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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1993
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 01-09300
COCA-COLA ENTERPRISES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-0503352
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION
NUMBER)
ONE COCA-COLA PLAZA, N.W., ATLANTA, GEORGIA 30313
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(404) 676-2100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Stock, par value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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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
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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 March 1, 1994 was $1,084,391,309.
There were 129,577,651 shares of Common Stock outstanding as of March 1,
1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the Annual Meeting of
Share Owners to be held on April 13, 1994 are incorporated by reference in Part
III hereof.
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TABLE OF CONTENTS
PAGE
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PART I
ITEM 1. BUSINESS..................................................... 1
Introduction............................................... 1
Relationship with The Coca-Cola Company.................... 2
Acquisitions and Divestitures.............................. 3
Territories................................................ 3
Products................................................... 4
Marketing.................................................. 4
Raw Materials.............................................. 5
Domestic Bottle Contracts.................................. 6
International Bottler's Agreement.......................... 9
Competition................................................ 10
Employees.................................................. 10
Governmental Regulation.................................... 10
ITEM 2. PROPERTIES................................................... 12
ITEM 3. LEGAL PROCEEDINGS............................................ 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......... 14
ITEM 4(A). EXECUTIVE OFFICERS OF THE COMPANY............................ 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS...................................................... 16
ITEM 6. SELECTED FINANCIAL DATA...................................... 18
Notes to Selected Financial Data........................... 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.................................... 20
Description of Business.................................... 20
Operating Results.......................................... 22
Financial Position......................................... 26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................. 29
Consolidated Statements of Operations...................... 29
Consolidated Balance Sheets................................ 30
Consolidated Statements of Share-Owners' Equity............ 32
Consolidated Statements of Cash Flows...................... 33
Notes to Consolidated Financial Statements................. 34
Report of Independent Auditors............................. 51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE..................................... 52
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........... 52
ITEM 11. EXECUTIVE COMPENSATION....................................... 52
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................... 52
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............... 52
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.......................................................... 52
SIGNATURES................................................... 59
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PART I
ITEM 1. BUSINESS
INTRODUCTION
Coca-Cola Enterprises Inc. (the "Company") is in the liquid nonalcoholic
refreshment business and is the world's largest producer, marketer and
distributor of bottle/can soft drink products of The Coca-Cola Company.
The Company was organized under the laws of the State of Delaware in 1944
as a wholly owned subsidiary of The Coca-Cola Company. It was inactive from 1970
until August 1986, when it was reactivated with a restated certificate of
incorporation and amended bylaws. Unless the context indicates otherwise, all
references in this report to the "Company" include the Company and its divisions
and subsidiaries.
On November 21, 1986, the Company sold 71,400,000 shares of its common
stock to the public, reducing the percentage of the Company's common stock owned
by The Coca-Cola Company immediately after the public offering from 100% to
approximately 49%. The Coca-Cola Company now owns approximately 43.5% of the
outstanding common stock of the Company.
The Company produces, markets and distributes carbonated soft drink
products of The Coca-Cola Company, representing approximately 55% of all
bottle/can sales of carbonated soft drink products of The Coca-Cola Company in
the United States. The Company estimates that the territories in which it
markets beverages to retailers (including portions of 38 states, the District of
Columbia, the U.S. Virgin Islands, and the Netherlands) contain approximately
150 million people. Slightly more than one-half (52%) of the population of the
United States and the entire population of the Netherlands reside within the
Company's territories. The Company is the principal Coca-Cola bottler in the
five states in the United States (California, Florida, Texas, Washington and
Virginia) with the largest increases in population from 1989 to 1993. In all of
its territories, the Company sold approximately 1.6 billion equivalent cases* of
liquid nonalcoholic refreshments in 1993.
Domestic Operations
Management estimates that 1993 sales of the Company represented
approximately 17% of the total 1993 dollar sales of soft drinks by all bottlers
and fountain distributors in the United States. In addition, the Company's 1993
total volume sales of such products were approximately 1.5 billion equivalent
cases or approximately 18% of the estimated total 1993 volume sales of soft
drink products by all bottlers and fountain distributors in the United States.
In 1993, approximately 70% of the equivalent case sales of the Company
(excluding products in post-mix form) were beverages bearing the trademarks
"Coca-Cola" or "Coke" ("Coca-Cola Trademark Beverages"), approximately 19% of
its equivalent case sales were other beverages of The Coca-Cola Company ("Allied
Beverages" and collectively with the Coca-Cola Trademark Beverages, "beverage
products of The Coca-Cola Company"), and approximately 11% of its equivalent
case sales were beverage products of companies other than The Coca-Cola Company.
Equivalent case sales by the Company of products in bottles and cans, including
products of companies other than The Coca-Cola Company, constituted
approximately 87% of the equivalent case sales of the Company in 1993. The
remaining 13% of the Company's equivalent case sales in 1993 related to post-mix
for fountain sales.
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* As used in this report, the term "equivalent case" refers to 192 ounces of
finished beverage product (24 eight-ounce servings).
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Dutch Operations
The Company's Dutch subsidiary, Coca-Cola Beverages Nederland B. V. ("CCB
Nederland"), in 1993 sold approximately 35 million equivalent cases.
Approximately 96% of CCB Nederland's equivalent case sales were of beverage
products of The Coca-Cola Company.
Strategy
The Company's management believes that share of the liquid nonalcoholic
refreshment market is the principal determinant of long-term profitability;
improvements in market share, together with increases in per capita consumption
and population, determine case sales growth. The Company's competitive strategy
is to obtain profitable increases in case sales and over the long term to
increase its total share of the liquid nonalcoholic refreshment market. The
Company attempts to meet these objectives through (i) the development and
superior execution of innovative marketing programs, (ii) the implementation of
cost-effective production and distribution strategies, including capital
investment in automation where appropriate, and (iii) an emphasis on the
marketing of the products of The Coca-Cola Company, including new "alternative"
and other beverages that the Company expects to introduce with increasing
frequency when they can be expected to contribute to gross profit. Management of
the Company believes that because its business is characterized by local
competition that may differ from one territory to another, discipline in the
execution of marketing programs at the local level is critical. Both the
Company's local sales representatives and its senior management are accountable
for the execution and success of such programs.
RELATIONSHIP WITH THE COCA-COLA COMPANY
The Coca-Cola Company is the Company's largest share owner. Two Directors
of the Company are executive officers of The Coca-Cola Company, and two other
Directors of the Company are 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 the Company and The Coca-Cola Company may enter into additional material
transactions and agreements from time to time in the future.
The Company conducts its business primarily under contracts with The
Coca-Cola Company. These contracts give the Company the exclusive right to
produce, market and distribute beverage products of The Coca-Cola Company in
authorized bottles and cans in specified territories and 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 "Domestic Bottle Contracts" and
"International Bottler's Agreement" below. Other significant transactions and
agreements relate to, among other things, 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, such as the June 1993 acquisition of CCB Nederland by the Company.
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 to acquire bottling companies or
interests therein to assist in the transfer of acquired bottlers to other
bottlers, which may or may not include the Company, viewed as the best suited to
promote the interests of The Coca-Cola Company and the Coca-Cola bottler system
in acquired territories. In connection with such transactions, The Coca-Cola
Company may own all or part of the equity interests of acquired bottlers for
varying periods of time. See "Acquisitions and Divestitures" below and "Certain
Relationships and Related Transactions -- Agreements and Transactions with The
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Coca-Cola Company -- Purchase of Coca-Cola Bottlers" in the 1994 Proxy
Statement, which information is incorporated by reference in Item 13 hereof.
The Company intends to acquire only bottling businesses offering the
Company the ability to produce long-term share-owner value. From time to time
The Coca-Cola Company may sell additional bottling businesses or additional
ownership interests therein to, or buy bottling businesses or ownership
interests therein from, the Company.
ACQUISITIONS AND DIVESTITURES
During 1993, the Company acquired four bottling businesses located in
Knoxville and Johnson City, Tennessee, the Netherlands and Jonesboro, Arkansas.
It also acquired an engineering consulting firm in Florida, Dr Pepper franchise
rights in Georgia, Rhode Island, and Wisconsin, and certain assets of a post-mix
business in Connecticut. For these 1993 acquisitions the Company paid an
aggregate cost, including assumed and issued debt, where applicable, of
approximately $430 million. In January 1994, the Company purchased 4% of the
outstanding stock of The Coca-Cola Bottling Company of New York, Inc. from The
Coca-Cola Company, the controlling share owner, for approximately $6 million,
with a right of first refusal exercisable within five years for any additional
stock proposed to be transferred by The Coca-Cola Company. These shares
represent an approximate 9% voting interest. The total cost of acquisitions
since reorganization in 1986, including assumed and issued debt, where
applicable, has been approximately $5.6 billion.
Since reorganization in 1986, the total proceeds to the Company from the
sale of bottlers and other businesses approximates $455 million. However, of
this amount, bottlers representing sales proceeds of approximately $404 million
were reacquired by the Company in 1991 as a result of the acquisition of
Johnston Coca-Cola Bottling Group, Inc. ("Johnston Coca-Cola"), now a subsidiary
of the Company. In 1993, the Company sold Seven-Up bottling rights in Louisiana
and Dr Pepper franchise rights in Mississippi for proceeds aggregating
approximately $564,000.
TERRITORIES
The domestic bottling territories in which the Company markets its products
include portions of 38 states, the District of Columbia and the U.S. Virgin
Islands and contain approximately 135 million people, or about 52% of the U.S.
population. Between 1989 and 1993, population in the territories in the United
States in which the Company operates increased by approximately 5.9% as compared
to an increase in the general United States population of approximately 3.6%
during the same period.
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The Company's territory in the Netherlands has a population of approximately 15
million people. The following maps identify the territories in which the Company
operates:
[MAP]
(MAPS NOT TO SAME SCALE)
PRODUCTS
The Company produces and markets beverage products of The Coca-Cola
Company. The beverage products of The Coca-Cola Company include Coca-Cola,
Coca-Cola classic, caffeine free Coca-Cola classic, diet Coke, caffeine free
diet Coke, Sprite, diet Sprite, cherry Coke, diet cherry Coke, Fanta brand soft
drinks, Fresca, Hi-C brand soft drinks, Mello Yello, diet Mello Yello, Minute
Maid and diet Minute Maid brand soft drinks and Minute Maid Juices To Go, Mr.
PiBB, diet Mr. PiBB, PowerAde, Ramblin' root beer and TAB. The Company also
produces and markets various noncola beverage products under the trademarks of
companies other than The Coca-Cola Company, including, in some markets Dr
Pepper. The Company markets substantially all of the Coca-Cola Trademark
Beverages, as well as TAB, Sprite and diet Sprite, and Minute Maid and diet
Minute Maid orange beverages, in substantially all of its domestic territories,
and markets other products of The Coca-Cola Company and other companies in
selected territories. In addition to producing products for its own territories,
certain of the Company's locations produce some products for sale to other
Coca-Cola bottlers and major fountain accounts.
The Coca-Cola Company and other companies manufacture concentrates, and in
some cases the finished product, for sale to bottlers and to fountain
wholesalers. Bottling and canning operations combine the concentrate with
sweetener and carbonated water, and package the finished product in authorized
bottles, cans and post-mix containers for sale to retailers. The Company
purchases some products, such as PowerAde and Nestea, from contract packers. See
"Marketing" and "Raw Materials" below.
Approximately 69% of the Company's domestic equivalent case sales in 1993
(excluding post-mix) represented caloric products and the balance represented
low calorie products.
MARKETING
The Company sells its products in a variety of cans and bottles authorized
by The Coca-Cola Company and other companies. Fountain syrup for use in post-mix
fountain dispensers is sold in one-gallon and five-gallon containers. In 1993,
excluding post-mix syrup sales, domestic equivalent
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case sales of the Company were packaged approximately 61% in cans, 38% in
nonrefillable bottles and the balance was in various other containers. Post-mix
syrup accounted for approximately 13% of the Company's domestic equivalent case
sales and approximately 6% of revenues during 1993. In the Netherlands, the
approximate packaging mix was 83% in returnable PET bottles and glass, 12% in
steel cans, 1% in nonreturnable glass and the balance in pre-mix and post-mix
containers.
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 and syrups and finished product to the
Company, together with the Company, make substantial advertising expenditures in
all major media to promote sales in the local areas served by the Company. In
addition, the Company benefits from national advertising programs conducted by
The Coca-Cola Company and other beverage companies. In 1993, the Company's local
media advertising expenditures were approximately $39 million, in addition to
cooperative media advertising payments by The Coca-Cola Company and other
beverage companies of approximately $41 million. Certain of the marketing
expenditures by The Coca-Cola Company are made pursuant to annual arrangements
between The Coca-Cola Company and the Company. Although The Coca-Cola Company
has advised the Company that it intends to continue to provide marketing support
in 1994, it is not obligated to do so under either the domestic or international
bottle contracts between The Coca-Cola Company and the Company. See "Domestic
Bottle Contracts" and "International Bottler's Agreement" below.
Sales of the Company's products are seasonal, with the second and third
calendar quarters generally accounting for higher sales volumes than the first
and fourth quarters.
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 bottle
contracts 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 of the
beverage products, other than low-calorie products, of The Coca-Cola Company.
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 requirements for sweeteners for 1994. See "Certain Relationships and
Related Transactions -- Agreements and Transactions with The Coca-Cola
Company -- Sweetener Requirements Agreement" in the Company's 1994 Proxy
Statement, which information is incorporated by reference in Item 13 hereof. The
Company does not directly purchase low-calorie sweeteners because sweeteners for
the low-calorie beverage products of The Coca-Cola Company are contained in the
concentrate purchased by the Company from The Coca-Cola Company.
The Company currently purchases a significant portion of the Company's
requirements for plastic bottles from cooperatives 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 items serve to reduce
or contain costs.
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.
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DOMESTIC BOTTLE CONTRACTS
The Company purchases concentrate and syrup from The Coca-Cola Company and
manufactures, packages, distributes and sells the principal liquid nonalcoholic
refreshment products in its domestic territories in the United States under two
basic forms of bottle contracts with The Coca-Cola Company: bottle contracts
that cover the Coca-Cola Trademark Beverages (the "Cola Bottle Contracts") and
bottle contracts that cover the Allied Beverages (the "Allied Bottle Contracts")
(herein referred to collectively as the "Bottle Contracts"). See "Introduction"
and "Products" above. The Company and each of its wholly owned bottling company
subsidiaries are parties to one or more separate Cola Bottle Contracts and to
various Allied Bottle Contracts. In this section, unless the context indicates
otherwise, a reference to the Company refers to the legal entity, which may be
either the Company or one of its bottling company subsidiaries, which is a party
to the Bottle Contracts with The Coca-Cola Company.
The Cola Bottle Contracts
The Cola Bottle Contracts 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 its territories in authorized containers, which
include various configurations of cans and refillable and nonrefillable bottles.
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.
The pricing terms for concentrates and syrups under the Cola Bottle
Contracts provide for prices determined from time to time by The Coca-Cola
Company in its sole discretion, and pursuant to the Cola Bottle Contracts, The
Coca-Cola Company has established the prices charged to the Company for
concentrates and syrups for Coca-Cola Trademark Beverages annually. The Company
expects that net prices charged by The Coca-Cola Company in 1994 for syrup and
concentrates will increase approximately 2.5% as compared to 1993 prices. Under
the Bottle Contracts, The Coca-Cola Company has no rights to establish the
resale prices at which the Company sells its products.
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 authorized containers in
accordance with the Cola Bottle Contracts and in sufficient quantities to
satisfy fully the demand for these beverages in authorized containers in its
territories; to undertake adequate quality control measures prescribed by The
Coca-Cola Company; to develop and 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 and its affiliates of
their obligations to The Coca-Cola Company. The Cola Bottle Contracts require
the Company to meet annually with The Coca-Cola Company to discuss the Company's
plans for the following year. At such meetings, the Company is obligated to
present plans that set out in reasonable detail its marketing, management and
advertising plans with respect to the Coca-Cola Trademark Beverages for the
year, including financial plans showing that the Company and all of its bottler
affiliates have the consolidated financial capacity to perform their 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 fully satisfy 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
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terminate the Cola Bottle Contract. 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 Bottle
Contract by eliminating the portion of the territory with respect to which such
failure has occurred.
The Coca-Cola Company has no obligation under the Bottle Contracts 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. Although The Coca-Cola Company has advised the Company
that it intends to continue to provide various forms of marketing support in
1994 at a comparable level of support as provided in 1993, it is not obligated
to do so under the Bottle Contracts.
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 bottle contract for the Coca-Cola
Trademark Beverages to conform to the terms of the Cola Bottle Contract
described above.
The Cola Bottle Contracts are perpetual, subject to termination by The
Coca-Cola Company in the event of default by the Company. Events of default with
respect to each Cola Bottle Contract include: (1) production or sale of any cola
product not authorized by The Coca-Cola Company; (2) insolvency, bankruptcy,
dissolution, receivership or the like; (3) any disposition by the Company of any
voting securities of any bottling company without the consent of The Coca-Cola
Company; and (4) any material breach of any obligation of the Company under the
Cola Bottle Contract that remains uncured for 120 days after notice by The
Coca-Cola Company. If any Cola Bottle Contract is terminated, The Coca-Cola
Company has the right to terminate all other Cola Bottle Contracts held by the
bottler which is a party to the terminated contract, as well as the Cola Bottle
Contracts of any other entity which such bottler controls.
In addition, each Cola Bottle Contract held by the Company provides that
The Coca-Cola Company has the right to terminate that Cola Bottle Contract 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 Coca-Cola Enterprises Inc. although
it would apply to the voting securities of each bottling company subsidiary.
The provisions of the Cola Bottle Contracts of the Company which make it an
event of default to dispose of any Cola Bottle Contract 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 Bottle Contracts are
designed to preclude any person not acceptable to The Coca-Cola Company from
obtaining an assignment of a Cola Bottle Contract or from acquiring any voting
securities of the Company's bottling subsidiaries. These provisions will 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.
The terms of the Cola Bottle Contracts generally impose greater obligations
upon the Company and contain events of default and termination and other
provisions that are less favorable to the Company bottlers than the bottle
contracts for Coca-Cola Trademark Beverages currently in effect
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for other Coca-Cola bottlers representing approximately 26% of 1993 domestic
gallon shipments for bottled and canned beverage products of The Coca-Cola
Company.
Supplementary Agreement
In addition to the Cola Bottle Contracts with The Coca-Cola Company
described above, 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 Bottle Contracts. Pursuant to the
Supplementary Agreement, The Coca-Cola Company has agreed to exercise good faith
and fair dealing under the Bottle Contracts; offer marketing support and
exercise its rights under the Bottle Contracts in a manner consistent with its
dealings with comparable bottlers; offer to the Company any material written
amendment to such Bottle Contracts which it offers to any other bottler; and,
subject to certain limitations, sell syrups and concentrates to the Company at
prices not greater than those charged to other bottlers which are parties to
agreements substantially similar to the Bottle Contracts. 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.
The Allied Bottle Contracts
The Allied Bottle Contracts contain provisions that are similar to those of
the Cola Bottle Contracts with respect to pricing, authorized containers,
planning, quality control, transfer restrictions and related matters, and grant
similar exclusive rights with respect to the distribution of the Allied
Beverages for sale in authorized containers in specified territories. Under the
Allied Bottle Contracts, the Company likewise has advertising, marketing and
promotional obligations, but without restriction as to the marketing of
competitive products 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 Bottle Contracts (except under the Allied
Bottle Contracts for Hi-C brand soft drinks and Minute Maid orange beverages) to
elect to market any new beverage introduced by The Coca-Cola Company under the
trademarks covered by the respective Allied Bottle Contracts. The Allied Bottle
Contracts each have a term of ten years and are renewable by the bottler for an
additional ten years at the end of each ten-year period. The initial term for
most of the Company's Allied Bottle Contracts will expire in 1996 and subsequent
years. The Allied Bottle Contracts are subject to termination in the event of
default by the Company. The Coca-Cola Company may terminate an Allied Bottle
Contract in the event of: (1) insolvency, bankruptcy, dissolution, receivership
or the like; (2) termination of the Cola Bottle Contract of the Company by
either party for any reason; or (3) any material breach of any obligation of the
Company under the Allied Bottle Contract that remains uncured for 120 days after
notice by The Coca-Cola Company.
Post-Mix Marketing, Fountain Appointments and Other Similar Arrangements
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
1993, the Company sold and/or delivered such post-mix products in most of its
major markets. Under the terms of the appointments, the Company is authorized to
distribute such syrups to retailers for dispensing to consumers within the
United States. The appointments are terminable by either party without cause
upon ten days' written notice. Unlike the Bottle Contracts, 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 market, the Company
is involved in the sale, distribution and marketing of post-mix syrups in
differing degrees. In some markets, the Company sells syrup on its own behalf,
but the primary
8
11
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 market. See "Certain Relationships and Related
Transactions -- Agency Billing and Delivery Arrangements" in the Company's 1994
Proxy Statement, which information is incorporated by reference in Item 13
hereof.
Other Bottle Agreements
The bottle 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 bottling agreements have limited terms of appointment
and in most instances, prohibit the bottler from dealing in competitive
products. Those agreements contain restrictions generally similar in effect to
those in the Cola Bottle Contracts as to trade names, approved bottles, cans and
labels, sale of imitations and cause for termination.
INTERNATIONAL BOTTLER'S AGREEMENT
CCB Nederland operates in the Netherlands under a Bottler's Agreement dated
December 14, 1992 (the "International Bottler's Agreement") with The Coca-Cola
Company; this agreement has some significant differences from the Bottle
Contracts under which the Company operates domestically.
Unlike the Cola Bottle Contracts, which are perpetual although subject to
early termination by The Coca-Cola Company under certain circumstances described
above, the International Bottler's Agreement is for a term of years, expiring
September 30, 1998 unless terminated earlier as provided therein. If CCB
Nederland has fully complied with the agreement during the initial term, is
"capable of the continued promotion, development and exploitation of the full
potential of the business" and requests 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 International
Bottler's Agreement before the expiration of the stated term upon the
insolvency, bankruptcy, nationalization or similar condition of CCB Nederland or
the occurrence of a default under the International Bottler's Agreement which is
not remedied within 60 days of notice of the default being given by The
Coca-Cola Company. The International Bottler's Agreement may be terminated by
either party in the event foreign exchange is unavailable or local laws prevent
performance.
CCB Nederland has the exclusive right to sell the beverages covered by the
International Bottler's Agreement in refillable glass bottles and PET bottles
within the territory, which is described as the Netherlands, excluding the
Netherlands Antilles. The covered beverages include the Coca-Cola Trademark and
Allied Beverages. 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, including cans, within the territory. CCB Nederland has been
granted a nonexclusive authorization to purchase finished product in cans from
The Coca-Cola Company or its designee and distribute them within its territory.
This authorization is granted in connection with the International Bottler's
Agreement and expires on September 30, 1998, with a provision for an extension
of five years at the discretion of The Coca-Cola Company. The Coca-Cola Company
has granted CCB Nederland a nonexclusive authorization to package and sell
post-mix and pre-mix beverages in the territory; this authorization is
terminable by either party with 90 days' prior notice.
CCB Nederland is prohibited from making sales of the beverages outside of
its territory or to anyone intending to resell the beverages outside the
territory 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 International Bottler's Agreement
contemplates that there may be instances in which large or special buyers have
operations transcending the boundaries of CCB Nederland's territories, and in
furtherance of this, CCB Nederland and The Coca-Cola Company are cooperating in
sales to such buyers.
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12
The Company believes that the International Bottler's Agreement is
substantially similar to other agreements between The Coca-Cola Company and
European bottlers of Coca-Cola Trademark and Allied Beverages.
Similar to the Bottle Contracts under which the Company and its other
subsidiaries operate, the International Bottler's Agreement provides that the
sales of beverage base and other goods to CCB Nederland are at prices which are
set from time to time by The Coca-Cola Company. The Company expects that net
prices charged in 1994 by The Coca-Cola Company for beverage base and other
goods will increase approximately 4% over 1993 prices.
The Coca-Cola Company has no commitment to provide marketing support under
the International Bottler's Agreement, but it has done so in the past and has
advised CCB Nederland that it intends to continue marketing support to CCB
Nederland in 1994 at a similar level as provided in 1993.
COMPETITION
The liquid nonalcoholic refreshment business is highly competitive.
Carbonated soft drink products compete with coffee, water, milk, beer and wine,
sports drinks, bottled waters, tea and juices as well as with noncarbonated soft
drinks, citrus and noncitrus fruit drinks and other beverages. Competitors in
the soft drink industry include bottlers and distributors of nationally
advertised and marketed products, regionally advertised and marketed products,
and chain store and private label soft drinks. The Company estimates that in
1993 the products of The Coca-Cola Company represented approximately 33% of
total food store soft drink sales in all domestic territories in which the
Company operates, and that those of PepsiCo, Inc. represented approximately 30%.
The Company also estimates that in each of its domestic territories, between 55%
and 72% of food store soft drink sales are accounted for by the Company and its
major competitor, which in most territories is the bottler of the soft drink
products of PepsiCo, Inc. Private label and store brands played an increased
role in domestic food store sales in 1993 over previous years and accounted for
a significant percentage of soft drink sales in the Netherlands.
Brand recognition and pricing are significant factors affecting the
Company's competitive position, and the trademarks associated with its products
are the most favorable factor for the Company. Other competitive factors among
bottlers are marketing, distribution methods, service to the trade and the
management of sales promotion activities. Vending machine sales, packaging
changes and contracts with fountain customers are also competitive factors.
The introduction of new products has been another major competitive element
in the liquid nonalcoholic refreshment industry. The Company expects The
Coca-Cola Company to introduce an increasing number of new "alternative"
beverages during 1994. These products include teas, fruit drinks, "natural"
sodas and bottled waters.
EMPLOYEES
As of March 1, 1994, the Company had approximately 26,500 employees, about
850 of whom are in the Netherlands. The Company is a party to collective
bargaining agreements covering approximately 24% of its employees. These
collective bargaining agreements expire at various dates through 1996. The
Company has no reason to believe that it will be unable to renegotiate any of
these agreements on satisfactory terms. Management of the Company believes that
the Company's relations with its employees are generally good.
GOVERNMENTAL REGULATION
Anti-litter measures have been enacted in the states of California,
Connecticut, Delaware, Iowa, Massachusetts, Michigan, New York, Oregon and the
City of Columbia, Missouri, where some of the Company bottlers operate,
prohibiting the sale of certain beverages, whether in refillable or
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nonrefillable containers, unless a deposit is charged by the retailer for the
container. The retailer or redemption center refunds 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 the past, similar legislation has been
proposed but not adopted elsewhere, although the Company anticipates that
additional states or local 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 and interest earned. A
portion of the Massachusetts law had been held unconstitutional by the
Massachusetts Supreme Judicial Court as it related to deposits escheated to the
state prior to the effective date of the law, and the Company, together with
beer distributors and other soft drink bottlers, is negotiating with the
Commonwealth of Massachusetts for the return of such deposits. Michigan also has
a statute, effective January 1, 1990, requiring bottlers to pay to the state
unclaimed container deposits. The Michigan Soft Drink Association filed a
lawsuit challenging the constitutionality of the Michigan law. On February 14,
1991, a Michigan trial court ruled that the sections of the Michigan statute
requiring bottlers to pay unclaimed deposits to the state were unconstitutional.
The Michigan Attorney General appealed that decision. On December 20, 1993, the
Michigan Court of Appeals heard oral arguments in the Michigan Soft Drink
Association's lawsuit.
Excise taxes on sales of soft drinks have been in place in various states
for several years. The states in which the Company operates currently imposing
such taxes are the states of Arkansas, Louisiana, North Carolina, Ohio,
Tennessee and Washington. In addition, three local jurisdictions in which the
Company operates, Baltimore and Montgomery County, Maryland and 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.
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 any such legislation could
be potentially significant if widely enacted.
The domestic 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 and
local environmental statutes and regulations; and various other federal, state
and local statutes regulating the production, packaging, sale, safety,
advertising, labeling and ingredients of such products.
A California law, enacted in 1986 by ballot initiative, 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 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
its soft drink and other products and has concluded that none of its 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, nor can the
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14
Company predict what impact, either in terms of direct costs or diminished
sales, imposition of the law may have.
Substantially all of the facilities of the Company are subject to federal,
state and local provisions regulating 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
federal and state requirements. 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 material adverse effect on the financial condition or results of
operations of the Company.
Several underground fuel storage tanks used by the Company may not be in
compliance with all 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 and remediation of their sites, if necessary.
The Company spent approximately $25 million pursuant to such plan in 1991, $8
million in 1992 and $9 million in 1993. The Company estimates it will spend
approximately $15 million from 1994 through 1998 pursuant to this plan. In the
opinion of management of the Company, any liabilities associated with such
underground fuel storage tanks will not have a material adverse effect on the
financial condition or results of operations of the Company.
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 federal and
state antitrust laws of general applicability. Under the federal 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 legal 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 which the Company operates.
ITEM 2. PROPERTIES
The executive offices of the Company occupy approximately 104,000 square
feet in an office building in Atlanta, Georgia leased from The Coca-Cola
Company. See "Certain Relationships and Related Transactions -- Agreements and
Transactions with The Coca-Cola Company -- Lease of Office Space" in the
Company's 1994 Proxy Statement, which information is incorporated by reference
in Item 13 hereof.
The principal properties of the Company include production facilities,
distribution facilities, administrative offices and service centers. The Company
operates 45 soft drink production facilities, 15 of which are solely production
facilities and 30 of which are combination production/distribution facilities,
and also operates 206 principal distribution facilities. The Company owns all of
its production facilities, except one, and owns 183 of its principal
distribution facilities and leases the others. In the aggregate, the Company's
owned and leased facilities cover approximately 21 million square feet.
Management of the Company believes that its production and distribution
facilities are generally sufficient to meet present needs.
12
15
Seventeen of the facilities owned by the Company are subject to liens to
secure indebtedness in an aggregate principal amount of approximately $13
million at December 31, 1993. Excluding expenditures for bottler acquisitions,
the Company's capital expenditures in 1993 were approximately $353 million.
The Company also owns and operates approximately 23,000 vehicles of all
types used in the sale, production and distribution of its products. The Company
also owns approximately 750,000 coolers, beverage dispensers and vending
machines.
ITEM 3. LEGAL PROCEEDINGS
Immediately prior to the acquisition of Johnston Coca-Cola by the Company
in 1991, a derivative suit (i.e., one which is purportedly brought on behalf of
the Company) was filed by Three Bridges Investment Group in the Chancery Court
of the State of Delaware against The Coca-Cola Company, Johnston Coca-Cola and
the Directors of the Company then in office. The suit is seeking, among other
things, a declaration that it is a proper class action, to enjoin or rescind the
acquisition of Johnston Coca-Cola, damages, costs and attorneys' fees. The
complaint alleged breaches of fiduciary duties on the part of The Coca-Cola
Company and the Directors, and asserted a claim against Johnston Coca-Cola for
allegedly aiding and abetting the alleged wrongdoing. Johnston Coca-Cola has
since been dismissed from the claim, and the remaining defendants have filed
answers denying all substantive allegations. The suit is still in the process of
discovery. Management of the Company believes this action to be without merit
and is defending it vigorously.
Several of the Company's bottling subsidiaries or divisions have been named
as potentially responsible parties ("PRPs") at several federal "Superfund"
sites. In 1991 Johnston Coca-Cola was named by the Environmental Protection
Agency ("EPA") and the Minnesota Pollution Control Agency as one of
approximately 200 PRPs at the Arrowhead site near Duluth, Minnesota. Each PRP
may be jointly and severally liable for the remediation of that site, which has
been estimated to cost as much as $60 million. Johnston Coca-Cola's contribution
of petroleum waste and solvents, which Johnston Coca-Cola had entrusted to third
parties for recycling, appears to represent less than one percent of the total
volume of all used oil contributed by all PRPs. Johnston Coca-Cola believes it
should be successful in limiting its pro rata share of liability for the cleanup
cost to an amount commensurate with the degree of its involvement in the
contamination. As of December 31, 1993, Johnston Coca-Cola had paid a total of
$100,000 to the site committee for investigation and cleanup; it may spend a
like amount in 1994. In 1987 the Coca-Cola Bottling Company of Los Angeles
("CCBCLA") was named by the EPA as a PRP at the Operating Industries, Inc. site
at Monterey Park, California. CCBCLA has contributed approximately $300,000
toward the remediation efforts, which are virtually complete. CCBCLA believes
that any future contributions to the remediation efforts will not be material.
Additionally, in 1992 the Florida Coca-Cola Bottling Company ("Florida CCBC")
was named by the EPA as a PRP at the Peak Oil Site in Tampa, Florida, a location
which was used in the 1960s and 1970s for the refining of used motor oil.
Florida CCBC's involvement with this site has not yet been determined, although
the Peak Oil PRP group has informed Florida CCBC that its ultimate liability
could be between $600,000 and $1.4 million, based on Peak Oil records and
testimony of former employees. Florida CCBC has joined the Peak Oil PRP group to
contest the volume of waste oil attributed to it. It is not currently known
whether Florida CCBC's ultimate liability, if any, would be material. In late
1992 a PRP for the West Memphis Landfill site in West Memphis, Arkansas brought
The Coca-Cola Bottling Company of Memphis, Tenn. ("CCBC Memphis") into the
remediation proceedings as an additional PRP with respect to that site. The site
is alleged to have been used in the 1950s and 1960s as a dump site for by-
products from the reprocessing of used motor oil. The EPA is still in the
initial stages of its investigation and has not issued an estimate for the costs
of remediating the site; however, the PRP naming CCBC Memphis has estimated the
total cost to be as much as $45 million. The involvement of CCBC Memphis has not
yet been determined; accordingly, CCBC Memphis does not yet know whether its
ultimate liability, if any, would be material. During 1993 the Company settled
its liability
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for its alleged contributions to the Kingston Steel Drum site in New Hampshire
and has agreed, subject to the approval of the EPA, to settle its liability
relating to the Commercial Oil Services site near Toledo, Ohio. In each case,
the settlement involves payment by the Company of an immaterial amount.
In August 1992, Phar-Mor, Inc. and a number of its subsidiaries
(collectively "Phar-Mor"), a national retail chain customer of the Company,
filed for reorganization under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court of the Northern District of Ohio, Eastern Division. The
Company's claim against Phar-Mor for unpaid product is approximately $10
million. Additionally, the Company is a party to contracts with Phar-Mor which,
if terminated early, would increase the Company's claim. Management of the
Company believes that any losses resulting from Phar-Mor's bankruptcy will be
fully covered by the Company's existing allowances for uncollectible trade
accounts receivable.
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 material 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.
ITEM 4(A). EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information as of March 1, 1994 regarding the executive
officers of the Company:
PRINCIPAL OCCUPATION DURING
NAME AGE THE PAST FIVE YEARS
- ------------------------------- ---- --------------------------------------------------------
Summerfield K. Johnston, Jr.... 61 Mr. Johnston has been the Vice Chairman of the Board and
Chief Executive Officer of the Company since December
1991. From 1979 to December 1991, he served as Chairman
of the Board and Chief Executive Officer of Johnston
Coca-Cola and served as President of Johnston Coca-Cola
prior to that time.
Henry A. Schimberg............. 61 Mr. Schimberg has been the President, Chief Operating
Officer and a Director of the Company since December
1991. From 1984 to December 1991, he served as President
and Chief Operating Officer of Johnston Coca-Cola.
John R. Alm.................... 48 Mr. Alm has been a Senior Vice President and Chief
Financial Officer of the Company since December 1991 and
has also served as the principal accounting officer
since July 1992. From 1985 to December 1991, he served
as Senior Vice President -- Finance and Administration
of Johnston Coca-Cola.
Bernice H. Winter.............. 45 Ms. Winter has been Vice President and Controller of the
Company since December 1993. She was Vice President,
European Community Group, Coca-Cola International from
1991 to December 1993 and was President, Coca-Cola
Financial Corporation from 1989 to 1991.
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17
PRINCIPAL OCCUPATION DURING
NAME AGE THE PAST FIVE YEARS
- ------------------------------- ---- --------------------------------------------------------
Norman P. Findley.............. 49 Mr. Findley has been Vice President, Domestic and
International Marketing of the Company since July 1993.
From 1989 to July 1993, he served as Vice President,
Marketing of the Company. From 1987 to 1989, he served
as Vice President and Account Manager of the Coca-Cola
USA division of The Coca-Cola Company.
Robert F. Gray................. 46 Mr. Gray has been Vice President, Information Systems of
the Company since February 1992. Mr. Gray was a partner
with KPMG Peat Marwick (accounting firm) from 1984 to
1992.
S. K. Johnston III*............ 40 Mr. Johnston has been Vice President, Regional
Operations of the Company since July 1993. He was Vice
President and General Manager, West Central Region from
December 1992 to July 1993 and served as Vice President,
Human Resources of the Company from February 1992 to
December 1992. From 1987 to 1991, Mr. Johnston served as
Executive Vice President and General Manager of the Mid-
west Coca-Cola Bottling Company division of Johnston
Coca-Cola.
G. David Van Houten, Jr.*...... 44 Mr. Van Houten has been Vice President, Regional Opera-
tions of the Company since July 1993. He was Regional
Vice President and General Manager, Texas Region from
1992 to 1993 and served as Area Vice President, Texas
Area from 1989 to 1991.
Jarratt H. Jones*.............. 40 Mr. Jones has been Vice President, Human Resources of
the Company since October 1993. Mr. Jones was a General
Manager for International Business Machines Corporation
from 1989 to 1993.
John C. Heinrich............... 52 Mr. Heinrich has been Vice President, Operations of the
Company since February 1992. He was the Vice President
for Operations of Johnston Coca-Cola from 1988 to 1991,
and served as Vice President, Operations from 1985 to
1988 of the Central States Coca-Cola Bottling Company
division of Johnston Coca-Cola.
Philip H. Sanford.............. 40 Mr. Sanford has been Vice President, Finance and
Administration of the Company since February 1993. He
had been Vice President and Executive Assistant to the
Chief Executive Officer of the Company since February
1992. From 1985 to 1991, he was Senior Vice President
and Treasurer of Johnston Coca-Cola.
Vicki G. Roman................. 40 Ms. Roman has been Vice President and Treasurer of the
Company since December 1993. She was Treasurer of the
Company from February 1992 to December 1993 and was an
Assistant Treasurer of the Company from 1986 to Febru-
ary 1992.
- ---------------
* Designated an executive officer by the Company's Board of Directors on
February 15, 1994.
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PRINCIPAL OCCUPATION DURING
NAME AGE THE PAST FIVE YEARS
- ------------------------------- ---- --------------------------------------------------------
Lowry F. Kline................. 53 Mr. Kline has been General Counsel of the Company since
December 1991. He has been a partner in the law firm of
Miller & Martin, Chattanooga, Tennessee, since 1970.
Summerfield K. Johnston, Jr. is the father of S. 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, Cincinnati, Midwest,
Pacific, and Philadelphia Exchanges
Share owners of record as of March 1, 1994: 9,037
STOCK PRICES
- --------------------------------------------------------------------------------------------
1993 HIGH LOW
- --------------------------------------------------------------------------------------------
Fourth Quarter 15 5/8 13 1/2
Third Quarter 15 5/8 13 3/4
Second Quarter 15 7/8 12 3/4
First Quarter 15 3/4 11 3/4
- --------------------------------------------------------------------------------------------
1992 HIGH LOW
- --------------------------------------------------------------------------------------------
Fourth Quarter 12 7/8 11 5/8
Third Quarter 13 3/4 11 1/4
Second Quarter 13 3/4 12 5/8
First Quarter 16 1/4 12 5/8
- --------------------------------------------------------------------------------------------
DIVIDENDS
Quarterly dividends in the amount of $0.0125 per share were paid during the
fiscal years 1992 and 1993.
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17
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ITEM 6. SELECTED FINANCIAL DATA
COCA-COLA ENTERPRISES INC.
SELECTED FINANCIAL DATA
FISCAL
- ------------------------------------------------------------------------------------------------------
(In millions except per share data) 1993(A) 1992(B)
- ------------------------------------------------------------------------------------------------------
OPERATIONS SUMMARY
Net operating revenues $5,465 $5,127
Cost of sales 3,372 3,219
- ------------------------------------------------------------------------------------------------------
Gross profit 2,093 1,908
Selling, general and administrative expenses 1,708 1,602
Provision for restructuring -- --
- ------------------------------------------------------------------------------------------------------
Operating income 385 306
Interest expense, net 328 312
Other income (expense), net (2) (6)
Gain on sale of bottling operations -- --
- ------------------------------------------------------------------------------------------------------
Income (loss) before income taxes and cumulative effect of changes in
accounting principles 55 (12)
Income taxes:
Expense (benefit) excluding rate change 30 3
Rate change -- federal 40 --
- ------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of changes
in accounting principles (15) (15)
Cumulative effect of changes in accounting principles -- (171)
- ------------------------------------------------------------------------------------------------------
Net income (loss) (15) (186)
Preferred stock dividend requirements -- --
- ------------------------------------------------------------------------------------------------------
Net income (loss) applicable to common share owners $ (15) $ (186)
- ------------------------------------------------------------------------------------------------------
OTHER OPERATING DATA
Depreciation expense $ 254 $ 227
Amortization expense 165 162
- ------------------------------------------------------------------------------------------------------
SHARE AND PER SHARE DATA
Average common shares outstanding 129 129
Net income (loss) per common share before cumulative effect of changes
in accounting principles $(0.11) $(0.11)
Net income (loss) per common share (0.11) (1.45)
Dividends per common share 0.05 0.05
- ------------------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION
Property, plant and equipment, net $1,890 $1,733
Franchise and other noncurrent assets 6,046 5,651
Total assets 8,682 8,085
Long-term debt 4,391 4,131
Share-owners' equity 1,260 1,254
- ------------------------------------------------------------------------------------------------------
(Notes to Selected Financial Data begin on page 20)
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YEAR
- ------------------------------------------------------------------------------------------------------
1991 1986
- ------------------------- -------------------------
PRO FORMA(C) REPORTED 1990(D) 1989(E) 1988(F) 1987 PRO FORMA(G) REPORTED
- ------------------------------------------------------------------------------------------------------
$5,027 $3,915 $3,933 $3,822 $3,821 $3,327 $3,191 $1,951
3,170 2,420 2,400 2,350 2,303 1,953 1,872 1,138
- ------------------------------------------------------------------------------------------------------
1,857 1,495 1,533 1,472 1,518 1,374 1,319 813
1,535 1,223 1,199 1,162 1,137 1,037 1,024 645
152 152 9 -- 27 -- -- --
- ------------------------------------------------------------------------------------------------------
170 120 325 310 354 337 295 168
312 210 200 193 202 160 188 76
(3) (2) 3 10 12 (4) (9) (7)
-- -- 56 11 104 -- -- --
- ------------------------------------------------------------------------------------------------------
(145) (92) 184 138 268 173 98 85
(17) (9) 91 66 115 85 77 57
-- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
(128) (83) 93 72 153 88 21 28
-- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
(128) (83) 93 72 153 88 21 28
9 9 16 18 10 -- -- --
- ------------------------------------------------------------------------------------------------------
$ (137) $ (92) $ 77 $ 54 $ 143 $ 88 $ 21 $ 28
- ------------------------------------------------------------------------------------------------------
$ 205 $ 160 $ 150 $ 148 $ 143 $ 123 $ 108 $ 68
125 91 86 81 82 72 65 24
- ------------------------------------------------------------------------------------------------------
129 116 119 130 139 140 140 77
$(1.06) $(0.79) $ 0.65 $ 0.41 $ 1.03 $ 0.63 $ 0.15 $ 0.36
(1.06) (0.79) 0.65 0.41 1.03 0.63 0.15 0.36
0.05 0.05 0.05 0.05 0.05 0.05 -- --
- ------------------------------------------------------------------------------------------------------
$1,706 $1,706 $1,373 $1,286 $1,180 $1,038 $ 850 $ 850
4,265 4,265 3,153 2,952 3,001 2,760 2,539 2,539
6,677 6,677 5,021 4,732 4,669 4,250 3,811 3,811
4,091 4,091 2,537 2,305 2,211 2,157 1,804 1,804
1,442 1,442 1,627 1,680 1,808 1,526 1,448 1,448
- ------------------------------------------------------------------------------------------------------
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22
NOTES TO SELECTED FINANCIAL DATA
The Company changed its fiscal year end in 1991, from the Friday nearest
December 31 to a calendar year end. Accordingly, fiscal years presented are the
periods ended December 31, 1993, 1992 and 1991, December 28, 1990, December 29,
1989, December 30, 1988, January 1, 1988 and January 2, 1987. The Company
acquired subsidiaries in each year presented and divested subsidiaries in
certain periods. Such transactions, except for (i) the acquisition of Johnston
Coca-Cola Bottling Group, Inc. ("Johnston"), (ii) gains from the sale of certain
bottling operations, and (iii) acquisitions in 1986, did not significantly
affect the Company's operating results for any 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. Reclassifications have been made to certain prior period amounts to
conform to the 1993 presentation.
(A) On August 10, 1993, the Omnibus Budget Reconciliation Act was signed into
law resulting in an increase in the corporate marginal income tax rate from
34% to 35%. The resulting one-time adjustment increased deferred taxes and
income tax expense by approximately $40 million ($0.31 per common share).
(B) In the fourth quarter of 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 ("Employers' Accounting for Postretirement
Benefits Other Than Pensions") and Statement of Financial Accounting
Standards No. 109 ("Accounting for Income Taxes"), retroactive to January
1, 1992, resulting in one-time charges to income reflecting the cumulative
prior years' effect of changes in these accounting principles. Fiscal
periods prior to 1992 were not restated for these accounting changes.
(C) The pro forma Operations Summary, Other Operating Data, and Share and Per
Share Data give effect to the acquisition of Johnston in December 1991,
assuming such acquisition was consummated as of the beginning of 1991.
(D) In June 1990, the Company sold its interest in Coca-Cola Bottling Company
of Ohio and Portsmouth Coca-Cola Bottling Company. These operations were
sold to Johnston and, as a result of the 1991 acquisition of Johnston, have
been reacquired by the Company.
(E) In February 1989, the Company sold its wholly owned subsidiaries, Goodwill
Bottling Ltd. and Goodwill Bottling North Ltd.
(F) In December 1988, the Company sold a wholly owned subsidiary, The Coca-Cola
Bottling Company of Mid-America, Inc. The Mid-America operations were sold
to Johnston and, as a result of the 1991 acquisition of Johnston, have been
reacquired by the Company.
(G) The pro forma Operations Summary, Other Operating Data, and Share and Per
Share Data give effect to 1986 acquisitions as though they had been
completed at the beginning of 1986.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DESCRIPTION OF BUSINESS
Coca-Cola Enterprises Inc. (the "Company") is the world's largest producer
and distributor of bottle and can soft drink products of The Coca-Cola Company.
We are the Coca-Cola bottler within 38 states, the District of Columbia, the
U.S. Virgin Islands and the Netherlands. Within the United States, we operate
through exclusive and perpetual rights in territories encompassing approximately
52% of the population and accounting for approximately 55% of all Coca-Cola
bottled and canned products sold. Approximately 89% of our revenues are derived
from the sale of The Coca-Cola Company products.
Principal Stock Ownership and Relationship with The Coca-Cola Company
Management has a significant vested interest in the success of our Company.
Summerfield K. Johnston, Jr., our chief executive officer and vice chairman of
our Board of Directors, and his family
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were the principal owners of Johnston Coca-Cola Bottling Group, Inc.
("Johnston") and were the recipients of virtually all of the Coca-Cola
Enterprises common stock issued in the merger with Johnston. As a result, Mr.
Johnston and his family hold approximately 9% of our outstanding stock. All
directors and officers of the Company as a group hold approximately 10% of our
outstanding stock.
We also encourage employee stock ownership below the director and officer
level. In 1993, we established stock ownership guidelines for all officers and
senior management of the Company. Through implementation of these policies, our
intent is to encourage employees to have a share-owner focus in making
day-to-day operating decisions.
We benefit from a special relationship with The Coca-Cola Company. The
Coca-Cola Company is the supplier of the raw material beverage base for the
majority of our products and is the principal marketer of these products
providing us with a variety of media advertising and marketing program support.
The Chairman and other members of our Board of Directors are current or former
executives of The Coca-Cola Company, complementing other accomplished men and
women who comprise directors elected by our share owners. The Coca-Cola Company
is our largest single share owner, holding approximately 44% of our outstanding
stock. The Company's success, while principally dependent upon our expertise in
bottling operations, is enhanced by this relationship.
International Expansion
1993 was a significant milestone in the Company's existence. It was the
year we substantially completed the operational and organizational restructuring
of the Company, after the merger with Johnston Coca-Cola Bottling Group, Inc. in
1991, and the year that we began our expansion outside the United States.
International markets provide an increased opportunity for long-term volume
growth because of existing low consumption rates when compared to the domestic
market. Our first international acquisition was completed in June 1993 through
the acquisition of Coca-Cola Beverages Nederland B.V. ("CCBN") in the
Netherlands from The Coca-Cola Company. Through this acquisition, we purchased
the franchise rights to distribute all the canned and bottled products of The
Coca-Cola Company in the Netherlands.
The Coca-Cola Company completed its acquisition of all outside ownership
interests of CCBN during 1993. The Coca-Cola Company then began discussions with
us to acquire CCBN, we believe, principally because of the successes we have
achieved domestically and the opportunities for growth in this region through
efficient management. We believe the operating strategies we have developed in
the U.S. market to increase volume and advance market share can also be employed
successfully in other international markets.
We are interested in continuing international expansion given the right
opportunities and provided they do not dilute our current business. Our plans
for future international expansion will be guided by the availability of
additional franchise opportunities that we believe will grow share-owner value.
Business Strategy for Enhancing Share-Owner Value
We can best achieve our goal of enhancing share-owner value by increasing
long-term operating cash flows through the balancing of growth in sales volume
with optimal gross profit margins. Careful consideration will be given to all
the potential uses of these operating cash flows, including strategic
acquisition opportunities.
The liquid nonalcoholic refreshment business continues to be increasingly
competitive. This increased competition strengthens our belief that market share
is the principal determinant of long-term profitability. Improvements in market
share, together with increases in per capita consumption and population,
determine case sales growth. Our competitive strategy continues to be to obtain
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profitable increases in case sales by balancing case sales growth with improved
margins and sustainable increases in market share. We do not intend to implement
a strategy of liquidating market share to realize short-term profits. Our
objective is to increase our share of liquid nonalcoholic refreshment sales and
per capita consumption of our products through the development of innovative
marketing programs and improved execution at the local level.
In the past seven years, the Company has acquired numerous bottlers for an
aggregate purchase price of approximately $5.6 billion. As a result, the Company
currently maintains a high degree of financial leverage. Our capital structure,
financial position and cash flow streams allow us to maintain flexibility for
acquisitions and capital projects that offer an acceptable rate of return and an
opportunity to implement our operating strategies. We continually evaluate
alternative methods of financing acquisitions, including the use of preferred
and common stock.
OPERATING RESULTS
Summary of One-Time Charges
Operating results for each year in the period from 1991 through 1993 were
affected by significant one-time charges which materially impact reported
results of operations and net income per common share. In 1993, the Omnibus
Budget Reconciliation Act was signed into law resulting in a one-time charge for
the effect of the increase in the income tax rate from 34% to 35% on deferred
income taxes. In 1992, we adopted Financial Accounting Standards No. 106 ("FAS
106") and Financial Accounting Standards No. 109 ("FAS 109") resulting in
significant one-time adjustments for the cumulative effect of changes in
accounting principles and increased expense under FAS 106. The increased expense
under FAS 106 for 1993 was mitigated by the redesign of our postretirement
benefit plans in 1993. In 1991, we recognized a provision for restructuring the
Company after the merger with Johnston. Each of these items is discussed in
greater detail in the following highlights of operating results.
We believe comparisons of operating results are more meaningful when we
exclude these one-time items. The following table identifies the effects on
reported earnings of the increase in the income tax rate in 1993, FAS 106 and
FAS 109, the effects of postretirement benefit plan amendments and restructuring
charges on an after-tax basis.
- ------------------------------------------------------------------------------------------------
1993 1992 1991
---------------- ---------------- ----------------
PER PER PER
(In millions except per share NET COMMON NET COMMON NET COMMON
data) INCOME SHARE INCOME SHARE INCOME SHARE
- ------------------------------------------------------------------------------------------------
Net income (loss) applicable to
common share owners $(15) $(0.11) $ (186) $(1.45) $ (92) $(0.79)
FAS 106 increased expense -- -- (1) (18) (0.14) -- --
Tax legislation one-time charge (40) (0.31) -- -- -- --
Restructuring charges -- -- -- -- (100) (0.86)
- ------------------------------------------------------------------------------------------------
25 0.20 (168) (1.31) 8 0.07
Cumulative effect of changes in
accounting principles:
FAS 106 -- -- (148) (1.15) -- --
FAS 109 -- -- (23) (0.18) -- --
- ------------------------------------------------------------------------------------------------
Net income applicable to common
share owners, as adjusted $ 25 $0.20 $ 3 $0.03 (2) $ 8 $0.07
- ------------------------------------------------------------------------------------------------
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(1) The increased expense under FAS 106 for 1993 was entirely offset by the
accounting treatment for the plans' redesign in 1993.
(2) Does not sum to the total because of rounding of individual amounts.
The consolidation and redesign of our postretirement benefit plans was
completed in the first quarter of 1993 through plan amendments as of January 1,
1993. These plan amendments had the effect of decreasing the accumulated
postretirement benefit obligation at January 1, 1993 from approximately $312
million to $164 million. This reduction of $148 million in the postretirement
benefit obligation is being amortized over the average service life of plan
participants (approximately 17 years) as a reduction in net periodic benefit
cost. The accounting treatment for these plan amendments had the effect of
reducing postretirement benefit expense by approximately $31 million ($0.15 per
common share) in 1993.
On August 10, 1993, the Omnibus Budget Reconciliation Act was signed into
law. The primary effect on our operations was the increase in the corporate
marginal income tax rate from 34% to 35%. The adjustment in 1993 to our deferred
tax liability for the effect of the federal tax increase resulted in a one-time
charge of approximately $40 million ($0.31 per common share).
We adopted FAS 106 and FAS 109 in the fourth quarter of 1992, retroactive
to January 1, 1992. Although these new accounting principles had no effect on
cash flows, they affected the reporting of our operating results. The adoption
of FAS 106 changed our practice of recognizing the cost of postretirement
benefits expense as claims are paid to the practice of accruing these costs
during the period employees provide service to the Company. The cumulative
effect of adopting FAS 106 as of January 1, 1992 resulted in a one-time, noncash
earnings charge of $148 million. The adoption of FAS 106 in 1992 also increased
1992 expense by approximately $30 million.
The adoption of FAS 109 changed our method of accounting for income taxes
from an income statement approach to a balance sheet approach. We recognized, as
of January 1, 1992, the FAS 109 prior years' effect of $23 million as the
cumulative effect of this change. This new accounting principle decreased pretax
income and correspondingly decreased income tax expense by approximately $38
million in 1992 and 1993, with no effect on annual net income. Pretax income
decreased from 1991 because of increased amortization expense resulting from a
$1.4 billion increase in the franchise asset basis. Income tax expense for 1993
and 1992 decreased from 1991 because of the additional amortization of a
deferred benefit.
In 1991, we recognized a $152 million provision for restructuring relating
to standardization of operations following the merger with Johnston. The
restructuring charge related primarily to the reconfiguration of sales and
distribution centers, standardization of information systems, and severance and
relocation costs associated with the decentralization of our organizational
structure and elimination of redundant staff and operating positions.
Operating Results Overview
The most meaningful operating results comparisons between years reflect (i)
1993 excluding the impact of the Omnibus Budget Reconciliation Act on deferred
income taxes; (ii) 1992 excluding noncash charges resulting from the adoption of
FAS 106 and FAS 109; (iii) pro forma 1991 excluding the restructuring charge of
$152 million; and (iv) 1993, 1992 and 1991 adjusted for the effects of
acquisitions, if significant. Accordingly, we refer to "comparable" results in
the following discussions as the results of operations excluding the impact of
the above items.
Revenues, Pricing and Volume: Revenues are comprised principally of
wholesale sales and agency sales. Wholesale sales are sales to retailers and
accounted for approximately 96% of our net sales and 99% of our gross profit.
Agency sales are sales to other independent bottlers. Comparable net operating
revenues for 1993 increased approximately 4% over 1992. This increase results
from an approximate 1/2% increase in net pricing and an approximate 2% increase
in bottle/can case
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sales volume. Actual net operating revenues for 1993 increased approximately 7%
over 1992. This increase was driven by an approximate 5 1/2% increase in actual
bottle/can physical case sales volume for 1993 we achieved through sales volume
increases and the effects of acquisitions in 1993 and 1992.
The net price per case increase for 1993 is partially the result of shifts
into higher priced products and packages. The sales volume growth we experienced
on a comparable basis in 1993 was aided by the introductions of new products in
1993 and our marketing efforts for these products. The introductions of PowerAde
and Minute Maid Juices To Go were successes in 1993, and we are optimistic about
the impact these products will have on 1994.
Volume growth in 1993 and 1992 for The Coca-Cola Company products and the
soft drink industry was significantly influenced by the fountain segment of the
business. We experienced a growth in fountain sales, excluding the effects of
acquisitions, of approximately 8 1/2% and 9% in 1993 and 1992, respectively.
This increase in fountain sales, however, does not have a significant impact on
our operating results because operating margins on fountain sales are relatively
low.
Net operating revenues for 1992 increased 31% over the same period of 1991
principally from the acquisition of Johnston. Comparable net operating revenues
for 1992 increased approximately 2% from 1991. This increase results primarily
from an approximate 2 1/2% increase in net pricing for wholesale sales, reduced
by an approximate 1/2% decrease in bottle/can case sales volume. The decrease
in 1992 bottle/can physical case sales volume from 1991 resulted principally
from the economic environment, higher prices and unseasonably cool, damp weather
in many of the Company's territories.
Cost of Sales: Cost of sales per physical case for 1993, excluding the
effect of fountain sales, decreased approximately 1 1/2% over 1992. This
decrease is primarily attributable to favorable packaging and ingredient costs.
Comparable cost of sales per unit for 1993, excluding fountain sales, decreased
approximately 2% from 1992. Comparable cost of sales per case for 1992,
excluding fountain sales, increased approximately 1/2% from 1991. This increase
resulted principally from increased concentrate costs in 1992.
We expect concentrate costs to increase by approximately 2 1/2% in 1994,
with anticipated increases in other ingredient costs as well. These increased
costs, however, will be mitigated somewhat by anticipated savings in packaging
costs. We expect bottle/can unit cost of sales in 1994 to increase moderately
over 1993 due to the effect of these anticipated changes.
Cash Operating Profit and Operating Income: We believe the best measure of
the Company's performance is a comparison of cash operating profit (operating
income before the deduction for depreciation and amortization). Cash operating
profit growth encompasses various combinations of volume, price and cost
elements. We attempt to maximize cash operating profit growth by managing volume
and margins in response to existing market conditions. We do not predict trends
in these factors independently, but instead manage these factors over time to
achieve our cash operating profit goals.
Comparable cash operating profit and comparable operating income increased
approximately 8% and 12% over 1992, respectively. Actual cash operating profit
and operating income for 1993 increased approximately 16% and 26% over 1992,
respectively. Comparable cash operating profit and comparable operating income
for 1992 increased approximately 9% and 11% over 1991, respectively. Actual cash
operating profit and operating income for 1992, after giving effect in 1991 to
the acquisition of Johnston, increased approximately 39% and 80%, respectively,
over 1991.
We believe that revenue growth for 1994 will exceed reported 1993 revenue
growth of 7%, balanced between volume and price which, when combined with cost
containment measures, will achieve an approximate 8% growth in cash operating
profit, excluding the effect of acquisitions. We
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expect price increases in excess of any cost increases and volume growth for
bottle/can in excess of 1993 performance. We anticipate that net income and
earnings per common share, driven principally by our anticipated growth in cash
operating profit, will increase by more than 50% over 1993 results excluding the
$40 million one-time tax charge.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses for 1993 increased approximately 6 1/2% from 1992
resulting primarily from the increased case sales volume and acquisitions during
the year. Comparable selling, general and administrative expenses as a
percentage of sales for 1993 increased approximately 1/2% from 1992, primarily
as a result of increases in administrative expenses. We attribute this increase
to the cost of operating a fully implemented decentralized organizational
structure.
Selling, general and administrative expenses for 1992 increased
approximately 31% from 1991 as a result of the acquisition of Johnston and
increased expense related to the adoption of FAS 106 and FAS 109. Comparable
selling, general and administrative expenses as a percentage of sales for 1992
decreased approximately 1/2% from 1991. This decrease reflects our cost control
efforts coupled with the fixed nature of certain costs.
In response to the general decline in long-term interest rates during 1993,
we decreased the rate used to discount our postretirement and pension benefit
obligations. The change in the discount rate will increase net periodic benefit
cost by approximately $4 million in 1994. A 0.25% additional change in the
discount rate would increase or decrease, as appropriate, postretirement and
pension benefit expense in the aggregate for 1994 by approximately $1.4 million.
In 1991, we recognized a $152 million ($0.86 per common share) provision
for restructuring as a result of the Johnston merger. This restructuring charge
related primarily to the standardization of information systems, reconfiguration
of sales and distribution centers, and severance and relocation costs associated
with decentralizing our organizational structure and elimination of redundant
staff and operating positions. Our restructuring plan is now substantially
complete and we believe we are beginning to realize the effects of the
restructuring in our improved financial operating performance which occurred
despite the significant organizational distractions and difficult economic
environment.
Interest Expense: The increase in interest expense for 1993 over 1992
reflects (i) an increase in the average debt balance resulting from acquisitions
and (ii) a higher weighted average borrowing rate resulting principally from
fixed rate financings which occurred during 1992. The increase in net interest
expense for 1992 over 1991 reflected higher average debt balances resulting from
the acquisition of Johnston. Our blended borrowing rates for 1993, 1992 and 1991
were approximately 7.6%, 7.5% and 7.8%, respectively. Net interest expense for
1994 should not be appreciably different from 1993 after adjusting 1993 to give
effect to ownership of acquired companies for a full year.
Income Taxes: Changes in enacted tax rates are accounted for under FAS 109
as an adjustment to income tax expense in the period the change is effected. The
adjustment to deferred taxes to recognize the effect of the Omnibus Budget
Reconciliation Act resulted in a one-time charge of approximately $40 million
($0.31 per common share) in 1993 to increase the deferred tax liability existing
at the date of enactment for the effect of the rate change. Additionally, our
annual estimated effective tax rate was increased by an amount approximating the
1% marginal rate increase under the law. Other components of the law are not
expected to have a material impact on the Company.
Our effective tax rates for 1993, 1992 and 1991 were approximately 55%
(excluding the one-time charge), 25% and 10%, respectively. The change in the
effective tax rate from 1992 to 1993 is principally due to the level of pretax
income in each period and the relationship of
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nondeductible expenses to pretax income. 1991 was not restated for the adoption
of FAS 109 in 1992.
Operating Contingencies
We are subject to laws and regulations pertaining to special soft drink
taxes, forced deposit legislation, restrictive packaging measures and
escheats/unclaimed deposits. We have taken actions to mitigate the adverse
effects resulting from legislation which imposes additional costs on the Company
and to inform consumers of the possible resulting effect on product pricing.
Similar laws and regulations are receiving increased attention by the
legislatures of other states and by the Congress of the United States. We are
presently unable to quantify the impact on current and future operations which
may result from legislation enacted in the future, but we view this legislation
to be potentially significant if widely enacted.
Substantially all of the facilities of the Company are subject to federal,
state and local provisions regulating fuel storage tanks and the environmental
discharge of materials. Certain underground fuel storage tanks used in their
present condition may not be in compliance with all applicable requirements for
the continued maintenance and use of such tanks. Virtually all of such tanks
were acquired through acquisitions. We have established plans for the testing,
removal, replacement or repair of our underground fuel storage tanks and
remediation of their sites, if necessary. We are committed to maintaining our
environment and protecting our natural resources, and to achieving full
compliance with all applicable laws and regulations.
Expenditures related to federal and state requirements for remediation and
maintenance of underground fuel storage tanks approximated $9 million, $8
million and $25 million during 1993, 1992 and 1991, respectively. We believe our
reserves established for environmental remediation costs are adequate to provide
for noncapitalizable costs expected to be incurred in connection with completion
of the Company's multiyear remediation program. Cash expenditures remaining to
complete the program are expected to aggregate approximately $15 million through
1998.
The Company has been named as a potentially responsible party ("PRP") for
the costs of remediation of hazardous waste at federal "Superfund" sites in
Arkansas, California, Florida, Minnesota, New Hampshire and Ohio. Under current
law, the Company's liability for clean up of such sites may be joint and several
with other PRP's, regardless of the extent of the Company's use in relation to
other users. In each case, the Company has determined that to the extent that it
has any responsibility for hazardous waste deposited at any site, the amounts of
such deposits are minimal compared to those of other financially responsible
PRP's, and as a result, we believe the Company's ultimate liability will not
have a material effect on its financial position or results of operations.
The Congress of the United States is currently considering health care
reform proposals which would result in significant changes in health care
delivery, potentially increasing the amount of health care expenditures that
companies will be required to make. Because of the present uncertainty as to the
outcome of any proposed legislation, we cannot predict the impact any such
legislation may have on future results of operations.
FINANCIAL POSITION
Cash and cash equivalents increased approximately $5 million in 1993. Our
principal sources of cash consisted of (i) those provided from operations ($493
million) and (ii) the issuance of debt ($822 million). Our primary uses of cash
were (i) additions to property, plant and equipment ($353 million); (ii)
acquisitions of bottling companies ($287 million); and (iii) payments on debt
($668 million).
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On June 30, 1993, we acquired, from The Coca-Cola Company, the stock of (i)
Coca-Cola Beverages Nederland B.V. in the Netherlands; (ii) Roddy Coca-Cola
Bottling Company, Inc. in Knoxville, Tennessee; and (iii) Coca-Cola Bottling
Company of Johnson City, in Johnson City, Tennessee for an aggregate purchase
price of approximately $366 million in cash and assumed debt. On December 15,
1993, we acquired the outstanding stock of Coca-Cola Bottling Company of
Northeast Arkansas, Inc. for approximately $54 million in preferred stock and
assumed debt. These acquisitions were accounted for using the purchase method.
The assets and liabilities of the acquired companies are included in the
consolidated balance sheet at their estimated fair values representing a
preliminary allocation of the purchase price.
The increase in trade accounts receivable results primarily from the effect
of current year acquisitions. Excluding the effect of current year acquisitions,
inventories in 1993 decreased from 1992 as a result of increased purchases of
ingredients during 1992, including concentrate for the production of TAB clear
which was introduced to the market in January 1993. Amounts due from The
Coca-Cola Company result from the timing of receipts for marketing support
payments and are net of approximately $37 and $34 million in amounts payable for
purchases of ingredients in 1993 and 1992, respectively. The increase in
franchise and other noncurrent assets results primarily from current year
acquisitions.
The decrease in current maturities of long-term debt is a result of
scheduled maturities during 1993. Total long-term debt increased during 1993
reflecting a $325 million increase in commercial paper, the proceeds of which
were used primarily to finance current year acquisitions. The increase in
deferred income taxes from 1992 is due to a one-time charge of $40 million
resulting from newly enacted tax legislation and the tax effects of basis
differences from current year acquisitions.
During 1993, we issued preferred stock in connection with the acquisition
of a bottling business. We believe the use of equity financing as an alternative
to debt provides increased flexibility for both negotiating and funding future
acquisitions while maintaining a desired debt to equity ratio.
As a result of our entrance into the international marketplace, the Company
is exposed to fluctuations in the exchange rate for the Dutch florin. Currently,
gains and losses resulting from translation of foreign currency transactions are
not material. Adjustments resulting from translation of our net investment in
the Netherlands operation are recorded in the cumulative translation adjustment
component of share-owners' equity.
Our commercial paper program is supported by a $1 billion revolving bank
credit agreement maturing in April 1996 and two short-term credit facilities.
There are no borrowings currently outstanding under these agreements; however,
under the commercial paper program supported by these agreements, an aggregate
$522 million was outstanding at December 31, 1993.
We believe that adequate capital resources are available to satisfy our
capital expenditure program and to satisfy scheduled maturities of debt
obligations. We currently expect 1994 capital expenditures to aggregate $330 to
$370 million. Our sources of capital include, but are not limited to, the
issuance of public or private placement debt, bank borrowings and the issuance
of certain equity securities. We believe that the Company is able to generate
sufficient cash flow to maintain current operations.
In November 1992, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," requiring the accrual of benefits to former or inactive employees
after employment but before retirement. The Company has historically accrued for
postemployment benefit obligations in accordance with the requirements under the
Statement, therefore no adjustments are required.
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In May 1993, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," requiring a fair value approach to valuing certain debt and
marketable equity securities. The Company does not hold significant investments
in debt and equity securities which fall within the scope of the Statement,
therefore no adjustments are required.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------
(In millions except per share data) 1993 1992 1991
- ---------------------------------------------------------------------------------------------
NET OPERATING REVENUES $5,465 $5,127 $3,915
Cost of sales (includes purchases from The Coca-Cola Company of
approximately $1,392, $1,308 and $949) 3,372 3,219 2,420
- ---------------------------------------------------------------------------------------------
GROSS PROFIT 2,093 1,908 1,495
Selling, general and administrative expenses 1,708 1,602 1,223
Provision for restructuring -- -- 152
- ---------------------------------------------------------------------------------------------
OPERATING INCOME 385 306 120
Interest expense, net 328 312 210
Other nonoperating deductions, net 2 6 2
- ---------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 55 (12) (92)
Income taxes:
Expense (benefit) excluding rate change 30 3 (9)
Rate change -- federal 40 -- --
- ---------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES (15) (15) (83)
Cumulative effect of accounting changes:
Postretirement benefits (net of income taxes of $91) -- (148) --
Income taxes -- (23) --
- ---------------------------------------------------------------------------------------------
NET INCOME (LOSS) (15) (186) (83)
Preferred stock dividend requirements -- -- 9
- ---------------------------------------------------------------------------------------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARE OWNERS $ (15) $ (186) $ (92)
- ---------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 129 129 116
- ---------------------------------------------------------------------------------------------
PER SHARE DATA:
Income (loss) before cumulative effect of accounting changes $(0.11) $(0.11) $(0.71)
Cumulative effect of accounting changes:
Postretirement benefits -- (1.15) --
Income taxes -- (0.18) --
Preferred stock dividends -- -- (0.08)
Net income (loss) applicable to common share owners (0.11) (1.45) (0.79)
- ---------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
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COCA-COLA ENTERPRISES INC.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------
DECEMBER 31,
-------------------
(In millions except share data) 1993 1992
- --------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents, at cost (approximates market) $ 11 $ 6
Amounts due from The Coca-Cola Company 13 12
Trade accounts receivable, less allowances of $33 and $31, respectively 442 391
Inventories 200 212
Prepaid expenses and other assets 80 80
- --------------------------------------------------------------------------------------------
Total Current Assets 746 701
PROPERTY, PLANT AND EQUIPMENT
Land 163 179
Buildings and improvements 622 594
Machinery and equipment 2,132 1,851
- --------------------------------------------------------------------------------------------
2,917 2,624
Less allowances for depreciation 1,121 973
- --------------------------------------------------------------------------------------------
1,796 1,651
Construction in progress 94 82
- --------------------------------------------------------------------------------------------
1,890 1,733
FRANCHISE AND OTHER NONCURRENT ASSETS 6,046 5,651
- --------------------------------------------------------------------------------------------
$8,682 $8,085
- --------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
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COCA-COLA ENTERPRISES INC.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------
DECEMBER 31,
-------------------
1993 1992
- --------------------------------------------------------------------------------------------
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued expenses $ 699 $ 682
Current maturities of long-term debt 308 622
- --------------------------------------------------------------------------------------------
Total Current Liabilities 1,007 1,304
LONG-TERM DEBT 4,083 3,509
DEFERRED INCOME TAXES 1,831 1,567
OTHER LONG-TERM OBLIGATIONS 501 451
SHARE-OWNERS' EQUITY
Preferred stock, $35 stated value -- Authorized - 1,000,000 shares;
Issued - 1,000,000 shares in 1993 29 --
Common stock, $1 par value -- Authorized - 500,000,000 shares;
Issued - 142,182,183 shares and 141,569,162 shares, respectively 142 142
Paid-in capital 1,280 1,267
Reinvested earnings 9 32
Cumulative translation adjustment (3) --
Common stock in treasury, at cost (13,004,598 shares and
12,228,298 shares, respectively) (197) (187)
- --------------------------------------------------------------------------------------------
1,260 1,254
- --------------------------------------------------------------------------------------------
$8,682 $8,085
- --------------------------------------------------------------------------------------------
31
34
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
CUMULATIVE SHARE-
THREE YEARS ENDED DECEMBER 31, 1993 PREFERRED COMMON PAID-IN REINVESTED TRANSLATION TREASURY OWNERS'
(In millions except per share data) STOCK STOCK CAPITAL EARNINGS ADJUSTMENT STOCK EQUITY
- ---------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 28, 1990 $ 250 $141 $ 1,263 $ 382 $-- $ (409) $ 1,627
Issuance of shares to effect merger -- -- (2) (59) -- 222 161
Redemption of preferred stock (250) -- -- -- -- -- (250)
Exercise of employee stock options -- -- 2 -- -- -- 2
Issuance of shares under stock award
plan -- -- 2 -- -- -- 2
Unamortized cost of restricted
shares issued -- -- (1) -- -- -- (1)
Dividends on preferred stock
(per share -- $3,983.49) -- -- -- (10) -- -- (10)
Dividends on common stock
(per share -- $0.05) -- -- -- (6) -- -- (6)
Net loss -- -- -- (83) -- -- (83)
- ---------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1991 -- 141 1,264 224 -- (187) 1,442
Issuance of shares under stock award
plan -- 1 11 -- -- -- 12
Unamortized cost of restricted
shares issued -- -- (12) -- -- -- (12)
Amortization of restricted shares
cost -- -- 4 -- -- -- 4
Dividends on common stock
(per share -- $0.05) -- -- -- (6) -- -- (6)
Net loss -- -- -- (186) -- -- (186)
- ---------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1992 -- 142 1,267 32 -- (187) 1,254
Issuance of shares under stock award
plan -- -- 6 -- -- -- 6
Unamortized cost of restricted
shares issued -- -- (6) -- -- -- (6)
Amortization of restricted shares
cost -- -- 2 -- -- -- 2
Conversion of executive deferred
compensation to equity -- -- 9 -- -- -- 9
Purchase of common stock for
treasury -- -- -- -- -- (17) (17)
Issuance of preferred stock to
effect acquisition 29 -- -- -- -- -- 29
Issuance of treasury stock to effect
acquisition -- -- -- (2) -- 7 5
Exercise of employee stock options -- -- 2 -- -- -- 2
Translation adjustments -- -- -- -- (3) -- (3)
Dividends on common stock
(per share -- $0.05) -- -- -- (6) -- -- (6)
Net loss -- -- -- (15) -- -- (15)
- ---------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1993 $ 29 $142 $ 1,280 $ 9 $(3) $ (197) $ 1,260
- ---------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
32
35
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------
(In millions) 1993 1992 1991
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (15) $ (186) $ (83)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Cumulative effect of accounting changes -- 171 --
Depreciation 254 227 160
Amortization 165 162 91
Deferred income taxes 60 (21) (16)
Changes in current assets and current liabilities 22 (116) 72
Other nonoperating cash flows 7 42 37
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 493 279 261
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (353) (291) (238)
Proceeds from the sale of property, plant and equipment 19 20 16
Acquisitions of companies, net of cash acquired (amounts paid to
The Coca-Cola Company were $260, $11 and $81) (287) (27) (222)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (621) (298) (444)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of debt 822 2,218 1,091
Payments on debt (668) (2,251) (580)
Redemption of preferred stock -- -- (250)
Purchase of treasury stock (17) -- --
Dividends on common and preferred stock (6) (6) (16)
Proceeds from issuance of common stock 2 -- 2
- --------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 133 (39) 247
- --------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
DURING THE YEAR 5 (58) 64
Cash and cash equivalents at beginning of year 6 64 --
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 11 $ 6 $ 64
- --------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
33
36
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS AND OWNERSHIP
The Company operates in a single industry segment, which encompasses the
manufacture, distribution and marketing of liquid nonalcoholic refreshments
under rights to acquired franchise territories. The Coca-Cola Company owns
approximately 44% of the Company's outstanding common shares.
PRINCIPAL ACCOUNTING POLICIES
Significant accounting policies and practices of the Company follow:
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 fiscal years presented are the fiscal periods ended December 31, 1993,
1992 and 1991. Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.
Net Income (Loss) Per Common Share: Net income (loss) per common share is
computed by dividing net income (loss) less dividends on preferred stock by the
weighted average number of common shares outstanding.
Cash Equivalents: Cash equivalents include all highly liquid debt
instruments purchased with original maturities of less than three months.
Concentrations of Credit Risk: The Company sells products to chain store
and other customers and extends credit based on an evaluation of the customer's
financial condition, generally without requiring collateral. Exposure to losses
on receivables varies by customer principally due to the financial condition of
each customer. The Company monitors exposure to credit losses and maintains
allowances for anticipated losses.
Inventories: Inventories are valued at the lower of cost or market. Cost
is computed principally on the last-in, first-out (LIFO) method.
Property, Plant and Equipment: Property, plant and equipment is stated at
cost, less allowances for depreciation. Depreciation expense is determined
principally by the straight-line method. The annual rates of depreciation are 3%
to 5% for buildings and improvements and 7% to 34% for machinery and equipment.
The Company capitalizes, as land improvements, certain environmental remediation
costs which improve the condition of the property as compared to the condition
when constructed or acquired.
Franchise Assets: The Company operates under franchise agreements with The
Coca-Cola Company and certain other licensors of beverage products. These
agreements establish performance obligations as to production, distribution and
marketing arrangements. The majority of such agreements are perpetual in nature
and reflect a long and ongoing relationship with The Coca-Cola Company and other
franchisors. The Company has one nonperpetual franchise agreement with The
Coca-Cola Company covering our Netherlands operations. This is a result of the
fact that The Coca-Cola Company's franchises outside of the United States are
not perpetual.
Given the Company's historical relationship with The Coca-Cola Company and
The Coca-Cola Company's equity ownership of approximately 44% in the Company,
management of the Company believes this agreement will continue to be renewed
upon expiration and that the economic period of benefit is ongoing. Franchise
assets, stated at cost, are amortized on a straight-line basis over the
34
37
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
maximum allowed estimated periods to be benefitted (principally 40 years).
Accumulated amortization amounted to $738 million and $577 million at December
31, 1993 and 1992, respectively.
Impairment of Long-Lived Assets: In the event facts and circumstances
suggest that the cost of franchise assets or other assets may be impaired, an
assessment of recoverability would be performed. If the estimated future cash
flows associated with an asset were less than the carrying amount of the asset,
an impairment write-down to a market value or discounted cash flow value would
be required.
Foreign Currency: The Company uses the local currency of Dutch florins as
the functional currency of its Netherlands operations. Accordingly, assets and
liabilities of the Netherlands subsidiary are translated into dollars at the
rate of exchange in effect at the balance sheet date. Income and expense items
are translated at the monthly average exchange rates prevailing during the year.
The cumulative translation adjustment is included in a separate component of
share-owners' equity.
Hedging Instruments: The Company is party to a variety of interest rate
swaps, short positions in interest rate futures and foreign currency option
contracts in the management of interest rate and foreign currency exposures. The
interest differential related to interest rate swap agreements is recognized as
an adjustment of interest expense. Foreign currency options were not significant
at December 31, 1993. Realized and unrealized gains and losses on all financial
instruments designated and effective as hedges of interest rate exposure are
deferred and recognized as increases or decreases to interest expense over the
periods the hedged liabilities are outstanding.
Marketing Costs: The Company participates in various advertising and
marketing programs, some with The Coca-Cola Company. Certain costs incurred in
connection with these programs are reimbursed by The Coca-Cola Company. All
unreimbursed costs related to marketing and advertising the Company's products
are expensed in the period incurred.
Postretirement Benefits Other Than Pensions: In 1992, the Company adopted
Statement of Financial Accounting Standards No. 106 ("FAS 106"), a method of
accounting for postretirement benefits by accrual of the costs of such benefits
during the periods employees provide service to the Company. The Company
previously accounted for such costs as expense when incurred. The effect on
years prior to 1992, representing that portion of future retiree benefit costs
related to past service of both active and retired employees at the date of
adoption, has been reported as the cumulative effect of an accounting change and
such prior periods have not been restated.
Income Taxes: In 1992, the Company changed its method of accounting for
income taxes from the deferred method under Accounting Principles Board
Statement No. 11 to the liability method by adopting Statement of Financial
Accounting Standards No. 109 ("FAS 109"). Financial statements for periods prior
to 1992 have not been restated for the effects of adopting FAS 109. The effect
on prior years of adopting FAS 109 has been reported as the cumulative effect of
an accounting change. FAS 109 requires that deferred tax liabilities and assets
be established based on the difference between the financial statement and
income tax bases of assets and liabilities using existing tax rates.
ACQUISITIONS AND DIVESTITURES
The Company has the right to produce, distribute and market the soft drink
products of The Coca-Cola Company and/or other soft drink products in the
territories of acquired operations. Under the purchase method of accounting, the
results of operations of acquired companies are included in the consolidated
statements of operations of the Company as of their acquisition date. The assets
and liabilities of acquired companies are included in the Company's consolidated
35
38
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
balance sheet at their estimated fair values on date of purchase based on a
preliminary allocation of the purchase price.
On June 30, 1993, the Company acquired, from The Coca-Cola Company, the
stock of (i) Coca-Cola Beverages Nederland B.V. in the Netherlands ("CCBN");
(ii) Roddy Coca-Cola Bottling Company, Inc. ("Roddy") in Knoxville, Tennessee;
and (iii) Coca-Cola Bottling Company of Johnson City ("JC"), in Johnson City,
Tennessee for an aggregate purchase price of approximately $366 million in cash
and assumed debt. The transaction was accounted for under the purchase method.
In December 1991, the Company acquired the Johnston Coca-Cola Bottling
Group, Inc. ("Johnston"), the second largest bottler of soft drink products of
The Coca-Cola Company in the United States. Johnston's territories, with a
population estimated at approximately 28 million or 11% of the U.S. population,
were located principally in the Midwestern United States. All of the outstanding
Johnston common stock was acquired in exchange for the issuance from treasury of
13.438 million shares of the Company's common stock and the payment of
approximately $196 million in cash in a transaction accounted for under the
purchase method.
Assuming the Johnston bottling operations had been acquired as of January
1, 1991, and the CCBN/Roddy/JC acquisition occurred as of January 1, 1992,
unaudited pro forma results of operations are as follows (in millions except per
share amounts):
- -------------------------------------------------------------------------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------------------------------
NET OPERATING REVENUES $5,667 $5,538 $5,027
Cost of Sales 3,535 3,547 3,170
- -------------------------------------------------------------------------------------------------------
GROSS PROFIT 2,132 1,991 1,857
Selling, general and administrative expenses 1,741 1,670 1,535
Provision for restructuring -- -- 152
- -------------------------------------------------------------------------------------------------------
OPERATING INCOME 391 321 170
Interest expense, net 334 325 312
Other nonoperating deductions, net 2 7 3
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGES 55 (11) (145)
Income taxes:
Expense (benefit) excluding rate change 30 4 (17)
Rate change -- federal 40 -- --
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES (15) (15) (128)
Cumulative effect of accounting changes -- (171) --
- -------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) (15) (186) (128)
Preferred stock dividend requirements -- -- 9
- -------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARE OWNERS $ (15) $ (186) $ (137)
- -------------------------------------------------------------------------------------------------------
Income (Loss) Before Cumulative Effect of Accounting Changes
Per Common Share $(0.11) $(0.11) $(0.99)
Net Income (Loss) Applicable to Common Share Owners Per Share (0.11) (1.45) (1.06)
- -------------------------------------------------------------------------------------------------------
Depreciation $ 266 $ 248 $ 205
Amortization 172 175 125
- -------------------------------------------------------------------------------------------------------
The foregoing summary pro forma financial information reflects adjustments
for the CCBN/Roddy/JC acquisition to give effect to (i) interest expense on
acquisition financing through issuance of commercial paper at an annual interest
rate of 3.8% for 1992 and 3.1% for the
36
39
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
preacquisition period of 1993; (ii) repayment of assumed debt; (iii)
amortization of the franchise assets acquired in the acquisition; and (iv) the
income tax effect of such pro forma adjustments.
The foregoing also reflects adjustments for the Johnston acquisition to
give effect to (i) interest expense on acquisition financing at an estimated
annual interest rate of 8.4%; (ii) issuance from treasury of 13.438 million
shares of the Company's common stock; (iii) amortization of the franchise asset;
(iv) the effect of adjusting debt assumed from Johnston for terms anticipated
for such debt to remain outstanding and to an effective annual interest rate of
approximately 7.8%; (v) elimination of the gain recognized by the Company from
the sale of its Ohio operations to Johnston in June 1990; and (vi) the income
tax effect of such pro forma adjustments.
Also in separate transactions in 1993, the Company acquired bottling
operations in Arkansas and an architectural design and facility engineering
company. The aggregate purchase price for these acquisitions, accounted for
under the purchase method, approximated $60 million in common stock, preferred
stock and debt.
In separate transactions in 1992, the Company acquired bottling operations
in Quincy, Illinois; Manchester, Georgia; Erie, Pennsylvania; and Laredo, Texas.
The aggregate purchase price of these acquisitions, accounted for under the
purchase method, approximated $40 million in cash and debt.
In separate transactions in 1991, the Company acquired bottling operations
in Ukiah, California; Jasper, Texas; Westminster, Annapolis and Cambridge,
Maryland; and Dover, Delaware. The aggregate purchase price of these
acquisitions, accounted for under the purchase method, approximated $55 million
in cash and debt. Also in 1991, the Company sold its right to produce,
distribute and market Dr Pepper and Barq's soft drinks in Jackson, Tennessee for
approximately $3 million, resulting in a pretax gain of approximately $1
million.
INVENTORIES
Inventories are comprised of the following (in millions):
- --------------------------------------------------------------------------------------------
DECEMBER 31,
---------------
1993 1992
- --------------------------------------------------------------------------------------------
Finished goods $134 $127
Raw materials 48 74
Other 20 21
- --------------------------------------------------------------------------------------------
202 222
Less LIFO reserve 2 10
- --------------------------------------------------------------------------------------------
$200 $212
- --------------------------------------------------------------------------------------------
37
40
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are comprised of the following (in
millions):
- --------------------------------------------------------------------------------------------
DECEMBER 31,
-------------
1993 1992
- --------------------------------------------------------------------------------------------
Trade accounts payable $185 $263
Deposits on containers and shells 53 21
Accrued advertising payable 98 78
Accrued compensation payable 78 71
Accrued insurance payable 62 68
Accrued interest payable 98 95
Other accrued expenses 125 86
- --------------------------------------------------------------------------------------------
$699 $682
- --------------------------------------------------------------------------------------------
LONG-TERM DEBT
Long-term debt including current maturities consists of the following (in
millions):
- --------------------------------------------------------------------------------------------
DECEMBER 31,
---------------
1993 1992
- --------------------------------------------------------------------------------------------
Commercial Paper $ 522 $ 197
8.00% and 8.20% Notes, due 1993 -- 500
8.20% Notes, due 1994 243 243
8.35% Notes, due 1995 250 250
6.50% and 7.875% Notes, due 1997 550 550
7.00% Notes, due 1999 200 200
7.875% Notes, due 2002 500 500
8.00% Notes, due 2005 250 --
8.50% Debentures, due 2012 250 250
8.75% Debentures, due 2017 154 154
8.00% and 8.50% Debentures, due 2022 1,000 1,000
6.75% Debentures, due 2023 250 --
Other long-term obligations 222 287
- --------------------------------------------------------------------------------------------
$4,391 $4,131
- --------------------------------------------------------------------------------------------
Maturities of long-term debt for the five fiscal years subsequent to
December 31, 1993, are as follows (in millions): 1994 -- $308; 1995 -- $263;
1996 -- $558; 1997 -- $555; and 1998 -- $10.
The Company's commercial paper program is supported by a $1 billion
revolving bank credit agreement maturing in April 1996 and two short-term credit
facilities. There are no borrowings outstanding under these agreements; however,
under the commercial paper program supported by these agreements, an aggregate
$522 million was outstanding at December 31, 1993. The weighted average interest
rates of borrowings under the commercial paper program were approximately 3.2%
and 3.8% for 1993 and 1992, respectively.
Terms of the revolving bank credit agreement and/or the outstanding notes
and debentures include various provisions which, among other things, require the
Company to (i) maintain a defined leverage ratio and (ii) limit the incurrence
of certain liens or encumbrances in excess of defined amounts. None of these
restrictions are presently significant to the Company.
38
41
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has outstanding certain interest rate swap agreements with
financial institutions. At December 31, 1993, these interest rate swap
agreements change (i) $150 million of the floating rate exposure on commercial
paper to fixed rate exposure and (ii) $500 million of the fixed rate exposure on
the $250 million 8% debentures due 2022 and $250 million of the $750 million
8.5% debentures due 2022 to floating rate exposure. All of the above interest
rate swap agreements were in force at the beginning of 1993 except for the swap
agreement related to the $250 million outstanding on the 8% debentures due 2022.
These swap agreements expire in varying periods from 1994 through 1996, but may
extend through 2023 depending upon interest rates at the initial expiration
date.
In addition, the Company has certain Eurodollar futures contracts with
financial institutions which hedge its floating rate exposure on the interest
rate swap agreements. At December 31, 1993, the Eurodollar futures cover the
following periods: (i) $250 million from December 1993 through September 1994
and (ii) $250 million from March 1994 through June 1996. The adjustment to
market of these Eurodollar futures contracts aggregate unrecognized losses of $5
million as of December 31, 1993. These unrecognized amounts will be decreased or
increased, as appropriate, to the final settlement date of each contract, at
which time amounts will be amortized over the ensuing contract period.
Activities under interest rate swap agreements and Eurodollar futures
contracts have resulted in a decrease in interest expense for 1993 of
approximately $7 million. The Company is exposed to credit losses for periodic
settlements of amounts due under interest rate swaps; however, amounts due under
these agreements were not significant at December 31, 1993.
LEASES
The Company leases office and warehouse space, computer hardware, and
machinery and equipment under lease agreements which expire at various dates
through 2019. At December 31, 1993, future minimum lease payments under
noncancellable operating leases aggregate approximately $44 million. Rent
expense was approximately $25 million, $25 million and $24 million during 1993,
1992 and 1991, respectively.
PREFERRED STOCK
In connection with the 1993 acquisition of the Coca-Cola Bottling Company
of Northeast Arkansas, Inc., the Company issued 1,000,000 shares of nonvoting
convertible preferred stock with a stated value of $35 per share. Each share is
convertible into one share of common stock at any time at the option of the
holder. The preferred stock may be called by the Company at any time for cash
equal to its stated value plus accrued dividends. The preferred stock pays
cumulative cash dividends of 3% per annum for the first five years, 4.29% per
annum for the following five years, adjusting to an annual rate equal to LIBOR
plus 1% thereafter. Adjustment of the stated value of the preferred stock to its
estimated fair value of approximately $29 million results in an annual dividend
cost of approximately 6%.
During 1991, the Company redeemed all of its then existing nonvoting
variable dividend rate preferred stock at book value.
SHARE REPURCHASE
During 1993, the Company repurchased 1,153,900 shares of its common stock
on the open market for an aggregate cost of approximately $17 million. The
repurchased shares represent
39
42
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additions to treasury stock and are intended, among other things, to replenish
an aggregate 400,000 treasury shares issued to effect an acquisition during
1993.
STOCK OPTIONS AND OTHER STOCK PLANS
The Company's 1992 Restricted Stock Award Plan ("the 1992 Plan") provides
for awards to certain officers and other key employees of the Company of up to
an aggregate 1.5 million shares of the Company's common stock. The 1986
Restricted Stock Award Plan ("the 1986 Plan") provides for awards to certain
officers and other key employees of the Company of up to an aggregate 1 million
shares of the Company's common stock. Awards under both plans vest (i) when a
participant dies, retires or becomes disabled; (ii) when the Compensation
Committee of the Board of Directors elects, in its sole discretion, to remove
certain restrictions; or, with regard to the 1992 Plan, (iii) based on the
attainment of certain market price levels of the Company's stock. Such awards
also entitle the participant to full dividend and voting rights. Shares awarded
under both plans are restricted as to disposition and subject to forfeiture
under certain circumstances. The market value of the shares at the date of grant
is charged to operations ratably over the vesting periods.
In 1992, the Board of Directors of the Company terminated the 1986 Plan,
canceling the remaining 476,000 shares under this plan available for grant.
Restricted shares issued under the 1992 Plan, totalling 22,400 shares were
forfeited in 1993 and returned to treasury. Further information relating to
restricted stock awards follows:
- --------------------------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------------------------
Awards available for grant -- beginning of year 648,900 476,000
New awards authorized -- 1,500,000
Available shares terminated -- (476,000)
Shares issued (463,100) (851,100)
- --------------------------------------------------------------------------------------------
Awards available for grant -- end of year 185,800 648,900
- --------------------------------------------------------------------------------------------
The Company's 1991 Stock Option Plan (the "Stock Option Plan"), provides
for the granting of nonqualified stock options to officers and certain key
employees. The Stock Option Plan provides that options for 3 million shares of
the Company's common stock may be granted prior to the plan's expiration in
1996. The Company's 1990 Management Stock Option Plan (the "Management Option
Plan") provides for the granting of nonqualified stock options to certain key
employees. The Management Option Plan provides that options for 2 million shares
of the Company's common stock may be granted. Options awarded under the Stock
Option Plan and the Management Option Plan (i) are generally granted at prices
which equate to or are above fair market value on the date of grant; (ii) become
exercisable over either a three or four year period; and (iii) expire ten years
subsequent to award.
40
43
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Included in options outstanding at December 31, 1993 were various options
granted under previous plans with similar terms. Further information relating to
options follows:
- ---------------------------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------------------------
Options outstanding at beginning of year 5,680,333 4,128,067
Options granted 1,109,900 1,885,800
Options exercised (149,921) --
Options canceled (598,545) (333,534)
- ---------------------------------------------------------------------------------------------
Options outstanding at end of year 6,041,767 5,680,333
- ---------------------------------------------------------------------------------------------
Options exercisable at end of year
(Option price -- $13.125 to $18.50 per share) 3,034,534 3,230,828
- ---------------------------------------------------------------------------------------------
Shares available for future grant 286,500 1,396,400
- ---------------------------------------------------------------------------------------------
On initial offering of stock to the public, each of the seven directors who
was not an officer of the Company or The Coca-Cola Company was awarded options
to acquire up to 1,500 shares of common stock and certain officers of the
Company were granted options to purchase 245,000 shares of the Company's common
stock at $16.50 per share (the initial public offering price). Since that time,
new directors, upon election, who were not an officer of the Company or The
Coca-Cola Company were awarded options to acquire up to 1,500 shares of common
stock at $16.50 per share. Options to purchase 198,000 shares under this plan
have subsequently been canceled, and 15,000 options have been exercised.
Currently exercisable options with rights totaling 45,500 shares remain
outstanding and will expire in November 1996.
In 1991, the Company adopted the Stock Appreciation Rights Plan (the "SAR
Plan") which provides for the award of an aggregate 1 million stock appreciation
rights ("units") to qualified participants prior to the SAR Plan's expiration in
1996. Each unit entitles the holder to receive cash based on the difference
between the market value of a share of the Company's common stock on the date of
award and the fair market value of such stock on the date of exercise. Included
in stock appreciation rights outstanding at December 31, 1993 are various units
awarded under a prior plan with similar terms. In 1992, units available for
future grants under all stock appreciation rights plans were terminated.
Further information relating to stock appreciation rights follows:
- ---------------------------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------------------------
Units outstanding at beginning of year 1,070,572 1,076,580
Units granted -- --
Units exercised (58,027) --
Units canceled (134,168) (6,008)
- ---------------------------------------------------------------------------------------------
Units outstanding at end of year
(Base value -- $14.50 to $17.50 per unit) 878,377 1,070,572
- ---------------------------------------------------------------------------------------------
PENSION AND CERTAIN BENEFIT PLANS
The Company sponsors various pension plans and participates in certain
multiemployer pension plans covering substantially all U.S. employees. The
benefits related to company-sponsored plans are based on years of service and
compensation earned during years of employment. The Company's funding policy is
to contribute amounts to the plans sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
plus such
41
44
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additional amounts as management may determine to be appropriate but within
applicable legal limits. These qualified defined benefit plans sponsored by the
Company are insured by the Pension Benefit Guaranty Corporation ("PBGC"). The
Company also sponsors several unfunded nonqualified defined benefit plans
covering certain officers and other employees.
Total pension expense amounted to approximately $19 million (including $6
million for multiemployer plans) in 1993 and 1992, and $14 million (including $5
million for multiemployer plans) in 1991.
Net periodic pension cost for company-sponsored defined benefit plans
included the following (in millions):
- --------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------
Service cost -- benefits earned during the period $ 19 $ 14 $ 10
Interest cost on projected benefit obligation 29 29 23
Actual return on assets (61) (36) (61)
Net amortization and deferral 26 6 37
- --------------------------------------------------------------------------------------------
Net periodic pension cost $ 13 $ 13 $ 9
- --------------------------------------------------------------------------------------------
The following table sets forth the funded status of domestic
company-sponsored plans and amounts recognized by the Company, segregated by
(i) plans whose assets exceed the accumulated benefit obligation ("ABO") and
(ii) plans whose ABO exceeds assets (in millions):
- ------------------------------------------------------------------------------------------
PBGC INSURED PLANS OTHER PLANS
----------------------------------- -----------------
1993 1992 1993 1992
---------------- ---------------- ------- -------
ASSETS ABO ASSETS ABO ABO ABO
EXCEED EXCEEDS EXCEED EXCEEDS EXCEEDS EXCEEDS
ABO ASSETS ABO ASSETS ASSETS ASSETS
- ------------------------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $(303) $ (22) $(212) $ (50) $ (13) $ (12)
- ------------------------------------------------------------------------------------------
Accumulated benefit obligation $(325) $ (25) $(248) $ (54) $ (13) $ (14)
- ------------------------------------------------------------------------------------------
Projected benefit obligation $(367) $ (25) $(311) $ (64) $ (14) $ (19)
Plan assets at fair value,
primarily listed stocks, bonds
and government securities 402 18 321 46 -- --
- ------------------------------------------------------------------------------------------
Plan assets in excess of (less
than) projected benefit
obligation 35 (7) 10 (18) (14) (19)
Unrecognized net (gain) loss (14) 3 20 3 4 4
Unrecognized prior service cost (12) 2 1 2 (9) --
Unrecognized net transition
(asset) liability and other (12) -- (13) 1 2 2
- ------------------------------------------------------------------------------------------
Prepaid (accrued) pension cost
included in the balance sheet $ (3) $ (2) $ 18 $ (12) $ (17) $ (13)
- ------------------------------------------------------------------------------------------
The weighted average discount rate utilized in determining the actuarial
present value of the projected benefit obligation as of the respective valuation
dates was 7.5% and 8.25% in 1993 and 1992, respectively. The weighted average
rate of increase in future compensation was 5.5% and 6%
42
45
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
in 1993 and 1992, respectively. The expected long-term rate of return on plan
assets was 8.5%, 9.5% and 9% in 1993, 1992 and 1991, respectively.
CCBN participates in a multiemployer pension plan covering a majority of
its employees. CCBN also sponsors a supplemental defined benefit plan for
certain employees. At December 31, 1993, the accumulated benefit obligation for
the supplemental plan was $9 million, the projected benefit obligation was $17
million and plan assets were $17 million. CCBN also sponsors an unfunded
voluntary early retirement plan for certain employees allowing early retirement
at age 60. At December 31, 1993, the accumulated benefit obligation, which has
been fully accrued, was $5 million and the projected benefit obligation was $6
million.
In addition to the defined benefit plans described above, the Company also
sponsors a qualified defined contribution plan covering all full-time nonunion
employees in the United States. The Company matches 50% of a participant's
voluntary contributions up to a maximum of 6% of a participant's compensation.
The Company's contribution expense was approximately $10 million in 1993 and
1992, and $9 million in 1991.
POSTRETIREMENT BENEFIT PLANS
The Company sponsors various unfunded defined benefit postretirement plans
that provide health care and life insurance benefits to substantially all
nonunion and certain union retirees who retire with a minimum period of service.
Adoption of FAS 106 during 1992 changed the Company's method of accounting for
such postretirement benefits as an expense when claims were incurred to accrual
of the costs of such benefits during the periods employees provide service to
the Company.
The Company immediately recognized the transition obligation of adopting
FAS 106. The effect on years prior to 1992 of adopting FAS 106, representing
that portion of unrecognized future retiree benefit costs related to past
service of both active and retired employees as of the date of adoption, has
been reported as the cumulative effect of an accounting change and prior periods
have not been restated. The cumulative effect of adopting FAS 106 as of January
1, 1992 decreased net income by approximately $148 million (net of income taxes
of $91 million) or $1.15 per common share.
In the first quarter of 1993, the Company completed the redesign and
consolidation of its postretirement benefit plans by amending the plans then in
effect. The effect of plan amendments was to decrease the accumulated
postretirement benefit obligation at January 1, 1993 from approximately $312
million to $164 million, resulting in $148 million of excess prior service cost,
and to reduce the full-year 1993 postretirement benefits expense by
approximately $31 million. The excess prior service cost is being amortized over
the average service life of plan participants, approximately 17 years.
43
46
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table presents the plan's funded status reconciled with
amounts recognized in the Company's balance sheets at December 31, 1993 and 1992
(in millions):
- --------------------------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $105 $108
Fully eligible active plan participants 11 32
Other active plan participants 63 172
- --------------------------------------------------------------------------------------------
179 312
Unamortized excess prior service cost asset 140 --
Unrecognized net loss (2) --
- --------------------------------------------------------------------------------------------
Accrued postretirement benefit obligation $317 $312
- --------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost for 1993 and 1992 includes the
following components (in millions):
- --------------------------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------------------------
Service cost attributed to service during the year $ 6 $14
Interest cost on accumulated postretirement benefit obligation 14 24
Amortization of unrecognized excess prior service cost (9) --
- --------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $11 $38
- --------------------------------------------------------------------------------------------
Actuarial assumptions used in determining the postretirement benefit cost
and the accumulated postretirement benefit obligation include a discount rate of
7.5% and 8.5% and an average rate of increase in future compensation of 5.5% and
6%, in 1993 and 1992, respectively. The assumed weighted average annual rate of
increase in the per capita cost of covered benefits (the health care cost trend
rate) was 15% pre-Medicare and 11% post-Medicare for 1993 and 1992, decreasing
to 6% by the year 2052 and remaining at that level thereafter. However, the
postretirement benefit plan, as amended effective January 1, 1993, is a "defined
dollar benefit plan" which limits the effect of medical inflation to a maximum
of 4% per year after 1996. Because the amended postretirement medical plan has
established dollar limits for determining company contributions, the effect of a
1% increase in the assumed health care cost trend rates is not significant.
PROVISION FOR RESTRUCTURING
The Company recognized in the fourth quarter of 1991 a $152 million ($0.86
per common share) provision for restructuring related primarily to the
standardization of information systems, reconfiguration of sales and
distribution centers, and severance and relocation costs associated with
decentralizing the Company's organizational structure and eliminating redundant
staff and operating positions.
INCOME TAXES
On August 10, 1993, the Omnibus Budget Reconciliation Act was signed into
law. The Company was affected principally by the increase in the corporate
marginal income tax rate from 34% to 35%. Under FAS 109, the Company's deferred
income taxes were adjusted to reflect the effect of the new rate. This
adjustment resulted in a one-time charge of approximately $40 million ($0.31 per
common share) to increase the Company's deferred tax liability existing at the
date of enactment for the effect of the rate change. Additionally, the Company's
annual estimated effective tax rate was
44
47
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
increased by an amount approximating the 1% marginal rate increase. Other
components of the new law are not expected to have a material impact on the
financial position or results of operations of the Company.
Application of FAS 109 decreases pretax income and decreases income tax
expense in both 1992 and 1993 by approximately $38 million as a result of
amortization of the increased franchise asset. This increased amortization
results from the requirement to report assets acquired in prior business
combinations at their pretax amounts, eliminating the impact of nondeductible
amortization from the computation of income tax expense under the new accounting
standard.
During 1987, the Company filed elections under Section 338 of the Internal
Revenue Code, relating to various bottling companies acquired in 1986. Tax
operating loss carryforwards aggregating approximately $943 million have arisen
principally from the additional tax deductions resulting from such elections.
These carryforwards are available to offset future federal taxable income
through their expiration in varying amounts aggregating $5 million in 1996
through 1998; $279 million in 1999 through 2003; and $659 million in 2004
through 2008.
A deferred tax asset is recognized for the tax benefit of deductible
temporary differences and net operating loss and tax credit carryforwards. A
valuation allowance is recognized if it is "more likely than not" that some or
all of the deferred tax asset will not be realized. Management believes that the
future reversal of existing taxable temporary differences provides evidence that
the majority of deferred tax assets will be realized. A valuation allowance of
$105 million, $86 million and $77 million as of December 31, 1993, 1992 and
January 1, 1992, respectively, was established for the remaining deferred tax
assets. Upon realization, the tax benefit for net operating loss carryforwards
of acquired companies for which a valuation allowance has been established will
be applied to reduce recorded franchise values. Net operating loss carryforwards
of acquired companies were approximately $59 million at December 31, 1993.
Deferred income taxes reflect the tax effects of differences between the
carrying amounts of assets and liabilities for financial reporting and income
tax purposes. Significant components of the Company's deferred tax liabilities
and assets as of December 31, 1993 and 1992 are as follows (in millions):
- --------------------------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------------------------
Deferred tax liabilities:
Franchise assets $2,210 $1,894
Property, plant and equipment 180 164
- --------------------------------------------------------------------------------------------
Total deferred tax liabilities 2,390 2,058
- --------------------------------------------------------------------------------------------
Deferred tax assets:
Net operating loss carryforwards (378) (335)
Employee and retiree benefit accruals (186) (166)
Restructuring reserves (31) (35)
Long-term debt (4) (11)
Other, net (65) (30)
- --------------------------------------------------------------------------------------------
Total deferred tax assets (664) (577)
Valuation allowance for deferred tax assets 105 86
- --------------------------------------------------------------------------------------------
Net deferred tax liabilities $1,831 $1,567
- --------------------------------------------------------------------------------------------
45
48
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of the provision for income taxes attributable to
continuing operations, excluding the cumulative effect of accounting changes,
are as follows (in millions):
- ---------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------
Current:
United States
Federal $-- $ 6 $ 2
State and local 9 18 5
Foreign 1 -- --
- ---------------------------------------------------------------------------------------------
Total current provision 10 24 7
- ---------------------------------------------------------------------------------------------
Deferred:
United States
Federal 20 (9) (17)
State and local 2 (12) 1
Rate change -- federal 40 -- --
Foreign (2) -- --
- ---------------------------------------------------------------------------------------------
Total deferred provision 60 (21) (16)
- ---------------------------------------------------------------------------------------------
Total provision for income taxes $70 $ 3 $ (9)
- ---------------------------------------------------------------------------------------------
The current tax provision for 1993 and 1992 represents the amount of income
taxes paid or payable for the year. The deferred tax provision for 1993 and 1992
represents the change in the deferred tax liabilities and assets and, for
business combinations, the change since date of acquisition.
The components of the provision for deferred income taxes for 1991,
computed using the deferred method, are as follows (in millions):
- -------------------------------------------------------------------------------------------
1991
- -------------------------------------------------------------------------------------------
Depreciation $ 13
Amortization 67
Tax net operating losses (42)
Installment gain election for sale of Ohio operations (12)
Accrual to cash adjustments (50)
Alternative minimum tax (1)
Other, net 9
- -------------------------------------------------------------------------------------------
$(16)
- -------------------------------------------------------------------------------------------
46
49
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the expected income tax expense (benefit) at the
statutory federal rate to the Company's actual income tax provision follows (in
millions):
- ----------------------------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------------------------
Statutory expense (benefit) $19 $(4) $(31)
State income taxes -- net of federal benefit 7 4 4
Nondeductible items 2 1 1
Rate change -- federal 40 -- --
Amortization of franchise assets -- -- 13
Acquisition adjustments -- -- 1
Other, net 2 2 3
- ----------------------------------------------------------------------------------------------
$70 $ 3 $ (9)
- ----------------------------------------------------------------------------------------------
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating fair values for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheets for cash and cash equivalents approximates fair value.
Long-term debt: The carrying amounts of commercial paper, variable rate
debt and other short-term borrowings approximate their fair values. The fair
values of the Company's long-term debt are estimated using discounted cash flow
analyses, based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
Hedging instruments and warrants: The fair values of the Company's futures
contracts are estimated based on quoted market prices of comparable contracts or
current settlement values. The fair values of the Company's interest rate swaps
and warrants are estimated based on independent valuations from major investment
banks.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1993 are as follows (in millions):
- -------------------------------------------------------------------------------------------------
CARRYING AMOUNT FAIR VALUE
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 11 $ 11
Long-term debt 4,391 4,783
Futures contracts 5 5
Interest rate swaps -- 5
Warrants -- 58
- -------------------------------------------------------------------------------------------------
The Company does not anticipate any significant refunding activities which
would settle long-term debt at fair value.
RELATED PARTY TRANSACTIONS
The Company and The Coca-Cola Company have entered into various
transactions and agreements related to their respective businesses. Various
significant transactions and agreements entered into between the Company and The
Coca-Cola Company are disclosed in other sections of
47
50
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the accompanying financial statements and related notes. The following items
represent other transactions between the Company and The Coca-Cola Company, and
its affiliates:
Acquisition: The Coca-Cola Company had an approximate 20% ownership
interest in Johnston. As a result of the acquisition in 1991, The Coca-Cola
Company received 49,892 shares of the Company's common stock and $81 million in
cash, reducing The Coca-Cola Company's ownership in the outstanding common stock
of the Company from approximately 49% to approximately 44%.
Fountain Syrup and Package Product Sales: Certain of the Company's
operations sell fountain syrup to The Coca-Cola Company and deliver this syrup
on behalf of The Coca-Cola Company to certain major or national accounts of The
Coca-Cola Company. In addition, the Company sells bottle/can products to The
Coca-Cola Company at prices that equate to amounts charged by the Company to its
major customers. During 1993, 1992 and 1991, The Coca-Cola Company paid the
Company approximately $220 million, $193 million and $138 million, respectively,
for fountain syrups, bottle/can products and delivery and billing services.
Antitrust Indemnity Agreement: During 1991, The Coca-Cola Company paid the
Company approximately $1 million, pursuant to an agreement which indemnifies the
Company for certain costs, settlements and fines arising out of alleged
antitrust violations which occurred prior to the acquisition of certain bottlers
by the Company. The indemnity period expired January 1, 1993.
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. For 1993, 1992 and 1991, total direct marketing support provided to
the Company or on behalf of the Company by The Coca-Cola Company was
approximately $256 million, $253 million and $199 million, respectively. In
addition, the Company paid an additional $65 million, $63 million and $45
million in 1993, 1992 and 1991, respectively, for local media and marketing
program expense pursuant to a cooperative advertising arrangement with The
Coca-Cola Company.
COMMITMENTS AND CONTINGENCIES
The Company is contingently liable for guarantees of the indebtedness owed
primarily by manufacturing cooperatives of approximately $43 million at December
31, 1993.
Under the Company's insurance programs, coverage is obtained for
catastrophic exposures as well as those risks required to be insured by law or
contract. Generally, the Company is self-insured for certain expected losses
related primarily to workers' compensation, physical loss to property, business
interruption resulting from such loss and comprehensive general, product and
vehicle liability. Provisions for losses expected under these programs are
recorded based upon the Company's estimates of the aggregate liability for
claims incurred. Such estimates utilize certain actuarial assumptions followed
in the insurance industry. The Company has provided letters of credit
aggregating approximately $104 million in connection with self-insurance
programs.
The Company has purchase agreements with various suppliers extending beyond
one year. Subject to the supplier's quality and performance, the purchases
covered by these agreements aggregate approximately $527 million in 1994, $529
million in 1995, $502 million in 1996, $508 million in 1997 and $103 million in
1998.
Federal, state and local laws govern the Company's operation of underground
fuel storage tanks and the required removal, replacement or modification of such
tanks to satisfy regulations which go into effect in varying stages through
1998. Expenditures aggregating $9 million, $8 million
48
51
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and $25 million were made in 1993, 1992 and 1991, respectively, in a structured
program designed to enhance compliance with such regulations including
regulations governing the environmental discharge of materials. The Company has
completed a majority of its multiyear program for remediation of environmental
contamination. Completion of the Company's remediation program is not expected
to have a material adverse effect on the financial position or results of
operations of the Company.
The Company has been named as a potentially responsible party ("PRP") for
the costs of remediation of hazardous waste at six federal "Superfund" sites in
Arkansas, California, Florida, Minnesota, New Hampshire and Ohio. Under current
law, the Company's liability for clean up of such sites may be joint and several
with other PRP's, regardless of the extent of the Company's use in relation to
other users. In each case, the Company has determined that to the extent that it
has any responsibility for hazardous waste deposited at any site, the amounts of
such deposits are minimal compared to those of other financially responsible
PRP's, and as a result, we believe the Company's ultimate liability will not
have a material effect on its financial position or results of operations.
In 1991, a Complaint was filed against the Company, each of the directors
of the Company and Johnston seeking, among other things, to enjoin the Johnston
acquisition. The Complaint alleges that The Coca-Cola Company, as the holder of
approximately 49% (prior to the Johnston acquisition) of the outstanding common
stock of the Company, owes fiduciary duties of loyalty, care and candor to the
Company and the Company's public share owners and that The Coca-Cola Company
breached its fiduciary duties by exerting influence over the Company in
connection with the acquisition in order to maximize its financial interests at
the expense of the Company and the Company's public share owners. The Complaint
also alleges that the directors of the Company breached their fiduciary duties
to the Company and its public share owners. Management believes that the
Complaint is without merit and its ultimate disposition will not have a material
adverse effect on the financial condition or results of operations of the
Company.
The Company is also involved in various other claims and legal proceedings,
the resolution of which management believes will not have a material adverse
effect on the financial position or results of operations of the Company.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Changes in assets and liabilities, net of effects from acquisitions of
companies, were as follows (in millions):
- --------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------
Trade accounts and other receivables $ 1 $ (30) $ 26
Inventories 28 (16) (14)
Prepaid expenses and other assets 6 (13) 6
Accounts payable and accrued expenses (13) (57) 54
- --------------------------------------------------------------------------------------------
Decrease (Increase) $ 22 $(116) $ 72
- --------------------------------------------------------------------------------------------
Cash payments during the year were as follows (in millions):
- --------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------
Interest $330 $255 $212
Income taxes 10 36 8
- --------------------------------------------------------------------------------------------
49
52
COCA-COLA ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In conjunction with the acquisitions of bottling companies, liabilities were
assumed as follows (in millions):
- --------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------
Fair value of assets acquired $ 774 $ 48 $1,674
Cash paid (287) (27) (222)
Equity issued (34) -- (161)
Debt issued (1) (15) --
- --------------------------------------------------------------------------------------------
Liabilities assumed $ 452 $ 6 $1,291
- --------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL DATA
(Unaudited; in millions except per share data)
- -----------------------------------------------------------------------------------------------
FISCAL
1993 FIRST SECOND THIRD FOURTH YEAR
- -----------------------------------------------------------------------------------------------
Net Operating Revenues $1,208 $1,448 $1,487 $1,322 $5,465
Gross Profit 477 556 541 519 2,093
Net Income (Loss) (5) 16 (30) 4 (15)
Net Income (Loss) Per Common Share (0.04) 0.13 (0.23) 0.03 (0.11)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
FISCAL
1992 FIRST SECOND THIRD FOURTH YEAR
- -----------------------------------------------------------------------------------------------
Net Operating Revenues $1,112 $1,385 $1,351 $1,279 $5,127
Gross Profit 424 519 491 474 1,908
- -----------------------------------------------------------------------------------------------
Income (Loss) Before Cumulative Effect of
Accounting Changes $ 25 $ (26) $ 17 $ (31) $ (15)
Cumulative Effect of Accounting Changes (171) -- -- -- (171)
- -----------------------------------------------------------------------------------------------
Net Income (Loss) $ (146) $ (26) $ 17 $ (31) $ (186)
- -----------------------------------------------------------------------------------------------
Per Common Share Data:
Income (Loss) Before Cumulative Effect of
Accounting Changes $ 0.20 $(0.20) $ 0.13 $(0.24) $(0.11)
Cumulative Effect of Accounting Changes (1.33) -- -- -- (1.33)
Net Income (Loss) (1.14) (0.20) 0.13 (0.24) (1.45)
- -----------------------------------------------------------------------------------------------
Each quarter presented includes ninety-one days, except the first quarter
of 1992 (eighty-seven days), the fourth quarter of 1992 (ninety-seven days) and
the first quarter of 1993 (ninety-two days).
Due to the method used in calculating per share data as prescribed by
Accounting Principles Board Opinion No. 15 and the timing of share repurchases
by the Company, the per share data does not sum in certain instances to the per
share data as computed for the quarter and the year.
The third quarter of 1993 includes a one-time charge of approximately $40
million ($0.31 per common share) to increase the Company's deferred tax
liability as a result of a 1% increase in the corporate marginal income tax
rate.
The fourth quarter of 1993 included a favorable year-end inventory (LIFO)
adjustment of approximately $7 million of which approximately $5 million ($0.03
per common share) applied to previous quarters.
50
53
COCA-COLA ENTERPRISES INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors
Coca-Cola Enterprises Inc.
We have audited the accompanying consolidated balance sheets of Coca-Cola
Enterprises Inc. and the related consolidated statements of operations,
share-owners' equity, and cash flows for each of the three years in the period
ended December 31, 1993. Our audits also included the financial statement
schedules listed in the Index at Item 14(a)(2). These financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedules 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, 1993 and 1992, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in the notes to consolidated financial statements, in 1992 the
Company changed its methods of accounting for income taxes and postretirement
benefits other than pensions.
/s/ ERNST & YOUNG
Atlanta, Georgia
January 31, 1994
51
54
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
captions "Election of Directors -- Nominees" and "Election of
Directors -- Information Concerning Directors" on pages 3 through 7 of the
Company's 1994 Proxy Statement. Such information is incorporated herein by
reference. Pursuant to Instruction 3 of Item 401(b) of Regulation S-K and
General Instruction G(3) of Form 10-K, 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 regarding 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 -- Compliance with Section 16(a) of the Securities
Exchange Act of 1934" on pages 11 and 12 of the Company's 1994 Proxy Statement.
Such information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth under the
captions "Election of Directors -- Compensation of Directors" and "Election of
Directors -- Executive Compensation" on pages 8 and 9 and pages 13 through 22,
respectively, of the Company's 1994 Proxy Statement. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding ownership of the Company's $1 par value 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 pages 2 and 3 and pages 9 through 11, respectively, of the
Company's 1994 Proxy Statement. Such information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain transactions between the Company, The
Coca-Cola Company and their affiliates and certain other persons is set forth
under the caption "Election of Directors -- Certain Relationships and Related
Transactions" on pages 23 through 27 of the 1994 Proxy Statement. Such
information is incorporated herein 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 are included in Item 8 of this report:
Consolidated Statements of Operations for each of the three years in the
period ended December 31, 1993
Consolidated Balance Sheets as of December 31, 1993 and December 31, 1992
52
55
Consolidated Statements of Share-Owners' Equity for each of the three years
in the period ended December 31, 1993
Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 1993
Notes to Consolidated Financial Statements
Report of Independent Auditors
(2) Financial Statement Schedules. The following financial statement
schedules of the Company are included in this report on the pages indicated:
PAGE
----
Schedule V -- Property, Plant and Equipment for the fiscal years ended
December 31, 1993, 1992 and 1991............................ F- 2
Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant
and Equipment for the fiscal years ended December 31, 1993,
1992 and 1991............................................... F- 3
Schedule VIII -- Valuation and Qualifying Accounts for the fiscal years ended
December 31, 1993, 1992 and 1991............................ F- 4
Schedule IX -- Short-Term Borrowings for the fiscal years ended December
31, 1993, 1992 and 1991..................................... F- 5
Schedule X -- Supplementary Income Statement Information for the fiscal
years ended December 31, 1993, 1992 and 1991................ F- 6
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
(3) Exhibits.
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
3.1 -- Restated Certificate of Incorporation Exhibit 28.2 to the Company's Quarterly
of Coca-Cola Enterprises, as amended on Report on Form 10-Q as filed May 11,
April 15, 1992. 1992.
3.2 -- Bylaws of Coca-Cola Enterprises, as Exhibit 3.2 to the Company's Annual
amended through February 18, 1992. Report on Form 10-K for the fiscal year
ended December 31, 1991.
53
56
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
4.1 -- Indenture dated as of July 30, 1991, Exhibit 4.1 to the Company's Current
together with the First Supplemental Report on Form 8-K (Date of Report:
Indenture thereto dated January 29, July 30, 1991); Exhibit 4.01 to the
1992, between Coca-Cola Enterprises and Company's Current Report on Form 8-K
Manufacturers Hanover Trust Company, as (Date of Report: January 29, 1992);
Trustee, with regard to certain Exhibit 4.02 to the Company's Current
unsecured and unfunded debt securities Report on Form 8-K (Date of Report:
of Coca-Cola Enterprises, and forms of January 29, 1992); Exhibit 4.01 to the
notes and debentures issued thereunder. Company's Current Report on Form 8-K
(Date of Report: September 8, 1992);
Exhibits 4.01 and 4.02 to the Company's
Current Report on Form 8-K (Date of
Report: November 12, 1992); Exhibit
4.01 to the Company's Current Report on
Form 8-K (Date of Report: January 4,
1993); Exhibit 4.02 to the Company's
Current Report on Form 8-K (Date of
Report: September 15, 1993).
4.2 -- Medium Term Notes Issuing and Paying Exhibit 4.3 to the Company's Annual
Agency Agreement dated as of November Report on Form 10-K for the fiscal year
10, 1987, as amended, between Coca-Cola ended December 30, 1988.
Enterprises and Morgan Guaranty Trust
Company of New York, as issuing and
paying agent, including as Exhibit B
thereto the form of Medium Term Note
issuable thereunder, and including
Supplement No. 1 and Supplement No. 2
thereto each dated as of June 15, 1988.
4.3 -- Indenture dated as of November 15, 1989 Exhibit 4.01 to the Company's Current
between Coca-Cola Enterprises and Report on Form 8-K (Date of Report:
Bankers Trust Company, as Trustee, with December 12, 1989); Exhibit 4.4(a) to
regard to certain unsecured and the Company's Annual Report on Form
unsubordinated debt securities of 10-K for the fiscal year ended December
Coca-Cola Enterprises, and forms of 29, 1989; Exhibit 4.4(b) to the
Fixed Rate Medium Term Note and Company's Annual Report on Form 10-K
Floating Rate Medium Term Note, each for the fiscal year ended December 29,
issuable commencing December 18, 1989 1989.
pursuant to the above-referenced
Indenture.
54
57
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
4.4 -- Credit Agreement dated as of April 12, Exhibit 4 to the Company's Quarterly
1993 among Coca-Cola Enterprises; Bank Report on Form 10-Q as filed on August
of America National Trust and Savings 16, 1993.
Association; Citibank, N.A.;
NationsBank of Texas, National
Association; The First National Bank of
Chicago; Union Bank of Switzerland, New
York Branch; Texas Commerce Bank
National Association; Trust Company
Bank; Wachovia Bank of Georgia, N.A.;
Canadian Imperial Bank of Commerce; The
Toronto-Dominion Bank; Swiss Bank
Corporation, New York Branch and Cayman
Islands Branch; Mellon Bank, N.A.; The
Northern Trust Company.
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 Coca-Cola Exhibit 10.1 to the Company's Annual
Enterprises, as amended through Report on Form 10-K for the fiscal year
February 12, 1991.* ended December 31, 1991.
10.2 -- Form of Stock Option Agreement between Exhibit 10.5 to the Company's
Coca-Cola Enterprises and certain of Registration Statement on Form S-1, No.
its officers.* 33-9447.
10.3 -- 1986 Restricted Stock Award Plan of Exhibit 10.6 to the Company's Annual
Coca-Cola Enterprises, as amended Report on Form 10-K for the fiscal year
February 16, 1988.* ended January 1, 1988.
10.4 -- Long-Term Incentive Plan of Coca-Cola Exhibit 10.7 to the Company's Annual
Enterprises, as amended through July Report on Form 10-K for the fiscal year
10, 1989.* ended December 29, 1989.
10.5 -- 1992-1993 Long-Term Incentive Plan of Filed herewith.
Coca-Cola Enterprises, as amended.*
10.6 -- Management Incentive Plan of Coca-Cola Exhibit 10.6 to the Company's Annual
Enterprises.* Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.7 -- 1991 Amendment and Restatement of the Exhibit 10.7 to the Company's Annual
Coca-Cola Enterprises Supplemental Report on Form 10-K for the fiscal year
Retirement Plan, as amended July 1, ended December 31, 1991.
1993.*
10.8 -- Form of Stock Option Agreements between Exhibit 10.36 to the Company's
Coca-Cola Enterprises and certain of Registration Statement on Form S-1, No.
its Directors.* 33-9447.
55
58
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
10.9 -- Coca-Cola Enterprises 1988 Stock Exhibit 10.10 to the Company's Annual
Appreciation Rights Plan as amended Report on Form 10-K for the fiscal year
through February 12, 1991.* ended December 31, 1991.
10.10 -- Coca-Cola Enterprises 1991 Stock Option Exhibit 10.11 to the Company's Annual
Plan, as amended and restated through Report on Form 10-K for the fiscal year
February 18, 1992.* ended December 31, 1992.
10.11 -- Coca-Cola Enterprises 1992 Restricted Exhibit 10.12 to the Company's Annual
Stock Award Plan.* Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.12 -- Coca-Cola Enterprises Officer Severance Exhibit 10.12 to the Company's Annual
Plan.* Report on Form 10-K for the fiscal year
ended December 31, 1991.
10.13 -- Johnston Coca-Cola Bottling Group Exhibit 10.18 to Johnston Coca-Cola
Supplemental Retirement Plan.* Bottling Group's Annual Report on Form
10-K for the fiscal year ended October
27, 1990 (Commission File No. 0-16428).
10.14 -- Coca-Cola Enterprises Medical Exhibit 10.14 to the Company's Annual
Reimbursement Plan.* Report on Form 10-K for the fiscal year
ended December 31, 1991.
10.15 -- Johnston Coca-Cola Bottling Group Exhibit 10.6 to Johnston Coca-Cola
Medical Reimbursement Plan.* Bottling Group's Annual Report on Form
10-K for the fiscal year ended October
26, 1991. (Commission File No.
0-16428).
10.16 -- Amended and Restated Deferred Filed herewith.
Compensation Agreement between Johnston
Coca-Cola Bottling Group and Henry A.
Schimberg dated December 16, 1991, as
amended.*
10.17 -- 1993 Amendment and Restatement of Filed herewith.
Deferred Compensation Agreement between
Johnston Coca-Cola Bottling Group and
John R. Alm dated as of April 30, 1993*
10.18 -- 1993 Amendment and Restatement of Filed herewith.
Deferred Compensation Agreement between
Johnston Coca-Cola Bottling Group and
Philip H. Sanford dated as of April 30,
1993*
10.19 -- Retirement Plan for the Board of Exhibit 10.33 to the Company's Annual
Directors of Coca-Cola Enterprises, Report on Form 10-K for the fiscal year
effective April 11, 1991.* ended December 31, 1991.
10.20 -- Deferred Compensation Plan for Non- Filed herewith.
Employee Director Compensation, dated
June 15, 1989, as amended.*
56
59
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
10.21 -- Matching Gifts Program.* Exhibit 10.23 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.22 -- Tax Sharing Agreement dated November Exhibit 10.1 to the Company's
12, 1986 between Coca-Cola Enterprises Registration Statement on Form S-1, No.
and The Coca-Cola Company. 33-9447.
10.23 -- Registration Rights Agreement dated Exhibit 10.3 to the Company's
November 12, 1986 between Coca-Cola Registration Statement on Form S-1, No.
Enterprises and The Coca-Cola Company. 33-9447.
10.24 -- Registration Rights Agreement dated as Exhibit 10 to the Company's Current
of December 17, 1991 among Coca-Cola Report on Form 8-K (Date of Report:
Enterprises, The Coca-Cola Company and December 18, 1991).
the share owners of Johnston Coca-Cola
Bottling Group named therein.
10.25 -- Registration Rights Agreement dated as Filed herewith.
of December 15, 1993 among Coca-Cola
Enterprises, The Coca-Cola Company and
the share owners of the Coca-Cola
Bottling Company of Northeast Arkansas,
Inc.
10.26 -- Form of Bottle Contract, as amended. Exhibit 10.24 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 30, 1988.
10.27 -- Letter Agreement dated March 15, 1989 Exhibit 10.23 to the Company's Annual
between Coca-Cola Enterprises and The Report on Form 10-K for the fiscal year
Coca-Cola Company with respect to the ended December 31, 1991.
Bottle Contracts, as amended by letter
agreement dated December 18, 1991.
10.28 -- Form of Tolling Agreement between The Exhibit 10.41 to the Company's Annual
Coca-Cola Company and various Company Report on Form 10-K for the fiscal year
bottlers. ended January 2, 1987.
10.29 -- Sweetener Sales Agreement -- Bottler Exhibit 10.30 to the Company's Annual
between The Coca-Cola Company and Report on Form 10-K for the fiscal year
various Company bottlers. ended December 31, 1992.
10.30 -- Lease Agreement by and between The Exhibit 10.31 to the Company's Annual
Coca-Cola Company and Coca-Cola Report on Form 10-K for the fiscal year
Enterprises, as Tenant, commencing July ended December 31, 1992.
1, 1987, as amended.
10.31 -- Share Repurchase Agreement dated Exhibit 10.44 to the Company's Annual
January 1, 1991 between The Coca-Cola Report on Form 10-K for the fiscal year
Company and Coca-Cola Enterprises. ended December 28, 1990.
57
60
INCORPORATED BY REFERENCE OR FILED
HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION UNDER FILE NO. 01-09300)
- ------ --------------------------------------- ---------------------------------------
10.32 -- Stock Purchase Agreement dated as of Exhibit 2 to the Company's Current
June 29, 1993 by and among Coca-Cola Report on Form 8-K (Date of Report:
Holdings (Netherlands) B.V., The June 30, 1993).
Coca-Cola Company, Bottling Holdings
(Netherlands) B.V. and Coca-Cola
Enterprises.
11 -- Statement re computation of per share Filed herewith.
earnings.
12 -- Statement re computation of ratios. Filed herewith.
22 -- Subsidiaries of the Registrant. Filed herewith.
23 -- Consent of Independent Auditors. Filed herewith.
24 -- Powers of Attorney. Filed herewith.
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(c) of this report.
(b) REPORTS ON FORM 8-K.
On October 27, 1993 the Company filed a Current Report on Form 8-K, the
date of which report was October 19, 1993, regarding the Company's financial
results for the third quarter and the first nine months of 1993.
(c) EXHIBITS
See Item 14(a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES
See Item 14(a)(2) above.
58
61
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)
By: /s/ S. K. JOHNSTON, JR.
---------------------------------
S. K. Johnston, Jr.
Vice Chairman and Chief Executive
Officer
Date: March 10, 1994
Pursuant to the 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.
SIGNATURE TITLE DATE
/s/ S. K. JOHNSTON, JR. Vice Chairman, Chief Executive March 10, 1994
-------------------------- Officer and a Director
(S. K. Johnston, Jr.) (principal executive
officer)
/s/ JOHN R. ALM Senior Vice President and March 10, 1994
-------------------------- Chief Financial Officer
(John R. Alm) (principal financial officer
and principal accounting
officer)
* Director March 10, 1994
--------------------------
(Howard G. Buffett)
* Director March 10, 1994
--------------------------
(John L. Clendenin)
* Director March 10, 1994
--------------------------
(Johnnetta B. Cole)
* Director March 10, 1994
--------------------------
(T. Marshall Hahn, Jr.)
* Director March 10, 1994
--------------------------
(Claus M. Halle)
* Director March 10, 1994
--------------------------
(L. Phillip Humann)
* Director March 10, 1994
--------------------------
(M. Douglas Ivester)
* Director March 10, 1994
--------------------------
(E. Neville Isdell)
59
62
SIGNATURE TITLE DATE
* Director March 10, 1994
---------------------------
(John E. Jacob)
* Director March 10, 1994
---------------------------
(Robert A. Keller)
* Director March 10, 1994
---------------------------
(S. L. Probasco, Jr.)
* Director March 10, 1994
---------------------------
(Henry A. Schimberg)
* Director March 10, 1994
---------------------------
(Francis A. Tarkenton)
*By: /s/ LOWRY F. KLINE
------------------------
Lowry F. Kline
Attorney-in-Fact
60
63
INDEX TO FINANCIAL STATEMENT SCHEDULES
PAGE
----
Schedule V -- Property, Plant and Equipment for the fiscal years ended
December 31, 1993, 1992 and 1991...................................... F-2
Schedule VI -- Accumulated Depreciation and Amortization of Property,
Plant and Equipment for the fiscal years ended
December 31, 1993, 1992 and 1991...................................... F-3
Schedule VIII -- Valuation and Qualifying Accounts for the fiscal years ended
December 31, 1993, 1992 and 1991...................................... F-4
Schedule IX -- Short-Term Borrowings for the fiscal years ended
December 31, 1993, 1992 and 1991...................................... F-5
Schedule X -- Supplementary Income Statement Information for the fiscal
years ended December 31, 1993, 1992 and 1991.......................... F-6
F-1
64
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
COCA-COLA ENTERPRISES INC.
(In millions)
- ---------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------------
BALANCE AT OTHER CHANGES- BALANCE AT
BEGINNING ADDITIONS RETIREMENTS ADD (DEDUCT)- END
CLASSIFICATION OF PERIOD AT COST (a) DESCRIBE(b) OF PERIOD
- ---------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED:
DECEMBER 31, 1993
Land $ 179 $ -- $ 22 $ 6 $ 163
Buildings and improvements 594 25 9 12 622
Machinery and equipment 1,851 307 116 90 2,132
- ---------------------------------------------------------------------------------------------------------
2,624 332 147 108 2,917
Construction in progress(c) 82 6 8 14 94
- ---------------------------------------------------------------------------------------------------------
TOTAL $2,706 $ 338 $ 155 $ 122 $3,011
- ---------------------------------------------------------------------------------------------------------
DECEMBER 31, 1992
Land $ 172 $ 17 $ 10 $ -- $ 179
Buildings and improvements 577 27 9 (1) 594
Machinery and equipment 1,673 245 63 (4) 1,851
- ---------------------------------------------------------------------------------------------------------
2,422 289 82 (5) 2,624
Construction in progress(c) 83 5 6 -- 82
- ---------------------------------------------------------------------------------------------------------
TOTAL $2,505 $ 294 $ 88 $ (5) $2,706
- ---------------------------------------------------------------------------------------------------------
DECEMBER 31, 1991
Land $ 157 $ 9 $ 6 $ 12 $ 172
Buildings and improvements 453 50 13 87 577
Machinery and equipment 1,340 243 89 179 1,673
- ---------------------------------------------------------------------------------------------------------
1,950 302 108 278 2,422
Construction in progress(c) 146 (63) -- -- 83
- ---------------------------------------------------------------------------------------------------------
TOTAL $2,096 $ 239 $ 108 $ 278 $2,505
- ---------------------------------------------------------------------------------------------------------
(a) The amounts shown in Column D include amounts transferred to other assets
applicable to assets identified as idle during the year.
(b) The amounts shown in Column E include amounts applicable to acquired
companies at date of acquisition net of (i) the effect of the restructuring
reserve in 1991 and (ii) the effect of FAS 109 in 1992.
(c) Additions for construction in progress are net of amounts transferred to
productive asset categories for assets placed in service during the year.
F-2
65
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
COCA-COLA ENTERPRISES INC.
(In millions)
- ---------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------
ADDITIONS
BALANCE CHARGED BALANCE
AT TO COSTS OTHER CHANGES- AT END
BEGINNING AND RETIREMENTS ADD (DEDUCT)- OF
DESCRIPTION OF PERIOD EXPENSES (a) DESCRIBE PERIOD
- ---------------------------------------------------------------------------------------------
FISCAL YEAR ENDED:
DECEMBER 31, 1993
Buildings and
improvements $ 125 $ 26 $ 3 $ -- $ 148
Machinery and equipment 848 228 103 -- 973
- ---------------------------------------------------------------------------------------------
TOTAL $ 973 $ 254 $106 $ -- $1,121
- ---------------------------------------------------------------------------------------------
DECEMBER 31, 1992
Buildings and
improvements $ 108 $ 21 $ 4 $ -- $ 125
Machinery and equipment 691 206 49 -- 848
- ---------------------------------------------------------------------------------------------
TOTAL $ 799 $ 227 $ 53 $ -- $ 973
- ---------------------------------------------------------------------------------------------
DECEMBER 31, 1991
Buildings and
improvements $ 103 $ 11 $ 6 $ -- $ 108
Machinery and equipment 621 149 79 -- 691
- ---------------------------------------------------------------------------------------------
TOTAL $ 724 $ 160 $ 85 $ -- $ 799
- ---------------------------------------------------------------------------------------------
(a) Includes amounts transferred to other assets applicable to assets identified
as idle during the year.
F-3
66
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
COCA-COLA ENTERPRISES INC.
(In millions)
- --------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------------
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND CHARGED TO OTHER DEDUCTIONS- AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS-DESCRIBE DESCRIBE OF PERIOD
- --------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED:
DECEMBER 31, 1993
Allowance for losses on
trade accounts $ 31 $ 13 $ 5(a) $16(b) $ 33
Valuation allowance for
deferred tax assets 86 19 -- -- 105
DECEMBER 31, 1992
Allowance for losses on
trade accounts $ 22 $ 13 $ 4(a) $ 8(b) $ 31
Valuation allowance for
deferred tax assets -- 9 77(c) -- 86
DECEMBER 31, 1991
Allowance for losses on
trade accounts $ 19 $ 1 $ 6(a) $ 4(b) $ 22
- --------------------------------------------------------------------------------------------------------
(a) Principally represents allowances for losses on trade accounts of acquired
companies at date of acquisition and recoveries of amounts previously
charged off.
(b) Charge off of uncollectible accounts.
(c) Adoption of FAS 109 as of January 1, 1992.
F-4
67
SCHEDULE IX -- SHORT-TERM BORROWINGS
COCA-COLA ENTERPRISES INC.
(In millions)
- ---------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
END OF INTEREST DURING THE DURING THE DURING THE
CATEGORY PERIOD RATE PERIOD PERIOD(a) PERIOD(b)
- ---------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED:
DECEMBER 31, 1993
Notes payable to banking
institutions $ 22 6.7% $ 27 $ 12 7.3%
Commercial paper 522 3.4% 694 409 3.2%
DECEMBER 31, 1992
Public medium-term notes $ -- -- $ 484 $ 169 4.4%
Commercial paper 197 3.3% 779 523 3.8%
DECEMBER 31, 1991
Notes payable to banking
institutions $ -- -- $ 250 $ 63 7.9%
Public medium-term notes 484 4.4% 484 338 5.5%
Commercial paper 778 4.8% 778 546 6.0%
- --------------------------------------------------------------------------------------------------------
(a) The average amount outstanding during the period was computed by dividing
the total of month-end outstanding principal balances by the number of
months in the period.
(b) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term debt outstanding.
F-5
68
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
COCA-COLA ENTERPRISES INC.
(In millions)
- -------------------------------------------------------------------------------------------------
COLUMN A COLUMN B
- -------------------------------------------------------------------------------------------------
CHARGED TO COSTS AND EXPENSES
(b)
--------------------------------
FISCAL YEAR
--------------------------------
ITEM 1993 1992 1991
- -------------------------------------------------------------------------------------------------
Maintenance and repairs $ 76 $ 70 $ 48
Media advertising costs(a) 39 44 35
Amortization of franchise and other assets 165 162 91
- -------------------------------------------------------------------------------------------------
(a) Media advertising costs as shown above do not include administrative
expenses, as it is not practical to determine that portion applicable to
media advertising. In addition, the amounts shown are net of cooperative
advertising credits received from soft drink licensors of $41 million in
1993, $39 million in 1992 and $32 million in 1991.
(b) Royalties and taxes other than payroll and income taxes do not exceed one
percent of net operating revenues and, accordingly, are not presented in the
schedule.
F-6
69
APPENDIX TO MAPS
Maps of the United States and a portion of Western Europe outlining the
Company's territories are displayed on page 4 of this form. These maps appear
in the paper format version of the form and not in this electronic filing.
70
EXHIBIT INDEX
COCA-COLA ENTERPRISES INC.
1993 FORM 10-K
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
3.1 Restated Certificate of Incorporation of Exhibit 28.2 to the Company's Quarterly
Coca-Cola Enterprises, as amended on April 15, Report on Form 10-Q as filed May 11,
1992. 1992.
3.2 Bylaws of Coca-Cola Enterprises, as amended Exhibit 3.2 to the Company's Annual
through February 18, 1992. Report on Form 10-K for the fiscal year
ended December 31, 1991.
71
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
4.1 Indenture dated as of July 30, 1991, together Exhibit 4.1 to the Company's Current
with the First Supplemental Indenture thereto Report on Form 8-K (Date of Report:
dated January 29, 1992, between Coca-Cola July 30, 1991); Exhibit 4.01 to the
Enterprises and Manufacturers Hanover Trust Company's Current Report on Form 8-K
Company, as Trustee, with regard to certain (Date of Report: January 29, 1992);
unsecured and unfunded debt securities of Exhibit 4.02 to the Company's Current
Coca-Cola Enterprises, and forms of notes and Report on Form 8-K (Date of Report:
debentures issued thereunder. January 29, 1992); Exhibit 4.01 to the
Company's Current Report on Form 8-K
(Date of Report: September 8, 1992);
Exhibits 4.01 and 4.02 to the Company's
Current Report on Form 8-K (Date of
Report: November 12, 1992); Exhibit
4.01 to the Company's Current Report on
Form 8-K (Date of Report: January 4,
1993); Exhibit 4.02 to the Company's
Current Report on Form 8-K (Date of
Report: September 15, 1993).
72
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
4.2 Medium Term Notes Issuing and Paying Agency Exhibit 4.3 to the Company's Annual
Agreement dated as of November 10, 1987, as Report on Form 10-K for the fiscal year
amended, between Coca-Cola Enterprises and ended December 30, 1988.
Morgan Guaranty Trust Company of New York, as
issuing and paying agent, including as Exhibit
B thereto the form of Medium Term Note issuable
thereunder, and including Supplement No. 1 and
Supplement No. 2 thereto each dated as of June
15, 1988.
4.3 Indenture dated as of November 15, 1989 between Exhibit 4.01 to the Company's Current
Coca-Cola Enterprises and Bankers Trust Report on Form 8-K (Date of Report:
Company, as Trustee, with regard to certain December 12, 1989); Exhibit 4.4(a) to
unsecured and unsubordinated debt securities of the Company's Annual Report on Form 10-K
Coca-Cola Enterprises, and forms of Fixed Rate for the fiscal year ended December 29,
Medium Term Note and Floating Rate Medium Term 1989; Exhibit 4.4(b) to the Company's
Note, each issuable commencing Annual Report on Form 10-K for the
December 18, 1989 pursuant to the above- fiscal year ended December 29, 1989.
referenced Indenture.
73
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
4.4 Credit Agreement dated as of April 12, 1993 Exhibit 4 to the Company's Quarterly Report on
among Coca-Cola Enterprises; Bank of America Form 10-Q as filed on August 16, 1993.
National Trust and Savings Association;
Citibank, N.A.; NationsBank of Texas, National
Association; The First National Bank of
Chicago; Union Bank of Switzerland, New York
Branch; Texas Commerce Bank National
Association; Trust Company Bank; Wachovia Bank
of Georgia, N.A.; Canadian Imperial Bank of
Commerce; The Toronto-Dominion Bank; Swiss
Bank Corporation, New York Branch and Cayman
Islands Branch; Mellon Bank, N.A.; The Northern
Trust Company.
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 Coca-Cola Exhibit 10.1 to the Company's Annual
Enterprises, as amended through February 12, Report on Form 10-K for the fiscal year
1991.* ended December 31, 1991.
- ----------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c).
74
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
10.2 Form of Stock Option Agreement between Exhibit 10.5 to the Company's
Coca-Cola Enterprises and certain of its Registration Statement on Form S-1, No.
officers.* 33-9447.
10.3 1986 Restricted Stock Award Plan of Coca-Cola Exhibit 10.6 to the Company's Annual
Enterprises, as amended February 16, 1988.* Report on Form 10-K for the fiscal year
ended January 1, 1988.
10.4 Long-Term Incentive Plan of Coca-Cola Exhibit 10.7 to the Company's Annual
Enterprises, as amended through July 10, 1989.* Report on Form 10-K for the fiscal year
ended December 29, 1989.
10.5 1992-1993 Long-Term Incentive Plan of Coca-Cola Page 1 of Exhibit 10.5
Enterprises, as amended.*
10.6 Management Incentive Plan of Coca-Cola Exhibit 10.6 to the Company's Annual
Enterprises.* Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.7 1991 Amendment and Restatement of the Coca-Cola Exhibit 10.7 to the Company's Annual
Enterprises Supplemental Retirement Plan, as Report on Form 10-K for the fiscal year
amended July 1, 1993.* ended December 31, 1991.
10.8 Form of Stock Option Agreements between Exhibit 10.36 to the Company's
Coca-Cola Enterprises and certain of its Registration Statement on Form S-1,
Directors.* No. 33-9447.
- ----------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c).
75
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
------- --------------------------- -----------------------
10.9 Coca-Cola Enterprises 1988 Stock Appreciation Exhibit 10.10 to the Company's Annual
Rights Plan as amended through February 12, Report on Form 10-K for the fiscal year
1991.* ended December 31, 1991.
10.10 Coca-Cola Enterprises 1991 Stock Option Plan, Exhibit 10.11 to the Company's Annual
as amended and restated through February 18, Report on Form 10-K for the fiscal year
1992.* ended December 31, 1992.
10.11 Coca-Cola Enterprises 1992 Restricted Stock Exhibit 10.12 to the Company's Annual
Award Plan.* Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.12 Coca-Cola Enterprises Officer Severance Plan.* Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1991.
10.13 Johnston Coca-Cola Bottling Group Supplemental Exhibit 10.18 to Johnston Coca-Cola
Retirement Plan.* Bottling Group's Annual Report on Form
10-K for the fiscal year ended October
27, 1990 (Commission File No. 0-16428).
10.14 Coca-Cola Enterprises Medical Reimbursement Exhibit 10.14 to the Company's Annual
Plan.* Report on Form 10-K for the fiscal year
ended December 31, 1991.
- ----------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c).
76
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
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10.15 Johnston Coca-Cola Bottling Group Medical Exhibit 10.6 to Johnston Coca-Cola
Reimbursement Plan.* Bottling Group's Annual Report on Form
10-K for the fiscal year ended October
26, 1991. (Commission File No.
0-16428).
10.16 Amended and Restated Deferred Compensation Page 1 of Exhibit 10.16
Agreement between Johnston Coca-Cola Bottling
Group and Henry A. Schimberg dated December 16,
1991, as amended.*
10.17 1993 Amendment and Restatement of Deferred Page 1 of Exhibit 10.17
Compensation Agreement between Johnston Coca-Cola
Bottling Group and John R. Alm dated as of
April 30, 1993.*
10.18 1993 Amendment and Restatement of Deferred Page 1 of Exhibit 10.18
Compensation Agreement between Johnston
Coca-Cola Bottling Group and Philip H. Sanford
dated as of April 30, 1993.*
10.19 Retirement Plan for the Board of Directors of Exhibit 10.33 to the Company's Annual
Coca-Cola Enterprises, effective April 11, Report on Form 10-K for the fiscal year
1991.* ended December 31, 1991.
10.20 Deferred Compensation Plan for Non-Employee Page 1 of Exhibit 10.20
Director Compensation, dated June 15, 1989, as
amended.*
- ----------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c).
77
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
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10.21 Matching Gifts Program.* Exhibit 10.23 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.22 Tax Sharing Agreement dated November 12, 1986 Exhibit 10.1 to the Company's
between Coca-Cola Enterprises and The Coca-Cola Registration Statement on Form S-1,
Company. No. 33-9447.
10.23 Registration Rights Agreement dated November Exhibit 10.3 to the Company's
12, 1986 between Coca-Cola Enterprises and The Registration Statement on Form S-1, No.
Coca-Cola Company. 33-9447.
10.24 Registration Rights Agreement dated as of Exhibit 10 to the Company's Current
December 17, 1991 among Coca-Cola Enterprises, Report on Form 8-K (Date of Report:
The Coca-Cola Company and the share owners of December 18, 1991).
Johnston Coca-Cola Bottling Group named
therein.
10.25 Registration Rights Agreement dated as of Page 1 of Exhibit 10.25
December 15, 1993 among Coca-Cola Enterprises,
The Coca-Cola Company and the share owners of
the Coca-Cola Bottling Company of Northeast
Arkansas, Inc.
10.26 Form of Bottle Contract, as amended. Exhibit 10.24 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 30, 1988.
- ----------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c).
78
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
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Letter Agreement dated March 15, 1989 between Exhibit 10.23 to the Company's Annual
10.27 Coca-Cola Enterprises and The Coca-Cola Company Report on Form 10-K for the fiscal year
with respect to the Bottle Contracts, as ended December 31, 1991.
amended by letter agreement dated December 18,
1991.
10.28 Form of Tolling Agreement between The Coca-Cola Exhibit 10.41 to the Company's Annual
Company and various Company bottlers. Report on Form 10-K for the fiscal year
ended January 2, 1987.
10.29 Sweetener Sales Agreement--Bottler between The Exhibit 10.30 to the Company's Annual
Coca-Cola Company and various Company bottlers. Report on Form 10-K for the fiscal year
ended December 31, 1992.
10.30 Lease Agreement by and between The Coca-Cola Exhibit 10.31 to the Company's Annual
Company and Coca-Cola Enterprises, as Tenant, Report on Form 10-K for the fiscal year
commencing July 1, 1987, as amended. ended December 31, 1992.
10.31 Share Repurchase Agreement dated January 1, Exhibit 10.44 to the Company's Annual
1991 between The Coca-Cola Company and Report on Form 10-K for the fiscal year
Coca-Cola Enterprises. ended December 28, 1990.
10.32 Stock Purchase Agreement dated as of June 29, Exhibit 2 to the Company's Current
1993 by and among Coca-Cola Holdings Report on Form 8-K (Date of Report:
(Netherlands) B.V., The Coca-Cola Company, June 30, 1993).
Bottling Holdings (Netherlands) B.V. and
Coca-Cola Enterprises.
11 Statement re computation of per share earnings. Page 1 of Exhibit 11
12 Statement re computation of ratios. Page 1 of Exhibit 12
79
INCORPORATED BY REFERENCE OR
FILED HEREWITH
(THE COMPANY'S CURRENT, QUARTERLY AND
ANNUAL REPORTS ARE FILED WITH THE
EXHIBIT SECURITIES AND EXCHANGE COMMISSION UNDER
NUMBER DESCRIPTION FILE NO. 01-09300)
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22 Subsidiaries of the Registrant. Page 1 of Exhibit 22
23 Consent of Independent Auditors. Page 1 of Exhibit 23
24 Powers of Attorney. Page 1 of Exhibit 24