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 OCTOBER 1, 1995 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 (I.R.S. Employer Identification Number) incorporation or organization) 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 November 3, 1995 Common Stock, $1 Par Value 7,958,059 Class B Common Stock, $1 Par Value 1,336,362
PART I - FINANCIAL INFORMATION Item l. Financial Statements. Coca-Cola Bottling Co. Consolidated CONSOLIDATED BALANCE SHEETS (UNAUDITED) In Thousands (Except Share Data) <TABLE> <CAPTION> Oct. 1, Jan. 1, Oct. 2, 1995 1995 1994 <S> <C> <C> <C> ASSETS Current Assets: Cash $ 2,723 $ 1,812 $ 2,200 Accounts receivable, trade, less allowance for doubtful accounts of $401, $400 and $419 11,180 7,756 7,522 Accounts receivable from The Coca-Cola Company 6,337 4,514 5,991 Due from Piedmont Coca-Cola Bottling Partnership 1,457 1,383 1,907 Accounts receivable, other 4,577 7,232 6,583 Inventories 33,447 31,871 30,320 Prepaid expenses and other current assets 5,538 5,054 5,269 Total current assets 65,259 59,622 59,792 Property, plant and equipment, less accumulated depreciation of $152,271, $141,419 and $138,022 189,118 185,633 179,008 Investment in Piedmont Coca-Cola Bottling Partnership 66,629 67,729 68,801 Other assets 24,258 23,394 22,369 Identifiable intangible assets, less accumulated amortization of $83,068, $75,667 and $73,200 250,450 257,851 260,318 Excess of cost over fair value of net assets of businesses acquired, less accumulated amortization of $23,407, $21,689 and $21,117 68,212 69,930 70,502 Total $663,926 $664,159 $660,790 </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED BALANCE SHEETS (UNAUDITED) In Thousands (Except Share Data) <TABLE> <CAPTION> Oct. 1, Jan. 1, Oct. 2, 1995 1995 1994 <S> <C> <C> <C> LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Portion of long-term debt payable within one year $ 174 $ 300 $ 376 Accounts payable and accrued liabilities 52,812 59,413 51,634 Accounts payable to The Coca-Cola Company 3,470 2,930 1,993 Accrued compensation 3,464 4,246 3,314 Accrued interest payable 4,886 11,275 5,593 Total current liabilities 64,806 78,164 62,910 Deferred income taxes 99,269 89,531 88,302 Other liabilities 38,364 29,512 21,630 Long-term debt 419,827 432,971 454,392 Total liabilities 622,266 630,178 627,234 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-10,090,859 shares 10,090 10,090 10,090 Class B Common Stock, $1 par value: Authorized-10,000,000 shares; Issued-1,964,476 shares 1,965 1,965 1,965 Class C Common Stock, $1 par value: Authorized-20,000,000 shares; Issued-None Capital in excess of par value 123,057 130,028 132,351 Accumulated deficit (71,902) (86,552) (87,590) Minimum pension liability adjustment (3,904) (3,904) (5,614) 59,306 51,627 51,202 Less-Treasury stock, at cost: Common-2,132,800 shares 17,237 17,237 17,237 Class B Common-628,114 shares 409 409 409 Total shareholders' equity 41,660 33,981 33,556 Total $663,926 $664,159 $660,790 </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> Third Quarter Nine Months 1995 1994 1995 1994 <S> <C> <C> <C> <C> Net sales (includes sales to Piedmont of $19,355, $23,121, $55,664 and $67,932) $ 203,559 $ 188,418 $ 582,412 $ 552,927 Cost of products sold, excluding depreciation shown below (includes $16,715, $19,679, $48,599 and $59,785 related to sales to Piedmont) 120,832 112,554 340,477 328,979 Gross margin 82,727 75,864 241,935 223,948 Selling expenses 41,831 37,524 119,918 111,473 General and administrative expenses 13,868 13,565 40,839 39,732 Depreciation expense 6,786 5,895 19,756 17,659 Amortization of goodwill and intangibles 3,058 3,081 9,173 9,235 Income from operations 17,184 15,799 52,249 45,849 Interest expense 8,312 7,999 25,205 23,358 Other income (expense), net (1,099) 761 (2,656) 474 Income before income taxes and effect of accounting change 7,773 8,561 24,388 22,965 Federal and state income taxes 3,134 3,662 9,738 9,856 Income before effect of accounting change 4,639 4,899 14,650 13,109 Effect of accounting change (2,211) Net income $ 4,639 $ 4,899 $ 14,650 $ 10,898 Income per share: Income before effect of accounting change $ .50 $ .53 $ 1.58 $ 1.41 Effect of accounting change (.24) Net income $ .50 $ .53 $ 1.58 $ 1.17 Cash dividends per share: Common Stock $ .25 $ .25 $ .75 $ .75 Class B Common Stock .25 .25 .75 .75 Weighted average number of Common and Class B Common shares outstanding 9,294 9,294 9,294 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 B 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 January 2, 1994 $10,090 $ 1,965 $139,322 $ (98,488) $ (5,614) $ 17,646 Net income 10,898 Cash dividends declared (6,971) Balance on October 2, 1994 $10,090 $ 1,965 $132,351 $ (87,590) $ (5,614) $ 17,646 Balance on January 1, 1995 $10,090 $ 1,965 $130,028 $ (86,552) $ (3,904) $ 17,646 Net income 14,650 Cash dividends declared (6,971) Balance on October 1, 1995 $10,090 $ 1,965 $123,057 $ (71,902) $ (3,904) $ 17,646 </TABLE> See Accompanying Notes to Consolidated Financial Statements
Coca-Cola Bottling Co. Consolidated CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) In Thousands <TABLE> <CAPTION> Nine Months 1995 1994 <S> <C> <C> Cash Flows from Operating Activities Net income $14,650 $10,898 Adjustments to reconcile net income to net cash provided by operating activities: Effect of accounting change 2,211 Depreciation expense 19,756 17,659 Amortization of goodwill and intangibles 9,173 9,235 Deferred income taxes 9,738 9,856 (Gains) losses on sale of property, plant and equipment 1,037 (1,432) Amortization of debt costs 344 341 Undistributed (earnings) loss of Piedmont Coca-Cola Bottling Partnership 1,100 (401) Increase in current assets less current liabilities (18,084) (24,361) Increase in other noncurrent assets (1,076) (2,353) Increase (decrease) in other noncurrent liabilities 6,944 (301) Other 132 490 Total adjustments 29,064 10,944 Net cash provided by operating activities 43,714 21,842 Cash Flows from Financing Activities Proceeds from the issuance of long-term debt 21,246 Payments on long-term debt (13,144) (1,213) Cash dividends paid (6,971) (6,971) Other 1,721 (1,260) Net cash provided by (used in) financing activities (18,394) 11,802 Cash Flows from Investing Activities Additions to property, plant and equipment (26,304) (36,748) Proceeds from the sale of property, plant and equipment 1,895 4,042 Net cash used in investing activities (24,409) (32,706) Net increase in cash 911 938 Cash at beginning of period 1,812 1,262 Cash at end of period $ 2,723 $ 2,200 </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. Except for the accounting change discussed in Note 2, 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 January 1, 1995 filed with the Securities and Exchange Commission. Certain prior year amounts have been reclassified to conform to current year classifications. 2. Accounting Change In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). SFAS 112 requires the accrual, during the years that employees render service, of the expected cost of providing postemployment benefits if certain criteria are met. The Company adopted the provisions of SFAS 112 in the first quarter of 1994, effective January 3, 1994. As a result, the Company recorded a one-time, after-tax charge of $2.2 million. This charge appears within the caption "Effect of accounting change."
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 3. 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: Third Quarter Nine Months In Thousands 1995 1994 1995 1994 Net sales $ 59,396 $ 51,837 $ 163,856 $ 149,470 Gross margin 23,627 22,534 66,337 64,313 Income from operations 1,777 2,576 5,312 6,397 Net income (loss) (758) 1,612 (2,200) 802 4. Inventories Inventories are summarized as follows: Oct. 1, Jan. 1, Oct. 2, In Thousands 1995 1995 1994 Finished products $20,429 $17,621 $18,272 Manufacturing materials 11,585 12,638 10,444 Used bottles and cases 1,433 1,612 1,604 Total inventories $33,447 $31,871 $30,320
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 5. Long-Term Debt Long-term debt is summarized as follows: <TABLE> <CAPTION> Fixed(F) or Interest Variable Interest Oct. 1, Jan. 1, Oct. 2, In Thousands Maturity Rate (V) Rate Paid 1995 1995 1994 <S> <C> <C> <C> <C> <C> <C> <C> Lines of Credit 1997 5.93% - V Varies $ 85,601 $ 93,420 $114,601 6.83% Term Loan Agreement 2000 6.38% V Semi- 60,000 60,000 60,000 annually Term Loan Agreement 2001 6.39% V Semi- 60,000 60,000 60,000 annually Medium-Term Notes 1998 6.39% V Quarterly 10,000 10,000 10,000 Medium-Term Notes 1999 7.99% F Semi- 66,500 66,500 66,500 annually Medium-Term Notes 2000 10.00% F Semi- 57,000 57,000 57,000 annually Medium-Term Notes 2002 8.56% F Semi- 66,500 66,500 66,500 annually Notes acquired in Sunbelt acquisition 2001 8.00% F Quarterly 217 5,327 5,421 Capital leases and other notes payable 1995 - 6.85% - F Varies 14,183 14,524 14,746 2001 12.00% 420,001 433,271 454,768 Less: Portion of long- term debt payable within one year 174 300 376 Long-term debt $419,827 $432,971 $454,392 </TABLE>
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 5. Long-Term Debt (cont.) As of October 1, 1995, the Company was in compliance with all of the covenants of its various borrowing agreements. It is the Company's intent to renew its lines of credit, commercial paper borrowings 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. A $100 million commercial paper program was established in January 1990 with funds to be used for general corporate purposes. There were no balances outstanding under this program on October 1, 1995, January 1, 1995 or October 2, 1994. In June 1992, the Company entered into a three-year arrangement under which it has the right to sell an undivided interest in a designated pool of trade accounts receivable for up to a maximum of $40 million. The Company had sold trade receivables of $35 million as of October 1, 1995, January 1, 1995 and October 2, 1994. This arrangement has been amended to extend the arrangement to June 1998 on terms substantially similar to those previously in place. 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 will be used principally for refinancing of existing indebtedness with the remainder to be used for general corporate purposes. As of November 10, 1995, $36.3 million of medium-term notes due 1999 with a coupon rate of 7.99% and $26 million of medium-term notes due 2000 with a coupon rate of 10.00% had been repurchased. The Company has guaranteed a portion of the debt for two cooperatives in which the Company is a member. The amounts guaranteed were $34 million, $31 million and $27 million as of October 1, 1995, January 1, 1995 and October 2, 1994, respectively.
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 6. Derivative Financial Instruments The Company uses derivative financial instruments to cost effectively 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 has entered into interest rate swaps that resulted in weighted average interest rates for the debt portfolio of approximately 7.3%, 7.0% and 6.6% as of October 1, 1995, January 1, 1995 and October 2, 1994, respectively. The Company's overall weighted average interest rate on its long-term debt increased from an average of 6.6% during the first nine months of 1994 to an average of 7.4% during the first nine months of 1995. After taking into account the effect of all of the interest rate swap activities, approximately 53%, 47% and 55% of the total debt portfolio was subject to changes in short-term interest rates as of October 1, 1995, January 1, 1995 and October 2, 1994, respectively. A rate increase of 1% would have increased interest expense for the first nine months of 1995 by approximately $1.7 million and net income for the nine months ended October 1, 1995 would have been reduced by approximately $1 million. Interest coverage as of October 1, 1995 would have been 3.0 times (versus 3.2 times) if interest rates had increased by 1%. Derivative financial instruments were as follows: <TABLE> <CAPTION> Oct. 1, 1995 Jan. 1, 1995 Oct. 2,1994 Remaining Remaining Remaining In Thousands Amount Term Amount Term Amount Term <S> <C> <C> <C> <C> <C> <C> Interest rate swaps-floating $ 60,000 8 years $221,600 6-9 years $221,600 6-9 years Interest rate swaps-fixed 60,000 8 years 215,000 1-9 years 215,000 1-9 years Interest rate caps - - 110,000 .5 year 110,000 1 year </TABLE>
Coca-Cola Bottling Co. Consolidated Notes to Consolidated Financial Statements (Unaudited) 6. Derivative Financial Instruments (cont.) The table below summarizes interest rate swap activity. Third Quarter Nine Months In Thousands 1995 1995 Total swaps, beginning of period $ 383,600 $ 436,600 New swaps - 25,000 Terminated swaps (263,600) (341,600) Expired swaps - - Total swaps, end of period $ 120,000 $ 120,000 Deferred gains on terminated interest rate swap contracts were $6.2 million, $4.2 million and $4.4 million on October 1, 1995, January 1, 1995 and October 2, 1994, respectively. The carrying amounts and fair values of the Company's balance sheet and off-balance-sheet instruments were as follows: Oct. 1, 1995 Jan. 1, 1995 Carrying Fair Carrying Fair In Thousands Amount Value Amount Value Balance Sheet Instruments Public debt $200,000 $217,209 $200,000 $201,119 Non-public variable rate long-term debt 205,601 205,601 213,420 213,420 Non-public fixed rate long-term debt 14,400 15,190 19,851 19,030 Off-Balance-Sheet Instruments Interest rate swaps (5,102) (11,123) 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) 7. Supplemental Disclosures of Cash Flow Information Changes in current assets and current liabilities affecting cash, net of the effect of an accounting change, were as follows: Nine Months In Thousands 1995 1994 Accounts receivable, trade, net $ (3,424) $ (2,562) Due from Piedmont Coca-Cola Bottling Partnership (74) 547 Accounts receivable, other 832 4,882 Inventories (1,576) (2,787) Prepaid expenses and other current assets (484) (1,944) Portion of long-term debt payable within one year (126) (335) Accounts payable and accrued liabilities (6,061) (18,755) Accrued compensation (782) 1,108 Accrued interest payable (6,389) (4,515) Increase in current assets less current liabilities $ (18,084) $ (24,361)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction The following discussion presents management's analysis of the results of operations for the third quarter and first nine months of 1995 compared to the third quarter and first nine months of 1994 and changes in financial condition from October 2, 1994 and January 1, 1995 to October 1, 1995. The Company reported net income of $4.6 million or $.50 per share for the third quarter of 1995 compared with net income of $4.9 million or $.53 per share for the same period in 1994. For the first nine months of 1995, net income was $14.7 million or $1.58 per share compared with net income of $10.9 million or $1.17 per share for the first nine months of 1994. In the first quarter of 1994, the Company recorded a one-time, after-tax noncash charge of $2.2 million or $.24 per share related to the adoption of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." 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 For the third quarter of 1995, net franchise sales increased approximately 13% over the same quarter in 1994, reflecting higher net selling prices and a volume increase of slightly more than 9%. Net franchise sales for the first nine months of 1995 increased approximately 9% over the 1994 period. This increase was due principally to increased net selling prices but also reflected a volume increase of almost 4%. Selling prices were increased in early 1995 in order to cover the anticipated increased cost of raw materials, primarily aluminum cans. In the third quarter of 1995, gross margin on net franchise sales increased by approximately 10.5% over the same period in 1994. As a percentage of net franchise sales, gross margin was 46.6%, a slight decrease from the same measurement for the 1994 period. For the first nine months of 1995, gross margin on net franchise sales increased approximately 8.5% over the comparable 1994 period and was slightly lower as a percentage of net franchise sales. Cost of goods sold related to net franchise sales increased due to increases in packaging costs, but selling price increases more than offset the increased cost of goods sold. Although the cost of cans increased during the first nine months of 1995, agreements currently in place with suppliers ensure that the cost of cans will not increase further this year and may decline from current pricing if aluminum ingot prices decrease below a specified level. Effective November 7, 1995, the Company entered into a can supply agreement with a major can supplier. This agreement, which has an initial term of five years commencing January 1, 1996, will effectively place upper and lower limits on the cost of cans for certain production facilities which the Company owns or manages (approximately 70% of the Company's total can requirements) during such period. The Company intends to conclude similar agreements with one or more suppliers with respect to the remainder of its can requirements. Plastic bottles have also contributed to the increase in cost of goods sold. Average resin prices
increased more than 10% during the first nine months of 1995 as compared with the first nine months of 1994. For the third quarter of 1995, selling expenses increased almost 11.5% over the comparable 1994 period. Selling expenses increased 7.6% for the first nine months of 1995 as compared to the first nine months of 1994. As a percentage of net sales, selling expenses increased from 19.9% in the third quarter of 1994 to 20.5% in the third quarter of 1995 and from 20.2% during the first nine months of 1994 to 20.6% during the first nine months of 1995. Selling expenses related to net franchise sales increased approximately 14% and 10% over the 1994 third quarter and nine month periods, respectively, due primarily to higher employment costs and increased expenses related to sales development programs and marketing costs. During the third quarter of 1995, selling expenses also increased due to a number of under the crown promotions. The impact of these promotions is reflected in the third quarter volume increase. The Company has begun a multi-year program to increase volume of certain carbonated beverage products of The Coca-Cola Company through various marketing efforts. General and administrative expenses increased 2.8% for the first nine months of 1995 over the same 1994 period due to increased employment costs. The increased employment costs were partially offset by reductions in other general and administrative expenses. As a percentage of net sales, general and administrative expenses declined for both the first nine months and third quarter of 1995 as compared to the same periods in 1994. Depreciation expense increased approximately 11.9% between the first nine months of 1994 and the first nine months of 1995. The third quarter 1995 depreciation expense increased 15.1% over the comparable 1994 period. These increases reflect the high level of capital expenditures during 1994 and the timing of placing assets in service. During 1994, certain capital improvements were made at the manufacturing facilities to produce new packages. Interest expense increased 7.9% from the first nine months of 1994 to the first nine months of 1995 due to higher short-term interest rates. During the third quarter of 1995, interest expense increased 3.9% over the same period in 1994. Outstanding long-term debt decreased approximately $35 million from October 2, 1994 to October 1, 1995. The Company's weighted average interest rate increased from an average of 6.6% during the first nine months of 1994 to an average of 7.4% during the first nine months of 1995. The change in "other income (expense), net" between the first nine months of 1994 and the first nine months of 1995 was due primarily to a third quarter 1994 gain of approximately $1.3 million on the sale of one of the Company's aircraft and a first quarter 1994 gain on the sale of an idle production facility. For the first nine months of 1995, losses of approximately $1.0 million on sales of property, plant and equipment were included in "other income (expense), net." Gains of approximately $1.4 million on sales of property, plant and equipment were included in "other income (expense), net" for the first nine months of 1994. In addition, the discount on sales of trade accounts receivable increased almost $.6 million from the first nine months of 1994 to the first nine months of 1995 due to higher short-term rates associated with this arrangement.
Changes in Financial Condition Working capital increased $19.0 million from January 1, 1995 and $3.6 million from October 2, 1994 to October 1, 1995. The increase from January 1, 1995 was due principally to scheduled payments of accrued interest and seasonal increases in trade accounts receivable and inventories. The increased cost of cans and bottles also contributed to the higher inventory balances. The increase in working capital from October 2, 1994 was due to volume related increases in accounts receivable and inventories as well as increased costs of items held in inventory. Capital expenditures in the first nine months of 1995 were $26.3 million compared to $36.7 million in the first nine months of 1994. Expenditures for 1995 capital additions are expected to be significantly lower than expenditures for 1994 capital additions. In 1995, the Company resumed its vehicle leasing program. Additions to the Company's fleet were purchased rather than leased during 1994. Long-term debt decreased approximately $35 million from October 2, 1994 and more than $13 million from January 1, 1995. During this period, cash flow has exceeded dividend, capital expenditure and working capital requirements. As of October 1, 1995, the Company was in compliance with all of the covenants of its various borrowing agreements. 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, the informal lines of credit and commercial paper program do not exceed the amount available under the Company's $170 million revolving credit facility, they are classified as noncurrent liabilities. As of October 1, 1995, the Company had no amounts outstanding under the revolving credit facility or the commercial paper program and had approximately $86 million outstanding under the informal lines of credit. The Company had sold trade accounts receivable of $35 million as of October 1, 1995, January 1, 1995 and October 2, 1994. The Company uses derivative financial instruments to modify risk from interest rate fluctuations. Derivative financial instruments are not used for trading purposes. As of October 1, 1995, the debt portfolio had a weighted average interest rate of approximately 7.3% and approximately 53% of the total portfolio of $420 million was subject to changes in short-term interest rates. 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 will be used principally for refinancing of existing indebtedness with the remainder to be used for general corporate purposes. As of November 10, 1995, $36.3 million of medium-term notes due 1999 with a coupon rate of 7.99% and $26 million of medium-term notes due 2000 with a coupon rate of 10.00% had been repurchased. These refinancing activities extend the Company's debt maturities and reduce future interest expense. In the fourth quarter of 1995, the Company expects to record an extraordinary charge related to the premuium associated with the debt repurchases. 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 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Description 1.1 Underwriting Agreement, dated November 1, 1995, among the Company, Citicorp Securities, Inc. and Salomon Brothers Inc. 4.1 Form of the Company's 6.85% Debentures Due 2007. 10.1 Lease Funding No. 95008, dated as of July 18, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.2 Lease Funding No. 95009, dated as of August 14, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.3 Lease Funding No. 95010, dated as of September 8, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.4 Lease Schedule No. 012, dated as of June 21, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.5 Lease Schedule No. 013, dated as of June 21, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.6 Lease Schedule No. 014, dated as of July 27, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.7 Lease Schedule No. 015, dated as of August 7, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.8 Lease Schedule No. 016, dated as of August 24, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.9 Lease Schedule No. 017, dated as of August 24, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.10 Lease Schedule No. 18-Revised, dated as of August 29, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.11 Lease Schedule No. 019, dated as of August 7, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles.
Item 6. Exhibits and Reports on Form 8-K (Cont.) 10.12 Lease Schedule No. 020, dated as of August 7, 1995, of a Lease Agreement dated as of December 15, 1994 between the Company and BA Leasing & Capital Corporation covering various vehicles. 10.13 Lease Funding No. 95011, dated as of September 15, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.14 Lease Funding No. 95012, dated as of October 10, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.15 Lease Funding No. 95013, dated as of October 18, 1995, of a Master Equipment Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.16 Can Supply Agreement, dated November 7, 1995, between the Company and American National Can Company. 27 Financial data schedule for period ended October 1, 1995. (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: November 14, 1995 By: /s/ David V. Singer David V. Singer Principal Financial Officer of the Registrant and Vice President - Chief Financial Officer