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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 29, 1996
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.)
2500 Windy Ridge Parkway, Suite 700
Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
770-989-3000
(Registrant's telephone number, including area code)
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
123,325,633 Shares of $1 Par Value Common Stock as of May 6, 1996
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<PAGE>
COCA-COLA ENTERPRISES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 29, 1996
INDEX
Page
----
Part I - Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the
Quarters ended March 29, 1996 and March 31, 1995......... 1
Condensed Consolidated Balance Sheets as of March 29, 1996
and December 31, 1995.................................... 2
Condensed Consolidated Statements of Cash Flows for the
Quarters ended March 29, 1996 and March 31, 1995......... 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 4. Submission of Matters to a Vote of Security
Holders.................................................... 15
Part II - Item 6. Exhibits and Reports on Form 8-K........... 16
Signatures................................................... 17
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions except per share data)
Quarter ended
-------------------------
March 29, March 31,
1996 1995
--------- ---------
Net Operating Revenues................ $ 1,600 $ 1,462
Cost of sales......................... 970 901
------- -------
Gross Profit.......................... 630 561
Selling, general and administrative
expenses............................ 539 485
------- -------
Operating Income...................... 91 76
Interest expense, net................. 79 80
Gain from sale of ownership interest
in bottling operation............... - 9
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Income Before Income Taxes............ 12 5
Income tax expense.................... 5 2
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Net Income............................ 7 3
Preferred stock dividends............. 2 1
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Net Income Applicable to Common
Share Owners........................ $ 5 $ 2
======= =======
Average Common Shares Outstanding..... 126 129
======= =======
Net Income Per Share Applicable to
Common Share Owners................. $ 0.04 $ 0.02
======= =======
Dividends Per Share Applicable to
Common Share Owners................. $ 0.025 $0.0125
======= =======
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
March 29, December 31,
ASSETS 1996 1995
--------- ------------
(Unaudited)
Current
Cash and cash equivalents, at cost
approximating market............... $ 16 $ 8
Trade accounts receivable, less reserves
of $35 and $33, respectively....... 502 510
Inventories:
Finished goods..................... 190 151
Raw materials and supplies......... 84 74
------ ------
274 225
Current deferred income taxes........ 130 130
Prepaid expenses and other current
assets............................. 104 109
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Total Current Assets................. 1,026 982
Property, Plant and Equipment
Land................................. 183 182
Buildings and improvements........... 716 700
Machinery and equipment.............. 2,850 2,774
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3,749 3,656
Less allowances for depreciation..... 1,657 1,587
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2,092 2,069
Construction in progress............. 96 89
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2,188 2,158
Franchise and Other Noncurrent Assets 6,364 5,924
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$9,578 $9,064
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See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)
March 29, December 31,
LIABILITIES AND SHARE-OWNERS' EQUITY 1996 1995
--------- ------------
(Unaudited)
Current
Accounts payable and accrued expenses.... $ 818 $ 796
Current maturities of long-term debt..... 125 63
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Total Current Liabilities................ 943 859
Long-Term Debt........................... 4,356 4,138
Retirement and Insurance Programs and
Other Long-Term Obligations............ 600 600
Deferred Income Taxes.................... 2,204 2,032
Share-Owners' Equity
Preferred stock.......................... 183 30
Common stock, $1 par value -- Authorized
- 500,000,000 shares; Issued -
145,365,359 and 145,094,936 shares,
respectively........................... 145 145
Paid-in capital.......................... 1,356 1,346
Reinvested earnings...................... 146 144
Cumulative effect of currency
translations........................... 32 38
Common stock in treasury, at cost
(21,042,257 and 16,543,458 shares,
respectively).......................... (387) (268)
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1,475 1,435
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$9,578 $9,064
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<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Quarter ended
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March 29, March 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................. $ 7 $ 3
Adjustments to derive net cash provided
by operating activities:
Depreciation............................. 86 76
Amortization............................. 50 45
Deferred income tax provision............ (13) (4)
Gain from sale of ownership interest
in bottling operation.................. - (9)
Net changes in current assets and
current liabilities.................... (36) (46)
Additional nonoperating cash flows....... 8 (1)
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Net cash provided by operating activities.. 102 64
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures....................... (96) (134)
Fixed asset dispositions................... 10 3
Investments in bottling and other
businesses, net of cash acquired......... (144) (148)
Sale of ownership interest in bottling
operations............................... - 17
Additional investing activities............ - 6
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Net cash used in investing activities...... (230) (256)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt.......................... 303 200
Settlements of debt obligations........... (47) (6)
Cash dividend payments on common and
preferred stock......................... - (2)
Exercise of employee stock options........ 4 4
Stock purchases for treasury.............. (118) (9)
Additional financing activities........... (6) (4)
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Net cash provided by financing activities. 136 183
------ ------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS........................ 8 (9)
Cash and cash equivalents at beginning
of period............................... 8 22
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16 $ 13
====== ======
See Notes to Condensed Consolidated Financial Statements.
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<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 (GAAP) for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements and
footnotes included in the Coca-Cola Enterprises Inc. annual report on Form
10-K, for the year ended December 31, 1995.
Note B - Seasonality of Business
Operating results for the first quarter ended March 29, 1996 are not indica-
tive of results that may be expected for the year ended December 31, 1996,
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 and Divestitures
On February 21, 1996, the Company acquired all the issued and outstanding
shares of stock of the Ouachita Coca-Cola Bottling Company, Inc.("Ouachita")
for a total transaction value (purchase price plus issued and assumed debt)
of approximately $313 million. The purchase price was paid in a combination
of cash, 26,311 shares of the Company's common stock from treasury, and two
types of convertible preferred stock (refer to Note E) as selected by
individual Ouachita share owners. The acquisition was accounted for using
the purchase method of accounting for acquisitions.
In January 1995, the Company acquired all the issued and outstanding shares
of stock of the Wichita Coca-Cola Bottling Company, Inc. ("Wichita") for a
purchase price of $157 million in cash. The acquisition was accounted for
using the purchase method of accounting for acquisitions. Also in January
1995, the Company sold its 50% ownership interest in The Coca-Cola Bottling
Company of the Mid South ("Mid South") to Ouachita for $17 million. This
sale resulted in a pre-tax gain of $9 million ($0.04 per common share after
taxes). The Company's interest in Mid-South was reacquired as a result of
the Ouachita acquisition.
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<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note C - Acquisitions and Divestitures (continued)
In December 1995, the Company announced preliminary discussions for the
acquisition of The Coca-Cola Company's bottling and canning operations in
France and Belgium. These franchise territories include approximately 90%
of the population of France and all of the population of Belgium.
Note D - Long-Term Debt
Long-term debt including current maturities consists of the following (in
millions):
March 29, December 31,
1996 1995
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Commercial Paper.................... $1,080 $ 777
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
8.35% Zero Coupon Notes, due 2020
(net of unamortized discount of
$1,666).......................... 266 261
8.00% and 8.50% Debentures, due
2022.............................. 1,000 1,000
6.75% Debentures, due 2023.......... 250 250
Additional debt..................... 231 259
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$4,481 $4,201
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Aggregate maturities of long-term debt for the five twelve-month periods
subsequent to March 29, 1996 are as follows: 1997 - $125 million; 1998 -
$311 million; 1999 - $7 million; 2000 - $1,203 million; and 2001 - $3
million.
The Company's commercial paper program is supported by $1 billion revolving
bank credit agreement maturing in December 1999 and $400 million of short-
term credit facilities. An aggregate $1,080 million of commercial paper
supported by these agreements was outstanding at March 29, 1996. The
weighted average interest rate of borrowings under the commercial paper
program at March 29, 1996 was 5.3% per annum.
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<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note E - Preferred Stock
In connection with the acquisition of Ouachita on February 21, 1996, the
Company authorized 1,110,000 shares and issued 923,413 shares of voting
convertible preferred stock, Ouachita Series A ("Series A") and authorized
350,000 shares and issued 95,880 shares of voting convertible preferred
stock, Ouachita Series B ("Series B"). Series A has a stated value of $150
per share and pays a quarterly cumulative dividend of 4% per year. Series B
has a stated value of $150 per share and pays no dividends. The Series A
and Series B shares convert to common stock no later than two years
from date of issuance based on specific conversion ratios applicable
independently to each series.
Note F - Income Taxes
The Company's effective tax rates for the first quarters of 1996 and 1995
were 43% and 44%, 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
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March 29, March 31,
1996 1995
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Statutory expense - 35%.......... $ 4 $ 2
State expense, net of federal.... 1 -
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$ 5 $ 2
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Note G - Stock Options and Other Stock Plans
The Company's 1996 stock option awards provide for performance-vested
options granted to the chief executive officer and certain senior
executives, and service-vested options for certain executives and other
management employees. Performance-vested options become exercisable solely
upon attainment of certain increases in the Company's common stock within
five years from the date of grant. Service-vested options for certain
executives and other management are granted at an exercise price of 100% of
the fair market value on grant date; vest ratably over a three year period;
and expire ten years from the date of grant. An aggregate 1,283,600 perfor-
mance vested options and 636,700 service-vested options with an option
price of $27.06 were granted in the first quarter of 1996. Additionally,
an aggregate 270,423 shares of common stock were issued during the first
quarter of 1996 as a result of the exercise of stock options under the
Company's various stock option plans.
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<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note G - Stock Options and Other Stock Plans (continued)
The Company's 1996 restricted stock awards provide for awards to certain key
executives of the Company. The 1996 stock awards 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. In the first quarter of 1996, an aggregate
1,085,000 shares of common stock were awarded under the 1996 restricted
stock awards program. The 1996 grants were a one-time award representing
three years of grants, and the executives will not receive restricted stock
in 1997 or 1998. Stock awards were issued in April 1996. Additionally, an
aggregate 42,710 restricted shares which had been awarded under various
restricted stock award plans of the Company were forfeited during the first
quarter of 1996 and returned to treasury stock.
Note H - Share Repurchase Program
The Company repurchased 4,482,400 shares of common stock during the first
quarter of 1996 for an aggregate cost of approximately $118 million, repre-
senting cumulative repurchases of 7,904,100 shares under its 10 million
August 1994 share repurchase program. In April 1996,the Company repurchased
2,095,900 shares for $65 million, completing the August 1994 program. On
April 11, 1996, the Board of Directors approved a new share repurchase
program authorizing the repurchase of up to 10 million shares of the
Company's common stock.
Note I - Contingencies
The Company purchases substantially all of its PET (plastic) bottles from
certain bottling cooperatives and other entities involved in the manufac-
ture of plastic bottles. The Company has guaranteed payment of up to $240
million of indebtedness owed by these bottling cooperatives to third
parties. At March 29, 1996, these manufacturers had approximately $160
million of indebtedness outstanding guaranteed by the Company. In addition,
the Company has provided letters of credit aggregating approximately $92
million, primarily in connection with self-insurance programs.
The Company incurs costs for the required removal, replacement, or modifi-
cation of underground fuel storage tanks, and any required soil and ground
water remediation resulting from leaking tanks. Ongoing environmental
compliance costs, including routine maintenance, monitoring, and similar
costs, are not significant. The Company also incurs costs on 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 previously funded or accrued as an expense would not
have a material adverse effect on its financial position, cash flows, or
results of operations.
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<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note I - Contingencies (continued)
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. The Company believes that any ultimate Superfund liability will not
have a material adverse effect on its financial position, cash flows, or
results of operations. At March 29, 1996, there were four federal sites
for which the Company's involvement or liability as a PRP was unresolved.
In addition, there were 16 other federal and five state sites for which it
has been concluded that the Company either had no responsibility, the
ultimate liability amounts would be less than $100,000 or payments made to
date by the Company would be sufficient to satisfy all liability of the
Company.
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
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 when compared to amounts deposited by
financially solvent PRPs.
In March 1996, the Company was awarded a settlement of approximately $10
million ($0.05 per common share after taxes) from claims against certain
suppliers. The amount of the settlement award is included in cost of sales.
- 9 -
<PAGE>
Part I. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OPERATIONS REVIEW
Business Strategy
Our greatest challenge is maintaining and accelerating our current operat-
ing momentum while directing our cash resources toward profitable high-
return projects. To ensure a continued focus on building share-owner value,
we have clearly defined operating and financial objectives and strategies.
Our primary operating objective is to increase long-term operating cash
flows through profitable increases in sales volume. We plan to achieve our
operating objective through the continued implementation and execution of
the following strategies:
- Creating and executing innovative and superior marketing programs
at the local level.
- Balancing volume growth with improved margins and sustainable
increases in market share.
- Developing profitable business partnerships with our customers.
- Increasing our investment in high-profit, high-volume distribution
channels such as cold drink.
- Providing financial incentives to our employees which increase
their focus on enhancing share-owner value.
Our primary financial objective is to deliver a superior return on invest-
ment to our share owners. We plan to achieve this objective through the
continued implementation and execution of the following strategies:
- Maintaining a capital structure which maximizes our financial
flexibility, given current investment opportunities.
- Identifying and acquiring territories that result in long-term
value.
- Allocating resources appropriately between capital expenditures,
infrastructure, share repurchases, acquisitions, and debt repayment.
-10-
<PAGE>
Operations Overview
In the opinion of management, the most meaningful comparison of operating
results adjusts for the impact of acquisitions and excludes one-time items.
Accordingly, "comparable" results in the following discussions represent
the following:
* 1996 operating results (i) adjusted for the impact from acquisition
of Ouachita Coca-Cola Bottling Company ("Ouachita") on February 21,
1996 (refer to Note C), and (ii) excluding the favorable claims
settlement in first-quarter 1996 (refer to Note I).
* 1995 operating results (i) adjusted for the impact from acquisition
of Wichita Coca-Cola Bottling Company ("Wichita") on January 27, 1995
(refer to Note C), and (ii) excluding the gain from sale of Coca-Cola
Bottling Company of the Mid South ("Mid South") in first-quarter 1995
(refer to Note C).
Gross profit margins increased to 38.8% of net revenues in the first quarter
of 1996 (excluding the favorable supplier claims settlement) from 37% in the
most recent quarter (fourth-quarter 1995) and from 38.4% in the same prior
year period. Actual and comparable operating income in the first quarter of
1996 increased 19% and 4%, respectively, over the first quarter of 1995.
Actual and comparable net income margins improved over fourth-quarter
1995, reflecting our solid operating performance, favorable net interest
expense as a percent of net revenues, and a lower effective tax rate.
First-quarter 1996 net income per common share of $0.04 increased 100% over
first-quarter 1995 net income per common share of $0.02. Comparable 1996 net
income per share reflects a loss per share of $0.01 which compares favorably
to the first-quarter 1995 comparable net loss per common share of $0.02.
Cash Operating Profit
Cash operating profit (operating income before reductions for depreciation
and amortization expense) is one of the key standards by which management
measures the Company's performance. This measure is provided as a supplement,
not an alternative, to operating income as an indicator of operating perfor-
mance, and cash flows from operating activities as a measure of liquidity,
each as determined in accordance with generally accepted accounting
principles. Actual and comparable cash operating profit for first-quarter
1996 increased 15% and 8%, respectively, over first-quarter 1995.
Net Operating Revenues -- Volume and Price
Actual and comparable net operating revenues for the first quarter of 1996
and 1995, increased approximately 9% and 8%, respectively, over the same
prior-year period primarily as a result of 10 1/2% and 8 1/2% increases in
bottle/can physical case sales volume, respectively.
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<PAGE>
Net Operating Revenues -- Volume and Price (continued)
Strong first-quarter 1996 volume growth results from substantial growth in
Coca-Cola classic and Sprite brands, particularly in the plastic contour
Coca-Cola classic packaging and the plastic Sprite proprietary package.
Sprite remains one of the fastest growing soft drinks in the domestic
market, with first-quarter 1996 growth rates significantly outpacing strong
full-year 1995 performance.
Cost of Sales
Bottle/can cost of sales per case for first-quarter 1996 increased 2% from
first-quarter 1995, excluding the favorable supplier settlement in 1996
which reduced cost of sales in the period. This increase was primarily due
to lower costs per case in first-quarter 1995 as a result of the buildup of
inventory at year-end 1994 in anticipation of increased aluminum costs.
Cost of sales per case for the remainder of 1996 are expected to be up
slightly from 1995 levels.
Selling, General and Administrative Expenses
Comparable selling, general, and administrative expenses increased approxi-
mately 10% for first-quarter 1996 when compared to the same period in 1995.
This increase principally results from the acquisition of Ouachita in
February 1996 and increased selling and delivery infrastructure investments
associated with cold drink channel development and noncarbonated product
introductions. Selling, general, and administrative expenses as a percent
of sales increased from 33.1% of sales for first-quarter 1995 to 33.7% of
sales for first-quarter 1996.
Interest Expense
The weighted average interest rate for the first quarters of 1996 and 1995
was 7.5%. Given the current rate environment, we anticipate that net
interest expense will increase approximately 4% to 7% for full-year 1996
due to a higher debt balance resulting from the Ouachita acquisition and
share repurchase activity.
Income Taxes
The Company's effective tax rates for the first quarter of 1996 and 1995
were 43% and 44%, respectively. The decrease in the 1996 effective tax rate
primarily reflects expectations for higher full-year pre-tax earnings in
1996 when compared to expectations in first-quarter 1995.
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<PAGE>
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 share-owner dividends.
Long-term Capital Resources: We have available for issuance $1.5 billion in
debt securities under a shelf registration statement with the Securities
and Exchange Commission. We also have equity and debt securities markets
available to us as sources for long-term financing facilities.
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 $1
billion revolving bank credit agreement maturing in December 1999 and $400
million of short-term credit facilities. An aggregate $1.1 billion of
commercial paper borrowings supported by these agreements was outstanding
at March 29, 1996. The Company intends to refinance borrowings under its
commercial paper program through long-term financing facilities.
Summary of Cash Activities
Cash and cash equivalents increased approximately $8 million in the first
quarter of 1996. Our principal sources of cash consisted of those provided
from operations of $102 million and the issuance of debt aggregating $303
million. Our primary uses of cash were capital expenditures totaling $96
million, share repurchases aggregating $118 million, and the acquisition of
Ouachita for a cash cost of $144 million (net of cash acquired).
Operating Activities: Net cash provided by operating activities increased
in first-quarter 1996 when compared to first-quarter 1995. The higher
depreciation expense in 1996 results from the effects of increased 1995
capital spending and the acquisition of Ouachita during first-quarter 1996.
Increased amortization primarily reflects increased franchise amortization
as a result of acquisitions and increased amortization of performance-based
restricted stock and stock options resulting from additional awards during
the first quarter of 1996.
Investing Activities: While our capital expenditures investment decreased
when compared to first-quarter 1995, we continue to expect full-year 1996
capital expenditures to be approximately $550 million.
- 13 -
<PAGE>
Investing Activities (continued)
On February 21, 1996, the Company acquired all the issued and outstanding
shares of stock of Ouachita for a total transaction value (purchase price
plus issued and assumed debt) of approximately $313 million. The purchase
price was paid through a combination of $148 million in cash and debt
pay-offs at closing, shares of the Company's common stock from treasury,
and the issuance of two types of convertible preferred stock, as selected
by individual Ouachita share owners. The Ouachita bottling operations are
located in sections of Arkansas, Louisiana, and Mississippi. The Company
financed the cash portion of the acquisition through the issuance of
commercial paper. On January 27, 1995, the Company acquired all the
issued and outstanding shares of stock of Wichita for a purchase price of
$157 million paid in cash.
In December 1995, the Company announced preliminary discussions with The
Coca-Cola Company for the acquisition of The Coca-Cola Company's bottling
and canning operations and franchise territories in France and Belgium.
These franchise territories include approximately 90% of the population of
France and all of the population of Belgium.
In the past ten years, the Company has acquired a number of bottling
companies for an aggregate purchase price of approximately $6 billion. Our
sources of capital allow us to maintain flexibility to make acquisitions
that offer us opportunities to implement our operating strategies to
achieve an acceptable rate of return. We will purchase additional domestic
and international bottling operations when such acquisitions are expected
to increase long-term share-owner value.
Financing Activities: During the first quarter of 1996 we repurchased
4,482,400 shares of our common stock for a total cost of $118 million. In
April 1996, we purchased an additional 2,095,900 shares of our common stock
for a total cost of $65 million to complete the 10 million August 1994
share repurchase program. On April 11, 1996, the board of directors
approved a new 10 million share repurchase program. Shares will be repur-
chased based on prevailing market conditions in open market and privately
negotiated transactions. Repurchased shares will be available for general
corporate purposes including acquisition financing and the funding of
various employee benefits and compensation plans.
FINANCIAL POSITION
Inventory levels were low at December 31, 1995 as compared to March 29,
1996, primarily as a result of planned depletions of higher-cost 1995
inventories before year end in anticipation of decreases in the price of
aluminum in 1996. The increase in franchise and deferred income taxes
results from the acquisition of Ouachita. The increase in property, plant
and equipment results from capital expenditures of $96 million in first-
quarter 1996 and the acquisition of Ouachita. The increase in long-term
debt results from financing the Ouachita acquisition and share repurchases.
The decrease in the cumulative translation adjustment results from an
increase in the value of the dollar against the Dutch florin during first-
quarter 1996.
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<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 Thursday, April 11, 1996 in
Wilmington, Delaware, at which the election of certain Directors and six
other matters as identified below 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
----------- ----------
John L. Clendenin 116,752,917 550,573
M. Douglas Ivester 116,555,555 747,935
John E. Jacob 116,747,496 555,994
Summerfield K. Johnston, Jr. 116,551,130 752,360
Robert A. Keller 115,300,339 2,003,151
Additional Directors, whose terms of office as Directors continued
after the meeting are as follows:
Term expiring in 1997 Term expiring in 1998
--------------------- ---------------------
Howard G. Buffett L. Phillip Humann
Johnnetta B. Cole E. Neville Isdell
T. Marshall Hahn, Jr. Scott L. Probasco, Jr.
Claus M. Halle Francis A. Tarkenton
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:
- 15 -
<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 1996 Restricted 112,375,518 1,714,479 3,213,493 -
Stock Award Plan
Approve the 1996 Stock 107,175,404 6,919,822 3,207,764 500
Option Plan
Approve the Long-Term 109,071,392 853,945 3,221,147 4,157,006
Incentive Plan
Ratify the appointment of 116,885,630 198,952 218,908 -
Independent Auditors
Create an independent 10,992,960 97,735,280 4,418,844 4,156,406
nominating committee
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 computations Filed Herewith
of ratios
27 Financial Data Schedule Filed Herewith
(b) Reports on Form 8-K:
On January 25, 1996, the Company filed a current report on Form 8-K dated
January 23, 1996, reporting fourth-quarter and full-year 1995 results of
operations and a summary of key financial results.
- 16 -
<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)
/S/ JOHN R. ALM
Date: May 6, 1996 --------------------------------
John R. Alm
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial Officer)
/S/ BERNICE H. WINTER
Date: May 6, 1996 ------------------------------
Bernice H. Winter
Vice President and Controller
(Principal Accounting Officer)
- 17 -
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 29, March 31,
1996 1995
--------- ---------
Computation of Earnings:
Earnings (loss) from continuing operations
before income taxes...................... $ 12 $ 5
Add:
Interest expense......................... 74 82
Amortization of debt
premium/discount and expenses.......... 6 -
Interest portion of rent expense......... 2 2
----- -----
Earnings as Adjusted......................... $ 94 $ 89
===== =====
Computation of Fixed Charges:
Interest expense........................... $ 74 $ 82
Capitalized interest....................... 1 1
Amortization of debt
premium/discount and expenses............ 6 -
Interest portion of rent expense........... 2 2
----- -----
Fixed Charges................................ 83 85
Preferred stock dividends (a).............. 2 1
----- -----
Combined Fixed Charges and Preferred
Stock Dividends............................ $ 85 $ 86
===== =====
Ratio of Earnings to Fixed Charges (b)....... 1.14 1.05
===== =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (b).. 1.10 1.04
===== =====
(a) Preferred stock dividends have been increased to an amount representing
the pretax earnings which would be required to cover such dividend
requirements.
(b) Ratios were calculated prior to rounding to millions.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE FILER FOR THE PERIOD ENDED
MARCH 29, 1996 INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 29, 1996 (COMMISSION FILE NO. 001-9300) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> COCA-COLA ENTERPRISES
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<PERIOD-END> MAR-29-1996
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