-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KM4tfeuBFhPzzLjLJ7OnQsPC2KfOM3iW4DgSaaK4sjO7FYA0rdD8vnOkEyKjGPz0 rTYkEMoS5F6l9mAbHuPf3Q== 0000804055-97-000015.txt : 19970509 0000804055-97-000015.hdr.sgml : 19970509 ACCESSION NUMBER: 0000804055-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970328 FILED AS OF DATE: 19970508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COCA COLA ENTERPRISES INC CENTRAL INDEX KEY: 0000804055 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 580503352 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09300 FILM NUMBER: 97598430 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7709893000 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY CITY: ATLANTA STATE: GA ZIP: 30339 10-Q 1 THIRD QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 28, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-09300 COCA-COLA ENTERPRISES INC. (Exact name of registrant as specified in its charter) Delaware 58-0503352 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2500 Windy Ridge Parkway, Suite 700 Atlanta, Georgia 30339 (Address of principal executive offices) (Zip Code) 770-989-3000 (Registrant's telephone number, including area code) ______________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock. 385,300,512 Shares of $1 Par Value Common Stock as of May 5, 1997 COCA-COLA ENTERPRISES INC. QUARTERLY REPORT ON FORM 10-Q FOR QUARTER ENDED MARCH 28, 1997 INDEX Page ---- Part I - Item 1. Financial Statements Condensed Consolidated Statements of Operations for the Quarters ended March 28, 1997 and March 29, 1996...................................... 1 Condensed Consolidated Balance Sheets as of March 28, 1997 and December 31, 1996.......................... 2 Condensed Consolidated Statements of Cash Flows for the Quarters ended March 28, 1997 and March 29, 1996...................................... 4 Notes to Condensed Consolidated Financial Statements.. 5 Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... 13 Part II - Item 4. Submission of Matters to a Vote of Security Holders............................... 19 Part II - Item 6. Exhibits and Reports on Form 8-K......... 21 Signatures................................................. 22 Part I. Financial Information Item 1. Financial Statements COCA-COLA ENTERPRISES INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in millions except per share data) Quarter ended ------------------------ March 28, March 29, 1997 1996 --------- --------- Net Operating Revenues.................... $ 2,141 $ 1,600 Cost of sales............................. 1,341 970 ------- ------- Gross Profit.............................. 800 630 Selling, general, and administrative expenses................................ 742 539 ------- ------- Operating Income.......................... 58 91 Interest expense, net..................... 107 79 Other nonoperating deductions, net........ 5 - ------- ------- (Loss) Income Before Income Taxes......... (54) 12 Income tax (benefit) expense.............. (21) 5 ------- ------- (Loss) Net Income......................... (33) 7 Preferred stock dividends................. 2 2 ------- ------- (Loss) Net Income Applicable to Common Share Owners............................ $ (35) $ 5 ======= ======= Average Common Shares Outstanding......... 377 379 ======= ======= Net (Loss) Income Per Share Applicable to Common Share Owners.................. $ (0.09) $ 0.01 ======= ======= See Notes to Condensed Consolidated Financial Statements. - 1 - COCA-COLA ENTERPRISES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) March 28, December 31, ASSETS 1997 1996 --------- ------------ (Unaudited) Current Cash and cash investments, at cost approximating market................... $ 9 $ 47 Trade accounts receivable, less reserves of $47 and $45 million, respectively... 928 668 Inventories: Finished goods......................... 282 221 Raw materials and supplies............. 127 96 ------- ------- 409 317 Current deferred income tax assets....... 140 140 Prepaid expenses and other current assets................................. 165 147 ------- ------- Total Current Assets.................. 1,651 1,319 Property, Plant, and Equipment Land..................................... 260 213 Buildings and improvements............... 949 860 Machinery and equipment.................. 3,878 3,558 ------- ------- 5,087 4,631 Less allowances for depreciation......... 1,973 1,881 ------- ------- 3,114 2,750 Construction in progress................. 83 62 ------- ------- Net Property, Plant, and Equipment.... 3,197 2,812 Franchises and Other Noncurrent Assets, Net...................................... 9,641 7,103 ------- ------- $14,489 $11,234 ======= ======= See Notes to Condensed Consolidated Financial Statements. - 2 - COCA-COLA ENTERPRISES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions except share data) March 28, December 31, LIABILITIES AND SHARE-OWNERS' EQUITY 1997 1996 --------- ------------ (Unaudited) Current Accounts payable and accrued expenses............................... $ 1,509 $ 1,199 Current portion of long-term debt........ 2,207 491 ------- ------- Total Current Liabilities............ 3,716 1,690 Long-Term Debt, Less Current Maturities.... 5,123 4,814 Retirement and Insurance Programs and Other Long-Term Obligations.................... 849 699 Long-Term Deferred Income Tax Liabilities.. 3,249 2,481 Share-Owners' Equity (Note H) Preferred stock.......................... 115 134 Common stock, $1 par value -- Authorized - 1,000,000,000 and 500,000,000 shares respectively; Issued - 441,585,870 and 146,763,463 shares, respectively... 442 147 Additional paid-in capital............... 1,209 1,434 Reinvested earnings...................... 200 237 Cumulative effect of currency translations........................... 3 21 Cost of common stock in treasury (62,999,940 and 21,328,590 shares, respectively).......................... (417) (423) ------- ------- Total Share-Owners' Equity........... 1,552 1,550 ------- ------- $14,489 $11,234 ======= ======= - 3 - COCA-COLA ENTERPRISES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in millions) Quarter ended ----------------------- March 28, March 29, 1997 1996 --------- --------- Cash Flows From Operating Activities Net (loss) income.......................... $ (33) $ 7 Adjustments to reconcile net (loss) income to net cash (used in) derived from operating activities: Depreciation........................... 120 86 Amortization........................... 96 50 Deferred income tax provision.......... (52) (13) Net changes in current assets and current liabilities.................. (282) (36) Additional nonoperating cash flows..... 45 8 ------- ------ Net cash (used in) derived from operating activities................. (106) 102 Cash Flows From Investing Activities Purchases of fixed assets.................. (183) (96) Fixed asset sales.......................... 3 10 Cash investment in bottling businesses, net of cash acquired..................... (1,017) (144) ------- ------ Net cash used in investing activities.. (1,197) (230) Cash Flows From Financing Activities Issuance of long-term debt................. 1,337 303 Payments on long-term debt................. (77) (47) Stock purchases for treasury............... - (118) Exercise of employee stock options......... 5 4 Additional financing activities............ - (6) ------- ------ Net cash derived from financing activities........................... 1,265 136 ------- ------ Net (Decrease) Increase in Cash and Cash Investments.............................. (38) 8 Cash and cash investments at beginning of period................................ 47 8 ------- ------ Cash and Cash Investments at End of Period $ 9 $ 16 ======= ====== Supplemental Noncash Investing and Financing Activities: Acquisitions Fair value of assets acquired.......... $ 3,344 $ 552 Liabilities assumed.................... (1,337) (235) Debt issued and assumed................ (990) (19) Equity issued.......................... - (154) ------- ------ Cash paid, net of cash acquired........ $ 1,017 $ 144 ======= ====== See Notes to Condensed Consolidated Financial Statements. - 4 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended December 31, 1996. Note B - Seasonality of Business Operating results for the first quarter ended March 28, 1997 are not indicative of results that may be expected for the year ended December 31, 1997 primarily due to the seasonality of the Company's business. This seasonality results from a combination of higher unit sales of the Company's products in the second and third quarters versus the first and fourth quarters of the year and the methods of accounting for fixed costs such as depreciation, amortization, and interest expense which are not significantly impacted by the seasonality of the business. Note C - Acquisitions and Divestitures On February 10, 1997, the Company purchased Amalgamated Beverages Great Britain Limited (ABGB) from The Coca-Cola Company and Cadbury Schweppes plc for an aggregate transaction value (purchase price, assumed debt, and other long-term obligations) of approximately $2 billion. The acquisition was initially financed through a combination of sellers' notes and short-term borrowings. The Company intends to refinance portions of these borrowings with longer-term fixed and floating rate financings. Coca-Cola & Schweppes Beverages Limited (CCSB), a wholly-owned subsidiary of ABGB, produces and distributes beverage products of The Coca-Cola Company and Cadbury Schweppes plc in Great Britain. CCSB has entered into long-term contracts to continue to produce and distribute products of both The Coca-Cola Company and Cadbury Schweppes plc in Great Britain. - 5 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note C - Acquisitions and Divestitures (continued) The following table summarizes unaudited proforma financial information of the Company as if the 1996 and 1997 acquisitions of S.A. Beverage Sales Holding N.V., Coca-Cola Enterprises S.A. (formerly known as Coca-Cola Beverages S.A.), Coca-Cola Production S.A., Ouachita Coca-Cola Bottling Company, Inc. (Ouachita), Coca-Cola Bottling Company West, Inc., Grand Forks Coca-Cola Bottling Company, and ABGB, were completed effective January 1, 1996. The unaudited proforma financial information for the quarters ended March 28, 1997 and March 29, 1996 reflects adjustments for: (i) the repayment of assumed debt, (ii) financing of the transactions at an interest cost of approximately 6.9% for the quarter ended March 28, 1997 and 7.5% for the quarter ended March 29, 1996, (iii) amortization of the value of the acquired franchise assets over 40 years, (iv) contractual changes to the business of certain of the acquired companies, and (v) income tax effects of the foregoing (in millions except per share data): Quarter Ended ---------------------- March 28, March 29, 1997 1996 --------- --------- Net Operating Revenues.......... $2,307 $2,201 Cost of sales................... 1,454 1,373 ------ ------ Gross Profit.................... 853 828 Selling, general, and administrative expenses....... 798 738 ------ ------ Operating Income................ 55 90 Interest expense, net........... 123 141 Other nonoperating (deductions) income, net................... (5) 7 ------ ------ Loss Before Income Taxes........ (73) (44) Income tax benefit.............. (28) (14) ------ ------ Net Loss........................ (45) (30) Preferred stock dividends....... 2 3 ------ ------ Proforma Net Loss Applicable to Common Share Owners........... $ (47) $ (33) ====== ====== Proforma Net Loss Per Share Applicable to Common Share Owners........................ $(0.12) $(0.09) ====== ====== - 6 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note D - Long-Term Debt Long-term debt including current maturities consists of the following (in millions): March 28, December 31, 1997 1996 --------- ------------ Commercial Paper, weighted average interest rate of 5.5%......................... $ 769 $ 648 Foreign-denominated bank loans, weighted average interest rates of 5.7% - 1997 and 3.4% - 1996.................. 2,079 370 6.50% Notes due 1997........... 300 300 7.00% Notes due 1999........... 200 200 7.875% Notes due 2002.......... 500 500 8.00% Notes due 2005........... 250 250 8.50% Debentures due 2012...... 250 250 8.75% Debentures due 2017...... 142 142 8.35% Zero Coupon Notes due 2020 (net of unamortized discount of $1,643 and $1,649, respectively)........ 289 283 8.00% and 8.50% Debentures due 2022..................... 1,000 1,000 6.75% Debentures due 2023...... 250 250 6.95% and 7.00% Debentures due 2026..................... 550 550 6.70% Debentures due 2036...... 300 300 5.71% Notes due 2037........... 150 - Additional debt................ 301 262 ------ ------ $7,330 $5,305 ====== ====== Aggregate maturities of long-term debt during the next five years are as follows (in millions): 1997 - $2,207; 1998 - $77; 1999 - $204; 2000 - $5; and 2001 - $1,506. - 7 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note D - Long-Term Debt (continued) The Company's commercial paper program is supported by a $1 billion short-term credit facility and a $1.5 billion multicurrency revolving bank credit agreement maturing in November 2001. At March 28, 1997, approximately $1,047 million is outstanding under this multicurrency credit agreement and $453 million of the outstanding commercial paper supported by this agreement has been classified as long-term debt. The Company has exchanged approximately $769 million of its commercial paper borrowings under foreign currency swap agreements and intends to renew these 30-day foreign currency swap agreements as they expire. The Company has available for issuance approximately $3 billion in registered debt securities under a registration statement with the Securities and Exchange Commission. Additionally, the Company has short-term foreign currency-denominated credit facilities with international banks totaling approximately $751 million and $736 million, of which $294 million and $370 million was outstanding at March 28, 1997 and December 31, 1996, respectively. Effective April 1, 1997 the Company redeemed all of its outstanding 8.75% Debentures due April 1, 2017. During first quarter 1997, $6 million of cost associated with this debt redemption was included in the results of operations as other nonoperating expense. In March 1997 the Company issued $150 million of 5.71% Notes due March 18, 2037. Holders of the Notes may require the Company to repay the notes after one year and every year thereafter. The revolving bank credit agreement and the outstanding notes and debentures contain various provisions which, among other things, require the Company to maintain a defined leverage ratio and limit the incurrence of certain liens or encumbrances in excess of defined amounts. These provisions are not anticipated to become restrictive to the Company's liquidity or capital resources. - 8 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note E - Preferred Stock The Company issued 936,965 of 1,110,000 authorized shares of voting convertible preferred stock, Ouachita Series A (Series A), and issued 95,955 of 350,000 authorized shares of voting convertible preferred stock authorized, Ouachita Series B (Series B), under the Ouachita acquisition. Series A and Series B each have stated values of $150 per share. Series A pays quarterly dividends equaling 4% annually. Series B does not pay dividends. During the first quarter of 1997, the holders of Series A preferred stock converted 124,297 shares into 328,554 shares of common stock, representing cumulative conversions of 180,248 shares of Series A preferred stock into 571,814 shares of common stock. Also during the first quarter of 1997, the holders of Series B preferred stock converted 17 shares into 56 shares of common stock, completing the conversions of all issued shares of Series B preferred stock into a cumulative total of 555,083 shares of common stock. Additional paid-in capital increased by the difference between the recorded value of the converted preferred stock and the cost of treasury stock issued by approximately $14 million in the first quarter of 1997. The cumulative increase through March 28, 1997 to additional paid-in capital for all conversions of preferred stock was $24 million. As of April 28, 1997 all remaining shares of Series A preferred stock have been converted into common stock. Note F - Income Taxes The Company's effective tax rates for the first quarters of 1997 and 1996 were 39% and 43%, respectively. A reconciliation of the income tax provision at the statutory federal rate to the Company's actual income tax provision follows (in millions): Quarter ended ----------------------- March 28, March 29, 1997 1996 --------- --------- Statutory expense (benefit) - 35%........................... $(19) $ 4 State expense (benefit), net of federal......................... (3) 1 Other, net........................ 1 - ----- ---- $ (21) $ 5 ===== ==== - 9 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note G - Stock-Based Compensation Plans An aggregate 845,000 shares of common stock were issued during the first quarter of 1997 from the exercise of stock options under the Company's various stock option plans. In the first quarter of 1997 the Company made grants of 3,433,500 stock performance-based options and 1,811,000 service-based options to certain executives and management employees. All options were granted at an exercise price equal to the fair market value on the grant date and expire ten years from the date of grant. Performance-based options vest either solely upon attainment of specified increases in the Company's common stock within five years from the date of grant or upon attainment of this stock performance criterion coupled with a period of continued employment of up to three years after the stock performance criterion has been met. Service- based options vest ratably over a three-year period. The Company made additional grants in first-quarter 1997 of 7,500 stock options to each non-employee member of the Board of Directors. These options vest solely upon attainment of specified increases in the Company's common stock within five years from the date of grant. In the first quarter of 1997, the Company made grants of 405,000 shares of restricted common stock to certain officers of the Company. These awards vest generally only upon attainment of specified increases in the market price of the Company's common stock within five years from the date of grant and after continued employment for a period of up to five years once the stock performance criterion is met. Note H - Earnings Per Share On February 18, 1997, the Company's Board of Directors approved a proposal to amend the Company's certificate of incorporation to increase the authorized common shares from 500 million to 1 billion and to effect a 3-for-1 stock split. The split was approved at the April 21, 1997 annual meeting of share owners and was effective for share owners of record on May 1, 1997. Common stock at March 28, 1997, was retroactively adjusted to stated par value by $295 million in the first quarter of 1997 to reflect this distribution. The condensed consolidated balance sheet as of March 28, 1997 and results of operations and outstanding shares and per share data for the quarters ended March 28, 1997 and March 29, 1996 contained in this report have been adjusted to reflect the impact of the stock split. In the first quarter of 1997, dividends in the amount of $0.025 per common share were declared for share owners of record on April 1, 1997. After the 3-for-1 stock split, quarterly dividends for share- owners of record on July 1, 1997 were also declared in the amount of $0.025 per common share. Future dividend payments will be determined by the Company's Board of Directors. - 10 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note H - Earnings Per Share (continued) SFAS No. 128, Earnings Per Share, issued during first-quarter 1997 is effective for full-year 1997 and subsequent periods. SFAS No. 128 modifies the method of calculation of net income per share applicable to common share owners and also requires a reconciliation between basic and diluted per-share amounts. Early adoption of the statement prior to the end of 1997 is not allowed. The following table (in millions except per share data) presents the effect of SFAS No. 128 on the Company's net income per share applicable to common share owners as if adopted for current period disclosure. A reconciliation between basic and diluted amounts for the first quarter of 1997 is not presented below because of the net loss during the first quarter. Quarter ended ------------------------ March 28, March 29, 1997 1996 --------- --------- Net (Loss) Income..................... $ (33) $ 7 Preferred stock dividends............. 2 2 ------ ------ Basic and Diluted Net (Loss) Income Applicable to Common Share Owners... $ (35) $ 5 ====== ====== Basic Average Common Shares Outstanding......................... 377 375 ====== ====== Basic Net (Loss) Income Per Share Applicable to Common Share Owners... $(0.09) $ 0.01 ====== ====== Effect of Dilutive Securities: Stock Compensation Awards........... 5 ------ Diluted Average Common Shares Outstanding......................... 380 ====== Diluted Net Income Per Share Applicable to Common Share Owners.............. $ 0.01 ====== - 11 - COCA-COLA ENTERPRISES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note I - Contingencies The Company purchases substantially all of its PET (plastic) bottles from manufacturing cooperatives and other entities involved in the manufacture of plastic bottles. The Company has guaranteed payment of up to $234 million of indebtedness owed by these manufacturing cooperatives to third parties. At March 28, 1997, these cooperatives had approximately $148 million of indebtedness guaranteed by the Company. The Company has also provided letters of credit aggregating approximately $98 million primarily in connection with self-insurance programs. The Company has been named as a potentially responsible party (PRP) for the costs of remediation of hazardous waste at federal and state Superfund sites. The Company believes any ultimate Superfund liability under these PRP designations will not have a materially adverse effect on its financial position, cash flows, or results of operations. At March 28, 1997, there were five federal sites and one state site for which the Company's involvement or liability as a PRP was unresolved. In addition, there were 17 other federal and seven state sites for which it had been concluded that the Company either had no responsibility, the ultimate liability amounts would be less than $100,000 or payments made to date by the Company would be sufficient to satisfy all liability of the Company. Under current law, the Company's liability for clean-up of Superfund sites may be joint and several with other PRPs, regardless of the Company's use in relation to other users. As to any site where the Company may be liable, the Company has determined there are other PRPs who are financially solvent as well, and that any hazardous waste deposited by the Company is minimal when compared to amounts deposited by financially solvent PRPs. - 12 - Part I. Financial Information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations BUSINESS SUMMARY Coca-Cola Enterprises Inc. (the Company) is the world's largest marketer, distributor, and producer of bottled and canned liquid nonalcoholic refreshments. In the United States we operate through exclusive and perpetual rights in franchise territories distributing approximately 58% of The Coca-Cola Company's bottle and can product sales. We are also the sole licensed bottler for products of The Coca-Cola Company in Belgium, Great Britain, the Netherlands, and most of France. Business Objectives and Strategies To ensure a continued focus on building share-owner value, we have defined our objectives and strategies. Our primary operating objective is to increase long-term operating cash flows through profitable increases in sales volume. We plan to achieve our operating objective through the continued execution of the following key strategies: * Creating and executing innovative and superior marketing programs at the local level. * Balancing volume growth with improved margins and sustainable increases in market share. * Developing profitable business partnerships with our customers. * Integrating our international and domestic acquisitions. * Structuring our compensation plans to help focus our employees on enhancing share-owner value. Our primary financial objective is to deliver a superior investment return to our share owners. We strive to achieve this objective through the continued implementation and execution of the following key strategies: * Allocating resources appropriately between capital expenditures, investment in personnel and infrastructure, acquisitions, share repurchases, and debt repayment. * Maintaining a capital structure which maximizes our financial flexibility, given current investment opportunities. * Continuing to evaluate acquisition opportunities that will result in long-term value. -13- OPERATIONS REVIEW Overview We are pleased with the strength of our first quarter performance, particularly considering the highly competitive pricing environment that we are experiencing in the United States. Cash operating profit reached $274 million in the first quarter of 1997, 21% ahead of reported first-quarter 1996 results, and 8% above comparable first-quarter 1996 performance. The reported first-quarter growth rate is significantly impacted by our domestic and European acquisitions completed in 1996 and 1997. Comparable first-quarter 1997 cash operating performance primarily reflects the strong volume growth in the Company's territories in the United States and Europe. In the opinion of management, cash operating profit, or net income before deducting interest, taxes, depreciation, amortization, and other nonoperating items, is one of the key standards for measuring our operating performance. For comparison, 1996 operating results, including cash operating profit, have been adjusted to include all of the Company's 1996 and 1997 acquisitions for the same period they are reflected in the reported first-quarter 1997 results and to exclude the first- quarter 1996 favorable supplier settlement. In addition to comparison adjustments for acquisitions, volume and per case data have also been adjusted for common fiscal periods and elimination of the effect of changes in currency exchange rates, respectively. Cost of sales as a percentage of net operating revenues for the Company's European operations are higher than for domestic operations reflecting different net pricing and packaging and ingredient costs. These differences and the impact of currency fluctuations distort reported changes in net revenues and cost of sales per case. As a result, we believe that changes in consolidated comparable results, after adjusting for the effect of currency translations, are more meaningful indications of underlying business trends. The Company generated a net loss from operations of $0.09 per common share, after adjusting for the 3-for-1 stock split, including a one-time charge of $0.01 per common share resulting from the redemption of debt, an increase in noncash selling, general, and administrative expenses relating to certain stock- based compensation plans and the dilutive effect of the Company's new European operations. Cash Operating Profit Cash operating profit is provided as a supplement to, and not an alternative to, operating income as an indicator of operating performance, or as an alternative to cash flows from operating activities as a measure of liquidity, both of which are defined by generally accepted accounting principles. Actual and comparable cash operating profit for first-quarter 1997 increased 21% and 8%, respectively, over first-quarter 1996. After excluding the effect of currency exchange rates, the comparable first-quarter 1997 cash operating profit grew by 9%. - 14 - Cash Operating Profit (continued) The Company's first-quarter 1997 performance indicates that we are on track to produce 9% comparable cash operating profit growth in 1997 which translates into a 10% to 15% increase in earnings per share for full-year 1997. Our expectations for consolidated growth in 1997 include projections for our European operations to outpace our domestic performance growth. First- quarter 1997 results confirmed this expectation with European operations reporting cash operating profit growth exceeding domestic growth. Earnings per Share In first-quarter 1997, our Board of Directors approved a proposal increasing authorized common shares from 500 million to 1 billion and to effect a 3-for-1 stock split. The stock split was approved by share owners at the April 21, 1997 annual meeting and is effec- tive for share owners of record on May 1, 1997. The following financial information adjusts for the stock split as if it occurred March 28, 1997. The net loss per common share for first-quarter 1997 of $0.09 includes a one-time charge of $6 million ($0.01 per common share after tax) for the redemption of the Company's 8.75% Debentures due 2017 and an increase in noncash selling, general, and administrative expenses for certain stock-based compensation plans as the market price of the Company's stock increased approximately 25% for the quarter. Net Operating Revenues Net operating revenues reached $2.1 billion in the first quarter of 1997, a reported growth of 34% over the same prior year period and a 5% increase over comparable first-quarter 1996 levels. The overall increase in net operating revenues is primarily a result of increases in reported and comparable bottle and can physical case sales volume of 32% and 10%, respectively. The Company's domestic territories produced 77% of the consolidated first- quarter 1997 net operating revenues with the European group contributing the remaining 23%. Volume In the first quarter of 1997, consolidated physical case bottle and can volume exceeded prior-year levels by 32% on a reported basis and 10% on a comparable basis. The significant difference between the reported basis increase and the comparable basis increase results primarily from acquisitions. The first-quarter 1997 comparable growth rate of 10% results from strong performance in both our domestic and international markets. First-quarter 1997 domestic volume exceeded comparable first- quarter 1996 performance by 9 percent. This growth rate is our strongest quarterly volume growth since 1988. Sprite and Coca- Cola classic along with the introduction of Surge are The Coca- Cola Company's brands primarily generating this volume growth. Sales of noncarbonated brands, such as Cool from Nestea, POWERaDE, and our water products, NAYA and Evian, continued to increase at rates faster than carbonated brands. - 15 - Volume (continued) As expected, our European operations generated volume increases that outpaced our domestic volume growth. First-quarter 1997 European volume increased 14% above comparable first-quarter 1996 levels. European operations accounted for 21% of total physical case bottle and can reported volume in first-quarter 1997 compared to 4% of the total reported volume in first-quarter 1996. Net Revenues and Cost of Sales Per Case First-quarter 1997 consolidated net revenues per case declined 1.5% from comparable first-quarter 1996 levels, primarily reflecting the highly competitive pricing environment in the United States. Cost decreases in aluminum and plastic packaging and high fructose corn syrup more than offset the higher concentrate costs resulting in first-quarter 1997 consolidated cost of sales per case 1.5% below comparable first-quarter 1996 consolidated cost of sales per case. Cost of sales as a percentage of net operating revenues for the Company's European operations are much higher than for domestic operations, reflecting different net pricing and packaging and ingredient costs. Selling, General, and Administrative For the first quarter of 1997, selling, general, and administrative expenses as a percent of net operating revenues increased to 35% compared to 34% for comparable first-quarter 1996, primarily due to incremental costs associated with stock-based compensation. Interest Expense First-quarter 1997 net interest expense increased significantly from reported first-quarter 1996 levels due to the higher average debt balances resulting from the 1996 and 1997 acquisitions. The weighted average interest rate for the first quarter of 1997 was 6.9% compared to first-quarter 1996 of 7.5%. Income Tax Expense The Company's effective tax rates for the first quarter of 1997 and 1996 were 39% and 43%, respectively. The reduction in the Company's first-quarter 1997 effective tax rate is a result of the favorable effect of our expanded operations in Europe combined with current expectations for higher pretax profits in 1997. - 16 - CASH FLOW AND LIQUIDITY REVIEW Capital Resources Our sources of capital include, but are not limited to, the issuance of public or private placement debt, bank borrowings, and the issuance of equity securities. We believe that short-term and long-term capital resources available to us are more than sufficient to fund our capital expenditure and working capital requirements, scheduled debt payments, interest and income tax obligations, dividends to our share owners, acquisitions, and plans for share repurchases. For long-term financing needs, we have available $3 billion in debt securities for issuance under a registration statement with the Securities and Exchange Commission. We satisfy seasonal working capital needs and other financing requirements with bank borrowings and short-term borrowings under our commercial paper program. Additionally, we have a $1.5 billion multicurrency revolving bank credit agreement maturing in November 2001 and a $1 billion short-term credit facility. An aggregate of $769 million in commercial paper borrowings and $1,047 million in foreign- denominated borrowings supported by these agreements was outstanding at March 28, 1997. We also have short-term credit facilities aggregating $751 million for our international operations. At the end of first-quarter 1997, the Company's debt portfolio was 60% fixed rate debt and 40% floating rate debt. The majority of the floating rate debt is in foreign-denominated debt. The Company intends to continue to refinance borrowings under its commercial paper program and its foreign-denominated credit facilities with longer-term fixed and floating rate financings. Summary of Cash Activities Cash and cash investments decreased $38 million during first- quarter 1997. Our primary uses of cash were for operations of approximately $106 million, capital expenditures totaling $183 million, and long-term debt payments totaling $77 million. Our primary source of cash for first-quarter 1997 was proceeds from the issuance of debt aggregating $1.3 billion. Operating Activities: Operating activities resulted in a net cash use of $106 million during first-quarter 1997 in comparison to $102 million provided by operations in first-quarter 1996. The higher depreciation expense in first-quarter 1997 results from the effects of increased capital spending and the effects of the 1996 and 1997 acquisitions. Increased amortization reflects increased franchise amortization as a result of acquisitions and increased amortization of performance-based restricted stock and stock options resulting from performance of the Company's stock. Investing Activities: Consistent with the increase in our first- quarter 1997 capital expenditures, the Company continues to expect full-year 1997 capital expenditures to increase over full-year 1996. Full-year 1997 capital expenditures are expected to be between $800 million and $900 million. This increase is primarily attributable to the capital investments expected to be made by our international operations. - 17 - Financing Activities: In February 1997, the Company purchased the Great Britain bottler for a purchase price of approximately $2 billion. The acquisition was initially financed through a combination of sellers' notes and short-term borrowings. The Company expects to refinance portions of these borrowings with longer-term fixed and floating rate financings. Additionally, in the first quarter of 1997, the Company issued $150 million of 5.71% Notes due March 18, 2037. Holders of the Notes may require the Company to repay the notes after one year and every year thereafter. FINANCIAL POSITION REVIEW Overall, the Company's increase in total assets and total liabilities from December 31, 1996 to March 28, 1997 is primarily attributable to the acquisition of the Great Britain bottler. The increase in franchises and other noncurrent assets is a direct result of the franchise asset acquired in connection with the 1997 acquisition. The increase in property, plant, and equipment results from capital expenditures of $183 million in first-quarter 1997 and the acquisition of the Great Britain bottler. The increase in long-term debt and the increase in deferred income taxes also primarily results from the acquisition of the Great Britain bottler. As a result of the 3-for-1 stock split, common stock at March 28, 1997 was retroactively adjusted to stated par value by an increase to common stock and a decrease to additional paid-in capital of $295 million. Activities in currency markets resulted in a decrease in the cumulative translation adjustment of $18 million in first-quarter 1997. As currency exchange rates fluctuate, translation of the statements of operations for our international businesses into U.S. dollars will affect the comparability of revenues and expenses between periods. In first-quarter 1996 the Company primarily operated in U.S. Dollars and the Dutch Florin and in 1997 the Company operates in a multicurrency environment. CAUTIONARY STATEMENTS Certain expectations and projections regarding future performance of the Company referenced in this report are forward-looking statements involving risks and uncertainties. These expectations and projections are based on currently available competitive, financial and economic data, and the Company's operating plans. We caution readers that important factors as described on page 27 of the Company's annual report on Form 10-K for the year ended December 31, 1996 could cause the Company's actual consolidated results in 1997 and thereafter to differ significantly from those expressed in any forward-looking statements contained herein. - 18 - Part II. Other Information Item 4. Submission of Matters to a Vote of Security-Holders The Annual Meeting of share owners was held on Monday, April 21, 1997 in Wilmington, Delaware at which the following matters were submitted to a vote of the share owners of the Company: (a) Votes cast for or withheld regarding the re-election of five Directors for terms expiring in 2000: For Withheld ----------- --------- Howard G. Buffett 102,333,631 2,545,457 Johnnetta B. Cole 104,195,279 683,809 Claus M. Halle 104,194,734 684,354 Jean-Claude Killy 104,196,557 682,531 Henry A. Schimberg 104,188,800 690,288 Additional Directors, whose terms of office as Directors continued after the meeting, are as follows: Term expiring in 1998 Term expiring in 1999 --------------------- --------------------- L. Phillip Humann John L. Clendenin E. Neville Isdell M. Douglas Ivester Scott L. Probasco, Jr. John E. Jacob Francis A. Tarkenton Summerfield K. Johnston, Jr. Robert A. Keller - 19 - Part II. Other Information Item 4. Submission of Matters to a Vote of Security-Holders (continued) (b) Votes cast for or against, and the number of abstentions and broker non-votes for each other proposal brought before the meeting are as follows: Broker Proposal For Against Abstain Non-Votes - ---------------------- ---------- ---------- ------- ---------- Approve the 1997 Stock Option Plan 94,693,833 10,062,147 127,421 - Approve the Long-Term Incentive Plan 100,251,708 871,442 172,320 3,587,931 Approve the Executive Management Incentive Plan 99,967,291 1,073,331 254,852 3,587,927 Approve Amendment to Certificate of Incorporation to increase the authorized common shares and to affect the 3-for-1 stock split 103,602,932 1,239,036 41,433 - Ratify the Appointment of Independent Auditors 104,682,252 89,465 111,684 - Share-owners' proposal to create an independent nominating committee 13,253,472 86,781,134 1,260,868 3,587,927 - 20 - Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K): Exhibit Incorporated by Reference Number Description or Filed Herewith - ------- -------------------------------- -------------------------- 3 Certificate of Incorporation, Filed Herewith as amended 12 Statements regarding computations Filed Herewith of ratios 27 Financial Data Schedule Filed Herewith (b) Reports on Form 8-K: During first-quarter 1997, the Company filed the following current reports on Form 8-K: Date of Report Description - ----------------- --------------------------------------------- December 31, 1996 Current report on Form 8-K filed January 31, 1997 reporting fourth-quarter and full-year 1996 results of operations and a summary of key financial results February 10, 1997 Press release announcing completion of the acquisition of Amalgamated Beverages Great Britain Limited filed February 24, 1997 February 10, 1997 Amendment, filed March 10, 1997, to item 7 of 8-K dated February 10, 1997, filed on February 24, 1997, to include financial statements of business acquired and pro forma financial information February 18, 1997 Press release announcing proposed 3-for-1 stock split and amendment to articles of incorporation to increase common shares, filed February 27, 1997 - 21 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COCA-COLA ENTERPRISES INC. (Registrant) Date: May 8, 1997 -------------------------------- John R. Alm Senior Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer) Date: May 8, 1997 -------------------------------- O. Michael Whigham Vice President, Controller and Chief Accounting Officer - 22 - EX-12 2 RATIO OF EARNINGS COCA-COLA ENTERPRISES INC. Exhibit 12 EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (In millions except ratios) Quarter ended -------------------- March 28, March 29, 1997 1996 --------- --------- Computation of Earnings: Earnings (loss) from continuing operations before income taxes...................... $ (54) $ 12 Add: Interest expense......................... 104 74 Amortization of debt premium/discount and expenses.......... 6 6 Interest portion of rent expense......... 5 2 ----- ----- Earnings as Adjusted......................... $ 61 $ 94 ===== ===== Computation of Fixed Charges: Interest expense........................... $ 104 $ 74 Capitalized interest....................... - 1 Amortization of debt premium/discount and expenses............ 6 6 Interest portion of rent expense........... 5 2 ----- ----- Fixed Charges................................ 115 83 Preferred stock dividends (a).............. 3 2 ----- ----- Combined Fixed Charges and Preferred Stock Dividends............................ $ 118 $ 85 ===== ===== Ratio of Earnings to Fixed Charges (b)....... (c) 1.14 ===== ===== Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (b).. (c) 1.10 ===== ===== (a) Preferred stock dividends have been increased to an amount representing the pretax earnings which would be required to cover such dividend requirements. (b) Ratios were calculated prior to rounding to millions. (c) Earnings for March 28, 1997 were insufficient to cover fixed charges and combined fixed charges and preferred stock dividends by $54 million and $57 million, respectively. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF THE FILER FOR THE PERIOD ENDED MARCH 28, 1997 INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 28, 1997 (COMMISSION FILE NO. 001-9300) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000804055 COCA-COLA ENTERPRISES 1,000,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-28-1997 9 0 975 47 409 1,651 5,170 1,973 14,489 3,716 5,123 0 115 442 995 14,489 2,141 2,141 1,341 1,341 5 0 107 (54) (21) (33) 0 0 0 (33) (0.09) (0.09)
EX-3.1 4 EXHIBIT 3(i) ------------------------------ | STATE OF DELAWARE | | SECRETARY OF STATE | | DIVISION OF CORPORATIONS | | FILED 10:00 AM 04/15/1992 | | 72106041 - 388509 | ----------------------------- RESTATED CERTIFICATE OF INCORPORATION OF COCA-COLA ENTERPRISES INC. (RESTATED AS OF APRIL 15, 1992) (Originally incorporated on January 25, 1944 under the name of The Hickory Publishing Company) ------------- (Pursuant to Section 245 of the General Corporation Law of the State of Delaware) ------------- FIRST: The name of the corporation is Coca-Cola Enterprises Inc. (hereinafter referred to as the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: A. The total number of shares of all classes of stock that the Corporation shall have authority to issue is Six Hundred Million (600,000,000) shares, consisting of Five Hundred Million (500,000,000) shares of common stock, par value $1 per share (hereinafter referred to as "Common Stock") and One Hundred Million (100,000,000) shares of preferred stock, par value $1 per share (hereinafter referred to as "Preferred Stock"). B. The board of directors of the Corporation is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as a "Preferred Stock Designation") to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the shares of Common Stock, without a vote of the holders of the shares of Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the Preferred Stock Designation or Preferred Stock Designations establishing the series of Preferred Stock. C. Each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which the holders of shares of Common Stock are entitled to vote. D. Each share of Common Stock of the Corporation issued and outstanding or held in the treasury of the Corporation immediately prior to the close of business on May 1, 1997, that being the time when the amendment of this Article FOURTH of the Certificate of Incorporation shall have become effective, is changed into and reclassified as two fully paid and nonassessable shares of Common Stock, par value $1.00 per share, and at the close of business on such date, each holder of record of Common Stock shall, without further action, be and become the holder of one additional share of Common Stock for each share of Common Stock held of record immediately prior thereto. Effective at the close of business on such date, each certificate representing shares of Common Stock outstanding or held in treasury immediately prior to such time shall continue to represent the same number of shares of Common Stock and as promptly as practicable thereafter, the Corporation shall issue and cause to be delivered to each holder of record of shares of Common Stock at the close of business on such date an additional certificate or certificates representing one additional share of Common Stock for each share of Common Stock held of record immediately prior thereto. FIFTH: A. The business and affairs of the Corporation shall be managed by the board of directors, and the directors need not be elected by ballot unless required by the bylaws of the Corporation. B. The number of directors shall be fixed by, or in the manner provided in, the bylaws. Commencing with the election of directors at the annual meeting of stockholders held in 1986, the directors shall be divided, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the next annual meeting of stockholders thereafter, the term of the office of the second class to expire at the second annual meeting of stockholders thereafter, and the term of office of the third class to expire at the third annual meeting of stockholders thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of 2 stockholders commencing with the first annual meeting after the division of directors into classes, directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified. All vacancies on the board of directors and newly created directorships resulting from any increase in the authorized number of directors shall be filled exclusively by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. C. The board of directors is expressly authorized to adopt, amend or repeal the bylaws of the Corporation. SIXTH: A. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after this Restated Certificate of Incorporation becomes effective to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. B. Any repeal or modification of the foregoing Section A by the stockholders of the Corporation shall not adversely affect any right or protection of a director or the Corporation existing at the time of such repeal or modification. SEVENTH: A. In anticipation that the Corporation will cease to be a wholly owned subsidiary of The Coca-Cola Company, but that The Coca-Cola Company will remain a substantial stockholder of the Corporation, and in anticipation that the Corporation and The Coca-Cola Company may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by the Corporation through its continued contractual, corporate and business relations with The Coca-Cola Company (including service of officers and directors of The Coca-Cola Company as officers and directors of the Corporation), the provisions of this Article SEVENTH are set forth to regulate and define the conduct of certain affairs of the Corporation as they may involve The Coca-Cola Company and its officers and directors, and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith. 3 B. The Coca-Cola Company shall have no duty to refrain from engaging in the same or similar activities or lines of business as the Corporation, and neither The Coca-Cola Company nor any officer or director thereof (except as provided in paragraph C below) shall be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of any such activities of The Coca-Cola Company or of such person's participation therein. In the event that The Coca-Cola Company acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both The Coca-Cola Company and the Corporation, The Coca-Cola Company shall have no duty to communicate or offer such corporate opportunity to the Corporation and shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder of the Corporation by reason of the fact that The Coca-Cola Company pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Corporation. C. In the event that a director or officer of the Corporation who is also a director or officer of The Coca-Cola Company acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both the Corporation and The Coca-Cola Company, such director or officer of the Corporation shall have fully satisfied and fulfilled the fiduciary duty of such director or officer to the Corporation and its stockholders with respect to such corporate opportunity and shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of the fact that The Coca-Cola Company pursues or acquires such corporate opportunity for itself or directs such corporate opportunity to another person or does not communicate information regarding such corporate opportunity to the Corporation, if such director or officer acts in a manner consistent with the following policy: (i) A corporate opportunity offered to any person who is an officer of the Corporation, and who is also a director but not an officer of The Coca-Cola Company, shall belong to the Corporation; (ii) a corporate opportunity offered to any person who is a director but not an officer of the Corporation, and who is also a director or officer of The Coca-Cola Company shall belong to the Corporation if such opportunity is expressly offered to such person in writing solely in his or her capacity as a director of the Corporation, and otherwise shall belong to The Coca Cola Company; and (iii) a corporate opportunity offered to any person who is an officer of both the Corporation and The Coca-Cola Company shall belong to the Corporation. D. Any person purchasing or otherwise acquiring any interest in shares of the capital stock of the Corporation shall be deemed to have consented to the provisions of this Article SEVENTH. 4 E. For purposes of this Article SEVENTH: (1) A director of the Corporation who is Chairman of the board of directors of the Corporation or of a committee thereof shall not be deemed to be an officer of the Corporation by reason of holding such position (without regard to whether such position is deemed an office of the Corporation under the bylaws of the Corporation), unless such person is a full-time employee of the Corporation; and (2) The Coca-Cola Company shall include all subsidiary corporations and other entities in which The Coca-Cola Company owns (directly or indirectly) more than 50% of the outstanding voting capital stock or voting power. EIGHTH: Any action required or permitted to be taken by the stockholders of the Corporation shall be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing of such stockholders. NINTH: In addition to any affirmative vote required by law, by this Certificate of Incorporation or by any Preferred Stock Designation: (a) any amendment or alteration of this Certificate of Incorporation by the stockholders; (b) any amendment or alteration of the bylaws of the Corporation by the stockholders; (c) any merger or consolidation of the Corporation with or into any other corporation other than a merger or consolidation that does not require the vote of the stockholders of the Corporation; (d) any sale, lease, or exchange (in one transaction or a series of transactions) of all or substantially all of the property and assets of the Corporation; or (e) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation shall require the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the outstanding shares of the Common Stock and any series of Preferred Stock entitled to vote generally in the election of directors, voting together as a single class. Such affirmative vote shall be required notwithstanding any other provisions of this Certificate of Incorporation or any provision of law or of any agreement with any national securities exchange or otherwise which might otherwise permit a lesser vote or no vote. 5 TENTH: The board of directors of the Corporation, when evaluating any offer of a person, other than the Corporation itself, to (a) make a tender or exchange offer for any equity security of the Corporation, (b) merge or consolidate the Corporation with another person, or (c) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation shall, in connection with the exercise of its business judgment in determining what are the best interests of the Corporation and its stockholders, give due consideration to all relevant factors, including without limitation (i) the consideration being offered in relation to the current market price, but also in relation to the current value of the Corporation in a freely negotiated transaction and in relation to the board of directors' current estimate of the future value of the Corporation as an independent entity, (ii) the social and economic effects on the employees, customers, suppliers and other constituents of the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located, and (iii) the desirability of maintaining independence from any other entity. ELEVENTH: A. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or (if serving for another corporation at the request of the Corporation) agent or in any other capacity while serving as a director, officer, employee or (if serving for another corporation at the request of the Corporation) agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA, excise taxes or penalties and amounts to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or (if serving for another corporation at the request of the Corporation) agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in Section B hereof with respect to proceedings seeking to enforce 6 rights to indemnification, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article ELEVENTH or otherwise. B. If a claim under Section A of this Article ELEVENTH is not paid in full by the Corporation within ninety days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. C. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article ELEVENTH shall not be exclusive of any other right which any person may have or 7 hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. D. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. TWELFTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. This Restated Certificate of Incorporation was duly adopted by the board of directors pursuant to Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation as amended or supplemented through April 15, 1992, and there is no discrepancy between such provisions and the provisions of this Restated Certificate of Incorporation. IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been executed on this 15th day of April, 1992. COCA-COLA ENTERPRISES INC. S/ SUMMERFIELD K. JOHNSTON, JR. By:-------------------------------- Summerfield K. Johnston, Jr. Vice Chairman and Chief Executive Officer ATTEST: S/ J. GUY BEATTY,JR. -------------------------------- J. Guy Beatty, Jr., Secretary 8 ---------------------------- | STATE OF DELAWARE | | SECRETARY OF STATE | | DIVISION OF CORPORATIONS | | FILED 11:10 AM 04/21/1997 | | 971127667 - 0388509 | ---------------------------- Certificate of Amendment of the ------------------------------- Certificate of Incorporation --------------------------- of -- Coca-Cola Enterprises Inc. --------------------------- Under Section 242 of the General Corporation Law of the State of Delaware COCA-COLA ENTERPRISES INC., a corporation duly organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That on February 18, 1997, the Board of Directors duly adopted the following resolution amending the Certificate of Incorporation of the Corporation, and declared its advisability and directed that the amendment be considered at the next annual meeting of the stockholders of the Corporation: RESOLVED, that the Certificate of Incorporation of the Corporation be, and the same hereby is, amended by deleting the current Article FOURTH thereof, and substituting the following: A. The total number of shares of all classes of stock that the Corporation shall have authority to issue is One Billion One Hundred Million (1,100,000,000) shares, consisting of One Billion (1,000,000,000) shares of common stock, par value $1 per share (hereinafter referred to as "Common Stock") and One Hundred Million (100,000,000) shares of preferred stock, par value $1 per share (hereinafter referred to as "Preferred Stock") B. The board of directors of the Corporation is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as a "Preferred Stock Designation") to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the shares of Common Stock, without a vote of the holders of the shares of Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the Preferred Stock Designation or Preferred Stock Designations establishing the series of Preferred Stock. C. Each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which the holders of shares of Common Stock are entitled to vote. D. Each share of Common Stock of the Corporation issued and outstanding or held in the treasury of the Corporation immediately prior to the close of business on May 1, 1997, that being the time when the amendment of this Article FOURTH of the Certificate of Incorporation shall have become effective, is changed into and reclassified as three fully paid and nonassessable shares of Common Stock, par value $1 per share, and at the close of business on such date, each holder of record of Common Stock shall, without further action, be and become the holder of two additional shares of Common Stock for each share of Common Stock held of record immediately prior thereto. Effective at the close of business on such date, each certificate representing shares of Common Stock outstanding or held in treasury immediately prior to such time shall continue to represent the same number of shares of Common Stock and as promptly as practicable thereafter, the Corporation shall issue and cause to be delivered to each holder of record of shares of Common Stock at the close of business on such date an additional certificate or certificates representing two additional shares of Common Stock for each of Common Stock held of record immediately prior thereto. SECOND: That on April 21, 1997, at the Corporation's annual meeting called and held in accordance with the provisions of the General Corporation Law of the State of Delaware, the amendment was duly approved and adopted by a majority of the outstanding stock of the Corporation entitled to vote upon the amendment. THIRD: That the effective date of this amendment shall be at the close of business on May 1, 1997. IN WITNESS WHEREOF, this Certificate of Amendment has been signed on behalf of the Corporation by its Senior Vice President and attested by its Assistant Secretary as of the 21st day of April, 1997. COCA-COLA ENTERPRISES INC. S/ LOWRY F. KLINE ------------------------------ Lowry F. Kline Senior Vice President Attest: S/ E. LISTON BISHOP III - ----------------------------- E. Liston Bishop III Assistant Secretary [Seal] -----END PRIVACY-ENHANCED MESSAGE-----