Coca-Cola Enterprises Reports Second-Quarter 1999 Results.ATLANTA--(BUSINESS WIRE)--July 20, 1999-- -0-
-- Second-quarter 1999 cash operating profit was $574 million.
-- Excluding the nonrecurring product recall costs, second-quarter
1999 cash operating profit was $677 million, 6 percent above
comparable second-quarter 1998 results.
-- Reflecting the 4 1/2 percent increase in net revenues per case to
retailers and the product recall in Europe, consolidated constant
territory volume declined 6 percent in the second quarter of
1999.
-- Second-quarter 1999 net income was 8 cents per diluted common
share.
-- Excluding the 16 cents per share nonrecurring product recall
costs, second-quarter 1999 net income per diluted common share
was 24 cents.
Coca-Cola Enterprises Coca-Cola Enterprises NYSE: CCE is the largest bottler by volume in the Coca-Cola System. It is the anchor bottler for North America and parts of Europe. The company is the bottler of Coca-Cola and its other soft drink products, and in some areas a few other soft drink today announced that second-quarter 1999 cash operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $574 million, a decline from second-quarter 1998 results entirely due to the nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. costs and lost sales associated with the product recall in certain parts of Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Excluding the
previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). nonrecurring product recall costs of $103 million, second-quarter 1999 cash operating profit was $677 million, 6 percent above comparable, or acquisition-adjusted, second-quarter 1998 results. The 6 percent second-quarter 1999 comparable cash operating profit growth reflects higher pricing and improved operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. in the Company's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. territories partially offset by volume declines in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe. In the first six months of 1999, cash operating profit was $991 million, up 4 percent from reported six-month 1998 results. Excluding the nonrecurring product recall costs, six-month 1999 cash operating profit exceeded comparable six-month 1998 results by 8 percent. "Considering the disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in our business from the product recall in Europe, we are pleased that we were able to produce 6 percent second-quarter 1999 comparable cash operating profit growth excluding nonrecurring costs," commented Henry A. Schimberg Schimberg is a Thuringian (Germany) municipality in the district of Eichsfeld.
• , president and chief executive officer of Coca-Cola Enterprises. "We have made significant progress in price improvement on our products in North America and in managing our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . In addition, we believe our efforts, in concert with The Coca-Cola Coca-Cola soft drink found throughout the world. [Trademarks:Crowley Trade, 115] See : Ubiquity Company, to reintroduce Re`in`tro`duce´ v. t. 1. To introduce again. Verb 1. reintroduce - introduce anew; "We haven't met in a long time, so let me reintroduce myself" re-introduce our products back in the markets affected by the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. product recall will substantially minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. any impact on our results for the rest of 1999." In management's opinion, comparable cash operating profit represents one of the key indicators for measuring operating performance in the beverage bottling industry. Cash operating profit is defined as earnings before deducting interest, taxes, depreciation, amortization, and other nonoperating items (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ). Comparable, or acquisition-adjusted, 1998 results include all material 1998 and 1999 acquisitions as if the transactions occurred on January January: see month. 1, 1998. In addition, 1999 comparable results have been adjusted to exclude the second-quarter 1999 nonrecurring product recall costs. Reflecting the impact of nonrecurring expenses and lost sales from the European product recall, second-quarter 1999 net income applicable to common share owners declined to $33 million, or 8 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Excluding the nonrecurring product recall costs of $103 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern , or 16 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. after tax, second-quarter 1999 net income per diluted common share was 24 cents. In the first six months of 1999, the net loss applicable to common share owners was $29 million, or a loss of 7 cents per share. Excluding the second-quarter 1999 nonrecurring product recall costs, net income per share was 9 cents per share in the first half of 1999. Operating Results Second-quarter 1999 net operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. grew 3 percent to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.8 billion, primarily reflecting the impact of the Company's 1998 and 1999 acquisitions partially offset by lost sales from the European product recall. North American net operating revenues represented approximately 76 percent of total second-quarter 1999 revenues with Europe generating the remaining 24 percent. In the first six months of 1999, net operating revenues exceeded $7 billion, up 6 percent from reported six-month 1998 results. In the first half of 1999, North America represented 75 percent of total revenues and Europe contributed the remaining 25 percent. In the second quarter of 1999, consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: constant territory physical case bottle and can volume decreased by 6 percent. Second-quarter 1999 consolidated results represented declines of 5 percent in North America and 7 percent in Europe. The second-quarter 1999 North American volume decline reflects the Company's price increases, which exceeded the industry average, and the consumer response to these price initiatives. In addition, the North American volume decline reflects strong second-quarter 1998 performance when volume growth exceeded 9 percent. The volume decline in Europe primarily reflects the impact of the product recall in certain parts of the Company's European territories. Volume in Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. , where no product was recalled, increased 6 percent in the second quarter of 1999, including a 9 percent increase in the month of June June: see month. when the recall occurred in other parts of the Company's European territories. Volume in the Benelux Be·ne·lux An economic union of Belgium, the Netherlands, and Luxembourg, originally established as a customs union in 1948. Noun 1. region, territories most affected by the product recall, declined approximately 29 percent in the second quarter of 1999 with a decline of almost 70 percent in the month of June. In the first six months of 1999, constant territory and constant fiscal period physical case bottle and can volume declined 3 percent in both Europe and North America. Bottle and can net revenues per physical case to retailers increased 4 1/2 percent in the second quarter of 1999. In the second quarter of 1999, the net revenues per physical case growth primarily reflected higher price levels in North America as well as favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product, package, and channel mix shifts. Six-month 1999 bottle and can net revenues per physical case to retailers grew 4 percent. In the second quarter and first six months of 1999, approximately $91 million of the $103 million nonrecurring product recall costs were expensed in cost of sales with the remainder reflected in selling, delivery, and administrative expenses. Excluding the impact of the nonrecurring product recall costs, comparable bottle and can cost of sales per physical case declined 1/2 percent in the second quarter of 1999 and increased 1/2 percent in the first half of 1999. The Company has experienced favorable package mix shifts and packaging costs throughout the first half of 1999. In the second quarter of 1999, net interest expense increased from 1998 reported results, primarily due to higher debt balances from the Company's 1998 capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. programs. The second-quarter and six-month 1999 effective tax rate was 33 percent, below the second-quarter and six-month 1998 effective tax rate of 36 percent. The lower second-quarter 1999 effective tax rate reflects the combination of expected 1999 pretax earnings and the beneficial tax impact of certain international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Included in this news release are several forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. management comments and other statements that reflect management's current outlook for future periods. As always, these expectations are based on the currently available competitive, financial, and economic data along with the Company's operating plans, and is subject to future events and uncertainties. Among the events or uncertainties which could adversely affect future periods are any long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. impact on European sales related to the second-quarter 1999 product quality issues, lower-than-expected net pricing resulting from increased marketplace competition, an inability to meet performance requirements for expected levels of marketing support payments from The Coca-Cola Company, material changes from expectations in the cost of raw materials and ingredients, an inability to achieve the expected timing for returns on cold drink equipment and employee infrastructure expenditures, an inability to meet projections for performance in newly acquired territories, unexpected costs associated with Year 2000 compliance or the business risk associated with Year 2000 noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance by customers and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. suppliers, unexpected costs associated with conversion to the common European currency (the Euro), and unfavorable interest rate and currency fluctuations. The forward-looking statements in this news release should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the detailed cautionary statements found on page 19 of the Company's 1998 Annual Report and in the Company's first-quarter 1999 Form 10-Q Form 10-Q See 10-Q. . Coca-Cola Enterprises Inc. (NYSE NYSE See: New York Stock Exchange : CCE CCE Cornell Cooperative Extension CCE Corporate and Continuing Education CCE Coca-Cola Enterprises Inc. CCE Commission de Coopération Environnementale CCE Centre for Continuing Education CCE College of Continuing Education CCE Certified Computer Examiner ) is the world's largest marketer, distributor, and producer of bottle and can liquid nonalcoholic non·al·co·hol·ic adj. A beverage usually containing less than 0.5 percent alcohol by volume. refreshment. Coca-Cola Enterprises sells approximately 74 percent of The Coca-Cola Company's bottle and can volume in North America and is the sole licensed bottler for products of The Coca-Cola Company in Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , Great Britain, Luxembourg Luxembourg, province, Belgium Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. , the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , and most of France.
COCA-COLA ENTERPRISES INC.
KEY OPERATING INFORMATION
Reported Comparable
Second-Quarter 1999 Change Change (a)
------------------- -------- ----------
Cash Operating Profit - Consolidated (6)% 6 %
Physical Case Bottle and Can Volume (b)
Consolidated (1)% (6)%
North America 1 % (5)%
Europe (7)% (7)%
Fountain Gallon Volume (b) 13 % 3 %
Net Revenues Per Case to Retailers
(Bottle and Can) 2 1/2 % 4 1/2 %
Cost of Sales Per Case (Bottle and Can) 5 % (1/2)%
Reported Comparable
Six-Months 1999 Change Change (a)
--------------- -------- ----------
Cash Operating Profit - Consolidated 4 % 8 %
Physical Case Bottle and Can Volume (b)
Consolidated 2 % (3)%
North America 4 % (3)%
Europe (5)% (3)%
Fountain Gallon Volume (b) 12 % 2 %
Net Revenues Per Case to Retailers
(Bottle and Can) 3 1/2 % 4 %
Cost of Sales Per Case (Bottle and Can) 4 % 1/2 %
(a) To determine the comparable results for the change in key
operating variables, 1998 and 1999 acquisitions are included for
the same period in 1998 as reported in 1999 and 1999 results have
been adjusted to exclude the second-quarter 1999 nonrecurring
product recall costs.
(b) To determine comparable results for the change in volume, 1998
results have also been adjusted to include the same number of
fiscal days as 1999.
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions Except Per Share Data)
Second Quarter
----------------------------
1999 (a) 1998 Change
------ ------ ------
Net Operating Revenues $3,797 $3,687 3 %
Cost of Sales 2,433 2,297 6 %
------ ------
Gross Profit 1,364 1,390 (2)%
Selling, Delivery, and
Administrative Expenses 1,127 1,048 8 %
------ ------
Operating Income 237 342 (31)%
Interest Expense, Net 186 170 9 %
Other Nonoperating Expense, Net 1 0
------ ------
Income Before Income Taxes 50 172
Income Tax Expense 16 61
------ ------
Net Income 34 111
Preferred Stock Dividends 1 0
------ ------
Net Income Applicable to
Common Share Owners $ 33 $ 111
====== ======
Basic Average Common Shares
Outstanding 426 394
====== ======
Basic Net Income Per Share
Applicable to Common
Share Owners (b) $ 0.08 $ 0.28
====== ======
Diluted Average Common Shares
Outstanding 437 407
====== ======
Diluted Net Income Per Share
Applicable to Common
Share Owners (b) $ 0.08 $ 0.27
====== ======
Cash Operating Profit Data:
Operating Income $ 237 $ 342 (31)%
Depreciation 226 177 28 %
Amortization 111 92 21 %
------ ------
Cash Operating Profit $ 574 $ 611 (6)%
====== ======
(a) Second-quarter 1999 results include nonrecurring European product
recall costs of $103 million pretax, or 16 cents per share after
tax. The costs were allocated $91 million to cost of sales and
$12 million to selling, delivery, and administrative expenses.
(b) Per share data calculated prior to rounding to millions.
COCA-COLA ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions Except Per Share Data)
Six Months
------------------------------
1999 (a) 1998 Change
------ ------ ------
Net Operating Revenues $7,066 $6,645 6 %
Cost of Sales 4,476 4,173 7 %
------ ------
Gross Profit 2,590 2,472 5 %
Selling, Delivery, and
Administrative Expenses 2,258 2,041 11 %
------ ------
Operating Income 332 431 (23)%
Interest Expense, Net 373 338 10 %
Other Nonoperating Income, Net 0 0
------ ------
Income (Loss) Before Income Taxes (41) 93
Income Tax Expense (Benefit) (14) 33
------ ------
Net Income (Loss) (27) 60
Preferred Stock Dividends 2 0
------ ------
Net Income (Loss) Applicable to
Common Share Owners $ (29) $ 60
====== ======
Basic Average Common Shares
Outstanding 424 390
====== ======
Basic Net Income (Loss) Per
Share Applicable to Common
Share Owners (b) $(0.07) $ 0.15
====== ======
Diluted Average Common Shares
Outstanding 424 404
====== ======
Diluted Net Income (Loss) Per
Share Applicable to Common
Share Owners (b) $(0.07) $ 0.15
====== ======
Cash Operating Profit Data:
Operating Income $ 332 $ 431 (23)%
Depreciation 437 342 28 %
Amortization 222 182 22 %
------ ------
Cash Operating Profit $ 991 $ 955 4 %
====== ======
(a) Six-month 1999 results reflect the 7 acquisitions completed late
in 1998 and early in 1999 as if the transactions were completed
on January 1, 1999. In addition, six-month 1999 results include
nonrecurring product recall costs of $103 million pretax, or
16 cents per share after tax. The costs were allocated
$91 million to cost of sales and $12 million to selling,
delivery, and administrative expenses.
(b) Per share data calculated prior to rounding to millions.
COCA-COLA ENTERPRISES INC.
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)
July 2, December 31,
1999 1998
----------- ------------
(Unaudited)
ASSETS
Current
Cash and cash investments $ 142 $ 68
Trade accounts receivable,
net 1,495 1,337
Inventories 707 543
Prepaid expenses and other
current assets 391 337
------- -------
Total Current Assets 2,735 2,285
Net Property, Plant, and Equipment 5,201 4,891
Franchises and Other Noncurrent
Assets, Net 14,608 13,956
------- -------
$22,544 $21,132
======= =======
LIABILITIES AND SHARE-OWNERS' EQUITY
Current
Accounts payable and accrued
expenses $ 2,330 $ 2,257
Current portion of long-term debt 1,776 1,140
------ -------
Total Current Liabilities 4,106 3,397
Long-Term Debt, Less Current Maturities 9,480 9,605
Retirement and Insurance Programs
And Other Long-Term Obligations 1,025 977
Long-Term Deferred Income Tax
Liabilities 4,987 4,715
Share-Owners' Equity 2,946 2,438
------- -------
$22,544 $21,132
======= =======
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