UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 28, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-09300
COCA-COLA ENTERPRISES INC.
(Exact name of registrant as specified in its charter)
Delaware 58-0503352
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 Windy Ridge Parkway, Suite 700
Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
770-989-3000
(Registrant's telephone number, including area code)
______________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock.
385,300,512 Shares of $1 Par Value Common Stock as of May 5, 1997
<PAGE>
COCA-COLA ENTERPRISES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 28, 1997
INDEX
Page
----
Part I - Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Quarters ended March 28, 1997 and
March 29, 1996...................................... 1
Condensed Consolidated Balance Sheets as of March 28,
1997 and December 31, 1996.......................... 2
Condensed Consolidated Statements of Cash Flows for
the Quarters ended March 28, 1997 and
March 29, 1996...................................... 4
Notes to Condensed Consolidated Financial Statements.. 5
Part I - Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations..................................... 13
Part II - Item 4. Submission of Matters to a Vote of
Security Holders............................... 19
Part II - Item 6. Exhibits and Reports on Form 8-K......... 21
Signatures................................................. 22
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions except per share data)
Quarter ended
------------------------
March 28, March 29,
1997 1996
--------- ---------
Net Operating Revenues.................... $ 2,141 $ 1,600
Cost of sales............................. 1,341 970
------- -------
Gross Profit.............................. 800 630
Selling, general, and administrative
expenses................................ 742 539
------- -------
Operating Income.......................... 58 91
Interest expense, net..................... 107 79
Other nonoperating deductions, net........ 5 -
------- -------
(Loss) Income Before Income Taxes......... (54) 12
Income tax (benefit) expense.............. (21) 5
------- -------
(Loss) Net Income......................... (33) 7
Preferred stock dividends................. 2 2
------- -------
(Loss) Net Income Applicable to Common
Share Owners............................ $ (35) $ 5
======= =======
Average Common Shares Outstanding......... 377 379
======= =======
Net (Loss) Income Per Share Applicable
to Common Share Owners.................. $ (0.09) $ 0.01
======= =======
See Notes to Condensed Consolidated Financial Statements.
- 1 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
March 28, December 31,
ASSETS 1997 1996
--------- ------------
(Unaudited)
Current
Cash and cash investments, at cost
approximating market................... $ 9 $ 47
Trade accounts receivable, less reserves
of $47 and $45 million, respectively... 928 668
Inventories:
Finished goods......................... 282 221
Raw materials and supplies............. 127 96
------- -------
409 317
Current deferred income tax assets....... 140 140
Prepaid expenses and other current
assets................................. 165 147
------- -------
Total Current Assets.................. 1,651 1,319
Property, Plant, and Equipment
Land..................................... 260 213
Buildings and improvements............... 949 860
Machinery and equipment.................. 3,878 3,558
------- -------
5,087 4,631
Less allowances for depreciation......... 1,973 1,881
------- -------
3,114 2,750
Construction in progress................. 83 62
------- -------
Net Property, Plant, and Equipment.... 3,197 2,812
Franchises and Other Noncurrent Assets,
Net...................................... 9,641 7,103
------- -------
$14,489 $11,234
======= =======
See Notes to Condensed Consolidated Financial Statements.
- 2 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)
March 28, December 31,
LIABILITIES AND SHARE-OWNERS' EQUITY 1997 1996
--------- ------------
(Unaudited)
Current
Accounts payable and accrued
expenses............................... $ 1,509 $ 1,199
Current portion of long-term debt........ 2,207 491
------- -------
Total Current Liabilities............ 3,716 1,690
Long-Term Debt, Less Current Maturities.... 5,123 4,814
Retirement and Insurance Programs and Other
Long-Term Obligations.................... 849 699
Long-Term Deferred Income Tax Liabilities.. 3,249 2,481
Share-Owners' Equity (Note H)
Preferred stock.......................... 115 134
Common stock, $1 par value -- Authorized -
1,000,000,000 and 500,000,000 shares
respectively; Issued - 441,585,870
and 146,763,463 shares, respectively... 442 147
Additional paid-in capital............... 1,209 1,434
Reinvested earnings...................... 200 237
Cumulative effect of currency
translations........................... 3 21
Cost of common stock in treasury
(62,999,940 and 21,328,590 shares,
respectively).......................... (417) (423)
------- -------
Total Share-Owners' Equity........... 1,552 1,550
------- -------
$14,489 $11,234
======= =======
- 3 -
<PAGE>
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Quarter ended
-----------------------
March 28, March 29,
1997 1996
--------- ---------
Cash Flows From Operating Activities
Net (loss) income.......................... $ (33) $ 7
Adjustments to reconcile net (loss) income
to net cash (used in) derived from
operating activities:
Depreciation........................... 120 86
Amortization........................... 96 50
Deferred income tax provision.......... (52) (13)
Net changes in current assets and
current liabilities.................. (282) (36)
Additional nonoperating cash flows..... 45 8
------- ------
Net cash (used in) derived from
operating activities................. (106) 102
Cash Flows From Investing Activities
Purchases of fixed assets.................. (183) (96)
Fixed asset sales.......................... 3 10
Cash investment in bottling businesses,
net of cash acquired..................... (1,017) (144)
------- ------
Net cash used in investing activities.. (1,197) (230)
Cash Flows From Financing Activities
Issuance of long-term debt................. 1,337 303
Payments on long-term debt................. (77) (47)
Stock purchases for treasury............... - (118)
Exercise of employee stock options......... 5 4
Additional financing activities............ - (6)
------- ------
Net cash derived from financing
activities........................... 1,265 136
------- ------
Net (Decrease) Increase in Cash and Cash
Investments.............................. (38) 8
Cash and cash investments at beginning
of period................................ 47 8
------- ------
Cash and Cash Investments at End of Period $ 9 $ 16
======= ======
Supplemental Noncash Investing and
Financing Activities:
Acquisitions
Fair value of assets acquired.......... $ 3,344 $ 552
Liabilities assumed.................... (1,337) (235)
Debt issued and assumed................ (990) (19)
Equity issued.......................... - (154)
------- ------
Cash paid, net of cash acquired........ $ 1,017 $ 144
======= ======
See Notes to Condensed Consolidated Financial Statements.
- 4 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles (GAAP) for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all information and footnotes
required by GAAP for complete financial statements. In the opinion of
management, all adjustments consisting of normal recurring accruals
considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements
and footnotes included in the Company's annual report on Form 10-K for
the year ended December 31, 1996.
Note B - Seasonality of Business
Operating results for the first quarter ended March 28, 1997 are not
indicative of results that may be expected for the year ended December
31, 1997 primarily due to the seasonality of the Company's business.
This seasonality results from a combination of higher unit sales of
the Company's products in the second and third quarters versus the
first and fourth quarters of the year and the methods of accounting
for fixed costs such as depreciation, amortization, and interest
expense which are not significantly impacted by the seasonality of the
business.
Note C - Acquisitions and Divestitures
On February 10, 1997, the Company purchased Amalgamated Beverages
Great Britain Limited (ABGB) from The Coca-Cola Company and Cadbury
Schweppes plc for an aggregate transaction value (purchase price,
assumed debt, and other long-term obligations) of approximately $2
billion. The acquisition was initially financed through a combination
of sellers' notes and short-term borrowings. The Company intends to
refinance portions of these borrowings with longer-term fixed and
floating rate financings. Coca-Cola & Schweppes Beverages Limited
(CCSB), a wholly-owned subsidiary of ABGB, produces and distributes
beverage products of The Coca-Cola Company and Cadbury Schweppes plc
in Great Britain. CCSB has entered into long-term contracts to
continue to produce and distribute products of both The Coca-Cola
Company and Cadbury Schweppes plc in Great Britain.
- 5 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note C - Acquisitions and Divestitures (continued)
The following table summarizes unaudited proforma financial
information of the Company as if the 1996 and 1997 acquisitions of
S.A. Beverage Sales Holding N.V., Coca-Cola Enterprises S.A. (formerly
known as Coca-Cola Beverages S.A.), Coca-Cola Production S.A.,
Ouachita Coca-Cola Bottling Company, Inc. (Ouachita), Coca-Cola
Bottling Company West, Inc., Grand Forks Coca-Cola Bottling Company,
and ABGB, were completed effective January 1, 1996. The unaudited
proforma financial information for the quarters ended March 28, 1997
and March 29, 1996 reflects adjustments for: (i) the repayment of
assumed debt, (ii) financing of the transactions at an interest cost
of approximately 6.9% for the quarter ended March 28, 1997 and 7.5%
for the quarter ended March 29, 1996, (iii) amortization of the value
of the acquired franchise assets over 40 years, (iv) contractual
changes to the business of certain of the acquired companies, and (v)
income tax effects of the foregoing (in millions except per share
data):
Quarter Ended
----------------------
March 28, March 29,
1997 1996
--------- ---------
Net Operating Revenues.......... $2,307 $2,201
Cost of sales................... 1,454 1,373
------ ------
Gross Profit.................... 853 828
Selling, general, and
administrative expenses....... 798 738
------ ------
Operating Income................ 55 90
Interest expense, net........... 123 141
Other nonoperating (deductions)
income, net................... (5) 7
------ ------
Loss Before Income Taxes........ (73) (44)
Income tax benefit.............. (28) (14)
------ ------
Net Loss........................ (45) (30)
Preferred stock dividends....... 2 3
------ ------
Proforma Net Loss Applicable to
Common Share Owners........... $ (47) $ (33)
====== ======
Proforma Net Loss Per Share
Applicable to Common Share
Owners........................ $(0.12) $(0.09)
====== ======
- 6 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note D - Long-Term Debt
Long-term debt including current maturities consists of the following
(in millions):
March 28, December 31,
1997 1996
--------- ------------
Commercial Paper, weighted
average interest rate of
5.5%......................... $ 769 $ 648
Foreign-denominated bank loans,
weighted average interest
rates of 5.7% - 1997 and
3.4% - 1996.................. 2,079 370
6.50% Notes due 1997........... 300 300
7.00% Notes due 1999........... 200 200
7.875% Notes due 2002.......... 500 500
8.00% Notes due 2005........... 250 250
8.50% Debentures due 2012...... 250 250
8.75% Debentures due 2017...... 142 142
8.35% Zero Coupon Notes due
2020 (net of unamortized
discount of $1,643 and
$1,649, respectively)........ 289 283
8.00% and 8.50% Debentures
due 2022..................... 1,000 1,000
6.75% Debentures due 2023...... 250 250
6.95% and 7.00% Debentures
due 2026..................... 550 550
6.70% Debentures due 2036...... 300 300
5.71% Notes due 2037........... 150 -
Additional debt................ 301 262
------ ------
$7,330 $5,305
====== ======
Aggregate maturities of long-term debt during the next five years are
as follows (in millions): 1997 - $2,207; 1998 - $77; 1999 - $204;
2000 - $5; and 2001 - $1,506.
- 7 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note D - Long-Term Debt (continued)
The Company's commercial paper program is supported by a $1 billion
short-term credit facility and a $1.5 billion multicurrency revolving
bank credit agreement maturing in November 2001. At March 28, 1997,
approximately $1,047 million is outstanding under this multicurrency
credit agreement and $453 million of the outstanding commercial paper
supported by this agreement has been classified as long-term debt. The
Company has exchanged approximately $769 million of its commercial
paper borrowings under foreign currency swap agreements and intends to
renew these 30-day foreign currency swap agreements as they expire.
The Company has available for issuance approximately $3 billion in
registered debt securities under a registration statement with the
Securities and Exchange Commission. Additionally, the Company has
short-term foreign currency-denominated credit facilities with
international banks totaling approximately $751 million and $736
million, of which $294 million and $370 million was outstanding at
March 28, 1997 and December 31, 1996, respectively.
Effective April 1, 1997 the Company redeemed all of its outstanding
8.75% Debentures due April 1, 2017. During first quarter 1997, $6
million of cost associated with this debt redemption was included in
the results of operations as other nonoperating expense.
In March 1997 the Company issued $150 million of 5.71% Notes due March
18, 2037. Holders of the Notes may require the Company to repay the
notes after one year and every year thereafter.
The revolving bank credit agreement and the outstanding notes and
debentures contain various provisions which, among other things,
require the Company to maintain a defined leverage ratio and limit the
incurrence of certain liens or encumbrances in excess of defined
amounts. These provisions are not anticipated to become restrictive to
the Company's liquidity or capital resources.
- 8 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note E - Preferred Stock
The Company issued 936,965 of 1,110,000 authorized shares of voting
convertible preferred stock, Ouachita Series A (Series A), and
issued 95,955 of 350,000 authorized shares of voting convertible
preferred stock authorized, Ouachita Series B (Series B), under the
Ouachita acquisition. Series A and Series B each have stated values
of $150 per share. Series A pays quarterly dividends equaling 4%
annually. Series B does not pay dividends.
During the first quarter of 1997, the holders of Series A preferred
stock converted 124,297 shares into 328,554 shares of common stock,
representing cumulative conversions of 180,248 shares of Series A
preferred stock into 571,814 shares of common stock. Also during the
first quarter of 1997, the holders of Series B preferred stock
converted 17 shares into 56 shares of common stock, completing the
conversions of all issued shares of Series B preferred stock into a
cumulative total of 555,083 shares of common stock. Additional paid-in
capital increased by the difference between the recorded value
of the converted preferred stock and the cost of treasury stock issued
by approximately $14 million in the first quarter of 1997. The
cumulative increase through March 28, 1997 to additional paid-in
capital for all conversions of preferred stock was $24 million. As of
April 28, 1997 all remaining shares of Series A preferred stock have
been converted into common stock.
Note F - Income Taxes
The Company's effective tax rates for the first quarters of 1997 and
1996 were 39% and 43%, respectively. A reconciliation of the income
tax provision at the statutory federal rate to the Company's actual
income tax provision follows (in millions):
Quarter ended
-----------------------
March 28, March 29,
1997 1996
--------- ---------
Statutory expense (benefit)
- 35%........................... $(19) $ 4
State expense (benefit), net of
federal......................... (3) 1
Other, net........................ 1 -
----- ----
$ (21) $ 5
===== ====
- 9 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note G - Stock-Based Compensation Plans
An aggregate 845,000 shares of common stock were issued during the
first quarter of 1997 from the exercise of stock options under the
Company's various stock option plans.
In the first quarter of 1997 the Company made grants of
3,433,500 stock performance-based options and 1,811,000
service-based options to certain executives and management employees.
All options were granted at an exercise price equal to the fair market
value on the grant date and expire ten years from the date of grant.
Performance-based options vest either solely upon attainment of
specified increases in the Company's common stock within five years
from the date of grant or upon attainment of this stock performance
criterion coupled with a period of continued employment of up to three
years after the stock performance criterion has been met. Service-
based options vest ratably over a three-year period.
The Company made additional grants in first-quarter 1997 of 7,500
stock options to each non-employee member of the Board of Directors.
These options vest solely upon attainment of specified increases in
the Company's common stock within five years from the date of grant.
In the first quarter of 1997, the Company made grants of 405,000
shares of restricted common stock to certain officers of the Company.
These awards vest generally only upon attainment of specified
increases in the market price of the Company's common stock within
five years from the date of grant and after continued employment for a
period of up to five years once the stock performance criterion is
met.
Note H - Earnings Per Share
On February 18, 1997, the Company's Board of Directors approved a
proposal to amend the Company's certificate of incorporation to
increase the authorized common shares from 500 million to 1 billion
and to effect a 3-for-1 stock split. The split was approved at the
April 21, 1997 annual meeting of share owners and was effective for
share owners of record on May 1, 1997. Common stock at March 28, 1997,
was retroactively adjusted to stated par value by $295 million in the
first quarter of 1997 to reflect this distribution. The condensed
consolidated balance sheet as of March 28, 1997 and results of
operations and outstanding shares and per share data for the quarters
ended March 28, 1997 and March 29, 1996 contained in this report
have been adjusted to reflect the impact of the stock split.
In the first quarter of 1997, dividends in the amount of $0.025 per
common share were declared for share owners of record on April 1,
1997. After the 3-for-1 stock split, quarterly dividends for share-
owners of record on July 1, 1997 were also declared in the amount of
$0.025 per common share. Future dividend payments will be determined
by the Company's Board of Directors.
- 10 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note H - Earnings Per Share (continued)
SFAS No. 128, Earnings Per Share, issued during first-quarter 1997 is
effective for full-year 1997 and subsequent periods. SFAS No. 128
modifies the method of calculation of net income per share applicable to
common share owners and also requires a reconciliation between basic and
diluted per-share amounts. Early adoption of the statement prior to the
end of 1997 is not allowed.
The following table (in millions except per share data) presents the
effect of SFAS No. 128 on the Company's net income per share applicable
to common share owners as if adopted for current period disclosure. A
reconciliation between basic and diluted amounts for the first quarter of
1997 is not presented below because of the net loss during the first
quarter.
Quarter ended
------------------------
March 28, March 29,
1997 1996
--------- ---------
Net (Loss) Income..................... $ (33) $ 7
Preferred stock dividends............. 2 2
------ ------
Basic and Diluted Net (Loss) Income
Applicable to Common Share Owners... $ (35) $ 5
====== ======
Basic Average Common Shares
Outstanding......................... 377 375
====== ======
Basic Net (Loss) Income Per Share
Applicable to Common Share Owners... $(0.09) $ 0.01
====== ======
Effect of Dilutive Securities:
Stock Compensation Awards........... 5
------
Diluted Average Common Shares
Outstanding......................... 380
======
Diluted Net Income Per Share Applicable
to Common Share Owners.............. $ 0.01
======
- 11 -
<PAGE>
COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note I - Contingencies
The Company purchases substantially all of its PET (plastic)
bottles from manufacturing cooperatives and other entities
involved in the manufacture of plastic bottles. The Company has
guaranteed payment of up to $234 million of indebtedness owed by
these manufacturing cooperatives to third parties. At March 28,
1997, these cooperatives had approximately $148 million of
indebtedness guaranteed by the Company. The Company has also
provided letters of credit aggregating approximately $98 million
primarily in connection with self-insurance programs.
The Company has been named as a potentially responsible party
(PRP) for the costs of remediation of hazardous waste at federal
and state Superfund sites. The Company believes any ultimate
Superfund liability under these PRP designations will not have a
materially adverse effect on its financial position, cash flows,
or results of operations. At March 28, 1997, there were five
federal sites and one state site for which the Company's
involvement or liability as a PRP was unresolved. In addition,
there were 17 other federal and seven state sites for which it had
been concluded that the Company either had no responsibility, the
ultimate liability amounts would be less than $100,000 or payments
made to date by the Company would be sufficient to satisfy all
liability of the Company.
Under current law, the Company's liability for clean-up of
Superfund sites may be joint and several with other PRPs,
regardless of the Company's use in relation to other users. As to
any site where the Company may be liable, the Company has
determined there are other PRPs who are financially solvent as
well, and that any hazardous waste deposited by the Company is
minimal when compared to amounts deposited by financially solvent
PRPs.
- 12 -
<PAGE>
Part I. Financial Information
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
BUSINESS SUMMARY
Coca-Cola Enterprises Inc. (the Company) is the world's largest
marketer, distributor, and producer of bottled and canned liquid
nonalcoholic refreshments. In the United States we operate
through exclusive and perpetual rights in franchise territories
distributing approximately 58% of The Coca-Cola Company's bottle
and can product sales. We are also the sole licensed bottler for
products of The Coca-Cola Company in Belgium, Great Britain, the
Netherlands, and most of France.
Business Objectives and Strategies
To ensure a continued focus on building share-owner value, we have
defined our objectives and strategies.
Our primary operating objective is to increase long-term operating
cash flows through profitable increases in sales volume. We plan
to achieve our operating objective through the continued execution
of the following key strategies:
* Creating and executing innovative and superior marketing
programs at the local level.
* Balancing volume growth with improved margins and sustainable
increases in market share.
* Developing profitable business partnerships with our
customers.
* Integrating our international and domestic acquisitions.
* Structuring our compensation plans to help focus our
employees on enhancing share-owner value.
Our primary financial objective is to deliver a superior
investment return to our share owners. We strive to achieve this
objective through the continued implementation and execution of
the following key strategies:
* Allocating resources appropriately between capital
expenditures, investment in personnel and infrastructure,
acquisitions, share repurchases, and debt repayment.
* Maintaining a capital structure which maximizes our financial
flexibility, given current investment opportunities.
* Continuing to evaluate acquisition opportunities that will
result in long-term value.
-13-
<PAGE>
OPERATIONS REVIEW
Overview
We are pleased with the strength of our first quarter performance,
particularly considering the highly competitive pricing
environment that we are experiencing in the United States. Cash
operating profit reached $274 million in the first quarter of
1997, 21% ahead of reported first-quarter 1996 results, and 8%
above comparable first-quarter 1996 performance. The reported
first-quarter growth rate is significantly impacted by our
domestic and European acquisitions completed in 1996 and 1997.
Comparable first-quarter 1997 cash operating performance primarily
reflects the strong volume growth in the Company's territories in
the United States and Europe.
In the opinion of management, cash operating profit, or net income
before deducting interest, taxes, depreciation, amortization, and
other nonoperating items, is one of the key standards for
measuring our operating performance. For comparison, 1996
operating results, including cash operating profit, have been
adjusted to include all of the Company's 1996 and 1997
acquisitions for the same period they are reflected in the
reported first-quarter 1997 results and to exclude the first-
quarter 1996 favorable supplier settlement. In addition to
comparison adjustments for acquisitions, volume and per case data
have also been adjusted for common fiscal periods and elimination
of the effect of changes in currency exchange rates, respectively.
Cost of sales as a percentage of net operating revenues for the
Company's European operations are higher than for domestic
operations reflecting different net pricing and packaging and
ingredient costs. These differences and the impact of currency
fluctuations distort reported changes in net revenues and cost of
sales per case. As a result, we believe that changes in
consolidated comparable results, after adjusting for the effect of
currency translations, are more meaningful indications of
underlying business trends.
The Company generated a net loss from operations of $0.09 per
common share, after adjusting for the 3-for-1 stock split,
including a one-time charge of $0.01 per common share resulting
from the redemption of debt, an increase in noncash selling,
general, and administrative expenses relating to certain stock-
based compensation plans and the dilutive effect of the Company's
new European operations.
Cash Operating Profit
Cash operating profit is provided as a supplement to, and not an
alternative to, operating income as an indicator of operating
performance, or as an alternative to cash flows from operating
activities as a measure of liquidity, both of which are defined by
generally accepted accounting principles. Actual and comparable
cash operating profit for first-quarter 1997 increased 21% and 8%,
respectively, over first-quarter 1996. After excluding the effect
of currency exchange rates, the comparable first-quarter 1997 cash
operating profit grew by 9%.
- 14 -
<PAGE>
Cash Operating Profit (continued)
The Company's first-quarter 1997 performance indicates that
we are on track to produce 9% comparable cash operating profit
growth in 1997 which translates into a 10% to 15% increase in
earnings per share for full-year 1997. Our expectations for
consolidated growth in 1997 include projections for our European
operations to outpace our domestic performance growth. First-
quarter 1997 results confirmed this expectation with European
operations reporting cash operating profit growth exceeding
domestic growth.
Earnings per Share
In first-quarter 1997, our Board of Directors approved a proposal
increasing authorized common shares from 500 million to 1 billion
and to effect a 3-for-1 stock split. The stock split was approved
by share owners at the April 21, 1997 annual meeting and is effec-
tive for share owners of record on May 1, 1997. The following
financial information adjusts for the stock split as if it
occurred March 28, 1997.
The net loss per common share for first-quarter 1997 of $0.09
includes a one-time charge of $6 million ($0.01 per common share
after tax) for the redemption of the Company's 8.75% Debentures
due 2017 and an increase in noncash selling, general, and
administrative expenses for certain stock-based compensation plans
as the market price of the Company's stock increased approximately
25% for the quarter.
Net Operating Revenues
Net operating revenues reached $2.1 billion in the first quarter
of 1997, a reported growth of 34% over the same prior year period
and a 5% increase over comparable first-quarter 1996 levels. The
overall increase in net operating revenues is primarily a result
of increases in reported and comparable bottle and can physical
case sales volume of 32% and 10%, respectively. The Company's
domestic territories produced 77% of the consolidated first-
quarter 1997 net operating revenues with the European group
contributing the remaining 23%.
Volume
In the first quarter of 1997, consolidated physical case bottle
and can volume exceeded prior-year levels by 32% on a reported
basis and 10% on a comparable basis. The significant difference
between the reported basis increase and the comparable basis
increase results primarily from acquisitions. The first-quarter
1997 comparable growth rate of 10% results from strong performance
in both our domestic and international markets.
First-quarter 1997 domestic volume exceeded comparable first-
quarter 1996 performance by 9 percent. This growth rate is our
strongest quarterly volume growth since 1988. Sprite and Coca-
Cola classic along with the introduction of Surge are The Coca-
Cola Company's brands primarily generating this volume growth.
Sales of noncarbonated brands, such as Cool from Nestea, POWERaDE,
and our water products, NAYA and Evian, continued to increase at
rates faster than carbonated brands.
- 15 -
<PAGE>
Volume (continued)
As expected, our European operations generated volume increases
that outpaced our domestic volume growth. First-quarter 1997
European volume increased 14% above comparable first-quarter 1996
levels. European operations accounted for 21% of total physical
case bottle and can reported volume in first-quarter 1997 compared
to 4% of the total reported volume in first-quarter 1996.
Net Revenues and Cost of Sales Per Case
First-quarter 1997 consolidated net revenues per case declined
1.5% from comparable first-quarter 1996 levels, primarily
reflecting the highly competitive pricing environment in the
United States. Cost decreases in aluminum and plastic packaging
and high fructose corn syrup more than offset the higher
concentrate costs resulting in first-quarter 1997 consolidated
cost of sales per case 1.5% below comparable first-quarter 1996
consolidated cost of sales per case.
Cost of sales as a percentage of net operating revenues for the
Company's European operations are much higher than for domestic
operations, reflecting different net pricing and packaging and
ingredient costs.
Selling, General, and Administrative
For the first quarter of 1997, selling, general, and administrative
expenses as a percent of net operating revenues increased to 35%
compared to 34% for comparable first-quarter 1996, primarily due
to incremental costs associated with stock-based compensation.
Interest Expense
First-quarter 1997 net interest expense increased significantly
from reported first-quarter 1996 levels due to the higher average
debt balances resulting from the 1996 and 1997 acquisitions. The
weighted average interest rate for the first quarter of 1997 was
6.9% compared to first-quarter 1996 of 7.5%.
Income Tax Expense
The Company's effective tax rates for the first quarter of 1997
and 1996 were 39% and 43%, respectively. The reduction in the
Company's first-quarter 1997 effective tax rate is a result of the
favorable effect of our expanded operations in Europe combined
with current expectations for higher pretax profits in 1997.
- 16 -
<PAGE>
CASH FLOW AND LIQUIDITY REVIEW
Capital Resources
Our sources of capital include, but are not limited to, the
issuance of public or private placement debt, bank borrowings, and
the issuance of equity securities. We believe that short-term and
long-term capital resources available to us are more than
sufficient to fund our capital expenditure and working capital
requirements, scheduled debt payments, interest and income tax
obligations, dividends to our share owners, acquisitions, and
plans for share repurchases.
For long-term financing needs, we have available $3 billion in
debt securities for issuance under a registration statement with
the Securities and Exchange Commission. We satisfy seasonal
working capital needs and other financing requirements with bank
borrowings and short-term borrowings under our commercial paper
program. Additionally, we have a $1.5 billion multicurrency
revolving bank credit agreement maturing in November 2001 and a $1
billion short-term credit facility. An aggregate of $769 million
in commercial paper borrowings and $1,047 million in foreign-
denominated borrowings supported by these agreements was
outstanding at March 28, 1997. We also have short-term credit
facilities aggregating $751 million for our international
operations.
At the end of first-quarter 1997, the Company's debt portfolio was
60% fixed rate debt and 40% floating rate debt. The majority of
the floating rate debt is in foreign-denominated debt. The Company
intends to continue to refinance borrowings under its commercial
paper program and its foreign-denominated credit facilities with
longer-term fixed and floating rate financings.
Summary of Cash Activities
Cash and cash investments decreased $38 million during first-
quarter 1997. Our primary uses of cash were for operations of
approximately $106 million, capital expenditures totaling $183
million, and long-term debt payments totaling $77 million. Our
primary source of cash for first-quarter 1997 was proceeds from
the issuance of debt aggregating $1.3 billion.
Operating Activities: Operating activities resulted in a net cash
use of $106 million during first-quarter 1997 in comparison to
$102 million provided by operations in first-quarter 1996. The
higher depreciation expense in first-quarter 1997 results from the
effects of increased capital spending and the effects of the 1996
and 1997 acquisitions. Increased amortization reflects increased
franchise amortization as a result of acquisitions and increased
amortization of performance-based restricted stock and stock
options resulting from performance of the Company's stock.
Investing Activities: Consistent with the increase in our first-
quarter 1997 capital expenditures, the Company continues to expect
full-year 1997 capital expenditures to increase over full-year
1996. Full-year 1997 capital expenditures are expected to be
between $800 million and $900 million. This increase is primarily
attributable to the capital investments expected to be made by our
international operations.
- 17 -
<PAGE>
Financing Activities: In February 1997, the Company purchased the
Great Britain bottler for a purchase price of approximately
$2 billion. The acquisition was initially financed through a
combination of sellers' notes and short-term borrowings. The
Company expects to refinance portions of these borrowings with
longer-term fixed and floating rate financings.
Additionally, in the first quarter of 1997, the Company issued
$150 million of 5.71% Notes due March 18, 2037. Holders of the
Notes may require the Company to repay the notes after one year
and every year thereafter.
FINANCIAL POSITION REVIEW
Overall, the Company's increase in total assets and total
liabilities from December 31, 1996 to March 28, 1997 is primarily
attributable to the acquisition of the Great Britain bottler. The
increase in franchises and other noncurrent assets is a direct
result of the franchise asset acquired in connection with the 1997
acquisition. The increase in property, plant, and equipment
results from capital expenditures of $183 million in first-quarter
1997 and the acquisition of the Great Britain bottler. The
increase in long-term debt and the increase in deferred income
taxes also primarily results from the acquisition of the Great
Britain bottler. As a result of the 3-for-1 stock split, common
stock at March 28, 1997 was retroactively adjusted to stated par
value by an increase to common stock and a decrease to additional
paid-in capital of $295 million.
Activities in currency markets resulted in a decrease in the
cumulative translation adjustment of $18 million in first-quarter
1997. As currency exchange rates fluctuate, translation of the
statements of operations for our international businesses into
U.S. dollars will affect the comparability of revenues and
expenses between periods. In first-quarter 1996 the Company
primarily operated in U.S. Dollars and the Dutch Florin and in
1997 the Company operates in a multicurrency environment.
CAUTIONARY STATEMENTS
Certain expectations and projections regarding future performance
of the Company referenced in this report are forward-looking
statements involving risks and uncertainties. These expectations
and projections are based on currently available competitive,
financial and economic data, and the Company's operating plans.
We caution readers that important factors as described on page 27
of the Company's annual report on Form 10-K for the year ended
December 31, 1996 could cause the Company's actual consolidated
results in 1997 and thereafter to differ significantly from those
expressed in any forward-looking statements contained herein.
- 18 -
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of share owners was held on Monday, April 21,
1997 in Wilmington, Delaware at which the following matters were
submitted to a vote of the share owners of the Company:
(a) Votes cast for or withheld regarding the re-election of five
Directors for terms expiring in 2000:
For Withheld
----------- ---------
Howard G. Buffett 102,333,631 2,545,457
Johnnetta B. Cole 104,195,279 683,809
Claus M. Halle 104,194,734 684,354
Jean-Claude Killy 104,196,557 682,531
Henry A. Schimberg 104,188,800 690,288
Additional Directors, whose terms of office as Directors
continued after the meeting, are as follows:
Term expiring in 1998 Term expiring in 1999
--------------------- ---------------------
L. Phillip Humann John L. Clendenin
E. Neville Isdell M. Douglas Ivester
Scott L. Probasco, Jr. John E. Jacob
Francis A. Tarkenton Summerfield K. Johnston, Jr.
Robert A. Keller
- 19 -
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security-Holders (continued)
(b) Votes cast for or against, and the number of abstentions and
broker non-votes for each other proposal brought before the
meeting are as follows:
Broker
Proposal For Against Abstain Non-Votes
- ---------------------- ---------- ---------- ------- ----------
Approve the 1997 Stock
Option Plan 94,693,833 10,062,147 127,421 -
Approve the Long-Term
Incentive Plan 100,251,708 871,442 172,320 3,587,931
Approve the Executive
Management Incentive
Plan 99,967,291 1,073,331 254,852 3,587,927
Approve Amendment to
Certificate of
Incorporation to
increase the
authorized common
shares and to affect
the 3-for-1 stock
split 103,602,932 1,239,036 41,433 -
Ratify the Appointment
of Independent
Auditors 104,682,252 89,465 111,684 -
Share-owners' proposal
to create an
independent nominating
committee 13,253,472 86,781,134 1,260,868 3,587,927
- 20 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K):
Exhibit Incorporated by Reference
Number Description or Filed Herewith
- ------- -------------------------------- --------------------------
3 Certificate of Incorporation, Filed Herewith
as amended
12 Statements regarding computations Filed Herewith
of ratios
27 Financial Data Schedule Filed Herewith
(b) Reports on Form 8-K:
During first-quarter 1997, the Company filed the following current
reports on Form 8-K:
Date of Report Description
- ----------------- ---------------------------------------------
December 31, 1996 Current report on Form 8-K filed January 31,
1997 reporting fourth-quarter and full-year
1996 results of operations and a summary of
key financial results
February 10, 1997 Press release announcing completion of the
acquisition of Amalgamated Beverages Great
Britain Limited filed February 24, 1997
February 10, 1997 Amendment, filed March 10, 1997, to item 7 of
8-K dated February 10, 1997, filed on
February 24, 1997, to include financial
statements of business acquired and pro forma
financial information
February 18, 1997 Press release announcing proposed 3-for-1
stock split and amendment to articles of
incorporation to increase common shares,
filed February 27, 1997
- 21 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COCA-COLA ENTERPRISES INC.
(Registrant)
Date: May 8, 1997 --------------------------------
John R. Alm
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial Officer)
Date: May 8, 1997 --------------------------------
O. Michael Whigham
Vice President, Controller and
Chief Accounting Officer
- 22 -
<PAGE>
COCA-COLA ENTERPRISES INC. Exhibit 12
EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(In millions except ratios)
Quarter ended
--------------------
March 28, March 29,
1997 1996
--------- ---------
Computation of Earnings:
Earnings (loss) from continuing operations
before income taxes...................... $ (54) $ 12
Add:
Interest expense......................... 104 74
Amortization of debt
premium/discount and expenses.......... 6 6
Interest portion of rent expense......... 5 2
----- -----
Earnings as Adjusted......................... $ 61 $ 94
===== =====
Computation of Fixed Charges:
Interest expense........................... $ 104 $ 74
Capitalized interest....................... - 1
Amortization of debt
premium/discount and expenses............ 6 6
Interest portion of rent expense........... 5 2
----- -----
Fixed Charges................................ 115 83
Preferred stock dividends (a).............. 3 2
----- -----
Combined Fixed Charges and Preferred
Stock Dividends............................ $ 118 $ 85
===== =====
Ratio of Earnings to Fixed Charges (b)....... (c) 1.14
===== =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (b).. (c) 1.10
===== =====
(a) Preferred stock dividends have been increased to an amount representing
the pretax earnings which would be required to cover such dividend
requirements.
(b) Ratios were calculated prior to rounding to millions.
(c) Earnings for March 28, 1997 were insufficient to cover fixed charges
and combined fixed charges and preferred stock dividends by $54
million and $57 million, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE FILER FOR THE PERIOD ENDED
MARCH 28, 1997 INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 28, 1997 (COMMISSION FILE NO. 001-9300) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000804055
<NAME> COCA-COLA ENTERPRISES
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-28-1997
<CASH> 9
<SECURITIES> 0
<RECEIVABLES> 975
<ALLOWANCES> 47
<INVENTORY> 409
<CURRENT-ASSETS> 1,651
<PP&E> 5,170
<DEPRECIATION> 1,973
<TOTAL-ASSETS> 14,489
<CURRENT-LIABILITIES> 3,716
<BONDS> 5,123
0
115
<COMMON> 442
<OTHER-SE> 995
<TOTAL-LIABILITY-AND-EQUITY> 14,489
<SALES> 2,141
<TOTAL-REVENUES> 2,141
<CGS> 1,341
<TOTAL-COSTS> 1,341
<OTHER-EXPENSES> 5
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107
<INCOME-PRETAX> (54)
<INCOME-TAX> (21)
<INCOME-CONTINUING> (33)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
EXHIBIT 3(i)
------------------------------
| STATE OF DELAWARE |
| SECRETARY OF STATE |
| DIVISION OF CORPORATIONS |
| FILED 10:00 AM 04/15/1992 |
| 72106041 - 388509 |
-----------------------------
RESTATED CERTIFICATE OF INCORPORATION
OF
COCA-COLA ENTERPRISES INC.
(RESTATED AS OF APRIL 15, 1992)
(Originally incorporated on January 25, 1944
under the name of The Hickory Publishing Company)
-------------
(Pursuant to Section 245 of the General Corporation Law
of the State of Delaware)
-------------
FIRST: The name of the corporation is Coca-Cola
Enterprises Inc. (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1209 Orange Street,
Wilmington, County of New Castle, Delaware 19801. The name of
the registered agent of the Corporation at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: A. The total number of shares of all classes of
stock that the Corporation shall have authority to issue is Six
Hundred Million (600,000,000) shares, consisting of Five Hundred
Million (500,000,000) shares of common stock, par value $1 per
share (hereinafter referred to as "Common Stock") and One Hundred
Million (100,000,000) shares of preferred stock, par value $1 per
share (hereinafter referred to as "Preferred Stock").
B. The board of directors of the Corporation is
authorized, subject to any limitations prescribed by law, to
provide for the issuance of the shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable
law of the State of Delaware (hereinafter referred to as a
"Preferred Stock Designation") to establish from time to time the
number of shares to be included in each such series, and to fix
the designation, powers, preferences, and rights of the shares of
each such series and any qualifications, limitations or
<PAGE>
restrictions thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the shares of Common Stock,
without a vote of the holders of the shares of Preferred Stock,
or of any series thereof, unless a vote of any such holders is
required pursuant to the Preferred Stock Designation or Preferred
Stock Designations establishing the series of Preferred Stock.
C. Each holder of shares of Common Stock shall
be entitled to one vote for each share of Common Stock held of
record on all matters on which the holders of shares of Common
Stock are entitled to vote.
D. Each share of Common Stock of the Corporation
issued and outstanding or held in the treasury of the Corporation
immediately prior to the close of business on May 1, 1997, that
being the time when the amendment of this Article FOURTH of the
Certificate of Incorporation shall have become effective, is
changed into and reclassified as two fully paid and nonassessable
shares of Common Stock, par value $1.00 per share, and at the
close of business on such date, each holder of record of Common
Stock shall, without further action, be and become the holder of
one additional share of Common Stock for each share of Common
Stock held of record immediately prior thereto. Effective at the
close of business on such date, each certificate representing
shares of Common Stock outstanding or held in treasury
immediately prior to such time shall continue to represent the
same number of shares of Common Stock and as promptly as
practicable thereafter, the Corporation shall issue and cause to
be delivered to each holder of record of shares of Common Stock
at the close of business on such date an additional certificate
or certificates representing one additional share of Common Stock
for each share of Common Stock held of record immediately prior
thereto.
FIFTH: A. The business and affairs of the Corporation
shall be managed by the board of directors, and the directors
need not be elected by ballot unless required by the bylaws of
the Corporation.
B. The number of directors shall be fixed by, or
in the manner provided in, the bylaws. Commencing with the
election of directors at the annual meeting of stockholders held
in 1986, the directors shall be divided, with respect to the time
for which they severally hold office, into three classes, as
nearly equal in number as reasonably possible, with the term of
office of the first class to expire at the next annual meeting of
stockholders thereafter, the term of the office of the second
class to expire at the second annual meeting of stockholders
thereafter, and the term of office of the third class to expire
at the third annual meeting of stockholders thereafter, with each
director to hold office until his or her successor shall have
been duly elected and qualified. At each annual meeting of
2
<PAGE>
stockholders commencing with the first annual meeting after the
division of directors into classes, directors elected to succeed
those directors whose terms then expire shall be elected for a
term of office to expire at the third succeeding annual meeting
of stockholders after their election, with each director to hold
office until his or her successor shall have been duly elected
and qualified. All vacancies on the board of directors and newly
created directorships resulting from any increase in the
authorized number of directors shall be filled exclusively by a
majority of the directors then in office, although less than a
quorum, or by a sole remaining director.
C. The board of directors is expressly
authorized to adopt, amend or repeal the bylaws of the
Corporation.
SIXTH: A. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper personal
benefit. If the Delaware General Corporation Law is amended
after this Restated Certificate of Incorporation becomes
effective to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
B. Any repeal or modification of the foregoing
Section A by the stockholders of the Corporation shall not
adversely affect any right or protection of a director or the
Corporation existing at the time of such repeal or modification.
SEVENTH: A. In anticipation that the Corporation will
cease to be a wholly owned subsidiary of The Coca-Cola Company,
but that The Coca-Cola Company will remain a substantial
stockholder of the Corporation, and in anticipation that the
Corporation and The Coca-Cola Company may engage in the same or
similar activities or lines of business and have an interest in
the same areas of corporate opportunities, and in recognition of
the benefits to be derived by the Corporation through its
continued contractual, corporate and business relations with The
Coca-Cola Company (including service of officers and directors of
The Coca-Cola Company as officers and directors of the
Corporation), the provisions of this Article SEVENTH are set
forth to regulate and define the conduct of certain affairs of
the Corporation as they may involve The Coca-Cola Company and its
officers and directors, and the powers, rights, duties and
liabilities of the Corporation and its officers, directors and
stockholders in connection therewith.
3
<PAGE>
B. The Coca-Cola Company shall have no duty to
refrain from engaging in the same or similar activities or lines
of business as the Corporation, and neither The Coca-Cola Company
nor any officer or director thereof (except as provided in
paragraph C below) shall be liable to the Corporation or its
stockholders for breach of any fiduciary duty by reason of any
such activities of The Coca-Cola Company or of such person's
participation therein. In the event that The Coca-Cola Company
acquires knowledge of a potential transaction or matter which may
be a corporate opportunity for both The Coca-Cola Company and the
Corporation, The Coca-Cola Company shall have no duty to
communicate or offer such corporate opportunity to the
Corporation and shall not be liable to the Corporation or its
stockholders for breach of any fiduciary duty as a stockholder of
the Corporation by reason of the fact that The Coca-Cola Company
pursues or acquires such corporate opportunity for itself,
directs such corporate opportunity to another person, or does not
communicate information regarding such corporate opportunity to
the Corporation.
C. In the event that a director or officer of
the Corporation who is also a director or officer of The Coca-Cola
Company acquires knowledge of a potential transaction or
matter which may be a corporate opportunity for both the
Corporation and The Coca-Cola Company, such director or officer
of the Corporation shall have fully satisfied and fulfilled the
fiduciary duty of such director or officer to the Corporation and
its stockholders with respect to such corporate opportunity and
shall not be liable to the Corporation or its stockholders for
breach of any fiduciary duty by reason of the fact that The
Coca-Cola Company pursues or acquires such corporate opportunity for
itself or directs such corporate opportunity to another person or
does not communicate information regarding such corporate
opportunity to the Corporation, if such director or officer acts
in a manner consistent with the following policy:
(i) A corporate opportunity offered to any person who
is an officer of the Corporation, and who is also a director
but not an officer of The Coca-Cola Company, shall belong to
the Corporation; (ii) a corporate opportunity offered to any
person who is a director but not an officer of the
Corporation, and who is also a director or officer of The
Coca-Cola Company shall belong to the Corporation if such
opportunity is expressly offered to such person in writing
solely in his or her capacity as a director of the
Corporation, and otherwise shall belong to The Coca Cola
Company; and (iii) a corporate opportunity offered to any
person who is an officer of both the Corporation and The
Coca-Cola Company shall belong to the Corporation.
D. Any person purchasing or otherwise acquiring
any interest in shares of the capital stock of the Corporation
shall be deemed to have consented to the provisions of this
Article SEVENTH.
4
<PAGE>
E. For purposes of this Article SEVENTH:
(1) A director of the Corporation who is Chairman
of the board of directors of the Corporation or of a
committee thereof shall not be deemed to be an officer of
the Corporation by reason of holding such position (without
regard to whether such position is deemed an office of the
Corporation under the bylaws of the Corporation), unless
such person is a full-time employee of the Corporation; and
(2) The Coca-Cola Company shall include all
subsidiary corporations and other entities in which The
Coca-Cola Company owns (directly or indirectly) more than
50% of the outstanding voting capital stock or voting power.
EIGHTH: Any action required or permitted to be taken by
the stockholders of the Corporation shall be effected at an
annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing of such
stockholders.
NINTH: In addition to any affirmative vote required by
law, by this Certificate of Incorporation or by any Preferred
Stock Designation:
(a) any amendment or alteration of this Certificate of
Incorporation by the stockholders;
(b) any amendment or alteration of the bylaws of the
Corporation by the stockholders;
(c) any merger or consolidation of the Corporation
with or into any other corporation other than a merger or
consolidation that does not require the vote of the stockholders
of the Corporation;
(d) any sale, lease, or exchange (in one transaction
or a series of transactions) of all or substantially all of the
property and assets of the Corporation; or
(e) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation shall require the
affirmative vote of the holders of at least 66-2/3% of the voting
power of all of the outstanding shares of the Common Stock and
any series of Preferred Stock entitled to vote generally in the
election of directors, voting together as a single class. Such
affirmative vote shall be required notwithstanding any other
provisions of this Certificate of Incorporation or any provision
of law or of any agreement with any national securities exchange
or otherwise which might otherwise permit a lesser vote or no
vote.
5
<PAGE>
TENTH: The board of directors of the Corporation, when
evaluating any offer of a person, other than the Corporation
itself, to (a) make a tender or exchange offer for any equity
security of the Corporation, (b) merge or consolidate the
Corporation with another person, or (c) purchase or otherwise
acquire all or substantially all of the properties and assets of
the Corporation shall, in connection with the exercise of its
business judgment in determining what are the best interests of
the Corporation and its stockholders, give due consideration to
all relevant factors, including without limitation (i) the
consideration being offered in relation to the current market
price, but also in relation to the current value of the
Corporation in a freely negotiated transaction and in relation to
the board of directors' current estimate of the future value of
the Corporation as an independent entity, (ii) the social and
economic effects on the employees, customers, suppliers and other
constituents of the Corporation and its subsidiaries and on the
communities in which the Corporation and its subsidiaries operate
or are located, and (iii) the desirability of maintaining
independence from any other entity.
ELEVENTH: A. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal
representative, is or was a director, officer or employee of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or (if
serving for another corporation at the request of the
Corporation) agent or in any other capacity while serving as a
director, officer, employee or (if serving for another
corporation at the request of the Corporation) agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA, excise taxes or
penalties and amounts to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or (if serving for another
corporation at the request of the Corporation) agent and shall
inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in
Section B hereof with respect to proceedings seeking to enforce
6
<PAGE>
rights to indemnification, the Corporation shall indemnify any
such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the board of
directors of the Corporation. The right to indemnification
conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Article
ELEVENTH or otherwise.
B. If a claim under Section A of this Article
ELEVENTH is not paid in full by the Corporation within ninety
days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to
be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or
stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or
stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard
of conduct.
C. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article ELEVENTH shall not be
exclusive of any other right which any person may have or
7
<PAGE>
hereafter acquire under any statute, provision of the Certificate
of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
D. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
TWELFTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Restated
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
This Restated Certificate of Incorporation was duly adopted
by the board of directors pursuant to Section 245 of the General
Corporation Law of the State of Delaware. This Restated
Certificate of Incorporation only restates and integrates and
does not further amend the provisions of the Certificate of
Incorporation as amended or supplemented through April 15, 1992,
and there is no discrepancy between such provisions and the
provisions of this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation has been executed on this 15th day of April, 1992.
COCA-COLA ENTERPRISES INC.
S/ SUMMERFIELD K. JOHNSTON, JR.
By:--------------------------------
Summerfield K. Johnston, Jr.
Vice Chairman and Chief
Executive Officer
ATTEST:
S/ J. GUY BEATTY,JR.
--------------------------------
J. Guy Beatty, Jr., Secretary
8
<PAGE>
----------------------------
| STATE OF DELAWARE |
| SECRETARY OF STATE |
| DIVISION OF CORPORATIONS |
| FILED 11:10 AM 04/21/1997 |
| 971127667 - 0388509 |
----------------------------
Certificate of Amendment of the
-------------------------------
Certificate of Incorporation
---------------------------
of
--
Coca-Cola Enterprises Inc.
---------------------------
Under Section 242 of the General Corporation Law
of the State of Delaware
COCA-COLA ENTERPRISES INC., a corporation duly
organized and existing under the laws of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That on February 18, 1997, the Board of
Directors duly adopted the following resolution amending the
Certificate of Incorporation of the Corporation, and
declared its advisability and directed that the amendment be
considered at the next annual meeting of the stockholders of
the Corporation:
RESOLVED, that the Certificate of
Incorporation of the Corporation be, and
the same hereby is, amended by deleting
the current Article FOURTH thereof, and
substituting the following:
A. The total number of shares of all
classes of stock that the Corporation
shall have authority to issue is One
Billion One Hundred Million
(1,100,000,000) shares, consisting of
One Billion (1,000,000,000) shares of
common stock, par value $1 per share
(hereinafter referred to as "Common
Stock") and One Hundred Million
(100,000,000) shares of preferred stock,
par value $1 per share (hereinafter
referred to as "Preferred Stock")
B. The board of directors of the
Corporation is authorized, subject to
any limitations prescribed by law, to
<PAGE>
provide for the issuance of the shares
of Preferred Stock in series, and by
filing a certificate pursuant to the
applicable law of the State of Delaware
(hereinafter referred to as a "Preferred
Stock Designation") to establish from
time to time the number of shares to be
included in each such series, and to fix
the designation, powers, preferences,
and rights of the shares of each such
series and any qualifications,
limitations or restrictions thereof.
The number of authorized shares of
Preferred Stock may be increased or
decreased (but not below the number of
shares thereof then outstanding) by the
affirmative vote of the holders of a
majority of the shares of Common Stock,
without a vote of the holders of the
shares of Preferred Stock, or of any
series thereof, unless a vote of any
such holders is required pursuant to the
Preferred Stock Designation or Preferred
Stock Designations establishing the
series of Preferred Stock.
C. Each holder of shares of Common
Stock shall be entitled to one vote for
each share of Common Stock held of
record on all matters on which the
holders of shares of Common Stock are
entitled to vote.
D. Each share of Common Stock of the
Corporation issued and outstanding or
held in the treasury of the Corporation
immediately prior to the close of
business on May 1, 1997, that being the
time when the amendment of this Article
FOURTH of the Certificate of
Incorporation shall have become
effective, is changed into and
reclassified as three fully paid and
nonassessable shares of Common Stock,
par value $1 per share, and at the close
of business on such date, each holder of
record of Common Stock shall, without
further action, be and become the holder
of two additional shares of Common Stock
for each share of Common Stock held of
record immediately prior thereto.
Effective at the close of business on
such date, each certificate representing
shares of Common Stock outstanding or
held in treasury immediately prior to
<PAGE>
such time shall continue to represent
the same number of shares of Common
Stock and as promptly as practicable
thereafter, the Corporation shall issue
and cause to be delivered to each holder
of record of shares of Common Stock at
the close of business on such date an
additional certificate or certificates
representing two additional shares of
Common Stock for each of Common Stock
held of record immediately prior
thereto.
SECOND: That on April 21, 1997, at the
Corporation's annual meeting called and held in accordance
with the provisions of the General Corporation Law of the
State of Delaware, the amendment was duly approved and
adopted by a majority of the outstanding stock of the
Corporation entitled to vote upon the amendment.
THIRD: That the effective date of this amendment
shall be at the close of business on May 1, 1997.
IN WITNESS WHEREOF, this Certificate of Amendment
has been signed on behalf of the Corporation by its Senior
Vice President and attested by its Assistant Secretary as of
the 21st day of April, 1997.
COCA-COLA ENTERPRISES INC.
S/ LOWRY F. KLINE
------------------------------
Lowry F. Kline
Senior Vice President
Attest:
S/ E. LISTON BISHOP III
- -----------------------------
E. Liston Bishop III
Assistant Secretary
[Seal]
