-----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, G6iZFS0hWJJ5gbyhCMP+tfYNMDIcKnPDy2lketIrfcCq/CtByD+/bGOG/Mj+iUdf gnpRB+5+oMRvYb8YDie9ew== 0000950144-98-010239.txt : 19980825 0000950144-98-010239.hdr.sgml : 19980825 ACCESSION NUMBER: 0000950144-98-010239 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980703 FILED AS OF DATE: 19980824 SROS: BSE SROS: CSE SROS: CSX SROS: NYSE SROS: PHLX SROS: PCX 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: SEC FILE NUMBER: 033-69274 FILM NUMBER: 98696648 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7709893000 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 10-Q 1 THE COCA-COLA BOTTLING GROUP/SOUTHWEST, INC. 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended July 3, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 33-69274 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. (Exact name of registrant as specified in its charter) NEVADA 75-1494591 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2500 WINDY RIDGE PARKWAY, SUITE 700 ATLANTA, GEORGIA 30339 (Address of principal executive offices) (Zip Code) 770-989-3000 (Registrant's telephone number, including area code) -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock. 100,000 SHARES OF $.10 PAR VALUE COMMON STOCK AS OF AUGUST 17, 1998 ================================================================================ 2 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. QUARTERLY REPORT ON FORM 10-Q FOR QUARTER ENDED JULY 3, 1998 INDEX Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Income for the Quarters ended July 3, 1998 and June 30, 1997.......... 1 Condensed Consolidated Statements of Income for the Six Months ended July 3, 1998 and June 30, 1997............ 2 Condensed Consolidated Balance Sheets as of July 3, 1998 and December 31, 1997.................................. 3 Condensed Consolidated Statements of Cash Flows for the Six Months ended July 3, 1998 and June 30, 1997........ 5 Notes to Condensed Consolidated Financial Statements..... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K......................... 11 Signatures........................................................ 12 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED; IN THOUSANDS) QUARTER ENDED --------------------- JULY 3, JUNE 30, 1998 1997 -------- -------- NET OPERATING REVENUES................................ $86,444 $63,789 Cost of sales......................................... 48,237 32,881 ------- ------- GROSS PROFIT.......................................... 38,207 30,908 Selling, general, and administrative expenses......... 32,684 21,183 ------- ------- OPERATING INCOME...................................... 5,523 9,725 Interest expense, net................................. 6,030 5,223 Other income (expense), net - Note D.................. 7,194 (41) Equity in earnings (loss) of unconsolidated subsidiary......................................... (576) 1,453 ------- ------- INCOME BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM............................. 6,111 5,914 Income tax expense.................................... 2,139 1,207 ------- ------- NET INCOME BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM................................. 3,972 4,707 Loss from discontinued operations, net of income tax benefit of $23..................................... -- (249) ------- ------- NET INCOME BEFORE EXTRAORDINARY ITEM.................. 3,972 4,458 Extraordinary loss, net of income tax benefit of $481. (894) -- ------- ------- NET INCOME............................................ $ 3,078 $ 4,458 ======= ======= See Notes to Condensed Consolidated Financial Statements. -1- 4 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED; IN THOUSANDS) SIX MONTHS ENDED ------------------------ JULY 3, JUNE 30, 1998 1997 -------- -------- NET OPERATING REVENUES........................... $146,499 $121,682 Cost of sales.................................... 77,864 60,956 -------- -------- GROSS PROFIT..................................... 68,635 60,726 Selling, general, and administrative expenses.... 57,659 44,196 -------- -------- OPERATING INCOME................................. 10,976 16,530 Interest expense, net............................ 10,972 10,346 Other income (expense), net - Note D............. 7,194 (41) Equity in earnings (loss) of unconsolidated subsidiary.................................... (1,238) 1,832 -------- -------- INCOME BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM............. 5,960 7,975 Income tax expense............................... 2,075 2,051 -------- -------- NET INCOME BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM............................ 3,885 5,924 Loss from discontinued operations, net of income tax benefit of $199.................... -- (575) -------- -------- NET INCOME BEFORE EXTRAORDINARY ITEM............. 3,885 5,349 Extraordinary loss, net of income tax benefit of $908....................................... (1,686) -- -------- -------- NET INCOME....................................... $ 2,199 $ 5,349 ======== ======== See Notes to Condensed Consolidated Financial Statements. -2- 5 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JULY 3, DECEMBER 31, ASSETS 1998 1997 ------------ ------------ (Unaudited) CURRENT Cash and cash investments, at cost approximating market..................... $ 8,592 $ 3,208 Trade accounts receivable, less reserves of $1,040 and $523, respectively......... 42,646 17,431 Inventories: Finished goods........................... 13,364 6,643 Raw materials and supplies............... 6,124 2,818 -------- -------- 19,488 9,461 Current deferred income tax assets......... 4,825 6,883 Prepaid expenses and other current assets.. 15,012 9,348 -------- -------- Total Current Assets................... 90,563 46,331 PROPERTY, PLANT, AND EQUIPMENT Land 10,294 5,655 Buildings and improvements................. 33,885 27,818 Machinery and equipment.................... 124,999 103,064 -------- -------- 169,178 136,537 Less allowances for depreciation........... 79,879 86,132 -------- -------- Net Property, Plant, and Equipment..... 89,299 50,405 FRANCHISES AND OTHER NONCURRENT ASSETS, NET... 666,296 131,901 -------- -------- $846,158 $228,637 ======== ======== See Notes to Condensed Consolidated Financial Statements. -3- 6 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE DATA) JULY 3, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997 ------------ ------------ (Unaudited) CURRENT Accounts payable and accrued expenses........ $ 49,562 $ 25,215 Current portion of long-term debt............ 1,798 2,015 Net liabilities of discontinued operations... -- 17 --------- -------- Total Current Liabilities................ 51,360 27,247 LONG-TERM DEBT, LESS CURRENT MATURITIES......... 466,531 251,529 DEFERRED TAX LIABILITY.......................... 188,160 -- OTHER LIABILITIES............................... 19,497 11,900 STOCKHOLDERS' EQUITY Common stock, $.10 par value; 250,000 shares authorized: 100,000 shares issued and outstanding................................. 10 10 Additional paid-in capital................... 206,670 26,223 Retained deficit............................. (86,070) (88,272) --------- -------- Total Stockholders' Equity............... 120,610 (62,039) --------- -------- $ 846,158 $228,637 ========= ======== -4- 7 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED; IN THOUSANDS) SIX MONTHS ENDED ------------------------ JULY 3, JUNE 30, 1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income..................................... $ 2,199 $ 5,349 Adjustments to reconcile net income to net cash provided by operating activities: Net loss from discontinued operations...... -- 575 Depreciation and amortization.............. 9,998 7,555 Deferred income tax provision.............. 293 1,851 Extraordinary item......................... 2,594 -- Loss (Earnings) of unconsolidated subsidiary............................... 1,238 (1,832) Net changes in current assets and liabilities.............................. (4,248) (9,102) Gain on sale of operating division......... (7,215) -- --------- --------- Net cash provided by operating activities...... 4,859 4,396 NET CASH USED BY DISCONTINUED OPERATIONS.......... -- (52) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, and equipment.... (7,168) (3,215) Disposals of property, plant, and equipment... 13,071 -- Cash investments in bottling businesses........ (11,044) -- Other investing activities..................... (1,427) (123) --------- --------- Net cash used in investing activities.......... (6,568) (3,338) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings under credit facilities......... 308,128 6,350 Retirement of long-term debt................... (312,215) -- Payments of long-term debt..................... (1,895) (7,230) Capital contributions.......................... 13,075 -- --------- --------- Net cash provided (used) by financing activities................................... 7,093 (880) --------- --------- NET INCREASE IN CASH AND CASH INVESTMENTS......... 5,384 126 Cash and cash investments at beginning of period....................................... 3,208 3,182 --------- --------- CASH AND CASH INVESTMENTS AT END OF PERIOD........ $ 8,592 $ 3,308 ========= ========= See Notes to Condensed Consolidated Financial Statements. -5- 8 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of The Coca-Cola Bottling Group (Southwest), Inc., (the "Company") and its wholly owned subsidiaries have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended December 31, 1997. The results of operations for the quarter and six months ended July 3, 1998 are not necessarily indicative of results expected for the entire year ending December 31, 1998. NOTE B - ACQUISITIONS AND CHANGE IN OWNERSHIP On June 5, 1998, Coca-Cola Enterprises Inc. ("CCE") became the holder of all of the issued and outstanding stock of the Company. This was accomplished by a merger of a wholly owned subsidiary of CCE into the Company's parent corporation, followed by the merger of the Company's parent corporation into CCE. Following this acquisition, the Company acquired the remaining 51% ownership of Texas Bottling Group, Inc. and Subsidiary ("TBG") making TBG a wholly owned subsidiary of the Company. The purchase price for the acquisition by the Company of the remaining 51% ownership of TBG was approximately $167 million funded through a capital contribution from CCE. Shareholders of TBG received common stock of CCE in exchange for their shares. Prior to the acquisition, the Company owned shares of common stock of TBG representing 49% of the ownership of TBG. The Company previously accounted for its investment in TBG under the equity method. TBG primarily bottles and distributes soft drinks in its franchise territories in central and southern Texas, including the cities of San Antonio and Corpus Christi. The purchase method of accounting has been used for the Company's acquisition of TBG and, accordingly, the results of operations of TBG are included in the Company's consolidated statement of income beginning with the date of acquisition. In addition, assets and liabilities of TBG have been included in the Company's July 3, 1998 consolidated balance sheet at their estimated fair values at the date of acquisition. Management has determined any adjustments to the Company's historical basis of accounting to reflect CCE's purchase of the Company are not appropriate because of the existence of the Company's outstanding public debt. -6- 9 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE B - ACQUISITIONS AND CHANGE IN OWNERSHIP (CONTINUED) The following table summarizes unaudited pro forma financial information of the Company as if the acquisition of TBG were completed effective January 1, 1997. The pro forma financial information presented below for the six months ended June 30, 1997 and July 3, 1998 reflects adjustments for the elimination of certain transactions between the Company and TBG, amortization of the value of the acquired franchise asset over 40 years and the income tax effect of the amortization expense: QUARTER ENDED SIX MONTHS ENDED -------------------- -------------------- JULY 3, JUNE 30, JULY 3, JUNE 30, (UNAUDITED; IN THOUSANDS) 1998 1997 1998 1997 -------- -------- -------- -------- Net Operating Revenues.......... $126,297 $112,486 $233,219 $214,057 ======== ======== ======== ======== Net Income From Continuing Operations.................... $ 1,865 $ 4,945 $ 1,307 $ 5,380 ======== ======== ======== ======== Net Income (Loss)............... $ 971 $ 4,696 $ (1,849) $ 4,805 ======== ======== ======== ======== The pro forma adjustments in certain cases are based on preliminary estimates of the fair value of assets and liabilities of TBG, which may require further adjustment when additional information is obtained as of the acquisition date and during the one year period subsequent to acquisition. Any reallocation of the purchase price based on final valuations of assets and liabilities should not differ significantly from the original estimates and should not have a material impact on the pro forma financial statements. On April 1, 1998 Southwest Coca-Cola Bottling Company, Inc., a wholly owned subsidiary of the Company, merged into the Company. NOTE C - LONG-TERM DEBT On March 11, 1998, the Company entered into a new credit agreement (the "1998 Bank Credit Agreement") with a group of banks. The 1998 Bank Credit Agreement provided the Company with credit facilities under which the Company could borrow up to $270 million. Also, on March 11, 1998, TBG entered into a credit agreement (the "1998 Senior Credit Facility") with a group of banks. The 1998 Senior Credit Facility provided TBG with a revolving credit facility under which TBG could borrow up to $230 million. In March 1998, the Company used proceeds from the 1998 Bank Credit Agreement to repay amounts outstanding related to its existing credit facility with a group of banks and other debt. The remaining unamortized cost, including the cost of an interest rate cap agreement purchased in 1995 (approximately $1.2 million), has been recognized, net of the income tax benefit, as an extraordinary loss in 1998. -7- 10 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE C - LONG-TERM DEBT (CONTINUED) Subsequent to CCE's purchase of the Company's parent, CCE loaned the Company a total of approximately $222 million to repay all amounts outstanding under the Company's 1998 Bank Credit Agreement and TBG's 1998 Senior Credit Facility. The remaining unamortized cost, approximately $1.4 million, associated with the 1998 Bank Credit Agreement, has been recognized, net of the income tax benefit, as an extraordinary loss in 1998. The outstanding principal balance of these new loans, together with all accrued but unpaid interest, is due and payable in full on demand or, if no demand has been made, on June 5, 2008. These new loans bear interest at 6% annually, compounded monthly, payable on the last day of the fiscal year, commencing December 31, 1998. The outstanding balance of these loans at July 3, 1998 have been classified as long-term because CCE has agreed to not demand payment within the next twelve months or alternatively, to refinance or to arrange refinancing on a long-term basis. NOTE D - SALE OF ACFS On June 4, 1998, Automated and Custom Food Services, L.P., purchased the assets (including approximately $2 million in cash) and assumed the liabilities of the ACFS division of the Company and purchased certain other assets and assumed certain other liabilities of the Company for a total purchase price, net of liabilities, of approximately $15.1 million in cash. The sale by the Company resulted in a gain of $7.2 million included in other income. -8- 11 PART I. FINANCIAL INFORMATION 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 are not generally included in discussions concerning unit sales volume as post-mix sales are essentially sales of syrup and not of packaged products. All references to net revenues and gross profit include volumes for post-mix. On June 5, 1998, Coca-Cola Enterprises Inc. ("CCE") became the holder of all of the issued and outstanding stock of the Company. This was accomplished by a merger of a wholly owned subsidiary of CCE into the Company's parent corporation, followed by the merger of the Company's parent corporation into CCE. Following this acquisition, the Company acquired 51% ownership of Texas Bottling Group, Inc. ("TBG") making TBG a wholly owned subsidiary of the Company. RESULTS OF OPERATIONS Net Operating Revenues: Net revenues for the second quarter of 1998 increased 36% to $86 million compared to $64 million for the same period in 1997. Net revenues for the first six months of 1998 increased 20% to $146 million compared to $122 million for the same period in 1997. The 1998 periods include the results of TBG from the date of acquisition, June 5, 1998. Excluding the TBG results, net revenues for both the second quarter and first six months of 1998 increased 3.7%. The increase in net revenues was due to an increase in sales volume and three additional days included in the second-quarter 1998 period as compared to the same period in 1997. Equivalent case sales increased 62.5% and 37.9% for the second quarter and first six months of 1998, respectively, compared to the same periods in 1997. Equivalent case sales adjusted to exclude TBG results and the additional three days in 1998 increased 9.1% and 8.6% for the second quarter and first six months of 1998, respectively, compared to the same period in 1997. Net revenues per case did not change significantly for the second quarter and first six months of 1998. Gross Profit: Gross profit for the second quarter of 1998 increased 24% to $38 million compared to $31 million for the same period in 1997. Gross profit for the first six months of 1998 increased 13% to $69 million compared to $61 million for the same period in 1997. The increase in gross profit was due to the impact of TBG on consolidated results in addition to sales volume increases partially offset by higher raw material costs primarily for soft drink concentrates and sugars. Gross profit as a percentage of net revenues was 44% and 47% for the second quarter and first six months of 1998, respectively, compared to 48% and 50% for the same periods in 1997. -9- 12 Selling, general, and administrative expenses: Selling, general, and administrative expenses for the second quarter of 1998 increased 54% to $33 million from $21 million for the same period in 1997. Selling, general, and administrative expenses for the first six months 1998 increased 30% to $58 million from $44 million for the same period in 1997. This increase was due primarily to selling, general, and administrative expenses relating to TBG from the date of acquisition in addition to increases in labor expense associated with hiring for key sales positions, stock appreciation rights expense, bad debt expense, and a reduction of casualty insurance expense in 1997. Operating Income: As a result of the above, operating income for the second quarter of 1998 decreased 43% to $6 million compared to $10 million for the same period in 1997. Operating income for the first six months of 1998 decreased 34% to $11 million compared to $17 million for the same period in 1997. Operating income as a percentage of net revenues was 6% and 7% for the second quarter and first six months of 1998, respectively, compared to 15% and 14% for the same periods in 1997. Interest expense, net: Net interest expense was $6 million and $11 million for the second quarter and first six months of 1998, respectively, compared to $5 million and $10 million for the same periods in 1997, due primarily to the additional interest associated with TBG's outstanding debt assumed by the Company in connection with the purchase of TBG. Equity in earnings (loss) of unconsolidated subsidiary: The Company recognized equity in the loss of TBG of $0.6 million and $1.2 million in the second quarter and first half of 1998, respectively. TBG recognized a net loss of $2.5 million for the period January 1, 1998 to June 5, 1998. On June 5, 1998, TBG became a wholly owned subsidiary of the Company and the results of operations of TBG are included in the Company's consolidated statements of income beginning with the date of acquisition. Other income (expense), net: On June 4, 1998, the Company sold its ACFS division for a total purchase price, net of liabilities, of approximately $15.1 million in cash. The sale by the Company resulted in a gain of $7.2 million recognized in other income. LIQUIDITY AND CAPITAL RESOURCES The primary sources of cash for the first half of 1998 consisted of those provided by operations of $4.9 million, net cash received from the sale of ACFS of $13 million, and from borrowings under credit facilities of $308 million. Our primary uses of cash were for the retirement of long-term debt of $312 million and for the acquisition of TBG for a net cash cost of $11 million. The Company's business is subject to seasonality due to the influence of weather conditions on consumer demand for soft drinks, which affects working capital. This seasonality results from a combination of higher unit sales in the second and third quarters versus the first and forth quarters of the year and the methods of accounting for fixed costs such as depreciation, amortization, and interest expense which are not significantly impacted by business seasonality. Therefore, operating results for the second quarter and six months ended July 3, 1998 are not indicative of results that may be expected for the year ending December 31, 1998. -10- 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K): Exhibit Incorporated by Reference Number Description or Filed Herewith - ------- ------------------------------------------ ------------------------- 3 By-Laws Filed Herewith 4.1 Revolving Credit Note between The Coca- Filed Herewith Cola Bottling Group (Southwest), Inc. and Coca-Cola Enterprises Inc. 4.2 Revolving Credit Note between The Texas Filed Herewith Bottling Group, Inc. and Coca-Cola Enterprises Inc. 27 Financial Data Schedule (for SEC use only) Filed Herewith (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended July 3, 1998. -11- 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 17, 1998 /s/ John R. Alm ------------------------------- John R. Alm Executive Vice President and Chief Financial Officer Date: August 17, 1998 /s/ O. Michael Whigham ------------------------------- O. Michael Whigham Vice President, Controller and Principal Accounting Officer -12- EX-3 2 BY-LAWS 1 EXHIBIT 3 THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. BY-LAWS As adopted and in effect on June 5, 1998 2 ARTICLE ONE Offices 1.1 Registered Office and Agent. The corporation shall maintain a registered office in the State of Nevada and shall have a registered agent whose business office is identical with such registered office. 1.2 Other Offices. The corporation may have offices at such place or places within or without the State of Nevada as the Board of Directors may from time to time appoint or the business of the corporation may require or make desirable. ARTICLE TWO Shareholders' Meetings 2.1 Place of Meetings. Meetings of the shareholders shall be held at any place within or without the State of Nevada as set forth in the notice thereof or, in the event of a meeting held pursuant to waiver of notice, as may be set forth in the waiver or, if no place is so specified, at the registered office of the corporation. 2.2 Annual Meetings. The annual meeting of shareholders shall be held on the second Friday in March unless that day be a legal holiday, and in that event, on the next succeeding business day, or at such other date and time as shall be designated by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and transacting any and all business that may properly come before the meeting. 2.3 Special Meetings. Special meetings of the shareholders may be called at any time by the President, the Board of Directors, or by the holder of fifty percent (50%) or more of all the shares entitled to vote. 2.4 Notice of Meetings. Unless waived as contemplated in Section 5.2 or by attendance at the meeting, either in person or by proxy, for any purpose other than to object to the transaction of business, a written or printed notice of each shareholders' meeting stating the place, day and hour of the meeting shall be delivered not less than ten days nor more than sixty days before the date thereof, either personally or by mail, by or at the direction of the President or Secretary or other person calling the meeting, to each shareholder of record entitled to vote at such meeting. In the case of an annual or substitute annual meeting, the notice of the meeting need not state the purpose or purposes of the meeting unless the purpose or purposes constitute a matter which the Nevada Revised Statutes requires to be stated 3 in the notice of the meeting. In the case of a special meeting, the notice of meeting shall state the purpose or purposes for which the meeting is called. 2.5 Quorum. At all meetings of the shareholders, the presence, in person or by proxy of the holders of more than one-half of the shares outstanding and entitled to vote shall constitute a quorum. If a quorum is present, a majority of the shares outstanding and entitled to vote which are represented at any meeting shall determine any matter coming before the meeting unless a different vote is required by statute, by the Articles of Incorporation or by these by-laws. The stockholders at a meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. 2.6 Voting of Shares. Except as otherwise provided by statute or the Articles of Incorporation, each outstanding share having voting rights shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders except as otherwise provided herein. Voting on all matters shall be voice vote or by show of hands unless any qualified voter, prior to the voting on any matter, demands a vote by ballot, in which case each ballot shall state the name of the shareholder voting and the number of shares voted by such shareholder, and if such ballot be cast by proxy, it shall also state the name of such proxy. 2.7 Proxies. A shareholder entitled to vote pursuant to Section 2.6 may vote in person or by proxy executed in writing by the shareholder or by an attorney-in-fact. A proxy shall not be valid after eleven (11) months from the date of its execution, unless a longer period is expressly stated therein. If the validity of any proxy is questioned it must be submitted to the Secretary of the shareholders' meeting for examination or to a proxy officer or committee appointed by the person presiding at the meeting. The Secretary of the meeting or, if appointed, the proxy officer or committee shall determine the validity or invalidity of any proxy submitted and reference by the Secretary in the minutes of the meeting to the validity of the proxy shall be received as prima facie evidence of the facts stated for the purpose of establishing the presence of quorum at such meeting and for all other purposes. 2.8 Presiding Officer. The Chairman of the Board of Directors, or in his or her absence, the President, shall serve as Chairman of every shareholders' meeting unless some other person is elected to serve as Chairman by a majority vote of the shares represented at the meeting. The Chairman shall appoint such person as he or she deems required to assist with the meeting. 4 2.9 Adjournments. Any meeting of the shareholders, whether or not a quorum is present, may be adjourned by the holders of a majority of the voting shares represented at the meeting to reconvene at a specific time and place. It shall not be necessary to give any notice of the reconvened meeting or of the business to be transacted, if the time and place of the reconvened meeting are announced at the meeting which was adjourned, except that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At any such reconvened meeting at which a quorum is represented or present, any business may be transacted which could have been transacted at the meeting which was adjourned. 2.10 Action of Shareholders Without a Meeting. Any action which may be taken at a meeting of the shareholders may be taken without a meeting if a written consent, setting forth the action authorized, shall be signed by each of the shareholders entitled to vote on such action. Such written consent shall have the same effect as a unanimous vote of the shareholders at a special meeting called for the purpose of considering the action authorized and shall be filed in the minute book of the corporation by the officer having custody of the corporate books and records. ARTICLE THREE The Board of Directors 3.1 General Powers. The business and affairs of the corporation shall be managed by the Board of Directors. In addition to the powers and authority expressly conferred upon it by these by-laws, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things except those acts and things which by law, by a legal agreement among stockholders, by the Articles of Incorporation or by these by-laws are required to be done by the shareholders. 3.2 Number, Election and Term of Office. Except when state law permits a lesser number, the number of directors of the corporation shall be not less than three (3) nor more than nine (9), the precise number to be fixed by resolution of the shareholders from time to time. Except as provided in Section 3.4, the directors shall be elected by the affirmative vote of a majority of the shares represented at the annual meeting. Directors need not be residents of the State of Nevada or shareholders of the corporation. Each director, except in case of death, resignation, retirement, disqualification or removal, 5 shall serve until the next succeeding annual meeting and thereafter until his or her successor shall have been elected and qualified. 3.3 Removal. Any director may be removed from office with or without cause by the affirmative vote of the holders of a majority of the shares entitled to vote at an election of directors. Removal action may be taken at any shareholders' meeting with respect to which notice of such purpose has been given, and a removed director's successor may be elected at the same meeting to serve the unexpired term. 3.4 Vacancies. A vacancy occurring in the Board of Directors, except by reason of removal of a director, may be filled for the unexpired term, and until the shareholders shall have elected a successor, by affirmative vote of a majority of the directors remaining in office though less than a quorum of the Board of Directors. 3.5 Compensation. Directors may receive such compensation for their services as directors as may from time to time be fixed by vote of the Board of Directors or the shareholders. A director may also serve the corporation in a capacity other than that of a director and receive compensation, as determined by the Board of Directors, for services rendered in that other capacity. 3.6 Committees of the Board of Directors. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees, each consisting of three or more directors. Except as prohibited by law, each committee shall have the authority set forth in the resolution establishing said committee. ARTICLE FOUR Meetings of the Board of Directors 4.1 Regular Meetings. Regular meetings of the Board of Directors shall be held immediately after the annual meeting of shareholders or any meeting held in lieu thereof. In addition, the Board of Directors may schedule other meetings to occur at regular intervals throughout the year. 4.2 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board of Directors or the President, or in their absence by the Secretary of the corporation, or by any two directors in office at 6 that time, except that when the Board of Directors consists of only one Director, then one director may call a special meeting. 4.3 Place of Meetings. Directors may hold their meetings at any place within or without the State of Oklahoma as the Board of Directors may from time to time establish for regular meetings or as is set forth in the notice of special meetings or, in the event of a meeting held pursuant to waiver of notice, as may be set forth in the waiver. 4.4 Notice of Meetings. No notice shall be required for any regularly scheduled meeting of the directors of the corporation. Unless waived as contemplated in Section 5.2, the Chairman of the Board of Directors, the President or Secretary of the corporation or any director thereof shall give notice to each director of each special meeting which notice shall state the time, place and purposes of the meeting. Such notice shall be given by mailing a notice of the meeting at least ten days before the date of the meeting, or by telephone, telegram, cablegram or facsimile transmission or personal delivery at least two days before the date of the meeting. Notice shall be deemed to have been given by telegram or cablegram at the time notice is filed with the transmitting agency. Attendance by a director at a meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of business because the meeting is not lawfully called. 4.5 Quorum. At meetings of the Board of Directors, more than one-half of the directors then in office shall be necessary to constitute a quorum for the transaction of business. In no case shall less than two directors constitute a quorum, except that when the Board of Directors consists of only one director, then one director shall constitute a quorum. 4.6 Vote Required for Action. Except as otherwise provided in these by-laws or by law, the act of a majority of the directors present at a meeting at which there is a quorum shall be the act of the Board of Directors. 4.7 Action by Directors Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if a written consent thereto shall be signed by all the directors or members of the committee and such written consent is filed with the minutes of the proceedings of the Board or the committee. Such consent shall have the same force and effect as a unanimous vote of the Board of Directors at a duly called and duly constituted meeting. 7 4.8 Adjournments. A meeting of the Board of Directors, whether or not a quorum is present, may be adjourned by a majority of the directors present to reconvene at a specific time and place. It shall not be necessary to give notice of the reconvened meeting or of the business to be transacted, other than by announcement at the meeting which was adjourned. At any such reconvened meeting at which a quorum is present, any business may be transacted which could have been transacted at the meeting which was adjourned. 4.9 Participation by Conference Telephone. Members of the Board of Directors, or members of any committee of the Board of Directors, may participate in a meeting of the Board of Directors or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 4.9 shall constitute presence in person at such meeting. ARTICLE FIVE Notice and Waiver 5.1 Procedure. Whenever these by-laws require notice to be given to any shareholder or director, the notice shall be given as prescribed in Section 2.4 or 4.4 for any shareholder or director respectively. Whenever notice is given to a shareholder or director by mail, the notice shall be sent first class mail by depositing the same in a post office or letter box in a postage prepaid sealed envelope addressed to the shareholder or director at his or her address as it appears on the books of the corpora tion, and such notice shall be deemed to have been given at the time the same is deposited in the United States Mail. 5.2 Waiver. Whenever any notice is required to be given to any shareholder or director by law, by the Articles of Incorporation or by these by-laws, a waiver thereof in writing signed by the director or shareholder entitled to such notice or by the proxy of such shareholder, whether before or after the meeting to which the waiver pertains, shall be deemed equivalent thereto. 8 ARTICLE SIX Officers 6.1 Number. The Officers of the corporation shall be elected by the Board of Directors and shall consist of a Chairman of the Board of Directors, a President, one or more Vice Presidents as determined or designated by the Board of Directors, a Secretary and a Treasurer. The Board of Directors may elect a Vice Chairman and a Controller and one or more of the following: Assistant Secretary, Assistant Treasurer and Assistant Controller. Any two or more offices may be held by the same person, except the offices of Chairman of the Board of Directors, President and Secretary. The corporation may have a General Counsel who shall be appointed by the Board of Directors and shall have general supervision of all matters of a legal nature concerning the corporation, unless the Board of Directors has also appointed a General Tax Counsel, in which event the General Tax Counsel shall have general supervision of all tax matters of a legal nature concerning the corporation. The corporation may have a Chief Financial Officer who shall be appointed by the Board of Directors and shall have general supervision over the financial affairs of the corporation. 6.2 Election and Term. All Officers shall be elected by the Board of Directors and shall serve at the will of the Board of Directors and until their successors have been elected and have qualified or until their earlier death, resignation, removal, retirement or disqualification. 6.3 Compensation. The compensation of all Officers of the corporation shall be fixed by the Board of Directors. 6.4 Removal. Any officer or agent elected by the Board of Directors may be removed by the Board of Directors at any meeting with respect to which notice of such purpose has been given to the members thereof. 6.5 Chairman of the Board of Directors. The Board of Directors may appoint a Chairman of the Board of Directors, who shall preside as chairman of all meetings of the directors and all meetings of the shareholders of the corporation, and who shall perform such other duties as may be assigned from time to time by the Board of Directors. In the absence of, or in the case of a vacancy in the office of, the Chairman of the Board of Directors, a chairman selected by the Chairman of the Board of Directors or, if he fails to do so, by the directors, shall preside. 9 6.6 President. The President shall be the Chief Executive Officer of the corporation and shall be in charge of the day-to-day affairs of the corporation, subject to the direction of the Board of Directors and the Chairman of the Board of Directors, and shall have such other powers and perform such duties as may be assigned by the Chairman of the Board of Directors or the Board of Directors. In the absence or disability of the President his or her duties shall be performed by such Vice Presidents as the Chairman of the Board of Directors or the Board of Directors may designate. The President shall also have the power to make and execute contracts on the corporation's behalf and to delegate such power to others. 6.7 Vice Presidents. The Vice President shall, in the absence or disability of the President, or at the direction of the President, perform the duties and exercise the powers of the President. If the corporation has more than one Vice President, the one designated by the Board of Directors shall act in lieu of the President. Any Vice President shall have the power and authority to vote in behalf of the corporation any shares of stock, or equity interest in any corporation, partnership, association or other entity, owned of record or beneficially by the corporation. Vice Presidents shall perform whatever duties and exercise such powers as the Board of Directors may from time to time assign. 6.8 Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of shareholders, directors and committees of directors. He or she shall have authority to give all notices required by law or these by-laws. He or she shall be custodian of the corporate books, records, contracts and other documents. The Secretary may affix the corporate seal to any lawfully executed documents requiring it and shall sign such instruments as may require his or her signature. The Secretary shall perform such additional duties and have such additional powers as may be assigned to him or her from time to time by the Chairman of the Board of Directors or the Board of Directors. 6.9 Treasurer. The Treasurer shall have custody of all funds and securities belonging to the corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. The Treasurer shall keep full and true accounts of all receipts and disbursements and shall make such reports of the same to the Board of Directors and President upon request. The Treasurer shall perform such additional duties and have such additional powers as may be assigned to him or her from time to time by the Chairman of the Board of Directors or the Board of Directors. 10 6.10 Controller. The Controller shall keep or cause to be kept in the books of the corporation provided for that purpose a true account of all transactions and of the assets and liabilities of the corporation. The Controller shall prepare and submit to the Chief Financial Officer periodic balance sheets, profit and loss statements and such other schedules as may be required to keep the Chief Financial Officer and the Chairman of the Board of Directors currently informed of the operations and financial condition of the corporation, cause adequate internal audits of the financial transactions of the corporation to be made, prepare and submit annual budgets, and perform such other duties as may be assigned by the Chief Financial Officer. 6.11 Assistant Secretary and Assistant Treasurer. The Assistant Secretary and Assistant Treasurer shall, in the absence or disability of the Secretary or the Treasurer, respectively, perform the duties and exercise the powers of those offices, and they shall, in general, perform such other duties as shall be assigned to them by the Board of Directors or by the person appointing them. Specifically, the Assistant Secretary may affix the corporate seal to all necessary documents and attest the signature of any officer of the corporation. 6.12 Bonds. The Board of Directors may by resolution require any and all of the officers, agents or employees of the corporation to give bonds to the corporation, with sufficient surety or sureties, conditioned on the faithful performance of the duties of their respective offices or positions and to comply with such other conditions as may from time to time be required by the Board of Directors. ARTICLE SEVEN Dividends 7.1 Time and Conditions of Declaration. Dividends upon the outstanding shares of the corporation may be declared by the Board of Directors at any regular or special meeting and paid in cash, property or in shares of capital stock. 7.2 Reserves. Before the payment of any dividend or the making of any distribution of profit, there shall be set aside out of the earned surplus or current net earnings of the corporation such sums as the Board of Directors from time to time in its absolute discretion deems proper as a reserve fund to meet contingencies, to pay and discharge indebtedness, or to fulfill other purposes which the Board of Directors shall deem to be in the best interest of the corporation. 11 7.3 Stock Dividends - Unissued Shares. Dividends may be declared by the Board of Directors and paid in the authorized but unissued shares of the corporation out of any unreserved and unrestricted surplus of the corporation; provided that such shares shall be issued at not less than the par value thereof, and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus at least equal to the aggregate par value of the shares to be issued as a dividend. 7.4 Stock Splits. A split or division of the issued shares of any class into a greater number of shares of the same class without increasing the stated capital of the corporation shall not be construed to be a stock dividend within the meaning of this Article. ARTICLE EIGHT Shares 8.1 Authorization and Issuance of Shares. The par value and the maximum number of shares, of any class, of the corporation which may be issued and outstanding shall be as set forth from time to time in the Articles of Incorporation of the corporation. The Board of Directors may, by resolution fixing the number of shares to be issued and the amount and kind of consideration to be received, increase or decrease the number of issued and outstanding shares of the corporation within the maximum authorized by the Articles of Incorporation and the minimum requirements of the Articles of Incorporation and of Nevada law. 8.2 Stock Certificates. The interest of each shareholder shall be evidenced by a certificate or certificates representing shares of the corporation which shall be in such form as the Board of Directors may from time to time adopt in accordance with Nevada law. Stock certificates shall be consecutively numbered, shall be in registered form, and shall indicate the date of issue and all such information shall be entered on the corporation's books. Each certificate for shares of the corporation, the transfer of which is restricted by law, by these by-laws or by contract, shall bear a legend conspicuously noting the existence of such restriction. Each certificate shall be signed by the Chairman of the Board of Directors or the President or a Vice President and the Secretary or an Assistant Secretary and shall be sealed with the seal of the corporation or a facsimile thereof; provided, however, that where such certificate is signed by a transfer agent, or registered by a registrar, the signature of any such officer may be facsimile. In case any officer or officers who shall have signed or whose facsimile signature shall have been placed upon a stock certificate shall have ceased for any reason 12 to be such officer or officers of the corporation before such certificate is issued, such certificate may be issued by the corporation with the same effect as if the person or persons who signed such certificate or whose facsimile signatures shall have been used thereon had not ceased to be such officer or officers. 8.3 Rights of Corporation with Respect to Registered Owners. Prior to due presentation for transfer of registration of its shares, the corporation may treat the registered owner of the shares as the person exclusively entitled to vote such shares, to receive any dividend or other distribution with respect to such shares, and for all other purposes; and the corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. 8.4 Transfer of Stock. Transfers of shares, duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, shall be made upon the transfer books of the corporation, kept at the office of the transfer agent designated to transfer the shares, only upon direction of the person named in the certificate, or by an attorney lawfully constituted in writing; and before a new certificate is issued, the old certificate shall be surrendered for cancellation or, in the case of a certificate alleged to have been lost, stolen, or destroyed, the provisions of Section 8.5 of these by-laws must be completed. 8.5 Lost, Stolen or Destroyed Certificates. Any person claiming a stock certificate to be lost, stolen or destroyed shall make an affidavit or affirmation of the fact in such manner as the Board of Directors may require and shall, if the Board of Directors so requires, give the corporation a bond of indemnity in form and amount and with one or more sureties satisfactory to the Board of Directors, as the Board of Directors may require, whereupon an appropriate new certificate may be issued in lieu of the one alleged to have been lost, stolen or destroyed. 8.6 Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date, such date to be not more than fifty (50) days (and, in the case of a shareholders' meeting, not less than ten (10) days) prior to the date on which the particular action requiring such determination of shareholders is to be taken. 13 8.7 Record Date if None Fixed. If no record date is fixed, as provided in Section 8.6 of these by-laws, then the record date for any determination of shareholders which may be proper or required by law, shall be the date on which notice is mailed, in the case of a shareholders' meeting; the date on which the Board of Directors approves a resolution declaring a dividend, in the case of a payment of a dividend; and the date on which any other action, the consummation of which requires a determination of shareholders, is to be taken, in the case of such action. ARTICLE NINE Indemnification 9.1 Indemnification. The corporation may indemnify its officers, directors, employees and agents to the extent permitted by the Nevada Revised Statutes. The corporation may purchase and maintain insurance on behalf of any such officers and directors against any liabilities asserted against such persons whether or not the corporation would have the power to indemnify such officers and directors against such liability under the laws of the State of Nevada. ARTICLE TEN Books and Records 10.1 Inspection of Books and Records. The Board of Directors shall have power to determine which accounts, books and records of the corporation shall be opened to the inspection of shareholders, except such as may by law be specifically open to inspection, and shall have power to fix reasonable rules and regulations not in conflict with the applicable law for the inspection of accounts, books and records which by law or by determination of the Board of Directors shall be open to inspection. 10.2 Fiscal Year. The Board of Directors is authorized to fix the fiscal year of the corporation and to change the same from time to time as it deems appropriate. Unless the Board of Directors shall otherwise determine, the fiscal year of the corporation for each year shall end on the last Friday closest to December 31 in such year, or if December 31 is the last Friday in each year, shall end on December 31. 10.3 Seal. The corporate seal shall be in such form as the Board of Directors may from time to time determine. 14 10.4 Annual Statement. The Board of Directors shall present at each annual meeting, and at any special meeting of the shareholders, when called for by the vote of the shareholders, a full and clear statement of the business and condition of the corporation. ARTICLE ELEVEN Amendments 11.1 Power to Amend By-Laws. The Board of Directors shall have power to alter, amend or repeal these by-laws or adopt new by-laws, but any by-laws adopted by the Board of Directors may be altered, amended or repealed, and new by-laws adopted by the shareholders. The shareholders may prescribe that any by-law or by-laws adopted by them shall not be altered, amended or repealed by the Board of Directors. 11.2 Conditions. Action taken by the shareholders with respect to by-laws shall be taken by an affirmative vote of a majority of all shares entitled to elect directors, and action by the Board of Directors with respect to by-laws, shall be taken by an affirmative vote of a majority of all directors then holding office. EX-4.1 3 REVOLVING CREDIT NOTE 1 EXHIBIT 4.1 REVOLVING CREDIT NOTE $102,100,047.22 June 5, 1998 FOR VALUE RECEIVED, the undersigned THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC., a Nevada corporation (the "Company") promises to pay at the earlier of demand or maturity as set forth below to the order of COCA-COLA ENTERPRISES INC., a Delaware corporation (hereinafter "Payee"; Payee or any subsequent holder(s) hereof being hereinafter referred to as "Holder") at 2500 Windy Ridge Parkway, Atlanta, Georgia 30339, or at such other place as the Holder may from time to time designate in writing, in lawful money of the United States of America, the principal sum of One Hundred Two Million One Hundred Thousand Forty-Seven and 22/100 Dollars ($102,100,074.22) or so much thereof as may have been advanced hereunder and remain outstanding, together with interest on the outstanding principal sum at the annual rate of six percent (6%). Interest shall be compounded monthly and shall be paid on the last day of the fiscal year, commencing December 31, 1998, and on the last day of each fiscal year thereafter. Interest shall be computed on the basis of a 360-day year for the actual number of days involved and on the weighted daily average amount outstanding hereunder. The entire outstanding principal balance, together with all accrued but unpaid interest and all other sums owing hereunder shall be due and payable in full at the demand of Holder or, if no demand has been made, on June 5, 2008. All payments hereon shall be credited first to accrued interest, next to any other sums due hereunder, and the remainder to the unpaid principal balance, until all sums hereunder have been paid in full. The Company shall have the right to prepay this Note at any time, without premium or penalty. Within the limits of the principal sum set forth above, and subject to the terms and conditions set forth in this instrument, the Company may borrow, repay and reborrow under the terms of this instrument; provided, however, that the Company may neither borrow nor reborrow should an Event of Default, as defined herein, have occurred. The Company shall give the Holder five days' notice of any borrowings permitted hereunder. Any one or more of the following such constitute an "Event of Default" hereunder: (a) The Company fails to pay when due any payment of principal or interest on the Note or any other sum payable hereunder within five days after notice thereof to the Company by the Holder, such notice to be in writing and 2 delivered to the address for notices specified on the signature page of this Note, or to such other address as the Company may specify in a written notice personally delivered to the chief financial officer of the Holder. (b) Coca-Cola Enterprises Inc. ceases to own, directly or indirectly, all of the issued and outstanding capital stock of the Company and its Subsidiaries; or (c) substantially all of the assets of the Company or of any Subsidiary shall have been transferred to any entity other than Coca-Cola Enterprises Inc. or a Subsidiary. As used herein, a "Subsidiary" of the Company or of Coca-Cola Enterprises Inc. is any entity of which more than 50% of the total voting power of all outstanding shares, interests, participations, rights or other equivalents, however designated, entitled to elect the directors of other management of such entity is owned of record, directly or beneficially, by (as the case may be): (i) the Company or Coca-Cola Enterprises Inc.; or (ii) a Subsidiary of the Company or Coca-Cola Enterprises Inc.; or (iii) the Company and one or more of its Subsidiaries, or Coca-Cola Enterprises Inc. and one or more of its Subsidiaries. Upon the occurrence of an Event of Default, the Holder of this Note may elect to mature this Note in its entirety, including principal and interest then accrued, whereupon, without notice, presentation or demand, all of the same shall at once become due and payable. The Company agrees to pay all costs of collection, including, but not limited to, reasonable attorney's fees and court costs incurred by the Holder as a result of the Event of Default. This Note is intended as a contract under and shall be construed and enforceable in accordance with the laws of the State of Georgia. Presentment for payment, demand, protest and notice of demand, protest and nonpayment and all other notices other than as set forth herein are hereby waived by the Company. No course of dealing between the Company and the Holder, nor delay or failure on the part of the Holder to exercise or enforce any right or remedy provided for herein or otherwise available to the Holder, including without limitation, failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past due installment, or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Holder thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by the laws of the State of Georgia. The Company hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. 2 3 Past due principal and (to the extent legally enforceable) interest hereunder shall, at the option of Holder, bear interest from the due date until paid at either the rate of interest provided herein, plus 100 basis points, or the maximum legal rate permitted under the laws of the State of Georgia for obligations of this type, whichever is less. Nothing contained in this Note shall be construed to permit the Holder to receive at any time interest, fees or other charges in excess of the amounts which the Holder is legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no event whatsoever shall the compensation payable to the Holder by the Company hereunder, howsoever characterized or computed, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that the Holder shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that any excess has been charged or received, then, ipso facto, such rate shall be reduced to the highest lawful rate so that no amounts shall be charged which are in excess thereof. No extension of time for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of the Company under this Note, either in whole or in part unless Holder agrees otherwise in writing. This Note may not be changed orally, but only in writing, signed by the party against who enforcement of any waiver, change, modification or discharge is sought. Wherever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. As used herein the terms "Company" and "Holder" shall be deemed to include their respective heirs, successors, legal representatives and assigns, whether by voluntary action of the parties or by operation of law. 3 4 IN WITNESS WHEREOF, this Note is executed as of the date first above written. THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC. /s/ Vicki R. Palmer ---------------------------- Vicki R. Palmer (SEAL) Vice President and Treasurer 4 EX-4.2 4 REVOLVING CREDIT AGREEMENT 1 EXHIBIT 4.2 REVOLVING CREDIT NOTE $119,879,131.11 June 5, 1998 FOR VALUE RECEIVED, the undersigned THE TEXAS BOTTLING GROUP, INC., a Nevada corporation (the "Company") promises to pay at the earlier of demand or maturity as set forth below to the order of COCA-COLA ENTERPRISES INC., a Delaware corporation (hereinafter "Payee"; Payee or any subsequent holder(s) hereof being hereinafter referred to as "Holder") at 2500 Windy Ridge Parkway, Atlanta, Georgia 30339, or at such other place as the Holder may from time to time designate in writing, in lawful money of the United States of America, the principal sum of One Hundred Nineteen Million Eight Hundred Seventy-Nine Thousand One Hundred Thirty-One and 11/100 Dollars ($119,879,131.11) or so much thereof as may have been advanced hereunder and remain outstanding, together with interest on the outstanding principal sum at the annual rate of six percent (6%). Interest shall be compounded monthly and shall be paid on the last day of the fiscal year, commencing December 31, 1998, and on the last day of each fiscal year thereafter. Interest shall be computed on the basis of a 360-day year for the actual number of days involved and on the weighted daily average amount outstanding hereunder. The entire outstanding principal balance, together with all accrued but unpaid interest and all other sums owing hereunder shall be due and payable in full at the demand of Holder or, if no demand has been made, on June 5, 2008. All payments hereon shall be credited first to accrued interest, next to any other sums due hereunder, and the remainder to the unpaid principal balance, until all sums hereunder have been paid in full. The Company shall have the right to prepay this Note at any time, without premium or penalty. Within the limits of the principal sum set forth above, and subject to the terms and conditions set forth in this instrument, the Company may borrow, repay and reborrow under the terms of this instrument; provided, however, that the Company may neither borrow nor reborrow should an Event of Default, as defined herein, have occurred. The Company shall give the Holder five days' notice of any borrowings permitted hereunder. Any one or more of the following such constitute an "Event of Default" hereunder: (a) The Company fails to pay when due any payment of principal or interest on the Note or any other sum payable hereunder within five days after 2 notice thereof to the Company by the Holder, such notice to be in writing and delivered to the address for notices specified on the signature page of this Note, or to such other address as the Company may specify in a written notice personally delivered to the chief financial officer of the Holder. (b) Coca-Cola Enterprises Inc. ceases to own, directly or indirectly, all of the issued and outstanding capital stock of the Company and its Subsidiaries; or (c) substantially all of the assets of the Company or of any Subsidiary shall have been transferred to any entity other than Coca-Cola Enterprises Inc. or a Subsidiary. As used herein, a "Subsidiary" of the Company or of Coca-Cola Enterprises Inc. is any entity of which more than 50% of the total voting power of all outstanding shares, interests, participations, rights or other equivalents, however designated, entitled to elect the directors of other management of such entity is owned of record, directly or beneficially, by (as the case may be): (i) the Company or Coca-Cola Enterprises Inc.; or (ii) a Subsidiary of the Company or Coca-Cola Enterprises Inc.; or (iii) the Company and one or more of its Subsidiaries, or Coca-Cola Enterprises Inc. and one or more of its Subsidiaries. Upon the occurrence of an Event of Default, the Holder of this Note may elect to mature this Note in its entirety, including principal and interest then accrued, whereupon, without notice, presentation or demand, all of the same shall at once become due and payable. The Company agrees to pay all costs of collection, including, but not limited to, reasonable attorney's fees and court costs incurred by the Holder as a result of the Event of Default. This Note is intended as a contract under and shall be construed and enforceable in accordance with the laws of the State of Georgia. Presentment for payment, demand, protest and notice of demand, protest and nonpayment and all other notices other than as set forth herein are hereby waived by the Company. No course of dealing between the Company and the Holder, nor delay or failure on the part of the Holder to exercise or enforce any right or remedy provided for herein or otherwise available to the Holder, including without limitation, failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past due installment, or indulgences granted from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Holder thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by the laws of the State of Georgia. The Company hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. 2 3 Past due principal and (to the extent legally enforceable) interest hereunder shall, at the option of Holder, bear interest from the due date until paid at either the rate of interest provided herein, plus 100 basis points, or the maximum legal rate permitted under the laws of the State of Georgia for obligations of this type, whichever is less. Nothing contained in this Note shall be construed to permit the Holder to receive at any time interest, fees or other charges in excess of the amounts which the Holder is legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no event whatsoever shall the compensation payable to the Holder by the Company hereunder, howsoever characterized or computed, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that the Holder shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that any excess has been charged or received, then, ipso facto, such rate shall be reduced to the highest lawful rate so that no amounts shall be charged which are in excess thereof. No extension of time for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of the Company under this Note, either in whole or in part unless Holder agrees otherwise in writing. This Note may not be changed orally, but only in writing, signed by the party against who enforcement of any waiver, change, modification or discharge is sought. Wherever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note sh all be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. As used herein the terms "Company" and "Holder" shall be deemed to include their respective heirs, successors, legal representatives and assigns, whether by voluntary action of the parties or by operation of law. 3 4 IN WITNESS WHEREOF, this Note is executed as of the date first above written. TEXAS BOTTLING GROUP, INC. /s/ Vicki R. Palmer ---------------------------- Vicki R. Palmer (SEAL) Vice President and Treasurer 4 EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF THE FILER FOR THE PERIOD ENDED JULY 3, 1998 INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED JULY 3, 1998 (COMMISSION FILE NO. 33-69274) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUL-03-1998 8,592 0 43,686 1,040 19,488 90,563 169,178 79,879 846,158 51,360 0 0 0 10 120,600 846,158 146,499 146,499 77,864 57,659 0 0 10,972 5,960 2,075 3,885 0 (1,686) 0 2,199 0 0
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