<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 7, 1997
(Date of earliest event reported)
COCA-COLA ENTERPRISES INC.
(Exact name of Registrant as specified in its charter)
Delaware 01-09300 58-0503352
(State of (Commission File No.) (IRS Employer
incorporation) Identification No.)
2500 Windy Ridge Parkway, Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 989-3000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The acquisitions of bottlers in New York and Canada by wholly owned
subsidiaries of Coca-Cola Enterprises Inc. (the "Company") are not currently
reportable under Item 2. See the discussion of these acquisitions under Item 5
of this report.
ITEM 5. OTHER EVENTS
Election of Officers
Summerfield K. Johnston, Jr. was elected chairman and chief executive officer
of the Company at a special meeting of the Company's Board of Directors on
October 29, 1997. He was formerly vice chairman and chief executive officer.
John R. Alm was elected executive vice president and chief financial officer,
Lowry F. Kline was elected executive vice president and general counsel, and
Paul M. Gunderson was elected vice president, human resources.
Acquisitions
On August 7, 1997, The Coca-Cola Bottling Company of the Northeast
("Northeast"), a wholly owned subsidiary of the Company, paid Bottling
Investment Holdings, Inc. ("BIH") approximately $328 million for common and
preferred stock of The Coca-Cola Bottling Company of New York, Inc. ("KONY")
owned by BIH. On October 1, 1997, Northeast paid George D. Overend approximately
$500,000 for KONY common stock owned by Mr. Overend. Prior to these purchases,
the Company was a minority stockholder of KONY, having previously acquired KONY
common stock from The Coca-Cola Company on January 4, 1994 for approximately $6
million. The Company is currently in discussions with the remaining minority
stockholders of KONY for the purchase of their common stock.
KONY is a Coca-Cola bottler operating in the New York metropolitan area,
certain other areas in the state of New York, and parts of Connecticut,
Massachusetts, New Hampshire, New Jersey and Vermont.
As a condition to the August 7, 1997 acquisition of the stock of KONY
from Bottling Investment Holdings, Inc., the Company, through its wholly owned
subsidiary, Enterprises KOC Acquisition Company Ltd. ("KOC Acquisition"),
acquired from Coca-Cola Ltd. all of its shares of Coca-Cola Beverages Ltd. ("CC
Beverages") for approximately $243 million. This constituted approximately 48%
of the issued and outstanding shares of CC Beverages. KOC Acquisition
subsequently commenced a tender offer for the balance of the CC Beverages stock,
which was held by public stockholders. This tender offer was successful, and on
September 5, 1997, KOC Acquisition acquired the balance of the shares for
approximately $372 million.
CC Beverages is a Coca-Cola bottler operating throughout Canada, and its sales
represent approximately 95% of The Coca-Cola Company's unit case volume in
Canada.
Financing for the January 4, 1994 acquisition of KONY stock from The Coca-Cola
Company came from the proceeds of
<PAGE> 3
commercial paper; subsequent acquisitions of KONY stock were financed by the
Company's issuance of long-term public debt. The acquisition of CC Beverages
stock from Coca-Cola Ltd. was financed by a loan from Canadian Imperial Bank of
Commerce, Citibank Canada and Deutsche Bank Canada. This loan was later
refinanced and additional proceeds were borrowed to finance the purchase of
CC Beverages stock from public stockholders under a credit agreement dated as
of August 29, 1997 with a group of banks composed of Canadian Imperial
Bank of Commerce, Citibank Canada, Deutsche Bank Canada, Royal Bank of
Canada, Bank of America Canada, Texas Commerce Bank National Association,
Credit Suisse First Boston Canada, Nationsbank, The Toronto-Dominion Bank, The
Bank of Nova Scotia, Wachovia Bank of Georgia, ABN AMRO Bank, Banque
Nationale de Paris, Jersey Branch, Banque Nationale de Paris (Luxembourg)
S.A.; Kredietbank N.V., First Chicago NBD Bank, Canada, The Northern Trust
Company, Union Bank of Switzerland (Canada), Bank Brussels Lambert, New York
Branch, and Bank of Montreal.
The Coca-Cola Company owns both Bottling Investment Holdings, Inc. and
Coca-Cola Ltd. Additionally, The Coca-Cola Company owns approximately 44% of
the outstanding shares of the Company. Two Directors of the Company are also
officers of The Coca-Cola Company: E. Neville Isdell is a Senior Vice President
of The Coca-Cola Company and President of its Greater Europe Group and Joseph
R. Gladden, Jr. is a Senior Vice President of The Coca-Cola Company and its
General Counsel. Two other Directors of the Company are former executive
officers of The Coca-Cola Company.
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements of Businesses Acquired:
The Coca-Cola Bottling Company of New York, Inc. Consolidated
Financial Statements - for the years ended December 31, 1996 and
1995:
Consolidated Balance Sheets
Consolidated Statements of Operations and Retained Earnings (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
The Coca-Cola Bottling Company of New York, Inc. Unaudited Condensed
Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of June 27, 1997 and
December 31, 1996
Condensed Consolidated Statements of Operations and Retained Earnings
(Deficit) for the six month periods ended June 27, 1997 and June
28, 1996
Condensed Consolidated Statements of Cash Flows for the six month
periods ended June 27, 1997 and June 28, 1996
Notes to Unaudited Condensed Consolidated Financial Statements
Coca-Cola Beverages Ltd. Consolidated Financial Statements - for the
years ended December 31, 1996, 1995, and 1994:
Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Earnings (Loss) and Retained Earnings
(Deficit)
Consolidated Statements of Changes in Financial Position
Notes to Consolidated Financial Statements
Coca-Cola Beverages Ltd. Unaudited Condensed Consolidated Financial
Statements:
Condensed Consolidated Balance Sheets as of June 28, 1997 and
December 31, 1996
Condensed Consolidated Statements of Earnings for the six month
periods ended June 28, 1997 and June 29, 1996
Condensed Consolidated Statements of Changes in Financial Position
for the six month periods ended June 28, 1997 and June 29, 1996
Notes to Unaudited Condensed Consolidated Financial Statements
(b) Pro Forma Financial Information:
Coca-Cola Enterprises Inc. Pro Forma Combined Condensed Financial
Information - for the six month period ended June 27, 1997 and for
the year ended December 31, 1996 (unaudited):
Introductory Information
Pro Forma Combined Condensed Statements of Operations for the Six
Months Ended June 27, 1997
Pro Forma Combined Condensed Statements of Operations for the
Quarters Ended March 28, 1997 and June 27, 1997
Pro Forma Combined Condensed Statement of Operations for the
Year Ended December 31, 1996
Pro Forma Combined Condensed Statements of Operations for the
Quarters ended March 29, 1996, June 28, 1996, September 27, 1996,
and December 31, 1996
Pro Forma Combined Condensed Balance Sheet as of June 27, 1997
Notes to Unaudited Pro Forma Combined Condensed Financial
Information
(c) Exhibits:
EXHIBIT NO.2.1 Stock Purchase Agreement among The Coca-Cola Bottling
Company of the Northeast, Bottling Investment
Holdings, Inc., Coca-Cola Enterprises Inc. and The
Coca-Cola Company, dated as of August 7, 1997.
EXHIBIT NO.2.2 Stock Purchase Agreement among Enterprises KOC
Acquisition Company Ltd., Coca-Cola Ltd., Coca-Cola
Enterprises Inc. and The Coca-Cola Company, dated as
of August 7, 1997.
EXHIBIT NO.2.3 Stock Purchase Memorandum between George D. Overend
and The Coca-Cola Bottling Company of the Northeast,
dated as of October 1, 1997.
EXHIBIT NO.23.1 Consent of Ernst & Young LLP
EXHIBIT NO.23.2 Consent of Ernst & Young
<PAGE> 5
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 hereunto duly authorized.
COCA-COLA ENTERPRISES INC.
(Registrant)
By: /s/ LOWRY F. KLINE
--------------------------
Name: Lowry F. Kline
Title: Executive Vice President and
General Counsel
Date: November 6, 1997
<PAGE> 6
INDEX TO FINANCIAL STATEMENTS
PAGE
FINANCIAL STATEMENTS NUMBERS
-------------------- -------
The Coca-Cola Bottling Company of
New York, Inc. Consolidated Financial
Statements - for the years
ended December 31, 1996 and 1995:
Consolidated Balance Sheets F-2
Consolidated Statements of Operations and
Retained Earnings (Deficit) F-3
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Financial Statements F-5
Report of Independent Auditors F-21
The Coca-Cola Bottling Company of New York, Inc.
Unaudited Condensed Consolidated Financial
Statements:
Condensed Consolidated Balance Sheets as of June
27, 1997 and December 31, 1996 F-23
Condensed Consolidated Statements of Operations
and Retained Earnings (Deficit) for the six
month periods ended June 27, 1997 and
June 28, 1996 F-24
Condensed Consolidated Statements of Cash Flows
for the six month periods ended June 27, 1997
and June 28, 1996 F-25
Notes to Unaudited Condensed Consolidated
Financial Statements F-26
Coca-Cola Beverages Ltd. Consolidated Financial
Statements: - for the years ended
December 31, 1996, 1995 and 1994:
Auditors' Report F-28
Consolidated Balance Sheets F-29
Consolidated Statements of Earnings (Loss)
and Retained Earnings (Deficit) F-30
Consolidated Statements of Changes
in Financial Position F-31
Notes to Consolidated Financial Statements F-32
Coca-Cola Beverages Ltd. Unaudited Condensed
Consolidated Financial Statements:
Condensed Consolidated Balance Sheets
as of June 28, 1997 and December 31, 1996 F-44
Condensed Consolidated Statements of Earnings
for the six month periods ended June 28,
1997 and June 29, 1996 F-45
Condensed Consolidated Statements of Changes
in Financial Position for the six month
periods ended June 28, 1997 and June 29, 1996 F-46
Notes to Unaudited Condensed Consolidated
Financial Statements F-47
Coca-Cola Enterprises Inc. Pro Forma Combined
Condensed Financial Information - for the six month
period ended June 27, 1997 and for the
year ended December 31, 1996 (unaudited):
Introductory Information PF-1
Pro Forma Combined Condensed Statement of
Operations for the Six Months Ended June 27, 1997 PF-4
Pro Forma Combined Condensed Statements of
Operations for the Quarters Ended March 28, 1997 and
June 27, 1997 PF-6
Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1996 PF-7
Pro Forma Combined Condensed Statements of
Operations for the Quarters Ended March 29, 1996,
June 28, 1996, September 27, 1996 and
December 31, 1996 PF-9
Pro Forma Combined Condensed Balance Sheet
as of June 27, 1997 PF-10
Notes to Unaudited Pro Forma Combined
Condensed Financial Information PF-11
F
<PAGE> 7
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
F-1
<PAGE> 8
FINANCIAL REPORTS
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31
----------------------------
1996 1995
------------ ------------
ASSETS
Current
Cash and cash equivalents $ 19 $ 12,353
Accounts and other receivables 86,157 76,881
Inventories 22,316 30,388
Prepaid expenses and other current assets 3,275 3,280
------------ ------------
Total Current Assets 111,767 122,902
Other non-current assets 24,350 25,942
Property, plant and equipment 189,180 201,923
Intangible assets 209,680 226,252
------------ ------------
$ 534,977 $ 577,019
============ ============
LIABILITIES AND SHAREOWNERS' DEFICIENCY
Current
Accounts payable and accrued expenses $ 119,199 $ 108,874
Current maturities of debt 21,024 23,399
------------ ------------
Total Current Liabilities 140,223 132,273
Commitments and contingencies
(Notes 7, 8 and 15)
Long-term debt 265,379 247,144
Other long-term liabilities 55,920 78,728
Redeemable preferred stock 178,965 160,257
Shareowners' deficiency (105,510) (41,383)
------------ ------------
$ 534,977 $ 577,019
============ ============
See accompanying Notes to Consolidated Financial Statements.
F-2
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FINANCIAL REPORTS
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(In Thousands)
Year ended
December 31
----------------------------
1996 1995
------------ ------------
NET OPERATING REVENUES $ 743,996 $ 706,766
Cost of revenues 468,973 476,343
------------ ------------
GROSS PROFIT 275,023 230,423
Selling, general and administrative
expenses 279,686 263,976
------------ ------------
OPERATING LOSS (4,663) (33,553)
Interest expense 26,108 32,884
Other expenses, net 14,648 234
------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (45,419) (66,671)
Extraordinary loss on extinguishment
of debt - 5,972
------------ ------------
NET LOSS (45,419) (72,643)
Retained earnings (deficit) at beginning
of the year (44,199) 30,414
------------ ------------
(89,618) (42,229)
Dividends and accretion on redeemable
preferred stock 18,708 1,970
------------ ------------
RETAINED DEFICIT AT END OF THE YEAR $ (108,326) $ (44,199)
============ ============
See accompanying Notes to Consolidated Financial Statements.
F-3
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FINANCIAL REPORTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year ended
December 31
----------------------------
1996 1995
------------ ------------
OPERATING ACTIVITIES
Net loss $ (45,419) $ (72,643)
Adjustments to reconcile net loss to
net cash provided by (used
in) operating activities:
Depreciation and amortization 66,326 49,012
Curtailment gain (26,000) -
Write-down of intangible asset
carrying value 13,648 -
Non-cash interest 5,906 4,656
Non-cash portion of extraordinary loss - 4,384
Other 1,546 396
Changes in operating assets
and liabilities:
Accounts and other receivables (9,276) 3,139
Inventories 8,072 (2,960)
Prepaid expenses and other
current assets 5 6,853
Accounts payable and accrued expenses 10,325 (865)
Other long-term liabilities 3,192 1,407
------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 28,325 (6,621)
------------ ------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (35,841) (33,278)
Proceeds from sale of property,
plant and equipment 3,182 -
Distribution conversion costs (5,930) (6,949)
Southeastern Container Cooperative (1,426) (986)
Net increase in other assets (5,442) (2,181)
------------ ------------
NET CASH (USED IN) INVESTING ACTIVITIES (45,457) (43,394)
------------ ------------
FINANCING ACTIVITIES
Borrowings under revolving credit
agreement 36,500 69,000
Payments on obligations to former
distributors (29,233) (24,885)
Financing costs and net change in
other borrowings (2,469) (6,721)
Proceeds from issuance of senior
subordinated notes - 175,000
Proceeds from issuance of redeemable
preferred stock - 160,000
Repayment of debt - (310,180)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,798 62,214
------------ ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (12,334) 12,199
Cash and cash equivalents at
beginning of the year 12,353 154
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR $ 19 $ 12,353
============ ============
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends and accretion on redeemable
preferred stock $ 18,708 $ 1,970
Issuance of capital leases 4,690 8,764
Acquisition of distributor routes 1,330 103,655
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 11
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. THE COMPANY
The Coca-Cola Bottling Company of New York, Inc. ("Company") is a bottler of
products of The Coca-Cola Company, the most popular beverage brands in the
world, together with other licensed soft drink products. The Company operates in
six states located in the Northeastern portion of the United States, and serves
a population base of approximately 24 million.
Prior to 1994, the Company was privately owned by six independent shareowners.
The Coca-Cola Company owned in excess of 50% of the economic and voting shares
of the Company. The remaining portion was owned essentially by large
institutional investors. On January 4, 1994, The Coca-Cola Company sold 37,044
shares of its holdings of Class A Common stock of the Company to Coca-Cola
Enterprises Inc., a publicly held company which is the world's largest bottler
of products of The Coca-Cola Company. This transaction had the effect of
reducing The Coca-Cola Company's ownership interest in the Company to less than
50%.
In November 1995, the Company issued 640,000 shares of non-voting Cumulative
Exchangeable Redeemable Preferred Stock to Coca-Cola Financial Corporation
("CCFC"), a subsidiary of The Coca-Cola Company, giving CCFC a 41.2% economic
ownership interest in the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of the Company and its subsidiary. Significant intercompany accounts
and transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
CASH EQUIVALENTS: Cash equivalents include all highly liquid instruments
purchased with original maturities less than three months.
CONCENTRATIONS OF CREDIT RISK: The Company sells products to chain stores and
other customers primarily in the New York Metropolitan area, upstate New York,
New Jersey and Connecticut and extends credit based on an evaluation of the
customer's financial condition, generally without requiring collateral. Exposure
to losses on receivables is principally dependent on each customer's financial
condition. The Company monitors its exposure to credit losses and maintains
allowances for anticipated losses.
INVENTORIES: Inventories consist of ingredients, packaging and other raw
materials as well as finished beverage goods and are stated at the lower of
cost (first-in, first-out method) or market.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost
less accumulated depreciation. Depreciation expense is computed for financial
reporting purposes using the straight-line method.
F-5
<PAGE> 12
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS: The Company operates under license agreements with The
Coca-Cola Company and certain other licensors of soft drink products. These
agreements include certain production, distribution and marketing performance
obligations and give the Company the right to distribute and sell products of
the licensors within a specified territory. The majority of such core products
are covered by agreements which are perpetual in nature and reflect an ongoing
relationship with The Coca-Cola Company and other licensors.
Intangible assets consist of unamortized values for certain of these license
rights and for goodwill recognized upon the Company's reorganization via a
leveraged buyout in 1981, as well as certain amounts paid in excess of
identifiable assets acquired in the 1995 transaction with certain distributors
in its New York territory. Intangible assets are stated at cost less accumulated
amortization and are being amortized, using the straight-line method, over 40
years.
ENVIRONMENTAL COMPLIANCE AND REMEDIATION: Environmental compliance costs include
ongoing maintenance, monitoring and similar expenditures. Such costs are
expensed as incurred. Environmental remediation costs are accrued when
environmental assessments and/or remedial efforts are probable and the cost can
be reasonably estimated.
MARKETING AND ADVERTISING COSTS: The Company participates in various advertising
and marketing programs with The Coca-Cola Company and other licensors. Certain
of the Company's costs incurred in connection with these programs are
reimbursed. All costs related to advertising and marketing of the Company's
products are expensed in the period incurred or expensed ratably over the fiscal
year on the basis of revenues or certain other applicable performance measures.
Advertising expenses amounted to $7.2 million and $6.8 million in the years
ended December 31, 1996 and 1995, respectively, and were included in selling,
general and administrative expenses.
START-UP COSTS: Certain incremental expenditures directly related to and
incurred during the start-up operational phases of major internal projects,
primarily during conversion of its distribution systems, are deferred and
amortized over future periods. Upon conclusion of the start-up period, these
costs are amortized on a straight-line basis over periods of no more than three
years. Recoverability of these costs is assessed on an ongoing basis.
3. ACCOUNTS AND OTHER RECEIVABLES
(In Thousands)
1996 1995
------------ ------------
Trade accounts receivable $ 77,301 $ 71,974
Due from licensors 10,564 7,409
Other 3,620 1,632
------------ ------------
91,485 81,015
Allowance for doubtful accounts (5,328) (4,134)
------------ ------------
Total accounts and other receivables $ 86,157 $ 76,881
============ ============
F-6
<PAGE> 13
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
4. INVENTORIES
(In Thousands)
1996 1995
------------ ------------
Packaging materials and ingredients $ 7,629 $ 8,662
Finished goods 13,887 20,476
Fountain inventory 800 1,250
------------ ------------
Total inventories $ 22,316 $ 30,388
============ ============
5. PROPERTY, PLANT AND EQUIPMENT
(In Thousands)
1996 1995
------------ ------------
Land and buildings $ 92,293 $ 90,531
Vehicles 50,239 47,514
Machinery and equipment 314,548 295,781
------------ ------------
457,080 433,826
Allowance for depreciation (267,900) (231,903)
------------ ------------
Total property, plant and equipment $ 189,180 $ 201,923
============ ============
Included in property, plant and equipment at December 31, 1996 and 1995 was
$12.4 million and $8.9 million, respectively, of equipment under capital leases,
net of allowance for depreciation.
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
(In Thousands)
1996 1995
------------ ------------
Trade accounts payable $ 26,123 $ 27,272
Accrued employee benefits 14,358 14,629
Accrued insurance 11,500 9,900
Accrued wages and incentives 11,629 6,817
Accrued chain store incentives 9,764 7,832
Accrued restructuring costs 7,276 7,912
Deposits on returnable containers 4,612 4,182
Other accrued expenses 33,937 30,330
------------ ------------
Total accounts payable and accrued expenses $ 119,199 $ 108,874
============ ============
F-7
<PAGE> 14
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
7. ACQUISITIONS AND DIVESTITURES
Commencing in 1995, the Company instituted a Company operated distribution
system in its New York region. Prior to such date, the Company utilized
independent distributors to deliver its products to customers. In 1995, the
Company entered into settlement agreements with over 90% of the distributors
providing for non-interest bearing payments due in annual installments through
1999, which aggregated $121 million. As of December 31, 1996, the Company had
imputed $5.8 million in interest which is being amortized over the term of the
notes. Such payments have been secured by a letter of credit issued under the
Revolving Credit Agreement described in Note 8. The transaction has been
accounted for as an acquisition of the assets of a business and the excess of
the cost over the fair value of the identifiable assets acquired are being
amortized over a forty year period on a straight-line basis. The Company also
purchased the distributors' trucks and vending equipment for an aggregate $7.2
million. Additionally, the Company incurred $5.6 million in distribution
conversion costs which are being amortized over a three year period commencing
in 1995.
On February 2, 1995, a group of 27 New York distributors filed a lawsuit in
connection with the Company's decision not to renew their distribution
contracts. Collectively they demanded $40 million in compensatory damages and
$80 million in punitive damages. On September 11, 1995, the United States
District Court-Southern District of New York dismissed the complaint in its
entirety as to two plaintiffs, and for the other plaintiffs, dismissed all
counts other than a claim for promissory estoppel. The claims of an additional
sixteen plaintiffs have been voluntarily discontinued with prejudice, and seven
of the remaining plaintiffs have agreed in principle to settle their claims,
subject to their obtaining satisfactory releases from their respective secured
creditors. Settlement amounts total $1.9 million, which approximates the
Company's original offer and was accounted for as an addition to the purchase
price. The Company has valid defenses against the claims of the remaining two
plaintiffs and will defend such claims vigorously.
Commencing March 1996, the Company offered to its former New York Distributors
the opportunity to accelerate the payment of scheduled installments due in 1996,
1997 and 1998 pursuant to the 1995 settlement agreements. Fifty-one distributors
elected to participate, thereby reducing $6.1 million of the obligations in
consideration of $5.4 million in cash payments.
The Company utilizes independent distributors to deliver its products to
customers in its New Jersey region. In 1996, the Company reached agreements for
transfer of distribution rights with its New Jersey distributors operating out
of the Carlstadt, Parsippany and Asbury Park sales centers whose distribution
contracts were to expire in 1996. The Company also reached agreements with its
North Brunswick distributors whose distribution contracts were to expire in
August 2000. The agreements call for a transition from independent distribution
to employee-based operations in the first quarter of 1997. The agreements also
call for non-interest bearing annual payments over a four year period in the
aggregate amount of $77 million, subject to certain conditions. The non-interest
bearing payments will be secured by irrevocable letters of credit. The Company
paid approximately $3.0 million to distributors as an early sign-on advance in
1996. The Company has also offered to assume leases or purchase the
distributors' trucks and purchase distributor-owned vending equipment. The
acquisition will be accounted for as an acquisition of the assets of a business
and the excess cost over the fair value of the identifiable assets acquired will
be amortized over a forty year period on a straight-line basis. Additionally
during 1996, the Company incurred $2.1 million in distribution conversion costs
which will be amortized over a three year period commencing in 1997; and an
additional $0.6 million in acquisition costs that will be amortized over a forty
year period.
F-8
<PAGE> 15
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
7. ACQUISITIONS AND DIVESTITURES (CONTINUED)
In August 1996, the Company entered into a memorandum of agreement to assign a
portion of its sales and distribution rights in the southwestern part of its New
Jersey region to The Philadelphia Coca-Cola Bottling Company for approximately
$14.4 million. Such territory consists of operations representing approximately
2% of the Company's case sales volume. The completion of the sale, scheduled for
March 1997, is subject to a legal and binding agreement with the usual and
customary closing conditions.
8. LONG-TERM DEBT OBLIGATIONS, CREDIT FACILITIES AND LEASE COMMITMENTS
(In Thousands)
1996 1995
------------ ------------
8.68% Senior Subordinated Notes due 2005 $ 175,000 $ 175,000
Floating rate obligations under Revolving
Credit Agreement due 2000 (7.13% to 8.25%) 36,500 -
Capital lease obligations - varying maturities
through 2002 (6.57% to 7.40%) 12,054 9,393
Obligations to former distributors due 1999
(face value - $68,000 and $96,100,
respectively) 62,221 85,252
Notes payable (6.5% to 11.0%) 628 898
------------ ------------
286,403 270,543
Less current portion (21,024) (23,399)
------------ ------------
Total long-term debt $ 265,379 $ 247,144
============ ============
In November 1995, the Company completed the refinancing of substantially all of
its then outstanding debt. As part of the refinancing, (i) a Revolving Credit
Agreement was entered into which provides for borrowings and the issuance of
certain letters of credit of up to an aggregate $315 million, (ii) the Company
issued $160 million of Cumulative Exchangeable Redeemable Preferred Stock, and
(iii) the Company issued $175 million of Senior Subordinated Notes.
The Company recorded an extraordinary loss of approximately $6.0 million
relating to the early retirement of debt. Such extraordinary loss was comprised
of (i) a $1.6 million pre-payment penalty relating to a variable rate Senior
Note, (ii) a $1.3 million write-off of unamortized debt issuance costs relating
to the extinguished debt, and (iii) a $3.1 million charge relating to the
interest rate swap instrument described below.
The Company incurred $5.2 million of debt origination costs relating to the
placement of the Revolving Credit Agreement and issuance of the Senior
Subordinated Notes. The Senior Subordinated Notes were issued to institutional
investors, two of which are shareowners of the Company. These costs are included
in other non-current assets and are being amortized to interest expense over the
respective lives of the facilities.
The Revolving Credit Agreement was placed with a syndicate of ten banks.
Interest rates range from LIBOR plus 0.50% to LIBOR plus 2.50% and commitment
fees range from 0.25% to 0.50% based upon certain financial ratios, as defined
in the agreement. A letter of credit in the amount of $74 million, supported by
the Revolving Credit Agreement, is outstanding at December 31, 1996 which serves
to guarantee payments to the Company's former New York distributors.
F-9
<PAGE> 16
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
8. LONG-TERM DEBT OBLIGATIONS, CREDIT FACILITIES AND LEASE COMMITMENTS
(CONTINUED)
In May 1994, the Company entered into an interest rate swap agreement for a
notional amount of $85 million with Citibank, N.A. with a forward start hedge
date of May 1995. The original intent of the agreement was to convert the
variable interest rate of a then existing Subordinated Term Loan to a fixed rate
facility. Due to the extinguishment of the Subordinated Term Loan in November
1995, the swap was marked to market and the related charge was included in the
extraordinary loss on extinguishment of debt. Under the terms of the swap
agreement, the Company will continue to pay, on a quarterly basis, the higher of
6.70% or LIBOR less 0.75% and will receive LIBOR, calculated on the notional
amount. Net receipts or payments were recognized as an adjustment to interest
expense in 1995. The swap agreement expires in May 1998. In February 1996, the
Company entered into an additional interest rate swap agreement for a notional
amount of $85 million with Citibank, N.A. with a term which expires in May 1998.
Under the terms of the agreement, the Company will receive, on a quarterly
basis, the higher of either 5.40% or LIBOR less 2.05% and will pay LIBOR,
calculated on the notional amount. The terms of the February 1996 swap agreement
effectively negate the effects of the May 1994 swap agreement. The Company is
exposed to credit loss in the event of nonperformance by Citibank, N.A.;
however, the Company does not anticipate any such nonperformance.
In connection with the 1995 recapitalization of the Company, CCFC issued
letters of credit on behalf of the Company in an aggregate amount not to exceed
$50 million. Such obligation by CCFC to issue letters of credit on behalf of
the Company terminates based on certain financial ratios being achieved by the
Company. The Company will thereafter be required to obtain such letters of
credit from other financial institutions. The Company anticipates achieving
such financial ratios and thereby releasing CCFC of such obligation during
1997. At December 31, 1996 and 1995, an aggregate of $28.7 million and $27.3
million, respectively, was available under the letter of credit agreement.
Commitment fees are equal to 0.25% per annum on the stated amount from the
issuance date to the expiration date.
Obligations to former distributors are non-interest bearing and are due in equal
annual installments through 1999. The payment obligations are discounted for
financial reporting purposes using an average interest rate of 7.4% per annum.
The Company's credit facilities include covenants which prohibit a significant
change in ownership of the Company, establish ratio requirements related to cash
flow and limit the incurrence of certain new liens or payments of dividends in
excess of defined amounts. The Company does not consider such covenants overly
restrictive.
Principal maturities on long-term debt and capital lease obligations for the
five years subsequent to December 31, 1996 are as follows: 1997 - $21.0 million;
1998 - $20.0 million; 1999 - $23.5 million; 2000 - $36.1 million; and 2001 -
$1.4 million.
Payments of interest were $19.7 million and $32.9 million in 1996 and 1995,
respectively.
Corporate headquarters and certain other operating facilities are leased. There
are various terms under these lease agreements with provisions for escalation
based on certain increases in costs incurred by the lessor. Certain leases
provide the Company renewal rights. In addition, the Company has other operating
leases, primarily for vehicles, which expire in 1998. Lease payments charged to
expense as incurred were $9.2 million and $9.7 million for 1996 and 1995,
respectively.
F-10
<PAGE> 17
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
8. LONG-TERM DEBT OBLIGATIONS, CREDIT FACILITIES AND LEASE COMMITMENTS
(CONTINUED)
Future minimum lease commitments for all operating leases aggregate $27.0
million as of December 31, 1996, and annually are as follows: 1997 - $8.0
million; 1998 - $6.6 million; 1999 - $2.8 million; 2000 - $2.2 million; 2001 -
$1.9 million; and $5.5 million thereafter.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company to estimate the
fair value of financial instruments as required by Statement of Financial
Accounting Standards No. 107, "Fair Value Disclosures about Financial
Instruments".
CASH AND CASH EQUIVALENTS: The carrying amount approximates its fair
value.
LONG-TERM DEBT: The carrying amounts of the Company's borrowings under the
Revolving Credit Agreement, capital lease obligations, obligations to former
distributors, and notes payable approximate their fair value. The fair value of
the Company's Senior Subordinated Notes is estimated using a discounted cash
flow analysis, based on the Company's current incremental borrowing rates for
similar types of borrowing arrangements and assumes such debt will be held to
maturity.
REDEEMABLE PREFERRED STOCK: The fair value is estimated using a discounted cash
flow analysis.
The carrying amounts and fair values of the Company's financial instruments at
December 31, 1996 and 1995 are as follows:
(In Thousands)
1996 1995
--------------------- ---------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------- ---------------------
Cash and cash equivalents $ 19 $ 19 $ 12,353 $ 12,353
Long-term debt, including
current maturities 286,403 285,503 270,543 279,378
Redeemable preferred stock 178,965 177,096 160,257 174,137
F-11
<PAGE> 18
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
10. REDEEMABLE PREFERRED STOCK
In November 1995, the Company authorized the issuance of 1,080,000 shares, $1
par value, of non-voting Cumulative Exchangeable Redeemable Preferred Stock
("redeemable preferred stock"). An aggregate 640,000 shares are issued and
outstanding. The shares have an aggregate liquidation preference value of $160
million. The redeemable preferred stock was recorded at preference value less
issuance costs of $1.7 million. The excess of the preference value over the
carrying value is being accreted by periodic charges to retained earnings over
the maximum life of the issue.
In preference to shares of convertible preferred and common stock, each share of
redeemable preferred stock is entitled to cumulative cash dividends calculated
at 11% per annum of the then effective liquidation preference per share,
quarterly in arrears. The redeemable preferred shares may be redeemed by the
Company at any time on or after November 21, 2000, in whole or in part, at a
price per share equal to the percentage of the then liquidation value of such
shares set forth below (which will include any accrued but unpaid dividends
through the redemption date):
Redemption Price as %
Redemption Period of Liquidation Value
- --------------------------------------------- ----------------------
December 1, 2000 through November 30, 2001 105.5%
December 1, 2001 through November 30, 2002 103.5%
December 1, 2002 through November 30, 2003 101.5%
December 1, 2003 and thereafter 100.0%
The Company will be required to redeem all remaining outstanding redeemable
preferred shares by November 21, 2007. The holder of the redeemable preferred
stock may, subject to certain restrictions, exchange such stock for an equal
face amount of 11% Subordinated Exchange Debentures due November 21, 2007.
Under the terms of the redeemable preferred stock agreement, the holder is
required to purchase additional shares of such stock to satisfy, if necessary,
the Company's contingent liabilities under both a letter of credit agreement
with CCFC and the Guarantee Agreement with Southeastern Container Cooperative
as described in Note 15. This requirement will remain in existence until
certain of the Company's cash flow coverage ratios reach specified levels. CCFC
is not required to purchase, in the aggregate, more than 440,000 shares at $250
per share.
11. SHAREOWNERS' DEFICIENCY
(In Thousands)
1996 1995
------------ ------------
Convertible preferred stock $ 793 $ 793
Common stock 9 9
Capital in excess of par value 22,490 22,490
Retained deficit (108,326) (44,199)
Treasury stock (20,476) (20,476)
------------ ------------
Shareowners' deficiency $ (105,510) $ (41,383)
============ ============
F-12
<PAGE> 19
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
11. SHAREOWNERS' DEFICIENCY (CONTINUED)
CONVERTIBLE PREFERRED STOCK ($100 PAR VALUE): Of the authorized 200,000 shares
of Convertible Preferred Stock, an aggregate 7,933 shares were outstanding at
December 31, 1996 and 1995, of which 4,000 shares were held by The Coca-Cola
Company. The holders of Convertible Preferred Stock are entitled to 1.81 votes
per share on all matters to be voted on by the shareowners of the Company and
are entitled to receive non-cumulative cash dividends at the annual rate of 5%
before any dividend is declared or paid on any class of the Company's Common
Stock. Each Convertible Preferred share is convertible into 1.81 fully paid and
non-assessable shares of Class A Common Stock.
CLASS A COMMON STOCK (PAR VALUE $0.01): In November 1995, the shareowners voted
to increase the total number of authorized Class A Common Stock shares from
835,631 to 1,700,000. Of such authorized shares, an aggregate 390,923 shares
were outstanding at December 31, 1996 and 1995, of which 191,348 shares were
held by The Coca-Cola Company. Class A Common Stock shares are entitled to one
vote per share. In addition, an aggregate 362,000 shares are reserved for
potential conversion of outstanding shares of the Company's Convertible
Preferred Stock.
CLASS B COMMON STOCK (PAR VALUE $0.01): Of the authorized 264,369 shares, an
aggregate 259,854 were outstanding and held by institutional lenders at December
31, 1996 and 1995. These shares have the right to vote only on matters involving
any consolidation or merger of the Company, the sale of all or substantially all
of the Company's assets and any liquidation, dissolution or winding up of the
Company's business.
CLASS C COMMON STOCK (PAR VALUE $0.01): Of the authorized 300,000 shares, an
aggregate 249,903 were outstanding and held by The Coca-Cola Company at December
31, 1996 and 1995. The holders of these shares have the right to vote only on
those matters which holders of Class B Common stock are entitled to vote.
Pursuant to the terms of a certain Note and Stock Purchase Agreement dated
September 18, 1981, investors have the option to request an initial public
offering for the purpose of selling securities held by investors. The Company
must initiate a filing upon receipt of written requests from the holder or
holders of 17% of the Company's shares subject to such registration right. As of
December 31, 1996, the Company has not received any such request.
12. LONG-TERM INCENTIVE PLANS
PHANTOM STOCK PLAN
The Company maintains a strategy for compensating key executives by providing
elements (salary, bonus and incentives) which are targeted to achieve a
compensation package equal to the 75th percentile for comparable positions at
comparable companies as well as incorporate varying levels of risk and reward as
it relates to executive pay. As an integral part of such strategy, in November
1995, the Board of Directors of the Company adopted a Phantom Stock Plan
effective as of January 1, 1995. The purpose of the Phantom Stock Plan is to
provide the Company a further means of motivating and retaining key executives
by linking financial awards with the long-term growth and increased
profitability of the Company.
F-13
<PAGE> 20
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
12. LONG-TERM INCENTIVE PLANS (CONTINUED)
Benefits under the Phantom Stock Plan are determined based upon the increase in
value of shares allocated ("award units") to each participant as granted by the
Compensation Committee of the Board of Directors ("Committee"). The term of a
performance period is usually seven years. An award unit is not an equity
holding in the Company nor does it possess any rights or privileges of equity
ownership. The value of an award unit is based upon certain financial benchmarks
employed to determine appreciation in the value of the Company. Benefits on
award units are earned when the increase in its value, as determined by the
Phantom Stock Plan, exceeds a minimum growth rate established by the Committee
and three years have elapsed in the performance period. Participants receive
benefits in cash for the difference between the award unit value at the date of
exercise and the value established at the beginning of the performance period.
An aggregate 822,078 and 503,250 Phantom Stock Plan award units were outstanding
at December 31, 1996 and 1995, respectively. The cost of the Phantom Stock Plan
is accrued ratably over the vesting period. Compensation cost amounted to $1.5
million in 1996 and was charged to selling, general and administrative expenses.
LONG-TERM VALUE CREATION PLAN
In 1996, the Company, through the Committee, adopted a Long-Term Value Creation
Plan effective January 1, 1996. The objectives of the Long-Term Value Creation
Plan are to (i) provide an incentive to Company officers for long-term growth in
the economic value of the Company, (ii) enhance commitment to the long-term
success of the Company by linking personal financial rewards to the growth in
economic value of the Company, and (iii) increase the Company's ability to
attract and retain key executives.
Benefits under the Long-Term Value Creation Plan are awarded at the end of each
of the performance periods (the term of which is three years) based upon the
achievement of a predetermined targeted financial measure which incorporates
profitability reduced by a cost of capital charge. The cost of the Long-Term
Value Creation Plan is accrued ratably over the three year period. Compensation
cost amounted to $0.2 million in 1996 and was charged to selling, general and
administrative expenses.
13. RESTRUCTURING AND IMPAIRMENT CHARGES
During 1996, the Company recorded a restructuring charge of $5.1 million related
to a personnel reduction program and the planned conversion of its fountain
operations from five gallon cylinders to Bag-In-Box service. The charge includes
severance costs and the write-off of the carrying value of certain assets
currently used in the Company's fountain operations.
F-14
<PAGE> 21
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
13. RESTRUCTURING AND IMPAIRMENT CHARGES (CONTINUED)
During 1995, the Company recorded a restructuring charge of $8.0 million for a
program designed by the Company to reduce costs and improve operating
efficiencies. The program included (i) the decision to relocate corporate
headquarters to a smaller facility and sublet the Company's present office
space, (ii) the initial phase of integrating the Company's Bottle/Can and
Fountain operations, and (iii) as part of the Company's overall facilities
consolidation strategy, the decision to relocate the Company's Forest Park, New
York distribution warehouse to a recently-purchased facility adjacent to the
Maspeth, New York production center. The restructuring provision includes the
expected loss on the sublease of the existing corporate headquarters, the
write-off of unamortized leasehold improvements, certain severance costs, the
cost of improvements required to vacate certain premises, and rental and other
costs of the Forest Park facility subsequent to the relocation.
Such charges are included in selling, general and administrative expenses. As of
December 31, 1996, $7.3 million of these charges were not utilized, principally
related to the 1996 charge and the loss on the sublease of the former corporate
headquarters.
As a result of management's evaluation of an anticipated reduction in future
cash flows from certain license rights it holds, the Company recognized in 1996
a writedown of the carrying value of certain license rights not associated with
those provided by The Coca-Cola Company by approximately $13.7 million. Such
charge is included in other expenses.
14. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company did not
record an income tax provision in 1996 or 1995 because any benefit was offset
by an increase in the valuation allowance.
F-15
<PAGE> 22
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
14. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets and liabilities are
as follows:
(In Thousands)
1996 1995
------------ ------------
Deferred tax assets:
Net operating loss carryforwards $ 65,994 $ 43,957
Postretirement obligation 17,579 27,845
Insurance accruals 10,671 11,296
AMT credit carryforwards 6,803 7,090
Restructuring accruals 4,865 3,442
Bottle deposit and handling reserves 1,895 1,794
Unrealized swap instrument loss 1,058 1,365
Allowance for doubtful accounts 2,317 1,798
Other, net 8,220 6,824
------------ ------------
119,402 105,411
Valuation allowance for deferred tax assets (62,926) (40,342)
------------ ------------
Total deferred tax assets 56,476 65,069
Deferred tax liabilities:
Depreciation and amortization 55,359 61,244
Other, net 1,117 3,825
------------ ------------
Total deferred tax liabilities 56,476 65,069
------------ ------------
Net deferred taxes $ - $ -
============ ============
At December 31, 1996, the Company has a Federal net operating loss carryforward
of $146.6 million that expires in 2007 through 2012, subject to certain
limitations, and state net operating loss carryforwards of $157.7 million that
expire in years 1997 through 2012.
Net income tax payments (refunds) were $(1.7) million and $0.5 million in 1996
and 1995, respectively.
15. CONTINGENCIES
Under the Company's insurance programs, coverage is obtained for catastrophic
exposures as well as those risks required to be insured by law or contract. The
Company is self-insured, to the extent of significant deductible programs, for
losses and liabilities related to workers' compensation, comprehensive general,
product and vehicle liability, and for physical damage to specific property
resulting from certain events. Losses are accrued based upon the Company's
estimates of the aggregate liability for claims incurred using certain
actuarial assumptions employed in the insurance industry and based on the
Company's loss experience and, for certain coverages, considering the time
value of money. The Company has provided letters of credit aggregating
approximately $21.3 million in connection with certain insurance programs.
F-16
<PAGE> 23
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
15. CONTINGENCIES (CONTINUED)
The Company invested $1.4 million and $1.0 million in the preferred stock of
Southeastern Container Cooperative, a beverage container manufacturing company,
during 1996 and 1995, respectively, and has guaranteed debt of the cooperative
of approximately $20.3 million at December 31, 1996.
A substantial number of employees, primarily involved in production, warehouse
and distribution, operate under collective bargaining agreements with the
Company and various union locals. The Company will be negotiating with two such
union locals covering approximately 14% of its work force relating to contracts
which are scheduled to expire in 1997. While such negotiations have historically
been resolved without adverse operational impact, any work disruption arising
after contract expiration could have an adverse impact upon the Company. The
Company is undertaking precautionary measures to minimize the effect, if any, of
a work disruption.
The Company is also involved in certain litigation and has received other
notices arising in the ordinary course of business which management believes,
based upon the advice of legal counsel retained by the Company, will not have a
material effect on the financial position or results of operations of the
Company.
16. RELATED PARTIES
The Company purchases sweeteners, syrup, concentrates and finished product from
The Coca-Cola Company and participates with it in cooperative advertising,
immediate consumption infrastructure and marketing support programs. The Company
made net payments to The Coca-Cola Company of approximately $156.1 million and
$150.2 million in 1996 and 1995, respectively.
The Company also purchased finished product and/or raw materials from the
following entities:
(In Thousands)
1996 1995
------------ ------------
Southeastern Container Cooperative $40,934 $27,412
Coca-Cola Enterprises Inc. 5,199 10,470
The Company paid $11.3 million in interest to CCFC in 1995 in connection with
the Subordinated Term Loan which was extinguished in 1995.
17. PENSION ARRANGEMENTS
The Company and its subsidiaries have a number of defined benefit plans covering
most employees. Plans covering non-union employees provide pension benefits that
are based on the employees' compensation and years of service. The Company's
funding policy is to contribute annually at a rate that is sufficient to satisfy
the minimum funding standards of The Employee Retirement Income Security Act of
1974, as amended, plus such additional amounts as management may determine to be
appropriate. The Company contributes to multi-employer plans in which it
participates pursuant to collective bargaining agreements. The plans provide
defined benefits to substantially all of the Company's unionized workers.
Amounts charged to pension expense and contributed to the multi-employer plans
in 1996 and 1995 aggregated $8.1 million and $7.3 million, respectively.
F-17
<PAGE> 24
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
17. PENSION ARRANGEMENTS (CONTINUED)
A summary of the components of net periodic pension cost for the defined benefit
plans, excluding multi-employer plans, follows:
(In Thousands)
1996 1995
------------ ------------
Defined benefit plans:
Service cost of benefits earned
during the period $ 2,403 $ 1,937
Interest cost on projected benefit
obligation 3,658 3,317
Actual return on plan assets (5,356) (9,534)
Net amortization and deferral 2,075 6,242
------------ ------------
Net periodic pension cost $ 2,780 $ 1,962
============ ============
The following table sets forth the plans' funded status and amounts recognized
in the Company's consolidated balance sheets as of December 31, 1996 and 1995
for the Company's defined benefit plans, excluding multi-employer plans:
(In Thousands)
1996 1995
------------ -------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $ (37,669) $ (37,579)
============ ============
Accumulated benefit obligation $ (38,044) $ (38,173)
============ ============
Projected benefit obligation $ (48,143) $ (48,612)
Plans' assets at fair value 49,829 45,334
------------ ------------
Plans' assets in excess of (less
than) projected benefit obligation
1,686 (3,278)
Unrecognized net gain (7,041) (995)
Prior service cost not yet recognized
in net periodic pension cost
1,421 1,655
Unrecognized portion of initial net
obligation (767) (876)
------------ ------------
Net pension liability $ (4,701) $ (3,494)
============ ============
Certain significant assumptions used in the accounting for the defined benefit
plans were:
1996 1995
------------ ------------
Discount rate 8.25% 7.50%
Average rate of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return on plan assets 8.75% 8.75%
F-18
<PAGE> 25
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
17. PENSION ARRANGEMENTS (CONTINUED)
The plans' assets are primarily invested in listed stocks and bonds.
The Company sponsors a Savings and Investment Plan ("Plan"), which is organized
under Section 401(k) of the Internal Revenue Code. The Plan allows management
and certain employees who have completed at least one year of service to
contribute up to 16% of their salary on a pre-tax basis. The Company contributes
an amount equal to 50% of the first 6% contributed by the employee up to the
amount permitted by law. A participant's right to Company contributions vests at
a rate of 25% upon completion of two years of service and 25% per year
thereafter. The Company's cost under this Plan was $1.1 million and $0.9 million
in 1996 and 1995, respectively.
18. POSTRETIREMENT BENEFIT PLANS
The Company provides certain retiree health care and life insurance benefits
covering substantially all salaried employees and certain employees covered by
collective bargaining agreements. Employees are generally eligible for benefits
upon retirement and completion of a specified number of years of credited
service. The Company does not pre-fund these benefits and has the right to
modify or terminate certain of these plans in the future. The postretirement
benefit expense for 1996 and 1995 was $4.9 million and $5.8 million,
respectively.
In conjunction with the Company's agreement with its Metropolitan New York labor
union in its renegotiated collective bargaining agreement during 1996, health
and welfare benefits, commencing October 1, 1996, will be provided by the
multi-employer plan administered by the trust, operating as the Local 812 Group
Insurance Premium Account Program. Such agreement resulted in the Company
recognizing a gain on the curtailment of such previously recorded postretirement
liability for these employees. Accordingly, an aggregate $26 million of gains
were recognized as a reduction in selling, general and administrative expenses
in 1996. The Company will commence recognizing postretirement benefit expense as
part of the multi-employer plan, in accordance with the renegotiated union
contract.
The following postretirement benefit obligations are included in accounts
payable and accrued expenses and other long-term liabilities in the consolidated
balance sheets at December 31, 1996 and 1995:
(In Thousands)
1996 1995
------------ ------------
Accumulated postretirement
benefit obligation:
Retirees $ (13,534) $ (30,305)
Fully eligible active
plan participants (3,135) (6,300)
Other active plan participants (14,083) (30,215)
------------ ------------
Total accumulated postretirement
benefit obligation (30,752) (66,820)
Unrecognized net gain from past
experience different from that assumed
and from changes in assumptions (1,505) 12,601
Prior service cost not yet recognized in
net periodic postretirement
benefit cost (8,257) (8,882)
------------ ------------
Accrued postretirement benefit cost $ (40,514) $ (63,101)
============ ============
F-19
<PAGE> 26
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
18. POSTRETIREMENT BENEFIT PLANS (CONTINUED)
Net periodic postretirement benefit cost for the year ended December 31, 1996
and 1995 included the following components:
(In Thousands)
1996 1995
------------ ------------
Service cost for benefits earned
during the period $ 2,061 $ 2,013
Interest cost on accumulated
postretirement benefit obligation 3,464 4,399
Net amortization and deferral (625) (625)
------------ ------------
Net periodic postretirement benefit cost $ 4,900 $ 5,787
============ ============
In 1995 and 1996, retiree medical costs were estimated assuming a health care
cost trend of 9%, decreasing gradually to 5.5% annually by 2003 and remaining at
that level thereafter.
The effect of a one percentage point increase in each future year's assumed
medical care cost trend rate, holding all other assumptions constant, would have
been to increase the net periodic postretirement benefit cost by $0.8 million
and $0.9 million in 1996 and 1995, respectively; and the accrued postretirement
benefit obligation by $3.7 million and $8.7 million at December 31, 1996 and
1995, respectively.
The discount rate used to determine the accumulated postretirement benefit
obligation was 8.25% and 7.5% at December 31, 1996 and 1995, respectively.
F-20
<PAGE> 27
REPORT OF INDEPENDENT
AUDITORS
To the Board of Directors and Shareowners of
The Coca-Cola Bottling Company of New York, Inc.
We have audited the accompanying consolidated balance sheets of The Coca-Cola
Bottling Company of New York, Inc. as of December 31, 1996 and 1995, and the
related consolidated statements of operations and retained earnings (deficit)
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Coca-Cola
Bottling Company of New York, Inc. at December 31, 1996 and 1995, and the
consolidated results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
January 27, 1997
Stamford, CT
F-21
<PAGE> 28
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 27, 1997
F-22
<PAGE> 29
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
JUNE 27, DECEMBER 31,
1997 1996
------------- -------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents .................. $ - $ 19
Accounts and other receivables ............. 92,639 86,157
Inventories ................................ 28,050 22,316
Prepaid expenses and other current assets .. 2,891 3,275
--------- ---------
TOTAL CURRENT ASSETS ................. 123,580 111,767
Other non-current assets ...................... 25,008 24,350
Property, plant and equipment ................. 189,470 189,180
Intangible assets ............................. 265,747 209,680
--------- ---------
$ 603,805 $ 534,977
========= =========
LIABILITIES AND SHAREOWNERS' DEFICIENCY
Current
Accounts payable and accrued expenses ...... $ 121,589 $ 119,199
Current maturities of debt ................. 34,547 21,024
--------- ---------
TOTAL CURRENT LIABILITIES ............ 156,136 140,223
Long-term debt ................................ 323,110 265,379
Other long-term liabilities ................... 57,582 55,920
Redeemable preferred stock .................... 189,084 178,965
Shareowners' deficiency ....................... (122,107) (105,510)
--------- ---------
$ 603,805 $ 534,977
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-23
<PAGE> 30
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(Unaudited; In Thousands)
PERIOD ENDED
-----------------------------
JUNE 27, JUNE 28,
1997 1996
------------- -------------
NET OPERATING REVENUES ......................... $ 379,939 $ 366,026
Cost of revenues ............................ 218,318 238,297
--------- ---------
GROSS PROFIT ................................... 161,621 127,729
Selling, general and administrative
expenses .................................. 161,100 147,445
--------- ---------
OPERATING PROFIT (LOSS) ........................ 521 (19,716)
Interest expense ............................ 15,217 13,028
Other expenses, net ......................... 810 (1,234)
Gain on sale of territory ................... (9,088) --
--------- ---------
NET LOSS ....................................... (6,418) (31,510)
Retained earnings (deficit) at beginning of
the period................................. (108,326) (44,199)
--------- ---------
(114,744) (75,709)
Dividends and accretion on redeemable
preferred stock............................ 10,137 9,102
--------- ---------
RETAINED DEFICIT AT END OF THE PERIOD .......... $(124,881) $ (84,811)
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-24
<PAGE> 31
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In Thousands)
PERIOD ENDED
---------------------------
JUNE 27, JUNE 28,
1997 1996
------------ ------------
OPERATING ACTIVITIES
Net loss ........................................ $ (6,418) $(31,510)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ............... 27,809 30,054
Gain on sale of territory ................... (9,088) -
Non-cash interest ........................... 3,057 3,393
Other ....................................... 878 (573)
Changes in operating assets and liabilities:
Accounts and other receivables ............ (6,482) (9,810)
Inventories ............................... (5,734) (2,522)
Prepaid expenses and other current assets . 384 (96)
Accounts payable and accrued expenses ..... 2,390 17,519
Other long-term liabilities ............... 1,662 3,597
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .......... 8,458 10,052
-------- --------
INVESTING ACTIVITIES
Proceeds from sale of territory ................. 14,868 -
Proceeds from sale of property, plant and
equipment ..................................... - 2,914
Purchases of property, plant and equipment ...... (15,400) (13,888)
Distribution conversion costs ................... (1,868) (3,188)
Southeastern Container Cooperative .............. (537) (677)
Net increase in other assets .................... (2,402) (756)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES .............. (5,339) (15,595)
-------- --------
FINANCING ACTIVITIES
Net borrowings on debt .......................... 30,659 10,624
Payments on obligations to former distributors .. (33,797) (16,948)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES .............. (3,138) (6,324)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS .............. (19) (11,867)
Cash and cash equivalents at beginning of
the period .................................... 19 12,353
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD ..... $ - $ 486
======== ========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Dividends and accretion on redeemable preferred
stock.......................................... $ 10,137 $ 9,102
Issuance of capital leases ...................... 6,028 1,581
Acquisition of distributor routes ............... 43,617 -
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-25
<PAGE> 32
THE COCA-COLA BOTTLING COMPANY OF NEW YORK, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
The Coca-Cola Bottling Company of New York, Inc. (Company) is a bottler of
products of The Coca-Cola Company, the most popular beverage brands in the
world, together with other licensed soft drink products. The Company operates in
six states located in the northeastern portion of the United States and serves a
population base of approximately 24 million.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The unaudited condensed consolidated financial
statements include the accounts of the Company and its subsidiary. Significant
intercompany accounts and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with GAAP for interim financial information. Accordingly,
they do not include all information and footnotes required by 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. These financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's annual
report for the year ended December 31, 1996.
F-26
<PAGE> 33
COCA-COLA BEVERAGES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
F-27
<PAGE> 34
AUDITORS' REPORT
To the Shareholder of Coca-Cola Beverages Ltd.
We have audited the consolidated balance sheets of Coca-Cola Beverages Ltd. as
at December 31, 1996 and 1995 and the consolidated statements of earnings (loss)
and retained earnings (deficit) and changes in financial position for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1996
and 1995 and the results of its operations and the changes in its financial
position for each of the three years in the period ended December 31, 1996 in
accordance with accounting principles generally accepted in Canada.
/s/ Ernst & Young
Chartered Accountants
Toronto, Canada,
January 24, 1997 (except for Notes 5 and
15 which are as at September 12, 1997).
F-28
<PAGE> 35
Coca-Cola Beverages Ltd.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
As at December 31,
(in thousands of Canadian dollars) 1996 1995
ASSETS
CURRENT ASSETS
Cash $ 1,990 $ 6,062
Trade accounts receivable, less reserves of
$2.8 and $4.0 million, respectively (note 2) 40,532 68,155
Inventories (note 3) 46,416 46,773
Prepaid expenses and other assets 15,094 15,646
104,032 136,636
LAND, BUILDINGS AND EQUIPMENT (note 4) 239,546 249,723
ASSETS TO BE SOLD -- 6,520
DEFERRED INCOME TAXES 4,206 19,586
DEFERRED PENSION SURPLUS (note 5) 24,438 20,041
GOODWILL 199,654 203,916
$ 571,876 $ 636,422
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $ 5,373 $ 447
Accounts payable and accrued expenses (note 6) 119,611 117,874
Due to related companies (note 7) 13,311 19,215
138,295 137,536
LONG-TERM DEBT (notes 8 & 9) 375,000 410,000
513,295 547,536
SHAREHOLDERS' EQUITY (note 10)
Commons Shares - 40,561,590 outstanding
(1995 - 40,150,491) 221,873 218,734
First Preferred Shares, Series A - Nil
outstanding (1995 - 90) 0 44,702
Contributed surplus 4,143 4,441
Deficit (167,435) (178,991)
58,581 88,886
$ 571,876 $ 636,422
================================================================================
See accompanying notes.
F-29
<PAGE> 36
Coca-Cola Beverages Ltd.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
AND RETAINED EARNINGS (DEFICIT)
- --------------------------------------------------------------------------------
Years ended December 31,
(in thousands of Canadian dollars
except per share amounts) 1996 1995 1994
- --------------------------------------------------------------------------------
EARNINGS (LOSS)
Net operating revenues $ 956,727 $ 929,840 $ 855,181
Cost of sales 609,969 587,175 540,771
Gross profit 346,758 342,665 314,410
Selling, general and
administrative expenses 275,756 275,998 285,054
Amortization of goodwill 6,312 6,285 6,291
Operating income 64,690 60,382 23,065
Interest expense 30,827 44,265 37,667
Other deductions 3,713 1,984 724
Income (loss) before income taxes 30,150 14,133 (15,326)
Income tax expense (note 11) 17,323 10,133 666
NET INCOME (LOSS) FOR THE YEAR 12,827 4,000 (15,992)
Preferred share dividends 1,271 3,463 2,739
Net income (loss) available
to common shareholders $ 11,556 $ 537 $ (18,731)
================================================================================
Net income (loss) per common
share (note 1) $ 0.29 $ 0.01 $ (0.47)
================================================================================
RETAINED EARNINGS (DEFICIT)
Balance at beginning of the year $(178,991) $(179,528) $(160,797)
Net income (loss) for the year 12,827 4,000 (15,992)
Preferred share dividends (1,271) (3,463) (2,739)
Balance at end of the year $(167,435) $(178,991) $(179,528)
================================================================================
See accompanying notes.
F-30
<PAGE> 37
Coca-Cola Beverages Ltd.
CONSOLIDATED STATEMENTS OF CHANGES
IN FINANCIAL POSITION
Years ended December 31,
(in thousands of Canadian dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) for the year $ 12,827 $ 4,000 $ (15,992)
Non-cash charges to operations
excluding restructuring:
Depreciation 33,508 33,980 35,909
Amortization expense 11,822 8,679 7,202
Loss on disposal of land,
buildings and equipment 3,154 1,433 724
Deferred income taxes 15,380 7,965 (2,046)
Pension income (4,397) (6,458) (2,800)
- --------------------------------------------------------------------------------
72,294 49,599 22,997
Net change in non-cash working capital
before restructuring (Note 13) 19,127 499 (20,239)
- --------------------------------------------------------------------------------
Net cash provided from operating
activities (before restructuring) 91,421 50,098 2,758
Net cash provided from (used for)
restructuring 6,470 7,755 (21,390)
- --------------------------------------------------------------------------------
97,891 57,853 (18,632)
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITIES
Additions to land, buildings
and equipment (30,007) (25,075) (29,436)
Proceeds on disposal of land,
buildings and equipment 3,300 10,882 2,574
Purchase of distributor rights (2,050) (856) -
- --------------------------------------------------------------------------------
(28,757) (15,049) (26,862)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Additions to long-term debt 15,000 30,000 140,000
Net decrease to long-term debt (50,000) (48,000) (123,512)
Redemption/repurchase of
preferred shares (44,702) (5,000) -
(Decrease)/increase in
contributed capital (298) 750 -
Issuance of share capital 3,139 192 56
Dividends (1,271) (3,463) (2,739)
- --------------------------------------------------------------------------------
(78,132) (25,521) 13,805
- --------------------------------------------------------------------------------
(DECREASE)/INCREASE IN CASH POSITION (8,998) 17,283 (31,689)
CASH POSITION AT BEGINNING OF THE YEAR 5,615 (11,668) 20,021
- --------------------------------------------------------------------------------
CASH POSITION AT END OF THE YEAR $ (3,383) $ 5,615 $ (11,668)
================================================================================
REPRESENTED BY:
Cash $ 1,990 $ 6,062 $ 2,789
Bank indebtedness (5,373) (447) (14,457)
- --------------------------------------------------------------------------------
$ (3,383) $ 5,615 $ (11,668)
================================================================================
See accompanying notes.
F-31
<PAGE> 38
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. These consolidated financial
statements have been prepared in accordance with Canadian generally accepted
accounting principles. These principles conform in all material respects with
accounting principles generally accepted in the United States except as noted in
note 14.
BASIS OF PRESENTATION. Coca-Cola Beverages Ltd. (the Company) is incorporated
under the Canada Business Corporations Act. The Company sells, distributes and
produces soft drink products and other beverages in Canada under license
agreements with Coca-Cola Ltd. (CCL) and other companies. CCL owns approximately
48% of the outstanding common shares of the Company and is an indirect wholly
owned subsidiary of The Coca-Cola Company of Atlanta, Georgia, U.S.A. The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, Coca-Cola Bottling Ltd. Management of the Company is
required to make estimates in the preparation of the consolidated financial
statements and accompanying notes that affect reported amounts. Actual results
could differ from these estimates.
CASH. Cash is defined as cash on account or on hand plus demand deposits and
short-term investments with maturities of three months or less. Outstanding
cheques are classified as accounts payable.
INVENTORIES. Inventories are stated at the lower of standard cost and net
realizable value. Standard cost approximates actual cost.
LAND, BUILDINGS AND EQUIPMENT. Land, buildings and equipment are carried at
cost. Depreciation is calculated on a straight-line basis over the following
estimated useful lives of the assets:
- --------------------------------------------------------------------------------
Years
- --------------------------------------------------------------------------------
Buildings and improvements 5 - 40
Machinery and equipment 5 - 12
Containers 3
- --------------------------------------------------------------------------------
GOODWILL. The excess of the cost of acquisitions over the fair value assigned to
identifiable net tangible assets acquired is allocated to goodwill. Goodwill is
stated on the basis of cost, less accumulated amortization of $55.0 million
(1995 - $48.7 million, 1994 - $42.4 million) and is amortized on a straight-line
basis over 40 years.
An evaluation to determine the amount of goodwill impairment, if any, is
measured on the basis of estimated future undiscounted cash flows associated
with the asset. The estimated future undiscounted cash flows is compared to the
asset's carrying value to determine whether a write-down is required.
PENSION COSTS. The cost of pension benefits earned by employees is determined by
using the projected benefit method prorated on services and is charged to
earnings as services are rendered. The cost reflects management's best estimates
of the expected investment yield on pension plan assets, wages and salary
escalation and various other factors including mortality rates, terminations and
retirement ages. The excess value of pension fund assets over the actuarially
determined present value of accrued pension obligations is amortized, using the
mortgage rate basis, over the expected fourteen-year average remaining service
life of pension plan members. Pension fund assets are valued at current market
values.
INCOME TAXES. The deferral method is used in accounting for income taxes,
whereby timing differences between income reported in the consolidated financial
statements and taxable income result in deferred income taxes. Such timing
differences occur when revenue or expenses are recognized in the Company's
earnings in one year and are included in taxable income in another year.
F-32
<PAGE> 39
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
INTEREST RATE HEDGING. The Company uses various financial instruments including
forward rate agreements, swaps and caps to hedge interest rates on debt
obligations. The differential to be paid or received is accrued as interest
rates change and is recognized as an adjustment to interest expense related to
the debt obligations. The Company does not speculate in the market by taking
positions unrelated to the business of the Company.
EARNINGS PER SHARE. Earnings per share are calculated on the weighted average
number of common shares outstanding during the year which amounted to 40,353,516
shares (1995 - 40,123,538; 1994 - 40,108,306).
2. SALE OF RECEIVABLES
The Company has an agreement with a financial institution whereby the Company
can sell up to $75.0 million of a designated pool of accounts receivable. As at
December 31, 1996, the Company had sold an interest representing $66.1 million
(1995 - $55.2 million, 1994 - $56.1 million) of receivables for cash proceeds of
$60.0 million (1995 - $50.0 million, 1994 - $51.0 million). The $6.1 million
balance is an initial purchase discount from the face value of the receivables
and a deferred purchase price which is payable to the Company upon final
collection of receivables, net of losses and certain other deductions.
Subsequent collections received by the Company are replaced by new receivables
to maintain the aggregate outstanding balance for the amounts in which an
interest was sold. These collections are offset against the purchase price for
the replacement receivables and the difference, being the applicable purchase
discount, is paid by the Company to the purchaser. The purchase discount, which
approximates the current Bankers' Acceptance rates is calculated monthly, and is
charged to interest expense. The Company is responsible for collection of the
accounts during the term of the agreement for which it receives a collection
fee. The agreement is scheduled to expire in 2002 although both parties have a
right of termination at any time subject to defined notification arrangements.
3. INVENTORIES
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Finished goods $ 25,153 $ 26,803
Raw materials 15,847 18,239
Other 5,416 1,731
- --------------------------------------------------------------------------------
$ 46,416 $ 46,773
- --------------------------------------------------------------------------------
4. LAND, BUILDINGS AND EQUIPMENT
1996
------------------------------------
(in thousands of ACCUMULATED NET BOOK
Canadian dollars) COST DEPRECIATION VALUE
- --------------------------------------------------------------------------------
Land $ 11,967 $ - $ 11,967
Buildings and improvements 88,720 24,132 64,588
Machinery and equipment 403,365 241,974 161,391
Containers 3,953 2,353 1,600
- --------------------------------------------------------------------------------
$508,005 $268,459 $239,546
- --------------------------------------------------------------------------------
(CONTINUED)
1995
------------------------------------
(in thousands of Accumulated Net Book
Canadian dollars) Cost Depreciation Value
- --------------------------------------------------------------------------------
Land $ 12,178 $ - $ 12,178
Buildings and improvements 88,469 21,868 66,601
Machinery and equipment 424,615 253,999 170,616
Containers 2,077 1,749 328
- --------------------------------------------------------------------------------
$527,339 $277,616 $249,723
- --------------------------------------------------------------------------------
F-33
<PAGE> 40
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
5. PENSION PLANS
The Company has various pension plans, including five defined benefit plans,
covering substantially all employees. The benefits related to the defined
benefit plans are based on years of service and employee compensation. With
respect to the defined benefit plans, the Company bears the risk of loss for any
shortfall between the value of the pension benefit obligation and the market
value of the plan assets. The Company's policy is to fund no less than the
minimum contribution required by applicable regulations. Risk is managed by
placing all plan assets in trust and directing investments pursuant to the
Statement of Investment Policies and Goals which defines the allowable
investments for the pension funds. Pension plan assets include 1,176,000 shares
of the Company, with a market value of $17.9 million (1995 - $9.8 million.)
Based on the most recent actuarial valuation, dated December 31, 1994 using
assumptions amended as of September 8, 1997, the obligations and assets of the
defined pension plans are as follows:
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATIONS:
Vested $ 133,642 $ 133,263
Non-vested 8,072 7,912
- --------------------------------------------------------------------------------
Accumulated benefit obligation 141,714 141,175
Effect of future compensation increases 15,995 15,793
- --------------------------------------------------------------------------------
Projected benefit obligation 157,709 156,968
MARKET VALUE OF PENSION PLAN ASSETS,
primarily listed equities, bonds and 243,840 217,188
government securities
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 86,131 60,220
- --------------------------------------------------------------------------------
Credits (charges) to future income
Unrecognized net gain 36,752 12,101
Unrecognized initial surplus 23,409 26,420
Unrecognized past service cost (344) (370)
Other 1,876 2,028
- --------------------------------------------------------------------------------
Pension asset $ 24,438 $ 20,041
================================================================================
Significant actuarial assumptions used in determining the projected benefit
obligation are as follows:
1996 1995
- --------------------------------------------------------------------------------
Discount rate 7.5% 7.5%
Expected rate of return on pension plan assets 9.0% 9.0%
Rate of increase in future compensation 5.5% 5.5%
- --------------------------------------------------------------------------------
The amount of income recognized before income taxes in respect of these plans
was $4.4 million (1995 - $6.5 million, 1994 - $2.8 million).
F-34
<PAGE> 41
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
At December 31, accounts payable and accrued expenses consist of the following:
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Trade accounts payable $ 50,343 $ 45,059
Accrued compensation costs 6,852 7,585
Accrued interest 665 1,268
Accrued taxes 11,482 7,589
Deposits on containers 5,035 4,011
Additional accrued expenses 45,234 52,362
- --------------------------------------------------------------------------------
$ 119,611 $ 117,874
================================================================================
7. RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company purchased concentrates and
finished product from a subsidiary of The Coca-Cola Company amounting to $127.9
million in 1996 (1995 - $128.7 million, 1994 - $124.9 million) which amount was
charged to the Company's cost of sales. The cost of these purchases is inclusive
of the costs of national advertising and certain other promotional programs. In
1996 the Company received $9.2 million (1995 - $3.3 million, 1994 - $3.4
million) in financial support from CCL to engage in a variety of local
promotional programs.
The Company provides certain services to CCL, such as business analysis and
development, administration, telecommunications and data processing as well as
the use of office space. In 1996, total consideration paid to the Company by CCL
in respect of these services was $6.2 million (1995 - $6.1 million, 1994 - $8.2
million). This amount was credited to the Company's selling, general and
administrative expenses.
The Company also purchased from The Minute Maid Company Canada Inc. (formerly
Coca-Cola Foods Canada Inc.), a subsidiary of CCL, concentrates and finished
product totaling $41.7 million (1995 - $41.3 million, 1994 $17.5 million). In
1996, the Company also purchased from The Coca-Cola Trading Company, a
subsidiary of The Coca-Cola Company, concentrates totaling $4.2 million (1995 -
$2.8 million, 1994 - nil). These amounts were charged to the Company's cost of
sales.
As at December 31, 1996, the Company had $13.3 million (1995 - $19.2 million)
payable to related companies. All purchase and sale transactions with related
companies are based on similar terms and conditions as those transacted with
third parties.
In May 1996, the Company repaid the $50.0 million subordinated debt from
Coca-Cola Financial Corporation, a subsidiary of The Coca-Cola Company.
F-35
<PAGE> 42
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
8. LONG-TERM DEBT
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Bankers' Acceptances $ 375,000 $ 360,000
Subordinated Debt, 2000 - 50,000
- --------------------------------------------------------------------------------
$ 375,000 $ 410,000
================================================================================
In April 1996, the Company renegotiated its $400.0 million five-year term loan
into an annually revolving line of credit under a credit facility of a maximum
of $425.0 million (the Credit Facility) with the option to convert the Credit
Facility at any time to a five-year term loan. The Bankers' Acceptances
outstanding under the Credit Facility mature at various dates between January
and March 1997.
As at December 31, 1996, the Company had $375.0 million (1995 - $360.0 million)
outstanding in Bankers' Acceptances at floating interest rates of which $360.0
million (1995 - $320.0 million) were fixed by interest rate conversion
agreements. The effective weighted average interest rate on total Bankers'
Acceptances at December 31, 1996 was 5.0% (1995 - 8.0%).
The Company has demand operating lines of $30.0 million to cover bank
indebtedness. Amounts drawn through bank overdraft carry interest of prime and
the average rate of interest for 1996 was 6.0% (1995 - 8.75%).
9. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts receivable, all
current liabilities, long-term debt and interest rate swaps and caps.
At December 31, 1996, the fair value of the Company's financial instruments
other than long-term debt approximated their carrying amount, due to the
short-term maturity of these instruments. The carrying amounts of these
short-term instruments represent the amount at which the instrument could be
exchanged in a current arm's-length transaction between willing parties. The
Company does not have any significant exposure to any individual customer or
counterparty under these instruments.
The carrying value and fair value of the Company's long-term debt at December 31
are as follows:
1996 1995
Carrying Fair Carrying Fair
(in thousands of Canadian dollars) Amount Value Amount Value
- --------------------------------------------------------------------------------
Long-term debt
- variable rate
Bankers' Acceptances $375,000 $375,000 $410,000 $410,000
- interest rate swap
and cap agreements - 4,556 - 1,022
- --------------------------------------------------------------------------------
$375,000 $379,556 $410,000 $411,022
================================================================================
As at December 31, 1996, the Company had $180.0 million of swap agreements and
$180.0 million of caps outstanding to fix the interest rates on $360.0 million
(1995 - $370.0 million) of its floating rate long-term debt obligation. These
financial instruments have interest rates ranging from 4.99% to 6.5% and mature
as follows: within one year - $130.0 million; between two and five years -
$230.0 million. The fair value of these financial instruments is calculated on a
replacement cost valuation based on prevailing interest rates in the Canadian
financial marketplace. This fair value represents the amount that the Company
would have received/paid on December 31, 1996 to settle these instruments prior
to their expiry dates. As at December 31, 1996, the Company had no plans to
settle any of its financial instruments prior to their expiry dates.
F-36
<PAGE> 43
6Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
The differential between the negotiated and market interest rates to be paid or
received is accrued as the market interest rates change and is recognized as an
adjustment to interest expense related to the debt obligations. In 1996, the
cost of all premiums paid and received by the Company was $3.6 million (1995 -
$1.0 million).
10. SHARE CAPITAL
Authorized: Unlimited number of Common Shares;
Unlimited number of First Preferred Shares.
<TABLE>
<CAPTION>
Issued:
(in thousands of Canadian dollars 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
except share amounts) SHARES AMOUNT Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON SHARES
Balance, beginning of the year 40,150,491 $ 218,734 40,114,485 $ 218,542 40,102,666 $ 218,486
Shares issued during the year 411,099 3,139 36,006 192 11,819 56
- ------------------------------------------------------------------------------------------------------------------------
Balance, end of the year 40,561,590 221,873 40,150,491 218,734 40,114,485 218,542
- ------------------------------------------------------------------------------------------------------------------------
FIRST PREFERRED SHARES, SERIES A
Balance, beginning of the year 90 44,702 100 49,702 100 49,702
Shares repurchased during the year (90) (44,702) (10) (5,000) - -
- ------------------------------------------------------------------------------------------------------------------------
Balance, end of the year - - 90 44,702 100 49,702
- ------------------------------------------------------------------------------------------------------------------------
Contributed surplus 4,143 4,441 3,691
- ------------------------------------------------------------------------------------------------------------------------
Total share capital $ 226,016 $ 267,877 $ 271,935
========================================================================================================================
</TABLE>
In June 1996, the Company redeemed all of the outstanding First Preferred
Shares, Series A (1995 - 10 shares repurchased) at a redemption price of
$500,000 per share (1995 - $425,000 per share) plus accrued dividends. A total
of 90 shares were redeemed for an aggregate redemption price of $45.0 million
(1995 - $4.3 million). The dividend rate on the First Preferred Shares, Series
A, was determined in accordance with the terms and provisions of the shares and
averaged 5.7% for January to June 20, 1996 (1995 - 7.4%).
Contributed surplus decreased by $0.3 million in 1996 (1995 - $0.7 million
increase) as a result of the redemption of the First Preferred Shares, Series A.
The Company has granted options in respect of common shares in favour of certain
directors, officers and employees of the Company as summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
WTD. AVG. Wtd. Avg. Wtd. Avg.
SHARES EX. PRICE Shares Ex. Price Shares Ex. Price
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OUTSTANDING AT BEGINNING OF YEAR 3,115,924 5.80 2,378,000 6.01 2,126,750 6.32
Granted 794,928 10.41 893,500 5.32 493,500 5.24
Exercised (411,099) 7.63 (36,006) 5.37 (11,819) 4.80
Forfeited (96,968) 5.58 (119,570) 6.59 (230,431) 7.18
- ------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AT END OF YEAR 3,402,749 6.66 3,115,924 5.80 2,378,000 6.01
========================================================================================================================
</TABLE>
F-37
<PAGE> 44
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
Stock options outstanding at December 31, 1996 are as follows:
Options Outstanding Options Exercisable
-------------------------------------------------------------
Number Wtd. Avg. Number Wtd
Range of Outstanding Remaining Wtd. Avg. Exercisable Avg.
Exercise at Contractual Exercise at Exercise
Prices 12/31/1996 Life Price 12/31/1996 Price
- ------------------------------------------------------------------------------
$3.75 to $5.00 351,346 6.0 years 4.52 349,223 4.51
$5.00 to $10.00 2,809,903 7.6 years 6.27 1,922,240 5.73
$10.00 to $15.00 58,000 4.7 years 11.51 48,000 11.55
$15.00 to $20.00 183,500 10.0 years 15.18 - -
- ------------------------------------------------------------------------------
$3.75 to $20.00 3,402,749 7.5 years 6.66 2,319,463 5.67
==============================================================================
The exercise of these options would not have a material dilutive effect on
earnings per share.
11. INCOME TAXES
A reconciliation of the combined basic federal and provincial income tax rates
to the related effective rates is as follows:
1996 1995 1994
- ------------------------------------------------------------------------------
Combined basic federal and
provincial rates 44.5% 44.5% 44.5%
Increase (decrease) resulting from:
Manufacturing and processing
profits deductions (3.7) (3.7) (4.2)
Non-deductible amortization
of goodwill 8.3 17.5 (16.9)
Large corporations tax 3.8 7.6 (7.7)
Non-deductible reserves 3.9 5.7 (18.9)
Other, net 0.7 0.1 (1.1)
- ------------------------------------------------------------------------------
Effective rates 57.5% 71.7% (4.3)%
==============================================================================
As at December 31, 1996, the Company had $39.1 million (1995 - $41.5 million)
excess of undepreciated capital cost of its buildings and equipment over the net
book value of these assets. This excess is available to reduce future years'
earnings for income tax purposes. The Company also has non-capital losses,
carried forward for tax purposes, of $27.7 million (1995 - $55.3 million) the
benefit of which has not been reflected in the accounts. All non-capital losses
are available for carryforward through their expiration in years 1999 through
2001.
F-38
<PAGE> 45
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
12. LEASE COMMITMENTS
The Company has entered into various operating leases for certain of its
premises, computer equipment, vending equipment and coolers, manufacturing
equipment and motor vehicles. Operating lease expenses during the year were
$14.6 million (1995 - $10.0 million, 1994 - $6.4 million). Future minimum
payments under these leases are as follows:
(in thousands of Canadian dollars)
- --------------------------------------------------------------------------------
1997 $ 15,362
1998 13,436
1999 10,673
2000 7,015
2001 5,171
thereafter 10,103
- --------------------------------------------------------------------------------
$ 61,760
================================================================================
13. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in current assets and liabilities pertaining to operating activities
were as follows:
(in thousands of Canadian dollars) 1996 1995 1994
- -----------------------------------------------------------------------------
CURRENT ASSETS
Trade accounts receivable $ 27,623 $ 22,784 $(23,942)
Inventories 357 1,798 3,053
Prepaid expenses and other assets 552 2,180 (4,214)
- -----------------------------------------------------------------------------
28,532 26,762 (25,103)
- -----------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable 5,284 (7,313) 2,698
Accrued expenses (3,547) 1,173 (38,996)
Due to related companies (5,904) (17,724) 12,349
Other (5,238) (2,399) 28,813
- -----------------------------------------------------------------------------
(9,405) (26,263) 4,864
- -----------------------------------------------------------------------------
$ 19,127 $ 499 $(20,239)
=============================================================================
Cash payments during the year
were as follows:
(in thousands of Canadian dollars) 1996 1995 1994
- -----------------------------------------------------------------------------
Interest $ 31,130 $ 43,584 $ 38,582
=============================================================================
Income taxes $ 3,320 $ 4,389 $ 3,947
=============================================================================
F-39
<PAGE> 46
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
14. UNITED STATES ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada (Canadian GAAP) which
conform in all material respects with those in the United States (U.S. GAAP),
except as follows:
EARNINGS PER SHARE Under U.S. GAAP, primary earnings per share is determined
as if all dilutive common stock equivalents, such as stock options, were
exercised at the beginning of the year, and that the funds obtained were used
to purchase common stock of the Company at the average market price during the
year. Fully diluted earnings per share assumes that the proceeds from the
issuance of dilutive common stock equivalents were used to purchase the
Company's common stock at the higher of its market value at the end of the
year or the average during the year.
POSTRETIREMENT BENEFITS The Company sponsors an unfunded defined benefit
postretirement plan providing healthcare and life insurance benefits to
substantially all employees who retire after qualifying for such benefits. For
Canadian GAAP purposes amounts paid out in benefits are treated as a period
expense. Post retirement benefits expense included in the reconciliation to U.S.
GAAP is comprised of the following components:
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Service cost attributed to
service during the year $ 527 $ 490
Interest cost on accumulated
postretirement benfit obligation 1,701 1,602
Recognition of transitional obligation -- 21,250
- --------------------------------------------------------------------------------
Postretirement benefits expense $ 2,228 $ 23,342
================================================================================
Amounts recognized in the consolidated balance sheets reconciled to U.S. GAAP at
December 31 represent unfunded previously expensed obligations as follows:
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 11,024 $ 10,386
Active plan participants eligible to retire 2,834 2,670
Other active plan participants 10,104 9,520
- --------------------------------------------------------------------------------
Total accumulated postretirement
benefits obligation $ 23,962 $ 22,576
================================================================================
Significant actuarial assumptions used in determining the accumulated
postretirement benefit obligation are as follows:
1996 1995
- --------------------------------------------------------------------------------
Discount rate 7.5% 7.5%
Rate of increase in cost of benefits 5.5% 5.5%
- --------------------------------------------------------------------------------
The effect of a 1% increase in the assumed healthcare cost trend rate is not
significant.
INCOME TAXES For reconciliation purposes to U.S. GAAP, the Company has applied
the provisions of SFAS 109 "Accounting for Income Taxes", whereby the liability
method is used in accounting for income taxes. SFAS 109 requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets and
liabilities using enacted tax rates that will be in effect for the year in which
the differences are expected to reverse.
F-40
<PAGE> 47
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
Significant components of the Company's deferred tax assets and liabilities as
of December 31 are as follows:
(in thousands of Canadian dollars) 1996 1995
- --------------------------------------------------------------------------------
Deferred tax assets
Fixed assets $ 21,144 $ 21,837
Restructuring costs 7,170 13,426
Postretirement benefits 10,543 9,933
Non-capital loss carry forwards 5,263 10,700
- --------------------------------------------------------------------------------
44,120 55,896
Valuation allowance for deferred tax assets (17,988) (16,530)
- --------------------------------------------------------------------------------
Total deferred tax assets 26,132 39,366
Deferred tax liabilities
Pension surplus (10,904) (8,934)
- --------------------------------------------------------------------------------
Net deferred tax asset $ 15,228 $ 30,432
- --------------------------------------------------------------------------------
STOCK-BASED COMPENSATION For reconciliation purposes to U.S. GAAP, the Company
has chosen to follow APB 25 in accounting for employee stock options. The
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of the grant and accordingly no compensation
expense has been included in the Company's reconciliation of net income under
U.S. GAAP.
NEW PRONOUNCEMENTS The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standards No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" ('SFAS 125')
and No. 128 "Earnings per Share" ('SFAS 128'). SFAS 125 and 128 are effective
for the Company's December 31, 1997 year end. The Company has not determined the
impact, if any, of SFAS 125 or 128 on its consolidated financial statements.
The following table reconciles net income and shareholders' equity as presented
under Canadian GAAP in these consolidated financial statements to what would
have been reported had the consolidated financial statements been prepared under
United States GAAP.
Net Income (Loss) Available to
(in thousands of Common Shareholders Shareholders' Equity
Canadian dollars) 1996 1995 1994 1996 1995
- --------------------------------------------------------------------------------
Canadian GAAP $ 11,556 $ 537 $ (18,731) $ 58,581 $ 88,886
Income tax
provision 176 10,846 1,578 11,022 10,846
Postretirement
benefits cost (1,386) (22,576) - (23,962) (22,576)
- --------------------------------------------------------------------------------
$ 10,346 $ (11,193) $ (17,153) $ 45,641 $ 77,156
================================================================================
Net income
(loss) per
common share
Primary 0.25 (0.28) (0.43)
Fully-diluted 0.24 (0.28) (0.43)
================================================================================
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION The definition of cash
used in the consolidated statement of changes in financial position includes
cash less bank indebtedness. Under U.S. GAAP, cash would
F-41
<PAGE> 48
Coca-Cola Beverages Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
In Canadian dollars
exclude bank indebtedness of $5.4 million (1995 - $0.4 million, 1994 - $14.5
million) and changes in bank indebtedness would be disclosed as a financing
activity.
STOCK-BASED COMPENSATION PLANS FASB Statement No. 123 "Accounting for
Stock-Based Compensation" (SFAS 123) provides guidelines as to the disclosure
and calculation of the cost of stock-based compensation plans. The current
status of the Company's stock option plan is outlined in note 10. Generally,
options granted under the Company's stock option plan are granted at the market
value of the stock on the date of issue, vest over a three-year period and
expire ten years subsequent to award. Under SFAS 123, the fair value of options
granted in 1995 and 1996 is calculated using the Black-Scholes option pricing
model with the following assumptions: dividend yield of 0%, expected volatility
of 28%, a risk free interest rate of 6.2% and an expected life of 10 years. The
resulting weighted average fair value of options issued in 1996 is $5.76 (1995 -
$2.92).
If compensation cost for the Company's 1996 and 1995 stock-based compensation
plans had been determined on a basis consistent with SFAS 123, the Company's net
income and net income per common share would approximate:
1996 1995
(in thousands
of Canadian dollars
except per
share amounts) As Reported Pro Form As Reported Pro Forma
- -------------------------------------------------------------------------------
Net Income - U.S. GAAP $10,346 $8,592 $(11,193) $(11,927)
- -------------------------------------------------------------------------------
Net Income per Common
Share - U.S.GAAP 0.25 0.20 (0.28) (0.30)
- -------------------------------------------------------------------------------
15. SUBSEQUENT EVENT
On August 7, 1997, Enterprises KOC Acquisition Company Ltd. (the "Offeror"), a
wholly-owned subsidiary of Coca-Cola Enterprises Inc. of Atlanta, Georgia,
U.S.A. purchased all of the common shares of the Company owned by CCL. In
connection with this change, all outstanding options issued under the Company's
stock option plan were fully exercisable. On September 11, 1997 the Offeror took
up and paid for all of the common shares of the Company deposited under its
offer to purchase dated August 13, 1997. The Offeror acquired the remaining
outstanding common shares of the Company in accordance with statutory compulsory
acquisition provisions. On September 12, 1997 the Company's Board of Directors
and certain officers resigned and new directors and officers were appointed.
16. COMPARATIVE FIGURES
Certain 1995 and 1994 comparative figures have been reclassified to reflect the
presentation adopted in 1996.
F-42
<PAGE> 49
COCA-COLA BEVERAGES LTD.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 28, 1997
F-43
<PAGE> 50
================================================================================
COCA-COLA BEVERAGES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
================================================================================
Unaudited
June 28, December 31,
1997 1996
------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 1,798 $ 1,990
Trade accounts receivable, net 44,395 40,532
Inventories 68,556 46,416
Prepaid expenses and other assets 16,802 15,094
--------- ---------
131,551 104,032
LAND, BUILDINGS AND EQUIPMENT 241,396 239,546
DEFERRED INCOME TAXES - 4,206
DEFERRED PENSION SURPLUS 27,218 24,438
GOODWILL 196,626 199,654
--------- ---------
$ 596,791 $ 571,876
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $ 10,673 $ 5,373
Accounts payable and accrued expenses 129,665 119,611
Due to related companies 19,064 13,311
--------- ---------
159,402 138,295
LONG-TERM DEBT 370,000 375,000
DEFERRED INCOME TAXES 773 -
SHAREHOLDERS' EQUITY
Share capital 226,938 226,016
Deficit (160,322) (167,435)
--------- ---------
66,616 58,581
--------- ---------
$ 596,791 $ 571,876
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-44
<PAGE> 51
================================================================================
COCA-COLA BEVERAGES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED SIX MONTHS ENDED
(in thousands of Canadian dollars except per share amounts)
================================================================================
June 28, June 29,
1997 1996
------------ ------------
Net operating revenues $455,949 $451,906
Cost of sales 285,184 285,147
-------- --------
Gross profit 170,765 166,759
Selling, general and administrative expenses 139,010 138,045
Amortization of goodwill 3,177 3,150
-------- --------
Operating income 28,578 25,564
Interest expense 11,970 17,307
Other deductions 4,306 1,680
-------- --------
Income before income taxes 12,302 6,577
Income tax expense 5,189 5,238
-------- --------
NET INCOME 7,113 1,339
Preferred share dividends - 1,271
-------- --------
Net income available to common shareholders $ 7,113 $ 68
======== ========
Net income per common share $ 0.17 $ -
======== ========
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-45
<PAGE> 52
================================================================================
COCA-COLA BEVERAGES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
UNAUDITED SIX MONTHS ENDED
(in thousands of Canadian dollars except per share amounts)
================================================================================
June 28, June 29,
1997 1996
------------ ------------
OPERATING ACTIVITIES
Net income $ 7,113 $ 1,339
Non-cash charges to operations
excluding restructuring:
Depreciation and other
non-cash expenses 17,077 16,821
Amortization of goodwill and
other amortization expense 3,177 4,990
Loss on disposal of land,
buildings and equipment 323 1,450
Deferred income taxes 4,979 3,890
Pension income (2,778) (2,198)
-------- --------
29,891 26,292
Net change in non-cash
working capital (11,905) (1,974)
-------- --------
Net cash provided from
operating activities 17,986 24,318
-------- --------
INVESTMENT ACTIVITIES
Additions to land, buildings
and equipment (22,676) (11,813)
Proceeds on disposal of land,
buildings and equipment 3,426 1,226
Purchase of distributor rights (150) -
-------- --------
(19,400) (10,587)
-------- --------
FINANCING ACTIVITIES
(Decrease) Increase to long-term debt (5,000) 14,600
Repurchase of preferred shares - (45,000)
Issuance of share capital 922 1,471
-------- --------
(4,078) (28,929)
-------- --------
DIVIDENDS - (1,271)
-------- --------
DECREASE IN CASH POSITION (5,492) (16,469)
CASH POSITION AT BEGINNING
OF THE PERIOD (3,383) 5,615
-------- --------
$ (8,875) $(10,854)
======== ========
CASH POSITION AT END
OF THE PERIOD
REPRESENTED BY:
Cash $ 1,798 $ 9,309
Bank indebtedness (10,673) (20,163)
-------- --------
$ (8,875) $(10,854)
======== ========
See Notes to Unaudited Condensed Consolidated Financial Statements.
F-46
<PAGE> 53
COCA-COLA BEVERAGES LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (Canadian GAAP) for interim financial
information. Accordingly, they do not include all information and footnotes
required by Canadian GAAP for complete financial statements. Canadian GAAP
principles conform in all material respects with accounting principles generally
accepted in the United States except as noted in note 2. In the opinion of
management, all adjustments consisting of normal recurring accruals considered
necessary for a fair presentation have been included. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's annual
report for the year ended December 31, 1996.
BASIS OF PRESENTATION - Coca-Cola Beverages Ltd. (the Company) is incorporated
under the Canada Business Corporations Act. The Company sells, distributes and
produces soft drink products and other beverages in Canada under license
agreements with Coca-Cola Ltd. (CCL) and other companies. The consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiary, Coca-Cola Bottling Ltd. Management of the Company is required to
make estimates in the preparation of the consolidated financial statements and
accompanying notes that affect reported amounts. Actual results could differ
from these estimates.
2. UNITED STATES ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with
Canadian GAAP which conform in all material respects with those in the United
States (U.S. GAAP), except as follows:
EARNINGS PER SHARE - Under U.S. GAAP, primary earnings per share is determined
as if all dilutive common stock equivalents, such as stock options, were
exercised at the beginning of the year, and that the funds obtained were used to
purchase common stock of the Company at the average market price during the
year. Fully diluted earnings per share assumes that the proceeds from the
issuance of dilutive common stock equivalents were used to purchase the
Company's common stock at the higher of its market value at the end of the year
or the average during the year.
POSTRETIREMENT BENEFITS - The Company sponsors an unfunded defined benefit
postretirement plan providing healthcare and life insurance benefits to
substantially all employees who retire after qualifying for such benefits. For
Canadian GAAP purposes amounts paid out in benefits are treated as a period
expense.
INCOME TAXES - For reconciliation purposes to U.S. GAAP, the Company has applied
the provisions of SFAS 109 "Accounting for Income Taxes", whereby the liability
method is used in accounting for income taxes. SFAS 109 requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets and
liabilities using enacted tax rates that will be in effect for the year in which
the differences are expected to reverse.
STOCK-BASED COMPENSATION - For reconciliation purposes to U.S. GAAP, the Company
has chosen to follow APB 25 in accounting for employee stock options. The
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of the grant and accordingly no compensation
expense has been included in the Company's reconciliation of net income under
U.S. GAAP.
F-47
<PAGE> 54
COCA-COLA BEVERAGES LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
The following table reconciles net income and shareholders' equity as presented
under Canadian GAAP in these unaudited condensed consolidated financial
statements to what would have been reported had the financial statements
been prepared under U.S. GAAP.
Net Income (Loss) Available
to Common Shareholders Shareholders' Equity
--------------------------- ---------------------------
UNAUDITED
(in thousands of For the Six Months ended JUNE 28, December 31,
Canadian dollars) 1997 1996 1997 1996
-------------------------- ------------ ------------
Canadian GAAP $ 7,113 $ 68 $ 66,616 $ 58,581
Income tax provision 656 88 11,678 11,022
Postretirement
benefits cost (748) (694) (24,710) (23,962)
-------- -------- -------- --------
$ 7,021 $ (538) $ 53,584 $ 45,641
-------- -------- -------- --------
Net income
(loss) per
common share $ 0.16 $ (0.01)
======== ========
STATEMENT OF CHANGES IN FINANCIAL POSITION - The definition of cash used in the
condensed consolidated statement of changes in financial position includes
cash less bank indebtedness. Under U.S. GAAP, changes in bank indebtedness would
be disclosed as a financing activity and cash would exclude bank indebtedness of
$10.7 million and $20.2 million for the periods ending June 28, 1997 and June
29, 1996, respectively. For the periods beginning January 1, 1997 and 1996, cash
would exclude $5.4 million and $447 thousand, respectively.
3. SUBSEQUENT EVENT
On August 7, 1997, Enterprises KOC Acquisition Company Ltd. (the "Offeror"), a
wholly-owned subsidiary of Coca-Cola Enterprises Inc. of Atlanta, Georgia,
U.S.A., purchased all of the common shares of the Company owned by CCL. In
connection with this change, all outstanding options issued under the Company's
stock option plan were fully exercisable. On September 11, 1997, the Offeror
took up and paid for all of the common shares of the Company deposited under its
offer to purchase dated August 13, 1997. The Offeror acquired the remaining
outstanding common shares of the Company in accordance with statutory compulsory
acquisition provisions. On September 12, 1997, the Company's Board of Directors
and certain officers resigned and new directors and officers were appointed.
F-48
<PAGE> 55
COCA-COLA ENTERPRISES INC.
PRO FORMA FINANCIAL STATEMENTS
PF
<PAGE> 56
COCA-COLA ENTERPRISES INC.
PRO FORMA FINANCIAL INFORMATION
INTRODUCTORY INFORMATION
The following unaudited pro forma combined condensed financial information sets
forth the combined results of operations and financial position of Coca-Cola
Enterprises Inc. (the "Company") and (i) SA Beverage Sales Holding NV, Coca-Cola
Enterprises SA (formerly known as Coca-Cola Beverages SA) and Coca-Cola
Production SA (collectively "France/ Belgium"), (ii) Amalgamated Beverages Great
Britain Limited ("Great Britain bottler"), (iii) Ouachita Coca-Cola Bottling
Company, Inc. ("Ouachita"), (iv) Coca-Cola Bottling Company West, Inc. and Grand
Forks Coca-Cola Bottling Company (collectively "Coke West"), (v) The Coca-Cola
Bottling Company of New York, Inc. ("Coke New York"), and (vi) Coca-Cola
Beverages Ltd. ("Coke Canada") assuming the Company purchased the Acquired
Companies (referring to all of the purchased companies, collectively) based on
the information set forth in the following Notes to Unaudited Pro Forma Combined
Condensed Financial Information. The unaudited pro forma combined condensed
financial statements do not include the impact from the proposed acquisition of
the Coca-Cola bottling operations in Luxembourg announced on July 21, 1997 for
approximately $20 million. The Company has recently begun due diligence
procedures to evaluate the assets and liabilities of the Luxembourg bottler.
There can be no assurance that the proposed acquisition of the Luxembourg
bottler will close.
Acquisitions
On February 21, 1996, the Company acquired Ouachita for a total transaction
value of approximately $316 million. The purchase price was paid in a
combination of cash, shares of the Company's common stock from treasury, and two
types of convertible preferred stock. The Ouachita bottling operations are
located in portions of Arkansas, Louisiana, and Mississippi.
On July 26, 1996, the Company acquired The Coca-Cola Company's bottling and
canning operations in France and Belgium for a transaction value of
approximately $915 million. The France/Belgium franchise territories include
approximately 90% of the population in France and all of the population in
Belgium.
On August 12, 1996, the Company acquired Coke West for a transaction value of
approximately $158 million. Coke West operates in franchise territories in
portions of Montana, Wyoming, North Dakota, South Dakota, and Minnesota.
On February 10, 1997, the Company purchased the Great Britain bottler from The
Coca-Cola Company and Cadbury Schweppes plc for an aggregate transaction value
of approximately 1.2 billion British Pounds Sterling, or approximately $2
billion. The Great Britain bottler produces and distributes beverage products of
The Coca-Cola Company and Cadbury Schweppes plc in Great Britain.
On August 7, 1997, the Company acquired The Coca-Cola Company's 48% interest in
Coke Canada and increased its ownership interest in Coke New York to 53% by
acquiring The Coca-Cola Company's 49% interest in Coke New York. In September
1997 the Company acquired the remaining shares of Coke Canada held by the
public. The Company is seeking to acquire the remaining shares of Coke New York
currently held by private investors.
PF-1
<PAGE> 57
COCA-COLA ENTERPRISES INC.
PRO FORMA FINANCIAL INFORMATION
INTRODUCTORY INFORMATION - (CONTINUED)
The total transaction value (purchase price, acquired debt, and preferred stock)
for all ownership interests in Coke New York and Coke Canada is estimated to be
$1.69 billion including the anticipated cost of the remaining Coke New York
shares. The Company has financed the acquisition through the issuance of debt.
Coke Canada operates in parts of all 10 Canadian provinces. Coke New York
operates in the New York metropolitan area, certain other areas in the state of
New York, and in parts of Connecticut, Massachusetts, New Hampshire, New Jersey,
and Vermont.
The purchase method of accounting has been used for all acquisitions and,
accordingly, the results of operations of acquired companies are included in the
Company's consolidated statement of operations beginning with periods
approximating the respective dates of acquisition. In addition, assets and
liabilities of all acquisitions except Coke New York and Coke Canada have been
included in the Company's June 27, 1997 consolidated balance sheet at their
estimated fair values at date of acquisition.
The acquisitions were initially financed through short-term bank borrowings,
commercial paper and seller financing. The Company has refinanced, and intends
to further refinance, portions of the short-term borrowings on a long-term
basis. With respect to international acquisitions, the Company has financed the
acquisitions in local currency (or alternatively, executed currency agreements)
to eliminate exposure to fluctuating currencies on the Company's acquisition
cost.
The following unaudited pro forma financial information should be read in
conjunction with the Company's audited and unaudited financial statements,
including the notes thereto, contained in: (i) the Coca-Cola Enterprises' Annual
Report on Form 10-K for the year ended December 31, 1996 and (ii) Coca-Cola
Enterprises' Quarterly Reports on Form 10-Q for the quarterly periods ended
March 29, 1996, June 28, 1996, September 27, 1996, March 28, 1997, and June 27,
1997.
The unaudited pro forma combined condensed statements of operations for the six
months ended June 27, 1997 and for the year ended December 31, 1996 and the
unaudited pro forma combined condensed statements of operations for each of the
quarterly periods ended March 29, 1996, June 28, 1996, September 27, 1996,
December 31, 1996, March 28, 1997, and June 27, 1997 present the combined
operating results of the Company and the Acquired Companies as if the Coke New
York pending acquisition and the completed acquisitions described above had
occurred at the beginning of 1996. The unaudited pro forma combined condensed
balance sheet as of June 27, 1997 includes the unaudited balance sheet of Coke
Canada as of June 28, 1997 and Coke New York as of June 27, 1997. The unaudited
pro forma combined condensed balance sheet as of June 27, 1997 presents the
combined financial position of the Company and the Acquired Companies as if the
Coke New York and Coke Canada acquisitions described above had occurred on June
27, 1997. There can be no assurance that the acquisition of the remaining 47%
ownership interest in Coke New York currently held by private investors will
close. These pro forma financial statements reflect the use of the purchase
method of accounting and are based on the historical financial information of
the Company and the Acquired Companies adjusted for the pro forma adjustments
described in the attached notes to unaudited pro forma combined condensed
financial information. Certain reclassifications and adjustments have been made
to the historical financial statements of the Acquired Companies to conform to
the Company's financial presentation and interim reporting dates.
PF-2
<PAGE> 58
COCA-COLA ENTERPRISES INC.
PRO FORMA FINANCIAL INFORMATION
INTRODUCTORY INFORMATION - (CONTINUED)
The pro forma adjustments in certain cases are based on preliminary estimates of
the fair value of assets and liabilities of the Acquired Companies, which may
require further adjustment when additional information is obtained as of the
acquisition date and during the one year period subsequent to acquisition. Any
reallocation of the purchase price based on final valuations of assets and
liabilities should not differ significantly from the original estimates and
should not have a material impact on the pro forma financial statements.
The pro forma financial information is presented for illustrative purposes only
as prepared under guidelines of the Securities and Exchange Commission and is
not intended to be indicative of the operating results that would have occurred
if the acquisitions had been consummated in accordance with the assumptions set
forth below, nor is it intended to be a forecast of future operating results or
financial position.
PF-3
<PAGE> 59
COCA-COLA ENTERPRISES INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 27, 1997
(UNAUDITED; IN MILLIONS EXCEPT PER SHARE DATA)
COCA-COLA GREAT BRITAIN COKE
ENTERPRISES BOTTLER NEW YORK
(HISTORICAL) (HISTORICAL) (HISTORICAL)
------------- ------------- -------------
NET OPERATING REVENUES ........... $5,046 $ 166 $ 388
Cost of sales .................... 3,162 113 223
------ ------ ------
GROSS PROFIT ..................... 1,884 53 165
Selling, delivery & administrative
expenses ........................ 1,516 46 165
------ ------ ------
OPERATING INCOME ................. 368 7 -
Interest expense, net ............ 234 - 15
Other nonoperating expenses
(income), net ................... 6 - (9)
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES 128 7 (6)
Income tax expense (benefit) ..... 50 (1) -
------ ------ ------
NET INCOME (LOSS) ................ 78 8 (6)
Preferred stock dividends ........ 2 - 10
------ ------ ------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHARE OWNERS .......... $ 76 $ 8 $ (16)
====== ====== ======
AVERAGE COMMON SHARES OUTSTANDING 381
======
NET INCOME PER COMMON SHARE ...... $ 0.20
======
OTHER OPERATING DATA:
Operating Income ............... $ 368 $ 7 $ -
Depreciation ................... 259 9 23
Amortization ................... 171 - 6
------ ------ ------
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION ... $ 798 $ 16 $ 29
====== ====== ======
COKE PRO PRO
CANADA FORMA FORMA
(continued) (HISTORICAL) ADJUSTMENTS COMBINED
- ----------- ------------- ------------- -------------
NET OPERATING REVENUES ........... $ 401 $ - $6,001
Cost of sales .................... 283 - 3,781
------ ------ ------
GROSS PROFIT ..................... 118 - 2,220
Selling, delivery & administrative
expenses ........................ 98 33 1,858
------ ------ ------
OPERATING INCOME ................. 20 (33) 362
Interest expense, net ............ 9 45 303
Other nonoperating expenses
(income), net ................... 3 - -
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES 8 (78) 59
Income tax expense (benefit) ..... 3 (28) 24
------ ------ ------
NET INCOME (LOSS) ................ 5 (50) 35
Preferred stock dividends ........ - (10) 2
------ ------ ------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHARE OWNERS .......... $ 5 $ (40) $ 33
====== ====== ======
AVERAGE COMMON SHARES OUTSTANDING 381
======
NET INCOME PER COMMON SHARE ...... $ 0.09
======
OTHER OPERATING DATA:
Operating Income ............... $ 20 $ (33) $ 362
Depreciation ................... 13 - 304
Amortization ................... 2 33 212
------ ------ ------
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION ... $ 35 $ - $ 878
====== ====== ======
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results. The Pro Forma Adjustments for each
acquired company are detailed by company on the following page.
PF-4
<PAGE> 60
COCA-COLA ENTERPRISES INC.
DETAIL OF PRO FORMA ADJUSTMENTS BY COMPANY
FOR THE SIX MONTHS ENDED JUNE 27, 1997
(UNAUDITED; IN MILLIONS)
PRO FORMA ADJUSTMENTS
-------------------------------------------------------
GREAT BRITAIN COKE COKE
BOTTLER NEW YORK CANADA TOTAL
------------- ------------- ------------- -------------
NET OPERATING REVENUES .. $ - $ - $ - $ -
Cost of sales ........... - - - -
---- ---- ---- ----
GROSS PROFIT ............ - - - -
Selling, delivery &
administrative
expenses ............... 10 (A) 8 (A) 15 (A) 33
---- ---- ---- ----
OPERATING INCOME ........ (10) (8) (15) (33)
Interest expense, net ... 16 (B) 16 (B) 13 (B) 45
Other nonoperating
expenses (income), net . - - - -
---- ---- ---- ----
INCOME (LOSS) BEFORE
INCOME TAXES ........... (26) (24) (28) (78)
Income tax expense
(benefit)............... (5)(C) (11)(C) (12)(C) (28)
---- ---- ---- ----
NET INCOME (LOSS) ....... (21) (13) (16) (50)
Preferred stock
dividends .............. - (10)(D) - (10)
---- ---- ---- ----
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHARE OWNERS ........... $(21) $ (3) $(16) $(40)
==== ==== ==== ====
OTHER OPERATING DATA:
Operating Income ..... $(10) $ (8) $(15) $(33)
Depreciation ......... - - - -
Amortization ......... 10 8 15 33
---- ---- ---- ----
OPERATING INCOME
BEFORE DEPRECIATION
AND AMORTIZATION ....... $ - $ - $ - $ -
==== ==== ==== ====
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements.
PF-5
<PAGE> 61
COCA-COLA ENTERPRISES INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 28, 1997 AND JUNE 27, 1997
(UNAUDITED; IN MILLIONS EXCEPT PER SHARE DATA)
MARCH 28, JUNE 27,
1997 1997 TOTAL
------------- ------------- -------------
NET OPERATING REVENUES ........ $2,640 $3,361 $6,001
Cost of sales ................. 1,667 2,114 3,781
------ ------ ------
GROSS PROFIT .................. 973 1,247 2,220
Selling, delivery &
administrative expenses ...... 937 921 1,858
------ ------ ------
OPERATING INCOME .............. 36 326 362
Interest expense, net ......... 150 153 303
Other nonoperating expenses
(income), net ................ (4) 4 -
------ ------ ------
INCOME BEFORE INCOME TAXES .... (110) 169 59
Income tax expense (benefit) .. (42) 66 24
------ ------ ------
NET INCOME .................... (68) 103 35
Preferred stock dividends ..... 2 - 2
------ ------ ------
NET INCOME APPLICABLE TO
COMMON SHARE OWNERS .......... $ (70) $ 103 $ 33
====== ====== ======
AVERAGE COMMON SHARES
OUTSTANDING .................. 377 384 381
====== ====== ======
NET INCOME PER COMMON SHARE ... $(0.18) $ 0.27 $ 0.09
====== ====== ======
OTHER OPERATING DATA:
Operating Income ........... $ 36 $ 326 $ 362
Depreciation ............... 148 156 304
Amortization ............... 121 91 212
------ ------ ------
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION ............... $ 305 $ 573 $ 878
====== ====== ======
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results.
PF-6
<PAGE> 62
COCA-COLA ENTERPRISES INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED; IN MILLIONS EXCEPT PER SHARE DATA)
GREAT
COCA-COLA FRANCE/ BRITAIN
ENTERPRISES BELGIUM BOTTLER
(HISTORICAL) (HISTORICAL) (HISTORICAL)
------------- ------------- -------------
NET OPERATING REVENUES.... $ 7,921 $ 846 $ 1,511
Cost of sales............. 4,896 570 976
------- ------- -------
GROSS PROFIT.............. 3,025 276 535
Selling, delivery &
administrative
expenses............... 2,480 223 341
------- ------- -------
OPERATING INCOME.......... 545 53 194
Interest expense, net..... 351 6 12
Other nonoperating
expenses (income)...... - 2 -
------- ------- -------
INCOME (LOSS)
BEFORE INCOME TAXES.... 194 45 182
Income tax expense
(benefit).............. 80 2 60
------- ------- -------
NET INCOME (LOSS)......... 114 43 122
Preferred stock
dividends.............. 8 - -
------- ------- -------
NET INCOME (LOSS)
APPLICABLE TO
COMMON SHARE OWNERS.... $ 106 $ 43 $ 122
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING............ 375
=======
NET INCOME (LOSS)
PER COMMON SHARE....... $ 0.28
=======
OTHER OPERATING DATA:
Operating Income....... $ 545 $ 53 $ 194
Depreciation........... 392 32 56
Amortization........... 235 5 -
------- ------- -------
OPERATING INCOME
BEFORE DEPRECIATION
AND AMORTIZATION....... $ 1,172 $ 90 $ 250
======= ======= =======
COKE COKE
OUACHITA WEST NEW YORK
(continued) (HISTORICAL) (HISTORICAL) (HISTORICAL)
- ----------- ------------- ------------- -------------
NET OPERATING REVENUES.... $ 20 $ 69 $ 753
Cost of sales............. 12 44 467
------- ------- -------
GROSS PROFIT.............. 8 25 286
Selling, delivery &
administrative
expenses............... 14 26 311
------- ------- -------
OPERATING INCOME.......... (6) (1) (25)
Interest expense, net..... 1 7 26
Other nonoperating
expenses (income)...... (7) - (6)
------- ------- -------
INCOME (LOSS)
BEFORE INCOME TAXES.... - (8) (45)
Income tax expense
(benefit).............. - - -
------- ------- -------
NET INCOME (LOSS)......... - (8) (45)
Preferred stock
dividends.............. - - 19
------- ------- -------
NET INCOME (LOSS)
APPLICABLE TO
COMMON SHARE OWNERS.... $ - $ (8) $ (64)
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING............
NET INCOME (LOSS)
PER COMMON SHARE.......
OTHER OPERATING DATA:
Operating Income....... $ (6) $ (1) $ (25)
Depreciation........... 1 2 58
Amortization........... 1 3 10
------- ------- -------
OPERATING INCOME
BEFORE DEPRECIATION
AND AMORTIZATION....... $ (4) $ 4 $ 43
======= ======= =======
COKE PRO PRO
CANADA FORMA FORMA
(continued) (HISTORICAL) ADJUSTMENTS COMBINED
- ----------- ------------- ------------- -------------
NET OPERATING REVENUES.... $ 818 $ (60) $11,878
Cost of sales............. 576 (54) 7,487
------- ------- -------
GROSS PROFIT.............. 242 (6) 4,391
Selling, delivery &
administrative
expenses............... 196 117 3,708
------- ------- -------
OPERATING INCOME.......... 46 (123) 683
Interest expense, net..... 23 244 670
Other nonoperating
expenses (income)...... 2 - (9)
------- ------- -------
INCOME (LOSS)
BEFORE INCOME TAXES.... 21 (367) 22
Income tax expense
(benefit).............. 12 (142) 12
------- ------- -------
NET INCOME (LOSS)......... 9 (225) 10
Preferred stock
dividends.............. 1 (18) 10
------- ------- -------
NET INCOME (LOSS)
APPLICABLE TO
COMMON SHARE OWNERS.... $ 8 $ (207) $ -
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING............ 375
=======
NET INCOME (LOSS)
PER COMMON SHARE....... $ -
=======
OTHER OPERATING DATA:
Operating Income....... $ 46 $ (123) $ 683
Depreciation........... 24 - 565
Amortization........... 5 121 380
------- ------- -------
OPERATING INCOME
BEFORE DEPRECIATION
AND AMORTIZATION....... $ 75 $ (2) $ 1,628
======= ======= =======
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results. The Pro Forma Adjustments for each
Acquired Company are detailed by company on the following page.
PF-7
<PAGE> 63
COCA-COLA ENTERPRISES INC.
DETAIL OF PRO FORMA ADJUSTMENTS BY COMPANY
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED; IN MILLIONS)
PRO FORMA ADJUSTMENTS
------------------------------------
GREAT
FRANCE/ BRITAIN
BELGIUM BOTTLER OUACHITA
---------- ---------- ----------
NET OPERATING REVENUES................ $ (36)(E) $ - $ -
(13)(F)
(11)(G)
Cost of sales......................... (35)(E) - -
(12)(F)
(7)(H)
----- ----- -----
GROSS PROFIT.......................... (6) - -
Selling, delivery & administrative
expenses............................ 5 (A) 68 (A) 1 (A)
(4)(I)
----- ----- -----
OPERATING INCOME...................... (7) (68) (1)
Interest expense, net................. 35 (B) 152 (B) -
Other nonoperating
expenses (income), net............... - - -
----- ----- -----
INCOME (LOSS) BEFORE INCOME TAXES..... (42) (220) (1)
Income tax expense (benefit).......... (5)(C) (75)(C) (1)(C)
----- ----- -----
NET INCOME (LOSS)..................... (37) (145) -
Preferred stock dividends............. - - 1 (J)
----- ----- -----
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHARE OWNERS........................ $ (37) $(145) $ (1)
===== ===== =====
OTHER OPERATING DATA:
Operating Income................... (7) (68) (1)
Depreciation....................... - - -
Amortization....................... $ 5 $ 68 $ 1
----- ----- -----
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION........................ $ (2) $ - $ -
===== ===== =====
PRO FORMA ADJUSTMENTS
-----------------------
COKE COKE
(continued) WEST NEW YORK
- ----------- ---------- ----------
NET OPERATING REVENUES................ $ - $ -
Cost of sales......................... - -
----- -----
GROSS PROFIT.......................... - -
Selling, delivery &
administrative expenses.............. 1 (A) 16 (A)
----- -----
OPERATING INCOME...................... (1) (16)
Interest expense, net................. - 32 (B)
Other nonoperating
expenses (income), net............... - -
----- -----
INCOME (LOSS) BEFORE INCOME TAXES..... (1) (48)
Income tax expense (benefit).......... - (34)(C)
----- -----
NET INCOME (LOSS)..................... (1) (14)
Preferred stock dividends............. - (19)(D)
----- -----
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHARE OWNERS........................ $ (1) $ 5
===== =====
OTHER OPERATING DATA:
Operating Income................... (1) (16)
Depreciation....................... - -
Amortization....................... $ 1 $ 16
----- -----
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION........................ $ - $ -
===== =====
(continued) PRO FORMA ADJUSTMENTS
- ----------- -----------------------
COKE
CANADA TOTAL
---------- ----------
NET OPERATING REVENUES................ $ - $ (60)
Cost of sales......................... - (54)
----- -----
GROSS PROFIT.......................... - (6)
Selling, delivery &
administrative expenses.............. 30 (A) 117
----- -----
OPERATING INCOME...................... (30) (123)
Interest expense, net................. 25 (B) 244
Other nonoperating
expenses (income), net............... - -
----- -----
INCOME (LOSS) BEFORE INCOME TAXES..... (55) (367)
Income tax expense (benefit).......... (27)(C) (142)
----- -----
NET INCOME (LOSS)..................... (28) (225)
Preferred stock dividends............. - (18)
----- -----
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHARE OWNERS........................ $ (28) $(207)
===== =====
OTHER OPERATING DATA:
Operating Income................... (30) (123)
Depreciation....................... - -
Amortization....................... $ 30 $ 121
----- -----
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION........................ $ - $ (2)
===== =====
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements.
PF-8
<PAGE> 64
COCA-COLA ENTERPRISES INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 29, 1996, JUNE 28, 1996, SEPTEMBER 27, 1996,
AND DECEMBER 31, 1996
(UNAUDITED; IN MILLIONS EXCEPT PER SHARE DATA)
MARCH 29, JUNE 28, SEPTEMBER 27,
1996 1996 1996
------------- ------------- -------------
NET OPERATING REVENUES........ $ 2,533 $ 3,306 $ 3,134
Cost of sales................. 1,595 2,099 1,978
------- ------- -------
GROSS PROFIT.................. 938 1,207 1,156
Selling, delivery &
administrative expenses..... 872 925 958
------- ------- -------
OPERATING INCOME.............. 66 282 198
Interest expense, net......... 168 172 168
Other nonoperating expenses
(income), net............... (6) 4 1
------- ------- -------
INCOME (LOSS) BEFORE INCOME
TAXES....................... (96) 106 29
Income tax expense (benefit).. (35) 37 15
------- ------- -------
NET INCOME (LOSS)............. (61) 69 14
Preferred stock dividends..... 4 2 2
------- ------- -------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHARE OWNERS...... $ (65) $ 67 $ 12
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING................. 379 370 373
======= ======= =======
NET INCOME (LOSS) PER COMMON
SHARE....................... $ (0.17) $ 0.18 $ 0.03
======= ======= =======
OTHER OPERATING DATA:
Operating Income........... $ 66 $ 282 $ 198
Depreciation............... 132 139 140
Amortization............... 89 95 100
------- ------- -------
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION................ $ 287 $ 516 $ 438
======= ======= =======
(continued) DECEMBER 31, FULL YEAR
- ----------- 1996 1996
------------- -------------
NET OPERATING REVENUES........ $ 2,905 $11,878
Cost of sales................. 1,815 7,487
------- -------
GROSS PROFIT.................. 1,090 4,391
Selling, delivery &
administrative expenses..... 953 3,708
------- -------
OPERATING INCOME.............. 137 683
Interest expense, net......... 162 670
Other nonoperating expenses
(income), net............... (8) (9)
------- -------
INCOME (LOSS) BEFORE INCOME
TAXES....................... (17) 22
Income tax expense (benefit).. (5) 12
------- -------
NET INCOME (LOSS)............. (12) 10
Preferred stock dividends..... 2 10
------- -------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHARE OWNERS...... $ (14) $ -
======= =======
AVERAGE COMMON SHARES
OUTSTANDING................. 376 375
======= =======
NET INCOME (LOSS) PER COMMON
SHARE....................... $ (0.04) $ -
======= =======
OTHER OPERATING DATA:
Operating Income........... $ 137 $ 683
Depreciation............... 154 565
Amortization............... 96 380
------- -------
OPERATING INCOME BEFORE
DEPRECIATION AND
AMORTIZATION................ $ 387 $ 1,628
======= =======
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements. Pro forma combined information should not be construed
to be forecasts of future operating results.
PF-9
<PAGE> 65
COCA-COLA ENTERPRISES INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 27, 1997
(UNAUDITED; IN MILLIONS)
COCA-COLA COKE COKE
ENTERPRISES NEW YORK CANADA
(HISTORICAL) (HISTORICAL) (HISTORICAL)
------------ ------------ ------------
ASSETS
CURRENT
Cash and cash investments,
at cost approximating
market.................... $ 31 $ - $ 1
Trade accounts receivable,
net....................... 1,152 93 32
Inventories................. 476 28 50
Prepaid expenses and other
assets.................... 311 3 12
------- ------- --------
Total Current Assets.... 1,970 124 95
PROPERTY, PLANT, AND EQUIPMENT,
NET ......................... 3,288 189 175
FRANCHISES AND OTHER NONCURRENT
ASSETS, NET.................. 9,610 291 162
------- ------- -------
$14,868 $ 604 $ 432
======= ======= =======
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued
expenses.................. $ 1,840 $ 122 $ 125
Current portion of long-term
debt...................... 2,117 35 8
------- ------- -------
Total Current
Liabilities........... 3,957 157 133
LONG-TERM DEBT, LESS CURRENT
MATURITIES................... 5,129 323 268
RETIREMENT AND INSURANCE
PROGRAMS AND OTHER LONG-TERM
OBLIGATIONS................. 849 58 -
LONG-TERM DEFERRED INCOME TAX
LIABILITIES.................. 3,293 - (8)
SHARE-OWNERS' EQUITY
Preferred stock............. - 189 -
Common stock................ 442 - 161
Additional paid-in capital.. 1,303 22 3
Reinvested earnings......... 301 (125) (125)
Cumulative effect of
currency translations..... (23) - -
Cost of common stock in
treasury.................. (383) (20) -
------- ------- -------
Total Share-Owners'
Equity................ 1,640 66 39
------- ------- -------
$14,868 $ 604 $ 432
======= ======= =======
(continued) PRO FORMA PRO FORMA
- ----------- ADJUSTMENTS COMBINED
------------- -------------
ASSETS
CURRENT
Cash and cash investments,
at cost approximating
market.................... $ - $ 32
Trade accounts receivable,
net....................... - 1,277
Inventories................. - 554
Prepaid expenses and other
assets.................... - 326
------- -------
Total Current Assets.... - 2,189
PROPERTY, PLANT, AND EQUIPMENT,
NET ......................... - 3,652
FRANCHISES AND OTHER NONCURRENT
ASSETS, NET.................. 2,019 (L) 12,082
------- -------
$ 2,019 $17,923
======= =======
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued
expenses.................. $ 87 (L) $ 2,174
Current portion of long-term
debt...................... - 2,160
------- -------
Total Current
Liabilities........... 87 4,334
LONG-TERM DEBT, LESS CURRENT
MATURITIES................... 1,103 (K) 6,823
RETIREMENT AND INSURANCE
PROGRAMS AND OTHER LONG-TERM
OBLIGATIONS................. - 907
LONG-TERM DEFERRED INCOME TAX
LIABILITIES.................. 934 (L) 4,219
SHARE-OWNERS' EQUITY
Preferred stock............. (189)(L) -
Common stock................ (161)(L) 442
Additional paid-in capital.. (25)(L) 1,303
Reinvested earnings......... 250 (L) 301
Cumulative effect of
currency translations..... - (23)
Cost of common stock in
treasury.................. 20 (L) (383)
------- -------
Total Share-Owners'
Equity................ (105) 1,640
------- -------
$ 2,019 $17,923
======= =======
The introductory information contained on page PF-1 and the accompanying Notes
to Unaudited Pro Forma Combined Condensed Financial Information are an integral
part of these statements.
PF-10
<PAGE> 66
COCA-COLA ENTERPRISES INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
The historical information for each company reflected in the accompanying
unaudited pro forma combined condensed financial statements have been determined
using United States generally accepted accounting principles.
The following notes describe the pro forma adjustments necessary to reflect the
effects of the acquisitions. Actual adjustments to account for the acquisitions
under the purchase method are dependent upon the final valuations of the various
assets and liabilities of the Acquired Companies for all acquisitions other than
Ouachita acquired in February 1996.
NOTE A - Pro forma adjustments to "Selling, delivery & administrative expenses"
reflect amortization of the assigned value of the rights of the Acquired
Companies to market, produce and distribute beverage products in their franchise
territories principally over 40 years, net of franchise amortization recorded by
the Acquired Companies.
NOTE B - The pro forma adjustments to "Interest expense, net" reflect additional
interest costs on debt issued to fund the cash portion of the purchase price
based on estimated financing costs for each acquisition and, in certain cases,
to repay assumed debt contemplating the long-term fixed rate financing of the
transactions. The acquisitions were initially financed through short-term bank
borrowings, commercial paper, and seller financing. The Company has refinanced,
and intends to further refinance, portions of the short-term borrowings on a
long-term basis.
NOTE C - The pro forma adjustments to "Income tax expense (benefit)" reflect the
income tax attributes of the foregoing adjustments and the effect on the
consolidated tax provision after inclusion of the Acquired Companies. On a
quarterly basis, the pro forma adjustments reflect modifications to the
Company's estimated effective annual income tax rate for full-year 1996 and 1997
giving effect to the results of operations of the Acquired Companies and the pro
forma adjustments.
NOTE D - The pro forma adjustments to "Preferred stock dividends" reflect the
elimination of preferred stock dividends associated with the Company's purchase
of 100% of the outstanding Coke New York preferred stock.
NOTE E - This pro forma adjustment to "Net Operating Revenues" and "Cost of
Sales" gives effect to the elimination of historical sales by France/Belgium to
the Company's Netherlands operations.
NOTE F - This pro forma adjustment to "Net Operating Revenues" and "Cost of
Sales" gives effect to the elimination of historical product sales by
France/Belgium to the German Coca-Cola bottler owned by The Coca-Cola Company.
These sales were discontinued as a condition of the purchase agreement.
NOTE G - This pro forma adjustment to "Net operating revenues" gives effect to
the elimination of certain marketing support funding provided by The Coca-Cola
Company. As a condition of the purchase agreement, the marketing support
arrangement between France/Belgium and The Coca-Cola Company has reduced the
funding. Therefore, France/Belgium will no longer be receiving this marketing
support.
PF-11
<PAGE> 67
COCA-COLA ENTERPRISES INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION - (CONTINUED)
NOTE H - This pro forma adjustment to "Cost of sales" gives effect to the
elimination of intercompany centralized purchasing costs for certain products
and packaging materials purchased directly from a subsidiary of The Coca-Cola
Company by France/Belgium. As a condition of the purchase agreement,
France/Belgium will no longer be charged additional costs for centralized
purchasing efforts.
NOTE I - This pro forma adjustment to "Selling, delivery & administrative
expenses" gives effect to the elimination of certain overhead and administrative
expense allocations charged to France/Belgium by the corporate regional offices
of The Coca-Cola Company. As a condition of the acquisition, these costs will no
longer be incurred by France/Belgium.
NOTE J - In connection with the acquisition of Ouachita in February, 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 pays quarterly cumulative dividends of
4% per year and Series B pays no dividend. Dividends are provided at a
market-related rate for both Series A and Series B to reflect the actual cost of
the preferred stock.
NOTE K - Pro forma adjustments to reflect the increase in outstanding
indebtedness as a result of acquisitions of the Acquired Companies by the
Company.
NOTE L - The purchase method of accounting for acquisitions requires that the
assets and liabilities of the acquired companies be adjusted to their estimated
fair values. The following are the pro forma adjustments which reflect
management's best estimate of the fair values of the assets and liabilities of
the acquired companies as of June 27, 1997 using information currently
available.
NET ASSETS
-------------------
Increase (Decrease)
Amounts as reported by the acquired companies.............. $ 105
Fair value adjustments:
Franchise and other noncurrent assets................... 2,019
Current liabilities..................................... (87)
Deferred income taxes................................... (934)
------
$1,103
======
NOTE M- Pro forma fully diluted net income (loss) per common share data are not
presented because there are no material differences between such amounts and the
pro forma net income (loss) per share presented. All per share data is
calculated prior to rounding to millions.
PF-12
<PAGE> 68
EXHIBIT INDEX
Exhibit
No. Description Page No.
- --------- -------------------------------------------- --------
2.1 Stock Purchase Agreement among The Coca-Cola
Bottling Company of the Northeast, Bottling
Investment Holdings, Inc., Coca-Cola
Enterprises Inc. and The Coca-Cola Company, E-1
dated as of August 7, 1997. *
2.2 Stock Purchase Agreement among Enterprises
KOC Acquisition Company Ltd., Coca-Cola
Ltd., Coca-Cola Enterprises Inc. and The E-20
Coca-Cola Company, dated as of August 7,
1997. *
2.3 Stock Purchase Memorandum between George
D. Overend and The Coca-Cola Bottling
Company of the Northeast, dated as of E-37
October 1, 1997. *
23.1 Consent of Ernst & Young LLP E-40
23.2 Consent of Ernst & Young E-41
* A list of all schedules and exhibits to the Agreement is included in
the Agreement. None of such schedules or exhibits is filed with this report, but
a copy of any omitted schedule or exhibit will be furnished supplementally to
the Commission upon its request.
E
<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
The Buyer
The Coca-Cola Bottling Company of the Northeast,
a Delaware corporation
The Seller
Bottling Investment Holdings, Inc.,
a Delaware corporation
E-1
<PAGE> 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 7th day of August, 1997 between and among the following parties,
regarding the sale and purchase of certain securities identified below:
The Buyer:
The Coca-Cola Bottling Company of the Northeast, a Delaware
corporation and wholly-owned subsidiary of Coca-Cola Enterprises Inc. ("Coke
Northeast")
The Seller:
Bottling Investment Holdings, Inc., a Delaware corporation ("BIH")
The Guarantors:
Coca-Cola Enterprises Inc., a Delaware corporation ("Enterprises")
The Coca-Cola Company, a Delaware corporation ("TCCC")
Securities to be Sold and Purchased:
BIH owns the following securities issued by The Coca-Cola Bottling
Company of New York, Inc., a Delaware corporation ("KONY"):
4,000 shares of Convertible Preferred Stock, par value $100 per share
191,348 shares of Class A Common Stock, par value $.01 per share
249,903 shares of Class C Common Stock, par value $.01 per share
640,000 shares of 11% Cumulative Exchangeable Redeemable First
Preferred Stock, par value $1.00 per share
(collectively, the "KONY Shares")
IN CONSIDERATION OF the mutual covenants contained herein, the parties
agree as follows:
ARTICLE I
PURCHASE AND SALE; CONSIDERATION
1.01 Purchase and Sale. At the Closing (as defined in Section 4.02)
and upon the terms and subject to the conditions of this Agreement, BIH shall
sell, assign and transfer to Coke Northeast and Coke Northeast shall purchase
from BIH all of BIH's right, title and interest in and to the KONY Shares
hereinafter described, at the following prices:
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<PAGE> 3
Convertible Preferred Stock at US $506.80 per share Class A
Common Stock at US $280.00 per share Class C Common Stock at US
$280.00 per share
11% Cumulative Exchangeable Redeemable First Preferred Stock at
US $265.63 per share, plus an amount equal to the aggregate
amount of accrued but unpaid dividends from November 21, 1995
through the Closing Date calculated in accordance with the
Certificate of Designation creating such stock.
1.02 Purchase Price. Subject to the terms and conditions of this
Agreement, the aggregate of the prices for the KONY Shares will be paid by Coke
Northeast at the Closing by the wire transfer of immediately available funds to
an account or accounts designated at least two Business Days prior to the
Closing in writing by BIH.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TCCC AND BIH
TCCC and BIH hereby represent and warrant to Enterprises and Coke
Northeast as follows, with full knowledge that such representations and
warranties are a material consideration to and underlie the execution of this
Agreement by Enterprises and Coke Northeast and the consummation of the
transactions contemplated by this Agreement.
2.01 Power and Authority of TCCC and BIH
(a) Each of TCCC and BIH has the corporate power and authority to
execute and deliver this Agreement and those agreements set forth on Exhibit
2.01(a) (collectively, the "Seller Documents") to which it is a party, and to
perform its obligations hereunder and under each of the Seller Documents to
which it is a party and to consummate the transactions contemplated hereby and
by the Seller Documents to which it is a party.
(b) The execution, delivery and performance by TCCC and BIH of
this Agreement and each of the Seller Documents to which it is a party have been
duly and validly authorized by all necessary corporate action on the part of
TCCC and BIH, as appropriate.
(c) This Agreement has been duly and validly executed and
delivered by each of TCCC and BIH and constitutes, and each of the Seller
Documents to be delivered at Closing will be duly and validly executed and
delivered by TCCC and BIH, to the extent it is a party thereto, and will
constitute, the valid and binding obligation of TCCC and BIH, to the extent it
is a party thereto, enforceable against TCCC and BIH, to the extent it is a
party thereto, in accordance with its terms, except to the extent the
enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
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<PAGE> 4
enforceability is considered in a proceeding at law or in equity.
(d) The execution and delivery by each of TCCC and BIH of this
Agreement and each of the Seller Documents to which it is a party, the
consummation by TCCC and BIH of the transactions contemplated hereby and by each
of the Seller Documents to which it is a party and the compliance by each of
TCCC and BIH with the terms and provisions of this Agreement and each of the
Seller Documents to which it is a party, will not, with or without the giving of
notice or the lapse of time or both:
(i) violate any provision of law, statute, rule or
regulation to which TCCC or BIH is subject;
(ii) violate any order, ruling, injunction, judgment or
decree to which TCCC or BIH is a party or subject; or
(iii) except as set forth on Disclosure Schedule
2.01(d)(iii), conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, result in the creation of a lien or security interest under, or
terminate, modify, cancel or require any notice under, any agreement,
contract, lease, license, instrument or other obligation to which TCCC or
BIH is a party, or by which TCCC or BIH is bound, or to which TCCC's or
BIH's assets are subject,
except where an event or occurrence described in clauses (i)
through (iii) would neither require the expenditure of money by Enterprises,
Coke Northeast, KONY or any of their affiliates, nor have a material adverse
effect on the KONY Shares or the business or assets of Enterprises, Coke
Northeast, KONY or their subsidiaries, nor have a material adverse effect on the
ability of TCCC or BIH to consummate the transactions in the manner contemplated
by this Agreement.
2.02 KONY Shares.
(a) BIH holds of record and owns beneficially at the date hereof,
and will hold of record and own beneficially at the Closing, the KONY Shares,
and, except with respect to any rights or obligations being assigned to or
assumed by Coke Northeast (or for which Coke Northeast otherwise agrees to be
responsible) pursuant to this Agreement or the Buyer Documents (as defined in
Section 3.01(a)), such shares are the only shares of KONY's capital stock owned
by TCCC or its consolidated subsidiaries.
(b) Except with respect to any rights or obligations being
assigned to or assumed by Coke Northeast (or for which Coke Northeast otherwise
agrees to be responsible) hereunder or under the Buyer Documents, immediately
following the Closing, neither TCCC nor any of its consolidated subsidiaries
will have any right to have any shares of the capital stock of KONY issued to
TCCC or its consolidated subsidiaries.
(c) The sale and delivery of the KONY Shares to Enterprises
pursuant to this Agreement will vest in Coke Northeast legal and valid title to
the KONY Shares, free and clear of all liens, security interests, adverse claims
or other
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<PAGE> 5
encumbrances of any character whatsoever (collectively,
"Encumbrances"), except for Encumbrances created by Coke Northeast and
restrictions on sales of such shares under applicable securities laws and except
as set forth on Disclosure Schedule 2.02(c).
(d) Except as set forth on Disclosure Schedule 2.02(d), neither
TCCC nor any of its consolidated subsidiaries is a party to any agreement or
understanding with respect to the voting of any of the KONY Shares.
(e) The KONY Shares have been validly issued, fully paid and are
nonassessable.
2.03 Capitalization.
(a) The issued and outstanding capital stock of KONY is set forth
on Disclosure Schedule 2.03(a), which also lists all stockholders of record of
KONY as shown on the books and records of KONY, showing the number and
description of securities reflected as owned of record by each.
(b) Except as disclosed on Disclosure Schedule 2.03(b), to the
Knowledge of BIH (as defined in Section 2.04(b)), KONY does not have
outstanding, nor is it bound by, any subscriptions, options, warrants, calls,
commitments or agreements to issue any additional shares of capital stock or any
other equity security of KONY or any securities representing the right to
purchase or otherwise receive any shares of any equity securities of KONY.
2.04 Undisclosed Liabilities.
(a) A copy of the audited consolidated balance sheets of KONY and
its subsidiary as of December 31, 1996 (including the notes thereto, the "1996
Balance Sheet") and December 31, 1995, respectively, and the related
consolidated statements of operations and retained earnings (deficit) and cash
flows for the years then ended, including the notes thereto, in each case
accompanied by the audit report of Ernst & Young LLP, independent public
accountants with respect to KONY, has been provided to Enterprises. To the
knowledge of BIH, neither KONY nor its subsidiary has any liability that would
have a material adverse effect on KONY, except for (i) liabilities and
obligations reflected in the 1996 Balance Sheet, (ii) liabilities and
obligations incurred since December 31, 1996 in the ordinary course of business,
and (iii) liabilities and obligations not required by generally accepted
accounting principles to be reflected or reserved against in a balance sheet
prepared in accordance with such principles.
(b) As used in Section 2.03(b) and in this Section 2.04, the term
"to the Knowledge of BIH" shall mean the actual knowledge (conscious awareness)
of any of the following individuals: James E. Chestnut, Jack L. Stahl, and David
M. Taggart, who have been provided a copy of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
ENTERPRISES AND COKE NORTHEAST
E-5
<PAGE> 6
Enterprises and Coke Northeast hereby represent and warrant to TCCC
and BIH as follows, with full knowledge that such representations and warranties
are a material consideration to and underlie the execution of this Agreement by
TCCC and BIH and the consummation of the transactions contemplated by this
Agreement.
3.01 Power and Authority of Enterprises and Coke Northeast.
(a) Each of Enterprises and Coke Northeast has the corporate
power and authority to execute and deliver this Agreement and those agreements
set forth on Exhibit 3.01(a) (collectively, the "Buyer Documents") to which it
is a party, and to perform its obligations hereunder and under each of the Buyer
Documents to which it is a party, and to consummate the transactions
contemplated hereby and by the Buyer Documents to which it is a party.
(b) The execution, delivery and performance by Enterprises and
Coke Northeast of this Agreement and each of the Buyer Documents to which it is
a party have been duly and validly authorized by all necessary corporate action
on the part of Enterprises and Coke Northeast, as appropriate.
(c) This Agreement has been duly and validly executed and
delivered by Enterprises and Coke Northeast and constitutes, and each of the
Buyer Documents to be delivered at Closing will be duly and validly executed and
delivered by Enterprises and Coke Northeast, to the extent it is a party
thereto, and will constitute, the valid and binding obligation of Enterprises
and Coke Northeast, to the extent it is a party thereto, enforceable against
Enterprises and Coke Northeast, to the extent it is a party thereto, in
accordance with its terms, except to the extent the enforceability thereof may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(d) The execution and delivery by each of Enterprises and Coke
Northeast of this Agreement and each of the Buyer Documents to which it is a
party, the consummation by Enterprises and Coke Northeast of the transactions
contemplated hereby and by each of the Buyer Documents to which it is a party,
and the compliance by each of Enterprises and Coke Northeast with the terms and
provisions of this Agreement and each of the Buyer Documents to which it is a
party, will not, with or without the giving of notice or the lapse of time or
both:
(i) violate any provision of law, statute, rule or
regulation to which Enterprises or Coke Northeast is subject;
(ii) violate any order, ruling, injunction, judgment or
decree to which Enterprises or Coke Northeast is a party or subject; or
(iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right
to accelerate, result in
E-6
<PAGE> 7
the creation of a lien or security interest under, or terminate, modify,
cancel or require notice under, any agreement, contract, lease,
license, instrument or other obligation to which Enterprises or Coke
Northeast is a party, or by which Enterprises or Coke Northeast is bound,
or to which Enterprises' or Coke Northeast's assets are subject,
except where an event or occurrence described in clauses (i) through
(iii) would neither require the expenditure of money by TCCC or any of its
consolidated subsidiaries, nor have a material adverse effect on the business or
assets of TCCC, Enterprises, Coke Northeast, or their subsidiaries, nor have a
material adverse effect on the ability of Enterprises or Coke Northeast to
consummate the transactions in the manner contemplated by this Agreement.
3.02 Investment Intent. Coke Northeast understands that none of the
KONY Shares have been registered under the Securities Act of 1933, as amended,
or applicable United States, state, or foreign securities laws. Coke Northeast
is acquiring the KONY Shares for its own account, for investment purposes and
without a present intent to make a distribution thereof. Each certificate
representing the KONY Shares, and any other certificates issued in respect of
such shares upon any stock split, stock dividend, recapitalization or similar
event, unless no longer required in the opinion of counsel to Coke Northeast, in
addition to any other required legends, shall bear a legend substantially in the
following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or under any other applicable securities laws of any
jurisdiction and may not be sold or otherwise transferred in the
absence of such registration or an exemption from the
registration requirements of the Act or laws of any other
applicable jurisdiction.
The shares represented by this certificate have been sold in
reliance on paragraph (13) of Code Section 10-5-9 of the Georgia
Securities Act of 1973 (the "Georgia Act"), and may not be sold
or transferred except in a transaction which is exempt under the
Georgia Act or pursuant to an effective registration under the
Georgia Act.
ARTICLE IV
THE CLOSING
4.01 Pre-Closing Covenants. Prior to the Closing, the parties
covenant and agree as follows:
E-7
<PAGE> 8
(a) BIH and Coke Northeast will cooperate and use their
respective good faith efforts to secure all necessary consents, approvals,
authorizations and exemptions from governmental agencies and other third
parties, and to obtain the satisfaction of all of the conditions specified in
Section 4.03, as shall be required in order to enable BIH and Coke Northeast to
effect the transactions contemplated hereby in accordance with the terms and
conditions hereof.
(b) Prior to the Closing, BIH shall not directly or indirectly
solicit, initiate or encourage any inquiries or proposals from, discuss or
negotiate with, provide any nonpublic information to, or consider the merits of
any inquiries or proposals from any person or entity other than Coke Northeast
or Enterprises relating to any transaction involving the sale of the KONY Shares
(or any of them) or the sale or transfer of substantially all of the assets of
KONY.
(c) BIH agrees to use its good faith efforts to ensure that prior
to the Closing, no earnings are distributed to the stockholders of KONY in the
form of dividends or other distributions to stockholders, except to the extent
required by the terms of any series of preferred stock.
4.02 The Closing. Except as may be otherwise agreed by the parties in
writing, the payment and deliveries contemplated by this Agreement to be made at
the Closing shall be made at the offices of Coca-Cola Enterprises Inc., 2500
Windy Ridge Parkway, Atlanta, Georgia 30339 at 10:00 a.m., Atlanta time, on the
later of the third Business Day after the satisfaction or written waiver of the
conditions set forth in Sections 4.03, 4.04 and 4.05, or August 7, 1997. The
date on which such payment and deliveries occurs is the "Closing Date", and the
events comprising such payment and deliveries are collectively, the "Closing".
As used in this Agreement, a "Business Day" shall be a day other than a
Saturday, Sunday or any day on which banks are required or authorized to close
in New York, New York or Toronto, Ontario.
4.03 Conditions to Each Party's Obligations. The respective obligation
of each party to consummate the transactions contemplated by this Agreement is
subject to the satisfaction, or waiver by Enterprises, Coke Northeast, TCCC and
BIH, of the following conditions:
(a) No action, suit or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, national,
state, provincial, or local jurisdiction which would be reasonably expected to:
(i) prevent consummation of the purchase and sale of the
KONY Shares contemplated herein;
(ii) cause such purchase and sale to be rescinded
following its consummation; or
(iii) materially modify the terms of the purchase and sale
of the KONY Shares or result in material damage or Loss (as defined below)
to any party hereto as a result of the purchase and sale of the KONY
Shares.
The pendency of an action, suit or proceeding relating to any
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<PAGE> 9
tender offer for shares of common stock of Coca-Cola Beverages Ltd. initiated
by Enterprises or its affiliates will not prevent the condition set forth in
this paragraph (a)from being satisfied unless such action, suit or
proceeding challenges the purchase and sale of the KONY Shares contemplated
herein, and such challenge could not be eliminated by a termination or
withdrawal by Enterprises or its affiliates of such tender offer.
(b) No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Authority (as hereinafter
defined) which prohibits, materially restricts or makes illegal consummation of
the transactions contemplated hereby. As used in this Agreement, the term
"Governmental Authority" means any national, federal, provincial, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
(c) All applicable waiting periods and any extensions thereof
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have
expired or otherwise been terminated.
(d) All other authorizations, consents and approvals of
Governmental Authorities required to consummate the transactions contemplated
hereby shall have been received.
(e) The purchase by Enterprises KOC Acquisition Company Ltd., or
another wholly-owned subsidiary of Enterprises, of all of the stock of Coca-Cola
Beverages Ltd. owned by Coca-Cola Ltd. shall have occurred simultaneously with
the purchase of the KONY Shares hereunder.
It is expressly acknowledged and agreed by each of BIH, TCCC, Enterprises and
Coke Northeast that the transactions contemplated by this Agreement are not
conditioned in any manner upon any decision by Enterprises or any of its
subsidiaries to effect a tender offer for shares of common stock of Coca-Cola
Beverages Ltd. or upon the timing or completion of any such tender offer.
However, it is further acknowledged and agreed that the immediately preceding
sentence shall not modify or amend the Closing condition established in Section
4.03(a).
4.04 Conditions to Obligations of Coke Northeast. The obligation of
Enterprises and Coke Northeast to consummate the transactions contemplated
hereby is also subject to the satisfaction (or waiver by Enterprises and Coke
Northeast) at or prior to the Closing of the following conditions:
(a) The representations and warranties of TCCC and BIH contained
in Article II shall be true and correct in all material respects at the time of
the Closing with the same effect as though such representations and warranties
had been made at such time, except (i) for representations and warranties that
speak as of a specific date or time other than the date of the Closing (which
need only be true and correct in all material respects as of such date or time),
and (ii) for changes resulting from the consummation of the transactions
contemplated by this
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<PAGE> 10
Agreement. Coke Northeast shall have received certificates signed by an officer
of TCCC and BIH, as appropriate, to the foregoing effect.
(b) TCCC and KONY shall have executed a Marketing Support
Agreement between TCCC and KONY, in form and substance reasonably satisfactory
to TCCC, KONY, Coke Northeast and Enterprises.
(c) There shall have occurred no material adverse change in the
financial condition or business of KONY since December 31, 1996.
4.05 Conditions to Obligations of TCCC and BIH. The obligations of
TCCC and BIH to consummate the transactions contemplated hereby are also subject
to the satisfaction (or waiver by TCCC and BIH) at or prior to the Closing of
the following condition: namely, that the representations and warranties of
Enterprises and Coke Northeast contained in Article III shall be true and
correct in all material respects at the time of the Closing with the same effect
as though such representations and warranties had been made at such time, except
for (i) representations and warranties that speak as of a specific date or time
other than the date of the Closing (which need only be true and correct in all
material respects as of such date or time), and (ii) changes resulting from the
consummation of the transactions contemplated by this Agreement. TCCC and BIH
shall have received certificates signed by an officer of Enterprises and Coke
Northeast, as appropriate, to the foregoing effect.
4.06 Deliveries by the Parties. At the Closing:
(a) BIH shall:
(i) deliver to Enterprises and Coke Northeast certified
copies of the resolutions of the boards of directors of TCCC and BIH,
respectively, authorizing the execution and delivery of this Agreement and
the Seller Documents and the consummation of the transactions contemplated
by this Agreement and the Seller Documents;
(ii) deliver to Enterprises and Coke Northeast a
certificate dated as of the Closing Date executed by an officer of BIH, in
form and substance reasonably satisfactory to Enterprises and Coke
Northeast, (A) to the effect provided for in Section 4.04(a) and (B)
stating that BIH has performed and complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by BIH prior to or at Closing;
(iii) deliver to Enterprises and Coke Northeast a
certificate dated as of the Closing Date executed by an officer of TCCC, in
form and substance reasonably satisfactory to Enterprises and Coke
Northeast, (A) to the effect provided for in Section 4.04(a) and (B)
stating that TCCC has performed and complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by TCCC prior to or at Closing;
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(iv) deliver to Enterprises and Coke Northeast stock
certificates representing all of the KONY Shares being sold by BIH
hereunder, duly endorsed or accompanied by assignments separate from
certificate in form reasonably satisfactory to counsel for Enterprises and
Coke Northeast; and
(v) deliver to Enterprises and Coke Northeast opinions
from each of King & Spalding and F. Rodger Wrege, Finance Counsel to TCCC,
each dated the Closing Date in substantially the form of Exhibits
4.06(a)(v)-1 and 4.06(a)(v)-2.
(b) Coke Northeast shall:
(i) deliver to TCCC and BIH certified copies of the
resolutions of the boards of directors of Enterprises and Coke Northeast,
respectively, authorizing the execution and delivery of this Agreement and
the Buyer Documents and the consummation of the transactions contemplated
by this Agreement and the Buyer Documents;
(ii) deliver to TCCC and BIH a certificate dated as of the
Closing Date executed by an officer of Coke Northeast, in form and
substance reasonably satisfactory to TCCC and BIH, (A) to the effect
provided for in Section 4.05, and (B) stating that Coke Northeast has
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
Coke Northeast prior to or at Closing;
(iii) deliver to TCCC and BIH a certificate dated as of the
Closing Date executed by an officer of Enterprises, in form and substance
reasonably satisfactory to TCCC and BIH, (A) to the effect provided for in
Section 4.05, and (B) stating that Enterprises has performed and complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by Enterprises prior to or at
Closing;
(iv) effect the payment to BIH provided for in Section
1.02; and
(v) deliver to TCCC and BIH an opinion from Miller &
Martin dated the Closing Date in substantially the form of Exhibit
4.06(b)(v).
(c) Coke Northeast shall deliver, and shall cause Enterprises to
deliver, to TCCC and/or Coca-Cola Financial Corporation, a Delaware corporation
and a consolidated subsidiary of TCCC ("CCFC"), and TCCC shall deliver, and
shall cause CCFC to deliver, to Coke Northeast and/or Enterprises the following
executed agreements:
(i) an Assignment and Assumption Agreement between CCFC
and Coke Northeast, in substantially the form of Exhibit 4.06(c)(i),
related to the Preferred Stock Purchase Agreement dated as of November 21,
1995, as amended, between CCFC and KONY;
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(ii) an Assignment and Assumption Agreement between CCFC
and Coke Northeast, in substantially the form of Exhibit 4.06(c)(ii),
related to the Exchange Agreement dated as of November 21, 1995 between
CCFC and KONY;
(iii) an Assignment and Assumption Agreement between CCFC
and Coke Northeast, in substantially the form of Exhibit 4.06(c)(iii),
related to the Letters of Credit issued by CCFC listed on Exhibit
4.06(c)(iii)-1;
(iv) an Assignment and Assumption Agreement between CCFC
and Coke Northeast, in substantially the form of Exhibit 4.06(c)(iv),
related to the Amended and Restated Reimbursement Agreement dated as of
November 21, 1995 between CCFC and KONY;
(v) an Assignment and Assumption Agreement between CCFC
and Coke Northeast, in substantially the form of Exhibit 4.06(c)(v);
(vi) separate Assignment and Assumption Agreements between
TCCC and Coke Northeast, in substantially the form of Exhibit 4.06(c)(vi),
related to each of the Agreements listed on Exhibit 4.06(c)(vi)-1;
(vii) a Termination Agreement between TCCC and Enterprises,
in substantially the form of Exhibit 4.06(c)(vii), related to the Right of
First Refusal Agreement dated as of January 4, 1994 between TCCC and
Enterprises; and
(viii) Cooperation Agreements between TCCC and Coke
Northeast, in substantially the form of Exhibit 4.06(c)(viii), relating to
certain transfer agreements and transfer arrangements with stockholders of
KONY (other than Enterprises and BIH).
4.07 Additional Agreements. TCCC, BIH, Enterprises and Coke Northeast
agree that, from time to time, whether at or after the Closing Date, each of
them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the terms
of this Agreement. TCCC, BIH, Enterprises and Coke Northeast each further agrees
that it will not take any action that will prevent its performance of this
Agreement in accordance with its terms, except as may be required by applicable
law.
ARTICLE V
GUARANTEES
5.01 Guaranty of Enterprises. Enterprises, as a primary obligor, shall
and hereby does, absolutely and unconditionally and irrevocably, guarantee the
prompt payment and performance of the obligations of Coke Northeast hereunder
and under each of the Buyer Documents to which Coke Northeast is a party
(collectively, the "Coke Northeast Obligations"). No change, amendment or
modification of this Agreement or any Buyer Document or waiver of any of the
terms hereof or of any Buyer Document, or permitted assignment of this Agreement
or any Buyer Document, shall diminish, release or discharge the liability of
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Enterprises under this Section 5.01, which shall be continuing and shall be
discharged only by the full performance of the Coke Northeast Obligations.
5.02 Guaranty of TCCC. TCCC, as a primary obligor, shall and hereby
does, absolutely and unconditionally and irrevocably, guarantee the prompt
payment and performance of the obligations of BIH hereunder (the "BIH
Obligations"). No change, amendment or modification of this Agreement or waiver
of any of the terms hereof, or permitted assignment, shall diminish, release or
discharge the liability of TCCC under this Section 5.02, which shall be
continuing and shall be discharged only by the full performance of the BIH
Obligations.
ARTICLE VI
INDEMNIFICATION
6.01 Remedies. Each of BIH and Coke Northeast, as the case may be (the
"Indemnifying Party"), shall indemnify, defend and hold harmless the other party
(the "Indemnified Party") from and against any Losses (as hereinafter defined)
arising from any inaccuracy of the representations and warranties of such party
or its ultimate parent or any breach of the covenants of such party or its
ultimate parent contained herein. As used in this Agreement, the term "Loss"
means any loss, damage, liability, cost or expense including, without
limitation, any interest, fine, penalty, criminal or civil judgment or
settlement, court costs, reasonable attorneys' and expert witnesses' fees,
reasonable accountants' fees, disbursements and expenses, and any
indemnification or similar payments required to be made to officers, directors,
employees or agents under duly enacted provisions of the certificate of
incorporation or bylaws, board resolutions or undertakings, commitments or other
understandings or under applicable corporate law. The foregoing indemnification
provision shall constitute the sole remedy under this Agreement for any breach
of a representation or warranty contained in this Agreement.
6.02 Survival. The representations and warranties contained in this
Agreement and in each of the Seller Documents and Buyer Documents, as
applicable, shall not be extinguished by the Closing and shall survive without
limitation as to time; and the covenants and agreements contained herein shall
survive without limitation as to time except as may be otherwise specified
herein; provided, however, that the representation contained in Section 2.04 of
this Agreement shall only survive for a period of one year following the Closing
Date. No investigation or other examination by any party hereto or its designee
or representatives shall affect the term of survival of the representations and
warranties set forth above. With respect to the representation contained in
Section 2.04, an Indemnified Party may pursue claims under this Article VI after
the applicable survival date as provided in this Section 6.02, so long as notice
of such claims is given on or prior to such survival date.
6.03 Notice of Claim. The Indemnified Party shall promptly notify the
Indemnifying Party involved, in writing, of any claim for recovery, specifying
in reasonable detail the nature of the Loss, and, if known, the amount, or an
estimate of the amount, of the liability arising therefrom, provided that the
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<PAGE> 14
failure to provide such notice shall not affect the obligations of the
Indemnifying Party hereunder except to the extent such party is materially and
actually prejudiced thereby. The Indemnified Party shall provide to the
Indemnifying Party as promptly as practicable thereafter information and
documentation reasonably requested by such Indemnifying Party to support and
verify the claim asserted, unless the Indemnified Party has been advised by
counsel that there are no reasonable grounds to assert the joint defense
privilege with respect to such information and documentation.
6.04 Defense. If the facts pertaining to a Loss arise out of the claim
of any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnifying Party may assume the
defense or the prosecution thereof by written notice to the Indemnified Party,
including the employment of counsel or accountants, at its cost and expense. The
Indemnified Party shall have the right to employ counsel separate from counsel
employed by the Indemnifying Party in any such action and to participate
therein, but the fees and expenses of such counsel employed by the Indemnified
Party shall be at its expense. The Indemnifying Party shall not be liable for
any settlement of any such claim effected without its prior written consent,
which shall not be unreasonably withheld; provided that if the Indemnifying
Party does not assume the defense or prosecution of any such claim within 30
days of notice thereof, the Indemnified Party may settle such claim without the
Indemnifying Party's consent in which event the Indemnifying Party shall be
liable for such settlement. Without the Indemnified Party's prior written
consent, the Indemnifying Party shall not settle any claim in a manner which is
prejudicial (financially or otherwise) to the Indemnified Party. Whether or not
the Indemnifying Party chooses to so defend or prosecute such claim, each of the
parties hereto shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith.
ARTICLE VII
TERMINATION PRIOR TO CLOSING
This Agreement may be terminated at any time prior to the Closing:
(a) By the mutual written consent of all the parties hereto;
(b) By BIH in writing, if Coke Northeast or Enterprises shall (i)
fail to perform in any material respect its agreements contained herein or in
any of the Buyer Documents required to be performed by it on or prior to the
Closing Date, or (ii) breach in any material respect any of its representations
or warranties contained herein or in any of the Buyer Documents, which failure
or breach in either case is not cured within thirty (30) days after BIH has
notified Coke Northeast and Enterprises of its intent to terminate this
Agreement pursuant to this Article VII;
(c) By Coke Northeast in writing, if BIH or TCCC shall (i) fail
to perform in any material respect its agreements
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<PAGE> 15
contained herein or in any of the Seller Documents required to be performed by
it on or prior to the Closing Date, or (ii) breach in any material respect
any of its representations or warranties contained herein or in any of the
Seller Documents, which failure or breach in either case is not cured within
thirty (30) days after Coke Northeast has notified BIH and TCCC of its intent
to terminate this Agreement pursuant to this Article VII;
(d) By either BIH or Coke Northeast in writing, without
liability, if there shall be any final, non-appealable order, writ, injunction
or decree of any Governmental Authority binding on Enterprises, Coke Northeast,
BIH or TCCC, which prohibits or restrains Enterprises, Coke Northeast, BIH or
TCCC from consummating the transactions contemplated hereby; or
(e) By either BIH or Coke Northeast, in writing, without
liability, if for any reason the Closing has not occurred by the first
anniversary of the execution of this Agreement, unless the failure of the
Closing to occur by such date is due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein.
ARTICLE VIII
OTHER MATTERS
8.01 Brokerage. Each party hereto will indemnify and hold harmless the
other against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, when such
claim is based in any way on agreements, arrangements or understandings made or
claimed to have been made by the indemnifying party with any third party.
8.02 Expenses. Each party shall pay all costs and expenses incurred by
it or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel, regardless of whether such transactions
are consummated.
8.03 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally or sent prepaid by
FedEx or other recognized overnight courier or delivered by telecopy
transmission, provided that if delivered by telecopy transmission such notice
shall also be sent on the same day by recognized overnight courier, in each case
to the applicable addresses set forth below:
To Enterprises or Coke Northeast:
John R. Alm
Senior Vice President and Chief Financial Officer
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3363
with copies to:
Lowry F. Kline
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<PAGE> 16
Senior Vice President and General Counsel
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3784
and
E. Liston Bishop III
Miller & Martin
1000 Volunteer Building
Chattanooga, Tennessee 37402-2289
Telecopy No.: (423) 785-8480
To TCCC or BIH:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: Chief Financial Officer
Telecopy No.: (404) 676-8683
with copies to:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: General Counsel
Telecopy No.: (404) 676-6209
or to such other address as such party shall have designated by notice given in
accordance with the above to the other parties. Any such notice shall be deemed
to have been given as of the date delivered, if delivered in person or by
telecopy transmission, or upon the next Business Day, if sent by recognized
overnight courier.
8.04 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that no party hereto may assign any of its
rights, interests or obligations hereunder without the prior written consent of
all other parties hereto.
8.05 Complete Agreement. Except as otherwise provided herein, this
Agreement embodies the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes (i) all prior agreements
and understandings relating to such subject matter, whether written or oral, and
(ii) all purportedly contemporaneous oral agreements and understandings relating
to such subject matter.
8.06 Partial Invalidity. If any term or provision of this Agreement
not essential to the basic purpose hereof shall be held to be illegal, invalid
or unenforceable by a court of competent jurisdiction, the parties intend that
the remaining terms shall constitute the agreement with respect to the subject
matter thereof, as if the illegal, invalid or unenforceable provision had never
been a part.
8.07 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered to be
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<PAGE> 17
one and the same agreement, and each of which shall be deemed an original.
8.08 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia, regardless of the
conflicts of laws principles thereof.
8.09 Section 338 Election. If Enterprises makes a "qualified stock
purchase" as defined in Section 338(d) of the Internal Revenue Code of 1986, as
amended ("IRC"), of the KONY Shares, and otherwise meets the applicable
requirements of that section, BIH acknowledges that Coke Northeast may make an
election under IRC Section 338(g) with respect to the purchase of the KONY
Shares. Neither TCCC nor BIH shall have any liability for any tax liabilities of
KONY arising from such election, and Enterprises agrees to indemnify and hold
harmless TCCC and BIH from any such liability.
8.10 Amendments; Waivers. This Agreement may not be altered, amended,
superseded, or renewed except in writing signed by all parties hereto. The
failure of any party at any time to require performance of any provisions hereof
shall in no manner affect the right to enforce the same. No waiver by any party
of any condition, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
to be a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other term, provision, or
warranty, representation, agreement or covenant of this Agreement.
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<PAGE> 18
IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Agreement to be duly executed and delivered on the date
first above written:
THE COCA-COLA BOTTLING COMPANY
OF THE NORTHEAST
By: /s/JOHN R. ALM
-----------------------------------------
Name: John R. Alm
Title: Senior Vice President and
Chief Financial Officer
BOTTLING INVESTMENT HOLDINGS, INC.
By: /s/ DAVID M. TAGGART
-----------------------------------------
Name: David M. Taggart
Title: Vice President
COCA-COLA ENTERPRISES INC.
By: /s/JOHN R. ALM
-----------------------------------------
Name: John R. Alm
Title: Senior Vice President and
Chief Financial Officer
THE COCA-COLA COMPANY
By: /s/ DAVID M. TAGGART
-----------------------------------------
Name: David M. Taggart
Title: Vice President
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<PAGE> 19
SCHEDULES AND EXHIBITS TO
STOCK PURCHASE AGREEMENT
Disclosure Schedule
Exhibit 2.01(a) Seller Documents
Exhibit 3.01(a) Buyer Documents
Exhibit 4.06(a)(v)-1 Form of opinion of King & Spalding
Exhibit 4.06(a)(v)-2 Form of opinion of F. Rodger Wrege
Exhibit 4.06(b)(v) Form of opinion of Miller & Martin
Exhibit 4.06(c)(i) Form of Assignment and Assumption Agreement between
Coca-Cola Financial Corporation and the Coca-Cola
Bottling Company of the Northeast
Exhibit 4.06(c)(ii) Form of Assignment and Assumption Agreement between
Coca-Cola Financial Corporation and The Coca-Cola
Bottling Company of the Northeast
Exhibit 4.06(c)(iii) Form of Assignment and Assumption
Agreement between Coca-Cola Financial Corporation, The
Coca-Cola Bottling Company of the Northeast and The
Coca-Cola Bottling Company of New York, Inc.
Exhibit 4.06(c)(iii)(1) Listing of letters of credit
Exhibit 4.06(c)(iv) Form of Assignment and Assumption Agreement between
Coca-Cola Financial Corporation, The Coca-ColaBottling
Coca-Cola Bottling Company of New York, Inc.
Exhibit 4.06(c)(v) Form of Assignment and Assumption Agreement between
Coca-Cola Financial Corporation and The Coca-Cola
Bottling Company of the Northeast
Exhibit 4.06(c)(vi) Form of Assignment and Assumption Agreement between The
Bottling Company of the Northeast
Exhibit 4.06(c)(vi)-1 List of option agreements
Exhibit 4.06(c)(vii) Form of Termination Agreement between The Coca-Cola
Company and Coca-Cola Enterprises Inc.
Exhibit 4.06(c)(v) Form of Assignment and Assumption Agreement between
Coca-Cola Financial Corporation and The Coca-Cola
Bottling Company of the Northeast
Exhibit 4.06(c)(viii)-1 Form of Cooperation Agreement --
relating to Transfer Agreement dated September 18, 1981
Exhibit 4.06(c)(viii)-2 Form of Cooperation Agreement -- relating to
Stockholders ( Non-Institutional Investors ) Transfer
Agreement dated September 18, 1981
Exhibit 4.06(c)(viii)-3 Form of Cooperation Agreement -- relating to
Agreement dated September 2, 1983
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<PAGE> 1
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
The Buyer
Enterprises KOC Acquisition Company Ltd.,
a New Brunswick company
The Seller
Coca-Cola Ltd.,
a corporation organized and existing under the
laws of Canada
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<PAGE> 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 7th day of August, 1997 between and among the following parties,
regarding the sale and purchase of certain securities identified below:
The Buyer:
Enterprises KOC Acquisition Company Ltd., a New Brunswick company and
a wholly-owned subsidiary of Coca-Cola Enterprises Inc. ("KOC Acquisition")
The Seller:
Coca-Cola Ltd., a corporation organized and existing under the laws of
The Guarantors:
Coca-Cola Enterprises Inc., a Delaware corporation ("Enterprises")
The Coca-Cola Company, a Delaware corporation ("TCCC")
Securities to be Sold and Purchased:
CCL owns the following securities issued by Coca-Cola Beverages Ltd.,
a corporation organized and existing under the laws of Canada ("KOC"):
19,600,000 Common Shares (the "KOC
Shares")
IN CONSIDERATION OF the mutual covenants contained herein, the parties
agree as follows:
ARTICLE I
PURCHASE AND SALE; CONSIDERATION
1.01 Purchase and Sale. At the Closing (as defined in Section 4.02)
and upon the terms and subject to the conditions of this Agreement, CCL shall
sell, assign and transfer to KOC Acquisition and KOC Acquisition shall purchase
from CCL all of CCL's right, title and interest in and to the KOC Shares for an
aggregate purchase price of CDN $333,200,000 (the "Purchase Price").
1.02 Purchase Price. Subject to the terms and conditions of this
Agreement, the Purchase Price for the KOC Shares will be paid by KOC Acquisition
at the Closing by the wire transfer of immediately available funds to an account
or accounts designated at least two Business Days prior to the Closing in
writing by CCL.
ARTICLE II
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<PAGE> 3
REPRESENTATIONS AND WARRANTIES OF TCCC AND CCL
TCCC and CCL hereby represent and warrant to Enterprises and KOC
Acquisition as follows, with full knowledge that such representations and
warranties are a material consideration to and underlie the execution of this
Agreement by Enterprises and KOC Acquisition and the consummation of the
transactions contemplated by this Agreement.
2.01 Power, Authority and Status of TCCC and CCL
(a) Each of TCCC and CCL has the corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by TCCC and CCL of
this Agreement have been duly and validly authorized by all necessary corporate
action on the part of TCCC and CCL.
(c) This Agreement has been duly and validly executed and
delivered by TCCC and CCL and constitutes the valid and binding obligation of
TCCC and CCL enforceable against TCCC and CCL in accordance with its terms,
except to the extent the enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium, arrangement or other laws
affecting the enforcement of creditors' rights generally and the discretion that
a court may exercise in the granting of equitable remedies.
(d) The execution and delivery by TCCC and CCL of this Agreement,
the consummation by TCCC and CCL of the transactions contemplated hereby and the
compliance by TCCC and CCL with the terms and provisions of this Agreement, will
not, with or without the giving of notice or the lapse of time or both:
(i) violate any provision of law, statute, rule or
regulation to which TCCC or CCL is subject;
(ii) violate any order, ruling, injunction, judgment or
decree to which TCCC or CCL is a party or subject; or
(iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right
to accelerate, result in the creation of a lien or security interest under,
or terminate, modify, cancel or require notice under, any agreement,
contract, lease, license, instrument or other obligation to which TCCC or
CCL is a party, or by which TCCC or CCL is bound, or to which TCCC's or
CCL's assets are subject,
except where an event or occurrence described in clauses (i) through
(iii) would neither require the expenditure of money by KOC Acquisition, KOC or
any of their affiliates, nor have a material adverse effect on the KOC Shares or
the business or assets of Enterprises, KOC Acquisition or KOC or their
subsidiaries, nor have a material adverse effect on the ability of TCCC or CCL
to consummate the transactions in the manner contemplated by this Agreement.
(e) CCL is not a non-resident of Canada for the
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<PAGE> 4
purposes of the Income Tax Act (Canada).
2.02 The KOC Shares.
(a) CCL holds of record and owns beneficially at the date hereof,
and will hold of record and beneficially at the Closing, the KOC Shares, and
such shares are the only shares of KOC's capital stock owned by TCCC or its
consolidated subsidiaries.
(b) Immediately following the Closing, neither TCCC nor any of
its consolidated subsidiaries will have any right to have any shares of the
capital stock of KOC issued to TCCC or its consolidated subsidiaries.
(c) The sale and delivery of the KOC Shares to KOC Acquisition
pursuant to this Agreement will vest in KOC Acquisition legal and valid title to
the KOC Shares, free and clear of all liens, security interests, adverse claims
or other encumbrances of any character whatsoever (collectively,
"Encumbrances"), except for Encumbrances created by KOC Acquisition and
restrictions on sales of such shares under applicable securities laws.
(d) Neither TCCC nor any of its consolidated subsidiaries is a
party to any agreement or understanding with respect to the voting of any of the
KOC Shares.
(e) The KOC Shares have been validly issued, fully paid and are
nonassessable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
ENTERPRISES AND KOC ACQUISITION
Enterprises and KOC Acquisition hereby represent and warrant to TCCC
and CCL as follows, with full knowledge that such representations and warranties
are a material consideration to and underlie the execution of this Agreement by
TCCC and CCL and the consummation of the transactions contemplated by this
Agreement.
3.01 Power and Authority of Enterprises and KOC
Acquisition.
(a) Each of Enterprises and KOC Acquisition has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of Enterprises and KOC Acquisition and have been approved by the board of
directors of Enterprises and the Affiliated Transaction Committee of
Enterprises.
(c) This Agreement has been duly and validly executed and
delivered by Enterprises and KOC Acquisition and constitutes the valid and
binding obligation of Enterprises and KOC Acquisition enforceable against
Enterprises and KOC Acquisition in accordance with its terms, except to the
extent the enforceability thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, arrangement or other laws affecting the
enforcement of creditors' rights generally and by the discretion
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<PAGE> 5
that a court may exercise in the granting of equitable remedies.
(d) The execution and delivery by Enterprises and KOC Acquisition
of this Agreement, the consummation by Enterprises and KOC Acquisition of the
transactions contemplated hereby and the compliance by Enterprises and KOC
Acquisition with the terms and provisions of this Agreement, will not, with or
without the giving of notice or the lapse of time or both:
(i) violate any provision of law, statute, rule or
regulation to which Enterprises or KOC Acquisition is subject;
(ii) violate any order, ruling, injunction, judgment or
decree to which Enterprises or KOC Acquisition is aparty or subject; or
(iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right
to accelerate, result in the creation of a lien or security interest under,
or terminate, modify, cancel or require notice under, any agreement,
contract, lease, license, instrument or other obligation to which
Enterprises or KOC Acquisition is a party, or by which Enterprises or KOC
Acquisition is bound, or to which Enterprises' or KOC Acquisition's assets
are subject,
except where an event or occurrence described in clauses (i) through
(iii) would neither require the expenditure of money by TCCC or any of its
consolidated subsidiaries, nor have a material adverse effect on the business or
assets of TCCC, Enterprises, KOC Acquisition or their subsidiaries, nor have a
material adverse effect on the ability of Enterprises or KOC Acquisition to
consummate the transactions in the manner contemplated by this Agreement.
3.02 Investment Intent. KOC Acquisition understands that none of the
KOC Shares have been registered under any securities laws of any jurisdiction.
KOC Acquisition is acquiring the KOC Shares as principal for its own account,
for investment purposes and not with a view to the resale or distribution
thereof.
ARTICLE IV
THE CLOSING
4.01 Pre-Closing Covenants. Prior to the Closing, the parties covenant
and agree as follows:
(a) CCL and KOC Acquisition will cooperate and use all reasonable
efforts to secure all necessary consents, approvals, authorizations and
exemptions from governmental agencies and other third parties, and to obtain the
satisfaction of all of the conditions specified in Section 4.03, as shall be
required in order to enable CCL and KOC Acquisition to effect the transactions
contemplated hereby in accordance with the terms and conditions hereof.
(b) Prior to the Closing, CCL and TCCC shall not directly or
indirectly solicit, initiate or encourage any inquiries or proposals from,
discuss or negotiate with, provide any nonpublic information to, or consider the
merits of any inquiries or
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<PAGE> 6
proposals from any person or entity other than KOC Acquisition, Enterprises or
their respective advisors relating to any transaction involving the sale
of the KOC Shares (or any of them) or the sale or transfer of substantially all
of the assets of KOC. Prior to the Closing, neither CCL nor TCCC nor any of
their consolidated subsidiaries shall purchase any additional shares in the
capital stock or other securities of KOC (whether upon a treasury issuance,
pursuant to a market purchase or otherwise) or agree to do so except with the
prior written consent of KOC Acquisition, which consent may be withheld or
granted in its sole discretion.
(c) KOC Acquisition shall promptly file or cause to be filed on
a confidential basis:
(i) an application for review pursuant to and in
compliance with the Investment Canada Act; and
(ii) a short-form pre-merger notification and/or an
application for an advance ruling certificate pursuant to and in compliance
with the Competition Act.
CCL shall provide such information and assistance as KOC
Acquisition may reasonably require in connection with the filings required under
(i) and (ii) above.
4.02 The Closing. Except as may be otherwise agreed by the parties in
writing, the payment and deliveries contemplated by this Agreement to be made at
the Closing shall be made at the offices of Coca-Cola Enterprises Inc., 2500
Windy Ridge Parkway, Atlanta, Georgia 30339 at 10:00 a.m., Atlanta time, on the
later of the third Business Day after the satisfaction or written waiver of the
conditions set forth in Sections 4.02, 4.04 and 4.05, or August 7, 1997. The
date on which such payment and deliveries occurs is the "Closing Date", and the
events comprising such payment and deliveries are collectively, the "Closing".
As used in this Agreement, a "Business Day" shall be a day other than a
Saturday, Sunday or any day on which banks are required or authorized to close
in New York, New York or Toronto, Ontario.
4.03 Conditions to Each Party's Obligations. The respective obligation
of each party to consummate the transactions contemplated by this Agreement is
subject to the satisfaction, or waiver by TCCC, CCL, Enterprises and KOC
Acquisition, of the following conditions:
(a) No action, suit or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, national,
state, provincial, or local jurisdiction which would be reasonably expected to:
(i) prevent consummation of the purchase and sale of the
KOC Shares contemplated herein;
(ii) cause such purchase and sale to be rescinded
following its consummation; or
(iii) materially modify the terms of the purchase and sale
of the KOC Shares or result in material damage or Losses (as defined below)
to any party hereto as a result of the purchase and sale of the KOC Shares.
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<PAGE> 7
The pendency of an action, suit or proceeding relating to any tender offer for
shares of common stock of KOC initiated by KOC Acquisition or its affiliates
will not prevent the condition set forth in this paragraph (a) from being
satisfied unless such action, suit or proceeding challenges the purchase and
sale of the KOC Shares contemplated herein, and such challenge could not be
eliminated by a termination or withdrawal by KOC Acquisition or its affiliates
of such tender offer.
(b) No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Authority (as hereinafter
defined) which prohibits, materially restricts or makes illegal consummation of
the transactions contemplated hereby. As used in this Agreement, the term
"Governmental Authority" means any national, federal, provincial, state, local,
foreign or international court, government, department, commission, stock
exchange, board, bureau, agency, official or other regulatory, administrative or
governmental authority.
(c) The Minister of Industry Canada shall have been satisfied or
have been deemed to have been satisfied that the acquisition of the KOC Shares
by KOC Acquisition is likely to be of net benefit to Canada pursuant to the
Investment Canada Act or KOC Acquisition shall have been advised in writing by
the Minister of Industry Canada that the acquisition of the KOC Shares is not
reviewable under the provisions of the Investment Canada Act.
(d) KOC Acquisition and CCL shall each have filed all notices and
information required under Part IX of the Competition Act and shall have
satisfied any request for additional information thereunder and the applicable
waiting periods and any extensions thereof shall have expired without the threat
of restraint or challenge, or KOC Acquisition shall have received an advance
ruling certificate in form satisfactory to its counsel.
(e) All other authorizations, consents and approvals of
Governmental Authorities required to consummate the transactions contemplated
hereby shall have been received.
(f) The purchase by The Coca-Cola Bottling Company of the
Northeast of the stock of The Coca-Cola Bottling Company of New York, Inc. held
by Bottling Investment Holdings, Inc. shall have occurred simultaneously with
the purchase of the KOC Shares hereunder.
It is expressly acknowledged and agreed by each of CCL and KOC Acquisition that
the transactions contemplated by this Agreement are not conditioned in any
manner upon any decision by Enterprises, KOC Acquisition or their subsidiaries
to effect a tender offer for shares of common stock of KOC or upon the timing or
completion of any such tender offer. However, it is acknowledged and agreed that
the immediately preceding sentence shall not modify or amend the Closing
condition established in Section 4.03(a).
4.04 Conditions to Obligations of KOC Acquisition. The obligation of
Enterprises and KOC Acquisition to consummate the transactions contemplated
hereby is also subject to the satisfaction (or waiver by KOC Acquisition) at or
prior to the
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<PAGE> 8
Closing of the following conditions:
(a) The representations and warranties of TCCC and CCL contained
in Article II shall be true and correct in all material respects at the time of
the Closing with the same effect as though such representations and warranties
had been made at such time, except (i) for representations and warranties that
speak as of a specific date or time other than the date of the Closing (which
need only be true and correct in all material respects as of such date or time),
and (ii) for changes resulting from the consummation of the transactions
contemplated by this Agreement. KOC Acquisition shall have received certificates
signed by an officer of TCCC and CCL, as appropriate, to the foregoing effect.
(b) TCCC and KOC Acquisition shall have executed a Marketing
Support Agreement relating to KOC, in form and substance reasonably satisfactory
to TCCC, KOC Acquisition and Enterprises.
(c) There shall have occurred no material adverse change in the
financial condition or business of KOC since December 31, 1996.
4.05 Conditions to Obligations of TCCC and CCL. The obligations of
TCCC and CCL to consummate the transactions contemplated hereby are also subject
to the satisfaction (or waiver by TCCC and CCL) at or prior to the Closing of
the following condition: namely, that the representations and warranties of
Enterprises and KOC Acquisition contained in Article III shall be true and
correct in all material respects at the time of the Closing with the same effect
as though such representations and warranties had been made at such time, except
(i) for representations and warranties that speak as of a specific date or time
other than the date of the Closing (which need only be true and correct in all
respects as of such date or time), and (ii) for changes resulting from the
consummation of the transactions contemplated by this Agreement. TCCC and CCL
shall have received certificates signed by an officer of Enterprises and KOC
Acquisition, as appropriate, to the foregoing effect.
4.06 Deliveries by the Parties. At the Closing:
(a) CCL shall:
(i) deliver to KOC Acquisition certified copies of the
resolutions of the boards of directors of TCCC and CCL, respectively,
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement;
(ii) deliver to KOC Acquisition a certificate dated as of
the Closing Date executed by an officer of CCL, in form and substance
reasonably satisfactory to KOC Acquisition, (A) to the effect provided for
in Section 4.04(a), and (B) stating that CCL has performed and complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by CCL prior to or at Closing;
(iii) deliver to KOC Acquisition a certificate dated as of
the Closing Date executed by an officer of TCCC, in form and substance
reasonably satisfactory to KOC Acquisition, (A) to the effect provided for
in Section
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<PAGE> 9
4.04(a) and (B) stating that TCCC has performed and complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by TCCC prior to or at Closing;
(iv) deliver to KOC Acquisition stock certificates
representing all of the KOC Shares being sold by CCL hereunder, duly
endorsed or accompanied by assignments separate from certificate in form
reasonably satisfactory to counsel for KOC Acquisition; and
(v) deliver to Enterprises and KOC Acquisition opinions
from each of Fiona K. Orr, General Counsel to CCL, and F. Rodger Wrege,
Finance Counsel to TCCC each dated the Closing Date in substantially the
form of Exhibits 4.06(a)(v)-1 and 4.06(a)(v)-2.
(b) KOC Acquisition shall:
(i) deliver to TCCC and CCL certified copies of the
resolutions of the boards of directors of KOC Acquisition and Enterprises,
respectively, authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement;
(ii) deliver to TCCC and CCL a certificate dated as of the
Closing Date executed by an officer of KOC Acquisition, in form and
substance satisfactory to TCCC and CCL, (A) to the effect provided for in
Section 4.05, and (B) stating that KOC Acquisition has performed and
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by KOC
Acquisition prior to or at Closing;
(iii) deliver to CCL a certificate dated as of the Closing
Date executed by an officer of Enterprises, in form and substance
satisfactory to CCL, (A) to the effect provided for in Section 4.05, and
(B) stating that Enterprises has performed and complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by Enterprises prior to or at Closing;
(iv) deliver to TCCC and CCL opinions from each of Miller &
Martin and Clark, Drummie & Company each dated the Closing Date in
substantially the form of Exhibit 4.06(b)(iv)-1 and Exhibit 4.06(b)(iv)-2;
and
(v) effect the payment to CCL of the Purchase Price
provided for in Section 1.02.
4.07 Additional Agreements. TCCC, CCL, Enterprises and KOC Acquisition
agree that, from time to time, whether at or after the Closing Date, each of
them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the terms
of this Agreement. TCCC, CCL, Enterprises and KOC Acquisition each further
agrees that it will not take any action that will prevent the performance of
this Agreement in accordance with its terms, except as may be required by
applicable law.
ARTICLE V
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<PAGE> 10
GUARANTEES
5.01 Guaranty of Enterprises. Enterprises, as a primary obligor, shall
and hereby does, absolutely and unconditionally and irrevocably, guarantee the
prompt payment and performance of the obligations of KOC Acquisition hereunder
(the "KOC Acquisition Obligations"). No change, amendment or modification of
this Agreement or waiver of any of the terms hereof, or permitted assignment,
shall diminish, release or discharge the liability of Enterprises under this
Section 5.01, which shall be continuing and shall be discharged only by the full
performance of the KOC Acquisition Obligations.
5.02 Guaranty of TCCC. TCCC, as a primary obligor, shall and hereby
does, absolutely and unconditionally and irrevocably, guarantee the prompt
payment and performance of the obligations of CCL hereunder (the "CCL
Obligations"). No change, amendment or modification of this Agreement or waiver
of any of the terms hereof, or permitted assignment, shall diminish, release or
discharge the liability of TCCC under this Section 5.02, which shall be
continuing and shall be discharged only by the full performance of the CCL
Obligations.
ARTICLE VI
INDEMNIFICATION
6.01 Remedies. Each of CCL and KOC Acquisition, as the case may be
(the "Indemnifying Party"), shall indemnify, defend and hold harmless the other
party (the "Indemnified Party") from and against any Losses (as hereinafter
defined) arising from any inaccuracy of the representations and warranties of
such party or its ultimate parent or any breach of the covenants of such party
or its ultimate parent contained herein. As used in this Agreement, the term
"Loss" means any loss, damage, liability, cost or expense including, without
limitation, any interest, fine, penalty, criminal or civil judgment or
settlement, court costs, reasonable attorneys' and expert witnesses' fees,
reasonable accountants' fees, disbursements and expenses, and any
indemnification or similar payments required to be made to officers, directors,
employees or agents under duly enacted provisions of the certificate of
incorporation or bylaws, board resolutions or undertakings, commitments or other
understandings or under applicable corporate law. The foregoing indemnification
provision shall constitute the sole remedy under this Agreement for any breach
of a representation or warranty contained in this Agreement.
6.02 Survival. The representations and warranties contained in this
Agreement shall not be extinguished by the Closing and shall survive without
limitation as to time; and the covenants and agreements contained herein shall
survive without limitation as to time except as may be otherwise specified
herein. No investigation or other examination by any party hereto or its
designee or representatives shall affect the term of survival of the
representations and warranties set forth above.
6.03 Notice of Claim. The Indemnified Party shall promptly notify the
Indemnifying Party involved, in writing, of any claim for recovery, specifying
in reasonable detail the nature of the Loss, and, if known, the amount, or an
estimate of the amount, of the liability arising therefrom, provided that the
failure to
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<PAGE> 11
provide such notice shall not affect the obligations of the Indemnifying
Party hereunder except to the extent such party is materially and actually
prejudiced thereby. The Indemnified Party shall provide to the Indemnifying
Party as promptly as practicable thereafter information and documentation
reasonably requested by such Indemnifying Party to support and verify the claim
asserted, unless the Indemnified Party has been advised by counsel that there
are no reasonable grounds to assert the joint defense privilege with
respect to such information and documentation.
6.04 Defense. If the facts pertaining to a Loss arise out of the claim
of any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnifying Party may assume the
defense or the prosecution thereof by written notice to the Indemnified Party,
including the employment of counsel or accountants, at its cost and expense. The
Indemnified Party shall have the right to employ counsel separate from counsel
employed by the Indemnifying Party in any such action and to participate
therein, but the fees and expenses of such counsel employed by the Indemnified
Party shall be at its expense. The Indemnifying Party shall not be liable for
any settlement of any such claim effected without its prior written consent,
which shall not be unreasonably withheld; provided that if the Indemnifying
Party does not assume the defense or prosecution of any such claim within 30
days of notice thereof, the Indemnified Party may settle such claim without the
Indemnifying Party's consent in which event the Indemnifying Party shall be
liable for such settlement. Without the Indemnified Party's prior written
consent, the Indemnifying Party shall not settle any claim in a manner which is
prejudicial (financially or otherwise) to the Indemnified Party. Whether or not
the Indemnifying Party chooses to so defend or prosecute such claim, each of the
parties hereto shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith.
ARTICLE VII
TERMINATION PRIOR TO CLOSING
This Agreement may be terminated at any time prior to the Closing:
(a) By the mutual written consent of all the parties hereto;
(b) By CCL in writing, if KOC Acquisition or Enterprises shall
(i) fail to perform in any material respect its agreements contained herein
required to be performed by it on or prior to the Closing Date, or (ii) breach
in any material respect any of its representations or warranties contained
herein, which failure or breach in either case is not cured within thirty (30)
days after CCL has notified KOC Acquisition and Enterprises of its intent to
terminate this Agreement pursuant to this Article VII;
(c) By KOC Acquisition in writing, if CCL or TCCC shall (i) fail
to perform in any material respect its agreements contained herein required to
be performed by it on or prior to the Closing Date, or (ii) breach in any
material respect any of its representations or warranties contained herein,
which failure or breach in either case is not cured within thirty (30) days
after
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<PAGE> 12
KOC Acquisition has notified CCL and TCCC of its intent to terminate this
Agreement pursuant to this Article VII;
(d) By either CCL or KOC Acquisition in writing, without
liability, if there shall be any final, non-appealable order, writ, injunction
or decree of any Governmental Authority binding on KOC Acquisition, Enterprises,
CCL or TCCC, which prohibits or restrains KOC Acquisition, Enterprises, CCL or
TCCC from consummating the transactions contemplated hereby; or
(e) By either CCL or KOC Acquisition, in writing, without
liability, if for any reason the Closing has not occurred by the first
anniversary of the execution of this Agreement, unless the failure of the
Closing to occur by such date is due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein.
ARTICLE VIII
OTHER MATTERS
8.01 No Participation in Tender. CCL shall not tender, nor allow to be
tendered by any other person or entity, the KOC Shares in response to any
take-over bid or offer made for any or all of the common shares of KOC.
8.02 Brokerage. Each party hereto will indemnify and hold harmless the
other against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, when such
claim is based in any way on agreements, arrangements or understandings made or
claimed to have been made by the indemnifying party with any third party.
8.03 Expenses. Each party shall pay all costs and expenses incurred by
it or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel, regardless of whether such transactions
are consummated.
8.04 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally or sent prepaid by
FedEx or other recognized overnight courier or delivered by telecopy
transmission, provided that if delivered by telecopy transmission such notice
shall also be sent on the same day by recognized overnight courier, in each case
to the applicable addresses set forth below:
To Enterprises:
John R. Alm
Senior Vice President and Chief Financial Officer
Coca-Cola Enterprises, Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3363
with copies to:
Lowry F. Kline
Senior Vice President and General Counsel
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<PAGE> 13
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3784
and
E. Liston Bishop III
Miller & Martin
1000 Volunteer Building
Chattanooga, Tennessee 37402-2289
Telecopy No.: (423) 785-8480
To KOC Acquisition:
Assistant Secretary
Enterprises KOC Acquisition Company Ltd.
c/o Stikeman, Elliott
Commerce Court West, Suite 5300
Toronto, Ontario
CANADA
Telecopy No.: (416) 947-0866
with copies to:
John R. Alm
Senior Vice President and Chief Financial Officer
Coca-Cola Enterprises, Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3363
and:
Lowry F. Kline
Senior Vice President and General Counsel
Coca-Cola Enterprises Inc.
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
Telecopy No.: (770) 989-3784
and
E. Liston Bishop III
Miller & Martin
1000 Volunteer Building
Chattanooga, Tennessee 37402-2289
Telecopy No.: (423) 785-8480
To TCCC or CCL:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: Chief Financial Officer
Telecopy No.: (404) 676-8683
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<PAGE> 14
with copies to:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
Attention: General Counsel
Telecopy No.: (404) 676-6209
and
Coca-Cola Ltd.
Suite 100, 42 Overlea Boulevard
Toronto, Ontario
CANADA
M4H 1B8
Attention: General Counsel
Telecopy No.: (416) 467-2222
or to such other address as any such party shall have designated by notice given
in accordance with the above to the other parties. Any such notice shall be
deemed to have been given as of the date delivered, if delivered in person or by
telecopy transmission, or upon the next Business Day, if sent by recognized
overnight courier.
8.05 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that TCCC, CCL and Enterprises may not
assign any of their rights, interests or obligations hereunder without the prior
written consent of all other parties hereto. KOC Acquisition may assign its
rights and duties hereunder in whole or in part to one or more entities which
are, at the time of such assignment and at the time of the Closing, wholly-owned
direct or indirect subsidiaries of Enterprises, subject to the continuing
effectiveness of the guaranty of Enterprises set forth in Section 5.01, which
may not be delegated without the consent of TCCC.
8.06 Complete Agreement. Except as otherwise provided herein, this
Agreement embodies the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes (i) all prior agreements
and understandings relating to such subject matter, whether written or oral, and
(ii) all purportedly contemporaneous oral agreements and understandings relating
to such subject matter.
8.07 Partial Invalidity. If any term or provision of this Agreement
not essential to the basic purpose hereof shall be held to be illegal, invalid
or unenforceable by a court of competent jurisdiction, the parties intend that
the remaining terms shall constitute the agreement with respect to the subject
matter thereof, as if the illegal, invalid or unenforceable provision had never
been a part.
8.08 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered to be one and the same agreement,
and each of which shall be deemed an original.
8.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia,
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<PAGE> 15
regardless of the conflicts of laws principles thereof.
8.10 Section 338 Election. If KOC Acquisition makes a "qualified stock
purchase" as defined in Section 338(d) of the Internal Revenue Code of 1986, as
amended ("IRC"), of the KOC Shares, and otherwise meets the applicable
requirements of that section, CCL acknowledges that KOC Acquisition may make an
election under IRC Section 338(g) with respect to the purchase of the KOC
Shares. Neither TCCC nor CCL shall have any liability for any tax liabilities of
KOC or its subsidiaries arising from such election and Enterprises agrees to
indemnify and hold harmless TCCC and CCL from any such liability.
8.11 Amendments; Waivers. This Agreement may not be altered, amended,
superseded, canceled or renewed except in writing signed by all parties hereto.
The failure of any party at any time to require performance of any provisions
hereof shall in no manner affect the right to enforce the same. No waiver by any
party of any condition, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
to be a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other term, provision, or
warranty, representation, agreement or covenant of this Agreement.
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<PAGE> 16
IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Agreement to be duly executed and delivered on the date
first above written:
ENTERPRISES KOC ACQUISITION
COMPANY LTD.
By: /s/JOHN R. ALM
------------------------------
Name: John R. Alm
Title: Senior Vice President and
Chief Financial Officer
COCA-COLA LTD.
By: /s/ ANTHONY G. EAMES
------------------------------
Name: Anthony G. Eames
Title: President
COCA-COLA ENTERPRISES INC.
By: /s/JOHN R. ALM
------------------------------
Name: John R. Alm
Title: Senior Vice President and
Chief Financial Officer
THE COCA-COLA COMPANY
By: /s/ DAVID M. TAGGART
------------------------------
Name: David M. Taggart
Title: Vice President
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<PAGE> 17
SCHEDULES AND EXHIBITS TO
STOCK PURCHASE AGREEMENT
Exhibit 4.06(a)(v)-1 Form of opinion of Fiona K. Orr.
Exhibit 4.06(a)(v)-2 Form of opinion of F. Rodger Wrege
Exhibit 4.06(b)(iv)-1 Form of opinion of Miller & Martin
Exhibit 4.06(b)(iv)-2 Form of opinion of Clark, Drummie &
Company
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<PAGE> 1
EXHIBIT 2.3
STOCK PURCHASE MEMORANDUM
THIS MEMORANDUM is made and entered into as of the 1st day of October,
1997, by and between George D. Overend, a resident of Atlanta, Georgia (the
"Seller") and THE COCA-COLA BOTTLING COMPANY OF THE NORTHEAST, a Delaware
corporation ("Purchaser"), under the following circumstances:
A. The Seller has this day sold to the Purchaser 1,778 shares of the Class
A Common Stock, of the par value $.01 per share, of The Coca-Cola Bottling
Company of New York, Inc., a Delaware corporation (the "KONY Stock").
B. This document is being executed to record the agreement of the parties
with respect to the sale and purchase of the KONY Stock, which is as follows:
1. Purchase Price. The purchase price for the 1,778 shares of KONY
Stock was $501,921.66 which the Purchaser has this day paid to the Seller, and
the Seller's receipt of which is acknowledged.
2. Delivery of Certificate. The Seller has delivered to the Purchaser
certificates no. 53 and 91 evidencing ownership of the KONY Stock, issued in the
name of Seller, together with its duly executed stock power, with signatures
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange. The Purchaser hereby acknowledges receipt of such certificate and
stock power.
3. Representations and Warranties of Seller.
(a) The Seller has full corporate power and authority to execute and
deliver this Memorandum and to transfer to the Purchaser the KONY Stock to
which this Memorandum relates.
(b) The KONY Stock is validly issued, fully paid and nonassessable,
and except as otherwise disclosed on Schedule 3(c), is free and clear of any
liens, restrictions, claims, equities, charges, options or other encumbrances,
with no defects of title whatsoever.
(c) The Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
described in this Memorandum for which the Purchaser could become liable or
obligated.
(d) The Seller's representations and warranties shall survive the
delivery of the Stock.
4. Representations and Warranties of Purchaser.
(a) The Purchaser hereby represents and warrants that Purchaser is
acquiring the KONY Stock for investment for Purchaser's
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<PAGE> 2
account, with the intent of holding the KONY Stock for investment, without
the present intent of participating directly or indirectly in a distribution
of the KONY Stock, and without the participation of any other person in any
part of the purchase.
(b) The Purchaser's representations and warranties shall survive the
delivery of the KONY Stock.
IN WITNESS WHEREOF, this Memorandum is signed by the parties as of the date
first above written.
SELLER:
/s/GEORGE D. OVEREND
-----------------------------
George D. Overend
PURCHASER:
THE COCA-COLA BOTTLING COMPANY
OF THE NORTHEAST
/s/ JOHN R. ALM
By:----------------------------
SENIOR VICE PRESIDENT
Its:---------------------------
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<PAGE> 3
SCHEDULES AND EXHIBITS TO
STOCK PURCHASE MEMORANDUM
Schedule 3(c) Liens and Restrictions
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<PAGE> 1
EXHIBIT NO. 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 27, 1997, with respect to the
consolidated financial statements of The Coca-Cola Bottling Company of New York,
Inc. for the years ended December 31, 1996 and 1995, included in this report on
Form 8-K of Coca-Cola Enterprises Inc. and incorporated by reference in the
Registration Statements of Coca-Cola Enterprises Inc. listed below:
- - Registration Statement No.33-18039 on Form S-8, as amended, dated October
21, 1987 and related Prospectus
- - Registration Statement No.33-18495 on Form S-8, as amended, dated November
13, 1987 and related Prospectus
- - Registration Statement No.33-38771 on Form S-8 dated January 31, 1991 and
related Prospectus
- - Registration Statement No.33-44448 on Form S-8 dated December 18, 1991 and
related Prospectus
- - Registration Statement No.33-48482 on Form S-8 dated June 17, 1992 and
related Prospectus
- - Registration Statement No.33-53219 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53221 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53223 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53225 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53227 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53229 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-54951 on Form S-8 dated August 5, 1994 and
related Prospectus
- - Registration Statement No.33-54953 on Form S-8 dated August 5, 1994 and
related Prospectus
- - Registration Statement No.33-58695 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-58697 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-58699 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-62757 on Form S-3, as amended, dated November
14, 1995 and related Prospectus
- - Registration Statement No.33-65257 on Form S-8 dated December 21, 1995 and
related Prospectus
- - Registration Statement No.33-65261 on Form S-8 dated December 21, 1995 and
related Prospectus
- - Registration Statement No.33-65413 on Form S-8 dated December 27, 1995 and
related Prospectus
- - Registration Statement No.333-18569 on Form S-3 dated December 23, 1996
and related Prospectus
- - Registration Statement No.333-26181 on Form S-8 dated April 29, 1997 and
related Prospectus
- - Registration Statement No.333-26173 on Form S-8 dated April 29, 1997 and
related Prospectus
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
October 30, 1997
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<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 24, 1997 (except for Notes 5
and 15 which are as at September 12, 1997), with respect to the consolidated
financial statements of Coca-Cola Beverages Ltd. as at December 31, 1996 and
1995 and for each of the years in the three year period ended December 31, 1996,
included in this report on Form 8-K of Coca-Cola Enterprises Inc. and
incorporated by reference in the Registration Statements of Coca-Cola
Enterprises Inc. listed below:
- - Registration Statement No.33-18039 on Form S-8, as amended, dated October
21, 1987 and related Prospectus
- - Registration Statement No.33-18495 on Form S-8, as amended, dated November
13, 1987 and related Prospectus
- - Registration Statement No.33-38771 on Form S-8 dated January 31, 1991 and
related Prospectus
- - Registration Statement No.33-44448 on Form S-8 dated December 18, 1991 and
related Prospectus
- - Registration Statement No.33-48482 on Form S-8 dated June 17, 1992 and
related Prospectus
- - Registration Statement No.33-53219 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53221 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53223 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53225 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53227 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-53229 on Form S-8 dated April 22, 1994 and
related Prospectus
- - Registration Statement No.33-54951 on Form S-8 dated August 5, 1994 and
related Prospectus
- - Registration Statement No.33-54953 on Form S-8 dated August 5, 1994 and
related Prospectus
- - Registration Statement No.33-58695 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-58697 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-58699 on Form S-8, as amended, dated May 18,
1995 and related Prospectus
- - Registration Statement No.33-62757 on Form S-3, as amended, dated November
14, 1995 and related Prospectus
- - Registration Statement No.33-65257 on Form S-8 dated December 21, 1995 and
related Prospectus
- - Registration Statement No.33-65261 on Form S-8 dated December 21, 1995 and
related Prospectus
- - Registration Statement No.33-65413 on Form S-8 dated December 27, 1995 and
related Prospectus
- - Registration Statement No.333-18569 on Form S-3 dated December 23, 1996
and related Prospectus
- - Registration Statement No.333-26181 on Form S-8 dated April 29, 1997 and
related Prospectus
- - Registration Statement No.333-26173 on Form S-8 dated April 29, 1997 and
related Prospectus
Toronto, Canada /s/ ERNST & YOUNG
October 30, 1997 Chartered Accountants
E-41
