e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 3, 2010
Commission File Number 0-9286
COCA-COLA BOTTLING CO. CONSOLIDATED
(Exact name of registrant as specified in its charter)
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Delaware
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56-0950585 |
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.) |
4100 Coca-Cola Plaza, Charlotte, North Carolina 28211
(Address of principal executive offices) (Zip Code)
(704) 557-4400
(Registrants 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
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Class |
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Outstanding at October 29, 2010 |
Common Stock, $1.00 Par Value
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7,141,447 |
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Class B Common Stock, $1.00 Par Value
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2,044,202 |
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COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 2010
INDEX
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
In Thousands (Except Per Share Data)
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Third Quarter |
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First Nine Months |
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2010 |
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2009 |
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2010 |
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2009 |
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Net sales |
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$ |
395,364 |
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$ |
374,556 |
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$ |
1,160,223 |
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$ |
1,088,566 |
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Cost of sales |
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222,247 |
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217,236 |
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672,395 |
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623,990 |
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Gross margin |
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173,117 |
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157,320 |
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487,828 |
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464,576 |
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Selling, delivery and administrative expenses |
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139,455 |
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131,024 |
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406,689 |
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386,461 |
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Income from operations |
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33,662 |
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26,296 |
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81,139 |
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78,115 |
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Interest expense, net |
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8,841 |
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8,866 |
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26,453 |
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28,059 |
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Income before income taxes |
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24,821 |
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17,430 |
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54,686 |
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50,056 |
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Income tax expense |
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7,610 |
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1,043 |
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18,936 |
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11,928 |
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Net income |
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17,211 |
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16,387 |
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35,750 |
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38,128 |
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Less: Net income attributable to the
noncontrolling interest |
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1,678 |
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959 |
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3,514 |
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1,982 |
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Net income attributable to Coca-Cola Bottling Co.
Consolidated |
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$ |
15,533 |
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$ |
15,428 |
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$ |
32,236 |
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$ |
36,146 |
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Basic net income per share based on
net income attributable to Coca-Cola
Bottling Co. Consolidated: |
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Common Stock |
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$ |
1.69 |
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$ |
1.68 |
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$ |
3.51 |
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$ |
3.94 |
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Weighted average number of Common Stock
shares outstanding |
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7,141 |
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7,141 |
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7,141 |
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7,047 |
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Class B Common Stock |
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$ |
1.69 |
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$ |
1.68 |
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$ |
3.51 |
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$ |
3.94 |
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Weighted average number of Class B Common
Stock shares outstanding |
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2,044 |
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2,022 |
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2,039 |
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2,117 |
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Diluted net income per share based on
net income attributable to Coca-Cola
Bottling Co. Consolidated: |
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Common Stock |
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$ |
1.68 |
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$ |
1.68 |
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$ |
3.50 |
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$ |
3.93 |
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Weighted average number of Common Stock
shares outstanding assuming dilution |
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9,225 |
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9,203 |
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9,220 |
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9,194 |
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Class B Common Stock |
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$ |
1.68 |
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$ |
1.67 |
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$ |
3.48 |
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$ |
3.92 |
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Weighted average number of Class B Common
Stock shares outstanding assuming dilution |
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2,084 |
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2,062 |
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2,079 |
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2,147 |
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Cash dividends per share: |
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Common Stock |
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$ |
.25 |
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$ |
.25 |
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$ |
.75 |
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$ |
.75 |
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Class B Common Stock |
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$ |
.25 |
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$ |
.25 |
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$ |
.75 |
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$ |
.75 |
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See Accompanying Notes to Consolidated Financial Statements
3
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS
In Thousands (Except Share Data)
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Unaudited |
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Unaudited |
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Oct. 3, |
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Jan. 3, |
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Sept. 27, |
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2010 |
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2010 |
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2009 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
30,424 |
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$ |
17,770 |
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$ |
25,062 |
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Restricted cash |
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3,500 |
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4,500 |
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4,512 |
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Accounts receivable, trade, less allowance for
doubtful accounts of $1,261, $2,187 and $1,971,
respectively |
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115,554 |
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92,727 |
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96,263 |
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Accounts receivable from The Coca-Cola Company |
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20,165 |
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4,109 |
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17,460 |
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Accounts receivable, other |
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23,382 |
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17,005 |
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17,015 |
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Inventories |
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62,686 |
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59,122 |
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67,762 |
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Prepaid expenses and other current assets |
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31,817 |
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35,016 |
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25,398 |
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Total current assets |
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287,528 |
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230,249 |
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253,472 |
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Property, plant and equipment, net |
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312,759 |
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326,701 |
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319,456 |
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Leased property under capital leases, net |
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48,029 |
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51,548 |
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52,727 |
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Other assets |
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40,645 |
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46,508 |
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46,001 |
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Franchise rights |
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520,672 |
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520,672 |
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520,672 |
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Goodwill |
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102,049 |
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102,049 |
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102,049 |
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Other identifiable intangible assets, net |
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4,983 |
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5,350 |
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5,489 |
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Total |
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$ |
1,316,665 |
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$ |
1,283,077 |
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$ |
1,299,866 |
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See Accompanying Notes to Consolidated Financial Statements
4
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS
In Thousands (Except Share Data)
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Unaudited |
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Unaudited |
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Oct. 3, |
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Jan. 3, |
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Sept. 27, |
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2010 |
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2010 |
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2009 |
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LIABILITIES AND EQUITY |
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Current Liabilities: |
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Current portion of debt |
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$ |
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$ |
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$ |
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Current portion of obligations under capital leases |
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3,861 |
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3,846 |
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3,759 |
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Accounts payable, trade |
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38,377 |
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36,794 |
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32,597 |
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Accounts payable to The Coca-Cola Company |
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43,394 |
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27,880 |
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43,601 |
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Other accrued liabilities |
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65,119 |
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61,978 |
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64,208 |
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Accrued compensation |
|
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26,385 |
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25,963 |
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|
23,195 |
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Accrued interest payable |
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10,056 |
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5,521 |
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12,487 |
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Total current liabilities |
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187,192 |
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|
161,982 |
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179,847 |
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Deferred income taxes |
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158,359 |
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158,548 |
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|
142,239 |
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Pension and postretirement benefit obligations |
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81,021 |
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|
89,306 |
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|
99,066 |
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Other liabilities |
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108,417 |
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106,968 |
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|
103,788 |
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Obligations under capital leases |
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56,386 |
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59,261 |
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60,247 |
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Long-term debt |
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523,025 |
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537,917 |
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552,882 |
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Total liabilities |
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1,114,400 |
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1,113,982 |
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1,138,069 |
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Commitments and Contingencies (Note 14) |
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Equity: |
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Common Stock, $1.00 par value: |
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Authorized
30,000,000 shares; |
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Issued 10,203,821 shares |
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10,204 |
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10,204 |
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10,204 |
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Class B Common Stock, $1.00 par value: |
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Authorized
10,000,000 shares; |
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Issued 2,672,316, 2,649,996 and 2,649,996 shares,
respectively |
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2,671 |
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2,649 |
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|
2,649 |
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Capital in excess of par value |
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|
104,758 |
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103,464 |
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|
103,562 |
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Retained earnings |
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|
133,347 |
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|
107,995 |
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|
108,295 |
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Accumulated other comprehensive loss |
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(43,779 |
) |
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(46,767 |
) |
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(54,038 |
) |
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|
|
|
|
|
|
|
|
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|
|
|
207,201 |
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|
|
177,545 |
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|
170,672 |
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Less-Treasury stock, at cost: |
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Common 3,062,374 shares |
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|
60,845 |
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|
|
60,845 |
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|
60,845 |
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Class B
Common 628,114 shares |
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|
409 |
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|
409 |
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|
409 |
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Total equity of Coca-Cola Bottling Co. Consolidated |
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|
145,947 |
|
|
|
116,291 |
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|
|
109,418 |
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Noncontrolling interest |
|
|
56,318 |
|
|
|
52,804 |
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|
|
52,379 |
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|
|
|
|
|
|
|
|
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Total equity |
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|
202,265 |
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|
|
169,095 |
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|
|
161,797 |
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Total |
|
$ |
1,316,665 |
|
|
$ |
1,283,077 |
|
|
$ |
1,299,866 |
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|
|
|
|
|
|
|
|
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|
See Accompanying Notes to Consolidated Financial Statements
5
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
In Thousands
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Capital |
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Accumulated |
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Class B |
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|
in |
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|
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Other |
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Total |
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|
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|
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Common |
|
|
Common |
|
|
Excess of |
|
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Retained |
|
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Comprehensive |
|
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Treasury |
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Equity |
|
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Noncontrolling |
|
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Total |
|
|
|
Stock |
|
|
Stock |
|
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Par Value |
|
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Earnings |
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|
Loss |
|
|
Stock |
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|
of CCBCC |
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Interest |
|
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Equity |
|
Balance on Dec. 28, 2008 |
|
$ |
9,706 |
|
|
$ |
3,127 |
|
|
$ |
103,582 |
|
|
$ |
79,021 |
|
|
$ |
(57,873 |
) |
|
$ |
(61,254 |
) |
|
$ |
76,309 |
|
|
$ |
50,397 |
|
|
$ |
126,706 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,146 |
|
|
|
|
|
|
|
|
|
|
|
36,146 |
|
|
|
1,982 |
|
|
|
38,128 |
|
Foreign currency translation
adjustments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
Pension and postretirement
benefit adjustments,
net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,834 |
|
|
|
|
|
|
|
3,834 |
|
|
|
|
|
|
|
3,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,981 |
|
|
|
1,982 |
|
|
|
41,963 |
|
Cash dividends paid
Common ($.75 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,232 |
) |
|
|
|
|
|
|
|
|
|
|
(5,232 |
) |
|
|
|
|
|
|
(5,232 |
) |
Class B Common
($.75 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,640 |
) |
|
|
|
|
|
|
|
|
|
|
(1,640 |
) |
|
|
|
|
|
|
(1,640 |
) |
Issuance of 20,000 shares
of Class B Common Stock |
|
|
|
|
|
|
20 |
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Class B
Common Stock into
Common Stock |
|
|
498 |
|
|
|
(498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance on Sept. 27, 2009 |
|
$ |
10,204 |
|
|
$ |
2,649 |
|
|
$ |
103,562 |
|
|
$ |
108,295 |
|
|
$ |
(54,038 |
) |
|
$ |
(61,254 |
) |
|
$ |
109,418 |
|
|
$ |
52,379 |
|
|
$ |
161,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance on Jan. 3, 2010 |
|
$ |
10,204 |
|
|
$ |
2,649 |
|
|
$ |
103,464 |
|
|
$ |
107,995 |
|
|
$ |
(46,767 |
) |
|
$ |
(61,254 |
) |
|
$ |
116,291 |
|
|
$ |
52,804 |
|
|
$ |
169,095 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,236 |
|
|
|
|
|
|
|
|
|
|
|
32,236 |
|
|
|
3,514 |
|
|
|
35,750 |
|
Ownership share of
Southeastern OCI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
39 |
|
Foreign currency translation
adjustments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(7 |
) |
Pension and postretirement
benefit adjustments,
net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,956 |
|
|
|
|
|
|
|
2,956 |
|
|
|
|
|
|
|
2,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,224 |
|
|
|
3,514 |
|
|
|
38,738 |
|
Cash dividends paid
Common ($.75 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,356 |
) |
|
|
|
|
|
|
|
|
|
|
(5,356 |
) |
|
|
|
|
|
|
(5,356 |
) |
Class B Common
($.75 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,528 |
) |
|
|
|
|
|
|
|
|
|
|
(1,528 |
) |
|
|
|
|
|
|
(1,528 |
) |
Issuance of 22,320 shares of
Class B Common Stock |
|
|
|
|
|
|
22 |
|
|
|
1,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
|
|
|
|
|
1,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance on Oct. 3, 2010 |
|
$ |
10,204 |
|
|
$ |
2,671 |
|
|
$ |
104,758 |
|
|
$ |
133,347 |
|
|
$ |
(43,779 |
) |
|
$ |
(61,254 |
) |
|
$ |
145,947 |
|
|
$ |
56,318 |
|
|
$ |
202,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements
6
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
|
|
|
2010 |
|
|
2009 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
35,750 |
|
|
$ |
38,128 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
44,163 |
|
|
|
45,526 |
|
Amortization of intangibles |
|
|
367 |
|
|
|
421 |
|
Deferred income taxes |
|
|
2,188 |
|
|
|
6,470 |
|
Loss on sale of property, plant and equipment |
|
|
1,211 |
|
|
|
767 |
|
Impairment of property, plant and equipment |
|
|
425 |
|
|
|
|
|
Net gain on property, plant and equipment damaged in flood |
|
|
(881 |
) |
|
|
|
|
Amortization of debt costs |
|
|
1,760 |
|
|
|
1,811 |
|
Amortization of deferred gain related to terminated
interest rate agreements |
|
|
(907 |
) |
|
|
(1,770 |
) |
Stock compensation expense |
|
|
1,588 |
|
|
|
1,464 |
|
Insurance proceeds received for flood damage |
|
|
1,450 |
|
|
|
|
|
Increase in current assets less current liabilities |
|
|
(22,043 |
) |
|
|
(13,063 |
) |
(Increase) decrease in other noncurrent assets |
|
|
4,434 |
|
|
|
(12,606 |
) |
Decrease in other noncurrent liabilities |
|
|
(5,368 |
) |
|
|
(8,813 |
) |
Other |
|
|
(13 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
Total adjustments |
|
|
28,374 |
|
|
|
20,208 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
64,124 |
|
|
|
58,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(29,011 |
) |
|
|
(29,776 |
) |
Proceeds from the sale of property, plant and equipment |
|
|
1,373 |
|
|
|
4,942 |
|
(Increase) decrease in restricted cash |
|
|
1,000 |
|
|
|
(4,512 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(26,638 |
) |
|
|
(29,346 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt, net |
|
|
|
|
|
|
108,062 |
|
Borrowings
(repayments) under revolving credit facility |
|
|
(15,000 |
) |
|
|
30,000 |
|
Repayment
current portion of long-term debt |
|
|
|
|
|
|
(176,693 |
) |
Cash dividends paid |
|
|
(6,884 |
) |
|
|
(6,872 |
) |
Payments for the termination of interest rate lock agreements |
|
|
|
|
|
|
(340 |
) |
Principal payments on capital lease obligations |
|
|
(2,860 |
) |
|
|
(2,364 |
) |
Debt issuance costs paid |
|
|
|
|
|
|
(1,042 |
) |
Other |
|
|
(88 |
) |
|
|
(86 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(24,832 |
) |
|
|
(49,335 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
|
12,654 |
|
|
|
(20,345 |
) |
Cash at beginning of period |
|
|
17,770 |
|
|
|
45,407 |
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
30,424 |
|
|
$ |
25,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Issuance of Class B Common Stock in connection with stock award |
|
$ |
1,316 |
|
|
$ |
1,130 |
|
Capital lease obligations incurred |
|
|
|
|
|
|
660 |
|
See Accompanying Notes to Consolidated Financial Statements
7
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
1. Significant Accounting Policies
The consolidated financial statements include the accounts of Coca-Cola Bottling Co. Consolidated
and its majority owned subsidiaries (the Company). All significant intercompany accounts and
transactions have been eliminated.
The consolidated financial statements reflect all adjustments which, in the opinion of management,
are necessary for a fair statement of the results for the interim periods presented. All such
adjustments are of a normal, recurring nature.
The consolidated financial statements have been prepared in accordance with United States generally
accepted accounting principles (GAAP) for interim financial reporting and 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. The preparation of consolidated financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Certain
prior year amounts have been reclassified to conform to current
classifications.
The accounting policies followed in the presentation of interim financial results are consistent
with those followed on an annual basis. These policies are presented in Note 1 to the consolidated
financial statements included in the Companys Annual Report on Form 10-K for the year ended
January 3, 2010 filed with the United States Securities and Exchange Commission.
2. Seasonality of Business
Historically, operating results for the third quarter and the first nine months of the fiscal year
have not been representative of results for the entire fiscal year. Business seasonality results
primarily from higher unit sales of the Companys products in the second and third quarters versus
the first and fourth quarters of the fiscal year. Fixed costs, such as depreciation expense, are
not significantly impacted by business seasonality.
3. Piedmont Coca-Cola Bottling Partnership
On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling
Partnership (Piedmont) to distribute and market nonalcoholic beverages primarily in portions of
North Carolina and South Carolina. The Company provides a portion of the nonalcoholic
beverage products to Piedmont at cost and receives a fee for managing the operations of
Piedmont pursuant to a management agreement. These intercompany transactions are eliminated in the
consolidated financial statements.
Noncontrolling interest as of October 3, 2010, January 3, 2010 and September 27, 2009 represents
the portion of Piedmont owned by The Coca-Cola Company. The Coca-Cola Companys interest in
Piedmont was 22.7% for all periods presented.
8
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
4. Inventories
Inventories were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Finished products |
|
$ |
36,149 |
|
|
$ |
33,686 |
|
|
$ |
40,576 |
|
Manufacturing materials |
|
|
8,284 |
|
|
|
8,275 |
|
|
|
7,968 |
|
Plastic shells, plastic pallets and other inventories |
|
|
18,253 |
|
|
|
17,161 |
|
|
|
19,218 |
|
|
Total inventories |
|
$ |
62,686 |
|
|
$ |
59,122 |
|
|
$ |
67,762 |
|
|
5. Property, Plant and Equipment
The principal categories and estimated useful lives of property, plant and equipment were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
|
Estimated |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Useful Lives |
|
Land |
|
$ |
12,966 |
|
|
$ |
12,671 |
|
|
$ |
12,167 |
|
|
|
|
|
Buildings |
|
|
117,131 |
|
|
|
111,314 |
|
|
|
110,059 |
|
|
10-50 years |
Machinery and equipment |
|
|
132,088 |
|
|
|
127,068 |
|
|
|
124,410 |
|
|
5-20 years |
Transportation equipment |
|
|
151,215 |
|
|
|
156,692 |
|
|
|
165,867 |
|
|
4-17 years |
Furniture and fixtures |
|
|
35,613 |
|
|
|
36,573 |
|
|
|
37,363 |
|
|
4-10 years |
Cold drink dispensing equipment |
|
|
314,352 |
|
|
|
312,079 |
|
|
|
309,727 |
|
|
6-15 years |
Leasehold and land improvements |
|
|
67,152 |
|
|
|
64,390 |
|
|
|
61,937 |
|
|
5-20 years |
Software for internal use |
|
|
68,449 |
|
|
|
65,290 |
|
|
|
65,022 |
|
|
3-10 years |
Construction in progress |
|
|
2,944 |
|
|
|
7,907 |
|
|
|
2,426 |
|
|
|
|
|
|
Total property, plant and equipment, at cost |
|
|
901,910 |
|
|
|
893,984 |
|
|
|
888,978 |
|
|
|
|
|
Less: Accumulated depreciation
and amortization |
|
|
589,151 |
|
|
|
567,283 |
|
|
|
569,522 |
|
|
|
|
|
|
Property, plant and equipment, net |
|
$ |
312,759 |
|
|
$ |
326,701 |
|
|
$ |
319,456 |
|
|
|
|
|
|
Depreciation
and amortization expense was $14.9 million and $15.1 million in the third quarter of
2010 (Q3 2010) and the third quarter of 2009 (Q3 2009), respectively. Depreciation and
amortization expense was $44.2 million and $45.5 million in the first nine months of 2010 (YTD
2010) and the first nine months of 2009 (YTD 2009), respectively. These amounts included
amortization expense for leased property under capital leases.
9
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
6. Leased Property Under Capital Leases
Leased property under capital leases was summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
|
Estimated |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Useful Lives |
|
Leased property under capital leases |
|
$ |
76,877 |
|
|
$ |
76,877 |
|
|
$ |
76,877 |
|
|
3-20 years |
Less: Accumulated amortization |
|
|
28,848 |
|
|
|
25,329 |
|
|
|
24,150 |
|
|
|
|
|
|
Leased property under capital leases, net |
|
$ |
48,029 |
|
|
$ |
51,548 |
|
|
$ |
52,727 |
|
|
|
|
|
|
As of October 3, 2010, real estate represented $47.7 million of the leased property under capital
leases and $46.2 million of this real estate is leased from related parties as described in Note
19 to the consolidated financial statements.
The Company modified a related party lease and terminated a second lease in the first quarter of
2009 (Q1 2009). See Note 19 to the consolidated financial statements for additional information
on the lease modification.
The Companys outstanding lease obligations for these capital leases were $60.2 million, $63.1
million and $64.0 million as of October 3, 2010, January 3, 2010 and September 27, 2009,
respectively.
7. Franchise Rights and Goodwill
There was no change in the carrying amounts of franchise rights and goodwill in the periods
presented. The Company performs its annual impairment test of franchise rights and goodwill as of
the first day of the fourth quarter. During YTD 2010, the Company did not experience any
triggering events or changes in circumstances that indicated the carrying amounts of the Companys
franchise rights or goodwill exceeded fair values. As such, the Company has not recognized any
impairments of franchise rights or goodwill.
8. Other Identifiable Intangible Assets
Other identifiable intangible assets were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
|
Estimated |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Useful Lives |
|
Other identifiable intangible assets |
|
$ |
8,665 |
|
|
$ |
8,665 |
|
|
$ |
8,665 |
|
|
1-20 years |
Less: Accumulated amortization |
|
|
3,682 |
|
|
|
3,315 |
|
|
|
3,176 |
|
|
|
|
|
|
Other identifiable intangible assets, net |
|
$ |
4,983 |
|
|
$ |
5,350 |
|
|
$ |
5,489 |
|
|
|
|
|
|
Other identifiable intangible assets primarily represent customer relationships and
distribution rights.
10
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
9. Other Accrued Liabilities
Other accrued liabilities were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Accrued marketing costs |
|
$ |
15,809 |
|
|
$ |
9,738 |
|
|
$ |
9,987 |
|
Accrued insurance costs |
|
|
18,012 |
|
|
|
18,086 |
|
|
|
17,940 |
|
Accrued taxes (other than income taxes) |
|
|
2,830 |
|
|
|
408 |
|
|
|
2,480 |
|
Accrued income taxes |
|
|
|
|
|
|
|
|
|
|
3,000 |
|
Employee benefit plan accruals |
|
|
10,985 |
|
|
|
12,015 |
|
|
|
12,126 |
|
Checks and transfers yet to be presented for
payment from zero balance cash accounts |
|
|
9,795 |
|
|
|
11,862 |
|
|
|
11,950 |
|
All other accrued liabilities |
|
|
7,688 |
|
|
|
9,869 |
|
|
|
6,725 |
|
|
Total other accrued liabilities |
|
$ |
65,119 |
|
|
$ |
61,978 |
|
|
$ |
64,208 |
|
|
10. Debt
Debt was summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
Interest |
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
Maturity |
|
Rate |
|
Paid |
|
2010 |
|
2010 |
|
2009 |
|
Revolving Credit Facility |
|
|
2012 |
|
|
|
|
|
|
Varies |
|
$ |
|
|
|
$ |
15,000 |
|
|
$ |
30,000 |
|
Senior Notes |
|
|
2012 |
|
|
|
5.00 |
% |
|
Semi-annually |
|
|
150,000 |
|
|
|
150,000 |
|
|
|
150,000 |
|
Senior Notes |
|
|
2015 |
|
|
|
5.30 |
% |
|
Semi-annually |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
Senior Notes |
|
|
2016 |
|
|
|
5.00 |
% |
|
Semi-annually |
|
|
164,757 |
|
|
|
164,757 |
|
|
|
164,757 |
|
Senior Notes |
|
|
2019 |
|
|
|
7.00 |
% |
|
Semi-annually |
|
|
110,000 |
|
|
|
110,000 |
|
|
|
110,000 |
|
Unamortized discount on Senior Notes |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
(1,732 |
) |
|
|
(1,840 |
) |
|
|
(1,875 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
523,025 |
|
|
|
537,917 |
|
|
|
552,882 |
|
Less: Current portion of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
523,025 |
|
|
$ |
537,917 |
|
|
$ |
552,882 |
|
|
11
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
10. Debt
On March 8, 2007, the Company entered into a $200 million revolving credit facility ($200 million
facility), replacing its $100 million revolving credit facility. The $200 million facility
matures in March 2012 and includes an option to extend the term for an additional year at the
discretion of the participating banks. The $200 million facility bears interest at a floating
base rate or a floating rate of LIBOR plus an interest rate spread of .35%, dependent on the
length of the term of the interest period. In addition, the Company must pay an annual facility
fee of .10% of the lenders aggregate commitments under the facility. Both the interest rate
spread and the facility fee are determined from a commonly-used pricing grid based on the
Companys long-term senior unsecured debt rating. The $200 million facility contains two financial
covenants: a fixed charges coverage ratio and a debt to operating cash flow ratio, each as
defined in the credit agreement. The fixed charges coverage ratio requires the Company to
maintain a consolidated cash flow to fixed charges ratio of 1.5 to 1 or higher. The operating
cash flow ratio requires the Company to maintain a debt to cash flow ratio of 6.0 to 1 or lower.
The Company is currently in compliance with these covenants. These covenants do not currently,
and the Company does not anticipate they will, restrict its liquidity or capital resources. On
July 1, 2009, the Company borrowed $55.0 million under the $200 million facility and used the
proceeds, along with $2.4 million of cash on hand, to repay at maturity the Companys $57.4
million outstanding 7.20% Debentures due July 2009. On October 3, 2010, the Company had no
outstanding borrowings on the $200 million facility. The Company had $15 million and $30 million
of outstanding borrowings on the $200 million facility as of January 3, 2010 and September 27,
2009, respectively.
In April 2009, the Company issued $110 million of unsecured 7% Senior Notes due 2019. The
proceeds plus cash on hand were used to repay the $119.3 million debt maturity on May 1, 2009.
On February 10, 2010, the Company entered into an agreement for an uncommitted line of credit.
Under this agreement, the Company may borrow up to a total of $20 million for periods of 7 days,
30 days, 60 days or 90 days. On October 3, 2010, the Company had no outstanding borrowings under
the uncommitted line of credit.
The Company had a weighted average interest rate of 5.8%, 5.6% and 5.5% for its debt and capital
lease obligations as of October 3, 2010, January 3, 2010 and September 27, 2009, respectively. The
Companys overall weighted average interest rate on its debt and capital lease obligations was 5.9%
for YTD 2010 compared to 5.7% for YTD 2009. As of October 3, 2010, approximately 4.8% of the
Companys debt and capital lease obligations of $583.3 million was subject to changes in short-term
interest rates.
The Companys public debt is not subject to financial covenants but does limit the incurrence of
certain liens and encumbrances as well as the incurrence of indebtedness by the Companys
subsidiaries in excess of certain amounts.
All of the outstanding long-term debt has been issued by the Company with none being issued by any
of the Companys subsidiaries. There are no guarantees of the Companys debt.
12
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
11. Derivative Financial Instruments
Interest
The Company periodically uses interest rate hedging products to modify risk from interest rate
fluctuations. The Company has historically altered its fixed/floating rate mix based upon
anticipated cash flows from operations relative to the Companys debt level and the potential
impact of changes in interest rates on the Companys overall financial condition. Sensitivity
analyses are performed to review the impact on the Companys financial position and coverage of
various interest rate movements. The Company does not use derivative financial instruments for
trading purposes nor does it use leveraged financial instruments.
On September 18, 2008, the Company terminated six outstanding interest rate swap agreements with a
notional amount of $225 million receiving $6.2 million in cash proceeds including $1.1 million for
previously accrued interest receivable. After accounting for the previously accrued interest
receivable, the Company is amortizing the gain of $5.1 million over the remaining term of the
underlying debt. During YTD 2010 and YTD 2009, $0.7 million and $1.0 million of the gain,
respectively, was amortized. The remaining amount to be amortized is $2.7 million. All of the
Companys interest rate swap agreements were LIBOR-based.
The Company had no interest rate swap agreements outstanding at October 3, 2010, January 3, 2010
and September 27, 2009.
Commodities
The Company is subject to the risk of loss arising from adverse changes in commodity prices. In
the normal course of business, the Company manages these risks through a variety of strategies,
including the use of derivative instruments. The Company does not use derivative instruments for
trading or speculative purposes. All derivative instruments are recorded at fair value as either
assets or liabilities in the Companys consolidated balance sheets. These derivative instruments
are not designated as hedging instruments under GAAP and are used as economic hedges to manage
commodity price risk. Currently the Company has derivative instruments to hedge some or all of its
projected diesel fuel and aluminum purchase requirements. These derivative instruments are marked
to market on a monthly basis and recognized in earnings consistent with the expense classification
of the underlying hedged item. Settlements of derivative agreements are included in cash flows
from operating activities on the Companys consolidated statements of cash flows.
The Company uses several different financial institutions for commodity derivative instruments to
minimize the concentration of credit risk. While the Company is exposed to credit loss in the
event of nonperformance by these counterparties, the Company does not anticipate nonperformance by
these parties. The Company has master agreements with the counterparties to its derivative
financial agreements that provide for net settlement of derivative transactions.
13
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
11. Derivative Financial Instruments
The Company used derivative instruments to hedge substantially all of the diesel fuel purchases
for 2009 and is using derivative instruments to hedge substantially all of the diesel fuel
purchases for 2010. These derivative instruments relate to diesel fuel used by the Companys
delivery fleet. During the first quarter of 2009, the Company began using derivative instruments
to hedge approximately 75% of the projected 2010 aluminum purchase requirements. During the
second quarter of 2009, the Company entered into derivative agreements to hedge approximately 75%
of the projected 2011 aluminum purchase requirements.
The following summarizes Q3 2010 and Q3 2009 net gains and losses on the Companys fuel and
aluminum derivative financial instruments and the classification, either as cost of sales or
selling, delivery and administrative (S,D&A) expenses, of such net gains and losses in the
consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
In Thousands |
|
Classification of Gain (Loss) |
|
2010 |
|
2009 |
|
Fuel hedges
contract premium
and contract settlement |
|
S,D&A expenses |
|
$ |
(213 |
) |
|
$ |
(138 |
) |
Fuel hedges
mark-to-market
adjustment |
|
S,D&A expenses |
|
|
82 |
|
|
|
(497 |
) |
Aluminum
hedges contract
premium and contract settlement |
|
Cost of sales |
|
|
98 |
|
|
|
|
|
Aluminum
hedges mark-to-market
adjustment |
|
Cost of sales |
|
|
3,003 |
|
|
|
1,440 |
|
|
Total Net Gain (Loss) |
|
|
|
$ |
2,970 |
|
|
$ |
805 |
|
|
The following summarizes YTD 2010 and YTD 2009 net gains and losses on the Companys fuel and
aluminum derivative financial instruments and the classification of such net gains and losses in
the consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
In Thousands |
|
Classification of Gain (Loss) |
|
2010 |
|
2009 |
|
Fuel hedges
contract premium
and contract settlement |
|
S,D&A expenses |
|
$ |
(243 |
) |
|
$ |
(947 |
) |
Fuel hedges
mark-to-market
adjustment |
|
S,D&A expenses |
|
|
(1,274 |
) |
|
|
2,921 |
|
Aluminum
hedges contract
premium and contract settlement |
|
Cost of sales |
|
|
609 |
|
|
|
|
|
Aluminum
hedges mark-to-market
adjustment |
|
Cost of sales |
|
|
(3,210 |
) |
|
|
5,326 |
|
|
Total Net Gain (Loss) |
|
|
|
$ |
(4,118 |
) |
|
$ |
7,300 |
|
|
14
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
11. Derivative Financial Instruments
The following summarizes the fair values and classification in the consolidated balance sheets of
derivative instruments held by the Company as of October 3, 2010, January 3, 2010 and September
27, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet |
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
Classification |
|
2010 |
|
2010 |
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel hedges at fair market value |
|
Prepaid expenses and other current assets |
|
$ |
343 |
|
|
$ |
1,617 |
|
|
$ |
584 |
|
Unamortized cost of fuel hedging agreements |
|
Prepaid expenses and other current assets |
|
|
246 |
|
|
|
863 |
|
|
|
859 |
|
Aluminum hedges at fair market value |
|
Prepaid expenses and other current assets |
|
|
5,660 |
|
|
|
3,303 |
|
|
|
968 |
|
Unamortized cost of aluminum hedging agreements |
|
Prepaid expenses and other current assets |
|
|
2,284 |
|
|
|
967 |
|
|
|
716 |
|
|
Total |
|
|
|
$ |
8,533 |
|
|
$ |
6,750 |
|
|
$ |
3,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel hedges at fair market value |
|
Other assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
353 |
|
Unamortized cost of fuel
hedging agreements |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
246 |
|
Aluminum hedges at fair market value |
|
Other assets |
|
|
1,582 |
|
|
|
7,149 |
|
|
|
4,358 |
|
Unamortized cost of aluminum
hedging agreements |
|
Other assets |
|
|
651 |
|
|
|
2,453 |
|
|
|
2,935 |
|
|
Total |
|
|
|
$ |
2,233 |
|
|
$ |
9,602 |
|
|
$ |
7,892 |
|
The following table summarizes the Companys outstanding derivative agreements as of October 3, 2010:
|
|
|
|
|
|
|
|
|
|
|
Notional |
|
Latest |
In Thousands |
|
Amount |
|
Maturity |
|
Fuel hedging agreements |
|
$ |
2,621 |
|
|
December 2010 |
Aluminum hedging agreements |
|
|
36,258 |
|
|
December 2011 |
12. Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating the fair values of
its financial instruments:
Cash and Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable
The fair values of cash and cash equivalents, restricted cash, accounts receivable and accounts
payable approximate carrying values due to the short maturity of these items.
Public Debt Securities
The fair values of the Companys public debt securities are based on estimated current market
prices.
15
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
12. Fair Value of Financial Instruments
Non-Public Variable Rate Debt
The carrying amounts of the Companys variable rate borrowings approximate their fair values.
Deferred Compensation Plan Assets/Liabilities
The fair values of deferred compensation plan assets and liabilities, which are held in mutual
funds, are based upon the quoted market value of the securities held within the mutual funds.
Derivative Financial Instruments
The fair values for the Companys fuel hedging and aluminum hedging agreements are based on
current settlement values. The fair values of the fuel hedging and aluminum hedging agreements at
each balance sheet date represent the estimated amounts the Company would have received or paid
upon termination of these agreements. Credit risk related to the derivative financial instruments
is managed by requiring high standards for its counterparties and periodic settlements. The
Company considers nonperformance risk in determining the fair value of derivative financial
instruments.
The carrying amounts and fair values of the Companys debt, deferred compensation plan assets and
liabilities, and derivative financial instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, 2010 |
|
Jan. 3, 2010 |
|
Sept. 27, 2009 |
|
|
Carrying |
|
Fair |
|
Carrying |
|
Fair |
|
Carrying |
|
Fair |
In Thousands |
|
Amount |
|
Value |
|
Amount |
|
Value |
|
Amount |
|
Value |
|
Public debt securities |
|
$ |
(523,025 |
) |
|
$ |
(580,380 |
) |
|
$ |
(522,917 |
) |
|
$ |
(557,758 |
) |
|
$ |
(522,882 |
) |
|
$ |
(559,627 |
) |
Non-public variable rate debt |
|
|
|
|
|
|
|
|
|
|
(15,000 |
) |
|
|
(15,000 |
) |
|
|
(30,000 |
) |
|
|
(30,000 |
) |
Deferred compensation plan
assets |
|
|
9,040 |
|
|
|
9,040 |
|
|
|
8,471 |
|
|
|
8,471 |
|
|
|
7,996 |
|
|
|
7,996 |
|
Deferred compensation plan
liabilities |
|
|
(9,040 |
) |
|
|
(9,040 |
) |
|
|
(8,471 |
) |
|
|
(8,471 |
) |
|
|
(7,996 |
) |
|
|
(7,996 |
) |
Fuel hedging agreements |
|
|
343 |
|
|
|
343 |
|
|
|
1,617 |
|
|
|
1,617 |
|
|
|
937 |
|
|
|
937 |
|
Aluminum hedging agreements |
|
|
7,242 |
|
|
|
7,242 |
|
|
|
10,452 |
|
|
|
10,452 |
|
|
|
5,326 |
|
|
|
5,326 |
|
The fair values of the fuel hedging and aluminum hedging agreements at October 3, 2010, January 3,
2010 and September 27, 2009 represented the estimated amount the Company would have received upon
termination of these agreements.
GAAP requires that assets and liabilities carried at fair value be classified and disclosed in one
of the following categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market
data.
Level 3: Unobservable inputs that are not corroborated by market data.
16
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
12. Fair Value of Financial Instruments
The following table summarizes, by assets and liabilities, the valuation of the Companys deferred
compensation plan, aluminum hedging agreements and fuel hedging agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, 2010 |
|
Jan. 3, 2010 |
|
Sept. 27, 2009 |
In Thousands |
|
Level 1 |
|
Level 2 |
|
Level 1 |
|
Level 2 |
|
Level 1 |
|
Level 2 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation plan assets |
|
$ |
9,040 |
|
|
|
|
|
|
$ |
8,471 |
|
|
|
|
|
|
$ |
7,996 |
|
|
|
|
|
Fuel hedging agreements |
|
|
|
|
|
$ |
343 |
|
|
|
|
|
|
$ |
1,617 |
|
|
|
|
|
|
$ |
937 |
|
Aluminum hedging agreements |
|
|
|
|
|
|
7,242 |
|
|
|
|
|
|
|
10,452 |
|
|
|
|
|
|
|
5,326 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation plan liabilities |
|
|
9,040 |
|
|
|
|
|
|
|
8,471 |
|
|
|
|
|
|
|
7,996 |
|
|
|
|
|
The Company maintains a non-qualified deferred compensation plan for certain executives and other
highly compensated employees. The investment assets are held in mutual funds. The fair value of
the mutual funds is based on the quoted market value of the securities held within the funds (Level
1). The related deferred compensation liability represents the fair value of the investment
assets.
The Companys fuel hedging agreements are based upon NYMEX rates that are observable and quoted
periodically over the full term of the agreement and are considered Level 2 items.
The Companys aluminum hedging agreements are based upon LME rates that are observable and quoted
periodically over the full term of the agreement and are considered Level 2 items.
The Company does not have Level 3 assets or liabilities. Also, there were no transfers of
assets or liabilities between Level 1 and Level 2 for any of the periods presented.
13. Other Liabilities
Other liabilities were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Accruals for executive benefit plans |
|
$ |
89,322 |
|
|
$ |
85,382 |
|
|
$ |
83,825 |
|
Other |
|
|
19,095 |
|
|
|
21,586 |
|
|
|
19,963 |
|
|
Total other liabilities |
|
$ |
108,417 |
|
|
$ |
106,968 |
|
|
$ |
103,788 |
|
|
17
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
14. Commitments and Contingencies
The Company is a member of South Atlantic Canners, Inc. (SAC), a manufacturing cooperative from
which it is obligated to purchase 17.5 million cases of finished product on an annual basis
through May 2014. The Company is also a member of Southeastern Container (Southeastern), a
plastic bottle manufacturing cooperative from which it is obligated to purchase at least 80% of
its requirements of plastic bottles for certain designated territories. See Note 19 to the
consolidated financial statements for additional information concerning SAC and Southeastern.
The Company guarantees a portion of SACs and Southeasterns debt and lease obligations. The
amounts guaranteed were $35.7 million, $30.5 million and $38.4 million as of October 3, 2010,
January 3, 2010 and September 27, 2009, respectively. The Company has not recorded any liability
associated with these guarantees and holds no assets as collateral against these guarantees. The
guarantees relate to the debt and lease obligations of SAC and Southeastern, which resulted
primarily from the purchase of production equipment and facilities. These guarantees expire at
various dates through 2021. The members of both cooperatives consist solely of Coca-Cola
bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill its
commitments. The Company further believes each of these cooperatives has sufficient assets,
including production equipment, facilities and working capital, and the ability to adjust selling
prices of their products which adequately mitigate the risk of material loss from the Companys
guarantees. In the event either of these cooperatives fails to fulfill its commitments under the
related debt and lease obligations, the Company would be responsible for payments to the lenders
up to the level of the guarantees. If these cooperatives had borrowed up to their borrowing
capacity, the Companys maximum exposure under these guarantees on October 3, 2010 would have been
$25.2 million for SAC and $25.2 million for Southeastern and the Companys maximum total exposure,
including its equity investment, would have been $30.8 million for SAC and $40.9 million for
Southeastern.
The Company has been purchasing plastic bottles from Southeastern and finished products from SAC
for more than ten years and has never had to pay against these guarantees.
The Company has an equity ownership in each of the entities in addition to the guarantees of
certain indebtedness and records its investment in each under the equity method. As of October 3,
2010, SAC had total assets of approximately $43.9 million and total debt of approximately $17.8
million. SAC had total revenues for YTD 2010 of approximately $132.6 million. As of October 3,
2010, Southeastern had total assets of approximately $405 million and total debt of
approximately $212 million. Southeastern had total revenue for YTD 2010 of approximately $446
million.
The Company has standby letters of credit, primarily related to its property and casualty
insurance programs. On October 3, 2010, these letters of credit totaled $23.1 million. The
Company was required to maintain $4.5 million of restricted cash for letters of credit beginning
in the second quarter of 2009 which was reduced to $3.5 million in the second quarter of 2010.
The Company participates in long-term marketing contractual arrangements with certain prestige
properties, athletic venues and other locations. The future payments related to these contractual
arrangements as of October 3, 2010 amounted to $18.7 million and expire at various dates through
2018.
18
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
14. Commitments and Contingencies
During May 2010, Nashville, Tennessee experienced a severe rain storm which caused extensive flood
damage in the area. The Company has a production/sales distribution facility located in the
flooded area. Due to damage incurred during this flood, the Company recorded a loss of
approximately $.2 million on uninsured cold drink equipment. This loss was offset by gains of
approximately $1.1 million for the excess of insurance proceeds received as compared to the net
book value of production equipment damaged as a result of the flood. In YTD 2010, the Company
recorded a receivable of $7.1 million for insured losses of which $1.5 million has already been
collected as of the end of Q3 2010. The Company does not expect to incur any significant expenses
related to the Nashville area flood for the remainder of 2010.
The Company is involved in various claims and legal proceedings which have arisen in the ordinary
course of its business. Although it is difficult to predict the ultimate outcome of these claims
and legal proceedings, management believes the ultimate disposition of these matters will not have
a material adverse effect on the financial condition, cash flows or results of operations of the
Company. No material amount of loss in excess of recorded amounts is believed to be reasonably
possible as a result of these claims and legal proceedings.
The Company is subject to audit by tax authorities in jurisdictions where it conducts business.
These audits may result in assessments that are subsequently resolved with the tax authorities or
potentially through the courts. Management believes the Company has adequately provided for any
assessments that are likely to result from these audits; however, final assessments, if any, could
be different than the amounts recorded in the consolidated financial statements.
15. Income Taxes
The Companys effective tax rate, as calculated by dividing income tax expense by income before
income taxes, for YTD 2010 and YTD 2009 was 34.6% and 23.8%, respectively. The Companys effective
tax rate, as calculated by dividing income tax expense by the difference of income before income
taxes minus net income attributable to the noncontrolling interest, for YTD 2010 and YTD 2009 was
37.0% and 24.8%, respectively. The increase in the effective tax rate
for YTD 2010 was due to a larger adjustment to the reserve for
uncertain tax positions in 2009 as compared to 2010 and the elimination of the
tax deduction associated with Medicare Part D subsidy as required by the Patient Protection and
Affordable Care Act (PPACA) enacted on March 23, 2010 and the Health Care and Education
Reconciliation Act of 2010 (Reconciliation Act) enacted on March 30, 2010.
19
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
15. Income Taxes
The following table provides a reconciliation of the income tax expense at the statutory federal
rate to actual income tax expense.
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
In Thousands |
|
2010 |
|
2009 |
|
Statutory expense |
|
$ |
17,910 |
|
|
$ |
16,826 |
|
State income taxes, net of federal effect |
|
|
2,165 |
|
|
|
2,094 |
|
Manufacturing deduction benefit |
|
|
(1,791 |
) |
|
|
(1,197 |
) |
Meals and entertainment |
|
|
774 |
|
|
|
754 |
|
Adjustment for uncertain tax positions |
|
|
(1,080 |
) |
|
|
(7,070 |
) |
Tax law change related to Medicare Part D subsidy |
|
|
464 |
|
|
|
|
|
Other, net |
|
|
494 |
|
|
|
521 |
|
|
Income tax expense |
|
$ |
18,936 |
|
|
$ |
11,928 |
|
|
The Company had $4.5 million of uncertain tax positions as of October 3, 2010, including accrued interest, of which $2.4
million would affect the Companys effective tax rate if recognized. The
Company had $5.6 million of uncertain tax positions as of January 3, 2010, including accrued interest, of which $3.5
million would affect the Companys effective tax rate if recognized. The
Company had $3.0 million of uncertain tax positions as of September 27, 2009, including accrued interest, all of which would
affect the Companys effective tax rate if recognized. While it is
expected that the amount of uncertain tax positions may change in the next 12 months, the Company
does not expect the change to have a significant impact on the consolidated financial statements.
The Company recognizes potential interest and penalties related to uncertain tax positions in
income tax expense. As of October 3, 2010, the Company had approximately $.4 million of accrued
interest related to uncertain tax positions. As of January 3, 2010, the Company had approximately
$.9 million of accrued interest related to uncertain tax positions. As of September 27, 2009, the
Company had approximately $.8 million of accrued interest related to uncertain tax positions.
Income tax expense included an interest credit of approximately $.5 million in YTD 2010 and an
interest credit of approximately $1.7 million in YTD 2009.
The PPACA and the Reconciliation Act include provisions that will reduce the tax benefits available
to employers that receive Medicare Part D subsidies. As a result, during the first quarter of
2010, the Company recorded tax expense totaling $.5 million related to changes made to the tax
deductibility of Medicare Part D subsidies.
In Q1 2009, the Company reached an agreement with a taxing authority to settle prior tax positions
for which the Company had previously provided reserves due to uncertainty of resolution. As a
result, the Company reduced the liability for uncertain tax positions by $1.7 million. The net
effect of the adjustment was a decrease to income tax expense in YTD 2009 of approximately $1.7
million.
In Q3 2009, the Company reduced its liability for uncertain tax positions by $5.4 million. The net
effect of the adjustment was a decrease to income tax expense of approximately $5.4 million. The
reduction of the liability for uncertain tax positions was due mainly to the lapse of applicable
statute of limitations.
20
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
15. Income Taxes
In Q3 2010, the Company reduced its liability for uncertain tax positions by $1.7 million. The net
effect of the adjustment was a decrease to income tax expense by
approximately $1.7 million. The reduction of the liability for
uncertain tax positions was due mainly to the lapse of the applicable statute of limitations.
Various tax years from 1992 remain open to examination by taxing jurisdictions to which the Company
is subject due to loss carryforwards.
16. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss is comprised of adjustments relative to the Companys pension
and postretirement medical benefit plans, foreign currency translation adjustments required for a
subsidiary of the Company that performs data analysis and provides consulting services outside the
United States and the Companys share of Southeasterns other comprehensive loss.
A summary of accumulated other comprehensive loss for Q3 2010 and Q3 2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 4, |
|
Pre-tax |
|
Tax |
|
Oct. 3, |
In Thousands |
|
2010 |
|
Activity |
|
Effect |
|
2010 |
|
Net pension activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
$ |
(38,809 |
) |
|
$ |
1,365 |
|
|
$ |
(535 |
) |
|
$ |
(37,979 |
) |
Prior service costs |
|
|
(32 |
) |
|
|
4 |
|
|
|
(2 |
) |
|
|
(30 |
) |
Net postretirement benefits activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
|
(12,592 |
) |
|
|
410 |
|
|
|
(161 |
) |
|
|
(12,343 |
) |
Prior service costs |
|
|
6,834 |
|
|
|
(446 |
) |
|
|
175 |
|
|
|
6,563 |
|
Transition asset |
|
|
18 |
|
|
|
(6 |
) |
|
|
2 |
|
|
|
14 |
|
Ownership share of Southeastern OCI |
|
|
(19 |
) |
|
|
16 |
|
|
|
(7 |
) |
|
|
(10 |
) |
Foreign currency translation adjustment |
|
|
5 |
|
|
|
|
|
|
|
1 |
|
|
|
6 |
|
|
Total |
|
$ |
(44,595 |
) |
|
$ |
1,343 |
|
|
$ |
(527 |
) |
|
$ |
(43,779 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, |
|
Pre-tax |
|
Tax |
|
Sept. 27, |
In Thousands |
|
2009 |
|
Activity |
|
Effect |
|
2009 |
|
Net pension activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
$ |
(53,880 |
) |
|
$ |
2,339 |
|
|
$ |
(921 |
) |
|
$ |
(52,462 |
) |
Prior service costs |
|
|
(40 |
) |
|
|
4 |
|
|
|
(2 |
) |
|
|
(38 |
) |
Net postretirement benefits activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
|
(9,361 |
) |
|
|
218 |
|
|
|
(86 |
) |
|
|
(9,229 |
) |
Prior service costs |
|
|
7,917 |
|
|
|
(446 |
) |
|
|
176 |
|
|
|
7,647 |
|
Transition asset |
|
|
33 |
|
|
|
(6 |
) |
|
|
2 |
|
|
|
29 |
|
Foreign currency translation adjustment |
|
|
12 |
|
|
|
4 |
|
|
|
(1 |
) |
|
|
15 |
|
|
Total |
|
$ |
(55,319 |
) |
|
$ |
2,113 |
|
|
$ |
(832 |
) |
|
$ |
(54,038 |
) |
|
21
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
16. Accumulated Other Comprehensive Loss
A summary of accumulated other comprehensive loss for YTD 2010 and YTD 2009 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan. 3, |
|
Pre-tax |
|
Tax |
|
Oct. 3, |
In Thousands |
|
2010 |
|
Activity |
|
Effect |
|
2010 |
|
Net pension activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
$ |
(40,626 |
) |
|
$ |
4,355 |
|
|
$ |
(1,708 |
) |
|
$ |
(37,979 |
) |
Prior service costs |
|
|
(37 |
) |
|
|
12 |
|
|
|
(5 |
) |
|
|
(30 |
) |
Net postretirement benefits activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
|
(13,470 |
) |
|
|
1,092 |
|
|
|
35 |
|
|
|
(12,343 |
) |
Prior service costs |
|
|
7,376 |
|
|
|
(1,338 |
) |
|
|
525 |
|
|
|
6,563 |
|
Transition asset |
|
|
26 |
|
|
|
(19 |
) |
|
|
7 |
|
|
|
14 |
|
Ownership share of Southeastern OCI |
|
|
(49 |
) |
|
|
65 |
|
|
|
(26 |
) |
|
|
(10 |
) |
Foreign currency translation adjustment |
|
|
13 |
|
|
|
(13 |
) |
|
|
6 |
|
|
|
6 |
|
|
Total |
|
$ |
(46,767 |
) |
|
$ |
4,154 |
|
|
$ |
(1,166 |
) |
|
$ |
(43,779 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 28, |
|
Pre-tax |
|
Tax |
|
Sept. 27, |
In Thousands |
|
2008 |
|
Activity |
|
Effect |
|
2009 |
|
Net pension activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
$ |
(56,717 |
) |
|
$ |
7,017 |
|
|
$ |
(2,762 |
) |
|
$ |
(52,462 |
) |
Prior service costs |
|
|
(45 |
) |
|
|
12 |
|
|
|
(5 |
) |
|
|
(38 |
) |
Net postretirement benefits activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
|
(9,625 |
) |
|
|
653 |
|
|
|
(257 |
) |
|
|
(9,229 |
) |
Prior service costs |
|
|
8,459 |
|
|
|
(1,339 |
) |
|
|
527 |
|
|
|
7,647 |
|
Transition asset |
|
|
41 |
|
|
|
(19 |
) |
|
|
7 |
|
|
|
29 |
|
Foreign currency translation adjustment |
|
|
14 |
|
|
|
1 |
|
|
|
|
|
|
|
15 |
|
|
Total |
|
$ |
(57,873 |
) |
|
$ |
6,325 |
|
|
$ |
(2,490 |
) |
|
$ |
(54,038 |
) |
|
17. Capital Transactions
The Company has two classes of common stock outstanding, Common Stock and Class B Common Stock.
The Common Stock is traded on the NASDAQ Global Select Marketsm under the symbol COKE.
There is no established public trading market for the Class B Common Stock. Shares of the Class B
Common Stock are convertible on a share-for-share basis into shares of Common Stock at any time at
the option of the holders of Class B Common Stock.
No cash dividend or dividend of property or stock other than stock of the Company, as specifically
described in the Companys certificate of incorporation, may be declared and paid on the Class B
Common Stock unless an equal or greater dividend is declared and paid on the Common Stock. During
YTD 2010 and YTD 2009, dividends of $.75 per share were declared and paid on both Common Stock and
Class B Common Stock.
22
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
17. Capital Transactions
Each share of Common Stock is entitled to one vote per share and each share of Class B Common
Stock is entitled to 20 votes per share at all meetings of stockholders. Except as otherwise
required by law, holders of the Common Stock and Class B Common Stock vote together as a single
class on all matters brought before the Companys stockholders. In the event of liquidation,
there is no preference between the two classes of common stock.
On May 12, 1999, the stockholders of the Company approved a restricted stock award program for J.
Frank Harrison, III, the Companys Chairman of the Board of Directors and Chief Executive Officer,
consisting of 200,000 shares of the Companys Class B Common Stock. Under the award, shares of
restricted stock were granted at a rate of 20,000 shares per year over a ten-year period. The
vesting of each annual installment was contingent upon the Company achieving at least 80% of the
overall goal achievement factor in the Companys Annual Bonus Plan. The restricted stock award did
not entitle Mr. Harrison, III to participate in dividend or voting rights until each installment
had vested and the shares were issued. The restricted stock award expired at the end of fiscal
year 2008. On March 4, 2009, the Compensation Committee determined an additional 20,000 shares of
restricted Class B Common Stock vested and such shares were issued to Mr. Harrison, III for the
fiscal year ended December 28, 2008.
On April 29, 2008, the stockholders of the Company approved a Performance Unit Award Agreement for
Mr. Harrison, III consisting of 400,000 performance units (Units). Each Unit represents the
right to receive one share of the Companys Class B Common Stock, subject to certain terms and
conditions. The Units vest in annual increments over a ten-year period starting in fiscal year
2009. The number of Units that vest each year will equal the product of 40,000 multiplied by the
overall goal achievement factor (not to exceed 100%) under the Companys Annual Bonus Plan. The
Performance Unit Award Agreement replaced the restricted stock award program.
Each annual 40,000 Unit tranche has an independent performance requirement as it is not
established until the Companys Annual Bonus Plan targets are approved each year by the Companys
Board of Directors. As a result, each 40,000 Unit tranche is considered to have its own service
inception date, grant-date and requisite service period. The Companys Annual Bonus Plan targets,
which establish the performance requirements for the Performance Unit Award Agreement, are
approved by the Compensation Committee of the Board of Directors in the first quarter of each
year. The Performance Unit Award Agreement does not entitle Mr. Harrison, III to participate in
dividends or voting rights until each installment has vested and the shares are issued. Mr.
Harrison, III may satisfy tax withholding requirements in whole or in part by requiring the
Company to settle in cash such number of Units otherwise payable in Class B Common Stock to meet
the maximum statutory tax withholding requirements.
On March 9, 2010, the Compensation Committee determined that 40,000 Units vested for the fiscal
year ended January 3, 2010. Of such Units, 22,320 were settled for 22,320 shares of Class B
Common Stock and 17,680 were settled in cash to satisfy tax withholding obligations in connection
with the vesting of the Units.
Compensation expense for the Performance Unit Award Agreement recognized in YTD 2010 was $1.6
million, which was based upon a share price of $52.94 on October 1, 2010. Compensation expense
recognized in YTD 2009 was $1.5 million, which was based upon a share price of $48.80 on September
25, 2009.
23
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
17. Capital Transactions
On February 19, 2009, The Coca-Cola Company converted 497,670 shares of the Companys Class B
Common Stock into an equivalent number of shares of the Companys Common Stock.
The increase in the total number of shares outstanding in YTD 2010 was due to the issuance of the
22,320 shares of Class B Common Stock related to the Performance Unit Award Agreement. The
increase in the total number of shares outstanding in YTD 2009 was due to the issuance of 20,000
shares of Class B Common Stock related to the restricted stock award.
18. Benefit Plans
Pension Plans
Retirement benefits under the two Company-sponsored pension plans are based on the employees
length of service, average compensation over the five consecutive years that give the highest
average compensation and average Social Security taxable wage base during the 35-year period
before reaching Social Security retirement age. Contributions to the plans are based on the
projected unit credit actuarial funding method and are limited to the amounts currently deductible
for income tax purposes. On February 22, 2006, the Board of Directors of the Company approved an
amendment to the principal Company-sponsored pension plan to cease further benefit accruals under
the plan effective June 30, 2006.
The components of net periodic pension cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
First Nine Months |
|
In Thousands |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
Service cost |
|
$ |
20 |
|
|
$ |
23 |
|
|
$ |
58 |
|
|
$ |
68 |
|
Interest cost |
|
|
2,864 |
|
|
|
2,788 |
|
|
|
8,578 |
|
|
|
8,365 |
|
Expected return on plan assets |
|
|
(2,894 |
) |
|
|
(2,270 |
) |
|
|
(8,630 |
) |
|
|
(6,810 |
) |
Amortization of prior service cost |
|
|
4 |
|
|
|
4 |
|
|
|
12 |
|
|
|
12 |
|
Recognized net actuarial loss |
|
|
1,365 |
|
|
|
2,339 |
|
|
|
4,355 |
|
|
|
7,017 |
|
|
Net periodic pension cost |
|
$ |
1,359 |
|
|
$ |
2,884 |
|
|
$ |
4,373 |
|
|
$ |
8,652 |
|
|
The Company contributed $8.7 million to its Company-sponsored pension plans during YTD 2010. The
Company has made additional payments of $.9 million subsequent to the end of Q3 2010. These
contributions represent all required payments for 2010.
Postretirement Benefits
The Company provides postretirement benefits for a portion of its current employees. The Company
recognizes the cost of postretirement benefits, which consist principally of medical benefits,
during employees periods of
active service. The Company does not pre-fund these benefits and has the right to modify or
terminate certain of these benefits in the future.
24
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
18. Benefit Plans
The components of net periodic postretirement benefit cost were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
First Nine Months |
|
In Thousands |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
Service cost |
|
$ |
182 |
|
|
$ |
158 |
|
|
$ |
572 |
|
|
$ |
473 |
|
Interest cost |
|
|
634 |
|
|
|
557 |
|
|
|
1,886 |
|
|
|
1,672 |
|
Amortization of unrecognized transitional assets |
|
|
(7 |
) |
|
|
(6 |
) |
|
|
(19 |
) |
|
|
(19 |
) |
Recognized net actuarial loss |
|
|
410 |
|
|
|
218 |
|
|
|
1,092 |
|
|
|
653 |
|
Amortization of prior service cost |
|
|
(446 |
) |
|
|
(446 |
) |
|
|
(1,338 |
) |
|
|
(1,339 |
) |
|
Net periodic postretirement benefit cost |
|
$ |
773 |
|
|
$ |
481 |
|
|
$ |
2,193 |
|
|
$ |
1,440 |
|
|
401(k) Savings Plan
The Company provides a 401(k) Savings Plan for substantially all of its employees who are not part
of collective bargaining agreements. The Company suspended matching contributions to its 401(k)
Savings Plan effective April 1, 2009. The Company maintained the option to match its employees
401(k) Savings Plan contributions based on the financial results for 2009. The Company
subsequently decided to match the first 5% of its employees contributions (consistent with Q1 2009
matching contribution percentage) for the entire year of 2009.
The Company will match the first 3% of its employees contributions for 2010. The Company
maintains the option to increase the matching contributions an additional 2%, for a total of 5%,
for the Companys employees based on the financial results for 2010. Based on the financial
results of the first quarter of 2010, the Company decided to increase the matching contributions an
additional 2% for that quarter, which was approved and paid in the second quarter of 2010. Based
on the financial results of the second quarter of 2010, the Company decided to increase the
matching contributions an additional 2% for that quarter which was approved and paid in the third
quarter of 2010. The total cost for this benefit in YTD 2010 and YTD 2009 was $6.8 million and
$6.7 million, respectively.
Multi-Employer Benefits
The
Company entered into a new agreement in the third quarter of 2008
after one of its collective
bargaining contracts expired in July 2008. The new agreement allowed the Company to freeze its
liability to Central States Southeast and Southwest Areas Pension Plan (Central States), a
multi-employer defined benefit pension fund, while preserving the pension benefits previously
earned by the employees. As a result of freezing the Companys liability to Central States, the
Company recorded a charge of $13.6 million in the second half of 2008. The Company paid $3.0
million in the fourth quarter of 2008 to the Southern States Savings and Retirement Plan under the
agreement to freeze the Central States liability. The remaining $10.6 million was the present value
amount, using a discount rate of 7% that will be paid to Central States over the next 20 years and
was recorded in other liabilities. The Company paid approximately $1 million in 2009 and will pay
approximately $1 million annually over the next 19 years.
25
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
19. Related Party Transactions
The Companys business consists primarily of the production, marketing and distribution of
nonalcoholic beverages of The Coca-Cola Company, which is the sole owner of the secret formulas
under which the primary components (either concentrate or syrup) of its beverage products are
manufactured. As of October 3, 2010, The Coca-Cola Company had a 27.0% interest in the Companys
total outstanding Common Stock and Class B Common Stock on a combined basis, representing 5.2% of
the total votes of the Companys Common Stock and Class B Common Stock voting together as a single
class.
The following table summarizes the significant transactions between the Company and The Coca-Cola
Company:
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
|
In Millions |
|
2010 |
|
|
2009 |
|
|
Payments by the Company for concentrate, syrup,
sweetener and other purchases |
|
$ |
301.6 |
|
|
$ |
277.4 |
|
Marketing funding support payments to the Company |
|
|
33.8 |
|
|
|
35.1 |
|
|
|
|
|
|
|
|
Payments by the Company net of marketing funding support |
|
$ |
267.8 |
|
|
$ |
242.3 |
|
|
|
|
|
|
|
|
|
|
Payments by the Company for customer marketing programs |
|
$ |
38.6 |
|
|
$ |
39.4 |
|
Payments by the Company for cold drink equipment parts |
|
|
6.4 |
|
|
|
5.3 |
|
Fountain delivery and equipment repair fees paid to the Company |
|
|
7.7 |
|
|
|
8.5 |
|
Presence marketing funding support provided by
The Coca-Cola Company on the Companys behalf |
|
|
3.3 |
|
|
|
3.0 |
|
Payments to the Company to facilitate the distribution of
certain brands and packages to other Coca-Cola bottlers |
|
|
2.2 |
|
|
|
.6 |
|
Sales of finished products to The Coca-Cola Company |
|
|
|
|
|
|
1.1 |
|
|
The Company had a production arrangement with Coca-Cola Enterprises Inc. (CCE) to buy and sell
finished products at cost. Sales to CCE under this arrangement were $37.6 million and $38.2
million in YTD 2010 and YTD 2009, respectively. Purchases from CCE under this arrangement were
$19.4 million and $16.3 million in YTD 2010 and YTD 2009, respectively. In addition, CCE began
distributing one of the Companys own brands (Tum-E Yummies) in the first quarter of 2010. Total
sales to CCE for this brand were $10.5 million in YTD 2010.
The Coca-Cola Company has significant equity interest in the Company
and acquired the North American operations of CCE on October 2,
2010.
Along with all other Coca-Cola bottlers in the United States, the Company is a member in Coca-Cola
Bottlers Sales and Services Company, LLC (CCBSS), which was formed in 2003 for the
purposes of facilitating various procurement functions and distributing certain specified beverage
products of The Coca-Cola Company with the intention of enhancing the efficiency and
competitiveness of the Coca-Cola bottling system in the United States. CCBSS negotiates the
procurement for the majority of the Companys raw materials (excluding concentrate). The Company
pays an administrative fee to CCBSS for its services.
Administrative fees to CCBSS for its services were $.6 million and $.5 million in YTD 2010 and YTD
2009, respectively.
26
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
19. Related Party Transactions
The Company is a member of SAC, a manufacturing cooperative. SAC sells finished products to the
Company and Piedmont at cost. Purchases from SAC by the Company and Piedmont for finished products
were $100.6 million and $100.2 million in YTD 2010 and YTD 2009, respectively. The Company also
manages the operations of SAC pursuant to a management agreement. Management fees earned from SAC
were $1.1 million in YTD 2010 and $.9 million in YTD 2009. The Company has also guaranteed a
portion of debt for SAC. Such guarantee amounted to $18.0 million as of October 3, 2010. The
Company has not recorded any liability associated with this guarantee and holds no assets as
collateral against this guarantee. The Companys equity investment in SAC was $5.6 million as of
October 3, 2010, January 3, 2010 and September 27, 2009.
The Company is a shareholder in two entities from which it purchases substantially all its
requirements for plastic bottles. Net purchases from these entities were $55.5 million in YTD 2010
and $51.3 million in YTD 2009. In connection with its participation in Southeastern, the Company
has guaranteed a portion of the entitys debt. Such guarantee amounted to $17.7 million as of
October 3, 2010. The Company has not recorded any liability associated with this guarantee and
holds no assets as collateral against this guarantee. The Companys equity investment in one of
these entities, Southeastern, was $15.7 million, $13.2 million and $13.3 million as of October 3,
2010, January 3, 2010 and September 27, 2009, respectively.
The Company monitors its investments in cooperatives and would be required to write down its
investment if an impairment is identified and the Company determined it to be other-than temporary.
No impairment of the Companys investments in cooperatives has been identified as of October 3,
2010 nor was there any impairment in 2009 or 2008.
The Company leases from Harrison Limited Partnership One (HLP) the Snyder Production Center
(SPC) and an adjacent sales facility, which are located in Charlotte, North Carolina. HLP is
directly and indirectly owned by trusts of which J. Frank Harrison, III, Chairman of the Board of
Directors and Chief Executive Officer of the Company, and Deborah H. Everhart, a director of the
Company, are trustees and beneficiaries. The current lease was to expire on December 31, 2010. On
March 23, 2009, the Company modified the lease agreement (new terms to begin January 1, 2011) with
HLP related to the SPC lease. The modified lease would not have changed the classification of the
existing lease had it been in effect in the first quarter of 2002, when the capital lease was
recorded, as the Company received a renewal option to extend the term of the lease, which it
expected to exercise. The modified lease did not extend the term of the existing lease (remaining
lease term was reduced from approximately 22 years to approximately 12 years). Accordingly, the
present value of the leased property under capital leases and capital lease obligations was
adjusted by an amount equal to the difference between the future minimum lease payments under the
modified lease agreement and the present value of the existing obligation on the modification date.
The capital lease obligations and leased property under capital leases were both decreased by $7.5
million in March 2009. The annual base rent the Company is obligated to pay under the modified
lease is subject to an adjustment for an inflation factor. The prior lease annual base rent was
subject to adjustment for an inflation factor and for increases or decreases in interest rates,
using LIBOR as the measurement device. The principal balance outstanding under this capital lease
as of October 3, 2010 was $27.7 million. Rental payments related to this lease were $2.4 million
and $2.6 million in YTD 2010 and YTD 2009, respectively.
27
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
19. Related Party Transactions
The Company leases from Beacon Investment Corporation (Beacon) the Companys headquarters office
facility and an adjacent office facility. The lease expires on December 31, 2021. Beacons sole
shareholder is J. Frank Harrison, III. The principal balance outstanding under this capital lease
as of October 3, 2010 was $29.6 million. Rental payments related to the lease were $2.9 million
and $2.8 million YTD 2010 and YTD 2009, respectively.
20. Net Sales by Product Category
Net sales by product category were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
First Nine Months |
In Thousands |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
Bottle/can sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sparkling beverages (including energy products) |
|
$ |
259,824 |
|
|
$ |
257,289 |
|
|
$ |
783,531 |
|
|
$ |
749,488 |
|
Still beverages |
|
|
66,109 |
|
|
|
58,253 |
|
|
|
172,917 |
|
|
|
162,703 |
|
|
Total bottle/can sales |
|
|
325,933 |
|
|
|
315,542 |
|
|
|
956,448 |
|
|
|
912,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to other Coca-Cola bottlers |
|
|
36,589 |
|
|
|
31,822 |
|
|
|
107,273 |
|
|
|
98,433 |
|
Post-mix and other |
|
|
32,842 |
|
|
|
27,192 |
|
|
|
96,502 |
|
|
|
77,942 |
|
|
Total other sales |
|
|
69,431 |
|
|
|
59,014 |
|
|
|
203,775 |
|
|
|
176,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
395,364 |
|
|
$ |
374,556 |
|
|
$ |
1,160,223 |
|
|
$ |
1,088,566 |
|
|
Sparkling beverages are carbonated beverages while still beverages are noncarbonated beverages.
28
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
21. Net Income Per Share
The following table sets forth the computation of basic net income per share and diluted net income
per share under the two-class method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
First Nine Months |
|
In Thousands (Except Per Share Data) |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
Numerator for basic and diluted net income per
Common Stock and Class B Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Coca-Cola Bottling Co.
Consolidated |
|
$ |
15,533 |
|
|
$ |
15,428 |
|
|
$ |
32,236 |
|
|
$ |
36,146 |
|
Less dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
1,785 |
|
|
|
1,785 |
|
|
|
5,356 |
|
|
|
5,285 |
|
Class B Common Stock |
|
|
512 |
|
|
|
505 |
|
|
|
1,528 |
|
|
|
1,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total undistributed earnings |
|
$ |
13,236 |
|
|
$ |
13,138 |
|
|
$ |
25,352 |
|
|
$ |
29,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock undistributed earnings
basic |
|
$ |
10,291 |
|
|
$ |
10,239 |
|
|
$ |
19,721 |
|
|
$ |
22,511 |
|
Class B Common Stock undistributed earnings
basic |
|
|
2,945 |
|
|
|
2,899 |
|
|
|
5,631 |
|
|
|
6,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
undistributed earnings basic |
|
$ |
13,236 |
|
|
$ |
13,138 |
|
|
$ |
25,352 |
|
|
$ |
29,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
undistributed earnings diluted |
|
$ |
10,246 |
|
|
$ |
10,194 |
|
|
$ |
19,635 |
|
|
$ |
22,438 |
|
Class B Common Stock undistributed earnings
diluted |
|
|
2,990 |
|
|
|
2,944 |
|
|
|
5,717 |
|
|
|
6,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
undistributed earnings diluted |
|
$ |
13,236 |
|
|
$ |
13,138 |
|
|
$ |
25,352 |
|
|
$ |
29,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic net income per Common
Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Common Stock |
|
$ |
1,785 |
|
|
$ |
1,785 |
|
|
$ |
5,356 |
|
|
$ |
5,285 |
|
Common Stock
undistributed earnings basic |
|
|
10,291 |
|
|
|
10,239 |
|
|
|
19,721 |
|
|
|
22,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic net income per Common
Stock share |
|
$ |
12,076 |
|
|
$ |
12,024 |
|
|
$ |
25,077 |
|
|
$ |
27,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic net income per Class B
Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Class B Common Stock |
|
$ |
512 |
|
|
$ |
505 |
|
|
$ |
1,528 |
|
|
$ |
1,587 |
|
Class B Common Stock undistributed earnings
basic |
|
|
2,945 |
|
|
|
2,899 |
|
|
|
5,631 |
|
|
|
6,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for basic net income per Class B
Common Stock share |
|
$ |
3,457 |
|
|
$ |
3,404 |
|
|
$ |
7,159 |
|
|
$ |
8,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
21. Net Income Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
First Nine Months |
|
In Thousands (Except Per Share Data) |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
Numerator for diluted net income per
Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Common Stock |
|
$ |
1,785 |
|
|
$ |
1,785 |
|
|
$ |
5,356 |
|
|
$ |
5,285 |
|
Dividends on Class B Common Stock
assumed converted to Common Stock |
|
|
512 |
|
|
|
505 |
|
|
|
1,528 |
|
|
|
1,587 |
|
Common Stock undistributed earnings
diluted |
|
|
13,236 |
|
|
|
13,138 |
|
|
|
25,352 |
|
|
|
29,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted net income per
Common Stock share |
|
$ |
15,533 |
|
|
$ |
15,428 |
|
|
$ |
32,236 |
|
|
$ |
36,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted net income per Class B
Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Class B Common Stock |
|
$ |
512 |
|
|
$ |
505 |
|
|
$ |
1,528 |
|
|
$ |
1,587 |
|
Class B Common Stock undistributed earnings
diluted |
|
|
2,990 |
|
|
|
2,944 |
|
|
|
5,717 |
|
|
|
6,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted net income per Class B
Common Stock share |
|
$ |
3,502 |
|
|
$ |
3,449 |
|
|
$ |
7,245 |
|
|
$ |
8,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
21. Net Income Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
First Nine Months |
|
In Thousands (Except Per Share Data) |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
Denominator for basic net income per Common
Stock and Class B Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock weighted average shares
outstanding basic |
|
|
7,141 |
|
|
|
7,141 |
|
|
|
7,141 |
|
|
|
7,047 |
|
Class B Common Stock weighted average shares
outstanding basic |
|
|
2,044 |
|
|
|
2,022 |
|
|
|
2,039 |
|
|
|
2,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted net income per Common
Stock and Class B Common Stock share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock weighted average shares
outstanding diluted (assumes conversion of
Class B Common Stock to Common Stock) |
|
|
9,225 |
|
|
|
9,203 |
|
|
|
9,220 |
|
|
|
9,194 |
|
Class B Common Stock weighted average shares
outstanding diluted |
|
|
2,084 |
|
|
|
2,062 |
|
|
|
2,079 |
|
|
|
2,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.69 |
|
|
$ |
1.68 |
|
|
$ |
3.51 |
|
|
$ |
3.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common Stock |
|
$ |
1.69 |
|
|
$ |
1.68 |
|
|
$ |
3.51 |
|
|
$ |
3.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.68 |
|
|
$ |
1.68 |
|
|
$ |
3.50 |
|
|
$ |
3.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common Stock |
|
$ |
1.68 |
|
|
$ |
1.67 |
|
|
$ |
3.48 |
|
|
$ |
3.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO TABLE
(1) |
|
For purposes of the diluted net income per share computation for Common Stock, all shares of
Class B Common Stock are assumed to be converted; therefore, 100% of undistributed earnings is
allocated to Common Stock. |
|
(2) |
|
For purposes of the diluted net income per share computation for Class B Common Stock,
weighted average shares of Class B Common Stock are assumed to be outstanding for the entire
period and not converted. |
|
(3) |
|
Denominator for diluted net income per share for Common Stock and Class B Common Stock
includes the dilutive effect of shares relative to the Performance Unit Award. |
31
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
22. Risks and Uncertainties
Approximately 88% of the Companys YTD 2010 bottle/can volume to retail customers are products of
The Coca-Cola Company, which is the sole supplier of these products or of the concentrates or
syrups required to manufacture these products. The remaining 12% of the Companys YTD 2010
bottle/can volume to retail customers are products of other beverage companies and the Company.
The Company has beverage agreements under which it has various requirements to meet. Failure to
meet the requirements of these beverage agreements could result in the loss of distribution rights
for the respective product.
The Coca-Cola Company recently acquired the North American operations of CCE, and the Companys
primary competitors were recently acquired by their franchisor. These transactions may cause
uncertainty within the Coca-Cola bottler system or adversely impact the Company and its business.
At this time, it is unknown whether the transactions will have a material impact on the Companys
business and financial results.
The Companys products are sold and distributed directly by its employees to retail stores and
other outlets. During YTD 2010, approximately 69% of the Companys bottle/can volume to retail
customers was sold for future consumption, while the remaining bottle/can volume to retail
customers of approximately 31% was sold for immediate consumption. During YTD 2009, approximately
68% of the Companys bottle/can volume to retail customers was sold for future consumption, while
the remaining bottle/can volume to retail customers of approximately 32% was sold for immediate
consumption. The Companys largest customers, Wal-Mart Stores, Inc. and Food Lion, LLC, accounted
for approximately 25% and 10%, respectively, of the Companys total bottle/can volume to retail
customers in YTD 2010. Wal-Mart Stores, Inc. and Food Lion, LLC accounted for approximately 19%
and 11%, respectively, of the Companys total bottle/can volume to retail customers in YTD 2009.
Wal-Mart Stores, Inc. accounted for 17% of the Companys total net sales during YTD 2010. Wal-Mart
Stores, Inc. accounted for 15% of the Companys total net sales during YTD 2009.
The Company obtains all of its aluminum cans from two domestic suppliers. The Company currently
obtains all of its plastic bottles from two domestic entities. See Note 14 and Note 19 to the
consolidated financial statements for additional information.
The Company is exposed to price risk on such commodities as aluminum, corn and resin which affects
the cost of raw materials used in the production of finished products. The Company both produces
and procures these finished products. Examples of the raw materials affected are aluminum cans and
plastic bottles used for packaging and high fructose corn syrup used as a product ingredient.
Further, the Company is exposed to commodity price risk on crude oil which impacts the Companys
cost of fuel used in the movement and delivery of the Companys products. The Company participates
in commodity hedging and risk mitigation programs administered both by CCBSS and by the Company.
In addition, there is no limit on the price The Coca-Cola Company and other beverage companies can
charge for concentrate.
Certain liabilities of the Company are subject to risk due to changes in both long-term and
short-term interest rates. These liabilities include floating rate debt, leases, retirement benefit
obligations and the Companys pension liability.
32
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
22. Risks and Uncertainties
Approximately 7% of the Companys labor force is covered by collective bargaining agreements. One
collective bargaining contract covering approximately .5% of the Companys employees will expire
during the fourth quarter of 2010. One collective bargaining contract covering approximately .5%
of the Companys employees expired in the first quarter of 2010 and the Company entered into a new
agreement during the first quarter of 2010.
23. Supplemental Disclosures of Cash Flow Information
Changes in current assets and current liabilities affecting cash flows were as follows:
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
In Thousands |
|
2010 |
|
2009 |
|
Accounts receivable, trade, net |
|
$ |
(22,827 |
) |
|
$ |
3,586 |
|
Accounts receivable from The Coca-Cola Company |
|
|
(16,056 |
) |
|
|
(14,006 |
) |
Accounts receivable, other |
|
|
(4,972 |
) |
|
|
(4,025 |
) |
Inventories |
|
|
(5,014 |
) |
|
|
(2,265 |
) |
Prepaid expenses and other current assets |
|
|
3,128 |
|
|
|
(4,355 |
) |
Accounts payable, trade |
|
|
359 |
|
|
|
(9,786 |
) |
Accounts payable to The Coca-Cola Company |
|
|
15,514 |
|
|
|
8,290 |
|
Other accrued liabilities |
|
|
3,141 |
|
|
|
6,704 |
|
Accrued compensation |
|
|
149 |
|
|
|
(1,554 |
) |
Accrued interest payable |
|
|
4,535 |
|
|
|
4,348 |
|
|
Increase in current assets less current liabilities |
|
$ |
(22,043 |
) |
|
$ |
(13,063 |
) |
|
Non-cash activity
Additions to property, plant and equipment of $1.2 million have been accrued but not paid and are
recorded in accounts payable, trade as of October 3, 2010. Of that amount, $.2 million was related
to the Nashville flood damage.
Additions to property, plant and equipment included $1.5 million for a trade-in allowance on
manufacturing equipment in YTD 2010.
24. New Accounting Pronouncements
Recently Adopted Pronouncements
In June 2009, the Financial Accounting Standards Board (FASB) issued new guidance which replaces
the quantitative-based risks and rewards calculation for determining which enterprise, if any, has
a controlling financial interest in a variable interest entity (VIE) with an approach focused
on identifying which enterprise
33
Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)
24. New Accounting Pronouncements
has the power to direct the activities of the VIE that most significantly impacts the entitys
economic performance and the obligation to absorb losses or the right to receive benefits from the
entity. The new guidance was effective for annual reporting periods that begin after November 15,
2009. The Companys adoption of this new guidance did not have a material impact on the Companys
consolidated financial statements.
In June 2009, the FASB issued new guidance which eliminates the exceptions for qualifying
special-purpose entities from consolidation guidance and the exception that permitted sale
accounting for certain mortgage securitization when a transferor has not surrendered control over
the transferred financial assets. The new guidance was effective for annual reporting periods that
begin after November 15, 2009. The Companys adoption of this new guidance did not have a material
impact on the Companys consolidated financial statements.
In January 2010, the FASB issued new guidance that clarifies the decrease-in-ownership of
subsidiaries provisions of GAAP. The new guidance clarifies to which subsidiaries the
decrease-in-ownership provision of Accounting Standards Codification 810-10 apply. The new
guidance was effective for the Company in the first quarter of 2010. The Companys adoption of
this new guidance did not have a material impact on the Companys consolidated financial
statements.
In January 2010, the FASB issued new guidance related to the disclosures about transfers into and
out of Levels 1 and 2 fair value classifications and separate disclosures about
purchases, sales, issuances and settlements relating to the Level 3 fair value classification.
The new guidance also clarifies existing fair value disclosures about the level of disaggregation
and about inputs and valuation techniques used to measure the fair value. The new guidance was
effective for the Company in the first quarter of 2010 except for the requirement to provide the
Level 3 activity of purchases, sales, issuances and settlements on a gross basis, which is
effective for the Company in the first quarter of 2011. The Companys adoption of this new
guidance did not have a material impact on the Companys consolidated financial statements. The
Company also does not expect the Level 3 requirements of the new guidance effective in the first
quarter of 2011 to have a material impact on the Companys consolidated financial statements.
34
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following Managements Discussion and Analysis of Financial Condition and Results of Operations
(M,D&A) should be read in conjunction with Coca-Cola Bottling Co. Consolidateds (the Company)
consolidated financial statements and the accompanying notes to the consolidated financial
statements. M,D&A includes the following sections:
|
|
|
Our Business and the Nonalcoholic Beverage Industry a general description of the
Companys business and the nonalcoholic beverage industry. |
|
|
|
|
Areas of Emphasis a summary of the Companys key priorities. |
|
|
|
|
Overview of Operations and Financial Condition a summary of key information and trends
concerning the financial results for the third quarter of 2010 (Q3 2010) and the first
nine months of 2010 (YTD 2010) and changes from the third quarter of 2009 (Q3 2009) and
the first nine months of 2009 (YTD 2009). |
|
|
|
|
Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
a discussion of accounting policies that are most important to the portrayal of the
Companys financial condition and results of operations and that require critical judgments
and estimates and the expected impact of new accounting pronouncements. |
|
|
|
|
Results of Operations an analysis of the Companys results of operations for Q3 2010
and YTD 2010 compared to Q3 2009 and YTD 2009. |
|
|
|
|
Financial Condition an analysis of the Companys financial condition as of the end of
Q3 2010 compared to year-end 2009 and the end of Q3 2009 as presented in the consolidated
financial statements. |
|
|
|
|
Liquidity and Capital Resources an analysis of capital resources, cash sources and
uses, investing activities, financing activities, off-balance sheet arrangements, aggregate
contractual obligations and hedging activities. |
|
|
|
|
Cautionary Information Regarding Forward-Looking Statements. |
The consolidated financial statements include the consolidated operations of the Company and its
majority-owned subsidiaries including Piedmont Coca-Cola Bottling Partnership (Piedmont). The
noncontrolling interest consists of The Coca-Cola Companys interest in Piedmont, which was 22.7%
for all periods presented.
During May 2010, Nashville, Tennessee experienced a severe rain storm which caused extensive flood
damage in the area. The Company has a production/sales distribution facility located in the
flooded area. Due to damage incurred during this flood, the Company recorded a loss of $.2 million
on uninsured cold drink equipment. This loss was offset by gains of $1.1 million for the excess
of insurance proceeds received as compared to the net book value of production equipment damaged as
a result of the flood. In YTD 2010, the Company recorded a receivable of $7.1 million for insured
losses of which $1.5 million has already been collected as of YTD 2010. The Company does not
expect to incur any significant expenses related to the Nashville area flood for the remainder of
2010.
Our Business and the Nonalcoholic Beverage Industry
The Company produces, markets and distributes nonalcoholic beverages, primarily products of The
Coca-Cola Company, which include some of the most recognized and popular beverage brands in the
world. The Company is the largest independent bottler of products of
The Coca-Cola Company in the
United States, distributing these products in eleven states primarily in the Southeast. The
Company also distributes several other beverage brands. These product offerings include both
sparkling and still beverages. Sparkling beverages are carbonated beverages including energy
products. Still beverages are noncarbonated beverages such as bottled water, tea, ready to drink
35
coffee, enhanced water, juices and sports drinks. The Company had net sales of approximately $1.4
billion in 2009.
The nonalcoholic beverage market is highly competitive. The Companys competitors include bottlers
and distributors of nationally and regionally advertised and marketed products and private label
products. In each region in which the Company operates, between 85% and 95% of sparkling beverage
sales in bottles, cans and other containers are accounted for by the Company and its principal
competitors, which in each region includes the local bottler of Pepsi-Cola and, in some regions,
the local bottler of Dr Pepper, Royal Crown and/or 7-Up products. During the last several years,
industry sales of sugar sparkling beverages, other than energy products,
have declined. The
decline in sugar sparkling beverages has generally been offset by volume growth in other
nonalcoholic product categories. The sparkling beverage category (including energy products)
represents 82% of the Companys YTD 2010 bottle/can net sales.
The principal methods of competition in the nonalcoholic beverage industry are point-of-sale
merchandising, new product introductions, new vending and dispensing equipment, packaging changes,
pricing, price promotions, product quality, retail space management, customer service, frequency of
distribution and advertising. The Company believes it is competitive in its territories with
respect to each of these methods.
Historically, operating results for the third quarter and the first nine months of the fiscal year
have not been representative of results for the entire fiscal year. Business seasonality results
primarily from higher unit sales of the Companys products in the second and third quarters versus
the first and fourth quarters of the fiscal year. Fixed costs, such as depreciation expense, are
not significantly impacted by business seasonality.
The Company performs its annual impairment test of franchise rights and goodwill as of the first
day of the fourth quarter. During YTD 2010, the Company did not experience any triggering events
or changes in circumstances that indicated the carrying amounts of the Companys franchise rights
or goodwill exceeded fair values. As such, the Company has not recognized any impairments of
franchise rights or goodwill.
The Coca-Cola Company recently acquired the North American operations of Coca-Cola Enterprises Inc.
(CCE), and the Companys primary competitors were recently acquired by their franchisor. These
transactions may cause uncertainty within the Coca-Cola bottler system or adversely impact the
Company and its business. At this time, it is unknown whether the transactions will have a
material impact on the Companys business and financial results.
Net sales by product category were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
First Nine Months |
In Thousands |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
Bottle/can sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sparkling beverages (including energy products) |
|
$ |
259,824 |
|
|
$ |
257,289 |
|
|
$ |
783,531 |
|
|
$ |
749,488 |
|
Still beverages |
|
|
66,109 |
|
|
|
58,253 |
|
|
|
172,917 |
|
|
|
162,703 |
|
|
Total bottle/can sales |
|
|
325,933 |
|
|
|
315,542 |
|
|
|
956,448 |
|
|
|
912,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to other Coca-Cola bottlers |
|
|
36,589 |
|
|
|
31,822 |
|
|
|
107,273 |
|
|
|
98,433 |
|
Post-mix and other |
|
|
32,842 |
|
|
|
27,192 |
|
|
|
96,502 |
|
|
|
77,942 |
|
|
Total other sales |
|
|
69,431 |
|
|
|
59,014 |
|
|
|
203,775 |
|
|
|
176,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
395,364 |
|
|
$ |
374,556 |
|
|
$ |
1,160,223 |
|
|
$ |
1,088,566 |
|
|
36
Areas of Emphasis
Key priorities for the Company include revenue management, product innovation and beverage
portfolio expansion, distribution cost management and productivity.
Revenue Management
Revenue management requires a strategy which reflects consideration for pricing of brands and
packages within product categories and channels, highly effective working relationships with
customers and disciplined fact-based decision-making. Revenue management has been and continues to
be a key performance driver which has significant impact on the Companys results of operations.
Product Innovation and Beverage Portfolio Expansion
Sparkling beverage volume, other than energy products, has declined over the past several years.
Innovation of both new brands and packages has been and will continue to be critical to the
Companys overall revenue. New packaging introductions included the 2-liter contour bottle during
2009.
The Company has invested in its own brand portfolio with products such as Tum-E Yummies, a vitamin
C enhanced flavored drink, Country Breeze tea and diet Country Breeze tea. These brands enable the
Company to participate in strong growth categories and capitalize on distribution channels that may
include the Companys traditional Coca-Cola franchise territory as well as third party distributors
outside the Companys traditional Coca-Cola franchise territory. While the growth prospects of
Company-owned or exclusively licensed brands appear promising, the cost of developing, marketing
and distributing these brands is anticipated to be significant as well.
Distribution Cost Management
Distribution costs represent the costs of transporting finished goods from Company locations to
customer outlets. Total distribution costs amounted to $140.3 million and $138.7 million in YTD
2010 and YTD 2009, respectively. Over the past several years, the Company has focused on converting
its distribution system from a conventional routing system to a predictive system. This conversion
to a predictive system has allowed the Company to more efficiently handle increasing numbers of
products. In addition, the Company has closed a number of smaller sales distribution centers over
the past several years reducing its fixed warehouse-related costs.
The Company has three primary delivery systems for its current business:
|
|
|
bulk delivery for large supermarkets, mass merchandisers and club stores; |
|
|
|
|
advanced sales delivery for convenience stores, drug stores, small supermarkets and
certain on-premise accounts; and |
|
|
|
|
full service delivery for its full service vending customers. |
Distribution cost management will continue to be a key area of emphasis for the Company.
Productivity
A key driver in the Companys selling, delivery and administrative (S,D&A) expense management
relates to ongoing improvements in labor productivity and asset productivity.
37
Overview of Operations and Financial Condition
The following items affect the comparability of the financial results presented below:
|
|
|
Q3 2010 and YTD 2010 |
|
|
|
|
a $.1 million pre-tax favorable mark-to-market adjustment and a $1.3 million pre-tax
unfavorable mark-to-market adjustment to S,D&A expenses related to the Companys 2010 fuel
hedging program in Q3 2010 and YTD 2010, respectively; |
|
|
|
|
a $3.0 million pre-tax favorable mark-to-market adjustment and a $3.2 million pre-tax
unfavorable mark-to-market adjustment to cost of sales related to the Companys 2010 and
2011 aluminum hedging program in Q3 2010 and YTD 2010, respectively; |
|
|
|
|
a $.1 million and a $.9 million pre-tax favorable adjustment to cost of sales related to
the gain on the replacement of flood damaged production equipment in Q3 2010 and YTD 2010,
respectively; |
|
|
|
|
a $.2 million pre-tax unfavorable adjustment to S,D&A expenses related to the loss
recorded on the disposal of uninsured vending equipment from the Nashville area flood in
YTD 2010; |
|
|
|
|
a $.1 million pre-tax favorable adjustment to S,D&A expenses related to the gain on
replacement of flood damaged building fixtures in Q3 2010; |
|
|
|
|
a $.5 million unfavorable adjustment to income tax expense related to the elimination of
the deduction related to Medicare Part D subsidy in the first quarter of 2010; and |
|
|
|
|
a $1.7 million credit to income tax expense related to the reduction of the liability
for uncertain tax positions in Q3 2010 due mainly to the lapse of applicable statutes of
limitations. |
|
|
|
|
Q3 2009 and YTD 2009 |
|
|
|
|
a $1.4 million and $5.3 million pre-tax favorable mark-to-market adjustment to cost of
sales related to the Companys 2010 and 2011 aluminum hedging programs in Q3 2009 and YTD
2009, respectively; |
|
|
|
|
a $1.7 million credit to income tax expense related to the agreement with a state tax
authority to settle certain prior tax positions in the first quarter of 2009 (Q1 2009); |
|
|
|
|
a $5.4 million credit to income tax expense related to the reduction of the liability
for uncertain tax positions in Q3 2009 due mainly to the lapse of applicable statutes of
limitations; and |
|
|
|
|
a $.5 million pre-tax unfavorable mark-to-market adjustment and $2.9 million pre-tax
favorable mark-to-market adjustment to S,D&A expenses related to the Companys 2009 and
2010 fuel hedging programs in Q3 2009 and YTD 2009, respectively. |
38
The following overview provides a summary of key information concerning the Companys financial
results for
Q3 2010 and YTD 2010 compared to Q3 2009 and YTD 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
% |
In Thousands (Except Per Share Data) |
|
2010 |
|
2009 |
|
Change |
|
Change |
|
Net sales |
|
$ |
395,364 |
|
|
$ |
374,556 |
|
|
$ |
20,808 |
|
|
|
5.6 |
|
Gross margin |
|
|
173,117 |
|
|
|
157,320 |
|
|
|
15,797 |
|
|
|
10.0 |
|
S,D&A expenses |
|
|
139,455 |
|
|
|
131,024 |
|
|
|
8,431 |
|
|
|
6.4 |
|
Income from operations |
|
|
33,662 |
|
|
|
26,296 |
|
|
|
7,366 |
|
|
|
28.0 |
|
Interest expense, net |
|
|
8,841 |
|
|
|
8,866 |
|
|
|
(25 |
) |
|
|
(0.3 |
) |
Income before income taxes |
|
|
24,821 |
|
|
|
17,430 |
|
|
|
7,391 |
|
|
|
42.4 |
|
Income tax expense |
|
|
7,610 |
|
|
|
1,043 |
|
|
|
6,567 |
|
|
NM* |
Net income |
|
|
17,211 |
|
|
|
16,387 |
|
|
|
824 |
|
|
|
5.0 |
|
Net income attributable to the Company |
|
|
15,533 |
|
|
|
15,428 |
|
|
|
105 |
|
|
|
0.7 |
|
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.69 |
|
|
$ |
1.68 |
|
|
$ |
0.01 |
|
|
|
0.6 |
|
Class B Common Stock |
|
$ |
1.69 |
|
|
$ |
1.68 |
|
|
$ |
0.01 |
|
|
|
0.6 |
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.68 |
|
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
Class B Common Stock |
|
$ |
1.68 |
|
|
$ |
1.67 |
|
|
$ |
0.01 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
|
|
|
|
|
% |
In Thousands (Except Per Share Data) |
|
2010 |
|
2009 |
|
Change |
|
Change |
|
Net sales |
|
$ |
1,160,223 |
|
|
$ |
1,088,566 |
|
|
$ |
71,657 |
|
|
|
6.6 |
|
Gross margin |
|
|
487,828 |
|
|
|
464,576 |
|
|
|
23,252 |
|
|
|
5.0 |
|
S,D&A expenses |
|
|
406,689 |
|
|
|
386,461 |
|
|
|
20,228 |
|
|
|
5.2 |
|
Income from operations |
|
|
81,139 |
|
|
|
78,115 |
|
|
|
3,024 |
|
|
|
3.9 |
|
Interest expense, net |
|
|
26,453 |
|
|
|
28,059 |
|
|
|
(1,606 |
) |
|
|
(5.7 |
) |
Income before income taxes |
|
|
54,686 |
|
|
|
50,056 |
|
|
|
4,630 |
|
|
|
9.2 |
|
Income tax expense |
|
|
18,936 |
|
|
|
11,928 |
|
|
|
7,008 |
|
|
|
58.8 |
|
Net income |
|
|
35,750 |
|
|
|
38,128 |
|
|
|
(2,378 |
) |
|
|
(6.2 |
) |
Net income attributable to the Company |
|
|
32,236 |
|
|
|
36,146 |
|
|
|
(3,910 |
) |
|
|
(10.8 |
) |
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
3.51 |
|
|
$ |
3.94 |
|
|
$ |
(0.43 |
) |
|
|
(10.9 |
) |
Class B Common Stock |
|
$ |
3.51 |
|
|
$ |
3.94 |
|
|
$ |
(0.43 |
) |
|
|
(10.9 |
) |
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
3.50 |
|
|
$ |
3.93 |
|
|
$ |
(0.43 |
) |
|
|
(10.9 |
) |
Class B Common Stock |
|
$ |
3.48 |
|
|
$ |
3.92 |
|
|
$ |
(0.44 |
) |
|
|
(11.2 |
) |
The Companys net sales increased 5.6% in Q3 2010 compared to Q3 2009. The increase in net sales
was primarily due to a 2.1% increase in bottle/can sales price per unit and a $4.4 million increase
in sales of the Companys own brand portfolio (primarily Tum-E Yummies). The 2.1% increase in
bottle/can sales price per unit was primarily due to higher per unit prices in sparkling beverages
except energy products and a change in product mix primarily due to decreased sales of future
consumption 12-ounce cans which have a lower sales price per unit compared to immediate consumption
prices partially offset by lower sales price per unit for still beverages. The Companys net sales
increased 6.6% in YTD 2010 compared to YTD 2009. The increase in net sales was primarily due to a
6.8% increase in bottle/can volume and a $15.2 million increase in sales of the
Companys own brand portfolio (primarily Tum-E Yummies) partially offset by a 1.8% decrease in
average sales
39
price per bottle/can unit. The increase in bottle/can volume was primarily due to an
increase in volume in all product categories. The decrease in average sales price per bottle/can
unit was primarily due to decreased sales prices in all product categories and a change in product
mix primarily due to increased sales of future consumption 12-ounce cans which have a lower sales
price per unit compared to immediate consumption products. The increases in sales of the Companys
own brand portfolio were primarily due to CCEs distribution of the Companys Tum-E Yummies
products beginning in the first quarter of 2010.
Gross margin dollars increased 10.0% in Q3 2010 compared to Q3 2009. The Companys gross margin
percentage increased to 43.8% for Q3 2010 from 42.0% for Q3 2009. The increase in gross margin
percentage was primarily due to higher sales price per bottle/can unit. Gross margin dollars
increased 5.0% in YTD 2010 compared to YTD 2009. The Companys gross margin percentage decreased
to 42.0% for YTD 2010 from 42.7% in YTD 2009. The decrease in gross margin percentage was
primarily due to lower sales prices per bottle/can unit and increased costs due to the Companys
aluminum hedging program.
S,D&A expenses increased 6.4% in Q3 2010 from Q3 2009 and increased 5.2% in YTD 2010 compared to
YTD 2009. The increase in S,D&A expenses in Q3 2010 from Q3 2009 was primarily attributable to an
increase in employee costs related to an auto allowance program, an increase in employee salaries
(including bonus and incentive expense) and an increase in professional fees due to consulting
project support offset partially by a decrease in fuel costs and a decrease in property and
casualty insurance expense. The increase in S,D&A expenses in YTD 2010 from YTD 2009 was primarily
attributable to an increase in employee costs related to the auto allowance program, an increase in
employee salaries (including bonus and incentive expense), an increase in professional fees and an
increase in fuel costs offset partially by a decrease in bad debt expense, a decrease in
depreciation expense, a decrease in employee benefit costs and a decrease in property and casualty
insurance expense.
Net interest expense was unchanged in Q3 2010 compared to Q3 2009 and decreased 5.7% in YTD 2010
compared to YTD 2009. The decrease in YTD 2010 compared to YTD 2009 was due to lower debt
borrowing levels. The Companys overall weighted average interest rate increased to 5.9% during
YTD 2010 from 5.7% during YTD 2009.
Net debt and capital lease obligations were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct. 3, |
|
Jan. 3, |
|
Sept. 27, |
In Thousands |
|
2010 |
|
2010 |
|
2009 |
|
Debt |
|
$ |
523,025 |
|
|
$ |
537,917 |
|
|
$ |
552,882 |
|
Capital lease obligations |
|
|
60,247 |
|
|
|
63,107 |
|
|
|
64,006 |
|
|
Total debt and capital lease obligations |
|
|
583,272 |
|
|
|
601,024 |
|
|
|
616,888 |
|
Less: Cash and cash equivalents |
|
|
33,924 |
|
|
|
22,270 |
|
|
|
29,574 |
|
|
Total net debt and capital lease obligations (1) |
|
$ |
549,348 |
|
|
$ |
578,754 |
|
|
$ |
587,314 |
|
|
|
|
|
(1) |
|
The non-GAAP measure Total net debt and capital lease obligations is used to
provide investors with additional information which management believes is helpful in the
evaluation of the Companys capital structure and financial leverage. |
40
Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
Critical Accounting Policies
In the ordinary course of business, the Company has made a number of estimates and assumptions
relating to the reporting of results of operations and financial position in the preparation of its
consolidated financial statements in conformity with accounting principles generally accepted in
the United States of America. Actual results could differ significantly from those estimates under
different assumptions and conditions. The Company included in its Annual Report on Form 10-K for
the year ended January 3, 2010 a discussion of the Companys most critical accounting policies,
which are those most important to the portrayal of the Companys financial condition and results of
operations and require managements most difficult, subjective and complex judgments, often as a
result of the need to make estimates about the effect of matters that are inherently uncertain.
The Company did not make changes in any critical accounting policies during YTD 2010. Any changes
in critical accounting policies and estimates are discussed with the Audit Committee of the Board
of Directors of the Company during the quarter in which a change is made.
New Accounting Pronouncements
Recently
Adopted Pronouncements
In June 2009, the Financial Accounting Standards Board (FASB) issued new guidance which replaced
the quantitative-based risks and rewards calculation for determining which enterprise, if any, has
a controlling financial interest in a variable interest entity (VIE) with an approach focused on
identifying which enterprise has the power to direct the activities of the VIE that most
significantly impacts the entitys economic performance and the obligation to absorb losses or the
right to receive benefits from the entity. The new guidance was effective for annual reporting
periods that begin after November 15, 2009. The Companys adoption of this new guidance did not
have a material impact on the Companys consolidated financial statements.
In June 2009, the FASB issued new guidance which eliminates the exceptions for qualifying
special-purpose entities from consolidation guidance and the exception that permitted sale
accounting for certain mortgage securitization when a transferor has not surrendered control over
the transferred financial assets. The new guidance was effective for annual reporting periods that
begin after November 15, 2009. The Companys adoption of this new guidance did not have a material
impact on the Companys consolidated financial statements.
In January 2010, the FASB issued new guidance that clarifies the decrease-in-ownership of
subsidiaries provisions of generally accepted accounting principles (GAAP). The new guidance
clarifies to which subsidiaries the decrease-in-ownership provision of Accounting Standards
Codification 810-10 apply. The new guidance was effective for the Company in the first quarter of
2010. The Companys adoption of this new guidance did not have a material impact on the Companys
consolidated financial statements.
In January 2010, the FASB issued new guidance related to the disclosures about transfers into and
out of Levels 1 and 2 fair value classifications and separate disclosures about purchases, sales,
issuances and settlements relating to the Level 3 fair value classification. The new guidance
also clarifies existing fair value disclosures about the level of disaggregation and about inputs
and valuation techniques used to measure the fair value. The new guidance was effective for the
Company in the first quarter of 2010 except for the requirement to provide the Level 3 activity of
purchases, sales, issuances and settlements on a gross basis,
which is effective for the Company in the first quarter of 2011. The Companys adoption of this
new
41
guidance did not have a material impact on the Companys consolidated financial statements.
The Company also does not expect the Level 3 requirements of the new guidance effective in the
first quarter of 2011 to have a material impact on the Companys consolidated financial
statements.
Results of Operations
Q3 2010 Compared to Q3 2009 and YTD 2010 Compared to YTD 2009
Net Sales
Net sales increased $20.8 million, or 5.6%, to $395.4 million in Q3 2010 compared to $374.6 million
in Q3 2009. Net sales increased $71.7 million, or 6.6% to $1,160.2 million in YTD 2010 compared
to $1,088.6 million in YTD 2009.
The increase in net sales for Q3 2010 compared to Q3 2009 was the result of the following:
|
|
|
|
|
Q3 2010 |
|
|
Attributable to: |
(In Millions) |
|
$ |
6.8 |
|
|
2.1% increase in bottle/can sales price per unit primarily due to higher per unit prices in sparkling
beverages except energy products and a change in product mix primarily due to a lower percentage of future
consumption 12-ounce can sales which have a lower sales price per unit than immediate consumption products
partially offset by lower per unit prices for still beverages |
|
4.4 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
3.6 |
|
|
1.2% increase in bottle/can volume primarily due to a volume increase in still
beverages and energy products partially offset by a volume decrease in sparkling beverages
excluding energy products |
|
3.0 |
|
|
8.9% increase in sales price per unit for sales to other Coca-Cola bottlers |
|
1.8 |
|
|
5.6% increase in sales volume to other Coca-Cola bottlers primarily due to an
increase in still beverages |
|
1.2 |
|
|
Other |
|
|
|
|
$ |
20.8 |
|
|
Total increase in net sales |
|
|
|
|
The increase in net sales for YTD 2010 compared to YTD 2009 was the result of the following:
|
|
|
|
|
YTD 2010 |
|
|
Attributable to: |
(In Millions) |
|
$ |
61.9 |
|
|
6.8% increase in bottle/can volume primarily due to a volume increase in all beverages |
|
(17.7 |
) |
|
1.8% decrease in bottle/can sales price per unit primarily due to lower per unit prices in
all product categories and a change in product mix primarily due to a higher percentage of
future consumption 12-ounce can sales which have a lower sales price per unit than immediate
consumption products |
|
15.2 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
4.5 |
|
|
4.6% increase in sales volume to other Coca-Cola bottlers primarily due to an
increase in still beverages |
|
4.3 |
|
|
4.2% increase in sales price per unit for sales to other Coca-Cola bottlers |
|
3.5 |
|
|
Other |
|
|
|
|
$ |
71.7 |
|
|
Total increase in net sales |
|
|
|
|
42
Bottle/can volume in Q3 2010 was negatively impacted by the second quarter of 2010 including the
July 4th holiday weekend while the second quarter of 2009 ended on June 28, 2009.
In YTD 2010, the Companys bottle/can sales to retail customers accounted for 82% of the Companys
total net sales compared to 84% in YTD 2009. Bottle/can net pricing is based on the invoice price
charged to customers reduced by promotional allowances. Bottle/can net pricing per unit is
impacted by the price charged per package, the volume generated in each package and the channels in
which those packages are sold. The increase in the Companys bottle/can net pricing per unit in Q3
2010 compared to Q3 2009 was primarily due to sales price increases in sparkling beverages except
energy products and a change in product mix primarily due to decreased sales of future consumption
12-ounce cans which have a lower sales price per unit compared to immediate consumption prices
partially offset by lower sales price per unit for still beverages. The decrease in the Companys
bottle/can net pricing per unit in YTD 2010 compared to YTD 2009 was primarily due to sales price
decreases in all product categories and a change in product mix primarily due to increased sales of
future consumption 12-ounce cans which have a lower sales price per unit compared to immediate
consumption products.
The increase in sales of the Companys own brand portfolio in Q3 2010 and YTD 2010 compared to Q3
2009 and YTD 2009 was primarily due to CCE beginning distribution of Tum-E Yummies in the first
quarter of 2010.
Product category sales volume in Q3 2010 and Q3 2009 and YTD 2010 and YTD 2009 as a percentage of
total bottle/can sales volume and the percentage change by product category was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bottle/Can Sales Volume |
|
Bottle/Can Sales Volume |
Product Category |
|
Q3 2010 |
|
Q3 2009 |
|
% Increase (Decrease) |
Sparkling beverages (including
energy products) |
|
|
81.7 |
% |
|
|
85.0 |
% |
|
|
(2.8 |
) |
Still beverages |
|
|
18.3 |
% |
|
|
15.0 |
% |
|
|
23.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bottle/can sales volume |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bottle/Can Sales Volume |
|
Bottle/Can Sales Volume |
Product Category |
|
YTD 2010 |
|
YTD 2009 |
|
% Increase |
Sparkling beverages (including
energy products) |
|
|
84.2 |
% |
|
|
85.5 |
% |
|
|
5.2 |
|
Still beverages |
|
|
15.8 |
% |
|
|
14.5 |
% |
|
|
15.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bottle/can sales volume |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
6.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys products are sold and distributed through various channels. These channels include
selling directly to retail stores and other outlets such as food markets, institutional accounts
and vending machine outlets. During both YTD 2010 and YTD 2009, approximately 69% of the Companys
bottle/can volume was sold for future consumption, while the remaining bottle/can volume of
approximately 31% was sold for immediate consumption. The Companys largest customer, Wal-Mart
Stores, Inc., accounted for approximately 25% of the Companys total bottle/can volume during YTD
2010. Wal-Mart Stores, Inc. accounted for approximately 19% of the Companys total bottle/can
volume during YTD 2009. The Companys second largest customer, Food Lion, LLC, accounted for
approximately 10% of the Companys total bottle/can volume during YTD 2010. Food Lion, LLC
accounted for approximately 11% of the Companys total bottle/can volume during YTD 2009. All of
the Companys beverage sales are to customers in the United States.
The Company recorded delivery fees in net sales of $5.7 million and $5.9 million in YTD 2010 and
YTD 2009, respectively. These fees are used to offset a portion of the Companys delivery and
handling costs.
43
Cost of Sales
Cost of sales includes the following: raw material costs, manufacturing labor, manufacturing
overhead including depreciation expense, manufacturing warehousing costs and shipping and handling
costs related to the movement of finished goods from manufacturing locations to sales distribution
centers.
Cost of sales increased 2.3%, or $5.0 million, to $222.2 million in Q3 2010 compared to $217.2
million in Q3 2009. Cost of sales increased 7.8%, or $48.4 million, to $672.4 million in YTD
2010 compared to $624.0 million in YTD 2009.
The increase in cost of sales for Q3 2010 compared to Q3 2009 was principally attributable to the
following:
|
|
|
|
|
Q3 2010 |
|
|
Attributable to: |
(In Millions) |
|
|
|
$ |
(2.9 |
) |
|
Decrease in raw material costs such as concentrate, aluminum and high fructose corn syrup |
|
2.3 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
2.2 |
|
|
1.2% increase in bottle/can volume primarily due to a volume increase in still
beverages and energy products partially offset by a volume decrease in sparkling beverages
excluding energy products |
|
1.7 |
|
|
5.6% increase in sales volume to other Coca-Cola bottlers primarily due to an increase
in still beverages |
|
(1.7 |
) |
|
Decrease in cost due to the Companys aluminum hedging program |
|
0.5 |
|
|
Decrease in marketing funding support received primarily from The Coca-Cola Company |
|
(0.1 |
) |
|
Gain on the replacement of flood damaged production equipment |
|
3.0 |
|
|
Other |
|
|
|
|
$ |
5.0 |
|
|
Total increase in cost of sales |
|
|
|
|
The increase in cost of sales for YTD 2010 compared to YTD 2009 was principally attributable to the
following:
|
|
|
|
|
YTD 2010 |
|
|
Attributable to: |
(In Millions) |
|
$ |
36.4 |
|
|
6.8% increase in bottle/can volume primarily due to a volume increase in all beverages |
|
(16.1 |
) |
|
Decrease in raw material costs such as concentrate, aluminum and high fructose corn syrup |
|
9.9 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
7.9 |
|
|
Increase in cost due to the Companys aluminum hedging program |
|
4.4 |
|
|
4.6% increase in sales volume to other Coca-Cola bottlers primarily due to an increase
in still beverages |
|
(0.9 |
) |
|
Gain on the replacement of flood damaged production equipment |
|
0.8 |
|
|
Decrease in marketing funding support received primarily from The Coca-Cola Company |
|
6.0 |
|
|
Other |
|
|
|
|
$ |
48.4 |
|
|
Total increase in cost of sales |
|
|
|
|
The Company relies extensively on advertising and sales promotion in the marketing of its products.
The Coca-Cola Company and other beverage companies that supply concentrates, syrups and finished
products to the Company make substantial marketing and advertising expenditures to promote sales in
the local territories served by the Company. The Company also benefits from national advertising
programs conducted by The Coca-Cola Company and other beverage companies. Certain of the marketing
expenditures by The Coca-Cola Company and other beverage companies are made pursuant to
annual arrangements. Although
The Coca-Cola Company has advised the Company that it intends to continue to provide marketing
funding support, it is not obligated to do so under the Companys Beverage Agreements. Significant
decreases in
44
marketing funding support from The Coca-Cola Company or other beverage companies could
adversely impact operating results of the Company in the future.
The Companys production facility located in Nashville, Tennessee was damaged by a flood in May
2010. The Company recorded a gain of $.9 million from the replacement of production equipment
damaged by the flood in YTD 2010. The gain was based on replacement value insurance coverage that
exceeded the net book value of the damaged production equipment.
Total marketing funding support from The Coca-Cola Company and other beverage companies, which
includes direct payments to the Company and payments to customers for marketing programs, was $13.8
million for Q3 2010 compared to $14.3 million for Q3 2009. Total marketing funding support from
The Coca-Cola Company and other beverage companies, which includes direct payments to the Company
and payments to customers for marketing programs, was $40.3 million for YTD 2010 compared to $41.1
million for YTD 2009.
Gross Margin
Gross margin dollars increased 10.0%, or $15.8 million, to $173.1 million in Q3 2010 compared to
$157.3 million in Q3 2009. Gross margin as a percentage of net sales increased to 43.8% for Q3
2010 from 42.0% for Q3 2009. Gross margin dollars increased 5.0% or $23.3 million, to $487.8
million in YTD 2010 compared to $464.6 million in YTD 2009. Gross margin as a percentage of net
sales decreased to 42.0% for YTD 2010 from 42.7% in YTD 2009.
The increase in gross margin dollars for Q3 2010 compared to Q3 2009 was primarily the result of
the following:
|
|
|
|
|
Q3 2010 |
|
|
Attributable to: |
(In Millions) |
|
$ |
6.8 |
|
|
2.1% increase in bottle/can sales price per unit primarily due to higher per unit prices in sparkling
beverages except energy products and a change in product mix primarily due to a lower percentage of future
consumption 12-ounce can sales which have a lower sales price per unit than immediate consumption products
partially offset by lower per unit prices for still beverages |
|
3.0 |
|
|
8.9% increase in sales price per unit for sales to other Coca-Cola bottlers |
|
2.9 |
|
|
Decrease in raw material costs such as concentrate, aluminum and high fructose corn
syrup |
|
2.1 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
1.7 |
|
|
Decrease in cost due to the Companys aluminum hedging program |
|
1.4 |
|
|
1.2% increase in bottle/can volume primarily due to a volume increase in still
beverages and energy products partially offset by a volume decrease in sparkling beverages
excluding energy products |
|
(0.5 |
) |
|
Decrease in marketing funding support received primarily from The Coca-Cola Company |
|
0.1 |
|
|
5.6% increase in sales volume to other Coca-Cola bottlers primarily due to an increase
in still beverages |
|
0.1 |
|
|
Gain on the replacement of flood damaged production equipment |
|
(1.8 |
) |
|
Other |
|
|
|
|
$ |
15.8 |
|
|
Total increase in gross margin |
|
|
|
|
45
The increase in gross margin dollars for YTD 2010 compared to YTD 2009 was primarily the
result of the following:
|
|
|
|
|
YTD 2010 |
|
|
Attributable to: |
(In Millions) |
|
|
|
$ |
25.5 |
|
|
6.8% increase in bottle/can volume primarily due to a volume increase in all beverages |
|
(17.7 |
) |
|
1.8% decrease in bottle/can sales price per unit primarily due to lower per unit prices in
all product categories and a change in product mix primarily due to a higher percentage of
future consumption 12-ounce can sales which have a lower sales price per unit than immediate
consumption products |
|
16.1 |
|
|
Decrease in raw material costs such as concentrate, aluminum and high fructose corn syrup |
|
(7.9 |
) |
|
Increase in cost due to the Companys aluminum hedging program |
|
5.3 |
|
|
Increase in sales of the Companys own brand portfolio (primarily Tum-E Yummies) |
|
4.3 |
|
|
4.2% increase in sales price per unit for sales to other Coca-Cola bottlers |
|
0.9 |
|
|
Gain on the replacement of flood damaged production equipment |
|
(0.8 |
) |
|
Decrease in marketing funding support received primarily from The Coca-Cola Company |
|
0.1 |
|
|
4.6% increase in sales volume to other Coca-Cola bottlers primarily due to an increase
in still beverages |
|
(2.5 |
) |
|
Other |
|
|
|
|
$ |
23.3 |
|
|
Total increase in gross margin |
|
|
|
|
The increase in gross margin percentage in Q3 2010 compared to Q3 2009 was primarily due to higher
sales prices per bottle/can unit. The decrease in gross margin percentage in YTD 2010 compared to
YTD 2009 was primarily due to lower sales price per bottle/can unit and increased costs due to the
Companys aluminum hedging program.
The Companys gross margins may not be comparable to other companies, since some entities include
all costs related to their distribution network in cost of sales. The Company includes a portion
of these costs in S,D&A expenses.
S,D&A Expenses
S,D&A expenses include the following: sales management labor costs, distribution costs from sales
distribution centers to customer locations, sales distribution center warehouse costs,
depreciation expense related to sales centers, delivery vehicles and cold drink equipment,
point-of-sale expenses, advertising expenses, cold drink equipment repair costs, amortization of
intangibles and administrative support labor and operating costs such as treasury, legal,
information services, accounting, internal control services, human resources and executive
management costs.
S,D&A expenses increased by $8.4 million, or 6.4%, to $139.5 million in Q3 2010 from $131.0 million
in Q3 2009. S,D&A expenses as a percentage of net sales increased from 35.0% in Q3 2009 to 35.3%
in Q3 2010. S,D&A expenses increased by $20.2 million, or 5.2%, to $406.7 million in YTD 2010 from
$386.5 million in YTD 2009. S,D&A expenses as a percentage of net sales decreased from 35.5% in
YTD 2009 to 35.1% in YTD 2010.
46
The increase in S,D&A expenses for Q3 2010 compared to Q3 2009 was primarily due to the following:
|
|
|
|
|
Q3 2010 |
|
|
Attributable to: |
(In Millions) |
|
|
|
$ |
2.7 |
|
|
Increase in employee salaries including bonus and incentive expense |
|
2.1 |
|
|
Increase in professional fees primarily due to consulting project support |
|
1.7 |
|
|
Payments to employees participating in the Companys auto allowance program (program implemented in
phases beginning in the second quarter of 2009) |
|
0.9 |
|
|
Increase in
marketing expenses |
|
(0.7 |
) |
|
Decrease in property and casualty insurance expense |
|
(0.5 |
) |
|
Decrease fuel costs primarily due to mark-to-market adjustment on fuel hedging ($.5
million loss in Q3 2009 as compared to $.1 million gain in Q3 2010) |
|
2.2 |
|
|
Other |
|
|
|
|
$ |
8.4 |
|
|
Total increase in S,D&A expenses |
|
|
|
|
The increase in S,D&A expenses for YTD 2010 compared to YTD 2009 was primarily due to the following:
|
|
|
|
|
YTD 2010 |
|
|
Attributable to: |
(In Millions) |
|
|
|
$ |
7.0 |
|
|
Payments to employees participating in the Companys auto allowance program (program implemented in phases
beginning in the second quarter of 2009) |
|
7.0 |
|
|
Increase in employee salaries including bonus and incentive expense |
|
4.0 |
|
|
Increase in fuel costs primarily due to the mark-to-market adjustment on fuel hedging ($2.9 million gain
in YTD 2009 as compared to $1.3 million loss in YTD 2010) |
|
3.6 |
|
|
Increase in professional fees primarily due to consulting project support |
|
1.2 |
|
|
Increase in
marketing expenses |
|
(2.4 |
) |
|
Decrease in bad debt expense due to improvement in customer trade receivable portfolio
performance |
|
(2.4 |
) |
|
Decrease in employee benefit costs primarily due to decreased pension expense |
|
(2.3 |
) |
|
Decrease in property and casualty insurance expense |
|
(1.9 |
) |
|
Decrease in depreciation expense primarily due to new auto allowance program |
|
6.4 |
|
|
Other |
|
|
|
|
$ |
20.2 |
|
|
Total increase in S,D&A expenses |
|
|
|
|
Shipping and handling costs related to the movement of finished goods from manufacturing locations
to sales distribution centers are included in cost of sales. Shipping and handling costs related
to the movement of finished goods from sales distribution centers to customer locations are
included in S,D&A expenses and totaled $140.3 million and $138.7 million in YTD 2010 and YTD 2009,
respectively.
The net impact of the Companys fuel hedging program was to increase fuel costs by $1.5 million in
YTD 2010 and decrease fuel costs by $2.0 million in YTD 2009.
Primarily due to the performance of the Companys pension plan investments during 2009, the
Companys expense recorded in S,D&A expenses related to the two Company-sponsored pension plans
decreased by $1.2 million from $2.5 million in Q3 2009 to $1.3 million in Q3 2010 and by $3.5
million from $7.4 million in YTD 2009 to $3.9 million in YTD 2010.
The Company suspended matching contributions to its 401(k) Savings Plan effective April 1, 2009.
The Company maintained the option to match its employees 401(k) Savings Plan contributions based
on the financial results for 2009. The Company subsequently decided to match the first 5% of its
employees contributions (consistent with the first quarter of 2009 matching contribution
percentage) for the entire year of 2009. The Company will match the first 3% of its employees
contributions for 2010. The Company
47
maintains the option to increase the matching contributions an additional 2%, for a total of 5%,
for the Companys employees based on the financial results for 2010. Based on the financial
results of the first quarter of 2010, the Company decided to increase the matching contributions an
additional 2% for that quarter, which was approved and paid in the second quarter of 2010. Based
on the financial results of the second quarter of 2010, the Company decided to increase the
matching contributions an additional 2% for that quarter, which was
approved and paid in Q3 2010. The total costs for this benefit
recorded in S,D&A expenses for YTD 2010 and YTD 2009 was
$6.0 million and $5.9 million, respectively.
On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law.
On March 30, 2010, a companion bill, the Health Care and Education Reconciliation Act of 2010
(Reconciliation Act), was also signed into law. The PPACA and the Reconciliation Act, when taken
together, represent comprehensive healthcare reform legislation that will likely affect the cost
associated with providing employer-sponsored medical plans. At this point, the Company is in the
process of determining the impact this legislation will have on the Companys employer-sponsored
medical plans.
Interest Expense
Net interest expense was unchanged in Q3 2010 compared to Q3 2009 and decreased 5.7%, or $1.6
million, in YTD 2010 compared to YTD 2009. The decrease in interest expense in YTD 2010 compared
to YTD 2009 was due to lower debt borrowing levels. The Companys overall weighted average interest
rate increased to 5.9% during YTD 2010 from 5.7% during YTD 2009. See the Liquidity and Capital
Resources Hedging Activities Interest Rate Hedging section of M,D&A for additional
information.
Income Taxes
The Companys effective tax rate, as calculated by dividing income tax expense by income before
income taxes, for YTD 2010 and YTD 2009 was 34.6% and 23.8%, respectively. The Companys effective
tax rate, as calculated by dividing income tax expense by the difference of income before income
taxes minus net income attributable to the noncontrolling interest, for YTD 2010 and YTD 2009 was
37.0% and 24.8%, respectively. The increase in the effective tax rate for YTD 2010 resulted
primarily from lower reductions in the reserve for uncertain tax
positions in 2010 as compared to 2009 and the elimination of the
tax deduction associated with Medicare Part D subsidy as required by the PPACA enacted on March 23,
2010 and the Reconciliation Act enacted on March 30, 2010. During YTD 2010, the
Company recorded tax expense totaling $.5 million related to changes made to the tax deductibility
of Medicare Part D subsidies.
In the first quarter of 2009, the Company reached an agreement with a taxing authority to settle
prior tax positions for which the Company had previously provided reserves due to uncertainty of
resolution. As a result, the Company reduced the liability for uncertain tax positions by $1.7
million. The net effect of the adjustment was a decrease to income tax expense in YTD 2009 of
approximately $1.7 million. In Q3 2009, the Company reduced its liability for uncertain tax
positions by $5.4 million. The net effect of the adjustment was a decrease to income tax expense
of approximately $5.4 million. The reduction of the liability for uncertain tax positions was due
mainly to the lapse of applicable statute of limitations. In Q3 2010, the Company reduced its
liability for uncertain tax positions by $1.7 million. The net effect of the adjustment was a
decrease to income tax expense of approximately $1.7 million. The reduction of the liability for
uncertain tax positions was due mainly to the lapse of the applicable statute of limitations. See
Note 15 to the consolidated financial statements for additional information. The Companys income
tax rate for the remainder of 2010 is dependent upon the results of operations and may change if
the results in 2010 are different from current expectations.
48
Noncontrolling Interest
The Company recorded net income attributable to the noncontrolling interest of $3.5 million in YTD
2010 compared to $2.0 million in YTD 2009 related to the portion of Piedmont owned by The Coca-Cola
Company. The increased amount in YTD 2010 was due to higher income at Piedmont.
Financial Condition
Total assets of $1.3 billion at October 3, 2010 increased from January 3, 2010 primarily due to
increases in cash and cash equivalents and accounts receivable offset by a decrease in property,
plant and equipment, net. Property, plant and equipment, net
decreased primarily due to the reduction of transportation equipment
that resulted from the implementation of a new auto allowance program
during fiscal year 2009.
Net working capital, defined as current assets less current liabilities, increased by $32.1 million
to $100.3 million at October 3, 2010 from January 3, 2010 and increased by $26.7 million at October
3, 2010 from September 27, 2009.
Significant changes in net working capital from January 3, 2010 were as follows:
|
|
An increase in cash and cash equivalents of $12.7 million primarily due to cash flow from
operations. |
|
|
|
An increase in accounts
receivable, trade of $22.8 million primarily due to increased
sales. |
|
|
|
An increase in inventories
of $3.6 million due primarily to normal seasonal increase. |
|
|
|
An increase in accounts receivable from and an increase in accounts payable to The
Coca-Cola Company of $16.1 million and $15.5 million, respectively, primarily due to the
timing of payments. |
|
|
|
An increase in accrued interest payable of $4.5 million due to the timing of payments. |
Significant changes in net working capital from September 27, 2009 were as follows:
|
|
An increase in cash and cash equivalents of $5.4 million primarily due to cash flow from
operations. |
|
|
|
An increase in accounts
receivable, trade of $19.3 million primarily due to increased
sales. |
|
|
|
A decrease in inventories of
$5.1 million due primarily to the decreased demand for future
consumption products during Q3 2010. |
|
|
|
An increase in accounts receivable from and a decrease in accounts payable to The Coca-Cola
Company of $2.7 million and $.2 million, respectively, primarily due to the timing of
payments. |
|
|
|
An increase in accounts
payable, trade of $5.8 million primarily due to the timing of payments. |
|
|
|
An increase in prepaid
expenses and other current assets of $6.4 million primarily due to hedging
activities. |
Debt and capital lease obligations were $583.3 million as of October 3, 2010 compared to $601.0
million as of January 3, 2010 and $616.9 million as of September 27, 2009. Debt and capital lease
obligations as of October 3, 2010 included $60.2 million of capital lease obligations related
primarily to Company facilities.
49
Liquidity and Capital Resources
Capital Resources
The Companys sources of capital include cash flows from operations, available credit facilities
and the issuance of debt and equity securities. Management believes the Company has sufficient
resources available to finance its business plan, meet its working capital requirements and
maintain an appropriate level of capital spending. The amount and frequency of future dividends
will be determined by the Companys Board of Directors in light of the earnings and financial
condition of the Company at such time, and no assurance can be given that dividends will be
declared in the future.
As of October 3, 2010, the Company had all $200 million available under the $200 million revolving
credit facility ($200 million facility) to meet its cash requirements. The $200 million facility
contains two financial covenants: a fixed charges coverage ratio and a debt to operating cash flow
ratio, each as defined in the credit agreement. The fixed charges coverage ratio requires the
Company to maintain a consolidated cash flow to fixed charges ratio of 1.5 to 1 or higher. The
operating cash flow ratio requires the Company to maintain a debt to cash flow ratio of 6.0 to 1 or
lower. The Company is currently in compliance with these covenants and has been throughout 2010.
In April 2009, the Company issued $110 million of unsecured 7% Senior Notes due 2019.
The Company had debt maturities of $119.3 million in May 2009 and $57.4 million in July 2009. On
May 1, 2009, the Company used the proceeds from the $110 million 7% Senior Notes due 2019 plus cash
on hand to repay the debt maturity of $119.3 million. The Company used cash flow generated from
operations and $55.0 million in borrowings under its $200 million facility to repay the $57.4
million debt maturity on July 1, 2009. The Company currently believes that all of the banks
participating in the Companys $200 million facility have the ability to and will meet any funding
requests from the Company.
The Company has obtained the majority of its long-term financing, other than capital leases, from
public markets. As of October 3, 2010, $523.0 million of the Companys total outstanding balance
of debt and capital lease obligations of $583.3 million was financed through publicly offered debt.
The Company had capital lease obligations of $60.2 million as of October 3, 2010. There were no
amounts outstanding on either the $200 million facility or on the uncommitted line of credit as of
October 3, 2010.
Cash Sources and Uses
The primary sources of cash for the Company have been cash provided by operating activities,
investing activities and financing activities. The primary uses of cash have been for capital
expenditures, the payment of debt and capital lease obligations,
dividend payments, income tax
payments and pension payments.
50
A summary of activity for YTD 2010 and YTD 2009 follows:
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
In Millions |
|
2010 |
|
2009 |
|
Cash Sources |
|
|
|
|
|
|
|
|
Cash provided by operating activities (excluding income tax
and pension payments) |
|
$ |
86.9 |
|
|
$ |
82.2 |
|
Proceeds from reduction of restricted cash |
|
|
1.0 |
|
|
|
|
|
Proceeds from lines of credit, net |
|
|
|
|
|
|
30.0 |
|
Proceeds from issuance of debt |
|
|
|
|
|
|
108.1 |
|
Proceeds from the sale of property, plant and equipment |
|
|
1.4 |
|
|
|
4.9 |
|
|
Total cash sources |
|
$ |
89.3 |
|
|
$ |
225.2 |
|
|
|
|
|
|
|
|
|
|
|
Cash Uses |
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
29.0 |
|
|
$ |
29.8 |
|
Payment of debt and capital lease obligations |
|
|
17.9 |
|
|
|
179.1 |
|
Investment in restricted cash |
|
|
|
|
|
|
4.5 |
|
Debt issuance costs |
|
|
|
|
|
|
1.0 |
|
Dividends |
|
|
6.9 |
|
|
|
6.9 |
|
Income tax payments |
|
|
14.1 |
|
|
|
13.8 |
|
Pension payments |
|
|
8.7 |
|
|
|
10.1 |
|
Other |
|
|
|
|
|
|
.3 |
|
|
Total cash uses |
|
$ |
76.6 |
|
|
$ |
245.5 |
|
|
Increase (decrease) in cash |
|
$ |
12.7 |
|
|
$ |
(20.3 |
) |
|
Investing Activities
Additions to property, plant and equipment during YTD 2010 were $31.7 million of which $1.2 million
were accrued in accounts payable, trade as unpaid including $.2 million related to the Nashville
flood damage and $1.5 million was a trade-in allowance on manufacturing equipment. This compared
to $29.8 million in total additions to property, plant and equipment during YTD 2009. Capital
expenditures during YTD 2010 were funded with cash flows from operations. The Company anticipates
total additions to property, plant and equipment in fiscal year 2010 will be in the range of $55
million to $60 million. Additions to property, plant and equipment during 2009 were $55.0 million
of which $11.6 million were accrued in accounts payable, trade as unpaid. Leasing is used for
certain capital additions when considered cost effective relative to other sources of capital. The
Company currently leases its corporate headquarters, two production facilities and several sales
distribution facilities and administrative facilities.
Financing Activities
On March 8, 2007, the Company entered into the $200 million facility replacing its $100 million
revolving credit facility. The $200 million facility matures in March 2012 and includes an option
to extend the term for an additional year at the discretion of the participating banks. The $200
million facility bears interest at a floating base rate or a floating rate of LIBOR plus an
interest rate spread of .35%, dependent on the length of the term of the interest period. In
addition, the Company must pay an annual facility fee of .10% of the lenders aggregate
commitments under the facility. Both the interest rate spread and the facility fee are determined
from a commonly-used pricing grid based on the Companys long-term senior unsecured debt rating.
The $200 million facility contains two financial covenants: a fixed charges coverage ratio and a
debt to operating cash flow ratio, each as defined in the credit agreement. The fixed charges
coverage ratio requires the Company to maintain a
consolidated cash flow to fixed charges ratio of 1.5 to 1 or higher. The operating cash flow
ratio requires the
51
Company to maintain a debt to operating cash flow ratio of 6.0 to 1 or lower.
The Company is currently in compliance with these covenants. These covenants do not currently,
and the Company does not anticipate they will, restrict its liquidity or capital resources. On
July 1, 2009, the Company borrowed $55 million under the $200 million facility and used the
proceeds, along with $2.4 million of cash on hand, to repay at maturity the Companys $57.4
million outstanding 7.2% Debentures due 2009. On October 3, 2010, the Company had no outstanding
borrowings on the $200 million facility. On January 3, 2010 and September 27, 2009, the Company
had $15.0 million and $30.0 million outstanding under the $200 million facility, respectively.
In April 2009, the Company issued $110 million of 7% Senior Notes due 2019. The proceeds plus cash
on hand were used on May 1, 2009 to repay at maturity the $119.3 million outstanding 6.375%
Debentures due 2009.
On February 10, 2010, the Company entered into an agreement for an uncommitted line of credit.
Under this agreement, the Company may borrow up to a total of $20 million for periods of 7 days, 30
days, 60 days or 90 days. On October 3, 2010, the Company had no amount outstanding under the
uncommitted line of credit.
All of the outstanding debt has been issued by the Company with none having been issued by any of
the Companys subsidiaries. There are no guarantees of the Companys debt. The Company or its
subsidiaries have entered into four capital leases.
At October 3, 2010, the Companys credit ratings were as follows:
|
|
|
|
|
|
|
Long-Term Debt |
Standard & Poors |
|
BBB |
Moodys |
|
Baa2 |
The Companys credit ratings are reviewed periodically by the respective rating agencies. Changes
in the Companys operating results or financial position could result in changes in the Companys
credit ratings. Lower credit ratings could result in higher borrowing costs for the Company or
reduced access to capital markets, which could have a material impact on the Companys financial
position or results of operations. There were no changes in these credit ratings from the prior
year and the credit ratings are currently stable.
The Companys public debt is not subject to financial covenants but does limit the incurrence of
certain liens and encumbrances as well as indebtedness by the Companys subsidiaries in excess of
certain amounts.
Off-Balance Sheet Arrangements
The Company is a member of two manufacturing cooperatives and has guaranteed $35.7 million of debt
and related lease obligations for these entities as of October 3, 2010. In addition, the Company
has an equity ownership in each of the entities. The members of both cooperatives consist solely
of Coca-Cola bottlers. The Company does not anticipate either of these cooperatives will fail to
fulfill their commitments. The Company further believes each of these cooperatives has sufficient
assets, including production equipment, facilities and working capital, and the ability to adjust
selling prices of their products to adequately mitigate the risk of material loss from the
Companys guarantees. As of October 3, 2010, the Companys maximum exposure, if the entities
borrowed up to their borrowing capacity, would have been $71.7 million including the Companys
equity interests. See Note 14 and Note 19 to the consolidated financial statements for additional
information about these entities.
52
Aggregate Contractual Obligations
The following table summarizes the Companys contractual obligations and commercial commitments as
of October 3, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
|
|
|
Oct. 2010- |
|
Oct. 2011- |
|
Oct. 2013- |
|
After |
In Thousands |
|
Total |
|
Sept. 2011 |
|
Sept. 2013 |
|
Sept. 2015 |
|
Sept. 2015 |
|
Contractual obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt, net of interest |
|
$ |
523,025 |
|
|
$ |
|
|
|
$ |
150,000 |
|
|
$ |
100,000 |
|
|
$ |
273,025 |
|
Capital lease obligations,
net of interest |
|
|
60,247 |
|
|
|
3,861 |
|
|
|
8,358 |
|
|
|
9,875 |
|
|
|
38,153 |
|
Estimated interest on
long-term debt and capital
lease obligations (1) |
|
|
179,869 |
|
|
|
32,959 |
|
|
|
58,354 |
|
|
|
46,167 |
|
|
|
42,389 |
|
Purchase obligations (2) |
|
|
326,865 |
|
|
|
89,145 |
|
|
|
178,290 |
|
|
|
59,430 |
|
|
|
|
|
Other long-term liabilities (3) |
|
|
111,251 |
|
|
|
9,938 |
|
|
|
17,842 |
|
|
|
12,763 |
|
|
|
70,708 |
|
Operating leases |
|
|
18,596 |
|
|
|
3,810 |
|
|
|
4,624 |
|
|
|
3,131 |
|
|
|
7,031 |
|
Long-term contractual
arrangements (4) |
|
|
18,706 |
|
|
|
6,531 |
|
|
|
9,686 |
|
|
|
2,294 |
|
|
|
195 |
|
Postretirement obligations |
|
|
45,449 |
|
|
|
2,898 |
|
|
|
5,445 |
|
|
|
5,871 |
|
|
|
31,235 |
|
Purchase orders (5) |
|
|
35,774 |
|
|
|
35,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations |
|
$ |
1,319,782 |
|
|
$ |
184,916 |
|
|
$ |
432,599 |
|
|
$ |
239,531 |
|
|
$ |
462,736 |
|
|
|
|
|
(1) |
|
Includes interest payments based on contractual terms and current interest
rates for variable rate debt. |
|
(2) |
|
Represents an estimate of the Companys obligation to purchase 17.5 million cases
of finished product on an annual basis through May 2014 from South Atlantic Canners, a
manufacturing cooperative. |
|
(3) |
|
Includes obligations under executive benefit plans, the liability to exit from a
multi-employer pension plan and other long-term liabilities. |
|
(4) |
|
Includes contractual arrangements with certain prestige properties, athletics
venues and other locations, and other long-term marketing commitments. |
|
(5) |
|
Purchase orders include commitments in which a written purchase order has been
issued to a vendor, but the goods have not been received or the services have not been
performed. |
The Company has $4.5 million of uncertain tax positions including accrued interest as of
October 3, 2010 (excluded from other long-term liabilities in the table above because the Company is
uncertain as to if or when such amounts will be recognized) of which $2.4 million would affect the
Companys effective tax rate if recognized. While it is expected that the amount of uncertain tax
positions may change in the next 12 months, the Company does not expect the change to have a
significant impact on the consolidated financial statements. See Note 15 to the consolidated
financial statements for additional information.
The Company is a member of Southeastern Container, a plastic bottle manufacturing cooperative,
from which the Company is obligated to purchase at least 80% of its requirements of plastic
bottles for certain designated territories. This obligation is not included in the Companys
table of contractual obligations and commercial commitments since there are no minimum purchase
requirements.
As of October 3, 2010, the Company has $23.1 million of standby letters of credit, primarily
related to its property and casualty insurance programs. See Note 14 to the consolidated
financial statements for additional information related to commercial commitments, guarantees,
legal and tax matters.
The Company has made contributions to the Company-sponsored pension plans of $8.7 million in YTD
2010. The Company made additional payments of $.9 million subsequent to the end of Q3 2010. These
53
contributions represent all required contributions for 2010. The Company
continues to monitor and review the funding position of the Company-sponsored pension plans and
may make additional contributions during 2010. Postretirement medical care payments are expected
to be approximately $2.5 million in 2010. See Note 18 to the consolidated financial statements
for additional information related to pension and postretirement obligations.
Hedging Activities
Interest Rate Hedging
The Company periodically uses interest rate hedging products to mitigate risk from interest rate
fluctuations. The Company has historically altered its fixed/floating rate mix based upon
anticipated cash flows from operations relative to the Companys debt level and the potential
impact of changes in interest rates on the Companys overall financial condition. Sensitivity
analyses are performed to review the impact on the Companys financial position and coverage of
various interest rate movements. The Company does not use derivative financial instruments for
trading purposes nor does it use leveraged financial instruments.
The Company has not had any interest rate swap agreements outstanding since September 2008.
Interest expense was reduced due to the amortization of deferred gains on previously terminated
interest rate swap agreements and forward interest rate agreements by $.9 million and $1.8 million
during YTD 2010 and in YTD 2009, respectively.
The weighted average interest rate of the Companys debt and capital lease obligations was 5.8% as
of October 3, 2010 compared to 5.6% as of January 3, 2010, and 5.5% as of September 27, 2009. The
Companys overall weighted average interest rate on its debt and capital lease obligations
increased to 5.9% in YTD 2010 from 5.7% in YTD 2009. Approximately 4.8% of the Companys debt and
capital lease obligations of $583.3 million as of October 3, 2010 was maintained on a floating rate
basis and was subject to changes in short-term interest rates.
Fuel Hedging
The Company used derivative instruments to hedge substantially all of the projected diesel fuel
purchases for 2010 and 2009. These derivative instruments relate to diesel fuel used by the
Companys delivery fleet. The Company pays a fee for these instruments which is amortized over the
corresponding period of the instrument. The Company accounts for its fuel hedges on a
mark-to-market basis with any expense or income being reflected as an adjustment of fuel costs.
The Company uses several different financial institutions for commodity derivative instruments to
minimize the concentration of credit risk. The Company has master agreements with the
counterparties to its derivative financial agreements that provide for net settlement of derivative
transactions.
In October 2008, the Company entered into derivative contracts to hedge substantially all of its
projected diesel fuel purchases for 2009 establishing an upper and lower limit on the Companys
price of diesel fuel.
In February 2009, the Company entered into derivative contracts to hedge substantially all of its
projected diesel purchases for 2010 establishing an upper limit on the Companys price of diesel
fuel.
The net impact of the Companys fuel hedging program was to increase fuel costs by $1.5 million in
YTD 2010 and decrease fuel costs by $2.0 million in YTD 2009.
54
Aluminum Hedging
At the end of the first quarter of 2009, the Company began using derivative instruments to hedge
approximately 75% of the projected 2010 aluminum purchase requirements. The Company pays a fee for
these instruments which is amortized over the corresponding period of the instruments. The Company
accounts for its aluminum hedges on a mark-to-market basis with any expense or income being
reflected as an adjustment to cost of sales.
During the second quarter of 2009, the Company entered into derivative contracts to hedge
approximately 75% of the projected 2011 aluminum purchase requirements.
The net impact of the Companys aluminum hedging program was to increase cost of sales by $2.6
million in YTD 2010 and decrease cost of sales by $5.3 million in YTD 2009.
55
Cautionary Information Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, as well as information included in future filings by the
Company with the Securities and Exchange Commission and information contained in written material,
press releases and oral statements issued by or on behalf of the Company, contains, or may contain,
forward-looking management comments and other statements that reflect managements current outlook
for future periods. These statements include, among others, statements relating to:
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the Companys belief that the covenants on its $200 million facility will not restrict
its liquidity or capital resources; |
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the Companys belief that other parties to certain contractual arrangements will perform
their obligations; |
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potential marketing funding support from The Coca-Cola Company and other beverage
companies; |
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the Companys belief that disposition of certain claims and legal proceedings will not
have a material adverse effect on its financial condition, cash flows or results of
operations and that no material amount of loss in excess of recorded amounts is reasonably
possible; |
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managements belief that the Company has adequately provided for any ultimate amounts
that are likely to result from tax audits; |
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managements belief that the Company has sufficient resources available to finance its
business plan, meet its working capital requirements and maintain an appropriate level of
capital spending; |
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the Companys belief that the cooperatives whose debt and lease obligations the Company
guarantees have sufficient assets and the ability to adjust selling prices of their
products to adequately mitigate the risk of material loss and that the cooperatives will
perform their obligations under their debt and lease agreements; |
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the Companys key priorities which are revenue management, product innovation and
beverage portfolio expansion, distribution cost management and productivity; |
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the Companys hypothetical calculation of the impact of a 1% increase in interest rates
on outstanding floating rate debt and capital lease obligations for the next twelve months
as of October 3, 2010; |
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the Companys belief that cash contributions in 2010 to its two Company-sponsored
pension plans will be approximately $9.6 million; |
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the Companys belief that postretirement medical care payments are expected to be
approximately $2.5 million in 2010; |
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the Companys expectation that additions to property, plant and equipment in 2010 will
be in the range of $55 million to $60 million; |
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the Companys beliefs and estimates regarding the impact of the adoption of certain new
accounting pronouncements; |
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the Companys beliefs that the growth prospects of Company-owned or exclusive licensed
brands appear promising and the cost of developing, marketing and distributing these brands
may be significant; |
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the Companys belief that all of the banks participating in the Companys $200 million
facility have the ability to and will meet any funding requests from the Company; |
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the Companys belief that it is competitive in its territories with respect to the
principal methods of competition in the nonalcoholic beverage industry; |
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the Companys estimate that a 10% increase in the market price of certain commodities
over the current market prices would cumulatively increase costs during the next 12 months
by approximately $27 million assuming no change in volume; |
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the Companys belief that innovation of new brands and packages will continue to be
critical to the Companys overall revenue; |
56
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the Companys expectation that it will not incur any significant expenses related to the
Nashville area flood for the remainder of 2010; and |
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the Companys expectation that uncertain tax positions may change over the next 12
months as a result of tax audits but will not have a significant impact on the consolidated
financial statements. |
These statements and expectations are based on currently available competitive, financial and
economic data along with the Companys operating plans, and are subject to future events and
uncertainties that could cause anticipated events not to occur or actual results to differ
materially from historical or anticipated results. Factors that could impact those statements and
expectations or adversely affect future periods include, but are not limited to, the factors set
forth in Part II, Item 1A. of this Form 10-Q and in Item 1A. Risk Factors of the Companys Annual
Report on Form 10-K for the year ended January 3, 2010.
Caution should be taken not to place undue reliance on the Companys forward-looking statements,
which reflect the expectations of management of the Company only as of the time such statements are
made. Except as required by law, the Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise.
57
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to certain market risks that arise in the ordinary course of business. The
Company may enter into derivative financial instrument transactions to manage or reduce market
risk. The Company does not enter into derivative financial instrument transactions for trading
purposes. A discussion of the Companys primary market risk exposure and interest rate risk is
presented below.
Debt and Derivative Financial Instruments
The Company is subject to interest rate risk on its fixed and floating rate debt. The Company
periodically uses interest rate hedging products to modify risk from interest rate fluctuations.
The Company has historically altered its fixed/floating rate mix based upon anticipated cash flows
from operations relative to the Companys overall financial condition. Sensitivity analyses are
performed to review the impact on the Companys financial position and coverage of various interest
rate movements. The counterparties to these interest rate hedging arrangements were major
financial institutions with which the Company also had other financial relationships. The Company
did not have any interest rate hedging products as of October 3, 2010. The Company has
historically maintained between 40% and 60% of total borrowings at variable interest rates after
taking into account all of the interest rate hedging activities. While this has been the target
range for the percentage of total borrowings at variable interest rates, the financial position of
the Company and market conditions may result in strategies outside of this range at certain points
in time. Approximately 4.8% of the Companys debt and capital lease obligations of $583.3 million
as of October 3, 2010 was subject to changes in short-term interest rates.
As it relates to the Companys variable rate debt and variable rate leases, assuming no changes in
the Companys financial structure, if market interest rates average 1% more over the next twelve
months than the interest rates as of October 3, 2010, interest expense for the following twelve
months would increase by approximately $.1 million. This amount was determined by calculating the
effect of the hypothetical interest rate on the Companys variable rate debt and variable rate
leases. This calculated, hypothetical increase in interest expense for the following twelve months
may be different from the actual increase in interest expense from a 1% increase in interest rates
due to varying interest rate reset dates on the Companys floating rate debt.
Raw Material and Commodity Price Risk
The Company is also subject to commodity price risk arising from price movements for certain other
commodities included as part of its raw materials. The Company manages this commodity price risk
in some cases by entering into contracts with adjustable prices. The Company has not historically
used derivative commodity instruments in the management of this risk. The Company estimates that a
10% increase in the market prices of these commodities over the current market prices would
cumulatively increase costs during the next 12 months by approximately $27 million assuming no
change in volume.
The Company entered into derivative instruments to hedge essentially all of the projected diesel
fuel purchases for 2010 and 2009. These derivative instruments relate to diesel fuel used by the
Companys delivery fleet. The Company pays a fee for these instruments which is amortized over the
corresponding period of the instrument. The Company currently accounts for its fuel hedges on a
mark-to-market basis with any expense or income being reflected as an adjustment of fuel costs.
At the end of the first quarter of 2009, the Company began using derivative instruments to hedge
approximately 75% of the projected 2010 aluminum purchase requirements. During the second quarter
of 2009, the Company entered into derivative contracts to hedge approximately 75% of the projected
2011 aluminum purchase requirements. The Company pays a fee for these instruments which is
amortized over the corresponding period
58
of the instruments. The Company accounts for its aluminum hedges on a mark-to-market basis with
any expense or income being reflected as an adjustment to cost of sales.
Effects of Changing Prices
The principal effect of inflation on the Companys operating results is to increase costs. The
Company may raise selling prices to offset these cost increases; however, the resulting impact on
retail prices may reduce the volume of product purchased by consumers.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, the Company carried out an evaluation, under
the supervision and with the participation of the Companys management, including the Companys
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Securities Exchange Act of 1934 (the Exchange Act)), pursuant to Rule 13a-15(b) of the
Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded the Companys disclosure controls and procedures are effective for the purpose of
providing reasonable assurance the information required to be disclosed in the reports the Company
files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms and (ii) is accumulated and communicated to
the Companys management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosures.
There has been no change in the Companys internal control over financial reporting during the
quarter ended October 3, 2010 that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.
59
PART II OTHER INFORMATION
Item 1A. Risk Factors.
Except for the risk factor set forth below, there have been no material changes to the factors
disclosed in Part I, Item 1A. Risk Factors in the Companys Annual Report on Form 10-K for the
year ended January 3, 2010.
Increases in the cost of employee benefits, including current employees medical benefits and
postretirement benefits, could impact the Companys financial results and cash flow.
On March 23, 2010 the Patient Protection and Affordable Care Act (PPACA) was signed into law.
On March 30, 2010, a companion bill, the Health Care and Education Reconciliation Act of 2010
(Reconciliation Act), was also signed into law. The PPACA and the Reconciliation Act, when
taken together, represent comprehensive healthcare reform legislation that will likely affect the
cost associated with providing employer-sponsored medical plans. At this point, the Company is in
the process of determining the impact this legislation will have on the Companys
employer-sponsored medical plans. Additionally, the PPACA and the Reconciliation Act include
provisions that will reduce the tax benefits available to employers that receive Medicare Part D
subsidies.
60
Item 6. Exhibits.
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Exhibit |
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Number |
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Description |
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4.1
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The registrant, by signing this report, agrees to furnish the Securities and
Exchange Commission, upon its request, a copy of any instrument which defines the
rights of holders of long-term debt of the registrant and its consolidated
subsidiaries which authorizes a total amount of securities not in excess of 10 percent
of the total assets of the registrant and its subsidiaries on a consolidated basis. |
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10.1
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Form of Master Bottle Contract (Cola Beverage Agreement), made and entered
into, effective January 27, 1989, between The Coca-Cola Company and Coca-Cola Bottling
Co. Consolidated (the Company), together with Form of Home Market Amendment to
Master Bottle Contract, effective as of October 29, 1999 (filed herewith). |
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10.2
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Form of Allied Bottle Contract (Allied Beverage Agreement), made and entered
into effective January 11, 1990, between The Coca-Cola Company and the Company (as
successor to Coca-Cola Bottling Company of Anderson, S.C.) (filed herewith). |
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10.3
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Letter Agreement, dated January 27, 1989, between The Coca-Cola Company and the
Company, modifying the Cola Beverage Agreements and Allied Beverage Agreements (filed
herewith). |
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10.4
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Form of Marketing and Distribution Agreement (Still Beverage Agreement), made
and entered into effective October 1, 2000, between The Coca-Cola Company and the
Company (as successor to Metrolina Bottling Company), with respect to Dasani (filed
herewith). |
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10.5
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Form of Letter Agreement, dated December 10, 2001, between The Coca-Cola
Company and the Company, together with Letter Agreement dated December 14, 1994,
modifying the Still Beverage Agreements (filed herewith). |
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10.6*
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Incident Pricing Letter Agreement, dated March 16, 2009, between The Coca-Cola
Company and the Company (filed herewith). |
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12
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Ratio of earnings to fixed charges (filed herewith). |
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31.1
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith). |
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31.2
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith). |
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32
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
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* |
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Certain portions of the exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested for such
portions of the exhibit. |
61
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.
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COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)
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Date: November 12, 2010 |
By: |
/s/ James E. Harris
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James E. Harris |
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Principal Financial Officer of the Registrant
and
Senior Vice President and Chief Financial Officer |
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Date: November 12, 2010 |
By: |
/s/ William J. Billiard
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William J. Billiard |
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Principal Accounting Officer of the Registrant
and
Vice President, Controller and Chief Accounting Officer |
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62
exv10w1
Exhibit 10.1
MASTER BOTTLE CONTRACT
THIS AGREEMENT, (this Agreement) effective as of January 27, 1989 is made and entered into
by and between THE COCA-COLA COMPANY, a corporation organized and existing under the laws of the
State of Delaware having its principal place of business in Atlanta, Georgia (the Company), and
COCA-COLA BOTTLING CO. CONSOLIDATED, a corporation organized and existing under the laws of the
State of DELAWARE having its principal place of business in CHARLOTTE, NORTH CAROLINA (the
Bottler).
WITNESSETH
WHEREAS
A The Company manufactures and sells, or authorizes others to manufacture and sell, the soft
drinks identified on Schedule A (as modified from time to time under paragraphs 21 and 22, the
Beverages), the concentrates for the Beverages (the Concentrates), and the syrups prepared from
the Concentrates (the Syrups), the formulas for all of which constitute trade secrets owned by
the Company,
B The Company is the owner of the trademarks identified on Schedule B (together with such
other trademarks as may be authorized by the Company from time to time for current use by the
Bottler under this Agreement, the Trademarks), which, among other things, identify and
distinguish the Concentrates, the Syrups and the Beverages,
C The primary business of the Bottler is to act as a bottler of the Beverages, either directly
pursuant to certain agreements with the Company, all of which are identified on Schedule C
(collectively, together with all amendments thereto, the Existing Bottle Contracts), or
indirectly through one or more persons controlling, controlled by or under common control with the
Bottler (the Bottler Affiliates),
D The reputation of the Beverages as being of consistently superior quality has been a major
factor in stimulating and sustaining demand for the Beverages, and special technical skill and
constant diligence on the part of the Bottler and the Company are required in order for the
Beverages to maintain the excellence that consumers expect, and
E Conditions affecting the production, sale and distribution of Beverages have changed since
the Company and the Bottler, or its predecessors-in-interest, entered into the Existing Bottle
Contracts, and, as a consequence, the Company and the Bottler desire to amend the Existing Bottle
Contracts, the terms of the Existing Bottle Contracts, as so amended, being restated in the form of
this Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Bottler agree as follows.
ARTICLE I
The Authorization
1 The Company authorizes the Bottler, and the Bottler undertakes, to manufacture and
package the Beverages and to distribute and sell the Beverages only in Authorized Containers, as
hereinafter defined, under the Trademarks in and throughout the territory described on Schedule D
(together with any territories added under paragraph 31, and subject to the possible elimination of
subterritories under paragraph 29, the Territory).
2 The Company will, from time to time, in its discretion, approve containers of certain
types, sizes, shapes and other distinguishing characteristics (collectively, subject to any
additions, deletions and modifications by the Company, the Authorized Containers). A list of
Authorized Containers for each Beverage will be provided by the Company to the Bottler, which list
may be amended by the Company from time to time by additions, deletions or modifications. The
Bottler is authorized to use only Authorized Containers in the manufacture, distribution and sale
of the Beverages. The Company reserves the right to withdraw from time to time its approval of any
of the Authorized Containers upon six (6) months notice to the Bottler, and, in such event, the
repurchase provisions of subparagraph 28(e) shall apply to containers so disapproved that are owned
by the Bottler. The Company will exercise its right to approve, and to withdraw its approval of,
specific Authorized Containers in good faith so as to permit the Bottler to continue to satisfy the
demand in the Territory as a whole for Beverages in containers of the nature identified on Schedule
E.
ARTICLE II
Exclusive Authorization
3 The Company appoints the Bottler as its sole and exclusive purchaser of the Concentrates
and Syrups for the purpose of manufacture, packaging and distribution of the Beverages under the
Trademarks in Authorized Containers for sale in the Territory.
4 The Company agrees not to authorize any other party whatsoever to use the Trademarks on
Beverages in Authorized Containers, or any other containers of the nature identified on Schedule E,
for purposes of resale in the Territory.
5 The Bottler shall purchase its entire requirements of Concentrates and Syrups
exclusively from the Company and shall not use any other syrup, beverage base, concentrate or other
ingredient in the Beverages than as specified by the Company.
2
ARTICLE III
Obligations of Bottler Relating to Trademarks and Other Matters
6 The Bottler acknowledges that the Company is the sole and exclusive owner of the
Trademarks, and the Bottler agrees not to question or dispute the validity of the Trademarks or
their exclusive ownership by the Company. By this Agreement, the Company extends to the Bottler
only (i) a nonexclusive license to use the trademark Coca-Cola as part of the corporate name of
the Bottler; and (ii) an exclusive license to use the Trademarks solely in connection with the
manufacture, packaging, distribution, and sale of the Beverages in Authorized Containers in the
Territory subject to the rights reserved to the Company under this Agreement. Nothing herein, nor
any act or failure to act by the Bottler or the Company, shall give the Bottler any proprietary or
ownership interest of any kind in the Trademarks or in the goodwill associated therewith.
7 The Bottler agrees during the term of this Agreement and in accordance with any
requirements imposed upon the Bottler under applicable laws:
(a) Not to produce, manufacture, package, sell, deal in or otherwise use or handle
any Cola Product (herein defined to mean any soft drink beverage which is generally
marketed as a cola product or which is generally perceived as being a cola product) other
than a soft drink manufactured, packaged, distributed or sold by the
Bottler under authority
of the Company,
(b) Not to manufacture, package, sell, deal in or otherwise use or handle any
concentrate, beverage base, syrup, beverage or any other product which is likely to be
confused with, or passed off for, any of the Concentrates, Syrups or Beverages,
(c) Not to manufacture, package, sell, deal in or otherwise use or handle any
product under any trade dress or in any container that is an imitation of a trade dress or
container in which the Company claims a proprietary interest or which is likely to be
confused or cause confusion or be confusingly similar to or be passed off as such trade
dress or container,
(d) Not to manufacture, package, sell, deal in or otherwise use or handle any
product under any trademark or other designation that is an imitation, counterfeit, copy or
infringement of, or confusingly similar to, any of the Trademarks, and
(e) Not to acquire or hold, directly or indirectly, any ownership interest in, or
enter into any contract or arrangement with respect to the management or control of, any
person within or without the Territory that engages in any of the activities prohibited
under subparagraphs (a), (b), (c) or (d) of this paragraph 7.
3
ARTICLE IV
Obligations
of Bottler Relating to Manufacture and Packaging of the Beverages
8
(a) The Bottler represents and warrants that the Bottler possesses, or will
possess, in the Territory, prior to the manufacture, packaging and distribution of the
Beverages, and will maintain during the term of this Agreement, such plant or plants,
machinery and equipment, trained staff, and distribution and vending facilities as are
capable of manufacturing, packaging and distributing the Beverages in Authorized Containers
in accordance with this Agreement, in compliance with all applicable governmental and
administrative requirements, and in sufficient quantities to satisfy fully the demand for
the Beverages in Authorized Containers in the Territory.
(b) The Company and the Bottler acknowledge that each is or may become a party to one
or more agreements authorizing a bottler or other Company-authorized entity to produce
Beverages for sale by another bottler. Such agreements include, but are not limited to (i)
agreements permitting bottlers, subject to certain conditions, to commence or continue to
manufacture the Beverages for other bottlers, and (ii) agreements pursuant to which bottlers
may have the Beverages manufactured for them by other Company-authorized entities. It is
hereby agreed that the Company shall not unreasonably withhold (i) any consents required by
such agreements, or (ii) approval of Bottlers participation in such agreements. All such
existing agreements shall remain in full force and effect in accordance with their terms.
9 The Bottler recognizes that increases in the demand for the Beverages, as well as
changes in the list of Authorized Containers, may, from time to time, require adaptation of its
existing manufacturing, packaging or delivery equipment or the purchase of additional
manufacturing, packaging and delivery equipment. The Bottler agrees to make such modifications and
adaptations as necessary and to purchase and install such equipment, in time to permit the
introduction and manufacture, packaging and delivery of sufficient quantities of the Beverages in
the Authorized Containers, to satisfy fully the demand for the Beverages in Authorized Containers
in the Territory.
10 The Bottler warrants that the handling and storage of the Concentrates, the
manufacture, handling and storage of the Syrups, and the manufacture, handling, storage and
packaging of the Beverages shall be accomplished in accordance with the Companys quality control
and sanitation standards, as reasonably established by the Company and communicated to the Bottler
from time to time, and shall, in any event, conform with all food, labeling, health, packaging and
other relevant laws and regulations applicable in the Territory.
11 The Bottler, in accordance with such instructions as may be given from time to time by
the Company, shall submit to the Company, at the Bottlers expense, samples of the Syrups, the
Beverages and the raw materials used in the manufacture of the Syrups and the Beverages. The
Bottler shall permit representatives of the Company to have access to the premises of the Bottler
during ordinary business hours to inspect the plant, equipment and methods used by the Bottler in
order to ascertain whether the Bottler is complying with the
4
instructions and standards prescribed
for the manufacturing, handling, storage and packaging of the Beverages.
12
(a) For the packaging, distribution and sale of the Beverages, the Bottler shall
use only such Authorized Containers, closures, cases, cartons and other packages and labels
as shall be authorized from time to time by the Company for the Bottler and shall purchase
such items only from manufacturers approved by the Company, which approval shall not be
unreasonably withheld. The Company shall approve three or more manufacturers of such items,
if in the reasonable opinion of the Company, there are three or more manufacturers who are
capable of producing such items to be fully suitable for the purpose intended and in
accordance with the high quality standards and image of excellence of the Trademarks and the
Beverages. Such approval by the Company does not relieve the Bottler of the Bottlers
independent responsibility to assure that the Authorized Containers, closures, cases,
cartons and other packages and labels purchased by the Bottler are suitable for the purpose
intended, and in accordance with the good reputation and image of excellence of the
Trademarks and Beverages.
(b) The Bottler shall maintain at all times a stock of Authorized Containers,
closures, labels, cases, cartons and other essential related materials bearing the
Trademarks, sufficient to satisfy fully the demand for Beverages in Authorized Containers in
the Territory, and the Bottler shall not use or permit the use of Authorized Containers, or
such closures, labels, cases, cartons and other materials, if they bear the Trademarks or
contain any Beverages, for any purpose other than the packaging and distribution of the
Beverages. The Bottler further agrees not to refill or otherwise reuse nonreturnable
containers.
13 If the Company determines the existence of quality or technical difficulties with any
Beverage, or any package used for such product, the Company shall have the right, immediately and
at its sole option, to withdraw such product or any such package from the market. The Company
shall notify the Bottler in writing of such withdrawal, and the Bottler shall, upon receipt of
notice, immediately cease distribution of such product or such package therefor. If so directed by
the Company, the Bottler shall recall and reacquire the product or package involved from any
purchaser thereof. If any recall of any product or any of the packages used therefor is caused by
(i) quality or technical defects in the Syrup, Concentrate or other materials prepared by the
Company from which the product involved was prepared by the Bottler, or (ii) quality or technical
defects in the Companys designs and design specifications of packages which it has imposed on the
Bottler or the Bottlers third party suppliers if such designs and specifications were negligently
established by the Company (and specifically excluding designs and specifications of other parties
and the failure of other parties to manufacture packages in strict conformity with the designs and
specifications of the Company), the Company shall reimburse the Bottler for the Bottlers total
expenses incident to such recall. Conversely, if any recall is caused by the Bottlers failure to
comply with instructions, quality control procedures or specifications for the preparation,
packaging and distribution of the product involved, the Bottler shall bear its total expenses of
such recall and reimburse the Company for the Companys total expenses incident to such recall.
5
ARTICLE V
Conditions of Purchase and Sale
14
(a) The Company reserves the right to establish and to revise at any time, in its
sole discretion, the price of any of the Concentrates or Syrups, the terms of payment, and
the other terms and conditions of supply, any such revision to be effective immediately upon
notice to the Bottler. If Bottler rejects a change in price or the other terms and
conditions contained in any such notice, then the Bottler shall so notify the Company within
thirty (30) days of receipt of the Companys notice, and this Agreement will terminate
ninety (90) days after the date or such notification by the Bottler, without further
liability of the Company or the Bottler. The change in price or other terms and conditions
so rejected by the Bottler shall not apply to purchases of such Concentrate or Syrup by the
Bottler during such ninety (90) day period preceding termination. Failure by the Bottler to
notify the Company of its rejection of the changes in price or such other terms and
conditions shall be deemed acceptance thereof by the Bottler.
(b) The Company shall sell to the Bottler, upon Bottlers request, either Syrup or
Concentrate, provided, however, that once the Bottler or any Bottler Affiliate has elected
to purchase Concentrate for any Company soft drink, the Company shall no longer be obligated
to supply Syrup to the Bottler, and provided further that any such election by the Bottler
or by any Bottler Affiliate to purchase Concentrate shall be with respect to all Company
soft drinks.
15 The Bottler shall purchase from the Company only such quantities of the Concentrates or
Syrups as shall be necessary and sufficient to carry out the Bottlers obligations under this
Agreement. The Bottler shall use the Concentrates exclusively for its manufacture of the Syrups
and shall use the Syrups exclusively for its manufacture of the Beverages. The Bottler shall not
sell or otherwise transfer any Concentrate or Syrup or permit the same to get into the hands of
third parties.
16
(a) The Bottler agrees not to distribute or sell any Beverage outside the
Territory. The Bottler shall not sell any Beverage to any person (other than another
bottler pursuant to subparagraph 8(b)) under circumstances where Bottler knows or should
know that such person will redistribute the Beverage for ultimate sale outside the
Territory. If any Beverage distributed by the Bottler is found outside of the Territory,
Bottler shall be deemed to have transshipped such Beverage and shall be deemed to be a
Transshipping Bottler for purposes hereof, provided, however, that if the Offended Bottler
has not agreed to terms substantially similar to this subparagraph 16(a) with respect to the
transshipment of Beverages, Bottler shall only be deemed to have transshipped such Beverage
if Bottler knew or should have known that the purchaser would redistribute the Beverage
outside of the Territory prior to ultimate sale. For purposes of this Agreement, Offended
Bottler shall mean a bottler in any territory into which any Beverage is transshipped.
(b) In addition to all other remedies the Company may have against any
Transshipping Bottler for violation of this paragraph 16, the Company may impose upon
6
any Transshipping Bottler a charge for each case of Beverage transshipped by such bottler. The
per-case amount of such charge shall be determined by the Company in its sole discretion and
may be an amount not to exceed three times the Offended Bottlers most current average gross
margin per case of the Beverage transshipped, as reasonably estimated by the Company. If
the Offended Bottler does not sell the Beverage that has
been transshipped, the Company may make the foregoing estimate on the basis of what it
considers a comparable product. The Company and the Bottler agree that the amount of such
charge shall be deemed to reflect the damages to the Company, the Offended Bottler and the
bottling system. The Company shall forward to the Offended Bottler, upon receipt from the
Transshipping Bottler, not less than an amount per case which approximates the Offended
Bottlers most current average gross margin per case of the Beverage transshipped. If the
Company or its agent recalls any Beverage which has been transshipped, the Transshipping
Bottler shall, in addition to any other obligation it may have hereunder, reimburse the
Company for its costs of purchasing, transporting and/or destroying such Beverage.
ARTICLE VI
Obligations of the Bottler Relating to the
Marketing of the Beverages, Financial Capacity and Planning
17 The continuing responsibility to develop and stimulate and satisfy fully the demand for
the Beverages in Authorized Containers within the Territory rests upon the Bottler. The Bottler
agrees to use all approved means as may be reasonably necessary to meet this responsibility.
18 The parties agree that to develop and stimulate demand for the Beverages in Authorized
Containers advertising and other forms of marketing activities are required. Therefore, the
Bottler will spend such funds in advertising and marketing the Beverages as may be reasonably
required to stimulate, as well as maintain, demand for the Beverages in Authorized Containers in
the Territory. The Bottler shall fully cooperate in and vigorously promote all cooperative
advertising and sales promotion programs and campaigns that may be reasonably established by the
Company for the Territory. The Bottler will use and publish only such advertising, promotional
materials or other items bearing the Trademarks relating to the Beverages as the Company has
approved and authorized. The expenditures required by this Article VI shall be made by the
Bottler. The Company may, in its sole discretion, contribute to such expenditures. The Company
may also undertake, at its expense, independently of the Bottlers marketing programs, any
advertising or promotional activity that the Company deems appropriate to conduct in the Territory,
but this shall in no way affect the responsibility of the Bottler for stimulating and developing
the demand for the Beverages in Authorized Containers in the Territory.
19 The Bottler and all Bottler Affiliates shall maintain the consolidated financial
capacity reasonably necessary to assure that the Bottler and all Bottler Affiliates directly or
indirectly controlled by the Bottler will be financially able to perform their respective duties
and obligations under this Agreement and under all other agreements between the
7
Company and Bottler
Affiliates regarding the manufacture, packaging, distribution and sale of the Beverages in
authorized containers (as defined in such agreements).
20
(a) Since periodic planning is essential for the proper implementation of this
Agreement, the Bottler and the Company shall meet annually, as close to the anniversary date
of this Agreement as practicable or at such other annual date as the
parties may set from time to time, to discuss the Bottlers plans for the ensuing year. At
such meeting, the Bottler shall present a plan that sets out in reasonable detail
satisfactory to the Company the marketing, management and advertising plans of the Bottler
with respect to the Beverages for the ensuing year, including a financial plan showing that
the Bottler and all Bottler Affiliates have the consolidated financial capacity to perform
their respective duties and obligations under their respective agreements with the Company
regarding the manufacture, packaging, distribution and sale of the Beverages in authorized
containers (as defined in such agreements). The Company and the Bottler shall discuss this
plan and this plan, upon approval by the Company, which shall not be unreasonably withheld,
shall define the Bottlers obligation herein to maintain such consolidated financial
capacity and to develop and stimulate and satisfy fully the demand for the Beverages in
Authorized Containers in the Territory for the period of time covered by the plan.
(b) The Bottler shall report to the Company periodically, but not less than
quarterly, as to its implementation of the approved plan; it is understood, however, that
the Bottler shall report sales on a regular basis as requested by the Company and in such
detail and containing such information as may be reasonably requested by the Company. The
failure by the Bottler to carry out the plan, or if the plan is not presented or is not
approved, will constitute a primary consideration for determining whether the Bottler has
fulfilled its obligation to maintain the consolidated financial capacity required under
paragraph 19 and to develop and stimulate and satisfy fully the demand for the Beverages in
Authorized Containers in the Territory. If the Bottler carries out the plan in all material
respects, it shall be deemed to have satisfied the obligations of the Bottler under
paragraphs 17, 18, 19 and 20 for the period of time covered by the plan.
ARTICLE VII
Reformulation, New Products and Related Matters
21 The Company has the sole and exclusive right and discretion to reformulate any of the
Beverages. In addition, the Company has the sole and exclusive right and discretion to discontinue
any of the Beverages under this Agreement, provided (i) such Beverage is discontinued on a national
basis in Authorized Containers and in such other containers as may have been authorized for use by
other bottlers under their respective bottle contracts, and (ii) the Company does not discontinue
all Beverages under this Agreement. In the event that the Company discontinues any Beverage,
Schedule A to this Agreement shall be deemed amended by deleting the discontinued Beverage from the
list of Beverages set forth on Schedule A.
8
22 In the event that the Company introduces any new beverage in the Territory under the
trademarks Coca-Cola or Coke or any modification thereof (herein defined to mean the addition
of a prefix, suffix or other modifier used in conjunction with the trademarks Coca-Cola or
Coke) the Bottler shall be obligated to manufacture, package, distribute and sell such new
beverage in Authorized Containers in the Territory pursuant to the terms
and conditions of this Agreement, and Schedule A to this Agreement shall be deemed amended by
adding such new beverage to the list of Beverages set forth on Schedule A.
23 The Company has the unrestricted right to use the Trademarks on the Beverages and on
all other products and merchandise other than the Beverages in Authorized Containers in the
Territory.
ARTICLE VIII
Term and Termination of the Agreement
24 The term of this Agreement shall commence on the effective date hereof and, unless
earlier terminated in accordance with its provisions, will continue perpetually.
25 The obligation to supply Concentrates or Syrups to the Bottler and the Bottlers
obligation to purchase Concentrates or Syrups from the Company and to manufacture, package,
distribute and sell the Beverages under this Agreement shall be suspended during any period when
any of the following conditions exist:
(a) There shall occur a change in the law or regulation (including without
limitation any government permission or authorization regarding customs, health or
manufacturing) in such a manner as to render unlawful or commercially
impracticable:
(i) the importation of Concentrate or Syrup or any of its essential ingredients
which cannot be produced in quantities sufficient to satisfy the demand therefor by
existing Company facilities in the United States, or
(ii) the
manufacture and distribution of the Concentrates, Syrups or Beverages,
or
(b) There shall occur any inability or commercial impracticability of either of the
parties to perform resulting from an act of God, or force majeure, public enemies,
boycott, quarantine, riot, strike, or insurrection, or due to a declared or undeclared war,
belligerency or embargo sanctions, blacklisting or other hazard or danger incident to the
same, or resulting from any other cause whatsoever beyond its control.
If any of the conditions described in this paragraph 25 persists so that either partys
obligation to perform is suspended for a period of six (6) months or more, the other party may
terminate this Agreement forthwith, upon notice to the party whose obligation to perform is
suspended.
9
26
(a) The Company may terminate this Agreement in the event of the occurrence of any of the
following events of default:
(i)
If the Bottler becomes insolvent, if a petition in bankruptcy is filed
against or on behalf of the Bottler which is not stayed or dismissed within sixty
(60) days, if the Bottler is put in liquidation or placed under sequester, if a
receiver is appointed to manage the business of the Bottler; or if the Bottler
enters into any judicial or voluntary arrangement or composition with its creditors,
or concludes any similar arrangements with them or makes an assignment for the
benefit of creditors,
(ii) If the Bottler adopts a plan of dissolution or liquidation,
(iii) If any person or any Affiliated Group, other than (a) the
stockholders of the Bottler at the effective date of this Agreement or (b) any
person or any Affiliated Group acting with the consent or the Company, acquires, or
obtains any contract, option, conversion privilege or other right to acquire,
directly or indirectly, Beneficial Ownership of more than ten percent (10%) of any
class or series of voting securities of the Bottler, and if such person or
Affiliated Group does not divest itself of Beneficial Ownership of such voting
securities or otherwise terminate any such contract, option, conversion privilege or
other right within thirty (30) days after the Company notifies the Bottler that the
failure of such person or Affiliated Group to thus divest or terminate may result in
termination of this Agreement,
(iv) If any Disposition is made without the consent of the Company by
Bottler or by any Bottler Subsidiary of any voting securities of any Bottler
Subsidiary,
(v) If any agreement regarding the manufacture, packaging, distribution or
sale of the Beverages in authorized containers (as defined in such agreement)
between the Company and any person that controls, directly or indirectly, the
Bottler is terminated, unless the Company agrees in writing that this subparagraph
26(a)(v) will not be applied by the Company to such termination, or
(vi) If the Bottler or any person in which the Bottler has Beneficial
Ownership of any equity or voting securities, or in which the Bottler has a right of
control of management, or which controls or is under common control with the
Bottler, should engage directly or indirectly in the manufacture, distribution or
marketing of any product specified in subparagraphs (a), (b), (c) or (d) of
paragraph 7 above, or should obtain a right or license to do the same, and if the
Company has given the Bottler notice that such condition exists and that the Company
will terminate this Agreement within six (6) months if such condition is not
eliminated, and if such condition has not been eliminated within the six (6) month
period.
10
(b) For purposes of this Agreement:
(i) Affiliated Group shall mean two or more persons acting as a
partnership, limited partnership, syndicate or other group, or who agree to act
together, for the purpose of acquiring, holding, voting or making any Disposition of
any voting securities of the Bottler, provided further that the Affiliated Group
formed thereby shall be deemed to have acquired Beneficial Ownership of all
voting securities of the Bottler beneficially owned by any such persons
(ii) Beneficial Ownership shall mean (i) voting power which includes the
power to vote, or to direct the voting of, any securities, or (ii) investment power
which includes the power to dispose, or to direct the Disposition of, any
securities; provided further Beneficial Ownership shall include any such voting
power or investment power which any person has or shares, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise;
provided, however, that the following persons shall not be deemed to have acquired
Beneficial Ownership under the circumstances described (a) a person engaged in
business as an underwriter of securities who acquires securities through his
participation in good faith in a firm commitment underwriting registered under the
Securities Act of 1933 shall not be deemed to be the Beneficial Owner of such
securities until such time as such underwriter completes his participation in the
underwriting and shall not thereupon or thereafter be deemed to be the Beneficial
Owner of the securities acquired by other members of any underwriting syndicate or
selected dealers in connection with such underwriting solely by reason of customary
underwriting or selected dealer arrangements, (b) a member of a national securities
exchange shall not be deemed to be a Beneficial Owner of securities held directly or
indirectly by it on behalf of another person solely because such member is the
record holder of such securities and, pursuant to the rules of such exchange, may
direct the vote of such securities, without instruction, on other than contested
matters or matters that may affect substantially the rights or privileges of the
holders of the securities to be voted, but is otherwise precluded by the rules of
such exchange from voting without instruction, and (c) the holder of a proxy
solicited by the Board of Directors of the Bottler for the voting of securities of
such Bottler at any annual or special meeting and any adjournment or adjournments
thereof of the stockholders of such Bottler shall not be deemed to be a Beneficial
Owner of the securities that are the subject of the proxy solely for such reason
(iii) Bottler Subsidiary shall mean any person that is controlled directly or
indirectly by the Bottler, and that is a party, or controls directly or indirectly a
party, to an agreement with the Company regarding the manufacture, packaging,
distribution or sale of the Beverages in authorized containers (as defined in such
agreement)
(iv) Disposition shall mean any sale, merger, issuance of securities or other
transaction in which, or as a result of which, any person other than Bottler or a
wholly owned subsidiary of Bottler acquires, or obtains any contract, option,
11
conversion privilege or other right to acquire Beneficial Ownership of any
securities.
(c) Upon the occurrence of any of the events of default specified in subparagraph
26(a), the Company may terminate this Agreement by giving the Bottler notice to that effect,
effective immediately.
27
(a) In addition to the events of default described in paragraph 26, the Company
may also terminate this Agreement subject to the limitations of subparagraph 27(b), in the
event of the occurrence of any of the following events of default:
(i) If the Bottler fails to make timely payment for Concentratc or Syrup, or
of any other debt owing to the Company,
(ii) If the condition of the plant or equipment used by the Bottler in
manufacturing, packaging or distributing the Beverages fails to meet the sanitary
standards reasonably established by the Company,
(iii) If the Syrups or Beverages manufactured by the Bottler fail to meet the
quality control standards reasonably established by the Company,
(iv) If the Beverages are not manufactured in such conformity with such
standards and instructions as the Company may reasonably establish,
(v) If the Bottler fails to carry out a plan approved under paragraph 20 in
all material respects, or
(vi) If the Bottler materially breaches any of the Bottlers other obligations
under this Agreement.
The standards and instructions of the Company comprise privately published information
concerning the manufacture, handling and storage of the Beverages under good manufacturing
practices, as well as technical instructions, bulletins and other communications issued or
amended from time to time by the Company (including, but not limited to, Syrup Room
Practices, Quality Control and Engineering Standards and GMP: A Guide to Good Manufacturing
Practices, as they may be amended or supplemented from time to time).
(b) Upon the occurrence of any of the foregoing events of default, the Company
shall, as a condition to termination of this Agreement under this paragraph 27, give the
Bottler notice thereof. The Bottler shall then have a period of sixty (60) days within
which to cure the default, including, at the instruction of the Company and at the Bottlers
expense, by the prompt withdrawal from the market and destruction of any Syrup or Beverage
that fails to meet the quality control standards of the Company or any Beverage that is not
manufactured in accordance with the instructions of the Company. If such default has not
been cured within such period, then the Company may, by giving the Bottler further notice to
such effect, suspend sales to the Bottler of Concentrates and Syrups and require the Bottler
to cease production of the Syrups and the Beverages and the packaging and
12
distribution of
Beverages in Authorized Containers. During such second period of sixty (60) days, the Company
also may supply, or cause or permit others to supply, the Beverages in Authorized Containers
under the Trademarks in the Territory. If such default has not been cured during such
second period of sixty (60) days, then the Company may terminate this Agreement, by giving
the Bottler notice to such effect, effective immediately.
28 Upon the termination of this Agreement:
(a) The Bottler shall forthwith take such action as necessary to eliminate the
trademark Coca-Cola from its corporate name,
(b) Any other agreement between the Company and the Bottler regarding the
manufacture, packaging, distribution, sale or promotion of soft drinks in authorized
containers (as defined in such agreement) may, at the election of the Company, be
automatically terminated and thereby become of no further force or effect,
(c) The Bottler shall not thereafter continue to manufacture, package, distribute
or sell any of the Beverages in Authorized Containers or to make any use of the Trademarks
or Authorized Containers, or any closures, cases, labels or advertising material bearing the
Trademarks,
(d) The Bottler shall forthwith remove and efface all reference to the Company, the
Beverages and the Trademarks from the business premises and equipment of the Bottler and
from all business paper and advertising used or maintained by the Bottler, and it shall not
thereafter hold forth in any manner whatsoever that it has any connection with the Company
or the Beverages, and,
(e) The Bottler shall forthwith deliver all Concentrate, Syrup, Beverage, usable
returnable or any nonreturnable containers, cases, closures, labels, and advertising
material bearing the Trademarks, still in the Bottlers possession or under the Bottlers
control, to the Company or the Companys nominee, as instructed, and, upon receipt, the
Company shall pay to the Bottler a sum equal to the reasonable market value of such supplies
or materials. The Company will accept and pay for only such articles as are, in the opinion
of the Company, in first-class and usable condition, and all other such articles shall be
destroyed at the Bottlers expense. Containers, closures and advertising material and all
other items bearing the name of the Bottler, in addition to the Trademarks, that have not
been purchased by the Company shall be destroyed without cost to the Company, or otherwise
disposed of in accordance with instructions given by the Company, unless the Bottler can
remove or obliterate the Trademarks therefrom to the satisfaction of the Company. The
provisions for repurchase contained in subparagraph 28(e) shall apply with regard to any
Authorized Container, approval of which has been withdrawn by the Company under paragraph 2,
upon termination by either party under paragraph 25, and upon termination by the Bottler
under subparagraph 14(a). In all other cases, the Company shall have the right, but not the
obligation, to purchase the aforementioned items from the Bottler.
29
(a) Subject to the limitations set forth in subparagraph 29(b), in the event that
the Bottler at any time fails to carry out a plan approved under paragraph 20 in all
material
13
respects in any geographic segment of the Territory, which segment shall be defined
by the Company (hereinafter Subterritory), the Company may reduce the Territory covered by
this Agreement, and thereby restrict the Bottlers authorization hereunder to the remainder
of the Territory, by eliminating the Subterritory from the Territory covered by this
Agreement
(b) In the event of such failure, the Company may eliminate Subterritories from the
Territory covered by this Agreement by giving the Bottler notice to that effect, which
notice shall define the Subterritory or Subterritories to which the notice applies. The
Bottler shall then have a period of six (6) months within which to cure such failure.
If the Bottler has not cured such failure in such six (6) month period, the Company may
eliminate such Subterritory or Subterritories from the Territory by giving the Bottler
further notice to that effect, effective immediately
(c) Upon elimination of any Subterritory from the Territory:
(i) Schedule D to this Agreement shall be deemed amended by eliminating
such Subterritory from the Territory described on Schedule D,
(ii) The Company may manufacture, package, distribute and sell the Beverages in
Authorized Containers under the Trademarks in such Subterritory, or authorize others
to do so,
(iii) Any other agreement between the Bottler and the Company regarding the
manufacture, packaging, distribution or sale of soft drinks in authorized
containers (as defined in such agreement) in such Subterritory may, at the election
of the Company, be automatically terminated and thereby become of no further force
or effect in such Subterritory,
(iv) The Bottler shall not thereafter continue to manufacture, package,
distribute or sell any of the Beverages in Authorized Containers in such
Subterritory, or to make any use of the Trademarks, Authorized Containers, closures,
cases, labels or advertising material bearing the Trademarks in connection with the
sale or distribution of the Beverages in such Subterritory, and
(v) The Bottler shall not thereafter hold forth in such Subterritory in any
manner whatsoever that it has any connection with the Beverages.
ARTICLE IX
Transferability/Additional Territories
30 The Bottler hereby acknowledges the personal nature of the Bottlers obligations under
this Agreement with respect to the performance standards applicable to the Bottler, the dependence
of the Trademarks on proper quality control, the level of marketing effort required of the Bottler
to stimulate and maintain demand for the Beverages in Authorized Containers, and the
confidentiality required for protection of the Companys trade secrets and confidential
information. In recognition of the personal nature of these and other obligations of the Bottler
under this Agreement, the Bottler may not assign, transfer or pledge this Agreement or any interest
14
therein, in whole or in part, whether voluntarily, involuntarily, or by operation of law
(including, but not limited to, by merger or liquidation), or delegate any material element of the
Bottlers performance thereof, or sublicense its rights hereunder, in whole or in part, to any
third party or parties, without the prior consent of the Company. Any attempt to take such action
without such consent shall he void and shall be deemed to be a material breach of this Agreement.
31 In the event that the Bottler acquires the right to manufacture and sell any of the
Beverages in any container that has been designated as an Authorized Container in any territory
in the United States outside of the Territory, such additional territory shall automatically
be deemed to be included within the Territory covered by this Agreement for all purposes. Any
separate agreement that may exist concerning such additional territory shall be ipso facto amended
to conform to the terms of this Agreement. In addition, if the Bottler acquires control, directly
or indirectly, of any person which is a party, or which controls directly or indirectly a party, to
an agreement whereby such party has the right to manufacture and sell any of the Beverages in any
territory in the United States in any container that has been designated as an Authorized
Container, the Bottler shall cause such party to amend such agreement, effective as of the date of
acquisition or control of such party, to conform to the terms of this Agreement with respect to all
such territory in the United States.
ARTICLE X
Litigation
32
(a) The Company reserves the right to institute any civil, administrative or
criminal proceeding or action, and generally to take or seek any available legal remedy it
deems desirable, for the protection of its good reputation and industrial property rights
(including, but not limited to, the Trademarks), as well as for the protection of the
Concentrates, the Syrups, the Beverages and the formulas therefor, and to defend any action
affecting these matters. At the request of the Company, the Bottler will render reasonable
assistance in any such action. The Bottler may not claim any right against the Company as a
result of such action or for any failure to take such action. The Bottler shall promptly
notify the Company of any litigation or proceeding instituted or threatened affecting these
matters. The Bottler shall not institute any legal or administrative proceedings against
any third party which may affect the interests of the Company in connection with this
Agreement without the Companys prior consent
(b) The Company has the sole and exclusive right and responsibility to prosecute
and defend all suits relating to the Trademarks. The Company may prosecute or defend any
suit relating to the Trademarks in the name of the Bottler whenever an issue in such suit
involves the Territory and therefore it is appropriate to act in the Bottlers name, or may
proceed alone in the name of the Company, provided that the Company shall take no action in
the Bottlers name which the Company knows or should know will materially prejudice or
impair the rights or interests of the Bottler under this Agreement
(c) The Bottler recognizes the importance and benefit to itself and all other
bottlers of the Beverages of protecting the interest of the Company in the Beverages,
15
Authorized Containers and the goodwill associated with the Trademarks. Therefore, the
Bottler agrees to consult with the Company on all products liability claims or lawsuits
brought against the Bottler in connection with the Beverages or Authorized Containers and to
take such action with respect to the defense of any such claim or lawsuit as the Company may
reasonably request in order to protect the interest of the Company in the Beverages,
Authorized Containers and goodwill associated with the Trademarks. Further, the Bottler
shall supervise, control and direct the defense of all such products liability claims and
lawsuits brought against it in a manner that is reasonably calculated to be
consistent with the Companys aforementioned interest. The Bottler and the Company
shall individually be responsible for their respective liability, loss, damage, costs,
attorneys fees and expenses arising out of or in connection with any such products liability
claim or lawsuit brought against them whether individually or jointly, provided, however,
that the Bottler and the Company expressly reserve all rights of contribution and indemnity
as prescribed by law.
ARTICLE XI
Automatic Amendment
33 In the event that eighty percent (80%) of the bottlers who are parties to agreements
with the Company containing substantially the same terms as this Agreement, which bottlers
purchased for their own account eighty percent (80%) or more of all of the Syrup and equivalent
gallons of Concentrate for Beverages purchased for the account of all such bottlers, agree to any
different provisions to be included in this Agreement, then the Bottler hereby agrees to include an
amendment containing such different provisions in this Agreement. The gallons of Syrup and
equivalent gallons of Concentrate purchased by such bottlers shall be determined based on the most
recently-ended calendar year prior to the date such amendment was first offered to bottlers.
ARTICLE XII
General
34 For purposes of this Agreement, the following terms shall have the meanings set forth
below:
(a) person means an individual, a corporation, a partnership, a limited
partnership, an association, a joint-stock company, a trust, any unincorporated
organization, or a government or political subdivision thereof.
(b) control (including terms controlling, controlled by and under common
control with) means (i) Beneficial Ownership of a majority of any class or series of voting
securities of a person, or (ii) the power or authority, directly or indirectly, to elect or
designate a majority of the members of the board of directors, or other governing body of a
person.
16
35 The Company hereby reserves for its exclusive benefit all rights of the Company not
expressly granted to the Bottler under the terms of this Agreement.
36 Without relieving the Bottler of any of us responsibilities under this Agreement, the
Company, from time to time during the term of this Agreement, at its option and either free of
charge or on such terms and conditions as the Company may propose, may offer technology to the
Bottler which the Company possesses, develops or acquires (and is free to furnish to third parties
without obligation) relating to the design, installation, operation and maintenance of the plant
and equipment appropriate for the
maintenance of product quality, sanitation and safety as well as for the efficient manufacture
and packaging of the Beverages, or relating to personnel training, accounting methods, electronic
data processing and marketing and distribution techniques.
37 The Bottler agrees:
(a) It will not disclose to any third party any nonpublic information whatsoever
concerning the composition of the Concentrates, the Syrup or the Beverages, without the
prior consent of the Company, and it will use any such information solely to perform its
obligations hereunder;
(b) It will at all times treat and maintain as confidential, all nonpublic
information that it may receive at any time from the Company, including, but not limited to:
(i) Information or instructions of a technical or other nature, relating to
the mixing, sale, marketing and distribution of the product,
(ii) Information about projects or plans worked out in the course of this
Agreement, and
(iii) Information constituting manufacturing or commercial trade secrets.
The Bottler further agrees to disclose such information, as necessary to perform its
obligations hereunder, only to employees of its enterprise (i) who have a reasonable need to
know such information, (ii) who have agreed to keep such information secret, and (iii) whom
the Bottler has no reason to believe is untrustworthy; and
(c) Upon the termination of this Agreement, Bottler will promptly surrender to the
Company all original documents and all photocopies or other reproductions in its possession
(including, but not limited to, any extracts or digests thereof) containing or relating to
any nonpublic information described in this paragraph 37. Following such termination, and
the surrender of such materials, the Bottler and its employees shall continue to hold any
nonpublic information in confidence and refrain from any further use or disclosure thereof
whatsoever, provided that such obligation shall expire as to any nonpublic information that
does not constitute trade secrets ten (10) years following such termination.
17
38 The Bottler agrees that it will not enter into any contract or other arrangement to
manage or participate in the management of any other Coca-Cola bottler without the prior consent of
the Company.
39
The Bottler is an independent manufacturer and not the agent of the Company. The Bottler
agrees that it will not represent that it is an agent of the Company nor hold itself out as such.
40 The Bottler covenants and agrees that, so long as this Agreement is in effect, the
Bottler shall deliver to Company:
(a) Quarterly Statements. As soon as such statements are made available to the
public, or if such statements are not regularly made available to the public, within thirty
days after each fiscal quarter, an unaudited income and expense statement and balance sheet
for the Bottler certified as correct by the chief financial officer of the Bottler;
(b) Annual Audit Statement. As soon as such statements are made available to the
public, or if such statements are not regularly made available to the public, within 120
days after the end of each fiscal year, statements of income and retained earnings of the
Bottler for the just-ended fiscal year, and a balance sheet of the Bottler as of the end of
such year, accompanied by an opinion from the independent public accountants of the Bottler;
and
(c) Other Information. With reasonable promptness such other financial information
as the Company may reasonably request.
41 The Bottler shall maintain its books, accounts and records in accordance with generally
accepted accounting principles and shall permit any person designated in writing by the Company to
visit and inspect any of its properties, corporate books and financial records, and make copies
thereof and take extracts therefrom, and to discuss the accounts and finances of the Bottler with
the principal officers thereof, all at such times as the Company may reasonably request. The
Companys rights of inspection under this paragraph 41 shall be exercised reasonably, and only for
purposes of determining Bottlers compliance with its obligations under paragraph 19, so as not to
interfere with the normal operation of the Bottlers business. The Company will treat and maintain
as confidential for a period of one year all nonpublic financial information received from the
Bottler.
42 The parties agree:
(a) The Existing Bottle Contracts identified on Schedule C are hereby amended,
superseded and restated in their entirety, and all rights, duties and obligations of the
Company and the Bottler regarding the Trademarks and the manufacture, packaging,
distribution and sale of the Beverages in Authorized Containers shall be determined under
this Agreement, without regard to the terms of any prior agreement and without regard to any
prior course of conduct between the parties,
18
(b) As to all matters addressed herein, this Agreement sets forth the entire
agreement between the Company and the Bottler, and all prior understandings, commitments or
agreements relating to such matters between the parties or their predecessors-in-interest
are of no force or effect, and
(c) Any waiver or modification of this Agreement or any of its provisions, and any
notices given or consents made under this Agreement shall not be binding upon the Bottler or
the Company unless made in writing, signed by an officer or
other duly qualified and authorized representative of the Company or by a duly
qualified and authorized representative of the Bottler, and personally delivered or sent by
telegram, telex or certified mail to an officer or other duly qualified and authorized
representative of the Company (if from the Bottler) or a duly qualified and authorized
representative of the Bottler (if from the Company) at the principal address of such party.
43 Failure of the Company to exercise promptly any option or right herein granted or to
require strict performance of any such option or right shall not be deemed to be a waiver of such
option or right, or of the right to demand subsequent performance of any and all obligations herein
imposed upon the Bottler.
44 The Company may delegate any of its rights, performance or obligations under this
Agreement to any subsidiaries or affiliates of the Company upon notice to the Bottler, but no such
delegation shall relieve the Company of its obligations hereunder.
45 If any provision of this Agreement, or the application thereof to any party or
circumstance shall ever be prohibited by or held invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition without invalidating the remainder of such
provision or any other provision hereof, or the application of such provision to other parties or
circumstances.
46 This Agreement shall be governed, construed and interpreted under the laws of the State
of Georgia.
IN WITNESS WHEREOF, the parties have duly executed this Agreement in duplicate effective as of
the day and year first above written.
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COCA-COLA |
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THE COCA-COLA COMPANY |
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BOTTLING CO. CONSOLIDATED |
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COCA-COLA USA DIVISION |
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By:
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/s/ James L. Moore
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By:
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/s/
Charles Wallace
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Title:
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President
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Title:
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Vice President
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Date:
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January 27, 1989
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Date:
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January 24, 1989 |
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19
SCHEDULE A
Beverages
The soft drink beverages listed below are subject to the terms and conditions of this
Agreement.
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1. |
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Coca-Cola |
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2. |
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Coca-Cola classic |
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3. |
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cherry Coke |
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4. |
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caffeine free Coca-Cola |
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5. |
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diet Coke |
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6. |
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caffeine free diet Coke |
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7. |
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diet cherry Coke |
SCHEDULE B
Trademarks
The following trademarks are owned by the Company and authorized for use by the Bottler
subject to the terms and conditions of this Agreement.
Coca-Cola
Coca-Cola (Script)
Coke
Coca-Cola Bottle
Coca-Cola classic
Dynamic Ribbon
diet Coca-Cola
diet Coke
caffeine free Coca-Cola
caffeine free diet Coke
cherry Coke
diet cherry Coke
SCHEDULE C
Existing Bottle Contracts
The following agreements are all of the agreements pursuant to which the Bottler acts as a bottler
of the Beverages (Existing Bottle Contracts). All of the following agreements, together with any
and all amendments thereto, are amended, superseded and restated in their entirety.
Bottlers Contract (First Line)
Dated: June 15, 1928
Parties: The Coca-Cola Bottling Company and Charlotte
Coca-Cola Bottling Company and consented to by The
Coca-Cola Company
Bottlers Contract
Dated: April 1, 1974
Parties: Coca-Cola Bottling Co. (Thomas), Inc. and Coca-Cola
Bottling Co. Consolidated
Amendment to Bottlers Contract
Dated: March 31, 1934
Parties: The Coca-Cola Bottling Company (A Tennessee
Corporation), The Coca-Cola Bottling Company (A
Delaware Corporation), The Charlotte Coca-Cola
Bottling Co., and consented to by The Coca-Cola
Company, a Tennessee corporation and The Coca-Cola
Company, a Delaware corporation.
Steel Drum Letter
Dated: March 14, 1940
Parties: The Coca-Cola Company and Coca-Cola Bottling
Company of Charlotte
Agreement Respecting Delivery of Coca-Cola Syrup (Bottlers)
in Tank Trucks
Dated: September 28, 1964
Parties: The Coca-Cola Company and Greensboro Coca-Cola
Bottling Co.
Agreement Respecting Delivery of Coca-Cola Syrup (Bottlers) in
Tank Trucks
Dated: November 5, 1965
Parties: The Coca-Cola Company and The Capital Coca-Cola
Bottling Co., Inc.
Page two
Agreement Respecting Delivery of Coca-Cola Syrup (Bottlers) in
Tank Trucks
Dated: November 30, 1966
Parties: The Coca-Cola Company and Greensboro Coca-Cola
Bottling Co.
Agreement Respecting Delivery of Coca-Cola Syrup (Bottlers)
in Tank Trucks
Dated: November 30, 1966
Parties: The Coca-Cola Company and Greensboro Coca-Cola
Bottling Co.
Agreement
Dated: December 1, 1966
Parties: Roanoke Coca-Cola Bottling Works, Inc.,
Martinsville Coca-Cola Bottling Company, Inc. and
Greensboro Coca-Cola Bottling Company
Amendment to First Line Bottlers Contract, Bottlers Pre-Mix
Contract and Contract for Allied Products (Substitution of
Parties)
Dated: October 1, 1970
Parties: The Coca-Cola Company, The Charlotte Coca-Cola
Bottling Company and The Charlotte Coca-Cola
Bottling Company
Amendment to First Line Bottlers Contract, Bottlers Pre-Mix
Contract and Contract for Allied Products (Substitution of
Parties)
Dated: March 13, 1972
Parties: The Coca-Cola Company, The Charlotte Coca-Cola
Bottling Company and Coca-Cola Bottling Co. of
Mid-Carolinas
Agreement Respecting Delivery of Coca-Cola Syrup (Bottlers)
in Tank Trucks
Dated: January 15, 1974
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Amendment
Dated: January 15, 1974
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Page three
Amendment
Dated: October 26, 1978
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Amendment
Dated: January 2, 1979
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Letter Agreement
Dated: April 20, 1979
Parties: The Coca-Cola Company, Coca-Cola Bottling Co.
Consolidated
Letter Agreement
Dated: April 20, 1979
Parties: The Coca-Cola Company, Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Letter Agreement
Dated: July 24, 1979
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Letter Agreement
Dated: July 24, 1979
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Letter Agreement
Dated: February 8, 1980
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Temporary License Agreement
Dated: September 10, 1981
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
1983 Amendment
Dated: July 15, 1983
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
1983 Amendment
Dated: July 15, 1983
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Page four
Concentrate Amendment
Dated: August 18, 1983
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Cessation of Production Agreement
Dated: May 16, 1984
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Temporary Amendment to 1983 Amendment-Maximum Low Calorie
Sweetener Element and Concentrate Discount
Dated: January 17, 1986
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Temporary Amendment to 1983 Amendment-Maximum Low Calorie
Sweetener Element and Concentrate Discount
Dated: January 17, 1986
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Home Market Amendment
Dated: June 22, 1987
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated (Danville, VA Territory)
Home Market Amendment
Dated: June 22, 1987
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
Amendment to Temporary License Amendment
Dated: March 3, 1988
Parties: The Coca-Cola Company and Coca-Cola Bottling Co.
Consolidated
SCHEDULE D
Territories
The geographic areas described below define the Territory subject to the terms and conditions of
the Agreement.
(Contract June 15, 1928
Amended and Redescribed
September 8, 1938)
All of Cleveland, Gaston, Lincoln, Iredell, Alexander, Rowan, Cabarrus, Stanley, Mecklenburg, and
Union Counties, North Carolina. All of Davidson County, North Carolina except Abbotts Creek
Township, Thomasville Township, Emmons Township, and that portion of Conrad Hill Township east of a
line running due north, from the northwest corner of Emmons Township to the Thomasville Township
boundary line. In Davie County, North Carolina, the Townships of Fulton and Shady Grove, and the
Town of Cooleemee as established by the present property lines of the Erwin Mills in Davie County,
and all territory within one-half mile of the north, south, east, and west property lines of the
said Erwin Mills as now established.
That portion of Anson County, North Carolina, west of a line drawn due north and south thru the
county, which line is one mile due east of the most easterly point in the present eastern boundary
line of the town of Polkton. That portion of York County and Cherokee County, South Carolina,
north of a line beginning at the southeast corner of Gaston County, North Carolina, and running
southwestwardly in a straight line to the most southerly point in the southern boundary line of the
Town of Clover in York County, South Carolina as said boundary was located in 1908, and including
the Town of Clover as its corporate limits were defined in 1908; thence northwestwardly in a
straight line to a point in the southwestern corner of the present boundary line of the Town of
Grover in Cleveland County, North Carolina.
(Added October 31, 1973)
That portion of the State of South Carolina included within the following boundaries, to-wit:
Beginning at the Northeast corner of Spartanburg County, South Carolina, and running
Southeastwardly along the Cherokee-Spartanburg County Line to a point on said line which lies four
and one-quarter (4-1/4) miles from the Northeast corner of Spartanburg County; thence Southwardly
in a straight line to a point which lies one and one-half (1-1/2) miles measured perpendicularly
from a point on the Cherokee-Spartanburg County Line which lies six and one-half (6-1/2) miles from
the Northeast corner of said Spartanburg County (it being understood and agreed that Mary-Louise
Mill and Mary Louise Mill Village, as the same existed November 20, 1952, including the store
servicing this mill, is in the territory of Coca-Cola Bottling Company of Gaffney); thence
Southeastwardly in a straight line to a point on the Cherokee-Spartanburg County Line which lies
nine and one half (9-1/2) miles from the Northeast corner of said Spartanburg County; thence
Southwardly along the Cherokee-Spartanburg County Line to a point which lies two and
eleven-sixteenths (2-11/16) miles from the intersection of Union, Spartanburg, and Cherokee
Counties; thence Northeastwardly in a straight line drawn perpendicularly from the last named point
for a distance of two and one-fourth (2-
1/4) miles; thence Southwardly to the intersection of Spartanburg, Cherokee and Union Counties; (it
being understood and agreed that the store now occupied by R. R. Brown is in the territory of Union
Coca-Cola Bottling Company); thence Southeastwardly along the Union-Cherokee County Line to the
Southeast corner of Cherokee County; thence Northwardly along the Western boundary of York County
to a point on said boundary due northwest of the Town of Smyrna in York County; thence in a
Southeasterly direction in a straight line to but not including Smyrna; thence in a Northeasterly
direction in a straight line to and including Bethel Church; thence in a Westerly direction in a
straight line to the most Southerly point in the Southern boundary line of the Town of Clover as
said boundary was located in 1908, and not including the Town of Clover as its corporate limits
were defined in 1908; thence Northwestwardly in a straight line toward the Southwestern corner of
the boundary line of the Town of Grover in Cleveland County, North Carolina, (as the same existed
on September 8, 1938) to the South Carolina-North Carolina State Line; thence Westwardly along the
Northern boundary of Cherokee County to the Northeast corner of Spartanburg County, said point of
beginning.
-2-
AND ALSO:
That portion of the State of South Carolina included within the following boundaries, to-wit:
Beginning at a point on the Cherokee-Spartanburg County Line which lies two and eleven-sixteenth a
(2-11/16) miles from the intersection of Union, Spartanburg and Cherokee Counties and running
Southwestwardly in a straight line and parallel to the Union-Spartanburg County Line for a distance
of three and one-half (3-1/2) miles; thence Southeastwardly in a straight line to a point on the
Union-Spartanburg County Line which lies three and one-half (3-1/2) mites from the intersection of
Union, Spartanburg and Cherokee Counties; thence Southwardly along the Union-Spartanburg County
Line to the intersection of Union, Laurens, and Spartanburg Counties; thence Southeastwardly along
the Laurens-Union County Line to the intersection of Laurens, Union and Newberry Counties; thence
Southwardly along the Union-Newberry County line to a point on the Union-Newberry County Line which
lies one and one-half (1-1/2) miles North of the Seaboard Airline Railway; thence Northeastwardly
running parallel to and one-half mile North of the Seaboard Airline Railway to the Union-Chester
County Line; thence Northwardly along the Union-Chester County Line to the intersection of Union,
York and Chester Counties; thence continuing Northwardly along the Union-York County Line to the
intersection of Union, Cherokee and York Counties; thence Northwestwardly along the Union-Cherokee
County Line to the intersection of Union, Spartanburg and Cherokee Counties; thence Northwardly in
a straight line to a point which lies two and one-fourth (2-1/4) miles measured perpendicularly
from a point on the Spartanburg-Cherokee County Line which lies two and eleven-sixteenths (2-11/16)
miles from the intersection of Spartanburg, Cherokee and Union Counties (it being understood and
agreed that the store now occupied by R. R. Brown is included within the above described
territory); thence Southwestwardly in a straight line to said point on the Spartanburg-Cherokee
County Line which lies two and eleven-sixteenths (2-11/16) miles from the intersection of
Spartanburg, Cherokee and Union Counties, said point of beginning.
Attached hereto and made a part hereof are photostatic copies of portions of General Highway
Transportation Maps of Spartanburg and Cherokee Counties on which portions of the above described
lines are drawn in red.
-3-
(Added April 1, 1974 with notations of certain prior deletions)
GREENSBORO, NORTH CAROLINAs ORIGINAL TERRITORY
(As set out in Contract of February 26, 1937)
The town of Kernersville in Forsyth County, the town of Prospect Hill in Caswell County, North
Carolina, and that portion of the State of North Carolina included within the following boundaries,
to-wit:
Beginning at the northwest corner of Guilford County; thence running east along the northern
boundary of said county to the southwest corner of New Bethel township in Rockingham County; thence
north along the western boundary of New Bethel township to its intersection with the eastern
boundary of Mayo township; thence northeastwardly along the eastern boundary of Mayo township to
the point of intersection with a straight line extending from a point one mile south of the town of
Price, to a point one mile south of the town of Leaksville; thence southeastwardly along said line
to said point one mile south of Leaksville; thence eastwardly in a straight line to a point one
mile south of Ruffin, North Carolina, thence southeastwardly to a point one mile south of the town
of Blackwells, North Carolina; thence eastwardly in a straight line toward a point one mile south
of the town of Yanceyville, to the eastern boundary of Locust Hill township; thence southwardly
along the eastern boundaries of Locust Hill and Stony Creek townships to the northern line of
Alamance County; thence west along the northern line of Alamance County to the northwest corner of
said county; thence south along the western line of said county to its southwest corner; thence
east along the southern line of said county to its southeast corner; thence north along the eastern
line of said county to its northeast corner; thence east along the southern line of Caswell County
to the southeast corner of Caswell County; thence southeastwardly in a straight line to a point on
the Southern Railway one-half way between the town of Hillsboro and University Station; thence in a
southwesterly direction in a straight line to but not including the town of Bynum in Chatham
County; thence southwardly in a straight line to and including the town of Cumnock in Lee County;
thence south in a straight line to but not including Lemon Springs; thence due west to the western
boundary of Lee County; thence northwestwardly along the Lee-Moore County line to Deep River;
thence southwestwardly in a straight line to the southwest corner of Deep River township in Moore
County; thence continuing southwestwardly in a straight line to a point on the west line of
Carthage township which is equi-distant from the northwest and southwest corners of said township;
thence westwardly in a straight line to a point on the N. & S. R. R. midway between the towns of
Biscoe and Candor; thence due west to the eastern boundary of Troy township; in Montgomery County;
thence south along the eastern line of Troy township to its southeast corner; thence east to the
northeast corner of Cheek Creek township; thence south along the east line of Cheek Creek township
to the south line of Montgomery County; thence westwardly along the south line of Montgomery County
to the southwest corner of Montgomery County; thence northwardly along the west line of said County
to the northwest corner of said County; thence east along the north line of said County to the
southeast corner of Davidson County; thence north along the east line of Davidson County to the
southeast corner of Emmons township in Davidson County; thence westwardly and northwardly along the
southern and western line of Emmons township to the northwest corner of said township; thence due
north in a straight line to the south line of Thomasville township; thence westwardly along the
south line of Thomasville township to the southwest corner of said township; thence northwardly and
eastwardly along the west and north lines of Thomasville township to the west line of Guilford
-4-
County; thence northwardly along the west line of Guilford County to the northwest corner of said
County, the point of beginning.
(All references to Cities and Towns are as they existed on February 26, 1937)
LESS AS
DELETED (Added to Burlington, North Carolinas Contract as of January 15, 1940)
The town of Prospect Hill in Caswell County North Carolina; and that part of Orange County, North
Carolina, west of a line described as follows: Beginning at the southeast corner of Caswell
County; thence southeastwardly in a straight line to a point on the Southern Railway one-half way
between the town of Hillsboro and University Station; thence in a southwesterly direction in a
straight line, toward the town of Buynum to the southern line of Orange County.
LESS AS
DELETED (Added to Winston-Salem, North Carolinas Contract as of June 1, 1949)
In the County of Forsyth, North Carolina, the Town of Kernersville.
(All references to Cities and Towns are as they existed on February 26, 1937)
AND ALSO
BURLINGTON,
NORTH CAROLINAS ORIGINAL TERRITORY:
(As set out in Contract of February 26, 1937)
All of Alamance County, North Carolina; also that part of the townships of Yanceyville and Leasburg
in Caswell County, North Carolina, lying south of a line extending across said townships from a
point one mile south of the town of Blackwells, North Carolina; thence in a straight line to a
point one mile south of the town of Yanceyville; thence in a straight line to a point on the
eastern boundary line of Caswell County one mile south of the town of Leasburg; also all of
Anderson and Hightowers townships in said county except the town of Prospect Hill.
(All references to Cities and Towns are as they existed on February 26, 1937)
AND ALSO
ADDED (Acquired from Greensboro, North Carolina, as of January 15, 1940)
The town of Prospect Hill in Caswell County, North Carolina; and that part of Orange County, North
Carolina, west of a line described as follows: Beginning at the southeast corner of Caswell
County; thence southeastwardly in a straight line to a point on the Southern Railway one-half way
between the town of Hillsboro and University Station: thence in a southwesterly direction in a
straight line; toward the town of Buynum, to the southern line of Orange County.
(All references to Cities and Towns are as they existed on February 26, 1937)
AND ALSO
-5-
WINSTON-SALEM, NORTH CAROLINAS ORIGINA L TERRITORY
(As set out in Contract of February 26, 1937)
All of Abbots Creek Township in Davidson County, North Carolina, all of Surry County, North
Carolina, except the towns of Elkin and Crutchfield; all of Stokes County, North Carolina; all of
Forsyth County, North Carolina, except the town of Kernersville; all of Davie County, North
Carolina, except the town of Cooleemee, territory within a quarter of a mile from the town of
Cooleemee, and the townships of Fulton and Shady Grove; in Rockingham County, all the townships of
Huntsville and Madison, and all of the townships of Mayo and Price lying south of a straight line
extending from a point on the Virginia North Carolina line west of the town of Price, North
Carolina, and running southeastwardly through a point one mile south of Price and to a point one
mile south of Leaksville, North Carolina.
That portion of Yadkin County, North Carolina lying east of a line running from the point of
intersection of Iredell, Davie and Yadkin lines to a point one-fourth mile due east of the town of
Footville, thence northwardly in a straight line to a point one mile due west of the present city
limits of Yadkinville; thence northwardly in a straight line to a point one mile due west of the
present city limits of Boonville; thence due north to the northern boundary of Yadkin County.
(All references to Cities and Towns are as they existed on February 26, 1937)
LESS AS
DELETED (Added to Charlotte, North Carolina, Contract as of April 6, 1937)
The town of Cooleemee, as established by the present property lines of the Erwin Mills in Davie
County, and all territory within one-half mile of the north, south, east, and west property lines
of the said Erwin Mills.
AND ALSO
ADDED (Acquired from Greensboro, North Carolina, as of June 1, 1949)
In the County of Forsyth, North Carolina, the Town of Kernersville.
(All references to Cities and Towns are as they existed on February 26, 1937)
AND ALSO
RALEIGH, NORTH CAROLINAS ORIGINAL TERRITORY
(As set out in Contract of August 6, 1930)
The town of Raleigh and all the territory East, North and South within a radius of fifty
miles, and the following territory towards Greensboro on the Southern Road to University Station,
on the Southern Road to Claranden (Clarendon) and on the Seaboard Air Line towards Hamlet as far as
Lemon Springs.
1. (SANFORD, N. C.): Part of the above territory is covered by a sub-bottlers contract
dated August 1, 1916, for Sanford, N.C. Said Sanford, N.C., and the territory covered by said
contract, described as follows, to wit:
-6-
The County of Lee, Harnett County south of Cape Fear River, now owned by the Raleigh Coca-Cola
Bottling Company of Raleigh, N. C., and the part of Chatham County, south of Haw River, now owned
by the Raleigh Coca-Cola Bottling Company of Raleigh, N. C., including the town of Buynum (Bynum).
is subject to the terms of said sub-bottlers contract.
2. (DUNN, N. C.): Part of the above territory is covered by a sub-bottlers contract
dated the 10th day of November, 1925, for Dunn, N.C. Said Dunn, N, C., and the territory covered by
said contract, described as follows, to wit:
Beginning at the intersection of the Atlantic Coast Line R. R. and the Harnett and Cumberland
County line, thence westward with the Harnett County line to a point where the Cape Fear River
enters Cumberland County, thence up the Cape Fear River with the eastern bank to a point where the
Norfolk & Southern R. R. crosses the Cape Fear River, thence in a straight line northeastwardly to
a point on the Durham and Southern R. R. one mile south of Angier, thence to a point on contact or
intersection of Wake, Harnett and Johnson County lines, thence in a straight line eastward to a
point where the Atlantic Coast Line R. R. crosses the Neuse River, thence in a straight line to a
point of contact or intersection of Johnson, Wayne and Sampson counties, thence with the Johnson
and Harnett County lines to the beginning. Also including all territory in Cumberland and Sampson
counties within a radius of 50 miles of Raleigh, N. C. as covered by Raleigh Coca-Cola Bottling
Co.s contract.
Is subject to the terms of said sub-bottlers contract.
LESS:
3. WILSON, N. C, territory, which territory was covered by contract dated July 20, 1909,
described as follows, to wit:
The town of Wilson, North Carolina, together with all of the towns in North Carolina named
below and all that section of territory included within a boundary line passing through said towns
in order mentioned, Baca, Red Oak, Oakland, Bunn, Sutton, Middlesex, Micoe, Pinelevel, Oliver,
Beasley, Rosinhill, Dudley, Moyton, Wilbanks, Medora and Baca.
LESS:
4. DURHAM, N. C., territory, which territory was covered by contract with Durham dated
February 3, 1911, as amended and revised by contract dated October 31, 1929, described as follows,
to wit:
Beginning at a point on the Southern Railway half-way between University Station and
Hillsboro; and running to the Southwest corner of Person County; thence along the Western boundary
of Person County to a point one mile south of the Southern Railway (Atlantic & Danville Division);
thence parallel to and one mile south of this railroad in a northeastwardly direction to the
Northern boundary of Person County; thence along this county line to the Person-Granville county
line; thence south along this line to a point one mile south of Holloway Mines, N.C.; thence
northeastwardly to the northeast corner of Granville County; thence to and including the town of
Ridgeway; thence south to an arc of a circle of fifty miles radius from Raleigh, N.C.; thence
southeast along said arc to and including the town of Creek, on Fishing Creek; thence south to and
-7-
including Inez; thence southwest to a point in Franklin County two miles north of Louisburg;
thence west to a point in Franklin County two miles north of Franklinton; thence to a point five
miles east of Creedmoor; thence to a point one mile west of Leesville; thence to and including
Morrisville; thence to and including Upchurch; thence to and including Ebeneezer, on the Norfolk &
Southern Railroad; thence north along the Norfolk & Southern Railroad to the station of Seaforth;
thence west to a point half-way between Seaforth and Bynum; thence north to a point on the Southern
Railway half-way between University Station and Hillsboro, the point of beginning.
PLUS (As included under Raleighs Bottlers Contract on October 11, 1938)
All territory in Franklin County, North Carolina south of a line running from a point five miles
east of the town of Creedmoor in Granville County eastwardly in a straight line to a point two
miles north of the town of Franklinton in Franklin County; thence eastwardly in a straight line to
a point two miles north of the town of Louisburg; thence northeastwardly in a straight line to and
including the town of Inez in Warren County. (Not already covered by Raleighs contract, dated
August 6, 1930.)
LESS (As surrendered by Raleigh on October 11, 1938)
That portion of Nash County, North Carolina which is within 50 miles of the City of Raleigh, North
Carolina.
LESS (As surrendered by Raleigh on May 15, 1957)
That portion of the State of North Carolina, lying within the following described boundaries,
to-wit:
Beginning at the intersection of Johnston, Wayne and Sampson Counties, and running Southwardly in a
straight line to a point two-tenths (2/10) of one (1) mile Northwest of Monks Crossroads on United
States Highway Number 701; thence continuing in a Southwardly direction in a straight line to a
point where the arc of a circle, having a radius of fifty (50) miles measured from the
Triangulation Station Number Two (2) located on top of the Security Bank Building in Raleigh, North
Carolina, crosses the Great Coharie Creek in Sampson County; thence continuing clockwise along said
arc of a circle, having a radius of fifty (50) miles measured from the Triangulation Station Number
Two (2) located on top of the Security Bank Building in Raleigh, North Carolina, to its
intersection with the Hoke County line; thence Northwardly along the Hoke-Cumberland County line to
the point of intersection of Harnett, Cumberland and Hoke Counties; thence Northeastwardly along
the Harnett-Cumberland County line to its intersection with the Cape Fear River; thence Northwardly
along the Eastern bank of Cape Fear River to a point where the Norfolk & Southern Railroad crosses
the Cape Fear River; thence in a straight line Northeastwardly to a point on the Durham and
Southern Railroad one (1) mile South of Angier; thence Northeastwardly in a straight line to the
intersection of Wake, Harnett and Johnston Counties; thence Eastwardly in a straight line to a
point where the Atlantic Coast Line Railroad crosses the Neuse River, said point lying in Johnston
County, thence Southwardly in a straight line to a point of contact or intersection of Johnston,
Wayne and Sampson Counties, said point of beginning.
(Added May 1, 1978)
That portion of the States of North Carolina and South Carolina included within the following
boundaries: Beginning at and including the Town of Middendorf, in Chesterfield County, South
-8-
Carolina, and running Northeastwardly in a straight line to but not including the Town of Cash,
thence Southeastwardly in a straight line to but not including the Town of Marlboro, thence
Northeastwardly in a straight line through a point on the S.A.L. Railroad midway between the Towns
of McColl and Clio to the North Carolina-South Carolina State line; thence Southeastwardly along
said North Carolina-South Carolina State line to a point where the projection of a straight line
drawn from but not including Red Springs, Robeson County, North Carolina, to the Eastern boundary
(as the same existed on February 19, 1932) of the Town of Red Banks (a station on the S.A.L.R.R.)
intersects said North Carolina-South Carolina State line; thence Northwardly along said projection
and said straight line drawn from but not including Red Springs to the Eastern boundary (as the
same existed on February 19, 1932) of the Town of Red Banks to but not including said Town of Red
Springs; thence along the West side of North Carolina State Highway No. 70, including all territory
on the West side of said Highway, to a point where the dividing line between Hoke and Robeson
Counties crosses said North Carolina State Highway No. 70, thence Northwardly along the Eastern
boundary of Hoke County so as to include all of said Hoke County to the intersection of Hoke,
Moore, and Harnett Counties; thence Northeastwardly and Northwestwardly along the Northeastern
boundary of Moore County to the point where Deep River first touches the Lee-Moore County line;
thence Southwestwardly in a straight line to the Southwest corner of Deep River Township, in Moore
County, thence continuing Southwestwardly in a straight line to a point on the West line of
Carthage Township, which is equidistant from the Northwest and Southwest corners of said township;
thence Westwardly in a straight line to a point on the N. & S R.R. midway between the Towns of
Biscoe and Candor; thence due West to the Eastern boundary of Troy Township, in Montgomery County,
thence South along the Eastern line of Troy Township to its Southeast corner; thence East to the
Northeast corner of Cheek Creek Township, thence South along the East line of Cheek Creek Township
to the South line of Montgomery County; thence Westwardly along the South line of Montgomery County
to the Southwest corner of Montgomery County, thence Westwardly along the Stanly-Anson County line
to a point which lies due North of a point one (1) mile due East of the most Eastern point in the
Eastern boundary line of the Town of Polkton (as the same existed on the 8th day of September,
1938); thence due South through said point one (1) mile due East of the most Easterly point in the
Eastern boundary of said Town of Polkton to the North Carolina-South Carolina State line, thence
Eastwardly along said North Carolina-South Carolina State line to a point on said line due North of
the Town of Chesterfield, in Chesterfield County, South Carolina; thence Southwardly in a straight
line to and including the Town of Middendorf, said point of beginning.
(All points referred to above, unless specifically indicated, are as the same existed on December
21, 1948.)
(Deleted December 6, 1984)
All of Thomasville Township and all of Emmons Township and that portion of Conrad Hill Township
east of a line running due north from the northwest corner of Emmons Township to the Thomasville
Township line, all lying in Davidson County, North Carolina.
(Deleted January 1, 1985)
All of Lincoln County, North Carolina. That portion of Gaston County, North Carolina lying within
the following boundaries:
-9-
Beginning at a point, the southeast corner of Lincoln County, and running in a southwesterly
direction in a straight line to the southeast corner of the present boundary line of the Town of
Stanley, North Carolina, and including the Town of Stanley, North Carolina; thence west, north and
east with the present boundary lines of the Town of Stanley, North Carolina to a point in the
present northern boundary line of the Town of Stanley, which point is one-fourth mile west of the
center line of the Seaboard Airline Railway right of way; thence northwestwardly, running parallel
to and one-fourth of a mile west of the Seaboard Airline Railway (between Stanley and Lincolnton)
to the southern boundary line of Lincoln County; thence in an easterly direction following said
Lincoln County line to the point of beginning.
(Deleted February 1, 1985)
Territory described in the Sub-Bottlers Contract dated January 1, 1938 between Greensboro
Coca-Cola Bottling Co. and Biscoe Coca-Cola Bottling Co., Inc. (incorrectly referred to as Biscoe
Coca-Cola Bottling Company, Incorporated), described therein as follows:
That portion of the State of North Carolina included within the following boundaries:
Beginning at the point on the Moore-Lee county line where Deep River first touches said county line
and running southwestwardly in a straight line to the southwest corner of Deep River township in
Moore County; thence continuing southwestwardly in a straight line to a point on the west line of
Carthage township which is equidistant from the northwest and southwest corners of said township;
thence westwardly in a straight line to a point on the N. & S. R. R. midway between the towns of
Biscoe and Candor; thence due west to the eastern boundary of Troy township in Montgomery County;
thence south along the eastern line of Troy township to its southeast corner; thence east to the
northeast corner of Cheek Creek township; thence south along the east line of Cheek Creek township
to the south line of Montgomery County; thence westwardly along the south line of Montgomery County
to the southwest corner of Montgomery County; thence northwardly along the west line of said county
to the northwest corner of said county; thence east along the north line of said county to the
southeast corner of Davidson County; thence east along the south line of Randolph County to the
northeast corner of Eldorado township: thence in a southeasterly direction in a straight line to a
point midway between the towns of Ether and Star; thence in a northeasterly direction in a straight
line to a point on the northern boundary of Moore County due south of Maffit, a town in Randolph
County; thence eastwardly along the northern boundary of Moore County to the western boundary of
Lee County; thence south along the Moore-Lee county line to the point on the Moore-Lee county line
where Deep River first touches said county line, the point of beginning, excepting from said
territory, however, the town of Carbonton.
(Deleted February 1, 1985)
That portion of the State of North Carolina included within the following boundaries: Beginning at
the Southeast corner of Montgomery County and running Southeastwardly along the Moore-Richmond
County line to the Southernmost corner of Moore County; thence Southeastwardly, Northeastwardly and
Northwestwardly around the Southern, Eastern and Northern boundaries of Hoke County so as to
include all of said Hoke County to the intersection of Hoke, Moore, and Harnett Counties; thence
Northeastwardly and Northwestwardly along the Northeastern boundary of Moore County to the point
where Deep River first touches the Lee-Moore County line; thence
-10-
Southwestwardly in a straight line to the Southwest corner of Deep River Township, in Moore County;
thence continuing Southwestwardly in a straight line to a point on the West line of Carthage
Township, which is equidistant from the Northwest and Southwest corners of said township; thence
Westwardly in a straight line to a point on the N. & S. R. R. midway between the Towns of Biscoe
and Candor; thence due West to the Eastern boundary of Troy Township, in Montgomery County; thence
South along the Eastern line of Troy Township to its Southeast corner; thence East to the Northeast
corner of Cheek Creek Township; thence South along the East line of Cheek Creek Township to the
South line of Montgomery County; thence Eastwardly along the Southern boundary of Montgomery County
to the Southeast corner of Montgomery County, said point of beginning.
-11-
(Deleted September 22, 1986)
IN THE STATE OF NORTH CAROLINA:
All of Lincoln County, North Carolina. That portion of Gaston County, North Carolina lying within
the following boundaries:
Beginning at a point, the southeast corner of Lincoln County, and running in a southwesterly
direction in a straight line to the southeast corner of the present boundary line of the Town of
Stanley, North Carolina, and including the Town of Stanley, North Carolina; thence west, north and
east with the present boundary lines of the Town of Stanley, North Carolina to a point in the
present northern boundary line of the Town of Stanley, which point is one-fourth mile west of the
center line of the Seaboard Airline Railway right of way; thence northwestwardly, running parallel
to and one-fourth of a mile west of the Seaboard Airline Railway (between Stanley and Lincolnton)
to the southern boundary line of Lincoln County; thence in an easterly direction following said
Lincoln County line to the point of beginning.
(Said points are as same existed on November 11, 1938.)
-12-
(Danville, Virginia territory Contract April 1, 1974)
In the Cities of Danville, South Boston, Chase City, Va., and Leaksville, N. C, and the
following territory in the State of Virginia, to wit: That part of Pittsylvania County, Virginia,
that is colored green and lies East of the line indicated on the map attached hereto, marked
Schedule A and made a part hereof; all points on the line of railroad running from, and
including, the towns of Boydton and Keysville to Danville; at all points on the Norfolk & Western
Ry. from South Boston, Va., to the south side of the Staunton River; all points in Charlotte
County, Va.; the town of Biery in Prince Edwards County, and all other territory in the State of
Virginia within fifty (50) miles of the City of Danville, Va., except all such other territory
within fifty miles of Roanoke, Va., not specifically included in the above description. All points
within fifty one (51) miles of Richmond, Va., are specifically excluded from this contract. The
following territory in the State of North Carolina is included in this contract, to wit: Those
points in the State of North Carolina lying north of a direct line beginning at a point one mile
south of Price; thence in a southeastwardly direction to a point one mile south of Leaksville;
thence to a point one mile south of Ruffin; thence southeastwardly to a point one mile south of
Blackswell in Caswell County; thence to a point one mile south of Yanceyville (but it is understood
that N. W. Miles Store, in Caswell County is not included in this contract); thence to a point one
mile south of Leasburg; thence north along the Caswell-Person County line to a point one mile south
of the Southern Railway (Atlantic & Danville Division) at Semora; thence parallel to and one mile
south of this railroad in a northeastwardly direction to the northern boundary of Person County;
thence along this county line to the Person-Granville County line; thence south along this line to
a point one mile south of Holloway Mines, N.C.; thence northeastwardly to the northeast corner of
Granville County. This contract does not include any point that is within 100 miles of Charlotte,
N.C.
-13-
Coca-Cola
USA List of Authorized Packaging
|
|
|
TYPE: REFILLABLE BOTTLES
|
|
Schedule E |
|
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|
|
|
|
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|
|
|
|
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|
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|
TOLERANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
|
MAJ. |
|
|
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
|
DIAMETER |
|
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Coca-Cola |
|
Crown |
|
6.5 oz. |
|
13 oz. |
|
|
7.750" |
|
|
|
2.237" |
|
|
+.047-.031 |
|
± .047 |
|
1.953 |
|
7104-04 |
|
a |
Coca-Cola |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
Coca-Cola |
|
Crown & 28mm |
|
300 mL |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
Coca-Cola |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
Coca-Cola |
|
Crown & 28mm |
|
500 mL |
|
15 oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
Coca-Cola |
|
Crown & 28mm |
|
16 oz. |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
Coca-Cola |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
± .062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
Coca-Cola |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
Coca-Cola |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
Coca-Cola |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
Coca-Cola |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coca-Cola classic |
|
Crown |
|
6.5 oz. |
|
13 oz. |
|
|
7.750" |
|
|
|
2.237" |
|
|
+.047-.031 |
|
± .047 |
|
1.953 |
|
7104-04 |
|
a |
Coca-Cola classic |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
Coca-Cola classic |
|
Crown & 28mm |
|
300 mL |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
Coca-Cola classic |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
Coca-Cola classic |
|
Crown & 28mm |
|
500 mL |
|
15 oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
Coca-Cola classic |
|
Crown & 28mm |
|
16 oz. |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
Coca-Cola classic |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
± .062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
Coca-Cola classic |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
Coca-Cola classic |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
Coca-Cola classic |
|
38mm |
|
2 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
Coca-Cola classic |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±
..062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
May, 1996
* S.C.
authorized only.
Page 1
Coca-Cola
USA List of Authorized Packaging
|
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|
TOLERANCE |
|
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|
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|
|
MAJOR |
|
|
MAJ. |
|
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|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
|
DIAMETER |
|
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
C.F.
Coca-Cola |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
C.F.
Coca-Cola |
|
Crown & 28mm |
|
300mL |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
C.F.
Coca-Cola |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
C.F.
Coca-Cola |
|
Crown & 28mm |
|
500mL |
|
15 oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
+.062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
C.F.
Coca-Cola |
|
Crown & 28mm |
|
16 oz. |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
±.062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
C.F.
Coca-Cola |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
±.062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
C.F.
Coca-Cola |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
C.F.
Coca-Cola |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
C.F.
Coca-Cola |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
C.F.
Coca-Cola |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
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|
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|
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|
|
diet
Coke |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+0.62-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
diet
Coke |
|
Crown & 28mm |
|
300mL |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
diet
Coke |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
diet
Coke |
|
Crown & 28mm |
|
500mL |
|
15 oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
+.062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
diet
Coke |
|
Crown & 28mm |
|
16 oz. |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
±.062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
diet
Coke |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
2.570 |
|
7110-01 |
|
c |
diet
Coke |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
2.570 |
|
7118-R31 |
|
c |
diet
Coke |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
diet
Coke |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
±.062 |
|
± .078 |
|
2.562 |
|
17001 |
|
a |
diet
Coke |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
* S.C.
authorized only.
Page 2
Coca-Cola USA- List of Authorized Packaging
TYPE: REFILLABLE BOTTLES
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|
TOLERANCE |
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MAJOR |
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|
MAJ. |
|
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|
FILL |
|
DESIGN |
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|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
|
DIAMETER |
|
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
C F diet Coke |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
C F diet Coke |
|
Crown & 28mm |
|
300 mL |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
C F diet Coke |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
C F diet Coke |
|
Crown & 28mm |
|
500 mL |
|
15 oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
C F diet Coke |
|
Crown & 28mm |
|
16 oz |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
C F diet Coke |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
C F diet Coke |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
C F diet Coke |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
C F diet Coke |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
± .062 |
|
± .078 |
|
2.562 |
|
17001 |
|
a |
C F diet Coke |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cherry Coke |
|
Crown & 28mm |
|
10 oz. |
|
15 oz |
|
|
9.956" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
Cherry Coke |
|
Crown & 28mm |
|
300 mL. |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
Cherry Coke |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
Cherry Coke |
|
Crown & 28mm |
|
500 mL |
|
15 oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
Cherry Coke |
|
Crown & 28mm |
|
16 oz |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
Cherry Coke |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
Cherry Coke |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
Cherry Coke |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
Cherry Coke |
|
Crown |
|
26 oz |
|
26 oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
± .062 |
|
± .078 |
|
2.562 |
|
17001 |
|
a |
Cherry Coke |
|
28mm |
|
36 oz |
|
34 oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
diet Cherry Coke |
|
Crown & 28mm |
|
10 oz. |
|
15 oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a,c |
diet Cherry Coke |
|
Crown & 28mm |
|
300 mL. |
|
11 oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a,c |
diet Cherry Coke |
|
Crown & 28mm |
|
12 oz. |
|
16 oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a,c |
diet Cherry Coke |
|
Crown & 28mm |
|
500 mL. |
|
15 oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a,c |
diet Cherry Coke |
|
Crown & 28mm |
|
16 oz. |
|
17 oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a,c |
diet Cherry Coke |
|
28mm |
|
32 oz. |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
diet Cherry Coke |
|
28mm |
|
1 Liter |
|
32 oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
diet Cherry Coke |
|
38mm |
|
1 Liter |
|
32 oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
diet Cherry Coke |
|
Crown |
|
26 oz. |
|
26 oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
± .062 |
|
± .078 |
|
2.562 |
|
17001 |
|
a |
diet Cherry Coke |
|
28mm |
|
36 oz. |
|
34 oz. |
|
|
12.376" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
* S.C.
authorized only.
Page 3
Coca-Cola USA List of Authorized Packaging
TYPE: REFILLABLE BOTTLES
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|
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|
|
|
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|
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|
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|
|
|
|
|
|
|
|
TOLERANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
MAJ. |
|
|
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
TAB
|
|
Crown
|
|
7 oz.
|
|
13 oz.
|
|
7.750"
|
|
2.328"
|
|
+ .047- .031
|
|
± .047
|
|
|
1.953 |
|
|
7216-01
|
|
a |
TAB
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.956"
|
|
2.360"
|
|
+ .047- .031
|
|
+ .062
|
|
|
2.203 |
|
|
7218-02
|
|
a, c |
TAB
|
|
Crown & 28mm
|
|
16 oz.
|
|
17 oz.
|
|
11.125"
|
|
2.635"
|
|
+ .062- .047
|
|
± .078
|
|
|
2.203 |
|
|
7220-02
|
|
a, c |
TAB
|
|
Crown & 28mm
|
|
500 mL
|
|
15 oz.
|
|
9.956"
|
|
2.781"
|
|
± .062
|
|
±.062
|
|
|
1.703 |
|
|
7291-003
|
|
a, c |
TAB
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7288-02
|
|
c |
TAB
|
|
28mm
|
|
1 Liter
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7222-006
|
|
c |
TAB
|
|
38mm
|
|
1 Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
1.797 |
|
|
7222-04
|
|
d |
TAB
|
|
28mm
|
|
36 oz.
|
|
34 oz.
|
|
12.375"
|
|
3.656"
|
|
± .062
|
|
±.094
|
|
|
2.203 |
|
|
7369-1*
|
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CF TAB
|
|
Crown & 28mm
|
|
10 oz
|
|
15 oz
|
|
9.956"
|
|
2.360"
|
|
+ .047- .031
|
|
±.062
|
|
|
2.203 |
|
|
7218-02
|
|
a, c |
CF TAB
|
|
Crown & 28mm
|
|
16 oz
|
|
17 oz.
|
|
11.125"
|
|
2.635"
|
|
+ .062- .047
|
|
±.078
|
|
|
2.203 |
|
|
7220-02
|
|
a, c |
CF TAB
|
|
Crown & 28mm
|
|
500 mL
|
|
15 oz |
|
9.956"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7291-003
|
|
a, c |
CF. TAB
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+.078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7288-02
|
|
c |
CF TAB
|
|
28mm
|
|
1 Liter
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+.078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7222-006
|
|
c |
CF TAB
|
|
38mm
|
|
1 Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+.078- .062
|
|
±.078
|
|
|
1.797 |
|
|
7222-04
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprite
|
|
Crown
|
|
7 oz
|
|
13 oz.
|
|
7.750"
|
|
2.344"
|
|
+ .047- .031
|
|
±.047
|
|
|
1.953 |
|
|
7119-04
|
|
a |
Sprite
|
|
Crown & 28mm
|
|
10 oz
|
|
15 oz.
|
|
9.656"
|
|
2.355"
|
|
+ .047- .031
|
|
±.062
|
|
|
2 203 |
|
|
7203-02
|
|
a, c |
Sprite
|
|
Crown & 28mm
|
|
16 oz
|
|
18 oz.
|
|
11.125"
|
|
2.635"
|
|
+ .062- .047
|
|
±.078
|
|
|
2.203 |
|
|
7207-04
|
|
a, c |
Sprite
|
|
Crown & 28mm
|
|
500 mL
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
±.062
|
|
|
1.703 |
|
|
7270-06
|
|
a, c |
Sprite
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
± .078
|
|
|
2.578 |
|
|
7293-01
|
|
a |
Sprite
|
|
28mm
|
|
32 oz
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7293-002
|
|
c |
Sprite
|
|
28mm
|
|
1 Liter
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
2 578 |
|
|
7103-014
|
|
c |
Sprite
|
|
38mm
|
|
1 Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
1.797 |
|
|
7103-11
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diet Sprite
|
|
Crown & 28mm
|
|
10 oz
|
|
15 oz.
|
|
9.656"
|
|
2.355"
|
|
+ .047- .031
|
|
±.062
|
|
|
2.203 |
|
|
7203-02
|
|
a, c |
diet Sprite
|
|
Crown & 28mm
|
|
16 oz
|
|
18 oz.
|
|
11.125"
|
|
2.635"
|
|
+ .062- .047
|
|
±.078
|
|
|
2.203 |
|
|
7207-04
|
|
a, c |
diet Sprite
|
|
Crown & 28mm
|
|
500 mL
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7270-06
|
|
a, c |
diet Sprite
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
2.578 |
|
|
7293-002
|
|
c |
diet Sprite
|
|
38mm
|
|
1 Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078- .062
|
|
±.078
|
|
|
1.797 |
|
|
7103-11
|
|
d |
* S.C.
authorized only.
Page 4
Coca Cola USA List of Authorized Packaging
TYPE REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLERANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
MAJ. |
|
|
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Mr PIBB
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.656"
|
|
2.323"
|
|
+. 047- .031
|
|
± .062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Mr PIBB
|
|
Crown & 28mm
|
|
15 oz.
|
|
17 oz.
|
|
11.125"
|
|
2.534"
|
|
+ .062-.047
|
|
± .078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Mr PIBB
|
|
Crown & 28mm
|
|
500 mL.
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Mr PIBB
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Mr PIBB
|
|
28mm
|
|
1.Liter
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7169-13
|
|
c,ACL |
Mr PIBB
|
|
38mm
|
|
1.Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mello Yello
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.656"
|
|
2.323"
|
|
+ .047-.031
|
|
± .062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Mello Yello
|
|
Crown & 28mm
|
|
15 oz.
|
|
17 oz.
|
|
11.125"
|
|
2.534"
|
|
+ .062-.047
|
|
± .078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Mello Yello
|
|
Crown & 28mm
|
|
500 mL.
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Mello Yello
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Mello Yello
|
|
38mm
|
|
1.Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramblin
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.656"
|
|
2.323"
|
|
+ .047-.031
|
|
± .062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Ramblin
|
|
Crown & 28mm
|
|
16 oz.
|
|
17 oz.
|
|
11.125"
|
|
2.534"
|
|
+ .062-.047
|
|
± .078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Ramblin
|
|
Crown & 28mm
|
|
500 mL.
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Ramblin
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Ramblin
|
|
38mm
|
|
1.Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresca
|
|
Crown
|
|
7 oz.
|
|
13 oz.
|
|
7.750"
|
|
2.328"
|
|
+ .047-.031
|
|
± .047
|
|
|
1.953 |
|
|
7146-01
|
|
a |
Fresca
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.656"
|
|
2.390"
|
|
+ .062-.047
|
|
± .062
|
|
|
2.203 |
|
|
7149-03
|
|
a,c |
Fresca
|
|
Crown & 28mm
|
|
16 oz.
|
|
18 oz.
|
|
11.125"
|
|
2.641"
|
|
+ .062-.047
|
|
± .078
|
|
|
2.203 |
|
|
7151-01
|
|
a,c |
Fresca
|
|
Crown & 28mm
|
|
500 mL
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7330-003
|
|
a,c |
Fresca
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11.703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7286-01
|
|
c |
Fresca
|
|
38mm
|
|
1.Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
1.797 |
|
|
7157-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fanta
|
|
Crown |
|
7 oz.
|
|
14 oz.
|
|
7.750"
|
|
2.345"
|
|
+ .047-.031
|
|
± .047
|
|
|
1.953 |
|
|
7126-01
|
|
a |
Fanta
|
|
Crown & 28mm
|
|
10 oz.
|
|
15 oz.
|
|
9.656"
|
|
2.360"
|
|
+ .047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7131-03
|
|
a,c |
Fanta
|
|
Crown & 28mm
|
|
16 oz.
|
|
17 oz.
|
|
11.125"
|
|
2.563"
|
|
+ .062-.047
|
|
± .078
|
|
|
2.203 |
|
|
7135-01
|
|
a,c |
Fanta
|
|
Crown & 28mm
|
|
500 mL.
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7460-001
|
|
a,c,c |
Fanta
|
|
Crown & 28mm
|
|
500 mL.
|
|
15 oz.
|
|
9.656"
|
|
2.781"
|
|
± .062
|
|
± .062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Fanta
|
|
28mm
|
|
32 oz.
|
|
32 oz.
|
|
11. 703"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
2.578 |
|
|
7287-02
|
|
c |
Fanta
|
|
38mm
|
|
1.Liter
|
|
32 oz.
|
|
11.125"
|
|
3.656"
|
|
+ .078-.062
|
|
± .078
|
|
|
1.797 |
|
|
7143-14
|
|
d |
Page 5
Coca-Cola USA List of Authorized Packaging
TYPE REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLERANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
MAJ. |
|
|
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Minute Maid |
|
Crown & 28mm |
|
10oz |
|
15 oz. |
|
9.656" |
|
2.323" |
|
+.047-.031 |
|
±.062 |
|
2.203 |
|
7167-02 |
|
a, c |
Minute Maid |
|
Crown & 28mm |
|
16oz |
|
18 oz. |
|
11.125" |
|
2.641" |
|
+.062-.047 |
|
±.078 |
|
2.203 |
|
7151-01 |
|
a, c |
Minute Maid |
|
Crown & 28mm |
|
500ml |
|
15 oz. |
|
9.656" |
|
2.781" |
|
±.062 |
|
±.062 |
|
1.703 |
|
7330-003 |
|
a, c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generic |
|
Crown & 28mm |
|
300 ml |
|
11 oz. |
|
8.268" |
|
2.401" |
|
+.062-.047 |
|
±.062 |
|
1.693 |
|
7464-002 |
|
a, c, e |
Generic |
|
Crown & 28mm |
|
500 ml |
|
15 oz. |
|
9.556" |
|
2.781" |
|
±.062 |
|
±.062 |
|
1.703 |
|
7454-01 |
|
a, c, e |
Generic |
|
Crown & 28mm |
|
500 ml |
|
15 oz. |
|
9.556" |
|
2.781" |
|
±.062 |
|
±.062 |
|
1.703 |
|
7460-001 |
|
a, c, e |
Generic |
|
28mm |
|
32 oz |
|
32 oz. |
|
11.703" |
|
3.656" |
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7292-02 |
|
c, e |
Generic |
|
38mm |
|
1 Liter |
|
32 oz. |
|
11.125" |
|
3.656" |
|
+.078-.062 |
|
±.078 |
|
1.797 |
|
7169-12 |
|
c, e |
Generic |
|
38mm |
|
2 Liter |
|
52 oz. |
|
12.875" |
|
4.656" |
|
±.079 |
|
±.094 |
|
2.578 |
|
7383-02 |
|
d, f |
For Brand(s) Coca-Cola, Coca-Cola classic, cf Coca-Cola, cf Coca classic, diet Coke, cf diet Coke,
cherry Coke, diet Cherry Coke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major |
|
Tolerance |
|
Tolerance |
|
|
|
Design |
|
|
Material |
|
Finish |
|
Capacity |
|
Weight |
|
Height |
|
Diameter |
|
Diameter |
|
Height |
|
Fill Point |
|
Number |
|
Reference |
Pre Labeled |
|
crown |
|
8 oz. |
|
7.93 oz. |
|
7.578" |
|
2.317" |
|
±.047 |
|
±.031 |
|
1.953" |
|
B-89158 |
|
a, I |
ACL |
|
crown |
|
8 oz. |
|
7.93 oz. |
|
7.578" |
|
2.317" |
|
±.047 |
|
±.031 |
|
1.953" |
|
7236026 |
|
a, I |
Pre Labeled |
|
28mm |
|
16 oz |
|
9.08oz. |
|
8.281" |
|
2.827" |
|
±.047 |
|
±.031 |
|
1.797" |
|
B-89149-GC |
|
b, I |
TYPE CROWNS/CLOSURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLERANCE |
ITEM |
|
MATERIAL |
|
DIAMETER |
|
HEIGHT |
|
DIAMETER |
|
HEIGHT |
Crowns |
|
Tin-free steel or Tinplate |
|
(OD) 1.262" |
|
.235" |
|
± .008" |
|
± .008" |
|
|
|
|
|
|
|
|
|
|
|
Metal Closures |
|
Aluminum |
|
38 mm (ID)1.495" |
|
0.692" |
|
.008"/-0.002 |
|
± .007" |
|
|
|
|
|
|
|
|
|
|
|
Plastic Closures |
|
Polypropylene |
|
28 mm(OD) 1.166" |
|
0.708" |
|
± .010" |
|
± .015" |
(Ethyl 1716) |
|
|
|
38 mm (OD) 1.570" |
|
0.890" |
|
± .009" |
|
± .010" |
|
|
|
|
38 mm (OD) 1.585" |
|
0.863" |
|
± .010" |
|
± .010" |
Page 6
Coca - Cola USA List of Authorized Packaging
TYPE. CANS
|
|
|
|
|
|
|
MATERIAL |
|
CAPACITY |
|
NOMENCLATURE |
|
REFERENCE |
ALUMINUM |
|
8 oz (236 ml) |
|
206/211x 307, 2-pc. |
|
f |
ALUMINUM |
|
12 oz (354 ml) |
|
206/211x 413, Quad necked-in, 2-pc. |
|
f |
ALUMINUM |
|
16 oz (473 ml) |
|
206/211x 603, 2-pc Spinneck |
|
f |
ALUMINUM |
|
12 oz (354 ml) |
|
206/211x 413, 2-pc. Spinneck |
|
f |
ALUMINUM |
|
12 oz (354 ml) |
|
202/211x 413, 2-pc. Spinneck |
|
f |
STEEL |
|
12 oz (354 ml) |
|
206/211x 413, 2-pc. Spinneck |
|
f |
TYPE PRODUCT CONTAINERS
|
|
|
|
|
MATERIAL |
|
CAPACITY |
|
TYPE CONTAINER |
Stainless Steel |
|
4.75 gal |
|
Model A, Pre-Mix |
Stainless Steel |
|
4.75 gal |
|
Model E, Pre-Mix |
Stainless Steel |
|
4.75 gal |
|
Model R, Pre-Mix |
TYPE SECONDARY PACKAGING
|
|
|
|
|
|
|
ITEM |
|
MATERIAL |
|
PRIMARY PACKAGE |
|
CONFIGURATION |
Paperboard Wrap |
|
Paperboard |
|
12 oz. Cans |
|
3x4 |
|
|
Paperboard |
|
12 oz Cans |
|
3x5 |
|
|
Paperboard |
|
12 oz Cans |
|
3x6 |
|
|
Paperboard |
|
12 oz. Cans |
|
4x6 |
|
|
Paperboard |
|
12 oz Cans |
|
3x4x2 |
|
|
|
|
|
|
|
Contour-Pak |
|
Polyethylene |
|
16 oz S/W PET |
|
2X3 or 2x4 |
|
|
|
|
20 oz S/W PET |
|
2x3 |
|
|
|
|
10 oz Pre-Labeled Glass |
|
2x3 |
|
|
|
|
16 Oz. Pre-Labeled Glass |
|
2x3 |
|
|
|
|
1-Liter S/W PET |
|
2x3 |
Page 8
Coca-Cola USA List of Authorized Packaging
TYPE. SECONDARY PACKAGING
|
|
|
|
|
|
|
|
|
ITEM |
|
MATERIAL |
|
PRIMARY PACKAGING |
|
CONFIGURATION |
|
REFERENCE |
Shrink Wrap |
|
Polyethylene |
|
20 oz. PET Proprietary and S/W |
|
2x3 |
|
|
|
|
|
|
16 oz Glass |
|
2x3 |
|
|
|
|
|
|
20 oz. Glass |
|
2x3 |
|
|
|
|
|
|
|
|
|
|
|
Basket Wraps |
|
Paperboard |
|
20 oz S/W PET |
|
2x3 |
|
i |
|
|
|
|
20 oz. Proprietary PET |
|
2x3 |
|
|
Basket Carriers |
|
Paperboard |
|
20 oz S/W PET |
|
2x3 |
|
i |
|
|
|
|
20 oz. Proprietary PET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 oz Glass |
|
2x3 |
|
i |
|
|
|
|
|
|
|
|
|
Hi-Cone |
|
Polyethylene |
|
16 oz. S/W PET |
|
2x3 or 2x4 |
|
|
|
|
|
|
20 oz. S/W PET |
|
2x3 or 2x4 |
|
|
|
|
|
|
12 oz. Cans |
|
2x3 or 2x4 |
|
|
|
|
References |
|
(a) |
|
Crown denotes the 26 mm Crown Finish (GPI 600 Finish-Refillables/GPI 665
Finish-Non-Refillables) |
|
(b) |
|
28 mm denotes the 28 mm ROPP Threaded Glass Finish
(GPI 1650 Finish-Refillable
and NON-Refillable). |
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(c) |
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Denotes finish designed to accomodate Plastic Closure only, Alcoa, 969-1810-000. |
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(d) |
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38 mm denotes the 38 mm ROPP Threaded Glass Finish (GPI 1650) |
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(d p1) |
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denotes the 38 mm ROPP PET finish, Alcoa 969-1690-001 |
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(e) |
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Authorized for use with Allied Products only when decorated with ACL, paper or
foil labels according to specification issued by the Coca-Cola Company. |
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(f) |
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Authorized for use with all Products only when decorated according to
specifications issued by The Coca-Cola Company. |
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(g) |
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Design variations at different weights have been authorized on a manufacturing
plant basis only. |
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(i) |
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Authorized only for Coca-Cola Brands |
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(j) |
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Authorized only for brand Sprite |
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() |
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CT refers to contour package, PS refers to propritary Sprite package |
Page 9
HOME MARKET AMENDMENT
Master Bottle Contract
THIS HOME MARKET AMENDMENT (Home Market Amendment) is made and entered into by and between
The Coca-Cola Company (Company), through its Coca-Cola USA Division, and
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LYBC, Inc. |
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Lynchburg, Virginia
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(Bottler); |
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Company and Bottler are presently parties to the MASTER BOTTLE CONTRACT effective as of
10-29-99 (the Master Bottle Contract). This Home Market
Amendment provides for the sale of the Beverages in syrup form for use and consumption in the Home
Market (as such term is hereinafter defined).
NOW, THEREFORE, for and in consideration of the mutual benefits and promises from one to the
other, and other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed as follows, all of which shall constitute an amendment to the Master
Bottle Contract.
1. Definitions. As used in this Home Market Amendment, (i) capitalized terms
which are defined in the Master Bottle Contract shall have the meanings ascribed to them in
the Master Bottle Contract, and (ii) the following terms shall have the indicated meanings:
1.1. Home Market Syrup. Home Market Syrup shall mean any kind of
syrup for any Beverage that is sold or distributed in syrup form by any person for
use and consumption in the Home Market.
1.2. Home Market. Home Market shall mean with respect to the
Territory (i) residences, i.e., the places where people reside such as single family
dwellings, condominiums, apartment houses and cooperative housing complexes, and
(ii) the nonpublic areas within residences specifically excluding any restaurants,
cafeterias, similar food service outlets and any other retail outlets located
therein.
1.3. Total Bottler Syrup Gallons. Total Bottler Syrup Gallons shall
mean, with respect to any time period, the total number of gallons of Home Market
Syrup and Syrup (including equivalent gallons of beverage base and concentrate) to
produce Beverages for distribution and sale in Authorized Containers purchased by
the Bottler for its own account.
1.4. Unauthorized Home Market Syrup. Unauthorized Home Market Syrup
shall mean Home Market Syrup which is sold in the Territory by any person other than
through Bottler or any entity affiliated with Bottler.
1.5. Fountain Home Delivery Syrup. Fountain Home Delivery Syrup
shall mean equivalent gallons of syrup for any Beverage which has been used by
anyone other than through Bottler or an entity affiliated with Bottler to produce a
finished Beverage which was sold and delivered to the Home Market in the Territory
by the vendor of such Beverage.
1.6. Weighted Average Fountain Concentrate Price, Weighted Average
Fountain Concentrate Price shall mean a price calculated in the following manner:
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With respect to each Beverage, multiply (A) the number of
gallons of fountain syrup (and equivalent gallons of concentrate and beverage
base to produce fountain syrup) sold by the Company during such calendar
quarter by (B) the lowest fountain concentrate price published by the Company
for fountain wholesalers effective during such quarter (net of all discounts,
allowances, fees and other generally available adjustments, except volume
discounts); |
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(b) |
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Add together all of the arithmetic products of the foregoing
computations; |
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(c) |
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Divide the foregoing sum by the total number of gallons of
fountain syrup (and equivalent gallons of concentrate and beverage base to
produce fountain syrup) for all Beverages sold by the Company during such
quarter. |
1.7. Independent First Line Master Bottler. Independent First Line
Master Bottler shall mean any business entity having contracts with the Company
substantially similar to the Master Bottle Contract and this Home Market Amendment
covering a geographic territory within the United States of America, if a majority
of the voting securities of such business entity is not owned directly or indirectly
by the Company,
2. General Statement of Relationship; Home Market Syrup. Home Market Syrup for
each of the Beverages listed on Schedule A to the Master Bottle Contract (as Schedule A may
be modified from time to time under the Master Bottle Contract) shall be deemed to be a
Beverage and a Syrup covered by all of the terms and conditions of the Master Bottle
Contract; and Bottler shall have the sole, exclusive and perpetual right and license in
Bottlers Territory to supply the Home Market with Home Market Syrup, subject to all of the
provisions of the Master Bottle Contract.
No other party shall be authorized by Company to sell and deliver any beverage marketed under
the Coca-Cola or Coke trademarks with or without modification produced in any form that may
hereafter be developed into the Home Market in the Territory unless Company shall have first
offered such authorization to Bottler on terms and conditions which are equivalent in every
2
material respect to those which may be offered to such other party. For purposes of this
Paragraph, beverages shall include syrups, concentrates, beverage bases and other materials used to
produce beverages but shall not include finished beverages purchased at retail from fountain
accounts. The terms and conditions offered to Bottler may be different from or additional to
but not inconsistent with the terms and conditions of the Master Bottle Contract. Bottler shall
have 75 days after receipt of Companys proposal to accept the authorizations included therein by
giving Company notice of such acceptance. If Bottler does not give Company timely notice of
Bottlers acceptance of such authorizations and the terms and conditions thereof, then Company
shall have the right to authorize others to sell and deliver such beverages in such new form in the
Territory on the same terms as offered to Bottler.
2.4. Reservation of Rights. This Home Market Amendment defines the
rights and obligations of the parties only with respect to the matters specifically
set forth herein. This Home Market Amendment shall not by implication amend or
change any rights or obligations of the parties under the Master Bottle Contract.
Except as expressly amended by this Home Market Amendment, the Master Bottle
Contract defines the rights and obligations of the parties with respect to the
manufacture, packaging and distribution of the Beverages under the Trademarks in
Authorized Containers for sale in the Territory, and said Master Bottle Contract
shall remain in full force and effect in accordance with its terms.
3. Covenants. The Company and Bottler shall cooperate with each other in
carrying out the covenants contained in this Paragraph 3. Nothing contained in Paragraph 4
of the Master Bottle Contract shall be deemed to be inconsistent with the specific
provisions of this Paragraph 3.
3.1. Unauthorized Bottling. The Company shall take all actions which
are commercially reasonable and legally permissible to prohibit the manufacture and
sale of any beverage marketed under the Coca-Cola or Coke trademarks with or without
modification in Authorized Containers in the Territory by anyone other than through
Bottler, except to the extent that such manufacture and sale may in the future be
permitted under any of the provisions of Article VIII of the Master Bottle Contract.
3.2. Sales of Home Market Syrup. The Company shall take all actions
which are commercially reasonable and legally permissible to prohibit the sale of
Home Market Syrup in the Territory by anyone other than through Bottler and any
entity affiliated with Bottler, except to the extent that such sale may in the
future be permitted under the Master Bottle Contract and this Home Market Amendment.
3.3. Unauthorized Fountain Sales. Bottler shall take all actions
commercially reasonable and legally permissible to prohibit the distribution and
sale of any Syrup purchased hereunder to fountain wholesalers or to fountain
accounts.
3
3.4. Home Delivery. Company will not actively encourage and promote
home delivery of fountain products; provided, however, that nothing herein shall
restrict Company from taking appropriate action if Company
reasonably determines that such activity is necessary because of activity by
its competitors, or in order to service its customers.
4. Royalty Payments.
4.1. General Provision. If a commercially significant amount of Unauthorized
Home Market Syrup plus Fountain Home Delivery Syrup is sold in the Territory, Company shall
pay Bottler a royalty amount determined under this Paragraph 4.
4.2. Commercially Significant Amount; Royalty Rate. The parties agree that a
Commercially Significant Amount of Unauthorized Home Market Syrup plus Fountain Home
Delivery Syrup is being sold in the Territory (such combined amount being referred to herein
as Total Royalty Gallons) if such Total Royalty Gallons exceed 3% of the Total Bottler
Syrup Gallons. If in any calendar quarter, the Total Royalty Gallons exceed 3% of the Total
Bottler Syrup Gallons, the Company shall make the royalty payments provided for in this
Paragraph 4 to Bottler. Subject to the further provisions of this Paragraph 4, the amount of
such royalty (the Royalty Amount) shall be 40% of the Weighted Average Fountain
Concentrate Price with respect to each Total Royalty Gallon that is reasonably estimated, as
provided below, to have been sold in the Territory during the preceding calendar quarter.
4.3. Determination of Total Royalty Gallons. The determination of Total
Royalty Gallons shall be made in accordance with the methodology (Royalty Study) set forth
in Attachment A hereto. Bottler shall have the. right to demand that a Royalty Study be
performed with respect to any calendar quarter for which Bottler contends that a
Commercially Significant Amount of Total Royalty Gallons was sold in the Territory.
Bottlers demand must be made, if at all, by delivering written notice to the Company within
15 days after the close of the calendar quarter. If the Royalty Study determines that a
Commercially Significant Amount of Total Royalty Gallons was sold in the Territory during
the calendar quarter, the Company shall owe Bottler the Royalty Amount based upon the Total
Royalty Gallons determined pursuant to the Royalty Study. The same Royalty Amount shall
continue to be paid quarterly by the Company for each calendar quarter following a Royalty
Study that determines that a Commercially Significant Amount of Total Royalty Gallons has
been sold in the Territory, unless and until a subsequent Royalty Study determines a
different amount of Total Royalty Gallons has been sold in the Territory in any quarter.
The Companys obligation to continue to pay the Royalty Amount shall cease when and if a
subsequent Royalty Study determines that less than a Commercially Significant Amount of
Total Royalty Gallons has been sold in the Territory in any quarter. The Company shall have
the right to demand that a Royalty Study be performed with respect to any calendar quarter
for which the Company would otherwise be obligated to pay a Royalty Amount pursuant to a
Royalty Study performed in a prior quarter. The following rules shall apply to the
performance of any Royalty Study and to the payment of any Royalty Amount:
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(a) |
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Only one Royalty Study shall be performed with respect to any quarter; |
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(b) |
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The person that performs the Royalty Study shall be mutually agreeable to the
Bottler and the Company; |
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(c) |
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The costs and expenses incurred with respect to a Royalty Study (including the
fees of the person performing the study) shall be paid by the Company if the Royalty
Study determines that a Commercially Significant Amount of Total Royalty Gallons was
sold in the Territory during the quarter In question, but such costs and expenses shall
be paid by the Bottler for any Royalty Study that determines that the Total Royalty
Gallons were less than a Commercially Significant Amount. |
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The Company shall pay the Royalty Amount, if any, due with respect to any
calendar quarter not later than 15 days after the completion of a Royalty Study that
establishes the Total Royalty Gallons upon which the Royalty Amount is based, or if no
Royalty Study has been demanded for the quarter In question, not later than 30 days
after the end of that quarter. The Companys payment of any Royalty Amount that may
become due shall be accompanied by a certificate executed by the Chief Financial
Officer of Coca-Cola USA certifying that the Royalty Amount has been computed in
accordance with the Royalty Study and this Paragraph 4; and |
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The Company shall never owe any Royalty Amount unless Total Royalty Gallons
exceed a Commercially Significant Amount. For any quarter in which Total Royalty
Gallons exceed a Commercially Significant Amount, the Company shall pay Royalty Amount
based upon the entire amount of Total Royalty Gallons. |
4.4. Exceptions to Royalty Payments. The Company shall not be obligated to
make any payments of the Royalty Amount if:
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Bottler shall cease being the exclusive seller of Home Market Syrup in the
Territory, or |
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The exclusivity granted to Bottler pursuant to this Home Market Amendment is
finally determined not to be legally enforceable. |
4.5. National Maximum Royalty. In no event shall the Company be obligated to
make royalty payments to all Independent First Line Master Bottlers with respect to gallons
of syrup in excess of 5% of the Total Bottler Syrup Gallons purchased by all such
Independent First Line Master Bottlers for their own account. If such payment maximum is
reached, (i) the Company shall continue to make royalty payments based on the number of
Total Royalty Gallons, not to exceed 5% of Total Bottler Syrup Gallons purchased by all
Independent First Line Master Bottlers in each quarter, such payments being allocated among
Independent First Line Master Bottlers in proportion to the respective amounts of Total
Royalty Gallons sold in their territories during the most recent quarter for so long as the
number of Total Royalty Gallons exceeds such 5% maximum, and (ii) the Company and Bottler
shall negotiate in good faith concerning a
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new agreement on this subject based upon the then
existing facts and conditions. In the
event that the Independent First Line Master Bottlers who purchased for their own
account eighty percent (80%) or more of all Total Bottler Syrup Gallons purchased for their
own account by all Independent First Line Master Bottlers agree with the Company to amend
the provisions of this Paragraph 4 to reflect a new arrangement based upon the then existing
facts and conditions, then Bottler hereby agrees to include such amendment in this Home
Market Amendment. The Total Bottler Syrup Gallons purchased by such Independent First Line
Master Bottlers shall be determined based on the most recently-ended calendar year prior to
the date such amendment was first offered to bottlers.
4.6. Exclusive Remedy. The royalty payments to be made pursuant to this
Paragraph 4 shall be Bottlers sole and exclusive remedy for any breach of the provisions of
Paragraphs 3.2 and 3.4 of this Home Market Amendment by the Company.
5. Packages.
5.1. Authorized Containers for Home Market Syrup. The Company will, from time
to time, in its discretion, approve containers of certain types, sizes, shapes and other
distinguishing characteristics for the packaging of Home Market Syrup. Such containers
approved by the Company for Home Market Syrup will be separately identified on the list of
Authorized Containers provided by the Company to the Bottler under Paragraph 2 of the Master
Bottle Contract and shall be deemed to be Authorized Containers under the Master Bottler
Contract, except that Bottler shall be authorized to fill such containers only with Home
Market Syrup.
6. Performance: Home Market Syrup.
6.1. Standard. The Bottler shall be free to determine how to supply the demand
for soft drink beverages in its territory, including the demand created by making Home
Market Syrup available, so long as the obligations of the Bottler relating to the marketing
of the Beverages, financial capacity and planning are satisfied in accordance with Article
VI of the Master Bottle Contract.
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Bottler also agrees to cooperate in good faith with the
Company in programs designed to service the needs of customers
whose operations are located in more than one bottler territory.
The intent of this provision is to ensure reasonable levels of
program consistency while recognizing Bottlers right to set
prices and terms to its customers. |
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6.1.2. |
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Bottler shall invest in plant and equipment, and keep such
plant and equipment in a condition to meet satisfactorily the
demand for Home Market Syrup in the Territory, and shall
increase such investment as the demand for Home Market Syrup may
require, all in accordance with |
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the obligations of the Bottler
under Article IV of the Master Bottle Contract. |
7. No Third Party Beneficiary. No person, firm or other entity shall be a third party
beneficiary of this Home Market Amendment.
8. Effectiveness. This Home Market Amendment will become effective upon execution by
Bottler and the Company.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to
execute this Home Market Amendment on this 29th day of October 1999.
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THE COCA-COLA COMPANY
Coca-Cola USA Division
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By: |
/s/
W. Thomas Haynes
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Title: General Counsel |
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LYBC, Inc.
Bottler
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By: |
/s/ Umesh Kasbekar
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Title: Vice President |
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7
ATTACHMENT A
Royalty Study
Methodology
1. |
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A representative panel of no less than 300 households and no more than 500 households that
purchase soft drinks for use at home will be selected within the Territory. |
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2. |
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Data collected from these households will include: |
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Soft drink brands purchased |
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Soft drink package sizes purchased |
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Soft drink package types purchased |
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Locations of soft drink purchases including home delivery of fountain products |
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Quantity of soft drinks purchased |
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Demographics |
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At least six weeks will be necessary for study completion. This consists of approximately
two weeks to assemble the panel, two weeks for data collection, one week for tabulation and
one week for analysis. |
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4. |
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Households will record the sources from which soft drinks enter the home and the amount of
volume purchased from each source. This will provide a measure of total soft drink purchases
for use at home. Package and source of purchase data will be used to quantify the components
of syrup volume identifiable as: (i) Unauthorized Home Market Syrup and Fountain Home
Delivery Syrup (the combined amount being Total Royalty Gallons); and (ii) Total Bottler
Syrup Gallons as defined in Paragraph 1.3. |
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5. |
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To conclude that Total Royalty Gallons is greater than three percent (3%) of Total Bottler
Syrup Gallons, the data must demonstrate that Total Royalty Gallons exceeds three percent (3%)
of Total Bottler Syrup Gallons at the .95 level of statistical significance. |
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6. |
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The Royalty Study will be conducted by an independent market research firm that is agreeable
to the Bottler and the Company. The Company shall propose a market research firm to conduct
the Royalty Study, subject to the approval of the Bottler. |
Attachment A-1
exv10w2
Exhibit 10.2
ALLIED BOTTLE CONTRACT
FOR Sprite
THIS AGREEMENT (this Agreement), effective as of January 11, 1990, is made and
entered into by and between THE COCA-COLA COMPANY, a corporation organized and existing under the
laws of the State of Delaware having its principal place of business in Atlanta, Georgia (the
Company), and COCA-COLA BOTTLING COMPANY OF ANDERSON, S.C., a corporation
organized an existing under the laws of the State of SOUTH CAROLINA having its
principal place of business in ANDERSON, SOUTH CAROLINA (the Bottler).
WITNESSETH
WHEREAS
A. The Company and the Bottler are parties to that certain Master Bottle Contract effective
as of 1-11-90 (the Master Contract) whereby the Bottler has been authorized, among other
things, to manufacture, package, distribute and sell certain soft drinks subject to the terms and
conditions of the Master Contract;
B. The Company manufactures and sells, or authorizes others to manufacture and sell, the soft
drinks identified on Schedule A (as modified from time to time under paragraphs 20 and 22, the
Beverages), the concentrates for the Beverages (the Concentrates), and the syrups prepared from
the Concentrates (the Syrups), the formulas for all of which constitute trade secrets owned by
the Company;
C. The Company is the owner of the trademarks identified on Schedule B (together with such
other trademarks as may be authorized by the Company from time to time for current use by the
Bottler under this Agreement, the Trademarks), which, among other things, identify and
distinguish the Concentrates, the Syrups and the Beverages;
D. The Bottler acts as a bottler of the Beverages pursuant to certain agreements all of which
are identified on Schedule C (collectively, together with all amendments thereto, the Existing
Allied Bottle Contracts);
E. The reputation of the Beverages as being of consistently superior quality has been a major
factor in stimulating and sustaining demand for the Beverages, and special technical skill and
constant diligence on the part of the Bottler and the Company are required in order for the
Beverages to maintain the excellence that consumers expect; and
F. Having entered into the Master Contract, and the conditions affecting the production, sale
and distribution of Beverages having changed since the Company and the Bottler, or its
predecessors-in-interest, entered into the Existing Allied Bottle Contracts, the Company and the
Bottler desire to amend the Existing Allied Bottle Contracts, the terms of the Existing Allied
Bottle Contracts, as so amended being restated in the form of this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Bottler agree as follows:
ARTICLE I
The Authorization
1. The Company authorizes the Bottler, and the Bottler undertakes, to manufacture and package
the Beverages and to distribute and sell the Beverages only in Authorized Containers, as
hereinafter defined, under the Trademarks in and throughout the territory described on Schedule D
(together with any territories added under paragraph 31, and subject to the possible elimination of
geographic areas and subterritories under paragraphs 21 and 29, the Territory).
2. The Company will, from time to time, in its discretion, approve containers of certain
types, sizes, shapes and other distinguishing characteristics (collectively, subject to any
additions, deletions and modifications by the Company, the Authorized Containers). A list of
Authorized Containers for each Beverage will be provided by the Company to the Bottler, which list
may be amended by the Company from time to time by additions, deletions or modifications. The
Bottler is authorized to use only Authorized Containers in the manufacture, sale and distribution
of the Beverages. The Company reserves the right to withdraw from time to time its approval of any
of the Authorized Containers upon six (6) months notice to the Bottler, and, in such event, the
repurchase provisions of subparagraph 28(b) shall apply to containers so disapproved that are owned
by the Bottler. The Company will exercise its right to approve, and to withdraw its approval of,
specific Authorized Containers in good faith so as to permit the Bottler to continue to satisfy the
demand in the Territory as a whole for Beverages in containers of the nature identified on Schedule
E.
ARTICLE II
Exclusive Authorization
3. The Company appoints the Bottler as its sole and exclusive purchaser of the Concentrates
and Syrups for the purpose of manufacture, packaging and distribution of the Beverages under the
Trademarks in Authorized Containers for sale in the Territory.
4. The Company agrees not to authorize any other party whatsoever to use the Trademarks on
Beverages in Authorized Containers, or any other containers of the nature identified on Schedule E,
for purposes of resale in the Territory.
5. The Bottler shall purchase its entire requirements of Concentrates and Syrups exclusively
from the Company and shall not use any other syrup, beverage base, concentrate or other ingredient
in the Beverages other than as specified by the Company.
ARTICLE III
Obligations of Bottler Relating to Trademarks and Other Matters
6. The Bottler acknowledges that the Company is the sole and exclusive owner of the
Trademarks, and the Bottler agrees not to question or dispute the validity of the Trademarks or
their exclusive ownership by the Company. By this Agreement, the Company extends to the Bottler
only an exclusive license to use the Trademarks solely in connection with the manufacture,
packaging, distribution, and sale of the Beverages in Authorized Containers in the Territory
subject to the rights reserved to the Company under this Agreement. Nothing herein, nor any act or
failure to act by the Bottler or the Company, shall give the Bottler any proprietary or ownership
interest of any kind in the Trademarks or in the goodwill associated therewith.
7. The Bottler agrees during the term of this Agreement and in accordance with any
requirements imposed upon the Bottler under applicable laws:
(a) Not to manufacture, package, sell, deal in or otherwise use or handle any product
under any trade dress or in any container that is an imitation of a trade dress or container
in which the Company claims a proprietary interest or which is likely to be confused or cause
confusion or be confusingly similar to or be passed off as such trade dress or container; and
(b) Not to manufacture, package, sell, deal in or otherwise use or handle any product
under any trademark or other designation that is an imitation, counterfeit, copy or
infringement of, or confusingly similar to, any of the Trademarks.
ARTICLE IV
Obligations of Bottler Relating to Manufacture and Packaging of the Beverages
8. (a) The Bottler represents and warrants that the Bottler possesses, or will possess, in
the Territory, prior to the manufacture, packaging and distribution of the Beverages, and
will maintain during the term of this Agreement, such plant or plants, machinery and
equipment, trained staff, and distribution and vending facilities as are capable of
manufacturing, packaging and distributing the Beverages in Authorized Containers in
accordance with this Agreement, in compliance with all applicable governmental and
administrative requirements, and in sufficient quantities to meet fully every demand for the
Beverages in Authorized Containers in the Territory.
(b) The Company and the Bottler acknowledge that each is or may become a party to one or
more agreements authorizing a bottler or other Company-authorized entity to produce Beverages
for sale by another bottler. Such agreements include, but are not limited to (i) agreements
permitting bottlers, subject to certain conditions, to commence or continue to manufacture
the Beverages for other bottlers, and (ii) agreements pursuant to which bottlers may have the
Beverages manufactured for them by other Company-authorized entities. It is hereby agreed
that the Company shall not unreasonably withhold (i) any consents required by such
agreements, or (ii) approval of Bottlers participation in such agreements. All such existing
agreements shall remain in full force and effect in accordance with their terms.
9. The Bottler recognizes that increases in the demand for the Beverages, as well as changes
in the list of Authorized Containers, may, from time to time, require adaptation of its existing
manufacturing, packaging or delivery equipment or the purchase of additional manufacturing,
packaging and delivery equipment. The Bottler agrees to make such modifications and adaptations as
necessary and to purchase and install such equipment, in time to permit the introduction and
manufacture, packaging and delivery of sufficient quantities of the Beverages in the Authorized
Containers, to satisfy fully the demand for the Beverages in Authorized Containers in the
Territory.
10. The Bottler warrants that the handling and storage of the Concentrates; the manufacture,
handling and storage of the Syrups; and the manufacture, handling, storage, and packaging of the
Beverages shall be accomplished in accordance with the Companys quality control and sanitation
standards, as reasonably established by the Company and communicated to the Bottler from time to
time, and shall, in any event, conform with all food, labelling, health, packaging and other
relevant laws and regulations applicable in the Territory.
11. The Bottler, in accordance with such instructions as may be given from time to time by the
Company, shall submit to the Company, at the Bottlers expense, samples of the Syrups, the
Beverages and the raw materials used in the manufacture of the Syrups and the Beverages. The
Bottler shall permit representatives of the Company to have access to the premises of the Bottler
during ordinary business hours to inspect the plant, equipment, and methods used by the Bottler in
order to ascertain whether the Bottler is complying with the terms of this Agreement, including
whether the Bottler is complying strictly with the instructions and standards prescribed for the
manufacturing, handling, storage and packaging of the Beverages.
12. (a) For the packaging, distribution and sale of the Beverages, the Bottler shall use only
such Authorized Containers, closures, cases, cartons and other packages and labels as shall
be authorized from time to time by the Company for the Bottler and shall purchase such items
only from manufacturers approved by the Company. The Company shall approve three or more
manufacturers of such items, if in the reasonable opinion of the Company, there are three or
more manufacturers who are capable of producing such items to be fully suitable for the
purpose intended and in accordance with the high quality standards and image of excellence of
the Trademarks and the Beverages. Such approval by the Company does not relieve the Bottler
of the Bottlers independent responsibility to assure that the Authorized Containers,
closures, cases, cartons and other packages and labels purchased by the Bottler are suitable
for the purpose intended, and in accordance with the good reputation and image of excellence
of the Trademarks and Beverages.
(b) The Bottler shall maintain at all times a stock of Authorized Containers, closures,
labels, cases, cartons, and other essential related materials bearing the Trademarks,
sufficient to satisfy fully the demand for
2
Beverages in Authorized Containers in the Territory, and the Bottler shall not use or
permit the use of Authorized Containers, or such closures, labels, cases, cartons and other
materials, if they bear the Trademarks or contain any Beverages, for any purpose other than
the packaging and distribution of the Beverages. The Bottler further agrees not to refill or
otherwise reuse nonreturnable containers.
13. If the Company determines the existence of quality or technical difficulties with any
Beverage, or any package used for such product, the Company shall have the right, immediately and
at its sole option, to withdraw such product or any such package from the market. The Company shall
notify the Bottler in writing of such withdrawal, and the Bottler shall, upon receipt of notice,
immediately cease distribution of such product or such package therefor. If so directed by the
Company, the Bottler shall recall and reacquire the product or package involved from any purchaser
thereof. If any recall of any product or any of the packages used therefor is caused by (i) quality
or technical defects in the Syrup, Concentrate, or other materials prepared by the Company from
which the product involved was prepared by the Bottler, or (ii) quality or technical defects in the
Companys designs and design specifications of packages which it has imposed on the Bottler or the
Bottlers third party suppliers if such designs and specifications were negligently established by
the Company (and specifically excluding designs and specifications of other parties and the failure
of other parties to manufacture packages in strict conformity with the designs and specifications
of the Company), the Company shall reimburse the Bottler for the Bottlers total expenses incident
to such recall. Conversely, if any recall is caused by the Bottlers failure to comply with
instructions, quality control procedures or specifications for the preparation, packaging and
distribution of the product involved, the Bottler shall bear its total expenses of such recall and
reimburse the Company for the Companys total expenses incident to such recall.
ARTICLE V
Conditions of Purchase and Sale
14. (a) The Company reserves the right to establish and to revise at any time, in its sole
discretion, the price of any of the Concentrates or Syrups, the terms of payment, and the
other terms and conditions of supply, any such revision to be effective immediately upon
notice to the Bottler. If Bottler rejects a change in price or the other terms and conditions
contained in any such notice, then the Bottler shall so notify the Company within thirty (30)
days of receipt of the Companys notice, and this Agreement will terminate ninety (90) days
after the date of such notification by the Bottler, without further liability of the Company
or the Bottler. The change in price or other terms and conditions so rejected by the Bottler
shall not apply to purchases of such Concentrate or Syrup by the Bottler during such ninety
(90) day period preceding termination. Failure by the Bottler to notify the Company of its
rejection of the changes in price or such other terms and conditions shall be deemed
acceptance thereof by the Bottler.
(b) The Company shall sell to the Bottler, upon Bottlers request, either Syrup or
Concentrate; provided, however, that once the Bottler has elected to purchase Concentrate for
any Beverage under this Agreement, the Company shall no longer be obligated to supply Syrup
to the Bottler, and provided further that if the Bottler elects to purchase concentrate under
the Master Contract, the Company shall have the right to supply only Concentrate to the
Bottler under this Agreement.
15. The Bottler shall purchase from the Company only such quantities of the Concentrates or
Syrups as shall be necessary and sufficient to carry out the Bottlers obligations under this
Agreement. The Bottler shall use the Concentrates exclusively for its manufacture of the Syrups and
shall use the Syrups exclusively for its manufacture of the Beverages. The Bottler shall not sell
or otherwise transfer any Concentrate or Syrup or permit the same to get into the hands of third
parties.
16. (a) The Bottler agrees not to distribute or sell any Beverage outside the Territory. The
Bottler shall not sell any Beverage to any person (other than another bottler pursuant to
subparagraph 8(b)) under circumstances where Bottler knows or should know that such person
will redistribute the Beverage for ultimate sale outside the Territory. If any Beverage
distributed by the Bottler is found outside of the Territory, Bottler shall be deemed to have
transshipped such Beverage and shall be deemed to be a Transshipping Bottler for purposes
hereof; provided, however, that if the Offended Bottler has not agreed to terms substantially
similar to this subparagraph 16(a) with respect to the transshipment of Beverages, Bottler
shall only be deemed to have transshipped such Beverage if Bottler knew or should have known
that the purchaser would redistribute the Beverage outside of the Territory prior to ultimate
sale. For purposes of this Agreement, Offended Bottler shall mean a bottler in any
territory into which any Beverage is transshipped.
(b) In addition to all other remedies the Company may have against any Transshipping
Bottler for violation of this paragraph 16, the Company may impose upon any Transshipping
Bottler a charge for each case of Beverage transshipped by such bottler. The per-case amount
of such charge shall be determined by the Company in its sole discretion and may be an amount
not to exceed three times the Offended Bottlers most current average gross margin per case
of the Beverage transshipped, as reasonably estimated by the Company. If the Offended Bottler
does not sell the Beverage that has been transshipped, the Company may make the foregoing
estimate on the basis of what it considers a comparable product. The Company and the Bottler
agree that the amount of such charge shall be deemed to reflect the damages to the Company,
the Offended Bottler and the bottling system. The Company shall forward to the Offended
Bottler, upon receipt from the Transshipping Bottler, not less than an amount per case which
approximates the Offended Bottlers most current average gross margin per case of the
Beverage transshipped. If, upon the mutual agreement of the Company and the Offended Bottler,
the Company or its agent recalls any Beverage which has been transshipped, the Transshipping
Bottler shall, in addition to any other obligation it may have hereunder, reimburse the
Company for its costs of purchasing, transporting, and/or destroying such Beverage.
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ARTICLE VI
Obligations of the Bottler Relating to the Marketing of the Beverages and Planning
17. The continuing responsibility to develop and stimulate and satisfy fully the demand for
the Beverages in Authorized Containers within the Territory rests upon the Bottler. The Bottler
agrees to use all approved means as may be reasonably necessary to meet this responsibility;
provided. however that the Bottlers obligation to develop and stimulate and satisfy fully the
demand for the Beverages in Authorized Containers within the Territory shall be secondary and
subordinate to the Bottlers obligations under the Master Contract.
18. The parties agree that to develop and stimulate demand for the Beverages in Authorized
Containers advertising and other forms of marketing activities are required. Therefore, subject to
the Bottlers primary obligations under the Master Contract, the Bottler will spend such funds in
advertising and marketing the Beverages as may be reasonably required to stimulate, as well as
maintain, demand for the Beverages in Authorized Containers in the Territory. The Bottler shall
fully cooperate in and vigorously promote all reasonable cooperative advertising and sales
promotion programs and campaigns that may be established by the Company for the Territory. The
Bottler will use and publish only such advertising, promotional materials or other items bearing
the Trademarks relating to the Beverages as the Company has approved and authorized. The
expenditures required by this Article VI shall be made by the Bottler. The Company may, in its sole
discretion, contribute to such expenditures. The Company may also undertake, at its expense,
independently of the Bottlers marketing programs, any advertising or promotional activity that the
Company deems appropriate to conduct in the Territory, but this shall in no way affect the
responsibility of the Bottler for stimulating and developing the demand for the Beverages in
Authorized Containers in the Territory.
19. (a) Since periodic planning is essential for the proper implementation of this Agreement,
the Bottler and the Company shall meet annually, as close to the anniversary date of this
Agreement as practicable or at such other annual date as the parties may set from time to
time, to discuss the Bottlers plans for the ensuing year. At such meeting, the Bottler shall
present a plan that sets out in reasonable detail satisfactory to the Company the management,
financial, marketing and advertising plans of the Bottler with respect to the Beverages for
the ensuing year. The parties shall discuss this plan and this plan, upon approval by the
Company, which shall not be unreasonably withheld, shall define the Bottlers obligation
herein to develop and stimulate and satisfy fully the demand for the Beverages in Authorized
Containers in the Territory for the period of time covered by the plan.
(b) The Bottler shall report to the Company periodically, but not less than quarterly,
as to its implementation of the approved plan; it is understood, however, that the Bottler
shall report sales on a regular basis as requested by the Company and in such detail and
containing such information as may be reasonably requested by the Company. The failure by the
Bottler to carry out the plan, or if the plan is not presented or is not approved, will
constitute a primary consideration for determining whether the Bottler has fulfilled its
obligation to develop and stimulate and satisfy fully the demand for the Beverages in
Authorized Containers in the Territory. If the Bottler carries out the plan in all material
respects, it shall be deemed to have satisfied the obligations of the Bottler under
paragraphs 17, 18 and 19 for the period of time covered by the plan.
ARTICLE VII
Reformulation, Product Discontinuation, New Products and Related Matters
20. The Company has the sole and exclusive right and discretion to reformulate any of the
Beverages. In addition, the Company has the sole and exclusive right and discretion to discontinue
any or all of the Beverages under this Agreement. In the event that the Company discontinues any
Beverage under this Agreement, Schedule A to this Agreement shall be amended to delete the
discontinued Beverage from the list of Beverages set forth on Schedule A. In the event that the
Company discontinues all Beverages under this Agreement, this Agreement shall be terminated upon
the terms set forth in paragraph 28.
21. The Bottler has the right to discontinue the manufacture, packaging, distribution and sale
of all Beverages in Authorized Containers in all of the Territory or in any State in the Territory.
This right shall be exercised, if at all, by the Bottler giving nine (9) months notice of such
discontinuation to the Company, specifying that the notice of discontinuation applies to all of the
Territory or specifying the State or States within the Territory to which the notice of
discontinuation applies. Upon expiration of such nine (9) month period, the Bottler shall cease the
manufacture, packaging, distribution and sale of all Beverages in Authorized Containers in the
geographic area specified in the notice, the Company may manufacture, package, distribute and sell
the Beverages in Authorized Containers under the Trademarks in such geographic area, or authorize
others to do so, and Schedule D to this Agreement shall be amended to eliminate such geographic
area from the Territory described on Schedule D.
22. In the event that the Company proposes to introduce any new beverage in the Territory
under the Trademarks or any modification thereof (herein defined to mean the addition of a prefix,
suffix or other modifier used in conjunction with any of the Trademarks), the Bottler shall have
the option to manufacture, package, distribute and sell such new beverage in Authorized Containers
in the Territory pursuant to the terms and conditions of this Agreement. The Bottlers option under
this paragraph 22 shall be exercised, if at all, by giving the Company notice of such election
within thirty (30) days of the date on which the Company notifies the Bottler that the Company
intends to introduce the new beverage in the Territory. If the Bottler gives the Company timely
notice of the Bottlers exercise of such option within such period, Schedule A to this Agreement
shall be amended by adding such new beverage to the list of Beverages set forth on Schedule A. If
the Bottler does not give the Company timely notice of the Bottlers exercise of such option within
such period, then the Company shall have the right to authorize others in the Territory to
manufacture, package, distribute and sell and otherwise undertake any activity with respect to that
new beverage, including use of the Trademarks or any modification of the Trademarks and use of the
Authorized Containers in connection with the new beverage in the Territory.
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23. The Company has the unrestricted right to use the Trademarks on the Beverages and on all
other products and merchandise other than the Beverages in Authorized Containers in the Territory.
ARTICLE VIII
Term and Termination of the Agreement
24. This Agreement shall be and remain in force for a period of ten (10) years from the
effective date hereof, unless terminated prior thereto in a manner provided in this Agreement; and
upon the expiration of the first ten (10) year period, and also upon the expiration of each
successive ten (10) year period, the Bottler shall have the option to renew this Agreement on the
same terms and conditions for successive ten (10) year periods, without limit of the number of
renewals, and when notified to do so by the Company, not more than twelve (12) months prior to the
expiration of any ten (10) year period, the Bottler shall, within twenty (20) days after receipt of
such notice, give notice of the exercise or non-exercise of each option.
25. The obligation to supply Concentrates or Syrups to the Bottler and the Bottlers
obligation to purchase Concentrates or Syrups from the Company and to manufacture, package,
distribute and sell the Beverages under this Agreement shall be suspended during any period when
any of the following conditions exist:
(a) There shall occur a change in the law or regulation (including without limitation,
any government permission or authorization regarding customs, health or manufacturing) in
such a manner as to render unlawful or commercially impracticable:
(i) the importation of Concentrate or Syrup or any of its essential ingredients,
which cannot be produced in quantities sufficient to satisfy the demand therefor by
existing Company facilities in the United States; or
(ii) the manufacture and distribution of the Concentrates, Syrups or Beverages;
or
(b) There shall occur any inability or commercial impracticability of either of the
parties to perform resulting from an act of God, or force majeure, public enemies, boycott,
quarantine, riot, strike, or insurrection, or due to a declared or undeclared war,
belligerency or embargo, sanctions, blacklisting, or other hazard or danger incident to the
same, or resulting from any other cause whatsoever beyond its control.
If any of the conditions for suspension of performance described in this paragraph 25 persists
so that either partys obligation to perform is suspended for a period of six (6) months or more,
the other party may terminate this Agreement forthwith, upon notice to the party whose obligation
to perform is suspended.
26. (a) The Company may terminate this Agreement in the event of the occurrence of any of the
following events of default:
(i) If the Master Contract is terminated by either party for any reason;
(ii) If the Bottler becomes insolvent; if a petition in bankruptcy is filed
against or on behalf of the Bottler which is not stayed or dismissed within sixty (60)
days; if the Bottler is put in liquidation or placed under sequester; if a receiver is
appointed to manage the business of the Bottler; or if the Bottler enters into any
judicial or voluntary arrangement or composition with its creditors, or concludes any
similar arrangements with them or makes an assignment for the benefit of creditors;
(iii) If the Bottler adopts a plan of dissolution or liquidation.
(b) Upon the occurrence of any of the foregoing events of default, the Company may
terminate this Agreement by giving the Bottler notice to that effect, effective immediately.
27. (a) In addition to the events of default described in paragraph 26, the Company may also
terminate this Agreement, subject to the limitations of subparagraph 27(b), in the event of
the occurrence of any of the following events of default:
(i) If the Bottler fails to make timely payment for Concentrate or Syrup, or of
any other debt owing to the Company;
(ii) If the condition of the plant or equipment used by the Bottler in
manufacturing, packaging or distributing the Beverages fails to meet the sanitary
standards reasonably established by the Company;
(iii) If the Syrups or Beverages manufactured by the Bottler fail to meet the
quality control standards reasonably established by the Company;
(iv) If the Beverages are not manufactured in strict conformity with such
standards and instructions as the Company may reasonably establish;
(v) If the Bottler fails to carry out a plan approved under paragraph 19 in all
material respects; or
(vi) If the Bottler materially breaches any of the Bottlers other obligations
under this Agreement.
The standards and instructions of the Company comprise privately published information concerning
the manufacture, handling and storage of the Beverages under good manufacturing practices, as well
as technical instructions, bulletins and other communications issued or amended from time to time
by the Company (including, but not limited to, Syrup Room Practices, Quality Control and
Engineering Standards and GMP: A Guide to Good Manufacturing Practices, as they may be amended or
supplemented from time to time).
(b) Upon the occurrence of any of the foregoing events of default, the Company shall, as
a condition to termination of this Agreement under this paragraph 27, give the Bottler notice
thereof. The Bottler shall then
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have a period of sixty (60) days within which to cure the default, including, at the
instruction of the Company and at the Bottlers expense, by the prompt withdrawal from the
market and destruction of any Syrup or Beverage that fails to meet the quality control
standards of the Company or any Beverage that is not manufactured in accordance with the
instructions of the Company. If such default has not been cured within such period, then the
Company may, by giving the Bottler further notice to such effect, suspend sales to the
Bottler of Concentrates and Syrups and require the Bottler to cease production of the Syrups
and the Beverages and the packaging and distribution of Beverages in Authorized Containers.
During such second period of sixty (60) days, the Company also may supply, or cause or permit
others to supply, the Beverages in Authorized Containers under the Trademarks in the
Territory. If such default has not been fully cured during such second period of sixty (60)
days, then the Company may terminate this Agreement, by giving the Bottler notice to such
effect, effective immediately.
28. Upon the termination of this Agreement:
(a) The Bottler shall not thereafter continue to manufacture, package, distribute or
sell any of the Beverages in Authorized Containers or to make any use of the Trademarks or
Authorized Containers, or any closures, cases, labels or advertising material bearing the
Trademarks;
(b) The Bottler shall forthwith deliver all Concentrate, Syrup, Beverage, usable
returnable or any nonreturnable containers, cases, closures, labels, and advertising material
bearing the Trademarks, still in the Bottlers possession or under the Bottlers control, to
the Company or the Companys nominee, as instructed, and, upon receipt, the Company shall pay
to the Bottler a sum equal to the reasonable market value of such supplies or materials. The
Company will accept and pay for only such articles as are, in the opinion of the Company, in
first-class and usable condition, and all other such articles shall be destroyed at the
Bottlers expense. Containers, closures and advertising material and all other items bearing
the name of the Bottler, in addition to the Trademarks, that have not been purchased by the
Company shall be destroyed without cost to the Company, or otherwise disposed of in
accordance with instructions given by the Company, unless the Bottler can remove or
obliterate the Trademarks therefrom to the satisfaction of the Company. The provisions for
repurchase contained in subparagraph 28(b) shall apply with regard to any Authorized
Container, approval of which has been withdrawn by the Company under paragraph 2; upon
discontinuation of all Beverages by the Company under paragraph 20; upon termination by
either party under paragraph 25; and upon termination by the Bottler under paragraph 14. In
all other cases, the Company shall have the right, but not the obligation, to purchase the
aforementioned items from the Bottler.
29. (a) Subject to the limitations set forth in subparagraph 29(b), in the event that the
Bottler at any time fails to carry out a plan approved under paragraph 19 in ail material
respects in any geographic segment of the Territory, which segment shall be defined by the
Company (hereinafter Subterritory), the Company may reduce the Territory covered by this
Agreement, and thereby restrict the Bottlers authorization hereunder to the remainder of the
Territory, by eliminating the Subterritory from the Territory covered by this Agreement.
(b) In the event of such failure, the Company may eliminate Subterritories from the
Territory covered by this Agreement by giving the Bottler notice to that effect, which notice
shall define the Subterritory or Subterritories to which the notice applies. The Bottler
shall then have a period of six (6) months within which to cure such failure. If the Bottler
has not cured such failure in such six (6) month period, the Company may eliminate such
Subterritories from the Territory by giving the Bottler further notice to that effect,
effective immediately.
(c) Upon elimination of any Subterritory from the Territory:
(i) Schedule D to this Agreement shall be amended to eliminate such Subterritory
from the Territory described on Schedule D;
(ii) The Company may manufacture, package, distribute and sell the Beverages in
Authorized Containers under the Trademarks in such Subterritory, or authorize others
to do so; and
(iii) The Bottler shall not thereafter continue to manufacture, package,
distribute or sell any of the Beverages in Authorized Containers in such Subterritory,
or to make any use of the Trademarks, Authorized Containers, closures, cases, labels
or advertising material bearing the Trademarks in connection with the sale or
distribution of the Beverages in such Subterritory.
ARTICLE IX
Transferability/Additional Territories
30. The Bottler hereby acknowledges the personal nature of the Bottlers obligations under
this Agreement with respect to the performance standards applicable to the Bottler, the dependence
of the Trademarks on proper quality control, the level of marketing effort required of the Bottler
to stimulate and maintain demand for the Beverages in Authorized Containers, and the
confidentiality required for protection of the Companys trade secrets and confidential
information. In recognition of the personal nature of these and other obligations of the Bottler
under this Agreement, the Bottler may not assign, transfer or pledge this Agreement or any interest
therein, in whole or in part, whether voluntarily, involuntarily, or by operation of law
(including, but not limited to, by merger or liquidation), or delegate any material element of the
Bottlers performance thereof, or sublicense its rights hereunder, in whole or in part, to any
third party or parties, without the prior consent of the Company. Any attempt to take such action
without such consent shall be void and shall be deemed to be a material breach of this Agreement.
31. In the event that the Bottler acquires the right to manufacture and sell any of the
Beverages in any container that has been designated as an Authorized Container in any territory in
the United States outside of the Territory, such additional territory shall automatically be deemed
to be included within the Territory covered by this
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Agreement for all purposes. Any separate agreement that may exist concerning such additional
territory shall be ipso facto amended to conform to this Agreement and Schedule D shall be amended
by adding such additional territory to the Territory set forth on Schedule D.
ARTICLE X
Litigation
32. (a) The Company reserves the right to institute any civil, administrative or criminal
proceeding or action, and generally to take or seek any available legal remedy it deems
desirable, for the protection of its good reputation and industrial property rights
(including, but not limited to, the Trademarks), as well as for the protection of the
Concentrates, the Syrups, the Beverages and the formulas therefor; and to defend any action
affecting these matters. At the request of the Company, the Bottler will render reasonable
assistance in any such action. The Bottler may not claim any right against the Company as a
result of such action or for any failure to take such action. The Bottler shall promptly
notify the Company of any litigation or proceeding instituted or threatened affecting these
matters. The Bottler shall not institute any legal or administrative proceedings against any
third party which may affect the interests of the Company in connection with this Agreement
without the Companys prior consent.
(b) The Company has the sole and exclusive right and responsibility to prosecute and
defend all suits relating to the Trademarks. The Company may prosecute or defend any suit
relating to the Trademarks in the name of the Bottler whenever an issue in such suit involves
the Territory and therefore it is appropriate to act in the Bottlers name, or may proceed
alone in the name of the Company, provided that the Company shall take no action in the
Bottlers name which the Company knows or should know will materially prejudice or impair the
rights or interests of the Bottler under this Agreement.
(c) The Bottler recognizes the importance and benefit to itself and all other bottlers
of the Beverages of protecting the interest of the Company in the Beverages, Authorized
Containers and the goodwill associated with the Trademarks. Therefore, the Bottler agrees to
consult with the Company on all products liability claims or lawsuits brought against the
Bottler in connection with the Beverages or Authorized Containers and to take such action
with respect to the defense of any such claim or lawsuit as the Company may reasonably
request in order to protect the interest of the Company in the Beverages, Authorized
Containers and goodwill associated with the Trademarks. Further, the Bottler shall supervise,
control and direct the defense of all such products liability claims and lawsuits brought
against it in a manner that is reasonably calculated to be consistent with the Companys
aforementioned interest. The Bottler and the Company shall individually be responsible for
their respective liability, loss, damage, costs, attorneys fees and expenses arising out of
or in connection with any such products liability claim or lawsuit brought against them
whether individually or jointly; provided, however, that the Bottler and the Company
expressly reserve all rights of contribution and indemnity as prescribed by law.
ARTICLE XI
General
33. The Company hereby expressly reserves for its exclusive benefit all rights of the Company
not expressly granted to the Bottler under the terms of this Agreement.
34. Without relieving the Bottler of any of its responsibilities under this Agreement, the
Company, from time to time during the term of this Agreement, at its option and either free of
charge or on such terms and conditions as the Company may propose, may offer technology to the
Bottler which the Company possesses, develops or acquires (and is free to furnish to third parties
without obligation) relating to the design, installation, operation and maintenance of the plant
and equipment appropriate for the maintenance of product quality, sanitation and safety as well as
for the efficient manufacture and packaging of the Beverages; and relating to personnel training,
accounting methods, electronic data processing and marketing and distribution techniques.
35. The Bottler agrees:
(a) It will not disclose to any third party any nonpublic information whatsoever
concerning the composition of the Concentrates, the Syrup or the Beverages, except with the
prior consent of the Company, and it will use any such information solely to perform its
obligations hereunder;
(b) It will at all times treat and maintain as confidential, all nonpublic information
that it may receive at any time from the Company, including, but not limited to:
(i) Information or instructions of a technical or other nature, relating to the
mixing, sale, marketing and distribution of the product;
(ii) Information about projects or plans worked out in the course of this
Agreement; and
(iii) Information constituting manufacturing or commercial trade secrets.
The Bottler further agrees to disclose such information, as necessary to perform its
obligations hereunder, only to employees of its enterprise: (i) who have a reasonable need to know
such information; (ii) who have agreed to keep such information secret; and (iii) whom the Bottler
has no reason to believe is untrustworthy; and
(c) Upon the termination of this Agreement, it will promptly surrender to the Company
all original documents and all photocopies or other reproductions in its possession
(including, but not limited to, any extracts or digests thereof) containing or relating to
any nonpublic information described in this paragraph 35. Following such termination, and the
surrender of such materials, the Bottler and its employees shall continue to hold any
nonpublic information in confidence and refrain from any further use or disclosure thereof
whatsoever, provided
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that such obligation shall expire as to any nonpublic information that does not
constitute trade secrets ten (10) years following such termination.
36. The Bottler is an independent manufacturer and not the agent of the Company. The Bottler
agrees that it will not represent that it is an agent of the Company nor hold itself out as such.
37. The parties agree:
(a) The Existing Allied Bottle Contracts identified on Schedule C are hereby amended,
superseded and restated in their entirety, and all rights, duties and obligations of the
Company and the Bottler regarding the Trademarks and the manufacture, packaging, distribution
and sale of the Beverages in Authorized Containers shall be determined under this Agreement,
without regard to the terms of any prior agreement and without regard to any prior course of
conduct between the parties;
(b) As to all matters addressed herein, this Agreement sets forth the entire agreement
between the Company and the Bottler, and all prior understandings, commitments or agreements
relating to such matters between the parties hereto or their predecessors-in-interest are of
no force or effect; and
(c) Any waiver or modification of this Agreement or any of its provisions, and any
notices given or consents made under this Agreement shall not be binding upon the Bottler or
the Company unless made in writing, signed by an officer or other duly qualified and
authorized representative of the Company or by a duly qualified and authorized representative
of the Bottler, and personally delivered or sent by telegram, telex or certified mail to an
officer or other duly qualified and authorized representative of the Company (if from the
Bottler) or to a duly qualified and authorized representative of the Bottler (if from the
Company) at the principal address of such party.
38. Failure of the Company to exercise promptly any option or right herein granted or to
require strict performance of any such option or right shall not be deemed to be a waiver of such
option or right, or of the right to demand subsequent performance of any and all obligations herein
imposed upon the Bottler.
39. The Company may delegate any of its rights and obligations to any of its subsidiaries or
affiliates upon notice to the Bottler, but no such delegation shall relieve the Company of its
obligations hereunder.
40. If any provision of this Agreement, or the application thereof to any party or
circumstance shall ever be prohibited by or held invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition without invalidating the remainder of such
provision or any other provision hereof, or the application of such provision to other parties or
circumstances.
41. This Agreement shall be governed, construed and interpreted under the laws of the State of
Georgia.
IN WITNESS WHEREOF, the parties have duly executed this Agreement in duplicate effective as of
the day and year first above written.
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COCA-COLA BOTTLING |
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THE COCA-COLA COMPANY |
COMPANY OF ANDERSON, S.C. |
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COCA-COLA USA DIVISION |
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(Bottler) |
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By:
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/s/ illegible
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By:
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/s/ Charles Wallace |
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Title: President
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Title: Vice President |
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Date: 1-11-90
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Date: 1-31-90 |
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SCHEDULE A
Beverages
The soft drink beverages listed below are subject to the terms and conditions of this
Agreement.
SPRITE
diet SPRITE
SCHEDULE B
Trademarks
The following trademarks are owned by the Company and authorized for use by the
Bottler subject to the terms and conditions of this Agreement:
SPRITE
SPRITE (stylized)
SPRITE Lite
diet SPRITE
SCHEDULE C
Existing Allied Bottle Contracts
The following agreements are all of the agreements pursuant to which the Bottler acts as a
bottler of the Beverages (Existing Allied Bottle Contracts). All of the following agreements,
together with any and all amendments thereto, are amended, superseded and restated in their
entirety.
Contract for Sprite
Dated: January 8, 1964
Parties: |
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Fanta Beverage Company and Coca-Cola Bottling Company of
Anderson, S.C. |
Renewal Letter (To January 7, 1994)
Dated: January 19, 1983
Parties: |
|
The Coca-Cola Company, Coca-Cola USA Division and
Coca-Cola Bottling Company of Anderson, S.C. |
SCHEDULE D
Territories
The geographic areas described below define the Territory subject to the terms and conditions of
the Agreement.
IN THE STATE OF SOUTH CAROLINA:
All of Oconee County, South Carolina. All of Anderson County, South Carolina, except that portion
of said County included within the following boundaries, to-wit: Beginning at a point on the
Anderson-Greenville County line due east of the town of Williamston and running west in a straight
line to and including Williamston (present corporate limits), a town in the Greenville territory;
thence northwardly in a straight line from the western extremity of the corporate limits of
Williamston to the western extremity of the present corporate limits of the town of West Pelzer (a
town in the Greenville Territory); thence northwardly in a straight line to and including the
settlement as now constituted adjoining the mill village of Piedmont in Anderson County, and
nicknamed Simpsonville, to a point one hundred (100) feet west of Ayers Grocery Store, in
Simpsonville (a point in the Greenville territory); thence east in a straight line in a slightly
northeasterly direction to a point on the Anderson-Greenville County line one mile north of State
Highway Number 8 which crosses said county line at Piedmont, South Carolina; thence in a southerly
direction along the Anderson-Greenville County line to a point on said line due east of the town of
Williamson, the point of beginning.
That portion of Pickens County, South Carolina, lying west and south of a line beginning at a point
on the Anderson-Pickens County line two hundred (200) feet east of the Wesleyan College Road and
running in a northwestwardly direction parallel to, and two hundred (200) feet east of said
Wesleyan College Road to a point on the Highway approximately two-tenths (2-10) of a mile northeast
of the city limits of the town of Central where the Wesleyan College Road joins the Greenville
Highway; thence continuing northwestwardly, at right angles to the Southern Railroad, for a
distance of one (1) mile; thence southwestwardly, running parallel to and one (1) mile mirth of the
Southern Railroad, to the Oconee County line.
(As all of said Towns and Counties existed on July 14. 1937)
Schedule E
COCA - COLA USA LIST OF AUTHORIZED PACKAGING
TYPE: REFILLABLE BOTTLES
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|
MAJOR |
|
|
TOLERANCES |
|
FILL |
|
DESIGN |
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BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
|
DIAMETER |
|
|
MAJ. DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Coca-Cola |
|
Crown |
|
6.5 oz. |
|
13. oz. |
|
|
7.750" |
|
|
|
2.237" |
|
|
+ .047-.031 |
|
± .047 |
|
1.953 |
|
7104-04 |
|
a |
Coca-Cola |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a, c |
Coca-Cola |
|
Crown & 28mm |
|
300mL |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a, c |
Coca-Cola |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a, c |
Coca-Cola |
|
Crown & 28mm |
|
500mL |
|
15. oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a, c |
Coca-Cola |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a, c |
Coca-Cola |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
± .062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
Coca-Cola |
|
28mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
Coca-Cola |
|
28mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
Coca-Cola |
|
38mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
Coca-Cola |
|
28mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
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|
|
|
|
|
|
|
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|
|
|
Coca-Cola classic |
|
Crown |
|
6.5 oz. |
|
13. oz. |
|
|
7.750" |
|
|
|
2.237" |
|
|
+ .047-.031 |
|
± .047 |
|
1.953 |
|
7104-04 |
|
a |
Coca-Cola classic |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.956" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a, c |
Coca-Cola classic |
|
Crown & 28mm |
|
300mL |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a, c |
Coca-Cola classic |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a, c |
Coca-Cola classic |
|
Crown & 28mm |
|
500mL |
|
15. oz. |
|
|
9.956" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a, c |
Coca-Cola classic |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a, c |
Coca-Cola classic |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
± .062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
Coca-Cola classic |
|
28mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
Coca-Cola classic |
|
28mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
Coca-Cola classic |
|
38mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
Coca-Cola classic |
|
28mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
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|
C.F. Coca-Cola |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a, c |
C.F. Coca-Cola |
|
Crown & 28mm |
|
300mL |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a, c |
C.F. Coca-Cola |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a, c |
C.F. Coca-Cola |
|
Crown & 28mm |
|
500mL |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a, c |
C.F. Coca-Cola |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a, c |
C.F. Coca-Cola |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.328" |
|
|
± .062 |
|
± .078 |
|
2.576 |
|
7110-02 |
|
a |
C.F. Coca-Cola |
|
28mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
C.F. Coca-Cola |
|
28mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
C.F. Coca-Cola |
|
38mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
C.F. Coca-Cola |
|
28mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
|
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|
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|
|
diet Coke |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+ .062-.047 |
|
± .062 |
|
2.203 |
|
7108-03 |
|
a, c |
diet Coke |
|
Crown & 28mm |
|
300mL. |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+ .062-.031 |
|
± .062 |
|
1.693 |
|
7109-007 |
|
a, c |
diet Coke |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+ .062-0.47 |
|
± .062 |
|
2.203 |
|
7111-03 |
|
a, c |
diet Coke |
|
Crown & 28mm |
|
500mL |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
± .062 |
|
± .062 |
|
1.703 |
|
7100-R14 |
|
a, c |
diet Coke |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
± .062-.047 |
|
± .078 |
|
2.203 |
|
7113-03 |
|
a, c |
diet Coke |
|
28mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+ .078-.062 |
|
± .078 |
|
2.578 |
|
7110-01 |
|
c |
diet Coke |
|
28mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
2.578 |
|
7118-R31 |
|
c |
diet Coke |
|
38mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
± .078-.062 |
|
± .078 |
|
1.797 |
|
7118-35 |
|
d |
diet Coke |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
± .062 |
|
± .078 |
|
2.562 |
|
17001 |
|
a |
diet Coke |
|
28mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
± .062 |
|
± .094 |
|
2.203 |
|
7323-03* |
|
c |
October 29, 1986
- 1 -
COCA-COLA USA LIST OF AUTHORIZED PACKAGING
TYPE:
REFILLABLE BOTTLES
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|
|
|
MAJOR |
|
|
TOLERANCES |
|
|
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
|
DIAMETER |
|
|
MAJ. DIAMETER |
|
HEIGHT |
|
FILL POINT |
|
NUMBER |
|
REFERENCE |
C.F. diet Coke |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7108-03 |
|
a, c |
C.F. diet Coke |
|
Crown & 28mm |
|
300mL. |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
±.062 |
|
1.693 |
|
7109-007 |
|
a, c |
C.F. diet Coke |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7111-03 |
|
a, c |
C.F. diet Coke |
|
Crown & 28mm |
|
500mL. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
±.062 |
|
±.062 |
|
1.703 |
|
7100-R14 |
|
a, c |
C.F. diet Coke |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
±.062-.047 |
|
+.078 |
|
2.203 |
|
7113-03 |
|
a, c |
C.F. diet Coke |
|
28 mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
2.578 |
|
7110-01 |
|
c |
C.F. diet Coke |
|
28 mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
2.578 |
|
7118-R31 |
|
c |
C.F. diet Coke |
|
38 mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
1.797 |
|
7118-35 |
|
d |
C.F. diet Coke |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
±.062 |
|
±.078 |
|
2.562 |
|
17001 |
|
a |
C.F. diet Coke |
|
28 mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
±.094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cherry Coke |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7108-03 |
|
a, c |
cherry Coke |
|
Crown & 28mm |
|
300ml |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
±.062 |
|
1.693 |
|
7109-007 |
|
a, c |
cherry Coke |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7111-03 |
|
a, c |
cherry Coke |
|
Crown & 28mm |
|
500ml. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
±.062 |
|
±.062 |
|
1.703 |
|
7100-R14 |
|
a, c |
cherry Coke |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
±.062-.047 |
|
±.078 |
|
2.203 |
|
7113-03 |
|
a, c |
cherry Coke |
|
28 mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7110-01 |
|
c |
cherry Coke |
|
28 mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
2.578 |
|
7118-R31 |
|
c |
cherry Coke |
|
38 mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
1.797 |
|
7118-35 |
|
d |
cherry Coke |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
±.062 |
|
±.078 |
|
2.562 |
|
17001 |
|
a |
cherry Coke |
|
28 mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
±.094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diet cherry Coke |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.391" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7108-03 |
|
a, c |
diet cherry Coke |
|
Crown & 28mm |
|
300ml |
|
11. oz. |
|
|
8.267" |
|
|
|
2.401" |
|
|
+.062-.031 |
|
±.062 |
|
1.693 |
|
7109-007 |
|
a, c |
diet cherry Coke |
|
Crown & 28mm |
|
12 oz. |
|
16. oz. |
|
|
9.656" |
|
|
|
2.580" |
|
|
+.062-.047 |
|
±.062 |
|
2.203 |
|
7111-03 |
|
a, c |
diet cherry Coke |
|
Crown & 28mm |
|
500ml. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
±.062 |
|
±.062 |
|
1.703 |
|
7100-R14 |
|
a, c |
diet cherry Coke |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
±.062-.047 |
|
±.078 |
|
2.203 |
|
7113-03 |
|
a, c |
diet cherry Coke |
|
28 mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7110-01 |
|
c |
diet cherry Coke |
|
28 mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
2.578 |
|
7118-R31 |
|
c |
diet cherry Coke |
|
38 mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
±.078-.062 |
|
±.078 |
|
1.797 |
|
7118-35 |
|
d |
diet cherry Coke |
|
Crown |
|
26 oz. |
|
26. oz. |
|
|
11.703" |
|
|
|
3.359" |
|
|
±.062 |
|
±.078 |
|
2.562 |
|
17001 |
|
a |
diet cherry Coke |
|
28 mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
±.094 |
|
2.203 |
|
7323-03* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAB |
|
Crown |
|
7 oz. |
|
13. oz. |
|
|
7.750" |
|
|
|
2.328" |
|
|
+.047-.031 |
|
±.047 |
|
1.953 |
|
7216-01 |
|
a |
TAB |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.956" |
|
|
|
2.360 |
|
|
+.047-.031 |
|
±.062 |
|
2.203 |
|
7218-02 |
|
a, c |
TAB |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
+.062-.047 |
|
±.078 |
|
2.203 |
|
7220-02 |
|
a, c |
TAB |
|
Crown & 28mm |
|
500ml. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
±.062 |
|
±.062 |
|
1.703 |
|
7291-003 |
|
a, c |
TAB |
|
28 mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7288-02 |
|
c |
TAB |
|
28 mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7222-006 |
|
c |
TAB |
|
38 mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
1.797 |
|
7222-04 |
|
d |
TAB |
|
28 mm |
|
36 oz. |
|
34. oz. |
|
|
12.375" |
|
|
|
3.656" |
|
|
±.062 |
|
±.094 |
|
2.203 |
|
7369-1* |
|
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. F. TAB |
|
Crown & 28mm |
|
10 oz. |
|
15. oz. |
|
|
9.956" |
|
|
|
2.360" |
|
|
+.047-.031 |
|
±.062 |
|
2.203 |
|
7218-02 |
|
a, c |
C. F. TAB |
|
Crown & 28mm |
|
16 oz. |
|
17. oz. |
|
|
11.125" |
|
|
|
2.635" |
|
|
+.062-.047 |
|
±.078 |
|
2.203 |
|
7220-02 |
|
a, c |
C. F. TAB |
|
Crown & 28mm |
|
500ml. |
|
15. oz. |
|
|
9.656" |
|
|
|
2.781" |
|
|
±.062 |
|
±.062 |
|
1.703 |
|
7291-003 |
|
a, c |
C. F. TAB |
|
28 mm |
|
32 oz. |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7288-02 |
|
c |
C. F. TAB |
|
28 mm |
|
1 Liter |
|
32. oz. |
|
|
11.703" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
2.578 |
|
7222-006 |
|
c |
C. F. TAB |
|
38 mm |
|
1 Liter |
|
32. oz. |
|
|
11.125" |
|
|
|
3.656" |
|
|
+.078-.062 |
|
±.078 |
|
1.797 |
|
7222-04 |
|
d |
October 29, 1986
-2-
COCA-COLA USA LIST OF AUTHORIZED PACKAGING
TYPE:
REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLERANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
|
|
|
|
FIIL |
|
DESIGN |
|
|
BRAND |
|
FIHISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAHETER |
|
MAJ.
DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Sprite
|
|
Crown
|
|
7 oz.
|
|
13. oz.
|
|
7.750"
|
|
2.344"
|
|
+.047-.031
|
|
± .047
|
|
|
1.953 |
|
|
7119-04
|
|
a |
Sprite
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.355"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7203-02
|
|
a,c |
Sprite
|
|
Crown & 28mm
|
|
16 oz.
|
|
18. oz.
|
|
11.125"
|
|
2.635"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7207-04
|
|
a,c |
Sprite
|
|
Crown & 28mm
|
|
500mL.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7270-06
|
|
a,c |
Sprite
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7293-01
|
|
c |
Sprite
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7293-002
|
|
c |
Sprite
|
|
28mm
|
|
1 Liter
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7103-014
|
|
c |
Sprite
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7103-11
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diet Sprite
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.355"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7203-02
|
|
a,c |
diet Sprite
|
|
Crown & 28mm
|
|
16 oz.
|
|
10. oz.
|
|
11.125"
|
|
2.635"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7207-04
|
|
a,c |
diet Sprite
|
|
Crown & 28mm
|
|
500mL
|
|
15. oz.
|
|
9.656"
|
|
2.701"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7270-06
|
|
a,c |
diet Sprite
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7293-002
|
|
c |
diet Sprite
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+,078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7103-11
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. PIBB
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.323"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Mr. PIBB
|
|
Crown & 28mm
|
|
16 oz.
|
|
17. oz.
|
|
11.125"
|
|
2.534"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Mr. PIBB
|
|
Crown & 28mm
|
|
500mL.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Mr. PIBB
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Mr. PIBB
|
|
28mm
|
|
1 Liter
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7169-13
|
|
c,ACI. |
Mr. PIBB
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mello Yello
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.323"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Mello Yello
|
|
Crown & 28mm
|
|
16 oz.
|
|
17. oz.
|
|
11.125"
|
|
2.534"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Mello Yello
|
|
Crown & 28mm
|
|
500mL.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Mello Yello
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-062
|
|
±.078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Mello Yello
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramblin
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.323"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Ramblin
|
|
Crown & 28mm
|
|
16 oz.
|
|
17. oz.
|
|
11.125"
|
|
2.534"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7340-01
|
|
a,c |
Ramblin
|
|
Crown & 28mm
|
|
500mL
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Ramblin
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-..062
|
|
±.078
|
|
|
2.578 |
|
|
7292-02
|
|
c |
Ramblin
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7169-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresca
|
|
Crown
|
|
7 oz.
|
|
13. oz.
|
|
7.750"
|
|
2.328"
|
|
+.047-.031
|
|
±.047
|
|
|
1.953 |
|
|
7146-01
|
|
a |
Fresca
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.390"
|
|
+.062-.047
|
|
±.062
|
|
|
2.203 |
|
|
7149-01
|
|
a |
Fresca
|
|
Crown & 28mm
|
|
16 oz.
|
|
18. oz.
|
|
11.125"
|
|
2.641"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7151-01
|
|
a,c |
Fresca
|
|
Crown & 28mm
|
|
500mL
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7330-003
|
|
a,c |
Fresca
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7286-01
|
|
c |
Fresca
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7157-10
|
|
d |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fanta
|
|
Crown
|
|
7 oz.
|
|
14. oz.
|
|
7.750"
|
|
2.345"
|
|
+.047-.031
|
|
±.047
|
|
|
1.953 |
|
|
7126-01
|
|
a |
Fanta
|
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.360"
|
|
+.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7131-03
|
|
a,c |
Fanta
|
|
Crown & 28mm
|
|
16 oz.
|
|
17. oz.
|
|
11.125"
|
|
2.563"
|
|
+.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7135-01
|
|
a,c |
Fanta
|
|
Crown & 28mm
|
|
500mL.
|
|
15. oz.
|
|
9.656"
|
|
|
2.781 |
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7460-001
|
|
a,c,c |
Fanta
|
|
Crown & 28mm
|
|
500mL.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7454-001
|
|
a,c |
Fanta
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7287-02
|
|
c |
Fanta
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
+.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7143-14
|
|
d |
October
29, 1986
-3-
COCA-COLA USA LIST OF AUTHORIZED PACKAGING
TYPE: REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
TOLERANCES |
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
MAJ. DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Minute Maid |
|
Crown & 28mm
|
|
10 oz.
|
|
15. oz.
|
|
9.656"
|
|
2.323"
|
|
±.047-.031
|
|
±.062
|
|
|
2.203 |
|
|
7167-02
|
|
a,c |
Minute Maid
|
|
Crown & 28mm
|
|
16 oz.
|
|
18. oz.
|
|
11.125"
|
|
2.641"
|
|
±.062-.047
|
|
±.078
|
|
|
2.203 |
|
|
7151-01
|
|
a,c |
Minute Maid
|
|
Crown & 28mm
|
|
500ml.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7330-003
|
|
a,c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generic
|
|
Crown & 28mm
|
|
300ml.
|
|
11. oz.
|
|
8.268"
|
|
2.401"
|
|
±.062-.047
|
|
±.062
|
|
|
1.693 |
|
|
7464-002
|
|
a,c,e |
Generic
|
|
Crown & 28mm
|
|
500ml.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7454-01
|
|
a,c,e |
Generic
|
|
Crown & 28mm
|
|
300ml.
|
|
15. oz.
|
|
9.656"
|
|
2.781"
|
|
±.062
|
|
±.062
|
|
|
1.703 |
|
|
7460-001
|
|
a,c,e |
Generic
|
|
28mm
|
|
32 oz.
|
|
32. oz.
|
|
11.703"
|
|
3.656"
|
|
±.078-.062
|
|
±.078
|
|
|
2.578 |
|
|
7292-02
|
|
c,e |
Generic
|
|
38mm
|
|
1 Liter
|
|
32. oz.
|
|
11.125"
|
|
3.656"
|
|
±.078-.062
|
|
±.078
|
|
|
1.797 |
|
|
7169-12
|
|
c,e |
Generic
|
|
38mm
|
|
2 Liter
|
|
52. oz.
|
|
12.875"
|
|
4.656"
|
|
±.079
|
|
±.084
|
|
|
2.578 |
|
|
7383-02
|
|
d,f |
TYPE: NON-REFILLABLE BOTTLES
Generic
Bare Glass
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-Wall |
|
28mm |
|
28 oz. |
|
19.00 oz. |
|
|
11.250" |
|
|
|
3.344" |
|
|
|
±.062 |
|
|
|
±.078 |
|
|
|
2.562 |
|
|
|
7252- 03 |
|
|
|
c,f |
|
Straight-Wall |
|
28mm |
|
28 oz. |
|
18.00 oz. |
|
|
10.500" |
|
|
|
3.344" |
|
|
|
|
|
|
|
|
|
|
|
1.953 |
|
|
|
7252-06 |
|
|
|
c,f |
|
Straight-Wall |
|
28mm |
|
32 oz. |
|
22.00 oz. |
|
|
11.687" |
|
|
|
3.516" |
|
|
|
±.062 |
|
|
|
±.078 |
|
|
|
2.562 |
|
|
|
7253-02 |
|
|
|
c,f |
|
Straight-Wall |
|
28mm |
|
32 oz. |
|
21. oz. |
|
|
11.250" |
|
|
|
3.516" |
|
|
|
±.062 |
|
|
|
±.078 |
|
|
|
2.203 |
|
|
|
7253-03 |
|
|
|
c,f |
|
TYPE: NON-REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
TOLERANCES |
|
FILL |
|
DESIGN |
|
|
MATERIAL |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
MAJ. DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
Generic Wrapped Glass |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plasti-Shield |
|
Crown & 28mm |
|
10 oz. |
|
5.50 oz. |
|
|
5.781" |
|
|
|
2.625" |
|
|
|
±.063-.047 |
|
|
|
±.031 |
|
|
|
1.297 |
|
|
BA-5985 (0-1) |
|
|
a,c |
|
Econo-Class-Pak/ Pre-Labeled |
|
Crown & 28mm |
|
10 oz. |
|
5.75 oz. |
|
|
5.781" |
|
|
|
2.609" |
|
|
|
±.062-.047 |
|
|
|
±.031 |
|
|
|
1.297 |
|
|
CC-5361 |
|
|
a,c,f |
|
Pre-Labeled/Universal |
|
28mm |
|
16 oz. |
|
7.5 oz. |
|
|
6.984" |
|
|
|
2.937" |
|
|
|
±.062 |
|
|
|
±.031 |
|
|
|
1.547 |
|
|
CC-5360 |
|
|
c,f,g |
|
Plasti-Shield |
|
28mm |
|
16 oz. |
|
7.5 oz. |
|
|
6.984" |
|
|
|
2.922" |
|
|
|
±.063 |
|
|
|
±.031 |
|
|
|
1.547 |
|
|
BB-3916 (0-1) |
|
|
a,c,f |
|
Plasti-Shield |
|
28mm |
|
1 Liter |
|
16.00 oz. |
|
|
10.886" |
|
|
|
3.500" |
|
|
|
±.063 |
|
|
|
±.078 |
|
|
|
1.875 |
|
|
BC-2673- 13 |
|
|
a, c,f |
|
TYPE: PLASTIC BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
TOLERANCES |
|
FILL |
|
DESIGN |
|
|
MATERIAL |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
MAJ. DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
PET |
|
28mm |
|
2 Liter |
|
66 Crams |
|
|
11.875" |
|
|
|
4.484" |
|
|
|
± .031 |
|
|
|
±.047 |
|
|
|
2.132 |
|
|
|
7433-04 |
|
|
c-pl,f,g |
PET |
|
38mm |
|
2 Liter |
|
72 Crams |
|
|
11.875" |
|
|
|
4.484" |
|
|
|
± .031 |
|
|
|
±.047 |
|
|
|
2.132 |
|
|
|
7433-02 |
|
|
d-pl,f,g |
TYPE:
CANS
|
|
|
|
|
|
|
MATERIAL |
|
CAPACITY |
|
NOMENCLATURE |
|
REFERENCE |
Aluminum
|
|
8 oz. (236ml.)
|
|
209/211 × 307,2-plece
|
|
f |
Aluminum
|
|
12 oz. (354ml.)
|
|
209/211 × 413 Necked In, 2-plece
|
|
f |
Aluminum
|
|
12 oz. (354ml.)
|
|
207.5/209/211 × 413 Double
Necked In, 2-plece
|
|
f |
Aluminum
|
|
12 oz. (354ml.)
|
|
206/207.5/209/211 × 413 Triple
Necked-In, 2-plece
|
|
f |
Aluminum
|
|
16 oz. (473ml.)
|
|
209/211 × 604 Necked-In, 2-plece
|
|
f |
Steel
|
|
12 oz. (354ml.)
|
|
209/211 × 413 Necked-In, 2-plece
|
|
f |
August 16, 1984
-4-
COCA-COLA USA LIST OF AUTHORIZED PACKAGING
TYPE
: REFILLABLE BOTTLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR |
|
TOLERANCES |
|
FILL |
|
DESIGN |
|
|
BRAND |
|
FINISH |
|
CAPACITY |
|
WEIGHT |
|
HEIGHT |
|
DIAMETER |
|
MAJ. DIAMETER |
|
HEIGHT |
|
POINT |
|
NUMBER |
|
REFERENCE |
TYPE : CROWNS/CLOSURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLERANCES |
|
|
ITEM |
|
MATERIAL |
|
DIAMETER |
|
HEIGHT |
|
DIAMETER |
|
HEIGHT |
|
REFERENCE |
Crowns
|
|
Tin-free Steel or Tinplate
|
|
(OD) 1.262" |
|
0.235" |
|
±0.008" |
|
±0.008" |
|
f |
Metal
|
|
Aluminum
|
|
28mm (ID) 1.092" |
|
0.600" (std. band)
|
|
+0.011"/-0.002" |
|
±0.007" |
|
f |
Closures
|
|
|
|
|
|
0.595" (8 score) |
|
|
|
|
|
|
|
|
|
|
38mm (ID) 1.496" |
|
0.692" |
|
+0.008"/-0.002" |
|
±0.007" |
|
f |
Plastic
|
|
Polyproplene
|
|
28mm (OD) 1.166" |
|
0.708" |
|
±0.010" |
|
±0.015
|
|
f |
Closures |
|
|
|
|
|
|
|
|
|
|
|
|
(Ethyl 1716) |
|
|
|
|
|
|
|
|
|
|
|
|
References
|
|
|
( a )
|
|
Crown denotes the 26mm Crown Finish (CP I 600 Finish-Refillables/CP I 665 Finish-Non-Refillables). |
( c )
|
|
28mm denotes the 28mm ROPP Threaded Glass Finish (CP I 1650 Finish Refillable and NON-Refillable). |
( c p l )
|
|
Denotes the 28mm ROPP PET finish, Alcoa 969 1716-001 Slotted Finish. |
( d )
|
|
38mm denotes the 38mm ROPP Threaded Glass Finish ( CP I 1650 ). |
( d p l )
|
|
Denotes the 38mm ROPP PET finish, Alcoa 969 1690-001. |
( e )
|
|
Authorized for use with Allied Products only when decorated with ACL, paper or foil labels according to
specifications issued by The Coca-Cola Company. |
( f )
|
|
Authorized for use with all Products only when decorated according to specifications issued by The Coca-Cola Company |
( g )
|
|
Design variations at different weights have been authorized on a manufacturing plant basis. |
* S.C. authorized only.
October 29, 1986
- 5 -
LIST OF AUTHORIZED PACKAGES CORRECTIONS/ADDITIONS
Refillable Bottles
Correct as submitted.
Non-Refillable Bottles Generic Wrapped Glass (add the following)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major |
|
Tolerances |
|
|
|
Design |
|
|
Material |
|
Finish |
|
Capacity |
|
Weight |
|
Height |
|
Diameter |
|
Diameter |
|
Height |
|
Fill Point |
|
Number |
|
Reference |
Plasti-Shield |
|
28mm |
|
20oz. |
|
8.5oz. |
|
8.167" |
|
2.922" |
|
± .063 |
|
± .031 |
|
1.875" |
|
C-84246-G |
|
a, c, f |
Pre-labeled |
|
28mm |
|
20oz. |
|
9.0oz. |
|
8.167" |
|
2.922" |
|
± .063 |
|
± .031 |
|
1.875" |
|
1.S.-2335 |
|
c, f, g |
Plastic Bottles (add the following)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PET |
|
38mm |
|
3L |
|
69-87 gms |
|
12.935" |
|
5.060" |
|
± .030 |
|
± .047 |
|
2.132" |
|
7523-001 |
|
d-pl, f, g |
Cans (revise as follows)
|
|
|
|
|
|
|
Material |
|
Capacity |
|
Nomenclature |
|
Reference |
Aluminum |
|
8oz. (236 mL) |
|
206/211 x 307, 2-pc. |
|
f |
Aluminum |
|
12oz. (354 mL) |
|
206/211 x 413, Quad necked-in, 2-pc. |
|
f |
Aluminum |
|
16oz. (473 mL) |
|
206/211 x 603, 2-pc. Spinneck |
|
f |
Aluminum |
|
12oz. (354 mL) |
|
206/211 x 413, 2-pc. Spinneck |
|
f |
Steel |
|
12oz. (354 mL) |
|
206/211 x 413, 2-pc. Spinneck |
|
f |
Product Containers (add new section)
|
|
|
|
|
|
|
Material |
|
Capacity |
|
Type Container |
|
Design |
Stainless Steel |
|
4.75 gal |
|
Model A, Pre-mix |
|
7023-1 |
Stainless Steel |
|
4.75 gal |
|
Model E, Pre-mix |
|
PS -218 |
Stainless Steel |
|
4.75 gal |
|
Model R, Pre-mix |
|
7321-003 |
Stainless Steel |
|
5.00 gal |
|
Model F, Post-mix |
|
7295-02 |
Plastic Bag with
Corrugated Box |
|
5.00 gal |
|
Bag-in-Box, Post-mix |
|
7054-012 |
Crowns/Closures
Delete plastic closures as these are still considered field test and have not yet been authorized
for general use.
April 6, 1989
exv10w3
Exhibit 10.3
Charles L. Wallace
Vice President
Franchise Affairs
Division of
The Coca-Cola Company
January 27, 1989
Coca-Cola Bottling Co. Consolidated
Tallan Building, Suite 901
Chattanooga, Tennessee 37402
Attention: Reid M. Henson
Gentlemen:
To provide Coca-Cola Bottling Co. Consolidated (Consolidated)1 assurances of The
Coca-Cola Companys good faith and reasonableness in exercising its rights under new bottler
contracts (together, the Contracts), to be executed simultaneously with and in reliance upon this
Agreement, and in recognition of the fact that Consolidated is executing the Contracts
simultaneously with, and in reliance upon, this Agreement, The Coca-Cola Company (the Company)
agrees that:
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The Company will continue to exercise good faith and fair dealing in its relationship with
Consolidated under the Contracts. In this regard, the Company acknowledges that the exercise
of its rights under the Contracts will require consideration, as appropriate to each
particular situation, of such criteria as: (i) the performance of Consolidated as bottlers
relative to that of other comparable Coca-Cola bottlers who are parties to similar contracts;
(ii) the nature of the competition and the identity of and resources of the major competitors
within the respective Territories of Consolidated, as well as the competitive activity in
those Territories; (iii) the price trends of the Concentrate or Syrup sold by the Company to
Consolidated relative to other competitive factors and market conditions in the Territories,
including Consolidateds prices to retailers for Beverages; (iv) such other criteria as shall
in the reasonable opinion of the Company be relevant and material to the exercise by the
Company of its rights under the Contracts; provided, however, that it is understood that while
these criteria are to be considered in the exercise of good faith and |
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Except with respect to paragraph 6 below, for
purposes of this Agreement, the term Consolidated shall include Consolidated
Coca-Cola Bottling Co. Inc. and its direct and indirect controlled subsidiaries
existing at any time during the term of this Agreement which are engaged in the
production or sale of beverages pursuant to Contracts with the Company. |
Coca-Cola Bottling Co. Consolidated
Page 2
January 27, 1989
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fair dealing, the Companys exercise of its rights under the Contracts shall not be limited
or mandated by any one or more of such criteria by themselves, and that the Company is free
to exercise its rights in accordance with its reasonable business judgment in view of all
relevant factors, including the Companys situation, so long as such exercise is consistent
with good faith and fair dealing. |
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The Company intends to offer to Consolidated marketing support and also intends to exercise
its rights under the Contracts, in a manner which is consistent with, and no more burdensome
than, as to any other comparable bottler which is a party to similar contracts. In assessing
the performance of Consolidated under the Contracts, the Company intends to use fair and
reasonable criteria which will include the performance of bottlers of similar size, who are
parties to similar contracts and who operate under similar conditions. However, with respect
to this paragraph, since the Companys relationships with its bottlers are significantly
affected by conditions in each bottlers territory, such as each bottlers performance and
competitive marketing conditions, the Company cannot make a binding contractual commitment to
treat any particular bottler in the same, or equivalent, fashion as any other bottler. |
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The Company agrees that in the event the Company enters into a written amendment to similar
contracts (including any amendment to such contracts with respect to the home market) between
the Company and any other bottler of Beverages in a territory in the United States (other than
an agreement relating to transfer such as that described in paragraph 6 below), the Company
will offer such amendment in its entirety to Consolidated on the same terms and conditions as
exist in the written amendment between the Company and such other bottler. The parties agree
that a written amendment to such similar contracts or the Home Market Amendment shall be
deemed to exist only in the event that the Company and another bottler expressly amend in
writing a material, substantive term or condition of those contracts or the Home Market
Amendment; and no such written amendment shall be deemed to exist by virtue of any action,
inaction or course of dealing undertaken by the Company with respect to marketing, planning,
quality control or other matters which are contemplated by the terms and conditions of those
Contracts and the Home Market Amendment as in existence on the date of this letter. |
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The attached form of Home Market Amendment shall be immediately executed by both parties,
thereby amending the Contracts. |
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The Company agrees that with respect to Concentrates or Syrups sold to Consolidated with
respect to territories in the U.S. under the Contracts and the Home Market Amendment, the
prices of such Concentrates or Syrups established and revised by the Company from time to time
under the Contracts shall not be greater than the prices established and revised by the
Company from time to time under similar contractual provisions of sale of the same
Concentrates or Syrups to any other bottler with respect to territories in the U.S. which is a
party to both similar contracts and the Home Market Amendment, including those which are
majority-owned by Coca-Cola Enterprises; provided, however, that it is understood that this
provision shall not prohibit minor or
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Coca-Cola Bottling Co. Consolidated
Page 3
January 27, 1989
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localized pricing differences which do not have a material impact on Consolidated, pricing
differences which exist for less than thirty days, or pricing differences which address the
needs of particular bottlers to meet specific situations. |
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For purposes of this letter, the prices of Syrups or Concentrates sold to bottlers shall
mean only the list prices established and revised by the Company pursuant to paragraph 14(a)
(or similar provisions) of the contracts between the Company and the bottlers which are
parties to such contracts, without regard to marketing or other expenditures, or
nonfinancial support by the Company to, or on behalf of, such bottlers. |
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As applied solely to Coca-Cola Bottling Co. Consolidated, the Company hereby waives the right
under paragraph 26 of the Contract between Coca-Cola Bottling Co. Consolidated and the Company
that would otherwise exist upon the occurrence of the event of default defined in subparagraph
26(a)(iii) of such Contract. |
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Except as expressly set forth in this paragraph 6 as applied solely to Coca-Cola Bottling
Co. Consolidated, the Company expressly reserves and does not waive any and all rights of
the Company under the Contract. |
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The provisions in the Contracts to the effect that the Contracts encompass all agreements
between the parties and supersede all prior agreements shall not have any effect on the
validity and continuance of the provisions of this Agreement, which shall have the same term
as the Contracts. |
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As used herein, similar contracts shall mean contracts which contain substantially the same
terms and are in substantially the same form as the Contracts. |
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The Contracts are not intended to apply to sales of fountain or post-mix syrup or to
Consolidateds marketing of such syrup. |
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This Agreement shall be binding upon the successors, if any, of the Company or Consolidated. |
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Company and Consolidated agree that the contents of this Agreement are confidential and that
neither party may discuss or disclose any of the provisions herein without the express written
permission of the other party. |
Please indicate your agreement with the foregoing by executing two copies of this Agreement.
Very truly yours,
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THE COCA-COLA COMPANY |
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By: |
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/s/ Charles L. Wallace |
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Title:
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Vice President |
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Coca-Cola Bottling Co. Consolidated
Page 4
January 27, 1989
ACCEPTED AND AGREED TO:
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Coca-Cola Bottling Co. Consolidated, |
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on behalf of itself and its direct and |
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indirect controlled subsidiaries |
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By: |
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/s/ James L. Moore |
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Title:
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President |
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FORM OF HOME MARKET AMENDMENT
Master Bottle Contract
THIS HOME MARKET AMENDMENT (Home Market Amendment) is made and entered into by and between The
Coca-Cola Company (Company), through its Coca-Cola USA Division, and
Company and Bottler are presently parties to the MASTER BOTTLE CONTRACT effective as of
_______________________ (the Master Bottle Contract). This Home Market Amendment provides for the
sale of the Beverages in syrup form for use and consumption in the Home Market (as such term is
hereinafter defined).
NOW, THEREFORE, for and in consideration of the mutual benefits and promises from one to the other,
and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it
is agreed as follows, all of which shall constitute an amendment to the Master Bottle Contract.
1. Definitions. As used in this Home Market Amendment, (i) capitalized terms which
are defined in the Master Bottle Contract shall have the meanings ascribed to them in the
Master Bottle Contract, and (ii) the following terms shall have the indicated meanings:
1.1. Home Market Syrup. Home Market Syrup shall mean any kind of syrup
for any Beverage that is sold or distributed in syrup form by any person for use and
consumption in the Home Market.
1.2. Home Market. Home Market shall mean with respect to the Territory
(i) residences, i.e., the places where people reside such as single family
dwellings, condominiums, apartment houses and cooperative housing complexes, and
(ii) the nonpublic areas within residences specifically excluding any restaurants,
cafeterias, similar food service outlets and any other retail outlets located
therein.
1.3. Total Bottler Syrup Gallons. Total Bottler Syrup Gallons shall mean,
with respect to any time period, the total number of gallons of Home Market Syrup
and Syrup (including equivalent gallons of beverage base and concentrate) to produce
Beverages for distribution and sale in Authorized Containers purchased by the
Bottler for its own account.
1.4. Unauthorized Home Market Syrup. Unauthorized Home Market Syrup shall
mean Home Market Syrup which is sold in the Territory by any person other than
through Bottler or any entity affiliated with Bottler.
1.5. Fountain Home Delivery Syrup. Fountain Home Delivery Syrup shall
mean equivalent gallons of syrup for any Beverage which has been used by anyone
other than through Bottler or an entity affiliated with Bottler to produce a
finished Beverage which was sold and delivered to the Home Market in the Territory
by the vendor of such Beverage.
1.6. Weighted Average Fountain Concentrate Price, Weighted Average Fountain
Concentrate Price shall mean a price calculated in the following manner:
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With respect to each Beverage, multiply (A) the number of
gallons of fountain syrup (and equivalent gallons of concentrate and beverage
base to produce fountain syrup) sold by the Company during such calendar
quarter by (B) the lowest fountain concentrate price published by the Company
for fountain wholesalers effective during such quarter (net of all discounts,
allowances, fees and other generally available adjustments, except volume
discounts); |
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Add together all of the arithmetic products of the foregoing
computations; |
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Divide the foregoing sum by the total number of gallons of
fountain syrup (and equivalent gallons of concentrate and beverage base to
produce fountain syrup) for all Beverages sold by the Company during such
quarter. |
1.7. Independent First Line Master Bottler. Independent First Line Master
Bottler shall mean any business entity having contracts with the Company
substantially similar to the Master Bottle Contract and this Home Market Amendment
covering a geographic territory within the United States of America, if a majority
of the voting securities of such business entity is not owned directly or indirectly
by the Company,
2. General Statement of Relationship; Home Market Syrup. Home Market Syrup for each
of the Beverages listed on Schedule A to the Master Bottle Contract (as Schedule A may be
modified from time to time under the Master Bottle Contract) shall be deemed to be a
Beverage and a Syrup covered by all of the terms and conditions of the Master Bottle
Contract; and Bottler shall have the sole, exclusive and perpetual right and license in
Bottlers Territory to supply the Home Market with Home Market Syrup, subject to all of the
provisions of the Master Bottle Contract.
No other party shall be authorized by Company to sell and deliver any beverage marketed under the
Coca-Cola or Coke trademarks with or without modification produced in any form that may hereafter
be developed into the Home Market in the Territory unless Company shall have first offered such
authorization to Bottler on terms and conditions which are equivalent in every material respect to
those which may be offered to such other party. For purposes of this Paragraph, beverages shall
include syrups, concentrates, beverage bases and other materials used to produce beverages but
shall not include finished beverages purchased at retail from fountain accounts. The terms and
conditions offered to Bottler may be different from or additional to but not inconsistent with the
terms and conditions of the Master Bottle Contract. Bottler shall have 75 days after receipt of
Companys proposal to accept the authorizations included therein by giving Company notice of such
acceptance. If Bottler does not give Company timely notice of Bottlers acceptance of such
authorizations and the terms and conditions thereof, then Company shall have the right to authorize
others to sell and deliver such beverages in such new form in the Territory on the same terms as
offered to Bottler.
2
2.4. Reservation of Rights. This Home Market Amendment defines the rights
and obligations of the parties only with respect to the matters specifically set
forth herein. This Home Market Amendment shall not by implication amend or change
any rights or obligations of the parties under the Master Bottle Contract. Except
as expressly amended by this Home Market Amendment, the Master Bottle Contract
defines the rights and obligations of the parties with respect to the manufacture,
packaging and distribution of the Beverages under the Trademarks in Authorized
Containers for sale in the Territory, and said Master Bottle Contract shall remain
in full force and effect in accordance with its terms.
3. Covenants. The Company and Bottler shall cooperate with each other in carrying
out the covenants contained in this Paragraph 3. Nothing contained in Paragraph 4 of the
Master Bottle Contract shall be deemed to be inconsistent with the specific provisions of
this Paragraph 3.
3.1. Unauthorized Bottling. The Company shall take all actions which are
commercially reasonable and legally permissible to prohibit the manufacture and sale
of any beverage marketed under the Coca-Cola or Coke trademarks with or without
modification in Authorized Containers in the Territory by anyone other than through
Bottler, except to the extent that such manufacture and sale may in the future be
permitted under any of the provisions of Article VIII of the Master Bottle Contract.
3.2. Sales of Home Market Syrup. The Company shall take all actions which
are commercially reasonable and legally permissible to prohibit the sale of Home
Market Syrup in the Territory by anyone other than through Bottler and any entity
affiliated with Bottler, except to the extent that such sale may in the future be
permitted under the Master Bottle Contract and this Home Market Amendment.
3.3. Unauthorized Fountain Sales. Bottler shall take all actions
commercially reasonable and legally permissible to prohibit the distribution and
sale of any Syrup purchased hereunder to fountain wholesalers or to fountain
accounts.
3.4. Home Delivery. Company will not actively encourage and promote home
delivery of fountain products; provided, however, that nothing herein shall restrict
Company from taking appropriate action if Company reasonably determines that such
activity is necessary because of activity by its competitors, or in order to service
its customers.
4. Royalty Payments.
4.1. General Provision. If a commercially significant amount of Unauthorized Home
Market Syrup plus Fountain Home Delivery Syrup is sold in the Territory, Company shall pay
Bottler a royalty amount determined under this Paragraph 4.
4.2. Commercially Significant Amount; Royalty Rate. The parties agree that a
Commercially Significant Amount of Unauthorized Home Market Syrup plus Fountain Home
Delivery Syrup is being sold in the Territory (such combined amount being referred to herein
as Total Royalty Gallons) if such Total Royalty Gallons exceed 3% of the Total Bottler
Syrup Gallons. If in any calendar quarter, the Total Royalty Gallons exceed 3% of the Total
Bottler Syrup Gallons, the Company shall make the royalty
3
payments provided for in this Paragraph 4 to Bottler. Subject to the further provisions of
this Paragraph 4, the amount of such royalty (the Royalty Amount) shall be 40% of the
Weighted Average Fountain Concentrate Price with respect to each Total Royalty Gallon that
is reasonably estimated, as provided below, to have been sold in the Territory during the
preceding calendar quarter.
4.3. Determination of Total Royalty Gallons. The determination of Total Royalty
Gallons shall be made in accordance with the methodology (Royalty Study) set forth in
Attachment A hereto. Bottler shall have the. right to demand that a Royalty Study be
performed with respect to any calendar quarter for which Bottler contends that a
Commercially Significant Amount of Total Royalty Gallons was sold in the Territory.
Bottlers demand must be made, if at all, by delivering written notice to the Company within
15 days after the close of the calendar quarter. If the Royalty Study determines that a
Commercially Significant Amount of Total Royalty Gallons was sold in the Territory during
the calendar quarter, the Company shall owe Bottler the Royalty Amount based upon the Total
Royalty Gallons determined pursuant to the Royalty Study. The same Royalty Amount shall
continue to be paid quarterly by the Company for each calendar quarter following a Royalty
Study that determines that a Commercially Significant Amount of Total Royalty Gallons has
been sold in the Territory, unless and until a subsequent Royalty Study determines a
different amount of Total Royalty Gallons has been sold in the Territory in any quarter.
The Companys obligation to continue to pay the Royalty Amount shall cease when and if a
subsequent Royalty Study determines that less than a Commercially Significant Amount of
Total Royalty Gallons has been sold in the Territory in any quarter. The Company shall have
the right to demand that a Royalty Study be performed with respect to any calendar quarter
for which the Company would otherwise be obligated to pay a Royalty Amount pursuant to a
Royalty Study performed in a prior quarter. The following rules shall apply to the
performance of any Royalty Study and to the payment of any Royalty Amount:
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Only one Royalty Study shall be performed with respect to any quarter; |
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The person that performs the Royalty Study shall be mutually agreeable to the
Bottler and the Company; |
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The costs and expenses incurred with respect to a Royalty Study (including the
fees of the person performing the study) shall be paid by the Company if the Royalty
Study determines that a Commercially Significant Amount of Total Royalty Gallons was
sold in the Territory during the quarter In question, but such costs and expenses shall
be paid by the Bottler for any Royalty Study that determines that the Total Royalty
Gallons were less than a Commercially Significant Amount. |
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The Company shall pay the Royalty Amount, if any, due with respect to any
calendar quarter not later than 15 days after the completion of a Royalty Study that
establishes the Total Royalty Gallons upon which the Royalty Amount is based, or if no
Royalty Study has been demanded for the quarter In question, not later than 30 days
after the end of that quarter. The Companys payment of any Royalty Amount that may
become due shall be accompanied by a certificate
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executed by the Chief Financial Officer of Coca-Cola USA certifying that the Royalty
Amount has been computed in accordance with the Royalty Study and this Paragraph 4;
and |
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The Company shall never owe any Royalty Amount unless Total Royalty Gallons
exceed a Commercially Significant Amount. For any quarter in which Total Royalty
Gallons exceed a Commercially Significant Amount, the Company shall pay Royalty Amount
based upon the entire amount of Total Royalty Gallons. |
4.4. Exceptions to Royalty Payments. The Company shall not be obligated to make any
payments of the Royalty Amount if:
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Bottler shall cease being the exclusive seller of Home Market Syrup in the
Territory, or |
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The exclusivity granted to Bottler pursuant to this Home Market Amendment is
finally determined not to be legally enforceable. |
4.5. National Maximum Royalty. In no event shall the Company be obligated to make
royalty payments to all Independent First Line Master Bottlers with respect to gallons of
syrup in excess of 5% of the Total Bottler Syrup Gallons purchased by all such Independent
First Line Master Bottlers for their own account. If such payment maximum is reached, (i)
the Company shall continue to make royalty payments based on the number of Total Royalty
Gallons, not to exceed 5% of Total Bottler Syrup Gallons purchased by all Independent First
Line Master Bottlers in each quarter, such payments being allocated among Independent First
Line Master Bottlers in proportion to the respective amounts of Total Royalty Gallons sold
in their territories during the most recent quarter for so long as the number of Total
Royalty Gallons exceeds such 5% maximum, and (ii) the Company and Bottler shall negotiate in
good faith concerning a new agreement on this subject based upon the then existing facts and
conditions. In the event that the Independent First Line Master Bottlers who purchased for
their own account eighty percent (80%) or more of all Total Bottler Syrup Gallons purchased
for their own account by all Independent First Line Master Bottlers agree with the Company
to amend the provisions of this Paragraph 4 to reflect a new arrangement based upon the then
existing facts and conditions, then Bottler hereby agrees to include such amendment in this
Home Market Amendment. The Total Bottler Syrup Gallons purchased by such Independent First
Line Master Bottlers shall be determined based on the most recently-ended calendar year
prior to the date such amendment was first offered to bottlers.
4.6. Exclusive Remedy. The royalty payments to be made pursuant to this Paragraph 4
shall be Bottlers sole and exclusive remedy for any breach of the provisions of Paragraphs
3.2 and 3.4 of this Home Market Amendment by the Company.
5. Packages.
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Authorized Containers for Home Market Syrup. The Company will, from time to
time, in its discretion, approve containers of certain types, sizes, shapes and other
distinguishing characteristics for the packaging of Home Market Syrup. Such containers
approved by the Company for Home Market Syrup will be separately identified on the |
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list of Authorized Containers provided by the Company to the Bottler under Paragraph 2
of the Master Bottle Contract and shall be deemed to be Authorized Containers under the
Master Bottler Contract, except that Bottler shall be authorized to fill such containers
only with Home Market Syrup. |
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Performance: Home Market Syrup. |
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6.1. Standard. The Bottler shall be free to determine how to supply the demand for
soft drink beverages in its territory, including the demand created by making Home Market
Syrup available, so long as the obligations of the Bottler relating to the marketing of the
Beverages, financial capacity and planning are satisfied in accordance with Article VI of
the Master Bottle Contract. |
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Bottler also agrees to cooperate in good faith with the
Company in programs designed to service the needs of customers
whose operations are located in more than one bottler territory.
The intent of this provision is to ensure reasonable levels of
program consistency while recognizing Bottlers right to set
prices and terms to its customers. |
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Bottler shall invest in plant and equipment, and keep such
plant and equipment in a condition to meet satisfactorily the
demand for Home Market Syrup in the Territory, and shall
increase such investment as the demand for Home Market Syrup may
require, all in accordance with the obligations of the Bottler
under Article IV of the Master Bottle Contract. |
7. No Third Party Beneficiary. No person, firm or other entity shall be a third party
beneficiary of this Home Market Amendment.
8. Effectiveness. This Home Market Amendment will become effective upon execution by
Bottler and the Company.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute
this Home Market Amendment on this 29th day of October 1999.
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THE COCA-COLA COMPANY
Coca-Cola USA Division
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By: |
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Title: |
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ATTACHMENT A
Royalty Study
Methodology
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A representative panel of no less than 300 households and no more than 500 households that
purchase soft drinks for use at home will be selected within the Territory. |
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Data collected from these households will include: |
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Soft drink brands purchased |
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Soft drink package sizes purchased |
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Soft drink package types purchased |
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Locations of soft drink purchases including home delivery of fountain products |
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Quantity of soft drinks purchased |
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Demographics |
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At least six weeks will be necessary for study completion. This consists of approximately
two weeks to assemble the panel, two weeks for data collection, one week for tabulation and
one week for analysis. |
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Households will record the sources from which soft drinks enter the home and the amount of
volume purchased from each source. This will provide a measure of total soft drink purchases
for use at home. Package and source of purchase data will be used to quantify the components
of syrup volume identifiable as: (i) Unauthorized Home Market Syrup and Fountain Home
Delivery Syrup (the combined amount being Total Royalty Gallons); and (ii) Total Bottler
Syrup Gallons as defined in Paragraph 1.3. |
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To conclude that Total Royalty Gallons is greater than three percent (3%) of Total Bottler
Syrup Gallons, the data must demonstrate that Total Royalty Gallons exceeds three percent (3%)
of Total Bottler Syrup Gallons at the .95 level of statistical significance. |
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The Royalty Study will be conducted by an independent market research firm that is agreeable to
the Bottler and the Company. The Company shall propose a market research firm to conduct the
Royalty Study, subject to the approval of the Bottler. |
exv10w4
Exhibit 10.4
DASANI
MARKETING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT (the Agreement), with effect from OCTOBER 1,2000, (the Effective
Date) is made and entered into by and between THE COCA-COLA COMPANY, a corporation organized
and existing under the laws of the State of Delaware having an office in Atlanta, Georgia, acting
through its Coca-Cola North America Division, herein referred to as Company, and Metrolina
Bottling Company, a Corporation organized and existing under the laws of the State of Delaware,
with a place of business at Charlotte, NC, herein referred to as Distributor.
W I T N E S S E T H
WHEREAS, Company will authorize the manufacture of certain beverages in the form of Purified
Water with Minerals Added for Flavor (the Beverages);
WHEREAS, Distributor is an established distributor of soft drink products of Company with
existing facilities and organization serving a well-established group of customers; and
WHEREAS, Distributor desires to purchase the Beverages referred to above from those
manufacturers authorized by Company and to distribute the Beverages in and throughout the territory
described in Appendix 1 (hereinafter referred to as the Territory).
WHEREAS, both Company and Distributor are committed to profitable volume and per capita growth
for the Beverages.
This having been set forth, the parties agree as follows:
I. OBJECTIVE OF THE AGREEMENT
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With respect to the Beverages packaged in the containers set forth in Appendix 2 hereof
(hereinafter referred to as the Authorized Containers,) Company grants to Distributor,
subject to the terms and conditions contained herein: |
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the authorization to purchase the Beverages packed in Authorized Containers
from those certain manufacturers that Company may from time to time designate in
writing to Distributor (the Approved Processors); and |
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the exclusive authorization to distribute the Beverages in Authorized
Containers in accordance with and subject to the provisions of the Agreement in the
Territory under the trademarks set forth in Appendix 3 hereof (hereinafter referred to
as the Trademarks).
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Company agrees that it will exercise its rights under the Agreement based upon all relevant
factors in a manner consistent with the terms of the Agreement and the standard of good
faith and fair dealing. |
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To this effect, Company will designate the Approved Processors who will manufacture the
Beverages and pack them in Authorized Containers; and Company will authorize the Approved
Processors to sell the Beverages in Authorized Containers to Distributor. In accordance with
this paragraph 2, Company agrees to authorize the Approved Processors to sell to Distributor
sufficient quantities of the Beverages in Authorized Containers to meet the requirements of
Distributor in the Territory as described herein. Subject to paragraph 9 of the Agreement,
Distributor and the Approved Processors shall establish between themselves the prices of the
Beverages in the Authorized Containers as well as the terms of payment and other conditions of
supply. |
II. OBLIGATIONS OF DISTRIBUTOR RELATING TO THE MARKETING,
HANDLING AND STORAGE OF THE
BEVERAGES
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For the Term of the Agreement, Distributor agrees: |
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to buy exclusively from the Approved Processors the quantities of the Beverages
required to satisfy fully the demand for the Beverages in Authorized Containers in the
Territory; |
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to distribute the Beverages in Authorized Containers in the Territory for its
own account, and, in general, to use best efforts and employ all suitable, commercially
reasonable and approved means to develop and exploit the potential of the business of
distributing and marketing the Beverages within the Territory by creating and
stimulating the demand for the Beverages and by satisfying fully and in all respects
such demand; |
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in particular, to invest all capital and to incur all expenses commercially
reasonably required for the organization, installation, operation and maintenance of a
distribution enterprise within the Territory, with warehousing, marketing,
distribution, delivery, transportation and other equipment and facilities necessary and
sufficient to exploit and develop satisfactorily the distribution enterprise of
Distributor throughout the entire Territory during the Term (as hereinafter defined) of
the Agreement and to satisfy the reasonable requirements of customers for the Beverages
in all trade channels; to secure at Distributors own expense competent and
well-trained management and to recruit, train, and use all personnel reasonably
required, sufficient in every respect to carry out the objectives of the Agreement and
to fulfill the duties hereunder of Distributor; |
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(d) |
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not to manufacture, sell, market or otherwise be concerned with any bottled
water in the Territory other than the Beverages during the Term of the Agreement
without Companys prior written consent. Distributor has advised Company that the
restrictions contained in this subparagraph (d) may conflict with the product
requirements of certain food service customers of the full line vending operations |
2
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of Distributor or of Distributors subsidiary or affiliate. When requested by such
customer, Distributor may provide a product that is otherwise prohibited by this
subparagraph 3(d); provided, however, that Distributor agrees that, in any such
circumstance, Distributor will use its best efforts to sell Beverages in Authorized
Containers to all such customers in lieu of or in addition to such other products.
Upon discovery of a violation of this subparagraph 3(d), Company shall have the
option to terminate the Agreement immediately without any liability of any kind or
nature; |
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(e) |
|
not to sell or distribute or cause the sale or distribution in any manner
whatsoever of any of the Beverages outside the Territory without the prior written
consent of Company; |
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(f) |
|
not to manufacture, package, sell, deal in or otherwise use or handle any
beverage, concentrate, beverage base, or syrup likely to be confused with, or passed
off for, the Beverages; |
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(g) |
|
not to manufacture, package, sell, deal in or otherwise use or handle any
product under any trade dress or in any container that is an imitation of a trade dress
or container for the Beverages in which Company claims a proprietary interest or which
is likely to be confused or cause confusion with or be confusingly similar to or be
passed off as such trade dress or container; |
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(h) |
|
not to manufacture, package, sell, deal in or otherwise use or handle any
product under any trademark or other designation that is an imitation, counterfeit,
copy or infringement of, or confusingly similar to, the Trademarks; and |
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(i) |
|
not to acquire or hold, directly or indirectly, any ownership interest in, or
enter into any contract or arrangement with respect to the management or control of,
any individual, corporation, partnership, limited partnership, trust or unincorporated
association within or without the Territory that engages in any of the activities
prohibited under subparagraphs (f), (g) and (h) of this paragraph 3. |
4. |
|
Company agrees, at its own expense, to use commercially reasonable efforts to develop and
maintain consumer demand for the Beverages on a national level through appropriate
advertising, marketing, and merchandising programs selected by Company. Company shall also
have the right, but not the obligation, to carry out at its own expense local or area
advertising, marketing or sales promotion activities of any kind that Company in its judgment
believes will support the maximization of sales of the Beverages, including sales in the
Territory; provided, however, Company shall provide distributor with reasonable advance notice
as to such local activities. |
5. |
(a) |
|
Distributor agrees, at its own expense, to appropriate and spend such funds for
advertising and sales promotion of the Beverages as are reasonably required to develop,
stimulate, and satisfy .fully the demand for the Beverages among Distributors customers in
the Territory. Distributor agrees to submit all advertising and sales promotion materials and
activities involving or mentioning |
3
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the Trademarks or the Beverages to Company for prior approval; Distributor shall
use, publish, maintain or distribute only such advertising and sales promotion
materials relating to the Trademarks or the Beverages that Company has authorized in
a prior writing. |
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(b) |
|
Company retains the right to test market anywhere within the Territory
prospective New Beverages or New Containers (as defined in paragraph 16 below), as well
as reformulations of the Beverages, as Company, in its sole discretion, deems necessary
or desirable. Company further retains the right to conduct such local marketing and
promotional activities regarding New Beverages or New Containers anywhere within the
Territory as Company, in its sole discretion, deems necessary or desirable. Such
activities may include, but are not limited to, the distribution of samples of New
Beverages or reformulated Beverages in the Territory. Before exercising any of the
rights retained under this subparagraph 5(b), Company shall provide Distributor in
writing a detailed description of test market activities planned by Company, and
Company will offer to Distributor the right to test market within the Territory the
prospective New Beverages, Beverages in New Containers or reformulations of the
Beverages that Company deems necessary or desirable. Only in the event that
Distributor chooses not to accept the test market offer within twenty (20) business
days after its receipt of the detailed description may Company then exercise any of the
aforesaid rights. If Distributor agrees to conduct the test market activities,
Distributor agrees to execute such test on a prompt basis to Companys satisfaction. |
|
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(c) |
|
Distributor acknowledges that Company has entered into, or shall enter into,
agreements similar to the Agreement with other parties outside the Territory.
Distributor agrees to conduct its business in such a manner as to avoid conflicts with
such other parties, and, in the event of disputes nevertheless arising with such other
parties, to make every effort to settle such disputes on a commercially reasonable
basis. |
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(d) |
|
Company may, if it chooses, either deliver Beverages directly to a Commissary
Exception Account as defined herein, or call upon Distributor to deliver the Beverages
in Authorized Containers for Company. If Company so requests, Distributor agrees that
it will deliver the Beverages in Authorized Containers to a Commissary Exception
Account. |
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If Company or another party acting under authority of Company delivers directly to a
Commissary Exception Account located in the Territory, Company agrees to pay to
Distributor as a Commissary Fee an amount equal to One Dollar ($1.00) for each
physical case or recognized industry equivalent (a Case) so delivered by Company
or another party acting under authority of Company if the Beverage is for ultimate
consumption within the Territory. If Company or another party acting under
authority of Company delivers directly to the Commissary Exception Account located
outside the Territory, Company agrees to pay to Distributor a Commissary Fee of One
Dollar ($1.00) for each Case so delivered if the Beverage |
4
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is for ultimate consumption within the Territory; provided, however, Distributor is
not entitled to receive such Commissary Fee with respect to Beverages so delivered
that are for consumption aboard a passenger transportation service, such as an
airline or railroad. |
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If Company does not deliver but instead asks Distributor to deliver to a Commissary
Exception Account, Distributor agrees to deliver for Company out of Distributors
inventory the Beverage in Authorized Containers to a Commissary Exception Account
located within the Territory as requested. Distributor shall then promptly receive
from Company (1) a Commissary Fee of One Dollar ($1.00) for each Case so delivered
by Distributor to a Commissary Exception Account, provided the Beverage is for
ultimate consumption within the Territory; (2) a Delivery Fee of seventy-five cents
($0.75) for each Case which Distributor so delivers and (3) payment of Distributors
Price for the Beverages so delivered. Distributor agrees that it shall, upon
request by Company, sell to Company such quantities of the Beverages in Authorized
Containers as Company may reasonably request in connection with sales by Company to
any Commissary Exception Account. Distributor agrees that its sales price (the
Distributors Price) to Company under these circumstances will be subject to
negotiation between Distributor and Company, but in no event shall Distributors
Price exceed Distributors floor cost for the Beverages in Authorized Containers.
For the avoidance of doubt, the Delivery Fee referred to in the preceding sentence
is also payable to Distributor with respect to delivery within the Territory to a
facility of a Commissary Exception Account which provides passenger transportation
services, such as an airline or railroad. |
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Upon receipt by the Company from Distributor of proof of costs actually incurred by
Distributor, net of any credits, refunds, rebates, collected deposits or recoveries,
in paying any applicable mandatory soft drink container deposit redemptions or
escheats, soft drink sales taxes, or other such mandatory soft drink taxes or soft
drink fees, including any applicable fee pertaining specifically to bottle water,
imposed by operation of law on the Beverages in Authorized Containers delivered (i)
by Company or Distributor to a Commissary Exception Account located outside the
Territory for ultimate consumption within the Territory, or (ii) by Company, or
another party acting under authority of Company, to a Commissary Exception Account
located outside the Territory for ultimate consumption within the Territory (for
purposes of this subparagraph, net statutory costs), Company agrees to pay to
Distributor a Commissary Refund equal to the amount of such net statutory costs. It
is the intent of the parties that the Commissary Refund, if any, shall be in
addition to, and not a reduction of, the Commissary Fee. |
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Beginning in the second calendar year of the Term, as defined below and for each
calendar year thereafter during the Term the Commissary Fee and the Delivery Fee
referred to in this subparagraph (d), but not the Commissary Refund, shall be
adjusted in an amount equal to the percentage change for the then most recently
completed calendar year in the Consumer Price Index (CPI) (as published by |
5
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the Bureau of Labor Statistics United State Department of Labor, for All Consumers
in the All Items category). The Company shall calculate the amount of the
adjustment when the percentage change is published and such adjusted amount shall
remain in effect for the remainder of the then current calendar year. Until such
adjustment is effected, the Company will pay any Commissary Fee or Deliver Fee due
to the Distributor on the basis of the applicable fee in effect as of January 1 of
the then current year. A retroactive payment, if any is due, will be made to the
Distributor on the basis of any adjustment to the fees based upon the published
percentage change in the CPI. |
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A Commissary Exception Account is an account that operates through a commissary
system for delivery of food and beverage products to its outlets and that serves its
customers the Beverages for on-premise consumption as distinct from selling the
Beverages for off-premise consumption. Some examples of Commissary Exception
Accounts are (i) restaurant chains, (ii) food service operators with respect to
their sale of Beverages through manual beverage units but not their sale of
Beverages through coin operated vending machines and (iii) passenger transportation
services, such as airlines and railroads. |
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The parties acknowledge and understand that the Beverages in Authorized Containers
subject to the terms of the Agreement shall not be warehouse delivered except to the
extent there is no other commercially feasible method available to provide service
to a Commissary Exception Account. |
6. |
|
Distributor warrants that the handling, storage, delivery and merchandising of the Beverages
shall be accomplished in accordance with handling, storage, delivery and merchandising
standards established by Company and communicated to Distributor by Company from time to time
and shall, in any event, conform with all applicable food, health, sanitation and other
relevant laws and regulations applicable in the Territory. Distributor is specifically
responsible for ensuring that shelf stocks of Beverages are rotated in accordance with
standards established by Company. Any costs associated with recall and disposal of Beverages
which arise out of Distributors failure properly to handle, store, deliver or merchandise the
Beverages, including, but not limited to, properly ensuring rotation of shelf stocks, shall be
the responsibility of Distributor in accordance with the provisions of paragraph 19 below.
Notwithstanding the foregoing, in the event of a recall of Beverages at a Commissary Exception
Account, Distributor and Company will negotiate in good faith with each other concerning the
financial responsibility for any such recall. |
7. |
(a) |
|
Periodic strategic planning is essential for the proper implementation of the Agreement.
Distributor and Company, therefore, shall cooperate in preparing an annual marketing plan (the
Annual Business Plan or Plan) for the mutually profitable volume and per capita growth of
the Beverages in the ensuing calendar year (the Plan Year). Company shall assist
Distributor in preparing the Plan by providing to Distributor, in sufficient time to permit
the preparation of a Plan in accordance with this subparagraph, (i) the estimated price at
which Company expects to sell Beverage Base for the Beverages to the Approved Processors |
6
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during the following calendar year, (ii) what advertising and marketing support
Company expects to be able to provide Distributor for the ensuing year, and (iii)
such other information which may be relevant to the development of the Plan. This
other information may include a description of Company concepts or programs with
respect to the advertising, marketing and promotion of the Beverages during the
ensuing calendar year and the marketing and sales objectives and strategies Company
has for the Beverages, including a channel merchandising strategy and such other
relevant information as may be helpful to Distributor in preparing the Plan.
Distributor and Company shall meet together at an appropriate time prior to the end
of the calendar year preceding the Plan Year to discuss Distributors proposed
Annual Plan, which Plan shall set out in reasonable detail the marketing, management
and advertising plans of Distributor with respect to the Beverages for the ensuing
year. Company and Distributor shall work together in finalizing the Annual Plan
prior to the beginning of the Plan Year, taking into consideration the circumstances
of Distributors local market conditions and performance of other Distributors
similarly situated. Upon approval by both parties of such Plan, which approval
shall not be unreasonably withheld by either party, Distributor and Company shall
perform their obligations substantially as described in such Plan. Distributor
shall be deemed to have not fulfilled its obligations (i) if it does not prepare and
submit a proposed Plan in accordance with this subparagraph 7(a) or (ii) if
Distributor fails to substantially perform the approved Plan or any material part
thereof; provided, however, that any such failure by Distributor shall be waived if
such failure results directly from failure on the part of Company to perform
Companys obligations under this subparagraph 7(a) or any material part thereof.
Failure by Distributor to prepare a Plan in accordance with this subparagraph 7(a)
or to perform substantially in accordance with the Plan or any material part thereof
will demonstrate Distributors unwillingness to develop, stimulate and satisfy fully
the demand for the Beverages in the Territory. Company recognizes that
circumstances may occur during the relevant Plan year, which circumstances could not
be anticipated and are beyond the control of Company and/or Distributor. If such
circumstances occur, Company and Distributor shall meet together and modify the Plan
as appropriate to such circumstances. |
|
(b) |
|
Distributor shall report to Company periodically, but not less than quarterly,
as to its implementation of the Annual Plan. Distributor shall also provide
information relating to Distributors sales of the Beverages and any extensions thereof
in the Territory by volume and package. Distributor also agrees to provide information
by volume and package for Beverages and any extensions thereof sold by Distributor to
each outlet of a customer with which Company has a national account agreement or
program. |
8. |
(a) |
|
Except as may be authorized specifically by Company in accordance with the Agreement,
Distributor shall not sell, distribute or otherwise transfer any Beverages to any person under
circumstances in which Distributor knows, should know or has been informed by Company that
such person will redistribute the Beverages for ultimate sale outside the Territory. If any
Beverages originating |
7
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with Distributor are found outside the Territory, Distributor shall be deemed to
have transshipped such Beverages and shall be deemed to be a Transshipping
Distributor for purposes hereof. The presumption of the foregoing sentence,
however, shall not apply with respect to Beverages in Authorized Containers sold to
a Commissary Exception Account if Distributor can demonstrate by its business
records that any such Beverages were either (i) not received by Distributor from an
Approved Processor or (ii) if Distributor did receive such Beverages, they were
delivered by Distributor to a Commissary Exception Account. In addition to any
other remedies Company may have a right to assert against a Transshipping
Distributor for violation of this paragraph, Company may impose upon a Transshipping
Distributor a charge for each case of Beverages transshipped by such Distributor.
The per case amount of such charge shall be determined by Company in its sole
discretion and may be an amount not to exceed three times Offended Distributors (as
such term is hereinafter defined) most current average gross margin per case of the
Beverages transshipped, as reasonably estimated by Company. Company and Distributor
agree that the amount of any such charge shall be deemed to reflect the damages to
Company, the Offended Distributor (if any) and the distribution system. If
Beverages are transshipped into the territory of an Offended Distributor, Company
shall forward to the Offended Distributor upon receipt, if any, from the
Transshipping Distributor, not less than the Offended Distributors most current
average gross margin per case of the Beverages transshipped. For purposes of the
Agreement, Offended Distributor shall mean a distributor of Beverages in
Authorized Containers into whose territory a Beverage in Authorized Containers is
transshipped. |
|
(b) |
|
In the event Beverages distributed or sold by Distributor are found in the
territory of an Offended Distributor, Distributor shall make available to Company all
documents and records relating to such Beverages and shall assist Company in all
investigations relating to such Beverages. The decisions as to which remedy to pursue
and whether to pursue any remedy shall be in the sole discretion of Company. |
III. TERMS AND CONDITIONS OF SALE OF THE BEVERAGES
9. |
|
If Distributor is unable to purchase the Beverages from an Approved Processor at a price (the
Offer Price) that is acceptable to Distributor, Distributor may give written notice to
Company describing the circumstances. Within thirty (30) days of its receipt of such notice.
Company shall use reasonable commercial efforts to obtain an Offer Price that is acceptable to
Distributor. If Company is unable to obtain an Offer Price that is acceptable to Distributor,
Distributor may, at its option, notify Company that Distributor is unwilling to purchase the
Beverages at the Offer Price. In this event, Company shall notify Distributor in writing that
Distributors authorization in respect of that Beverage or those Beverages or Authorized
Container or Authorized Containers for which Distributor is unwilling to pay the revised price
is cancelled, such cancellation to be effective sixty (60) days after the date of Companys
notice thereof. |
8
10. |
|
Except to the extent that paragraph 9 hereof may apply, Distributor shall purchase Beverages
from Approved Processors at a price and under terms or conditions as agreed by and between
Distributor and any Approved Processor. |
IV. OBLIGATIONS OF COMPANY RELATING TO THE BEVERAGES
11. |
|
Except as provided in paragraphs 5 and 16 hereof, Company, for the Term of the Agreement and
any renewal of the Term which may occur in accordance with paragraph 20, will not distribute
or sell or authorize third parties to distribute or sell the Beverages in Authorized
Containers in the Territory. |
12. |
|
Company covenants that it will require each Approved Processor to warrant to Distributor that
the Beverages delivered to Distributor shall comply in all respects with the Federal Food,
Drug and Cosmetic Act, as amended (the Act), and all federal, state and local laws, rules,
regulations and guidelines applicable in the Territory. Further, Company warrants it will
require each Approved Processor to warrant to Distributor that all Beverages shipped to
Distributor, and all packaging and other materials which come in contact with such Beverages,
will not at the time of shipment to Distributor be adulterated, contaminated, or misbranded
within the meaning of the Act or any other federal, state or local law, rule or regulation
applicable in the Territory, and that such Beverages, packaging and other materials will not
constitute articles prohibited from introduction into interstate commerce under the provisions
of Sections 301(d), 404, 405 or 505 of the Act. |
13. |
|
Company covenants that it will require each Approved Processor to warrant to Distributor that
the Beverages will be handled, stored and transported properly up until time of delivery to
Distributor and will be fresh by commercially reasonable standards at the time of delivery. |
14. |
|
Company makes no other covenant, representation or warranty concerning the Beverages of any
kind whatsoever, express or implied, except those set forth in paragraphs 12 and 13. |
V. REFORMULATION. NEW PRODUCTS AND RELATED MATTERS
15. |
(a) |
|
Company has the sole and exclusive right and discretion to reformulate any of the
Beverages. In addition, Company has the sole and exclusive right and discretion to
discontinue any of the Beverages or Authorized Containers under the Agreement, provided (i)
such Beverage or Authorized Container is discontinued on a regional basis; (ii) Distributor is
given not less than sixty (60) days written notice of such discontinuation and (iii) Company
does not discontinue all Beverages under the Agreement. In the event Company discontinues any
Beverage or Authorized Container, Appendix 2 of the Agreement shall be deemed amended by
deleting the discontinued Beverage from the list of Beverages set forth on Appendix 2 or by
deleting the discontinued Authorized Container from the list of Authorized Containers for the
Beverages set forth on Appendix 2, as may be the case. |
9
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(b) |
|
Subject to subparagraph (c) of this paragraph 15, Distributor has the right to
discontinue the distribution and sale of any of the Beverages in the Authorized
Containers in all of the Territory or in a designated geographic area in the Territory.
This right shall be exercised, if at all, by Distributor giving sixty (60) days notice
of such discontinuation to Company, specifying the geographic area within the Territory
to which the notice of discontinuation applies. Upon expiration of such sixty (60) day
period, Distributor shall cease distribution and sale of the specified Beverage or
Beverages in the specified Authorized Container or Containers in the geographic area
specified in the notice and Company may then distribute and sell such Beverage or
Beverages in such Authorized Container or Containers in such geographic area, or
authorize others to so distribute and sell. In the event of notice as described in
this subparagraph, Appendix 1 to the Agreement shall be amended to eliminate the
geographic area specified in the notice from the Territory. |
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(c) |
|
Distributor and Company acknowledge and agree that it may be in their
respective best interests to adopt and implement in the Annual Business Plan a strategy
for the Beverages under which Distributor will carry the Beverages in all available
Authorized Containers. In the event Company believes in its commercially reasonable
judgment that such strategy is necessary for the successful marketing of the Beverages,
Company shall include such strategy in the information it provides to Distributor as
described in subparagraph (a) of paragraph 7 of the Agreement. In that situation, and
if Distributor gives notice of discontinuance to Company as provided for in
subparagraph (b) of this paragraph 15, Company may respond to Distributor with a
request that Distributor refrain from effectuating such discontinuance until completion
of the process of developing the Annual Business Plan for the ensuing calendar year in
accordance with subparagraph (a) of paragraph 7. Under such circumstances Distributor
agrees that it will (i) so refrain from discontinuance as requested by Company and that
it will (ii) cooperate in good faith during the planning process to support the
strategy articulated by Company. |
16. |
(a) |
|
In the event Company proposes to introduce an extension of an existing Beverage (a New
Beverage) which utilizes one or more of the Trademarks, Distributor shall have the option to
distribute and sell such New Beverage in the Territory pursuant to the terms and conditions of
the Agreement. Distributors option under this subparagraph 16(a) shall be exercised, if at
all, by giving Company notice of the election within sixty (60) days of the date on which
Company gives notice to Distributor that Company intends to introduce a New Beverage in the
Territory. If Distributor gives Company timely notice of Distributors exercise of such
option within such period, Schedule A of the Agreement shall be amended by adding the New
Beverage to the list of Beverages set forth on Schedule A. If Distributor (i) accepts the
offer to introduce the New Beverage in a timely manner but fails to introduce the New Beverage
within a reasonable period of time, or (ii) fails to respond to Companys offer within the
sixty (60) day period, or (iii) elects to decline such offer within the sixty (60) day period;
Company shall have the |
10
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right to distribute or authorize others to distribute and sell or otherwise
undertake any activity in the Territory with respect to the New Beverage. |
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(b) |
|
In the event Company proposes to introduce a new package or container (referred
to jointly as a New Container) that is not an Authorized Container, Distributor shall
have the option to distribute and sell the Beverage in such New Container in the
Territory pursuant to the terms and conditions of the Agreement. Distributors option
under this subparagraph 16(b) shall be exercised, if at all, by giving Company notice
of the election within sixty (60) days of the date on which Company notifies
Distributor that Company intends to introduce a New Container in the Territory. If
Distributor gives Company timely notice of Distributors exercise of such option within
such period, Schedule D of the Agreement shall be amended by adding the New Container
to the list of Authorized Containers. If Distributor (i) accepts the offer to
introduce in a timely manner but fails to introduce within a reasonable period of time,
or (ii) fails to respond to Companys offer within the sixty (60) day period, or (iii)
elects to decline such offer within the sixty (60) day period; Company shall have the
right to distribute or authorize others to distribute and sell and otherwise undertake
any activity in the Territory with respect to the New Container. |
VI. OBLIGATIONS OF DISTRIBUTOR RELATIVE TO THE TRADEMARKS
17. |
|
Distributor acknowledges that Company is the sole and exclusive owner of the Trademarks, and
Distributor agrees not to question, dispute or challenge the validity of the Trademarks or
their exclusive ownership by Company. Nothing herein, nor any act or failure to act by
Distributor or Company, shall give Distributor any proprietary or ownership interest of any
kind in the Trademarks or in the goodwill associated with the Trademarks. Company has the
unrestricted right to use the Trademarks on the Beverages and on all other products and
merchandise other than the Beverages in the Authorized Containers in the Territory. Company
shall be absolutely entitled to determine in every instance the manner of presentation of the
Trademarks and such other steps necessary or desirable to secure compliance with this
paragraph. Distributor agrees to use and publish only such advertising, promotional materials
or other items bearing the Trademarks relating to the Beverages as Company has approved and
authorized in a prior writing. |
18. |
|
Distributor agrees not to adopt or use any name, corporate name, or other commercial
designation which includes the Trademarks individually or in any combination, or words that
may be confused with any of the Trademarks, unless it has obtained the prior written consent
of Company. |
VII. DUTIES REGARDING BEVERAGE RECALLS
19. |
|
In the event Distributor discovers or becomes aware of the existence of any quality or other
technical problems relating to the Beverages or to the packaging for the Beverages, then
Distributor shall immediately notify Company by telephone, telegraph, telex or any other form
of immediate communication. |
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Such notification must include: |
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(a) |
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identity and quantities of the Beverages concerned, |
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(c) |
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any other relevant data suitable or helpful for the tracing of such Beverages. |
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In the event Company becomes aware of the existence of any quality or other technical
problem relating to the Beverages or to an individual Beverage, Authorized Container or
other packaging for the Beverages, Company may require Distributor immediately to take all
necessary measures to withdraw the Beverages concerned from the market. Company shall
notify Distributor by telephone, telefax or any other form of immediate communication that
the Beverages concerned are to be withdrawn from the market. Upon receipt of such notice,
Distributor shall immediately cease the distribution of such Beverages and take all other
measures that are reasonably necessary or reasonably required by Company in connection with
the withdrawal of such Beverages from the market. If any withdrawal or recall of any
Beverage or Authorized Container is caused by Distributors failure to handle the Beverage
properly after delivery to Distributor by an Approved Processor, Distributor shall bear the
reasonable expenses of such withdrawal or recall and reimburse Company for all of its
reasonable expenses incident to such withdrawal or recall. If any withdrawal or recall is
allegedly caused by quality or technical defects arising from the manufacture, packaging,
storage or shipment of the Beverages, Authorized Containers or other packaging or materials
prior to delivery to Distributor, Distributor shall present any claims it may have to the
Approved Processor from whom Distributor purchased the Beverages in Authorized Containers
subject to such withdrawal or recall. Distributor shall also submit a copy of any such
claim to Company. Company agrees to use reasonable efforts to resolve any such claims
between Distributor and Approved Processor. |
VIII.
TERM AND TERMINATION OF THE AGREEMENT
20. |
(a) |
|
The Agreement shall commence on the
Effective Date and continue for a period of
fifteen (15) years (the Term), unless
earlier terminated pursuant to the
provisions of the Agreement. |
|
(b) |
|
Unless Distributor has given notice of its intention not to renew as
hereinafter provided or the Agreement has otherwise been earlier terminated as
hereinafter provided, the then effective term of the Agreement shall be automatically
renewed for Succeeding Terms of ten (10) years each. If Distributor chooses not to
renew, it must give Company notice of such intention at least one (1) year prior to the
expiration of the Term or any Succeeding Term which may occur. Company agrees that it
will give Distributor at least thirty (30) days written notice prior to the beginning
of such one (1) year period. |
21. |
|
The Agreement shall terminate immediately without any liability for damages if any of the
following events occur: |
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(a) |
|
Distributor files a voluntary petition or consents to an involuntary petition
for bankruptcy under any Chapter of Title 11 of the United States Code, as amended, or
under any other federal insolvency law which presently exists or may exist hereafter; |
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(b) |
|
Distributor voluntarily commences any bankruptcy, insolvency, assignment for
the benefit of creditors proceeding, case, or suit or consents to such a proceeding,
case or suit under the laws of any state, commonwealth or territory of the United
States or any country, kingdom or commonwealth not governed by the United States; |
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(c) |
|
an involuntary petition for bankruptcy, insolvency, assignment for the benefit
of creditors, proceeding, case or suit under the laws of any state, territory or
commonwealth of the United States or any country, commonwealth or kingdom not governed
by the United States is filed against Distributor and such a proceeding, suit or case
is not dismissed with prejudice within sixty (60) days after the commencement of such a
proceeding, case or suit or the order of dismissal is appealed and stayed; |
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(d) |
|
Distributor makes an assignment, deed of trust for the benefit of creditors or
makes an arrangement or composition with creditors other than a pledge as described in
subparagraph (d) of paragraph 26 of the Agreement; |
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(e) |
|
a receiver or trustee for Distributor or for any interest in Distributors
business is appointed and such order or decree appointing the receiver or trustee is
not vacated, dismissed or discharged within sixty (60) days after such appointment or
such order or decree is appealed and stayed; |
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(f) |
|
any of Distributors equipment or facilities are subject to attachment, levy or
other final process for more than twenty (20) days or any of its equipment or
facilities is noticed for judicial or non-judicial foreclosure sale and such
attachment, levy, process or sale would materially and adversely affect Distributors
ability to fulfill its obligations under the Agreement; |
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(g) |
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Distributors interest, rights or obligations under the Agreement or any part
thereof pass or transfer to another by operation of law other than a transfer to a
spouse, parent or lineal descendant in accordance with the law of hereditary
succession; |
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(h) |
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Distributor becomes insolvent or ceases to conduct its operations in the normal
course of business; |
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(i) |
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Distributor substantially changes the nature of its business; or |
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(j) |
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Distributors license to manufacture and distribute Coca-Cola is terminated for
any reason. |
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22. |
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The Agreement may also be terminated by Company or Distributor if the other party fails to
observe one or more of the material terms, covenants, or conditions of the Agreement and fails
to correct such default within a reasonable cure period, mutually established by Company and
Distributor, taking into account the nature and extent of such default, including Companys or
Distributors estimation, as the case may be, of the period of time in which a cure could be
effected through appropriate efforts. In no event, however, shall such cure period exceed one
hundred eighty (180) days. The right to damages of the party terminating the Agreement under
this paragraph 22 shall not be affected by such termination. |
23. |
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After termination of the Agreement: |
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(a) |
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Distributor may not make any further use of the Trademarks or advertising
materials which it used or which were intended to be used in connection with the sale
and distribution of the Beverages. |
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(b) |
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Distributor shall forthwith remove from its business premises and equipment, as
well as from any business stationery and advertising materials used or maintained by
Distributor, any reference to the Beverages and the Trademarks. Distributor may not
thereafter hold forth in any manner whatsoever that it still has any connection with
the Beverages. |
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(c) |
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Distributor shall forthwith deliver to Company, or to Companys designee, in
accordance with Companys instructions all Beverages and all packaging and advertising
materials for the Beverages which are still in Distributors possession or under
Distributors control, and Company shall pay to Distributor concurrently against the
delivery of the aforementioned objects Distributors unreimbursed actual cost of
purchase for such items, on a first in, first out basis. Company, or its designee,
shall accept and pay for only such articles as are in good and usable condition and
which can, in fact, be used by Company, or its designee. Any packaging and advertising
materials that carry the name of Distributor or are, according to Companys reasonable
determination, unfit for use shall either be destroyed without cost to Company or shall
otherwise be disposed of in accordance with instructions given by Company. In the
event the Agreement is terminated in accordance with the provisions of paragraphs 21 or
22 or as a result of any of the contingencies provided in paragraph 27 or by operation
of law, or if the Agreement is terminated by Distributor for any reason other than in
accordance with paragraph 22, then Company shall have the option, but not the
obligation, to purchase from Distributor the above-mentioned Beverages and/or materials
under the conditions set forth above in this paragraph. In the event that Company does
not purchase such Beverages from Distributor, Distributor shall have the right to sell
such Beverages either to customers within the Territory or to Company authorized
distributors within the United States for a period ending ninety (90) days after the
date of termination of the Agreement. |
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(d) |
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All rights, conditions, stipulations, obligations and claims under the
Agreement shall end and expire, whether specifically set forth or whether accrued or
accruing |
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by use or otherwise, except those obligations of Distributor contained in paragraphs
6, 8,17,18,19,23, 24, 25, 28, 30 and 33 or obligations of Company contained in
paragraphs 12, 13, 19, 23, 25, 30 and 33 or which survive by operation of law. |
IX.
GENERAL PROVISIONS
24. |
(a) |
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In the event that any claims shall be raised against
Company, any company or other entity related to it,
their legal representatives or their employees for any
action or failure to act on the part of Distributor or
on the part of any third party for which Distributor is
responsible in connection with the distribution,
marketing or promotion of the Beverages, Distributor
shall indemnify and hold harmless all the above-named;
provided Company provides reasonably prompt written
notice of such claim to Distributor. In addition,
Distributor shall refund any costs arising in this
connection, including, but not limited to court costs
and attorneys fees. |
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(b) |
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In the event that any claims shall be raised against Distributor, any company
related to it or their legal representatives or employees for any action or failure to
act on the part of Company or any third party for which Company is responsible in
connection with the production, distribution, marketing or promotion of the Beverages,
Company shall hold harmless all the above-named; provided that Distributor provides
reasonably prompt written notice of such claim to Company. In addition, Company shall
refund any costs arising in this connection, including, but not limited to court costs
and attorneys fees. |
25. |
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Company and Distributor agree: |
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(a) |
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that during the Term of the Agreement and also after its termination,
Distributor and Company will keep secret all trade and operational secrets as well as
all other confidential information, if any, which either receives from the other party
or in any other way in connection with the Agreement, including, but not limited to
information concerning sales, promotion and distribution of the Beverages; during the
Term, Distributor and Company shall disclose such trade and operational secrets as well
as such of its other confidential information only on a need-to-know basis and only to
such employees who have beforehand agreed to a corresponding secrecy obligation; |
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(b) |
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that after termination of the Agreement, Distributor and Company will deliver
to the other party in accordance with that partys instructions all written, graphic,
or other materials, including all copies thereof, which are covered by the
aforementioned secrecy obligation. |
26. |
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(a) This Agreement may be terminated immediately by Company upon written notice if, without
the prior written consent of Company, which consent shall not be unreasonably withheld: |
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(i) Distributor assigns, transfers or pledges, directly or indirectly, the
Agreement or any interest therein, in whole or in part, or delegates performance
thereof, in whole or in part;
(ii) Except as permitted under subparagraphs (c) or (d) below, any person or
Affiliated Group, other than a Shareholder as defined in subparagraph (c) below,
acquires or obtains any right to acquire, directly or indirectly, a material
interest in the ownership of Distributor. A person is an individual, corporation,
partnership, limited partnership, association, joint-stock company, trust,
unincorporated organization, or government or political subdivision. An Affiliated
Group means two or more persons who agree to act together for the purpose of
acquiring or obtaining any right to acquire, directly or indirectly, a material
interest in the ownership of Distributor. For the purposes hereof, material shall
mean ten percent (10%) or more of the voting power of any class or series of
securities issued by Distributor or any entity controlling Distributor; or
(iii) any change in ownership of Distributor occurs that constitutes a change
in control of Distributor or any entity that controls Distributor or Distributor
enters into an agreement with any person under which management control or authority
is granted to such person.
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(b) |
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Distributor agrees that it will notify Company in the event of the acquisition
by a third party of a material interest in the ownership of Distributor, and
Distributor will, at the same time, disclose to Company the identity of the owners of
Distributor prior to such transfer. Such owners shall include all persons and entities
who directly or indirectly control or are under common control with the owners. |
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(c) |
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Company agrees that it will consent to any transfer of the shares as
defined below to any spouse, grandparent, parent or lineal descendant, including
adopted children, of a Shareholder as defined below or to a trust or other entity for
the sole benefit of any spouse, grandparent, parent or lineal descendant, including
adopted children, of a Shareholder. For the purposes of this subparagraph (c), the
term transfer shall mean any one or more direct or indirect sales, pledges,
encumbrances, gifts, testamentary or intestate dispositions, exchanges, redemptions or
other forms of conveyance, whether voluntary, involuntary, or by operation of law. For
purposes of this paragraph 26, the term Shares shall mean the shares of issued and
outstanding capital stock of Distributor or any securities convertible into or
exchangeable for any such shares and the term Shareholder shall mean any natural
person, partnership, corporation, trust or other legal entity which, as of the
effective date of the Agreement owns or holds, directly or indirectly, a material
interest in the voting power of any class or series of securities issued by Distributor
or any entity controlling Distributor. |
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(d) |
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A pledge of shares by Distributor or a Shareholder as collateral for a loan to
any person shall not be prohibited. The Company, therefore, will not exercise its
right |
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of termination under this paragraph 26 on the basis of any such pledge in and of
itself. |
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(e) |
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If Distributor wishes to effect a transfer in which the proposed transferee is
another Coca-Cola distributor in the United States and such transfer is subject to the
restrictions contained in subparagraph (a) of this paragraph 26, Distributor is
required to give Company prior written notice of Distributors intent to make any such
transfer (the Transfer Notice). If Distributor gives the Transfer Notice to Company,
Company may elect to disapprove such transfer within thirty (30) days following
Companys receipt of the Transfer Notice by giving Distributor notice of Companys
disapproval of the proposed transfer (the Disapproval Notice); provided, however,
that approval of such transfer may not be unreasonably withheld by Company. If
Distributor gives the Transfer Notice to Company and Company does not give Distributor
a Disapproval Notice within thirty (30) days following Companys receipt of the
Transfer Notice, Company agrees that it will have waived its right of termination
hereunder with respect to the transfer described in the Transfer Notice and no
compensation (Compensation) shall be owed by Company to Distributor. If, however,
Company gives a timely Disapproval Notice to Distributor and Distributor chooses to
complete the transfer, Distributor agrees that, prior to completion of any transfer,
Distributor shall surrender all its rights under this Agreement, and Company agrees to
pay Compensation to Distributor in accordance with subparagraph (f) of this paragraph
26. |
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(f) |
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If the offeror is a Coca-Cola Bottler in the United States and Company issues a
Disapproval Notice in accordance with subparagraph 26(e), Company agrees to pay
Compensation, in an amount determined below, to Distributor for the value of
Distributors business in the Beverages that Distributor is surrendering. Compensation
payable by Company to Distributor under subparagraph (f) of this paragraph 26 is in
lieu of, and in full satisfaction of, any claims whatsoever that Distributor may have
against Company in connection with the Beverages or Distributors business in the
Beverages, including but not specifically limited to any payment to Distributor for any
materials as may be required by subparagraph (c) of paragraph 23 of this Agreement.
The Compensation, if any, to which Distributor is entitled is equal to fifty percent
(50%) of the greater of: |
(i) the amount agreed by Company and Distributor that represents the value of
Distributors business in the Beverages on the assumption that such business would
continue for a period of ten (10) years following the date Distributor surrenders
its rights under this Agreement (the Beverage Value) pursuant to this subparagraph
26(f), or such rights are terminated or
(ii) the offer price as contained in a Bona Fide Offer, as defined below,
made to Distributor that Distributor or Distributors shareholders wish to accept;
provided, however, that in no event shall the value of Distributors business in the
Beverages be greater on a proportionate unit basis than the value of Distributors
business in the beverage COCA-COLA. A Bona Fide Offer is an offer to
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purchase Distributors business in the Beverages that is contained in a written
communication received by Distributor from a person that is financially able to
consummate the transaction contemplated by the Bona Fide Offer.
If, Distributor and Company cannot determine the amount of Compensation on the basis
of clauses (i) and (ii) of this subparagraph (f) after attempting to do so through
good faith negotiations for a reasonable period of time, which in any event shall
not exceed three (3) months, either Distributor or Company may initiate arbitration
in accordance with the arbitration procedures described in subparagraphs (g) through
(m) of this paragraph 26. Following determination of Distributors entitlement to
and/or the amount of Compensation as a result of arbitration, Company shall pay the
Compensation to Distributor, if any, in accordance with this subparagraph 26(f).
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(g) |
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The forum for arbitration shall be such location as Company and Distributor may
agree, but in the absence of agreement, the forum shall be whichever of the following
cities is closest to Distributors territory: Atlanta, Chicago, Dallas, New York or
San Francisco. |
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(h) |
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The rules of arbitration shall be the Commercial Arbitration Rules of the
American Arbitration Association, except as otherwise provided in this paragraph 26. |
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(i) |
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The governing law for commercial arbitration shall be the law of the state of
New York, and the substantive law shall be as hereinafter provided. |
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(j) |
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The Company and the Distributor shall each select one arbitrator, and those two
arbitrators shall then select within thirty (30) days a third arbitrator. If the two
arbitrators cannot agree on a third arbitrator, they shall discuss the qualifications
of such third arbitrator with the Chief Judge of the United States District Court for
Delaware who shall then be empowered to appoint a third, neutral arbitrator. |
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(k) |
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The decision of the arbitrators on procedural and evidentiary matters shall be
final and binding. |
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(l) |
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The arbitrators shall have authority only to decide the Distributors
entitlement to Compensation and the amount of Compensation in accordance with this
paragraph 26, and the arbitrator shall not have the authority otherwise to amend,
modify or extend the contractual relationship of the parties. |
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(m) |
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The award rendered by arbitration conducted pursuant to this paragraph 26 shall
be final and binding on both Distributor and Company, and judgment upon the award may
be entered in any court of competent jurisdiction. The parties agree that the
arbitration award is in lieu and in full satisfaction of any claims whatsoever
Distributor may have in connection with the Beverages or the Distributors business in
the Beverages. |
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27. |
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Neither Company nor Distributor shall be in any way liable for failure to perform any of its
obligations hereunder when such failure is caused by an Act of God, fire, strikes, war, riot,
insurrection, boycott, acts of public authorities, delays or defaults caused by public
carriers, inability to obtain raw materials or if it is due to any cause whatsoever, whether
similar or dissimilar, beyond the reasonable control of the non-performing party; provided
that, if such a failure on the part of one of the contractual parties shall persist for a
period of twelve (12) months or more, either party may terminate the Agreement with immediate
effect without any liability for damages. |
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28. |
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Company reserves the right to conduct, in its own name, any proceedings, in court or out of
court, to protect its rights to the Trademarks, designs, trade dress and copyrights associated
with the Beverages and Authorized Containers. Distributor may not claim any rights against
Company for taking such action or for failure to take such action or because of the results of
such action. Distributor agrees to notify Company immediately of any proceedings that have
been instituted or that are threatened and which concern either the subject matter of
proceedings mentioned in the previous sentences or other interests of Company or of any
distributor or company authorized by Company. In the event Distributor believes it has a
claim against any third party, Distributor also undertakes not to institute, without the prior
written consent of Company, which consent Company will not unreasonably withhold, any
proceedings, in court or out of court, against any such third party which might affect the
Trademarks or substantial interests of Company or of any other distributor with regard to the
Beverages. The foregoing sentence is not intended to restrict Distributor from instituting
any such proceedings which are limited solely to the commercial interest of Distributor within
the Territory. |
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29. |
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If any provisions of the Agreement should be or become legally invalid, the validity of other
provisions of the Agreement shall not be affected thereby. To the extent legally possible, a
provision which corresponds to the spirit and purpose of the Agreement shall be substituted
for the invalid provision. |
30. |
(a) |
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As to the entire subject matter of the Agreement, the Agreement shall constitute the only
agreement between Company and Distributor. All prior agreements, arrangements, communications
or understandings, whether oral or written, with respect to the Agreement between the parties
and their legal predecessors (if any) are cancelled hereby. Company and Distributor further
agree that no such prior agreements, drafts, arrangements, correspondence, communications or
understandings, whether oral or written, shall be used by either party to the Agreement as
evidence in any legal proceeding that may arise with respect to the application, construction
or interpretation of the Agreement. |
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(b) |
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Any modifications of or additions to the Agreement are invalid and void,
abinitio. unless in writing signed by duly qualified and authorized
representatives of Company and Distributor, respectively. |
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(c) |
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All written notices in accordance with the Agreement shall be delivered by hand
or by telefax transmission (with a mandatory written confirmation sent as provided
below) or sent by regular, mail with correct postage affixed or by |
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registered or certified mail (postage prepaid) or by any express courier or express
mail, fees prepaid. Such notices shall be addressed to the address set forth on
page one of the Agreement, or to the last known address of the party concerned. |
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(d) |
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Nothing in the Agreement shall affect, by implication or otherwise, the rights
and obligations of the parties under any other agreement now existing between Company
and Distributor, specifically including the license agreement for Coca-Cola, and
nothing in any such other agreements shall affect the Agreement by implication. |
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(e) |
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Distributor agrees to consult with Company with respect to any product
liability claims raised against it as well as with respect to any proceedings, in court
or out of court, instituted against Distributor in connection with the Beverages or
with packaging, including but not limited to Authorized Containers, used for the
Beverages. Upon Company request, in the event of product liability claims, as well as
in the proceedings mentioned above, Distributor, to the extent that it is legally
empowered, shall allow Company by means of appropriate authorization or agreement to
assume responsibility for the defense of any claim or claims referred to in this
sentence; provided, however, that Distributor reserves the right to retain the
responsibility to defend itself against claims of gross negligence or intentional
misconduct. If Company does assume such defense, Company shall indemnify and hold
Distributor harmless from and against any costs or expenses, including any damages
assessed against Distributor and attorneys fees, arising out of or incurred in
connection with Companys defense of the claim. Companys obligation to indemnify
Distributor under this subparagraph 30(e) does not include indemnity or reimbursement
(i) for any fees paid by Distributor to its own attorneys, consultants or other third
parties for advisory or other services to Distributor in connection with the particular
claim or (ii) damages that a court determines are payable by Distributor because of
Distributors gross negligence or intention misconduct. Distributor and Company
further agree to cooperate in the defense of claims asserted in this subparagraph (e). |
31. |
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Failure of Company or Distributor to exercise promptly any option or right granted in the
Agreement or to require the strict performance of any obligation herein imposed upon the other
party shall not be deemed to be a waiver of such options or rights or of the right to demand
subsequent performance of any and all obligations herein imposed upon the other party. |
32. |
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Company may, after written notice to Distributor, assign rights under the Agreement to one or
more companies related to it, and have duties under the Agreement fulfilled by such companies;
provided, however, that any such delegation or transfer shall not relieve Company from its
obligations under the Agreement. |
33. |
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Distributor is an independent contractor and not the agent of Company. Distributor recognizes
that the Agreement does not constitute an agency or partnership agreement, and Distributor
agrees that it will not represent or otherwise hold itself out as an agent, or any other kind
of representative, of Company. |
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34. |
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The Agreement shall in all respects be governed by, construed and enforced in accordance with
the substantive laws of the State of Georgia applicable to contracts executed and to be wholly
performed therein. |
35. |
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All notices and other communications hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be sent, delivered or mailed, addressed or
transmitted by facsimile: |
Coca-Cola North America
Coca-Cola Plaza
Atlanta, Georgia 30313
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(b) |
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If to Distributor, to: |
The then current address of Distributor as contained in Distributors
contractual file maintained by Company.
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Each such notice or communication shall be given (i) by hand delivery, (ii) by nationally
recognized courier services or (iii) by facsimile transmission, receipt confirmed. Each
such notice or communication shall be effective (x) if delivered by hand or by nationally
recognized courier service, when delivered at the address specified in this paragraph 35 (or
in accordance with the latest unrevoked correction from such party) and (y) if given by
facsimile transmission when such facsimile is transmitted to the facsimile number specified
in this paragraph 35 (or in accordance with the latest unrevoked correction from such party)
and when confirmation is received. |
AGREED TO AND ACCEPTED:
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THE COCA-COLA COMPANY
COCA-COLA NORTH AMERICA DIVISION
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By: |
/s/ Paul W. Wood
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Paul W. Wood |
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Title: Vice President Bottler Business
Development, CCNA Date. April 10, 2002 |
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Metrolina Bottling Company
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By: |
/s/ Umesh Kasbekar
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Title: Vice President Date: 3/12/2002 |
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21
APPENDIX 1
TERRITORY
The territory described in Distributors contract for Coca-Cola in bottles and cans as may have
been heretofore and as may be hereafter amended.
APPENDIX 2
AUTHORIZED CONTAINERS
12 oz. PET BOTTLE
20 oz. PET BOTTLE
500 mL PET BOTTLE
1 liter PET BOTTLE
1.5 liter PET BOTTLE
APPENDIX 3
TRADEMARKS
Dasani
exv10w5
Exhibit 10.5
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P.O. Box 1734
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December 10, 2001
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Atlanta, GA 30301
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404.676.2121 |
Coca-Cola Bottling Co. Consolidated
4100 Coca-Cola Plaza
Charlotte, NC 28211-3481
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Attn: |
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William B. Elmore, Jr.
President and Chief Operating Officer |
Gentlemen:
This letter is submitted by The Coca-Cola Company (the Company) in response to the specific
request of Coca-Cola Bottling Co. Consolidated and its directly and indirectly controlled
subsidiaries and affiliates that are engaged in the production or sale of beverages pursuant to
Contracts (as defined below) with the Company (collectively, Consolidated), in connection with
the execution by Consolidated of the Marketing and Distribution Agreements for Dasani® covering the
licensed bottling territories of Consolidated (the Dasani MDAs).
The Company and Consolidated acknowledge that the Dasani MDAs are considered Contracts as
defined in that certain letter agreement dated December 14, 1994 between the Company and
Consolidated, a copy of which is attached hereto. Accordingly, the Company hereby confirms,
consistent with paragraph 3 of such letter agreement, that as applied solely to Coca-Cola Bottling
Co. Consolidated, the Company hereby waives the right under Paragraph 26 of the Dasani MDAs that
would otherwise exist upon the occurrence of the event of default defined in subparagraph 26(a)(ii)
or (iii) of the Dasani MDAs. The foregoing waiver will terminate immediately should Coca-Cola
Bottling Co. Consolidated cease to be a public company. As stated in such paragraph 3, except as
expressly set forth therein as applied solely to Coca-Cola Bottling Co. Consolidated, the Company
expressly reserves and does not waive any other rights of the Company under the Dasani MDAs or any
of the other Contracts or any other contract or agreement.
Please indicate your agreement with the foregoing by executing two copies of this letter
agreement and returning them to us.
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The Coca-Cola Company,
Coca-Cola North America Division
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By: |
/s/ Paul W. Wood
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Title: VP Bottler Business Development |
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December 10, 2001
Page 2
Accepted and agreed to:
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Coca-Cola Bottling Co. Consolidated, on behalf of itself
and its subsidiaries and affiliates described above |
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By: |
/s/ Umesh M. Kasbekar
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Title: Vice President |
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CONFIDENTIAL |
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JOHN J. CULHANE |
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GENERAL COUNSEL
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ADDRESS REPLY TO |
COCA-COLA USA
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ATLANTA, GA 3O3OI |
LEGAL DIVISION
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December 14, 1994
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404-818-5888 |
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FAX: 404-515-4128 |
Coca-Cola Battling Co. Consolidated
Tallan Building, Suite 901
Chattanooga, Tennessee 37402
Attention: Reid M. Henson
Gentlemen:
This letter is submitted by The Coca-Cola Company (the Company) in response to the specific
request of Coca-Cola Bottling Co. Consolidated (Consolidated)1 in
recognition of the special circumstances affecting Consolidated, including certain issues raised by
Consolidateds status as a publicly traded company. In consideration of the execution by
Consolidated, now and in the future, of the new Marketing and Distribution Agreement such as the
one offered in October, 1994 for POWERADE (the Contracts), and in recognition of the fact that
Consolidated is and will be in the future executing the Contracts in reliance upon this agreement,
the Company agrees that:
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1 |
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Except with respect to paragraph 3 below,
for purposes of this Agreement, the term Consolidated shall include Coca-Cola
Bottling Co, Consolidated and its directly and indirectly controlled
subsidiaries existing at any time during the term of this Agreement which are
engaged in the production or sale of beverages pursuant to Contracts with the
Company. |
Coca-Cola Bottling Co Consolidated
December 14, 1994
Page 2
1. The Company acknowledges that the exercise of its rights under the Contracts will require
consideration, as appropriate to each particular situation, of such criteria as: (i) the
performance of Consolidated as distributors relative to that of other comparable distributors who
are parties to similar contracts; (ii) the nature of the competition and the identity of and
resources of the major competitors within the respective Territories of Consolidated, as well as
the competitive activity in those Territories; (iii) the price trends of the Beverages sold by the
Company to consolidated relative to other competitive factors and market conditions in the
Territories, including Consolidateds prices to retailers for Beverages; (iv) such other criteria
as shall in the reasonable opinion of the Company be relevant and material to the exercise by the
Company of its rights under the contracts; provided, however, that it is understood that while
these criteria are to be considered, the Companys exercise of its rights under the Contracts shall
not be limited or mandated by any one or more of such criteria, and that the Company is free to
exercise its rights in accordance with its reasonable business judgment in view of all relevant
factors, including the Companys situation.
2. The Company agrees that in the event the Company enters into a written amendment to similar
contracts between the Company and any other distributor of Beverages in a territory in the United
States which amendment is of a material, substantive term or condition of those similar contracts
(other than an agreement relating to the transfer of ownership of a particular distributor such as
that of Paragraph 3 below) which term or condition as amended could have application to
Consolidated, the Company will offer such amendment in its entirety to Consolidated on the same
terms and conditions as exist in the written amendment between the Company and such other
distributor. The parties agree that no such written amendment shall be deemed to exist by virtue of
any action, inaction or course of dealing undertaken by the company with respect to marketing,
planning, quality control or other matters which are contemplated by the terms and conditions of
those similar contracts.
3. As applied solely to Coca-Cola Bottling Co. Consolidated, the Company hereby waives the right
under Paragraph 25 of the contracts between Coca-Cola Bottling Co. Consolidated and the company
that would otherwise exist upon the occurrence of the event of default defined in subparagraph
25(a)(ii) or (iii) of such Contracts. The foregoing waiver shall terminate immediately should
Coca-Cola Bottling Co. Consolidated cease to be a public company.
Except as expressly set forth in this paragraph 3 as applied solely to Coca-Cola Bottling Co.
Consolidated, the Company expressly reserves and does not waive any other rights of the company
under the Contracts or any other contract or agreement.
4. The company agrees that a default by Consolidated under the terms of the Contracts will not, in
and of itself, create a default under the terms of the Master Bottle Contracts, Allied Bottle
Contracts or other contracts between the Company and Consolidated, and that such default, in and of
itself, will not give the Company the right to terminate such other contracts.
Coca-Cola Bottling Co Consolidated
December 14, 1994
Page 3
5. The provisions in the Contracts to the effect that the Contracts encompass all agreements
between the parties and supersede all prior agreements shall not have any effect on the validity
and continuance of the provisions of this Agreement, which shall have the same term as the
contracts. The parties agree that the Contracts and this Agreement constitute the entire agreement
between Coca-Cola Bottling Co. Consolidated and the Company. All prior agreements, arrangements,
communications or understandings, whether oral or written, with respect to the Contracts or this
Agreement between the parties and their legal predecessors, if any, are canceled
hereby. The parties further agree that no such prior agreements, drafts, arrangements,
correspondence, communications or understandings, whether oral or written, shall be used in any
legal proceeding that may arise with respect to the application, construction or interpretation of
the contracts or this Agreement.
6. As used herein, similar contracts shall mean contracts which contain substantially the same
terns and are in substantially the same form as the Contracts.
7. This Agreement shall be binding upon the successors, if any, of the Company or Consolidated.
8. Company and Consolidated agree that the contents of this Agreement are confidential and that
neither party may discuss or disclose any of the provisions herein without the express written
permission of the other party.
Please indicate your agreement with the foregoing by executing two copies of this Agreement.
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Very truly yours,
COCA-COLA COMPANY
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By: |
/s/ John J. Culhane
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Title: General Counsel |
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ACCEPTED AND AGREED TO:
COCA-COLA BOTTLING Co. CONSOLIDATED,
on behalf of itself and its directly and indirectly controlled
subs.
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By: |
/s/ Reid M. Henson
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Title: Vice Chairman |
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exv10w6
Exhibit 10.6
CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH PORTIONS. ASTERISKS DENOTE OMISSIONS.
March 16, 2009
James E. Harris
Senior Vice-President and Chief Financial Officer
Coca-Cola Bottling Co. Consolidated
4100 Coca-Cola Plaza
Charlotte, NC 28211
Re: Incidence Pricing Agreement Dear Jamie:
This letter confirms our plans to enter into an incidence pricing program with Coca-Cola Bottling
Co. Consolidated (Bottler) starting in 2009 (the Program) for the Term defined below. The
Program described below will apply only to concentrate that the Bottler purchases from CCNA for the
Brands listed in Attachment A for ultimate resale as finished goods to your customers who resell
the finished goods directly or indirectly to retailers and consumers who are located in the
respective authorized territories for the Brands, as permitted in the respective agreements between
CCNA and the Bottler for the Brands (Covered Sales). The Program described below will not apply
to concentrate that the Bottler purchases from CCNA that is used to manufacture finished goods for
resale to CCNA or to authorized Coca-Cola bottlers that are not owned and controlled by the Bottler
(Excluded Sales).
1. |
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The Brands will include the following CCNA beverages: |
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All Sparkling beverages (e.g., Coca-Cola classic, diet Coke, Sprite, etc.) |
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Nestea (Coldfill only) and Minute Maid Adult Refreshment (Coldfill only) |
2. |
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The Program shall be for a minimum of two years beginning on January 1, 2009, and shall end
on December 31, 2010, unless terminated earlier by either party as permitted herein (the
Term). Either party may terminate the Program effective at the end of any calendar year
(i.e., on December 31) by giving not less than fifteen (15) days written notice to the other
party prior to the end of such calendar year. In addition, Bottler may terminate this
Agreement pursuant to paragraph 5.e below. |
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3. |
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During the Term, both parties temporarily waive the pricing provisions, including most
favored nations provisions relating to pricing, if any, for each of the Brands listed in
Attachment A that are contained in the agreements between them for those Brands (the Existing
Contracts), and both parties agree that the pricing for the Brands shall be governed by this
Agreement during the Term. In agreeing to this waiver, the parties acknowledge that Bottler
is relying on the fact that CCNA has offered this Program to all
Coca-Cola bottlers in the United States in substantially the same form and using substantially
the same methodology as stated in this Agreement. |
Classified Confidential
Page 2
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If CCNA offers a materially different incidence pricing program to any bottler, CCNA will either
make such program available to Bottler or allow Bottler the option to terminate this Program
effective at the end of the next calendar quarter by giving not less than thirty days written
notice to CCNA. However, the parties acknowledge that Other Participating Bottlers (as defined
below) will have different Incidence Rates and that such differences shall not be deemed a
material difference in incidence pricing programs. CCNA will continue to publish prices for the
Brands in accordance with the terms of the Existing Contracts, but such published prices shall
be informational only and shall not apply during the Term, unless this Agreement is terminated
early as permitted herein. |
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4. |
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During the Term, CCNA will bill Bottler for concentrate at the standard billing prices
(SBPs) by Brand category that are communicated by CCNA to Bottler. The SBPs for 2009 are
set forth in Attachment A. SBP pricing will change once a year: at the end of each Program
year, CCNA shall be free to change the SBPs for the next year by giving 30 days notice to
Bottler. This is a billing price and does not reflect the incidence price (see Paragraph 5
below), CCNA shall charge the same SBPs to every bottler that elects to participate in an
incidence pricing program substantially similar to this Program during the Term (Other
Participating Bottlers), before taking account of any funding that Bottler or Other
Participating Bottlers may elect to net pursuant to paragraph 5.h below. |
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5. |
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Within 15 days after the end of each calendar quarter, i.e., March 31, June 30, September 30,
and December 31, CCNA will calculate an effective Incidence Pricing Revenue (IPR) for each
category, as follows. |
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a. |
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The Bottler will calculate its Dead Net Net Selling Income (DNNSI) during the
preceding quarter for Covered Sales of each Brand and multiply the DNNSI by the
Incidence Rate for that Brand to yield an IPR for each Brand. The sum of these IPRs
is the Total IPR for that quarter. |
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b. |
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DNNSI is defined in as Revenue less CMA/CTM/Rebates. During the Program,
the Bottler will use the same process to calculate DNNSI for all of the quarters of the
program. Bottler will not alter the process or definition of DNNSI during the Program.
For auditing purposes, Bottler will provide copies (hard or electronic) of the results
of their sales systems (e.g., Margin Minder) to CCNA. |
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c. |
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The starting Incidence Rate for the Brands shall be defined and calculated as
set forth on Attachment B. Each bottler will have its own Incidence Rate, and this
rate may vary across bottlers. |
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d. |
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At the end of each year of the Program, CCNA will review and potentially adjust
Bottlers Incidence Rate for the next year of the Program with the Bottler. CCNA will
give not less than forty-five (45) days written notice of any changes to the Incidence
Rate. For Bottlers that are governed by the Bottlers Bottle Contract, the potential
adjustment in the Sparkling Incidence Rate will have a yearly cap, starting with the
Incidence Rate for 2010, that is based upon CPI. Attachment D illustrates
how Bottler and CCNA have agreed that the yearly cap on the maximum possible change
in the Incidence Rate will be calculated. |
Classified Confidential
Page 3
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e. |
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In addition to the annual review of the Incidence Rate described in the
preceding paragraph 5.d, CCNA may change the Incidence Rate at any time by giving not
less than 90 days prior written notice to Bottler, subject to the yearly cap described
in paragraph 5.d, if applicable. Should CCNA give notice of its intent to change the
Incidence Rate pursuant to this paragraph 5.e, Bottler shall have the right to
terminate this Program by giving written notice to CCNA not less than 15 days prior to
the date the change in Incidence Rate is scheduled to take effect. |
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f. |
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In order to help inform the calculations and decisions for paragraphs 5.d and
5.e above, the Bottler and CCNA may mutually elect and agree to share yearly category
P&L information to the Operating Income level with each other. Based upon this
information, CCNA may use a variety of economic indicators such as Bottler Revenue
Growth, GP margin, OI margin, and ROIC to inform, but not prescribe, potential
adjustments to the Incidence Rate (e.g., keep IR same, increase IR, or decrease IR) for
each of the Brands stated in section 1. |
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g. |
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If CCNA should add or change the formula or sweetener system for any Brand
during the Term, CCNA and the bottler will mutually determine whether to include the
affected Brand in the Program or whether to exclude the affected Brand and price it
pursuant to the Existing Contracts. |
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h. |
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At the Bottlers option, base funding and contractually mandated funding as
described in Existing Contracts and in your annual agreement with CCNA, if any, may be
netted against the Incidence Rate (thus lowering the rate) and/or deducted from the
SBP, as illustrated in Attachment A. In addition, at the Bottlers option, sales of
the Brands to customers in the full service vending channel may be excluded from
Covered Sales. If Bottler elects either of these options, Bottlers election will be
set forth in Attachment A and may not be changed except by mutual consent. |
6. |
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Not later than two weeks before the end of each calendar quarter, the Bottler shall provide
CCNA with its volume and DNNSI calculations under paragraph 5 above for approximately the
first eleven weeks of the quarter together with such underlying details as reasonably
requested by CCNA. As soon as practicable after the end of the quarter, the Bottler will
update these numbers for the full quarter. The Bottler and CCNA shall then reconcile the
amounts actually paid to CCNA for concentrate billed at the SBP for each Brand during the
quarter (the Total Standard Pricing Revenue or Total SPR), against the Total IPR
calculated above for that quarter. If the Total SPR is less than the Total IPR, the Bottler
shall pay the difference to CCNA no later than 30 days after the end of the quarter.
Similarly, if the Total SPR is more than the Total IPR, CCNA shall pay the difference to the
Bottler no later than 30 days after the end of the quarter. |
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7. |
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Both parties shall be entitled to review the others calculations and all relevant underlying
records upon written request. |
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8. |
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Within two weeks of the end of every quarter, the Bottler will provide CCNA package level
data for volume, gross revenue, and CTM/CMA/Rebates for all of the Brands covered in the
Program. |
Classified Confidential
Page 4
9. |
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The Bottler will make changes as needed to the views in its Route Settlement System (e.g.,
Margin Minder or other mutually agreeable system) to reflect the effective COGS under this
Program, and will use reasonable efforts to ensure that its key decision makers will have
access to the incidence pricing view in Margin Minder or other system, or make such other
changes that may be reasonably required in order to ensure that Bottler employees with
financial decision-making responsibility have access to Bottlers effective COGS under this
Program when making decisions in the performance of their duties. |
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10. |
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The parties will meet on a timely basis to jointly develop a mutually agreeable reporting and
review process. |
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11. |
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Bottler will share with CCNA in a timely fashion its annual and quarterly forecasting
information for the average prices it expects to charge for each of the Brands by package, to
the extent that Bottler maintains such information in the ordinary course of its business. |
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12. |
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The purpose of this Program is to determine the feasibility and effectiveness of implementing
an alternative pricing system. Characteristics of this Program may or may not be extended
past the end of the Program specified in Section 2, and any such extensions must be by mutual
agreement. |
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13. |
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Attached as Attachment C is a form of Confidentiality Agreement that shall govern this
Agreement and the information shared between the parties pursuant to this Agreement. |
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14. |
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Rights of Reversion. If either Bottler or CCNA terminates this agreement as permitted in
paragraphs 2 and 5.e above, the parties will reconcile Total SPR against Total IPR as provided
in paragraph 6 through the end of the Term. Beginning on the first day of the quarter
following the expiration or termination of this Agreement, CCNA will resume charging prices to
Bottler for the Brands in accordance with the terms of the Existing Contracts, Nothing in this
Agreement shall be deemed to modify, change or amend the interpretation of the Existing
Contracts or the parties respective rights and obligations thereunder following termination
or expiration of this Agreement. |
If this letter accurately sets forth our understanding and agreement, please sign below and return
one copy to me for our files.
Sincerely,
/s/ Alan Rabb
Alan Rabb
Vice President, Bottler Sales and Marketing
Coca-Cola North America
Classified Confidential
Page 5
AGREED this 25th day of March, 2009:
Coca-Cola Bottling Co. Consolidated
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By: |
/s/ James E. Harris
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Printed Name: |
James E. Harris |
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Title: |
Chief Financial Officer |
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cc:
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Classified Confidential
ATTACHMENT A:
Incidence Pricing 2009 CCNA-Consolidated Sparkling Billing Price
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D |
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A |
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B |
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C |
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SBP |
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Lookup |
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EQ |
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1/1/09 |
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Code |
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Brand |
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Throw |
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$/Gal |
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1 |
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COCA-COLA CLASSIC |
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[***] |
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$ |
[***] |
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2 |
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CF Coca-Cola CLASSIC |
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[***] |
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$ |
[***] |
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3 |
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VANILLA COKE |
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[***] |
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$ |
[***] |
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4 |
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CHERRY COKE |
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[***] |
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$ |
[***] |
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5 |
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DIET COKE |
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[***] |
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$ |
[***] |
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6 |
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CF DIET COKE |
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[***] |
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$ |
[***] |
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7 |
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COKE ZERO |
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[***] |
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$ |
[***] |
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8 |
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dKO w/Splenda |
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[***] |
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$ |
[***] |
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9 |
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DIET COKE with LIME |
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[***] |
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$ |
[***] |
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10 |
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DIET VANILLA COKE |
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[***] |
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$ |
[***] |
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11 |
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DIET CHERRY COKE |
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[***] |
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$ |
[***] |
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12 |
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Cherry Zero |
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[***] |
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$ |
[***] |
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13 |
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Vanilla Zero |
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[***] |
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$ |
[***] |
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14 |
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Diet KO Plus |
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[***] |
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$ |
[***] |
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15 |
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TAB |
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[***] |
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$ |
[***] |
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16 |
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BARQS Root Beer |
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[***] |
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$ |
[***] |
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17 |
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CARVERS GINGER ALE |
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[***] |
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$ |
[***] |
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18 |
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Barqs DELAWARE PUNCH |
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[***] |
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$ |
[***] |
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19 |
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BARQS Diet Root Beer |
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[***] |
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$ |
[***] |
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20 |
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DIET SPRITE |
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[***] |
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$ |
[***] |
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21 |
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FANTA Orange/Flavors |
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[***] |
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$ |
[***] |
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22 |
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FANTA ZERO |
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[***] |
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$ |
[***] |
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23 |
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FRESCA |
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[***] |
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$ |
[***] |
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24 |
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MELLO YELLO |
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[***] |
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$ |
[***] |
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25 |
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PIBB XTRA |
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[***] |
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$ |
[***] |
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26 |
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NORTHERN NECK GINGER |
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[***] |
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$ |
[***] |
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27 |
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Diet Northern Neck |
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[***] |
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$ |
[***] |
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28 |
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RED FLASH |
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[***] |
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$ |
[***] |
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29 |
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SEAGRAMS GINGER ALES |
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[***] |
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$ |
[***] |
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30 |
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SEAGRAMS DT GINGER ALE/DT RASP |
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[***] |
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$ |
[***] |
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31 |
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SEAGRAMS CLUB SODA |
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[***] |
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$ |
[***] |
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32 |
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SEAGRAMS TONIC WATER |
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[***] |
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$ |
[***] |
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33 |
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SEAGRAMS DIET TONIC WATER |
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[***] |
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$ |
[***] |
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34 |
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SEAGRAMS SELTZERS |
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[***] |
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$ |
[***] |
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35 |
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PIBB ZERO |
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[***] |
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$ |
[***] |
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36 |
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SPRITE |
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[***] |
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$ |
[***] |
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37 |
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VAULT/VAULT Red Blitz |
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[***] |
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$ |
[***] |
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38 |
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VAULT ZERO |
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[***] |
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$ |
[***] |
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A-1
Classified Confidential
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D |
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A |
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B |
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C |
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SBP |
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Lookup |
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EQ |
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1/1/09 |
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Code |
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Brand |
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Throw |
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$/Gal |
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39 |
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Nestea Sweet Lemon |
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[***] |
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$ |
[***] |
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40 |
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Diet Nestea |
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[***] |
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$ |
[***] |
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41 |
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MMAR |
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[***] |
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$ |
[***] |
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42 |
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MMAR Lights |
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[***] |
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$ |
[***] |
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*** |
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This information has been omitted and filed separately with the commission. Confidential
treatment has been requested for such information. |
A-2
Classified Confidential
ATTACHMENT B
Incidence Rate
The Incidence Rate is [***]% which was the agreed upon rate between CCNA Sparkling Finance and
Coca-Cola Bottling Co. Consolidated which took into account multiple business factors and was
reached in December of 2008.
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*** |
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This information has been omitted and filed separately with the commission. Confidential
treatment has been requested for such information. |
B-1
Classified Confidential
ATTACHMENT C
Confidentiality Agreement
C-1
Classified Confidential
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT is made and entered into as of the 6th day of February, 2009,
by and between (BOTTLER) and THE COCA-COLA COMPANY, by and through its Coca-Cola North America
division (KO), under the following circumstances:
A. KO has requested that BOTTLER allow KO access to certain of BOTTLERS nonpublic information
concerning sales of beverages by BOTTLER. This information will include (without limitation) the
identity of individual accounts and will show all products sold under license from KO, sales
volume, invoice prices, allowances and discounts. The information described in the preceding
sentence is referred to in this Agreement as the Confidential Information.
B. BOTTLER is willing to and agrees to allow certain KO employees (KO Employees) to have
such access to the Confidential Information, provided that KO agrees to the restrictions on the use
and disclosure of the Confidential Information as provided in this Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable legal
consideration, the parties agree as follows:
1. Non-disclosure. KO will use the Confidential Information only for the internal
purposes of KO, and, except as permitted by this Agreement, shall make no disclosure whatsoever of
any Confidential Information.
2. Restricted Access. KO will restrict access to the Confidential Information only to
KO Employees meeting all of the following criteria: (a) the KO Employee has a need to know this
information; (b) the KO Employee has been approved by an authorized KO official (i.e., above
Director level) to have access to the Confidential Information.
3. No Warranty. The Confidential Information to which KO is being allowed access is
prepared in the ordinary business operations of BOTTLER and is believed to reflect correctly the
records of BOTTLER and its affiliates at the date it is entered into the data system, but any
express or implied warranty that the Confidential Information is accurate or complete is
specifically disclaimed by BOTTLER. BOTTLER shall have no liability to KO for KOs use of or
reliance on the Confidential Information.
4. Exclusions from Confidential Information. The following information shall not be
considered as Confidential Information under this Agreement:
(a) Information which is, or subsequently may become, generally available to the public as a
matter of record through no fault of KO;
(b) Information which KO can show was previously known to it as a matter of record at the time
of receipt;
(c) Information which may subsequently be obtained from a third party (i) who received the
information lawfully and from a disclosing party who was under no duty to
C-2
Classified Confidential
keep such information confidential; and (ii) who obtained the information through no fault of
KO;
(d) Information which may subsequently be developed by KO independently of any disclosure of
Confidential Information from BOTTLER hereunder;
(e) Information which is required to be disclosed pursuant to the requirement of a government
agency or by operation of law, subsequent to prior consultation with BOTTLERS legal counsel;
(f) Information which is or becomes more than ten years old from the date it was first
provided to KO or the BOTTLER.
5. Legal Process. KO agrees to notify BOTTLER immediately if either becomes subject
to legal process compelling them to disclose Confidential Information, so that BOTTLER may seek a
protective order or other appropriate remedy. If legally compelled to disclose the Confidential
Information, KO agrees that it will furnish only that portion of the Confidential Information which
is legally required to be disclosed.
6. Termination, Either party may terminate this Agreement for any reason by giving not
less than ninety (90) days prior written notice.
7. Effect on Other Agreements, Nothing in this Agreement shall be deemed to modify,
amend or waive any rights either party may have under any bottling or distribution agreement
between the parties,
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
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Bottler |
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THE COCA-COLA COMPANY
by and
through its Coca-Cola North America division |
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By:
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/s/ James E. Harris |
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Authorized Signing Officer
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By: |
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Authorized Signing Officer |
C-3
Classified Confidential
ATTACHMENT D
Yearly Sparkling Incidence Rate Amended Cap Calculation
(where applicable)
D-1
Classified Confidential
exv12
Exhibit 12
Coca-Cola Bottling Co. Consolidated
Ratio of Earnings to Fixed Charges
(In Thousands, Except Ratios)
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Third Quarter |
|
|
First Nine Months |
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|
|
2010 |
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2009 |
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2010 |
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|
2009 |
|
Computation of Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
24,821 |
|
|
$ |
17,430 |
|
|
$ |
54,686 |
|
|
$ |
50,056 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
8,259 |
|
|
|
8,289 |
|
|
|
24,721 |
|
|
|
26,332 |
|
Amortization of debt premium/discount and expenses |
|
|
590 |
|
|
|
593 |
|
|
|
1,760 |
|
|
|
1,811 |
|
Interest portion of rent expense |
|
|
411 |
|
|
|
391 |
|
|
|
1,238 |
|
|
|
1,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings as adjusted |
|
$ |
34,081 |
|
|
$ |
26,703 |
|
|
$ |
82,405 |
|
|
$ |
79,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Fixed Charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
8,259 |
|
|
$ |
8,289 |
|
|
$ |
24,721 |
|
|
$ |
26,332 |
|
Capitalized interest |
|
|
8 |
|
|
|
13 |
|
|
|
85 |
|
|
|
64 |
|
Amortization of debt premium/discount and expenses |
|
|
590 |
|
|
|
593 |
|
|
|
1,760 |
|
|
|
1,811 |
|
Interest portion of rent expense |
|
|
411 |
|
|
|
391 |
|
|
|
1,238 |
|
|
|
1,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charges |
|
$ |
9,268 |
|
|
$ |
9,286 |
|
|
$ |
27,804 |
|
|
$ |
29,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges |
|
|
3.68 |
|
|
|
2.88 |
|
|
|
2.96 |
|
|
|
2.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
exv31w1
Exhibit 31.1
MANAGEMENT CERTIFICATION
I, J. Frank Harrison, III, certify that:
1. |
|
I have reviewed this quarterly report on Form 10-Q of Coca-Cola Bottling Co. Consolidated; |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and |
5. |
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and report
financial information; and |
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting. |
|
|
|
|
|
|
|
|
|
/s/ J. Frank Harrison, III
|
|
Date: November 12, 2010 |
J. Frank Harrison, III |
|
|
Chairman of the Board of Directors
and Chief Executive Officer |
|
exv31w2
Exhibit 31.2
MANAGEMENT CERTIFICATION
I, James E. Harris, certify that:
1. |
|
I have reviewed this quarterly report on Form 10-Q of Coca-Cola Bottling Co. Consolidated; |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and |
5. |
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and report
financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting. |
|
|
|
|
|
|
|
|
|
/s/ James E. Harris
|
|
Date: November 12, 2010 |
James E. Harris |
|
|
Senior Vice President and Chief Financial Officer |
|
exv32
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Coca-Cola Bottling Co. Consolidated (the Company)
on Form 10-Q for the quarter ending October 3, 2010, as filed with the Securities and Exchange
Commission on the date hereof (the Report), we, J. Frank Harrison, III, Chairman of the Board of
Directors and Chief Executive Officer of the Company, and James E. Harris, Senior Vice President
and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350 as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly represents, in all material respects, the
financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
|
/s/ J. Frank Harrison, III
|
|
|
J. Frank Harrison, III |
|
|
Chairman of the Board of Directors and
Chief Executive Officer
November 12, 2010 |
|
|
|
|
|
|
|
|
|
|
|
/s/ James E. Harris
|
|
|
James E. Harris |
|
|
Senior Vice President and
Chief Financial Officer
November 12, 2010 |
|
|