Coca-Cola Enterprises Inc. Reports Second-Quarter 1995 Cash Operating Profit Grew 11 Percent And Earnings Per Share Increased 21 Percent

Business Wire, July 18, 1995

ATLANTA--(BUSINESS WIRE)--July 18, 1995--Coca-Cola Enterprises today announced that strong operating performance produced second-quarter 1995 cash operating profit of $294 million, approximately 11 percent ahead of second-quarter 1994 results of $265 million. Six-month 1995 cash operating profit reached $491 million, an increase of approximately 10 percent above six-month 1994 results of $446 million. Second-quarter and six-month 1995 cash operating profit include the results of the January 27, 1995, acquisition of the Wichita Coca-Cola Bottling Company ("Wichita"). The results of the Wichita bottler acquisition added approximately 2 percent and 1 percent, respectively, to the reported second-quarter and six-month 1995 cash operating profit growth rates.

Second-quarter 1995 net income applicable to common share owners advanced to $46 million, or 35 cents per common share, an increase of approximately 21 percent from second-quarter 1994 results of $38 million, or 29 cents per common share. The Company reported six-month 1995 net income applicable to common share owners of $48 million, or 37 cents per common share. Excluding the first-quarter 1995 gain from the sale of the Company's 50 percent interest in The Coca-Cola Bottling Company of the Mid South, six-month 1995 net income applicable to common share owners was $43 million, or 33 cents per common share, more than 38 percent above six-month 1994 net income applicable to common share owners of $31 million, or 24 cents per common share.

While second-quarter and six-month 1995 gross margins decreased compared to the same periods in 1994, this was substantially offset by reductions in selling, general and administrative expenses as a percent of net operating revenues. Control of selling, general and administrative expenses combined with favorable interest expense as a percent of net operating revenues and a lower effective tax rate produced higher net income margins. The margin trends exhibited in the first half of 1995 are expected to continue for full-year 1995.

"In the face of significant cost increases, our solid operating and financial performance in the first half of 1995 reflects our superior local market execution combined with the resilience of our industry," commented Summerfield K. Johnston, Jr., vice chairman and chief executive officer of Coca-Cola Enterprises. "With the foundation of the first half of 1995 as a base, we are confident that we can produce another year of consistent growth in our financial results in 1995, and increase long-term value for our share owners."

Operating Results

"In 1995, our operating strategy is to maximize net revenues per case, manage operating expenses, and stimulate volume growth to offset packaging and ingredient cost increases," stated Henry A. Schimberg, president and chief operating officer of Coca-Cola Enterprises. "While we faced competitive price pressures in some markets, second-quarter 1995 net pricing increased significantly from second-quarter 1994 levels, volume growth accelerated, and per case operating expenses were flat relative to second-quarter 1994. In the first half of 1995, our local operations demonstrated their ability to respond to challenging market conditions and to maximize results," Mr. Schimberg continued.

Second-quarter 1995 physical case bottle and can volume exceeded second-quarter 1994 reported and constant territory levels by approximately 6 1/2 percent and 4 1/2 percent, respectively. Second-quarter 1995 fountain gallon volume increased above reported and constant territory second-quarter 1994 levels by approximately 9 percent and 6 percent, respectively. Solid volume growth in the second quarter of 1995 reflects the performance of core soft drink brands including Coca-Cola classic and diet Coke, and double-digit growth in Sprite. Noncarbonated products remain less than 5 percent of total cases sold, but high growth in Nestea Cool, Fruitopia, Powerade, and our still water products contributed to our second-quarter 1995 volume growth. Second-quarter 1995 volume growth also benefited from the shift of Easter holiday volume into the second quarter of 1995 compared to the first quarter in 1994.

Six-month 1995 physical case bottle and can volume increased by approximately 4 percent and 3 percent, respectively, from reported and constant territory six-month 1994 levels. Fountain results in the first six months of 1995 outpaced reported and constant territory fountain gallon volume in the first half of 1994 by approximately 8 1/2 percent and 5 1/2 percent, respectively. Category and brand performance in the first six months of 1995 demonstrated similar trends to second-quarter 1995 results, although the second-quarter 1995 growth rates accelerated from first-quarter 1995 levels.

Both second-quarter and year-to-date 1995 bottle and can net operating revenues per case exceeded same-period 1994 levels by approximately 7 percent. This year-to-date 1995 increase represents the strongest growth in net revenues per case in Coca-Cola Enterprises history. Net revenues per case growth in the second quarter and first six months of 1995 resulted primarily from higher net selling prices, with some effect from favorable trends in product and package mix.