-----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, N4UOi6h0EI5iWJByORVpCbH8A+00Lax3O9CO343sRCZBJrxsrtq3OV9+a2r9a/qH GMBXtPAZBB8Li/c4hjzaMg== 0000909334-96-000051.txt : 19960619 0000909334-96-000051.hdr.sgml : 19960619 ACCESSION NUMBER: 0000909334-96-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALL AMERICAN BOTTLING CORP CENTRAL INDEX KEY: 0000825811 STANDARD INDUSTRIAL CLASSIFICATION: 2086 IRS NUMBER: 731317652 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-69832 FILM NUMBER: 96567603 BUSINESS ADDRESS: STREET 1: 15 N ROBINSON STE 100 STREET 2: COLCORD BUILDING CITY: OKLAHOMA CITY STATE: OK ZIP: 73102 BUSINESS PHONE: 4052321158 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWNE BOTTLING CO CENTRAL INDEX KEY: 0000825813 STANDARD INDUSTRIAL CLASSIFICATION: 2086 IRS NUMBER: 171311569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-69832-01 FILM NUMBER: 96567604 BUSINESS ADDRESS: STREET 1: 15 N ROBINSON STE 700 CITY: OKLAHOMA CITY STATE: OK ZIP: 73102 BUSINESS PHONE: 4052321158 10-Q 1 ============================================================================== 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 MARCH 31, 1996 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 33-69832 ALL-AMERICAN BOTTLING CORPORATION BROWNE BOTTLING COMPANY (Exact name of registrant as specified in its charter) Delaware 73-1317652 (State or other jurisdiction 73-1311569 of incorporation or organization) (IRS Employer Identification No.) Colcord Building 15 North Robinson, Suite 100 Oklahoma City, Oklahoma 73102 (Address of Principal Executive Office) (405) 232-1158 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed 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 each 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 . As of May 1, 1996 Browne Bottling Company had 192,244 shares of common stock outstanding for which there is no public market; and All-American Bottling Corporation had 100,000 shares of common stock outstanding, all of which are held by Browne Bottling Company. ============================================================================== All-American Bottling Corporation Browne Bottling Company INDEX Part I Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 (unaudited) Consolidated Statements of Operations for the three months ended March 31, 1996 and 1995 (unaudited) Consolidated Statements of Changes in Stockholder's Equity for the three months ended March 31, 1996 and for the year ended December 31, 1995 (unaudited) Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (unaudited) Notes to Consolidated Financial Statements (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K PART I ITEM 1. Financial Statements BROWNE BOTTLING COMPANY Consolidated Balance Sheets (in thousands) - - --------------------------------------------------------------------------------
December 31, March 31, 1995 1996 ----------- ----------- (unaudited) ASSETS Current assets: Trade accounts receivable $ 11,944 $ 11,415 Franchise companies receivable 2,605 2,392 Other receivables 1,324 1,674 Allowance for doubtful accounts (515) (583) Inventories - ingredients and packaging 3,021 4,021 Inventories - finished goods 5,786 6,083 Inventories - other 291 271 Inventories - pallets at deposit value 344 334 Prepaid expenses 862 648 Deferred tax asset 781 781 ----------- ----------- Total current assets 26,443 27,036 ----------- ----------- Plant and equipment, at cost: Land 1,335 1,335 Buildings and improvements 6,961 6,814 Machinery and equipment 10,614 10,722 Vehicles 7,947 7,831 Vending equipment 9,525 6,618 Furniture and fixtures 512 434 Computer equipment 1,491 1,590 Returnable containers 2,355 2,366 Construction in progress 519 1,007 ----------- ----------- 41,259 38,717 Less - Accumulated depreciation (27,891) (25,240) ----------- ----------- Net plant and equipment 13,368 13,477 ----------- ----------- Intangible assets: Franchises 45,471 38,702 Goodwill 18,104 15,556 Other intangibles 2,877 2,951 ----------- ----------- 66,452 57,209 Less - Accumulated amortization (13,804) (12,405) ----------- ----------- Net intangible assets 52,648 44,804 ----------- ----------- Other assets 828 987 ----------- ----------- Total assets $ 93,287 $ 86,304 =========== ===========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Consolidated Balance Sheets (in thousands) - - --------------------------------------------------------------------------------
December 31, March 31, 1995 1996 ----------- ----------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank overdraft $ 2,106 $ 2,913 Current portion of long-term debt 810 3,397 Current portion of obligations under capital lease 262 250 Current portion of deferred compensation and non-compete agreements 71 71 Trade accounts payable 12,798 14,276 Accrued compensation and payroll taxes 2,017 2,065 Accrued interest payable 2,326 814 Accrued insurance reserves 881 908 Accrued pension liability 599 687 Other liabilities 1,830 2,181 ----------- ----------- Total current liabilities 23,700 27,562 ----------- ----------- Long-term debt, net of current maturities 57,418 51,404 ----------- ----------- Obligations under capital leases, net 939 1,001 ----------- ----------- Deferred compensation and non-compete agreements, net 613 903 ----------- ----------- Other non-current liabilities 44 43 ----------- ----------- Deferred tax liability 12,121 10,817 ----------- ----------- Stock warrants 856 856 ----------- ----------- Stockholder's equity: Preferred stock - Series B, $.01 par value, 1,000 shares authorized issued and outstanding; (liquidation preference of $1,000 per share) - - Common stock, $.01 par value, 220,295 shares authorized, and 192,244 shares issued and outstanding 2 2 Common stock, non-voting, $.01 par value, 5,263 shares authorized, none outstanding - - Additional paid-in capital 26,542 26,542 Deficit (28,948) (32,826) ----------- ----------- Total stockholders' equity (deficit) (2,404) (6,282) ----------- ----------- Total liabilities and stockholders' equity $ 93,287 $ 86,304 =========== ===========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Unaudited Consolidated Statements of Operations (in thousands) - - --------------------------------------------------------------------------------
Three Months Ended March 31, 1995 1996 ----------- ----------- Revenues, net of discounts and allowances ($16,344 and $14,488 in 1995 and 1996, respectively) $ 38,007 $ 33,533 Cost of sales 24,565 22,286 ----------- ----------- Gross Profit 13,442 11,247 Operating expenses: Plant and occupancy 1,501 1,543 Loading and shipping 1,075 1,029 Transport 233 227 Fleet service 207 185 Selling and delivery 6,707 6,173 Vending 612 572 Fountain 5 5 Advertising 708 517 General and administrative 1,909 1,709 Amortization of intangibles 573 555 ----------- ----------- Total operating expenses 13,530 12,515 ----------- ----------- Loss from operations (88) (1,268) Loss on disposals (278) (1,926) Interest expense - cash (1,855) (1,862) Interest expense - non-cash (335) (30) Other income 138 14 ----------- ----------- Loss before income tax benefit (2,418) (5,072) Income tax benefit 596 1,194 ----------- ----------- Net loss $ (1,822) $ (3,878) =========== =========== Loss per common share and common share equivalent: Primary and fully diluted: Net loss $ (9.48) $ (20.17) =========== ===========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Consolidated Statements of Changes in Stockholders' Equity (dollars in thousands) - - ----------------------------------------------------------------------------
Preferred Additional Retained Shares, Common Stock Paid-in Earnings Series B Shares Amount Capital (Deficit) Total --------- ------- ------ --------- --------- --------- Balance, December 31, 1994 1,000 192,244 $ 2 $26,542 $(29,035) $ (2,491) Net income 87 87 --------- ------- ------ --------- --------- --------- Balance, December 31, 1995 1,000 192,244 2 26,542 (28,948) (2,404) Net loss (unaudited) (3,878) (3,878) --------- ------- ------ --------- --------- --------- Balance, March 31, 1996 1,000 192,244 $ 2 $26,542 $(32,826) $ (6,282) ========= ======= ====== ========= ========= =========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Unaudited Consolidated Statements of Cash Flows (in thousands) - - -------------------------------------------------------------------------------
Three Months Ended March 31, 1995 1996 ----------- ----------- Cash flows from operating activities: Net loss $ (1,822) $ (3,878) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 1,326 1,285 Loss on disposal of assets and franchises 278 1,926 Deferred taxes (619) (1,305) Deferred compensation - 215 Changes in assets and liabilities, net of effect of acquisitions and dispositions: Decrease (increase) in accounts receivable 696 524 Decrease (increase) in inventories 858 (1,597) Increase (decrease) in accounts payable (1,498) 1,170 (Decrease) in accrued interest (1,037) (1,512) Increase (decrease) in overdraft (2,185) 807 Other 87 192 ----------- ----------- Net cash provided (used) by operating activities (3,916) (2,173) ----------- ----------- Cash flows from investing activities: Capital expenditures (312) (806) Proceeds from sale of fixed assets and franchises 3,907 7,185 Payment for purchase of territories and related fixed assets, net of cash acquired - (670) ----------- ----------- Net cash provided by investing activities 3,595 5,709 ---------- ----------- Cash flows from financing activities: Proceeds from issuance of debt 1,026 2,976 Principal payments on debt (787) (867) Borrowings on revolver note 46,868 39,969 Payments on revolver note (46,733) (45,514) Financing costs paid - (100) ---------- ----------- Net cash provided (used) by financing activities: 374 (3,536) ---------- ----------- Net increase in cash 53 - Cash at beginning of period - - ---------- ----------- Cash at end of period $ 53 $ - ========== ===========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Unaudited Consolidated Statements of Cash Flows (in thousands) - - -------------------------------------------------------------------------------- Supplemental Disclosures of Cash Flow Information
Three Months Ended March 31, 1995 1996 ----------- ----------- Cash paid during the period for interest $ 3,210 $ 3,401 =========== =========== Cash paid during the period for income taxes $ 67 $ 123 =========== ===========
The accompanying notes are an integral part of these financial statements. BROWNE BOTTLING COMPANY Notes to Unaudited Consolidated Financial Statements - - -------------------------------------------------------------------------------- 1. NATURE OF BUSINESS All-American Bottling Corporation (the "Company") is a wholly-owned subsidiary of Browne Bottling Company ("BBC"). BBC has no independent operations and its only material asset is its investment in the Company. The Company is an independent bottler and distributor of soft drinks and other beverage products, including flavored and premium waters, brewed teas, natural sodas and sparkling juices. The Company's largest markets in terms of franchise case sales volume are the metropolitan areas of Milwaukee, Louisville, Nashville and Oklahoma City. The Company has franchise agreements covering various territories for brands such as RC Cola, Diet Rite Cola, Seven-Up, Dr Pepper, Sunkist, Canada Dry, Dad's Root Beer, Crush, A&W Root Beer, Big Red, Sundrop, Snapple, Mistic, Clearly Canadian, Evian and Yoo-Hoo. 2. BASIS OF PRESENTATION The interim financial statements included herein have been prepared by BBC without audit, pursuant to the rules and regulations promulgated by the Securities and Exchange Commission (the "Commission"). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been omitted pursuant to Commission rules and regulations; nevertheless, BBC believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with BBC's audited financial statements and the notes thereto included in BBC's Annual Report on Form 10-K for the year ended December 31, 1995 filed with the Commission. In the opinion of management, the accompanying interim financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position, the results of operations, cash flows and stockholders' equity of BBC for the three month periods ended March 31, 1995 and 1996. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accompanying financial statements include the accounts of BBC and its wholly-owned subsidiary, the Company. All significant intercompany balances and transactions have been eliminated. In August 1993, the Company issued $45 million principal amount of 13% Senior Secured Notes (the "Senior Notes"), which indebtedness has been fully and unconditionally guaranteed by BBC. The separate financial statements of the Company have not been included because the assets, liabilities, earnings and equity of the Company are substantially equivalent to the assets, liabilities, earnings and equity of BBC on a consolidated basis and therefore are not considered material. 3. EARNINGS PER SHARE Primary and fully diluted earnings per common share (EPS) are based upon the weighted average number of shares of common stock outstanding plus the common stock equivalents which would arise from the exercise of warrants, unless such items would be anti-dilutive. Fully diluted earnings per common share assume the conversion of common stock equivalents which would arise from the exercise of warrants, unless such items would be anti- dilutive. Primary and fully diluted earnings per share are the same for all periods presented. Weighted average number of shares used in computing loss per common share and common share equivalent for both primary and fully diluted were 192,244 for 1995 and 1996. 4. ASSET SALES AND PURCHASES On March 23, 1996, the Company sold assets in St. Paul, Duluth and Rochester, Minnesota and North and South Dakota to an unrelated party for proceeds of approximately $5.6 million, resulting in a loss on sale of approximately $2.9 million. The assets sold included warehouse inventory in St. Paul, selected warehouse equipment, vendors and visicoolers, and franchise and distributor agreements. Sale proceeds included $5.4 million in cash paid at closing which was used to reduce the balance on the Company's Senior Credit Facility, and a receivable of $200,000 due September 23, 1996, subject to certain adjustments as defined in the asset purchase agreement. During the three months ended March 31, 1996, the Company also sold franchise and distribution rights in Madison, Wisconsin, Pulaski, Tennessee and Roanoke, Virginia for combined net sale proceeds of approximately $2.4 million, and recognized gains totaling approximately $1.1 million. Sale proceeds included $1.8 million in cash paid at closing which was used to reduce the balance on the Company's Senior Credit Facility and a $608,000 note payable with interest due monthly and principal due based on purchases made from the Company with any remaining balance due March 1, 2001. In January 1996, the Company acquired the franchise and distribution rights, accounts receivable, inventory, and fixed assets of an unrelated bottler in LaCrosse, Wisconsin. The purchase price was approximately $1.0 million and was financed primarily through borrowings under the Company's Senior Credit Facility. 5. SUPPLEMENTAL FINANCIAL INFORMATION The following table sets forth information concerning case sales and per case results for the three month periods ended March 31, 1995 and 1996. (CAPTION> Three Months Ended March 31, 1995 1996 ---------------- ---------------- Cases % Cases % ----- ---- ----- ---- ($000's, except percent data) DSD Sales................. 4,865 4,164 Distributor Sales......... 407 466 ----- ----- Total Franchise...... 5,272 88% 4,630 88% Contract Sales............ 692 12% 608 12% ----- ---- ----- ---- Total Case Sales..... 5,964 100% 5,238 100% Produced.................. 5,412 91% 4,887 93% Purchased................. 557 9% 475 9% Inventory - (Inc.)/Dec.... (5) (124) -2% ----- ---- ----- ---- Total Case Sales..... 5,964 100% 5,238 100%
Per Per Aggregate Case Aggregate Case --------- ---- --------- ---- ($000's, except per case and per share data) Franchise Sales........... $34,777 $6.60 $30,615 $6.61 Contract Sales............ 3,230 4.67 2,918 4.80 ------- ------- Net Sales............ 38,007 6.37 33,533 6.40 Cost of Goods Sold........ 24,565 4.12 22,286 4.25 ------- ----- ------- ----- Gross Profit......... 13,442 $2.25 11,247 $2.15 Admin.,Marketing & General 13,530 12,515 ------- ------- Operating loss............ (88) (1,268) Interest Expense.......... (2,190) (1,892) Other Non-operating (including gain [loss] on sale and other income)... (140) (1,912) ------- ------- Loss Before Income Tax Benefit.(2,418) (5,072) Income Tax Benefit........ 596 1,194 ------- ------- Net Loss.................. $(1,822) $(3,878) ======= ======= EPS....................... $ (9.48) $(20.17) EBITDA (a)................ $ 1,323 $ 27
(a) EBITDA consists of net income (loss) before (a) income taxes, (b) interest expense, (c) depreciation, (d) amortization, (e) gain (loss) on asset sales, (f) other non-cash charges, and (g) extraordinary gains. EBITDA should not be considered as an alternative to, or more meaningful than, operating income or cash flow as an indicator of the Company's operating performance. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL All-American Bottling Corporation (the "Company") is an independent bottler and distributor of soft drinks and other beverage products operating in 6 states. The Company is a wholly-owned subsidiary of Browne Bottling Company ("BBC"). The Company's soft drink product portfolio includes such well-known national brands as RC Cola, Diet Rite Cola, Seven-Up, Dr Pepper, Sunkist, Canada Dry, Dad's Root Beer, Crush and A&W Root Beer, as well as leading regional brands such as Big Red and Sundrop. Other beverages distributed by the Company include Snapple, Mistic, Clearly Canadian, Evian and other waters and are commonly referred to as "alternative beverages". The Company's largest markets in terms of franchise case sales volume are the metropolitan areas of Milwaukee, Louisville, Nashville and Oklahoma City. In August 1993, BBC and the Company completed a recapitalization plan designed to enhance the Company's financial flexibility. As part of the recapitalization plan, the Company issued $45.0 million principal amount of 13% Senior Secured Notes due 2001 (the "Senior Notes"), guaranteed by BBC, and entered into a new senior secured credit facility (the "Senior Credit Facility") providing for borrowing availability of up to $20.0 million, subject to borrow- ing base limitations (65% of eligible inventories and 85% of eligible accounts receivable). The Company's primary measurement of unit volume is franchise and contract case sales. Franchise case sales represent sales of products in the Company's franchise territories, while contract case sales consist of product sold under contract manufacturing arrangements to private label or other bottlers. Pro- duced product consists of product manufactured by the Company in its own facilities and purchased product is finished product purchased from other bottlers and suppliers. EBITDA consists of net income (loss) before income taxes, interest expense, depreciation, amortization, gain (loss) on asset sales and other non-cash charges and extraordinary gains. EBITDA should not be con- sidered as an alternative to, or more meaningful than, operating income or cash flow, as determined in accordance with generally accepted accounting principles, as an indicator of the Company's operating performance or liquidity. RESULTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 VS. THREE MONTHS ENDED MARCH 31, 1995 The following discussion addresses the results of operations for the three months ended March 31, 1996 ( the "Current Quarter") as compared to the three months ended March 31, 1995 (the "Prior Quarter"). Net sales for the Current Quarter were $33.5 million compared to $38.0 million for the Prior Quarter, a $4.5 million or 11.8% decrease. Franchise case sales were 4.6 million cases for the Current Quarter compared to 5.3 million cases for the Prior Quarter, a decrease of 642,000 cases or 12.2%. This decrease in franchise cases is attributable to volume losses in Minnesota, Wisconsin and Tennessee. Franchise case sales in Minnesota were 350,000 cases for the Current Quarter as compared to 562,000 cases for the Prior Quarter, a decline of 212,000 cases or 37.7%. This volume decline is attributable to a limited distribution system in Minnesota in anticipation of the sale of this territory which was completed on March 23, 1996. In Wisconsin, franchise case sales for the Current Quarter were 1.4 million cases as compared to 1.5 million cases for the Prior Quarter, a decrease of 94,000 cases or 6.4%. This decrease is primarily related to declines in the sales of can packages of RC Cola products due to the territory sales described in Note 4 above. Tennessee franchise case sales for the Current Quarter were 800,000 cases as compared to 1.0 million cases for the Prior Quarter, a decline of 242,000 cases or 23.2%. This decrease is primarily related to declines in the sales of can packages of RC Cola products in response to price increases implemented in Tennessee. For the Prior Quarter, heavy promotional activity in Tennessee resulted in volume increases at lower average net selling prices compared to the first quarter of 1996. The average net selling price for franchise sales for the Company increased to $6.61 for the Current Quarter as compared to $6.60 for the Prior Quarter. Contract case sales declined only slightly to 608,000 cases for the Current Quarter from 692,000 cases for the Prior Quarter. This decline was in the Oshkosh, Wisconsin production facility and is primarily attributable to the Company acquiring the LaCrosse, Wisconsin bottler in January 1996 which had formerly been a contract bottling customer. The average net selling price for contract cases increased to $4.80 for the Current Quarter as compared to $4.67 for the Prior Quarter. On a company-wide basis the net selling price for all cases increased to $6.40 for the Current Quarter as compared to $6.37 for the Prior Quarter, a .5% increase, due to increases in both franchise and contract per case selling prices. Cost of goods sold decreased $2.2 million or 9.3% for the Current Quarter 1996 as compared to the Prior Quarter primarily due to the volume decrease partially offset by an increase in the price of extracts and purchased finished goods. The Current Quarter per case cost of extracts averaged a 5.8% increase over the Prior Quarter. The Current Quarter per case cost of purchased finished goods averaged an increase of 3.4% over the Prior Quarter. Gross profit for the Current Quarter was $11.2 million as compared to $13.4 million for the Prior Quarter, a decrease of $2.2 million or 16.3% due to both volume declines and an increase in the per case cost of goods. Gross margin as a percentage of sales was 33.5% for the Current Quarter as compared to 35.4% for the Prior Quarter. The decline in the gross margin percentage is due to the increased per case cost of goods. Administrative, marketing and general expenses declined $1.0 million or 7.5% for the Current Quarter as compared to the Prior Quarter due to overall decreases in all categories of expenses as a result of the decreased volume of the Company and the sale of certain operations. The loss on disposal of $1.9 million realized for the Current Quarter is the aggregation of the loss of $2.9 million recognized on the St. Paul, Minnesota sale offset by gains on the sales of territories in Roanoke, Virginia, Madison, Wisconsin, and Pulaski, Tennessee. See Note 4 above. Interest expense was $1.9 million for the Current Quarter as compared to $2.2 million for the Prior Quarter. Cash interest expense remained constant, however, noncash interest declined due to the repurchase of the Senior Subordinated Notes in July 1995. Other income decreased to $14,000 for the Current Quarter from $138,000 for the Prior Quarter primarily due to a decline in trade discounts taken in the Current Quarter. Net loss for the Current Quarter was $3.8 million as compared to a net loss for the Prior Quarter of $1.8 million. The increase in the net loss results from a combination of the decline in gross margin and the loss on disposals discussed in Note 4 above. EBITDA was $27,000 for the Current Quarter as compared to $1.3 million for the Prior Quarter. The decrease in EBITDA is attributable to the decline in the volume and resulting gross margin partially offset by the reduction in operating expenses. LIQUIDITY AND CAPITAL RESOURCES For the Current Quarter, the Company's operating activities used cash of approximately $2.1 million compared to cash used of $3.9 million for the Prior Quarter. The net cash used of $2.1 million by operating activities in the Current Quarter resulted primarily from $1.8 million cash used from operations, a significant decrease in accrued interest and a significant increase in inventory levels partially offset by increases in accounts payable and the cash overdraft. The net cash used of $3.9 million by operating activities in the Prior Quarter resulted primarily from $837,000 cash used from operations, a significant decrease in accrued interest, accounts payable and cash overdraft partially offset by decreases in accounts receivable and inventory levels. At March 31, 1996 the Company had working capital (excluding cash, cash equivalents and the current portion of long-term debt and other obligations) of $6.1 million compared to $8.4 million at March 31, 1995. The decrease in working capital is due primarily to the decline in trade receivables and an increase in accounts payable at March 31, 1996 as compared to March 31, 1995. The Company's working capital needs have historically been funded from opera- tions and, on a seasonal basis, from borrowings under its revolving credit facility. During the Current Quarter investing activities provided net cash of $5.7 million as compared to $3.6 million for the Prior Quarter. The increase is due primarily to the $5.4 million in cash received on the sale of St. Paul as well as the proceeds from the sales of the other locations as described in Note 4 above. For the Prior Quarter the proceeds from sales resulted from the sale of the Rockford, Illinois territory. Financing activities used cash of $3.5 million in the Current Quarter due to the application of the proceeds from the sales described above to reduce the revolving credit facility by $5.5 million offset by proceeds from the issuance of debt of $2.9 million. Debt issued consists primarily of unsecured demand notes issued to Stephen B. Browne and entities affiliated with him. At March 31, 1996 such debt had a remaining balance of $2.8 million and was subsequently reduced to $1.1 million on April 15, 1996. These unsecured loans are made at the same interest rates charged under the Company's Senior Credit Facility. At March 31, 1996, the Company's borrowing base was $17.7 million, and the Company had borrowings of $8.2 million outstanding under the Senior Credit Facility, with an additional $198,000 of letters of credit issued thereto and $9.3 million of unused credit availability thereunder. The Company's earnings before income taxes and fixed charges were insufficient to cover its fixed charges by $1.3 million for the Current Quarter. EBITDA (as defined) and cash interest expense for the Current Quarter were $27,000 and $1.9 million, respectively. EBITDA is presented not as an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of the Company's operating performance or to cash flow from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of its liquidity, but rather to provide additional information related to the debt service ability of the Company. If the Company were to experience a deterioration in operating results, the Company's ability to generate sufficient cash to cover its interest expense would be reduced, and the Company would be- come unable to meet its interest obligations. The Company's long-term debt (including current maturities thereof and amounts payable under non-compete and deferred compensation agreements) was approximately $57.0 million as of March 31, 1996, and scheduled principal payments are estimated to be approximately $3.7 million during the twelve months ending March 31, 1997. Of this $3.7 million, approximately $2.8 million represents the unsecured demand notes from Stephen B. Browne and his affiliated entities described above and approximately $660,000 represents financing with original terms of 18 months or less from trade suppliers to finance 1995 capital expenditures. Repayment of the $660,000 is based upon surcharges for product purchases from these trade suppliers. The Company must make certain capital expenditures on an annual basis in order to maintain its business and assets and compete effectively. The Company expects to spend approximately $2.5 million on capital expenditures prior to December 31, 1996. To the extent that require- ments for debt service and capital expenditures are in excess of cash flow from operations, the Company will need to finance such requirements with additional indebtedness or defer capital expenditures. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibit and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K Form 8-K dated April 10, 1996 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. ALL-AMERICAN BOTTLING CORPORATION Date: May 13, 1996 By: STEPHEN B. BROWNE ------------------------ Stephen B. Browne President, Chief Executive Officer and Chairman of the Board Date: May 13, 1996 By: STEPHEN R. KERR ------------------------- Stephen R. Kerr Vice President and Chief Financial Officer BROWNE BOTTLING COMPANY Date: May 13, 1996 By: STEPHEN B. BROWNE ------------------------ Stephen B. Browne President, Chief Executive Officer and Chairman of the Board Date: May 13, 1996 By: STEPHEN R. KERR ------------------------- Stephen R. Kerr Vice President and Chief Financial Officer EXHIBIT INDEX
Exhibit Method of Filing - - ------- ---------------- 27. Financial Data Schedule Filed herewith electronically
EX-27 2
5 0000825811 ALL-AMERICAN BOTTLING CORPORATION 1,000 3-MOS DEC-31-1996 MAR-31-1996 (2913) 0 11415 583 10709 27036 38717 25240 86304 27562 53308 0 0 2 (6284) 86304 33533 33533 22286 22286 12515 0 1892 (5072) (1194) (3878) 0 0 0 (3878) (20.17) (20.17)
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