SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

Dated  November 11, 2004

 

Coca-Cola Hellenic Bottling Company S.A.

(Translation of Registrant’s Name Into English)

 

9 Fragoklissias Street, 151 25 Maroussi, Athens, Greece

(Address of Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F  ý  Form 40-F  o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1): 
o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7): 
o

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  o  No  ý

 

 



 

Table of Contents

 

1.

Press Release of November 10, 2004 – Results for the nine months ended October 1, 2004 (US GAAP)

 

 



 

 

Armenia, Austria, Belarus, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia

FYROM, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Moldova, Nigeria, Northern Ireland,

Poland, Romania, Russia, Serbia & Montenegro, Slovakia, Slovenia, Switzerland, Ukraine

 

Results for the Nine Months Ended October 1, 2004 (US GAAP)

 

HIGHLIGHTS FOR THE FIRST NINE MONTHS

 

         Volume of 1,078 million unit cases, 4% ahead of the same period in 2003,

 

         Operating profit of €394.4 million versus €354.4 million, 11% ahead of the same period in 2003,

 

         Significant increase in net income to €273.2 million from €217.9 million in the same period in 2003.

 

THIRD QUARTER HIGHLIGHTS

 

         Volume of 399 million unit cases, 2% ahead of the same period in 2003,

 

         Operating profit of €175.1 million versus €162.1 million, 8% ahead of the same period in 2003,

 

         Increase in net income to €122.4 million from €110.6 million in the same period in 2003.

 

 

Doros Constantinou, Managing Director of Coca-Cola HBC, commented:

 

‘Coca-Cola HBC performed well in difficult conditions and has delivered positive results. Despite the softness in volume, which was caused by external factors in many of our territories, margins were improved across the group as a result of successful pricing and mix initiatives and our commitment to effective cost management. We continue to invest for growth and value, critically review our manufacturing infrastructure and at the same time generate strong cash flows.

 

As always, it is the strength of our volume to value business model and the operational discipline of management across our business, which enable us to generate such positive results in challenging market conditions. We are well positioned to achieve our guidance for the full year 2004.’

 

November 10, 2004

 



 

Coca-Cola HBC (“the Company”) is one of the world’s largest bottlers of products of The Coca-Cola Company and has operations in 26 countries serving a population of more than 500 million people.  The Company shares are listed on the Athens Exchange (ATHEX:EEEK), with secondary listings on the London (LSE:CCB) and Australian (ASX:CHB) Stock Exchanges. The Company’s American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE:CCH).

 

Financial information in this announcement is presented on the basis of US generally accepted accounting principles (“US GAAP”). The Company also prepares financial information under International Financial Reporting Standards (“IFRS”), which are available on its website: www.coca-colahbc.com.

 

ENQUIRIES:

 

Melina Androutsopoulou 

 

Tel: +30 210 618 3308

Investor Relations Director

 

e-mail: melina.androutsopoulou@cchbc.com

 

 

 

Theodoros Varelas 

 

Tel: +30 210 618 3181

Investor Relations Associate

 

e-mail: theodoros.varelas@cchbc.com

 

 

 

Thalia Chantziara 

 

Tel: +30 210 618 3124 

Investor Relations Analyst

 

e-mail: thalia.chantziara@cchbc.com

 

 

 

European press contact:

 

 

FD Greece 

 

Tel: +30 210 725 8194 

Alastair Hetherington

 

e-mail: alastair.hetherington@fd.com

 

 

 

US press contact:

 

 

FD US

 

Tel: +1 212 850 5600 

Brian Maddox

 

e-mail: bmaddox@fd-us.com 

Jim Olecki

 

e-mail: jolecki@fd-us.com

 

CONFERENCE CALL:

 

The Company will host a conference call with financial analysts to discuss the 2004 third quarter results on November 10, 2004 at 4:00 pm, Athens time (2:00 pm London time and 9:00 am New York time). Interested parties can access the live, audio webcast of the calls through the Company’s website (www.coca-colahbc.com).

 

2



 

FORWARD LOOKING STATEMENTS

 

This document may contain forward-looking statements that involve risks and uncertainties.  These statements may generally, but not always, be identified by the use of words such as “believe”, “outlook”, “guidance”, “intend”, “expect”, “anticipate”, “plan”, “target” and similar expressions.  All statements other than statements of historical facts, including, among others, statements regarding our future financial position and results, business strategy, budgets, projected levels of consumption and production, projected costs, future taxation, the impact of our restructuring efforts, estimates of capital expenditure and plans and objectives of management for future operations, are forward-looking statements.  You should not place undue reliance on these forward-looking statements.  By their nature, forward-looking statements involve risk and uncertainty because they reflect our current expectations and assumptions as to future events and circumstances that may not prove accurate.  Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (File No 1-31466).

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations.  Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.  Unless we are required by law to update these statements, we will not necessarily update any of these statements after the date of the consolidated financial statements included here, either to conform them to actual results or to changes in our expectations.

 

3



 

Coca Cola Hellenic Bottling Company S.A.

 

Consolidated Statements of Income – unaudited

 

(Prepared in accordance with US GAAP)

 

 

 

Nine Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

 

 

(Euros in millions, except per share data)

 

 

 

 

 

 

 

Net sales revenue

 

3,262.4

 

3,115.1

 

Cost of goods sold

 

(1,919.1

)

(1,867.1

)

Gross profit

 

1,343.3

 

1,248.0

 

 

 

 

 

 

 

Selling, delivery and administrative expenses

 

(948.9

)

(893.6

)

Operating profit

 

394.4

 

354.4

 

 

 

 

 

 

 

Interest expense

 

(50.3

)

(45.8

)

Interest income

 

4.5

 

6.2

 

Other income

 

5.1

 

3.1

 

Other expenses

 

(4.5

)

(0.6

)

Income before income taxes

 

349.2

 

317.3

 

 

 

 

 

 

 

Income tax expense

 

(69.3

)

(93.4

)

Share of income of equity method investees

 

3.6

 

4.1

 

Minority interests

 

(10.3

)

(10.1

)

Net income

 

273.2

 

217.9

 

 

 

 

 

 

 

Basic and diluted net income per share (in euros):

 

1.15

 

0.92

 

 

See notes to the consolidated financial statements

 

4



 

 

 

Three Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

 

 

(Euros in millions, except per share data)

 

 

 

 

 

 

 

Net sales revenue

 

1,213.2

 

1,184.1

 

Cost of goods sold

 

(709.3

)

(698.2

)

Gross profit

 

503.9

 

485.9

 

 

 

 

 

 

 

Selling, delivery and administrative expenses

 

(328.8

)

(323.8

)

Operating profit

 

175.1

 

162.1

 

 

 

 

 

 

 

Interest expense

 

(21.0

)

(13.2

)

Interest income

 

1.0

 

4.3

 

Other income

 

2.6

 

0.8

 

Other expenses

 

(4.0

)

0.1

 

Income before income taxes

 

153.7

 

154.1

 

 

 

 

 

 

 

Income tax expense

 

(29.7

)

(43.3

)

Share of income of equity method investees

 

2.0

 

2.2

 

Minority interests

 

(3.6

)

(2.4

)

Net income

 

122.4

 

110.6

 

 

 

 

 

 

 

Basic net income per share (in euros):

 

 0.52

 

 0.47

 

Diluted net income per share (in euros):

 

 0.51

 

 0.47

 

 

See notes to the consolidated financial statements

 

5



 

Coca Cola Hellenic Bottling Company S.A.

 

Consolidated Balance Sheets – unaudited

 

(Prepared in accordance with US GAAP)

 

 

 

As at

 

 

 

October 1, 2004

 

December 31, 2003

 

 

 

(Euros in millions)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

278.4

 

35.5

 

Trade accounts receivable, less allowance of €25.6m in 2004 and €25.8m in 2003

 

569.0

 

482.3

 

Inventories

 

334.3

 

291.1

 

Receivables from related parties

 

44.5

 

57.2

 

Taxes receivable

 

14.0

 

12.8

 

Deferred income taxes

 

38.3

 

30.7

 

Prepaid expenses

 

54.9

 

51.2

 

Derivative assets

 

7.9

 

44.3

 

Other current assets

 

31.5

 

44.6

 

Total current assets

 

1,372.8

 

1,049.7

 

 

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

 

Land

 

102.0

 

98.1

 

Buildings

 

707.2

 

675.7

 

Returnable containers

 

252.5

 

220.2

 

Production and other equipment

 

2,081.9

 

1,851.2

 

 

 

3,143.6

 

2,845.2

 

Less accumulated depreciation

 

(1,218.3

)

(1,027.4

)

 

 

1,925.3

 

1,817.8

 

Construction in progress

 

71.6

 

55.8

 

Advances for equipment purchases

 

9.6

 

14.5

 

 

 

2,006.5

 

1,888.1

 

 

 

 

 

 

 

Investments in equity method investees

 

59.6

 

57.4

 

Deferred income taxes

 

 

0.5

 

Other tangible non-current assets

 

49.5

 

25.2

 

Franchise rights

 

1,969.4

 

1,948.4

 

Goodwill and other intangible assets

 

757.3

 

764.6

 

Total assets

 

6,215.1

 

5,733.9

 

 

See notes to the consolidated financial statements

 

6



 

 

 

As at

 

 

 

October 1, 2004

 

December 31, 2003

 

 

 

(Euros in millions)

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term borrowings

 

65.3

 

84.4

 

Accounts payable

 

202.1

 

189.8

 

Accrued expenses

 

396.1

 

335.8

 

Amounts payable to related parties

 

51.0

 

79.1

 

Deposit liabilities

 

152.8

 

142.8

 

Income taxes payable

 

76.0

 

82.2

 

Deferred income taxes

 

4.1

 

3.6

 

Derivative liabilities

 

4.7

 

4.5

 

Current portion of long term debt

 

295.9

 

295.9

 

Current portion of capital lease obligations

 

12.5

 

10.8

 

Total current liabilities

 

1,260.5

 

1,228.9

 

 

 

 

 

 

 

Long-term debt, less current portion

 

1,486.2

 

1,302.9

 

Capital lease obligations, less current portion

 

32.7

 

30.8

 

Cross currency swap payables relating to borrowings

 

72.5

 

89.9

 

Employee benefit obligations

 

104.1

 

98.4

 

Deferred income taxes

 

641.0

 

656.0

 

Other long term liabilities

 

16.5

 

16.7

 

Total long-term liabilities

 

2,353.0

 

2,194.7

 

 

 

 

 

 

 

Minority interests

 

64.3

 

54.0

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Ordinary shares, € 0.50 par value: 236,925,277 shares authorized, issued and outstanding

 

118.5

 

118.5

 

Additional paid-in capital

 

1,639.1

 

1,639.2

 

Deferred compensation

 

(0.8

)

(0.9

)

Retained earnings

 

717.9

 

492.1

 

Accumulated other comprehensive income

 

62.6

 

7.4

 

Total shareholders’ equity

 

2,537.3

 

2,256.3

 

Total liabilities and shareholders’ equity

 

6,215.1

 

5,733.9

 

 

See notes to the consolidated financial statements

 

7



 

Coca Cola Hellenic Bottling Company S.A.

 

Consolidated Statements of Cash Flows – unaudited

 

(Prepared in accordance with US GAAP)

 

 

 

Nine Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

 

 

(Euros in millions)

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

Net income

 

273.2

 

217.9

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

204.4

 

194.2

 

Deferred income taxes

 

(15.1

)

(4.0

)

(Gains) losses on disposal of non-current assets

 

(3.0

)

5.5

 

Minority interests

 

10.3

 

10.1

 

Share of income of equity method investees

 

(3.6

)

(4.1

)

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

 

 

Trade accounts receivable and other current assets

 

(87.4

)

(119.6

)

Inventories

 

(36.8

)

(41.9

)

Accounts payable and accrued expenses

 

32.5

 

105.2

 

Net cash provided by operating activities

 

374.5

 

363.3

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(257.0

)

(270.6

)

Proceeds from disposals of property, plant and equipment

 

7.4

 

7.6

 

Cash payments for acquisitions, net of cash acquired

 

(2.1

)

(9.1

)

Net proceeds from sale of investments and other assets

 

14.4

 

6.5

 

Net cash used in investing activities

 

(237.3

)

(265.6

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds from issuance of debt

 

671.2

 

1,072.3

 

Payments on debt

 

(506.2

)

(281.3

)

Payments on capital lease obligations

 

(8.7

)

(7.4

)

Return of capital to shareholders

 

(0.4

)

 

Dividends paid

 

(52.3

)

(50.0

)

Net cash provided by financing activities

 

103.6

 

733.6

 

 

 

 

 

 

 

Effect of exchange rates on cash

 

2.1

 

(1.0

)

Net increase in cash and cash equivalents

 

242.9

 

830.3

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

35.5

 

101.3

 

Cash and cash equivalents at end of period

 

278.4

 

931.6

 

 

See notes to the consolidated financial statements

 

8



 

Coca Cola Hellenic Bottling Company S.A.

 

Consolidated Statements of Shareholders’ Equity – unaudited

 

(Prepared in accordance with US GAAP)

 

 

 

Ordinary Shares

 

Additional
Paid-in
Capital

 

Deferred
Compen-
sation

 

Retained
Earnings

 

Accumulated
Other
Comprehen-
sive Income

 

Total

 

 

 

Number
of Shares

 

Amount

 

 

 

(millions)

 

 

 

 

 

(Euros in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at December 31, 2002

 

236.7

 

73.4

 

2,154.0

 

(0.5

)

305.2

 

181.1

 

2,713.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for nine months ended September 26, 2003

 

 

 

 

 

217.9

 

 

217.9

 

Currency translation adjustment, net of applicable income taxes of €0.2m

 

 

 

 

 

 

(122.5

)

(122.5

)

Change in fair value of derivatives including income tax credit of €0.4m

 

 

 

 

 

 

0.9

 

0.9

 

Unrealised gain on available-for-sale
investments, net of applicable income taxes of €0.3m

 

 

 

 

 

 

0.5

 

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

96.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock options

 

 

 

0.2

 

 

 

 

0.2

 

Cash dividends (€0.19 per share)

 

 

 

 

 

(45.0

)

 

(45.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at September 26, 2003

 

236.7

 

73.4

 

2,154.2

 

(0.5

)

478.1

 

60.0

 

2,765.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for three months ended December 31, 2003

 

 

 

 

 

14.0

 

 

14.0

 

Currency translation adjustment, net of applicable income taxes of €0.5m

 

 

 

 

 

 

(46.0

)

(46.0

)

Change in minimum pension liability, net of applicable income taxes of €3.3m

 

 

 

 

 

 

(7.4

)

(7.4

)

Change in fair value of derivatives, net of applicable income taxes of €0.5m

 

 

 

 

 

 

2.5

 

2.5

 

Gain on derivatives reclassified into earnings from other comprehensive income, net of applicable income tax benefit of €1.1m

 

 

 

 

 

 

(2.0

)

(2.0

)

Unrealised gain on available-for-sale investments, net of applicable income taxes of €0.1m

 

 

 

 

 

 

0.3

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

(38.6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capitalisation of reserves, increasing the par value of shares from € 0.31 to € 2.50

 

 

518.3

 

(518.3

)

 

 

 

 

Decrease in par value of shares from € 2.50 to € 0.50 and capital return to shareholders

 

 

(473.3

)

 

 

 

 

(473.3

)

Shares issued to employees exercising stock options

 

0.2

 

0.1

 

3.3

 

 

 

 

3.4

 

Issuance of stock options

 

 

 

 

(0.4

)

 

 

(0.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at December 31, 2003

 

236.9

 

118.5

 

1,639.2

 

(0.9

)

492.1

 

7.4

 

2,256.3

 

 

See notes to the consolidated financial statements

 

9



 

 

 

Ordinary Shares

 

Additional
Paid-in
Capital

 

Deferred
Compen-
sation

 

Retained
Earnings

 

Accumulated
Other
Comprehen-
sive Income

 

Total

 

 

 

Number
of Shares

 

Amount

 

 

 

(millions)

 

 

 

 

 

(Euros in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at December 31, 2003

 

236.9

 

118.5

 

1,639.2

 

(0.9

)

492.1

 

7.4

 

2,256.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for nine months ended October 1, 2004

 

 

 

 

 

273.2

 

 

273.2

 

Currency translation adjustment, net of applicable income taxes of € 5.9m

 

 

 

 

 

 

59.5

 

59.5

 

Change in minimum pension liability, net of applicable income taxes of € 0.1m

 

 

 

 

 

 

(0.3

)

(0.3

)

Change in fair value of derivatives, net of applicable income taxes of € 1.1m

 

 

 

 

 

 

(3.1

)

(3.1

)

Gain on derivatives reclassified into earnings from other comprehensive income, net of applicable taxes of € 0.2m

 

 

 

 

 

 

(0.9

)

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

328.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net movements in shares for equity compensation

 

 

 

(0.1

)

0.1

 

 

 

 

Cash dividends (€0.20 per share)

 

 

 

 

 

(47.4

)

 

(47.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at October 1, 2004

 

236.9

 

118.5

 

1,639.1

 

(0.8

)

717.9

 

62.6

 

2,537.3

 

 

See notes to the consolidated financial statements

 

10



 

Coca-Cola Hellenic Bottling Company S.A.

 

Notes to Consolidated Financial Statements – unaudited

 

1.              BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements of the Coca-Cola Hellenic Bottling Company S.A. (“the Company”) have been prepared in accordance with accounting principles generally accepted in the United States.  They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods presented.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report for the year ended December 31, 2003.

 

2.     ADOPTION OF NEW ACCOUNTING STANDARDS

 

In January 2003, the Financial Account Standards Board (“FASB”) issued Interpretation No. 46, Consolidation of Variable Interest Entities – an Interpretation of Accounting Research Bulletin No. 51 (“FIN No. 46”).  In December 2003, the FASB released a revised version of FIN 46 (“FIN No. 46R”) clarifying certain aspects of FIN No. 46 and providing certain entities with exemptions from the requirements of FIN No. 46. This interpretation requires consolidation by the primary beneficiary of variable interest entities, as defined by this interpretation.  FIN No. 46 is currently effective for all new variable interest entities created after January 31, 2003.  For variable interest entities created prior to February 1, 2003, the provisions of FIN No. 46R must be applied by the Company in 2004.  We have conducted a review of existing contracts for our variable interest parties and concluded that neither FIN No. 46 nor FIN No. 46R have an effect on the Company’s financial statements.

 

3.              INVENTORIES

 

Inventories consist of the following (in millions):

 

 

 

October 1, 2004

 

December 31, 2003

 

 

 

 

 

 

 

Finished goods

 

 €

134.6

 

 €

107.5

 

Raw materials & work in progress

 

132.2

 

122.7

 

Consumables

 

61.9

 

57.4

 

Payments on account

 

5.6

 

3.5

 

 

 

 €

334.3

 

 €

291.1

 

 

4.              RECENT ACQUISITIONS

 

On January 28, 2004, the Company completed the acquisition of the Croatian mineral water company Gotalka d.o.o.  The acquisition includes a production facility at Budinscina and the mineral water brand Bistra.  Total consideration for the acquisition was €7.2 million (excluding costs).  At this stage, the acquisition has resulted in the Company recording €8.4 million of trademarks and €0.4 million of water rights in its developing countries segment.  However, the fair values of the significant assets acquired and liabilities assumed are preliminary and pending finalization of valuations.

 

11



 

On December 30, 2003, the Company acquired 100% of the shares of the Greek potato chip company, Tsakiris S.A. Cash consideration was €6.2 million, with assumption of debt of an additional €9.3 million.  The acquisition has resulted in the Company recording €10.1 million of goodwill in its established countries segment.  However, the fair values of the significant assets acquired and liabilities assumed are preliminary and pending finalization of valuations.  Tsakiris S.A. was a subsidiary of Plias S.A., a company listed on the Athens Stock Exchange.  Plias S.A. is related to the Company by way of some common shareholdings.

 

On October 2, 2003, the Company completed the acquisition of 50% of the shares of the Polish mineral water company, Multivita sp. z o.o., in a joint acquisition with The Coca-Cola Company.  Total consideration for the acquisition was €21.0 million (excluding costs), of which the Company’s share was €10.5 million.  At this stage, the acquisition has resulted in the Company recording €7.9 million of goodwill in its developing countries segment.  However, the fair values of the significant assets acquired and liabilities assumed are preliminary and pending finalization of valuations.  The purchase of this brand complements our strategy of selectively broadening our portfolio of non-CSD brands, and strengthens further our presence in the Polish market.

 

On December 5, 2003, the Company completed the acquisition of 100% of the Austrian mineral water company Römerquelle GmbH. The acquisition involved production facilities at Edelstal and Pöttsching and the mineral water and wellness brands Römerquelle and Markusquelle. Total consideration for the acquisition was €63.3 million (excluding costs), with assumption of debt of an additional €6.4 million.  The acquisition has resulted in the Company recording €31.2 million of trademarks, €23.4 million of goodwill, €0.4 million of water rights and €0.2 million of customer lists in its established countries segment.  However, the fair values of the significant assets acquired and liabilities assumed are preliminary and pending finalization of valuations.

 

5.              FRANCHISE RIGHTS, GOODWILL AND OTHER INTANGIBLE ASSETS

 

Our intangible assets consist mainly of franchise rights related to our bottler’s agreements with The Coca-Cola Company, trademarks and goodwill, predominantly arising from the recognition of deferred tax on the franchise right and trademark values.

 

The Coca-Cola Company does not grant perpetual franchise rights outside of the United States, nonetheless, we believe our franchise agreements will continue to be renewed at each expiration date and, therefore, essentially have an indefinite useful life. We determine the useful life of our trademarks after considering potential limitations that could impact the life of the trademark, such as technological limitations, market limitations and the intent of management with regard to the trademark. All the trademarks that we have recorded on our balance sheet have been assigned an indefinite useful life, as they have an established sales history in the applicable region, it is our intention to receive a benefit from them indefinitely and there is no indication that this will not be the case.

 

In accordance with FASB Statement No. 142, Goodwill and Other Intangible Assets, goodwill and indefinite-lived intangible assets are not amortized, but are reviewed at least annually for impairment. Finite-lived assets are amortized over their estimated useful lives. The following table sets forth the carrying value of intangible assets subject to, and not subject to, amortization (in millions):

 

12



 

 

 

October 1, 2004

 

December 31, 2003

 

Intangible assets not subject to amortization

 

 

 

 

 

Franchise rights

 

1,969.4

 

1,948.4

 

Goodwill

 

722.4

 

711.2

 

Minimum pension liability

 

2.5

 

2.5

 

Trademarks and other intangible assets

 

31.4

 

50.9

 

 

 

2,725.7

 

2,713.0

 

Intangible assets subject to amortization

 

 

 

 

 

Water rights and customer lists

 

1.0

 

 

 

 

2,726.7

 

2,713.0

 

 

The changes in the carrying amount of goodwill are as follows (in millions):

 

 

 

Established
Countries

 

Developing
Countries

 

Emerging
Countries

 

Total

 

Balance as at December 31, 2003

 

587.3

 

103.7

 

20.2

 

711.2

 

Current period acquisitions

 

 

0.1

 

0.3

 

0.4

 

Adjustment to goodwill arising on prior period acquisitions

 

6.2

 

1.8

 

 

8.0

 

Reduction of valuation allowance on net operating losses from acquisition of CCB plc

 

 

(2.4

)

 

(2.4

)

Foreign exchange differences

 

0.7

 

4.3

 

0.2

 

5.2

 

Balance as at October 1, 2004

 

594.2

 

107.5

 

20.7

 

722.4

 

 

6.              SEGMENT INFORMATION

 

The Company has one business, being the production, distribution and sale of alcohol-free, ready-to-drink beverages.  The Company operates in 26 countries (including our equity investment based in the Former Yugoslav Republic of Macedonia) and its financial results are reported in the following segments:

 

Established countries:                      Austria, Greece, Italy, Northern Ireland, Republic of Ireland and Switzerland.

Developing countries:                       Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.

Emerging countries:                                 Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, Moldova, Nigeria, Romania, Russia, Serbia and Montenegro, and Ukraine.

 

The Company’s operations in each of the segments presented have similar economic characteristics, production processes, customers and distribution methods.  The Company evaluates performance and allocates resources primarily based on cash operating profit.  Cash operating profit is defined as operating profit before deductions for depreciation and amortization.  Information on the Company’s segments is as follows (in millions):

 

13



 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

October 1, 2004

 

September 26, 2003

 

Net sales revenue

 

 

 

 

 

 

 

 

 

Established countries

 

612.2

 

 621.2

 

1,754.0

 

1,704.3

 

Developing countries

 

229.2

 

226.9

 

562.5

 

556.3

 

Emerging countries

 

371.8

 

336.0

 

945.9

 

854.5

 

 

 

1,213.2

 

1,184.1

 

3,262.4

 

3,115.1

 

 

 

 

 

 

 

 

 

 

 

Cash operating profit

 

 

 

 

 

 

 

 

 

Established countries

 

120.6

 

118.8

 

320.4

 

300.7

 

Developing countries

 

40.8

 

41.4

 

89.1

 

88.1

 

Emerging countries

 

83.7

 

68.2

 

189.3

 

159.8

 

 

 

245.1

 

228.4

 

598.8

 

548.6

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

 

Established countries

 

(27.8

)

(26.9

)

(84.4

)

(79.0

)

Developing countries

 

(16.3

)

(15.5

)

(46.6

)

(46.5

)

Emerging countries

 

(25.9

)

(23.9

)

(73.4

)

(68.7

)

 

 

(70.0

)

(66.3

)

(204.4

)

(194.2

)

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

Established countries

 

92.8

 

91.9

 

236.0

 

221.7

 

Developing countries

 

24.5

 

25.9

 

42.5

 

41.6

 

Emerging countries

 

57.8

 

44.3

 

115.9

 

91.1

 

 

 

175.1

 

162.1

 

394.4

 

354.4

 

 

 

 

 

 

 

 

 

 

 

Reconciling items

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

(50.3

)

(45.8

)

Interest income

 

 

 

 

 

4.5

 

6.2

 

Other income

 

 

 

 

 

5.1

 

3.1

 

Other expense

 

 

 

 

 

(4.5

)

(0.6

)

Income tax expense

 

 

 

 

 

(69.3

)

(93.4

)

Share of loss/income of equity method investees

 

 

 

 

 

3.6

 

4.1

 

Minority interests

 

 

 

 

 

(10.3

)

(10.1

)

Net income

 

 

 

 

 

273.2

 

217.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

 

 

 

October 1, 2004

 

December 31, 2003

 

Total assets

 

 

 

 

 

 

 

 

 

Established countries

 

 

 

 

 

3,548.0

 

3,462.6

 

Developing countries

 

 

 

 

 

1,292.3

 

1,275.1

 

Emerging countries

 

 

 

 

 

1,158.1

 

1,035.6

 

Corporate / intersegment receivables

 

 

 

 

 

216.7

 

(39.4

)

 

 

 

 

 

 

6,215.1

 

5,733.9

 

 

14



 

7.              EARNINGS PER SHARE

 

The following table sets forth the computation of basic and diluted earnings per share (in millions):

 

 

 

Nine Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

Numerator

 

 

 

 

 

Net income

 

273.2

 

217.9

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

Basic

 

236.9

 

236.7

 

Dilutive effect of Stock Options

 

1.4

 

 

Diluted

 

238.3

 

236.7

 

 

8.              STOCK-BASED COMPENSATION

 

The Company accounts for stock-based compensation in accordance with Accounting Principles Board Opinion No 25, Accounting for Stock Issued to Employees.

 

The following table (in millions except earnings per share) illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB No. 123, Accounting for Stock-Based Compensation.

 

 

 

Nine Months Ended

 

 

 

October 1, 2004

 

September 26, 2003

 

 

 

 

 

 

 

Net income

 

273.2

 

217.9

 

Add: Stock option employee compensation expense included in net income, net of applicable income tax

 

 

0.2

 

Deduct: Total stock option employee compensation expense determined under fair value based method for all awards, net of applicable income tax

 

(3.3

)

(5.2

)

 

 

 

 

 

 

Pro forma net income

 

269.9

 

212.9

 

 

 

 

 

 

 

Earnings per share (euros):

 

 

 

 

 

Basic - reported

 

1.15

 

0.92

 

Basic - pro forma

 

1.14

 

0.90

 

 

 

 

 

 

 

Diluted - reported

 

1.15

 

0.92

 

Diluted - pro forma

 

1.13

 

0.90

 

 

15



 

9.              SEASONALITY OF BUSINESS

 

Operating results for the nine months ended October 1, 2004 are not indicative of the result that may be expected for the year ended December 31, 2004 because of business seasonality.  Business seasonality results from a combination of higher unit sales of the Company’s products in the warmer months of the year and the methods of accounting for fixed costs such as depreciation and interest expense that are not significantly affected by business seasonality.

 

10.       CONTINGENCIES

 

There have been no significant changes in contingencies since 31 December 2003 (as described in the 2003 Annual Report) except for the below.

 

Over the past five years, the Directorate General for Competition of the European Commission has been conducting an investigation into various commercial practices of The Coca-Cola Company and certain Coca-Cola Bottlers in Austria, Belgium, Denmark, Germany and Great Britain regarding possible abuse of a dominant position.

 

In the last few months, together with The Coca-Cola Company and other Coca-Cola Bottlers, we and the Commission have conducted a dialogue to identify and address the commercial practices understood to be under review by the Commission. As a part of this dialogue, we recently submitted draft proposals incorporating undertakings that address all such practices in the European Union. On 19 October 2004, the European Commission announced that it has accepted this Undertaking as a basis for terminating its investigation. The Commission also advised that it intends to formalise the Undertaking as a legally binding commitment. The Undertaking will potentially apply in 27 European countries, covering all channels of distribution where The Coca-Cola Company-branded carbonated soft drinks account for over 40% of national sales and twice the nearest competitor’s share.

 

11.       NET DEBT

       

Net debt consists of the following (in millions):

 

 

 

October 1, 2004

 

December 31, 2003

 

 

 

 

 

 

 

Long-term borrowings

 

1,518.9

 

1,333.7

 

Short-term borrowings

 

373.7

 

391.1

 

Cash and cash equivalents

 

(278.4

)

(35.5

)

Net debt

 

1,614.2

 

€ 1,689.3

 

 

On July 12, 2004, the Company successfully completed a €500 million bond issue.  The issue was completed off the Euro Medium Term Note Programme and has a term of seven years. On the same date the Company also announced the successful tender offer for €322 million of the outstanding debt under its €625 million 5.25% Eurobond which matures in June 2006.  Proceeds from the new Eurobond offering were used to finance the tender offer and partially to pre-fund the maturity of the €300 million Eurobond in December 2004.

 

16



 

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 Hellenic Bottling Company S.A.

 

 

 

 

 

By:

 /s/ Jan Gustavsson

 

 

Name: Jan Gustavsson

 

Title: General Counsel & Company Secretary

 

 

Date:  November 11, 2004

 

17