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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 March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-09300
(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.
129,677,114 Shares of $1 Par Value Common Stock as of May 5, 1995
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<PAGE>
COCA-COLA ENTERPRISES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1995
INDEX
Page
----
Part I - Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Quarters ended March 31, 1995 and
April 1, 1994 . . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Balance Sheets as of
March 31, 1995 and December 31, 1994. . . . . . . . . 2
Condensed Consolidated Statements of Cash Flows
for the Quarters ended March 31, 1995 and
April 1, 1994 . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements . . 5
Part I - Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 9
Part II - Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . 16
Part II - Item 6. Exhibits and Reports on Form 8-K. . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (unaudited)
- -----------------------------------------
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions except per share data)
Quarter ended
----------------------
March 31, April 1,
1995 1994
-------- --------
Net Operating Revenues. . . . . . . . . . . . . $ 1,462 $ 1,320
Cost of sales . . . . . . . . . . . . . . . . . 901 799
------- -------
Gross Profit. . . . . . . . . . . . . . . . . . 561 521
Selling, general and administrative expenses. . 485 452
------- -------
Operating Income. . . . . . . . . . . . . . . . 76 69
Interest expense, net . . . . . . . . . . . . . 80 80
Other nonoperating deductions, net. . . . . . . - 2
Gain from sale of bottling operations . . . . . 9 -
------- -------
Income (Loss) Before Income Taxes . . . . . . . . 5 (13)
Income tax expense (benefit). . . . . . . . . . 2 (7)
------- -------
Net Income (Loss) . . . . . . . . . . . . . . . 3 (6)
Preferred stock dividend requirements . . . . . 1 1
------- -------
Net Income (Loss) Applicable to Common
Share Owners. . . . . . . . . . . . . . . . . $ 2 $ (7)
======= =======
Average Common Shares Outstanding . . . . . . . 129 129
======= =======
Net Income (Loss) Per Common Share . . . . . . $ 0.02 $ (0.06)
======= =======
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)
March 31, December 31,
ASSETS 1995 1994
---------- ------------
(Unaudited)
CURRENT
Cash and cash equivalents . . . . . . . . . $ 13 $ 22
Trade accounts receivable, less allowances
of $35 and $34, respectively. . . . . . . 469 467
Inventories:
Finished goods. . . . . . . . . . . . . . 174 170
Raw materials . . . . . . . . . . . . . . 55 41
Other . . . . . . . . . . . . . . . . . . 26 25
------ ------
255 236
Prepaid expenses and other assets . . . . . 84 85
------ ------
Total Current Assets. . . . . . . . . . . . 821 810
PROPERTY, PLANT AND EQUIPMENT
Land. . . . . . . . . . . . . . . . . . . . 186 170
Buildings and improvements. . . . . . . . . 674 661
Machinery and equipment . . . . . . . . . . 2,474 2,390
------ ------
3,334 3,221
Less allowances for depreciation. . . . . . 1,403 1,352
------ ------
1,931 1,869
Construction in progress. . . . . . . . . . 132 94
------ ------
2,063 1,963
FRANCHISE AND OTHER NONCURRENT ASSETS . . . . 6,157 5,965
------ ------
$9,041 $8,738
====== ======
See Notes to Condensed Consolidated Financial Statements.
- 2 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)
March 31, December 31,
LIABILITIES AND SHARE-OWNERS' EQUITY 1995 1994
----------- ------------
(Unaudited)
CURRENT
Accounts payable and accrued expenses . . . $ 761 $ 798
Current maturities of long-term debt. . . . 302 291
------ ------
Total Current Liabilities . . . . . . . . . 1,063 1,089
LONG-TERM DEBT. . . . . . . . . . . . . . . . 4,097 3,896
DEFERRED INCOME TAXES . . . . . . . . . . . . 1,969 1,884
OTHER LONG-TERM OBLIGATIONS . . . . . . . . . 547 530
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 - 144,090,580
and 143,841,182 shares, respectively. . . 144 144
Paid-in capital . . . . . . . . . . . . . . 1,306 1,301
Reinvested earnings . . . . . . . . . . . . 71 70
Cumulative translation adjustment . . . . . 51 21
Common stock in treasury, at cost
(15,150,298 and 14,636,598 shares,
respectively) . . . . . . . . . . . . . . (236) (226)
------ ------
1,365 1,339
------ ------
$9,041 $8,738
====== ======
- 3 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Quarter ended
----------------------
March 31, April 1,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . $ 3 $ (6)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation. . . . . . . . . . . . . . . . 76 69
Amortization. . . . . . . . . . . . . . . . 45 43
Deferred income taxes . . . . . . . . . . . (4) (7)
Gain from sale of bottling operations . . . (9) -
Net changes in current assets and
current liabilities . . . . . . . . . . . (46) (25)
Other nonoperating cash flows . . . . . . . (1) 4
----- -----
Net cash provided by operating activities . . . 64 78
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures. . . . . . . . . . . . . . (134) (64)
Proceeds from the sale of fixed assets. . . . . 3 6
Acquisitions of and investments in businesses . (148) (6)
Proceeds from the sale of bottling operations . 17 -
Other investing activities. . . . . . . . . . . 6 -
----- -----
Net cash used in investing activities . . . . . (256) (64)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of debt. . . . . . . 200 238
Payments on debt. . . . . . . . . . . . . . . . (6) (261)
Dividends on common stock . . . . . . . . . . . (2) (2)
Proceeds from the issuance of common stock. . . 4 8
Purchases of treasury stock . . . . . . . . . . (9) -
Other financing activities. . . . . . . . . . . (4) (7)
----- -----
Net cash provided by (used in) financing
activities. . . . . . . . . . . . . . . . . . 183 (24)
----- -----
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . (9) (10)
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . 22 11
----- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD. . . $ 13 $ 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 have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
For further information, refer to the consolidated financial statements and
footnotes included in the Coca-Cola Enterprises Inc. annual report on Form
10-K for the year ended December 31, 1994.
Note B - Seasonality of Business
- --------------------------------
Operating results for the quarter ended March 31, 1995 are not indicative
of the results that may be expected for the year ended December 31, 1995,
primarily due to the seasonality of the Company's business. Unit sales of
the Company's products are greater in the second and third quarters due to
seasonal factors.
Note C - Acquisitions
- ---------------------
On January 27, 1995, the Company acquired all the issued and outstanding
shares of stock of the Wichita Coca-Cola Bottling Company ("Wichita") for
$150 million in cash. Also, on January 1, 1995, the Company sold its 50%
ownership interest in The Coca-Cola Bottling Company of the Mid South ("Mid
South") for $17 million, resulting in a $9 million pre-tax gain ($0.04 per
common share).
- 5 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note D - Long-Term Debt
- -----------------------
Long-term debt including current maturities consists of the following (in
millions):
March 31, December 31,
1995 1994
-------- ------------
Commercial Paper . . . . . . . . . . . . . $1,016 $ 828
8.35% Notes, due 1995. . . . . . . . . . . 250 250
6.50% Notes, due 1997. . . . . . . . . . . 300 300
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. . . . . . . . 229 205
------ ------
$4,399 $4,187
====== ======
Maturities of long-term debt for the five twelve-month periods subsequent
to March 31, 1995 are as follows: 1996 - $302 million; 1997 - $31 million;
1998 - $311 million; 1999 - $11 million; and 2000 - $1,220 million.
The Company's commercial paper program is supported by a revolving bank
credit agreement maturing in December 1999 and two short-term credit
facilities aggregating $1,200 million. An aggregate $1,016 million of
commercial paper supported by these agreements was outstanding at March 31,
1995. The weighted average interest rate of borrowings under the
commercial paper program at March 31, 1995 was 6.3% per annum.
- 6 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note E - Income Taxes
- ---------------------
The Company's effective tax rates for the first quarters of 1995 and 1994
were 44% and 48%, respectively. A reconciliation of the income tax
provision at the statutory federal rate to the Company's actual income tax
provision follows (in millions):
Quarter ended
----------------------
March 31, April 1,
1995 1994
-------- --------
Statutory expense (benefit) - 35% . . . . . . $ 2 $ (5)
State expense - net of federal. . . . . . . . - (1)
State net operating loss benefits - net
of federal. . . . . . . . . . . . . . . . . - (1)
State benefits valuation allowance provision - 1
Other, net. . . . . . . . . . . . . . . . . . - (1)
---- ----
$ 2 $ (7)
==== ====
Note F - Stock Options and Other Stock Plans
- --------------------------------------------
The Company's 1995 Stock Option Plan (the "1995 Option Plan") provides for
awards to officers and certain key employees of the Company. The total
number of shares of common stock that may be issued under the 1995 Option
Plan may not exceed 2,893,100 shares. Generally, options awarded under the
1995 Option Plan (i) are granted at an exercise price of 100% or more of
the fair market value on the date of grant; (ii) vest ratably over a three
year period; and (iii) expire ten years from the date of grant.
An aggregate 539,200 options have been awarded under the 1995 Option Plan.
The option price for such awards was $17.8750, representing the fair market
value of the Company's shares on the date of grant. An aggregate 249,398
shares of common stock have been issued during the first quarter of 1995
primarily as a result of the exercise of stock options under the Company's
various stock option plans.
- 7 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note F - Stock Options and Other Stock Plans (continued)
- --------------------------------------------------------
The Company's 1995 Restricted Stock Award Plan ("the 1995 Stock Plan")
provides for awards to officers and certain key employees of the Company.
The Company has reserved a total of 2,040,000 shares of common stock of the
Company for issuance under the 1995 Stock Plan. Awards under the 1995
Stock Plan vest only upon attainment of stated increases in the market
price of the Company's common stock within five years from the date of
grant, in which event the ownership restrictions on the shares are removed.
An aggregate 654,700 shares of common stock have been awarded under the
1995 Stock Plan. An aggregate 39,800 restricted shares which had been
awarded under various restricted stock award plans of the Company were
forfeited and have been added to treasury stock during the first quarter of
1995.
Note G - Share Repurchase Program
- ---------------------------------
In August 1994, the Company announced a share repurchase program to
repurchase up to 10 million shares of its outstanding common stock. During
the first quarter of 1995, prior to the acquisition of Wichita, the Company
repurchased 473,900 shares of common stock under this program for an
aggregate cost of approximately $8.7 million. Cumulative repurchases total
approximately two million shares under the program.
Note H - Contingencies
- ----------------------
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. The Company has provided letters of credit aggregating
approximately $85 million principally as a result of these self-insurance
programs.
The Company has guaranteed payment of up to $240 million of indebtedness
owed by manufacturers supplying certain packaging used in the Company's
manufacturing process. At March 31, 1995, these manufacturers had
approximately $102 million of indebtedness outstanding guaranteed by the
Company.
- 8 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note H - Contingencies (continued)
- ---------------------------------
The Company is responsible for the required removal, replacement, or
modification of underground fuel storage tanks, and any required soil and
groundwater remediation resulting from leaking tanks, to satisfy
regulations which go into effect in varying stages through 1998. The
Company also incurs costs in connection with other environmental programs
covering the discharge of materials and waste water treatment. The Company
believes that any amount it may be required to pay in excess of amounts
accrued would not have a material adverse effect on its financial
condition, cash flows or results of operations.
The Company has been named as a potentially responsible party ("PRP") for
the costs of remediation of hazardous waste at federal or state Superfund
sites. Under current law, the Company s liability for clean-up of
Superfund sites may be joint and several with other PRPs, regardless of the
extent of the Company s use in relation to other users. As to any site
where the Company has determined that it may be liable, the Company has
determined that there are other PRPs who are financially solvent as well,
and that any hazardous waste deposited by the Company is minimal compared
to amounts deposited by financially solvent PRPs. As a result, the Company
believes that any ultimate liability will not have a material effect on its
financial condition, cash flows or results of operations.
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations
- ---------------------------------------------
OPERATIONS REVIEW
Business Strategy
- -----------------
Through the implementation and execution of operating and financial
strategies designed to build value in our Company, we expect to accomplish
our primary goal -- the enhancement of share-owner value.
- 9 -
<PAGE>
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations
- ---------------------------------------------
Business Strategy (continued)
- ----------------------------
Our principal operating goal is to increase long-term operating cash flow
through profitable increases in sales volume. The liquid nonalcoholic
refreshment business is becoming increasingly complex and competitive as
products, packages, customers and marketing channels become more
sophisticated and diverse. This increased complexity drives our strategy
of developing and executing innovative marketing programs at the local
level. The competitive environment dictates our strategy to obtain
profitable increases in case sales by balancing volume growth with improved
margins and sustainable increases in market share. The realization of
short-term profitability at the expense of market share is inconsistent
with our strategy. We will grow our volume through profitable business
partnerships with our customers and superior marketing to our consumers.
Our financial strategies add value through the allocation of funds to
projects and activities which generate returns in excess of our cost of
capital and increase share-owner value. One of our primary financial
objectives is to achieve an optimal capital structure which provides the
financial flexibility for internal projects, share repurchases and
appropriately priced acquisitions.
Operating Income and Earnings Per Share
- ---------------------------------------
Gross profit margins were 39.5% in the first quarter of 1994 compared to
38.4% in the first quarter of 1995. This decrease was primarily a result
of the significant packaging cost increases that the industry is
experiencing. Through net revenue per case increases, volume growth and
control of our operating expenses, we maintained our operating margin at
5.2% in the first quarter of 1995, consistent with our operating margin in
the first quarter of 1994. Net income margins improved over the first
quarter of 1994, reflecting a stable net interest expense and a lower
effective tax rate during the first quarter of 1995.
- 10 -
<PAGE>
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations (continued)
- --------------------------------------------------------
Operating Income and Earnings Per Share (continued)
- --------------------------------------------------
During the first quarter of 1995, the Company sold its 50% interest in Mid
South for $17 million, resulting in a $9 million gain ($0.04 per common
share). Including the gain realized on the sale of Mid South, the Company
reported first-quarter 1995 net income applicable to common share owners of
$0.02 per common share. Excluding the gain realized on the sale of Mid
South, first- quarter 1995 reflects a net loss applicable to common share
owners of $0.02 per common share, compared to the first quarter 1994 net
loss applicable to common share owners of $0.06 per common share.
Cash Operating Profit
- ---------------------
Cash operating profit (operating income before the deductions for
depreciation and amortization), increased approximately 9% in the first
quarter of 1995 over the first quarter of 1994. Including Wichita in the
prior year, first-quarter 1995 cash operating profit increased
approximately 8% over first-quarter 1994. We continue to expect full-year
1995 growth in cash operating profit of approximately 8% excluding the
impact of acquisitions, and assuming no significant changes in the current
competitive environment.
Revenues, Pricing and Volume
- ----------------------------
Net operating revenues for the first quarter of 1995 increased
approximately 11% over the first quarter of 1994. This increase resulted
primarily from an approximate 1 1/2% increase in bottle and can physical
case sales volume and an approximate 7% increase in bottle and can net
revenues per case. Including Wichita in the prior year, net operating
revenues for the first quarter of 1995 increased approximately 10% over the
prior year. Constant territory bottle and can physical case sales volume
for the first quarter of 1995 increased approximately 1/2% over the first
quarter of 1994.
- 11 -
<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)
- ---------------------------------------
The first-quarter 1995 volume growth rate was affected by higher pricing
and the additional volume from the Easter holiday occurring in the second
quarter in 1995 as compared to the first quarter in 1994. The increase in
first-quarter 1995 bottle and can net revenues per case reflects
significantly higher net selling prices than the first quarter of 1994.
While we expect continued constant territory bottle and can physical case
sales volume growth for full-year 1995, we do not anticipate that volume
growth will reach the full-year growth of 4 1/2% attained in 1994.
Cost of Sales
- -------------
Primarily as a result of packaging cost increases, cost of sales per case
in the first quarter of 1995 exceeded first quarter 1994 costs by
approximately 8%, net of the effect of the sale of 1994 year-end inventory
with carrying costs significantly below first-quarter 1995 costs. The
effect of foreign currency translation increased cost of sales per case by
approximately 1%. We expect full-year 1995 bottle and can cost of sales per
case to increase in the range of 8% to 10%, excluding any effect of foreign
currency translations.
Selling, General and Administrative Expenses
- --------------------------------------------
Including Wichita in the prior year, selling, general and administrative
expenses increased approximately 7% during the first quarter of 1995
compared to the first quarter of 1994. This increase is principally a
result of selling and delivery infrastructure investments associated with
our increased cold drink channel development and noncarbonated beverage
introductions. Selling, general and administrative expenses as a percent
of sales decreased from 34.2% of sales in the first quarter of 1994 to
33.1% of sales in the first quarter of 1995.
- 12 -
<PAGE>
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations (continued)
- ---------------------------------------------------------
Interest Expense
- ----------------
The weighted average interest rate for the first quarter of 1995 was 7.5%
compared to 7.3% for the first quarter of 1994. Given the current rate
environment, we anticipate that net interest expense will increase
approximately 8% for full-year 1995 due to higher interest rates combined
with a higher debt balance resulting from the Wichita acquisition.
Income Taxes
- ------------
The Company's effective tax rates for the first quarters of 1995 and 1994
were approximately 44% and 48%, respectively. The change in the effective
tax rate between the periods is principally the result of increased full-
year earnings expectations for 1995 compared to full-year expectations for
1994 contemplated at the end of the first quarter of 1994.
CASH FLOW AND LIQUIDITY REVIEW
Capital Resources
- -----------------
Our 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. In addition to our operating cash flows, we believe
that adequate long-term and short-term capital resources are available to
satisfy our capital expenditure, acquisition and share repurchase programs;
and to satisfy scheduled debt maturities, interest payments, income tax
obligations, and dividend payments to our share owners.
Long-term Capital Resources: In addition to the availability of the equity
and new issue debt securities markets as a source of long-term financing,
the Company has unissued debt securities available under a shelf
registration with the Securities and Exchange Commission. Approximately
$871 million of this shelf registration remains unissued and may be issued
from time to time at fixed or floating interest rates, as determined by the
Company at the time of issuance.
- 13 -
<PAGE>
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations (continued)
- ---------------------------------------------------------
Short-term Capital Resources: We satisfy seasonal working capital needs
and other financing requirements with short-term borrowings under our
commercial paper program. Our commercial paper program is supported by a
revolving bank credit agreement maturing in December 1999 and two short-
term credit facilities, aggregating $1,200 million. An aggregate $1,016
million of commercial paper borrowings supported by these agreements was
outstanding at March 31, 1995. The Company intends to refinance borrowings
under its commercial paper program on a long-term basis, either through
continued short-term borrowings or through other available sources of
long-term financing.
Summary of Cash Activities
- --------------------------
Cash and cash equivalents decreased approximately $9 million in the first
quarter of 1995. Our principal sources of cash consisted of those
provided from operations of $59 million and the issuance of debt
aggregating $200 million. Our primary uses of cash were for capital
expenditures totaling $134 million and the acquisition of Wichita for $148
million (net of cash acquired).
Operating Activities: Net cash provided by operating activities in the
first quarter of 1995 decreased from the first quarter of 1994, primarily
resulting from increased inventory balances. These inventory increases
resulted from an increase in quantities due to the anticipation of the
second-quarter 1995 Easter holiday, and an increase in costs resulting
primarily from aluminum price increases. The increase in depreciation
expense in 1995 reflects capital spending and the acquisition of Wichita
during the first quarter of 1995.
Investing Activities: Cash used in investing activities increased in the
first quarter of 1995 compared to the first quarter of 1994 primarily as a
result of the acquisition of Wichita and increased capital spending. Our
annual capital expenditure requirements are expected to be financed
primarily with funds generated from operating activities. We expect
capital expenditures for full-year 1995 to approximate $400 million.
- 14 -
<PAGE>
Part I. Financial Information
- ------------------------------
Item 2. Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations (continued)
- ---------------------------------------------------------
In the past nine years, the Company has acquired a number of bottling
companies for an aggregate purchase price of approximately $5.7 billion.
Our sources of capital allow us to maintain flexibility for acquisitions
that offer opportunities to implement our operating strategies and to
achieve an acceptable rate of return. We will continue to make domestic
and international acquisitions provided such opportunities become available
and are expected to increase share-owner value over the long term.
Financing Activities: In August 1994, we began a share repurchase program
under which we may repurchase up to ten million shares of our outstanding
common stock. The amount of shares repurchased and the length of time
required to repurchase such shares will depend on our level of capital
expenditures, acquisition opportunities, other alternative uses of cash,
and market conditions. During the first quarter of 1995, prior to the
acquisition of Wichita, we repurchased 473,900 shares of our common stock
at a cost of approximately $8.7 million (an average of $18.26 per share).
FINANCIAL POSITION
The increase in franchise and other noncurrent assets reflects the increase
in franchise assets resulting from the acquisition of Wichita in January
1995, offset by the normal amortization of our other franchise assets. The
increase in long-term debt results from the financing of the acquisition of
the Wichita bottler. The increase in deferred taxes stems from the tax
effects of the acquisition. The increase in the cumulative translation
adjustment results from the continued decrease in the value of the dollar
against the Dutch florin during the first quarter of 1995.
- 15 -
<PAGE>
Part II. Other Information
- --------------------------
Item 4. Submission of Matters to a Vote of Security-Holders
- -----------------------------------------------------------
The Annual Meeting of Share Owners was held on Monday, April 17, 1995 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 terms expiring in 1998:
For Withheld
----------- --------
L. Phillip Humann 115,299,208 256,567
E. Neville Isdell 114,713,913 841,862
Scott L. Probasco, Jr. 115,294,771 261,004
Francis A. Tarkenton 115,251,744 304,031
Additional Directors, whose terms of office as Directors continued
after the meeting are as follows:
Term expiring in 1996 Term expiring in 1997
--------------------- ---------------------
John L. Clendenin Howard G. Buffett
M. Douglas Ivester Johnnetta B. Cole
John E. Jacob T. Marshall Hahn, Jr.
Summerfield K. Johnston, Jr. Claus M. Halle
Robert A. Keller Henry A. Schimberg
(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:
- 16 -
<PAGE>
Part II. Other Information
- --------------------------
Item 4. Submission of Matters to a Vote of Security-Holders(continued)
- ---------------------------------------------------------------------
Broker
Proposal For Against Abstain Non-Votes
- ---------------------------- ----------- ---------- --------- ---------
Approve the 1995 Restricted
Stock Award Plan 113,146,495 1,869,998 539,282 -
Approve the 1995 Stock
Option Plan 106,116,480 8,988,156 451,139 -
Approve the Executive
Management Incentive Plan 106,252,810 3,941,576 611,631 4,749,758
Approve the Long-Term
Incentive Plan 106,699,653 3,654,197 452,167 4,749,758
Ratify the appointment of
Independent Auditors 114,873,994 421,460 260,321 -
Create an independent
nominating committee 12,409,133 95,935,768 2,461,116 4,749,758
Part II. Other Information
- --------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K):
Exhibit Incorporated by Reference
Number Description or Filed Herewith
------- ------------------------ -------------------------
3 Bylaws of Coca-Cola Filed Herewith
Enterprises Inc. as
amended on April 17,
1995
12 Statements regarding
computations of ratios Filed Herewith
27 Financial Data Schedule Filed Herewith
- 17 -
<PAGE>
Part II. Other Information
- --------------------------
Item 6. Exhibits and Reports on Form 8-K (continued)
- ----------------------------------------------------
(b) Reports on Form 8-K:
During the first quarter of 1995, the Company filed a current report on
Form 8-K dated February 15, 1995, which reported financial results for the
Company for the fourth quarter and full-year 1994.
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: May 12, 1995 /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: May 12, 1995 /s/ Bernice H. Winter
---------------------------
Bernice H. Winter
Vice President and Controller
(Principal Accounting Officer)
- 18 -
<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
-------------------
March 31, April 1,
1995 1994
--------- --------
Computation of Earnings:
Earnings (loss) from continuing operations
before income taxes. . . . . . . . . . . $ 5 $ (13)
Add:
Interest expense . . . . . . . . . . . . 82 81
Amortization of debt
premium/discount and expenses. . . . . - 1
Interest portion of rent expense . . . . 2 2
----- -----
Earnings as Adjusted . . . . . . . . . . . . $ 89 $ 71
===== =====
Computation of Fixed Charges:
Interest expense . . . . . . . . . . . . . $ 82 $ 81
Capitalized interest . . . . . . . . . . . 1 1
Amortization of debt
premium/discount and expenses. . . . . . - 1
Interest portion of rent expense . . . . . 2 2
----- -----
Fixed Charges. . . . . . . . . . . . . . . . 85 85
Preferred stock dividends (a). . . . . . . 1 1
----- -----
Combined Fixed Charges and Preferred
Stock Dividends. . . . . . . . . . . . . . $ 86 $ 86
===== =====
Ratio of Earnings to Fixed Charges . . . . . 1.05 (b)
===== =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends. . . 1.04 (b)
===== =====
(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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANICIAL STATEMENTS OF THE FILER FOR THE PERIOD ENDED MARCH 31,
1995 INCLUDED IN ITS QUARTERLY REPORTON FORM 10-Q FOR THE QUARTER ENDED MARCH
31, 1995 (COMMISSION FILE NO. 001-09300) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000804055
<NAME> COCA-COLA ENTERPRISES
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 13
<SECURITIES> 0
<RECEIVABLES> 504
<ALLOWANCES> 35
<INVENTORY> 255
<CURRENT-ASSETS> 821
<PP&E> 3466
<DEPRECIATION> 1403
<TOTAL-ASSETS> 9041
<CURRENT-LIABILITIES> 1063
<BONDS> 4097
<COMMON> 144
0
29
<OTHER-SE> 1192
<TOTAL-LIABILITY-AND-EQUITY> 9041
<SALES> 1462
<TOTAL-REVENUES> 1462
<CGS> 901
<TOTAL-COSTS> 901
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 5
<INCOME-TAX> 2
<INCOME-CONTINUING> 3
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
BY-LAWS
OF
COCA-COLA ENTERPRISES INC.
As amended through April 17, 1995
<PAGE>
COCA-COLA ENTERPRISES INC.
BYLAWS
TABLE OF CONTENTS
Page
ARTICLE I - SHAREHOLDERS ----
Section 1 Place, Date and Time of Holding
Annual Meetings . . . . . . . . . . . 1
Section 2 Voting . . . . . . . . . . . . . . . . . . 1
Section 3 Quorum . . . . . . . . . . . . . . . . . . 1
Section 4 Adjournment of Meetings . . . . . . . . . 1
Section 5 Special Meetings . . . . . . . . . . . . . 1
Section 6 Notice of Shareholders Meeting . . . . . . 2
Section 7 Organization . . . . . . . . . . . . . . . 2
Section 8 Inspectors of Election . . . . . . . . . . 2
Section 9 Record Date . . . . . . . . . . . . . . . 2
Section 10 Notice of Shareholder Proposals . . . . . 2
ARTICLE II - DIRECTORS
Section 1 Number of Directors . . . . . . . . . . . 4
Section 2 Regular Meetings . . . . . . . . . . . . . 4
Section 3 Special Meetings . . . . . . . . . . . . . 4
Section 4 Notice of Meetings . . . . . . . . . . . . 4
Section 5 Quorum and Voting . . . . . . . . . . . . 5
Section 6 General Powers of Directors . . . . . . . 5
Section 7 Chairman . . . . . . . . . . . . . . . . . 5
Section 8 Compensation of Directors . . . . . . . . 5
Section 9 Qualification of Directors . . . . . . . . 5
Section 10 Resignation of Directors Who Cease
to be Officers of the Company . . . . . 5
ARTICLE III - COMMITTEES OF THE BOARD OF DIRECTORS
Section 1 Committees of the Board of Directors . . . 6
Section 2 Election of Committee Members . . . . . . 6
Section 3 Procedure/Quorum/Notice . . . . . . . . . 6
Section 4 Executive Committee . . . . . . . . . . . 7
Section 5 Audit Committee 7
Section 6 Compensation Committee . . . . . . . . . . 7
Section 7 Committee on Directors . . . . . . . . . . 8
Section 8 Public Issues Review Committee . . . . . . 8
Section 9 Retirement Plan Review Committee . . . . . 8
ARTICLE IV - NOTICE AND WAIVER OF NOTICE
Section 1 Notice . . . . . . . . . . . . . . . . . . 8
Section 2 Waiver of Notice . . . . . . . . . . . . . 8
ARTICLE V - OFFICERS
Section 1 Officers of the Company . . . . . . . . . 9
Section 2 Election of Officers . . . . . . . . . . . 9
Section 3 Tenure of Office; Removal . . . . . . . .10
Section 4 President . . . . . . . . . . . . . . . .10
Section 5 Vice Presidents . . . . . . . . . . . . .10
Section 6 Assistant Vice Presidents . . . . . . . .10
<PAGE>
Page
ARTICLE V - OFFICERS ----
Section 7 Secretary . . . . . . . . . . . . . . . .10
Section 8 Treasurer . . . . . . . . . . . . . . . .11
Section 9 Controller . . . . . . . . . . . . . . . .11
Section 10 Director of Internal Audit . . . . . . . .11
ARTICLE VI - RESIGNATIONS: FILLING OF VACANCIES
Section 1 Resignations . . . . . . . . . . . . . . .12
Section 2 Filling of Vacancies . . . . . . . . . . .12
ARTICLE VII - CAPITAL STOCK
Section 1 Form and Execution of Certificates . . . .12
Section 2 Record Ownerships . . . . . . . . . . . .13
Section 3 Transfer of Shares . . . . . . . . . . . .13
Section 4 Lost, Stolen or Destroyed Stock
Certificates . . . . . . . . . . . . . .12
Section 5 Regulations . . . . . . . . . . . . . . .13
Section 6 Transfer Agent and Registrar . . . . . . .13
ARTICLE VII - SEAL . . . . . . . . . . . . . . . . . . . .14
ARTICLE IX - FISCAL YEAR . . . . . . . . . . . . . . . . .14
ARTICLE X - AMENDMENTS
Section 1 Directors may Amend By-Laws . . . . . . .14
Section 2 By-Laws Subject to Amendment by
Shareholders . . . . . . . . . . . . . .14
ARTICLE XI - EMERGENCY BY-LAWS
Section 1 Emergency By-Laws . . . . . . . . . . . .14
Section 2 Meetings . . . . . . . . . . . . . . . . .15
Section 3 Quorum . . . . . . . . . . . . . . . . . .15
Section 4 By-Laws . . . . . . . . . . . . . . . . .15
Section 5 Liability . . . . . . . . . . . . . . . .15
Section 6 Repeal or Change . . . . . . . . . . . . .15
<PAGE>
BY-LAWS
OF
COCA-COLA ENTERPRISES INC.
ARTICLE I
SHAREHOLDERS
Section 1. Place, Date and Time of Holding Annual
--------------------------------------
Meetings. Annual meetings of shareholders shall be held at
- --------
such place, date and time as shall be designated from time to
time by the Board of Directors. In the absence of a resolution
adopted by the Board of Directors establishing such place, date
and time, the annual meeting shall be held at 1209 Orange
Street, Wilmington, Delaware, on the second Wednesday in April
of each year at 9:00 A.M. (local time).
Section 2. Voting. Each outstanding share of common
------
stock of the Company is entitled to one vote on each matter
submitted to a vote. The vote for the election of directors
shall be by written ballot. Directors shall be elected by a
plurality of votes cast in the election for such directors.
All other action shall be authorized by a majority of the votes
cast unless a greater vote is required by the Certificate of
Incorporation or the laws of Delaware. A shareholder may vote
in person or by written proxy.
Section 3. Quorum. The holders of a majority of the
------
issued and outstanding shares of the common stock of the
Company, present in person or represented by proxy, shall
constitute a quorum at all meetings of shareholders.
Section 4. Adjournment of Meetings. In the absence of a
-----------------------
quorum or for any other reason, the chairman of the meeting may
adjourn the meeting from time to time. If the adjournment is
not for more than thirty days, the adjourned meeting may be
held without notice other than an announcement at the meeting.
If the adjournment is for more than thirty days, or if a new
record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record
entitled to vote at such meeting. At any such adjourned
meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting
originally called.
Section 5. Special Meetings. Special meetings of the
----------------
shareholders for any purpose or purposes may be called by the
Board of Directors, the Chairman of the Board of Directors or
the President. Special meetings shall be held at the place,
date and time fixed by the Secretary.
-1-
<PAGE>
Section 6. Notice of Shareholders Meeting. Written
------------------------------
notice, stating the place, date, hour and purpose of the annual
or special meeting shall be given by the Secretary not less
than ten nor more than sixty days beforethe date of the meeting
to each shareholder entitled to vote at such meeting.
Section 7. Organization. The Chairman of the Board of
------------
Directors shall preside at all meetings of shareholders. In
the absence of, or in case of a vacancy in the office of, the
Chairman of the Board of Directors, the President, or in his
absence any Vice President in order of seniority in time in
office, shall preside. The Secretary of the Company shall act
as secretary at all meetings of the shareholders and in the
Secretary's absence, the presiding officer may appoint a
secretary.
Section 8. Inspectors of Election. All votes by ballot
----------------------
at any meeting of shareholders shall be conducted by such
number of inspectors of election as are appointed for that
purpose by either the Board of Directors or by the chairman of
the meeting. The inspectors of election shall decide upon the
qualifications of voters, count the votes and declare the
results.
Section 9. Record Date. The Board of Directors, in order
-----------
to determine the shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribu-
tion or allotment of any rights or entitled to exercise any
rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, shall fix
in advance a record date which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more
than sixty days prior to any other action and in such case only
such shareholders as shall be shareholders of record on the
date so fixed, shall be entitled to such notice of or to vote
at such meeting or any adjournment thereof, or be entitled to
receive payment of any such dividend or other distribution or
allotment of any rights or be entitled to exercise any such
rights in respect of stock or to take any such other lawful
action, as the case may be, notwithstanding any transfer of any
stock on the books of the Company after any such record date
fixed as aforesaid.
Section 10. Notice of Shareholder Proposals. (a) At any
-------------------------------
annual meeting of the shareholders, only such business shall be
conducted as shall have been brought before the meeting (i) by
or at the direction of the Board of Directors or (ii) by any
shareholder of the Company who complies with the notice pro-
cedures set forth in this Section 10(a) provided, in each case,
-2-
<PAGE>
that such business proposed to be conducted is, under the law,
an appropriate subject for shareholder action. For business to
be properly brought before an annual meeting by a shareholder,
the shareholder must have given timely notice thereof in
writing to the Secretary of the Company. To be timely, a
shareholder's notice must be delivered to or mailed and re-
ceived at the principal executive offices of the Company not
less than 30 days nor more than 60 days prior to the meeting;
provided, however, that in the event that less than 40 days'
prior public disclosure of the date of the meeting is given or
made by the Company, notice by the shareholder to be timely
must be received not later than the close of business on the
10th day following the day on which such public disclosure was
made. A shareholder's notice to the Secretary shall set forth
as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name
and address, as they appear on the Company's books, of the
shareholder proposing such business, (iii) the class and number
of shares of the Company which are beneficially owned by such
shareholder and (iv) any material interest of such shareholder
in such business. The Chairman of an annual meeting may, if
the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting and in
accordance with the provisions of this Section 10(a) and, if he
should so determine, he shall so declare to the meeting and any
such business so determined to be not properly brought before
the meeting shall not be transacted.
(b) Only persons who are nominated in accordance with the
procedures set forth in the By-Laws shall be eligible for
election as directors. Nominations of persons for election to
the Board of Directors of the Company may be made at a meeting
of shareholders (i) by or at the direction of the Board of
Directors or (ii) by any shareholder of the Company entitled to
vote for the election of directors at the meeting who complies
with the notice procedures set forth in this Section 10(b).
Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Company. To be
timely, a shareholder's notice shall be delivered to or mailed
and received at the principal executive offices of the Company
not less than 30 days nor more than 60 days prior to the
meeting; provided, however, that in the event that less than 40
days' prior disclosure of the date of the meeting is given or
made by the Company, notice by the shareholder to be timely
must be so received not later than the close of business on the
10th day following the day on which such public disclosure was
made. Such shareholder's notice shall set forth (i) as to each
person whom such shareholder proposes to nominate for election
or reelection as a director, all information relating to such
person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a
-3-
<PAGE>
nominee and to serving as a director if elected); and (ii) as
to the shareholder giving the notice (x) the name and address,
as they appear on the Company's books, of such shareholder and
(y) the class and number of shares of the Company which are
beneficially owned by such shareholder. At the request of the
Board of Directors any person nominated by the Board of Direc-
tors for election as a director shall furnish to the Secretary
of the Company that information required to be set forth in the
shareholder's notice of nomination which pertains to the
nominee. No person shall be eligible for election as a direc-
tor of the Company unless nominated in accordance with the
procedures set forth in the By-Laws. The Chairman of the
meeting may, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the
procedures prescribed by the By-Laws and, if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
ARTICLE II
DIRECTORS
Section 1. Number of Directors. The whole Board of
-------------------
Directors shall consist of not less than three (3) nor more
than twenty (20) members, the exact number to be set from time
to time by the Board of Directors. No decrease in the number
of directors shall shorten the term of any incumbent director.
In absence of the Board of Directors setting the number of
directors, the number shall be 12.
Section 2. Regular Meetings. Regular meetings of the
----------------
Board of Directors shall be held at such times as the Board of
Directors may determine from time to time.
Section 3. Special Meetings. Special meetings of the
----------------
Board of Directors may be called by the Chairman of the Board
of Directors, the President, the Secretary or by a majority of
the directors by written request to the Secretary.
Section 4. Notice of Meetings. The Chairman, a Vice
------------------
Chairman or the Secretary shall give notice of all meetings of
the Board of Directors by mailing the notice at least three
days before each meeting or by telegraphing or telephoning the
directors not later than one day before the meeting. The
notice shall state the time, date and place of the meeting,
which shall be determined by the Chairman of the Board of
Directors, or, in absence of the Chairman, by the Secretary of
the Company, unless otherwise determined by the Board of Dire-
ctors.
-4-
<PAGE>
Section 5. Quorum and Voting. A majority of the directors
-----------------
holding office shall constitute a quorum for the transaction
of business. Except as otherwise specifically required
by Delaware law or by the Certificate of Incorporation of the
Company or by these By-Laws, any action required to be taken
shall be authorized by a majority of the directors present at
any meeting at which a quorum is present.
Section 6. General Powers of Directors. The business and
---------------------------
affairs of the Company shall be managed under the direction of
the Board of Directors.
Section 7. Chairman. The Board of Directors may appoint
--------
a Chairman of the Board of Directors, who shall preside as
chairman of all meetings of the directors and all meetings of
the shareholders of the Company, and who shall perform such
other duties as may be assigned from time to time by the Board
of Directors. The Board of Directors may also appoint one or
more Vice Chairmen, who shall perform such duties as may be
assigned from time to time by the Board of Directors. In the
absence of, or in the case of a vacancy in the office of, the
Chairman of the Board of Directors, the Vice Chairman shall
preside. If there is more than one Vice Chairman, the Vice
Chairman who is also an officer, or, if each is an officer, the
Vice Chairman who is the senior officer, shall preside. In the
absence of, or, in the case of vacancies in the offices of,
Chairman and Vice Chairman of the Board of Directors, a
chairman selected by the Chairman of the Board of Directors, or
if he fails to do so, by the directors, shall preside.
Section 8. Compensation of Directors. Directors and
-------------------------
members of any committee of the Board of Directors shall be
entitled to such reasonable compensation and fees for their
services as shall be fixed from time to time by resolution of
the Board of Directors and shall also be entitled to
reimbursement for any reasonable expenses incurred in attending
meetings of the Board of Directors and any committee thereof,
except that a Director who is an officer or employee of the
Company shall receive no compensation or fees for serving as a
Director or a committee member.
Section 9. Qualification of Directors. Each person who
--------------------------
shall attain the age of 70 shall not thereafter be eligible for
nomination or renomination as a member of the Board of Directors.
Section 10. Resignation of Directors Who Cease to be
----------------------------------------
Officers of the Company. Any director who was an officer of
- -----------------------
the Company at the time of his or her election or most recent
reelection shall resign as a member of the Board of Directors
simultaneously when he or she ceases to be an officer of the
Company.
-5-
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
Section 1. Committees of the Board of Directors. The
------------------------------------
Board of Directors shall designate an Executive Committee, an
Audit Committee, a Compensation Committee, a Committee on
Directors, a Public Issues Review Committee, and a Retirement
Plan Review Committee, each of which shall have and may
exercise the powers and authority of the Board of Directors to
the extent hereinafter provided. The Board of Directors may
designate one or more additional committees of the Board of
Directors with such powers as shall be specified in the
resolution of the Board of Directors. Each committee shall
consist of such number of directors as shall be determined from
time to time by resolution of the Board of Directors. In the
absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such
absent or disqualified member.
All actions of the Board of Directors designating commit-
tees, or electing or removing members of such committees, shall
be taken by a resolution passed by a majority of the whole
Board.
Each committee shall keep regular minutes of its meetings.
All action taken by a committee shall be reported to the Board
of Directors at its meeting next succeeding such action and
shall be subject to approval and revision by the Board,
provided that no legal rights of third parties shall be
affected by such revisions
Section 2. Election of Committee Members. The members of
-----------------------------
each committee shall be elected by the Board of Directors and
shall serve until the first meeting of the Board of Directors
after the annual meeting of shareholders and until their
successors are elected and qualified or until the members'
earlier resignation or removal. The Board of Directors may
designate the Chairman of each committee. Vacancies may be
filled by the Board of Directors at any meeting.
Section 3. Procedure/Quorum/Notice. The Chairman, Vice
-----------------------
Chairman or a majority of any committee may call a meeting of
that committee. A quorum of any committee shall consist of a
majority of its members unless otherwise provided by resolution
of the Board of Directors. The majority vote of a quorum shall
be required for the transaction of business. The secretary of
the committee or the chairman of the committee shall give
notice of all meetings of the committee by mailing the notice
to the members of the committee at least three days before
each meeting or by telegraphing or telephoning the members not
-6-
<PAGE>
later than one day before the meeting. The notice shall state
the time, date and place of the meeting. Each committee shall
fix its other rules of procedure.
Section 4. Executive Committee. During the interval
-------------------
between meetings of the Board of Directors, the Executive
Committee shall have and may exercise all the powers and
authority of the Board of Directors, to act upon any matters
which, in the opinion of the Chairman of the Board, should not
be postponed until the next previously scheduled meeting of the
Board of Directors; but, to the extent prohibited by law, shall
not have the power or authority of the Board of Directors in
reference to amending the Certificate of Incorporation of the
Company (except that the Committee may, to the extent
authorized in the resolutions providing for the issuance of
shares of stock adopted by the Board of Directors fix the
designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any
distribution of assets of the Company or the conversion into,
or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class
or classes of stock of the Company or fix the number of shares
of any series of stock or authorize the increase or decrease of
the shares of any series), adopting an agreement of merger or
consolidation for the Company, recommending to the shareholders
of the Company the sale, lease or exchange of all or
substantially all of the Company's property and assets,
recommending to the shareholders a dissolution of the Company
or a revocation of a dissolution, or amending the By-Laws of
the Company. The Executive Committee shall have the power and
authority to authorize the issuance or sale of the capital
stock of the Company.
Section 5. Audit Committee. The Audit Committee shall
---------------
have the power to recommend to the Board of Directors the
selection and engagement of independent accountants to audit
the books and accounts of the Company and the discharge of the
independent accountants. The Audit Committee shall review the
scope of the audits as recommended by the independent accoun-
tants, the scope of the internal auditing procedures of the
Company and the system of internal accounting controls and
shall review the reports to the Audit Committee of the inde-
pendent accountants and the internal auditors.
Section 6. Compensation Committee. The Compensation
----------------------
Committee shall have the powers and authorities vested in it by
the incentive, stock option and similar plans of the Company.
The Compensation Committee shall have the power to approve,
disapprove, modify or amend all plans designed and intended to
provide compensation primarily for officers of the Company.
The Compensation Committee shall review, fix and determine from
time to time the salaries and other remunerations of all
officers of the Company.
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Section 7. Committee on Directors. The Committee on
----------------------
Directors shall have the power to recommend candidates for
election to the Board of Directors and shall consider nominees
for directorships submitted by shareholders. The Committee on
Directors shall consider issues involving potential conflicts
of interest of directors and committee members and recommend
and review all matters relating to fees and retainers paid to
directors, committee members and committee chairmen.
Section 8. Public Issues Review Committee. The Public
------------------------------
Issues Review Committee shall have the power to review Company
policy and practice relating to significant public issues of
concern to the shareholders, the Company, the business
community and the general public. The Committee may also
review management's position on shareholder proposals involving
issues of public interest to be presented at annual or special
meetings of shareholders.
Section 9. Retirement Plan Review Committee. The
--------------------------------
Retirement Plan Review Committee shall have the power to review
the administration of all employee retirement plans for the
Company and the financial condition of all trusts and other
funds established pursuant to such plans. The Retirement Plan
Review Committee shall also have the power to recommend to the
Board of Directors the adoption or amendment of any employee
retirement plan of the Company.
ARTICLE IV
NOTICE AND WAIVER OF NOTICE
Section 1. Notice. Any notice required to be given to
------
shareholders or directors under these By-Laws, the Certificate
of Incorporation or by law may be given by mailing the same,
addressed to the person entitled thereto, at such person's last
known post office address and such notice shall be deemed to be
given at the time of such mailing.
Section 2. Waiver of Notice. Whenever any notice is
----------------
required to be given under these By-Laws, the Certificate of
Incorporation or by law, a waiver thereof, signed by the person
entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the ex-
press purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be trans-
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acted at, nor the purpose of any regular or special meeting of
the shareholders, directors or a committee of directors need be
specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. Officers of the Company. The officers of the
-----------------------
Company shall be selected by the Board of Directors and shall
be a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Board of Directors may elect a Controller and
one or more of the following: Senior Executive Vice President,
Executive Vice President, Senior Vice President, Assistant Vice
President, Assistant Secretary, Associate Treasurer, Assistant
Treasurer, Associate Controller and Assistant Controller. Two
or more offices may be held by the same person.
The Company may have a Chief Executive Officer who shall
be appointed by the Board of Directors and who, subject to the
overall direction and supervision of the Board of Directors and
Committees thereof, shall be in general charge of the affairs
of the Company and shall consult with and advise the Board of
Directors and committees thereof on the business and the
affairs of the Company.
The Company may have a Chief Operating Officer who shall
be appointed by the Board of Directors and who, subject to the
overall direction and supervision of the Chief Executive
Officer, shall be in general charge, control and supervision
over the administration and operations of the Company and shall
have such other duties and powers as may be imposed or given by
the Board of Directors.
The Company may have a General Counsel who shall be
appointed by the Board of Directors and shall have general
supervision of all matters of a legal nature concerning the
Company, unless the Board of Directors has also appointed a
General Tax Counsel, in which event the General Tax Counsel
shall have general supervision of all tax matters of a legal
nature concerning the Company.
The Company may have a Chief Financial Officer who shall
be appointed by the Board of Directors and shall have general
supervision over the financial affairs of the Company. The
Company may also have a Director of Internal Audit who shall be
appointed by the Board of Directors.
Section 2. Election of Officers. At the first meeting of
--------------------
the Board of Directors after each annual meeting of share-
holders, the Board of Directors shall elect the officers. From
time to time the Board of Directors may elect other officers.
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Section 3. Tenure of Office; Removal. Each officer shall
-------------------------
hold office until the first meeting of the Board of Directors
after the annual meeting of shareholders following the
officer's election and until the officer's successor is elected
and qualified or until the officer's earlier resignation or
removal. Each officer shall be subject to removal at any time,
with or without cause, by the affirmative vote of a majority of
the entire Board of Directors.
Section 4. President. The President shall have such
---------
powers and perform such duties as may be assigned by the Board
of Directors or by the Chairman of the Board of Directors. In
the absence or disability of the President, his or her duties
shall be performed by such Vice Presidents as the Chairman of
the Board of Directors or the Board of Directors may designate.
The President shall have the power to make and execute
contracts on the Company's behalf and to delegate such power to
others.
Section 5. Vice Presidents. Each Vice President shall
---------------
have such powers and perform such duties as may be assigned to
the Vice President by the Board of Directors or the President.
Each Vice President shall have the power to make and execute
contracts on the Company's behalf.
Section 6. Assistant Vice Presidents. An Assistant Vice
-------------------------
President shall perform such duties as may be assigned to him
by the Board of Directors, the President or any Vice President.
Section 7. Secretary. The Secretary shall keep minutes
---------
of all meetings of the shareholders and of the Board of
Directors, and shall keep, or cause to be kept, minutes of all
meetings of Committees of the Board of Directors, except where
such responsibility is otherwise fixed by the Board of
Directors. The Secretary shall issue all notices for meetings
of the shareholders and Board of Directors and shall have
charge of and keep the seal of the Company and shall affix the
seal attested by the Secretary's signature to such instruments
or other documents as may properly require same. The Secretary
shall cause to be kept such books and records as the Board of
Directors, the Chairman of the Board of Directors or the
President may require; and shall cause to be prepared, re-
corded, transferred, issued, sealed and cancelled certificates
of stock as required by the transactions of the Company and its
shareholders. The Secretary shall attend to such correspond-
ence and such other duties as may be incident to the office of
the Secretary or assigned to him by the Board of Directors or
the President.
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In the absence of the Secretary, an Assistant Secretary is
authorized to assume the duties herein imposed upon the Secre-
tary and any Assistant Secretary or other duly authorized
officer may affix the seal of the Company to such instruments
or other documents as may require the same.
Section 8. Treasurer. The Treasurer shall perform all
---------
duties and acts incident to the position of Treasurer, shall
have custody of the Company funds and securities, and shall
deposit all money and other valuable effects in the name and to
the credit of the Company in such depositories as may be
designated by the Board of Directors. The Treasurer shall
disburse the funds of the Company as may be authorized, taking
proper vouchers for such disbursements, and shall render to the
Board of Directors, whenever required, an account of all the
transactions of the Treasurer and of the financial condition of
the Company. The Treasurer shall vote all of the stock owned
by the Company in any corporation and may delegate that power
to others. The Treasurer shall perform such other duties as
may be assigned to the Treasurer by the Board of Directors, the
President or the Chief Financial Officer and shall report to
the Chief Financial Officer or, in the absence of the Chief
Financial Officer, to the President.
In the absence of the Treasurer, an Assistant Treasurer is
authorized to assume the duties herein imposed upon the Trea-
surer.
Section 9. Controller. The Controller shall keep or
----------
cause to be kept in the books of the Company provided for that
purpose a true account of all transactions and of the assets
and liabilities of the Company. The Controller shall prepare
and submit to the Chief Financial Officer or, in the absence of
the Chief Financial Officer, to the President, such financial
statements and schedules as may be required to keep the
Chairman of the Board of Directors, the President and the Chief
Financial Officer currently informed of the operations and
financial condition of the Company, and perform such other
duties as may be assigned by the Chief Financial Officer, or
the President.
In the absence of the Controller, an Assistant Controller
is authorized to assume the duties herein imposed upon the
Controller.
Section 10. Director of Internal Audit. The Director of
--------------------------
Internal Audit shall cause to be performed, and have general
supervision over, auditing activities of the financial transac-
tions of the Company, including the coordination of such
auditing activities with the independent accountants of the
Company and shall perform such other duties as may be assigned
to him from time to time. The Director of Internal Audit shall
report to the Chief Executive Officer or, in the absence of the
Chief Executive Officer, to the President. From time to time
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at the request of the Audit Committee, the Director of Internal
Audit shall inform that Committee of the auditing activities of
the Company.
ARTICLE VI
RESIGNATIONS; FILLING OF VACANCIES
Section 1. Resignations. Any director, member of a
------------
committee, or officer may resign at any time. Such resignation
shall be made in writing and shall take effect at the time
specified therein, and, if no time be specified, at the time of
its receipt by the Chairman of the Board of Directors or the
Secretary. The acceptance of a resignation shall not be
necessary to make it effective.
Section 2. Filling of Vacancies. If the office of any
director becomes vacant, the directors then in office, although
less than a quorum, or, if the number of directors is in-
creased, the directors then in office, may elect any qualified
person to fill such vacancy. In the case of a vacancy in the
office of a director caused by an increase in the number of
directors, the person so elected shall hold office until the
next annual meeting of shareholders, or until his successor
shall be elected and qualified. In the case of a vacancy in
the office of a director resulting otherwise than from an
increase in the number of directors, the person so elected to
fill such vacancy shall hold office for the unexpired term of
the director whose office became vacant. If the office of any
officer becomes vacant, the Chairman of the Board of Directors
may appoint any qualified person to fill such vacancy tempo-
rarily until the Board of Directors elects any qualified person
for the unexpired portion of the term. Such person shall hold
office for the unexpired term and until the officer's successor
shall be duly elected and qualified or until the officer's
earlier resignation or removal.
ARTICLE VII
CAPITAL STOCK
Section 1. Form and Execution of Certificates. The
----------------------------------
certificates of shares of the capital stock of the Company
shall be in such form as shall be approved by the Board of
Directors. The certificates shall be signed by the Chairman of
the Board of Directors or the President, or a Vice President,
and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer. Each certificate of stock shall
certify the number of shares owned by the shareholder in the
Company.
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A facsimile of the seal of the Company may be used in
connection with the certificates of stock of the Company, and
facsimile signatures of the officers named in this Section may
be used in connection with said certificates. In the event any
officer whose facsimile signature has been placed upon a certi-
ficate shall cease to be such officer before the certificate is
issued, the certificate may be issued with the same effect as
if such person were an officer at the date of issue.
Section 2. Record Ownerships. All certificates shall be
-----------------
numbered appropriately and the names of the owners, the number
of shares and the date of issue shall be entered in the books
of the Company. The Company shall be entitled to treat the
holder of record of any share of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in any share on the
part of any other person, whether or not it shall have express
or other notice thereof, except as required by the laws of
Delaware.
Section 3. Transfer of Shares. Upon surrender to the
------------------
Company or to a transfer agent of the Company of a certificate
for shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, it shall be
the duty of the Company, if it is satisfied that all provisions
of law regarding transfers of shares have been duly complied
with, to issue a new certificate to the person entitled there-
to, cancel the old certificate and record the transaction upon
its books.
Section 4. Lost, Stolen or Destroyed Stock Certificates.
--------------------------------------------
Any person claiming a stock certificate in lieu of one lost,
stolen or destroyed shall give the Company an affidavit as to
such person's ownership of the certificate and of the facts
which prove that it was lost, stolen or destroyed. The person
shall also, if required by the Treasurer or Secretary of the
Company, deliver to the Company a bond, sufficient to indemnify
the Company against any claims that may be made against it on
account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate. Any Vice
President or the Secretary or any Assistant Secretary of the
Company is authorized to issue such duplicate certificates or
to authorize any of the transfer agents and registrars to issue
and register such duplicate certificates.
Section 5. Regulations. The Board of Directors from time
-----------
to time may make such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of
shares.
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Section 6. Transfer Agent and Registrar. The Board of
----------------------------
Directors may appoint such transfer agents and registrars of
transfers as it may deem necessary, and may require all stock
certificates to bear the signature of either or both.
ARTICLE VIII
SEAL
The Board of Directors shall provide a suitable seal
containing the name of the Company, the year "1986", and the
words, "CORPORATE SEAL, DELAWARE," or other appropriate words.
The Secretary shall have custody of the seal.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Company for each year shall end on
December 31 in each year or shall end on such other date as may
be determined by the Audit Committee from time to time.
ARTICLE X
AMENDMENTS
Section 1. Directors may Amend By-Laws. The Board of
---------------------------
Directors shall have the power to make, amend and repeal the
By-Laws of the Company at any regular or special meeting of the
Board of Directors.
Section 2. By-Laws Subject to Amendment by Shareholders.
--------------------------------------------
All By-Laws shall be subject to amendment, alteration, or
repeal by the shareholders entitled to vote at any annual
meeting or at any special meeting.
ARTICLE XI
EMERGENCY BY-LAWS
Section 1. Emergency By-Laws. This Article XI shall be
-----------------
operative during any emergency resulting from an attack on the
United States or on a locality in which the Company conducts
its business or customarily holds meetings of its Board of
Directors or its shareholders, or during any nuclear or atomic
disaster or during the existence of any catastrophe or other
similar emergency condition, as a result of which a quorum of
the Board of Directors or the Executive Committee thereof
cannot be readily convened (an "emergency"), notwithstanding
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any different or conflicting provision in the preceding
Articles of these By-Laws or in the Certificate of
Incorporation of the Company. To the extent not inconsistent
with the provisions of this Article, the By-Laws provided in
the preceding Articles and the provisions of the Certificate of
Incorporation of the Company shall remain in effect during such
emergency, and upon termination of such emergency, the
provisions of this Article XI shall cease to be operative.
Section 2. Meetings. During any emergency, a meeting of
--------
the Board of Directors, or any committee thereof, may be called
by any officer or director of the Company. Notice of the time
and place of the meeting shall be given by any available means
of communication by the person calling the meeting to such of
the directors and/or Designated Officers, as defined in
Section 3 hereof, as it may be feasible to reach. Such notice
shall be given at such time in advance of the meeting as, in
the judgment of the person calling the meeting, circumstances
permit.
Section 3. Quorum. At any meeting of the Board of
------
Directors, or any committee thereof, called in accordance with
Section 2 of this Article XI, the presence or participation of
two directors, one director and a Designated Officer or two
Designated Officers shall constitute a quorum for the
transaction of business.
The Board of Directors or the committees thereof, as the
case may be, shall, from time to time but in any event prior to
such time or times as an emergency may have occurred, designate
the officers of the Company in a numbered list (the "Designated
Officers") who shall be deemed, in the order in which they
appear on such list, directors of the Company for purposes of
obtaining a quorum during an emergency, if a quorum of
directors cannot otherwise be obtained.
Section 4. By-Laws. At any meeting called in accordance
-------
with Section 2 of this Article XI, the Board of Directors or
the committees thereof, as the case may be, may modify, amend
or add to the provisions of this Article XI so as to make any
provision that may be practical or necessary for the
circumstances of the emergency.
Section 5. Liability. No officer, director or employee
---------
of the Company acting in accordance with the provisions of this
Article XI shall be liable except for willful misconduct.
Section 6. Repeal or Change. The provisions of this
----------------
Article XI shall be subject to repeal or change by further
action of the Board of Directors or by action of the share-
holders, but no such repeal or change shall modify the
provisions of Section 5 of this Article XI with regard to
action taken prior to the time of such repeal or change.
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