ITEM 1 -- BUSINESS INTRODUCTION AND RECENT DEVELOPMENTS Coca-Cola Bottling Co. Consolidated ("the Company"), a Delaware corporation, is engaged in the production, marketing and distribution of carbonated soft drinks, primarily products of The Coca-Cola Company, Atlanta, Georgia ("The Coca-Cola Company"). The Company has been in the soft drink manufacturing business since 1902. Prior to 1984, the Company's business was concentrated in North Carolina. In 1984, the Company undertook a major expansion program, primarily through acquisitions. The following information summarizes significant acquisitions from 1984 through 1993, as well as other major developments. On July 16, 1984, the Company acquired Federal Coca-Cola Bottling Company of Columbus, Georgia; on October 19, 1984, it acquired the Pageland Coca-Cola Bottling Works; and on December 31, 1984, it acquired the Waycross-Douglas Bottling Company. On February 8, 1985, the Company acquired the bottling subsidiaries of Wometco Coca-Cola Bottling Company which gave the Company franchise rights to produce, market and distribute soft drink products principally in parts of Tennessee, Virginia and Alabama. On January 9, 1986, the Company acquired eight bottlers of Coca-Cola located in South Georgia, known collectively as the Haley Group. Additionally, on February 24, 1986, the Company acquired the bottling operations of Panama City Coca-Cola Bottling Company and Quincy Coca-Cola Bottling Company, each of which is located in Florida. On March 3, 1986, the Company sold Waycross-Douglas Coca-Cola Bottling Company and McRae Coca-Cola Bottling Company. In June 1987, the Company sold 1,355,033 shares of newly issued Common Stock and 269,158 shares of Class B Common Stock to The Coca-Cola Company. The proceeds from the sale were used to repay debt. On July 15, 1987, the Company sold its Canadian subsidiary located in Vancouver, British Columbia. Net proceeds from the sale were used to repay debt. On January 27, 1989, the Company acquired all of the outstanding capital stock of The Coca-Cola Bottling Company of West Virginia, Inc. from The Coca-Cola Company in exchange for 1.1 million shares of the Company's Common Stock and approximately $4 million in cash, as adjusted. Following this transaction, The Coca-Cola Company now owns approximately a 30% economic interest and a 23% voting interest in the Company. The acquired West Virginia franchise areas include warehouses in Bluefield, Charleston, Craigsville, Logan, Clarksburg, Morgantown, Huntington and Parkersburg, West Virginia and Pikeville, Kentucky. On January 27, 1989, the Company executed new Bottle Contracts, Allied Bottle Contracts and a Supplementary Agreement with The Coca-Cola Company, as further detailed below in Item 1. On April 20, 1990, the Company acquired all of the outstanding capital stock of Coca-Cola Bottling Works of Jackson, Incorporated and Jackson Coca-Cola Bottling Company, Inc. (collectively "Jackson") in Jackson, Tennessee pursuant to a merger of Jackson into a wholly owned subsidiary of the Company. On December 20, 1991, the Company acquired all of the outstanding capital stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately $15.2 million in cash and Company debt. In connection with this acquisition, Sunbelt repaid approximately $202.5 million of its outstanding indebtedness with funds supplied by the Company. In connection with the Sunbelt acquisition, total assets acquired were approximately $304 million. 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 certain 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 substantially all of the soft drink products for Piedmont and manages the operations of Piedmont pursuant to a Management Agreement. The term of the Management Agreement is 25 years, subject to early termination in the event of a "Change in Control" as defined therein, a termination of the Partnership or a material default by either party. The Partnership has an initial term of 25 years subject to early termination as a result of any Dissolving Event, as defined in the Partnership Agreement. Each Partner's Partnership Interest is subject to certain limitations on transfers, rights of first refusal and other purchase rights upon the occurrence of certain events. Subsidiaries of the Company made an initial capital contribution to Piedmont of $70 million in the aggregate. The capital contribution made by such subsidiaries was composed of approximately $21.7 million in cash and of bottling operations and certain assets used in connection with the
Company's Wilson, NC and Greenville and Beaufort, SC territories. The cash contributed to Piedmont by the Company's subsidiaries was provided from the Company's available credit facilities. The Company sold other territories to Piedmont for an aggregate purchase price of approximately $118 million. Proceeds from the sale of territories to Piedmont, net of the Company's cash contribution, totaled approximately $96 million and were used to reduce the Company's long-term debt. The Company considers acquisition opportunities for additional territories on an ongoing basis. To achieve its goals, further purchases and sales of franchise rights and entities possessing such rights and other related transactions designed to facilitate such purchases and sales may occur. GENERAL In its soft drink operations, the Company holds franchises under which it produces and markets, in certain regions, carbonated soft drink products of The Coca-Cola Company, including Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola classic, diet Coke, caffeine free diet Coke, cherry Coke, TAB, Sprite, diet Sprite, Mello Yello, diet Mello Yello, Mr. PiBB, Minute Maid orange and diet Minute Maid orange sodas. The Company also distributes and markets PowerAde in certain of its markets. The Company produces and markets Dr Pepper in most of its regions. Various other products, including Welch's flavors, Seagrams' products, Barq's Root Beer and Sundrop are produced and marketed in one or more of the Company's regions under franchise agreements with the companies that manufacture the concentrate for those beverages. In addition, the Company also produces soft drinks for other bottlers of Coca-Cola. The Company's principal soft drink is Coca-Cola classic. During the last three fiscal years, sales of products under the trademark Coca-Cola have accounted for more than half of the Company's soft drink sales. In total, the products of The Coca-Cola Company accounted for approximately 85% of the Company's soft drink sales during fiscal 1993. FRANCHISES The Company's franchises from The Coca-Cola Company entitle the Company to produce and market The Coca-Cola Company's soft drinks in bottles, cans and five gallon pressurized premix containers. The Company is one of many companies holding such franchises from The Coca-Cola Company. The Coca-Cola Company is the sole owner of the secret formulas pursuant to which the primary components (either concentrates or syrups) of its soft drinks are manufactured. The concentrates, when mixed with water and sweetener, produce syrup which, when mixed with carbonated water, produce the soft drinks known as "Coca-Cola," "Coca-Cola classic" or "Coke." Similar processes are used to produce the other soft drinks marketed and distributed by the Company. With limited exceptions, the Company purchases concentrates and syrups from The Coca-Cola Company and natural sweeteners from other sources. No royalty or other compensation is paid under the franchise agreements to The Coca-Cola Company for the Company's right to use in its territories the trade names and trademarks "Coca-Cola," "Coca-Cola classic" and "Coke" and associated patents, copyrights, designs and labels, all of which are owned by The Coca-Cola Company. BOTTLE CONTRACTS. The Company is party to bottle contracts with The Coca-Cola Company (the "Bottle Contracts") which provide that the Company will purchase its entire requirement of concentrates and syrups for Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola classic, cherry Coke, diet Coke, caffeine free diet Coke and diet cherry Coke (together, the "Coca-Cola Trademark Beverages") from The Coca-Cola Company. The Company has the exclusive right to distribute Coca-Cola Trademark Beverages for sale in its territories in authorized containers of the nature currently used by the Company, which include cans and returnable and non-returnable bottles. The Coca-Cola Company may determine from time to time what containers of this type to authorize for use by the Company. The price The Coca-Cola Company may charge for syrup or concentrate under the Bottle Contracts is set by The Coca-Cola Company from time to time. Except as provided in the Supplementary Agreement described below, there are no limitations on prices for concentrate or syrup. Consequently, the prices at which the Company purchases concentrates and syrup under the Bottle Contracts may vary materially from the prices it has paid during the periods covered by the financial information included in this report. Under the Bottle Contracts, the Company is obligated to maintain such plant, equipment, staff and distribution facilities as are required for the manufacture, packaging and distribution of the Coca-Cola Trademark Beverages in authorized containers, and in sufficient quantities to satisfy fully the demand for these beverages in its territories; to undertake adequate quality control measures and maintain sanitation standards prescribed by The Coca-Cola Company; to develop, to stimulate, and to satisfy fully the demand for Coca-Cola Trademark Beverages and to use all approved means, and to spend such funds on advertising and other forms of marketing, as may be reasonably required to meet that objective; and to maintain such sound
financial capacity as may be reasonably necessary to assure performance by the Company and its affiliates of their obligations to The Coca-Cola Company. The Bottle Contracts require the Company to submit to The Coca-Cola Company each year its plans for marketing, management and advertising with respect to the Coca-Cola Trademark Beverages for the ensuing year. Such plans must demonstrate that the Company has the financial capacity to perform its duties and obligations to The Coca-Cola Company under the Bottle Contracts. The Company must obtain The Coca-Cola Company's approval of those plans, which approval may not be unreasonably withheld, and if the Company carries out its plan in all material respects, it will have satisfied its contractual obligations. Failure to carry out such plans in all material respects would constitute an event of default that, if not cured within 120 days of notice of such failure, would give The Coca-Cola Company the right to terminate the Bottle Contracts. If the Company at any time fails to carry out a plan in all material respects with respect to any geographic segment (as defined by The Coca-Cola Company) of its territory, and if that failure is not cured within six months of notice of such failure, The Coca-Cola Company may reduce the territory covered by the applicable Bottle Contract by eliminating the portion of the territory with respect to which the failure has occurred. The Coca-Cola Company has no obligation under the Bottle Contracts to participate with the Company in expenditures for advertising and marketing. As it has in the past, The Coca-Cola Company may contribute to such expenditures and undertake independent advertising and marketing activities, as well as cooperative advertising and sales promotion programs which require mutual cooperation and financial support of the Company. The future levels of marketing support and promotional funds provided by The Coca-Cola Company may vary materially from the levels provided during the periods covered by the financial information included in this report. The Coca-Cola Company has the right to reformulate any of the Coca-Cola Trademark Beverages and to discontinue any of the Coca-Cola Trademark Beverages, subject to certain limitations, so long as all Coca-Cola Trademark Beverages are not discontinued. The Coca-Cola Company may also introduce new beverages under the trademarks "Coca-Cola" or "Coke" or any modification thereof, and in that event the Company would be obligated to manufacture, package, distribute and sell the new beverages with the same duties as exist under the Bottle Contracts with respect to Coca-Cola Trademark Beverages. If the Company acquires the right to manufacture and sell Coca-Cola Trademark Beverages in any additional territory, such territory automatically will be deemed to be included in the territories covered by the existing Bottle Contracts, and any existing agreement with respect to the acquired territory automatically shall be amended to conform to the terms of the existing Bottle Contracts. In addition, if the Company acquires control, directly or indirectly, of any bottler of Coca-Cola Trademark Beverages, or any party controlling a bottler of Coca-Cola Trademark Beverages, the Company must cause the acquired bottler to amend its franchises for the Coca-Cola Trademark Beverages to conform to the terms of the Bottle Contracts. The Bottle Contracts are perpetual, subject to termination by The Coca-Cola Company in the event of default by the Company. Events of default by the Company include (1) the Company's insolvency, bankruptcy, dissolution, receivership or similar conditions; (2) the Company's disposition of any interest in the securities of any bottling subsidiary; (3) termination of any agreement regarding the manufacture, packaging, distribution or sale of Coca-Cola Trademark Beverages between The Coca-Cola Company and any person that controls the Company; (4) any material breach of any obligation occurring under the Bottle Contracts (including, without limitation, failure to make timely payment for any syrup or concentrate or of any other debt owing to The Coca-Cola Company, failure to meet sanitary or quality control standards, failure to comply strictly with manufacturing standards and instructions, failure to carry out an approved plan as described above, and failure to cure a violation of the terms regarding imitation products), that remains uncured for 120 days after notice by The Coca-Cola Company; or (5) disposition of voting securities of any subsidiary without the consent of The Coca-Cola Company. In addition, upon termination of the Bottle Contracts for any reason, The Coca-Cola Company, at its discretion, may also terminate any other agreements with the Company regarding the manufacture, packaging, distribution, sale or promotion of soft drinks, including the Allied Bottle Contracts described elsewhere herein. The Company is prohibited from assigning, transferring or pledging its Bottle Contracts, or any interest therein, whether voluntarily or by operation of law, without the prior consent of The Coca-Cola Company. Moreover, the Company may not enter into any contract or other arrangement to manage or participate in the management of any other Coca-Cola bottler without the prior consent of The Coca-Cola Company. The Coca-Cola Company may automatically amend the Bottle Contracts if 80% of the domestic bottlers who are parties to agreements with The Coca-Cola Company containing substantially the same terms as the Bottle Contracts, which bottlers
purchased for their own account 80% of the syrup and equivalent gallons of concentrate for Coca-Cola Trademark Beverages purchased for the account of all such bottlers, agree that their bottle contracts shall be likewise amended. SUPPLEMENTARY AGREEMENT. The Company and The Coca-Cola Company are also parties to a Supplementary Agreement (the "Supplementary Agreement") that modifies some of the provisions of the Bottle Contracts. The Supplementary Agreement provides that The Coca-Cola Company will exercise good faith and fair dealing in its relationship with the Company under the Bottle Contracts; offer marketing support and exercise its rights under the Bottle Contracts in a manner consistent with its dealings with comparable bottlers; offer to the Company any written amendment to the Bottle Contracts (except amendments dealing with transfer of ownership) which it offers to any other bottler in the United States; and, subject to certain limited exceptions, sell syrups and concentrates to the Company at prices no greater than those charged to other bottlers which are parties to contracts substantially similar to the Bottle Contracts. The Supplementary Agreement permits transfers of the Company's capital stock that would otherwise be limited by the Bottle Contracts. ALLIED BOTTLE CONTRACTS. Other contracts with The Coca-Cola Company (the "Allied Bottle Contracts") grant similar exclusive rights to the Company with respect to the distribution of Sprite, Mr. PiBB, Mello Yello, diet Mello Yello, Fanta, TAB, diet Sprite, sugar free Mr. PiBB, Fresca, Minute Maid orange and diet Minute Maid orange sodas (the "Allied Beverages") for sale in authorized containers in its territories. These contracts contain provisions that are similar to those of the Bottle Contracts with respect to pricing, authorized containers, planning, quality control, trademark and transfer restrictions and related matters. Each Allied Bottle Contract has a term of ten years and is renewable by the Company for an additional ten years at the end of each ten year period, but is subject to termination in the event of (1) the Company's insolvency, bankruptcy, dissolution, receivership or similar condition; (2) termination of the Company's Bottle Contract covering the same territory by either party for any reason; and (3) any material breach of any obligation of the Company under the Allied Bottle Contract that remains uncured for 120 days after notice by The Coca-Cola Company. POST-MIX RIGHTS. The Company also has the non-exclusive right to sell Coca-Cola and other fountain syrups ("post-mix syrup") of The Coca-Cola Company. OTHER BOTTLING AGREEMENTS. The bottling agreements from most other soft drink franchisors are similar to those described above in that they are renewable at the option of the Company and the franchisors at prices unilaterally fixed by the franchisors. They also contain similar restrictions on the use of trademarks, approved bottles, cans and labels and sale of imitations or substitutes as well as termination for cause provisions. Sales of soft drinks by the Company under these agreements represented approximately 15% of the Company's sales for fiscal 1993. The territories covered by the Allied Bottle Contracts and by bottling agreements for products of franchisors other than The Coca-Cola Company in most cases correspond with the territories covered by the Bottle Contracts. The variations do not have a material effect on the business of the Company taken as a whole. MARKETS AND PRODUCTION AND DISTRIBUTION FACILITIES As of March 15, 1994, the Company held franchises covering the majority of central, northern and western North Carolina, and portions of Alabama, Mississippi, Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Georgia and Florida. The total population within the Company's Coca-Cola franchise area is approximately 11.5 million. As of March 15, 1994, the Company operated in six principal geographical regions. Certain information regarding each of these markets follows: 1. NORTH CAROLINA. This region includes the majority of central and western North Carolina, including Raleigh, Greensboro, Winston-Salem, High Point, Hickory, Asheville, Fayetteville and Charlotte and the surrounding areas. The region has an estimated population of 5.1 million. Production/distribution facilities are located in Charlotte and eighteen other distribution facilities are located in the region. 2. SOUTH ALABAMA. This region includes a portion of southwestern Alabama, including the area surrounding Mobile, and a portion of southeastern Mississippi. The region has an estimated population of 800,000. A production/distribution facility is located in Mobile, and five other distribution facilities are located in the region. 3. SOUTH GEORGIA. This region includes a small portion of eastern Alabama, a portion of southwestern Georgia surrounding Columbus, Georgia, in which a distribution facility is located, and a portion of the Florida Panhandle, including Panama
City and Quincy. Four other distribution facilities are located in the region. This region has an estimated population of 900,000. 4. MIDDLE TENNESSEE. This region includes a portion of central Tennessee, including areas surrounding Nashville, and a small portion of southern Kentucky. The region has an estimated population of 1.5 million. A production/distribution facility is located in Nashville and seven other distribution facilities are located in the region. 5. WESTERN VIRGINIA. This region includes most of southwestern Virginia, including areas surrounding Roanoke, a portion of the southern Piedmont of Virginia, a portion of northeastern Tennessee and a portion of southeastern West Virginia. The region has an estimated population of 1.4 million. A production/distribution facility is located in Roanoke and seven other distribution facilities are located in the region. 6. WEST VIRGINIA. This region includes most of the state of West Virginia, a portion of eastern Kentucky, a portion of eastern Ohio and a portion of southwestern Pennsylvania. The region has an estimated population of 1.8 million. There are eleven distribution facilities located in the region. The Company owns 100% of the operations in each of the regions listed. The Company sold the majority of its South Carolina franchise territory to Piedmont in July 1993. Pursuant to a management agreement, the Company produces substantially all of the soft drink products for Piedmont. During the past several years, the Company has made an effort to concentrate its soft drink production into fewer facilities for efficiency. Since May 1984, four major production centers have been closed, one in the North Carolina region, one in the Western Virginia region and two in the South Georgia region. A new production center in Roanoke became fully operational in December 1985. As a result of the Sunbelt acquisition, the Company acquired a production center in Morganton, North Carolina. This production center was closed in April 1992. Additional changes in the number and location of production and distribution facilities may be desirable in the future in response to changing market conditions and changes in the Company's franchise territories. In addition to producing bottled and canned soft drinks for their own franchise territories, each production facility also produces some products for sale by other Coca-Cola bottlers. With the exception of the Company's production of soft drink products for Piedmont, this contract production is currently not material in the Company's production centers. RAW MATERIALS In addition to concentrates obtained by the Company from The Coca-Cola Company and other concentrate companies for use in its soft drink manufacturing, the Company also purchases sweeteners, carbon dioxide, glass and plastic bottles, cans, closures, pre-mix containers and other packaging materials as well as equipment for the production, distribution and marketing of soft drinks. Except for sweetener and plastic bottles, the Company purchases its raw materials from multiple suppliers. The Company purchases substantially all of its plastic bottles (20 ounce, one liter, two liter and three liter sizes) from manufacturing plants which are owned and operated by two cooperatives of southern Coca-Cola bottlers, including the Company. The Company joined the southwest cooperative in February 1985 following its acquisition of the bottling subsidiaries of Wometco Coca-Cola Bottling Company. The Company joined the southeast cooperative in 1984. None of the materials or supplies used by the Company is in short supply, although the supply of specific materials could be adversely affected by strikes, weather conditions, governmental controls or national emergency conditions. MARKETING The Company's soft drink products are sold and distributed directly by its employees to retail stores and other outlets, including food markets, institutional accounts and vending machine outlets. During 1993, approximately 75% of the Company's total sales were made in the take-home channel through supermarkets, convenience stores and other retail outlets. The remaining sales were made in the cold drink channel, primarily through dispensing machines, owned either by the Company, retail outlets or third party vending companies. New product introductions, packaging changes and sales promotions have been major competitive techniques in the soft drink industry in recent years and have required and are expected to continue to require substantial expenditures. New product introductions in recent years include: caffeine free Coca-Cola classic; caffeine free diet Coke; cherry Coke; diet Mello Yello; Minute Maid orange; diet Minute Maid orange; and PowerAde. New product introductions have entailed increased
operating costs for the Company resulting from special marketing efforts, obsolescence of replaced items and occasionally higher raw materials costs. After several new package introductions in recent years, the Company now sells its soft drink products in a variety of returnable and non-returnable bottles, both glass and plastic, and in cans, in varying proportions from market to market. There may be as many as eight or more different packages for Coca-Cola classic, in addition to pre-mix containers and post-mix syrup packages, within a single geographical area. Excluding post-mix syrup sales, physical unit sales of soft drinks during fiscal year 1993 were approximately 52% cans, 45% non-returnable bottles, 2% pre-mix and 1% returnable bottles. Advertising in various media, primarily television and radio, is relied upon extensively in the marketing of the Company's soft drinks. The Coca-Cola Company and Dr Pepper Company have joined the Company in making substantial expenditures in cooperative advertising in the Company's marketing areas. The Company also benefits from national ad-vertising programs conducted by The Coca-Cola Company and Dr Pepper Company. In addition, the Company expends substantial funds on its own behalf for extensive local sales promotions of the Company's soft drink products. These expenses are partially offset by marketing funds which the concentrate companies provide to the Company in support of a variety of marketing programs, such as price promotions, merchandising programs and point-of-sale displays. The substantial outlays which the Company makes for advertising are generally regarded as necessary to maintain or increase sales volume, and any curtailment of the funding provided by The Coca-Cola Company for advertising or marketing programs which benefit the Company could have a materially adverse effect on the business of the Company. SEASONALITY A larger than average percentage of the Company's total sales occurs during peak periods, which are normally May, June, July and August. The Company has adequate production capacity to meet sales demands during these peak periods. COMPETITION The soft drink industry is highly competitive. The Company's competitors include several large soft drink manufacturers engaged in the distribution of nationally advertised products, as well as similar companies which market lesser-known soft drinks in limited geographical areas and manufacturers of chain store private brand soft drinks. In each region in which the Company operates, between 75% and 95% of carbonated soft drink sales in bottles, cans and pre-mix containers are accounted for by the Company and its principal competition, which in each region includes the local bottler of Pepsi-Cola and, in some regions, also includes the local bottler of Royal Crown products. The Company's carbonated soft drink products also compete with, among others, noncarbonated soft drinks and citrus and noncitrus fruit drinks. The principal methods of competition in the soft drink industry are point-of-sale merchandising, new product introductions, packaging changes, price promotions, quality of distribution and advertising. GOVERNMENT REGULATION The production and marketing of beverages are subject to the rules and regulations of the United States Food and Drug Administration ("FDA") and other federal, state and local health agencies. The FDA also regulates the labeling of containers. No reformulation of the Company's products is presently required by any rule or regulation, but there can be no assurance that future government regulations will not require reformulation of the Company's products. From time to time, legislation has been proposed in Congress and by certain state and local governments which would prohibit the sale of soft drink products in non-returnable bottles and cans or require a mandatory deposit as a means of encouraging the return of such containers in an attempt to reduce solid waste and litter. Soft drink and similar-type taxes have been in place in North Carolina, South Carolina, West Virginia and Tennessee for several years. Similar tax legislation was recently enacted in Ohio, beginning in February 1993. To the Company's knowledge, legislation has not been proposed or enacted to increase the tax in any of these states. ENVIRONMENTAL REMEDIATION The Company does not currently have any material capital expenditure commitments for environmental remediation for any of its properties.
EMPLOYEES As of March 15, 1994, the Company had a total of approximately 5,000 full-time employees, of whom approximately 450 were union members. ITEM 2
ITEM 2 -- PROPERTIES The principal properties of the Company include its corporate headquarters, its four production facilities and its 57 distribution centers, all of which are owned by the Company except for its corporate headquarters, two production/distribution facilities and nine distribution centers. On November 30, 1992, the Company and the owner of the Company's Snyder Production Center in Charlotte, North Carolina agreed to the early termination of the Company's lease. Harrison Limited Partnership One purchased the property contemporaneously with the termination of the lease, and the Company and Harrison Limited Partnership One entered into an agreement under which the Company leased the property for a ten-year term beginning on December 1, 1992. The annual base rent the Company is obligated to pay under the lease agreement is subject to adjustment for increases in the Consumer Price Index and for increases or decreases in interest rates based on LIBOR. On June 1, 1993, Beacon Investment Corporation, a North Carolina corporation of which J. Frank Harrison, III is sole shareholder, purchased the office building located on Rexford Road in Charlotte, North Carolina, in which the Company leases its executive offices. Contemporaneously, the Company entered into a ten-year lease commencing June 1, 1993 with Beacon Investment Corporation for office space within the building. The Company also leases its 297,500 square-foot production/distribution facility in Nashville, Tennessee. The lease requires monthly payments through 2002. The Company's other real estate leases are not material. The Company owns and operates two soft drink production facilities apart from the leased facilities described above. The current percentage utilization of the Company's production centers as of March 15, 1994 is approximately as indicated below: PRODUCTION FACILITIES
* Estimated 1994 production divided by capacity (based on 80 hours of operations per week). Because of the seasonality of the Company's soft drink business, the Company uses considerably more of its capacity for production during peak periods, normally May, June, July and August. Of the production facilities described above, the Roanoke production facility is subject to an encumbrance as follows: The Roanoke production facilities, constructed at a cost of approximately $24 million, are subject to a deed of trust securing the payment of an aggregate of $2.8 million principal amount industrial development bonds which will be released upon payment of the bonds, as scheduled, in October 1994. Bottled and canned soft drinks are transported to distribution centers for storage pending sale. The number of centers by market area as of March 15, 1994 is as follows: DISTRIBUTION CENTERS
The Company's distribution facilities are all in good condition and are adequate for the Company's operations as presently conducted. The Company also operates approximately 2,400 vehicles in the sale and distribution of its soft drink products, of which approximately 1,200 are delivery trucks. In addition, the Company owns or leases approximately 100,000 soft drink dispensing and vending machines. ITEM 3
ITEM 3 -- LEGAL PROCEEDINGS On February 11, 1991, a Complaint was filed against the Company and two Company employees in the matter of JEFF HALLUMS V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., File No. 8108 in the Chancery Court for Wilson County, Tennessee as previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1993. This suit by a visually handicapped former truck driver for Coca-Cola Bottling Company of Nashville, Inc., a wholly owned subsidiary of the Company, alleges liability under various Tennessee common law misrepresentation principles and under the employee discrimination provision of the Tennessee Human Rights Act. Plaintiff was terminated because he did not meet federal standards for commercial truck drivers. Plaintiff seeks damages in the amount of $750,000. On October 13, 1993, the Tennessee Court of Appeals, on an interlocutory appeal, reversed the trial court's denial of the Company's motion for summary judgment with respect to plaintiff's handicap discrimination claim. The appellate court remanded the case for trial of plaintiff's common law tort claims. On February 28, 1994, the Tennessee Supreme Court denied plaintiff's application for permission to appeal, leaving the order of the Court of Appeals intact. Plaintiff's suit is now limited to common law tort claims in the trial court. The Company does not believe it has liability and is defending the case vigorously. On March 4, 1993, a Complaint was filed against the Company, the predecessor bottling company for the Laurel, Mississippi territory and other unnamed parties in the matter of MRS. ELSIE LANGLEY, ADMINISTRATRIX OF THE ESTATE OF WALTER LANGLEY V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., Cause No. 93-3-30 in the Circuit Court of the Second Judicial District for Jones County, Mississippi. This suit by the testatrix spouse of a deceased former employee of the predecessor bottler alleges misrepresentation and fraud in connection with the severance package offered to employees terminated by the predecessor bottler in connection with the acquisition of the Laurel franchise subsidiary of the Company. Plaintiff claims that the former employee was led to believe that the severance package was to include continuation of health insurance by the Company. Plaintiff seeks damages in an amount up to $18 million in compensatory and punitive damages. The Company does not believe it has liability and is defending the case vigorously. The Company has owned and operated production, distribution and warehouse facilities for many years and has acquired certain facilities that have been in operation for many years. Federal and state authorities have adopted various laws relating to environmental matters in recent years that have caused or will cause the Company to incur costs related to environmental conditions presently existing at its facilities and could possibly, prior to remediation, subject the Company to fines for temporary failure to meet certain technical requirements. Furthermore, the Company anticipates that future federal and state legislation or regulations will impact the Company and its operations in various ways. However, the Company is not currently aware of any pending or threatened proceeding pursuant to which fines may be imposed upon the Company. ITEM 4
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 2, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G(3) of Form 10-K, the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Shareholders to be filed. The following is a list of names and ages of all the executive officers of the Registrant as of March 1, 1994, indicating all positions and offices with the Registrant held by each such person. All officers have served in their present capacities for the past five years except as otherwise stated. J. FRANK HARRISON, JR., age 63, is Chairman of the Board of Directors of the Company and has served the Company in that capacity since 1977. Mr. Harrison, Jr. served as Chief Executive Officer of the Company from August 1980 until April 1983. He has previously served the Company as Vice Chairman of the Board of Directors. He has been a Director of the Company since 1973. Mr. Harrison, Jr. presently is a Director of Dixie Yarns, Inc. Mr. Harrison, Jr. is Chairman of the Executive Committee and the Finance Committee and is a member of the Compensation Committee. J. FRANK HARRISON, III, age 39, is a Vice Chairman of the Board of Directors of the Company, a position to which he was elected in November 1987. He was first employed by the Company in 1977, and has served as a Division Sales Manager and as a Vice President of the Company. Mr. Harrison, III is a Director of Wachovia Bank & Trust Co., N.A., Southern Region Board. He is Chairman of the Compensation Committee and is a member of the Executive Committee, the Audit Committee and the Finance Committee. REID M. HENSON, age 54, has served as a Vice Chairman of the Board of Directors of the Company since 1983. Prior to that time, Mr. Henson served as a consultant for JTL Corporation, a management company, and later as President of JTL Corporation. He has been a Director of the Company since 1979, is Chairman of the Audit Committee and is a member of the Executive Committee, the Pension Committee and the Finance Committee. JAMES L. MOORE, JR., age 51, is President and Chief Executive Officer of the Company. Prior to his election as President and Chief Executive Officer in March 1987, he served as Vice President and later as President and Chief Executive Officer of Atlantic Soft Drink Co., a soft drink bottling subsidiary of Grand Metropolitan USA. Since February 1991, Mr. Moore has served as a Director of Park Meridian Bank. Mr. Moore has been a Director of the Company since March 1987. He is a member of the Executive Committee and is Chairman of the Pension Committee. DAVID V. SINGER, age 38, is Vice President and Chief Financial Officer. In addition to his Finance duties, Mr. Singer has overall responsibility for the Company's Purchasing/Materials Management function as well as the Distribution, Fleet and Transport function. He served as Vice President, Chief Financial Officer and Treasurer from October 1987 through May 1992; prior to that he was Vice President and Treasurer. Prior to joining the Company in March 1986, Mr. Singer was a Vice President of Corporate Banking for Mellon Bank, N.A. MILES C. AKINS, age 43, is Vice President, Cold Drink Market, a position he has held since October 1993. He was Vice President, Division Manager of the Tennessee Division from 1989-1993. From 1987 through 1988, he was General Manager of the Nashville, TN sales center. From 1985 through 1986, he was Trade Development Director of the Tennessee Division. Prior to joining the Company in 1985, he was a Regional Trade Development Manager for Coca-Cola USA. STEVEN D. CALDWELL, age 44, joined the Company in April 1987 as Vice President, Business Systems and Services. Since May 1992, Mr. Caldwell has had overall responsibility for the Company's manufacturing function as well as Business Systems and Services. Prior to joining the Company, he was Director of MIS at Atlantic Soft Drink Co., a soft drink bottling subsidiary of Grand Metropolitan USA for four years. WILLIAM B. ELMORE, age 38, is Vice President, Regional Manager for the Virginia/West Virginia/Georgia/Tennessee Division, a position he has held since November 1991. He was Vice President, Division Manager of the West Virginia Division from 1989-1991. He was Senior Director, Corporate Marketing from 1988-1989. Preceding that, he held various positions in sales and marketing in the Charlotte Division from 1985-1988. Before joining the Company in 1985, he was employed by Coca-Cola USA for seven years where he held several positions in their field sales organization. NORMAN C. GEORGE, age 38, is Vice President, Regional Manager for the Carolinas South Region, a position he has held since November 1991. He served as Vice President, Division Manager of the Southern Division from 1988-1991. He served as Vice President, Division Manager of the Alabama Division from 1986-1988. From 1982-1986, he served as Director of Sales and Operations in the Northern Division. Prior to joining the Company in 1982, he was Sales Manager of the Dallas-Fort Worth Dr Pepper Bottling Company in Irving, Texas.
BRENDA B. JACKSON, age 33, is Vice President and Treasurer, a position she has held since January 1993. From February 1992 until her promotion, she served as Assistant Treasurer. Mrs. Jackson joined the Company in March 1989 as Director of Finance. C. RAY MAYHALL, age 46, is Vice President, Regional Manager for the Carolinas North Region, a position he has held since November 1991. He served as Vice President, Division Manager of Northern Division from 1989-1991. Before joining the Company in 1989, he was Vice President, Sales and Marketing of Florida Coca-Cola Bottling Company, a position he had held since 1987. Prior to 1987, he was Division Manager of the Central Florida Division of Florida Coca-Cola Bottling Company for six years. ROBERT D. PETTUS, JR., age 49, is Vice President, Human Resources, a position he has held since September 1984. Prior to joining the Company, he was Director, Employee Relations for the Texize Division of Morton-Thiokol for seven years. JAMES B. STUART, age 51, joined the Company in October 1990 as Vice President, Marketing. Mr. Stuart had been Senior Vice President, Sales and Marketing with JTL Corporation from 1980 until such company was acquired by The Coca-Cola Company in 1986. From 1987 until joining the Company in 1990, Mr. Stuart formed his own marketing company, serving a number of clients inside and outside the soft drink industry. During this period, he worked almost exclusively with the International Business Sector of The Coca-Cola Company. STEVEN D. WESTPHAL, age 39, is Vice President and Controller of the Company, a position he has held since November 1987. Prior to joining the Company, he was Vice President-Finance for Joyce Beverages, an independent bottler, beginning in January 1985. Prior to working for Joyce Beverages, he was Director of Corporate Planning for Mid-Atlantic Coca-Cola Bottling Company, Inc. from December 1981 to December 1984.
PART II ITEM 5
ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company has two classes of common stock outstanding, Common Stock and Class B Common Stock. The Common Stock is traded in the over-the-counter market and is quoted on the NASDAQ National Market System under the symbol COKE. The table below sets forth for the periods indicated the high and low reported sales prices per share of Common Stock. There is no established public trading market for the Class B Common Stock. Shares of Class B Common Stock are convertible on a share-for-share basis into shares of Common Stock.
The quarterly dividends declared by the Company per share of Common Stock and Class B Common Stock for the fiscal years ended January 2, 1994 and January 3, 1993 are presented below.
Dividends on the Class B Common Stock are permitted to equal, but not exceed, dividends on the Common Stock. At its December 8, 1993 meeting, the Board of Directors stated its intention to increase and equalize dividends on the Company's two classes of stock, subject to the Company's overall financial condition. On February 8, 1994, the Board of Directors declared an increase in the first quarter 1994 dividends. Shareholders of record as of February 24, 1994 received $.25 per share on both their Common Stock and Class B Common Stock shares, payable on March 10, 1994. The amount and frequency of future dividends will be determined by the Company's Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given that dividends will be declared in the future. Pursuant to the Company's Certificate of Incorporation, no cash dividend or dividend of property or stock other than stock of the Company may be declared and paid, per share, on the Class B Common Stock unless a dividend of an amount greater than or equal to such cash or property or stock has been declared and paid on the Common Stock. Reference should be made to Article Fourth of the Company's Certificate of Incorporation for additional provisions relating to the relative dividend rights of holders of Common Stock and Class B Common Stock. The number of shareholders of record of the Common Stock and Class B Common Stock, as of March 15, 1994, was 1,166 and 15, respectively. ITEM 6
ITEM 6 -- SELECTED FINANCIAL DATA The following table sets forth certain selected financial data concerning the Company for the five years ended January 2, 1994. The data for the five years ended January 2, 1994 is unaudited but is derived from audited statements of the Company. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in Item 7
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION Coca-Cola Bottling Co. Consolidated ("the Company") is engaged in the production, marketing and distribution of soft drinks, primarily products of The Coca-Cola Company. Since 1984, the Company has expanded its franchise territory throughout the Southeast, primarily through acquisitions. 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 of The Coca-Cola Company and other third party licensors, primarily in certain portions of North Carolina and South Carolina. The Company provides substantially all of the soft drink products to Piedmont and manages the business of Piedmont pursuant to a management agreement. The Company and The Coca-Cola Company, through their respective subsidiaries, each beneficially own a 50% interest in Piedmont. Subsidiaries of the Company made an initial capital contribution to Piedmont of $70 million in the aggregate. The Company's capital contribution was composed of approximately $21.7 million in cash and of bottling operations and certain assets used in connection with the Company's Wilson, NC and Greenville and Beaufort, SC territories. The cash contributed to Piedmont by the Company's subsidiaries was provided from the Company's available credit facilities. The Company sold other territories to Piedmont for an aggregate purchase price of approximately $118 million. Proceeds from the sale of territories to Piedmont, net of the Company's cash contribution, totaled approximately $96 million and were used to reduce the Company's long-term debt. The Company is accounting for its investment in Piedmont using the equity method of accounting. On December 20, 1991, the Company acquired all of the outstanding capital stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately $15.2 million in cash and Company debt. In addition, the majority of the Sunbelt indebtedness as of December 20, 1991 was refinanced by the Company. The Company borrowed $152.5 million under a $230 million bridge facility provided by Coca-Cola Financial Corporation ("CCFC"), a wholly owned subsidiary of The Coca-Cola Company. The Company also issued $50 million of Series B Nonconvertible Preferred Stock to CCFC. The acquisition did not have a significant impact on 1991 operations. In the first quarter of 1992, $133 million of seven-and ten-year medium term notes were issued, the Company entered into a $60 million five-year term loan and the existing revolving credit agreement was increased by $30 million to a total commitment of $170 million. These transactions enabled the Company to repay the $230 million bridge facility obtained from CCFC. The Series B Nonconvertible Preferred Stock was redeemed in October 1992 using funds from a three-year bank term loan. RESULTS OF OPERATIONS 1993 COMPARED TO 1992 The Company reported net income applicable to common shareholders of $14.8 million or $1.60 per share for fiscal 1993. This compares with 1992's net loss applicable to common shareholders of $2.1 million or $.23 per share before the effect of accounting changes related to the adoption of SFAS 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," and SFAS 109, "Accounting for Income Taxes." For 1992, the reported net loss applicable to common shareholders was $118.3 million or $12.89 per share. The 1992 results included $116.2 million of noncash charges associated with the adoption of SFAS 109 and SFAS 106. The record 1993 results were due to increased net selling prices, slightly higher volume, lower packaging costs, lower financing costs, a lower effective tax rate and the formation of Piedmont. The reduction of one work-week in fiscal 1993 and the formation of Piedmont on July 2, 1993 make reported results less comparable. Reported net sales increased by approximately 5% from 1992 to 1993. On a comparable franchise territory and fiscal period basis, net franchise sales for 1993 increased by more than 4%, reflecting higher net selling prices and slightly higher case volume. Sales to other bottlers increased by $58.8 million in 1993 primarily due to the sale of soft drink products to Piedmont. Pursuant to the management agreement with Piedmont, soft drink products are sold to Piedmont at cost. Gross margin as reported increased by approximately 3%. When adjusted for comparable franchise territory and fiscal days, franchise gross margin increased by approximately 11% due to increased net selling prices and lower packaging costs. Management believes that overall packaging costs will continue to decline in 1994. Sweetener costs are expected to increase significantly in 1994.
Selling expenses decreased by 4.6% and declined as a percentage of net sales due primarily to reductions in operating costs resulting from the elimination of expenses associated with territories sold to Piedmont. General and administrative expenses increased by 8.4% as a result of increased employment costs. A special Company contribution to the 401(k) Savings Plan of approximately $750,000 was included in 1993 expense. The Board of Directors authorized this award in recognition of the employees' contribution to the significant improvement in the Company's financial performance. Depreciation expense increased by 4.8% during 1993. The sale and contribution of certain fixed assets to Piedmont and normal retirements were more than offset by additions to property, plant and equipment. Amortization of goodwill and intangibles declined 19.3% primarily due to the sale and contribution of franchise territories to Piedmont. Financing costs declined in 1993 as compared to 1992 due to lower interest rates and a reduction in long-term debt primarily resulting from the use of proceeds from the sale of territories to Piedmont. During the fourth quarter of 1992, the Company redeemed all outstanding shares of preferred stock. Dividends of $4.2 million were paid in 1992 on these preferred shares. Reported income tax expense differs from the amount computed at the statutory rate primarily due to amortization of certain nondeductible goodwill, state income taxes and the effect of the change in statutory rates on the deferred tax liability as of the beginning of the year. As a result of the enactment of the Omnibus Budget Reconciliation Act of 1993, the Company recorded an additional income tax charge of approximately $2.1 million to reflect the change in the maximum federal corporate tax rate from 34% to 35%. Due to the Company's restructuring related to the formation of Piedmont and a significant increase in profitability, the Company reduced a valuation allowance that had been recorded due to restrictions on the use of certain net operating losses. 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. SFAS 112 is effective for fiscal years beginning after December 15, 1993. Any accrual required to be recorded by SFAS 112 must be recognized initially as the effect of a change in accounting principle. The Company intends to adopt the provisions of SFAS 112 in the first quarter of 1994, effective January 3, 1994. The adoption of SFAS 112 will require an estimated one-time, after-tax charge between $1.5 million and $2.5 million. 1992 COMPARED TO 1991 The Company reported a net loss, excluding the effect of accounting changes, of $2.1 million or $.23 per share for 1992 as compared to net income applicable to common shareholders of $2.2 million or $.24 per share in 1991. For 1992, the Company's reported net loss applicable to common shareholders was $118.3 million or $12.89 per share. The results for 1992 included noncash charges of $116.2 million related to the Company's adoption of SFAS 109 and SFAS 106. The 1991 results reflected a reduction in income tax expense of approximately $2 million due to a settlement with the Internal Revenue Service relating to the deductibility of franchise amortization. Primarily as a result of the Sunbelt acquisition, net sales for 1992 as compared to 1991 increased by 41.1%, gross margin increased by 40.2% and income from operations increased by 62.9%. In 1992, the Company recorded certain one- time transition costs associated with the Sunbelt acquisition. Excluding Sunbelt, net sales for the Company were $485.1 million in 1992, an increase of $20.4 million or 4.4% from 1991 net sales of $464.7 million. This increase resulted principally from growth above industry averages in equivalent case sales volume and three extra working days in fiscal 1992. Excluding the results of Sunbelt, gross margin increased in 1992 by $10.9 million or 5.4% primarily due to continued improvements in manufacturing productivity, declining raw material costs and modest growth in equivalent case sales. Selling expenses for the Company, excluding Sunbelt, increased in 1992 by $2.2 million or 2.0%, principally as a result of wage rate increases. Excluding the results of Sunbelt, general and administrative costs increased in 1992 by $4.0 million or 10.5%. This increase was principally associated with wage rate increases and additional staff to support the growth of the Company.
Interest expense for the Company, excluding Sunbelt, in 1992 was $18.8 million as compared to $21.6 million in 1991. The decrease was primarily due to a continued overall reduction in average interest rates. Income tax expense in 1992 was $2.8 million compared to $20,000 in 1991. In 1992, the Company adopted SFAS 109. As a result, the Company recorded a charge of approximately $109.1 million or $11.88 per share. This charge resulted primarily from a difference between the financial statement basis and the tax basis of intangible assets related to the Sunbelt acquisition. The Company also adopted SFAS 106 in 1992, changing to the accrual method of accounting for postretirement benefits other than pensions. A pretax charge of $11.6 million ($7.1 million after taxes or $.77 per share) was recorded as the effect of this accounting change. In connection with the acquisition of Coca-Cola Bottling Works of Jackson, Incorporated and Jackson Coca-Cola Bottling Company, Inc. (collectively "Jackson") in 1990 and the Sunbelt acquisition in 1991, the Company issued preferred stock. All outstanding shares of preferred stock were redeemed in the fourth quarter of 1992. Preferred dividends of $4.2 million and $.7 million were paid in 1992 and 1991, respectively. FINANCIAL CONDITION Working capital decreased from a deficit of $16.8 million on January 3, 1993 to a deficit of $23.5 million on January 2, 1994. The decrease in working capital was primarily due to the sale and contribution of assets to Piedmont and a reduction in the Company's sale of trade accounts receivable. The working capital deficit is a result of the Company's sale of its trade accounts receivable of $33 million and $40 million as of January 2, 1994 and January 3, 1993, respectively. The Company used the proceeds from the sale of its trade accounts receivable to reduce its outstanding bank loans. Additions to property, plant and equipment of $28.8 million more than offset normal retirements and the sale and contribution of certain fixed assets to Piedmont. The initial capital contribution made to Piedmont by the Company was $70 million. The Company's share of Piedmont's loss for the period since July 2, 1993 reduced this investment from $70 million to $68.4 million. Identifiable intangible assets declined from January 3, 1993 to January 2, 1994 primarily as a result of the sale and contribution of certain franchise territories to Piedmont. As a result of the formation of Piedmont, the Company will use net operating losses of Sunbelt to offset taxable gains resulting from the sale of certain assets to Piedmont. A valuation allowance had previously been recorded for these net operating losses due to restrictions on their use. The use of the net operating losses resulted in a reduction of the Company's deferred income tax liability and a corresponding reduction in recorded franchise value of approximately $36 million. Other liabilities declined by $6.5 million from January 3, 1993 to January 2, 1994 primarily due to the assumption by Piedmont of postretirement benefit obligations for certain former employees of Sunbelt. The Company's long-term debt decreased by $121 million due to the use of the net sale proceeds of approximately $96 million from the Piedmont transaction and cash provided by operations. Shareholders' equity increased overall by $3.8 million during 1993. An adjustment, net of income taxes, of $5.6 million was charged directly to shareholders' equity. This adjustment represented the excess of accumulated pension benefit obligations over plan assets and was primarily a result of changes in certain actuarial assumptions. The issuance of new shares of Common Stock increased shareholders' equity by $2.3 million. On April 9, 1993, the Company acquired all of the outstanding stock of Whirl-i-Bird, Inc. in exchange for 80,000 shares of the Company's Common Stock valued at $1.6 million based on the closing market price of $20 per share on March 17, 1993. On June 25, 1993, the Company issued 33,464 shares of its Common Stock to The Coca-Cola Company at a price of $20 per share. These shares were issued pursuant to a Stock Rights and Restrictions Agreement dated January 27, 1989 that provided The Coca-Cola Company a preemptive right to purchase a percentage of any newly issued shares of any class as necessary to allow it to maintain ownership of both 29.67% of the outstanding shares of common stock of all classes and 22.59% of the total votes of all outstanding shares of all classes. LIQUIDITY AND CAPITAL RESOURCES On March 17, 1992, the Company entered into a revolving credit agreement totaling $170 million that eliminated the term loan portion of the facility and extended the revolving credit maturity date to March 1997. The agreement contains
several covenants that establish minimum ratio requirements related to debt and cash flow. A commitment fee of 1/5% per year on the average daily unused amount of the banks' commitment is payable quarterly. On January 2, 1994, there were no borrowings outstanding under the revolving credit facility. The Company borrows from time to time under informal lines of credit from various banks. On January 2, 1994, the Company had $175 million available under these lines, of which $18 million was outstanding. Loans under these lines are made at the sole discretion of the banks at rates negotiated at the time of borrowing. A $100 million commercial paper program was established in January 1990 for general corporate purposes. On January 2, 1994, there were no borrowings outstanding under this program. It is the Company's intent to renew any borrowings under the 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. On February 12, 1990, a $200 million shelf registration for debt securities filed with the Securities and Exchange Commission became effective and available for the issuance of medium-term notes ("MTNs"). As of February 19, 1992, all $200 million of MTNs had been issued for terms of seven, eight and ten years. On June 28, 1990, the Company entered into an eight-year, $60 million loan agreement. The Company amended the agreement in October 1993, extending the maturity date to October 28, 2001. On February 20, 1992, the Company entered into a five-year, $60 million loan agreement. The proceeds from the loan agreement were used to repay portions of a bridge facility from Coca-Cola Financial Corporation and other senior debt. In October 1993, the Company amended the agreement, extending the maturity date to October 28, 2000. On June 26, 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. On January 2, 1994, the Company had sold $33 million of its trade accounts receivable and used the proceeds to reduce its outstanding bank loans. It is the Company's intent to continue to sell its trade accounts receivable in the future. On October 30, 1992, the Company entered into a three-year, $50 million loan agreement. This agreement was amended November 30, 1992 to increase the facility by $25 million to a total of $75 million. The proceeds from the loan agreement were used primarily to redeem the Company's outstanding preferred stock. As of January 2, 1994, the Company was in compliance with the covenants contained in its various borrowing agreements. None of these covenants is presently expected to constrain the Company. The Company actively manages its interest rate risk using a variety of rate hedging agreements. As of January 2, 1994, approximately 43% of the total debt portfolio was subject to changes in short-term interest rates. During 1993, the Company spent $28.8 million for capital additions compared to $32.9 million in 1992. The higher spending in 1992 was attributable primarily to building improvements in the Sunbelt locations. As a result of the Company's tax loss carryforward position, leasing has continued to be used to lower the Company's overall cost for certain capital equipment purchases. Total lease expense in 1993 was $17.3 million as compared to $17.8 million in 1992. The Company plans to lease the majority of its vending requirements in 1994. In February 1994, the Board of Directors approved an increase in the dividend for the first quarter. The first quarter 1994 dividend, payable on March 10, 1994, was increased for Common and Class B Common shareholders from $.22 per share and $.13 per share, respectively, to $.25 per share per quarter for both classes of stock. If the Company continues to pay quarterly dividends of $.25 per share for both classes of common stock, annual dividend payments will increase from $7.7 million in 1993 to $9.3 million in 1994. At the end of 1993, the Company had no material commitments for the purchase of capital assets other than those related to normal replacement of equipment. 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.
ITEM 8
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA COCA-COLA BOTTLING CO. CONSOLIDATED CONSOLIDATED STATEMENTS OF OPERATIONS IN THOUSANDS (EXCEPT PER SHARE DATA)
See Accompanying Notes to Consolidated Financial Statements.
COCA-COLA BOTTLING CO. CONSOLIDATED CONSOLIDATED BALANCE SHEETS IN THOUSANDS (EXCEPT SHARE DATA)
See Accompanying Notes to Consolidated Financial Statements.
See Accompanying Notes to Consolidated Financial Statements.
COCA-COLA BOTTLING CO. CONSOLIDATED CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
COCA-COLA BOTTLING CO. CONSOLIDATED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Coca-Cola Bottling Co. Consolidated ("the Company") is engaged in the production, marketing and distribution of soft drinks, primarily products of The Coca-Cola Company. The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The fiscal years presented are the 52-week period ended January 2, 1994, the 53-week period ended January 3, 1993 and the 52-week period ended December 29, 1991. Certain prior year amounts have been reclassified to conform to current year classifications. The Company's more significant accounting policies are as follows: CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, cash in banks and cash equivalents, which are highly liquid debt instruments with maturities of less than 90 days. INVENTORIES Inventories are stated at the lower of cost, primarily determined on the last-in, first-out basis, or market. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Additions and major replacements or betterments are added to the assets at cost. Maintenance and repair costs and minor replacements are charged to expense when incurred. When assets are replaced or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and the gain or loss, if any, is reflected in income. INVESTMENT IN PIEDMONT COCA-COLA BOTTLING PARTNERSHIP The Company beneficially owns a 50% interest in Piedmont Coca-Cola Bottling Partnership ("Piedmont"). The Company accounts for its interest in Piedmont using the equity method of accounting. With respect to Piedmont, sales of soft drink products at cost, management fee revenue and the Company's share of Piedmont's results from operations are included in "Net sales." See Note 3 for additional information. INCOME TAXES The Company provides deferred income taxes for the tax effects of temporary differences between the financial reporting and income tax bases of the Company's assets and liabilities. BENEFIT PLANS The Company has a noncontributory pension plan covering substantially all nonunion employees and one noncontributory pension plan covering certain union employees. Costs of the plans are charged to current operations and consist of several components of net periodic pension cost based on various actuarial assumptions regarding future experience of the plans. In addition, certain other union employees are covered by plans provided by their respective union organizations. The Company expenses amounts as paid in accordance with union agreements. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees' periods of active service. INTANGIBLE ASSETS Identifiable intangible assets resulting from the acquisition of Coca-Cola bottling franchises are being amortized on a straight-line basis over periods ranging from four to forty years.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED The excess of cost over fair value of net assets of businesses acquired is being amortized on a straight-line basis over forty years. PER SHARE AMOUNTS Per share amounts are calculated based on the weighted average number of Common and Class B Common shares outstanding. POSTEMPLOYMENT BENEFITS 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. Postemployment benefits encompass various types of employer-provided benefits including, but not limited to, the following: workers' compensation, disability-related benefits and severance benefits. SFAS 112 is effective for fiscal years beginning after December 15, 1993, although earlier adoption is permitted. Any accrual required to be recorded by SFAS 112 must be recognized initially as the effect of a change in accounting principle. The Company intends to adopt the provisions of SFAS 112 in the first quarter of 1994, effective January 3, 1994. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK Costs associated with interest rate swaps, forward interest rate agreements and interest rate caps are recorded over the lives of the agreements as an adjustment to interest expense. 2. ACQUISITIONS On December 20, 1991, the Company acquired all of the outstanding capital stock of Sunbelt Coca-Cola Bottling Company, Inc. ("Sunbelt") for approximately $15.2 million. Approximately $4.4 million of the purchase price was paid in cash to The Coca-Cola Company and one of its affiliates (former shareholders of Sunbelt) and the balance of the purchase price was paid to the remaining shareholders through the issuance of Company debt. Funds used for the cash portion of the acquisition were obtained from the Company's existing lines of credit. Total assets acquired as a result of the Sunbelt acquisition were approximately $304 million. The acquisition was accounted for under the purchase method of accounting. The following unaudited pro forma combined summary results of operations for the year ended December 29, 1991 gives effect to the acquisition as though it had occurred at the beginning of the period presented. The pro forma earnings are not necessarily indicative of the results of operations had the acquisition actually occurred at the beginning of the period presented, nor are they necessarily indicative of the results of future operations.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. INVESTMENT IN 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 certain 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 substantially all of the soft drink products for Piedmont and manages the operations of Piedmont pursuant to a management agreement. Subsidiaries of the Company made an initial capital contribution to Piedmont of $70 million in the aggregate. The capital contribution made by such subsidiaries was composed of approximately $21.7 million in cash and of bottling operations and certain assets used in connection with the Company's Wilson, NC and Greenville and Beaufort, SC territories. The cash contributed to Piedmont by the Company's subsidiaries was provided from the Company's available credit facilities. The Company sold other territories to Piedmont for an aggregate purchase price of approximately $118 million. Proceeds from the sale of territories to Piedmont, net of the Company's cash contribution, totaled approximately $96 million and were used to reduce the Company's long-term debt. Summarized financial information for Piedmont is as follows:
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. INVENTORIES Inventories are summarized as follows:
The amounts included above for inventories valued by the LIFO method were greater than replacement or current cost by approximately $2.5 million and $2.6 million on January 2, 1994 and January 3, 1993, respectively, as a result of inventory premiums associated with certain acquisitions. 5. PROPERTY, PLANT AND EQUIPMENT The principal categories and estimated useful lives of property, plant and equipment were as follows:
The slight increase in property, plant and equipment resulted from capital additions in 1993 exceeding normal retirements and the sale and contribution of certain fixed assets to Piedmont. 6. IDENTIFIABLE INTANGIBLE ASSETS The principal categories and estimated useful lives of identifiable intangible assets, net of accumulated amortization, were as follows:
The decrease in identifiable intangible assets resulted primarily from the sale and contribution of certain franchise territories to Piedmont.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. LONG-TERM DEBT Long-term debt is summarized as follows:
The principal maturities of long-term debt outstanding on January 2, 1994 were as follows:
On March 17, 1992, the Company entered into a revolving credit agreement totaling $170 million which eliminated the term loan portion of the facility and extended the revolving credit maturity date to March 1997. The agreement contains several covenants which establish minimum ratio requirements related to debt and cash flow. A commitment fee of 1/5% per year on the average daily unused amount of the banks' commitment is payable quarterly. There were no borrowings outstanding under this facility as of January 2, 1994. A $100 million commercial paper program was established in January 1990 for general corporate purposes. On January 2, 1994, there were no borrowings outstanding under this program.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company borrows from time to time under informal lines of credit from various banks. On January 2, 1994, the Company had $175 million of credit available under these lines, of which $18.3 million was outstanding. Loans under these lines are made at the sole discretion of the banks at rates negotiated at the time of borrowing. It is the Company's intent to renew such borrowings as they mature. To the extent that these borrowings, the borrowings under the revolving credit facility described above, and outstanding commercial paper do not exceed the amount available under the Company's $170 million revolving credit facility, they are classified as noncurrent liabilities. On February 12, 1990, a $200 million shelf registration for debt securities filed with the Securities and Exchange Commission became effective and available for the issuance of medium-term notes ("MTNs"). As of December 30, 1990, $67 million of eight-and ten-year MTNs had been issued. On February 19, 1992, the Company issued $133 million of seven-and ten-year MTNs, the proceeds of which were used to repay a portion of a bridge facility from Coca-Cola Financial Corporation ("CCFC"). As of February 19, 1992, all $200 million of MTNs had been issued for terms of seven, eight and ten years. On June 28, 1990, the Company entered into an eight-year, $60 million loan agreement. On October 28, 1993, the Company amended the agreement, extending the term loan maturity date to October 28, 2001. On February 20, 1992, the Company entered into a five-year, $60 million loan agreement. The proceeds from the loan agreement were used to repay portions of a bridge facility from CCFC and other senior debt. On October 28, 1993, the Company amended the agreement, extending the term loan maturity date to October 28, 2000. On June 26, 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. As of January 2, 1994, the Company had sold $33 million of its trade accounts receivable and used the proceeds to reduce its outstanding bank loans. It is the Company's current intent to continue to sell its trade accounts receivable in the future. The discount on sales of trade accounts receivable was $1.4 million in 1993, $1.6 million in 1992 and $1.8 million in 1991 and is included in "Other expense, net." On October 30, 1992, the Company entered into a three-year, $50 million loan agreement, amended November 30, 1992 to increase the facility by $25 million for a total of $75 million. The proceeds from the loan agreement were used primarily to redeem the Company's outstanding preferred stock. As of January 2, 1994, the Company was in compliance with the covenants covering all of its various borrowing agreements. None of these covenants is presently expected to constrain the Company. 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK The Company actively manages its interest rate risk using a variety of rate hedging mechanisms. The Company has entered into a series of hedging transactions that resulted in a weighted average interest rate of 6.7% for the debt portfolio as of January 2, 1994. Approximately 43% of the total debt portfolio was subject to changes in short-term interest rates on January 2, 1994. The Company's overall weighted average borrowing rate on its long-term debt declined from an average of 6.6% in 1992 to an average of 5.9% in 1993. Off-balance-sheet financial instruments on January 2, 1994 are summarized as follows:
FINANCIAL GUARANTEES The Company guarantees a portion of the debt for one cooperative from which the Company purchases plastic bottles. See Note 15 to the consolidated financial statements for additional information concerning this financial guarantee.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CREDIT RISK The Company is exposed to credit loss in the event of nonperformance by the other parties to the various off-balance-sheet financial transactions as disclosed above. The Company does not anticipate nonperformance by the other parties. The Company has entered into these off-balance-sheet financial transactions with numerous counterparties during the year. The financial instruments outstanding on January 2, 1994 as disclosed above were with eight different commercial or investment banks. It is the Company's belief that this does not represent any material concentration of credit risk. COLLATERAL In accordance with standard market practice, no collateral has been given or received by the Company in connection with the off-balance-sheet financial instruments described above. The Company does not anticipate nonperformance by the counterparties. 9. FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments: PUBLICLY TRADED DEBT The fair value of the Company's publicly traded debt is estimated based on quoted market prices. NON-TRADED VARIABLE RATE LONG-TERM DEBT The carrying amounts of the Company's variable rate borrowings approximate their fair value. NON-TRADED FIXED RATE LONG-TERM DEBT The fair values of the Company's fixed rate long-term borrowings are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS Fair values for the Company's off-balance-sheet interest rate swaps are based on current settlement values; fair value of the interest rate caps is negligible. The carrying amounts and fair values of the Company's financial instruments on January 2, 1994 were as follows:
The fair value of the interest rate swaps represents the estimated amount the Company would have had to pay to terminate these agreements on January 2, 1994.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. LEASE COMMITMENTS The Company has entered into various fleet operating lease agreements, principally for route delivery trucks and over the road tractors, and various vending operating lease agreements. Operating lease payments are charged to expense as incurred. Such rental expenses included in the consolidated statements of operations were $17.3 million, $17.8 million and $13.0 million for 1993, 1992 and 1991, respectively. The following is a summary of future minimum lease payments for all operating leases as of January 2, 1994:
11. INCOME TAXES The Company adopted SFAS 109, "Accounting for Income Taxes," in 1992 with a charge of $109.1 million recorded as an "Effect of accounting change." The provision for income taxes for 1993 and 1992 has been calculated under the requirements of SFAS 109. The income tax provision for 1991 was calculated under the deferred method. The provision for income taxes consisted of the following:
The Company made income tax payments for alternative minimum tax of approximately $1.9 million during 1993.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and available tax credit carryforwards. Temporary differences and carryforwards that comprised a significant part of deferred tax assets and liabilities on January 2, 1994 and January 3, 1993 were as follows:
Net current deferred tax assets of $.7 million were included in prepaid expenses and other current assets on January 2, 1994. Current deferred income taxes of $.9 million were included in accounts payable and accrued liabilities on January 3, 1993. Reported income tax expense is reconciled to the amount computed on the basis of income before income taxes and effect of accounting changes at the statutory rate as follows:
The Company had $3.0 million of investment tax credits available to reduce future income tax payments for federal income tax purposes on January 2, 1994. These credits expire in varying amounts through 2001. On January 2, 1994, the Company had $129 million and $166 million of federal and state net operating losses available to reduce future income taxes. The net operating loss carryforwards expire in varying amounts through 2007. A valuation allowance of $29.9 million was recorded against certain income tax assets on January 3, 1993, primarily due to restrictions on the use of acquired net operating losses. The Company sold certain assets during the year which allowed utilization of these restricted net operating losses. The realization of the benefit from these net operating loss carryforwards resulted in a reduction of recorded franchise values of $35.6 million. Due to the Company's restructuring related to the formation of Piedmont and a significant increase in profitability, no valuation allowance is considered necessary on January 2, 1994. The Omnibus Budget Reconciliation Act of 1993 increased the maximum federal income tax rate from 34% to 35% effective January 1, 1993. This increase resulted in additional income tax expense of $2.1 million for the year ended January 2, 1994.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. REDEEMABLE PREFERRED STOCK On April 20, 1990, the Company acquired all of the outstanding capital stock of Coca-Cola Bottling Works of Jackson, Incorporated and Jackson Coca-Cola Bottling Company, Inc. in Jackson, Tennessee. In connection with this acquisition, the Company issued 20,800 shares of its Series A Nonconvertible Preferred Stock, $100 par value. On November 30, 1992, the Company redeemed all outstanding shares of this preferred stock. Preferred dividends of $728,000 were paid in both 1992 and 1991 on these preferred shares. 13. CAPITAL TRANSACTIONS On April 9, 1993, the Company acquired all of the outstanding stock of Whirl-i-Bird, Inc. in exchange for 80,000 shares, valued at $1.6 million, of the Company's Common Stock (based on the closing market price of $20 per share on March 17, 1993). Whirl-i-Bird, Inc. had previously leased a helicopter to the Company from time to time and was wholly owned by J. Frank Harrison, Jr. On June 25, 1993, the Company issued 33,464 shares of its Common Stock to The Coca-Cola Company at a price of $20 per share. These shares were issued pursuant to a Stock Rights and Restrictions Agreement dated January 27, 1989 that provided The Coca-Cola Company a preemptive right to purchase a percentage of any newly issued shares of any class as necessary to allow it to maintain ownership of both 29.67% of the outstanding shares of common stock of all classes and 22.59% of the total votes of all outstanding shares of all classes. On December 20, 1991, the Company issued 25,000 shares of its Series B Nonconvertible Preferred Stock to Coca-Cola Financial Corporation for a total of $50 million. These funds were used by the Company to repay certain indebtedness of Sunbelt. On October 30, 1992, the Company redeemed the $50 million of Series B Nonconvertible Preferred Stock. The preferred stock was refinanced using a $50 million three-year bank term loan. Dividends of $3.5 million were paid in 1992 on these preferred shares. On January 27, 1989, J. Frank Harrison, III, J. Frank Harrison, Jr. and Reid M. Henson, Co-Trustee, entered into a Voting Agreement with The Coca-Cola Company respecting all shares of Common Stock and Class B Common Stock of the Company which they hold or as to which, in the case of J. Frank Harrison, III and J. Frank Harrison, Jr., they had the right to vote or, as to Reid M. Henson, he had the right to vote as Co-Trustee of certain trusts (the "Voting Agreement"). Pursuant to the Voting Agreement, J. Frank Harrison, III, J. Frank Harrison, Jr. and Reid M. Henson, Co-Trustee, agreed to vote their shares of Common Stock and Class B Common Stock for a nominee (and any successor or replacement nominee) of The Coca-Cola Company for election to the Board of Directors of the Company. An irrevocable proxy was granted to J. Frank Harrison, III, for life and thereafter to J. Frank Harrison, Jr. by The Coca-Cola Company with respect to all shares of Class B Common Stock and Common Stock held by it during the term of the Voting Agreement (the "Irrevocable Proxy"). The Irrevocable Proxy covers voting on the election of directors and any other matters on which holders of Common Stock or Class B Common Stock are entitled to vote; however, the Irrevocable Proxy does not cover voting with respect to any merger, consolidation, sale of all or substantially all of the Company's assets, any other corporate reorganization or other similar corporate transaction involving the Company in which Messrs. Harrison, III and Harrison, Jr. would not exercise voting control over, or The Coca-Cola Company would not have an equity interest in, the resulting entity. The Coca-Cola Company agreed in the Voting Agreement to support the control of the Company by the Harrison family, provided that Messrs. Harrison, III and Harrison, Jr. or either of them are actively involved in the Company's management. Dividends on the Class B Common Stock are permitted to equal, but not exceed, dividends on the Common Stock. Shareholders with Class B Common Stock are entitled to 20 votes per share compared to one vote per share on the Common Stock. On March 8, 1989, the Company granted J. Frank Harrison, Jr. an option for the purchase of 100,000 shares of Common Stock exercisable at the closing market price of the stock on the day of grant. The closing market price of the stock on March 8, 1989 was $27.00 per share. The option is exercisable, in whole or in part, at any time at the election of Mr. Harrison, Jr. over a period of 15 years from the date of grant. None of this option has been exercised.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On August 9, 1989, the Company granted J. Frank Harrison, III an option for the purchase of 150,000 shares of Common Stock exercisable at the closing market price of the stock on the day of grant. The closing market price of the stock on August 9, 1989 was $29.75 per share. The option may be exercised, in whole or in part, during a period of 15 years beginning on the date of grant. The option is currently exercisable with respect to 112,500 shares and is exercisable with respect to an additional 7,500 shares annually. None of this option has been exercised. 14. BENEFIT PLANS Pension plan expense related to the Company-sponsored pension plans for the years ended January 2, 1994, January 3, 1993 and December 29, 1991 was $2,484,000, $812,000 and $874,000, respectively, including the pro rata share of past service costs, which are being amortized over 30 years. In addition, certain employees are covered by pension plans administered by unions. Expense associated with the union plans was $736,000, $709,000 and $668,000 for the years ended January 2, 1994, January 3, 1993 and December 29, 1991, respectively. Retirement benefits under the Company's principal pension plan are based on the employee's length of service, average compensation over the five consecutive years which gives the highest average compensation and the average of the Social Security taxable wage base during the 35-year period before a participant reaches Social Security retirement age. Contributions to the plan are based on the projected unit credit actuarial funding method and are limited to the amounts that are currently deductible for tax purposes. The following table sets forth the status of the Company-sponsored plans as of January 2, 1994 and January 3, 1993:
Under the requirements of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions," an additional minimum pension liability for certain plans, representing the excess of accumulated benefits over plan assets, was recognized as of January 2, 1994. The increase in liabilities was charged directly to shareholders' equity. The minimum pension liability adjustment, net of income taxes, was $5.6 million. Net periodic pension cost for the Company-sponsored pension plans included the following components:
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The actuarial assumptions that were used for the Company's principal pension plan calculations were as follows:
The Company provides a 401(k) Savings Plan for substantially all of its nonunion employees. Under provisions of the Savings Plan, an employee is vested with respect to Company contributions upon the earlier of two consecutive years of service while participating in the Savings Plan or after five years of service with the Company. The total cost for this benefit in 1993, 1992 and 1991 was $1,491,000, $603,000 and $478,000, respectively. The increase in this cost in 1993 resulted primarily from a special award of approximately $750,000. The Board of Directors authorized this award in recognition of the employees' contribution to the significant improvement in the Company's financial performance. During 1992, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" ("SFAS 106"). Under SFAS 106, the Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees' periods of active service. Prior to 1992, the Company accounted for the cost of such benefits when the benefits were paid. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these plans in the future. The accumulated postretirement benefit obligation as of December 30, 1991, which represented the portion of the expected cost of postretirement benefits attributable to employee service prior to that date, of $7.1 million (net of income taxes of $4.5 million) was charged to 1992 operations and appears in the consolidated statement of operations within the caption "Effect of accounting changes." In addition, the accumulated postretirement benefit obligation of $4.8 million relating to the Sunbelt operations was recorded as part of the purchase price of Sunbelt. Postretirement benefit expense was $1.5 million and $1.6 million in 1993 and 1992, respectively. The components of expense were as follows:
The accumulated postretirement benefit obligation was comprised of the following components:
The decrease in the accrued postretirement benefit obligation from 1992 to 1993 resulted from the assumption of postretirement benefit obligations for certain Sunbelt retirees by Piedmont, offset by postretirement benefit expense accrued in 1993. Future postretirement benefit costs were estimated assuming medical costs would decline over a five-year period from a 10% increase beginning January 1, 1993 to 6%, and then decline to a 5.5% increase thereafter. A 1% increase in this annual trend rate would have increased the accumulated postretirement benefit obligation on January 2, 1994 by approximately $1.7 million and postretirement benefit expense in 1993 would have increased by approximately $200,000. The weighted average discount rate used to estimate the accumulated postretirement benefit obligation was 7.5% and 9.0% as of January 2, 1994 and January 3, 1993, respectively.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. SFAS 112 is effective for fiscal years beginning after December 15, 1993. Any accrual required to be recorded by SFAS 112 must be recognized initially as the effect of a change in accounting principle. The Company intends to adopt the provisions of SFAS 112 in the first quarter of 1994, effective January 3, 1994. The adoption of SFAS 112 will require an estimated one-time, after-tax charge between $1.5 million and $2.5 million. 15. RELATED PARTY TRANSACTIONS The Company's business consists primarily of the production, marketing and distribution of soft drink products of The Coca-Cola Company, which is the sole owner of the secret formulas under which the primary components (either concentrates or syrups) of its soft drink products are manufactured. Accordingly, the Company purchases substantially all of its requirements of concentrates and syrups from The Coca-Cola Company in the ordinary course of its business. The Company paid The Coca-Cola Company approximately $158 million, $140 million and $106 million in 1993, 1992 and 1991, respectively, for sweetener, syrup, concentrate and other miscellaneous purchases. Additionally, the Company engages in a variety of marketing programs, local media advertising and similar arrangements to promote the sale of products of The Coca-Cola Company in territories operated by the Company. Total direct marketing support provided to the Company by The Coca-Cola Company was approximately $28 million, $32 million and $24 million in 1993, 1992 and 1991, respectively. In addition, the Company paid approximately $13 million, $14 million and $10 million in 1993, 1992 and 1991, respectively, for local media and marketing program expense pursuant to cooperative advertising and cooperative marketing arrangements with The Coca-Cola Company. On April 9, 1993, the Company acquired all of the outstanding stock of Whirl-i-Bird, Inc. in exchange for 80,000 shares, valued at $1.6 million, of the Company's Common Stock (based on the closing market price of $20 per share on March 17, 1993). Whirl-i-Bird, Inc. had previously leased a helicopter to the Company from time to time and was wholly owned by J. Frank Harrison, Jr. On June 25, 1993, the Company issued 33,464 shares of its Common Stock to The Coca-Cola Company at a price of $20 per share. These shares were issued pursuant to a Stock Rights and Restrictions Agreement dated January 27, 1989 that provided The Coca-Cola Company a preemptive right to purchase a percentage of any newly issued shares of any class as necessary to allow it to maintain ownership of both 29.67% of the outstanding shares of common stock of all classes and 22.59% of the total votes of all outstanding shares of all classes. On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership ("Piedmont"). The Company and The Coca-Cola Company, through their respective subsidiaries, each beneficially own a 50% interest in Piedmont. The Company provides substantially all of the soft drink products for Piedmont and manages the operations of Piedmont pursuant to a management agreement. The Company sold product to Piedmont during the six months ended January 2, 1994, at cost, totaling $38.9 million. The Company earned $4.8 million pursuant to its management agreement with Piedmont. Also, the Company subleased various fleet and vending equipment to Piedmont during 1993, at cost. These sublease rentals amounted to approximately $400,000. On December 20, 1991, the Company acquired all of the outstanding capital stock of Sunbelt for approximately $15.2 million. Approximately $4.4 million of the purchase price was paid in cash to The Coca-Cola Company and one of its affiliates (former shareholders of Sunbelt). In connection with the acquisition of Sunbelt, the Company entered into an agreement providing for a $230 million bridge facility with CCFC. On December 20, 1991, the Company borrowed $152.5 million under this agreement to repay certain indebtedness of Sunbelt. The Company also issued $50 million of Series B Nonconvertible Preferred Stock to CCFC. During the first quarter of 1992, the Company refinanced the $230 million bridge facility from CCFC. Interest paid to CCFC in 1992 under the bridge facility agreement amounted to $1.6 million. On October 30, 1992, the Company redeemed the $50 million of Series B Nonconvertible Preferred Stock held by CCFC. The preferred stock was refinanced using a $50 million three-year bank term loan. Dividends paid to CCFC in 1992 on these preferred shares totaled $3.5 million.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On November 30, 1992, the Company and the owner of the Company's Snyder Production Center in Charlotte, North Carolina agreed to the early termination of the Company's lease. Harrison Limited Partnership One purchased the property contemporaneously with the termination of the lease, and the Company and Harrison Limited Partnership One entered into an agreement pursuant to which the Company leased the property for a ten-year term beginning on December 1, 1992. A North Carolina corporation owned entirely by J. Frank Harrison, Jr. serves as sole general partner of the limited partnership. The sole limited partner of this limited partnership is a trust as to which J. Frank Harrison, III and Reid M. Henson are co-trustees. The annual base rent the Company is obligated to pay for its lease of the Snyder Production Center is approximately $1.9 million. The base rent is subject to adjustment for increases in the Consumer Price Index and for increases or decreases in interest rates, using LIBOR as the measurement device. Rent expense under this lease totaled $1,947,000 and $162,000 in 1993 and 1992, respectively. On June 1, 1993, the Company entered into a ten-year lease agreement with Beacon Investment Corporation related to the Company's headquarters office building. Beacon Investment Corporation's sole shareholder is J. Frank Harrison, III. The annual base rent the Company is obligated to pay under this lease is approximately $1.2 million. The base rent is subject to adjustment for increases in the Consumer Price Index and for increases or decreases in interest rates, using LIBOR as the measurement device. Rent expense under this lease totaled $738,000 in 1993. The Company is a shareholder in two entities from which it purchases substantially all its requirements for plastic bottles. Purchases from these entities were approximately $47 million, $46 million and $31 million in 1993, 1992 and 1991, respectively. In connection with its participation in one of these cooperatives, the Company has guaranteed a portion of the cooperative's debt. On January 2, 1994, such guarantee amounted to approximately $13.1 million. 16. LITIGATION On February 11, 1991, a Complaint was filed against the Company and two Company employees in the matter of JEFF HALLUMS V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., File No. 8108 in the Chancery Court for Wilson County, Tennessee as previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1993. This suit by a visually handicapped former truck driver for Coca-Cola Bottling Company of Nashville, Inc., a wholly owned subsidiary of the Company, alleges liability under various Tennessee common law misrepresentation principles and under the employee discrimination provision of the Tennessee Human Rights Act. Plaintiff was terminated because he did not meet federal standards for commercial truck drivers. Plaintiff seeks damages in the amount of $750,000. On October 13, 1993, the Tennessee Court of Appeals, on an interlocutory appeal, reversed the trial court's denial of the Company's motion for summary judgment with respect to plaintiff's handicap discrimination claim. The appellate court remanded the case for trial of plaintiff's common law tort claims. On February 28, 1994, the Tennessee Supreme Court denied plaintiff's application for permission to appeal, leaving the order of the Court of Appeals intact. Plaintiff's suit is now limited to common law tort claims in the trial court. The Company does not believe it has liability and is defending the case vigorously. On March 4, 1993, a Complaint was filed against the Company, the predecessor bottling company for the Laurel, Mississippi territory and other unnamed parties in the matter of MRS. ELSIE LANGLEY, ADMINISTRATRIX OF THE ESTATE OF WALTER LANGLEY V. COCA-COLA BOTTLING CO. CONSOLIDATED, ET AL., Cause No. 93-3-30 in the Circuit Court of the Second Judicial District for Jones County, Mississippi. This suit by the testatrix spouse of a deceased former employee of the predecessor bottler alleges misrepresentation and fraud in connection with the severance package offered to employees terminated by the predecessor bottler in connection with the acquisition of the Laurel franchise subsidiary of the Company. Plaintiff claims that the former employee was led to believe that the severance package was to include continuation of health insurance by the Company. Plaintiff seeks damages in an amount up to $18 million in compensatory and punitive damages. The Company does not believe it has liability and is defending the case vigorously.
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Changes in current assets and current liabilities affecting cash, net of effects from acquisitions and divestitures of companies and effects of accounting changes, are as follows:
Cash payments during the year were as follows:
COCA-COLA BOTTLING CO. CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. QUARTERLY FINANCIAL DATA (UNAUDITED) Set forth below are unaudited quarterly financial data for the fiscal years ended January 2, 1994 and January 3, 1993. Third quarter 1993 results have been reclassified to conform to current classifications.
REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COCA-COLA BOTTLING CO. CONSOLIDATED In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a) (1) and (2) of this filing present fairly, in all material respects, the financial position of Coca-Cola Bottling Co. Consolidated and its subsidiaries at January 2, 1994 and January 3, 1993, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. During 1992 the Company changed its method of accounting for income taxes and for postretirement benefits other than pensions, as described in Notes 11 and 14. PRICE WATERHOUSE Charlotte, North Carolina February 18, 1994
The financial statement schedules required by Regulation S-X are set forth in response to Item 14 below. The supplementary data required by Item 302 of Regulation S-K is set forth in Note 18 to the financial statements. ITEM 9
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable.
PART III ITEM 10
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY For information with respect to the executive officers of the Company, see "Executive Officers of the Registrant" at the end of Part I of this Report. For information with respect to the Directors of the Company, see the "Election of Directors" and "Certain Transactions" sections of the Proxy Statement for the 1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission, which is incorporated herein by reference. For information with respect to Section 16 reports for directors and executive officers of the Company, see the "Election of Directors -- Beneficial Ownership of Management" section of the Proxy Statement for the 1994 Annual Meeting of Shareholders. ITEM 11
ITEM 11 -- EXECUTIVE COMPENSATION For information with respect to executive compensation, see the "Executive Compensation" section of the Proxy Statement for the 1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission, which is incorporated herein by reference (other than the subsections entitled "Report of the Compensation Committee on Annual Compensation of Executive Officers" and "Common Stock Performance," which are specifically excluded from such incorporation). ITEM 12
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT For information with respect to security ownership of certain beneficial owners and management, see the "Principal Shareholders" and "Election of Directors -- Beneficial Ownership of Management" sections of the Proxy Statement for the 1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission, which is incorporated herein by reference. ITEM 13
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS For information with respect to certain relationships and related transactions, see the "Certain Transactions" and "Compensation Committee Interlocks and Insider Participation" sections of the Proxy Statement for the 1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission, which are incorporated herein by reference. PART IV ITEM 14
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K A. List of Documents filed as part of this report. 1. Financial Statements Report of Independent Accountants Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Cash Flows Consolidated Statements of Changes in Shareholders' Equity Notes to Consolidated Financial Statements 2. Financial Statement Schedules The following financial statement schedules are filed as part of this report following this Item 14. The Report of Independent Accountants with respect to the financial statement schedules is included in Item 8 above. Schedule V -- Property, Plant and Equipment Schedule VI -- Property, Plant and Equipment -- Accumulated Depreciation and Amortization Schedule VIII -- Valuation and Qualifying Accounts and Reserves Schedule IX -- Short-term Borrowings Schedule X -- Supplementary Statement of Operations Information Schedule XI -- Identifiable Intangible Assets All other financial statements and schedules not listed have been omitted because the required information is included in the consolidated financial statements or the notes thereto, or is not applicable or required.
3. Listing of Exhibits: (i) Exhibits Incorporated by Reference:
* To be supplied by amendment. B. Reports on Form 8-K There were no Current Reports on Form 8-K filed by the Company during the fourth quarter of 1993. D. Audited Financial Statements of Piedmont Coca-Cola Bottling Partnership
SCHEDULE V COCA-COLA BOTTLING CO. CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT (IN THOUSANDS)
(1) Arising from business combinations, transfers and reclassifications. (2) Includes sale and contribution of assets to Piedmont Coca-Cola Bottling Partnership.
SCHEDULE VI COCA-COLA BOTTLING CO. CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT ACCUMULATED DEPRECIATION AND AMORTIZATION (IN THOUSANDS)
(1) Arising from business combinations, transfers and reclassifications. (2) Includes sale and contribution of assets to Piedmont Coca-Cola Bottling Partnership.
SCHEDULE VIII COCA-COLA BOTTLING CO. CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS)
(1) Arising from business combinations and divestitures.
SCHEDULE IX COCA-COLA BOTTLING CO. CONSOLIDATED SHORT-TERM BORROWINGS (IN THOUSANDS)
(1) These short-term notes payable are classified as noncurrent debt in the Company's consolidated balance sheets because they are backed by a revolving credit agreement. (2) There were no outstanding commercial paper borrowings on January 2, 1994, January 3, 1993 and December 29, 1991. These borrowings, when utilized, are classified as noncurrent debt in the Company's consolidated balance sheets because they are backed by a revolving credit agreement. (3) These short-term notes payable are outstanding under the Company's revolving credit agreement.
SCHEDULE X COCA-COLA BOTTLING CO. CONSOLIDATED SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION (IN THOUSANDS) Supplementary statement of operations information is set forth in the following tabulation. All amounts have been charged directly to expense accounts.
SCHEDULE XI COCA-COLA BOTTLING CO. CONSOLIDATED IDENTIFIABLE INTANGIBLE ASSETS (IN THOUSANDS)
(1) Includes purchase accounting adjustments in the allocation of the purchase price of the various acquisitions. (2) Includes sale and contribution of franchise rights to Piedmont Coca-Cola Bottling Partnership.
REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS OF PIEDMONT COCA-COLA BOTTLING PARTNERSHIP In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of cash flows and of partners' equity present fairly, in all material respects, the financial position of Piedmont Coca-Cola Bottling Partnership and its subsidiary at January 2, 1994, and the results of their operations and their cash flows for the period July 2, 1993 through January 2, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. PRICE WATERHOUSE Charlotte, North Carolina February 18, 1994
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP CONSOLIDATED BALANCE SHEET IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD JULY 2, 1993 THROUGH JANUARY 2, 1994 IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP CONSOLIDATED STATEMENT OF PARTNERS' EQUITY IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD JULY 2, 1993 THROUGH JANUARY 2, 1994 IN THOUSANDS
See Accompanying Notes to Consolidated Financial Statements.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Piedmont Coca-Cola Bottling Partnership ("Piedmont") is engaged in the marketing and distribution of soft drinks, primarily products of The Coca-Cola Company. The consolidated financial statements include the accounts of Piedmont and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated. The fiscal period presented is the 26-week period from July 2, 1993 (date of inception) through January 2, 1994. The Company's more significant accounting policies are as follows: CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, cash in banks and cash equivalents, which are highly liquid debt instruments with maturities of less than 90 days. INVENTORIES Inventories are stated at the lower of cost, primarily determined on the first-in, first-out basis, or market. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Additions and major replacements or betterments are added to the assets at cost. Maintenance and repair costs and minor replacements are charged to expense when incurred. When assets are replaced or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and the gain or loss, if any, is reflected in income. INCOME TAXES Piedmont provides deferred income taxes for the tax effects of temporary differences between the financial reporting and income tax bases of the assets and liabilities of CCBC of Wilmington, Inc., a corporation wholly owned by Piedmont. BENEFIT PLANS Piedmont leases all of its active employees from Coca-Cola Bottling Co. Consolidated ("Consolidated"). Benefit plans of Consolidated cover these employees. Piedmont assumed the postretirement benefit obligation on July 2, 1993 for certain retired employees of the bottling operations which were sold or contributed by Consolidated and The Coca-Cola Company. Piedmont adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" upon its formation on July 2, 1993. INTANGIBLE ASSETS Identifiable intangible assets resulting from the acquisition of Coca-Cola bottling franchises are being amortized on a straight-line basis over forty years. EXCESS OF COST OVER FAIR VALUE OF NET ASSETS OF BUSINESSES ACQUIRED The excess of cost over fair value of net assets of businesses acquired is being amortized on a straight-line basis over forty years. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK Costs associated with interest rate swaps and forward interest rate agreements are recorded over the lives of the agreements as an adjustment to interest expense.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. FORMATION OF PIEDMONT COCA-COLA BOTTLING PARTNERSHIP On July 2, 1993, Consolidated and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership ("Piedmont") to distribute and market soft drink products primarily in certain portions of North Carolina and South Carolina. Consolidated and The Coca-Cola Company, through their respective subsidiaries, each beneficially own a 50% interest in Piedmont. Consolidated provides substantially all of the soft drink products for Piedmont and manages the operations of Piedmont pursuant to a management agreement. Subsidiaries of Consolidated and The Coca-Cola Company each made an initial capital contribution to Piedmont of $70 million in the aggregate. The capital contribution made by Consolidated's subsidiaries was composed of approximately $21.7 million in cash and of bottling operations and certain assets used in connection with Consolidated's Wilson, NC and Greenville and Beaufort, SC territories. Consolidated sold other territories to Piedmont for an aggregate purchase price of approximately $118 million. The Coca-Cola Company sold territories to Piedmont for an aggregate purchase price of approximately $160.5 million. Assets acquired and contributed from Consolidated and The Coca-Cola Company totaled $385.0 million and related liabilities aggregated $58.1 million. The acquisition of bottling territories was accounted for under the purchase method of accounting. 3. INVENTORIES Inventories are summarized as follows:
4. PROPERTY, PLANT AND EQUIPMENT The principal categories and estimated useful lives of property, plant and equipment were as follows:
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. LONG-TERM DEBT Long-term debt is summarized as follows:
On August 31, 1993, Piedmont entered into a revolving credit agreement totaling $215 million with a maturity date of August 31, 1998. A facility fee of approximately 1/5% per year on the banks' total commitment is payable annually. The agreement contains several covenants which establish minimum ratio requirements related to debt and cash flow. As of January 2, 1994, Piedmont was in compliance with the covenants covering its revolving credit agreement and none of these covenants is presently expected to constrain Piedmont. The $190 million in revolving credit loans as of January 2, 1994 is outstanding under Piedmont's $215 million revolving credit facility. It is Piedmont's intent to renew these borrowings as they mature. To the extent that these borrowings do not exceed the amount available under the $215 million revolving credit agreement, they are classified as noncurrent liabilities. 6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK Piedmont actively manages its interest rate risk using a variety of rate hedging mechanisms. Piedmont entered into hedging transactions that resulted in a weighted average interest rate of 4.9% for its outstanding long-term debt as of January 2, 1994. Approximately 21% of the outstanding long-term debt was subject to changes in short-term interest rates. Piedmont's overall weighted average borrowing rate on its long-term debt was 4.9% in 1993. Off-balance-sheet financial instruments on January 2, 1994 are summarized as follows:
CREDIT RISK Piedmont is exposed to credit loss in the event of nonperformance by the other parties to the various off-balance-sheet financial instruments as disclosed above. Piedmont does not anticipate nonperformance by the other parties. Piedmont has entered into these off-balance-sheet financial transactions with numerous counterparties during the year. The financial instruments outstanding on January 2, 1994 as disclosed above are with three different commercial banks. It is Piedmont's belief that this does not represent any material concentration of credit risk. COLLATERAL In accordance with standard market practice, no collateral has been given or received by Piedmont in connection with these off-balance-sheet financial instruments described above. Piedmont does not anticipate nonperformance by the counterparties.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used in estimating the fair values of Piedmont's financial instruments: NON-TRADED VARIABLE RATE LONG-TERM DEBT The carrying amounts of Piedmont's variable rate borrowings approximate their fair value. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS Fair values for Piedmont's off-balance-sheet instruments (interest rate swaps and forward rate agreements) are based on current settlement values. The carrying amounts and fair values of Piedmont's financial instruments on January 2, 1994 were as follows:
The fair values of the interest rate swaps and forward rate agreements represent the estimated amounts Piedmont would have received or would have had to pay, respectively, to terminate the agreements on January 2, 1994. 8. LEASE COMMITMENTS On July 2, 1993, Piedmont entered into certain sublease agreements with Consolidated for various fleet and vending equipment. Rent expense incurred for the six months ended January 2, 1994 under these sublease agreements totaled $380,000. Operating lease payments are charged to expense as incurred. Total rental expense included in the statement of operations for the six months ended January 2, 1994 amounted to $730,000. The following is a summary of future minimum lease payments for all operating leases as of January 2, 1994:
9. INCOME TAXES Piedmont owns all of the outstanding stock of CCBC of Wilmington, Inc. ("Wilmington"), a corporation under U.S. tax law. Partnerships are generally not taxable entities under federal and state law; accordingly, Piedmont has not provided for federal or state income taxes except for income taxes provided on the results of operations of Wilmington. Each partner reports its share of the profits and losses of Piedmont on its income tax return. All income tax expense recorded in the accompanying consolidated statement of operations and the deferred income tax liability reflected in the accompanying consolidated balance sheet relate to the operations of Wilmington. The tax provision for Wilmington was calculated under the requirements of SFAS 109, "Accounting for Income Taxes." Pretax income for Wilmington for the period July 2, 1993 through January 2, 1994 was approximately $160,000.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The provision for income taxes consisted of the following:
Wilmington made income tax payments of approximately $260,000 during 1993. Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities. Temporary differences that comprise a significant part of deferred tax assets and liabilities on January 2, 1994 were as follows:
Current deferred income taxes of $67,000 are included in accounts payable and accrued liabilities. Reported income tax expense is reconciled to the amount computed on the basis of income before income taxes at the statutory rate as follows:
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. BENEFIT PLANS Pursuant to the management agreement with Consolidated, Piedmont leases its active employees from Consolidated. These employees participate in Consolidated's benefit plans. Piedmont reimburses Consolidated for the actual costs of payroll and benefit expenses. On July 2, 1993, Piedmont assumed the postretirement benefit obligation for certain retired employees of the bottling operations which were sold or contributed by Consolidated and The Coca-Cola Company. Postretirement benefit expense, which consisted entirely of interest cost on the projected benefit obligation, was $340,000 for the six month period ended January 2, 1994. The accumulated postretirement benefit obligation for these former employees as of January 2, 1994 was approximately $8.0 million. Future postretirement benefit costs were estimated assuming medical costs would decline over a five-year period from a 10% increase beginning January 1, 1993 to 6%, and then decline to a 5.5% increase thereafter. A 1% increase in this annual trend rate would have increased the accumulated postretirement benefit obligation on January 2, 1994 by approximately $800,000 and postretirement benefit expense in the six month period ended January 2, 1994 would have increased by approximately $34,000. The weighted average discount rate used to estimate the postretirement benefit obligation was 7.5%. 11. RELATED PARTY TRANSACTIONS On July 2, 1993, Consolidated and The Coca-Cola Company formed Piedmont. Consolidated and The Coca-Cola Company, through their respective subsidiaries, each beneficially own a 50% interest in Piedmont. Consolidated provides substantially all of the soft drink products for Piedmont and manages the operations of Piedmont pursuant to a management agreement. Subsidiaries of Consolidated and The Coca-Cola Company each made an initial capital contribution to Piedmont of $70 million in the aggregate. The capital contribution made by Consolidated's subsidiaries was composed of approximately $21.7 million in cash and of bottling operations and certain assets used in connection with the Wilson, NC and Greenville and Beaufort, SC territories. Consolidated also sold other territories to Piedmont for an aggregate purchase price of approximately $118 million. The Coca-Cola Company sold territories to Piedmont for an aggregate purchase price of approximately $160.5 million. In conjunction with its formation on July 2, 1993, Piedmont recorded notes with Consolidated and The Coca-Cola Company for net amounts of approximately $85.2 million and $93.1 million, respectively. In addition, Piedmont executed an additional note payable for approximately $11.1 million to Consolidated on August 6, 1993 in conjunction with its purchase of the Aiken, SC territory. The interest rate on these notes was approximately 3.6%. These notes were repaid on August 31, 1993 when Piedmont secured its own bank financing. Interest paid to Consolidated and The Coca-Cola Company on these notes was approximately $528,000 and $547,000, respectively. Piedmont's business consists primarily of the marketing and distribution of soft drink products of The Coca-Cola Company, which is the sole owner of the secret formulas under which the primary components (either concentrates or syrups) of its soft drink products are manufactured. Piedmont engages in arrangements to promote the sale of products of The Coca-Cola Company in its territories. Total direct marketing support provided to Piedmont by The Coca-Cola Company for the six month period ended January 2, 1994 was approximately $3.6 million. In addition, Piedmont paid approximately $1.6 million for local media and marketing program expense pursuant to cooperative advertising and cooperative marketing arrangements with The Coca-Cola Company for the six month period ended January 2, 1994. For the six month period ended January 2, 1994, Piedmont purchased approximately $2.1 million of finished soft drink products, principally post-mix syrup, from The Coca-Cola Company. Pursuant to the management agreement with Consolidated, Piedmont purchased, at cost, $38.9 million of soft drink products from Consolidated during the six month period ended January 2, 1994. Piedmont recorded management fees to Consolidated of $4.8 million during the six month period ended January 2, 1994. Piedmont subleased various fleet and vending equipment from Consolidated during 1993, at Consolidated's cost. These sublease rentals amounted to $380,000. In addition, Piedmont reimbursed Consolidated, at cost, for certain operating expenses initially paid by Consolidated on Piedmont's behalf.
PIEDMONT COCA-COLA BOTTLING PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Changes in current assets and current liabilities affecting cash were as follows:
Cash payments during the period were as follows:
SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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: March 31, 1994 By: /s/ JAMES L. MOORE, JR. JAMES L. MOORE, JR. PRESIDENT AND CHIEF EXECUTIVE OFFICER Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
EXHIBIT INDEX Page Number or Exhibit Incorporation Number Description by Reference to 3.1 The Company's Bylaws. Exhibit 3. to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. 3.2 The Company's Certificate of Exhibit 3.2 to the Incorporation with all amendments. Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990. 4.1 Specimen of Common Stock Certificate. Exhibit 4.1 to the Company's Registra- tion Statement (No. 2-97822) on Form S-1. 4.2 Credit Agreement dated as of March 17, Exhibit 4.01 to the 1992 among the Company and NationsBank Company's Quarterly of North Carolina, as Agent, and other Report on Form 10-Q banks named therein. for the quarter ended March 29, 1992 4.3 Amendment No. 1 to Amended and Restated Exhibit 4.02 to the Revolving Credit and Reimbursement Company's Quarterly Agreement, dated as of March 27, 1992 Report on Form 10-Q between the Company and NationsBank of for the quarter ended North Carolina. March 29, 1992. 4.4 Specimen Fixed Rate Note under the Exhibit 4.1 to the Company's Medium-Term Note Program, Company's Current pursuant to which it may issue, from Report on Form 8-K time to time, up to $200 million dated February 14, aggregate principal amount of its 1990. Medium-Term Notes, Series A. 4.5 Specimen Floating Rate Note under the Exhibit 4.2 to the Company's Medium-Term Note Program, Company's Current pursuant to which it may issue, from Report on Form 8-K time to time, up to $200 million dated February 14, aggregate principal amount of its 1990. Medium-Term Notes, Series A.
4.6 Indenture dated as of October 15, 1989 Exhibit 4. to the between the Company and Manufacturers Company's Registra- Hanover Trust Company of California, as tion Statement (No. Trustee, in connection with the Company's 33-31784) on Form $200 million shelf registration of its S-3 as filed on Medium-Term Notes, Series A, due from February 14, 1990. nine months to 30 years from date of issue. 4.7 Selling Agency Agreement, dated as of Exhibit 1.2 to the February 14, 1990, between the Company Company's Registra- and Salomon Brothers and Goldman Sachs, tion Statement (No. as Agents, in connection with the 33-31784) on Form Company's $200 million Medium-Term Notes, S-3 as filed on Series A, due from nine months to 30 February 14, 1990. years from date of issue. 4.8 Commercial Paper Agreement, dated as of Exhibit 4.8 to the December 13, 1989, between the Company Company's Annual and Goldman Sachs Money Markets, Inc., Report on Form 10-K as co-agent. for the fiscal year ended December 31, 1989. 4.9 Form of Debenture issued by the Company Exhibit 4.04 to the to two shareholders of Sunbelt Coca-Cola Company's Current Bottling Company, Inc. dated as of Report on Form 8-K December 19, 1991. dated December 19, 1991. 4.10 Commercial Paper Dealer Agreement, Exhibit 4.14 to the dated as of February 11, 1993, between Company's Annual the Company and Citicorp Securities Report on Form 10-K Markets, Inc., as co-agent. for the fiscal year ended January 3, 1993. 4.11 The Registrant, by signing this report, agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument which defines the rights of holders of long-term debt of the Registrant and its subsidiaries for which consolidated financial state- ments are required to be filed, and which authorizes a total amount of securities not in excess of 10 percent of total assets of the Registrant and its sub- sidiaries on a consolidated basis. 10.1 Employment Agreement of James L. Moore, Exhibit 10.2 to the Jr. dated as of March 16, 1987. Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1986.
10.2 Stock Rights and Restrictions Agreement Exhibit 28.01 to the by and between Coca-Cola Bottling Co. Company's Current Consolidated and The Coca-Cola Company Report on Form 8-K dated January 27, 1989. dated January 27, 1989. 10.3 Description and examples of bottling Exhibit 10.20 to the franchise agreements between the Company Company's Annual and The Coca-Cola Company. Report on Form 10-K for the fiscal year ended December 31, 1988. 10.4 Lease, dated as of December 11, 1974, by Exhibit 19.6 to the and between the Company and the Ragland Company's Annual Corporation, related to the production/ Report on Form 10-K distribution facility in Nashville, for the fiscal year Tennessee. ended December 31, 1988. 10.5 Amendment to Lease Agreement designated Exhibit 19.7 to the as Exhibit 10.4. Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988. 10.6 Second Amendment to Lease Agreement Exhibit 19.8 to the designated as Exhibit 10.4. Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988. 10.7 Master Lease Agreement, beginning on Exhibit 19.3 to the May 31, 1988, with Schedules 1 through Company's Quarterly 3, between the Company and General Report on Form 10-Q Electric Capital Corporation covering for the quarter ended various vehicles. March 31, 1990. 10.8 Lease Agreement, dated as of July 17, Exhibit 19.4 to the 1988, between the Company and GE Capital Company's Quarterly Fleet Services covering various vehicles. Report on Form 10-Q for the quarter ended March 31, 1990. 10.9 Master Motor Vehicle Lease Agreement, Exhibit 19.5 to the dated as of December 15, 1988, with Company's Quarterly Schedule 4 between the Company and Report on Form 10-Q Citicorp North America, Inc. covering for the quarter ended various vehicles. March 31, 1990.
10.10 Master Lease Agreement, beginning on Exhibit 19.6 to the April 12, 1989, with Schedule 1, between Company's Quarterly the Company and Citicorp North America, Report on Form 10-Q Inc. covering various equipment. for the quarter ended March 31, 1990. 10.11 Supplemental Savings Incentive Plan, Exhibit 10.36 to the dated as of April 1, 1990 between certain Company's Annual Eligible Employees of the Company and Report on Form 10-K the Company. for the fiscal year ended December 30, 1990. 10.12 Description and example of Deferred Exhibit 19.1 to the Compensation Agreement, dated as of Company's Annual October 1, 1987, between Eligible Report on Form 10-K Employees of the Company and the Company for the fiscal year under the Officer's Split-Dollar Life ended December 30, Insurance Plan. 1990. 10.13 Schedules 2 through 6 of a Master Lease Exhibit 10.39 to the Agreement, beginning on April 12, 1989, Company's Quarterly between the Company and Citicorp North Report on Form 10-Q America, Inc. covering various forklifts for the quarter ended and vending machines. June 30, 1991. 10.14 Schedule 7 of a Master Lease Agreement, Exhibit 10.41 to the beginning on April 12, 1989, between the Company's Quarterly Company and Citicorp North America, Inc. Report on Form 10-Q covering various vending machines. for the quarter ended September 29, 1991. 10.15 Consolidated/Sunbelt Acquisition Exhibit 2.01 to the Agreement, dated as of December 19, 1991, Company's Current by and among the Company and the share- Report on Form 8-K holders of Sunbelt Coca-Cola Bottling dated December 19, Company, Inc. 1991. 10.16 Officer Retention Plan, dated as of Exhibit 10.47 to the January 1, 1991, between certain Eligible Company's Annual Officers of the Company and the Company. Report on Form 10-K for the fiscal year ended December 29, 1991. 10.17 Schedule 14 of a Master Motor Vehicle Exhibit 10.48 to the Lease Agreement, beginning on Company's Annual December 15, 1988, between the Company Report on Form 10-K and Citicorp North America, Inc. covering for the fiscal year various vehicles. ended December 29, 1991.
10.18 Schedules 8 and 9 of a Master Lease Exhibit 10.49 to the Agreement, beginning on April 12, 1989, Company's Annual between the Company and Citicorp North Report on Form 10-K America, Inc. covering various vending for the fiscal year machines. ended December 29, 1991.
10.19 Acquisition Agreement, by and among Exhibit 10.50 to the Sunbelt Coca-Cola Bottling Company, Inc., Company's Annual Sunbelt Carolina Acquisition Company, Report on Form 10-K Inc., certain of the common stockholders for the fiscal year of Coca-Cola Bottling Co. Affiliated, ended December 29, Inc., and the stockholders of TRNH, Inc., 1991. dated as of November 7, 1989. 10.20 Amendment Number One to the Sunbelt/ Exhibit 10.04 to the Affiliated Acquisition Agreement, dated Company's Quarterly as of December 29, 1989, between Sunbelt Report on Form 10-Q Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended Carolina Acquisition Company, Inc., March 29, 1992. certain of the common stockholders of Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc. 10.21 Amendment Number Two to the Sunbelt/ Exhibit 10.05 to the Affiliated Acquisition Agreement, dated Company's Quarterly as of December 29, 1989, between Sunbelt Report on Form 10-Q Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended Carolina Acquisition Company, Inc., March 29, 1992. certain of the common stockholders of Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc. 10.22 Amendment Number Three to the Sunbelt/ Exhibit 10.06 to the Affiliated Acquisition Agreement, dated Company's Quarterly as of December 29, 1989, between Sunbelt Report on Form 10-Q Coca-Cola Bottling Company, Inc., Sunbelt for the quarter ended Carolina Acquisition Company, Inc., March 29, 1992. certain of the common stockholders of Coca-Cola Bottling Co. Affiliated, Inc. and the stockholders of TRNH, Inc.
10.23 Master Lease Agreement, dated as of Exhibit 10.01 to the January 7, 1992 between the Company and Company's Quarterly Signet Leasing and Financial Corporation, Report on Form 10-Q and Schedules 1 through 4, covering for the quarter ended various vehicles. March 29, 1992. 10.24 Schedule No. 1, dated as of March 16, Exhibit 10.02 to the 1992, of a Master Lease Agreement between Company's Quarterly the Company and Citicorp North America, Report on Form 10-Q Inc. covering various vending machines. for the quarter ended March 29, 1992.
10.25 Schedule No. 2, dated as of April 27, Exhibit 10.03 to the 1992, of a Master Lease Agreement between Company's Quarterly the Company and Citicorp North America, Report on Form 10-Q Inc. covering various vending machines. for the quarter ended March 29, 1992. 10.26 Schedule No. 3, dated as of June 8, Exhibit 10.07 to the 1992, of a Master Lease Agreement Company's Quarterly between the Company and Citicorp North Report on Form 10-Q America, Inc. covering various vending for the quarter ended machines. June 28, 1992. 10.27 Schedule No. 4, dated as of July 13, Exhibit 10.08 to the 1992, of a Master Lease Agreement between Company's Quarterly the Company and Citicorp North America, Report on Form 10-Q Inc. covering various vending machines. for the quarter ended June 28, 1992. 10.28 Amended Schedules No. 1, 2 and 4 of a Exhibit 10.09 to the Master Lease Agreement, dated as of Company's Quarterly January 7, 1992 between the Company and Report on Form 10-Q Signet Leasing and Financial Corporation, for the quarter ended covering various vehicles. September 27, 1992. 10.29 Schedules No. 1A, 5, 6, 7 and 8 of a Exhibit 10.10 to the Master Lease Agreement, dated as of Company's Quarterly January 7, 1992 between the Company and Report on Form 10-Q Signet Leasing and Financial Corporation, for the quarter ended covering various vehicles and forklifts. September 27, 1992. 10.30 Master Equipment Lease, dated as of Exhibit 10.37 to the February 9, 1993, between the Company Company's Annual and Coca-Cola Financial Corporation Report on Form 10-K covering various vending machines. for the fiscal year ended January 3, 1993. 10.31 Lease Agreement, dated as of November 30, Exhibit 10.38 to the 1992, between the Company and Harrison Company's Annual Limited Partnership One, related to the Report on Form 10-K Snyder Production Center in Charlotte, for the fiscal year North Carolina. ended January 3, 1993. 10.32 Motor Vehicle Lease Agreement No. 790855, Exhibit 10.39 to the dated as of December 31, 1992, between Company's Annual the Company and Citicorp Leasing, Inc. Report on Form 10-K covering various vehicles. for the fiscal year ended January 3, 1993. 10.33 Schedules 1 through 5 of the Motor Exhibit 10.40 to the Vehicle Lease Agreement No. 790855, Company's Annual beginning on December 31, 1992, between Report on Form 10-K the Company and Citicorp Leasing, Inc. for the fiscal year covering various vehicles. ended January 3, 1993.
10.34 Amended and Restated Leasing Schedules Exhibit 10.41 to the No. 1, 3, 5, 6, 8, 9, 11, 12 and 13 of a Company's Annual Master Motor Vehicle Lease Agreement, Report on Form 10-K dated as of November 14, 1988, between for the fiscal year the Company and Citicorp North America, ended January 3, 1993. Inc. covering various vehicles. 10.35 Termination and Release Agreement dated Exhibit 10.43 to the as of March 27, 1992 by and among Sunbelt Company's Annual Coca-Cola Bottling Company, Coca-Cola Report on Form 10-K Bottling Co. Affiliated, Inc., the agent for the fiscal year for holders of certain debentures of ended January 3, 1993. Sunbelt issued pursuant to a certain Indenture dated as of January 11, 1990, as amended, and Wilmington Trust Company which acted as trustee under the Indenture. 10.36 Schedule 10 of a Master Lease Agreement, Exhibit 10.45 to the dated as of January 7, 1992 between the Company's Annual Company and Signet Leasing and Financial Report on Form 10-K Corporation covering various forklifts. for the fiscal year ended January 3, 1993. 10.37 Schedule No. 5, dated as of August 10, Exhibit 10.46 to the 1992, of a Master Lease Agreement between Company's Annual the Company and Citicorp Leasing, Inc. Report on Form 10-K covering various vending machines. for the fiscal year ended January 3, 1993. 10.38 Schedule No. 6, dated as of September 17, Exhibit 10.47 to the 1992, of a Master Lease Agreement between Company's Annual the Company and Citicorp Leasing, Inc. Report on Form 10-K covering various vending machines. for the fiscal year ended January 3, 1993. 10.39 Schedule No. 7, dated as of December 7, Exhibit 10.48 to the 1992, of a Master Lease Agreement Company's Annual between the Company and Citicorp Leasing, Report on Form 10-K Inc. covering various vending machines. for the fiscal year ended January 3, 1993. 10.40 Schedule No. 8, dated as of January 4, Exhibit 10.49 to the 1993, of a Master Lease Agreement between Company's Annual the Company and Citicorp Leasing, Inc. Report on Form 10-K covering various vending machines. for the fiscal year ended January 3, 1993. 10.41 Schedule No. 9, dated as of March 4, Exhibit 10.50 to the 1993, of a Master Lease Agreement between Company's Annual the Company and Citicorp Leasing, Inc. Report on Form 10-K covering various vending machines. for the fiscal year ended January 3, 1993.
10.42 Lease Funding No. 1, dated April 30, Exhibit 10.01 to the 1993, of a Master Equipment Lease Company's Quarterly between the Company and Coca-Cola Report on Form 10-Q Financial Corporation covering various for the quarter ended vending machines. April 4, 1993. 10.43 Amended and Restated Amendment No. 7, Exhibit 10.02 to the dated April 27, 1993, of Motor Vehicle Company's Quarterly Lease Agreement No. 743918 between the Report on Form 10-Q Company and Citicorp North America, Inc. for the quarter ended covering various vehicles. April 4, 1993. 10.44 Reorganization Plan and Agreement by and Exhibit 10.03 to the among Coca-Cola Bottling Co. Company's Quarterly Consolidated, Chopper Acquisitions, Report on Form 10-Q Inc., Whirl-i-Bird, Inc. and J. Frank for the quarter ended Harrison, Jr. April 4, 1993. 10.45 Partnership Agreement of Carolina Exhibit 2.01 to the Coca-Cola Bottling Partnership, dated as Company's Current of July 2, 1993, by and among Carolina Report on Form 8-K Coca-Cola Bottling Investments, Inc., dated July 2, 1993. Coca-Cola Ventures, Inc., Coca-Cola Bottling Co. Affiliated, Inc., Fayetteville Coca-Cola Bottling Company and Palmetto Bottling Company. 10.46 Asset Purchase Agreement, dated as of Exhibit 2.02 to the July 2, 1993, by and among Carolina Company's Current Coca-Cola Bottling Partnership, Coca- Report on Form 8-K Cola Bottling Co. Affiliated, Inc. and dated July 2, 1993. Coca-Cola Bottling Co. Consolidated.
10.47 Asset Purchase Agreement, dated as of Exhibit 2.03 to the July 2, 1993, by and among Carolina Company's Current Coca-Cola Bottling Partnership, Report on Form 8-K Fayetteville Coca-Cola Bottling Company dated July 2, 1993. and Coca-Cola Bottling Co. Consolidated. 10.48 Asset Purchase Agreement, dated as of Exhibit 2.04 to the July 2, 1993, by and among Carolina Company's Current Coca-Cola Bottling Partnership, Palmetto Report on Form 8-K Bottling Company and Coca-Cola Bottling dated July 2, 1993. Co. Consolidated.
10.49 Definition and Adjustment Agreement, Exhibit 2.05 to the dated July 2, 1993, by and among Carolina Company's Current Coca-Cola Bottling Partnership, Coca-Cola Report on Form 8-K Ventures, Inc., Coca-Cola Bottling Co. dated July 2, 1993. Consolidated, CCBC of Wilmington, Inc., Carolina Coca-Cola Bottling Investments, Inc., The Coca-Cola Company, Carolina Coca-Cola Holding Company, The Coastal Coca-Cola Bottling Company, Eastern Carolina Coca-Cola Bottling Company, Inc., Coca-Cola Bottling Co. Affiliated, Inc., Fayetteville Coca-Cola Bottling Company and Palmetto Bottling Company. 10.50 Management Agreement, dated as of July 2, Exhibit 10.01 to the 1993, by and among Coca-Cola Bottling Co. Company's Current Consolidated, Carolina Coca-Cola Bottling Report on Form 8-K Partnership, CCBC of Wilmington, Inc., dated July 2, 1993. Carolina Coca-Cola Bottling Investments, Inc., Coca-Cola Ventures, Inc. and Palmetto Bottling Company. 10.51 Post-Retirement Medical and Life Exhibit 10.02 to the Insurance Benefit Reimbursement Agree- Company's Current ment, dated July 2, 1993, by and between Report on Form 8-K Carolina Coca-Cola Bottling Partnership dated July 2, 1993. and Coca-Cola Bottling Co. Consolidated. 10.52 Aiken Asset Purchase Agreement, dated as Exhibit 2.01 to the of August 6, 1993 by and among Carolina Company's Quarterly Coca-Cola Bottling Partnership, Palmetto Report on Form 10-Q Bottling Company and Coca-Cola Bottling for the quarter ended Co. Consolidated. July 4, 1993.
10.53 Aiken Definition and Adjustment Agree- Exhibit 2.02 to the ment, dated as of August 6, 1993, by and Company's Quarterly among Carolina Coca-Cola Bottling Report on Form 10-Q Partnership, Coca-Cola Ventures, Inc., for the quarter ended Coca-Cola Bottling Co. Consolidated, July 4, 1993. Carolina Coca-Cola Bottling Investments, Inc., The Coca-Cola Company and Palmetto Bottling Company. 10.54 Lease Agreement, dated as of June 1, Exhibit 10.01 to the 1993, between the Company and Beacon Company's Quarterly Investment Corporation, related to the Report on Form 10-Q Company's corporate headquarters in for the quarter ended Charlotte, North Carolina. July 4, 1993.
10.55 Lease Funding No. 2, dated as of June 1, Exhibit 10.02 to the 1993, of a Master Equipment Lease between Company's Quarterly the Company and Coca-Cola Financial Report on Form 10-Q Corporation covering various vending for the quarter ended machines. July 4, 1993.
10.56 Lease Funding No. 3, dated as of July 12, Exhibit 10.03 to the 1993, of a Master Equipment Lease between Company's Quarterly the Company and Coca-Cola Financial Report on Form 10-Q Corporation covering various vending for the quarter ended machines. July 4, 1993. 10.57 Schedule No. 12 of a Master Lease Agree- Exhibit 10.04 to the ment, dated as of April 1, 1993, between Company's Quarterly the Company and Signet Leasing and Report on Form 10-Q Financial Corporation covering various for the quarter ended vehicles. July 4, 1993. 10.58 Schedule No. 13 of a Master Lease Agree- Exhibit 10.05 to the ment, dated as of April 1, 1993, between Company's Quarterly the Company and Signet Leasing and Report on Form 10-Q Financial Corporation covering various for the quarter ended vehicles. July 4, 1993.
10.59 Amended and Restated Guaranty Agreement, Exhibit 10.06 to the dated as of July 15, 1993 re: Company's Quarterly Southeastern Container, Inc. Report on Form 10-Q for the quarter ended July 4, 1993. 10.60 Lease Funding No. 4, dated as of August Exhibit 10.01 to the 24, 1993, of a Master Equipment Lease Company's Quarterly between the Company and Coca-Cola Report on Form 10-Q Financial Corporation covering various for the quarter ended vending machines. October 3, 1993. 10.61 Lease Funding No. 5, dated as of Exhibit 10.02 to the September 30, 1993, of a Master Equip- Company's Quarterly ment Lease between the Company and Report on Form 10-Q Coca-Cola Financial Corporation covering for the quarter ended various vending machines. October 3, 1993. 10.62 Schedule No. 11 of a Master Lease Agree- Exhibit 10.03 to the ment, dated as of July 1, 1993, between Company's Quarterly the Company and Signet Leasing and Report on Form 10-Q Financial Corporation covering various for the quarter ended vehicles. October 3, 1993. 10.63 Schedule No. 14 of a Master Lease Agree- Exhibit 10.04 to the ment, dated as of July 1, 1993, between Company's Quarterly the Company and Signet Leasing and Report on Form 10-Q Financial Corporation covering various for the quarter ended vehicles. October 3, 1993. 10.64 Schedule No. 15 of a Master Lease Agree- Exhibit 10.05 to the ment, dated as of July 1, 1993, between Company's Quarterly the Company and Signet Leasing and Report on Form 10-Q Financial Corporation covering various for the quarter ended vehicles. October 3, 1993.
10.65 Lease Funding No. 6, dated as of Exhibit 10.06 to the November 1, 1993, of a Master Equipment Company's Quarterly Lease between the Company and Coca-Cola Report on Form 10-Q Financial Corporation covering various for the quarter ended vending machines. October 3, 1993. 10.66 Lease Funding No. 7, dated as of Exhibit included in November 17, 1993, of a Master Equipment this filing. Lease between the Company and Coca-Cola Financial Corporation covering various vending machines.
10.67 Lease Funding No. 8, dated as of Exhibit included in December 30, 1993, of a Master Equipment this filing. Lease between the Company and Coca-Cola Financial Corporation covering various vending machines. 10.68 Description of the Company's Bonus Plan Exhibit included in for officers. this filing.
10.69 Master Lease Agreement, dated as of Exhibit included in February 18, 1992, between the Company this filing. and Citicorp Leasing, Inc. covering various equipment. 21.1 List of subsidiaries. Exhibit included in this filing.
23.1 Accountants Consent to Incorporation Exhibit included in by Reference into Forms S-3 (Registration this filing. No. 33-4325 and 33-31784). 99.1 Information, financial statements and To be supplied exhibits required by Form 11-K with by amendment. respect to the Coca-Cola Bottling Co. Consolidated Savings Plan.