138) $ 17,646 ======== ======== ======== ======== ======== ======== Balance on December 29, 1996 $ 10,107 $ 1,948 $111,439 $(59,868) $ (104) $ 41,253 Net income 9,245 Cash dividends paid: Common (4,182) Purchase of Common Stock 20,001 -------- -------- -------- -------- -------- ------- Balance on June 29, 1997 $ 10,107 $ 1,948 $107,257 $(50,623) $ (104) $ 61,254 ======== ======== ======== ======== ======== ======== </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) In Thousands <TABLE> <CAPTION> First Half 1997 1996 <S> <C> <C> Cash Flows from Operating Activities Net income $ 9,245 $ 10,482 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 16,421 14,062 Amortization of goodwill and intangibles 6,155 6,115 Deferred income taxes 6,936 Losses on sale of property, plant and equipment 838 1,191 Amortization of debt costs 280 262 Undistributed losses of Piedmont Coca-Cola Bottling Partnership 63 867 Increase in current assets less current liabilities (12,679) (17,684) Increase in other noncurrent assets (6,005) (682) Increase in other noncurrent liabilities 4,858 3,467 Other 3,009 1 -------- -------- Total adjustments 12,940 14,535 -------- -------- Net cash provided by operating activities 22,185 25,017 -------- -------- Cash Flows from Financing Activities Proceeds from the issuance of long-term debt 76,619 Increase (decrease) in current portion of long-term debt 12,030 (20) Payments on long-term debt (226) (4,677) Purchase of Common Stock (20,001) Cash dividends paid (4,182) (4,647) Other (352) (333) -------- -------- Net cash provided by (used in) financing activities 63,888 (9,677) -------- -------- Cash Flows from Investing Activities Additions to property, plant and equipment (81,578) (14,652) Proceeds from the sale of property, plant and equipment 103 471 Acquisition of companies, net of cash acquired (3,806) -------- -------- Net cash used in investing activities (85,281) (14,181) -------- -------- Net increase in cash 792 1,159 Cash at beginning of period 2,941 2,434 -------- -------- Cash at end of period $ 3,733 $ 3,593 ======== ======== </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 1. Accounting Policies The consolidated financial statements include the accounts of Coca-Cola Bottling Co. Consolidated and its majority owned subsidiaries (the "Company"). All significant intercompany accounts and transactions have been eliminated. The information contained in the financial statements is unaudited. The statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The accounting policies followed in the presentation of interim financial results are the same as those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 29, 1996 filed with the Securities and Exchange Commission. Certain prior year amounts have been reclassified to conform to current year classifications.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 2. Summarized Income Statement Data of Piedmont Coca-Cola Bottling Partnership On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership ("Piedmont") to distribute and market soft drink products primarily in portions of North Carolina and South Carolina. The Company and The Coca-Cola Company, through their respective subsidiaries, each beneficially own a 50% interest in Piedmont. The Company provides a portion of the soft drink products to Piedmont at cost and receives a fee for managing the business of Piedmont pursuant to a management agreement. Summarized income statement data for Piedmont is as follows: Second Quarter First Half In Thousands 1997 1996 1997 1996 ---------- --------- -------- ------------ Net sales $63,037 $62,254 $115,868 $110,179 Gross margin 28,218 25,841 51,946 46,250 Income from operations 4,535 2,999 5,919 3,727 Net income (loss) 1,508 115 (126) (1,734) 3. Inventories Inventories are summarized as follows: June 29, Dec. 29, June 30, In Thousands 1997 1996 1996 -------- ---------- --------- Finished products $20,914 $18,888 $23,312 Manufacturing materials 10,394 9,894 10,596 Plastic pallets and other 5,957 2,005 2,887 --------- --------- --------- Total inventories $37,265 $30,787 $36,795 ======= ======= ======= The amounts included above for inventories valued by the LIFO method were greater than replacement or current cost by approximately $2.1 million, $2.1 million and $1.0 million on June 29, 1997, December 29, 1996 and June 30, 1996, respectively, as a result of inventory premiums associated with certain acquisitions.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 4. Long-Term Debt Long-term debt is summarized as follows: <TABLE> <CAPTION> Fixed(F) or Interest Variable Interest June 29, Dec. 29, June 30, In Thousands Maturity Rate (V) Rate Paid 1997 1996 1996 ---------- -------- ----------- -------- ----------- ------------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> Lines of Credit 2001 5.70% - V Varies $132,350 $ 19,720 $ 19,370 5.78% Revolving Credit 24,000 Term Loan Agreement 2004 - 6.20% V Varies 170,000 170,000 170,000 2005 Medium-Term Notes 1998 6.38% V Quarterly 10,000 10,000 10,000 Medium-Term Notes 1998 10.05% F Semi- 2,000 2,000 2,000 annually Medium-Term Notes 1999 7.99% F Semi- 28,585 28,585 28,585 annually Medium-Term Notes 2000 10.00% F Semi- 25,500 25,500 25,500 annually Medium-Term Notes 2002 8.56% F Semi- 47,000 47,000 47,000 annually Debentures 2007 6.85% F Semi- 100,000 100,000 100,000 annually Other notes payable 2000 - 6.85% - F Varies 12,547 12,753 12,864 2001 10.00% -------- ------- ------- 527,982 439,558 415,319 Less: Portion of long- term debt payable within one year 12,135 105 100 ------ -------- -------- Long-term debt $515,847 $439,453 $415,219 -------- -------- -------- </TABLE>
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 4. Long-Term Debt (cont.) It is the Company's intent to renew its lines of credit and borrowings under the revolving credit facility as they mature. To the extent that these borrowings do not exceed the amount available under the Company's $170 million revolving credit facility, they are classified as noncurrent liabilities. The Company previously had an arrangement under which it had the right to sell an undivided interest in a designated pool of trade accounts receivable up to a maximum of $40 million. This arrangement was suspended in the fourth quarter of 1996. The Company had no trade accounts receivable outstanding as of June 29, 1997 and December 29, 1996 under this arrangement. On October 12, 1994, a $400 million shelf registration for debt and equity securities filed with the Securities and Exchange Commission became effective and the securities thereunder became available for issuance. On November 1, 1995, the Company issued $100 million of 6.85% debentures due 2007 pursuant to such registration. The net proceeds from this issuance were used principally for refinancing a portion of existing public indebtedness with the remainder used to repay other bank debt. On November 20, 1995, the Company entered into a $170 million term loan agreement. This loan was used to repay two $60 million loans previously entered into by the Company and other bank debt. On July 22, 1997, the maturities under this agreement were extended such that $85 million matures in 2004 and $85 million matures in 2005. The Company has guaranteed a portion of the debt for two cooperatives in which the Company is a member. The amounts guaranteed were $31.5 million, $32.2 million and $32.5 million as of June 29, 1997, December 29, 1996 and June 30, 1996, respectively. During July 1997, the Company issued $100 million of 7.20% debentures due 2009 pursuant to the $400 million shelf registration filed in October 1994. The proceeds from the issuance of the debentures were used to pay down borrowings under the Company's lines of credit. The lines of credit had been used primarily to fund the repurchase of shares of Common Stock and the purchase of assets previously leased. The Company entered into floating rate interest swap agreements on the $100 million of debentures issued.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 5. Derivative Financial Instruments The Company uses derivative financial instruments to modify risk from interest rate fluctuations in its underlying debt. The Company has historically altered its fixed/floating interest rate mix based upon anticipated operating cash flows of the Company relative to its debt level and the Company's ability to absorb increases in interest rates. These derivative financial instruments are not used for trading purposes. The Company had weighted average interest rates for the debt portfolio of approximately 6.8%, 7.2% and 7.0% as of June 29, 1997, December 29, 1996 and June 30, 1996, respectively. The Company's overall weighted average interest rate on its long-term debt decreased from an average of 7.0% during the first half of 1996 to an average of 6.9% during the first half of 1997. After taking into account the effect of all of the interest rate swap activities, approximately 59%, 51% and 48% of the total debt portfolio was subject to changes in short-term interest rates as of June 29, 1997, December 29, 1996 and June 30, 1996, respectively. A rate increase of 1% on the floating rate component of the Company's debt would have increased interest expense for the first half of 1997 by approximately $1.6 million and net income for the first six months ended June 29, 1997 would have been reduced by approximately $1.0 million. Derivative financial instruments were as follows: <TABLE> <CAPTION> June 29, 1997 December 29, 1996 June 30, 1996 ------------------------------------------------------------------------------- Remaining Remaining Remaining In Thousands Amount Term Amount Term Amount Term ---------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Interest rate swaps-floating $ 60,000 6.25 years $ 60,000 6.75 years $60,000 7.25 years Interest rate swaps-fixed 60,000 6.25 years 60,000 6.75 years 60,000 7.25 years </TABLE> During July 1997, the Company entered into new interest rate swap agreements related to $100 million of long-term debt.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 5. Derivative Financial Instruments (cont.) The carrying amounts and fair values of the Company's balance sheet and off-balance-sheet instruments were as follows: <TABLE> <CAPTION> June 29, 1997 June 30, 1996 ----------------------------- ------------------------ Carrying Fair Carrying Fair In Thousands Amount Value Amount Value <S> <C> <C> <C> <C> Balance Sheet Instruments Public debt $213,085 $216,850 $213,085 $214,697 Non-public variable rate long-term debt 302,350 302,350 189,370 189,370 Non-public fixed rate long-term debt 12,547 13,334 12,864 14,386 Off-Balance-Sheet Instruments Interest rate swaps (3,730) (4,327) </TABLE> The fair values of the interest rate swaps represent the estimated amounts the Company would have had to pay to terminate these agreements.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 6. Supplemental Disclosures of Cash Flow Information Changes in current assets and current liabilities affecting cash were as follows: First Half In Thousands 1997 1996 ------------ -------- Accounts receivable, trade, net $ (1,074) $ (5,890) Accounts receivable from The Coca-Cola Company (5,366) 4,052 Due from Piedmont Coca-Cola Bottling Partnership 2,357 1,118 Accounts receivable, other (2,020) 3,961 Inventories (6,438) (8,806) Prepaid expenses and other current assets (274) (1,314) Accounts payable and accrued liabilities (1,913) (10,055) Accounts payable to The Coca-Cola Company 3,546 (461) Accrued compensation (1,482) (1,281) Accrued interest payable (15) 992 -------- -------- Increase in current assets less current liabilities $(12,679) $(17,684) ======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and Result of Operations Introduction: The following discussion presents management's analysis of the results of operations for the second quarter and first six months of 1997 compared to the second quarter and first six months of 1996 and changes in financial condition from June 30, 1996 and December 29, 1996 to June 29, 1997. The Company reported net income of $9.1 million or $1.09 per share for the second quarter of 1997 compared with net income of $9.5 million or $1.03 per share for the same period in 1996. For the first half of 1997, net income was $9.2 million or $1.09 per share compared to net income of $10.5 million or $1.13 per share for the first half of 1996. The results for interim periods are not necessarily indicative of the results to be expected for the year due to seasonal factors. Results of Operations: Net sales for the second quarter of 1997 decreased by about 2% from the second quarter of 1996. The decrease in net sales for the second quarter was primarily attributable to unseasonably cool and wet weather and highly competitive pricing. Contract sales declined by $5.0 million and $8.6 million from the second quarter and first half of 1996, respectively. A significant portion of the reduction in contract sales reflects lower sales to Piedmont Coca-Cola Bottling Partnership, which is purchasing more of its product from South Atlantic Canners, Inc. Net sales for the first half of 1997 increased approximately 1% over the same period in 1996. The Company experienced 4.5% case volume sales growth in franchise sales in the first half of 1997 over the first half of 1996. The increase in franchise sales volume was offset by a 2.5% decrease in franchise net selling price per case. The decrease in franchise net selling price per case was due to extremely competitive market conditions. The Company's flagship brand, Coca-Cola Classic, showed solid growth during the first half of 1997. Sprite continued its strong performance with double-digit volume growth over the first half of 1996. The Company also had significant growth in non-carbonated products, including POWERaDE and Cool from Nestea. Franchise selling prices in the second quarter and first half of 1997 decreased approximately 2.5% from comparable periods in 1996 due to highly competitive pricing. Gross margin on net franchise sales for the second quarter of 1997 was basically unchanged from the second quarter of 1996. Gross margin for the first half of 1997 increased by approximately 3% as compared to the same period in 1996. Gross margin for both the second quarter and first half of 1997 was positively impacted by a decline in the cost of sales. Cost of sales on a per unit basis for the second quarter and first half of 1997 declined by 2.7% and 2.8%, respectively, from the same periods in 1996. The reduction in cost of sales was attributable to lower costs for sweetener, cans and PET bottles.
For the second quarter of 1997, selling expenses decreased 3.2% from the same quarter in 1996. The decline in selling expenses in the second quarter of 1997 was due to lower net marketing program costs and a reduction in equipment lease expense. The reduction in net marketing program costs is primarily due to additional funding from The Coca-Cola Company for support of cold drink activities. Selling expenses for the first six months of 1997 increased by 2.2% over the first half of 1996. General and administrative expenses in the second quarter increased by 4.6% from the second quarter of 1996. General and administrative expenses for the first six months of 1997 increased by 7.2% over 1996 first half levels. The increase in general and administrative expenses was impacted by higher employment costs. Depreciation expense increased 17% between the second quarter and first half of 1997 and the comparable periods in 1996. This increase was due primarily to depreciation expense on vending equipment that was previously leased. The Company bought out $66.3 million of vending equipment leases in January 1997. As a result of this transaction, lease expense declined by 15% for the second quarter and 13% for the first half of 1997 from the same periods in 1996. Interest expense in 1997 increased 26% from the second quarter of 1996 and 22% from the first half of 1996 primarily due to several transactions that increased outstanding long-term debt from June 30, 1996 to June 29, 1997. The Company repurchased approximately 930,000 shares of its Common Stock in three separate transactions between December 1996 and February 1997 for $43.6 million. The Company repurchased vending leases for $66.3 million during January 1997. Additionally, the Company suspended its arrangement to sell trade accounts receivable in the fourth quarter of 1996. As of June 30, 1996 the Company had sold $35 million of its trade accounts receivable under this program. The Company's overall weighted average interest rate decreased from an average of 7.0% during the first half of 1996 to an average of 6.9% during the first half of 1997. Other expense for the first half of 1997 decreased by $1.8 million over the same period in 1996. This decrease in other expense is primarily due to the suspension of the program to sell trade accounts receivable. The discount on the sale of trade accounts receivable was included in other expense while the program was active. CHANGES IN FINANCIAL CONDITION: Working capital increased $1.6 million from December 29, 1996 and $27 million from June 30, 1996 to June 29, 1997. The change from December 29, 1996 is attributable to a seasonal increase in inventory and an increase in amounts due from The Coca-Cola Company, offset by an increase of $12 million in the current portion of long-term debt. The increase from June 30, 1996 was due principally to an increase in trade accounts receivable of $34.1 million, offset partially by the $12 million increase in the current portion of long-term debt. The Company had sold trade accounts receivable of $35 million as of June 30, 1996 under an agreement to sell up to $40 million
of its trade accounts receivable. The trade accounts receivable sales agreement was suspended during the fourth quarter of 1996 and no trade accounts receivable had been sold as of December 29, 1996 or June 29, 1997. Capital expenditures in the first half of 1997, excluding the $66.3 million purchase of previously leased equipment, were $15.3 million as compared to $14.7 million in the first half of 1996. The Company entered into an agreement in April 1997 that will provide up to $61 million for the leasing of equipment in 1997. This agreement has a favorable overall cost structure and will be used to obtain the majority of the Company's capital requirements for fleet and vending assets in 1997. As of June 29, 1997, the Company had leased $45.0 million of equipment under this agreement. Long-term debt increased by $100 million from June 30, 1996 and increased $76.4 million from December 29, 1996. The significant increase in long-term debt is primarily due to the repurchase of approximately 930,000 shares of the Company's Common Stock during December 1996 and the first quarter of 1997 for $43.6 million; the buyout of leases from Coca-Cola Financial Corporation in January 1997 for approximately $66.3 million and the suspension of the arrangement to sell trade accounts receivable. The Company used its informal lines of credit for the additional borrowings as of June 29, 1997. During July 1997, the Company issued $100 million of 7.20% debentures due 2009 pursuant to the $400 million shelf registration filed in October 1994. The proceeds from the issuance of the debentures were used to pay down borrowings under the Company's lines of credit. The lines of credit had been used to fund the repurchase of Common Stock and the purchase of assets previously leased, as discussed above. The Company entered into floating rate interest swap agreements on the $100 million of debentures issued. Additionally, the Company extended the maturity dates on its $170 million Term Loan Agreement such that $85 million matures in 2004 and $85 million matures in 2005. It is the Company's intent to renew any borrowings under its $170 million revolving credit facility and the informal lines of credit as they mature and, to the extent that any borrowings under the revolving credit facility and the informal lines of credit do not exceed the amount available under the Company's $170 million revolving credit facility, they are classified as noncurrent liabilities. As of June 29, 1997, the Company had no amounts outstanding under the revolving credit facility and had approximately $132.3 million outstanding under the informal lines of credit. As of June 29, 1997 the debt portfolio had a weighted average interest rate of approximately 6.8% and approximately 59% of the total debt portfolio of $528.0 million was subject to changes in short-term interest rates. Management believes that the Company, through the generation of cash flow from operations and the utilization of unused borrowing capacity, has sufficient financial resources available to maintain its current operations and provide for its current capital expenditure requirements. The Company considers the acquisition of additional franchise territories on an ongoing basis.
PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of the Company's shareholders was held on May 14, 1997. (b) The meeting was held to consider and vote upon (i) fixing the number of the Company's directors at ten, (ii) electing three directors, each for a term of three years or until his successor shall be elected and shall qualify, and (iii) approving the performance goals under the Company's Annual Bonus Plan in order to permit bonuses paid thereunder to qualify as "performance based" compensation within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. The votes cast on the question of fixing the number of directors at ten are summarized as follows: For Abstain Total Votes 32,547,173 6,141 32,553,314 The votes cast with respect to each director are summarized as follows: Director Name For Abstain Total Votes ------------- --- ------- ----------- H.W. McKay Belk 32,521,020 32,295 32,553,315 H. Reid Jones 32,521,355 31,960 32,553,315 John W. Murrey, III 32,520,799 32,516 32,553,315 The votes cast for approving the performance goals under the Company's Annual Bonus Plan are summarized as follows: For Against Abstain Total Votes 32,429,033 49,524 59,651 32,538,208
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description 1.1 Underwriting Agreement dated July 1, 1997 among the Company, Citicorp Securities, Inc. and BancAmerica Securities, Inc. 4.1 Amendment, dated as of July 22, 1997, to Loan Agreement dated November 20, 1995, between the Company and LTCB Trust Company, as Agent, and other banks named therein. 4.2 Form of the Company's 7.20% Debentures Due 2009. 27 Financial data schedule for period ended June 29, 1997. (b) Reports on Form 8-K None.
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. COCA-COLA BOTTLING CO. CONSOLIDATED (REGISTRANT) Date: August 13, 1997 By: /s/ David V. Singer ------------------------------------- David V. Singer Principal Financial Officer of the Registrant and Vice President - Chief Financial Officer