<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 01-09300
----------------
LOGO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 58-0503352
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER)
</TABLE>
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)
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
Common Stock, par value $1.00 per share New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
----------------
Indicate by check mark whether the registrant (1) has filed all reports 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of Common Stock held by nonaffiliates of the
registrant as of February 20, 1998 was $6,036,929,290.
There were 387,003,367 shares of Common Stock outstanding as of February 20,
1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Share Owners for the year
ended December 31, 1997, are incorporated by reference in Parts II and IV.
Portions of the registrant's Proxy Statement for the Annual Meeting of Share
Owners to be held on April 17, 1998 are incorporated by reference in Part III
hereof.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PART I
<TABLE>
<C> <S> <C>
ITEM 1. BUSINESS...................................................... 1
Introduction.................................................. 1
Relationship With The Coca-Cola Company....................... 1
Acquisitions.................................................. 2
Territories................................................... 3
Products...................................................... 4
Marketing..................................................... 4
Raw Materials................................................. 5
North American Beverage Agreements............................ 5
European Beverage Agreements.................................. 10
Competition................................................... 12
Employees..................................................... 12
Governmental Regulation....................................... 13
Financial Information on Industry Segments and Geographic
Areas......................................................... 15
ITEM 2. PROPERTIES.................................................... 15
ITEM 3. LEGAL PROCEEDINGS............................................. 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 17
ITEM 4(A). EXECUTIVE OFFICERS OF THE COMPANY............................. 18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS....................................................... 19
ITEM 6. SELECTED FINANCIAL DATA....................................... 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................... 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................... 20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE...................................... 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............ 20
ITEM 11. EXECUTIVE COMPENSATION........................................ 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.................................................... 21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K...................................................... 21
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
INTRODUCTION
The Company is the world's largest marketer, distributor and producer of
bottled and canned beverages of The Coca-Cola Company.
The Company was incorporated in 1944 under the laws of Delaware as a wholly
owned subsidiary of The Coca-Cola Company and became a public company in 1986.
At December 31, 1997, The Coca-Cola Company owned approximately 44% of the
Company's common stock.
The Company's bottling territories in North America and in Europe contained
approximately 338 million people. The Company estimates that within its
territories 3.4 billion equivalent cases (192 ounces of finished beverage
product) were sold in 1997; 89% of this volume consisted of beverages produced
and sold under licenses from The Coca-Cola Company.
The Company's Coca-Cola bottling rights within the United States are
perpetual; elsewhere, bottling rights have stated expiration dates. (See
"North American Beverage Agreements" and "European Beverage Agreements.")
References in this report to the "Company" include Coca-Cola Enterprises
Inc., and its subsidiaries and divisions, unless the context requires
otherwise. Population and sales data include bottling franchises acquired
through January 31, 1998 as if they had been acquired January 1, 1997.
RELATIONSHIP WITH THE COCA-COLA COMPANY
The Coca-Cola Company is the Company's largest share owner. Three directors
of the Company are executive officers or former executive officers of The
Coca-Cola Company.
The Company and The Coca-Cola Company are parties to a number of significant
transactions and agreements incident to their respective businesses and may
enter into additional material transactions and agreements in the future.
The Company conducts its business primarily under agreements with The
Coca-Cola Company. These agreements give the Company the exclusive right to
market, distribute, and produce beverage products of The Coca-Cola Company in
authorized containers in specified territories. These agreements provide The
Coca-Cola Company with the ability, in its sole discretion, to establish
prices, terms of payment, and other terms and conditions for the purchase of
concentrates and syrups from The Coca-Cola Company. See "North American
Beverage Agreements" and "European Beverage Agreements" below. Other
significant transactions and agreements include acquisition of bottling
territories, arrangements for cooperative marketing, advertising expenditures,
and purchases of sweeteners.
Since 1979, The Coca-Cola Company has assisted in the transfer of ownership
or financial restructuring of a majority of its United States bottler
operations and has assisted in similar transfers of bottlers operating outside
the United States. Certain bottlers and interests therein have been acquired
by The Coca-Cola Company, and certain of those have been sold to bottlers,
including the Company, which are believed by management of The Coca-Cola
Company to be the best suited to manage and develop these acquired operations.
The Coca-Cola Company has advised the Company that it may continue this
reorganization of its bottler system. See "Acquisitions" below and "Certain
Relationships and Related Transactions--Agreements and Transactions with The
Coca-Cola Company" in the Company's Proxy Statement for the Annual Meeting of
Share Owners to be held April 17, 1998 (the "Company's 1998 Proxy Statement"),
which information is incorporated by reference into Item 13 of this report.
<PAGE>
ACQUISITIONS
On February 10, 1997, the Company acquired Coca-Cola & Schweppes Beverages
Limited, the bottler for all of Great Britain, for a transaction value
(purchase price, assumed debt and other long-term obligations) of
approximately 1.2 billion pounds sterling, or approximately $2 billion.
On August 7, 1997, the Company acquired The Coca-Cola Company's interest in
Coca-Cola Beverages Ltd. ("CCB"), the bottler for substantially all the
population of Canada. On September 11, 1997, the Company completed its
acquisition of shares of CCB held by the public share owners.
On August 7, 1997, the Company acquired The Coca-Cola Company's interest in
The Coca-Cola Bottling Company of New York, Inc. ("KONY"), the bottler serving
New York City, and certain other areas of New York, Connecticut,
Massachusetts, New Hampshire, New Jersey and Vermont. On January 5, 1998, the
Company completed its acquisition of KONY by acquiring the shares from the
remaining minority share owners.
The aggregate transaction value of the CCB and KONY acquisitions (purchase
price, acquired debt and KONY preferred stock) was approximately $1.7 billion.
The total cost of all of the Company's acquisitions since reorganization in
1986 through the date of this report is $10.9 billion including assumed and
issued debt where applicable. The Company intends to acquire only bottling
businesses offering the Company the ability to produce long-term share-owner
value.
2
<PAGE>
TERRITORIES
The Company's bottling territories in North America are located in 44 states
of the United States, the District of Columbia and all ten provinces of Canada.
At December 31, 1997, these territories contained approximately 201 million
people, representing approximately 64% of the population of the United States
and 94% of the population of Canada.
[map of North American territory]
The bottling territories for the Company's European operations consist of
Great Britain, Belgium, Luxembourg, the Netherlands, and most of France. The
aggregate population of these territories was approximately 137 million people
at December 31, 1997.
[map of European territory]
3
<PAGE>
PRODUCTS
Within its North American territories the Company markets, distributes and
produces beverage products of The Coca-Cola Company or its subsidiaries; these
products include Coca-Cola classic, caffeine free Coca-Cola classic, diet
Coke, caffeine free diet Coke, Sprite, diet Sprite, Cherry Coke, diet Cherry
Coke, Barq's, Citra, Fanta, Fresca, Fruitopia, Hi-C fruit drinks, Mello Yello,
Minute Maid and diet Minute Maid soft drinks, Minute Maid juices, Mr. PiBB,
POWERaDE, SURGE and TAB. Additionally, the Company markets, distributes and
produces (or obtains from authorized producers) Nestea products, under license
from Coca-Cola Nestle Refreshments Company, USA, and various noncola beverage
products under the trademarks of companies other than The Coca-Cola Company.
Substantially all of the beverages bearing the trademark "Coca-Cola" or "Coke"
(the "Coca-Cola Trademark Beverages") are available throughout the Company's
North American territories and major fountain accounts.
Other products marketed and distributed by the Company in select North
American markets include: Canada Dry, Dr Pepper, Diet Dr Pepper, Evian,
Mendota Springs, NAYA, Nestea, Cool from Nestea, diet Nestea, Schweppes,
Seagrams and Squirt.
Major products of The Coca-Cola Company and other companies marketed and
distributed by the Company in its international territories include Aquarius,
Buxton Mineral Water, caffeine free Coca-Cola, caffeine free Coca-Cola light,
Canada Dry, Capri Sun, Cherry Coke, Coca-Cola, Coca-Cola light, caffeine free
diet Coke, diet Coke, Dr Pepper, Fanta, Five Alive, Kia-Ora, Lilt, Malvern
Waters, Minute Maid juices, Nestea, Oasis, Perrier Mineral Water, Schweppes,
Sprite, Sprite light and Vittel Water.
The Coca-Cola Company and other companies manufacture syrups and
concentrates, and in some cases the finished product, for sale to bottlers
and, in some territories to fountain wholesalers. The Company's bottling and
canning operations combine the syrup or concentrate with sweetener and
carbonated water, and package the finished product in authorized containers
for sale and direct store delivery to wholesalers and/or retailers, depending
on the territory. See "Marketing" and "Raw Materials" below.
Approximately 74% of the Company's North American equivalent case sales in
1997 (excluding post-mix) represented caloric products and the balance
represented low-calorie products. "Post-mix" (sometimes called fountain syrup)
is syrup which is mixed with water and carbon dioxide at the time it is being
dispensed into open containers, such as cups, for immediate consumption.
MARKETING
The Company sells its products in a variety of packages authorized by The
Coca-Cola Company and other companies. In 1997, domestic and international
equivalent case sales of the Company, excluding post-mix syrup sales, were
packaged approximately 48% in cans, 47% in other nonrefillable packaging, 4%
in refillable containers, and 1% in pre-mix containers. Post-mix syrup
accounted for approximately 13% of the Company's equivalent case sales in
1997.
The Company relies extensively on advertising and sales promotion in the
marketing of its products. The Coca-Cola Company and the other beverage
companies that supply concentrates, syrups, and finished products to the
Company make substantial advertising expenditures in all major media to
promote sales in the local areas served by the Company. The Company also
benefits from national advertising programs conducted by The Coca-Cola Company
and other beverage companies. Certain of the marketing expenditures by The
Coca-Cola Company and other beverage companies are made pursuant to annual
arrangements. Although The Coca-Cola Company has advised the Company that it
intends to continue to provide marketing support in 1998, it is not obligated
to do so under either the domestic or international beverage agreements,
except as otherwise specifically committed. See "North American Beverage
Agreements" and "European Beverage Agreements" below.
Sales of the Company's products are seasonal, with the second and third
calendar quarters accounting for higher sales volumes than the first and
fourth quarters. The bottling territories in Europe have more volatile sales
volumes because of the higher sensitivity of European consumption to weather
conditions.
4
<PAGE>
RAW MATERIALS
In addition to concentrates, sweeteners, and finished product, the Company
purchases carbon dioxide, glass and plastic bottles, cans, closures, post-mix
packaging (such as plastic bags in cardboard boxes), and other packaging
materials. The Company generally purchases its raw materials, other than
concentrates, syrups, and sweeteners, from multiple suppliers. The beverage
agreements with The Coca-Cola Company provide that, with respect to the
products of The Coca-Cola Company, all authorized containers, closures, cases,
cartons, and other packages and labels must be purchased from manufacturers
approved by The Coca-Cola Company.
High fructose corn syrup currently is the principal sweetener used by the
Company in the United States and Canada for beverage products, other than low-
calorie products, of The Coca-Cola Company, although sugar is widely used as a
sweetener in Canada as well. The Company and The Coca-Cola Company have
entered into arrangements for the purchase by the Company from The Coca-Cola
Company of substantially all of the Company's 1998-2002 requirements for
sweeteners in the United States. See "Certain Relationships and Related
Transactions--Agreements and Transactions with The Coca-Cola Company--
Sweetener Requirements Agreement" in the Company's 1998 Proxy Statement, which
information is incorporated by reference into Item 13 hereof. The Company does
not separately purchase low-calorie sweeteners because sweeteners for low-
calorie beverage products of The Coca-Cola Company are contained in the syrup
or concentrate purchased by the Company from The Coca-Cola Company. In Europe,
the principal sweetener is sugar from sugar beets, purchased from multiple
suppliers.
The Company currently purchases its requirements for plastic bottles in the
United States from manufacturers jointly owned by it and other Coca-Cola
bottlers. Management of the Company believes that ownership interests in
certain suppliers and the self-manufacture of certain packages serve to reduce
or manage costs. In Canada a merchant supplier is used. In Europe, the Company
produces most of its plastic bottle requirements using preforms purchased from
various merchant suppliers.
There are no materials or supplies used by the Company which are currently
in short supply, although the supply of specific materials could be adversely
affected by strikes, weather conditions, governmental controls, or national
emergencies.
NORTH AMERICAN BEVERAGE AGREEMENTS
Domestic Carbonated Beverage Agreements in the United States with The
Coca-Cola Company
The Company purchases concentrate and syrup from The Coca-Cola Company and
produces, markets and distributes its principal liquid nonalcoholic
refreshment products within the United States under two basic forms of
carbonated beverage agreements with The Coca-Cola Company: beverage agreements
that cover the Coca-Cola Trademark Beverages (the "Cola Beverage Agreements")
and beverage agreements that cover other carbonated beverages of The Coca-Cola
Company (the "Allied Beverages" and "Allied Beverage Agreements") (herein
referred to collectively as the "Domestic Carbonated Beverage Agreements").
See "Introduction" and "Products" above. The Company and each of its bottling
company subsidiaries are parties to one or more separate Cola Beverage
Agreements and to various Allied Beverage Agreements. In this section, unless
the context indicates otherwise, a reference to the Company refers to the
legal entity in the United States that is a party to the beverage agreements
with The Coca-Cola Company.
Pricing. Pursuant to the Domestic Carbonated Beverage Agreements, The
Coca-Cola Company establishes the prices charged to the Company for
concentrates and syrups for Coca-Cola Trademark Beverages and Allied
Beverages. The Company expects that net prices charged by The Coca-Cola
Company in 1998 for syrup and concentrates will increase approximately 3.4% as
compared to 1997 prices. The Coca-Cola Company has no rights under the
Domestic Carbonated Beverage Agreements to establish the resale prices at
which the Company sells its products.
5
<PAGE>
Cola Beverage Agreements in the United States with The Coca-Cola Company
Exclusivity. The Cola Beverage Agreements provide that the Company will
purchase its entire requirements of concentrates and syrups for Coca-Cola
Trademark Beverages from The Coca-Cola Company at prices, terms of payment,
and other terms and conditions of supply, as determined from time to time by
The Coca-Cola Company in its sole discretion. The Company has the exclusive
right to distribute Coca-Cola Trademark Beverages for sale in authorized
containers within its territories. The Coca-Cola Company may determine, from
time to time in its sole discretion, what types of containers to authorize for
use with products of The Coca-Cola Company.
Transshipping. The Company may not sell Coca-Cola Trademark Beverages
outside its territories.
Company Obligations. The Company is obligated to maintain such plant and
equipment, staff, and distribution and vending facilities as are capable of
manufacturing, packaging, and distributing Coca-Cola Trademark Beverages in
accordance with the Cola Beverage Agreements and in sufficient quantities to
satisfy fully the demand for these beverages in its territories; to undertake
adequate quality control measures prescribed by The Coca-Cola Company; to
develop and to stimulate the demand for Coca-Cola Trademark Beverages in those
territories; to use all approved means, and spend such funds on advertising
and other forms of marketing, as may be reasonably required to satisfy that
objective; and to maintain such sound financial capacity as may be reasonably
necessary to assure performance by the Company of its obligations to The
Coca-Cola Company. The Company is required to meet annually with The Coca-Cola
Company to present its marketing, management, and advertising plans with
respect to the Coca-Cola Trademark Beverages for the year, including financial
plans showing that the Company has the consolidated financial capacity to
perform its duties and obligations to The Coca-Cola Company. The Coca-Cola
Company may not unreasonably withhold approval of such plans. If the Company
carries out its plans in all material respects, it will be deemed to have
satisfied its obligations to develop, stimulate, and satisfy fully the demand
for the Coca-Cola Trademark Beverages and to maintain the requisite financial
capacity. Failure to carry out such plans in all material respects would
constitute an event of default that, if not cured or waived by The Coca-Cola
Company within 120 days of notice of the failure, would give The Coca-Cola
Company the right to terminate the Cola Beverage Agreements. If the Company at
any time fails to carry out a plan in all material respects in any geographic
segment of its territory, and if such failure is not cured within six months
after notice of the failure, The Coca-Cola Company may reduce the territory
covered by that Cola Beverage Agreement by eliminating the portion of the
territory in which such failure has occurred.
Acquisition of Other Bottlers. If the Company acquires control, directly or
indirectly, of any bottler of Coca-Cola Trademark Beverages in the United
States, or any party controlling a bottler of Coca-Cola Trademark Beverages in
the United States, the Company must cause the acquired bottler to amend its
agreement for the Coca-Cola Trademark Beverages to conform to the terms of the
Cola Beverage Agreements described above.
Term and Termination. The domestic Cola Beverage Agreements are perpetual,
but they are subject to termination by The Coca-Cola Company upon the
occurrence of an event of default by the Company. Events of default with
respect to each Cola Beverage Agreement include: (i) production or sale of any
cola product not authorized by The Coca-Cola Company; (ii) insolvency,
bankruptcy, dissolution, receivership, or the like; (iii) any disposition by
the Company of any voting securities of any bottling company without the
consent of The Coca-Cola Company; and (iv) any material breach of any
obligation of the Company under that Cola Beverage Agreement that remains
uncured for 120 days after notice by The Coca-Cola Company. If any Cola
Beverage Agreement is terminated because of an event of default, The Coca-Cola
Company has the right to terminate all other Cola Beverage Agreements held by
the Company.
In addition, each Cola Beverage Agreement held by the Company provides that
The Coca-Cola Company has the right to terminate that Cola Beverage Agreement
if a person or affiliated group (with specified exceptions) acquires or
obtains any contract, option, conversion privilege, or other right to acquire,
directly or indirectly, beneficial ownership of more than 10% of any class or
series of voting securities of the Company. However, The Coca-Cola Company has
agreed with the Company that this provision will not apply with respect to the
ownership of any class or series of voting securities of the Company, although
it would apply to the voting securities of each bottling company subsidiary.
6
<PAGE>
The provisions of the Cola Beverage Agreements which make it an event of
default to dispose of any Cola Beverage Agreement or voting securities of any
bottling company subsidiary without the consent of The Coca-Cola Company and
which prohibit the assignment or transfer of the Cola Beverage Agreements are
designed to preclude any person not acceptable to The Coca-Cola Company from
obtaining an assignment of a Cola Beverage Agreement or from acquiring any
voting securities of the Company's bottling subsidiaries. These provisions
prevent the Company from selling or transferring any of its interest in any
bottling operations without the consent of The Coca-Cola Company. These
provisions may also make it impossible for the Company to benefit from certain
transactions, such as mergers or acquisitions, involving any of the bottling
operations that might be beneficial to the Company and its share owners but
which are not acceptable to The Coca-Cola Company.
Allied Beverage Agreements in the United States with The Coca-Cola Company
The Allied Beverages are beverages of The Coca-Cola Company and its
subsidiaries which are neither Coca-Cola Trademark Beverages nor (except for
Hi-C fruit drinks) noncarbonated beverages. The Allied Beverage Agreements
contain provisions that are similar to those of the Cola Beverage Agreements
with respect to pricing, transshipping, authorized containers, planning,
quality control, transfer restrictions, and related matters but have certain
significant differences from the Cola Beverage Agreements.
Exclusivity. Under the Allied Beverage Agreements, the Company has exclusive
rights to distribute the Allied Beverages in authorized containers in
specified territories. Like the Cola Beverage Agreements, the Company has
advertising, marketing, and promotional obligations, but, for some brands,
without restriction as to the marketing of products with similar flavors as
long as there is no manufacturing or handling of other products that would
imitate, infringe upon, or cause confusion with, the products of The Coca-Cola
Company. The Coca-Cola Company has the right to discontinue any or all Allied
Beverages, and the Company has a right, but not an obligation, under each of
the Allied Beverage Agreements (except under the Allied Beverage Agreements
for Hi-C fruit drinks and carbonated Minute Maid beverages) to elect to market
any new beverage introduced by The Coca-Cola Company under the trademarks
covered by the respective Allied Beverage Agreements.
Term and Termination. Each Allied Beverage Agreement has a term of ten or
fifteen years and is renewable by the Company for an additional ten or fifteen
years at the end of each term. The initial term for many of the Company's
Allied Beverage Agreements expired in 1996 and substantially all were renewed.
The Company intends to renew substantially all the Allied Beverage Agreements
as they expire. The Allied Beverage Agreements are subject to termination in
the event of default by the Company. The Coca-Cola Company may terminate an
Allied Beverage Agreement in the event of: (i) insolvency, bankruptcy,
dissolution, receivership, or the like; (ii) termination of the Cola Beverage
Agreement of the Company by either party for any reason; or (iii) any material
breach of any obligation of the Company under the Allied Beverage Agreement
that remains uncured after required prior notice by The Coca-Cola Company.
Supplementary Agreement in the United States with The Coca-Cola Company
In addition to the Domestic Carbonated Beverage Agreements, the Company is a
party to a supplementary agreement (the "Supplementary Agreement") with The
Coca-Cola Company regarding the exercise by The Coca-Cola Company of its
rights under the Domestic Carbonated Beverage Agreements. Pursuant to the
Supplementary Agreement, The Coca-Cola Company has agreed to exercise good
faith and fair dealing under the Domestic Carbonated Beverage Agreements;
offer marketing support and exercise its rights under the Domestic Carbonated
Beverage Agreements in a manner consistent with its dealings with comparable
bottlers; offer to the Company any material written amendment to such Domestic
Carbonated Beverage Agreements which it offers to any other bottler; and,
subject to certain limitations, sell syrups and concentrates to the Company in
the United States at prices not greater than those charged to other bottlers
which are parties to agreements substantially similar to the Domestic
Carbonated Beverage Agreements. The Supplementary Agreement provides for a
term expiring on March 15, 1999 and may be terminated by The Coca-Cola Company
upon 30 days' notice in the event that The Coca-Cola Company should cease to
own more than 40% of the Company's outstanding common stock.
7
<PAGE>
Noncarbonated Beverage Agreements in the United States with The Coca-Cola
Company
The Company purchases certain noncarbonated beverages such as isotonics,
teas, and fruit drinks in finished form from The Coca-Cola Company, or its
designees and joint ventures, pursuant to the terms of marketing and
distribution agreements (the "Noncarbonated Beverage Agreements"). The
Noncarbonated Beverage Agreements contain provisions that are similar to the
Domestic Carbonated Beverage Agreements with respect to authorized containers,
planning, quality control, transfer restrictions and related matters but have
certain significant differences therefrom.
Exclusivity. First, the Company does not manufacture some of the
noncarbonated beverages. Also, unlike the Cola Beverage Agreements, which
grant the Company exclusivity in the distribution of the covered beverages in
the territory, the Noncarbonated Beverage Agreements grant exclusivity but
permit The Coca-Cola Company to test market noncarbonated beverage products in
the territory, subject to the Company's right of first refusal to do so, and
to sell noncarbonated beverages to commissaries for delivery to retail outlets
in the territory where noncarbonated beverages are consumed on-premise, such
as restaurants. The Coca-Cola Company must pay the Company certain fees for
lost volume, delivery, and taxes in the event of such commissary sales. Under
the Noncarbonated Beverage Agreements, the Company may not sell other
beverages in the same product category.
Pricing. The Coca-Cola Company, in its sole discretion, establishes the
pricing the Company must pay for noncarbonated beverages but has agreed, under
certain circumstances, to give the Company the benefit of more favorable
pricing if offered to other Coca-Cola bottlers.
Term. Each of the Noncarbonated Beverage Agreements has a term of ten years
and is renewable by the Company for an additional ten years at the end of each
term. The initial term for most of the Noncarbonated Beverage Agreements for
POWERaDE will expire in 2004, and for Nestea, Fruitopia and Minute Maid juices
and juice drinks will expire in 2007.
Marketing Support in the United States from The Coca-Cola Company
The Coca-Cola Company has no obligation under the Domestic Carbonated
Beverage Agreements and Noncarbonated Beverage Agreements to participate with
the Company in expenditures for advertising and marketing, but it may, in its
discretion, contribute to such expenditures and undertake independent
advertising and marketing activities, as well as cooperative advertising and
sales promotion programs, that would require the cooperation and support of
the Company, and has advised the Company that it intends to continue to
provide various forms of marketing support in 1998 at a comparable level of
support as that provided in 1997. Also, in connection with the Company's
acquisition of The Coca-Cola Bottling Company of New York, Inc., The Coca-Cola
Company has agreed to pay a certain amount of marketing funds over the first
five years after acquisition plus additional payments based upon sales in the
acquired territory of carbonated soft drink products of The Coca-Cola Company.
Post-Mix Sales and Marketing Agreements in the United States with The
Coca-Cola Company
The Company has in the past sold and delivered the post-mix products of The
Coca-Cola Company pursuant to one-year post-mix distributorship appointments;
in 1998, the Company signed a five-year distributorship ending on December 31,
2002. In 1997, the Company sold and/or delivered such post-mix products in all
of its major territories in the United States. Under the terms of the
appointment, the Company is authorized to distribute such syrups to retailers
for dispensing to consumers within the United States. The appointment is
terminable by either party without cause upon ten days' written notice. Unlike
the Domestic Carbonated Beverage Agreements, there is no exclusive territory,
and the Company faces competition not only from sellers of other post-mix
syrups but from other sellers of post-mix syrups of The Coca-Cola Company
(including The Coca-Cola Company). Depending on the territory, the Company is
involved in the sale, distribution, and marketing of post-mix syrups in
differing degrees. In some territories, the Company sells syrup on its own
behalf,
8
<PAGE>
but the primary responsibility for marketing lies with The Coca-Cola Company.
In other territories, the Company is responsible for marketing post-mix syrup
to certain segments of the business. See "Certain Relationships and Related
Transactions--Agreements and Transactions with The Coca-Cola Company--Sales of
Syrups, Bottle and Can Products and Agency Billing and Delivery Arrangements"
in the Company's 1998 Proxy Statement, which information is incorporated by
reference into Item 13 hereof.
Beverage Agreements in the United States with Other Licensors
The beverage agreements in the United States between the Company and other
licensors of beverage products and syrups contain restrictions generally
similar in effect to those in the Domestic Carbonated Beverage Agreements as
to trade names, approved bottles, cans and labels, sale of imitations, and
cause for termination. Those agreements generally give those licensors the
unilateral right to change the prices for their products and syrups at any
time in their sole discretion. Some of these beverage agreements have limited
terms of appointment and, in most instances, prohibit the Company from dealing
in products with similar flavors in certain territories. The agreements with
subsidiaries of Cadbury Schweppes plc, which represented in 1997 approximately
7% of the beverages sold by the Company in the United States and the
Caribbean, provide that the parties will give each other at least one year's
notice prior to terminating the agreement for any brand, and pay certain fees
in some circumstances. Also, the Company agreed that it would not cease
distributing Dr Pepper brand products prior to December 31, 2005 or Canada
Dry, Schweppes, Sunkist or Squirt brand products prior to December 31, 2001.
The termination provisions for Dr Pepper renew for five-year periods; those
for the other Cadbury brands renew for three-year periods.
Canadian Beverage Agreements with The Coca-Cola Company
CCB, the Company's bottler in Canada, sells, distributes and produces
Coca-Cola Trademark Beverages, Allied Beverages and noncarbonated beverages of
The Coca-Cola Company and Coca-Cola Ltd., an affiliate of The Coca-Cola
Company ("Coca-Cola Beverage Products") in its territories pursuant to license
agreements and arrangements with Coca-Cola Ltd., and in certain cases, with
The Coca-Cola Company ("Canadian Beverage Agreements"). The Canadian Beverage
Agreements are similar to the Domestic Carbonated Beverage Agreements with
respect to authorized containers, planning, quality control, transshipping,
transfer restrictions, termination and related matters but have certain
significant differences therefrom.
Exclusivity. The Canadian Beverage Agreement for Coca-Cola Trademark
Beverages gives CCB the exclusive right to distribute Coca-Cola Trademark
Beverages in its territories in bottles authorized by Coca-Cola Ltd. CCB also
is authorized on a nonexclusive basis to sell, distribute and produce canned,
pre-mix and post-mix Coca-Cola Trademark Beverages in such territories. At
present, there are no other authorized producers or distributors of canned,
pre-mix or post-mix Coca-Cola Trademark Beverages in CCB's territories and CCB
has been advised by Coca-Cola Ltd. that there are no present intentions to
authorize any such producers or distributors in the future. In general, the
Canadian Beverage Agreement for Coca-Cola Trademark Beverages prohibits CCB
from producing or distributing beverages other than the Coca-Cola Trademark
Beverages unless Coca-Cola Ltd. has given CCB notice that it approves the
production and distribution of such beverages.
Pricing. An affiliate of The Coca-Cola Company supplies the concentrates for
the Coca-Cola Trademark Beverages and may establish and revise at any time the
price of concentrates, the payment terms and the other terms and conditions
under which CCB purchases concentrates for the Coca-Cola Trademark Beverages.
The Company expects that net prices charged in 1998 for concentrates will be
approximately equivalent to 1997 prices. Unlike other beverage agreements in
other parts of the world, Coca-Cola Ltd. may, in its sole discretion,
establish maximum prices at which the Coca-Cola Trademark Beverages may be
sold by CCB to its retailers. Coca-Cola Ltd. may also establish maximum retail
prices for such beverages, and CCB is required to use its best efforts to
maintain such maximum retail prices. CCB may not require a deposit on any
container used by it for the sale of the Coca-Cola Trademark Beverages unless
it is required by law or approved by Coca-Cola Ltd. and, if a deposit is
required, such deposit may not exceed the greater of the minimum deposit
required by law or the deposit approved by Coca-Cola Ltd.
9
<PAGE>
Term. The Canadian Beverage Agreement for Coca-Cola Trademark Beverages
expire on July 28, 2007, with provisions to renew for two additional terms of
ten years each, provided generally that CCB has complied with and continues to
be capable of complying with their provisions. CCB's authorizations to sell,
distribute and produce, pre-mix and post-mix Coca-Cola Trademark Beverages may
be terminated by either party on ninety days' notice.
Marketing Support. Coca-Cola Ltd. has no obligation under the Canadian
Beverage Agreements to participate with CCB in expenditures for advertising
and marketing, but it may, in its discretion, contribute to such expenditures
and undertake independent advertising and marketing activities, as well as
cooperative advertising and sales promotion programs, that would require the
cooperation and support of the Company, and has advised the Company that it
intends to continue to provide various forms of marketing support in 1998 at a
comparable level of support as that provided in 1997. Additionally, The
Coca-Cola Company has agreed to pay a certain amount of marketing funds over
the first five years after the acquisition of CCB by the Company.
Other Coca-Cola Beverage Products. The license agreements and arrangements
of CCB with Coca-Cola Ltd., and in certain cases, with The Coca-Cola Company,
for the Coca-Cola Beverage Products other than Coca-Cola Trademark Beverages
are on terms generally similar to those contained in the license agreement in
respect of the Coca-Cola Trademark Beverages.
Beverage Agreements in Canada with Other Licensors
CCB has several signed license agreements with other licensors, including:
license agreements with subsidiaries of Cadbury Schweppes plc having terms
expiring in July 2002 and December 2036, each being renewable for successive
five-year terms until terminated by either party. These beverage agreements
generally give CCB the exclusive right to produce and distribute authorized
beverages in authorized packaging in specified territories. These beverage
agreements also generally provide flexible pricing for the licensors, and in
many instances, prohibit CCB from dealing in beverages confusing with, or
imitative of, the authorized beverages. These agreements contain restrictions
generally similar in effect to those in the Canadian Beverage Agreements as to
the use of trademarks, approved bottles, cans and labels, sales of imitations
and cause for termination.
EUROPEAN BEVERAGE AGREEMENTS
European Beverage Agreements with The Coca-Cola Company
The Company's bottlers in the Netherlands, Belgium and France (collectively
the "Company Continental Bottlers") and the Company's bottlers in Great
Britain and Luxembourg (which together with the Company Continental Bottlers
are collectively called the "Company European Bottlers"), operate in their
respective territories under agreements with The Coca-Cola Company and The
Coca-Cola Export Corporation, dated July 26, 1996 for the Company Continental
Bottlers, February 10, 1997 for the British bottler and January 30, 1998 for
the Luxembourg bottler (the "European Beverage Agreements"); these agreements
have certain significant differences from the beverage agreements described
above. The Company believes that the European Beverage Agreements are
substantially similar to other agreements between The Coca-Cola Company and
other European bottlers of Coca-Cola Trademark Beverages and Allied Beverages.
Exclusivity. Subject to the European Supplemental Agreement, described below
in this report, and certain minor exceptions, the Company European Bottlers
have the exclusive rights granted by The Coca-Cola Company in their
territories to sell the beverages covered by their respective European
Beverage Agreements in glass bottles, plastic bottles and/or cans. The covered
beverages include Coca-Cola Trademark Beverages, Allied Beverages,
noncarbonated beverages and certain beverages not sold in the United States.
See "Products" above. The Coca-Cola Company has retained the rights to produce
and sell, or authorize third parties to produce and sell, the beverages in any
other manner or form within the territories. The Coca-Cola Company has further
granted certain Company European Bottlers a nonexclusive authorization to
package and sell post-mix and/or pre-mix beverages in their territories.
10
<PAGE>
Transshipping. The Company European Bottlers are prohibited from making
sales of the beverages outside of their territories, or to anyone intending to
resell the beverages outside their territories, without the consent of The
Coca-Cola Company, except for sales arising out of an order from a customer in
another Member State of the European Union or for export to another such
Member State. The European Beverage Agreements also contemplate that there may
be instances in which large or special buyers have operations transcending the
boundaries of the territories, and in furtherance of this, the Company
European Bottlers and The Coca-Cola Company are cooperating in sales to such
buyers.
Pricing. The European Beverage Agreements provide that the sales of beverage
base and other goods to the Company European Bottlers are at prices which are
set from time to time by The Coca-Cola Company. The Company expects that net
prices charged in 1998 by The Coca-Cola Company for syrup, concentrate, and
other goods will increase approximately 4.3% over 1997 prices.
Term and Termination. The European Beverage Agreements expire July 26, 2006
for the Company Continental Bottlers, February 10, 2007 for the British
bottler and January 30, 2008 for the Luxembourg bottler, unless terminated
earlier as provided therein. If the European Bottlers have fully complied with
the agreements during the initial term, are "capable of the continued
promotion, development, and exploitation of the full potential of the
business" and request an extension of the agreement, an additional ten-year
term may be granted at the sole discretion of The Coca-Cola Company. The Coca-
Cola Company is given the right to terminate the European Beverage Agreements
before the expiration of the stated term upon the insolvency, bankruptcy,
nationalization, or similar condition of the Company European Bottlers or the
occurrence of a default under the European Beverage Agreements which is not
remedied within 60 days of notice of the default being given by The Coca-Cola
Company. The European Beverage Agreements may be terminated by either party in
the event foreign exchange is unavailable or local laws prevent performance.
The post-mix and pre-mix authorizations are terminable by either party with 90
days' prior notice.
European Supplemental Agreement with The Coca-Cola Company
In addition to the European Beverage Agreements described above, the Company
Continental Bottlers, The Coca-Cola Company and The Coca-Cola Export
Corporation are parties to a supplemental agreement (the "European
Supplemental Agreement") with regard to the Company Continental Bottlers'
rights pursuant to the European Beverage Agreements. The European Supplemental
Agreement permits the Company Continental Bottlers to prepare, package,
distribute and sell the beverages covered by any of the Company Continental
Bottlers' European Beverage Agreements in any other territory of another
Company Continental Bottler, provided that the Company and The Coca-Cola
Company shall have reached agreement upon a business plan for such beverages.
The European Supplemental Agreement may be terminated, either in whole or in
part by territory, by The Coca-Cola Company at any time with 90 days' prior
written notice. The British and Luxembourg bottlers are not parties to the
European Supplemental Agreement, but The Coca-Cola Company has committed to
enter into a similar arrangement with them.
Marketing Support in Europe from The Coca-Cola Company
While The Coca-Cola Company has no commitment under the European Beverage
Agreements to provide marketing support, it has agreed with the Company to
provide certain specified assistance for limited periods of time in connection
with the Company's acquisitions of the bottlers in Belgium, France and Great
Britain. With respect to the bottlers in Belgium and France, the Company and
The Coca-Cola Company have developed a business plan through the year 2000, to
be supplemented with agreed annual plans, under which the Company will receive
set levels of funds to support the marketing of Coca-Cola brands; the Company
is obligated to cause the French bottler to spend marketing funds in support
of the Coca-Cola brands, the amounts of the expenditures to increase as case
volume increases. With respect to the bottler in Great Britain, a business
plan has been developed by agreement of the Company and The Coca-Cola Company
through the year 2002, to be supplemented with agreed annual plans. The Coca-
Cola Company has committed to a minimum level of annual support throughout the
period of the business plan to fund marketing programs for Coca-Cola brands,
and to make transition support payments in agreed amounts for 1998 and 1999 to
fund customer and consumer
11
<PAGE>
programs designed to enhance the marketing and sale of Coca-Cola brands. The
Coca-Cola Company has provided substantial marketing support in the past to
the Company's bottler in the Netherlands, and the Company expects that
increased support will be provided in 1998, as a recognition of increased
sales.
Beverage Agreements in Europe with Other Licensors
The beverage agreements between the Company and other licensors of beverage
products and syrups generally give those licensors the unilateral right to
change the prices for their products and syrups at any time in their sole
discretion. Some of these beverage agreements have limited terms of
appointment and, in most instances, prohibit the Company from dealing in
products with similar flavors. Those agreements contain restrictions generally
similar in effect to those in the European Beverage Agreements as to trade
names, approved bottles, cans and labels, sale of imitations, planning, and
cause for termination. As a condition to Cadbury Schweppes plc's sale of its
51% interest in the British bottler to the Company in February 1997, the
Company entered into agreements concerning certain aspects of the Cadbury
Schweppes products distributed by the British bottler. These agreements impose
obligations upon the Company with respect to the marketing, sale and
distribution of Cadbury Schweppes products within the British bottler's
territory. These agreements further require the British bottler to achieve
certain agreed growth rates for Cadbury Schweppes brands and grant certain
rights and remedies to Cadbury Schweppes if these rates are not met. These
agreements also place some limitations upon the British bottler's ability to
discontinue Cadbury Schweppes brands, and recognize the exclusivity of certain
Cadbury Schweppes brands in their respective flavor categories. The British
bottler is given the first right to any new Cadbury Schweppes brands
introduced in the territory. These agreements run through 2012 and are
automatically renewed for a ten-year term thereafter unless terminated by
either party.
COMPETITION
The liquid nonalcoholic refreshment business is highly competitive.
Competition exists among all beverages, including soft drinks, isotonics, tea,
tea drinks, juices, juice drinks, coffee, coffee drinks, water, beer, wine,
wine coolers, milk and milk drinks, and bottled waters. Competitors in this
business include bottlers and distributors of beverages marketed and
advertised at international, national, regional and local levels, as well as
chain store and private label beverages. Information on sales in the liquid
nonalcoholic refreshment business is not readily available. In the carbonated
soft drink segment of the liquid nonalcoholic refreshment business, however,
the Company estimates that in 1997 the products of The Coca-Cola Company
represented approximately 38% of total food store and petroleum outlet
carbonated soft drink sales in all United States territories in which the
Company operates, and that those of PepsiCo, Inc. represented approximately
32%. The Company also estimates that in each of its United States territories,
between 60% and 80% of food store and petroleum outlet carbonated soft drink
sales are accounted for by the Company and its major carbonated soft drinks
competitor, which in most territories is the bottler of the soft drink
products of PepsiCo, Inc.
Brand recognition and pricing are significant factors affecting the
Company's competitive position, and the consumer and customer goodwill
associated with the trademarks of its products are the most favorable factor
for the Company. Other competitive factors among beverage distributors include
marketing, distribution methods, service to the trade, and the management of
sales promotion activities. Vending machine sales, packaging changes and
relationships with fountain customers are also competitive factors. The
introductions of new products and packages have been major competitive
elements in the liquid nonalcoholic refreshment industry.
EMPLOYEES
At February 10, 1998, the Company had approximately 56,000 employees. At the
end of 1997, approximately 8,000 of these employees were in Europe, where the
Company added over 400 people during the year because of increased commercial
activity. The Company is a party to 148 collective bargaining agreements
covering approximately 11,300 of its North American employees. These
collective bargaining agreements expire at various dates through 2004. The
Company has no reason to believe that it will be unable to renegotiate any of
these agreements on satisfactory terms. On February 27, 1998, the Company
agreed with its European employee representatives to establish a European
Works Council. Management of the Company believes that the Company's relations
with its employees are generally good.
12
<PAGE>
GOVERNMENTAL REGULATION
Packaging
Anti-litter measures have been enacted in the United States in California,
Connecticut, Delaware, Iowa, Maine, Massachusetts, Michigan, New York, Oregon,
Vermont and the City of Columbia, Missouri, some of which prohibit the sale of
certain beverages, whether in refillable or nonrefillable containers, unless a
deposit is charged by the retailer for the container. The retailer or
redemption center refunds all or some of the deposit to the customer upon the
return of the container. The containers are then returned to the bottler,
which, in most jurisdictions, must pay the refund and, in certain others, must
also pay a handling fee. In California, a levy is imposed on beverage
containers to fund a waste recovery system. In the past, similar legislation
has been proposed but not adopted elsewhere, although the Company anticipates
that additional jurisdictions may enact such laws. Massachusetts requires the
creation of a deposit transaction fund by bottlers and the payment to the
state of balances in that fund that exceed three months of deposits received,
net of deposits repaid to customers and interest earned. Michigan also has a
statute requiring bottlers to pay to the state unclaimed container deposits.
In Canada, soft drink containers are subject to waste management measures in
each of the ten provinces. Four provinces have forced deposit schemes and
three have half-back deposit systems whereby a deposit is collected from the
consumer and one-half of the deposit amount is returned upon redemption. In
one province a levy is imposed on beverage containers to fund a multi-material
recovery system. Prince Edward Island requires all soft drink beverages to be
sold in refillable containers, and regulations in Ontario require that sales
by a bottler of soft drink beverages in refillable containers must meet a
minimum percentage of total sales of soft drink beverages by such bottler in
refillable and nonrefillable containers within that bottler's sales areas.
The European Commission has issued a packaging and packing waste directive
which is in the process of being incorporated into the national legislation of
the Member States. This will result in targets being set for the recovery and
recycling of household, commercial and industrial packaging waste and impose
substantial responsibilities upon bottlers and retailers for implementation.
The Company has taken actions to mitigate the adverse effects resulting from
legislation concerning deposits, restrictive packaging, and escheat of
unclaimed deposits which impose additional costs on the Company. The Company
is unable to quantify the impact on current and future operations which may
result from such legislation if enacted in the future, but the impact of any
such legislation could be significant if widely enacted.
Excise and Value Added Taxes
Excise taxes on sales of soft drinks have been in place in various states in
the United States for several years. The states in which the Company operates
currently imposing such taxes are Arkansas, North Carolina, and Tennessee. In
addition, the state of New York and one local jurisdiction in which the
Company operates, Honolulu, Hawaii, have imposed a special tax on
nonrefillable soft drink containers. To the knowledge of management of the
Company, no similar legislation has been enacted in any other markets served
by the Company. Proposals have been introduced in certain states and
localities that would impose a special tax on beverages sold in nonrefillable
containers as a means of encouraging the use of refillable containers.
Management of the Company is unable to predict, however, whether such
additional legislation will be adopted.
Value added tax on soft drinks varies widely in the Company's bottling
territories within Canada and the European Community, ranging from 3% to 21%.
In addition, excise taxes on sales of soft drinks are in place in Belgium,
France and the Netherlands. The existence and level of this indirect taxation
on the sale of soft drinks is now a matter of legal and public debate given
the need for further tax harmonization within the European Community.
California Legislation
A California law requires that any person who exposes another to a
carcinogen or a reproductive toxicant must provide a warning to that effect.
Because the law does not define quantitative thresholds below which a
13
<PAGE>
warning is not required, virtually all manufacturers of food products are
confronted with the possibility of having to provide warnings due to the
presence of trace amounts of defined substances. Regulations implementing the
law exempt manufacturers from providing the required warning if it can be
demonstrated that the defined substances occur naturally in the product or are
present in municipal water used to manufacture the product. The Company has
assessed the impact of the law and its implementing regulations on the
Company's beverage products and has concluded that none of the Company's
products currently requires a warning under the law. The Company cannot
predict whether or to what extent food industry efforts to minimize the law's
impact on food products will succeed, neither can the Company predict what
impact, either in terms of direct costs or diminished sales, imposition of the
law may have.
Underground Storage Tanks and Other Environmental Regulations
Substantially all of the facilities of the Company are subject to laws and
regulations dealing with above-ground and underground fuel storage tanks and
the discharge of materials into the environment. Compliance with these
provisions has not had, and the Company does not expect such compliance to
have, any material effect upon the capital expenditures, net income, financial
condition, or competitive position of the Company. The Company's beverage
manufacturing operations do not use or generate a significant amount of toxic
or hazardous substances. Management believes that its current practices and
procedures for the control and disposition of such wastes comply with
applicable law. In the United States, the Company has been named as a
potentially responsible party in connection with certain landfill sites where
the Company may have been a de minimis contributor. Under current law, the
Company's liability for cleanup costs may be joint and several with other
users of such sites, regardless of the extent of the Company's use in relation
to other users. However, in the opinion of management of the Company, the
potential liability of the Company in connection with such activity is not
significant and will not have a materially adverse effect on the financial
condition or results of operations of the Company.
Several underground fuel storage tanks used by the Company may be found to
be in noncompliance with applicable federal and state requirements for the
continued maintenance and use of such tanks. The Company has adopted a plan
for the testing, removal, replacement, and repair, if necessary, of
underground fuel storage tanks at Company bottlers in North America and
remediation of their sites, if necessary and, to a lesser extent, the
abatement of the discharge of pollutants, upgrading water treatment
facilities, and remediating friable asbestos, at various Company facilities.
The Company spent approximately $8 million in 1997 pursuant to this plan, and
the Company estimates it will spend approximately $14 million in 1998 and $13
million in 1999 pursuant to this plan. In the opinion of management of the
Company, any liabilities associated with the items covered by such plan will
not have a materially adverse effect on the financial condition or results of
operations of the Company.
Trade Regulation
The business of the Company, as the exclusive manufacturer and distributor
of bottled and canned beverage products of The Coca-Cola Company and other
manufacturers within specified geographic territories, is subject to antitrust
laws of general applicability. Under the United States' Soft Drink Interbrand
Competition Act, the exercise and enforcement of an exclusive contractual
right to manufacture, distribute, and sell a soft drink product in a
geographic territory is presumptively lawful if the soft drink product is in
substantial and effective interbrand competition with other products of the
same class in the market. Management of the Company believes that there is
such substantial and effective competition in each of the exclusive geographic
territories in the United States in which the Company operates.
The Treaty of Rome, which established the European Community, precludes
restrictions of the free movement of goods within the Member States. As a
result, unlike the Company's Domestic Carbonated Beverage Agreements, the
European Beverage Agreements do not grant the Company exclusive bottling
territories. Therefore, other European Union and/or European Economic Area
suppliers of the beverages produced by the Company can, in response to
unsolicited orders, sell such products in the Company's European Community
territories. See "European Beverage Agreements."
14
<PAGE>
Miscellaneous Regulations
The production, distribution, and sale of many of the Company's products are
subject to the Federal Food, Drug, and Cosmetic Act; the Occupational Safety
and Health Act; the Lanham Act; various federal, state, provincial and local
environmental statutes and regulations; and various other federal, state,
provincial and local statutes in the United States, Canada and Europe
regulating the production, packaging, sale, safety, advertising, labeling, and
ingredients of such products.
FINANCIAL INFORMATION ON INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS
For financial information on industry segments and operations in geographic
areas, see Note 16 to the Company's Consolidated Financial Statements, found
on page 42 of the Annual Report to Share Owners for the year ended December
31, 1997, which is incorporated into this report by reference.
ITEM 2. PROPERTIES
The principal properties of the Company include the executive offices,
production facilities, distribution facilities, administrative offices, and
service centers. At February 28, 1998, the Company operated 72 beverage
production facilities, 34 of which are solely production facilities and 38 of
which are combination production/distribution facilities, and also operated
323 principal distribution facilities. The Company owns 67 of its production
facilities and 238 of its principal distribution facilities, and leases the
others. In the aggregate, the Company's owned and leased facilities cover
approximately 34.6 million square feet. Management of the Company believes
that its production and distribution facilities are generally sufficient to
meet present operating needs.
One of the facilities owned by the Company is subject to a lien to secure
indebtedness in an aggregate principal amount of approximately $2 million at
December 31, 1997. Excluding expenditures for bottler acquisitions, the
Company's capital expenditures in 1997 were approximately $967 million.
At February 9, 1998, the Company owned and operated approximately 41,680
vehicles of all types used in the sale, production and distribution of its
products and over 1.6 million coolers, beverage dispensers and vending
machines.
ITEM 3. LEGAL PROCEEDINGS
The Company and several of its bottling subsidiaries or divisions in the
United States have been named as potentially responsible parties ("PRPs") at
several federal and state "Superfund" sites. In 1987, BCI Coca-Cola Bottling
Company of Los Angeles ("CCBCLA") was named by the Environmental Protection
Agency ("EPA") as a PRP at the Operating Industries, Inc. ("OII") site at
Monterey Park, California. As of 1991, CCBCLA had contributed approximately
$300,000 toward the remediation efforts. After 1991, CCBCLA had no further
communications from the EPA until October 1997 when CCBCLA received notice
from the EPA that a "Final Remedy" for the site had been chosen with an
estimated cost (in addition to what had already been spent) of approximately
$217 million (including an estimated $52 million for EPA's past and future
oversight costs), and which is expected to take 30 years to complete. There
are approximately 280 PRPs at this site. CCBCLA's monetary participation in
prior remediation activities at the OII site was based upon its allocated
percentage of volume of waste contributed to the site, which was 0.075%. Based
upon this percentage and the estimated costs, CCBCLA's share of the Final
Remedy should be about $162,750. In 1992, Florida Coca-Cola Bottling Company
("Florida CCBC") was named as a PRP at the Peak Oil site in Tampa, Florida,
formerly the location of a refiner of used motor oil. Following an internal
investigation and lengthy negotiations with the PRP Group, Florida CCBC agreed
to accept liability for approximately 32,000 gallons of used oil, representing
approximately 1.6% of the total amount. With total remediation costs estimated
at up to $18 million, Florida CCBC's ultimate liability could reach $300,000.
In 1992, The Coca-Cola Bottling Company of Memphis, Tenn. ("CCBC Memphis") was
named as a PRP with respect to the South 8th Street landfill site (a/k/a West
Memphis landfill) in West Memphis,
15
<PAGE>
Arkansas, which is alleged to have been used in the 1950s and 1960s as a dump
site for the by-products from the reprocessing of used motor oil. Total
cleanup for the site has been estimated at up to $45 million. CCBC Memphis
conducted an internal investigation of this matter and determined that some of
its waste oil may have been taken to the South 8th Street landfill. However,
neither the specific volume of waste oil that may have been generated by CCBC
Memphis, nor its percentage of the whole relative to other PRPs has yet been
determined. Accordingly, CCBC Memphis cannot yet estimate the amount of its
ultimate liability. In 1994, the Company was named as a PRP at the Waste
Disposal Engineering site in Andover, Minnesota, a former landfill. The claim
against the Company is approximately $110,000; however, if this site is a
"qualified landfill" under Minnesota law, the entire cost of remediation may
be paid by the state without contribution from any PRP. In 1994, Florida CCBC
was named as a PRP at the Petroleum Products Corporation site in Pembroke
Park, Florida, the former location of a used oil recycling facility. Total
cleanup for the site has been estimated at up to $100 million. Florida CCBC
conducted an internal investigation of this matter and determined that some of
its waste oil may have been taken to the site. However, neither the specific
volume of waste oil that may have been generated by Florida CCBC, nor its
percentage of the whole relative to other PRPs, has yet been determined.
Accordingly, Florida CCBC cannot yet estimate the amount of its ultimate
liability. In September 1996, the Cincinnati, Ohio facility of Johnston Coca-
Cola Bottling Group, Inc. ("Johnston CCBG") received a notice stating that 113
violations of the pH limits of the facility's wastewater discharge had been
detected between November 1994 and April 1996, and that the unpermitted
discharges had caused structural damage to the municipal wastewater collection
system. Accordingly, it is proposed that Johnston CCBG pay a permit violation
penalty in the amount of $16,900, reimburse certain investigative costs of
$19,370, and pay the estimated sewer replacement cost of $369,000. Johnston
CCBG is currently negotiating for a reduction in these costs. In September
1997, CCBLA's Tempe, Arizona facility received two administrative orders from
the City of Tempe totaling $154,357 for failure to meet a compliance deadline
for completion of the installation of a pH effluent pretreatment system and
for pH violations of the facility's wastewater permit limitations that
occurred during the period January-April 1997. CCBCLA has begun informal
settlement negotiations with the City of Tempe. If the matter is not resolved
informally, CCBCLA may seek administrative and/or judicial review to contest
the severity of these penalties. The Company or its bottling subsidiaries have
been named as PRPs at seventeen other federal and seven other state
"Superfund" sites where management of the Company has concluded either
(i) that the Company will have no further liability because there was no
responsibility for having deposited hazardous waste; (ii) that payments made
to date would be sufficient to satisfy all liability; or (iii) that the
Company's ultimate liability, if any, for such site would be less than
$100,000.
In an action commenced in December 1996, the Quebec Recycling Authority
alleged that the Company's bottler in Canada, CCB, is in violation of a 1992
industry agreement relating to the remittance of deposits on soft drink
containers. The amount claimed is approximately CDN $650,000, plus interest,
and is based on a claim for deposits on certain containers of soft drink
beverages produced by CCB in the Province of Quebec during the calendar years
1993 and 1994, regardless of where such containers were actually distributed
and sold by CCB. CCB did not remit any deposit amount for cans of soft drink
beverage which were produced by CCB in the Province of Quebec but distributed
and sold by CCB outside the Province during those years. CCB has denied any
liability in this matter and the claim is being vigorously defended.
The Ontario Environmental Protection Act and Regulations provide that sales
by a bottler of soft drink beverages in refillable containers must meet a
minimum percentage of total sales of soft drink beverages by such bottler in
refillable and nonrefillable containers within that bottler's sales areas. In
September 1996, CCB was charged in a private prosecution for failing to meet
these requirements. In December 1996, the Attorney General for Ontario
intervened in this matter and withdrew the charge. An application for judicial
review of the withdrawal and of the decision of the presiding justice of the
peace has been dismissed; however, a notice of appeal has been filed.
In August 1995, the European Commission (the "Commission") charged that
certain marketing rebates associated with the fountain business of the
Company's French bottler, Coca-Cola Entreprise S.A. ("CCESA"), constituted an
abuse of a dominant position in a "cola market" in France in violation of
Article 86 of the Treaty of Rome. The case arose from an investigation
commenced in 1993 at the behest of a competitor of CCESA. In
16
<PAGE>
July 1996, CCESA responded, denying that there was a "cola market" or that it
was dominant or that the practices complained of were abusive. If the
Commission maintains its initial conclusions, certain marketing practices may
have to be amended, and there is the possibility that penalties could be
imposed. The proceedings are being defended by The Coca-Cola Company, which is
obligated to indemnify CCESA and the Company for defense costs, fines and
penalties.
In November 1996, a complaint was filed with the Commission against the
Company's bottler in Great Britain, Coca-Cola & Schweppes Beverages Limited
("CCSB"), alleging that certain practices of CCSB constituted an abuse of an
alleged dominant position in a "carbonated soft drink market" in Great
Britain, in violation of Article 86 of the Treaty of Rome. The complaint,
which was filed by a competitor, complained specifically of CCSB's program of
annual rebates based on increased sales, alleged exclusive arrangements for
vending and dispensing equipment, and pricing policies. As part of obtaining
approval of its acquisition of Amalgamated Beverages Great Britain Limited
("ABGB") (see next paragraph), the parent of CCSB, the Company agreed in
February 1997 to undertakings with the Commission which modified certain of
CCSB's commercial practices, including the annual rebates criticized by the
complainant. Moreover, in March 1997, the Company responded to the complaint
and continues to cooperate with the Commission in its investigation, which
remains active. The Company believes the complaint is without merit.
On January 22, 1997, the Commission cleared the Company's acquisition of
ABGB, which was a joint venture owned 51% by Cadbury Schweppes plc and 49% by
The Coca-Cola Company. The Commission concluded that although The Coca-Cola
Company could exercise decisive influence over the Company and that ABGB was
dominant in a "cola market" in Great Britain, under the Merger Regulation the
acquisition had to be cleared because it would not strengthen that dominant
position. As a consequence of the decision certain commercial practices are
likely to be affected by restrictions generally imposed on companies found to
be in a dominant market position. In addition, the Company agreed to an
undertaking that restricts specific commercial practices with certain of
CCSB's customers in Great Britain. In April 1997, the Company filed an
application seeking the annulment of the Commission's conclusions regarding
control, the existence of a "cola market" and that CCSB is dominant, all of
which the Company believes are not supported by the facts or the law. The
Coca-Cola Company filed a similar application at the same time.
On January 27, 1997, the French Competition Council (the "Council")
concluded its investigation of CCESA by finding that certain practices of
CCESA constituted an abuse of a dominant position in what is defined as the
French cola market. CCESA was fined 10 million French francs. On February 27,
1997, CCESA filed an appeal of the Council's findings, which CCESA feels are
not supported by the facts or the law. In addition to the fine, CCESA may have
to modify certain of its practices regarding the provision of post-mix
machines to certain customers, and other commercial practices are likely to be
affected by restrictions generally imposed upon companies found to be in a
dominant market position. The proceedings are being defended by The Coca-Cola
Company, which is obligated to indemnify CCESA and the Company for defense
costs, fines and penalties.
There are various other lawsuits and claims pending against the Company.
Included among such litigation are claims for injury to persons or property.
Management of the Company believes that such claims are covered by insurance
with financially responsible carriers or adequate provisions for losses have
been recognized by the Company in its consolidated financial statements. In
the opinion of management of the Company, the losses that might result from
such litigation will not have a materially adverse effect on the financial
condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
17
<PAGE>
ITEM 4(A). EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information as of March 1, 1998 regarding the executive
officers of the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING THE PAST
NAME AGE FIVE YEARS
--------------------------------- --- ---------------------------------------
<C> <C> <S>
Summerfield K. Johnston, Jr. .... 65 Mr. Johnston has been Chairman of the
Board of Directors and Chief Executive
Officer since October 1997. He was Vice
Chairman of the Board and Chief
Executive Officer of the Company from
December 1991 to October 1997.
Henry A. Schimberg............... 64 Mr. Schimberg has been President, Chief
Operating Officer, and a director of
the Company since December 1991.
John R. Alm...................... 52 Mr. Alm has been Executive Vice
President and Chief Financial Officer
since October 1997. He was Senior
Vice President and Chief Financial
Officer of the Company from December
1991 to October 1997.
Margaret F. Carton............... 40 Ms. Carton has been Vice President,
Investor Relations and Planning since
October 1996. She served as Director,
Investor Relations from 1990 to October
1996.
John H. Downs, Jr. .............. 41 Mr. Downs has been Vice President,
Public Affairs of the Company since
1989.
Norman P. Findley III............ 53 Mr. Findley has been Senior Vice
President of the Company since December
1995 and European Group President since
July 1996. He was Vice President,
Domestic and International Marketing
from July 1993 to December 1995. From
1989 to July 1993 he served as Vice
President, Marketing of the Company.
Summerfield K. Johnston III...... 44 Mr. Johnston has been Senior Vice
President of the Company since December
1995 and Eastern North America Group
President since July 1996. He was Vice
President, Regional Operations from
July 1993 to December 1995. He was
Vice President and General Manager,
West Central Region from December 1992
to July 1993. He served as Vice
President, Human Resources of the
Company from February 1992 to December
1992.
Lowry F. Kline................... 57 Mr. Kline has been Executive Vice
President and General Counsel since
October 1997. He was Senior Vice
President from February 1996 to October
1997, and General Counsel of the
Company since December 1991. He was a
partner in the law firm of Miller &
Martin, Chattanooga, Tennessee, from
1970 until 1996.
Vicki R. Palmer.................. 44 Ms. Palmer has been Vice President and
Treasurer of the Company since December
1993. She was Treasurer of the Company
from February 1992 to December 1993.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING THE PAST
NAME AGE FIVE YEARS
--------------------------------- --- ---------------------------------------
<C> <C> <S>
Gary P. Schroeder................ 52 Mr. Schroeder has been Senior Vice
President of the Company and Western
North America Group President since
July 1996. He was Vice President,
Regional Operations of the Company from
December 1994 to July 1996. He was
Regional Vice President, General
Manager of the Southwest Region from
January 1992 to December 1994.
G. David Van Houten, Jr.......... 48 Mr. Van Houten has been Senior Vice
President of the Company since December
1995 and Central North America Group
President since July 1996. He was Vice
President, Regional Operations of the
Company from July 1993 to December 1995
and he was Regional Vice President and
General Manager, Texas Region from 1992
to 1993.
O. Michael Whigham............... 47 Mr. Whigham has been Vice President,
Controller and Principal Accounting
Officer of the Company since October
1996. He was Region Vice President of
Finance for the Atlanta Region of the
Company from 1992 to 1996 and served as
Director of Internal Audit from 1987 to
1992.
</TABLE>
Summerfield K. Johnston, Jr. is the father of Summerfield K. Johnston III.
The officers of the Company are elected annually by the Board of Directors
for terms of one year or until their successors are elected and qualified,
subject to removal by the Board of Directors at any time.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
LISTED AND TRADED: New York Stock Exchange
TRADED: Boston, Chicago, Cincinnati,
Pacific, and Philadelphia Exchanges
Common stock owners of record as of February 20, 1998: 15,268
STOCK PRICES*
<TABLE>
<CAPTION>
1997 HIGH LOW
---- -------- --------
<S> <C> <C>
Fourth Quarter........................................... 36 25 1/2
Third Quarter............................................ 31 5/8 22 1/4
Second Quarter........................................... 23 5/8 18 1/32
First Quarter............................................ 22 15 23/32
<CAPTION>
1996 HIGH LOW
---- -------- --------
<S> <C> <C>
Fourth Quarter........................................... 16 3/8 14 1/32
Third Quarter............................................ 15 13/32 11 11/32
Second Quarter........................................... 11 7/8 9 7/32
First Quarter............................................ 10 17/32 8
</TABLE>
- --------
* During the second quarter of 1997, the Company's common stock split 3-for-
1. All stock prices prior to second quarter 1997 are split-adjusted.
19
<PAGE>
DIVIDENDS
Quarterly dividends in the amount of $0.025 per share were paid during
fiscal year 1997. The dividend rate per share remained constant after the
stock split.
ITEM 6.SELECTED FINANCIAL DATA
"Selected Financial Data" for the years 1988 through 1997, on pages 46 and
47 of the Company's Annual Report to Share Owners for the year ended December
31, 1997 is incorporated into this report by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Financial Review" on pages 18 through 29 of the Company's
Annual Report to Share Owners for the year ended December 31, 1997 is
incorporated into this report by reference.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
"Management's Financial Review--Interest Rate and Currency Risk Management"
on pages 24 and 27 of the Company's Annual Report to Share Owners for the year
ended December 31, 1997 is incorporated into this report by reference.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries are incorporated into this report by reference to the Company's
Annual Report to Share Owners for the year ended December 31, 1997, at the
pages indicated:
Consolidated Statements of Income-Years ended December 31, 1997, 1996 and
1995 (page 21)
Consolidated Statements of Cash Flows-Years ended December 31, 1997, 1996
and 1995 (page 23)
Consolidated Balance Sheets-December 31, 1997 and 1996 (page 25)
Consolidated Statements of Share-Owners' Equity-Years ended December 31,
1997, 1996 and 1995 (page 26)
Notes to Consolidated Financial Statements (pages 30-44)
"Quarterly Financial Information," on page 44 of the Company's Annual
Report to Share Owners is incorporated into this report by reference.
Report of Independent Auditors (page 45)
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth under the
caption "Election of Directors--Information Concerning Directors" on pages 4
through 6 of the Company's 1998 Proxy Statement. Such information is
incorporated into this report by reference. Information relating to the
executive officers of the Company is set forth at Item 4(A) of this report
under the caption "Executive Officers of the Company." Information relating to
compliance with the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended, by the Company's executive officers and
directors, persons who own more than ten percent of the Company's common stock
and their affiliates who are required to comply with such reporting
requirements is set forth in "Election of Directors--Section 16(a) Beneficial
Ownership Reporting Compliance" on pages 11 and 12 of the Company's 1998 Proxy
Statement. Such information is incorporated into this report by reference.
20
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Information relating to Director compensation is set forth under the caption
"Election of Directors--Compensation of Directors" on pages 8 and 9 of the
Company's 1998 Proxy Statement, and information relating to executive
compensation is set forth under the caption "Executive Compensation" on pages
12 through 21 of the Company's 1998 Proxy Statement. Such information is
incorporated into this report by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to ownership of the Company's common stock by certain
persons is set forth under the captions "Voting--Principal Share Owners" and
"Election of Directors--Security Ownership of Directors and Officers" on page
2 and pages 9 through 11, respectively, of the Company's 1998 Proxy Statement.
Such information is incorporated into this report by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain transactions between the Company, The
Coca-Cola Company and their affiliates and certain other persons is set forth
under the caption "Certain Relationships and Related Transactions" on pages 21
through 24 of the 1998 Proxy Statement. Such information is incorporated into
this report by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) (1) Financial Statements. The following consolidated financial
statements of the Company and subsidiaries, included in the Company's Annual
Report to Share Owners for the year ended December 31, 1997, are incorporated
by reference into Part II, Item 8 of this report:
Consolidated Statements of Income--Years ended December 31, 1997, 1996
and 1995.
Consolidated Statements of Cash Flows--Years ended December 31, 1997,
1996 and 1995.
Consolidated Balance Sheets--December 31, 1997 and 1996.
Consolidated Statements of Share-Owners' Equity--Years ended December 31,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
(2) Financial Statement Schedules. The following financial statement
schedule of the Company and its subsidiaries is included in this report on the
page indicated:
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Report of Independent Auditors........................................... F-2
Schedule II-- Valuation and Qualifying Accounts for the fiscal years
ended December 31, 1997, 1996 and 1995................... F-3
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted either
because they are not required under the related instructions or because they
are inapplicable.
21
<PAGE>
(3) Exhibits.
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR
FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY,
AND ANNUAL REPORTS ARE
FILED WITH THE SECURITIES AND
EXHIBIT EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
--------- --------------------------------- --------------------------------
<C> <C> <S>
2.1-- Stock Purchase Agreement by and Exhibit 2 to the Company's
among The Coca-Cola Export Current Report on Form 8-K
Corporation and Varoise de (Date of Report: July 26, 1996).
Concentres, S.A., Barlan Inc.,
Beverage Products Limited,
Bottling Holdings (International)
Inc., The Coca-Cola Company, and
Coca-Cola Enterprises, dated as
of July 26, 1996.
2.2-- Agreement between Cadbury Exhibit 2.1, 2.2, 2.3 and 2.4 to
Schweppes Public Limited Company, the Company's Current
Coca-Cola Holdings (United Report on Form 8-K (Date of
Kingdom) Limited, The Coca-Cola Report: February 10, 1997).
Company, Bottling Holdings (Great
Britain) Limited, and Coca-Cola
Enterprises, dated August 9,
1996, as amended by amendments
dated November 29, 1996, December
16, 1996 and January 29, 1997.
2.3-- Stock Purchase Agreement among Exhibit 2.1 to the Company's
The Coca-Cola Bottling Company of Current Report on
the Northeast, Bottling Form 8-K (Date of Report: August
Investment Holdings, Inc., 7, 1997).
Coca-Cola Enterprises and The
Coca-Cola Company, dated as of
August 7, 1997.
2.4-- Stock Purchase Agreement among Exhibit 2.2 to the Company's
Enterprises KOC Acquisition Current Report on
Company Ltd, Coca-Cola Ltd., Form 8-K (Date of Report: August
Coca-Cola Enterprises and The 7, 1997).
Coca-Cola Company, dated as of
August 7, 1997.
2.5-- Stock Purchase Memorandum between Exhibit 2.3 to the Company's
George D. Overend and The Current Report on
Coca-Cola Bottling Company of the Form 8-K (Date of Report: August
Northeast, dated as of August 7, 7, 1997).
1997.
2.6-- Stock Purchase Agreement dated as Exhibit 2.1 to the Company's
of December 19, 1997 between The Current Report on
Prudential Insurance Company of Form 8-K (Date of Report:
America and The Coca-Cola January 5, 1998).
Bottling Company of the
Northeast.
2.7-- Stock Purchase Agreement dated as Exhibit 2.2 to the Company's
of December 19, 1997 between Current Report on
Aetna Life Insurance Company and Form 8-K (Date of Report:
The Coca-Cola Bottling Company of January 5, 1998).
the Northeast.
2.8-- Stock Purchase Agreement dated as Exhibit 2.3 to the Company's
of December 18, 1997 between The Current Report on
Northwestern Mutual Life Form 8-K (Date of Report:
Insurance Company and The January 5, 1998).
Coca-Cola Bottling Company of the
Northeast.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- ---------------------------------------------------------
<S> <C> <C>
2.9-- Stock Purchase Agreement Exhibit 2.4 to the Company's Current Report on
dated as of December 31, Form 8-K (Date of Report: January 5, 1998).
1997 between Smith Barney
Inc., IRA Rollover Custodian
for William H. Cosby, Jr.
and The Coca-Cola Bottling
Company of the Northeast.
3-- Restated Certificate of Exhibit 3 to the Company's Current Report on
Incorporation of Coca-Cola Form 8-K (Date of Report: July 22, 1997).
Enterprises (restated as of
April 15, 1992) as amended
by Certificate of Amendment
dated April 21, 1997.
3.2-- Bylaws of Coca-Cola Exhibit 3.2 to the Company's Annual Report on
Enterprises, as amended Form 10-K for the fiscal year ended December 31, 1995.
through February 20, 1996.
4.1-- Indenture dated as of July Exhibit 4.1 to the Company's Current Report on
30, 1991, together with the Form 8-K (Date of Report: July 30, 1991);
First Supplemental Indenture Exhibit 4.01 to the Company's Current Report on
thereto dated January 29, Form 8-K (Date of Report: January 29, 1992);
1992, between Coca-Cola Exhibit 4.02 to the Company's Current Report on
Enterprises and The Chase Form 8-K (Date of Report: January 29, 1992);
Manhattan Bank, formerly Exhibit 4.01 to the Company's Current Report on
known as Chemical Bank Form 8-K (Date of Report: September 8, 1992);
(successor by merger to Exhibits 4.01 and 4.02 to the Company's Current Report on
Manufacturers Hanover Trust Form 8-K (Date of Report: November 12, 1992);
Company), as Trustee, with Exhibit 4.01 to the Company's Current Report on
regard to certain unsecured Form 8-K (Date of Report: January 4, 1993);
and unfunded debt securities Exhibit 4.02 to the Company's Current Report on
of Coca-Cola Enterprises, Form 8-K (Date of Report: September 15, 1993), :
and forms of notes and Exhibit 4.01 to the Company's Current Report on
debentures issued Form 8-K (Date of Report: September 25, 1996):
thereunder. Exhibit 4.01 to the Company's Current Report on
Form 8-K (Date of Report: October 3, 1996):
Exhibit 4.01 to the Company's Current Report on
Form 8-K (Date of Report: November 19, 1996).
Exhibit 4.1 to the Company's Current Report on
Form 8-K (Date of Report: July 22, 1997);
Exhibit 4.2 to the Company's Current Report on
Form 8-K (Date of Report: July 22, 1997);
Exhibit 4.3 to the Company's Current Report on
Form 8-K (Date of Report: July 22, 1997);
Exhibit 4.4 to the Company's Current Report on
Form 8-K (Date of Report: July 22, 1997);
Exhibit 4.01 to the Company's Current Report on
Form 8-K (Date of Report: December 2, 1997);
Exhibit 4.01 to the Company's Current Report on
Form 8-K (Date of Report: January 6, 1998).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- ------------------------------------------------------
<S> <C> <C>
4.2-- Medium-Term Notes Issuing Exhibit 4.2 to the Company's Annual Report on
and Paying Agency Agreement Form 10-K for the fiscal year ended December 31, 1994.
dated as of October 24,
1994, between Coca-Cola
Enterprises and The Chase
Manhattan Bank formerly
known as Chemical Bank, as
issuing and paying agent,
including as Exhibit B
thereto the form of Medium-
Term Note issuable
thereunder.
4.3-- Indenture dated as of Exhibit 4.01 to the Company's Current Report on
November 15, 1989 between Form 8-K (Date of Report: December 12, 1989);
Coca-Cola Enterprises and Exhibit 4.4(a) to the Company's Annual Report on
Bankers Trust Company, as Form 10-K for the fiscal year ended December 29, 1989;
Trustee, with regard to Exhibit 4.4(b) to the Company's Annual Report on
certain unsecured and Form 10-K for the fiscal year ended December 29, 1989.
unsubordinated debt
securities of Coca-Cola
Enterprises, and forms of
Fixed Rate Medium Term Note
and Floating Rate Medium
Term Note, each issuable
commencing December 18, 1989
pursuant to the above-
referenced Indenture.
4.4-- Five Year Credit Agreement Exhibit 4.4 to the Company Annual Report on
dated as of November 4, 1996 Form 10-K for the fiscal year ended December 31, 1996.
(the "1996 Credit Agreement")
among Coca-Cola Enterprises;
Bottling Holdings (Great
Britain) Limited; Citibank
International PLC; Citibank,
N.A., ABN AMRO Bank N.V.,
Atlanta Agency; Bank of
America NT&SA; Bank Brussels
Lambert, New York Branch;
CIBC Inc.; Commerzbank AG;
The Dai-Ichi Kangyo Bank,
Ltd., Atlanta Agency;
Deutsche Bank A.G., New York
and/or Cayman Islands
Branches; The First National
Bank of Chicago; Kredietbank
N.V., Grand Cayman Branch;
Midland Bank PLC;
Nationsbank, N.A.; The
Northern Trust Company;
Societe Generale; SunTrust
Bank, Atlanta; Swiss Bank
Corporation, New York
Branch; Texas Commerce Bank,
National Association; Union
Bank of Switzerland, New
York Branch; Wachovia Bank
of Georgia, N.A.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- -------------------------------------------------------
<S> <C> <C>
4.5-- Amendment No. 1 to the 1996 Filed herewith.
Credit Agreement, dated as
of September 9, 1997.
4.6-- Programme Agreement dated Filed herewith.
25th September 1997 in
respect of a U.S.
$ 2,500,000,000 Euro Medium
Term Note Programme, between
and among Coca-Cola
Enterprises, as issuer and
guarantor, Coca-Cola
Enterprises Great Britain
plc, as issuer, and ABN AMRO
Bank N.V., Banque Lehman
Brothers, Banque Nationale
de Paris, Citibank
International plc, Credit
Suisse First Boston (Europe)
Limited, Deutsche Bank AG
London, Lehman Brothers
International (Europe),
Midland Bank plc, Morgan
Stanley & Co. International
Limited, Salomon Brothers
International Limited,
Societe General and UBS
Limited, as Dealers.
Certain instruments which define the rights of holders of long-term
debt of the Company and its subsidiaries are not being filed
because the total amount of securities authorized under each such
instrument does not exceed 10% of the total consolidated assets of
the Company and its subsidiaries. The Company and its subsidiaries
hereby agree to furnish a copy of each such instrument to the
Commission upon request.
10.1-- 1986 Stock Option Plan of Exhibit 10.1 to the Company's Annual Report on
Coca-Cola Enterprises, as Form 10-K for the fiscal year ended December 31, 1991.
amended through February 12,
1991.*
10.2-- Form of Stock Option Exhibit 10.5 to the Company's Registration Statement on
Agreement between Coca-Cola Form S-1, No. 33-9447.
Enterprises and certain of
its officers.*
10.3-- Coca-Cola Enterprises 1991 Exhibit 10.11 to the Company's Annual Report on
Stock Option Plan, as Form 10-K for the fiscal year ended December 31, 1992.
amended and restated through
February 18, 1992.*
10.4-- Coca-Cola Enterprises 1994 Exhibit 4.3 to the Company's Registration Statement on
Stock Option Plan.* Form S-8, No. 33-53221.
10.5-- Coca-Cola Enterprises 1995 Exhibit 4.3 to the Company's Registration Statement on
Stock Option Plan.* Form S-8, No. 33-58699.
10.6-- Coca-Cola Enterprises 1992 Exhibit 4.3 to the Company's Registration Statement on
Restricted Stock Award Plan Form S-8, No. 33-53219.
(as amended and restated
effective February 7, 1994).*
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- ------------------------------------------------------
<S> <C> <C>
10.7-- Coca-Cola Enterprises Exhibit 10.8 to the Company's Annual Report on
Restricted Stock Award Tax Form 10-K for the fiscal year ended December 31, 1995.
Withholding Agreement.*
10.8-- 1995 Phantom Stock Award Exhibit 10.9 to the Company's Annual Report on
Plan.* Form 10-K for the fiscal year ended December 31, 1995.
10.9-- Coca-Cola Enterprises 1995 Exhibit 10.10 to the Company's Annual Report on
Restricted Stock Award Plan Form 10-K for the fiscal year ended December 31, 1996.
(As Amended and Restated
effective January 2, 1996).*
10.10-- Coca-Cola Enterprises 1995 Exhibit 10.11 to the Company's Annual Report on
Stock Option Plan (As Form 10-K for the fiscal year ended December 31, 1996.
Amended and Restated
effective January 2, 1996).*
10.11-- Coca-Cola Enterprises 1997 Filed herewith.
Stock Option Plan.*
10.12-- Long-Term Incentive Plan (As Exhibit 10.12 to the Company's Annual Report on
Amended and Restated Form 10-K for the fiscal year ended December 31, 1996.
Effective January 1, 1996).*
10.13-- Coca-Cola Enterprises 1994- Exhibit 10.7 to the Company's Annual Report on
1996 Long-Term Incentive Form 10-K for the fiscal year ended December 31, 1994.
Plan.*
10.14-- Coca-Cola Enterprises Inc. Exhibit 10.12 to the Company's Annual Report on
Long-Term Incentive Plan Form 10-K for the fiscal year ended December 31, 1995.
(Effective January 1, 1995).*
10.15-- Coca-Cola Enterprises Inc. Filed herewith.
Long-Term Incentive Plan (As
Amended and Restated
Effective January 1, 1997).*
10.16-- Coca-Cola Enterprises Filed herewith.
Executive Management
Incentive Plan (Effective
January 1, 1997).*
10.17-- Coca-Cola Enterprises Exhibit 10.16 to the Company Annual Report on
Executive Pension Plan, Form 10-K for the fiscal year ended December 31, 1996.
Effective January 1, 1996.*
10.18-- Coca-Cola Enterprises Filed herewith.
Supplemental Pension Plan
(As Amended and Restated
Effective July 1, 1993).*
10.19-- 1991 Amendment and Exhibit 10.9 to the Company's Annual Report on
Restatement of the Coca-Cola Form 10-K for the fiscal year ended December 31, 1994.
Enterprises Supplemental
Retirement Plan (As Amended
Effective July 1, 1993).*
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- --------------------------------------------------------
<S> <C> <C>
10.20-- Form of Stock Option Exhibit 10.36 to the Company's Registration Statement on
Agreements between Coca-Cola Form S-1, No. 33-9447.
Enterprises and certain of
its directors.*
10.21-- Coca-Cola Enterprises 1988 Exhibit 10.10 to the Company's Annual Report on
Stock Appreciation Rights Form 10-K for the fiscal year ended December 31, 1991.
Plan, as amended through
February 12, 1991.*
10.22-- Amended and Restated Exhibit 10.16 to the Company's Annual Report on
Deferred Compensation Form 10-K for the fiscal year ended December 31, 1993.
Agreement between Johnston
Coca-Cola Bottling Group and
Henry A. Schimberg dated
December 16, 1991, as
amended.*
10.23-- 1993 Amendment and Exhibit 10.17 to the Company's Annual Report on
Restatement of Deferred Form 10-K for the fiscal year ended December 31, 1993.
Compensation Agreement
between Johnston Coca-Cola
Bottling Group and John R.
Alm as of April 30, 1993.*
10.24-- Retirement Plan for the Exhibit 10.33 to the Company's Annual Report on
Board of Directors of Form 10-K for the fiscal year ended December 31, 1991.
Coca-Cola Enterprises,
effective April 11, 1991.*
10.25-- Deferred Compensation Plan Exhibit 4.3 to the Company's Registration Statement
for Non-Employee Director on Form S-8, No. 333-47353.
Compensation, as amended and
restated effective January
1, 1998.*
10.26-- 1997 Director Stock Option Filed herewith.
Plan.*
10.27-- 1998 Director Stock Option Filed herewith.
Plan.*
10.28-- Tax Sharing Agreement dated Exhibit 10.1 to the Company's Registration Statement on
November 12, 1986 between Form S-1, No. 33-9447.
Coca-Cola Enterprises and
The Coca-Cola Company.
10.29-- Registration Rights Exhibit 10.3 to the Company's Registration Statement on
Agreement dated November 12, Form S-1, No. 33-9447.
1986 between Coca-Cola
Enterprises and The
Coca-Cola Company.
10.30-- Registration Rights Exhibit 10 to the Company's Current Report on
Agreement dated as of Form 8-K (Date of Report: December 18, 1991).
December 17, 1991 among
Coca-Cola Enterprises, The
Coca-Cola Company and the
share owners of Johnston
Coca-Cola Bottling Group
named therein.
10.31-- Form of Bottle Contract, as Exhibit 10.24 to the Company's Annual Report on
amended. Form 10-K for the fiscal year ended December 30, 1988.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE OR FILED HEREWITH (THE
COMPANY'S CURRENT, QUARTERLY, AND ANNUAL REPORTS ARE
EXHIBIT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------- ---------------------------- ------------------------------------------------------
<S> <C> <C>
10.32-- Letter Agreement dated March Exhibit 10.23 to the Company's Annual Report on
15, 1989 between Coca-Cola Form 10-K for the fiscal year ended December 31, 1991.
Enterprises and The
Coca-Cola Company with
respect to the Bottle
Contracts, as amended by
letter agreement dated
December 18, 1991.
10.33-- Form of Tolling Agreement Exhibit 10.41 to the Company's Annual Report on
between The Coca-Cola Form 10-K for the fiscal year ended January 2, 1987.
Company and various Company
bottlers.
10.34-- Sweetener Sales Agreement-- Filed herewith.
Bottler between The
Coca-Cola Company and
various Company bottlers,
dated July 10, 1997.
10.35-- Can Supply Agreement, dated Exhibit 10.30 to the Company's Annual Report on
November 30, 1995, between Form 10-K for the fiscal year ended December 31, 1995.
American National Can
Company and Coca-Cola
Enterprises.**
10.36-- Share Repurchase Agreement Exhibit 10.44 to the Company's Annual Report on
dated January 1, 1991 Form 10-K for the fiscal year ended December 28, 1990.
between The Coca-Cola
Company and Coca-Cola
Enterprises.
10.37-- Form of International Exhibit 10.33 to the Company's Annual Report on
Bottlers Agreement. Form 10-K for the fiscal year ended December 31, 1996.
10.38-- Supplementary Agreement Exhibit 10.34 to the Company's Annual Report on
between Coca-Cola Form 10-K for the fiscal year ended December 31, 1996.
Enterprises, certain of its
international bottlers and
The Coca-Cola Company and
The Coca-Cola Export
Corporation.
12-- Statement re computation of Filed herewith.
ratios.
13-- 1997 Annual Report to Share Filed herewith.
Owners (Pages 18 to 47).
21-- Subsidiaries of the Filed herewith.
Registrant.
23-- Consent of Independent Filed herewith.
Auditors.
24-- Powers of Attorney. Filed herewith.
27-- Financial Data Schedule. Filed herewith.
</TABLE>
- --------
* Management contracts and compensatory plans or arrangements required to be
filed as exhibits to this form pursuant to Item 14(c).
** The Company has requested confidential treatment with respect to portions
of this document.
28
<PAGE>
(B) REPORTS ON FORM 8-K
During the fourth quarter of 1997, the Company filed the following current
reports on Form 8-K:
<TABLE>
<CAPTION>
DATE OF REPORT DESCRIPTION
-------------- -----------
<C> <S>
August 7, 1997 Acquisition of The Coca-Cola Company's interests in The
Coca-Cola Bottling Company of New York, Inc. and Coca-Cola
Beverages Ltd.; the anticipated benefit from a tax decrease
in Great Britain; increased non-cash expenses related to
certain performance-based stock option plans.
August 7, 1997 Election of officers; acquisition of additional interest in
The Coca-Cola Bottling Company of New York, Inc.;
acquisition of public shares of Coca-Cola Beverages Ltd.
September 26, 1997 Financial results for third quarter and first nine months
of 1997.
December 2, 1997 Terms Agreement dated as of December 2, 1997 relating to
the offer and sale of the 6.95% Debentures Due 2026 and the
Form of the Debenture.
</TABLE>
(C) EXHIBITS
See Item 14(a)(3) above.
(D) FINANCIAL STATEMENT SCHEDULES
See Item 14(a)(2) above.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
COCA-COLA ENTERPRISES INC.
(Registrant)
/s/ Summerfield K. Johnston,
Jr.
By: _________________________________
Summerfield K. Johnston, Jr.
Chairman and Chief Executive
Officer
Date: March 13, 1998
Pursuant to requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Summerfield K. Johnston, Jr. Chairman of the Board of March 13, 1998
____________________________________ Directors and Chief
(Summerfield K. Johnston, Jr.) Executive Officer
(principal executive
officer)
/s/ John R. Alm Executive Vice President and March 13, 1998
____________________________________ Chief Financial Officer
(John R. Alm) (principal financial
officer)
/s/ O. Michael Whigham Vice President and March 13, 1998
____________________________________ Controller (principal
(O. Michael Whigham) accounting officer)
* President, Chief Operating March 13, 1998
____________________________________ Officer and a Director
(Henry A. Schimberg)
* Director March 13, 1998
____________________________________
(Howard G. Buffett)
* Director March 13, 1998
____________________________________
(John L. Clendenin)
* Director March 13, 1998
____________________________________
(Johnnetta B. Cole)
* Director March 13, 1998
____________________________________
(Joseph R. Gladden, Jr.)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director March 13, 1998
____________________________________
(Claus M. Halle)
* Director March 13, 1998
____________________________________
(L. Phillip Humann)
* Director March 13, 1998
____________________________________
(John E. Jacob)
* Director March 13, 1998
____________________________________
(Robert A. Keller)
* Director March 13, 1998
____________________________________
(Jean-Claude Killy)
* Director March 13, 1998
____________________________________
(Scott L. Probasco, Jr.)
* Director March 13, 1998
____________________________________
(Francis A. Tarkenton)
</TABLE>
/s/ Lowry F. Kline
*By: __________________________
Lowry F. Kline
Attorney-in-Fact
31
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ F-2
Schedule II--Valuation and Qualifying Accounts for the fiscal years ended
December 31, 1997, 1996 and 1995......................................... F-3
</TABLE>
F-1
<PAGE>
COCA-COLA ENTERPRISES INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Coca-Cola Enterprises Inc.
We have audited the consolidated financial statements of Coca-Cola
Enterprises Inc. listed in Part IV, Item 14(a)(1). Our audits also included
the financial statement schedule listed in Part IV, Item 14(a)(2). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Coca-Cola Enterprises Inc. at December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
January 19, 1998
F-2
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
COCA-COLA ENTERPRISES INC.
(IN MILLIONS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ----------------------- --------- ---------------------------- ------------- ---------
ADDITIONS
----------------------------
BALANCE
AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER ACCOUNTS -- DEDUCTIONS -- AT END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
----------- --------- ---------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED:
DECEMBER 31, 1997
Allowance for losses
on trade
accounts............ $ 45 $11 $ 14(a) $12(b) $ 58
Valuation allowance
for
deferred tax assets. 135 15 109(c) 13(d) 246
DECEMBER 31, 1996
Allowance for losses
on trade
accounts............ $ 33 $14 $ 6(a) $ 8(b) $ 45
Valuation allowance
for
deferred tax assets. 120 9 34(c) 28(d) 135
DECEMBER 31, 1995
Allowance for losses
on trade
accounts............ $ 34 $ 5 $ 3(a) $ 9(b) $ 33
Valuation allowance
for
deferred tax assets. 112 8 -- -- 120
</TABLE>
- --------
(a) Principally represents recoveries of amounts previously charged off and, at
December 31, 1997 and 1996, allowances for losses on trade accounts of
acquired companies at date of acquisition.
(b) Charge off of uncollectible accounts.
(c) Valuation allowances for deferred tax assets of acquired companies at date
of acquisition.
(d) Write-off, reversal and expiration of certain components of the valuation
allowance for deferred tax assets.
F-3
<PAGE>
LOGO
<PAGE>
EXHIBIT 4.5
AMENDMENT NO. 1
Dated as of September 9, 1997
AMENDMENT NO. 1 among Coca-Cola Enterprises Inc., a Delaware
corporation (the "Company"), Coca-Cola Enterprises Great Britain plc (formerly
known as Bottling Holdings (Great Britain) Limited), a corporation organized
under the laws of England ("UK Holdings" and, together with the Company, the
"Borrowers"), the banks, financial institutions and other institutional lenders
parties to the Credit Agreement referred to below (collectively, the "Lenders")
and Citibank International plc, as agent (the "Agent") for the Lenders, and Bank
of America NT&SA, Deutsche Bank AG, New York Branch, NationsBank, N.A. and Union
Bank of Switzerland, as co-agents (the "Co-Agents") for the Lenders.
PRELIMINARY STATEMENTS:
(1) The Borrowers, the Lenders, the Agent and the Co-Agents have
entered into a Five Year Credit Agreement dated as of November 4, 1996 (the
"Credit Agreement"). Capitalized terms not otherwise defined in this Amendment
have the same meanings as specified in the Credit Agreement.
(2) The Borrowers and the Majority Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby amended as follows:
(a) The definition of "Interest Period" is amended by deleting the
phrase "and, if acceptable to all Lenders, nine or twelve months".
(b) Section 2.02(a) is amended (i) by deleting the word "and"
immediately preceding clause (iv), (ii) by deleting from clause (iv) the
phrase "initial Interest Period" and substituting therefor the phrase "the
Interest Period" and (iii) by adding immediately after such clause (iv) a
new clause (v) to read as follows:
, and (v) in the case of a Syndicated Borrowing consisting of
Base Rate Loans, a maturity date for repayment of each Base Rate
Loan which may not be later than the earlier of (I) 180 days
after the date of such Syndicate Borrowing and (II) the
Termination Date.
(c) Section 2.06 is amended in full to read as follows:
SECTION 2.06 Maturity of Loans. (a) Each Syndicated Loan
other than Base Rate Loans shall mature, and the principal amount
thereof shall be due and payable, on the last day of the Interest
Period applicable to such Loan.
(b) Each Base Rate Loan and Competitive Bid Loan shall
mature, and the principal amount thereof shall be
<PAGE>
due and payable, on the maturity date specified in the Notice of
Syndicated Borrowing or (as the case may be) the Notice of
Competitive Bid Borrowing applicable to such Loan.
(c) If not sooner paid, each Borrower shall repay to the
Agent for the ratable account of the Lenders on the Termination
Date the aggregate principal amount of the Loans then outstanding
in respect of such Borrower.
(d) Each Lender agrees to use its reasonable best efforts to
return to the Company the Syndicated Note corresponding to each
Syndicated Loan repaid within ten Business Days after such
repayment.
(d) Section 2.08(e)(ii)(B) is amended by inserting immediately after
the phrase "Converted into a Base Rate Loan" the phrase "with a maturity
date of the earlier of (I) 180 days after the date of such Conversion and
(II) the Termination Date".
(e) Section 3.03 is amended (i) by redesignating clause (b) as clause
(c) and (ii) by adding a new clause (b) to read as follows:
(b) on or before the date of such Syndicated Borrowing, but prior
to such Syndicated Borrowing, the Agent shall have received a
Syndicated Note payable to the order of each Lender, in a
principal amount equal to such Lender's portion of the Syndicated
Loan to be evidenced thereby;
(f) Exhibit A-1 is amended in full to read as set forth on
Exhibit A-1 to this Amendment.
(g) Exhibit B-1 is amended in full to read as set forth on Exhibit B-
1 to this Amendment.
SECTION 2. Conditions of Effectiveness. This Amendment shall become
effective as of the date first above written when, and only when the Agent shall
have received counterparts of this Amendment executed by the Borrower and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to the Agent
that such Lender has executed this Amendment. This Amendment is subject to the
provisions of Section 9.01 of the Credit Agreement.
SECTION 3. Representations and Warranties of the Borrowers. Each
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction indicated in the
recital of parties to this Amendment.
(b) The execution, delivery and performance by each Borrower of this
Amendment and the performance by each Borrower of each of the Credit
Agreement and the Notes, as amended hereby, to which it is a party are
within such Borrower's corporate powers, have been duly authorized by all
necessary corporate action and do not contravene (i) such Borrower's
charter or by-laws (or equivalent constitutive documents) or (ii) any law,
rule, regulation or contractual restriction in any material contract or, to
the knowledge of the Chief Financial Officer of the Company, any other
contract the breach of which would limit the ability of any Borrower to
perform its obligations under the Credit Agreement or the Notes, as amended
hereby, binding on or affecting such Borrower.
<PAGE>
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery or performance by such Borrower of this
Amendment or the performance by each Borrower of each of the Credit
Agreement or the Notes, as amended hereby, to which it is a party.
(d) This Amendment has been duly executed and delivered by such
Borrower. This Amendment and each of the Credit Agreement and the Notes, as
amended hereby, to which such Borrower is a party are legal, valid and
binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms.
(e) There is no pending or, to the best of each Borrower's knowledge,
threatened action or proceeding involving any Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator (i) which
is likely to materially adversely affect the financial condition or
operations of the Company and its Subsidiaries taken as a whole or (ii)
purports to affect the legality, validity or enforceability of this
Amendment or the Credit Agreement and the Notes, as amended hereby.
SECTION 4. Reference to and Effect on the Credit Agreement and the
Notes. (a) On and after the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the Notes to
"the Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement, as amended by this Amendment.
(b) The Credit Agreement and the Notes, as specifically amended by
this Amendment, are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under the Credit Agreement, nor
constitute a waiver of any provision of the Credit Agreement.
SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 9.04 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
<PAGE>
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
COCA-COLA ENTERPRISES INC.
By S/ VICKI R. PALMER
------------------------------------
Title: Vice President and Treasurer
COCA-COLA ENTERPRISES GREAT
BRITAIN PLC (formerly known as
Bottling Holdings (Great Britain)
Limited)
By S/ VICKI R. PALMER
-----------------------------------
Title: Vice President and Treasurer
CITIBANK N.A.
as Agent and as Lender
By S/ STEVEN R. VICTORIN
------------------------------------
Title: Attorney-in-Fact
CITIBANK INTERNATIONAL PLC.
as Agent and as Lender
By S/ DAVID F. BASSETT
------------------------------------
Title: Vice President
BANK OF AMERICA NT&SA,
as Co-Agent and as Lender
By S/ MICHELLE W. KACERGIS
-------------------------------------
Title: Managing Director
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISALNDS BRANCH
as Co-Agent and as Lender
By S/ STEPHAN A. WIEDEMANN
------------------------------------
Title: Director
By S/ THOMAS A. FOLEY
------------------------------------
Title: Vice President
<PAGE>
NATIONSBANK, N.A.,
as Co-Agent and as Lender
By S/ THOMAS F. O'NEILL
------------------------------------
Title: Senior Vice President
UNION BANK OF SWITZERLAND,
as Co-Agent and as Lender
By S/ MARY V. TURNBACK
------------------------------------
Title: Assistant Treasurer
By S/ C. C. Glockler
------------------------------------
Title: Director
ABN AMRO BANK N.V.
By S/ STEVEN J. HIPEMAS
------------------------------------
Title: Vice President
By S/ THOMAS S. THORNHILL
------------------------------------
Title: Group Vice President
BANK BRUSEELS LAMBERT,
NEW YORK BRANCH
By S/ JOHN KIPPAX
-----------------------------------
Title: Vice President and Manager
By S/ DOMINICK VAN GAEVER
-----------------------------------
Title: Senior Vice President
CIBC, INC.
By S/ ROGER COLDEN
-----------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp. AS AGENT
THE DAI-ICHI KANGYO BANK, LTD.
By S/ TATSUJI NOGUCHI
-----------------------------------
Title: Joint General Manager
THE FIRST NATIONAL BANK OF
CHICAGO
By S/ BRETT NEUBERT
-----------------------------------
Title: Authorized Agent
<PAGE>
THE NORTHERN TRUST COMPANY
By S/ JOHN J. CONWAY
-----------------------------------
Title: Vice President
SUNTRUST BANK, ATLANTA
By S/ KEVIN S. MACDONALD
------------------------------------
Title: Vice President
WACHOVIA BANK N.A.
By S/ BRADLEY S. MARCUS
------------------------------------
Title: Senior Vice President
By S/ KEVIN S. MACDONALD
------------------------------------
Title: Vice President
MIDLAND BANK PLC
By S/ PHILIP G. KEMP
------------------------------------
Title: Corporate Banking Manager
TEXAS COMMERCE BANK N.A.
By S/ BECKY B. RAWALT
-------------------------------------
Title: Vice President
SWISS BANK CORPORATION,
NEW YORK BRANCH
By S/ JAMES J. DIAZ
-----------------------------------------
Title: Director, Banking Finance Support
By S/ ERNST SCHIRMER
-----------------------------------------
Title: Director, Credit Risk Management
SOCIETE GENERALE
By S/ RALPH SAHEB
-----------------------------------
Title: Vice President and Manager
<PAGE>
KREDIETBANK N.V.
By S/ ROBERT SNAUFFER
-----------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
HOUSTON AGENCY
By S/ JOHN L. STACY
-----------------------------------
Title: Vice President
CRESTAR BANK
By S/ JULIAN N. HOLLAND, JR.
-----------------------------------
Title: Vice President
<PAGE>
EXHIBIT A-1 - FORM OF
SYNDICATED
PROMISSORY NOTE
U.S. $ __________
Dated: _______________, 199_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a __________
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of __________
(the "Lender") for the account of its Applicable Lending Office (as defined in
the Credit Agreement referred to below) on [maturity date] the aggregate
outstanding principal amount of the Syndicated Loan made on the date hereof by
the Lender to the Borrower pursuant to the Five Year Credit Agreement dated as
of November 4, 1996 among the Borrower and certain other borrowers parties
thereto, the Lender and certain other lenders parties thereto, Citibank
International plc, as Agent, for the Lender and such other lenders (as amended
or modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined).
The Borrower promises to pay interest on the unpaid principal amount
of the Syndicated Loan made on the date hereof from the date of such Syndicated
Loan until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Credit Agreement.
Both principal and interest in respect of each Syndicated Loan (i) in
Dollars are payable in lawful money of the United States of America to Citibank
International plc, as Agent, at its account maintained at Citibank, N.A., 399
Park Avenue, New York, New York, 10043, in same day funds and (ii) in any
Primary Currency are payable in such currency at the applicable Payment Office
in same day funds. The Syndicated Loan evidenced by this Promissory Note owing
to the Lender by the Borrower pursuant to the Credit Agreement, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto which is part of
this Promissory Note.
This Promissory Note is one of the Syndicated Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Syndicated Loans by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the Dollar amount first above mentioned or the Equivalent
thereof in one or more Primary Currencies, the indebtedness of the Borrower
resulting from each such Syndicated Loan being evidenced by this Promissory
Note, (ii) contains provisions for determining the Dollar Equivalent of
Syndicated Loans denominated in Primary Currencies and (iii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This promissory note shall be governed by, and construed in
<PAGE>
accordance with the laws of the State of New York.
[NAME OF BORROWER]
By________________________________
Name:
Title:
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
========================================================================================================
| | | | | Amount of | | |
| | | Amount of | | Principal | Unpaid | |
| | Type of | Loan in | Interest | Paid | Principal | Notation |
| Date | Loan | Relevant Currency | Rate | or Prepaid | Balance | Made By |
|-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
|------------------------------------------------------------------------------------------------------|
| | | | | | | |
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B-1 - FORM OF NOTICE OF
SYNDICATED BORROWING
Citibank International plc, as Agent
for the Lenders parties
to the Credit Agreement
referred to below
3rd Floor Riverdale House
68 Molesworth Street
Lewisham, England
SE13 7EU
Citibank, N.A., as US Sub-Agent
for said Lenders
One Court Square
7th Floor, Zone 1
Long Island City, New York 11120 [Date]
Attention:
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the Five Year Credit
Agreement, dated as of November 4, 1996 (as amended or modified from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain other Borrowers parties
thereto, certain Lenders parties thereto and Citibank International plc, as
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the undersigned hereby requests a
Syndicated Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Syndicated Borrowing (the "Proposed
Syndicated Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The date of the Proposed Syndicated Borrowing is _______________.
(ii) The Type of Loans comprising the Proposed Syndicated Borrowing is
[Base Rate Loans] [Eurocurrency Rate Loans].
(iii) The aggregate amount of the Proposed Syndicated Borrowing is
[$ _______________] [for a Syndicated Borrowing in a Primary Currency, list
currency and amount of Syndicated Borrowing].
[(iv) The Interest Period for each Eurocurrency Rate Loan made
as part of the Proposed Syndicated Borrowing is ________ month[s].]
[(v) The maturity date for each Base Rate Loan made as a part of the
Proposed Syndicated Borrowing is _________________________.]
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Syndicated
Borrowing:
(A) the representations and warranties contained in Section 4.01 of the
Credit Agreement (except the representations set forth in the last sentence
of subsection (e) thereof and in subsection (f) thereof (other than clause
(ii) thereof)), are correct in all material respects, before and after giving
effect to the Proposed Syndicated Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date; and
<PAGE>
(B) no event has occurred and is continuing, or would result from such
Proposed Syndicated Borrowing or from the application of the proceeds
therefrom, that constitutes a Default.
Very truly yours,
[NAME OF BORROWER]
By____________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.6
CONFORMED COPY
Dated 25th September, 1997
COCA-COLA ENTERPRISES INC.
as Issuer and Guarantor
- and -
COCA-COLA ENTERPRISES GREAT BRITAIN plc
as Issuer
- and -
ABN AMRO BANK N.V.
BANQUE LEHMAN BROTHERS
BANQUE NATIONALE DE PARIS
CITIBANK INTERNATIONAL plc
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
DEUTSCHE BANK AG LONDON
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
MIDLAND BANK plc
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
SOCIETE GENERAL
and
UBS LIMITED
as Dealers
----------------------------------
PROGRAMME AGREEMENT
in respect of a
U.S.$2,500,000,000
EURO MEDIUM TERM NOTE PROGRAMME
-----------------------------------
ALLEN & OVERY
London
<PAGE>
CONTENTS
Clause Page
1. Definitions and interpretation .............................. 2
2. Agreements to issue and purchase Notes....................... 5
3. Conditions of issue; updating of legal opinions.............. 7
4. Representations and Warranties............................... 10
5. Undertakings of the Obligors................................. 14
6. Indemnity.................................................... 18
7. Authority to distribute documents............................ 20
8. Dealers' undertakings........................................ 20
9. Fees, expenses and stamp duties.............................. 20
10. Termination of appointment Dealers........................... 21
11. Appointment of New Dealers................................... 22
12. Increase in the aggregate nominal amount of the Programme.... 22
13. Status of the Dealers and the Arrangers...................... 23
14. Counterparts................................................. 23
15. Communications............................................... 23
16. Benefit of agreement......................................... 23
17. Currency indemnity........................................... 24
18. Calculation Agent............................................ 24
19. Stabilisation................................................ 24
20. Governing law and submission to jurisdiction................. 24
Appendices
A. Initial Documentation List................................... 26
B. Selling restrictions......................................... 28
C. Part I - Form of Dealer Accession Letter - Programme......... 32
Part II - Form of Confirmation Letter - Programme............ 34
Part III - Form of Dealer Acession Letter - Note issue....... 35
Part IV - Form of Confirmation Letter - Note issue.......... 37
D. Letter regarding increase in the aggregate nominal amount
of the Programme............................................. 38
E. Form of Subscription Agreement............................... 40
<PAGE>
PROGRAMME AGREEMENT
in respect of a
U.S.$25,000,000,000
EURO MEDIUM TERM NOTE PROGRAMME
THIS AGREEMENT is made on 25th September, 1997 BETWEEN:
(1) COCA-COLA ENTERPRISES INC. Of 2500 Windy Ridge Parkway, Suite 700,
Atlanta, Georgia 39339 (the "CCE");
(2) COCA-COLA ENTERPRISES GREAT BRITAIN plc of Charter Place, Vine Street,
Uxbridge, London UB81EZ ("CCE GB")
(3) ABN AMRO BANK N.V. of 199 Bishopsgate, London EC2M 3TY;
(4) BANQUE LEHMAN BROTHERS of 21 Rue Balzac, Etoile Saint Honore, 75406 Paris,
Cedex 8;
(5) BANQUE NATIONALE DE PARIS of 16, boulevard des Italiens, 75009 Paris;
(6) CITIBANK INTERNATIONAL plc of of Citibank House, 336 Strand, London WC2R
1HB;
(7) CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED of One Cabot Square, Canary
Wharf, London E14 4QJ;
(8) DEUTSCHE BANK AG LONDON of 6 Bishopsgate, London EC2P 2AT;
(9) LEHMAN BROTHERS INTERNATIONAL (EUROPE) ("Lehman Brothers") of One
Broadgate, London EC2M 7HA;
(10) MIDLAND BANK plc of c/o HSBC Markets Limited, Thames Exchange, 10 Queen
Street Place, London EC4R 1BQ;
(11) MORGAN STANELY & CO. INTERNATIONAL LIMITED of 25 Cabot Square, Canary
Wharf, London E14 4QA;
(12) SALOMON BROTHERS INTERNATIONAL LIMITED of 111 Buckingham Palace Road,
Victoria Plaza, London E14 4QA;
(13) SOCIETE GENERALE of Tour Societe Generale, Paris la Defense, 92987 Paris;
and
(14) UBS LIMITED of 100 Liverpool Street, London, EC2M 2RH.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
(1) For the purposes of this Agreement, except where the context requires
otherwise:
"AGENCY AGREEMENT" means the agreement of even date herewith between the
Obligors, the Agent and the other paying agents referred to therein under
which the Agent is appointed as issuing agent, principal paying agent and
agent bank for the purposes of the Programme;
"AGENT" means The Chase Manhattan Bank as Agent under the Agency Agreement
<PAGE>
and any successor agent appointed by the Obligors in accordance with the
Agency Agreement;
"AGREEMENT DATE" means, in respect of any Note, the date on which
agreement is reached for the issue of such Note as contemplated in clause
2 which, in the case of Notes issued on a syndicated basis or otherwise
in relation to which a Subscription Agreement is entered into, shall be
the date upon which the relevant Subscription Agreement is signed by or on
behalf of all the parties;
"ARRANGERS" means Lehman Brothers or (in the case of Notes denominated in
Deutsche Marks) Lehman Brothers Bankhaus Aktiengesellschaft or (in the
case of French Franc Notes) Banque Lehman Brothers and any company
appointed to the position of arranger for the Programme or in respect of
any particular issue of Notes under the Programme and references in this
Agreement to the "Arranger" shall be references to the relevant Arranger;
"COMMISSION" means the United States Securitites and Exchange Commission;
"CONFIRMATION LETTER" means:
(a) in respect of the appointment of a third party as a Dealer for the
duration of the Programme, the Confirmation Letter substantially in
the form set out in Part II of Appendix C hereto; and
(b) in respect of the appointment of a third party as a Dealer for one
or more particular issue(s) of Notes under the Programme, the
Confirmation Letter substantially in the form set out in Part IV of
Appendix C hereto;
"DEALER" means each of ABN AMRO Bank N.V., Banque Lehman Brothers, Banque
Nationale De Paris, Citibank International plc, Credit Suisse First Boston
(Europe) Limited, Deutsche Bank AG London, Lehman Brothers, Midland Bank
plc, Morgan Stanley & Co. International Limited, Solomon Brothers
Ineternational Limited, Societe Generale and UBS Limited and any New
Dealer and excludes excludes any entity whose appointment has been
terminated pursuant to clause 10, and references in this Agreement to the
"relevant Dealer" shall, in relation to any Note, be references to the
Dealer or Dealers with whom the Issuer has agreed the issue and purchase
of such Note;
"DEALER ACCESSION LETTER" means:
(a) in respect of the appointment of a third party as a Dealer for the
duration of the Programme, the Dealer Accession Letter substantially
in the form set out in Part I of Appendix C hereto; and
(b) in respect of the appointment of a third party as a Dealer for one
or more particular issue(s) of Notes under the Programme, the Dealer
Accession Letter substantially in the form set out in Part III of
Appendix C hereto;
"EURO FRENCH FRANC REGULATIONS" means the rules and regulations from time
to time relating to the Marche de l'Euro-franc of the Comite des
Emissions;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934;
"FRENCH FRANC NOTE" means a Note denominated in French francs or a Note
denominated in any other currency but linked, directly or indirectly, to
the French franc;
<PAGE>
"FSA" means the Financial Services Act 1986;
"GUARANTEE" means the Guarantee dated the date of this Agreement,
substantially in the form set out in Schedule 3 to the Agency Agreement,
executed by CCE;
"GROUP" means CCE and its consolidated subsidiaries;
"INDEMNIFIED PERSON" means each Dealer, its affiliates and each person who
controls such Dealer (within the meaning of section 15 of the Securities
Act or section 20 of the Exchange Act) and each of their directors,
officers, employees and agents;
"INFORMATION MEMORANDUM" means the Information Memorandum relating to the
Notes prepared in connection with the Programme as revised, supplemented
or amended from time to time by the Obligors in accordance with clause
5(2) including, in relation to each Tranche of Notes, the Pricing
Supplement relating to such Tranche and such other documents as are from
time to time incorporated therein by reference except that for the purpose
of clause 4(2) in respect of the Agreement Date and the Issue Date, the
Information Memorandum means the Information Memorandum as at the
Agreement Date but not including any subsequent revision, supplement or
amendment thereto;
"INITIAL DOCUMENTATION LIST" means the list of documents set out in
Appendix A to this Agreement;
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940 of the
United States.
"ISSUER" means any of CCE and CCE GB, as the case may be, as the issuer of
Notes under the Programme and references in this Agreement to the
"RELEVANT ISSUER" should, in relation to any Note, be references to the
Issuer, or intended Issuer, of such Note;
"LEAD MANAGER" means, in relation to any Tranche of Notes, the person
defined as the Lead Manager in the applicable Subscription Agreement or
when only one Dealer signs such Subscription Agreement, such Dealer;
"LISTING AGENT" means, in relation to any Notes which are, or are to be
listed on a Stock Exchange, such listing agent as the relevant Issuer may
from time to time appoint for the purposes of liaising with such Stock
Exchange;
"NEW DEALER" means any entity appointed as an additional Dealer in
accordance with clause 11;
"NOTE" means a note issued or to be issued by an Issuer pursuant to this
Agreement, which Note may be represented by a Global Note or be in
definitive form;
"OBLIGOR" means each of CCE and CCE GB and, together, the "OBLIGORS";
"PARIS LISTED NOTES" means Notes listed on the Paris Bourse;
"PRICING SUPPLEMENT" means the pricing supplement issued in relation to
each Tranche of Notes (substantially in the form of Annexe C to the
Procedures Memorandum) as a supplement to the Information Memorandum and
giving details of that Tranche;
"PROCEDURES MEMORANDUM" means the Operating and Administrative Procedures
Memorandum as amended or varied from time to time (in respect of any
<PAGE>
Tranche) by agreement between the relevant Issuer and the relevant Dealer
or Lead Manager, with the approval in writing of the Agent;
"PROGRAMME" means the Euro Medium Term Note Programme established by this
Agreement;
"SECURITIES ACT" means the Securities Act of 1933 of the United States;
"STOCK EXCHANGE" means the Luxembourg Stock Exchange, the Paris Bourse or
any other or further stock exchange(s) on which any Notes may from time to
time be listed, and references in this Agreement to the "RELEVANT STOCK
EXCHANGE" shall, in relation to any Notes, be references to the stock
exchange or stock exchanges on which such Notes are from time to time, or
are intended to be, listed;
"SUBSCRIPTION AGREEMENT" means an agreement (by whatever name called) in
or substantially in the form set out in Appendix E hereto or in such other
form as may be agreed between the relevant Issuer and the Lead Manager
which agreement shall be supplemental to this Agreement; and
"YEN NOTES" means Notes denominated or payable in Yen.
(2) Terms and expressions defined in the Agency Agreement, the Conditions
and/or the Pricing Supplement applicable to any Notes and not otherwise
defined in this Agreement shall have the same meanings in this Agreement,
except where the context otherwise requires.
(3) In this Agreement, clause headings are inserted for convenience and ease
of reference only and shall not affect the interpretation of this
Agreement.
(4) All references in this Agreement to the provisions of any statute shall be
deemed to be references to that statute as from time to time modified,
extended, amended or re-enacted.
(5) All references in this Agreement to an agreement, instrument or other
document (including this Agreement, the Agency Agreement, the Guarantee,
any Series of Notes and any Conditions appertaining thereto) shall be
construed as a reference to that agreement, instrument or document as the
same may be amended, modified, varied, supplemented, replaced or novated
from time to time including, but without prejudice to the generality of
the foregoing, this Agreement as supplemented by any Subscription
Agreement.
(6) Words denoting the singular number only shall include the plural number
also and vice versa; words denoting the masculine gender only shall
include the feminine gender also; and words denoting persons only shall
include firms and corporations and vice versa.
(7) All references in this Agreement to Euroclear and/or Cedel Bank shall,
wherever the context so permits, be deemed to include reference to any
additional or alternative clearing system (including, in the case of Paris
Listed Notes, Sicovam) approved by the relevant Issuer and the Agent.
2. AGREEMENTS TO ISSUE AND PURCHASE NOTES
(1) Subject to the terms and conditions of this Agreement, any Issuer may from
time to time agree with any Dealer to issue, and any Dealer may agree to
purchase, Notes.
(2) On each occasion upon which an Issuer and any Dealer agree on the terms of
the issue by such Issuer and purchase by such Dealer of one or more Notes:
<PAGE>
(a) such Issuer shall cause such Notes (which shall be initially
represented by a Temporary Global Note) to be issued and delivered
to a common depositary for Euroclear and Cedel Bank so that the
securities account(s) with Euroclear and/or with Cedel Bank (as
specified by such Dealer) is/are credited with such Notes on the
agreed Issue Date, as described in the Procedures Memorandum; and
(b) the relevant Dealer shall, subject to such Notes being so credited,
cause the net purchase moneys for such Notes to be paid in the
relevant currency by transfer of funds to the relevant account(s) of
the Agent with Euroclear and/or Cedel Bank or (in the case of
syndicated issues) the relevant account of such Issuer so that such
payment is credited to such account for value on such Issue Date, as
described in the Procedures Memorandum.
(3) Unless otherwise agreed between the relevant Issuer and such Dealers,
where more than one Dealer has agreed with the Issuer to purchase a
particular Tranche of Notes pursuant to this clause, the obligations of
such Dealers so to purchase the Notes shall be joint and several.
(4) Where an Issuer agrees with two or more Dealers to issue, and such Dealers
agree to purchase, Notes on a syndicated basis, such Issuer and CCE (where
the relevant Issuer is CCE GB) shall enter into a Subscription Agreement
with such Dealers. The relevant Issuer and CCE (where the relevant Issuer
is CCE GB) may also enter into a Subscription Agreement with one Dealer
only.
(5) The procedures which the parties intend should apply for the purposes of
issues not to be subscribed pursuant to a Subscription Agreement are set
out in Part 1 of Annexe A of the Procedures Memorandum. The procedures
which the parties intend should apply for the purposes of issues to be
subscribed pursuant to a Subscription Agreement are set out in Part 2 of
the Procedures Memorandum.
(6) Any issue of Notes denominated in a currency in respect of which
particular laws, guidelines, regulations, restrictions or reporting
requirements apply (including on the date hereof, without limitation,
Deutsche Marks, Swiss francs, Yen, French francs and Sterling) will only
be issued in circumstances which comply with such laws, guidelines,
regulations, restrictions or reporting requirements from time to time.
Without prejudice to the generality of the foregoing:
(a) Each issue of Notes denominated in Deutsche Marks will take place
only in compliance with the guidelines applicable for the time being
of the German Central Bank regarding the issue of Deutsche Mark
denominated debt securities. Only credit institutions domiciled in
Germany or a German branch of a foreign credit institution will be
eligible to act as Dealers in relation to such Notes. The
requirement set forth in the preceding sentence will not apply where
more than one Dealer has agreed with the relevant Issuer to purchase
a particular Tranche issued on a syndicated basis. In such a case,
only the Lead Manager need be a credit institution domiciled in
Germany or a German branch of a foreign credit institution provided
that the Lead Manager shall, in relation to such Tranche, perform
the functions customarily performed by the lead manager of a
syndicated issue of eurobonds. Indexed Notes denominated in
Deutsche Marks will be issued in compliance with the policy of the
German Central Bank regarding the indexation of Deutsche Mark
denominated debt obligations. The relevant Issuer will cause the
Agent to notify the German Central Bank at the end of each month
during which any Deutsche Mark denominated Notes are issued by such
<PAGE>
Issuer as to the amounts, Issue Dates and other terms of each
Tranche issued.
(b) Issues of Notes denominated in Swiss francs or carrying a Swiss
franc related element with a maturity of more than one year (other
than Notes privately placed with a single investor with no
publicity) will be effected in compliance with the relevant
regulations of the Swiss National Bank based on article 7 of the
Federal Law on Banks and Savings Banks of 8th November, 1934 (as
amended) and article 15 of the Federal Law on Stock Exchanges and
Securities Trading of 24th March, 1995 in connection with article 2,
paragraph 2 of the Ordinance of the Federal Banking Commission on
Stock Exchanges and Securities Trading on 2nd December, 1996. Under
the said regulations, the relevant Dealer or, in the case of a
syndicated issue, the Lead Manager (the "SWISS DEALER"), must be a
bank domiciled in Switzerland (which includes branches or
subsidiaries of a foreign bank located in Switzerland) or a
securities dealer duly licenced by the Swiss Federal Banking
Commission pursuant to the Federal Law on Stock Exchanges and
Securities Trading of 24th March, 1995. The Swiss Dealer must
report certain details of the relevant transaction to the Swiss
National Bank no later than the Issue Date of the relevant Notes.
(c) The Obligors will ensure that Yen Notes will only be issued in
compliance with applicable Japanese laws, regulations, guidelines
and policies. The relevant Issuer or the relevant Dealer/Lead
Manager on behalf of the relevant Issuer will, in relation to any
issue of Yen Notes with a nominal amount equal to or greater than
Yen 10,000,000,000, report to the Ministry of Finance of Japan
details of that issue of Notes in the form from time to time required
by the Ministry of Finance of Japan prior to the pre-closing of the
issue or, if earlier, prior to publication, if any, of the issue. The
Obligors or their designated agents shall submit such reports or
information as may be required from time to time by applicable laws,
regulations and guidelines promulgated by Japanese authorities in
the case of Yen Notes. Each Dealer agrees to provide any necessary
information relating to Yen Notes to the Obligors (which shall not
include the names of clients) so that the Obligors may make any
required reports to the Japanese Ministry of Finance through its
designated agent.
(d) A credit establishment or investment institution established in a
member state of the European Union which is authorised to lead-manage
eurobond issues by the competent authority of its home state
may (i) act as a Dealer in respect of issues of French Franc Notes
and (ii) act as lead manager of issues of French Franc Notes issued
on a syndicated basis. The Arranger for issues of French Franc
Notes, the Dealers in respect of French Franc Notes and the Issuer
undertake to comply with the Euro French Franc Regulations. In the
case of a public issue of such French Franc Notes the minimum
aggregate principal amount for that issue shall be FRF300,000,000.
In addition, Paris Listed Notes will be subject to the requirements
of the Paris Bourse. Under the current regulations, private
placements are construed as issues of Notes placed on a firm basis
with a small number of pre-determined non-French resident investors.
Indexed Notes which are French Franc Notes will be issued in
compliance with the Principes Generaux set by the Commission des
Operations de Bourse and by the Conseil des Marches Financiers. Each
Obligor will cause the Agent to comply with the reporting procedures
and requirements from time to time of the Direction du Tresor in
relation to the issue of French Franc Notes.
<PAGE>
(e) In relation to each issue of Notes in respect of which the proceeds of
issue are accepted by the relevant Issuer in the United Kingdom. The
Obligors will comply with all applicable laws and requlations (as
amended from time to time) of United Kingdom authorities and relevant
in the context of the issue of such Notes, and shall submit (or
procure the submission on its behalf of) such reports or information
as may from time to time be required for compliance with such laws and
regulations. The relevant Issuer shall ensure that such Notes shall
have the maturities and denominations as required by such laws and
regulations. In particular, in relation to Notes which are to fall
under the Banking Act (Exempt Transactions) Regulations 1997, the
Obligors undertakes to comply with the terms of such Regulations and
to ensure that any Notes which are to fall thereunder are only issued
in compliance with the terms thereof.
The restrictions set out in sub-clause (a) to (e) above in relation to the
currencies mentioned in such sub-clauses shall only apply insofar as they
are consistent with the relevant regulations of the appropriate regulatory
bodies or are necessary to comply with applicable laws, guidelines,
regulations, restrictions or reporting requirements from time to time. On
each occasion when any such regulatory body amends or introduces any
relevant regulation, the restrictions above shall be deemed to be amended
accordingly.
3. CONDITIONS OF ISSUE; UPDATING OF LEGAL OPINIONS
(1) FIRST ISSUE
Before either Issuer reaches its first agreement with any Dealer for the
issue and purchase of Notes, each Dealer shall have received, and found
satisfactory (in its reasonable opinion) all of the documents and
confirmations described in the Initial Documentation List. Any Dealer must
notify the Arranger and CCE within seven London business days of receipt of
the documents and confirmations described in the Initial Documentation List
if it considers any to be unsatisfactory in its reasonable opinion.
(2) EACH ISSUE
The obligations of a Dealer under any agreement for the issue and purchase
of Notes made pursuant to clause 2 are conditional upon:
(a) (save as expressly disclosed in writing by the relevant Issuer to the
relevant Dealer prior to such relevant Agreement Date) there having
been, as at the proposed Issue Date, no adverse change from that set
forth in the Information Memorandum as at the relevant Agreement Date
in the condition (financial or otherwise) of the relevant Issuer, CCE
(where the relevant Issuer is CCE GB) or the Group, taken as a whole,
which, in any case, is material in the context of the issue and
offering of the Notes, nor the occurrence of any event making untrue
or incorrect to an extent which is material as aforesaid any of the
warranties contained in clause 4;
(b) there being no outstanding breach of any of the obligations of the
relevant Issuer or CCE (where the relevant Issuer is CCE GB) under
this Agreement, any Notes, the Agency Agreement or the Guarantee which
has not been waived by the Dealer on or prior to the proposed Issue
Date;
(c) subject to clause 12, the aggregate nominal amount of the Notes to be
issued, when added to the aggregate nominal amount of all Notes
<PAGE>
outstanding (as defined in the Agency Agreement) on the proposed Issue
Date (excluding for this purpose Notes due to be redeemed on such
Issue Date) not exceeding U.S.$2,500,000,000 or its equivalent in
other currencies as determined pursuant to sub-clause (5);
(d) in the case of Notes which are intended to be listed, the relevant
Stock Exchange having agreed to list such Notes, subject only to the
issue of the relevant Temporary Global Note;
(e) no meeting of the holders of Notes (or any of them) having been duly
convened but not yet held or, if held but adjourned, the adjourned
meeting having not been held and neither the relevant Issuer nor CCE
(where the relevant Issuer is CCE GB) having been given notice of any
circumstances which are likely to lead to the convening of such a
meeting;
(f) there having been, between the Agreement Date and the Issue Date for
such Notes, in the opinion of the relevant Dealer (after prior
consultation with the relevant Issuer if practicable), no such change
in national or international financial, political or economic
conditions or currency exchange rates or exchange controls as would,
in the opinion of the relevant Dealer be likely to either (i)
prejudice materially the sale by such Dealer of the Notes proposed to
be issued or (ii) materially change the circumstances prevailing at
the Agreement Date;
(g) there having been, between the Agreement Date and the Issue Date, no
downgrading in the rating of any of the relevant Issuer's or CCE's
(where the relevant Issuer is CCE GB) debt by Standard & Poor's
Ratings Services or Moody's Investors Service or the placing on
"CREDITWATCH" with negative implications or similar publication of
formal review by the relevant rating agency;
(h) the forms of the Pricing Supplement, the Temporary Global Note, the
Permanent Global Note and the Definitive Notes in relation to the
relevant Tranche and the relevant settlement procedures having been
agreed by the relevant Issuer, the relevant Dealer and the Agent;
(i) the relevant currency being accepted for settlement by Euroclear and
Cedel Bank;
(j) (except in the case of calculations or determinations to be made by
the relevant Dealer) any calculations or determinations which are
required by the relevant Conditions to have been made prior to the
Issue Date having been duly made; and
(k) in the case of Notes which are intended or required to be listed on
the Paris Bourse, the registration numbers for the Programme and the
visa number for the relevant issue of Notes having been obtained, the
consent to such listing having been received from the Conseil des
Marches Financiers and the required notice legale having been
published in the Bulletin des Annonces Legales Obligatoires.
In the event that any of the foregoing conditions is not satisfied, the
relevant Dealer shall be entitled (but not bound) by notice to the relevant
Issuer to be released and discharged from its obligations under the
agreement reached under clause 2.
(3) WAIVER
Any Dealer, on behalf of itself only, may by notice in writing to the
relevant Issuer waive any of the conditions precedent contained in
<PAGE>
sub-clauses (1) and (2) (save for the condition precedent contained in sub-
clause (2)(c)) in so far as they relate to an issue of Notes to that
Dealer.
(4) UPDATING OF LEGAL OPINIONS
Before the first issue of Notes occurring after each anniversary of the
date of this Agreement, the Obligors will procure that further legal
opinions, in such form and with such content as the Dealers may reasonably
require, are delivered, at the expense of the Obligors, to the Dealers from
the counsel named in paragraph 6 of Appendix A or such other counsel as
approved by the Dealers, in their discretion, reasonable excercised.
In addition, on such other occasions as a Dealer agrees with an Obligor,
the relevant Obligor will procure that a further legal opinion or further
legal opinions, as the case may be, in such form and with such content as
the Dealers may reasonably require, is or are delivered to the Dealers from
the counsel named in paragraph 6 of Appendix A or such other counsel as
shall be approved by the Dealers, in their discretion reasonable exercised.
The expense for the delivery of such opinions shall be borne as agreed
between the relevant Obligor and the relevant Dealer.
If at or prior to the time of any agreement to issue and purchase Notes
under clause 2(a) such a request is made with respect to the Notes to be
issued, the receipt of the relevant opinion or opinions in a form
satisfactory to the relevant Dealer shall be a further condition precedent
to the issue of those Notes to that Dealer.
(5) DETERMINATION OF AMOUNTS OUTSTANDING
For the purposes of sub-clause (2)(c):
(a) the U.S. dollar equivalent of Notes denominated in a currency other
than U.S. dollars shall be determined, at the discretion of the
relevant Issuer, either as of the Agreement Date for such Notes or on
the preceding day on which commercial banks and foreign exchange
markets are open for business in London, in each case on the basis of
the spot rate for the sale of the U.S. dollar against the purchase of
the relevant currency in the London foreign exchange market quoted by
any leading international bank selected by the relevant Issuer on the
relevant day of calculation;
(b) the U.S. dollar equivalent of Dual Currency Notes, Indexed Notes and
Partly Paid Notes shall be calculated in the manner specified above by
reference to the original nominal amount on issue of such Notes (in
the case of Partly Paid Notes regardless of the amount of the
subscription price paid); and
(c) the U.S. dollar equivalent of Zero Coupon Notes and other Notes issued
at a discount or a premium shall be calculated in the manner specified
above by reference to the net proceeds received by the Issuer for the
relevant issue.
4. REPRESENTATIONS AND WARRANTIES
(1) As at the date of this Agreement CCE hereby warrants to and agrees with
the Dealers and each of them as follows:
(a) that the most recently published audited annual financial statements
of each Obligor and the most recently published audited consolidated
annual financial statements of each Obligor and its consolidated
subsidiaries were prepared in accordance with the requirements of
<PAGE>
law and with accounting principles generally accepted in the United
States of America in the case of CCE, in the United Kingdom in the
case of CCE GB, consistently applied and they present fairly the
financial condition of the relevant Obligor or of the relevant Obligor
and its consolidated subsidiaries, as the case may be, as at the date
to which they were prepared (the "RELEVANT DATE") and of the results
of the operations of the relevant Obligor or of the relevant Obligor
and its consolidated subsidiaries, as the case may be, for the
financial year ended on the relevant date and that there has been no
material adverse change in the condition (financial or otherwise) of
any Oblior or of any Obligor and its consolidated subsidiaries taken,
as the case may be, since the relevant date except as disclosed in the
Information Memorandum or in any documents incorporated by reference
therein;
(b) that the Information Memorandum contains all information with regard
to each Obligor and the Notes which is material in the context of the
Programme and the issue and offering of Notes thereunder, that the
information contained in the Information Memorandum with respect to
the Oblior and the Notes is true and accurate in all material respects
and is not misleading, that the opinions and intentions expressed
therein with respect to each Obligor and the Notes are honestly held,
that there are no other facts with respect to any Obligor or the Notes
the omission of which would make the Information Memorandum as a whole
or any of such information misleading in any material respect and that
each Obligor has made all reasonable enquiries to ascertain all facts
material for the purposes aforesaid;
(c) that CCE is a corporation duly incorporated in good standing under the
laws of the State of Delaware;
(d) that CCE GB is a public limited company duly incorporated under the
laws of England and Wales;
(e) that the issue of Notes and the execution and delivery of this
Agreement and the Agency Agreement by each Obligor have been duly
authorised by each Obligor and, in the case of Notes, upon due
execution, issue and delivery in accordance with the Agency Agreement,
will constitute, and, in the case of this Agreement and the Agency
Agreement constitute, legal, valid and binding obligations of the
relevant Obligor, enforceable in accordance with their respective
terms subject to the laws of bankruptcy and other laws affecting the
rights of creditors generally;
(f) that the execution of the Guarantee has been duly authorised by CCE
and constitutes legal, valid and binding obligations of CCE,
enforceable in accordance with its terms subject to the laws of
bankruptcy and other laws affecting the rights of creditors generally;
(g) that the execution and delivery of this Agreement and the Agency
Agreement, the issue, offering and distribution of Notes and the
performance of the terms of any Notes, this Agreement and the Agency
Agreement will not infringe any law or regulation and are not contrary
to the provisions of the constitutional documents of any Obligor and,
to an extent or in a manner which would be material in the context of
the Programme and/or the issue of the Notes, will not result in any
breach of the terms of, or constitute a default under, any instrument
or agreement to which any Obligor is a party or by which any Obligor
or its property is bound;
<PAGE>
(h) that the execution and delivery of the Guarantee will not infringe any
law or regulation and are not contrary to the provisions of the
articles of incorporation or by-laws of CCE and, to an extent or in a
manner which would be material in the context of the Programme and or
the issue of Notes, will not result in any breach of the terms of, or
constitute a default, under any instrument or agreement to which CCE
is a party or by which its property is bound;
(i) that no Event of Default or event which with the giving of notice or
lapse of time or other condition would constitute an Event of Default
is subsisting in relation to any outstanding Note and no event has
occurred which would constitute (after an issue of Notes) an Event of
Default thereunder or which with the giving of notice or lapse of time
or other condition would (after an issue of Notes) constitute such an
Event of Default;
(j) that none of the Obligors and their respective subsidiaries is
involved in any litigation or arbitration proceedings relating to
claims or amounts which are material to CCE and its subsidiaries,
considered as a whole nor has any Obligor received notice of any such
litigation or arbitration;
(k) that all relevant consents, approvals, authorisations, orders and
clearances of all regulatory authorities reed by each Obligor for or
in connection with the creation and offering of Notes under the
Programme, the execution and issue of, and compliance by the Issuers
with the terms of, any Note (including any Global Note), Receipt and
Coupon issued under the Programme and the execution and delivery of,
and compliance by the Obligors with the terms of, this Agreement and
the Agency Agreement and, in the case of CCE, the Guarantee have been
obtained and are in full force and effect;
(1) that all Notes will be direct, unconditional, unsubordinated and
(subject to the provisions of Condition 3) unsecured obligations of
the relevant Issuer and will rank pari passu among themselves and
(save for certain debts required to be preferred by law) equally with
all other unsecured obligations (other than subordinated obligations,
if any) of the relevant Issuer, from time to time outstanding;
(m) the obligations of CCE under the Guarantee are direct, unconditional
unsubordinated and (subject to the provisions of Condition 3)
unsecured obligations of CCE and will rank pari passu and (save for
certain debts required to be preferred by law) equally with all other
unsecured obligations (other than subordinated obligations, if any) of
CCE, from time to time outstanding;
(n) no Obligor is required to be registered as an "investment company"
under the Investment Company Act; and
(o) that no Obligor or any affiliate (as defined in Rule 405 under the
Securities Act) of any of them, nor any person (other than the
Dealers) acting on behalf of any of the foregoing persons has engaged
or will engage in any directed selling efforts (as defined in
Regulation S under the Securities Act) with respect to any Notes, and
each of the foregoing persons has complied and will comply with the
offering restrictions requirement of regulations under the Securities
Act.
<PAGE>
(2) As at the date of this Agreement CCE GB hereby warrants to and agrees with
the Dealers and each of them as follows:
(a) that the most recently published audited annual financial statements
of CCE GB and the most recently published audited consolidated annual
financial statements of CCE GB and its consolidated subsidiaries were
prepared in accordance with the requirements of law and with
accounting principles generally accepted in the United Kingdom,
consistently applied and they present fairly the financial condition
of CCE GB or of CCE GB and its consolidated subsidiaries, as the case
may be, as at the date to which they were prepared (the "RELEVANT
DATE") and of the results of the operations of CCE GB or of CCE GB and
its consolidated subsidiaries, as the case may be, for the financial
year ended on the relevant date and that there has been no material
adverse change in the condition (financial or otherwise) of CCE GB or
of CCE GB and its consolidated subsidiaries taken as a whole, as the
case may be, since the relevant date except as disclosed in the
Information Memorandum or in any documents incorporated by reference
therein;
(b) that the Information Memorandum contains all information with regard
to CCE GB and the Notes which is material in the context of the
Programme and the issue and offering of Notes by CCE GB thereunder,
that the information contained in the Information Memorandum with
respect to CCE GB and the Notes is true and accurate in all material
respects and is not misleading, that the opinions and intentions
expressed therein with respect to CCE GB and the Notes are honestly
held, that there are no other facts with respect to CCE GB or the
Notes the omission of which would make the Information Memorandum as a
whole or any of such information misleading in any material respect
and that CCE GB has made all reasonable enquiries to ascertain all
facts material for the purposes aforesaid;
(c) that CCE GB is a public limited company duly incorporated under the
laws of England and Wales;
(d) that the issue of Notes and the execution and delivery of this
Agreement and the Agency Agreement by CCE GB have been duly authorised
by CCE GB and, in the case of Notes, upon due execution, issue and
delivery in accordance with the Agency Agreement, will constitute,
and, in the case of this Agreement and the Agency Agreement
constitute, legal, valid and binding obligations of CCE GB,
enforceable in accordance with their respective terms subject to the
laws of bankruptcy and other laws affecting the rights of creditors
generally;
(e) that the execution and delivery of this Agreement and the Agency
Agreement, the issue, offering and distribution of Notes and the
performance of the terms of any Notes, this Agreement and the Agency
Agreement will not infringe any law or regulation and are not contrary
to memorandum and articles of association of CCE GB and, to an extent
or in a manner which would be material in the context of the Programme
and the issue of the Notes, will not result in any breach of the terms
of, or constitute a default under, any instrument or agreement to
which CCE GB is a party or by which CCE GB or its property is bound;
(f) that no Event of Default or event which with the giving of notice or
lapse of time or other condition would constitute an Event of Default
is subsisting in relation to any outstanding Note of CCE GB and no
event has occurred which would constitute (after an issue of Notes) an
Event of Default thereunder or which with the giving of notice or
lapse of time or other condition would (after an issue of Notes by CCE
GB) constitute such an Event of Default;
<PAGE>
(g) that none of CCE GB and its subsidiaries is involved in any litigation
or arbitration proceedings relating to claims or amounts which are
material to CCE, CCE GB and their subsidiaries, considered as a whole
nor has CCE GB received notice of any such litigation or arbitration;
(h) that all relevant consents, approvals, authorisations, orders and
clearances of all regulatory authorities required by CCE GB for or in
connection with the creation and offering by it of Notes under the
Programme, the execution and issue of, and compliance by CCE GB with
the terms of, any Note (including any Global Note), Receipt and Coupon
issued by it under the Programme and the execution and delivery of,
and compliance by CCE GB with the terms of, this Agreement and the
Agency Agreement have been obtained and are in full force and effect;
(i) that all Notes issued by CCE GB will be direct, unconditional,
unsubordinated and (subject to the provisions of Condition 3)
unsecured obligations of CCE GB and will rank pari passu among
themselves and (save for certain debts required to be preferred by
law) ~al1y with all other unsecured obligations (other than
subordinated obligations, if any) of CCE GB, from time to time
outstanding;
(j) that CCE GB is not required to register as an "investment company"
under the Investment Company Act; and
(k) that none of CCE GB, CCE and any affiliate (as defined in Rule 405
under the Securities Act) of any of them, nor any person (other than
the Dealers) acting on behalf of any of the foregoing persons has
engaged or will engage in any directed selling efforts (as defined in
Regulations under the Securities Act) with respect to any Notes issued
by CCE GB, and each of the foregoing persons has complied and will
comply with the offering restrictions requirement of Regulation S
under the Securities Act.
(3) With regard to each issue of Notes, the relevant Issuer and CCE (where
the relevant Issuer is CCE GB) shall be deemed to repeat the warranties
and agreements contained in sub-clause (1) or (2), as the case may be,
as at the Agreement Date for such Notes (any agreement on such Agreement
Date being deemed to have been made on the basis of, and in reliance on,
such warranties and agreements) and as at the Issue Date of such Notes.
(4) Each Obligor shall be deemed to repeat the representations, warranties and
agreements given by it contained in sub-clause (1) or (2), as the case may
be, on each date on which the Information Memorandum is revised,
supplemented or amended and on each date on which the aggregate nominal
amount of the Programme is increased in accordance with clause 12.
(5) The warranties and agreements contained in this clause shall continue in
full force and effect notwithstanding the actual or constructive knowledge
of any Dealer (other than the knowledge of the persons or department of
such Dealer as notified pursuant to Clause 15) with respect to any of the
matters referred to in the representations and warranties set out above,
any investigation by or on behalf of the Dealers or completion of the
subscription and issue of any Notes.
5. UNDERTAKINGS OF THE OBLIGORS
<PAGE>
(1) NOTIFICATION OF MATERIAL DEVELOPMENTS
(a) Each Obligor shall promptly after becoming aware of the occurrence thereof
notify each Dealer of any Event of Default or any condition,
event or act which would after an issue of Notes (or would with the giving
of notice and or the lapse of time) constitute an Event of Default or to
the extent that it is material in the context of the Programme or the issue
of Note any breach of the representations and warranties or undertakings
contained in this Agreement, the Agency Agreement and/or the Guarantee.
(b) If, following the time of an agreement under clause 2 and before the issue
of the relevant Notes, the relevant Issuer or CCE (where the relevant
Issuer is CCE GB) becomes aware that the conditions specified in clause
3(2) will not be satisfied in relation to that issue, the relevant Issuer
and/or CCE (where the relevant Issuer is CCE GB) shall forthwith notify the
relevant Dealer to this effect. In such circumstances, the relevant Dealer
shall be entitled (but not bound) by notice to the relevant Issuer to be
released and discharged from its obligations under the agreement reached
under clause 2.
(2) UPDATING OF INFORMATION MEMORANDUM
(a) On or before each anniversary of the date of this Agreement, the Obligors
shall update or amend the Information Memorandum (following consultation
with the Arranger who will consult with the Dealers) by the publication of
a supplement thereto or a new Information Memorandum, in a form approved by
the Dealers.
(b) In the event of a change in the condition of any Obligor which is material
to CCE and its subsidiaries considered as a whole in the context of the
Programme or the issue of any Notes the Obligors shall update or amend the
Information Memorandum (following consultation with the Arrangers who will
consult with the Dealers) by the publication of a supplement thereto or a
new Information Memorandum in a form approved by the Dealers.
(c) The Information Memorandum shall, as specified therein, be deemed to
incorporate by reference therein:
(i) the most recent Annual Report on Form I0-K of CCE filed with the
Commission;
(ii) any other reports filed by CCE with the Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act and the rules and
regulations thereunder subsequent to the date of the financial
statements included in the Annual Report on Form l0-K referred to in
sub-clause (i) above;
(iii) the most recently published audited annual financial statements (if
any) and, if published later, the most recently published interim
financial statements (if any) of CCE GB; and
(iv) all supplements to the Information Memorandum circulated by CCE and
CCE GB from time to time.
Upon any new financial statements being incorporated in the Information
Memorandum as aforesaid or upon the publication of a revision, supplement
or amendment to the Information Memorandum, the Obligors shall promptly
supply to each Dealer and the Agent such number of copies of such financial
statements, revision, supplement or amendment as each Dealer or the Agent
(as the case may be) may reasonably request.
<PAGE>
(d) If the terms of the Programme are modified or amended in a manner which
would make the Information Memorandum inaccurate or misleading in any
material respect, a new Information Memorandum or supplement will be
prepared.
(3) LISTING
Each Obligor shall cause an initial application to be made for Notes issued
under the Programme to be listed on the Luxembourg Stock Exchange.
If in relation to any issue of Notes, it is agreed between the relevant
Issuer and the relevant Dealer or the Lead Manager, as the case may be, to
list such Notes on a Stock Exchange, each of the relevant Issuer and CCE
(where the relevant Issuer is CCE GB) undertakes to use its reasonable
endeavours to obtain and maintain the listing of such Notes on such Stock
Exchange. If any Notes cease to be listed on the relevant Stock Exchange,
the relevant Issuer and CCE (where the relevant Issuer is CCE GB) shall use
its reasonable endeavours promptly to list such Notes on a stock exchange
to be agreed between the relevant Issuer and the relevant Dealer.
Each Obligor shall comply with the rules of each relevant Stock Exchange
and shall otherwise comply with any undertakings given by it from time to
time to the relevant Stock Exchange in connection with any Notes listed on
such Stock Exchange or the listing thereof and, without prejudice to the
generality of the foregoing, shall furnish or procure to be furnished to
the relevant Stock Exchange all such information as the relevant Stock
Exchange may require in connection with the listing on such Stock Exchange
of any Notes.
It is envisaged that issues of French Franc Notes may be listed on the
Paris Bourse. In connection with such application in respect of any Series
of Notes which is intended to be so listed, the relevant Issuer and CCE
(where the relevant Issuer is CCE GB) shall endeavour to obtain the listing
as promptly as practicable and the relevant Issuer and CCE (where the
relevant Issuer is CCE GB) shall furnish or procure to be furnished any and
all documents, instruments, information and undertakings that may be
necessary or advisable in order to obtain and maintain (whilst such Notes
are outstanding) such listing.
Each Obligor shall, if and for so long as any Notes are listed on the Paris
Bourse, notify the Commission des Operations de Bourse of any material
adverse change in its business or financial condition and will publish
detail thereof if so required by the Commission des Operations de Bourse.
The initial Information Memorandum has been granted the registration number
of the Commission des Operations de Bourse.
(4) AGENCY AGREEMENT AND GUARANTEE
Each Obligor undertakes that it will not:
(a) except with the consent of the Dealers terminate the Agency
Agreement or, in the case of CCE, the Guarantee or effect or
permit to become effective any amendment to any such agreement
which, in the case of an amendment, would or might adversely
affect the interests of any Dealer or of any holder of Notes
issued before the date of such amendment; or
<PAGE>
(b) except with the consent of the Dealers appoint a different Agent
or different paying agent(s) under the Agency Agreement,
and the Obligors will promptly notify each of the Dealers of any
termination of, or amendment to, the Agency Agreement or the Guarantee and
of any change in the Agent or paying agent(s) under the Agency Agreement.
(5) LAWFUL COMPLIANCE
Each Obligor will at all times ensure that all necessary action is taken
and all necessary conditions are fulfilled (including, without limitation,
the obtaining of all necessary consents) so that it may lawfully comply
with its obligations under all Notes, this Agreement, the Agency Agreement
and the Guarantee, as the case may be, and, and further, so that it may
comply with any applicable laws, regulations and published guidelines from
time to time promulgated by any governmental and regulatory authorities
relevant in the context of the issue of Notes.
(6) AUTHORISED REPRESENTATIVE
Each Obligor will notify the Dealers as soon as reasonably practicable in
writing if any of the persons named in the list referred to in paragraph 3
of the Initial Documentation List ceases to be authorised to take action on
behalf of such Obligor or if any additional person becomes so authorised
together, in the case of an additional authorised person, with evidence
satisfactory to the Dealers that such person has been so authorised.
(7) AUDITORS' COMFORT LETTERS
Each Obligor will, in each of the circumstances described in (i), (ii)
(iii) and (iv) below, deliver to the Dealers a comfort letter or comfort
letters from independent auditors in such form and with such content as the
Dealers may reasonably request provided that no such letter or letters will
be delivered in connection with the publication or issue of the audited
consolidated annual financial statements of the relevant Obligor. In the
case of (i), (ii) and (iii) below, such letter or letters shall be provided
at the expense of the relevant Obligor and, in the case of (iv) below, the
expense for the delivery of such letter or letters shall be as agreed
between the relevant Obligor and the relevant Dealer. Such letter or
letters shall be provided:
(i) at the time of the preparation of the initial Information Memorandum;
(ii) before the first issue of Notes after each anniversary of the date of
this Agreement;
(iii) at any time that the Information Memorandum shall be amended or
updated (except by mean of information incorporated by reference)
where such amendment or updating concerns or contains financial
information about the relevant Obligor; and
(iv) on such other occasions a Dealer and the relevant Obligor may
agree.
(8) INFORMATION ON NOTEHOLDERS' MEETINGS
Each Issuer will, at the same time as it is despatched, furnish the Dealers
with a copy of every notice of a meeting of the holders of the
<PAGE>
Notes (or any of them) and which is despatched at the instigation of such
Issuer and/or CCE (if the relevant Issuer is CCE GB) and will notify the
Dealers immediately upon its becoming aware that a meeting of the holders
of the Notes (or any of them), has been convened by holders of such Notes.
(9) OFFERS TO THE PUBLIC IN FRANCE
Each Obligor undertakes that it will not offer during their initial
distribution any Notes, directly or indirectly, to the public in France.
6. INDEMNITY
(1) Without prejudice to the other rights or remedies of the Dealers, the
Obligors jointly and severally undertake with the Dealers and each of them
that it will hold each Indemnified Person indemnified against any losses,
liabilities, costs, claims, charges, expenses, actions or demands which
that Indemnified Person may incur or which may be made against it as a
result of or in relation to:
(a) any actual or alleged breach of the representations and warranties and
undertakings contained in, or made or deemed to be made by any Obligor
pursuant to, this Agreement; or
(b) any untrue or misleading (or allegedly untrue or misleading) statement
in, or any omission (or alleged omission) from, the Information
Memorandum, in any case which is material (or allegedly material) in
the context of the Programme and/or the issue and offering of Notes;
or
(c) any untrue or misleading (or allegedly untrue or misleading) statement
in any additional written information provided by such Obligor to the
Dealers pursuant to clause 7 below; or
(d) any failure by the relevant Issuer to issue on the agreed Issue Date
any Notes which a Dealer has agreed to purchase (unless such failure
is as a result of the failure by the relevant Dealer to pay the
aggregate purchase price for such Notes);
and such indemnity shall extend to include all legal and other expenses
which that Indemnified Person may pay or incur in investigating or
defending any claim or action in respect of which indemnity may be sought
against any Obligor under this clause.
(2) Without prejudice to the other rights or remedies of the Obligers, the
Dealers severally undertake with the Obligers and each of them that it will
hold each Indemnified Person indemnified against any losses, liabilities,
costs, claims, charges, expenses, actions or demands which that indemnified
Person may incur or which may be made against it as a result of or in
relation to any breach by the Dealer of the restrictions and agreements
contained in Appendix B hereto; provided that no Dealer shall be liable
herb for any losses, liabilities, costs, claims, charges, expenses, actions
or demands arising from the sale by it of any Notes to any person believed
in good faith by such Dealer, on reasonable grounds and without actual
knowledge on the part of the Dealer to the contrary, to be a person to whom
the Notes could be sold in compliance with the provisions of Appendix B
hereto. Such indemnity shall extend to include all legal and other expenses
which that Indemnified Person may pay or incur in investigating or
defending any claim or action in respect of which indemnity may be sought
against any Dealer under this clause.
<PAGE>
(3) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action in respect of which the indemnity contained in
clause 6(1) or 6(2) above relates, such Indemnified Person will, if a claim
in respect thereof is to be made against any Obligor or, as the case may
be, any Dealer under this clause (the "INDEMNIFIER"), notify each relevant
Indemnifier or in writing of the commencement thereof; but the omission so
to notify any relevant Indemnifier will not relieve it from any liability
which it may have to any Indemnified Person otherwise than under this
clause.
(4) In case any such action is brought against any Indemnified Person, and it
notifies each relevant Indemnifier of the commencement thereof, any
relevant er will be entitled to participate therein, and to the extent that
it may elect by written notice delivered to the Indemnified Person promptly
after receiving the aforesaid notice from such Indemnified Person, to
assume the defense thereof, with counsel satisfactory to such Indemnified
Person; provided, however, that if the defendants in any such action
include both the Indemnified Person and any relevant Indemnifier and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it and, or other Indemnified Persons which are
different from or are additional to those available to each relevant
Indemnifier, the Indemnified Person or Persons shall have the right to
select separate counsel to assert its legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified
Person or Persons.
(5) Upon receipt of notice from each relevant Indemnifier, to such Indemnfied
Person under this clause, no Indemnifier will be liable to the Indemnfied
Person for any legal or other expenses subsequently incurred by such
Indemnified Person in connection with the defense thereof, unless:
(i) the Indemnified Person shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with
the proviso in subclause (4) above (it being understood, however,
that each relevant Indemnifier shall not be liable for the expenses
of more than one separate counsel per jurisdiction, approved by the
Indemnified Person for representing the Indemnified Person or Persons
who are parties to such action); or
(ii) no relevant Indemnifier shall have employed counsel satisfactory to
the Indemnified Person to represent the Indemnified within a
reasonable time after notice of the commencement of the action; or
(iii) any relevant Indemnifier has authorised the employment of counsel for
the Indemnified Person at the expense of such Indemnifier,
and except that, if subclause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in sub-clause (i) or
(iii).
(6) In order to provide for a just and equitable contribution in circumstances
in which the indemnification provided for in sub-clause (1) and (2) above
is due in accordance with its terms but is, for any reason, held by a court
to be unavailable from any relevant Indemnifier on grounds of policy or
otherwise, each relevant Obligor and the relevant Dealer shall contribute
to the aggregate losses, liabilities, acts, claims, charges, expenses,
action or demands (including legal and other expenses reasonably incurred
in connection with investigating or defending the same) to which each
relevant Obligor and one or more of the Dealers may be subject in such
proportion so that the relevant Dealer in respect of the indemnification
provided for in sub-clause (1) or the relevant Obligor in respect of the
indemnification provided for
<PAGE>
in sub-clause (2) is responsible for that portion represented by the
percentage that the commissions and concessions relating to the issue of
the relevant Notes bears to the Issue Price of the relevant Notes and each
relevant Obligor in respect of the indemnification provided for in sub-
clause (1) or the relevant Dealer in respect of the indemnification
provided for in sub-clause (2) is responsible for the balance; provided
that:
(i) in no case shall any Dealer be responsible for any amount in excess
of the commissions or concessions applicable to the
relevant Notes purchased by such Dealer pursuant to an agreement made
under clause 2; and
(ii) no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
(7) Any party entitled to contribution will notify each relevant Indemnifier
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may be made against another party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under sub-
clause (6) and this sub-clause (7).
7. AUTHORITY TO DISTRIBUTE DOCUMENTS
Subject to clause 8 below, each Obligor hereby authorises each of the
Dealers on behalf of the Obligors to provide copies of and oral statements
consistent with the Information Memorandum and such additional written
information as any Obligor shall provide to the Dealers or approve for the
Dealers to use or such information as is in the public domain to actual and
potential purchasers of Notes.
In relation to this clause, until a Dealer receives such financial
statements, revision, supplement or amendment, the definition of
"INFORMATION MEMORANDUM" in clause 1(1) shall, in relation to such Dealer,
mean the Information Memorandum prior to the receipt by such Dealer of such
financial statements or the publication of such revision, supplement or
amendment.
8. DEALERS' UNDERTAKINGS
Each Dealer represents, warrants and undertakes to each Obliger in
accordance with the restrictions and agreements set out in Appendix B
hereto and clause 7 above.
9. FEES, EXPENSES AND STAMP DUTIES
(1) The relevant Issuer, failing which CCE (where the relevant Issuer is CCE
GB) undertakes that it will:
(a) pay to each Dealer all commissions agreed between the relevant Issuer
and such Dealer in connection with the sale of any Notes to that
Dealer (and any value added tax thereon); and
(b) pay (together with any value added tax thereon):
(i) the fees and expenses of its legal advisers and auditors;
<PAGE>
(ii) the cost of listing and maintaining the listing of any Notes which
are to be listed on a Stock Exchange; and
(iii) the cost of any publicity agreed by the relevant Issuer and/or CCE
(where the relevant Issuer is CCE GB) in connection with an issue
of Notes;
(2) The Obligors jointly and severally undertake that they will:
(a) pay (together with any value added tax thereon):
(i) the fees and expenses of the Agent and all paying agents and of
any Calculation Agent;
(ii) all expenses in connection with the issue, authentication, packaging
and initial delivery of Notes and the preparation of Global Notes,
this Agreement, the Agency Agreement, the Guarantee and the
preparation and printing of Notes and the Information Memorandum; and
(iii) the cost of obtaining any credit rating for the Notes;
(b) pay to Lehman Brothers the fees and disbursements of legal advisers
appointed to represent the Dealers (including any value added tax
thereon as agreed between Lehman Brothers and the Guarantor) in
connection with the negotiation, preparation, execution and delivery of
this Agreement, the Agency Agreement, the Guarantee and any documents
referred to in any of them and any other documents referred to in any of
them and any other documents required in connection with the creation of
the Programme;
(c) pay promptly, and in any event before any penalty becomes payable, any
stamp, documentary, registration or similar duty or tax (including any
stamp duty reserve tax) payable in connection with the entry into,
performance, enforcement or admissibility in evidence of this Agreement,
any communication pursuant hereto, the Agency Agreement, the Guarantee
or any Note and indemnify each Dealer against any liability with respect
to or resulting from any delay in paying or omission to pay any such
duty or tax; and
(d) reimburse each Dealer for its costs and expenses reasonably and properly
incurred in protecting or enforcing any of its rights under this
Agreement.
10. TERMINATION OF APPOINTMENT OF DEALERS
The Obligors or (as to itself) a Dealer may terminate the arrangements
described in this Agreement by giving not less than 30 days' written
notice to the other parties hereto. The Obligors may terminate the
appointment of a Dealer or Dealers by giving not less than 30 days'
written notice to such Dealer or Dealers (with a copy promptly there to
all the other Dealers and the Agent). Termination shall not affect any
rights or obligations (including but not limited to those arising under
clauses 6, 8 and/or 9) which have accrued at the time of termination or
which accrue thereafter in relation to any act or omission or alleged
act or omission which occurred prior to such time.
11. APPOINTMENT OF NEW DEALERS
(1) Nothing in this Agreement shall prevent the Obligors from appointing one
or more New Dealers for the duration of the Programme or, with regard to
an issue of a particular Tranche of Notes, the Obligors from appointing
<PAGE>
one or more New Dealers for the purposes of that Tranche, in either case
upon the terms of this Agreement and provided that, unless such
appointment is effected pursuant to a Subscription Agreement:
(a) any New Dealer shall have first delivered an appropriate Dealer
Accession Letter to the Obligors, in the case of an appointment for
the duration of the Programme, or the relevant Issuer, in the case of
an appointment for a particular Tranche of Notes; and
(b) the Obligors, in the case of an appointment for the duration of the
Programme, or the relevant Issuer, in the case of an appointment for a
particular Tranche of Notes, shall have delivered to such New Dealer
an appropriate Confirmation Letter.
(2) Upon receipt of the relevant Confirmation Letter or execution of the
relevant Subscription Agreement, as the case may be, each such New
Dealer shall, subject to the terms of the relevant Dealer Accession and
the relevant Confirmation Letter or the relevant Subscription Agreement,
as the case may be, become a party to this Agreement, vested with all
authority, rights, powers, duties and obligations of a Dealer as if
originally named as a Dealer hereunder provided further that, except in
the case of the appointment of a New Dealer for the duration of the
Programme, following the Issue Date of the relevant Tranche, the
relevant New Dealer shall have no further such authority, rights,
powers, duties or obligations except such as may have accrued or been
incurred prior to, or in connection with, the issue of such Tranche.
(3) The Obligors shall promptly notify the other Dealers and the Agent of
any appointment of a New Dealer for the duration of the Programme by
supplying to such parties a copy of any Dealer Accession Letter and
Confirmation Letter. Such notice shall be required to be given in the
case of an appointment of a New Dealer for a particular Tranche of Notes
to the Agent only.
12. INCREASE IN THE AGGREGATE NOMINAL AMOUNT OF THE PROGRAMME
(1) From time to time the Obligors may wish to increase the aggregate
nominal amount of the Notes that may be issued under the Programmed In
such circumstances, the Obligors may give notification of such an
increase (subject as set out in sub-clause (2)) by delivering to the
Listing Agent and the Dealers with a copy to the Agent a letter
substantially in the form set out in Appendix D hereto. Upon the date
specified in such notice (which date may not be earlier than seven
London business days after the date the notice is given), all references
in this Agreement, the Agency Agreement or any other agreement or deed
or document in relation to the Programme to a Euro Medium Term Note
Programme of a certain nominal amount, shall be and shall be deemed to
be references to a Euro Medium Term Note Program of the increased
nominal amount.
(2) Notwithstanding sub-clause (1), the right of the Obligors to increase
the aggregate nominal amount of the Programme shall be subject to each
Dealer having received and found satisfactory such of the documents and
confirmations described in the Initial Documentation List which may be
relevant, with reference to the circumstances at the time of the
proposed increase, as agreed between the Obligors and the Dealers, and
the delivery of any farther or other documents reed by the Dealers or by
the relevant Stock Exchange for the purpose of listing any Notes to be
issued on the relevant Stock Exchange. The Arranger shall circulate to
the Dealers all the documents and confirmations described in the Initial
Documentation List and any farther documents to be produced. Any Dealer
must notify the Arranger and Obligors within seven London business days
<PAGE>
of receipt if it considers, in its reasonable opinion, such documents
and confirmations to be unsatisfactory and, in the absence of such
notification, such Dealer shall be deemed to consider such documents and
confirmations to be satisfactory.
13. STATUS OF THE DEALERS AND THE ARRANGERS
(1) Each of the Dealers agrees that each Arranger has only acted in an
administrative capacity to facilitate the establishment and/or
maintenance of the Programme and has no responsibility to it for (a) the
adequacy, accuracy, completeness or reasonableness of any
representation, warranty, undertaking, agreement, statement or
information in the Information Memorandum, any Pricing Supplement, this
Agreement or any information provided in connection with the Programme
or (b)the nature and suitability to it of all legal, tax and accounting
matters and all documentation in connection with the Programme or any
Tranche.
(2) The Arrangers shall have only those duties, obligations and
responsibilities expressly specified in this Agreement.
14. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement and
any party may enter into this Agreement by executing a counterpart.
15. COMMUNICATIONS
(1) All communications shall be by telex, fax or letter delivered by hand or
(but only where specifically provided in the Procedures Memorandum) by
telephone. Each communication shall be made to the relevant party at
the telex number, fax number or address or telephone number and, in the
case of a communication by telex, fax or letter, marked for the
attention of, or (in the case of a communication by telephone) made to,
the person(s) or department from time to time specified in writing by
that party to the other for the purpose. The initial telephone number,
telex number, fax number and person(s) or department so specified by
each party are set out on the signature pages hereof.
(2) A communication shall be deemed received (if by telex) when a confirmed
answerback is received at the end of the transmission, (if by fax) when
an acknowledgment of receipt is received, (if by telephone) when made or
(if by letter) when delivered, in each case in the manner required by
this clause. However, if a communication is received after business
hours on any business day or on a day which is not a business day in the
place of receipt it shall be deemed to be received and become effective
on the next business day in the place of receipt. Every communication
shall be irrevocable save in respect of any manifest error therein. Any
communication sent by fax must also be sent by letter within two days of
the date of the original fax transmission.
16. BENEFIT OF AGREEMENT
(1) This Agreement shall be binding upon and shall inure for the benefit of
the Obligors and each Dealer and their respective successors and
permitted assigns.
(2) The Dealers may only assign or transfer their rights or obligations
under this Agreement with the prior written consent of the Obligors
except for an assignment and/or transfer of all of a Dealer's rights and
obligations hereunder in whatever form such Dealer determines may be
<PAGE>
appropriate to a partnership, corporation, trust or other organisation
in whatever form that may succeed to, or to which the Dealer transfers,
all or substantially all of the Dealer's assets and business and that
assumes such obligations by contract, operation of law or otherwise.
Upon any such transfer and assumption of obligations such Dealer shall
be relieved of and fully discharged from all obligations under this
Agreement, whether such obligations arose before or after such transfer
and assumption.
17. CALCULATION AGENT
(1) In the case of any Series of Notes which require the appointment of a
Calculation Agent the Agent shall act as Calculation Agent, unless the
relevant Dealer or (in the case of a syndicated issue) the Lead Manager
requests the relevant Issuer to appoint such Dealer or Lead Manager, or
a person nominated by such Dealer or Lead Manager (a "NOMINEE"), as
Calculation Agent.
(2) Should such a request be made to the relevant Issuer the appointment of
that Dealer, Lead Manager or Nominee shall be automatic upon the issue
of the relevant Series of Notes, and shall, except as agreed, be on the
terms set out in the Calculation Agency Agreement attached as Appendix A
to the Agency Agreement, and no farther action shall be required to
effect the appointment of such Dealer, Lead Manager or Nominee as
Calculation Agent in relation to that Series of Notes, and the Schedule
to the Calculation Agency Agreement shall be deemed to be duly annotated
to include such Series. The name of the Dealer, Lead Manager or Nominee
so appointed will be entered in the relevant Pricing Supplement.
18. STABILISATION
In connection with the distribution of any Notes, the Dealer (if any)
designated as stabilising manager in the applicable Pricing Supplement
may over-allot or effect transactions which stabilise or maintain the
market price of such Notes and/or any associated securities at a level
which might not otherwise prevail, but in doing so such Dealer shall act
as principal and not as agent of the relevant Issuer or CCE, where the
relevant Issuer is CCE GB. Such stabilising, if commenced, may be
discontinued at any dine. Any loss resulting from over-allotment and
stabilisation shall be borne, and any net profit arising tnerefrom shall
be retained, by the stabilising manager for its own account.
19. GOVERNING LAW AND SUBMISSION TO JURISDICTION
(1) This Agreement and every agreement for the issue and purchase of Notes
as referred to in clause 2 shall be governed by, and construed in
accordance with, the laws of the State of New York.
(2) Each Obligor unconditionally and irrevocably agrees that any State or
Federal courts sitting in the Borough of Manhattan, the City of New York
shall have jurisdiction to settle any disputes which may arise out of or
in connection with this Agreement and accordingly any legal action or
proceedings arising out of or in connection with this Agreement
("PROCEEDINGS") may be brought in such courts.
Each Obligor unconditionally and irrevocably submits to the jurisdiction
of such courts and waives any objection which it may now or hereafter
have to Proceedings in any such courts whether on the ground of the
laying of venue or on the ground that the Proceedings have been brought
in an inconvenient forum.
To the extent that any Obligor has or hereafter may acquire any immunity
from
<PAGE>
jurisdiction of any court or from any legal process with respect to
itself or its property, each Obligor irrevocably waives such immunity in
respect of its obligations under this Agreement.
This submission is made for the benefit of the Dealers and shall not
limit the right of any Dealer to take Proceedings in any other court of
competent jurisdiction nor shall the taking of Proceedings in one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not).
Each Obligor unconditionally and irrevocably agrees that final judgment
in any Proceedings brought in such a court shall be conclusive and
binding upon it and may be enforced in any court to the jurisdiction of
which it is subject by a suit upon such judgment or in any manner
provided by law.
Each Obligor irrevocably waives to the fullest extent permitted by law,
any requirement or other provision of law, rule, regulation or practice
which requires or otherwise establishes as a condition to the
Proceedings (including appeals), the posting of any bond or the
furnishing, directly or indirectly, of any other security.
Each Obligor agrees that the process by which any Proceedings in New
York City are begun may be served on it by being delivered to it c/o
National Registered Agents, Inc., 105 Chambers Street, New York, NY
10007 (copy to the relevant Obligor). If the appointment of the person
appointed to receive process on behalf of any Obligor ceases to be
effective, such Obligor shall forthwith appoint a further person in the
United States of America to accept service of process on its behalf and
notify the name and address to the Dealers.
<PAGE>
APPENDIX A
INITIAL DOCUMENTATION LIST
1. A certified copy of the certificate of incorporation and by-laws of CCE
and of the memorandum and articles of association of CCE GB.
2. A certified copy of all resolutions and other authorisations required to
be passed or given, and evidence of any other action required to be taken,
on behalf of each Obligor:
(a) to approve this Agreement, the Agency Agreement, the Guarantee (if
applicable), the creation of the Programme and the issue of Notes;
(b) to authorise appropriate persons to execute each of this Agreement,
the Agency Agreement, the Guarantee and any Notes and to take any
other action in connection therewith; and
(c) to authorise appropriate persons to enter into agreements with any
Dealer on behalf of such Obligor to issue Notes in accordance with
clause 2 of this Agreement.
3. A certified list of the names, titles and specimen signatures of the
persons authorised on behalf of each Obligor in accordance with
paragraph 2(c) above.
4. Certified copies of any other governmental or other consents (including,
but not limited to, the consent of the Ministry of Finance of Japan and
confirmation that the Bank of England and the German Central Bank have
each been notified of the establishment of the Programme) required for
each Obligor to issue or, as the case may be, to guarantee, Notes, for
each Obligor to execute and deliver this Agreement, the Agency Agreement
and, if applicable, the Guarantee and for each Obligor to fulfil its
obligations under this Agreement, the Agency Agreement, all Notes and, in
the case of CCE, the Guarantee.
5. Confirmation that the master Temporary Global Notes and master Permanent
Global Notes (from which copies can be made for each particular issue of
Notes), duly executed by a person or persons authorised to take action on
behalf of the Issuer as specified in paragraph 2(b) above, have been
delivered to the Agent.
6. Legal opinions addressed to each of the Dealers dated on or after the date
of this Agreement, in such form and with such content as the Dealers may
reasonably require, from:
(a) Lowry F. Kline, general counsel to CCE;
(b) Clifford Chance, legal advisers to CCE GB as to English law; and
(c) Allen & Overy, legal advisers to the Dealers as to New York law.
7. A conformed copy of each of this Agreement, the Agency Agreement and the
Guarantee and confirmation that executed copies of such documents have
been delivered, in the case of the Agency Agreement, to the Agent and the
paying agents appointed thereunder and, in the case of the Guarantee, to
the Agent.
8. A printed final version of the Information Memorandum and the Procedures
Memorandum.
<PAGE>
9. Confirmation from the Listing Agent that the Luxembourg Stock Exchange
will list Notes to be issued under the Programme.
10. Confirmation that the Information Memorandum has received the registration
number of the Commission des Operations de Bourse.
11. Comfort letters from Ernst & Young LLP as independent auditors of CCE and
from Ernst & Young as independent auditors of CCE GB, each in such form
and with such content as the Dealers may reasonably request.
12. Confirmation that the Programme has been rated A3 by Moody's Investors
Service and A+ by Standard & Poor's Ratings Services.
13. Letter from National Registered Agents, Inc. confirming its acceptance
as agent for service of process of the Obligors.
<PAGE>
APPENDIX B
SELLING RESTRICTIONS
1. UNITED STATES
(1) The Notes have not been and will not be registered under the Securities
Act, and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act. Each Dealer
represents and agrees that it has offered and sold any Notes, and will
offer and sell any Notes (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the completion of the
distribution of all Notes of the Tranche of which such Notes are a part,
as determined and notified as provided below, only in accordance with
Rule 903 of Regulation S under the Securities Act. Accordingly, each
Dealer further represents and agrees that it, its affiliates or any
persons acting on its or their behalf have not engaged and will not
engage in any directed selling efforts with respect to any Note, and it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Dealer who has purchased Notes of a
Tranche hereunder (or in the case of a sale of a Tranche of Notes issued
to or through more than one Dealer, each of such Dealers as to the Notes
of such Tranche purchased by or through it or, in the case of a
syndicated issue, the relevant Lead Manager) shall determine and notify
to the Agent the completion of the distribution of the Notes of such
Tranche. On the basis of such notification or notifications, the Agent
agrees to notify such Dealer/Lead Manager of the end of the restricted
period with respect to such Tranche. Each Dealer also agrees that, at
or prior to confirmation of sale of Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "SECURITIES ACT") and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the completion of the distribution of
the Securities as determined and notified by the Agent for the
Securities to [name of Dealer/Lead Manager], except in either case in
accordance with Regulation S under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
Terms used in this sub-clause 1(1) have the meanings given to them by
Regulation S.
In order to facilitate compliance by each Dealer with the foregoing, the
relevant Issuer undertakes that, prior to such certification with respect
to such Tranche, it will notify each applicable Dealer in writing of each
acceptance by the relevant Issuer of an offer to purchase, and of any
issuance of, Notes or other debt obligations of the relevant Issuer which
are denominated in the same currency and which have substantially the same
interest rate and maturity date as the Notes of such Tranche.
(2) In addition, the Notes are in bearer form and are subject to United
States tax law requirements and may not be offered, sold or delivered
within the United States or its possessions or to a United States
person, except in certain transactions permitted by United States tax
regulations. Each Dealer represents and agrees with the Issuer that:
(a) except to the extent permitted under U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D) (the "D RULES"), each Dealer (a) represents
that it has not offered or sold, and agrees that during the
restricted period it will not offer or sell, Notes in bearer form
to a person who is within the United States or its possessions or
<PAGE>
to a United States person, and (b) represents that it has not
delivered and agrees that it will not deliver within the United
States or its possessions definitive Notes in bearer form that are
sold during the restricted period;
(b) each Dealer represents that it has and agrees that throughout the
restricted period it will have in effect procedures reasonably
designed to ensure that its employees or agents who are directly
engaged in selling Notes in bearer form are aware that such Notes
may not be offered or sold during the restricted period to a
person who is within the United States or its possessions or to a
United States person, except as permitted by the D Rules;
(c) if it is a United States person, each Dealer represents that it is
acquiring the Notes for purposes of resale in connection with
their original issuance and if it retains Notes in bearer form for
its own account, it will only do so in accordance with the
requirements of U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D)(6);
and
(d) with respect to each affiliate that acquires Notes from a Dealer
for the purpose of offering or selling such Notes during the
restricted period, such Dealer either (i) repeats and confirms the
representations and agreements contained in sub-clauses (a), (b)
and (c) on such affiliate's behalf or (ii) agrees that it will
obtain from such affiliate for the benefit of the Issuer the
representations and agreements contained in sub-clauses (a), (b)
and (c).
Terms used in this sub-clause 1(2) have the meanings given to them by
the U.S. Internal Revenue Code and regulations thereunder, including the
D Rules.
(3) Each Dealer represents and agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution
and delivery of the Notes, except with its affiliates or with the prior
written consent of the relevant Issuer.
(4) Each issue of Indexed Notes or Dual Currency Notes shall be subject to
such additional U.S. selling restrictions as the Issuer and the relevant
Dealer may agree as a term of the issue and purchase of such Notes,
which additional selling restrictions shall be set out in the Pricing
Supplement. Each relevant Dealer agrees that it shall offer, sell and
deliver such Notes only in compliance with such additional U.S. selling
restrictions.
2. UNITED KINGDOM
Each Dealer represents and agrees that:
(i) in relation to Notes which have a maturity of one year or more, it
has not offered or sold and, prior to the expiry of the period of six
months from the Issue Date of such Notes, will not offer or sell any
such Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities
Regulations 1995;
(ii) it has only issued or passed on and will only issue or pass on in
<PAGE>
the United Kingdom any document received by it in connection with the
issue of any Notes to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on; and
(iii) it has complied and will comply with all applicable provisions of the
FSA with respect to anything done by it in relation to any Notes in,
from or otherwise involving the United Kingdom.
3. FRANCE
Each Dealer acknowledges that French Franc Notes issued by CCE or CCE
GB, will be issued outside France and represents and agrees that, in
connection with their initial distribution, it has not offered or sold
and will not offer or sell, directly or indirectly, any Notes to the
public in France, and that it has not distributed and will not
distribute or cause to be distributed to the public in France the
Information Memorandum or any other offering material relating to the
Notes.
4. JAPAN
The Notes have not been and will not be registered under the Securities
and Exchange Law of Japan (the "SECURITIES AND EXCHANGE LAW") and each
Dealer agrees that it will not offer or sell any Notes, directly or
indirectly, in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan, including
any corporation or other entity organised under the laws of Japan), or
to others for re-offering or resale, directly or indirectly, in Japan or
to a resident of Japan except in compliance with the Securities and
Exchange Law and any other applicable laws or regulations of Japan.
5. GERMANY
In connection with the initial placement of any Notes in Germany, each
Dealer agrees that it will offer and sell such Notes (i) unless
otherwise provided in the relevant Subscription Agreement or the
applicable Pricing Supplement in the case of an issue made on a
syndicated basis, only for an aggregate purchase price per purchaser of
at least DM 80,000 (or the foreign currency equivalent) or such other
amount as may be stipulated from time to time by applicable German law
or (ii) as may otherwise be permitted in accordance with applicable
German law.
6. GENERAL
Each Dealer agrees that it will (to the best of its knowledge and
belief) comply with all applicable securities laws and regulations in
force in any jurisdiction in which it purchases, offers, sells or
delivers Notes or possesses or distributes the Information Memorandum
and will obtain any consent, approval or permission required by it for
the purchase, offer, sale or delivery by it of Notes under the laws and
regulations in force in any jurisdiction to which it is subject or in
which it makes such purchases, offers, sales or deliveries and no
Obligor or any other Dealer shall have any responsibility therefor.
None of the Obligors and any of the Dealers represents that Notes may at
any time lawfully be sold in compliance with any applicable registration
or other requirements in any jurisdiction, or pursuant to any exemption
available thereunder, or assumes any responsibility for facilitating
such sale.
<PAGE>
With regard to each Tranche, the relevant Dealer will be required to
comply with such other additional restrictions as the relevant Issuer
and the relevant Dealer shall agree and as shall be set out in the
applicable Pricing Supplement.
<PAGE>
APPENDIX C
PART I
FORM OF DEALER ACCESSION LETTER - PROGRAMME
[ ], 19[ ]
To: Coca-Cola Enterprises Inc.
Coca-Cola Enterprises Great Britain plc
(the "OBLIGORS")
Dear Sirs,
Coca-Cola Enterprises Inc.
Coca-Cola Enterprises Great Britain plc
U.S.$2,500,000,000 Euro Medium Term Note Programme
We refer to the Programme Agreement dated 25th September, 1997 entered into in
respect of the above Euro Medium Term Note Programme and made between the
Issuers and the Dealers party thereto (which agreement, as amended,
supplemented or restated from time to time, is herein referred to as the
"PROGRAMME AGREEMENT").
Conditions Precedent
We confirm that we are in receipt of the documents referenced below:
(i) a copy of the Programme Agreement; and
(ii) a copy of current versions of all documents referred to in Appendix A of
the Programme Agreement,
and have found them to our satisfaction. *
For the purposes of the Programme Agreement our notice details are as follows:
__________________________________________________________________________
* It is important that each original legal opinion and comfort letter
permits it to be delivered to, and relied upon by, New Dealers,
otherwise a side letter to this effect should be provided.
(insert name, address, telephone, facsimile, telex (+ answerback) and
attention).
In consideration of the appointment by the Issuers of us as a Dealer under the
Programme Agreement we hereby undertake, for the benefit of the Issuers and
each of the other Dealers, that we will perform and comply with all the duties
and obligations expressed to be assumed by a Dealer under the Programme
Agreement.
This letter is governed by, and shall be construed in accordance with, the
laws of the State of New York.
Yours faithfully,
<PAGE>
[Name of New Dealer]
By: ________________________________
cc: The Chase Manhattan Bank As Agent
The other Dealers
<PAGE>
PART II
FORM OF CONFIRMATION LETTER - PROGRAMME
[ ], 19[ ]
To: [Name and address of New Dealer]
Dear Sirs,
Coca-Cola Enterprises Inc.
Coca-Cola Enterprises Great Britain plc
U.S.$2,500,000,000 Euro Medium Term Note Programme
We refer to the Programme Agreement dated September, 1997 (such agreement, as
amended, supplemented or restated from time to time, the "PROGRAMME
AGREEMENT") entered into in respect of the above Euro Medium Term Note
Programme and hereby acknowledge receipt of your Dealer Accession Letter to us
dated [ ].
We hereby confirm that, with effect from the date hereof, you shall become a
Dealer under the Programme Agreement in accordance with clause 11(2) of the
Programme Agreement.
Yours faithfully,
For: Coca-Cola Enterprises Inc.
By:
----------------------------
For: Coca-Cola Enterprises Great Britain plc
By:
----------------------------
cc: The Chase Manhattan Bank as Agent
The other Dealers
<PAGE>
PART III
FORM OF DEALER ACCESSION LETTER - NOTE ISSUE
[ ], 19[ ]
To: [Coca-Cola Enterprises Inc./Coca-Cola Enterprises Great Britain plc]
(the "Issuer")
Dear Sirs,
[Coca-Cola Enterprises Inc./Coca-Cola Enterprises Great Britain plc]
[Description of issue] (the "Notes")
We refer to the Programme Agreement dated 25th September, 1997 and made
between inter alia the Issuer[, Coca-Cola Enterprises Inc. (the "Guarantor")]
and the Dealers party thereto (which agreement, as amended, supplemented or
restated from time to time, is herein referred to as the "Programme
Agreement").
Conditions Precedent
We confirm that we are in receipt of the documents referenced below:
(i) a copy of the Programme Agreement; and
(ii) a copy of current versions of such of the other documents referred to in
Appendix A of the Programme Agreement as we have requested,
and have found them to our satisfaction or (in the case of the documents
referred to in (ii) above) have waived such production.**
For the purposes of the Programme Agreement our notice details are as follows:
(insert name, address, telephone, facsimile, telex (+ answerback) and
attention).
In consideration of the appointment by the Issuer of us as a Dealer under the
Programme Agreement in respect of the issue of the Notes we hereby undertake,
for the benefit of the Issuer, the Guarantor and each of the other Dealers,
that, in relation to the issue of the Notes, we will perform and comply with
all the duties and obligations expressed to be assumed by a Dealer under the
Programme Agreement.
________________________________________________________________________________
** It is important that each original legal opinion and comfort letter permits
it to be delivered to, and relied upon by, New Dealers, otherwise a side
letter to this effect should be provided.
This letter is governed by, and shall be construed in accordance with, the laws
of the State of New York.
Yours faithfully,
For: [Name of New Dealer]
<PAGE>
By:
--------------------------------
cc: The Chase Manhattan Bank as Agent
<PAGE>
PART IV
FORM OF CONFIRMATION LETTER - NOTE ISSUE
[ ], 19[ ]
To: [Name and address of New Dealer]
Dear Sirs,
[Coca-Cola Enterprises Inc./Coca-Cola Enterprises Great Britain plc]
(the "Issuer")
[Description of issue]
(the "Notes")
- ---------------------------------------------------
We refer to the Programme Agreement dated 25th September, 1997 (such agreement,
as amended, supplemented or restated from time to time, the "Programme
Agreement") and hereby acknowledge receipt of your Dealer Accession Letter to us
dated [ ].
We hereby confirm that, with effect from the date hereof, in respect of the
issue of the Notes, you shall become a Dealer under the Programme Agreement in
accordance with the provisions of clause 11(2) of the Programme Agreement.
Yours faithfully,
For: [Coca-Cola Enterprises Inc./Coca-Cola Enterprises Great Britain plc]
By:
--------------------------------
cc: The Chase Manhattan Bank as Agent
<PAGE>
APPENDIX D
LETTER REGARDING INCREASE IN THE NOMINAL AMOUNT
OF THE PROGRAMME
[ ], 199[ ]
To: The Dealers and the Listing Agent
(as those expressions are defined
in the Programme Agreement dated
, 1997, as amended,
supplemented or restated from
time to time, (the "Programme Agreement"))
Dear Sirs,
Coca-Cola Enterprises Inc.
Coca-Cola Enterprises Great Britain plc
U.S.$2,500,000,000 Euro Medium Term Note Programme (the "Programme")
- -----------------------------------------------
We hereby require, pursuant to clause 12(1) of the Programme Agreement, that the
aggregate nominal amount of the above Programme be increased to U.S.$[ ]
from [specify date which is no earlier than seven London business days after the
date the notice is given] whereupon all references in the Programme Agreement,
the Agency Agreement, the Guarantee and/or any other agreement or deed or
document in relation to the Programme will be deemed amended accordingly.
We understand that this increase is subject to the satisfaction of the condition
set out in clause 12(2) of the Programme Agreement namely that each Dealer shall
have received and found satisfactory all the documents and confirmations
described in the Initial Documentation List (with such changes as may be
relevant, with reference to the circumstances at the time of the proposed
increase, as are agreed between the Obligors and the Dealers) and the delivery
of any further conditions precedent that any of the Dealers may reasonably
require.
You must notify the Arranger and ourselves within seven London business days
of receipt by you of those documents and confirmations and, if applicable,
further conditions precedent if you consider (in your reasonable opinion) such
documents, confirmations and, if applicable, such further conditions precedent
to be unsatisfactory and, in the absence of such notification, you will be
deemed to consider such documents and confirmations to be satisfactory and such
further conditions precedent to be satisfied.
<PAGE>
Terms used in this letter have the meaning given to them in the Programme
Agreement.
Yours faithfully,
For: Coca-Cola Enterprises Inc.
By:_______________________________
For: Coca-Cola Enterprises Great Britain plc
By:_______________________________
cc: The Chase Manhattan Bank as Agent
<PAGE>
APPENDIX E
FORM OF SUBSCRIPTION AGREEMENT
[COCA-COLA ENTERPRISES INC./
COCA-COLA ENTERPRISES GREAT BRITAIN plc]
[DESCRIPTION OF ISSUE]
[DATE]
To: [ ]
(the "Managers")
c/o [ ]
(the "Lead Manager")
cc: The Chase Manhattan Bank as Agent
Dear Sirs,
[Coca-Cola Enterprises Inc./Coca-Cola Enterprises Great Britain plc] (the
"Issuer") proposes to issue [DESCRIPTION OF ISSUE] (the "Notes") pursuant to its
U.S.$2,500,000,000 Euro Medium Term Note Programme. [The Notes will be
unconditionally and irrevocably guaranteed by Coca-Cola Enterprises Inc. (the
"Guarantor").] The terms of the issue shall be as set out in the form of Pricing
Supplement attached to this Agreement as Annexe.
This Agreement is supplemental to the Programme Agreement (the "Programme
Agreement") dated 25th September, 1997 made between, inter alia, the Issuer [,
the Guarantor] and the Dealers party thereto. All terms with initial capitals
used herein without definition have the meanings given to them in the Programme
Agreement.
We wish to record the arrangements agreed between us in relation to the issue:
* [1. This Agreement appoints each Manager which is not a party to the
Programme Agreement (each a "New Dealer") as a New Dealer in accordance
with the provisions of clause 11 of the Programme Agreement for the
purposes of the issue of the Notes. The Lead Manager confirms that it is in
receipt of the documents referenced below:
(i) a copy of the Programme Agreement; and
(ii) a copy of such of the documents referred to in Appendix A of the
Programme Agreement as the Lead Manager (on behalf of the Managers)
has requested and has confirmed with [each of] the New Dealer[s] that
[each of] the New Dealer[s] has found them to be satisfactory or (in
the case of any or all of the documents referred to in (ii)) has
waived such production.
For the purposes of the Programme Agreement the details of the Lead Manager
for service of notices are as follows:
- ----------
*Delete this paragraph for a Dealer-only syndicate.
<PAGE>
[insert name, address, telephone, facsimile, telex (+ answerback) and
attention].
In consideration of the Issuer appointing the New Dealer[s] as [a]
Dealer[s] in respect of the Notes under the Programme Agreement, [each/the]
New Dealer hereby undertakes, for the benefit of the Issuer [,the
Guarantor] and each of the other Dealers, that, in relation to the issue of
the Notes, it will perform and comply with all the duties and obligations
expressed to be assumed by a Dealer under the Programme Agreement, a copy
of which it acknowledges it has received from the Lead Manager. The Issuer
[and the Guarantor] hereby confirm[s] that [each of] the New Dealer[s]
shall be vested with all authority, rights, powers, duties and obligations
of a Dealer in relation to the issue of the Notes as if originally named as
a Dealer under the Programme Agreement provided that following the Issue
Date of the Notes [each of] the New Dealer[s] shall have no further such
authority, rights, powers, duties or obligations except such as may have
accrued or been incurred prior to, or in connection with, the issue of the
Notes.]
[2.] Subject to the terms and conditions of the Programme Agreement and this
Agreement the Issuer hereby agrees to issue the Notes and the Managers
jointly and severally agree to purchase the Notes at a purchase price of [
] per cent. of the principal amount of the Notes (the "Purchase Price"),
being the issue price of [ ] per cent. less a selling
[commission/concession] of [ ] per cent. of such principal amount and a
management and underwriting fee of [ ] per cent. of such principal
amount.
[3.] The settlement procedures set out in Part 2 of Annexe A to the Procedures
Memorandum shall apply as if set out in this Agreement provided that, for
the purposes of this Agreement:
(i) the sum payable on the Issue Date shall be [ ] (representing the
Purchase Price [, less the amount payable in respect of Managers'
expenses specified in clause [4] of this Agreement]);
(ii) "Issue Date" means [ ] a.m. ([ ] time) on [ ] or such
other time and/or date as the Issuer and the Lead Manager on behalf
of the Managers may agree; and
(iii) "Payment Instruction Date" means the Issue Date unless there is to
be a pre-closing for the issue in which case it means the business
day (being a day on which banks and foreign exchange markets are
open for business in London) prior to the Issue Date.
[4.] The Issuer [, or failing the Issuer, the Guarantor] shall bear and pay
(together with any applicable value added tax or similar tax) all costs and
expenses incurred in or in connection with the printing of the Notes, this
Agreement and the Pricing Supplement prepared in connection with the issue
of the Notes[, the listing of the Notes on the Luxembourg Stock Exchange]
and making initial delivery of the Notes. In addition, the Issuer [, or
failing the Issuer, the Guarantor] agrees to pay to the Lead Manager [ ] in
respect of reasonable legal, travelling, telex, facsimile, telephone,
postage and advertising expenses incurred and to be incurred by the
Managers in connection with the preparation and management of the issue and
distribution of the Notes which sum may be deducted from the Purchase Price
as provided in clause [3] hereof.
[5.] The obligation of the Managers to purchase the Notes is conditional upon:
(i) the conditions set out in clause 3(2) (other than that set out in
<PAGE>
clause 3(2)(f)) of the Programme Agreement being satisfied as of the
Payment Instruction Date and without prejudice to the aforesaid, the
Information Memorandum dated [ ] [, as supplemented by [
],] containing all material information relating to the assets
and liabilities, financial position and profits and losses of the
Issuer [and the Guarantor] and nothing having happened or being
expected to happen which would require the Information Memorandum [,
as so supplemented,] to be [further] supplemented or updated; and
(ii) the delivery to the Lead Manager on the Payment Instruction Date
of:
(A) legal opinions addressed to the Managers dated the Payment
Instruction Date in such form and with such contents as the
Lead Manager, on behalf of the Managers, may reasonably
require from Lowry F. Kline, the legal advisers to the
[Issuer/Guarantor],[, from Clifford Chance, the legal
advisers to the Issuer as to English law] and from Allen &
Overy, the legal advisers to the Managers as to New York
law;
(B) a certificate dated as at the Payment Instruction Date
signed by a duly authorised officer of the Issuer [and a
certificate dated as at the Payment Instruction Date signed
by a duly authorised officer of the Guarantor] giving
confirmation to the effect stated in paragraph (i) of this
clause;
(C) [a] comfort letter[s] dated the [date hereof and the]
Payment Instruction Date from the independent auditors of
[each of] the Issuer [and the Guarantor]], in such form and
with such content as the Managers may reasonably request;
and
(D) such other conditions precedent as the Lead Manager may
require.
If any of the foregoing conditions is not satisfied on or before the
Payment Instruction Date, this Agreement shall terminate on such date
and the parties hereto shall be under no further liability arising out
of this Agreement (except for the liability of the Issuer [, or failing
the Issuer, the Guarantor] in relation to expenses as provided in clause
[4] and except for any liability arising before or in relation to such
termination), provided that the Lead Manager, on behalf of the Managers,
may in its discretion waive any of the aforesaid conditions (other than
the condition precedent contained in clause 3(2)(c) of the Programme
Agreement) or any part of them.
[6.] The Lead Manager, on behalf of the Managers, may, by notice to the
Issuer [and the Guarantor], terminate this Agreement at any time prior
to payment of the net purchase money to the Issuer if in the opinion of
the Lead Manager there shall have been such a change in national or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would in its view be likely to
prejudice materially the success of the offering and distribution of the
Notes or dealings in the Notes in the secondary market and, upon such
notice being given, the parties to this Agreement shall (except for the
liability of the Issuer [, or failing the Issuer, the Guarantor] in
relation to expenses as provided in clause [4] of this Agreement and
except for any liability arising before or in relation to such
termination) be released and discharged from their respective
<PAGE>
obligations under this Agreement.
[7.] Clause 19 of the Programme Agreement shall also apply to this Agreement
as if expressly incorporated herein.
[8.] This Agreement may be signed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement and
any party may enter into this Agreement by executing a counterpart.
Please confirm that this letter correctly sets out the arrangements agreed
between us.
Yours faithfully,
For: [Issuer]
By: __________________________
[For: COCA-COLA ENTERPRISES INC.
By: __________________________]
We agree to the foregoing.
For: [NAMES OF MANAGERS]
By: __________________________
<PAGE>
ANNEXE A TO THE SUBSCRIPTION AGREEMENT
[Form of Pricing Supplement]
<PAGE>
SIGNATORIES
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
The Issuers
COCA-COLA ENTERPRISES INC.
Telephone: 001 770 989 3052
Telefax: 001 770 989 3061
Attention: Corporate Director Treasury Services
Vicki R. Palmer
By: __________________________
Treasurer
COCA-COLA ENTERPRISES GREAT BRITAIN plc
Telephone: 001 770 989 3052
Telefax: 001 770 989 3061
Attention: Corporate Director Treasury Services
Vicki R. Palmer
By: __________________________
Treasurer
The Dealers
ABN AMRO BANK N.V.
Telephone: 0171 392 3323
Telefax: 0171 392 3341
Attention: MTN Desk
BANQUE LEHMAN BROTHERS
Telephone: 331 4014 2286/4801 4099
Telex: 290727
Telefax: 331 4014 0662
Attention: EMTN Desk
BANQUE NATIONALE DE PARIS
Telephone: 331 4014 2286/4801 4099
Telex: 390727
Telefax: 331 4014 0662
Attention: EMTN Desk
CITIBANK INTERNATIONAL plc
Telephone: 0171 500 1122
Telex: 299831 CITI UK G
Telefax: 0717 500 1219
Attention: MTN Desk
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
Telephone: 0171 888 4021
<PAGE>
Telex: 892131 CSFB G
Telefax: 0171 888 3719
Attention: MTN Desk
DEUTSCHE BANK AG LONDON
Telephone: 0171 971 7186
Telex: 94015555 DBLN G
Telefax: 0171 971 7486
Attention: MTN Gorup
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
Telephone: 44 171 256 8256
Telex: 888881 LEHMAN G
Telefax: 44 171 260 2359
Attention: MTN Trading Desk
MIDLAND BANK plc
Telephone: 44 171 336 3000
Telex: 887213
Telefax: 44 171 336 3852
Attention: Transaction Development
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
Telephone: 0171 425 7799
Telex: 8812564 MORSTN G
Telefax: 0171 425 7999
Attention: Debt Capital Markets, Head of Transaction Management Group.
SOLOMON BROTHERS INTERNATIONAL LIMITED
Telephone: 0171 721 3625
Telex: 886441 SALBRO G
Telefax: 0171 721 2829
Attention: MTN Desk
SOCIETE GENERALE
Telephone: 331 4313 6683
Telex: 615890 SG MAR
Telefax: 331 4213 7721
Attention: MARC/GES/Tit/Syn
UBS LIMITED
Telephone: 0717 901 4253
Telex: 8812800 UBSLTD G
Telefax: 0171 901 1439
Attention: Euro Medium Term Note Desk
Each by its duly authorised signatory: DAVID M. SMITH
<PAGE>
EXHIBIT 10.11
COCA-COLA ENTERPRISES INC.
1997 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the 1997 Stock Option Plan (the "Plan") is to advance the
interest of Coca-Cola Enterprises Inc. (the "Company") and its Subsidiaries (as
defined in Section 4) by encouraging and enabling the acquisition of a financial
interest in the Company by officers and other key employees through grants of
stock options ("Options").
SECTION 2. ADMINISTRATION
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "nonemployee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code"), and the regulations thereunder.
The Committee shall determine the persons to whom and the times at which
Options will be granted, the number of shares to be subject to each Option, the
duration of each Option, the times within which the Option may be exercised, the
cancellation of the Option (with the consent of the holder thereof) and the
other conditions of the grant of an Option. The Committee, however, may
delegate, from time to time, to the Chief Executive Officer the authority to
make Awards under the Plan or to extend the period for exercise of Options
awarded under the Plan, unless such delegation would jeopardize the benefits of
Section 162(m) of the Internal Revenue Code or regulations thereunder.
Conditions of the grants of Options need not be the same with respect to each
optionee or with respect to each Option.
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations for the proper administration of the Plan, may make
interpretations and take other action in relation to the Plan as it deems
necessary or advisable. Each interpretation or other action made or taken
pursuant to the Plan shall be final and conclusive for all purposes and upon all
persons including, but without limitation, the Company, its Subsidiaries, the
Committee, the Board, the affected optionees, and their respective successors in
interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan or any Option granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
to the extent required by and in the manner provided by the Certificate of
Incorporation or Bylaws of the Company relating to indemnification of directors)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Committee member or members did not
act in good faith and in a manner he, she or they reasonably believed to be in
or not opposed to the best interest of the Company.
SECTION 3. STOCK
<PAGE>
The stock to be issued under the Plan shall be shares of common stock, $1
par value, of the Company (the "Stock"). The Stock shall be made available from
authorized and unissued Stock or from shares of Stock held by the Company in its
treasury. The total number of shares of Stock that may be issued under the
Plan pursuant to Options granted hereunder shall not exceed 5,433,000. Stock
subject to any unexercised portion of an Option which expires or is canceled,
surrendered or terminated for any reason may again be subject to Options
granted under the Plan. Stock received in payment upon the exercise of an
Option may not be the subject of a subsequent Option.
SECTION 4. ELIGIBILITY
Options may be granted to executive officers, other persons in the senior
executive band, and in the executive band, branch managers, sales center
managers, and other officers and management employees (including non-employee
officers) of the Company and its Subsidiaries. "Subsidiary" shall mean any
corporation or other business organization in which the Company owns, directly
or indirectly, 25% or more of the voting stock or capital at the time of the
granting of such Option.
No person shall be granted the right to acquire pursuant to Options granted
under the Plan more than 20% of the aggregate number of shares of Stock
originally authorized for issuance under the Plan.
SECTION 5. AWARDS OF OPTIONS
(A) OPTION PRICE. The option price shall be 100% or more of the fair
market value of the Stock on the date of grant. The fair market value of shares
of Stock shall be computed on the basis of the average of the high and low
market prices at which a share of Stock shall have been sold on the date for
which the valuation is made, or on the next preceding trading day if such date
was not a trading day, as reported on the New York Stock Exchange Composite
Transactions listing, or as otherwise determined by the Committee.
(B) PAYMENT. The option price shall be paid in full at the time of
exercise. No shares shall be issued until full payment has been received
therefor. Payment may be made in cash or, with the prior approval of and upon
the conditions established by the Committee, by other means, including delivery
of shares of Stock owned by the optionee.
(C) DURATION OF OPTIONS. Subject to the provisions of Section 9 and the
terms of the Option, the duration of Options shall be 10 years from date of
grant.
(D) TIME PERIOD FOR EXERCISE OF OPTION. Subject to the provisions of
Section 9 and terms of the Option, an Option shall be exercisable, in whole or
in part, within such time periods as established on the date of grant by the
Committee, or, when applicable, the Chief Executive Officer.
(E) OTHER TERMS AND CONDITIONS. Options may contain such other provisions,
as the Committee shall determine appropriate from time to time. The grant of an
Option to any officer or employee shall not affect in any way the right of the
Company and any Subsidiary to terminate the relationship between the Company or
Subsidiary and the optionee.
(F) OPTIONS GRANTED TO INTERNATIONAL OPTIONEES. Options granted to an
optionee who is subject to the laws of a country other than the United States of
America may contain terms and conditions inconsistent with provisions of the
Plan (except those necessary to retain the benefits of Section 162(m) of the
Internal Revenue Code), or may be granted under such supplemental documents, as
required under such laws.
<PAGE>
(G) WITHHOLDING. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the optionee the amount of any federal, state or local taxes
required by law to be withheld with respect to the Stock subject to such Award.
SECTION 6. REPLACEMENT
The Committee from time to time may permit an optionee under the Plan to
surrender for cancellation any unexercised outstanding stock option or stock
appreciation rights of the Company and receive in exchange from the Company
either shares of Stock, an option for such number of shares of Stock, or
both, in amounts and with features as designated by the Committee.
SECTION 7. EXTENSION OF THE TERMS OF OPTIONS
The Committee may extend the duration of any Option for a period not to
exceed one year without changing the option price and on such other terms and
conditions as the Committee may deem advisable unless such extension or change
would result in less favorable tax treatment than the optionee would have
received under the original option.
SECTION 8. NONTRANSFERABILITY OF OPTION
An Option granted pursuant to the Plan shall not be transferable otherwise
than by will or by the laws of descent and distribution or pursuant to a
domestic relations order as defined by the Internal Revenue Code unless
otherwise determined by the Committee. Certificate(s) representing the shares of
Stock issued upon exercise of an Option shall be issued only in the name of the
optionee or in the name of such optionee's duly authorized representative. With
the exception of any Option transferred pursuant to a qualified domestic
relations order, Options shall be exercisable, during the lifetime of an
optionee, only by the optionee personally or by the optionee's legal
representative. With respect to any Option transferred pursuant to a qualified
domestic relations order, any such Option shall be exercisable only by the
designated transferee personally or the designated transferee's legal
representative.
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT
(A) RETIREMENT AND DISABILITY.
(I) The Committee, in its sole discretion, may cause all outstanding
Options held by an optionee upon his or her retirement or disability to
become immediately exercisable.
(II) All Options exercisable upon retirement or disability of an
optionee (whether due to Committee action or otherwise) or becoming
exercisable thereafter shall expire no later than 36 months from the date
of such optionee's retirement or disability; provided, however, that if the
optionee dies within two years after the optionee's retirement or
disability, the Options shall expire 12 months after his or her death,
unless the Committee determines otherwise.
(B) DEATH WHILE EMPLOYED.
Upon the death of an optionee prior to termination of employment, all
outstanding Options held by such employee expire no later than 12 months after
the employee's death, unless the Committee determines otherwise.
(C) OTHER TERMINATION OF EMPLOYMENT.
(I) Upon the termination of employment of an optionee other than the
<PAGE>
death, disability or retirement of the optionee ("Other Termination of
Employment"), then the Committee, in its sole discretion, may cause all
outstanding nonexercisable Options held by such optionee to become
immediately exercisable.
(II) All Options exercisable upon the Other Termination of Employment
(whether due to Committee action or otherwise) or becoming exercisable
thereafter, shall expire no later than six months after the Other
Termination of Employment, unless the Committee determines otherwise.
(D) DEFINITIONS AND OTHER DETERMINATIONS.
(I) For purposes of this Section 9, "retirement" means an optionee's
voluntary termination of employment on a date which is on or after the
earliest date on which such optionee would be eligible for an immediately
payable benefit pursuant to the terms of the defined benefit pension plan
sponsored by the Company or a Subsidiary in which the optionee
participates. If the optionee does not participate in such a plan, the
date shall be determined as if the optionee participated in the Company's
defined benefit plan covering the majority of its nonbargaining employees
in the United States. With respect to nonemployee officers, "retirement"
means termination of services as an officer at or after age 55.
Notwithstanding the foregoing, options may contain such other definitions
of "retirement," as the Committee determines appropriate.
(II) For purposes of this Section 9, "disability" shall be determined
according to the definition of "disability," in effect at the time of the
determination, in the defined benefit pension plan sponsored by the Company
or a Subsidiary in which the optionee participates. If the optionee does
not participate in such a plan, the definition shall be determined as if
the optionee participated in the Company's defined benefit plan covering
the majority of its nonbargaining employees in the United States.
(III) For purposes of this Section 9, an optionee's employment shall
not be deemed to have terminated if the optionee obtains immediate
employment with certain affiliates of the Company, as defined in an Option,
and termination from such subsequent employment shall be deemed a
termination from the Company, unless the optionee obtains immediate
reemployment with the Company or its Subsidiaries.
SECTION 10. NO RIGHTS AS A SHARE OWNER
An optionee or transferee of an Option shall have no right as a share owner
with respect to any Stock covered by an Option or receivable upon the exercise
of an Option until the optionee or transferee shall have become the holder of
record of such Stock. No adjustments shall be made for dividends in cash or
other property (except for share dividends) or other distributions or rights in
respect of such Stock for which the record date is prior to the date on which
the optionee or transferee shall have in fact become the holder of record of the
share of Stock acquired pursuant to the Option.
SECTION 11. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of Stock through the
declaration of stock dividends or stock splits or through recapitalization or
merger, share exchange, consolidation, combination of shares or otherwise, the
Committee or the Board shall make such adjustment, if any, as it may deem
appropriate in the number of shares of Stock available for Options as well as
the number of shares of Stock subject to any outstanding Option and the option
price thereof. Any such adjustment may provide for the elimination of any
fractional shares which might otherwise become subject to any Option without
payment therefor.
<PAGE>
SECTION 12. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Options under the laws of various states (including tax
laws) or to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option granted thereunder, without the
approval of the share owners of the Company. However, no action shall be taken
without the approval of the share owners of the Company if the Committee
determines that the approval of share owners would be necessary to retain the
benefits of Section 162(m) of the Internal Revenue Code.
No amendment or termination or modification of the Plan shall in any manner
affect any Option theretofore granted without the consent of the optionee,
except that the Committee may amend or modify the Plan in a manner that does
affect Options theretofore granted upon a finding by the Committee that such
amendment or modification is necessary to retain the benefits of
Section 162(m) of the Internal Revenue Code or that it is not adverse to the
interest of holders of outstanding Options.
The Plan shall terminate five years after the date of approval of the Plan
by the share owners of the Company unless earlier terminated by the Board or by
the Committee.
SECTION 13. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
<PAGE>
EXHIBIT 10.15
LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
SECTION 1. PURPOSE.
The purpose of the Long-Term Incentive Plan (the "Plan") is to advance the
interest of Coca-Cola Enterprises Inc. (the "Company") by providing key
management and sales employees with incentive to assist the Company in meeting
and exceeding its business goals.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "outside directors" within the meaning of Section 162(m) and the
regulations thereunder of the Internal Revenue Code of 1986, as amended (the
"Code").
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations or take such action as it deems necessary or advisable for
the proper administration of the Plan. Each determination made or action taken
pursuant to the Plan, including interpretation of the Plan, shall be final and
conclusive for all purposes and upon all persons, including, but not limited to,
the Company, the Committee, the Board, officers, the affected Participants (as
defined in Section 3), and their respective successors in interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, but not
limited to, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in
the manner provided by the Certificate of Incorporation or Bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he, she or
they reasonably believed to be in or not opposed to the best interest of the
Company.
SECTION 3. ELIGIBILITY.
Cash awards ("Awards") may be made under this Plan to the persons who are
executive officers; in the senior executive band; in the executive band;
corporate directors; and, as such positions are defined by the Compensation
Committee, senior staff of the Company and its Subsidiaries ("Participants").
"Subsidiary" shall mean any corporation or other business organization in
which the Company owns, directly or indirectly, 25% or more of the voting stock
or capital during a Performance Period.
SECTION 4. PERFORMANCE GOAL CRITERIA.
Awards made under the Plan shall be paid solely on account of the
attainment of specified increases in cash operating profit ("COP"), as measured
<PAGE>
on a corporate-wide basis, over the period of three consecutive calendar years
(the "Performance Period") beginning on January 1 of any year the Compensation
Committee designates as the beginning of a Performance Period for which an Award
shall be made. The Committee shall preestablish the specific COP targets for
each Performance Period in accordance with Code Section 162(m) and regulations
thereunder. For the purposes of the Plan, COP is determined as operating income
plus depreciation and amortization, normalized for acquisitions, divestitures
and other significant financial events.
SECTION 5. CALCULATION OF THE AWARD.
The Committee has established Award levels, described as percentages by
which a Participant's Average Annual Base Salary shall be multiplied, to
determine the amount of an Award payable upon the attainment of specified
increases in the corporate-wide COP. "Average Annual Base Salary" means the
average of the base salary in effect on the last day of each year of the
three-year Performance Period for which an Award is made. Notwithstanding the
preceding, the Average Annual Base Salary used to calculate an Award paid to a
Participant may not exceed such Participant's annual base salary in effect on
January 1 that constitutes the beginning of the Performance Period for which the
Award is being paid, increased by 33 1/3%. No Award under the Plan shall exceed
160% of a Participant's Average Annual Base Salary.
SECTION 6. PAYMENT OF AWARD AND DEFINITIONS.
(i) Awards shall be paid in cash after the end of the Performance Period
in one or more installments, as determined by the Committee.
(ii) "Retirement" means a Participant's voluntary termination of employment
on a date which is on or after the earliest date on which such Participant would
be eligible for an immediately payable benefit pursuant to the terms of the
defined benefit pension plan sponsored by the Company or a Subsidiary in which
the Participant participates. If the Participant does not participate in such a
plan, the date shall be determined as if the Participant participated in the
Company's defined benefit plan covering the majority of its non-bargaining
employees in the United States.
(iii) "Disability" shall be determined according to the definition of "total
and permanent disability," in effect at the time of the determination, in the
defined benefit plan sponsored by the Company or a Subsidiary in which the
Participant participates. If the Participant does not participate in such a
plan, the definition shall be determined as if the Participant participated in
the Company's defined benefit plan covering the majority of its non-bargaining
employees in the United States.
SECTION 7. PRORATED AND PARTIAL AWARDS.
(i) If during the years to which the Plan applies, an employee is hired or
promoted into a position eligible for participation in the Plan, the employee
shall be eligible to receive a prorated Award for the period of partial
participation. To calculate the Average Annual Base Salary for a prorated Award,
each year's annual base salary shall be prorated based on the period in which
the employee was employed in the eligible position.
(ii) If a Participant is promoted from one position to another position
eligible for participation under the Plan, the Participant's Award shall be
prorated for the period of time the Participant was employed within each
position. The base salary in effect on the last day of each year shall be
included in the calculation of the Participant's Average Annual Base Salary,
irrespective of the changes of positions. Prorated awards shall be measured
according to the number of whole months in which a Participant was employed
within each position for which the Award is made.
<PAGE>
(iii) If, within a Performance Period, a Participant transfers from a
position eligible for participation under the Plan to a position ineligible for
participation, a prorated Award shall be paid to such Participant for the period
of time the Participant was employed within the eligible position. The
Participant's annual base salary in effect on the last day of the Participant's
employment in the eligible position shall be included in the calculation of the
Participant's Average Annual Base Salary, irrespective of the change of
positions. Prorated awards shall be measured according to the number of whole
months in which the Participant was employed within one or more eligible
positions.
(iv) Partial Awards under this Section 7 shall not be paid to a
Participant whose employment is terminated prior to the last day of the
Performance Period unless the reason for such termination was the Participant's
death, disability, or retirement (as defined in Section 6). To determine the
Average Annual Base Salary to be used in calculating a partial Award, each
year's base salary shall be prorated for the period in which the Participant was
employed in an eligible position during the Performance Period. A partial Award
paid to a Participant whose employment is terminated on account of death or
disability shall be calculated based on the increase in COP as of December 31st
of the year preceding the Participant's termination and shall be paid in the
year following such Participant's termination of employment. A partial Award
paid to a Participant whose employment is terminated on account of retirement
shall be paid in the year following the end of the Performance Period for which
the Award is made, and subject to the Committee's discretion described in
Section 8, shall be calculated on the basis of the increase in COP through the
end of the Performance Period.
(v) For purposes of this Section 7, a Participant's employment with the
Company will be deemed not to be a termination of employment if the
Participant's reason for termination with the Company is due to immediate
employment with any Affiliate; however, in such event, the Participant's Award
shall be subject to proration as if the Participant transferred to a position
within the Company that is ineligible for participation in the Plan. The term
"Affiliate" shall include The Coca-Cola Company or any corporation or business
entity in which The Coca-Cola Company owns, directly or indirectly, 25% or more
of the voting stock or capital if such company is a party to an active
reciprocity agreement with the Company and the Company has assented to the
Participant's subsequent employment.
SECTION 8. DISCRETION OF THE COMPENSATION COMMITTEE.
All Awards shall be made solely on the basis of the performance goals set
forth by the Committee pursuant to Section 4 and only in accordance with the
standards set forth in Section 5. The Committee shall have no authority to
increase the amount of an Award payable to a Participant which would otherwise
be due upon the attainment of the performance goal. The Committee shall,
however, have the authority to reduce or eliminate any Award under the Plan.
SECTION 9. COMMITTEE CERTIFICATION.
Prior to payment of an Award, the Committee shall certify in writing that
the performance targets described in Section 4 have, in fact, been satisfied.
SECTION 10. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN.
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in the Awards made thereunder that does not
constitute the modification of a material term of the Plan, without the approval
<PAGE>
of the share owners of the Company. No action shall be taken, however, without
the approval of the share owners of the Company unless the Committee determines
that the approval of share owners would not be necessary to retain the benefits
of Section 162(m) of the Internal Revenue Code of 1986, as amended.
SECTION 11. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
<PAGE>
EXHIBIT 10.16
EXECUTIVE MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1997)
SECTION 1. PURPOSE.
The purpose of the Executive Management Incentive Plan (the "Plan") is to
advance the interest of Coca-Cola Enterprises Inc. (the "Company") by providing
executive officers and managers of the Company with incentive to assist the
Company in meeting and exceeding its business goals.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "outside directors" within the meaning of Section 162(m) and the
regulations thereunder of the Internal Revenue Code of 1986, as amended (the
"Code").
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations or take such action as it deems necessary or advisable for
the proper administration of the Plan. Each interpretation made or action taken
pursuant to the Plan shall be final and conclusive for all purposes and binding
upon all persons, including, but not limited to, the Company, the Committee, the
Board, the affected Participants (as defined in Section 3), and their respective
successors in interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, but not
limited to, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in
the manner provided by the Certificate of Incorporation or Bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he, she or
they reasonably believed to be in or not opposed to the best interest of the
Company.
SECTION 3. ELIGIBILITY.
Cash awards ("Awards") may be made under this Plan to persons who are
executive officers, in the senior executive band, and in the executive band of
the Company and its Subsidiaries ("Participants").
"Subsidiary" shall mean any corporation or other business organization in
which the Company owns, directly or indirectly, 25% or more of the voting stock
or capital during any Performance Period.
SECTION 4. PERFORMANCE GOAL CRITERIA.
The Committee shall establish specific objective targets in relation to the
cash operating profit as budgeted by the Company ("budgeted COP") for each
performance unit of the Company over a period of a calendar year (the
"Performance Period") designated by Compensation Committee as a Performance
<PAGE>
Period for which an Award shall be made. Awards under the Plan shall be paid
solely on account of the attainment of these targets, which shall be
preestablished in accordance with Code Section 162(m) and regulations
thereunder. For the purposes of the Plan, COP shall be determined as operating
income plus depreciation and amortization, normalized for acquisitions,
divestitures and other significant financial events. For purposes of the Plan,
performance units shall be classified as corporate, group or region, or any
combination thereof.
SECTION 5. CALCULATION OF AWARDS.
The Committee shall establish Award levels, described as percentages by
which a Participant's annual base salary shall be multiplied, to determine the
amount of an Award payable upon the attainment of specified targets of budgeted
COP. No award under the Plan shall exceed 115% percent of a Participant's annual
base salary. An award paid to a Participant shall be calculated using the annual
base salary in effect on December 31 of the year for which the Award is made.
Notwithstanding the preceding sentence, the annual base salary used to calculate
an Award paid to a Participant (under this Section 5 or Section 6) may not
exceed such Participant's annual base salary in effect on January 1 of any
Performance Period for which the Award is made, increased by 10%.
SECTION 6. PRORATED AND PARTIAL AWARDS.
(i) A person hired or promoted into a position identified in Section 3
("Eligible Position") during a Performance Period shall receive a prorated Award
for the period of time the person was employed in an Eligible Position, using
the Participant's base salary in effect on December 31 of the Performance Period
for which the Award is made.
(ii) A Participant who is promoted from one Eligible Position to another
Eligible Position during a Performance Period shall receive an Award that is
prorated for the period of time the Participant was employed within each
Eligible Position, using the Participant's annual base salary in effect on
December 31 of the Performance Period for which the Award is made.
(iii) A Participant who is not employed in an Eligible Position on the
last day of the Performance Period due to the Participant's transfer to a
position with the Company or a Subsidiary that is not an Eligible Position shall
receive an Award that is prorated for the period of time the Participant was
employed in an Eligible Position, using the Participant's annual salary on the
last day that the Participant is employed in that Eligible Position.
(iv) A Participant whose employment is terminated prior to the last day
of the Performance Period shall not receive an Award that is prorated for the
period of time the Participant was employed in an Eligible Position unless the
reason for such termination was the Participant's death, disability, or
retirement. For purposes of this Section 6, a Participant's employment with the
Company will be deemed not to be terminated if the Participant's reason for
termination was due to immediate employment with any Affiliate; however, such
Participant's Award shall be prorated as if the Participant transferred from an
Eligible Position to a position that is ineligible for participation in the
Plan. The term "Affiliate" shall include The Coca-Cola Company or any
corporation or business entity in which The Coca-Cola Company owns, directly or
indirectly, 25% or more of the voting stock or capital if such Company is a
party to an active reciprocity agreement with the Company and the Company has
assented to the Participant's subsequent employment.
(v) For purposes of this Section 6:
(a) "Retirement" means a Participant's voluntary termination of
employment on a date which is on or after the earliest date on which such
<PAGE>
Participant would be eligible for an immediately payable benefit pursuant
to the terms of the defined benefit pension plan sponsored by the Company
or a Subsidiary in which the Participant participates. If the Participant
does not participate in such a plan, the date shall be determined as if the
Participant participated in the Company's defined benefit plan covering the
majority of its nonbargaining employees in the United States.
(b) "Disability" shall be determined according to the definition of
"total and permanent disability," in effect at the time of the
determination, in the defined benefit plan sponsored by the Company or a
Subsidiary in which the Participant participates. If the Participant does
not participate in such a plan, the definition shall be determined as if
the Participant participated in the Company's defined benefit plan covering
the majority of its non-bargaining employees in the United States.
(c) "Prorated" means the determination of the amount of an Award for
partial participation that is measured according to the nearest whole
number of months in which a Participant was employed in an Eligible
Position(s) during the Performance Period for which the Award is made.
SECTION 7. DISCRETION OF THE COMPENSATION COMMITTEE.
All Awards shall be made solely on the basis of the performance goals set
forth by the Committee pursuant to Section 4 and only in accordance with the
standards set forth in Section 5. The Committee shall have no authority to
increase the amount of an Award payable to a Participant which would otherwise
be due upon the attainment of the performance goal. The Committee shall,
however, have the authority to reduce or eliminate any Award under the Plan.
SECTION 8. COMMITTEE CERTIFICATION.
Prior to the payment of an Award, the Committee shall certify in writing
that the performance targets of Section 4 have, in fact, been satisfied.
SECTION 9. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN.
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in the Awards made thereunder that does not
constitute the modification of a material term of the Plan, without the approval
of the share owners of the Company. No action shall be taken, however, without
the approval of the share owners unless the Committee determines that the
approval of share owners would not be necessary to retain the benefits of
Section 162(m) of the Internal Revenue Code of 1986, as amended.
SECTION 10. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
<PAGE>
EXHIBIT 10.18
COCA-COLA ENTERPRISES INC.
SUPPLEMENTAL PENSION PLAN
(AMENDED AND RESTATED EFFECTIVE JULY 1, 1993)
ARTICLE I
INTRODUCTION AND PURPOSE
1.1 Background. Coca-Cola Enterprises Inc. (the "Company") established the
Coca-Cola Enterprises Inc. Supplemental Deferred Compensation Plan (the "Plan")
effective January 1, 1991.
1.2 Purpose. The Company established and has maintained this Plan for the
purpose of providing benefits to certain employees in excess of the limitations
on benefits that may be provided under the Coca-Cola Enterprises Employees'
Pension Plan (the "Pension Plan") imposed by certain provisions of the Internal
Revenue Code of 1986, as amended.
1.3 Amendment and Restatement. The Company hereby amends and restates the
Plan and changes the name of the Plan to the Coca-Cola Enterprises Inc.
Supplemental Pension Plan, effective July 1, 1993, except as otherwise provided
herein.
ARTICLE II
DEFINITIONS
2.1 "Administrative Committee" means the committee appointed to administer
the Plan pursuant to Article VI.
2.2 "Annuity Starting Date" shall have the same meaning as "Annuity
Starting Date" under the Pension Plan, as it may be amended from time to time.
2.3 "Beneficiary" shall have the same meaning as "Beneficiary" under the
Pension Plan.
2.4 "Board" means the Board of Directors of Coca-Cola Enterprises Inc.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Company" means Coca-Cola Enterprises Inc., a Delaware corporation,
or its successor or successors.
2.7 "Compensation" means those amounts included in the definition of
"Compensation" under the Pension Plan, determined without regard to the limits
of Section 401(a)(17) of the Code, plus any amounts deferred by the Participant
under the Coca-Cola Enterprises Supplemental Matched Employee Savings and
Investment Plan and any other nonqualified deferred compensation arrangement
between the Participant and the Company.
2.8 "Controlled Group" means all members of the controlled group of
corporations, as defined in Section 1563(a) of the Code, of which the Company is
a member, but determined without regard to Sections 1563(a)(4) and 1563(e)(3)(c)
of the Code.
2.9 "Disability" shall have the same meaning as the term
<PAGE>
"Disability" under the Pension Plan.
2.10 "Eligible Employee" means any Employee who satisfies the criteria for
participation in the Plan, as established from time to time by the
Administrative Committee, or who is eligible to participate in the Plan solely
pursuant to Section 3.2(b). Notwithstanding the preceding sentence, effective
January 1, 1996, an Employee who participates in the Coca-Cola Enterprises Inc.
Executive Pension Plan shall not become an Eligible Employee under this Plan.
2.11 "Employee" means any common-law employee of the Company or of a
member of the Controlled Group that has adopted the Plan.
2.12 "Employer" means the Company and any member of the Controlled Group
adopting the Plan with the consent of the Board.
2.13 "Participant" means an Eligible Employee who satisfies the
requirements for participation in the Plan. Any Employee or former Employee who
has an interest under the Plan shall also be considered a Participant.
2.14 "Pension Plan" means the Coca-Cola Enterprises Employees' Pension
Plan, as it may be amended from time to time.
2.15 "Plan" means the Coca-Cola Enterprises Inc. Supplemental Pension
Plan, as restated in this instrument, effective July 1, 1993, and as it may be
amended from time to time.
2.16 "Plan Year" means the 12-month period beginning January 1st and
ending on December 31st.
2.17 "Supplemental Pension" means the benefits paid under this Plan.
2.18 "Spouse" or "Surviving Spouse" shall have the same meaning as the
terms "Spouse" or "Surviving Spouse" under the Pension Plan, as it may be
amended from time to time.
ARTICLE III
ELIGIBILITY
3.1 Conditions on Eligibility. An Eligible Employee who was a Participant
in the Plan as of July 1, 1993 shall continue to be a Participant. An Eligible
Employee who, prior to July 1, 1993, was covered under a comparable plan
maintained by Johnston Coca-Cola Bottling Group, Inc. shall become a Participant
in this Plan as of July 1, 1993. Any other Eligible Employee shall become a
Participant upon becoming a participant under the Pension Plan.
3.2 Participation. (a) General Rule - An Eligible Employee who
participates in the Pension Plan shall be entitled to a Supplemental Pension
under the Plan if, at the Eligible Employee's Annuity Starting Date, the
benefits he would have been entitled to receive under the Pension Plan are
limited by one or more of the following:
(1) Section 415 of the Code, which restricts the maximum amount of benefits
that can be paid under one or more plans of the Employer that are
qualified under Section 401(a) of the Code;
(2) Section 401(a)(17), which limits the maximum amount of Compensation
that can be used to compute benefits under a
<PAGE>
plan qualified under Section 401(a) of the Code;
(3) Any other provision of the Code that restricts the inclusion in current
Compensation of amounts of salary or bonus that an Employee elects to
defer to a qualified or nonqualified benefit plan of an Employer,
provided, that for purposes of Section 4.2 of this Plan, such deferred
amounts shall only be considered Compensation for the year the Employee
elects to defer their receipt and not for the year such amounts are
actually paid to the Employee. The Administrative Committee, in its
sole discretion, shall determine the amount of Compensation to
include for purposes of this Section 3.2(a)(3) and the year or years
to which such Compensation shall be credited.
(b) Special Participation Rule. An Employee who has his benefits under the
Pension Plan restricted solely due to the limitations of Section 415 of the Code
shall be eligible to participate in the Plan in order to receive benefits under
Section 4.1(b), below.
ARTICLE IV
ACCRUAL OF BENEFITS
4.1 Amount of Supplemental Pension. (a) A Participant shall be entitled to
a Supplemental Pension in an amount equal to the excess of (1) over (2), below:
(1) The benefit the Participant would have been entitled to receive under
the Pension Plan if his benefits were computed without regard to the
limitations described in subparagraphs (1), (2) or (3) of Section
3.2(a).
(2) The benefit the Participant is actually entitled to receive under the
Pension Plan, excluding any benefits payable pursuant to a rollover
from a defined contribution plan.
(b) Notwithstanding the foregoing, an employee who is a Participant solely
on account of the Special Participation Rule of Section 3.2(b) shall be entitled
to a Supplemental Pension in an amount equal to the excess of (1) over (2),
below:
(1) The benefit such Participant would have been entitled to receive
under the Pension Plan if his benefits were computed without
regard to the limitations of Section 415 of the Code.
(2) The benefit such Participant is actually entitled to receive under
the Pension Plan, excluding any benefits payable pursuant to a
rollover from a defined contribution plan.
(c) Supplemental Pension Modified Under Certain Agreements. To the extent
the Administrative Committee, in its sole discretion, determines, a Participant
shall have his Supplemental Pension increased by service that is imputed under
an employment, severance or settlement agreement. In such case, a Participant's
Supplemental Pension shall be provided under this paragraph (c). The amount of
such Participant's Supplemental Pension shall be equal to the excess of (1) over
(2), below:
<PAGE>
(1) The benefit to which such a Participant would
be entitled under the Pension Plan if such
benefit were calculated (i) by disregarding
the limitations described in subparagraphs
(1), (2), or (3) of Section 3.2(a) (unless
the Participant is entitled to a Supplemental
Pension under Section 3.2(b), in which case
only the limitation of subparagraph (1) of
Section 3.2(a) shall be disregarded) and (ii)
by crediting, as Benefit Service, any service
imputed under an employment, severance or
settlement agreement between the Company and
such Participant.
(2) The benefit the Participant is actually
entitled to receive under the Pension Plan,
excluding any benefits payable pursuant to a
rollover from a defined contribution plan.
4.2 Limit on Supplemental Pension. The amount of the Supplemental Pension
and the benefits payable under the Pension Plan (excluding any benefits payable
pursuant to a rollover from a defined contribution plan), considered together,
shall not exceed an amount equal to two times the applicable limit under Section
415 of the Code. The Supplemental Pension shall be reduced to the extent
necessary to satisfy this Section 4.2. Notwithstanding the foregoing, benefits
payable under this Plan pursuant to Sections 4.6 and 5.2 shall not be included
in the amounts subject to the limitations of this Section 4.2.
4.3 Role of Pension Plan Terms. The determination of the amount of the
Supplemental Pension shall be made in accordance with the provisions of the
Pension Plan that apply to the calculation of the Participant's benefit under
the Pension Plan, including the vesting requirements and other qualification
requirements for the various types of benefits payable thereunder.
4.4 Minimum Benefit to Certain Former Participants in Johnston Coca-Cola
Bottling Group, Inc. Supplemental Pension Plan. Notwithstanding the foregoing
Section 4.1, for Participants who were participants under a comparable Johnston
Coca-Cola Bottling Group, Inc. supplemental pension plan on June 30, 1993, the
minimum benefit that may accrue under this Plan shall be calculated based on (1)
the Participant's five-year annual salary, the benefit service, vesting service
and age as of June 30, 1993; (2) with such data being used to determine the
retirement age at which a retirement benefit would have the greater value for
the participant; (3) with such benefit being multiplied by the ratio of benefit
service as of June 30, 1993 over 20 years; and (4) with the vested percentage of
such benefit determined as of June 30, 1993.
4.5 Survivor Benefit. A Supplemental Pension shall only be payable to the
Participant's Surviving Spouse or other Beneficiary upon satisfaction of the
terms and conditions provided in the Pension Plan. Except for benefit increases
granted to reflect cost of living increases (if any), if the benefit payable to
the Participant or his Surviving Spouse or other Beneficiary from the Pension
Plan is increased (except on account of benefits payable pursuant to a rollover
from a defined contribution plan) after the Supplemental Pension has commenced,
the Supplemental Pension shall be reduced accordingly.
4.6 Pension Purchase Option Benefit. Effective January 1, 1997, a
Participant may elect to rollover all or a portion of his account balance from
the Coca-Cola Enterprises Inc. Supplemental Matched Employee Savings
<PAGE>
and Investment Plan (SuppMESIP), provided the Participant's account balance
under the SuppMESIP and the present value of the Participant's accrued benefits
under this Plan each equal at least $3,500.00. The amount rolled over from the
SuppMESIP shall be used to provide a Pension Purchase Option (PPO) benefit, paid
in accordance with Section 5.2. The Plan shall, in no event, accept rollover
contributions from a plan other than the SuppMESIP.
ARTICLE V
DISTRIBUTION OF BENEFITS
5.1 Payment of Supplemental Pension. Except to the extent the
Administrative Committee establishes other rules governing the payment of
benefits and except for benefits payable under Section 5.2, the Participant's
Supplemental Pension shall be payable in the same form and for the same duration
as the Participant's benefit under the Pension Plan. Any benefits payable by
this Plan to the Participant's Surviving Spouse or other Beneficiary shall also
be payable in the same form and for the same duration as provided in the Pension
Plan. Notwithstanding the foregoing, if the present value of a Supplemental
Pension is equal to or less than $3,500, it shall be payable in single-sum
payment.
5.2 Pension Purchase Option Benefits. Effective January 1, 1997, a
Participant who has elected a rollover to this Plan from the SuppMESIP and for
whom a PPO Account has been established under this Plan shall be entitled to a
PPO benefit in accordance with the following:
(a) A PPO benefit shall be a monthly benefit, the amount of which shall be
determined as the actuarial equivalent of the balance of the Participant's PPO
Account on the date such account is established. The PPO benefit will commence
on the date elected by the Participant under the SuppMESIP and will be paid, in
accordance with the Participant's election, in any form of annuity available
under the Pension Plan at the commencement of the PPO benefit. A PPO benefit
paid as a single life annuity will contain a cash refund feature, as described
in paragraph (c), below. The actuarial equivalence of the PPO benefit shall be
determined using a mortality table derived by taking a fixed blend of 50 percent
of the 1983 Group Annuity Table for Males and 50 percent of the 1983 Group
annuity Table for Females and using an interest rate of 7 percent.
(b) If a Participant's benefit under the Plan is to be paid as a single
life annuity and the Participant should die prior to his receipt of his total
PPO benefit, under the cash refund feature any remaining amounts will be paid in
cash to the designated beneficiary, or if there is no such Beneficiary
designated, then to the Participant's estate.
(c) For purposes of this Section 5.2, "PPO Account" means an account
established on behalf of a Participant who has elected a direct rollover from
the SuppMESIP into this Plan.
ARTICLE VI
PLAN ADMINISTRATION
6.1 Administrative Committee. The Plan shall be administered by an
Administrative Committee which shall consist of at least three members appointed
by the Company.
6.2 Administrative Committee Action. Action of the Administrative Committee
may be taken with or without a meeting of its members; provided, however, that
any action shall be taken only upon the vote or other affirmative expression of
a majority of committee members qualified to vote with respect to such action.
If a member of the Administrative Committee
<PAGE>
is a Participant in the Plan, he shall not participate in any decision which
solely affects his own benefits under the Plan.
6.3 Rights and Duties. The Administrative Committee shall administer the
Plan and shall have all powers necessary to accomplish that purpose, including,
but not limited to, the following:
(a) to construe, interpret, and administer the Plan with its decisions to
be final and binding on all parties;
(b) determinations required by the Plan, and to maintain all necessary
records of the Plan;
(c) to compute and certify to the Company the amount of benefits payable to
Participants or their Beneficiaries, and to determine the time and manner in
which such benefits are to be paid.
6.4 Compensation, Indemnity, and Liability. The Administrative Committee
shall serve as such without bond and without compensation for services
hereunder. All expenses of the Plan and the Administrative Committee shall be
paid by the Company. No member of the Administrative Committee shall be liable
for any act or omission of any other member, nor any act or omission on his own
part, except his own willful misconduct. The Company shall indemnify and hold
harmless each member of the Administrative Committee against any and all
expenses and liabilities, including reasonable legal fees and expenses arising
out of his membership on the Administrative Committee, except for expenses or
liabilities arising out of his own willful misconduct.
6.5 Taxes. If all or any portion of a Participant's Supplemental Pension
shall become liable for the payment of any estate, inheritance, or other tax
which the Company shall be required to pay or withhold, the Company shall have
the full power and authority to withhold and pay such tax out of any monies or
other property credited to such Participant at the time benefits under this Plan
are distributable to the Participant.
ARTICLE VII
CLAIMS PROCEDURE
7.1 Claims for Benefits. If a Participant or Beneficiary does not receive
payment of any benefits which he believes are due and payable under the Plan, he
may make a claim for benefits to the Administrative Committee. The claim for
benefits must be in writing and addressed to the Administrative Committee or to
the Company. If the claim for benefits is denied, the Administrative Committee
shall notify the Participant or Beneficiary in writing within ninety (90) days
after receipt of the claim. However, if special circumstances require an
extension of time for processing the claim, the Administrative Committee shall
provide notice of the extension to the Participant or Beneficiary prior to the
termination of the initial ninety (90) day period, and such extension shall not
exceed one additional, consecutive ninety (90) day period. Any notice of a
denial of benefit shall inform the Participant or Beneficiary of the basis for
the denial, any additional material or information necessary to perfect such
claim, and the steps which must be taken to have such claim reviewed.
7.2 Appeals. Each Participant or Beneficiary whose claim for benefits has
been denied may file a written request for review of his claim with the
Administrative Committee. The request for review must be filed within sixty (60)
days after the Participant or Beneficiary received the written notice denying
his claim. The final decision of the Administrative Committee will be made
within sixty (60) days after receipt of the request
<PAGE>
for review and shall be communicated in writing, setting forth the basis for the
Administrative Committee's decision. If there are special circum-stances which
require an extension of time for completing the review, the Administrative
Committee's decision shall be rendered not later than one-hundred twenty (120)
days after the receipt of the request for review.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. The Company or Administrative Committee shall have the right
to amend the Plan in whole or in part at any time; provided, however, that no
amendment shall reduce the benefits accrued under the Plan on behalf of any
Participant as of the effective date of such amendment. Any amendment shall be
in writing and executed by a duly authorized officer of the Company or a
majority of members of the Administrative Committee.
8.2 Termination of the Plan. The Company reserves the right to discontinue
and terminate the Plan at any time, in whole or in part, for any reason. In the
event of termination of the Plan, the benefits accrued on behalf of any
Participant, as of the effective date of such termination, shall not be reduced
and shall be distributed at a time and in the manner determined by the
Administrative Committee.
ARTICLE IX
MISCELLANEOUS
9.1 Limitation on Participant's Rights. Participation in this Plan shall
not give any Participant the right to be retained in the Company's employ or any
rights or interest in this Plan or any assets of the Company other than as
herein provided. The Company reserves the right to terminate the employment of
any Participant without any liability for any claim against the Company under
this Plan, except to the extent provided herein.
9.2 Benefits Unfunded. The benefits provided by this Plan shall be
unfunded. All amounts payable under the Plan to Participants shall be paid from
the general assets of the Company, and nothing contained herein shall require
the Company to set aside or hold in trust any amounts or assets for the purpose
of paying benefits. Participants shall have the status of general unsecured
creditors of the Company with respect to amounts of Compensation they defer
under the Plan or any other obligation of the Company to pay benefits pursuant
hereto. Any funds of the Company available to pay benefits under the Plan shall
be subject to the claims of general creditors of the Company and may be used for
any purpose by the Company.
Notwithstanding the foregoing, the Company may at any time transfer assets
to a trust for purposes of paying all or any part of its obligations under this
Plan. However, to the extent provided in the trust agreement only, such
transferred amounts shall remain subject to the claims of general creditors of
the Company. To the extent that assets are held in a trust when a Participant's
benefits under the Plan become payable, the Administrative Committee shall
direct the trustee to pay such benefits to the Participant from the assets of
the trust.
9.3 Other Plans. This Plan shall not affect the right of any Eligible
Employee or Participant to participate in and receive benefits under any
employee benefit plans which are now or hereafter maintained by the Company,
unless the terms of such other employee benefit plan or plans specifically
provide otherwise.
9.4 Governing Law. This Plan shall be construed, administered, and
<PAGE>
governed in all respects in accordance with applicable federal law and, to the
extent not preempted by federal law, in accordance with the laws of the State of
Georgia. If any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective.
9.5 Gender, Number, and Headings. In this Plan, whenever the context so
indicates, the singular or plural number and the masculine, feminine, or neuter
gender shall be deemed to include the other. Headings and subheadings in this
Plan are inserted for convenience of reference only and are not considered in
the construction of the provisions hereof.
9.6 Successors and Assigns; Nonalienation of Benefits. This Plan shall
inure to the benefit of and be binding upon the parties hereto and their
successors and assigns; provided, however, that benefits accrued on behalf of a
Participant shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution
or levy of any kind, either voluntary or involuntary, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to any benefits payable hereunder shall be void,
including, without limitation, any assignment or alienation in connection with a
separation, divorce, child support or similar arrangement.
IN WITNESS WHEREOF, the Company has caused this amendment and restatement
of the Plan to be executed by its duly authorized officers this 19th day of
December, 1996.
COCA-COLA ENTERPRISES INC.
By: /s/ JARRETT H. JONES
----------------------------------
Title: VICE PRESIDENT, HUMAN RESOURCES
-------------------------------
Attest: LAURIE L.CLARK
------------------------------
Title: SENIOR HR ADMINISTRATOR
-------------------------------
<PAGE>
EXHIBIT 10.26
1997 Stock Options For Directors
Annual grant to each non-employee director of an option for 2,500 shares.
Performance vested. Vesting occurs upon stock option price targets being
reached within five years of grant date.
Option exercise price equals average of high and low market price at effective
grant date - January 2, 1997.
20% of options vest each time stock price increases by 15%.
For example, assuming $45 grant date price:
$51.75 500 options vest
$59.50 500 options vest
$68.50 500 options vest
$78.75 500 options vest
$90.00 500 options vest
Price levels for vesting will be adjusted to reflect actual price of January
2, 1997.
Vested options may be exercised any time during 10 years from date of grant,
so long as director remains on the board.
If director leaves Board for:
mandatory retirement age or disability_3-year period* to exercise
vested options and options which vest during that period.
death--1-year period* to exercise vested options and options which
vest during that period.
any other reason (such as declining to serve or failure to be
elected)--1-year period* to exercise vested options, but any options not
vested at the time the director leaves the Board are forfeited.
__________
*Or date of expiration of 10-year option term, if sooner.
<PAGE>
EXHIBIT 10.27
1998 STOCK OPTION GRANT FOR DIRECTORS
* option grants to consist of 4,250 premium-priced stock options
- Grants will reflect same terms and conditions as grants to CCE
officers
* Each grant is composed of five equal "subgrants" of 850 options, with
the exercise price of the subgrants reflecting a 15% annual increase
in the market price of CCE stock, measured from the January 2, 1998
- Assuming the market value of CCE stock on January 2, 1998 is $30,
the exercise price of the subgrants would be as follows:
Number of Options Exercise Price
----------------- --------------
850 $34.50
850 $39.68
850 $45.63
850 $52.47
850 $60.34
* Vesting of the 1998 grant occurs as of the earlier of the following:
- 33% per year after one, two and three years, measured from
January 2, 1998
- 100% on termination due to death, disability or at mandatory
retirement
* Vested options remain exercisable until the earlier of
- January 2, 2008, 10 years from the date of grant or
- In the event of a Director's service on the Board terminates
-- Because of disability or retirement upon reaching
mandatory retirement age, three years after such termination
-- Because of any other reason, one year after such termination
<PAGE>
EXHIBIT 10.34
SWEETENER SALES AGREEMENT--BOTTLER
THIS AGREEMENT ("Agreement"), made and entered into this 10th day of
July, 1997, by and between THE COCA-COLA COMPANY, a Delaware corporation
("Company"), through its Coca-Cola USA Division, and the subsidiaries of
Coca-Cola Enterprises Inc.(listed on Exhibit C), a Delaware corporation
("Bottler");
W I T N E S S E T H:
WHEREAS, Company has otherwise granted Bottler the right to manufacture
from concentrate and/or beverage base certain carbohydrate sweetened soft
drink beverages and/or syrups ("Products") under one or more agreements
("Authorization Agreements");
WHEREAS, Bottler plans to purchase carbohydrate sweeteners for use in
its manufacture of Products and not for resale or delivery to a third party;
WHEREAS, Company is engaged in the procurement of carbohydrate
sweeteners for its own purposes and has acquired certain skill and knowledge
in connection therewith;
WHEREAS, Bottler desires to take advantage of the skill, knowledge and
services of Company in the procurement of carbohydrate sweeteners;
WHEREAS, subject to the terms and conditions of this Agreement, Bottler
is willing to purchase carbohydrate sweeteners from Company and Company is
willing to sell carbohydrate sweeteners to Bottler;
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises contained herein, the parties hereto agree as follows:
Section 1. Definitions.
As used in this Agreement, the following terms have the specified
meanings:
(a) "Originating Supplier" means the carbohydrate sweetener
supplier which sells the sweeteners to or processes the sweeteners for
Company.
(b) "Sweeteners" means carbohydrate sweeteners derived from
sugar cane, sugar beet, corn or other source(s) approved by Company.
(c) "Bottler Customer" means any bottler of Coca-Cola for whom
Bottler manufactures carbohydrate sweetened soft drink beverages and/or
syrups using Sweeteners delivered hereunder.
Section 2. Authorization.
For purposes of Bottler's compliance with sweetener quality assurance
requirements independently established by Coca-Cola USA, Company shall be
deemed an approved supply point for Sweeteners furnished hereunder for
Bottler's manufacture of Products from concentrate and/or beverage base.
Nothing in this Agreement shall be construed to authorize Bottler to purchase
or use any concentrate or beverage base in the manufacture of syrups
<PAGE>
or beverages.
Section 3. Purchase, Sale and Usage of Sweeteners.
Company shall sell to Bottler and Bottler shall buy from Company all of
Bottler's requirements for Sweeteners. Bottler shall use the Sweeteners only
in its own manufacturing operations in the manufacture of products of Company
and approved non-Company products for itself and approved Bottler Customers.
Bottler shall not resell or arrange for the delivery to any third party of
Sweeteners covered by this Agreement. Approval of each Bottler Customer and
each non-Company product shall be within the sole discretion of Company.
The Sweeteners shall conform to the specifications in effect between
Company and the Originating Supplier(s) as may from time to time be revised by
Company (the "Specifications"). The Specifications (which may also include
quality control requirements for Sweeteners as set forth in Section 7 below)
shall be automatically incorporated herein by reference as Exhibit A and made
a part hereof.
Bottler shall furnish a good faith forecast of its requirements for
Sweeteners no later than October 1 of the year preceding the calendar year of
Sweetener delivery. The forecast shall set forth the types and quantities of
Sweeteners for each receiving location, for the calendar year and by delivery
month. The forecast shall list by name all proposed Bottler Customers and all
proposed non-Company products, and state the quantity for the calendar year of
each type of Sweetener for all Bottler Customers, collectively, and for all
non-Company products, collectively. Subject to approval within Company's sole
discretion, the forecast shall be amended to subtract quantities of Sweeteners
allocable to any non-approved Bottler Customers and/or non-Company products.
Bottler shall promptly advise Company of any proposed amendment to the approved
forecast, including any proposed change to the list of Bottler Customers and
non-Company products identified in the forecast. If approved in writing by
Company within its sole discretion, the amended forecast shall become the
approved forecast. Bottler shall be obligated to purchase the stated aggregate
quantity for each type of Sweetener listed in the forecast, plus or minus
five percent (5%).
If, without the express written approval of Company, Bottler fails to
comply with any provision of this Section 3, Company may, within its sole
discretion and without liability or advance notice, either terminate this
Agreement or reduce one or more future deliveries of Sweeteners hereunder such
that the aggregate deliveries to Bottler during any calendar year do not
exceed Bottler's actual requirements for use in its manufacture of Company and
approved non-Company products for itself and approved Bottler Customers.
Section 4. Pricing.
Company shall furnish price quotations based upon Bottler's instructions as
to date of pricing, quantity to be delivered and delivery period. The quantity
specified by Bottler shall be substantially in accordance with the monthly
quantities in the forecast. Bottler's acceptance of Company's quotations shall
establish the price and the quantity for delivery hereunder for the affected
delivery period. For pricing purposes, the delivery period shall be one or more
whole calendar months. If Bottler has not established a price by thirty (30)
days prior to a calendar month, then the price for that month shall be as
established by Company based on market conditions existing at that time for the
quantities to be delivered and the delivery period. However, if market
conditions indicate a delay in pricing, the Company may waive the
<PAGE>
thirty-day requirement. In the event Bottler has not otherwise specified the
quantity to be delivered prior to the date that pricing is established, the
quantity shall be that set forth in the forecast.
Company reserves the right upon written notice given on or before August
1st of any year to charge Bottler an amount to be determined within Company's
sole discretion for Company's services hereunder. This charge shall take
effect on January 1st of the next calendar year (or such later date as may be
specified in the notice) provided, however, Bottler shall have the right to
terminate this Agreement upon written notice given not later than three (3)
months preceeding the effective date of the charge.
Section 5. Invoicing and Payment.
Company shall invoice Bottler taking into account payment terms in
effect between the Originating Supplier(s) and Company. Invoices will be for
the net amount with any and all customary discounts available to Company
having been considered in establishing the price to Bottler.
Payment will be due within ten days from the date of invoice. Invoices
not paid within such ten-day period will be subject to interest charges.
Section 6. Delivery.
Delivery hereunder shall commence with the first calendar month set forth
in the forecast and continue until this Agreement terminates as provided in
Section 8 below. No later than the date of Company's quotation, the parties
hereto shall establish the terms of delivery which depend upon the type of
Sweeteners and the Originating Supplier. If not otherwise established at the
time, price quotations and established pricing shall be predicated upon
Company's delivery terms in effect with the Originating Supplier, adjustments to
be made by Company in accordance with terms for delivery to Bottler. Final
scheduling of deliveries shall be arranged by Bottler either directly or
indirectly (as specified by Company), with the Originating Supplier.
Section 7. Quality.
Bottler agrees to comply strictly with the terms of the Specifications,
and any requirements independently issued by Coca-Cola USA to bottlers of
Coca-Cola, relating to quality control with respect to Sweeteners, which terms
and requirements, if any, or any reissue thereof by Company, are made an
integral part of this Agreement. Bottler also agrees to submit samples of
Sweeteners in accordance with instructions as may be given by Company.
Bottler agrees to defend, indemnify and hold Company harmless against loss,
liability and damages caused by Bottler's failure to adhere to the
aforementioned terms, requirements and instructions of Company.
Section 8. Term and Termination.
This Agreement shall become effective on the date of first above written
and continue until December 31, 2002 ("Initial Period"), subject to automatic
renewal for successive one (1) year periods unless terminated at the end of
the initial period or any renewal by either party giving the other at least
ninety (90) days' written notice prior to the next renewal.
Section 9. Confidentiality.
In conjunction with performance under this Agreement, Company has
disclosed and anticipates disclosing or making available to Bottler, orally
and/or in writing, confidential information, including, but not limited to,
information relating to pricing, forward coverage and other terms of purchase
of Sweeteners. In consideration thereof and of Company entering into this
Agreement, Bottler shall (1) hold all such confidential information in strict
<PAGE>
confidence, (2) not disclose such information to any other party, including,
but not limited to, a party considering acquiring an equity interest in
Bottler or a party acquiring soft drinks from Bottler and (3) not disclose
such information to any of its employees involved in the purchasing of
sweeteners other than Sweeteners hereunder or, except on a need-to-know basis,
to any of its other employees. Any officer or employee of Bottler receiving
such confidential information shall be bound by the provisions of this
Section 9 as though a party hereto. In the event of a breach of this
Section 9 by Bottler or its officers or employees, Company may, within its
sole discretion and without liability or advance notice, terminate this
Agreement.
Section 10. Record Keeping and Auditing.
Bottler shall maintain records for two (2) years following the year of
Sweetener delivery adequate to substantiate compliance with all provisions of
this Agreement. Such records shall be available for inspection and auditing
by Company or its designee(s) upon notice during normal business hours. If
Bottler fails to fully comply with any provision of this Section, Company may,
within its sole discretion and without liability or advance notice, terminate
this Agreement.
Section 11. Force Majeure.
Neither party shall be liable to the other for loss, damage, or delay in
delivery or receipt of sugar caused by act of God, war conditions, compliance
with governmental laws, regulations, orders or actions, embargo, fire, flood,
accident, strike or labor trouble, transportation difficulty, or other similar
event where the occurrence of such event is beyond the control of and occurs
through no fault of either party. Further, neither party shall be liable to
the other for termination or suspension of delivery by the Originating
Supplier pursuant to force majeure provisions in Company's agreement(s) with
such Originating Supplier.
Section 12. Other Agreements.
All other agreements between the parties hereto shall continue in full
force and effect. Under no circumstances shall this Agreement be construed to
modify, amend, supersede or waive any provision of any other agreement between
the parties unless the same is expressly so stated in writing signed by the
parties with a specific reference to the other agreement.
Section 13. Notices.
Any notice, request, approval or other document required or permitted to
be given to either party under this Agreement shall be deemed to be duly given
when transmitted by telegraph, telex or deposited in the United States mail,
postage prepaid for mailing by first class addressed to the other party as
follows:
<PAGE>
If to Bottler:
the last known address
If to Company:
Coca-Cola USA
P. 0. Drawer 1734
Atlanta, Georgia 30301
Attention: Director, Global Sweeteners
Global Procurement & Trading
Section 14. Entire Agreement.
-----------------------------
This Agreement constitutes the entire understanding and Agreement
between parties with respect to subject matter hereof and cancels and
supersedes any prior negotiations, understandings and agreements, whether
verbal or written, with respect thereto.
Section 15. Waivers, Modifications, Amendments.
-----------------------------------------------
No waiver, modification or amendment of any provision of this Agreement
shall be valid or effective unless made in writing and signed by a duly
authorized representative of each party.
Section 16. Applicable Law.
---------------------------
The validity, interpretation and performance of this Agreement shall be
governed and construed in accordance with the laws of the State of Georgia as
though this Agreement were fully made and performed within the State of
Georgia.
Section 17. Assignment.
-----------------------
This Agreement is deemed to be of a personal nature, and Bottler may not
assign or transfer this Agreement or any interest therein or undertake any
transaction or series of transactions which would result in an effective
transfer of this Agreement or any interest therein, or sublicense or assign
any rights or obligations hereunder, or delegate or subcontract performance
hereof, in whole or in part, to any third party or parties, without the prior,
express, written consent of Company. For purposes of this Section 17, a
change in ownership of fifty percent (50%) or more of the voting equity in
Bottler will be deemed to be an assignment. Because this clause is considered
a material part of the bargain between the parties, any attempt to do so shall
be void and shall, at Company's option, have the effect of terminating this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives as of the date first above written.
THE COCA-COLA COMPANY,
acting by and through its
COCA-COLA USA DIVISION
By: /s/ CARL K. KOOYOOMJIAN
---------------------------------
President, The Coca-Cola
Trading Co. and Director of
Title: Global Procurement and Trading
------------------------------
BOTTLER
By: /s/ HENRY A. SCHIMBERG
---------------------------------
President and Chief Operating Officer
Title: Coca-Cola Enterprises Inc.
------------------------------
<PAGE> 1
EXHIBIT 12
COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
COCA-COLA ENTERPRISES INC.
(In millions except ratios)
Fiscal Year
----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Computation of Earnings:
Earnings (loss) from continuing
operations before income taxes
and cumulative effect of
accounting changes $178 $194 $145 $127 $ 55
Add:
Interest expense 532 332 319 314 332
Amortization of
capitalized interest 2 2 1 1 1
Amortization of debt
premium/discount 25 23 12 2 3
Interest portion of rent expense 27 12 10 9 8
---- ---- ---- ---- ----
Earnings as adjusted $764 $563 $487 $453 $399
==== ==== ==== ==== ====
Computation of Fixed Charges
and Combined Fixed Charges
and Preferred Stock Dividends:
Interest expense $532 $332 $319 $314 $332
Capitalized interest 2 2 4 3 1
Amortization of debt
premium/discount 25 23 12 2 3
Interest portion of rent expense 27 12 10 9 8
---- ---- ---- ---- ----
Fixed Charges 586 369 345 328 344
Preferred stock dividends(a) 2 13 3 3 --
---- ---- ---- ---- ----
Combined Fixed Charges and
Preferred Stock Dividends $588 $382 $348 $331 $344
==== ==== ==== ==== ====
Ratio of earnings to fixed
charges 1.30 1.53 1.41 1.38 1.16
==== ==== ==== ==== ====
Ratio of earnings to combined
fixed charges and preferred
stock dividends 1.30 1.47 1.40 1.37 1.16
==== ==== ==== ==== ====
(a) Preferred stock dividends have been increased to an amount representing the
pretax earnings which would be required to cover such dividend requirements.
<PAGE> 1
EXHIBIT 13
COCA-COLA ENTERPRISES
MANAGEMENT'S FINANCIAL REVIEW
Management's Financial Review should be read in conjunction with the Company's
consolidated financial statements and the accompanying footnotes along with
the cautionary statements at the end of this section.
Management's primary objective is to deliver a superior investment return to our
share owners through increases in long-term operating cash flows and profitable
increases in sales volume. To accomplish this objective, Coca-Cola Enterprises
Inc. ("the Company") has focused on implementing a comprehensive business plan
that includes key strategies emphasizing:
- Balanced volume growth with improved margins and sustainable
increases in market share.
- The creation and continued execution of innovative and
superior marketing programs at the local level.
- Continued integration of our North American and European
acquisitions while capitalizing on diverse opportunities in
various markets and channels.
- Continued development of profitable business partnerships with
our customers.
The success of these strategies is evidenced by the total return to our share
owners, growth in our cash operating profit, earnings, and volume, all of which
reflect the hard work of our employees.
-18-
<PAGE> 2
GOING GLOBAL
We believe our local market-driven operating philosophy and our decentralized
operating structure helps to ensure our success in the global markets of today.
Our recent acquisition of the Luxembourg bottler and the 1997 acquisitions of
bottling operations in Canada, Great Britain, and New York, combined with our
other operations in Europe and the United States, enhances our position as a
leader in the worldwide liquid nonalcoholic refreshment business.
Coca-Cola Enterprises Inc. is the world's largest marketer, distributor, and
producer of bottle and can liquid nonalcoholic refreshment. The Company
distributes more than 65% of The Coca-Cola Company's bottle and can products in
the United States and Canada through franchise territories in 44 states in the
United States, the District of Columbia, and in the 10 provinces of Canada. We
are also the sole licensed bottler for products of The Coca-Cola Company in
Belgium, Great Britain, Luxembourg, the Netherlands, and most of France.
Products of The Coca-Cola Company account for approximately 89% of our total
product sales volume. This reflects the successful partnership we have with The
Coca-Cola Company which owns approximately 44% of our outstanding common shares.
Our thirteen-member Board of Directors includes three current or former
executives of The Coca-Cola Company.
MOMENTUM IN `98
Our greatest challenge is maintaining and accelerating our current operating
momentum in what we believe will be a highly competitive market, while directing
our cash resources toward profitable high-return projects and capitalizing on
our European and North American opportunities.
For 1998 we expect to produce cash operating profit growth of 10% above 1997
comparable results of $1.75 billion. This rate of anticipated cash operating
profit growth would correspond with projected 1998 earnings per share that would
more than double comparable 1997 basic net income per share of $0.16.
-19-
<PAGE> 3
MANAGEMENT'S FINANCIAL REVIEW
OPERATIONS REVIEW - 1997
OVERVIEW
In 1997 consolidated cash operating profit, or net income before deducting
interest, taxes, depreciation, amortization, and other nonoperating items,
exceeded $1.6 billion, 42% above reported 1996 results, and 10% above comparable
1996 performance. The Company's comparable cash operating profit growth
reflected volume growth above industry rates and decreases in cost of sales per
case that more than offset lower net revenues per case.
Strong volume growth, reduced interest expense, and a lower effective tax rate
resulted in 1997 cash operating profit and net income margins in excess of
comparable 1996 margins. The gross profit and operating income margins for 1997
declined slightly from 1996 primarily because of higher depreciation and noncash
stock compensation amortization expenses.
To achieve our objective of increasing long-term value for our share owners, we
continue to invest additional capital to expand our geographic, product,
package, and channel diversity and to act on local market opportunities. In 1997
this diversity has been a key factor in our ability to deliver consistent growth
despite the highly competitive pricing environment in North America. With
approximately 27% of our net operating revenues generated in territories outside
North America, we believe our ability to manage our expanding portfolio of
diverse operations results in a significant competitive advantage and
accelerates our long-term growth potential.
Comparable Results - Because of the Company's significant acquisitions, results
adjusted to a comparable basis provide a better indication of current operating
trends. Comparable results as presented in this discussion are determined by
adjusting:
- 1997 results (i) to exclude the first-quarter 1997 charge of $6
million for the early redemption of debentures and (ii)
to exclude the third-quarter 1997 tax rate change benefit of
$58 million, and
- 1996 results (i) to include the results of significant
acquisitions for the same periods included in 1997 reported
results and (ii) to exclude the first-quarter 1996 favorable
supplier settlement of $10 million.
CASH OPERATING PROFIT
In the opinion of management, cash operating profit is one of the key standards
for measuring our operating performance.
To determine comparable cash operating profit growth rates, 1997 and 1996
reported results were adjusted as described above and were also adjusted to
exclude results from our recent 1997 acquisitions of Coke Canada and Coke New
York.
--------------------------------------------------------------
FULL-YEAR 1997
----------------------
REPORTED COMPARABLE
CHANGE CHANGE
--------------------------------------------------------------
Cash Operating Profit:
Consolidated 42% 10%
Currency neutral 11%
--------------------------------------------------------------
Cash operating profit is used by management as an additional indicator of
operating performance and not as a replacement of measures defined and required
by generally accepted accounting principles such as cash flows from operating
activities and operating income.
VOLUME
--------------------------------------------------------------
FULL-YEAR 1997
----------------------
REPORTED COMPARABLE
CHANGE CHANGE
--------------------------------------------------------------
Physical Case Bottle and Can Volume:
Consolidated 41% 7%
North American Territories 6%
European Territories 8%
--------------------------------------------------------------
Volume growth in 1997 was impacted by strong performance in brands of The
Coca-Cola Company with particularly strong increases in Coca-Cola classic,
Sprite, SURGE, Barq's, and Cool from Nestea. This growth is an indicator of our
continued increase in market share in our territories.
On a unit case basis, 76% of the Company's 1997 volume was from North American
operations and 24% was from our European operations. We expect approximately the
same ratio in 1998.
NET OPERATING REVENUES AND COST OF SALES
--------------------------------------------------------------
FULL-YEAR 1997
----------------------
REPORTED COMPARABLE
CHANGE CHANGE
--------------------------------------------------------------
Net Operating Revenues 42% 4 %
--------------------------------------------------------------
Net Revenues Per Case 0.5% (2.5)%
Currency neutral (1)%
--------------------------------------------------------------
Cost of Sales Per Case 3% (2)%
Currency neutral (0.5)%
--------------------------------------------------------------
Under our decentralized organizational and operating philosophy, net revenues
per case are managed locally, given individual market conditions and
opportunities. Net operating revenues are comprised principally of wholesale
sales to retailers, accounting for approximately 96% of our net revenues.
While we hope the pricing environment will improve in 1998, we expect modest
increases in costs of sales per case because of higher costs for concentrate and
certain packaging materials.
-20-
<PAGE> 4
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
------- ------- -------
NET OPERATING REVENUES ........................... $11,278 $ 7,921 $ 6,773
Cost of sales (purchases from The Coca-Cola
Company - $3,086, $2,150, and $1,828,
respectively) ................................... 7,096 4,896 4,267
------- ------- -------
GROSS PROFIT ..................................... 4,182 3,025 2,506
Selling, delivery, and administrative expenses ... 3,462 2,480 2,038
------- ------- -------
OPERATING INCOME ................................. 720 545 468
Interest expense, net ............................ 536 351 326
Other nonoperating deductions, net ............... 6 -- 6
Gain from sale of ownership interest in
bottling operation .............................. -- -- 9
------- ------- -------
INCOME BEFORE INCOME TAXES ....................... 178 194 145
Income tax expense before rate change benefit .... 65 80 63
Income tax rate change benefit ................... (58) -- --
------- ------- -------
NET INCOME ....................................... 171 114 82
Preferred stock dividends ........................ 2 8 2
------- ------- -------
NET INCOME APPLICABLE TO COMMON SHARE OWNERS ..... $ 169 $ 106 $ 80
======= ======= =======
BASIC NET INCOME PER SHARE APPLICABLE TO
COMMON SHARE OWNERS ............................. $ 0.44 $ 0.28 $ 0.21
======= ======= =======
DILUTED NET INCOME PER SHARE APPLICABLE TO
COMMON SHARE OWNERS ............................. $ 0.43 $ 0.28 $ 0.20
======= ======= =======
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
EARNINGS PER SHARE
At the April 21, 1997 annual meeting of share owners, a 3-for-1 stock split was
approved for share owners of record on May 1, 1997 and authorized common shares
were increased from 500 million to 1 billion. For all periods prior to the
effective date of the stock split, per share data contained in this report have
been restated to reflect the impact of the split.
In 1997 the Company produced basic net income per share of $0.44 compared to
reported year-to-date 1996 results of $0.28 per share. Basic net income per
share for 1997 includes a $58 million ($0.15 per share) one-time tax benefit
resulting from the reduction in the United Kingdom's corporate tax rate and a $6
million one-time charge for the redemption of $142 million in 8.75% Debentures
due 2017 ($0.01 per share after tax). When we exclude these one-time items, 1997
basic net income per share was $0.30.
SELLING, DELIVERY, AND ADMINISTRATIVE EXPENSES
In 1997 selling, delivery, and administrative expenses increased 4% over
comparable 1996 expenses. The 1997 acquisitions combined with incremental
amortization expenses for executive stock compensation plans resulted in a
reported increase in selling, delivery, and administrative expenses of 40%.
However, selling, delivery, and administrative expenses as a percent of net
operating revenues remained relatively constant for full-year 1997 when compared
to 1996.
Our stock-based compensation plans are designed to motivate management to make
decisions that promote maximum growth in financial and operating results and,
ultimately, in the Company's stock price. Noncash stock compensation costs are
included in selling, delivery, and administrative expenses. In 1997 the
significant increase in the Company's stock price and accelerated recognition of
costs associated with these plans resulted in a 67% increase in total stock
compensation expenses over 1996 costs. The 1998 stock-based compensation plans
have been designed to result in no recorded compensation expense to the Company
and, therefore, timing concerns relating to expense recognition encountered over
the last few years have been eliminated.
INTEREST EXPENSE
In 1997 interest expense increased over reported 1996 interest expense,
reflecting a higher 1997 debt balance primarily a result of the 1997 and 1996
acquisitions. For 1997 the weighted average cost of debt was 6.9% as compared to
the
-21-
<PAGE> 5
MANAGEMENT'S FINANCIAL REVIEW
1996 weighted average cost of debt of 7.2%. At the end of 1997, the Company's
debt portfolio was comprised of 35% floating-rate debt with the remainder at
fixed rates. We expect our portfolio to become more fixed as we continue to
execute fixed-rate longer-term debt to replace the floating-rate short-term debt
used in financing our acquisitions.
INCOME TAX EXPENSE
On July 31, 1997, the United Kingdom's income tax rate was reduced from 33% to
31% retroactive to April 1, 1997. This rate change reduced deferred tax
liabilities associated with the Company's United Kingdom operations by $58
million. This deferred tax liability reduction was recognized as a credit to
income tax expense ($0.15 per common share) in 1997.
Excluding this one-time tax benefit, the Company's effective tax rate for 1997
was 37%, below the 1996 effective tax rate of 41%. The reduction in the
Company's effective tax rate principally results from our expanded operations in
Europe including the favorable tax treatment granted to certain foreign
operations under a tax holiday expiring by the year 2000.
CASH FLOW AND LIQUIDITY REVIEW - 1997
CAPITAL RESOURCES
Our sources of capital include, but are not limited to, cash flows from
operations, 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.
At December 31, 1997, we had available for long-term financing needs
approximately $2 billion in debt securities for issuance under a registration
statement with the Securities and Exchange Commission and an additional $2
billion in debt securities under a program registered with the Luxembourg Stock
Exchange. We satisfy seasonal working capital needs and other financing
requirements with bank borrowings and short-term borrowings under our commercial
paper program and other credit facilities. At December 31, 1997, we had a total
amount outstanding of approximately $1,217 million under various short-term
credit facilities, with an additional $1,238 million available for future use.
We intend to continue to refinance borrowings under our commercial paper program
and our short-term credit facilities with longer-term fixed and floating rate
financings. Subsequent to December 31, 1997, the Company issued an additional
$506 million in notes and debentures.
The Company's sources of capital allow us the financial flexibility to execute
our disciplined acquisition strategy of acquiring businesses that offer us
opportunities to implement our operating strategies, achieve our desired rates
of return, and increase share-owner value over the long term.
SUMMARY OF CASH ACTIVITIES
The Company's principal sources of cash consisted of those derived from
operations of $942 million and proceeds from the issuance of debt aggregating
$4.6 billion. The Company's primary uses of cash were capital expenditures
totaling $967 million, long-term debt payments totaling $2.6 billion, and net
cash cost for acquired bottling operations of approximately $2 billion.
Operating Activities: The cash flows from operating activities for 1997 result
from the favorable operating performance discussed earlier and from our
acquisitions. The increase in depreciation expense for 1997 is caused by
increased capital spending and acquisitions. The increase in amortization
expense for 1997 reflects additional franchise amortization from acquisitions
and from stock-based compensation plans.
Investing Activities: The significant increase in net cash used in investing
activities in 1997 compared to 1996 is primarily a result of the 1997 European
and North American acquisitions at a total cost of approximately $2 billion in
cash, net of cash acquired. Capital expenditures in 1997 increased 55% over 1996
primarily because of our significant growth and the capital investments made by
our international operations. We expect 1998 capital expenditures to approximate
1997 expenditures, without giving any effect to possible future acquisitions.
On February 10, 1997, the Company purchased Amalgamated Beverages Great Britain
Limited from The Coca-Cola Company and Cadbury Schweppes plc. On August 7, 1997,
the Company acquired The Coca-Cola Company's 48% interest in Coca-Cola Beverages
Ltd. ("Coke Canada") and its 49% interest in The Coca-Cola Bottling Company of
New York, Inc. ("Coke New York"). In September 1997 the Company acquired the
remaining
-22-
<PAGE> 6
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...................................... $ 171 $ 114 $ 82
Adjustments to reconcile net income to net
cash derived from operating activities:
Depreciation .................................. 566 392 318
Amortization .................................. 380 235 211
Deferred income tax provision (benefit) ....... (80) (2) 22
Gain from sale of ownership interest in
bottling operation ........................... -- -- (9)
Net changes in current assets and current
liabilities .................................. (138) 218 (12)
Additional nonoperating cash flows ............ 43 49 32
------- ------- -------
Net cash derived from operating activities 942 1,006 644
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets ....................... (967) (622) (501)
Fixed asset sales ............................... 20 12 16
Cash investments in bottling businesses,
net of cash acquired ($1,580 and $533 was
paid to The Coca-Cola Company for bottling
operations in 1997 and 1996, respectively) (1,987) (676) (158)
Sale of ownership interest in bottling
operations ..................................... -- -- 17
Additional investing activities ................. -- -- 6
------- ------- -------
Net cash used in investing activities ........... (2,934) (1,286) (620)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt ...................... 4,630 875 301
Payments on long-term debt ...................... (2,613) (359) (315)
Cash dividend payments on common and
preferred stock ................................ (33) (19) (7)
Exercise of employee stock options .............. 13 10 10
Stock purchases for treasury .................... -- (183) (41)
Additional financing activities ................. (7) (5) 14
------- ------- -------
Net cash derived from (used in) financing
activities ..................................... 1,990 319 (38)
------- ------- -------
NET (DECREASE) INCREASE IN CASH AND CASH
INVESTMENTS DURING EACH YEAR
(2) 39 (14)
Cash and cash investments at beginning of
each year ...................................... 47 8 22
------- ------- -------
CASH AND CASH INVESTMENTS AT END OF EACH
YEAR ........................................... $ 45 $ 47 $ 8
======= ======= =======
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
shares of Coke Canada held by the public and as of January 5, 1998 the Company
owns all of the outstanding shares of Coke New York. Since inception, the
Company has acquired a number of bottling companies for a total cost of
approximately $10.9 billion.
Financing Activities: The 1997 acquisitions were initially financed through a
combination of sellers' notes, public debt securities, and bank borrowings.
In 1997 the Company issued (i) $150 million of 5.71% Notes due 2037, (ii) $250
million of 6.375% Notes due 2001, (iii) $200 million of 6.625% Notes due 2004,
(iv) $300 million of 7.125% Debentures due 2017, and (v) $250 million of 6.95%
Debentures due 2026.
On April 1, 1997, the Company redeemed 8.75% Debentures due 2017 aggregating
$142 million. Costs of $6 million associated with this redemption were included
in results of operations as a nonoperating expense.
On September 25, 1997, the Company registered debt securities of $2.5 billion
under a European Medium Term Note Program with the Luxembourg Stock Exchange. On
September 30, 1997, the Company issued $500 million in notes due 2002 under this
program.
On January 20, 1998, the Company announced it would restart the repurchase
activity under a 30 million share (restated for the 3-for-1 stock split) common
stock repurchase program approved by the Board of Directors on
-23-
<PAGE> 7
MANAGEMENT'S FINANCIAL REVIEW
April 11, 1996. In 1996 and 1997, no repurchases were made under this program.
Management considers market conditions and alternative uses of cash and/or debt,
balance sheet ratios, and share-owner returns when evaluating the timing of
share repurchases.
The Company can repurchase shares in the open market and in privately negotiated
transactions based on prevailing market conditions. Additionally, a management
stock buy-back program was implemented to purchase shares during the
ten-business day period beginning January 23, 1998 whereby certain employees
were allowed to sell up to 15% of their current holdings back to the Company.
Repurchased shares are added to treasury stock and are available for general
corporate purposes including acquisition financing and the funding of various
employee benefit and compensation plans.
Cash Tax Obligations: During 1987 the Company filed elections under Section 338
of the Internal Revenue Code relating to various bottling companies acquired in
1986. This election resulted in a tax deductible basis for the majority of our
franchise assets.
For tax purposes, the franchise assets from these acquisitions were fully
amortized in 1996. The cash income tax obligation for 1997 increased over 1996
and 1995 and is expected to continue to increase in the future once tax
operating loss carryforwards resulting from these accelerated deductions are
fully utilized.
FINANCIAL POSITION - 1997
ASSETS
Overall, the increase in total assets from December 31, 1996 to December 31,
1997 is primarily attributable to the acquisitions of the British, Canadian, and
New York bottlers. The increase in franchises and other noncurrent assets is
also a direct result of the franchise assets acquired in these acquisitions. The
increase in property, plant, and equipment results from these bottler
acquisitions combined with 1997 capital expenditures of approximately $967
million.
LIABILITIES AND EQUITY
The increase in long-term debt and the increase in deferred income taxes also
results from these acquisitions. As a result of the 3-for-1 stock split, common
stock balances were increased to stated aggregate par values by decreasing
additional paid-in capital by $295 million.
Changes in currency exchange rates resulted in a decrease in the cumulative
translation adjustment of $37 million in 1997. Through July 1996, the operations
of the Company were primarily in U.S. dollars and Dutch florins. Since August
1996 we have operated in a multicurrency environment.
CONTINGENCIES
At December 31, 1997, there were five federal and two state Superfund sites for
which the Company's involvement or liability as a potentially responsible party
("PRP") was unresolved. We believe any ultimate liability under these PRP
designations will not have a materially adverse effect on our financial
position, cash flows, or results of operations. In addition, there were 17
federal and seven state sites for which it had been concluded 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
the Company's liability.
The Company is a defendant in various matters of litigation generally arising
out of the normal course of business. Although it is difficult to predict the
ultimate outcome of these cases, management believes, based on discussion with
counsel, that any ultimate liability would not materially affect the Company's
financial position, results of operations, or liquidity.
INTEREST RATE AND CURRENCY RISK MANAGEMENT
Interest Rates: The Company is exposed to changes in domestic and international
interest rates due to the Company's intentions to finance the purchase and cash
flow requirements of international subsidiaries with either local currency
borrowings or borrowings that are effectively exchanged into local borrowings
through currency swap agreements. Interest rate risk is present with both fixed
and floating rate debt. We use interest rate swap agreements and other risk
management instruments to manage our fixed/floating debt profile.
Interest rate swap agreements generally involve exchanges of interest payments
based upon fixed and floating interest rates without exchanges of underlying
face (notional) amounts of the designated hedges. We continually evaluate the
credit quality of counterparties to interest rate swap agreements and other risk
management instruments and do not believe there is a significant risk of
nonperformance by any of the counterparties.
Based on the Company's fixed/floating debt profile at December 31, 1997, a 1%
increase in market interest rates would, on an annualized basis, increase
interest expense and decrease income before income taxes by $31 million. This
amount was determined by calculating the effect of the hypothetical interest
rate on our floating rate debt, after giving consideration to our interest rate
swap agreements and other risk management instruments. This amount does not
include the effects of certain potential results of increased interest rates,
such as a reduced level
-24-
<PAGE> 8
COCA-COLA ENTERPRISES INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT PER SHARE DATA)
DECEMBER 31,
-----------------
1997 1996
------- -------
ASSETS
CURRENT
Cash and cash investments, at cost approximating
market .................................................. $ 45 $ 47
Trade accounts receivable, less reserves of $58 and
$45, respectively ....................................... 1,007 668
Inventories:
Finished goods .......................................... 330 221
Raw materials and supplies .............................. 132 96
------- -------
462 317
Current deferred income tax assets ....................... 70 140
Prepaid expenses and other current assets ................ 229 147
------- -------
Total Current Assets ................................ 1,813 1,319
PROPERTY, PLANT, AND EQUIPMENT
Land ..................................................... 297 213
Buildings and improvements ............................... 1,065 860
Machinery and equipment .................................. 4,653 3,558
------- -------
6,015 4,631
Less allowances for depreciation ......................... 2,295 1,881
------- -------
3,720 2,750
Construction in progress ................................. 142 62
------- -------
Net Property, Plant, and Equipment ...................... 3,862 2,812
FRANCHISES AND OTHER NONCURRENT ASSETS, NET .............. 11,812 7,103
------- -------
$17,487 $11,234
======= =======
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued expenses .................... $ 1,994 $ 1,181
Amounts payable to The Coca-Cola Company, net ............ 6 18
Current portion of long-term debt ........................ 1,032 491
------- -------
Total Current Liabilities ......................... 3,032 1,690
LONG-TERM DEBT, LESS CURRENT MATURITIES .................. 7,760 4,814
RETIREMENT AND INSURANCE PROGRAMS AND OTHER LONG-TERM
OBLIGATIONS ............................................. 917 699
LONG-TERM DEFERRED INCOME TAX LIABILITIES ................ 3,996 2,481
SHARE-OWNERS' EQUITY
Preferred stock .......................................... -- 134
Common stock, $1 par value - Authorized 1,000,000,000
and 500,000,000 shares, respectively; Issued
442,971,597 and 146,763,463 shares, respectively ........ 443 147
Additional paid-in capital ............................... 1,364 1,434
Reinvested earnings ...................................... 374 237
Cumulative effect of currency translations ............... (16) 21
Common stock in treasury, at cost (56,418,084 and
21,328,590 shares, respectively)......................... (383) (423)
------- -------
Total Share-Owners' Equity .......................... 1,782 1,550
------- -------
$17,487 $11,234
======= =======
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
-25-
<PAGE> 9
COCA-COLA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY
(IN MILLIONS EXCEPT PER SHARE DATA)
ADDITIONAL
THREE YEARS ENDED PREFERRED COMMON PAID-IN REINVESTED
DECEMBER 31, 1997 STOCK STOCK CAPITAL EARNINGS
- -------------------- ------------- ------------- ------------- -------------
BALANCES AT
DECEMBER 31, 1994 . $ 29 $ 144 $1,301 $ 70
Issuance of
management stock
performance
awards ............ -- -- 18 --
Unamortized cost of
management stock
performance
awards ............ -- -- (18) --
Expense amortization
of management stock
performance
awards ............ -- -- 36 --
Forfeiture of
management stock
performance
awards ............ -- -- -- --
Purchase of common
stock for treasury
(refer to Note 8) . -- -- -- --
Exercise of
employee stock
options ........... -- 1 9 --
Currency
translations ...... -- -- -- --
Dividends on common
stock (per share -
$0.05) ............ -- -- -- (6)
Dividends on
preferred stock
(refer to Note 7) . -- -- -- (2)
Preferred stock
accretion (refer
to Note 7) ........ 1 -- -- --
Net income ......... -- -- -- 82
------ ------ ------ ------
BALANCES AT
DECEMBER 31, 1995 . 30 145 1,346 144
Issuance of
management stock
performance
awards ............ -- 1 89 --
Unamortized cost of
management stock
performance
awards ............ -- -- (90) --
Expense
amortization of
management stock
performance
awards ............ -- -- 40 --
Forfeiture of
management stock
performance
awards ............ -- -- -- --
Exercise of
employee stock
options, including
tax effect ........ -- 1 15 --
Purchase of common
stock for treasury
(refer to Note 8) . -- -- -- --
Tax effect of
management stock
performance
awards ............ -- -- 9 --
Issuance of shares
to effect
acquisition ....... 155 -- -- --
Currency
translations ...... -- -- -- --
Conversion of
preferred stock to
common stock ...... (53) -- 25 --
Dividends on common
stock (per share -
$0.10) ............ -- -- -- (13)
Dividends on
preferred stock
(refer to Note 7) . -- -- -- (8)
Preferred stock
accretion (refer
to Note 7) ........ 2 -- -- --
Net income ......... -- -- -- 114
------ ------ ------ ------
BALANCES AT
DECEMBER 31, 1996 . 134 147 1,434 237
Issuance of
management stock
performance
awards ............ -- -- 57 --
Unamortized cost of
management stock
performance
awards ............ -- -- (57) --
Expense amortization
of management stock
performance
awards ............ -- -- 89 --
Exercise of
employee stock
options ........... -- 1 12 --
Tax effect of
management stock
compensation
plans ............. -- -- 12 --
Currency
translations ...... -- -- -- --
Conversion of
preferred stock to
common stock ...... (134) -- 94 --
Dividends on common
stock (per share -
$0.10) ............ -- -- -- (32)
Dividends on
preferred stock
(refer to Note 7) . -- -- -- (2)
Conversion of
executive deferred
compensation to
equity ............ -- -- 18 --
3-for-1 common stock
split (refer to
Note 10) .......... -- 295 (295) --
Net income ......... -- -- -- 171
------ ------ ------ ------
BALANCES AT
DECEMBER 31, 1997 . $ -- $ 443 $1,364 $ 374
====== ====== ====== ======
THREE YEARS ENDED CURRENCY TREASURY SHARE-OWNERS'
DECEMBER 31, 1997 TRANSLATIONS STOCK EQUITY
- -------------------- ------------- ------------- -------------
BALANCES AT
DECEMBER 31, 1994 . $ 21 $ (226) $1,339
Issuance of
management stock
performance
awards ............ -- -- 18
Unamortized cost of
management stock
performance
awards ............ -- -- (18)
Expense amortization
of management stock
performance
awards ............ -- -- 36
Forfeiture of
management stock
performance
awards ............ -- (1) (1)
Purchase of common
stock for treasury
(refer to Note 8) . -- (41) (41)
Exercise of
employee stock
options ........... -- -- 10
Currency
translations ...... 17 -- 17
Dividends on common
stock (per share -
$0.05) ............ -- -- (6)
Dividends on
preferred stock
(refer to Note 7) . -- -- (2)
Preferred stock
accretion (refer
to Note 7) ........ -- -- 1
Net income ......... -- -- 82
------ ------ ------
BALANCES AT
DECEMBER 31, 1995 . 38 (268) 1,435
Issuance of
management stock
performance
awards ............ -- -- 90
Unamortized cost of
management stock
performance
awards ............ -- -- (90)
Expense
amortization of
management stock
performance
awards ............ -- -- 40
Forfeiture of
management stock
performance
awards ............ -- (1) (1)
Exercise of
employee stock
options, including
tax effect ........ -- -- 16
Purchase of common
stock for treasury
(refer to Note 8) . -- (183) (183)
Tax effect of
management stock
performance
awards ............ -- -- 9
Issuance of shares
to effect
acquisition ....... -- 1 156
Currency
translations ...... (17) -- (17)
Conversion of
preferred stock to
common stock ...... -- 28 --
Dividends on common
stock (per share -
$0.10) ............ -- -- (13)
Dividends on
preferred stock
(refer to Note 7) . -- -- (8)
Preferred stock
accretion (refer
to Note 7) ........ -- -- 2
Net income ......... -- -- 114
------ ------ ------
BALANCES AT
DECEMBER 31, 1996 . 21 (423) 1,550
Issuance of
management stock
performance
awards ............ -- -- 57
Unamortized cost of
management stock
performance
awards ............ -- -- (57)
Expense amortization
of management stock
performance
awards ............ -- -- 89
Exercise of
employee stock
options ........... -- -- 13
Tax effect of
management stock
compensation
plans ............. -- -- 12
Currency
translations ...... (37) -- (37)
Conversion of
preferred stock to
common stock ...... -- 40 --
Dividends on common
stock (per share -
$0.10) ............ -- -- (32)
Dividends on
preferred stock
(refer to Note 7) . -- -- (2)
Conversion of
executive deferred
compensation to
equity ............ -- -- 18
3-for-1 common stock
split (refer to
Note 10) .......... -- -- --
Net income ......... -- -- 171
------ ------ ------
BALANCES AT
DECEMBER 31, 1997 . $ (16) $ (383) $1,782
====== ====== ======
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
-26-
<PAGE> 10
MANAGEMENT'S FINANCIAL REVIEW
of overall economic activity or other actions management may take to mitigate
our risk. Furthermore, this sensitivity analysis does not assume changes in
our financial structure that could occur if interest rates were higher.
Currency: Our European operations represent approximately 29% of consolidated
long-lived assets and approximately 27% of 1997 consolidated net operating
revenues. Because of our international operations, we are exposed to translation
risk when the local currency statements of income are translated into U.S.
dollars. As currency exchange rates fluctuate, translation of the statements of
income of international businesses into U.S. dollars will affect comparability
of revenues and expenses between years. None of the components of our
consolidated statements of income was materially affected by exchange rate
fluctuations in 1997, 1996, or 1995. We hedge a significant portion of our net
investments in international subsidiaries by financing the purchase and cash
flow requirements of international subsidiaries through either local currency
borrowings or borrowings that are effectively exchanged into local borrowings
through currency swap agreements.
The Company's revenues are denominated in each international subsidiary's local
currency; thus, the Company is not exposed to currency transaction risk on its
revenues. The Company is exposed to currency transaction risk on certain
purchases of raw materials and equipment by international subsidiaries. We use
currency forward agreements and purchased currency options to hedge a
significant portion of the aforementioned raw material purchases. The notional
amounts outstanding at December 31, 1997 for the currency forward exchange
agreements and purchased currency options were $1,238 million and $96 million,
respectively. These forward and option contracts are scheduled to expire in 1998
and 1999. At December 31, 1997, a hypothetical 10% adverse movement in foreign
exchange rates applied to the hedging agreements and underlying exposures
described above would not have a material effect on our earnings.
CURRENT TRENDS AND UNCERTAINTIES
YEAR 2000 COMPLIANCE
Companies relying on automated information systems to conduct business are faced
with the possibility that certain systems will not process data appropriately in
transition from the year 1999 to the year 2000. Systems that process data using
only the last two digits of the year, rather than the full four digits, or that
contain year-based logic, may be unable to operate effectively. This possibility
impacts substantially all areas of our business as well as our suppliers and
customers, and will be further impacted by our recent and future acquisitions.
We have an ongoing information systems plan designed to produce updated and
consistent applications. As part of that plan, many of the Year 2000 issues are
currently being addressed. We also have a multifunctional task force to identify
and ensure all other Year 2000 compliance issues are corrected. Our systems
assessment has resulted in multiple projects to deal with identified problems.
We view this undertaking as important to the Company, and will continue to
dedicate the resources necessary to complete the task. Because of the numerous
uncertainties associated with the Year 2000 compliance project, we are unable at
this point to predict the ultimate cost and whether the Year 2000 issue
will have a materially adverse impact on the future operating results or
financial condition of the Company.
ACCOUNTING DEVELOPMENTS
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," was issued by the Financial Accounting Standards Board ("FASB") during
the first quarter of 1997 and is effective for the year ending December 31,
1997. The statement modifies the method of calculating net income per share
applicable to common share owners and also requires a reconciliation in the
footnotes to the financial statements between basic and diluted per share
amounts. All per share amounts in this annual report are presented in accordance
with SFAS No. 128.
In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
effective for fiscal years beginning after December 15, 1997. This statement
requires that companies present information on comprehensive income in a
financial statement. Comprehensive income includes net income and other items
such as currency translation adjustments. We are in the process of evaluating
the methods for adoption of this statement. This statement is not expected to
have a material impact on the Company's financial statements.
In June 1997 the FASB also issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" effective beginning in fiscal year 1998
with early adoption allowed. This statement requires public business enterprises
to report financial and descriptive information about reportable operating
segments and about certain geographic information. The Company operates in one
reportable segment: the marketing, distribution, and production of bottle and
can nonalcoholic refreshments. The Company's early adoption of SFAS No. 131 did
not have a material impact on the financial statements or accompanying notes.
-27-
<PAGE> 11
MANAGEMENT'S FINANCIAL REVIEW
CAUTIONARY STATEMENTS
Certain expectations and projections regarding future performance of the Company
referenced in this annual report are forward-looking statements. These
expectations and projections are based on currently available competitive,
financial, and economic data along with the Company's operating plans and are
subject to certain future events and uncertainties. We caution readers that in
addition to the important factors described elsewhere in this annual report, the
following factors, among others, could cause the Company's actual consolidated
results in 1998 and thereafter to differ significantly from those expressed in
any forward-looking statements.
MARKETPLACE - The Company's response to continued and increased
competition may result in lower than expected net pricing of our
products. In addition, competitive pressures may cause channel and
product mix shifts away from more profitable cold drink channels and
packages and adversely affect the Company's overall pricing. Also,
weather conditions, particularly in Europe, can have a significant
impact on the Company's sales volume. Net pricing, volume, and costs of
sales are the primary determinants of net earnings.
RAW MATERIALS - Our forecast of earnings and cash operating profit
assumes no unplanned increases in the cost of raw materials,
ingredients, packaging materials, or supplies. If such increases occur,
and the Company is unable to increase its pricing to customers by
comparable amounts, earnings and cash operating profit would be
adversely affected.
FUNDING FROM FRANCHISERS - Material changes in the performance
requirements or decreases in levels of funding historically provided
under our marketing programs with The Coca-Cola Company and other
franchisers, or our inability to meet the performance requirements for
the anticipated levels of such marketing support payments, would
adversely affect future earnings. The Coca-Cola Company is under no
obligation to continue past levels of funding.
FINANCING CONSIDERATIONS - Changes from our expectations regarding both
interest rates and currency exchange rates can have a material impact
on our earnings. We may not be able to mitigate completely the effect
of significant interest rate or currency exchange rate fluctuations.
YEAR 2000 COMPLIANCE - The Company's Year 2000 compliance project is
dependent on many factors including timely and successful compliance by
our customers and suppliers as well as adequate program changes from
our software vendors. It is also dependent upon our ability to manage
the project where the Year 2000 issue results in little impact to our
business. The inability to conduct business in certain areas because of
the Year 2000 situation could have a materially adverse impact on our
operating results and financial condition.
OPERATIONS REVIEW - 1996 - 1995
For 1996 comparative purposes, the Company's operating results, including cash
operating profit, are adjusted for impacts of acquisitions and one-time items.
Accordingly, "comparable" results in this 1996 -1995 review are determined as
follows:
- 1996 operating results are adjusted (i) to exclude the impact of
the 1996 international acquisition and (ii) to exclude a $10
million ($0.01 per common share after taxes) favorable
supplier settlement in first-quarter 1996.
- 1995 operating results are adjusted (i) to include the pro forma
impact of the 1996 domestic acquisitions, as if the acquisitions
were owned and operated by us for the same period in 1995 as
in 1996 and (ii) to exclude a $9 million ($0.01 per common share
after taxes) gain from the sale of The Coca-Cola Bottling
Company of the Mid South ("Mid South") in first-quarter 1995.
OVERVIEW
In 1996 the Company's cash operating profit results reflected strong,
broad-based domestic volume growth, increased net revenues per case, and a
slight decrease in domestic cost of sales per case. A reported 33% increase in
1996 basic net income applicable to common share owners is also attributable to
the above factors and is further impacted by a lower effective tax rate for
1996. Basic net income per common share for 1996 was $0.28, reflecting a 33%
increase over 1995.
CASH OPERATING PROFIT is a key standard by which management measures operating
performance. In 1996 cash operating profit reached approximately $1.2 billion,
reflecting 18% growth over 1995 actual results. On a comparable basis, 1996 cash
operating profit reflected a 10% growth rate.
-28-
<PAGE> 12
MANAGEMENT'S FINANCIAL REVIEW
EARNINGS PER SHARE increased 33% over 1995 levels. Reported 1996 basic net
income per common share was $0.28 compared to reported 1995 results of $0.21 per
common share. After excluding the first-quarter 1996 supplier settlement and the
first-quarter 1995 gain on the sale of the Company's interest in Mid South,
adjusted 1996 results were $0.27 per common share, or 35% above adjusted 1995
earnings of $0.20 per common share.
NET OPERATING REVENUES in 1996 are comprised principally of wholesale sales to
retailers, accounting for approximately 96% of our net revenues. Reported net
operating revenues for 1996 exceeded $7.9 billion, representing a 17% increase
over 1995. The increase in net operating revenues results from a 14.5% increase
in bottle and can physical case sales volume, partially attributable to the 1996
acquisitions, and a 3% increase in net revenues per case.
VOLUME growth in 1996 resulted from strong domestic carbonated brand performance
attributable to Coca-Cola classic, Barq's, Cherry Coke, and Sprite. In 1996
Sprite continued to produce double-digit growth outpacing its 17% 1995 domestic
growth rate. Domestic noncarbonated brand growth exceeded the carbonated brand
performance with double-digit growth in Cool from Nestea, POWERaDE, and the
Company's primary still water products, NAYA and Evian. The Company's fastest
growing package category was the contour plastic bottle in 20-ounce and 1-liter
sizes.
Comparable volume information represents reported results adjusted to include
volume of acquired companies for the same periods in 1995 as those periods for
which the entities were owned in 1996. Comparable bottle and can physical case
volume for 1996 increased over 1995 levels by 5.5%, following a 4.5% growth rate
in 1995. The 1996 growth results from a 6% increase in domestic volume that was
higher than projected industry growth rates, combined with a 2% growth in
international volume. The comparable 2% international volume growth rate is a
reflection of the unfavorable weather conditions in Europe during 1996. On a
unit case basis, 91% of our 1996 volume was from domestic operations and 9% was
from international operations.
NET REVENUES PER CASE AND COST OF SALES PER CASE increased 3% and 1%,
respectively, from 1995 to 1996. However, 1996 reported growth rates are
distorted when based on 1995 reported results which do not include the operating
results of our significant international acquisition that occurred in
third-quarter 1996. Therefore, management believes our domestic operating
results provide a better indication of underlying business trends for 1996.
In 1996 domestic bottle and can net revenues per case increased 1.5% over 1995
and domestic bottle and can cost of sales per case decreased by 1%, after
adjusting for the favorable first-quarter 1996 supplier settlement. The increase
in net revenues per case in 1996, compared to 1995, reflects favorable product,
package, and channel mix shifts. Packaging cost decreases created a favorable
domestic cost environment throughout 1996.
SELLING, DELIVERY, AND ADMINISTRATIVE EXPENSES increased 22% in 1996 as compared
to 1995. Additional costs associated with the 1996 international and domestic
acquisitions led to reported increases in selling, delivery, and administrative
expenses. Selling, delivery, and administrative expenses as a percent of net
operating revenues increased from 30% of revenues in 1995 to 31% of revenues in
1996, because of our investment in our infrastructure, including personnel and
information systems.
INTEREST EXPENSE increased in 1996 as compared to 1995, reflecting a higher 1996
debt balance resulting primarily from the 1996 acquisitions. For 1996 the
weighted average cost of debt was 7.2% as compared to the 1995 weighted average
cost of debt of 7.5%.
INCOME TAX EXPENSE as a percentage of earnings before income taxes decreased
reflecting a lower effective tax rate of 41% for 1996 as compared to 44% for
1995. The favorable change in the effective tax rate was principally due to the
tax effect of our expanded operations in Europe combined with the higher level
of pretax profits in 1996.
CASH FLOW REVIEW - 1996 - 1995
OPERATING ACTIVITIES
Cash flows from operating activities in 1996 increased 56% over 1995, primarily
resulting from favorable operating results as summarized earlier and
acquisitions in 1996. The increase in depreciation expense in 1996 is caused by
increased capital spending and the 1996 acquisitions. The increase in
amortization expense in 1996 reflects additional franchise amortization from the
1996 acquisitions.
INVESTING ACTIVITIES
The significant increase in net cash used in investing activities in 1996
compared to 1995 is primarily a result of the 1996 European and North American
acquisitions at a net cash cost of $676 million. Capital expenditures in 1996
increased 24% over 1995 primarily because of the expansion of our cold drink
program and the 1996 acquisitions.
FINANCING ACTIVITIES
Financing activities provided a net $319 million in 1996 as compared to a net
$38 million used in 1995. In 1996 we issued $875 million of public long-term
debt and used the proceeds to refinance commercial paper obligations.
During the first four months of 1996, we completed our August 1994 share
repurchase program by repurchasing 6,578,300 shares of common stock at a total
cost of $183 million. Stock options exercised provided additional cash of $10
million in both 1996 and 1995.
-29-
<PAGE> 13
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - SIGNIFICANT ACCOUNTING POLICIES
The Company's Business: Coca-Cola Enterprises Inc. ("the Company") is the
world's largest marketer, distributor, and producer of bottle and can liquid
nonalcoholic refreshment. The Company distributes more than 65% of The Coca-Cola
Company's bottle and can product sales in the United States and Canada through
franchise territories in 44 states in the United States, the District of
Columbia, and the 10 provinces of Canada. The Company is the sole licensed
bottler for products of The Coca-Cola Company in Belgium, Great Britain, the
Netherlands, and most of France. In January 1998 the Company expanded its
operations to include Luxembourg.
Basis of Presentation: The consolidated financial statements include the
accounts of the Company and its majority-owned subsidiaries. All significant
intercompany accounts and transactions are eliminated in consolidation. The
Company's fiscal year ends December 31. For quarterly reporting convenience, the
Company reports on the Friday closest to the end of the quarterly calendar
period. The financial statements and accompanying notes prepared in accordance
with generally accepted accounting principles ("GAAP") include estimates and
assumptions made by management of the Company that affect reported amounts.
Actual results could differ from those estimates.
Cash Investments: Cash investments include all highly liquid cash investments
purchased with original maturity dates less than three months. The fair value of
cash and cash investments approximates the amounts shown in the financial
statements.
Credit Risk and Sale of Accounts Receivable: The Company sells its products to
chain stores and other customers and extends credit, generally without requiring
collateral, based on an evaluation of the customer's financial condition.
Potential losses on receivables are dependent on each individual customer's
financial condition. The Company monitors its exposure to losses on receivables
and maintains allowances for potential losses or adjustments. The Company's
accounts receivable are typically collected within 30 days.
Certain subsidiaries of the Company have agreements with financial institutions
in Canada and France whereby the Company can sell up to approximately $138
million of designated pools of accounts receivable. At December 31, 1997, these
subsidiaries had sold approximately $112 million of receivables, which are
excluded from the accompanying balance sheet. The Company retains collection and
administrative responsibilities for the accounts receivable sold.
Inventories: The Company values its inventories at the lower of cost or market.
Cost is determined using the first-in, first-out ("FIFO") method.
Property, Plant, and Equipment: Property, plant, and equipment are stated at
cost. Depreciation expense is computed using the straight-line method over the
estimated useful lives of 20 to 40 years for buildings and improvements and
three to 14 years for machinery and equipment. Leasehold improvements are
amortized over the shorter of the asset's life or the remaining contractual
lease term.
Franchises and Other Noncurrent Assets, Net: Franchise agreements contain
performance requirements and convey to the franchisee the rights to distribute
and sell products of the franchiser within specified territories. The majority
of the Company's franchise agreements are perpetual, reflecting a long and
ongoing relationship with The Coca-Cola Company and other franchisers. The
Company's agreements covering its current international operations are not
perpetual because The Coca-Cola Company does not grant perpetual franchise
rights outside the United States. The Company believes these agreements will
continue to be renewed at each expiration date, and therefore, are essentially
perpetual.
Franchise costs are amortized on a straight-line basis over 40 years, the
maximum period of benefit allowed under GAAP. Accumulated franchise amortization
amounted to $1,537 million and $1,257 million at December 31, 1997 and 1996,
respectively.
In the event facts and circumstances indicate the cost of franchises or other
assets may be impaired, an evaluation of recoverability would then be performed.
If an evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount to
determine if a write-down to market value or discounted cash flow value is
required. In 1997, 1996, and 1995 the Company recognized no impairment losses.
Management Stock-Based Compensation Plans: The Company accounts for stock-based
compensation plans under Accounting Principles Board ("APB") Opinion No. 25 and
related Interpretations, as permitted by Financial Accounting Standards Board
("FASB") Statement No. 123 "Accounting for Stock-Based Compensation" ("SFAS
123"). As part of the Company's overall management compensation program, the
Company issues stock compensation awards to key executives that have value only
if aggressive stock performance goals are met. The Company believes these awards
enhance the focus of key executives on share-owner value, resulting in higher
stock values for the Company's share owners. The costs associated with these
plans, if any, are charged to additional paid-in capital upon award as an
unearned compensation intangible asset and amortized over the estimated vesting
period as compensation amortization expense. Changes to the total estimated
vesting period are based on
-30-
<PAGE> 14
management's judgment and the impact of these changes is reflected in the
financial statements in the period of change and subsequent periods.
Insurance Programs: In general, the Company is self-insured for costs of
workers' compensation, casualty, and health and welfare claims. The Company uses
commercial insurance for casualty and workers' compensation claims as a risk
reduction strategy to minimize catastrophic losses. Workers' compensation and
casualty losses are provided for using actuarial assumptions and procedures
followed in the insurance industry, adjusted for company-specific history and
expectations.
Foreign Currency Translation: Assets and liabilities of international operations
are translated from the local currency into U.S. dollars at the approximate rate
of currency exchange at the end of the fiscal period. Translation gains and
losses of foreign operations that use local currencies as the functional
currency are accumulated and reported as a separate component of share-owners'
equity. Revenues and expenses are translated at average monthly exchange rates
for the preceding month. Transaction gains and losses arising from exchange rate
fluctuations on transactions denominated in a currency other than the local
functional currency are included in the results of operations.
Derivative Financial Instruments: The Company uses interest rate swap
agreements, currency swap agreements, and other risk management instruments to
manage interest rate exposures. The Company specifically designates these
agreements as hedges of debt instruments and recognizes interest differentials
as adjustments to interest expense in the period the differentials occur.
The Company is exposed to financial risks from movements in currency exchange
rates from its international operations. To manage these risks, the Company
selectively uses currency swap agreements, forwards, and options and
specifically designates these instruments as hedges of (i) net investments in
international subsidiaries, (ii) foreign currency-denominated debt, (iii)
anticipated foreign currency transactions, or (iv) firmly committed foreign
currency transactions. Realized and unrealized gains and losses from hedges of
net investments are included in the cumulative effect of currency translations
as a component of share-owners' equity. Gains and losses on hedges of foreign
currency-denominated debt offset gains and losses on foreign
currency-denominated debt and are recognized in other nonoperating income
(deductions). Realized and unrealized gains and losses from hedges of
anticipated and firmly committed foreign currency transactions are recognized as
adjustments to gains and losses resulting from the underlying hedged
transactions. The Company does not hold or issue financial instruments for
trading purposes.
Marketing Costs and Support Arrangements: The Company directs various
advertising and marketing programs supported by The Coca-Cola Company or other
franchisers. Under these programs, certain costs incurred by the Company are
reimbursed by the applicable franchiser. Depending on the objective of each
specific program, marketing funds are recognized as either a reduction of sales
discounts and allowances in net revenues or a reduction of operating expenses.
Franchiser funding is recognized when performance measures are met or as funded
costs are incurred.
2 - ACQUISITIONS AND DIVESTITURES
When acquiring The Coca-Cola Company's franchised bottling operations, the
Company purchases the right to market, distribute, and produce beverage products
of The Coca-Cola Company in specified territories. When acquisitions of other
franchiser product rights occur, similar rights are also obtained. 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 statements of income beginning with the date of acquisition. In
addition, the assets and liabilities of companies acquired in 1997 are included
in the Company's consolidated balance sheet at the preliminary estimates of
their fair values on the date of acquisition.
The following outlines the Company's acquisition activity for 1997, 1996, and
1995 and also includes information regarding the Company's recent acquisition
activity that occurred in January 1998.
On January 30, 1998, the Company acquired the Coca-Cola bottling operations in
Luxembourg. In conjunction with the acquisition, the Company purchased the
exclusive rights to manufacture and distribute products of The Coca-Cola Company
in this country. The total transaction value (purchase price and acquired debt,
net of cash acquired) for this acquisition was approximately $20 million.
On August 7, 1997, the Company acquired The Coca-Cola Company's 48% interest in
Coca-Cola Beverages Ltd. ("Coke Canada") and increased its ownership interest in
The Coca-Cola Bottling Company of New York, Inc. ("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. In January 1998 the Company acquired the remaining shares of Coke New
York held by minority share owners. The total transaction value (purchase price,
acquired debt, and preferred stock) for all ownership interests in Coke New York
and
-31-
<PAGE> 15
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Coke Canada was approximately $1.7 billion. Coke Canada operates in 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.
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. 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.
On August 12, 1996, the Company acquired Coca-Cola Bottling Company West, Inc.
and a related company, Grand Forks Coca-Cola Bottling Co., (collectively, "Coke
West") for a transaction value (purchase price and assumed debt) of
approximately $158 million. Coke West operates franchise territories in portions
of Minnesota, Montana, North Dakota, South Dakota, and Wyoming.
On July 26, 1996, the Company acquired The Coca-Cola Company's bottling and
canning operations in Belgium and France for a transaction value (purchase price
and assumed debt, net of cash acquired) of approximately $915 million. These
franchise territories encompass most of France and all of Belgium. The entities
acquired were Coca-Cola Entreprise S.A. (formerly known as Coca-Cola Beverages
S.A., "French bottler"), Coca-Cola Production S.A. (French canner), and S.A.
Beverage Sales Holding N.V. (owner of the Belgian bottler).
On February 21, 1996, the Company acquired Ouachita Coca-Cola Bottling Company,
Inc. ("Ouachita") for a transaction value (purchase price and issued and assumed
debt) of approximately $313 million. The purchase price was paid through a
combination of cash, shares of the Company's common stock from treasury, and
convertible preferred stock. Ouachita operates in portions of Arkansas,
Louisiana, and Mississippi.
The following table summarizes unaudited pro forma financial information of the
Company as if the 1996 and 1997 acquisitions of S.A. Beverage Sales Holding
N.V., Coca-Cola Entreprise S.A., Coca-Cola Production S.A., Ouachita, Coke West,
ABGB, Coke Canada, and Coke New York, were completed effective January 1, 1996.
The unaudited pro forma financial information reflects adjustments for: (i) the
repayment of certain assumed debt, (ii) financing of the transactions at an
estimated financing cost for each acquisition, (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) the income tax effect of
the foregoing (in millions except per share data):
1997 1996
------- -------
NET OPERATING REVENUES ....................... $12,377 $11,878
Cost of sales ................................ 7,810 7,487
------- -------
GROSS PROFIT ................................. 4,567 4,391
Selling, delivery, and administrative
expenses .................................... 3,854 3,708
------- -------
OPERATING INCOME ............................. 713 683
Interest expense, net ........................ 615 670
Other nonoperating deductions (income),
net ......................................... 8 (9)
------- -------
INCOME BEFORE INCOME TAXES ................... 90 22
Income tax expense before rate change
benefit ..................................... 31 12
Income tax rate change benefit ............... (58) --
------- -------
NET INCOME ................................... 117 10
Preferred stock dividends .................... 2 10
------- -------
NET INCOME APPLICABLE TO COMMON SHARE
OWNERS ...................................... $ 115 $ --
======= =======
BASIC NET INCOME PER SHARE APPLICABLE TO
COMMON SHARE OWNERS ......................... $ 0.30 $ --
======= =======
DILUTED NET INCOME PER SHARE APPLICABLE TO
COMMON SHARE OWNERS ......................... $ 0.29 $ --
======= =======
OTHER PRO FORMA OPERATING DATA:
Depreciation ................................. $ 615 $ 565
Amortization ................................. $ 426 $ 380
In January 1995 the Company acquired all the issued and outstanding shares of
stock of Wichita Coca-Cola Bottling Company, Inc. ("Wichita") for a purchase
price of $157 million in cash. Also in January 1995, the Company sold its 50%
ownership interest in The Coca-Cola Bottling Company of the Mid South ("Mid
South") to Ouachita for $17 million. This sale resulted in a pre-tax gain of $9
million ($0.01 per common share after taxes). The Company's interest in Mid
South was reacquired through the Ouachita acquisition in February 1996.
The preceding acquisitions were initially financed through short-term bank
borrowings, commercial paper, and seller financing. The Company expects to
execute fixed-rate longer-term debt to replace portions of the floating-rate
short-term borrowings used in financing acquisitions. With respect to
international acquisitions, the Company has financed the acquisitions in local
currency (or alternatively, executed currency swap agreements) to eliminate
exposure to fluctuating currencies on the Company's acquisition cost.
-32-
<PAGE> 16
3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
At December 31 accounts payable and accrued expenses consist of the following
(in millions):
1997 1996
------ ------
Trade accounts payable............................... $ 581 $ 308
Accrued advertising costs............................ 335 203
Accrued compensation and benefits.................... 253 167
Accrued taxes........................................ 153 104
Deposits on containers and shells.................... 124 97
Additional accrued expenses.......................... 548 302
------ ------
$1,994 $1,181
====== ======
4 - LONG-TERM DEBT
The table below for the Company's long-term debt at December 31 (in millions) is
adjusted for the effects of interest rate and currency swap agreements:
1997 1996
------ ------
Commercial Paper (weighted average rates of
4.3% and 3.8%)(A)................................. $ 773 $ 648
Canadian dollar loans payable (weighted average
rate of 4.2%)..................................... 892 --
British pound sterling loans payable (weighted
average rate of 6.9%)............................. 1,194 --
Notes due 1997 - 2037 (weighted average rates
of 7.2% and 7.4%)(B).............................. 1,550 1,250
Debentures due 2012 - 2036 (weighted average
rates of 7.6% and 7.7%)(C)........................ 2,900 2,492
8.35% Zero Coupon Notes due 2020 (net of
unamortized discount of $1,625 and $1,649,
respectively)..................................... 307 283
Euro notes due 2002 (7.5%)(D)...................... 531 --
Various foreign currency debt...................... 138 370
Additional debt(A)................................. 504 262
------ ------
Long-term debt including effect of net asset
positions of currency swaps...................... $8,789 $5,305
Net asset positions of currency swap agreements(E) 3 --
------ ------
$8,792 $5,305
====== ======
Aggregate maturities of long-term debt during the next five years are as follows
(in millions): 1998 - $1,032; 1999 - $217; 2000 - $12; 2001 - $1,767; and 2002 -
$1,042.
(A) At December 31, 1997 and 1996, $957 million and $481 million of the
Company's commercial paper and additional debt had been effectively
exchanged into non-U.S. dollar obligations through currency swap
arrangements. These currency swap arrangements provide for the exchange of
U.S. dollars into Belgian francs, French francs, Dutch florins, and British
pounds sterling and also provide for the periodic exchange of interest
payments. The Company intends to renew these short-term currency swap
arrangements as they expire. These currency swap arrangements hedge net
investments in international subsidiaries.
(B) In March 1997 the Company issued $150 million of 5.71% Notes due 2037.
Holders of the these notes may require the Company to repay the notes after
one year and each anniversary date thereafter. In July 1997 the Company
issued $250 million of 6.375% Notes due 2001 and $200 million of 6.625%
Notes due 2004.
(C) In April 1997 the Company redeemed 8.75% Debentures due 2017 aggregating
$142 million. Early redemption costs of $6 million were included in results
of operations. In July 1997 the Company issued $300 million of 7.125%
Debentures due 2017. In December 1997 the Company issued $250 million of
6.95% Debentures due 2026.
(D) During September 1997 the Company registered debt securities of $2.5
billion under a European Medium Term Note Program with the Luxembourg Stock
Exchange and issued $500 million in notes due 2002 under this program. The
Company simultaneously entered into a currency swap agreement that
effectively changes the notes to 7.505% British pound sterling-denominated
notes.
(E) The net asset positions of currency swap agreements are included in the
balance sheet as assets.
The Company has a $1.5 billion multicurrency revolving bank credit agreement
maturing in November 2001. This credit facility supports the commercial paper
program and other borrowings as needed. At December 31, 1997, $422 million of
short-term British pound sterling loans had been issued under this credit
agreement; no amounts had been issued under this credit agreement at December
31, 1996. At December 31, 1997 and 1996, a total of $1.5 billion of borrowings
due in the next 12 months was classified as maturing after one year under this
agreement due to the Company's ability and intent to refinance these borrowings
on a long-term basis.
At December 31, 1997 and 1996, the Company had approximately $1,217 million and
$370 million, respectively, outstanding under various short-term credit
facilities with additional amounts available of $1,238 million and $736 million,
respectively. Included in the $1,217 million outstanding is approximately $866
million Canadian dollar-denominated loans issued under annually revolving credit
facilities. Because the Company has the option to convert these revolving credit
facilities to a five-year loan, amounts have been classified as maturing after
one year.
At December 31, 1997 and 1996, the Company had available for issuance
approximately $2 billion and $3.1 billion, respectively, in registered debt
securities under a registration statement with the Securities and Exchange
Commission. At December 31, 1997, the Company had available approximately $2.0
billion in debt securities under a program with the Luxembourg Stock Exchange.
Subsequent to December 31, 1997, the Company issued an additional $506 million
in notes and debentures under these facilities.
-33-
<PAGE> 17
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The multicurrency 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 requirements currently
are not, and it is not anticipated they will become, restrictive on the
Company's liquidity or capital resources.
5 - DERIVATIVE FINANCIAL INSTRUMENTS
Interest Rate Risk Management: The Company uses interest rate swap agreements
and other risk management instruments to manage its fixed/floating debt profile.
The Company has floating-to-fixed interest rate swaps with total notional
amounts outstanding at December 31, 1997 of $146 million that expire through
2001. At December 31, 1997, the Company received a weighted average interest
rate of 4.3% and paid a weighted average interest rate of 6.0% under these
swaps.
The Company was party to an interest rate swap agreement changing the fixed
interest rate on $250 million of 8% Debentures due 2022 to a floating interest
rate. The Company terminated this agreement during 1997 for a mark-to-market
payment of $8 million to be amortized to interest expense over the projected
remaining life of the swap.
At December 31, 1997 and 1996, the Company had interest rate caps outstanding of
$279 million and $1.2 billion, respectively. Premiums paid for these caps are
amortized to interest expense over the contract term. No payments were received
during 1997 or 1996 under these cap agreements.
Currency Risk Management: The Company uses currency swap agreements, forward
agreements, options, and other risk management instruments to manage its
exposure to currency fluctuations. Details of currency swap agreements related
to debt are presented in the long-term debt footnote.
The Company uses currency forward agreements and currency options to hedge
currency exchange rate exposure on certain of the Company's raw material
purchase commitments in Belgium, France, Great Britain, and the Netherlands. The
Company's forward and option contracts are scheduled to expire in 1998 and 1999.
Notional amounts outstanding for option contracts at December 31, 1997 are $96
million, with total premiums paid in 1997 of $3 million. Notional amounts
outstanding for forward contracts at December 31, 1997 are $1.2 billion. The
Company deferred approximately $1 million of realized losses relating to such
contracts at December 31, 1997.
Credit Risk: The Company is exposed to credit losses in the event of
nonperformance by counterparties to exchange agreements. The Company does not
believe significant risks exist under any of these instruments. Amounts payable
to the Company under the agreements at December 31, 1997 and 1996 were not
significant.
6 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Company's financial instruments at
December 31 are summarized as follows (in millions; (liability)/asset):
1997 1996
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUES AMOUNT VALUES
-------- -------- -------- --------
Debt Related Financial Instruments:
Long-term debt .................... $(8,753) $(9,228) $(5,303) $(5,527)
Currency swap agreements in
liability positions .............. (39) (33) (2) (2)
Interest rate swap agreements ..... -- (1) -- (15)
------- ------- ------- -------
(8,792) (9,262) (5,305) (5,544)
Currency swap agreements in
asset positions .................. 3 3 -- --
------- ------- ------- -------
Net debt ........................... $(8,789) $(9,259) $(5,305) $(5,544)
======= ======= ======= =======
Currency options ................... $ 3 $ 2 $ -- $ --
======= ======= ======= =======
Currency forward agreements ........ $ -- $ (33) $ -- $ --
======= ======= ======= =======
The term of commercial paper and the variable interest rate on variable rate
debt result in the recorded liabilities of these instruments approximating their
fair values. The fair values of the Company's long-term debt, representing the
estimated amounts at which the debt could be exchanged on the open market, are
determined using the Company's current incremental borrowing rate for similar
types of borrowing arrangements. The Company does not anticipate any significant
refinancing activities which would settle long-term debt at fair value. External
valuations performed by investment bankers were used to determine the fair
values of the Company's currency forward agreements, currency options, currency
swap agreements, and interest rate swap agreements.
-34-
<PAGE> 18
7 - PREFERRED STOCK
The Company issued 936,965 of 1,110,000 shares of voting convertible preferred
stock authorized, Ouachita Series A ("Series A"), and issued 95,955 of 350,000
shares of voting convertible preferred stock authorized, Ouachita Series B
("Series B"), in the acquisition of Ouachita in February 1996. Series A paid
quarterly dividends equaling 4% annually. Series B did not pay dividends. During
1996, 55,951 shares of Series A preferred stock were converted into 729,780
(split-adjusted) shares of common stock. During the first six months of 1997,
holders of Series A preferred stock converted 881,014 shares into 7,575,192
(split-adjusted) shares of common stock, completing the conversion of all issued
shares of Series A preferred stock into 8,304,972 (split-adjusted) shares of
common stock. During 1996, 95,938 shares of Series B preferred stock were
converted into 1,665,081 (split-adjusted) shares of common stock. In the first
quarter of 1997, holders of Series B preferred stock converted 17 shares into
168 (split-adjusted) shares of common stock, completing the conversion of all
issued shares of Series B preferred stock into 1,665,249 (split-adjusted) shares
of common stock. As a result of these conversions, additional paid-in capital
increased by approximately $94 million and $25 million and treasury stock
decreased by approximately $40 million and $28 million in 1997 and 1996,
respectively.
The Company issued 1,000,000 shares of nonvoting convertible preferred stock
with a stated value of $35 per share in connection with the 1993 acquisition of
the Coca-Cola Bottling Company of Northeast Arkansas, Inc. During 1996 all
outstanding shares of this preferred stock issue were converted into 3,000,000
(split-adjusted) shares of common stock. The increase in additional paid-in
capital resulting from the difference between the recorded value of the
converted preferred stock and the cost of treasury stock issued was
approximately $15 million.
8 - SHARE REPURCHASES
In 1996 the Company completed the August 1994 30 million (split-adjusted) share
repurchase program. On January 20, 1998, the Company announced it would restart
the repurchase activity under a 30 million share (restated for the 3-for-1 stock
split) common stock repurchase program approved by the Board of Directors on
April 11, 1996. In 1996 and 1997, no repurchases were made under this program.
Management considers market conditions and alternative uses of cash and/or debt,
balance sheet ratios, and share-owner returns when evaluating the timing of
share repurchases.
The Company can repurchase shares in the open market and in privately negotiated
transactions based on prevailing market conditions. As part of this repurchase
program, a management stock buy-back program was implemented to purchase shares
during the ten business day period beginning January 23, 1998 whereby certain
employees were allowed to sell up to 15% of their current holdings back to the
Company. Repurchased shares are added to treasury stock and are available for
general corporate purposes including acquisition financing and the funding of
various employee benefit and compensation plans.
-35-
<PAGE> 19
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9 - STOCK-BASED COMPENSATION PLANS
SFAS 123, if fully adopted, would change the method for recognition of cost on
plans similar to those of the Company. Adoption of the cost recognition
requirements of SFAS 123 is optional. The Company has elected to apply APB
Opinion No. 25 and related Interpretations in accounting for its stock-based
compensation plans. Pro forma disclosures as if the Company adopted the SFAS 123
cost recognition requirements in 1995 follow.
The Company's stock option plans provide for the granting of nonqualified stock
options to certain key employees. Generally, options outstanding under the
Company's stock option plans are granted at prices which equal or exceed the
market value of the stock on the date of grant and expire ten years subsequent
to award. The options vest either (i) ratably over a three year service vesting
period, (ii) solely upon attainment of specified increases in the Company's
common stock price within five years from the date of grant, or (iii) in certain
cases, after a period of continued employment for up to three years after the
stock performance criterion has been met. Compensation costs for stock
performance-based option plans were $54 million, $18 million, and $5 million for
1997, 1996, and 1995, respectively. At December 31, 1997, 78,000
performance-based stock options had not met the stock performance requirement.
A summary of the status of the Company's stock options as of December 31, 1997,
1996, and 1995 and changes during the year ended on those dates is presented
below (shares in thousands):
1997 1996
------------------------- -------------------------
WTD. AVG. WTD. AVG.
SHARES EXER. PRICE SHARES EXER. PRICE
----------- ----------- ----------- -----------
Outstanding at beginning
of year ............... 22,104 $ 6.26 18,435 $ 5.31
Granted ............... 5,957 16.75 5,760 9.02
Exercised ............. (2,250) 5.74 (1,728) 5.21
Forfeited ............. (172) 13.69 (363) 6.60
------- -------
Outstanding at end of
year .................. 25,639 8.70 22,104 6.26
======= =======
Options exercisable at
year-end .............. 20,798 16,218
======= =======
Options available for
future grant .......... 10,344 2,919
======= =======
Weighted average fair
value of options
granted during the
year .................. $ 6.17 $ 3.37
======= =======
1995
-------------------------
WTD. AVG.
SHARES EXER. PRICE
----------- -----------
Outstanding at beginning
of year ............... 18,999 $ 5.24
Granted ............... 1,617 5.96
Exercised ............. (1,797) 5.09
Forfeited ............. (384) 5.45
-------
Outstanding at end of
year .................. 18,435 5.31
=======
Options exercisable at
year-end .............. 11,574
=======
Options available for
future grant .......... 7,062
=======
Weighted average fair
value of options
granted during the
year .................. $ 2.53
=======
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted assumptions for
1997, 1996, and 1995, respectively: (i) dividend yields of 0.4%, 0.3%, and 0.3%,
(ii) expected volatility of 25%, 25%, and 27%, (iii) risk-free interest rates of
6.41%, 6.19%, and 7.82%, and (iv) expected life of six years for all years.
The following table summarizes information about stock options outstanding at
December 31, 1997 (shares in thousands):
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- ------------------------
RANGE OF NUMBER WTD. AVG. WTD. AVG. NUMBER WTD. AVG.
EXERCISE OUTSTANDING REMAINING EXERCISE EXERCISABLE EXERCISE
PRICES AT 12/31/97 CONTRACTUAL LIFE PRICE AT 12/31/97 PRICE
- ---------- ----------- ---------------- --------- ----------- ---------
$ 4 to 12 19,834 5.65 years $ 6.34 18,256 $ 6.19
12 to 20 4,920 9.01 15.90 2,420 15.90
over 20 885 9.28 21.40 122 20.18
------ ------
25,639 6.42 8.70 20,798 7.41
====== ======
-36-
<PAGE> 20
The Company's restricted stock award plans provide for awards to officers and
certain key employees of the Company. For awards granted prior to 1994,
restricted stock vests generally (i) when a participant retires, becomes
disabled, or dies, or (ii) based on the attainment of certain market price
levels of the Company's stock. For awards granted during 1994 and 1995,
restricted stock vests generally only upon attainment of certain increases in
the market price of the Company's common stock within five years from the date
of grant. For awards granted during 1996 and 1997, restricted stock vests
generally only (i) upon attainment of certain increases in the market price of
the Company's stock within five years from the date of grant and (ii) after
continued employment for a period of up to five years once the stock performance
criterion is met.
All restricted stock awards entitle the participant to full dividend and voting
rights. Unvested shares are restricted as to disposition and subject to
forfeiture under certain circumstances. Upon issuance of restricted shares,
unearned compensation is charged to share-owners' equity for the cost of
restricted stock and recognized as amortization expense ratably over the vesting
periods, as applicable. The amount of unearned compensation recognized as
expense was $35 million, $22 million, and $31 million for 1997, 1996, and 1995,
respectively. At December 31, 1997, all restricted shares issued prior to 1996
have vested, except for 30,000 shares.
A summary of restricted stock award activity follows (shares in thousands):
1997 1996 1995
------- ------- -------
Awards available for grant -
beginning of year .............................. 900 4,155 120
New awards authorized ........................... -- -- 6,120
Available awards terminated ..................... -- -- (120)
Restricted shares awarded ....................... (405) (3,255) (1,965)
------- ------- -------
Awards available for grant -
end of year .................................... 495 900 4,155
======= ======= =======
Restricted shares forfeited ..................... -- 129 129
======= ======= =======
Weighted average market value of
stock on grant date ............................ $ 15.90 $ 9.02 $ 5.96
======= ======= =======
If compensation cost for the Company's grants since 1995 for stock-based
compensation plans had been determined on a basis consistent with SFAS 123, the
Company's net income, net income applicable to common share owners, and basic
and diluted net income per share applicable to common share owners for 1997,
1996, and 1995 would approximate the pro forma amounts below (in millions except
per share data):
1997 1996
------------------- -------------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
-------- -------- -------- --------
Net income ............... $ 171 $ 196 $ 114 $ 121
===== ===== ===== =====
Net income applicable to
common share owners ..... $ 169 $ 194 $ 106 $ 113
===== ===== ===== =====
Basic net income per
share applicable to
common share owners ..... $0.44 $0.51 $0.28 $0.30
===== ===== ===== =====
Diluted net income per
share applicable to
common share owners ..... $0.43 $0.49 $0.28 $0.30
===== ===== ===== =====
1995
-------------------
AS PRO
REPORTED FORMA
-------- --------
Net income ............... $ 82 $ 83
===== =====
Net income applicable to
common share owners ..... $ 80 $ 81
===== =====
Basic net income per
share applicable to
common share owners ..... $0.21 $0.21
===== =====
Diluted net income per
share applicable to
common share owners ..... $0.20 $0.21
===== =====
The effects of applying SFAS 123 in this pro forma disclosure may not be
indicative of future results. SFAS 123 does not apply to awards prior to 1995
and additional awards in future years are possible.
-37-
<PAGE> 21
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10 - EARNINGS PER SHARE
SFAS No. 128, "Earnings Per Share" is effective for full-year 1997 and
subsequent periods. SFAS No. 128 modifies the method for calculations of net
income per share applicable to common share owners and also requires a
reconciliation between basic and diluted per share amounts.
The following table (in millions except per share data) presents the effect of
SFAS No. 128:
1997 1996 1995
----- ----- -----
NET INCOME ............................................. $ 171 $ 114 $ 82
Preferred stock dividends .............................. 2 8 2
----- ----- -----
NET INCOME APPLICABLE TO COMMON SHARE OWNERS ........... $ 169 $ 106 $ 80
===== ===== =====
BASIC AVERAGE COMMON SHARES OUTSTANDING ................ 383 373 386
EFFECT OF DILUTIVE SECURITIES:
Stock compensation awards ............................. 13 7 4
----- ----- -----
DILUTED AVERAGE COMMON SHARES OUTSTANDING .............. 396 380 390
===== ===== =====
BASIC NET INCOME PER SHARE APPLICABLE
TO COMMON SHARE OWNERS ................................ $0.44 $0.28 $0.21
===== ===== =====
DILUTED NET INCOME PER SHARE APPLICABLE
TO COMMON SHARE OWNERS ................................ $0.43 $0.28 $0.20
===== ===== =====
On April 21, 1997, the Company's share owners approved an amendment to the
Company's certificate of incorporation to increase authorized common shares from
500 million to 1 billion and to effect a 3-for-1 stock split with no change in
par values, effective for share owners of record on May 1, 1997. To reflect the
split, common stock was increased and additional paid-in capital was decreased
by $295 million. For periods prior to the effective date of the stock split,
outstanding shares and per share data contained in this report, except for
dividends per share, have been restated to reflect the impact of the 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 were also declared in the amount of $0.025 per
common share. Dividends are at the discretion of the Company's Board of
Directors.
11 - PENSION AND OTHER RETIREMENT PLANS
The Company sponsors a number of defined benefit plans covering substantially
all of its employees in North America and Europe. Additionally, the Company
participates in various multiemployer pension plans worldwide. Total pension
expense for multiemployer plans was $15 million in 1997, $11 million in 1996,
and $8 million in 1995. Benefits under Company-sponsored plans are based on
years of service and employee compensation. The Company's funding policy is to
make annual contributions to the extent such contributions are tax deductible
but not less than the minimum contribution required by applicable regulations.
The components of net pension expense for Company-sponsored plans are as follows
(in millions):
1997 1996 1995
----- ----- -----
North American Plans:
Service cost ........................... $ 26 $ 23 $ 18
Interest cost on projected benefit
obligation ............................ 41 36 32
Actual return on assets ................ (120) (68) (75)
Net amortization and deferral .......... 70 31 41
----- ----- -----
Net pension expense .................... $ 17 $ 22 $ 16
===== ===== =====
European Plans:
Service cost ........................... $ 8 $ 2 $ 2
Interest cost on projected benefit
obligation ............................ 8 2 2
Actual return on assets ................ (20) (2) (2)
Net amortization and deferral .......... 12 1 --
----- ----- -----
Net pension expense .................... $ 8 $ 3 $ 2
===== ===== =====
-38-
<PAGE> 22
The following table reconciles the funded status of Company-sponsored plans to
amounts recognized in the consolidated balance sheets at December 31, 1997 and
1996 segregated by (i) North American and European plans whose assets exceed the
accumulated benefit obligation ("ABO") and (ii) North American and European
plans whose ABO exceeds assets (in millions):
NORTH AMERICAN PLANS
-------------------------------------
1997 1996
----------------- -----------------
Assets ABO Assets ABO
Exceed Exceeds Exceed Exceeds
ABO Assets ABO Assets
------- ------- ------- -------
Actuarial present value of
benefit obligations:
Vested benefit obligation ............. $(616) $ (23) $(372) $ (51)
===== ===== ===== =====
Accumulated benefit obligation ........ $(659) $ (25) $(396) $ (62)
===== ===== ===== =====
Projected benefit obligation .......... $(752) $ (30) $(465) $ (68)
Plan assets (primarily listed stocks,
bonds and government securities) at
fair value ............................ 861 -- 476 40
----- ----- ----- -----
Plan assets in excess of (less than)
projected benefit obligation .......... 109 (30) 11 (28)
Unrecognized net (gain) loss ........... (59) 8 (41) 12
Unrecognized prior service cost
(asset) ............................... 1 (5) (4) --
Unrecognized net transition (asset)
liability and other ................... (6) 2 (4) 7
Adjustment required to recognize minimum
liability ............................. -- (4) -- --
----- ----- ----- -----
Pension asset (liability) included in
the consolidated balance sheets ....... $ 45 $ (29) $ (38) $ (9)
===== ===== ===== =====
EUROPEAN PLANS
-------------------------------------
1997 1996
----------------- -----------------
Assets ABO Assets ABO
Exceed Exceeds Exceed Exceeds
ABO Assets ABO Assets
------- ------- ------- -------
Actuarial present value of
benefit obligations:
Vested benefit obligation ............. $(111) $ (3) $ (19) $ --
===== ===== ===== =====
Accumulated benefit obligation ........ $(113) $ (21) $ (25) $ (9)
===== ===== ===== =====
Projected benefit obligation .......... $(145) $ (33) $ (41) $ (14)
Plan assets (primarily listed stocks,
bonds and government securities) at
fair value ............................ 169 -- 31 --
----- ----- ----- -----
Plan assets in excess of (less than)
projected benefit obligation .......... 24 (33) (10) (14)
Unrecognized net (gain) loss ........... (20) -- (9) --
Unrecognized prior service cost
(asset) ............................... -- -- -- --
Unrecognized net transition (asset)
liability and other ................... 2 -- -- --
Adjustment required to recognize minimum
liability ............................. -- -- -- --
----- ----- ----- -----
Pension asset (liability) included in
the consolidated balance sheets ....... $ 6 $ (33) $ (19) $ (14)
===== ===== ===== =====
Actuarial assumptions used in determining the projected benefit obligation are
established as of September 30th of each fiscal year. Significant weighted
average assumptions are listed as follows:
1997 1996 1995
------- ------- -------
North American Plans:
Discount rate............................ 7.5% 7.5% 7.5%
Expected return on plan assets........... 9.5% 8.5% 8.5%
Rate of increase in future compensation.. 5.0% 5.0% 5.0%
European Plans:
Discount rate............................ 7.2% 7.1% 7.5%
Expected return on plan assets........... 9.2% 7.4% 7.5%
Rate of increase in future compensation.. 4.7% 4.1% 3.0%
The Company also sponsors qualified defined contribution plans covering
substantially all employees in the U.S. and Canada. Under its primary plans, the
Company matches 50% of a participant's voluntary contributions up to a maximum
of 7% of the participant's compensation. The Company's contributions to these
plans were $22 million in 1997, $19 million in 1996, and $15 million in 1995.
-39-
<PAGE> 23
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12 - POSTRETIREMENT BENEFIT PLANS
The Company sponsors unfunded defined benefit postretirement plans providing
healthcare and life insurance benefits to substantially all U.S. and Canadian
employees who retire or terminate after qualifying for such benefits. European
retirees are covered primarily by government-sponsored programs and the specific
cost to the Company for these programs and other postretirement healthcare is
not significant.
Postretirement benefits expense is comprised of the following components (in
millions):
1997 1996 1995
---- ---- ----
Service cost attributed to service during
the year....................................... $ 5 $ 5 $ 4
Interest cost on accumulated postretirement
benefit obligation............................. 15 16 14
Net amortization and deferral................... (9) (9) (8)
---- ---- ----
Postretirement benefits expense................. $ 11 $ 12 $ 10
==== ==== ====
Amounts recognized in the consolidated balance sheets at December 31 represent
unfunded previously expensed obligations as follows (in millions):
1997 1996
---- ----
Accumulated postretirement benefit obligation:
Retirees.............................................. $164 $128
Fully eligible active plan participants............... 14 10
Other active plan participants........................ 72 59
---- ----
250 197
Unamortized excess prior service cost asset............ 104 113
Unrecognized net gain.................................. 2 10
---- ----
Accrued postretirement benefit obligation.............. $356 $320
==== ====
Actuarial assumptions used in determining the accumulated postretirement benefit
obligation are established as of September 30th of each fiscal year. Significant
assumptions are listed as follows:
1997 1996 1995
----- ----- -----
Discount Rate............................. 7.5% 7.5% 7.5%
Rate of increase in cost of benefits:
Pre-Medicare............................. 3.5% 3.5% 10.5%
Post-Medicare............................ 3.5% 3.5% 9.0%
The U.S. postretirement benefit plan is a defined dollar benefit plan limiting
the effect of medical inflation to a maximum of 3.5% per year after 1995.
Because the plan has established dollar limits for determining Company
contributions, the effect of a 1% increase in the assumed healthcare cost trend
rate is not significant.
13 - INCOME TAXES
The current income tax provision represents the amount of income taxes paid or
payable for the year. The deferred income tax provision represents the change in
deferred tax liabilities and assets and, for business combinations, the change
in such tax liabilities and assets since the date of acquisition. Significant
components of the provision for income taxes are as follows (in millions):
1997 1996 1995
---- ---- ----
Current:
Domestic
Federal........................................ $ 41 $ 70 $ 29
State and local................................ 15 12 12
European and Canadian............................ 31 -- --
---- ---- ----
Total current provision.......................... 87 82 41
Deferred:
Domestic
Federal........................................ (24) (6) 20
State and local................................ (3) 4 3
European and Canadian........................... 5 -- (1)
Rate change - United Kingdom.................... (58) -- --
---- ---- ----
Total deferred provision......................... (80) (2) 22
---- ---- ----
Total provision for income taxes................. $ 7 $ 80 $ 63
==== ==== ====
The tax benefit associated with management stock performance awards reduced
taxes payable by $12 million and $9 million in 1997 and 1996, respectively. In
1995 no such benefit was recognized. These benefits are reflected as an increase
to additional paid-in capital. The tax liability associated with short-term
currency swap agreements increased taxes payable by $14 million and $8 million
in 1997 and 1996, respectively. In 1995 no such liability was recognized. These
liabilities are reflected as a component of currency translations.
Income before income taxes from international operations used in computing the
Company's tax provision for 1997 was approximately $162 million. This amount is
before interest and other corporate cost allocations which are not deductible in
international tax computations. In 1996 and 1995 income before income taxes from
international operations used in computing the Company's tax provision was not
significant.
-40-
<PAGE> 24
A reconciliation of the expected income tax expense at the statutory U.S.
federal rate to the Company's actual income tax provision follows (in millions):
1997 1996 1995
---- ---- ----
U.S. federal statutory expense................... $ 62 $ 68 $ 51
State expense, net of federal benefit............ 2 5 5
Taxation of European and Canadian
operations, net................................. (21) 1 --
Rate change benefit - United Kingdom............. (58) -- --
Valuation allowance provision.................... 15 6 5
Nondeductible items.............................. 5 3 3
Other, net....................................... 2 (3) (1)
---- ---- ----
$ 7 $ 80 $ 63
==== ==== ====
The Company's income tax provision reflects favorable income tax treatment
granted certain foreign operations under a tax holiday expiring by the year
2000. The favorable effect amounted to $17 million in 1997.
Deferred income taxes are recognized for tax consequences of temporary
differences between the financial and tax bases of existing assets and
liabilities by applying enacted statutory tax rates to such differences.
Significant components of the Company's deferred tax liabilities and assets as
of December 31 are as follows (in millions):
1997 1996
------ ------
Deferred tax liabilities:
Franchise assets................................... $4,127 $2,624
Property, plant, and equipment..................... 419 292
------ ------
Total deferred tax liabilities...................... 4,546 2,916
Deferred tax assets:
Net operating loss carryforwards................... (328) (306)
Employee and retiree benefit accruals.............. (328) (255)
Alternative minimum tax credits.................... (115) (76)
Other, net......................................... (95) (73)
------ ------
Total deferred tax assets........................... (866) (710)
Valuation allowances for deferred tax assets....... 246 135
------ ------
Net deferred tax liabilities........................ 3,926 2,341
Current deferred tax assets........................ 70 140
------ ------
Total deferred tax liabilities...................... $3,996 $2,481
====== ======
Deferred tax assets are recognized for the tax benefit of deducting timing
differences and foreign, federal, and state net operating loss and tax credit
carryforwards. Valuation allowances are recognized on these assets if it is
believed that some or all of the deferred tax assets will not be realized.
Management believes the majority of deferred tax assets will be realized because
of the depletion of certain significant tax deductions and anticipated future
taxable income resulting from operations. Valuation allowances of $246 million
and $135 million as of December 31, 1997 and 1996, respectively, were
established for the remaining deferred tax assets. Included in the valuation
allowance as of December 31, 1997 and 1996 were $144 million and $79 million,
respectively, for net operating loss carryforwards of acquired companies.
Previously established valuation allowances for net operating losses of acquired
companies were reduced in 1997 and 1996 by $13 million and $22 million,
respectively. These reversals are reflected as a reduction to franchise assets.
Federal tax operating loss carryforwards total $520 million. The majority of
these carryforwards were acquired through the purchase of various bottling
companies. These carryforwards are available in varying amounts to offset future
federal taxable income through their expiration in years 2000 through 2010.
At December 31, 1997, the Company's foreign subsidiaries had $112 million in
distributable earnings, exclusive of amounts that if remitted in the future
would result in little or no tax under current laws. The Company's earnings from
foreign subsidiaries are considered to be indefinitely reinvested and,
accordingly, no provision for U.S. federal and state income taxes has been made
for these earnings. Determination of the amount of unrecognized deferred tax
liability on these undistributed earnings is not practicable. Upon distribution
of foreign subsidiary earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various foreign
countries.
On July 31, 1997, the United Kingdom's income tax rate was reduced from 33% to
31% retroactive to April 1, 1997. This rate change reduced deferred tax
liabilities associated with the Company's United Kingdom operations by
approximately $58 million. This deferred tax liability reduction was recognized
as a credit to income tax expense in 1997.
14 - RELATED PARTY TRANSACTIONS
At December 31, 1997, The Coca-Cola Company owned approximately 44% of the
Company's outstanding common shares. The Company generates approximately 89% of
its product sales volume from the sale of products of The Coca-Cola Company. The
Company and The Coca-Cola Company have entered into various transactions and
agreements in the ordinary course of business. Certain of these transactions and
agreements are disclosed in other sections of the accompanying financial
statements and related notes. The following outlines other significant
transactions between the Company and The Coca-Cola Company and its affiliates:
Marketing Support Arrangements: The Coca-Cola Company engages in a variety of
marketing programs, local media advertising, and other similar arrangements to
promote the sale of products of The Coca-Cola Company in territories operated by
the Company. In 1997, 1996, and 1995 total direct marketing support paid or
payable to the Company, or on behalf of the Company by The Coca-Cola Company,
approximated $604 million, $448 million, and $343 million, respectively.
Pursuant to cooperative
-41-
<PAGE> 25
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
advertising and trade arrangements with The Coca-Cola Company, the Company paid
The Coca-Cola Company $144 million, $123 million, and $82 million in 1997, 1996,
and 1995, respectively, for local media and marketing program expense. In
addition, to fund a portion of costs associated with market and infrastructure
development, funding paid or payable to the Company by The Coca-Cola Company
approximated $190 million, $120 million, and $55 million in 1997, 1996, and
1995, respectively.
Fountain Syrup and Package Product Sales: The Company sells fountain syrup back
to The Coca-Cola Company in certain territories and delivers this syrup to
certain major fountain accounts of The Coca-Cola Company. The Company will, on
behalf of The Coca-Cola Company, invoice and collect amounts receivable for
these fountain sales. In addition, the Company also sells bottle and can
beverage products to The Coca-Cola Company at prices which are generally similar
to the prices charged by the Company to its major customers. During 1997, 1996,
and 1995 The Coca-Cola Company paid the Company approximately $345 million, $295
million, and $253 million, respectively, for fountain syrup, bottle and can
products, and delivery and billing services.
15 - ENVIRONMENTAL MATTERS
The Company incurs costs to satisfy various federal and state regulations
involving materials discharge, wastewater treatment, and underground storage
tanks. The Company believes any amount it may be required to pay in excess of
amounts previously funded or accrued would not have a materially adverse effect
on the Company's financial position, cash flows, or results of operations.
At December 31, 1997, there were five federal and two state Superfund sites for
which the Company's involvement or liability as a potentially responsible party
("PRP") was unresolved. The Company believes any ultimate liability under these
PRP designations will not have a materially adverse effect on its financial
position, cash flows, or results of operations. In addition, there were 17
federal and seven state sites for which it had been concluded 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
the Company's liability.
16 - GEOGRAPHIC OPERATING INFORMATION
The Company operates in one industry: the marketing, distribution, and
production of bottle and can liquid nonalcoholic refreshments. On December 31,
1997, the Company operated in 44 states in the United States, the District of
Columbia, and in the 10 provinces of Canada (collectively referred to as the
"North American" territories), and in Belgium, Great Britain, most of France,
and the Netherlands (collectively referred to as the "European" territories).
Prior to the 1996 Belgian and French acquisition, the Company's net operating
revenues in geographic areas outside the United States were less than 5%. The
following presents net operating revenues for the years ended December 31, 1997
and 1996 and long-lived assets as of December 31, 1997 and 1996 by geographic
territory (in millions):
1997 1996
--------------------- ---------------------
NET LONG- NET LONG-
OPERATING LIVED OPERATING LIVED
REVENUES ASSETS REVENUES ASSETS
--------- --------- --------- ---------
North American(A) ...... $ 8,216 $11,174 $ 7,091 $ 8,354
European(B) ............ 3,062 4,500 830 1,561
------- ------- ------- -------
Consolidated ........... $11,278 $15,674 $ 7,921 $ 9,915
======= ======= ======= =======
(A) North American information presented above includes short
periods for the New York and Canadian bottlers acquired in the
third quarter of 1997 and therefore is not indicative of
full-year results.
(B) European information presented includes short periods for the
entities acquired in 1997 and 1996 and therefore is not
indicative of full-year results.
The Company has no material amounts of sales or transfers between its North
American and European territories and no significant United States export sales.
17 - COMMITMENTS AND CONTINGENCIES
In North America the Company purchases PET (plastic) bottles from manufacturing
cooperatives involved in the manufacture of plastic bottles. The Company has
guaranteed payment of up to $281 million of indebtedness owed by these
manufacturing cooperatives to third parties. At December 31, 1997, these
cooperatives had approximately $156 million of indebtedness guaranteed by the
Company. The Company has also issued letters of credit aggregating $132 million
primarily under self-insurance programs.
As of December 31, 1997, the Company has entered into long-term purchase
agreements with various suppliers. Subject to the supplier's quality and
performance, the aggregate purchase commitments covered by these agreements
during the next five years are as follows (in millions): 1998 - $1,626; 1999 -
$1,664; 2000 - $1,573; 2001 - $778; and 2002 - $760.
-42-
<PAGE> 26
The Company leases office and warehouse space, computer hardware, and machinery
and equipment under lease agreements expiring at various dates through 2019. At
December 31, 1997, future minimum lease payments under noncancellable operating
leases aggregate approximately $136 million. Rent expense was approximately $82
million, $35 million, and $31 million during 1997, 1996, and 1995, respectively.
In 1996 the Company recorded a settlement totaling $10 million in settlement of
claims against certain suppliers. The amount of the settlement award is included
as a reduction of cost of sales.
The Company is a defendant in various matters of litigation generally arising
out of the normal course of business. Although it is difficult to predict the
ultimate outcome of these cases, management believes, based on discussion with
counsel, that any ultimate liability would not materially affect the Company's
financial position, results of operations, or liquidity.
18 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments during the year were as follows (in millions):
1997 1996 1995
---- ---- ----
Interest (net of capitalized amount)............. $482 $318 $320
==== ==== ====
Income taxes .................................... $125 $ 39 $ 31
==== ==== ====
Changes in current assets and liabilities pertaining to operating activities
were as follows (in millions):
1997 1996 1995
----- ----- -----
(Increase)/decrease in trade accounts
and other receivables........................ $ (55) $ 66 $ (35)
(Increase)/decrease in inventories............ (17) 24 17
(Increase)/decrease in prepaid expenses
and other assets............................. (20) 10 (20)
(Decrease)/increase in accounts payable
and accrued expenses......................... (46) 118 26
----- ----- -----
Net change in current assets and
liabilities.................................. $(138) $ 218 $ (12)
===== ===== =====
In conjunction with the acquisitions of bottling operations, the fair values of
assets acquired, cash paid, equity and debt issued, and liabilities assumed were
as follows (in millions):
1997 1996 1995
------- ------- -------
Fair values of assets acquired....... $ 6,146 $ 2,244 $ 170
Debt issued and assumed.............. (1,621) (42) --
Other liabilities assumed............ (2,538) (1,370) (12)
Equity issued........................ -- (156) --
------- ------- -------
Cash paid, net of cash acquired...... $ 1,987 $ 676 $ 158
======= ======= =======
-43-
<PAGE> 27
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19 - QUARTERLY FINANCIAL INFORMATION
Unaudited quarterly financial information follows (in millions except per share
data):
FISCAL
1997 FIRST(A) SECOND THIRD FOURTH(A) YEAR
--------- --------- --------- --------- ---------
Net operating
revenues......... $ 2,141 $ 2,905 $ 3,183 $ 3,049 $11,278
======= ======= ======= ======= =======
Gross profit...... $ 800 $ 1,084 $ 1,166 $ 1,132 $ 4,182
======= ======= ======= ======= =======
Net (loss) income
applicable to
common share
owners........... $ (35) $ 111 $ 112(B) $ (19) $ 169
======= ======= ======= ======= =======
Basic net (loss)
income per share
applicable to
common share
owners........... $ (0.09) $ 0.29 $ 0.29 $ (0.05) $ 0.44
======= ======= ======= ======= =======
Diluted net (loss)
income per share
applicable to
common share
owners........... $ (0.09) $ 0.28 $ 0.28 $ (0.05) $ 0.43(C)
======= ======= ======= ======= =======
Basic pro forma
net (loss)
income per
common share(E).. $ (0.18) $ 0.27 $ 0.26 $ (0.05) $ 0.30
======= ======= ======= ======= =======
Diluted pro forma
net (loss) income
per common
share(E)......... $ (0.18) $ 0.26 $ 0.25 $ (0.05) $ 0.29(C)
======= ======= ======= ======= =======
FISCAL
1996 FIRST(A) SECOND THIRD FOURTH(A) YEAR
--------- --------- --------- --------- ---------
Net operating
revenues......... $ 1,600 $ 2,016 $ 2,187 $ 2,118 $ 7,921
======= ======= ======= ======= =======
Gross profit...... $ 630(D) $ 763 $ 824 $ 808 $ 3,025
======= ======= ======= ======= =======
Net income
applicable to
common share
owners........... $ 5 $ 57 $ 37 $ 7 $ 106
======= ======= ======= ======= =======
Basic net income
per share
applicable to
common share
owners........... $ 0.01 $ 0.15 $ 0.10 $ 0.02 $ 0.28
======= ======= ======= ======= =======
Diluted net income
per share
applicable to
common share
owners........... $ 0.01 $ 0.15 $ 0.10 $ 0.02 $ 0.28
======= ======= ======= ======= =======
Basic pro forma
net (loss) income
per common
share(E)......... $ (0.17) $ 0.18 $ 0.03 $ (0.04) $ 0.00
======= ======= ======= ======= =======
Diluted pro forma
net (loss) income
per common
share(E)......... $ (0.17) $ 0.18 $ 0.03 $ (0.04) $ 0.00
======= ======= ======= ======= =======
For quarterly reporting, the Company reports on the Friday closest to the end of
the quarterly calendar period for reporting convenience.
(A) Each quarter presented includes 91 days, except for the first quarter of
1997 (87 days), the fourth quarter of 1997 (96 days), the first quarter of
1996 (89 days), and the fourth quarter of 1996 (95 days).
(B) In the third quarter of 1997 the Company reduced its deferred tax
liabilities and recognized a $58 million ($0.15 per share) credit to income
tax expense as a result of the United Kingdom's decision to reduce the
income tax rate.
(C) Due to the method used in calculating per share data as prescribed by SFAS
No. 128, the quarterly per share data does not total to the full-year per
share data.
(D) In the first quarter of 1996 the Company recorded a $10 million ($0.01 per
share after taxes) favorable supplier settlement.
(E) Pro forma net income (loss) per share presents information as if all
international and domestic acquisitions described in Note 2 were effective
January 1, 1996.
-44-
<PAGE> 28
COCA-COLA ENTERPRISES INC.
REPORT OF MANAGEMENT
Management has prepared the accompanying consolidated financial statements
appearing in this Annual Report and is responsible for their integrity and
objectivity. The consolidated financial statements, including amounts that are
based on management's best estimates and judgment, have been prepared in
conformity with generally accepted accounting principles and are free of
material misstatement. Management also prepared other information in this Annual
Report and is responsible for its accuracy and consistency with the consolidated
financial statements.
Management maintains a system of internal accounting controls and procedures
over financial reporting designed to provide reasonable assurance, at an
appropriate cost/benefit relationship, that assets are safeguarded and that
transactions are authorized, recorded, and reported properly. The internal
accounting control system is augmented by a program of internal audits and
reviews by management, written policies and guidelines, careful selection and
training of qualified personnel, and a written Code of Business Conduct adopted
by the Board of Directors applicable to all employees of the Company and its
subsidiaries. Management believes that the Company's internal accounting
controls provide reasonable assurance (i) that assets are safeguarded against
material loss from unauthorized use or disposition and (ii) that the financial
records are reliable for preparing consolidated financial statements and other
data and maintaining accountability for assets.
The Audit Committee of the Board of Directors, composed solely of Directors who
are not officers of the Company or The Coca-Cola Company, meets with the
independent auditors, management, and the officer of the Company directing
internal audit periodically to discuss internal accounting control, auditing,
and financial reporting matters. The Committee reviews with the independent
auditors the scope and results of the audit effort. The Committee also meets
with the independent auditors and the Company's Director of Internal Audit,
without management present, to ensure that the independent auditors and the
Company's Director of Internal Audit have free access to the Committee.
The independent auditors, Ernst & Young LLP, are recommended by the Audit
Committee of the Board of Directors and selected by the Board of Directors and
ratified by the Company's share owners. Ernst & Young LLP is engaged to audit
the consolidated financial statements of Coca-Cola Enterprises Inc. and
subsidiaries and conduct such tests and related procedures as Ernst & Young LLP
deems necessary in conformity with generally accepted auditing standards. The
opinion of the independent auditors, based upon their audit of the consolidated
financial statements, is contained in this Annual Report.
/s/Summerfield K. Johnston, Jr. /s/John R. Alm /s/O. Michael Whigham
Chairman and Executive Vice Vice President,
Chief Executive Officer President and Chief Controller and
Financial Officer Principal Accounting
Officer
Atlanta, Georgia
January 19, 1998
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Coca-Cola Enterprises Inc.
We have audited the accompanying consolidated balance sheets of Coca-Cola
Enterprises Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of income, share-owners' equity, and cash flows for each of the three
years in the period ended December 31, 1997. 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 our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Coca-Cola Enterprises Inc. at December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
Atlanta, Georgia /s/ Ernst & Young LLP
January 19, 1998
-45-
<PAGE> 29
COCA-COLA ENTERPRISES INC.
SELECTED FINANCIAL DATA
(IN MILLIONS EXCEPT PER SHARE DATA)
FISCAL YEAR
-----------------------------------------
1997 1996
------------------- -------------------
PRO PRO
FORMA(A) REPORTED FORMA(B) REPORTED
-------- -------- -------- --------
OPERATIONS SUMMARY
Net operating revenues .......... $12,377 $11,278 $10,307 $ 7,921
Cost of sales ................... 7,810 7,096 6,444 4,896
------- ------- ------- -------
Gross profit .................... 4,567 4,182 3,863 3,025
Selling, delivery, and
administrative expenses ........ 3,854 3,462 3,155 2,480
------- ------- ------- -------
Operating income ................ 713 720 708 545
Interest expense, net ........... 615 536 564 351
Other nonoperating deductions
(income), net .................. 8 6 (5) --
Gain from sale of bottling
operations ..................... -- -- -- --
------- ------- ------- -------
Income (loss) before income
taxes .......................... 90 178 149 194
Income tax expense before rate
change benefit ................. 31 65 61 80
Income tax rate change (benefit)
expense ........................ (58) (58) -- --
------- ------- ------- -------
Net income before cumulative
effect of changes in accounting
principles ..................... 117 171 88 114
Cumulative effect of changes in
accounting principles .......... -- -- -- --
------- ------- ------- -------
Net income (loss) ............... 117 171 88 114
Preferred stock dividends ....... 2 2 9 8
------- ------- ------- -------
Net income (loss) applicable to
common share owners ............ $ 115 $ 169 $ 79 $ 106
======= ======= ======= =======
OTHER OPERATING DATA
Depreciation expense ............ $ 615 $ 566 $ 483 $ 392
Amortization expense ............ 426 380 319 235
AVERAGE COMMON SHARES
OUTSTANDING(G)(H)
Basic ........................... 383 383 373 373
Diluted ......................... 396 396 380 380
PER SHARE DATA(G)(H)
Basic net income (loss) per
common share before cumulative
effect of changes in accounting
principles ..................... $ 0.30 $ 0.44 $ 0.21 $ 0.28
Diluted net income (loss) per
common share before cumulative
effect of changes in accounting
principles ..................... 0.29 0.43 0.21 0.28
Basic net income (loss) per
share applicable to common
share owners ................... 0.30 0.44 0.21 0.28
Dilutive net income (loss) per
share applicable to common
share owners ................... 0.29 0.43 0.21 0.28
Dividends per common share ...... 0.10 0.10 0.033 0.033
Closing stock price ............. 35.56 35.56 16.16 16.16
YEAR-END FINANCIAL POSITION
Property, plant, and equipment,
net ............................ $ 3,862 $ 3,862 $ 3,156 $ 2,812
Franchises and other noncurrent
assets, net .................... 11,812 11,812 9,816 7,103
Total assets .................... 17,487 17,487 14,674 11,234
Long-term debt .................. 8,792 8,792 7,315 5,305
Share-owners' equity ............ 1,782 1,782 1,550 1,550
- -------------------------------------------------------------------------------
Fiscal periods presented are calendar years, beginning after 1991, and fiscal
years ending on the Friday nearest December 31 prior to 1991. The Company
acquired subsidiaries in each year presented and divested subsidiaries in
certain periods. Such transactions, except for: (i) the 1997 acquisitions of
Amalgamated Beverages Great Britain Limited ("Great Britain Bottler"), The
Coca-Cola Bottling Company of New York, Inc. ("Coke New York"), and Coca-Cola
Beverages Ltd. ("Coke Canada"), (ii) the 1996 acquisition of Coca-Cola
Entreprise S.A., Coca-Cola Production S.A., and S.A. Beverage Sales Holding
N.V. (collectively "the French and Belgian bottlers"), (iii) the 1991
acquisition of Johnston Coca-Cola Bottling Group, Inc. ("Johnston"), and (iv)
gains from the sale of certain bottling operations, did not significantly affect
the Company's operating results in any one fiscal period. All acquisitions and
divestitures have been included in or excluded from, as appropriate, the
consolidated operating results of the Company from their respective transaction
dates.
(A) The 1997 pro forma Operations Summary, Other Operating Data, and Per Share
Data give effect to the following acquisitions as though each had been
owned for a full year beginning January 1, 1997: the Great Britain Bottler,
Coke New York, and Coke Canada.
(B) The 1996 pro forma Operations Summary, Other Operating Data, Per Share
Data, and Year-End Financial Position give effect to the following
acquisitions as though each had been owned for a full year beginning
January 1, 1996: the Belgian, Great Britain, and French bottlers, Coca-Cola
Bottling Company West, Inc., Grand Forks Coca-Cola Bottling Co., and
Ouachita Coca-Cola Bottling Company, Inc. ("Ouachita").
-46-
<PAGE> 30
FISCAL YEAR
-----------------------------------------
1995(C) 1994 1993(D) 1992(E)
-------- -------- -------- --------
OPERATIONS SUMMARY
Net operating revenues .......... $ 6,773 $ 6,011 $ 5,465 $ 5,127
Cost of sales ................... 4,267 3,703 3,372 3,219
------- ------- ------- -------
Gross profit .................... 2,506 2,308 2,093 1,908
Selling, delivery, and
administrative expenses ........ 2,038 1,868 1,708 1,602
------- ------- ------- -------
Operating income ................ 468 440 385 306
Interest expense, net ........... 326 310 328 312
Other nonoperating deductions
(income), net .................. 6 3 2 6
Gain from sale of bottling
operations ..................... 9 -- -- --
------- ------- ------- -------
Income (loss) before income
taxes .......................... 145 127 55 (12)
Income tax expense before rate
change benefit ................. 63 58 30 3
Income tax rate change (benefit)
expense ........................ -- -- 40 --
------- ------- ------- -------
Net income before cumulative
effect of changes in accounting
principles ..................... 82 69 (15) (15)
Cumulative effect of changes in
accounting principles .......... -- -- -- (171)
------- ------- ------- -------
Net income (loss) ............... 82 69 (15) (186)
Preferred stock dividends ....... 2 2 -- --
------- ------- ------- -------
Net income (loss) applicable to
common share owners ............ $ 80 $ 67 $ (15) $ (186)
======= ======= ======= =======
OTHER OPERATING DATA
Depreciation expense ............ $ 318 $ 282 $ 254 $ 227
Amortization expense ............ 211 179 165 162
AVERAGE COMMON SHARES
OUTSTANDING(G)(H)
Basic ........................... 386 386 387 384
Diluted ......................... 390 388 387 384
PER SHARE DATA(G)(H)
Basic net income (loss) per
common share before cumulative
effect of changes in accounting
principles ..................... $ 0.21 $ 0.17 $ (0.04) $ (0.04)
Diluted net income (loss) per
common share before cumulative
effect of changes in accounting
principles ..................... 0.20 0.17 (0.04) (0.04)
Basic net income (loss) per
share applicable to common
share owners ................... 0.21 0.17 (0.04) (0.49)
Dilutive net income (loss) per
share applicable to common
share owners ................... 0.20 0.17 (0.04) (0.49)
Dividends per common share ...... 0.017 0.017 0.017 0.017
Closing stock price ............. 8.97 6.00 5.09 4.09
YEAR-END FINANCIAL POSITION
Property, plant, and equipment,
net ............................ $ 2,158 $ 1,963 $ 1,890 $ 1,733
Franchises and other noncurrent
assets, net .................... 5,924 5,965 6,046 5,651
Total assets .................... 9,064 8,738 8,682 8,085
Long-term debt .................. 4,201 4,187 4,391 4,131
Share-owners' equity ............ 1,435 1,339 1,260 1,254
FISCAL YEAR
----------------------------------------------------
1991(F)
-------------------
PRO
FORMA REPORTED 1990 1989 1988
-------- -------- -------- -------- --------
OPERATIONS SUMMARY
Net operating revenues .. $ 5,027 $ 3,915 $ 3,933 $ 3,822 $ 3,821
Cost of sales ........... 3,170 2,420 2,400 2,350 2,303
------- ------- ------- ------- -------
Gross profit ............ 1,857 1,495 1,533 1,472 1,518
Selling, delivery, and
administrative
expenses ............... 1,687 1,375 1,208 1,162 1,164
------- ------- ------- ------- -------
Operating income ........ 170 120 325 310 354
Interest expense, net ... 312 210 200 193 202
Other nonoperating
deductions (income),
net .................... 3 2 (3) (10) (12)
Gain from sale of
bottling operations .... -- -- 56 11 104
------- ------- ------- ------- -------
Income (loss) before
income taxes ........... (145) (92) 184 138 268
Income tax expense before
rate change benefit .... (17) (9) 91 66 115
Income tax rate change
(benefit) expense ...... -- -- -- -- --
------- ------- ------- ------- -------
Net income before
cumulative effect of
changes in accounting
principles ............. (128) (83) 93 72 153
Cumulative effect of
changes in accounting
principles ............. -- -- -- -- --
------- ------- ------- ------- -------
Net income (loss) ....... (128) (83) 93 72 153
Preferred stock
dividends .............. 9 9 16 18 10
------- ------- ------- ------- -------
Net income (loss)
applicable to common
share owners ........... $ (137) $ (92) $ 77 $ 54 $ 143
======= ======= ======= ======= =======
OTHER OPERATING DATA
Depreciation expense .... $ 205 $ 160 $ 150 $ 148 $ 143
Amortization expense .... 125 91 86 81 82
AVERAGE COMMON SHARES
OUTSTANDING(G)(H)
Basic ................... 345 345 357 388 416
Diluted ................. 345 345 357 388 416
PER SHARE DATA(G)(H)
Basic net income (loss)
per common share before
cumulative effect of
changes in accounting
principles ............. $ (0.35) $ (0.27) $ 0.22 $ 0.14 $ 0.34
Diluted net income (loss)
per common share before
cumulative effect of
changes in accounting
principles ............. (0.35) (0.27) 0.22 0.14 0.34
Basic net income (loss)
per share applicable to
common share owners .... (0.35) (0.27) 0.22 0.14 0.34
Dilutive net income (loss)
per share applicable to
common share owners .... (0.35) (0.27) 0.22 0.14 0.34
Dividends per common
share .................. 0.017 0.017 0.017 0.017 0.017
Closing stock price ..... 5.13 5.13 5.17 5.33 5.00
YEAR-END FINANCIAL POSITION
Property, plant, and
equipment, net ......... $ 1,706 $ 1,706 $ 1,373 $ 1,286 $ 1,180
Franchises and other
noncurrent assets, net . 4,265 4,265 3,153 2,952 3,001
Total assets ............ 6,677 6,677 5,021 4,732 4,669
Long-term debt .......... 4,091 4,091 2,537 2,305 2,211
Share-owners' equity .... 1,442 1,442 1,627 1,680 1,808
- --------------------------------------------------------------------------------
(C) In January 1995 the Company sold its 50% ownership interest in The
Coca-Cola Bottling Company of the Mid South ("Mid South") to Ouachita. The
Company's interest in Mid South was reacquired through the Ouachita
acquisition in February 1996.
(D) A one-time charge of $40 million in income tax expense to increase deferred
income taxes resulted from a 1% increase in the corporate marginal income
tax rate in connection with the U.S. Omnibus Budget Reconciliation Act of
1993.
(E) In 1992 the Company adopted SFAS 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and SFAS 109 "Accounting for
Income Taxes." Fiscal periods prior to 1992 were not restated for these
accounting changes.
(F) The 1991 pro forma Operations Summary, Other Operating Data and Per Share
Data give effect to the acquisition of Johnston in December 1991 as though
it had been completed at the beginning of 1991. A restructuring charge in
1991 of $152 million is included in selling, delivery, and administrative
expenses.
(G) Adjusted for a 3-for-1 stock split effective in 1997.
(H) In 1997 the Company adopted SFAS 128, "Earnings Per Share," and restated
average common shares and per share data beginning in 1988.
-47-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 21
COCA-COLA ENTERPRISES INC.
AND ITS SUBSIDIARIES(1)
Owner of Shares
(*unless
Jurisdiction otherwise
in which noted ownership Other names under
Name organized is 100%) which engaged in business
- ---- ------------ --------------- --------------------------------------
<S> <C> <C> <C>
Coca-Cola Enterprises Inc. (Registrant) ("CCE"). . . . . Delaware N/A The Atlanta Coca-Cola Bottling Company
Atlanta Ice Makers
Brevard Coca-Cola Bottling Company
Brooksville Coca-Cola Bottling Company
CCE Bottling Group
Coca-Cola Bottling Co. of the Virgin Islands
(St. Croix)
Coca-Cola Bottling Co. of the Virgin Islands
(St. Thomas)
Coca-Cola Bottling Company of Cody
Coca-Cola Bottling Company of Colorado/
Northern Wyoming
Coca-Cola Bottling Company of Gillette
Coca-Cola Bottling Company of Goodland
Coca-Cola Bottling Company of Greeley
Coca-Cola Bottling Company of Miami
Coca-Cola Bottling Company of New England
Coca-Cola Bottling Company of Providence
Coca-Cola Bottling Company of Riverton
Coca-Cola Bottling Company of Sheridan
Coca-Cola Bottling Company of West Point/
LaGrange
Colorado Coca-Cola Bottling Company
Colorado Springs Coca-Cola Bottling Company
Daytona Coca-Cola Bottling Company
Denver Coca-Cola Bottling Company
Enterprises Media
Florida Coca-Cola Bottling Company
Fort Myers Coca-Cola Bottling Company
Ft. Pierce Coca-Cola Bottling Company
Gainesville Coca-Cola Bottling Company
Highlands Coca-Cola Bottling Company
Jacksonville Coca-Cola Bottling Company
Lamar Coca-Cola Bottling Company
Ocala Coca-Cola Bottling Company
Orlando Coca-Cola Bottling Company
Pueblo Coca-Cola Bottling Company
Punta Gorda Coca-Cola Bottling Company
Rome Coca-Cola Bottling Company
Sarasota Coca-Cola Bottling Company
St. Petersburg Coca-Cola Bottling Company
Tallahassee Coca-Cola Bottling Company
Tampa Coca-Cola Bottling Company
The Mid-Atlantic Coca-Cola Bottling Company
Valdosta Coca-Cola Bottling Company
Austin Coca-Cola Bottling Company ("Austin") . . . . . Texas CCE Beaumont Coca-Cola Bottling Company
Coca-Cola Bottling Company of North Texas
Dallas Coca-Cola Bottling Company
Enterprises Media
Houston Coca-Cola Bottling Company
Tyler Coca-Cola Bottling Company
Waco Coca-Cola Bottling Company
The Laredo Coca-Cola Bottling Company, Inc. . . . . Texas Austin Enterprises Media
McAllen Coca-Cola Bottling Company
Valley Coca-Cola Bottling Company
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Owner of Shares
(*unless
Jurisdiction otherwise
in which noted ownership Other names under
Name organized is 100%) which engaged in business
- ---- ------------ --------------- --------------------------------------
<S> <C> <C> <C>
BCI Coca-Cola Bottling Company of Los Angeles. . . . . . Delaware CCE Coca-Cola Bottling Company of California
Coca-Cola Bottling Company of
Eureka, California
Coca-Cola Bottling Company of Hawaii
Coca-Cola Bottling Company of
Imperial Valley
Coca-Cola Bottling Company of Klamath Falls
Coca-Cola Bottling Company of Las Vegas
Coca-Cola Bottling Company of Los Angeles
Coca-Cola Bottling Company of
Northern California
Coca-Cola Bottling Company of Oregon
Coca-Cola Bottling Company of Port Angeles
Coca-Cola Bottling Company of San Diego
Coca-Cola Bottling Company of
Southern California
Coca-Cola Bottling Company of Spokane
Coca-Cola Bottling Company of Washington
Diamond Head Beverages
Enterprises Media
Medford Coca-Cola Bottling Company
Pacific Coca-Cola Bottling Company
Pacific Coca-Cola Bottling Company of
Marysville
Phoenix Coca-Cola Bottling Company
Prescott Coca-Cola Bottling Company
Yuma Coca-Cola Bottling Company
Bottling Holdings (International) Inc. ("BHI") . . . . . Delaware CCE
Coca-Cola Enterprises UK Limited ("CCEUK") . . . . . . United
Kingdom BHI
Coca-Cola Enterprises Great Britain plc ("CCEGB"). . . United
Kingdom CCEUK
Amalgamated Beverages Great Britain
Limited ("ABGB") . . . . . . . . . . . . . . . . . United
Kingdom CCEGB
Coca-Cola & Schweppes Beverages Limited("CCSB"). . United
Kingdom ABGB
Coca-Cola Beverages Nederland B.V. . . . . . . . . . . Netherlands Bottling
Holdings
(Netherlands) B.V.
Coca-Cola Entreprise SA. . . . . . . . . . . . . . . . France BHI (99%)
Coca-Cola Production SA . . . . . . . . . . . . . . . France BHI
The Coca-Cola Bottling Company of
Memphis, Tenn. ("Memphis"). . . . . . . . . . . . . . . Delaware CCE CCE Bottling Group
CCE-South
Canners of Eastern Arkansas
Coca-Cola Bottling Company of Arkansas
The Coca-Cola Bottling Company of Brownsville
Coca-Cola Bottling Company of Clarksdale
Coca-Cola Bottling Company of Flippin
Coca-Cola Bottling Company of Greenville
Coca-Cola Bottling Company of Little Rock
Coca-Cola Bottling Company of Marianna
Coca-Cola Bottling Company of Mississippi
Coca-Cola Bottling Company of Morrilton
Coca-Cola Bottling Company of Sardis
Coca-Cola Bottling Company of Searcy
Coca-Cola Bottling Company of West Plains
Enterprises Media
Jonesboro Coca-Cola Bottling Company
Enterprises KOC Acquisition Company Ltd. . . . . . . . . Canada BHI
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Owner of Shares
(*unless
Jurisdiction otherwise
in which noted ownership Other names under
Name organized is 100%) which engaged in business
- ---- ------------ --------------- --------------------------------------
<S> <C> <C> <C>
The Coca-Cola Bottling Company of the Northeast
("Northeast") . . . . . . . . . . . . . . . . . . . . Delaware CCE
The Coca-Cola Bottling Company of New York, Inc. . . . Delaware Northeast Coca-Cola Bottling Company of Albany
(73.1%) Coca-Cola Bottling Company of Glens Falls
CCE Coca-Cola Bottling Company of Greenfield
(2.4%) Coca-Cola Bottling Company of New England
Coca-Cola Bottling Company of Oneonta
Coca-Cola Bottling Company of Pittsfield
Coca-Cola Bottling Company of Rutland
Coca-Cola Bottling Company of Syracuse
Coca-Cola Bottling Company of Utica
Coca-Cola Bottling Company of Watertown
Johnston Coca-Cola Bottling Group, Inc. ("JCCBG"). . . . Delaware CCE Alabama Coca-Cola Bottling Company
Burlington Coca-Cola Bottling Company
Central States Coca-Cola Bottling Company
Centralia Coca-Cola Bottling Company
Champaign Coca-Cola Bottling Company
Cincinnati Coca-Cola Bottling Company
Coca-Cola Bottling Company of Bloomington
Coca-Cola Bottling Company of Michigan
Coca-Cola Bottling Company of Minot
Coca-Cola Bottling Company of Mt. Pleasant
Coca-Cola Bottling Company of Muskegon
Coca-Cola Bottling Company of Ohio/Kentucky
Coca-Cola Bottling Company of Ottumwa
Coca-Cola Bottling Company of Port Huron
Coca-Cola Bottling Company of St. Louis
The Coca-Cola Bottling Company of
Cedar Rapids
The Coca-Cola Bottling Company of Mid-America
Coca-Cola Enterprises-Atlanta Region
Danville Coca-Cola Bottling Company
Dayton Coca-Cola Bottling Company
Decatur Coca-Cola Bottling Company
DuQuoin Coca-Cola Bottling Company
Dr Pepper Bottling Company of Detroit
Enterprises Media
Erie Coca-Cola Bottling Company
Galesburg Coca-Cola Bottling Company
Johnston Coca-Cola Bottling Company
Lincoln Coca-Cola Bottling Company
Mid-America Packaging Company
Midwest Coca-Cola Bottling Company
Olney Coca-Cola Bottling Company
Peoria Coca-Cola Bottling Company
Peru Coca-Cola Bottling Company
Portsmouth Coca-Cola Bottling Company
Springfield Coca-Cola Bottling Company
The Louisiana Coca-Cola Bottling Company, Ltd.
("Louisiana"). . . . . . . . . . . . . . . . . . . . Louisiana CCE CCE Bottling Group
CCE-South
Dr Pepper Bottling Company of New Orleans
Enterprises Media
The Coca-Cola Bottling Company of New Iberia
</TABLE>
- -----------------
(1) This list omits certain subsidiaries which, considered in the aggregate
as a single subsidiary, would not constitute a significant subsidiary.
3
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements of
Coca-Cola Enterprises Inc. listed below of our report dated January 19, 1998,
with respect to the consolidated financial statements and schedule of Coca-Cola
Enterprises Inc. included and/or incorporated by reference in this Annual Report
(Form 10-K) for the year ended December 31, 1997.
* 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
<PAGE>
* Registration Statement No. 333-47353 on Form S-8 dated March 3, 1998
and related Prospectus
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
March 9, 1998
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, SUMMERFIELD K. JOHNSTON, JR.,
Chairman, Chief Executive Officer and a Director of Coca-Cola Enterprises Inc.
(the "Company"), do hereby appoint John R. Alm, Executive Vice President and
Chief Financial Officer of the Company and Lowry F. Kline, Executive Vice
President and General Counsel of the Company, and J. Guy Beatty, Jr., Secretary
of the Company, or any one of them, my true and lawful attorney for me and in my
name in any and all capacities for the purpose of executing on my behalf the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, or
any amendment or supplement thereto, and causing such Annual Report or any such
amendment or supplement to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ SUMMERFIELD K. JOHNSTON, JR.
-------------------------------------
Chairman, Chief Executive Officer
and Director
Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, L. PHILLIP HUMANN, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ L. PHILLIP HUMANN
-------------------------------------
Director, Coca-Cola Enterprises, Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, HENRY A. SCHIMBERG, President,
Chief Operating Officer and a Director of Coca-Cola Enterprises Inc. (the
"Company"), do hereby appoint John R. Alm, Executive Vice President and Chief
Financial Officer of the Company and Lowry F. Kline, Executive Vice President
and General Counsel of the Company, and J. Guy Beatty, Jr., Secretary of the
Company, or any one of them, my true and lawful attorney for me and in my name
in any and all capacities for the purpose of executing on my behalf the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, or
any amendment or supplement thereto, and causing such Annual Report or any such
amendment or supplement to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ HENRY A. SCHIMBERG
-------------------------------------
President, Chief Operating Officer
and Director
Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JOSEPH R. GLADDEN, JR.,
Vice Chairman of the Board of Directors of Coca-Cola Enterprises Inc.
(the "Company"), do hereby appoint John R. Alm, Executive Vice President and
Chief Financial Officer of the Company and Lowry F. Kline, Executive Vice
President and General Counsel of the Company, and J. Guy Beatty, Jr., Secretary
of the Company, or any one of them, my true and lawful attorney for me and in my
name in any and all capacities for the purpose of executing on my behalf the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, or
any amendment or supplement thereto, and causing such Annual Report or any such
amendment or supplement to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ JOSEPH R. GLADDEN, JR.
-------------------------------------
Vice Chairman of the Board of Directors
Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JOHN L. CLENDENIN, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ JOHN L. CLENDENIN
-------------------------------------
Director, Coca-Cola Enterprises, Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JOHNNETTA B. COLE, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ JOHNNETTA B. COLE
-------------------------------------
Director, Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, CLAUS M. HALLE, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ CLAUS M. HALLE
-------------------------------------
Director, Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JOHN E. JACOB, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ JOHN E. JACOB
-------------------------------------
Director, Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, ROBERT A. KELLER, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ ROBERT A. KELLER
-------------------------------------
Director, Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, FRANCIS A. TARKENTON, a Director
of Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ FRANCIS A. TARKENTON
-------------------------------------
Director, Coca-Cola Enterprises, Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, HOWARD G. BUFFETT, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ HOWARD G. BUFFETT
------------------------------------
Director, Coca-Cola Enterprises, Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, SCOTT L. PROBASCO, JR., a
Director of Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John
R. Alm, Executive Vice President and Chief Financial Officer of the Company and
Lowry F. Kline, Executive Vice President and General Counsel of the Company, and
J. Guy Beatty, Jr., Secretary of the Company, or any one of them, my true and
lawful attorney for me and in my name in any and all capacities for the purpose
of executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ SCOTT L. PROBASCO, JR.
-------------------------------------
Director, Coca-Cola Enterprises Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, JEAN-CLAUDE KILLY, a Director of
Coca-Cola Enterprises Inc. (the "Company"), do hereby appoint John R. Alm,
Executive Vice President and Chief Financial Officer of the Company and Lowry F.
Kline, Executive Vice President and General Counsel of the Company, and J. Guy
Beatty, Jr., Secretary of the Company, or any one of them, my true and lawful
attorney for me and in my name in any and all capacities for the purpose of
executing on my behalf the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, or any amendment or supplement thereto, and causing
such Annual Report or any such amendment or supplement to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
February, 1998.
S/ JEAN-CLAUDE KILLY
------------------------------------
Director, Coca-Cola Enterprises Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF COCA-COLA ENTERPRISES FOR THE YEAR ENDED DECEMBER 31,
1997, 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> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 1,065
<ALLOWANCES> 58
<INVENTORY> 462
<CURRENT-ASSETS> 1,813
<PP&E> 6,157
<DEPRECIATION> 2,295
<TOTAL-ASSETS> 17,487
<CURRENT-LIABILITIES> 3,032
<BONDS> 7,760
0
0
<COMMON> 443
<OTHER-SE> 1,339
<TOTAL-LIABILITY-AND-EQUITY> 17,487
<SALES> 11,278
<TOTAL-REVENUES> 11,278
<CGS> 7,096
<TOTAL-COSTS> 7,096
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536
<INCOME-PRETAX> 178
<INCOME-TAX> 7
<INCOME-CONTINUING> 171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 171
<EPS-PRIMARY> 0.44<F1>
<EPS-DILUTED> 0.43<F1>
<FN>
<F1>ON APRIL 21, 1997, THE COMPANY'S SHARE OWNERS APPROVED A 3-FOR-1 STOCK SPLIT
EFFECTIVE FOR SHARE OWNERS OF RECORD ON MAY 1, 1997. FINANCIAL DATA SCHEDULES
PRIOR TO THE FIRST QUARTER ENDED MARCH 28, 1997 HAVE NOT BEEN RESTATED.
</FN>
</TABLE>
