-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYIYHdHgMMz/8yqdF08CbpUQdQBXAFA5LBihidM2R7NkJSTx54VwAFutD89FHC13 VV3BYKWM5mJq9nx+qcobSA== 0000912057-97-027628.txt : 19970814 0000912057-97-027628.hdr.sgml : 19970814 ACCESSION NUMBER: 0000912057-97-027628 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COCA COLA BOTTLING GROUP SOUTHWEST INC CENTRAL INDEX KEY: 0000811615 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 751494591 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-69274 FILM NUMBER: 97659246 BUSINESS ADDRESS: STREET 1: 1999 BRYAN ST STE 3300 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149691910 MAIL ADDRESS: STREET 2: 1999 BRYAN ST STE 3300 CITY: DALLAS STATE: TX ZIP: 75201 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1997 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------- Commission file number 33-69274 ---------- THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) NEVADA 75-2158578 --------------- ------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organizatio) Identification No.) 1999 BRYAN STREET, SUITE 3300, DALLAS, TEXAS 75201 --------------------------------------------------- (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: (214) 969-1910 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The aggregate market value of the voting stock held by non-affiliates of the registrant, as of August 1, 1997 was $0.00. As of August 1, 1997, 100,000 shares of the Company's common stock , par value $.10 per share, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: None PART I FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS--JUNE 30, 1997 AND DECEMBER 31, 1996 (Amounts in Thousands, Except Share Data) June 30, December 31, 1997 1996 -------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 3,308 $ 3,182 Receivables- Trade accounts, net of allowance for doubtful accounts of $537 as of June 30, 1997 and $540 as of December 31, 1996 20,689 17,782 Other 11,602 6,818 --------- --------- 32,291 24,600 Inventories 11,170 9,843 Prepaid expenses and other 2,301 2,400 Deferred tax asset 6,204 5,848 --------- --------- Total current assets 55,274 45,873 --------- --------- PROPERTY, PLANT AND EQUIPMENT, at cost: Land 5,780 5,796 Buildings and improvements 27,680 28,257 Vending machines, machinery and equipment 74,265 69,444 Furniture and fixtures 3,404 3,859 Transportation equipment 18,550 17,745 --------- --------- 129,679 125,101 Less-Accumulated depreciation and amortization (81,137) (79,424) --------- --------- Property, plant and equipment, net 48,542 45,677 OTHER ASSETS: Franchise rights, net of accumulated amortization of $39,526 as of June 30, 1997 and $37,744 as of December 31, 1996 103,830 105,910 Goodwill, net of accumulated amortization of $2,079 as of June 30, 1997 and $1,874 as of December 31, 1996 13,637 13,558 --------- --------- Franchise rights and goodwill 117,467 119,468 Deferred financing costs, and other assets, net of accumulated amortization of $5,260 as of June 30, 1997 and $13,834 as of December 31, 1996 17,701 16,301 Deferred tax asset 1,717 3,725 --------- --------- Total other assets 136,885 139,494 --------- --------- Total assets $ 240,701 $ 231,044 --------- --------- --------- --------- The accompanying notes are an integral part of these consolidated balance sheets. 2 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS--JUNE 30, 1997 AND DECEMBER 31, 1996 (Amounts in Thousands, Except Share Data) June 30, December 31, 1997 1996 -------- ------------ CURRENT LIABILITIES: Accounts payable $ 22,532 $ 21,289 Accrued payroll 1,984 2,692 Accrued interest 1,640 1,629 Other accrued liabilities 1,678 1,392 Current maturities of long-term debt 13,672 12,816 -------- -------- Total current liabilities 41,506 39,818 -------- -------- LONG-TERM DEBT, net of current maturities 241,597 238,027 OTHER LIABILITIES 12,376 13,326 COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock, $.10 par value; 250,000 shares authorized: 100,000 shares issued and outstanding 10 10 Additional paid-in capital 26,223 26,223 Retained deficit (81,011) (86,360) -------- -------- Total stockholder's equity (54,778) (60,127) -------- -------- Total liabilities and stockholder's equity $240,701 $231,044 -------- -------- -------- -------- The accompanying notes are an integral part of these consolidated balance sheets. 3 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED JUNE 30, 1997 AND 1996 (Amounts in Thousands) Three Months Ended Six Months Ended ------------------ -------------------- 1997 1996 1997 1996 ------- ------- -------- -------- NET REVENUES $64,931 $67,164 $123,600 $123,959 ------- ------- -------- -------- COSTS AND EXPENSES: Cost of goods sold (exclusive of depreciation shown below) 33,837 35,800 62,718 65,068 Selling, general and administrative 17,828 17,802 37,833 35,675 Depreciation and amortization 3,854 3,365 7,334 6,640 ------- ------- -------- -------- 55,519 56,967 107,885 107,383 ------- ------- -------- -------- Operating income 9,412 10,197 15,715 16,576 INTEREST: Interest on debt (5,116) (5,261) (10,144) (10,496) Deferred financing cost (146) (146) (292) (301) Interest income 39 37 90 87 ------- ------- -------- -------- (5,223) (5,370) (10,346) (10,710) Equity in earnings of unconsolidated subsidiary 1,453 2,616 1,832 3,582 ------- ------- -------- -------- Income before income taxes 5,642 7,443 7,201 9,448 Provision for income taxes (1,184) (630) (1,852) (910) ------- ------- -------- -------- Net Income 4,458 6,813 5,349 8,538 ------- ------- -------- -------- ------- ------- -------- --------
The accompanying notes are an integral part of these consolidated statements. 4 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996 (Amounts in Thousands) 1997 1996 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,349 $ 8,538 Ajustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 7,334 6,640 Deferred tax provision 1,652 660 Amortization of deferred financing costs 292 301 Deferred compensation (520) 790 Earnings of unconsolidated subsidiary (1,832) (3,582) Change in assets and liabilities: Receivables (7,691) (6,933) Inventories (1,565) (3,082) Prepaid expenses and other 99 (1,468) Payables 1,243 5,545 Accrued expenses (411) (1,418) ------- ------- Net cash provided by operating activities 3,950 5,991 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment, net (3,253) (8,990) Other noncurrent assets acquired (123) (164) ------- ------- Net cash used in investing activities (3,376) (9,154) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under revolving credit facility 6,350 7,550 Payments on long-term debt (6,798) (4,074) ------- ------- Net cash provided (used) by financing activities (448) 3,476 ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 126 313 CASH AND CASH EQUIVALENTS, beginning of period 3,182 3,053 ------- ------- CASH AND CASH EQUIVALENTS, end of period $ 3,308 $ 3,366 ------- ------- ------- ------- The accompanying notes are an integral part of these consolidated statements. 5 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996 (Amounts in Thousands) SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: 1997 1996 ------- ------- Purchase of certain vending machines, machinery and transportation equipment through issuance of long-term debt $4,444 $ - ------ ------ ------ ------
The accompanying notes are an integral part of these consolidated statements. 6 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 AND 1996 (1) BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements of The Coca-Cola Bottling Group (Southwest) Inc., a Nevada corporation (the "Company") and its wholly owned subsidiaries have been prepared in accordance with generally accepted accounting principles for interim financial information and reflect, in the opinion of management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of financial position, results of operations, and changes in cash flows at June 30, 1997 and for all periods presented. These interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the consolidated financial statements of the Company included in Form 10-K for the fiscal year ended December 31, 1996. The results of operations for the period ended June 30, 1997 are not necessarily indicative of results to be expected for the entire year ending December 31, 1997. (2) INVENTORIES: Inventories consist of the following (in thousands): June 30, Dec. 31, 1997 1996 -------- -------- Raw materials $ 2,733 $ 1,991 Repair parts and supplies 194 513 Finished goods 8,243 7,339 -------- -------- $ 11,170 $ 9,843 -------- -------- -------- -------- 7 (3) INVESTMENT IN UNCONSOLIDATED SUBSIDIARY: Summarized financial information for Texas Bottling Group, Inc. ("TBG") as of June 30, 1997 and December 31, 1996, is as follows (in thousands): June 30 Dec. 31 1997 1996 --------- ---------- Current assets $ 60,091 $ 45,735 Noncurrent assets 209,730 210,388 Current liabilities 46,522 39,433 Long-term debt 204,551 203,000 Other liabilities 5,124 3,864 Postretirement benefit obligation 6,150 6,157 Stockholders' equity 7,474 3,669 FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996: 1997 1996 -------- -------- Net revenues $105,400 $109,070 Cost of goods sold 55,855 58,224 Net income before income taxes 5,909 8,773 Net income 3,805 7,273 The Company's equity in 1997 net income resulted in the Company recording income from TBG of $1,832,000. (4) INCOME TAXES: The Company's provision for income taxes for the six months ended June 30, 1997 and 1996, is as follows (in thousands): 1997 1996 ------ ----- Current $ 200 $ 250 Deferred 1,652 660 ------ ----- $1,852 $ 910 ------ ----- 8 (5) COMMITMENTS, CONTINGENCIES, AND RELATED PARTIES: The Company is a member of a soft drink canning cooperative and owns approximately 4% (qualifying shares) at June 30, 1997. The Company had purchases of $2,944,000 and $540,000 for the periods ended June 30, 1997 and 1996 from this cooperative. The Company's transactions with TBG included purchases of approximately $6,367,000 and $8,376,000 and sales of approximately $6,658,000 and $5,814,000 for the periods ended June 30, 1997 and 1996. The Company had purchases from Western Container Corporation, a plastic bottle manufacturer of which the Company's subsidiaries are shareholders, of $2,921,000 and $4,743,000 for the periods ended June 30, 1997 and 1996. (6) SUBSEQUENT EVENT: On August 1, 1997, the Company received a dividend from TBG in the amount of $4.6 million and paid a dividend to the Company's shareholder in the amount of $8.5 million. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Unit growth of soft drink sales is measured in equivalent case sales which convert all wholesale bottle, can and pre-mix unit sales into a value of equivalent cases of 192 ounces each. Unit sales of post-mix and contract bottling are not generally included in discussions concerning unit sales volume as post-mix sales are essentially sales of syrup and not of packaged products, and contract bottling is done as capacity permits and does not represent licensed products for the franchised territory. However, all references to net revenues and gross profit include volumes for post-mix and contract sales. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996 NET REVENUES. Net Revenues for the Company decreased by 3.3% or approximately $2.2 million to $64.9 million in 1997. Soft drink net revenues decreased 6.4% primarily as a result of a $1.6 million decrease in contract bottling sales in 1997 versus 1996. The Company ceased all its contract bottling operations for private label brands in late 1996. Equivalent case sales decreased 0.8% in 1997 and the net effective selling price per equivalent case decreased 2.8% in 1997 versus 1996. Net revenues for post-mix as a percentage of total net revenues increased to 12.7% in 1997, as compared to 12.4% in 1996. Net revenues for Automated & Custom Food Services, Inc. increased in 1997 by approximately 5.0% over 1996. GROSS PROFIT. Gross Profit decreased by 0.9% from $31.4 million to $31.1 million, as reductions in raw material costs for PET bottles and sweetener offset the lower net effective selling price noted above. The reduction in raw material cost accounted for an improvement in gross profit as a percentage of net revenues to 47.9% in 1997 as compared to 46.7% in 1996. SELLING, GENERAL & ADMINISTRATIVE. Selling, general and administrative expenses were flat in 1997. Selling, general and administrative expense as a percentage of net revenues increased to 27.5% in 1997 from 26.5% in 1996. Higher labor costs associated with increased hiring for certain key sales positions as well as increased marketing expenditures were offset by favorable trends in group health plans and refunds relating to prior years workers' compensation insurance premiums. OPERATING INCOME. As a result of the above, together with a $0.5 million increase in depreciation and amortization, operating income for the period ended June 30, 1997 decreased to $9.4 million, or 14.5% of net revenue, compared to $10.2 million or 15.2% of net revenue for the same period in 1996. 10 INTEREST EXPENSE. Net interest expense decreased by approximately $0.1 million in 1997 due primarily to lower debt levels as a result of scheduled principal payments. EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARY. The Company recognized equity in the income of TBG in 1997 of $1.8 million. TBG recorded net income of approximately $2.8 million in 1997 compared to net income of approximately $5.3 million in 1996. TBG's operating income was 17.8% lower in 1997 compared to 1996. SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996 NET REVENUES. Net Revenues for the Company decreased by 0.3% or approximately $0.4 million to $123.6 million in 1997. Soft drink net revenues decreased 2.6% primarily as a result of a $3.0 million decrease in contract bottling sales in 1997 versus 1996. The Company ceased all its contract bottling operations for private label brands in late 1996. Equivalent case sales increased 0.6% in 1997 and the net effective selling price per equivalent case decreased 0.3% in 1997 versus 1996. Net revenues for post-mix as a percentage of total net revenues increased to 12.3% in 1997, as compared to 12.0% in 1996. Net revenues for Automated & Custom Food Services, Inc. increased in 1997 by approximately 4.7% over 1996. GROSS PROFIT. Gross Profit increased by 3.4% from $58.9 million to $60.9 million, primarily as a result of reductions in raw material costs for PET bottles and sweetener. The reduction in raw material cost accounted for an improvement in gross profit as a percentage of net revenues to 49.3% in 1997 as compared to 47.5% in 1996. SELLING, GENERAL & ADMINISTRATIVE. Selling, general and administrative expenses increased 6.0% or approximately $2.2 million in 1997. Selling, general and administrative expense as a percentage of net revenues increased to 30.6% in 1997 from 28.8% in 1996. A significant increase in expenditures for marketing related items such as display racks, barrels and point-of-sale materials accounted for the largest portion of the increase. These types of expenditures have historically been expensed as incurred although they may benefit sales results in future periods as well as the current period. Higher labor costs associated with increased hiring for certain key sales positions also contributed to the increase. These increases were offset by favorable trends in group health plans and refunds relating to prior years workers' compensation insurance premiums. OPERATING INCOME. As a result of the above, together with a $0.7 million increase in depreciation and amortization, operating income for the period ended June 30, 1997 decreased to $15.7 million, or 12.7% of net revenue, compared to $16.6 million or 13.4% of net revenue for the same period in 1996. INTEREST EXPENSE. Net interest expense decreased by approximately $0.4 million in 1997 due primarily to lower debt levels as a result of scheduled principal payments. 11 EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARY. The Company recognized equity in the income of TBG in 1997 of $1.8 million. TBG recorded net income of approximately $3.8 million in 1997 compared to net income of approximately $7.3 million in 1996. TBG's operating income was 16.7% lower in 1997 compared to 1996. LIQUIDITY AND CAPITAL RESOURCES For the six months ended June 30, 1997, cash provided by operating activities was $4.0 million, generated primarily by net income plus depreciation and amortization. Investing activities used $3.4 million primarily for additions to property, plant and equipment while financing activities used $0.4 million primarily from payments on long-term debt net of borrowings under the revolving credit facility. Of total additions to property, plant and equipment of $7.7 million, $4.4 million were acquired through the issuance of long-term debt. In connection with the 1995 Bank Agreement the Company has entered into an interest rate cap agreement which caps the three month LIBOR rate at 9% on a notional principal amount of $60 million for four years. The Company has no interest rate exposure under the agreement other than the initial purchase cost of $0.6 million. The Company will continue to evaluate the realizability of its deferred tax asset in relation to future taxable income and adjust the valuation allowance accordingly. At June 30, 1997, the Company recognized provision for income taxes of $1.9 million of which $1.7 million represents deferred taxes. On August 1, 1997 the Company received a dividend from TBG in the amount of $4.6 million and paid a dividend to the Company's sole shareholder in the amount of $8.5 million. 12 PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On May 30, 1997, the sole shareholder of the Class A Common Stock of the Registrant, by written consent in lieu of the annual meeting, elected Edmund M. Hoffman, Robert K. Hoffman, Robert W. Decherd and Richard Ware II to serve as Directors of the Registrant. ITEM 5. OTHER INFORMATION. DIVIDEND PAYMENT. On August 1, 1997, the Registrant paid dividends in the aggregate amount of $8.5 million to its shareholders of record on July 18, 1997. CHANGE OF CONTROL. CCBG Corporation is the sole shareholder of the Registrant. By an agreement dated August 11, 1997, the Limited Liability Company Agreement of Hoffman Family Investments, L.L.C. (the "Family L.L.C.") has been amended effective March 21, 1997 to add Robert K. Hoffman as a Manager of the Family L.L.C. As a Manager of the Family L.L.C., Robert K. Hoffman has sole voting power and investment power over 15,158 shares of Class A Common Stock of CCBG Corporation held by CCBG Stock Management Limited Partnership (the "Partnership") because the Family L.L.C. is the General Partner of the Partnership. With the addition of the shares held by the Partnership, Robert K. Hoffman is the beneficial owner of 71,200 shares of Class A Common Stock of CCBG Corporation, which is 93.4% of the outstanding voting stock of CCBG Corporation (73.8% of the voting stock after conversion of the outstanding Class B Common Stock, including stock which may be issued pursuant to vested incentive stock options). 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Plan approved by the Board of Directors of the Registrant June 4, 1997 effective January 1, 1997. 10.2 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994, by and between the Registrant and Charles F. Stephenson. 10.3 Management Incentive Agreement executed June 5, 1997, effective January 1, 1997, by and between The Coca-Cola Bottling Group (Southwest), Inc. and Charles F. Stephenson. 10.4 Southwest Coca-Cola Bottling Company, Inc. Amendment to Management Incentive Plan adopted by the Board of Directors of Southwest Coca-Cola Bottling Company, Inc. effective June 1, 1997. 10.5 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994, entered by and among Southwest Coca-Cola Bottling Company, Inc. and all managers who were participants in the 1994 Management Incentive Plan. 10.6 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994 by and between Coca-Cola Bottling Company of the Southwest and E. T. Summers, III. 10.7 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994 by and between the Registrant and E. T. Summers, III. 10.8 Management Incentive Agreement executed June 30, 1997, effective January 1, 1997, entered by and among the Registrant, Texas Bottling Group, Inc., Coca-Cola Bottling Company of the Southwest and E.T. Summers, III. 27 Financial Data Schedule (b) Reports on Form 8-K No report on Form 8-K was filed for the quarter ended June 30, 1997. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The Coca-Cola Bottling Group (Southwest), Inc. (Registrant) Date AUGUST 12, 1997 By: /s/ CHARLES F. STEPHENSON --------------- ----------------------------------- Charles F. Stephenson President and Chief Financial Officer (duly authorized officer and Principal Financial Officer) 15 INDEX TO EXHIBITS Exhibit No. Description of Exhibit - ------- ---------------------- 10.1 The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Plan approved by the Board of Directors of the Registrant June 4, 1997 effective January 1, 1997. 10.2 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994, by and between the Registrant and Charles F. Stephenson. 10.3 Management Incentive Agreement executed June 5, 1997, effective January 1, 1997, by and between The Coca-Cola Bottling Group (Southwest), Inc. and Charles F. Stephenson. 10.4 Southwest Coca-Cola Bottling Company, Inc. Amendment to Management Incentive Plan adopted by the Board of Directors of Southwest Coca-Cola Bottling Company, Inc. effective June 1, 1997. 10.5 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994, entered by and among Southwest Coca-Cola Bottling Company, Inc. and all managers who were participants in the 1994 Management Incentive Plan. 10.6 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994 by and between Coca-Cola Bottling Company of the Southwest and E. T. Summers, III. 10.7 Amendment Agreement dated June 1, 1997 related to the Management Incentive Agreement effective January 1, 1994 by and between the Registrant and E. T. Summers, III. 10.8 Management Incentive Agreement executed June 30, 1997, effective January 1, 1997, entered by and among the Registrant, Texas Bottling Group, Inc., Coca-Cola Bottling Company of the Southwest and E.T. Summers, III. 27 Financial Data Schedule 16 EX-10.1 2 EXHIBIT 10.1 EXHIBIT 10.1 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. MANAGEMENT INCENTIVE PLAN 1. Purpose. The Coca-Cola Bottling Group (Southwest), Inc. (the "Company") and its subsidiaries, Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. (the "Bottling Operations") desire to establish an incentive plan (the "Plan") to retain key managers, motivate them to be creative and innovative while working to achieve the Company's financial goals, and provide a scaled financial reward based on continuous service and achievement of the Company's aspirational cash flow goals for defined periods of time. 2. Administration The Plan shall be administered by the Incentive Plan Committee (the "Committee") appointed by the Board of Directors of the Company (the "Board"). The Committee shall have at least three members at all times, all of whom shall be directors or employees of the Company or a subsidiary of the Company. The Board may increase or decrease the number of members on the Committee from time to time at its discretion, so long as there are at least three members of the Committee at any time. Each member of the Committee shall serve on the Committee until such member submits a written resignation or is removed by action of the Board. The Committee may, subject to the provisions of the Plan, establish such rules and regulations or take such action as it deems necessary or advisable for the proper administration of the Plan. Each determination made or action taken by the Committee pursuant to the Plan, including interpretation of the Plan, shall be final and conclusive for all purposes and upon all persons, including, but not limited to, the Company, the Committee, the Board, officers of the Company and/or the Bottling Operations, the affected Participants (as defined below), and their respective successors in interest. 3. Principles of the Plan The Plan will reward certain managers of the Company and the Bottling Operations for the successful attainment of cumulative cash flow goals for the combined operations of the Bottling Operations for successive periods of three years (each period is referred to as a "Performance Period"). In each fiscal year during the operation of this Plan and subject to the discretion of the Board, a new Performance Period will commence on January 1 and be designated to end on December 31 of the third consecutive year following the commencement year. The initial Performance Period under the Plan will be 1997 through 1999. A cash 1 award amount (the "Award") will be determined for each manager who is offered the opportunity to participate in the Plan (a "Participant"), based on such manager's position and ability to increase the combined cash flow of the Bottling Operations. For each Performance Period, the Board of Directors will establish a minimum level of cumulative cash flow (the "Cash Flow Threshold") for the Bottling Operations which must be achieved before any portion of the Award will be paid, and a formula (the "Award Formula") for determining the percentage, in a range from 50% to 150%, of the Award to be paid to each Participant (the "Award Payable") based on the Actual Cash Flow (defined below) in excess of the Cash Flow Threshold. All Participants will receive the same percentage of Award based on Actual Cash Flow. Each fiscal year, the Board will determine whether a new Performance Period will be established for the three-year period beginning in such year, and will determine the Cash Flow Threshold for such Performance Period. Therefore, one or two years of one Performance Period may overlap with years included in other Performance Periods. For example: the years 1998 and/or 1999 of the initial Performance Period may also be included in the Performance Period 1998 - 2000, and in the Performance Period 1999 - 2001, should the Board designate a new Performance Period in 1998 or 1999. 4. Eligibility Each Participant will be a party to a Management Incentive Agreement ("Agreement") with the Company and the employer of such Participant. The Agreements for the initial Performance Period shall be in the form of Exhibit A attached to this Plan. The Committee will recommend to the Board of Directors of the Company a list of employees to be offered the opportunity to become Participants and the amount of the Award for each Participant who is not also a member of the Committee. The Board of Directors shall determine the participation and Award for any Committee member on its own motion. Each Participant and respective Award must be approved by the Board of Directors before an Agreement is entered with such Participant. Designation as a Participant in one Performance Period will not assure designation in future Performance Periods. 5. Calculation and Payment of Award Awards made under the Plan shall be paid by the employer of each Participant solely on account of attainment of specified levels of cumulative cash flow for the combined Bottling Operations. For purposes of this Plan, "cash flow" is based on the audited financial information of the Company for each fiscal year in any Performance Period and is determined by adding the following items on the Statement of Operations for Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for the year ended on December 31 of each such year: consolidated net income, income taxes paid or accrued, interest expense net of interest income, depreciation, amortization, accruals for Awards under this Plan, and other non-cash charges to the extent deducted in calculating consolidated net income. At the end of each Performance Period, the actual three-year cumulative cash flow will be determined and certified in writing by the Chief Financial Officer of the Company. This certified cash flow ("Actual Cash Flow") will be a factor in the Award Formula established by the Board of Directors for such Performance Period, and 2 incorporated in the Agreements for such Performance Period. The Award designated in each Agreement will be multiplied by the percentage resulting from the Award Formula to determine the portion of the Award to be paid in cash to the respective Participant. Awards will be paid on the following schedule: on March 1 immediately following each Performance Period, two-thirds (2/3) of the Award Payable will be paid, and on March 1 two years after the first payment is made, the remaining one-third (1/3) of the Award Payable will be paid. Awards earned in each Performance Period will be paid in cash to Participants who have been employed continuously by the Company or a subsidiary of the Company throughout the Performance Period and through the payment date, except as provided in this Plan and the Agreements. Termination of employment due to death, disability or retirement will eliminate the requirement that the Participant must be employed on the date payment is made under this Plan, and may result in proration of an Award for partial participation or accelerated payment of an Award, at the discretion of the Board. 6. Discretion of the Board; Amendments, Modification and Termination of the Plan All Awards shall be made solely on the basis of the performance goals set forth in the Agreements in compliance with the terms of this Plan. The Board shall have no authority to amend any Agreement to increase the amount of an Award, but the Board shall have the authority to reduce or eliminate an Award in accordance with the terms of the related Agreement. In its sole discretion, the Board may adjust the Cash Flow Threshold for a Performance Period to incorporate anticipated increases in cash flow from after-acquired operations or significant decreases in cash flow resulting from divestitures or from significant and unforeseen increases in expenses without the consent of any Participant. Subject to the foregoing limitations on Board discretion, the Board may terminate the Plan in whole or in part and may suspend the Plan in whole or in part from time to time without affecting outstanding Agreements. In addition, the Board may amend the Plan from time to time to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in the Awards made thereunder that does not constitute the modification of a material term of the Plan, or take necessary action to effect legal compliance of the Plan, all without the approval of the shareholders of the Company and Texas Bottling Group, Inc. Individual Agreements may be amended by mutual written consent of the Company and the affected Participant. The terms of all Agreements for a specific Performance Period may be amended through action of the Board provided that the majority of Participants for such Performance Period accept such amendment by written consent. 3 EX-10.2 3 EXHIBIT 10.2 EXHIBIT 10.2 AMENDMENT AGREEMENT This agreement to amend (the "Amendment") the Management Incentive Agreement effective January 1, 1994 (the "Agreement"), issued pursuant to The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Plan (the "Plan") is entered by and among The Coca-Cola Bottling Group (Southwest), Inc. (the "Company") and Charles F. Stephenson. WHEREAS, The Company desires to establish a Management Incentive Plan ("Parent Plan") based on three-year cumulative cash flow for the combined operations of Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc.; WHEREAS, the Plan is based solely on the combined cash flow of Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for a five-year period which overlaps the time period to be covered by the Parent Plan, and is therefore redundant; and WHEREAS, Charles F. Stephenson has participated in the design and implementation of the Parent Plan; NOW, THEREFORE, in consideration of the foregoing, the payments to be received under the Plan and for other good and valuable consideration, the parties to this Amendment agree as follows: A. Paragraph 1 of the Agreement is hereby amended to read as follows: "1. PAYMENT OF BONUS. If Manager qualifies to receive the Incentive Bonus, the Annual Component of the Incentive Bonus will be paid on June 13, 1997, one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1998 and the remaining one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1999." B. Paragraph 2 of the Agreement is hereby amended to read as follows: "2. ONE-TIME BONUS CONCEPT. The amount of the Annual Component of the Incentive Bonus will be determined on June 1, 1997 by comparing the actual annual cash flow of the Company in each year from January 1, 1994 through December 31, 1996 to projected annual cash flow goals, and the Three Year Component of the Incentive Bonus will be determined by comparing the total cash flow for such three year period with the sum of the annual projected cash flow goals, according to the formula described in Paragraph 4 below." C. Paragraph 3 (a) of the Agreement is hereby amended by substituting the year 1996 for 1997, and deleting the reference to the financial statements for fiscal 1998. 1 D. Paragraph 3 (b) of the Agreement is hereby amended by substituting the following chart of Cash Flow Targets: YEAR CASH FLOW TARGET ---- ---------------- 1994 $ 85,315,000 1995 89,581,000 1996 94,060,000 ------------ Three Year Total $268,956,000 E. Paragraph 3(d) of the Agreement is hereby amended by substituting "Three" for "Five" every place where "Five" appears in the paragraph. F. Paragraphs 5, 6, and 7 of the Agreement are hereby amended by substituting "on the payment date" for "February 1, 1999" in each place where "February 1, 1999" appears in such paragraphs. APPROVED AND ACCEPTED effective June 1, 1997. THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. By: /s/ ROBERT K. HOFFMAN ------------------------------- Its: Co-Chairman ------------------------------ By: /s/ CHARLES F. STEPHENSON ------------------------------- Charles F. Stephenson 2 EX-10.3 4 EXHIBIT 10.3 EXHIBIT 10.3 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. MANAGEMENT INCENTIVE AGREEMENT This Management Incentive Agreement ("Agreement") is entered by and between The Coca-Cola Bottling Group (Southwest), Inc. (the "Company" and the "Employer") and CHARLES F. STEPHENSON ("Manager"), effective January 1, 1997. RECITALS A. The Company desires to retain the services of certain key managers and to encourage key managers to seek to attain the financial goals of the Company through creativity, innovation and good management practices; B. The Company measures its business success in part by setting financial goals and evaluating efforts to meet financial goals by increasing revenue and controlling expenditures; C. The Company has established a Management Incentive Plan, recorded in the minutes of the Board of Directors of the Company and expressed in this Agreement and in similar Agreements with certain other key managers, to encourage superior long-term performance by key managers of the Company and subsidiary operations of the Company through payments of cash awards based on the Company's performance during the three-year period from January 1, 1997 through December 31, 1999; and D. Manager is currently employed with Employer in a key leadership position. AGREEMENT 1. PAYMENT OF BONUS. If Manager qualifies to receive a cash award pursuant to this Agreement, two-thirds of the Award Payable (defined in Section 2(c) below) will be paid to Manager on March 1, 2000, and one-third of the Award Payable will be paid to Manager on March 1, 2002. Payments under this Agreement will be made by Employer, unless Manager has transferred to a position with a subsidiary of the Company prior to the payment date, in which case the Award Payable will be prorated among the employers of the Manager during the Performance Period on the basis of months worked for each affected employer. 1 2. DEFINITIONS. a. "Cash Flow" is based on the audited financial information of the Company for each fiscal year in any Performance Period and is determined by adding the following items on the Statement of Operations for Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for the year ended on December 31 of each such year: consolidated net income, income taxes paid or accrued, interest expense net of interest income, depreciation, amortization, accruals for Awards under this Plan, and other non-cash charges to the extent deducted in calculating consolidated net income. b. "Actual Cash Flow" is Cash Flow as certified to the Board of Directors of the Company by the Chief Financial Officer of the Company for purposes of the Plan and this Agreement. c. "Cash Flow Threshold" is $340,000,000.00. The Cash Flow Threshold may be adjusted by the Board of Directors of the Company to incorporate anticipated increases in Cash Flow resulting from the expansion of the Company's business through acquisition of any other business by the Company or Texas Bottling Group, Inc. or conversely to incorporate decreases in cash flow resulting from divestiture or significant increases in expenditures not foreseeable on the effective date of this Agreement. Any change in the Cash flow Threshold must be approved by the Board of Directors of the Company prior to the end of the Performance Period. The Board of Directors of the Company is not required to make any adjustment in the Cash Flow Threshold, but may take such action in its sole discretion. Any such change in the Cash Flow Threshold will be effected by written notice to Manager prior to the end of the Performance Period setting forth the amended Cash Flow Threshold. d. "Award" is $200,000.00 e. "Award Payable" will be calculated by multiplying the Award by the percentage determined by the following formula (the "Award Formula"): Percentage = Lesser of y or z, where y = 150% and z = Actual Cash Flow - Threshold Cash Flow x 100% + 50% -------------------------------------- $40,000,000 3. REQUIREMENTS TO QUALIFY FOR THE AWARD. To be qualified to receive the Award Payable, Manager must have been continuously employed by the Company or a bottling subsidiary of the 2 Company during the Performance Period in his present position or another key management position, and still actively employed on March 1, 2000 to receive the first installment, and on March 1, 2002 to receive the second installment. The only exceptions to these requirements are described in Paragraphs 4, 5, 6 and 7. 4. RESIGNATION DUE TO DISABILITY. If Manager fails to meet the requirements of Paragraph 3 above because he has resigned from employment with the Company or a bottling subsidiary of the Company after the Performance Period ends, but prior to a payment date due to a condition which meets the definition of "disability" in the Company's Long Term Disability Insurance Policy or is on medical leave, Manager will receive the Award Payable as provided in this Agreement. If Manager's resignation due to disability occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which Manager was actively employed to the 36 months in the Performance Period, and the payment date of such partial Award Payable may be accelerated in the sole discretion of the Board of Directors of the Company. 5. RESIGNATION DUE TO RETIREMENT. If Manager fails to meet the requirements of Paragraph 3 above because he has retired from employment with the Company or a bottling subsidiary of the Company after the Performance Period ends, but prior to a payment date in accordance with the terms of The Coca-Cola Bottling Group (Southwest), Inc. and Affiliates Retirement Plan, Manager will receive the Award Payable as provided in this Agreement. If Manager's resignation due to retirement occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which Manager was actively employed to the 36 months in the Performance Period. 6. DEATH OF MANAGER. If Manager dies while actively employed with the Company or a bottling subsidiary of the Company after the Performance Period ends, but prior to a payment date, Manager's estate or designated beneficiary will receive the Award Payable as provided in this Agreement. If Manager's death occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which the Manager was actively employed to the 36 months within the Performance Period, and the payment date of such partial Award Payable may be accelerated in the sole discretion of the Board of Directors of the Company. 7. CHANGE OF MAJORITY OWNERSHIP. If, during the term of this Agreement, the majority ownership of the stock of the Company and/or the Manager's employer changes, this Agreement shall terminate, and Manager will receive all or any remaining portion of an Award Payable from the Company, on or before December 31 of the year in which such change of ownership is consummated. If the Change of Ownership occurs during the Performance Period, the Award Payable will be determined using an amended Cash Flow Threshold which 3 proportionally adjusts the factors to be utilized in calculating the Award Payable. For purposes of this Paragraph 7 and Paragraph 8 below, a transfer of stock ownership from a person or entity which was a shareholder on the date of this Agreement (a "current shareholder") to a person or entity which is (a) controlled by or under common control with a current shareholder, (b) a family member of a current shareholder, or (c) a trust, partnership or other entity of which a current shareholder or a family member of a current shareholder is either a grantor, trustee, beneficiary, owner or holder of an equity or beneficial interest, will not constitute a Change of Majority Ownership of the Company or, if applicable, the Manager's employer. 8. TERMINATION OF AGREEMENT. This Agreement shall terminate immediately upon the occurrence of the first of the following events: a) payment of the entire Award Payable; b) voluntary resignation of the Manager; c) termination of Manager's employment with the Company or a bottling subsidiary of the Company, for any reason other than death, disability or retirement (as defined in Paragraphs 5 and 6 above); or Change of Majority Ownership of the Company or Manager's employer. This Agreement and the benefits of this Agreement may be assigned by the Company to any corporate successor of the Company, but may not be assigned, pledged, or otherwise transferred by Manager. 9. AMENDMENTS. Manager recognizes that the Board of Directors of the Company may determine in its sole discretion that modification, suspension or termination of the Plan is in the best interest of the Company, and that the Plan provides that the Board of Directors may act in its sole discretion to suspend or terminate the Plan in whole or in part. This Agreement may be amended by written agreement between the Manager and the Company. The Board of Directors of the Company may also make an amendment to the form of all Agreements for a specific Performance Period, and such amendment shall be effective for this Agreement when the majority of Participants who are parties to Agreements for the same Performance Period consent in writing to such amendment. The Board of Directors may also unilaterally amend this Agreement if it amends all Agreements for the same Performance Period in order to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in the Awards made thereunder that does not constitute the modification of a material term of the Plan or this Agreement, or take necessary action to effect legal compliance of the Plan or this Agreement. If Manager transfers from his position with the Company to a position with Coca-Cola Bottling Company of the Southwest or Southwest Coca-Cola Bottling Company, Inc., this Agreement will be amended by adding such employer as a party to this Agreement. 10. NOTICES. All notices given under this Agreement shall be in writing and shall be deemed to be delivered when actually received or shall be deemed received upon deposit in the United States mail, registered or certified, postage prepaid and, if to the Company, addressed to the Company at 1999 Bryan Street #3300, Dallas, Texas 75201, or if to Manager, at his principal place of residence. 11. EMPLOYMENT AT WILL. Manager acknowledges that this Agreement is not an employment agreement, and has no relationship to or effect on the terms of Manager's 4 employment with the Company. Manager acknowledges and affirms that his employment with the Company is terminable at will, subject only to compliance with existing law, by Manager or Manager's employer (whether the Company or a subsidiary of the Company) at any time. IN WITNESS WHEREOF, this Management Incentive Agreement is executed this 5th day of June, 1997. THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. By: /s/ ROBERT K. HOFFMAN ------------------------------ Its: Co-Chairman ----------------------------- MANAGER /s/ CHARLES F. STEPHENSON --------------------------------- Charles F. Stephenson 5 EX-10.4 5 EXHIBIT 10.4 EXHIBIT 10.4 SOUTHWEST COCA-COLA BOTTLING COMPANY, INC AMENDMENT TO MANAGEMENT INCENTIVE PLAN The Management Incentive Plan established in 1994 by Southwest Coca-Cola Bottling Company, Inc. is hereby amended in the following respects: A. The time period covered by the Plan is reduced from five years to three years. B. The Cash Flow Targets for the years 1997 and 1998 are eliminated. C. The Five Year Component of the Incentive Plan is renamed the Three Year Component and will be determined by achievement of the combined Cash Flow Targets for 1994 through 1996. D. The payment date of the Incentive Bonus is changed from a one-time payment on February 1, 1999 to the following: 1. Payment of the Annual Component of the Incentive Bonus for the years 1994 through 1996 will be made on June 13, 1997; 2. Payment of one-half of the Three-Year Component of the Incentive Bonus will be made on March 1, 1998; and 3. Payment of the remaining one-half of the Three-Year Component of the Incentive Bonus will be made on March 1, 1999. EX-10.5 6 EXHIBIT 10.5 EXHIBIT 10.5 AMENDMENT AGREEMENT This agreement to amend the Management Incentive Agreements effective January 1, 1994 (the "Agreements"), issued pursuant to the Southwest Coca-Cola Bottling Company, Inc. Management Incentive Plan (the "Plan") is entered by and among Southwest Coca-Cola Bottling Company, Inc. (the "Company") and the undersigned employees of the Company who are parties to the Agreements, to be effective when 8 such employees have signed this agreement (referred to below as the "Amendment"). WHEREAS, The Coca-Cola Bottling Group (Southwest), Inc. (the "Parent"), the corporate parent of the Company, desires to establish a Management Incentive Plan ("Parent Plan") based on three-year cumulative cash flow for the combined operations of the Company and Texas Bottling Group, Inc.; WHEREAS, the Plan is based solely on the cash flow of the Company for a five-year period which overlaps the time period to be covered by the Parent Plan, and is therefore redundant; WHEREAS, the Board of Directors of the Company believes that the Parent Plan will be more advantageous for the Company because it will align the efforts of the Parent, the Company and Texas Bottling Group, Inc. to improve the financial performance of all three entities; and WHEREAS, the Board of Directors of the Company has approved the revisions to the Plan and the Agreements incorporated in this Amendment; NOW, THEREFORE, in consideration of the foregoing, the payments to be received under the Plan and for other good and valuable consideration, the parties to this Amendment agree as follows: A. Paragraph 1 of the Agreements is hereby amended to read as follows: "1. PAYMENT OF BONUS. If Manager qualifies to receive the Incentive Bonus, the Annual Component of the Incentive Bonus will be paid on June 13, 1997, one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1998 and the remaining one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1999." B. Paragraph 2 of the Agreements is hereby amended to read as follows: "2. ONE-TIME BONUS CONCEPT. The amount of the Annual Component of the Incentive Bonus will be determined on June 1, 1997 by comparing the actual annual cash flow of the Company in each year from January 1, 1994 through December 31, 1996 to projected annual cash 1 flow goals, and the Three Year Component of the Incentive Bonus will be determined by comparing the total cash flow for such three year period with the sum of the annual projected cash flow goals, according to the formula described in Paragraph 4 below." C. Paragraph 3 (a) of the Agreements is hereby amended by substituting the year 1996 for 1997, and deleting the reference to the financial statements for fiscal 1998. D. Paragraph 3 (b)of the Agreements is hereby amended by substituting the following chart of Cash Flow Targets: YEAR CASH FLOW TARGET ---- ---------------- 1994 $ 42,700,000 1995 44,835,000 1996 47,077,000 ------------ Three Year Total $134,612,000 E. Paragraph 3(d) of the Agreements is hereby amended by substituting "Three" for "Five" every place where "Five" appears in the paragraph. F. Paragraphs 5, 6, and 7 of the Agreements are hereby amended by substituting "on the payment date" for "February 1, 1999" in each place where "February 1, 1999" appears in such paragraphs. G. The parties agree that the above-stated amendments will be effective as to all Agreements when 8 of the employees listed on the signature page of this Amendment have executed this Amendment. APPROVED AND ACCEPTED effective June 1, 1997. SOUTHWEST COCA-COLA BOTTLING COMPANY, INC. By: /s/ CHARLES F. STEPHENSON ----------------------------- Its: President ---------------------------- /s/ RONNIE HILL /s/ GARY PHY - --------------------------- -------------------------------- Ronnie Hill Gary Phy /s/ BILL PEVEHOUSE /s/ LARRY SHORT - --------------------------- -------------------------------- Bill Pevehouse Larry Short 2 /s/ MIKE FLORES /s/ JAMES LONG - --------------------------- -------------------------------- Mike Flores James Long /s/ REX CASTLE - --------------------------- -------------------------------- Bob Bolin Rex Castle /s/ PAT WALL - --------------------------- -------------------------------- Pat Wall Steve Arrington /s/ JOE HOPKINS /s/ PAT STONE - --------------------------- -------------------------------- Joe Hopkins Pat Stone /s/ JAMES DEVER - --------------------------- -------------------------------- Eugene Stout James Dever /s/ STEWART SWARTZ - --------------------------- Stewart Swartz 3 /s/ JAMES LONG - --------------------------- -------------------------------- Mike Flores James Long - --------------------------- -------------------------------- Bob Bolin Rex Castle /s/ STEVE ARRINGTON - --------------------------- -------------------------------- Pat Wall Steve Arrington - --------------------------- -------------------------------- Joe Hopkins Pat Stone /s/ EUGENE STOUT - --------------------------- -------------------------------- Eugene Stout James Dever - --------------------------- Stewart Swartz 3 EX-10.6 7 EXHIBIT 10.6 EXHIBIT 10.6 AMENDMENT AGREEMENT This agreement to amend (the "Amendment") the Management Incentive Agreement effective January 1, 1994 (the "Agreement"), issued pursuant to the Coca-Cola Bottling Company of the Southwest Management Incentive Plan (the "Plan") is entered by and among Coca-Cola Bottling Company of the Southwest (the "Company") and E. T. Summers, III. WHEREAS, The Coca-Cola Bottling Group (Southwest), Inc. (the "Parent"), the corporate parent of the Company, desires to establish a Management Incentive Plan ("Parent Plan") based on three-year cumulative cash flow for the combined operations of the Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc.; WHEREAS, the Plan is based solely on the cash flow of the Company for a five-year period which overlaps the time period to be covered by the Parent Plan, and is therefore redundant; WHEREAS, the Board of Directors of the Company believes that the Parent Plan will be more advantageous for the Company because it will align the efforts of the Parent, the Company, Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. to improve the financial performance of all four entities; and WHEREAS, the Board of Directors of the Company has approved the revisions to the Plan and the Agreement incorporated in this Amendment; NOW, THEREFORE, in consideration of the foregoing, the payments to be received under the Plan and for other good and valuable consideration, the parties to this Amendment agree as follows: A. Paragraph 1 of the Agreement is hereby amended to read as follows: "1. PAYMENT OF BONUS. If Manager qualifies to receive the Incentive Bonus, the Annual Component of the Incentive Bonus will be paid on June 13, 1997, one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1998 and the remaining one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1999." B. Paragraph 2 of the Agreement is hereby amended to read as follows: "2. ONE-TIME BONUS CONCEPT. The amount of the Annual Component of the Incentive Bonus will be determined on June 1, 1997 by comparing the actual annual cash flow of the Company in each year from January 1, 1994 through December 31, 1996 to projected annual cash flow goals, and the Three Year Component of the Incentive Bonus will be determined by comparing the total cash flow for such three year period with the sum of the annual projected cash 1 flow goals, according to the formula described in Paragraph 4 below." C. Paragraph 3 (a) of the Agreement is hereby amended by substituting the year 1996 for 1997, and deleting the reference to the financial statements for fiscal 1998. D. Paragraph 3 (b) of the Agreement is hereby amended by substituting the following chart of Cash Flow Targets: YEAR CASH FLOW TARGET ---- ---------------- 1994 $ 42,615,000 1995 44,746,000 1996 46,983,000 ------------ Three Year Total $134,344,000 E. Paragraph 3(d) of the Agreement is hereby amended by substituting "Three" for "Five" every place where "Five" appears in the paragraph. F. Paragraphs 5, 6, and 7 of the Agreement are hereby amended by substituting "on the payment date" for "February 1, 1999" in each place where "February 1, 1999" appears in such paragraphs. APPROVED AND ACCEPTED effective June 1, 1997. COCA-COLA BOTTLING COMPANY OF THE SOUTHWEST By: /s/ ROBERT K. HOFFMAN ------------------------------ Its: Co-Chairman ----------------------------- /s/ E. T. SUMMERS, III ---------------------------------- E. T. Summers, III 2 EX-10.7 8 EXHIBIT 10.7 EXHIBIT 10.7 AMENDMENT AGREEMENT This agreement to amend (the "Amendment") the Management Incentive Agreement effective January 1, 1994 (the "Agreement"), issued pursuant to The Coca-Cola Bottling Group (Southwest), Inc. Management Incentive Plan (the "Plan") is entered by and among The Coca-Cola Bottling Group (Southwest), Inc. (the "Company") and E. T. Summers, III. WHEREAS, The Company desires to establish a Management Incentive Plan ("Parent Plan") based on three-year cumulative cash flow for the combined operations of Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc.; WHEREAS, the Plan is based solely on the combined cash flow of Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for a five-year period which overlaps the time period to be covered by the Parent Plan, and is therefore redundant; and WHEREAS, E. T. Summers, III has participated in the design and implementation of the Parent Plan; NOW, THEREFORE, in consideration of the foregoing, the payments to be received under the Plan and for other good and valuable consideration, the parties to this Amendment agree as follows: A. Paragraph 1 of the Agreement is hereby amended to read as follows: "1. PAYMENT OF BONUS. If Manager qualifies to receive the Incentive Bonus, the Annual Component of the Incentive Bonus will be paid on June 13, 1997, one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1998 and the remaining one-half of the Three Year Component of the Incentive Bonus will be paid on March 1, 1999." B. Paragraph 2 of the Agreement is hereby amended to read as follows: "2. ONE-TIME BONUS CONCEPT. The amount of the Annual Component of the Incentive Bonus will be determined on June 1, 1997 by comparing the actual annual cash flow of the Company in each year from January 1, 1994 through December 31, 1996 to projected annual cash flow goals, and the Three Year Component of the Incentive Bonus will be determined by comparing the total cash flow for such three year period with the sum of the annual projected cash flow goals, according to the formula described in Paragraph 4 below." C. Paragraph 3 (a) of the Agreement is hereby amended by substituting the year 1996 for 1997, and deleting the reference to the financial statements for fiscal 1998. 1 D. Paragraph 3 (b) of the Agreement is hereby amended by substituting the following chart of Cash Flow Targets: YEAR CASH FLOW TARGET ---- ---------------- 1994 $ 85,315,000 1995 89,581,000 1996 94,060,000 ------------ Three Year Total $268,956,000 E. Paragraph 3(d) of the Agreement is hereby amended by substituting "Three" for "Five" every place where "Five" appears in the paragraph. F. Paragraphs 5, 6, and 7 of the Agreement are hereby amended by substituting "on the payment date" for "February 1, 1999" in each place where "February 1, 1999" appears in such paragraphs. APPROVED AND ACCEPTED effective June 1, 1997. THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. By: /s/ ROBERT K. HOFFMAN ------------------------------ Its: Co-Chairman ----------------------------- /s/ E. T. SUMMERS, III ---------------------------------- E. T. Summers, III 2 EX-10.8 9 EXHIBIT 10.8 EXHIBIT 10.8 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. MANAGEMENT INCENTIVE AGREEMENT This Management Incentive Agreement ("Agreement") is entered by and among The Coca-Cola Bottling Group (Southwest), Inc. (the "Company"), Texas Bottling Group, Inc., Coca-Cola Bottling Company of the Southwest "Employer") and E.T. SUMMERS, III ("Manager"), effective January 1, 1997. RECITALS A. The Company desires to retain the services of certain key managers and to encourage key managers to seek to attain the financial goals of the Company through creativity, innovation and good management practices; B. The Company measures its business success in part by setting financial goals and evaluating efforts to meet financial goals by increasing revenue and controlling expenditures; C. The Company has established a Management Incentive Plan, recorded in the minutes of the Board of Directors of the Company and expressed in this Agreement and in similar Agreements with certain other key managers, to encourage superior long-term performance by key managers of the Company, Employer and other subsidiary operations of the Company through payments of cash awards based on the Company's performance during the three-year period from January 1, 1997 through December 31, 1999; and D. Manager is currently employed with Employer in a key leadership position. AGREEMENT 1. PAYMENT OF BONUS. If Manager qualifies to receive a cash award pursuant to this Agreement, two-thirds of the Award Payable (defined in Section 2(c) below) will be paid to Manager on March 1, 2000, and one-third of the Award Payable will be paid to Manager on March 1, 2002. Payments under this Agreement will be made by Employer, unless Manager has transferred to a position with the Company or another subsidiary of the Company prior to the payment date, in which case the Award Payable will be prorated among the employers of the Manager during the Performance Period on the basis of months worked for each affected employer. 2. DEFINITIONS. a. "Cash Flow" is based on the audited financial information of the Company for each fiscal year in any Performance Period and is determined by adding the following 1 items on the Statement of Operations for Southwest Coca-Cola Bottling Company, Inc. and Texas Bottling Group, Inc. for the year ended on December 31 of each such year: consolidated net income, income taxes paid or accrued, interest expense net of interest income, depreciation, amortization, accruals for Awards under this Plan, and other non-cash charges to the extent deducted in calculating consolidated net income. b. "Actual Cash Flow" is Cash Flow as certified to the Board of Directors of the Company by the Chief Financial Officer of the Company for purposes of the Plan and this Agreement. c. "Cash Flow Threshold" is $340,000.000.00. The Cash Flow Threshold may be adjusted by the Board of Directors of the Company to incorporate anticipated increases in Cash Flow resulting from the expansion of the Company's business through acquisition of any other business by the Company, Employer or Texas Bottling Group, Inc., or conversely to incorporate decreases in cash flow resulting from divestiture or significant increases in expenditures not foreseeable on the effective date of this Agreement. Any change in the Cash Flow Threshold must be approved by the Board of Directors of the Company prior to the end of the Performance Period. The Board of Directors of the Company is not required to make any adjustment in the Cash Flow Threshold, but may take such action in its sole discretion. Any such change in the Cash Flow Threshold will be effected by written notice to Manager prior to the end of the Performance Period setting forth the amended Cash Flow Threshold. d. "Award" is $200,000.00. e. "Award Payable" will be calculated by multiplying the Award by the percentage determined by the following formula (the "Award Formula"): Percentage = Lesser of y or z, where y = 150% and z = Actual Cash Flow - Threshold Cash Flow x 100% + 50% -------------------------------------- $40,000,000 3. REQUIREMENTS TO QUALIFY FOR THE AWARD. To be qualified to receive the Award Payable, Manager must have been continuously employed by the Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. during the Performance Period in his present position or another key management position, and still actively employed on March 1, 2000 to receive the first installment, and on March 1, 2002 to receive the second installment. The only exceptions to these requirements are described in Paragraphs 4, 5, 6 and 7. 2 4. RESIGNATION DUE TO DISABILITY. If Manager fails to meet the requirements of Paragraph 3 above because he has resigned from employment with Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. after the Performance Period ends, but prior to a payment date due to a condition which meets the definition of "disability" in the Company's Long Term Disability Insurance Policy or is on medical leave, Manager will receive the Award Payable as provided in this Agreement. If Manager's resignation due to disability occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which Manager was actively employed to the 36 months in the Performance Period, and the payment date of such partial Award Payable may be accelerated in the sole discretion of the Board of Directors of the Company. 5. RESIGNATION DUE TO RETIREMENT. If Manager fails to meet the requirements of Paragraph 3 above because he has retired from employment with Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. after the Performance Period ends, but prior to a payment date in accordance with the terms of The Coca-Cola Bottling Group (Southwest), Inc. and Affiliates Retirement Plan, Manager will receive the Award Payable as provided in this Agreement. If Manager's resignation due to retirement occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which Manager was actively employed to the 36 months in the Performance Period. 6. DEATH OF MANAGER. If Manager dies while actively employed with the Company, Employer or Southwest Coca-Cola Bottling Company, Inc. after the Performance Period ends, but prior to a payment date, Manager's estate or designated beneficiary will receive the Award Payable as provided in this Agreement. If Manager's death occurs prior to the end of the Performance Period, the Board of Directors may waive the "continuous employment" requirement and prorate the Award Payable based on the ratio of the number of months within the Performance Period in which the Manager was actively employed to the 36 months within the Performance Period, and the payment date of such partial Award Payable may be accelerated in the sole discretion of the Board of Directors of the Company. 7. CHANGE OF MAJORITY OWNERSHIP. If, during the term of this Agreement, the majority ownership of the stock of the Company and/or the Manager's employer changes, this Agreement shall terminate, and Manager will receive all or any remaining portion of an Award Payable from the Company, on or before December 31 of the year in which such change of ownership is consummated. If the Change of Ownership occurs during the Performance Period, the Award Payable will be determined using an amended Cash Flow Threshold which proportionally adjusts the factors to be utilized in calculating the Award Payable. For purposes of this Paragraph 7 and Paragraph 8 below, a.transfer of stock ownership from a person or entity which was a shareholder on the date of this Agreement (a "current shareholder") to a person or entity which is (a) controlled by or under common control with a current shareholder, (b) a family 3 member of a current shareholder, or (c) a trust, partnership or other entity of which a current shareholder or a family member of a current shareholder is either a grantor, trustee, beneficiary, owner or holder of an equity or beneficial interest, will not constitute a Change of Majority Ownership of the Company, the Employer or, if applicable, the Manager's employer. 8. TERMINATION OF AGREEMENT. This Agreement shall terminate immediately upon the occurrence of the first of the following events: a) payment of the entire Award Payable; b) voluntary resignation of the Manager; c) termination of Manager's employment with the Company, the Employer or Coca-Cola Bottling Company of the Southwest, for any reason other than death, disability or retirement (as defined in Paragraphs 5 and 6 above); or Change of Majority Ownership of the Company or Manager's employer. This Agreement and the benefits of this Agreement may be assigned by the Company to any corporate successor of the Company, but may not be assigned, pledged, or otherwise transferred by Manager. 9. AMENDMENTS. Manager recognizes that the Board of Directors of the Company may determine in its sole discretion that modification, suspension or termination of the Plan is in the best interest of the Company, and that the Plan provides that the Board of Directors may act in its sole discretion to suspend or terminate the Plan in whole or in part. This Agreement may be amended by written agreement between the Manager, the Employer and the Company. The Board of Directors of the Company may also make an amendment to the form of all Agreements for a specific Performance Period, and such amendment shall be effective for this Agreement when the majority of Participants who are parties to Agreements for the same Performance Period consent in writing to such amendment. The Board of Directors may also unilaterally amend this Agreement if it amends all Agreements for the same Performance Period in order to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in the Awards made thereunder that does not constitute the modification of a material term of the Plan or this Agreement, or take necessary action to effect legal compliance of the Plan or this Agreement. If Manager transfers from his position with Employer to a position with Coca-Cola Bottling Company of the Southwest, this Agreement will be amended by substituting Southwest Coca-Cola Bottling Company, Inc. for Employer as a party to this Agreement. 10. NOTICES. All notices given under this Agreement shall be in writing and shall be deemed to be delivered when actually received or shall be deemed received upon deposit in the United States mail, registered or certified, postage prepaid and, if to the Company, addressed to the Company at 1999 Bryan Street #3300, Dallas, Texas 75201, or if to Manager, at his principal place of residence. 11. EMPLOYMENT AT WILL. Manager acknowledges that this Agreement is not an employment agreement, and has no relationship to or effect on the terms of Manager's employment with the Company. Manager acknowledges and affirms that his employment with the Company is terminable at will, subject only to compliance with existing law, by Manager or Manager's employer (whether the Company, Employer or another subsidiary of the Company) at anytime. 4 IN WITNESS WHEREOF, this Management Incentive Agreement is executed this 30th day of June, 1997. THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. By: /s/ ROBERT K. HOFFMAN ------------------------------------ Its: Co-Chairman ----------------------------------- TEXAS BOTTLING GROUP, INC. By: /s/ ROBERT K. HOFFMAN ------------------------------------ Its: Co-Chairman ----------------------------------- COCA-COLA BOTTLING COMPANY OF THE SOUTHWEST By: /s/ ROBERT K. HOFFMAN ------------------------------------ Its: Co-Chairman ----------------------------------- MANAGER /s/ E. T. SUMMERS, III --------------------------------------- E. T. Summers, III 5 EX-27 10 EXHIBIT 27
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 3,308 0 32,828 (537) 11,170 55,274 129,679 (81,137) 240,701 41,506 253,973 0 0 10 (54,788) 240,701 123,600 123,600 62,718 37,833 7,334 0 (10,346) 7,201 (1,852) 5,349 0 0 0 5,349 0 0
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