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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended April 1, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-09300
COCA-COLA ENTERPRISES INC.
(Exact name of registrant as specified in its charter)
Delaware 58-0503352
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Coca-Cola Plaza, N.W., Atlanta, Georgia 30313
(Address of principal executive offices) (Zip Code)
404-676-2100
(Registrant's telephone number, including area code)
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock.
129,723,700 Shares of $1 Par Value Common Stock as of April 29, 1994
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<PAGE>
COCA-COLA ENTERPRISES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED APRIL 1, 1994
INDEX
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Page
----
Part I - Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Quarters ended April 1, 1994 and
April 2, 1993. . . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Balance Sheets as of
April 1, 1994 and April 2, 1993. . . . . . . . . . . . 2
Condensed Consolidated Statements of Cash Flows
for the Quarters ended April 1, 1994 and
April 2, 1993. . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements. . . 5
Part I - Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . 10
Part II - Item 1. Legal Proceedings . . . . . . . . . . . . . 13
Part II - Item 4. Submission of Matters to a Vote of
Security-Holders . . . . . . . . . . . . . . . . . . . . . 13
Part II - Item 6. Exhibits and Reports on Form 8-K . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; In millions except per share data)
Quarter ended
-------------------
April April
1994 1993
------- -------
Net Operating Revenues. . . . . . . . . . . . . $ 1,320 $ 1,208
Cost of sales . . . . . . . . . . . . . . . . . 799 731
------- -------
Gross Profit. . . . . . . . . . . . . . . . . . 521 477
Selling, general and administrative expenses. . 452 408
------- -------
Operating Income. . . . . . . . . . . . . . . . 69 69
Interest expense, net . . . . . . . . . . . . . 80 83
Other nonoperating deductions, net. . . . . . . 2 1
------- -------
Income (Loss) Before Income Taxes . . . . . . . (13) (15)
Income tax expense (benefit) . . . . . . . . . (7) (10)
------- -------
Net Income (Loss) . . . . . . . . . . . . . . . (6) (5)
Preferred stock dividend requirements . . . . . 1 -
------- -------
Net Income (Loss) Applicable to Common
Share Owners . . . . . . . . . . . . . . . . $ (7) $ (5)
======= =======
Average Common Shares Outstanding . . . . . . . 129 129
======= =======
Net Income (Loss) Per Common Share. . . . . . . $ (0.06) $ (0.04)
======= =======
Dividends Per Common Share. . . . . . . . . . . $0.0125 $0.0125
======= =======
See Notes to Condensed Consolidated Financial Statements.
- 1 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)
April December
ASSETS 1994 1993
--------- --------
(Unaudited)
CURRENT
Cash and cash equivalents, at cost
(approximates market) . . . . . . . . . . . $ 1 $ 11
Trade accounts receivable, less allowances
of $32 and $33, respectively. . . . . . . . 457 442
Inventories . . . . . . . . . . . . . . . . . 217 200
Prepaid expenses and other assets . . . . . . 78 93
------ ------
Total Current Assets. . . . . . . . . . . . . 753 746
PROPERTY, PLANT AND EQUIPMENT
Land. . . . . . . . . . . . . . . . . . . . . 163 163
Buildings and improvements. . . . . . . . . . 626 622
Machinery and equipment . . . . . . . . . . . 2,152 2,132
------ ------
2,941 2,917
Less allowances for depreciation. . . . . . . 1,170 1,121
------ ------
1,771 1,796
Construction in progress. . . . . . . . . . . 112 94
------ ------
1,883 1,890
FRANCHISE AND OTHER NONCURRENT ASSETS . . . . . 6,030 6,046
------ ------
$8,666 $8,682
====== ======
See Notes to Condensed Consolidated Financial Statements.
- 2 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)
April December
LIABILITIES AND SHARE-OWNERS' EQUITY 1994 1993
--------- --------
(Unaudited)
CURRENT
Accounts payable and accrued expenses . . . . $ 702 $ 699
Current maturities of long-term debt . . . . 308 308
------ ------
Total Current Liabilities . . . . . . . . . . 1,010 1,007
LONG-TERM DEBT. . . . . . . . . . . . . . . . . 4,061 4,083
DEFERRED INCOME TAXES . . . . . . . . . . . . . 1,826 1,831
OTHER LONG-TERM OBLIGATIONS . . . . . . . . . . 505 501
SHARE-OWNERS' EQUITY
Preferred stock, $35 stated value;
Authorized and issued - 1,000,000 shares. . 29 29
Common stock, $1 par value; Authorized -
500,000,000 shares; Issued - 142,703,998
and 142,182,183 shares, respectively. . . . 143 142
Paid-in capital . . . . . . . . . . . . . . . 1,288 1,280
Reinvested earnings . . . . . . . . . . . . . - 9
Cumulative translation adjustments . . . . . 1 (3)
Common stock in treasury, at cost
(13,004,698 and 13,004,598 shares,
respectively) . . . . . . . . . . . . . . (197) (197)
------ ------
1,264 1,260
------ ------
$8,666 $8,682
====== ======
- 3 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In millions)
Quarter ended
-----------------
April April
1994 1993
----- -----
Cash Flows From Operating Activities
Net income (loss) . . . . . . . . . . . . . . . $ (6) $ (5)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation. . . . . . . . . . . . . . . . 69 57
Amortization. . . . . . . . . . . . . . . . 43 41
Deferred income taxes . . . . . . . . . . . (7) (9)
Changes in current assets and
current liabilities . . . . . . . . . . . (25) (44)
Other nonoperating cash flows . . . . . . . 4 10
----- -----
Net cash provided by operating activities . . . 78 50
Cash Flows From Investing Activities
Capital expenditures . . . . . . . . . . . . . (64) (57)
Proceeds from the sale of property,
plant and equipment . . . . . . . . . . . . . 6 3
Acquisition of and investments in businesses. . (6) (3)
----- -----
Net cash used for investing activities . . . . . (64) (57)
Cash Flows From Financing Activities
Proceeds from the issuance of debt. . . . . . . 238 313
Payments on debt. . . . . . . . . . . . . . . . (261) (309)
Dividends on common stock . . . . . . . . . . . (2) (2)
Proceeds from the issuance of common stock. . . 8 -
Other financing activities. . . . . . . . . . . (7) -
----- -----
Net cash provided by (used for) financing
activities. . . . . . . . . . . . . . . . . . (24) 2
----- -----
Net decrease in cash and cash equivalents
during the period . . . . . . . . . . . . . . (10) (5)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 11 6
----- -----
Cash and cash equivalents at end of period. . . $ 1 $ 1
===== =====
See Notes to Condensed Consolidated Financial Statements.
- 4 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
- - ------------------------------
The accompanying unaudited condensed consolidated financial statements
include the accounts of Coca-Cola Enterprises Inc. (the "Company") and its
majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Financial information
presented reflects results of operations and cash flows for the fiscal
quarters ended April 1, 1994 and April 2, 1993 and the financial position
as of April 1, 1994 and December 31, 1993.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial reporting
and with the instructions to Form 10-Q and Article 10 of Regulation S-X as
promulgated by the Securities and Exchange Commission. Such financial
statements do not include all disclosures required by generally accepted
accounting principles for annual financial statement reporting purposes.
However, there has been no material change in the information disclosed in
the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993, except as
disclosed herein. Accordingly, the information contained herein should be
read in conjunction with the consolidated financial statements and related
disclosures contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1993. The accompanying financial statements
reflect, in the opinion of management, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the interim
periods presented.
Note B - Seasonality of Business
- - --------------------------------
The results of normal business operations for the interim periods covered
by this report are not necessarily indicative of the results expected for
the year due to the seasonality of the Company's business. Unit sales of
the Company's soft drink products are generally greater in the second and
third quarters due to seasonal factors.
Note C - Acquisitions
- - ---------------------
On June 30, 1993, the Company acquired, from The Coca-Cola Company, the
stock of (i) Coca-Cola Beverages Nederland B.V. in the Netherlands;
(ii) Roddy Coca-Cola Bottling Company, Inc. in Knoxville, Tennessee; and
(iii) Coca-Cola Bottling Company of Johnson City, in Johnson City,
Tennessee (collectively the "acquisition") for an aggregate purchase price
of approximately $366 million in cash and assumed debt.
The acquisition was accounted for under the purchase method. The results
of operations of the acquired companies are included in the consolidated
statements of operations of the Company as of the beginning of the third
quarter of 1993. The assets and liabilities of the acquired companies are
included in the Company's consolidated balance sheet at their estimated
fair values on the date of purchase and represent a preliminary allocation
of the purchase price.
- 5 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note C - Acquisitions (continued)
- - ---------------------------------
The following unaudited pro forma results of operations reflect certain
reclassifications to conform to the Company's basis of presentation and
assume the acquisition occurred as of January 1, 1993 (in millions except
per share amounts):
Quarter ended
April 1993
-------------
Net Operating Revenues . . . . . . . . . . . . $1,303
Cost of sales. . . . . . . . . . . . . . . . . 808
------
Gross Profit . . . . . . . . . . . . . . . . . 495
Selling, general and
administrative expenses. . . . . . . . . . . 423
------
Operating Income . . . . . . . . . . . . . . . 72
Interest expense, net. . . . . . . . . . . . . 86
Other nonoperating deductions, net . . . . . . 1
------
Income (Loss) Before Income Taxes . . . . . . (15)
Income tax expense (benefit) . . . . . . . . . (10)
------
Net Income (Loss) . . . . . . . . . . . . . . $ (5)
======
Average Common Shares Outstanding. . . . . . . 129
======
Net Income (Loss) Per Common Share . . . . . . $(0.04)
======
The foregoing reflects certain pro forma adjustments to give effect to
(i) interest expense on acquisition financing through issuance of
commercial paper at an interest rate of 3.1% for the preacquisition period
of 1993; (ii) repayment of assumed debt; (iii) amortization of the
franchise assets acquired in the acquisition; and (iv) the income tax
effect of such pro forma adjustments.
In January 1994, the Company purchased approximately 4% of the outstanding
common stock (9% of the voting shares) of The Coca-Cola Bottling Company of
New York, Inc. ("KONY") for approximately $6 million in cash. The Company
has a five year right of first refusal on the KONY shares held by
The Coca-Cola Company with the option to enter into negotiations with
The Coca-Cola Company for its remaining shares after two years.
- 6 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note D - Inventories
- - --------------------
Inventories are valued at the lower of cost (principally last-in, first-out
method) or market and are comprised of the following (in millions):
April December
1994 1993
------ --------
Finished goods . . . . . . . . . . . . . . $150 $134
Raw materials. . . . . . . . . . . . . . . 50 48
Other. . . . . . . . . . . . . . . . . . . 19 20
---- ----
219 202
Less LIFO reserve. . . . . . . . . . . . . 2 2
---- ----
$217 $200
==== ====
Note E - Long-Term Debt
- - -----------------------
Long-term debt including current maturities consists of the following (in
millions):
April December
1994 1993
------ --------
Commercial Paper . . . . . . . . . . . . . $ 752 $ 522
8.20% Notes, due 1994. . . . . . . . . . . 243 243
8.35% Notes, due 1995. . . . . . . . . . . 250 250
6.50% and 7.875% Notes, due 1997 . . . . . 300 550
7.00% Notes, due 1999. . . . . . . . . . . 200 200
7.875% Notes, due 2002 . . . . . . . . . . 500 500
8.00% Notes, due 2005. . . . . . . . . . . 250 250
8.50% Debentures, due 2012 . . . . . . . . 250 250
8.75% Debentures, due 2017 . . . . . . . . 154 154
8.00% and 8.50% Debentures, due 2022 . . . 1,000 1,000
6.75% Debentures, due 2023 . . . . . . . . 250 250
Other long-term obligations. . . . . . . . 220 222
------ ------
$4,369 $4,391
====== ======
Maturities of long-term debt for the five twelve-month periods subsequent
to April 1, 1994 are as follows: 1995 - $308 million; 1996 - $263 million;
1997 - $788 million; 1998 - $309 million; and 1999 - $7 million.
The Company's commercial paper program is supported by a $1 billion
revolving bank credit agreement maturing in April 1996 and two short-term
credit facilities. There are no borrowings outstanding under these
agreements; however, under the commercial paper program supported by these
agreements, an aggregate $752 million was outstanding at April 1, 1994. The
weighted average interest rate of borrowings under the commercial paper
program at April 1, 1994 approximated 3.7% per annum.
- 7 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note F - Income Taxes
- - ---------------------
In August 1993, the Omnibus Budget Reconciliation Act was signed into law.
The Company was affected principally by the increase in the corporate
marginal income tax rate from 34% to 35%. The Company's effective tax
rates for the first quarters of 1994 and 1993 were approximately 48% and
68.5%, respectively.
A reconciliation of the effective income tax provision at the statutory
federal rate to the Company's actual income tax provision follows (in
millions):
Quarter ended
--------------
April April
1994 1993
----- -----
Statutory provision (35% and 34%, respectively) $(5) $ (5)
State income tax provision - net of
federal effect. . . . . . . . . . . . . . . (1) (3)
Nondeductible items . . . . . . . . . . . . . - (1)
Other, net. . . . . . . . . . . . . . . . . . (1) (1)
--- ----
$(7) $(10)
=== ====
Note G - Stock Options and Other Stock Plans
- - --------------------------------------------
The Company's 1994 Stock Option Plan (the "1994 Plan"), adopted during the
first quarter of 1994, provides for awards to certain officers and key
employees of the Company. The plan provides that options for up to 2
million shares of the Company's common stock may be granted. Options
awarded under the 1994 Plan (i) are generally granted at prices which
equate to or are above fair market value on date of grant; (ii) vest
ratably over a three year period; and (iii) expire ten years from the date
of grant. For certain senior executives receiving awards under the plan,
the options are performance-vested and become exercisable solely upon
attainment of certain increases in the market price of the Company's common
stock within five years from the date of grant.
During the first quarter of 1994, the Compensation Committee determined to
award an aggregate 1.8 million options under the 1994 Plan, subject to
approval of the plan by the share owners. The option price for such awards
was (i) $17.6875 with respect to 700,000 awards, representing fair market
value on the date of grant; (ii) $21.225 with respect to 375,000 awards,
representing a 20% premium over fair market value on the date of grant; and
(iii) $17.6875 with respect to 725,000 performance-vested options,
representing fair market value on the date of grant. The plan was approved
by the share owners at the annual meeting on April 13, 1994.
- 8 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note G - Stock Options and Other Stock Plans (continued)
- - --------------------------------------------------------
An aggregate 521,815 shares of common stock have been issued during the
first quarter of 1994 as a result of the exercise of stock options under
the Company's 1991 Stock Option Plan, 1990 Management Stock Option Plan and
1986 Stock Option Plan.
The Company's 1992 Restricted Stock Award Plan was amended and restated
effective as of February 7, 1994, with respect to grants after that date,
to allow for the removal of restrictions on the common stock solely upon
attainment of certain increases in the market price of the Company's common
stock within five years from the date of grant. The Company has reserved a
total of 725,000 shares of common stock of the Company for issuance in
connection with awards granted under the amended plan. During the first
quarter of 1994, the Compensation Committee determined to award an
aggregate 700,000 shares of common stock under the amended plan. The
amended plan was approved by the share owners at the annual meeting on
April 13, 1994.
Note H - Contingencies
- - ----------------------
Under the Company's insurance programs, coverage is obtained for
catastrophic exposures as well as those risks required to be insured by law
or contract. Generally, the Company is self-insured for certain expected
losses related primarily to workers' compensation, physical loss to
property, business interruption resulting from such loss and comprehensive
general, product and vehicle liability. Provisions for losses expected
under these programs are recorded based upon the Company's estimates of the
aggregate liability for claims incurred. Such estimates utilize certain
actuarial assumptions followed in the insurance industry. In addition, the
Company guarantees the indebtedness owed by manufacturing cooperatives.
The Company has provided letters of credit aggregating approximately $84
million primarily in connection with self-insurance programs and
manufacturing cooperatives.
Federal, state and local laws govern the Company's operation of underground
fuel storage tanks and the required removal, replacement or modification of
such tanks to satisfy regulations which go into effect in varying stages
through 1998. The Company has completed the majority of its multi-year
program for remediation of environmental contamination related to
underground fuel storage tanks. Completion of the Company's remediation
program is not expected to have a material adverse effect on the Company's
financial position or results of operations.
- 9 -
<PAGE>
Part I. Financial Information
- - ------------------------------
Item 2. Management's Discussion and Analysis of
- - ------------------------------------------------
Financial Condition and Results of Operations
- - ---------------------------------------------
OPERATING RESULTS
Business Strategy
- - -----------------
We can best achieve our goal of enhancing share-owner value by increasing
long-term operating cash flows through the balancing of growth in sales
volume with optimal profit margins. Careful consideration is given to all
the potential uses of these operating cash flows, including strategic
acquisition opportunities. Our competitive strategy is to obtain
profitable increases in case sales by balancing case sales growth with
improved margins and sustainable increases in market share. Our objective
is to increase our share of liquid nonalcoholic refreshment sales and per
capita consumption of our products through the development of innovative
marketing programs and improved execution at the local level.
In June 1993, we acquired certain bottling operations in Tennessee and the
Netherlands. The Netherlands acquisition represented our first
international bottling acquisition. We are interested in continuing both
international and domestic expansion given the right opportunities and
provided they grow share-owner value over the long-term.
Revenues, Pricing and Volume
- - ----------------------------
Net operating revenues for the first quarter of 1994 increased
approximately 9% over the same period of 1993. This increase results from
an approximate 9% increase in actual bottle/can physical case sales volume
with actual net pricing remaining flat as compared to the first quarter of
1993. Net operating revenues for the first quarter of 1994, adjusted for
the effect of significant acquisitions (i.e., "comparable"), increased
approximately 1% over the same period of 1993. This increase results from
an approximate 1 1/2% increase in bottle/can physical case sales volume,
coupled with a slight increase in net pricing, excluding international
operations, over the first quarter of 1993.
The Company typically experiences its lowest quarterly volume of the year
in the first quarter. While comparable domestic bottle/can physical case
volume increased approximately 2 1/2%, our bottler in the Netherlands
experienced a decline in volume in the first quarter of 1994 when compared
to the first quarter of 1993. The severe winter weather had a negative
effect on volume growth in many of our domestic territories. The decline
in volume experienced in the Netherlands compared to the first quarter of
1993 reflects the difficult economic conditions that currently exist in
Europe, and our bottler's strong first-quarter 1993 volume performance. We
expect comparable bottle/can physical case volume growth for full-year 1994
to exceed our 1993 full-year growth rate of 2%.
- 10 -
<PAGE>
Part I. Financial Information
- - ------------------------------
Item 2. Management's Discussion and Analysis of
- - ------------------------------------------------
Financial Condition and Results of Operations (continued)
- - ---------------------------------------------------------
Revenues, Pricing and Volume (continued)
- - ----------------------------------------
Fountain sales volume increased for the first quarter of 1994 by
approximately 9% over the first quarter of 1993, and 6% on a comparable
basis. This increase in fountain sales does not have a significant impact
on our operating results as operating margins on fountain sales are
relatively low.
Cost of Sales
- - -------------
Cost of sales per physical case for the first quarter of 1994 (excluding
fountain sales) remained flat as compared to first-quarter 1993. Excluding
international operations, which have a higher cost per unit, first quarter
1994 cost of sales per physical case decreased approximately 1 1/2% as
compared to the first quarter of 1993. This decrease reflects favorable
packaging costs which more than offset increases in ingredient costs. We
anticipate that cost of sales per unit for full-year 1994 will increase
moderately over 1993.
Selling, General and Administrative Expenses
- - --------------------------------------------
Selling, general and administrative expenses increased approximately 11%
during the first quarter of 1994 as compared to the same period in 1993,
principally as a result of increased case sales volume during the period
and the effect of acquisitions. Selling, general and administrative
expenses as a percent of sales increased from approximately 33.8% of sales
to 34.2% of sales. This increase is primarily a result of increases in
noncash expenses (depreciation and amortization). Excluding depreciation
and amortization expenses, selling, general and administrative expenses as
a percent of sales remained essentially flat for the first quarter of 1994
as compared to the first quarter of 1993.
Operating Income and Cash Operating Profit
- - ------------------------------------------
Because of the seasonal nature of the nonalcoholic beverage business,
relatively fixed expenses such as noncash depreciation and amortization
have a proportionally larger effect on the Company's first-quarter
performance. These noncash expenses actually increased in the first
quarter of 1994 due to 1993 acquisitions and capital spending. These
increases, coupled with the difficult winter weather and economic
conditions in Europe, resulted in flat operating income for the first
quarter of 1994 as compared to the first quarter of 1993.
Comparable cash operating profit (operating income before the deduction for
depreciation and amortization), increased approximately 2% in the first
quarter of 1994 over the first quarter of 1993. We continue to expect
growth in comparable cash operating profit for full-year 1994 of
approximately 8%.
- 11 -
<PAGE>
Part I. Financial Information
- - ------------------------------
Item 2. Management's Discussion and Analysis of
- - ------------------------------------------------
Financial Condition and Results of Operations (continued)
- - ---------------------------------------------------------
Interest Expense
- - ----------------
The decrease in interest expense reflects the lower weighted average
borrowing rate of approximately 7.3% for the first quarter of 1994 as
compared to 7.8% for the first quarter of 1993. This decreased cost of debt
more than offset the higher average debt balance resulting from 1993
acquisitions. Net interest expense for full-year 1994 should not be
appreciably different from 1993 after adjusting 1993 to give effect to
ownership of acquired companies for a full year.
Income Taxes
- - ------------
In August 1993, the Omnibus Budget Reconciliation Act was signed into law.
The Company was affected primarily by the increase in the corporate
marginal income tax rate from 34% to 35%.
The Company's effective tax rates for the first quarters of 1994 and 1993
were approximately 48% and 68.5%, respectively. The change in the
effective tax rate between the periods is principally the result of
increased full year earnings expectations for 1994 as compared to annual
expectations for 1993 contemplated at the end of the first quarter of 1993.
FINANCIAL POSITION
Our commercial paper program is supported by a $1 billion revolving bank
credit agreement maturing in April 1996 and two short-term credit
facilities. There are no borrowings outstanding under these agreements;
however, under the commercial paper program supported by these agreements,
an aggregate $752 million was outstanding at April 1, 1994.
In the past seven years the Company has acquired numerous bottlers for an
aggregate purchase price of approximately $5.6 billion, resulting in a high
level of financial leverage. Our capital structure, combined with our cash
flow streams, however, allow us to maintain a high degree of financial
flexibility.
In addition to operating cash flows, our external sources of capital
include, but are not limited to, the issuance of public or private
placement debt, bank borrowings and the issuance of equity securities. We
believe that adequate resources are available to satisfy our capital
expenditure and acquisition programs, and to satisfy scheduled maturities
of debt obligations. We anticipate that capital expenditures will
approximate $330 million to $370 million for full-year 1994.
- 12 -
<PAGE>
Part II. Other Information
- - --------------------------
Item 1. Legal Proceedings
- - --------------------------
On February 17, 1994, the Environmental Protection Agency approved the
Company's settlement of its liability for the Commercial Oil Services site
near Toledo, Ohio. This matter was previously reported in the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1993.
Part II. Other Information
- - --------------------------
Item 4. Submission of Matters to a Vote of Security-Holders
- - ------------------------------------------------------------
The Annual Meeting of Share Owners was held on Wednesday, April 13, 1994 in
Wilmington, Delaware, at which the election of certain Directors and six
other matters were submitted to a vote of the share owners of the Company:
(a) Votes cast for or withheld regarding the re-election of five
Directors for a term expiring in 1997:
For Withheld
----------- --------
Howard G. Buffett 113,100,850 288,598
Johnnetta B. Cole 113,098,345 291,103
T. Marshall Hahn, Jr. 113,098,836 290,612
Claus M. Halle 113,101,229 288,219
Henry A. Schimberg 113,100,693 288,755
Additional Directors, whose terms of office as Directors continued
after the meeting are as follows:
Term expiring in 1995 Term expiring in 1996
--------------------- ---------------------
L. Phillip Humann John L. Clendenin
Scott L. Probasco, Jr. M. Douglas Ivester
E. Neville Isdell John E. Jacob
Francis A. Tarkenton Summerfield K. Johnston, Jr.
Robert A. Keller
- 13 -
<PAGE>
Part II. Other Information
- - --------------------------
Item 4. Submission of Matters to a Vote of Security-Holders (continued)
- - ------------------------------------------------------------------------
(b) Votes cast for or against, and the number of abstentions and
broker non-votes for each other proposal brought before the meeting
are as follows:
Broker
Proposal For Against Abstain Non-Votes
- - ---------------------------- ----------- ---------- --------- ---------
Approve the 1992 Restricted
Stock Award Plan as
amended and restated 110,790,460 2,243,022 415,966 -
Approve the 1994 Stock
Option Plan 107,686,625 5,246,106 456,717 -
Approve the 1994 Executive
Management Incentive Plan 107,446,247 1,557,857 595,702 3,789,642
Approve the 1994-1996
Long-Term Incentive Plan 107,216,238 1,446,946 563,238 4,163,026
Ratify the appointment of
Ernst & Young 112,735,462 158,358 495,628 -
Create an independent
nominating committee 8,746,309 98,048,474 2,192,106 4,402,559
Part II. Other Information
- - --------------------------
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K):
Exhibit Incorporated by Reference
Number Description or Filed Herewith
------- ---------------------- -------------------------
12 Statements regarding Filed Herewith
computations of ratios
(b) Reports on Form 8-K
During the first quarter of 1994, the Company filed the following
current report on Form 8-K:
Date of Report Description
---------------- --------------------------------------
February 2, 1994 Condensed Consolidated Statements of
Operations (unaudited) of the Company,
reporting financial results for the
fourth quarter and full-year 1993.
- 14 -
<PAGE>
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.
COCA-COLA ENTERPRISES INC.
(Registrant)
Date: April 29, 1994 By: /s/ JOHN R. ALM
----------------------
John R. Alm
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial Officer)
Date: April 29, 1994 /s/ BERNICE H. WINTER
---------------------------
Bernice H. Winter
Vice President and Controller
(Principal Accounting Officer)
- 15 -
<PAGE>
COCA-COLA ENTERPRISES INC. Exhibit 12
COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(In millions except ratios)
Quarter ended
--------------
April April
1994 1993
----- -----
Computation of Earnings:
Earnings (loss) from continuing operations
before income taxes. . . . . . . . . . . $(13) $(15)
Add:
Interest expense . . . . . . . . . . . . 81 84
Amortization of debt
premium/discount and expenses. . . . . 1 1
Interest portion of rent expense . . . . 2 2
---- ----
Earnings as Adjusted . . . . . . . . . . . . $ 71 $ 72
==== ====
Computation of Fixed Charges:
Interest expense . . . . . . . . . . . . . $ 81 $ 84
Capitalized interest . . . . . . . . . . . 1 -
Amortization of debt
premium/discount and expenses. . . . . . 1 1
Interest portion of rent expense . . . . . 2 2
---- ----
Fixed Charges. . . . . . . . . . . . . . . . 85 87
Preferred stock dividends (a). . . . . . . 1 -
---- ----
Combined Fixed Charges and Preferred
Stock Dividends. . . . . . . . . . . . . . $ 86 $ 87
==== ====
Ratio of Earnings to Fixed Charges . . . . . (b) (c)
==== ====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends. . . (b) (c)
==== ====
(a) Preferred stock dividends have been increased to an amount
representing the pretax earnings which would be required to
cover such dividend requirements.
(b) Earnings for first quarter 1994 were insufficient to cover
fixed charges and combined fixed charges and preferred stock
dividends by $14 million and $15 million, respectively.
(c) Earnings for first quarter 1993 were insufficient to cover
fixed charges and combined fixed charges and preferred stock
dividends by $15 million.
