COCA COLA ENTERPRISES INC - 10-Q Quarterly Report

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Coca-Cola Enterprises Inc.

FORM 10-Q

QUARTERLY REPORT

FOR THE QUARTER ENDED APRIL 2, 2004

FILED PURSUANT TO SECTION 13

OF THE

SECURITIES EXCHANGE ACT OF 1934

================================================================================

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 April 2, 2004

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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock.

470,067,496 Shares of $1 Par Value Common Stock as of May 5, 2004

================================================================================

COCA-COLA ENTERPRISES INC.

QUARTERLY REPORT ON FORM 10-Q

FOR QUARTER ENDED APRIL 2, 2004

INDEX

Page
----

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Income Statements for the Quarters
ended April 2, 2004 and March 28, 2003.......................... 1

Condensed Consolidated Balance Sheets as of April 2, 2004
and December 31, 2003........................................... 2

Condensed Consolidated Statements of Cash Flows for the Quarters
ended April 2, 2004 and March 28, 2003.......................... 4

Notes to Condensed Consolidated Financial Statements............. 5

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 20

Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 41

Item 4. Controls and Procedures.......................................... 41

PART II - OTHER INFORMATION

Item 1. Legal Proceedings................................................ 42

Item 4. Submission of Matters to a Vote of Security Holders.............. 42

Item 6. Exhibits and Reports on Form 8-K................................. 44

Signatures................................................................ 45

Part I. Financial Information

Item 1. Financial Statements

COCA-COLA ENTERPRISES INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited; in millions except per share data)

Quarter ended
--------------------
April 2, March 28,
2004 2003
--------- ----------

Net Operating Revenues..................................... $ 4,240 $ 3,667
Cost of sales, transactions with The Coca-Cola Company
$1,138 and $932, respectively............................. 2,460 2,148
--------- ----------

Gross Profit............................................... 1,780 1,519
Selling, delivery, and administrative expenses............. 1,476 1,341
--------- ----------

Operating Income........................................... 304 178
Interest expense, net...................................... 156 140
Other nonoperating income, net............................. 1 4
--------- ----------

Income Before Income Taxes................................. 149 42
Income tax expense......................................... 45 14
--------- ----------

Net Income................................................. 104 28
Preferred stock dividends.................................. - 1
--------- ----------

Net Income Applicable to Common Shareowners................ $ 104 $ 27
========= ==========

Basic Net Income Per Share Applicable to Common
Shareowners............................................... $ 0.23 $ 0.06
========= ==========

Diluted Net Income Per Share Applicable to Common
Shareowners............................................... $ 0.22 $ 0.06
========= ==========

Dividends Per Share Applicable to Common Shareowners........$ 0.04 $ 0.04
========= ==========

See Notes to Condensed Consolidated Financial Statements.

-1-

COCA-COLA ENTERPRISES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)

April 2, December 31,
ASSETS 2004 2003
----------- -------------
(Unaudited)
Current
Cash and cash investments, at cost approximating
market.............................................$ 69 $ 80
Trade accounts receivable, less allowance reserves
of $51 and $52, respectively....................... 1,777 1,735
Amounts receivable from The Coca-Cola Company, net.. - 37
Inventories:
Finished goods.................................... 583 475
Raw materials and supplies........................ 264 250
----------- -------------
847 725
Current deferred income tax assets.................. 45 42
Prepaid expenses and other current assets........... 338 381
----------- -------------
Total Current Assets............................. 3,076 3,000

Property, Plant, and Equipment
Land................................................ 455 445
Buildings and improvements.......................... 2,072 2,064
Machinery and equipment............................. 10,815 10,743
----------- -------------
13,342 13,252
Less allowances for depreciation.................... 6,904 6,729
----------- -------------
6,438 6,523
Construction in progress............................ 225 271
----------- -------------
Net Property, Plant, and Equipment................ 6,663 6,794

Goodwill.............................................. 578 578

License Intangible Assets............................. 14,192 14,171

Long-Term Customer Contracts and Other
Noncurrent Assets.................................... 1,162 1,157
----------- -------------

$ 25,671 $ 25,700
=========== =============

See Notes to Condensed Consolidated Financial Statements.

-2-

COCA-COLA ENTERPRISES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share data)

April 2, December 31,
LIABILITIES AND SHAREOWNERS' EQUITY 2004 2003
----------- -------------
(Unaudited)

Current
Accounts payable and accrued expenses.............. $ 2,460 $ 2,760
Amounts due The Coca-Cola Company, net............. 46 -
Deferred cash payments from The Coca-Cola Company.. 49 87
Current portion of long-term debt.................. 1,363 1,094
----------- -------------
Total Current Liabilities........................ 3,918 3,941

Long-Term Debt, Less Current Maturities.............. 10,345 10,552

Retirement and Insurance Programs and Other Long-Term
Obligations......................................... 1,541 1,522

Deferred Cash Payments from The Coca-Cola Company,
Less Current........................................ 377 355

Long-Term Deferred Income Tax Liabilities............ 4,996 4,965

Shareowners' Equity
Common stock, $1 par value - Authorized -
1,000,000,000 shares; Issued - 467,093,681 and
462,084,668 shares, respectively.................. 467 462
Additional paid-in capital......................... 2,679 2,611
Reinvested earnings................................ 1,326 1,241
Accumulated other comprehensive income............. 104 133
Common stock in treasury, at cost - 6,371,391 and
6,330,513 shares, respectively.................... (82) (82)
----------- -------------
Total Shareowners' Equity........................ 4,494 4,365
----------- -------------

$ 25,671 $ 25,700
=========== =============

See Notes to Condensed Consolidated Financial Statements.

-3-

COCA-COLA ENTERPRISES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)

Quarter ended
--------------------
April 2, March 28,
2004 2003
--------- ----------

Cash Flows From Operating Activities
Net income................................................ $ 104 $ 28
Adjustments to reconcile net income to net cash derived
from (used in) operating activities:
Depreciation........................................... 260 255
Amortization........................................... 6 18
Deferred income tax expense............................ 28 1
Deferred cash payments from The Coca-Cola Company...... (16) (17)
Pension costs in excess of cash contributions.......... 31 15
Net changes in current assets and current liabilities.. (314) (487)
Other.................................................. (39) (42)
--------- ----------
Net cash derived from (used in) operating activities...... 60 (229)

Cash Flows From Investing Activities
Investments in capital assets............................. (158) (208)
Proceeds from fixed asset disposals, $58 from The Coca-Cola
Company in 2003 - 60
--------- ----------
Net cash used in investing activities..................... (158) (148)

Cash Flows From Financing Activities
Increase in commercial paper, net......................... 156 320
Issuance of long-term debt................................ 175 291
Payments on long-term debt................................ (284) (292)
Dividend payments on common and preferred stock........... (18) (1)
Exercise of employee stock options........................ 58 7
--------- ----------
Net cash derived from financing activities................ 87 325
--------- ----------

Net Decrease in Cash and Cash Investments.................. (11) (52)
Cash and cash investments at beginning of period.......... 80 68
--------- ----------

Cash and Cash Investments at End of Period................. $ 69 $ 16
========= ==========

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 accounting principles generally accepted in the
United States (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 Coca-Cola Enterprises Inc. (CCE) Annual
Report on Form 10-K for the year ended December 31, 2003.

Note B - Reclassifications

Classifications in the condensed consolidated statement of cash flows for the
prior year have been conformed to classifications used in the current year for
payments and amortization expense associated with contracts for pouring or
vending rights in specific athletic venues, specific school districts, or other
locations. In addition, prior year classifications have been conformed to
classifications used in the current year for the presentation of pension expense
in excess of retirement plan contributions.

Note C - Seasonality of Business

Operating results for the first quarter ended April 2, 2004 are not indicative
of results that may be expected for the year ending December 31, 2004 because of
business seasonality. Business seasonality results from a combination of higher
unit sales of our 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 business seasonality.

-5-

Note D - Earnings Per Share

The following table presents information concerning basic and diluted earnings
per share (in millions except per share data; per share data is calculated prior
to rounding to millions):

Quarter ended
--------------------
April 2, March 28,
2004 2003
--------- ----------

Net income ................................................ $ 104 $ 28
Preferred stock dividends.................................. - 1
--------- ----------
Net income applicable to common shareowners................ $ 104 $ 27
========= ==========

Basic average common shares outstanding.................... 459 452
Effect of dilutive securities:
Stock compensation awards................................ 8 8
--------- ----------
Diluted average common shares outstanding.................. 467 460
========= ==========
Basic net income per share applicable to common
shareowners............................................... $ 0.23 $ 0.06
========= ==========

Diluted net income per share applicable to common
shareowners............................................... $ 0.22 $ 0.06
========= ==========

Prior to the conversion into common stock during the third quarter of 2003, the
preferred stock outstanding was not included in our computation of diluted
earnings per share because the effect of its inclusion would have been
antidilutive.

-6-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note E - Comprehensive Income

The following table (in millions) presents a calculation of comprehensive
income, comprised of net income and other adjustments. Other adjustments include
currency items such as foreign currency translation adjustments and hedges of
net investments in international subsidiaries, unrealized gains and losses on
certain investments in debt and equity securities, changes in the fair value of
certain derivative financial instruments qualifying as cash flow hedges, and
minimum pension liability adjustments, where applicable. We adjust for the
income tax effect on all items comprising comprehensive income, excluding the
impact of currency translations as earnings from international subsidiaries are
determined to be indefinitely reinvested.

Quarter ended
--------------------
April 2, March 28,
2004 2003
--------- ----------
Net income................................................. $ 104 $ 28
Currency translations...................................... (37) 137
Hedges of net investments, net of tax...................... 13 (27)
Unrealized (losses) on securities, net of tax.............. (1) (6)
Realized (losses) on securities included in net income, net
of tax.................................................... - (2)
Unrealized (losses) gains on cash flow hedges, net of tax.. (5) 5
Realized gains (losses) on cash flow hedges included in net
income, net of tax........................................ 1 (7)
--------- ----------
Net change to derive comprehensive income for the period... (29) 100
--------- ----------
Comprehensive income....................................... $ 75 $ 128
========= ==========

-7-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note F - Related Party Transactions

The following table presents transactions with The Coca-Cola Company (TCCC),
and their impact on the income statement categories, for the periods presented
(in millions):

Quarter ended
--------------------
April 2, March 28,
2004 2003
--------- ----------

Amounts affecting net operating revenues:
Fountain syrup and packaged product sales................. $ 118 $ 101
Dispensing equipment repair services...................... 14 12
Other transactions........................................ 2 4
--------- ----------
$ 134 $ 117
========= ==========

Amounts affecting cost of sales:
Purchases of syrup and concentrate........................ $ (1,151) $ (959)
Purchases of sweetener.................................... (76) (72)
Purchases of finished products............................ (148) (119)
Marketing support funding earned.......................... 222 193
Cold drink equipment placement funding earned............. 15 17
Cost recovery from sale of hot-fill production facility... - 8
--------- ----------
$ (1,138) $ (932)
========= ==========

Amounts affecting selling, delivery, and administrative
expenses:
Marketing program payments................................ $ (12) $ -
Operating expense cost reimbursements:
To TCCC............................................... - (4)
From TCCC............................................. 6 9
--------- ----------
$ (6) $ 5
========= ==========

We are continuing to work with TCCC to simplify our financial relationship. As
part of our strategic planning project with TCCC, we have agreed that an
increase in the level of spending in the areas of brand building and innovation
is necessary to promote our objective of building value. In support of this
strategy, we paid TCCC $12 million for the first quarter of 2004 for
participation in marketing activities. This amount is shown as marketing program
payments in the table above.

-8-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note F - Related Party Transactions (continued)

During the first quarter of 2004, TCCC revised our base special marketing funds
(SMF) funding rate to include reimbursements between the companies for expenses
related to the transfer of customer marketing group efforts to us from TCCC and
the transfer of local media activities from us to TCCC in prior years. These
amounts are included in marketing support funding earned in 2004 in the table
above. The amount shown above as reimbursement to us from TCCC for the first
quarter of 2004 relates to the staffing costs transferred to us under another
agreement with TCCC.

During the first quarter of 2004, we recognized approximately $41 million of the
2004 volume growth funding available to us under the Strategic Growth Initiative
(SGI) Program. This amount is included in marketing support funding earned in
the table above. While this agreement provided us with the opportunity to earn
up to $165 million of volume growth funding in 2004, we and TCCC are currently
developing a different funding approach as described in the following paragraph.

We have agreed with TCCC that, prospectively, a significant portion of our
funding from TCCC will be netted against the price we pay TCCC for concentrate.
The result will be a lower price to us for concentrate. The reduction in price
will represent the amount of funding that would have otherwise been paid to us.
Effective May 1, 2004, a new concentrate price was established for our United
States territories based on the expectation that the funding under the SMF and
SGI programs will be discontinued and the amounts netted against the concentrate
price. We are also discussing other changes in our relationship with TCCC to
further streamline transactions between the two companies.

While implementation of this new pricing structure will be cash neutral to both
companies, our cost of sales will increase approximately $45 million in the
second quarter of 2004. As inventory on hand at May 1 is sold, marketing funding
related to the inventory will not be paid, increasing our cost of goods for the
second quarter. Effective May 1, the concentrate cost has been lowered which
will reduce our investment in inventory by a similar amount. The net result of
these changes is neutral to our net cash derived from operations.

We participate in cooperative trade marketing arrangements (CTM) in the United
States administered by TCCC. Beginning in 2002, we became responsible for all
costs of the program in our territories, other than costs related to a limited
number of specified customers. We transfer amounts to TCCC under the program for
payment to customers. Pursuant to these arrangements, amounts paid or payable to
TCCC for the quarters ended April 2, 2004 and March 28, 2003 totaled
approximately $56 million and $58 million, respectively, recognized as a
reduction of net operating revenues.

-9-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note F - Related Party Transactions (continued)

Deferred cash payments from TCCC include amounts deferred under Jumpstart and
other miscellaneous programs. Under our Jumpstart agreements with TCCC, we are
required to purchase and place targeted amounts of cold drink equipment through
2008. Due to our success in increasing equipment penetration in our North
American territories and the slower sales growth environment that exists in many
of the cold drink channels in these territories, we are in discussions with TCCC
to amend our Jumpstart agreements. The proposed amendment to the Jumpstart
agreements for the United States and Canada would reduce the cold drink
equipment purchase and placement requirements by 70,000 units per year for 2004
and 2005 and extend our North American purchase and placement requirements into
2010.

As we amend the North American Jumpstart agreements in the manner described, we
expect to recognize approximately $50 million of non-cash funding in 2004 and
2005 as we place the cold drink equipment. This is approximately $35 million
less than we would recognize in each of those years under the current Jumpstart
agreements. Support funding recognized under the Jumpstart programs with TCCC is
shown as cold drink equipment placement funding in the table above.

In March 2004, we recalled the recently launched Dasani water brand in Great
Britain as we became aware of bromate levels in the product that exceeded
British regulatory standards. We recognized $32 million as a reimbursement due
from TCCC as of April 2, 2004 as an offset to the related costs. This amount has
been netted in the amounts due to TCCC in our condensed consolidated balance
sheet as of April 2, 2004. There may be adjustments to the amounts recovered
from TCCC over the balance of the year as we refine and validate our initial
estimate of costs.

-10-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note G - Geographic Operating Information

We operate in one industry: the marketing, distribution, and production of
liquid nonalcoholic refreshments. On April 2, 2004, we operated in 46 states in
the United States, the District of Columbia, all 10 provinces of Canada
(collectively referred to as the "North American" territories), and in Belgium,
continental France, Great Britain, Luxembourg, Monaco, and the Netherlands
(collectively referred to as the "European" territories).

The following presents net operating revenues for the quarters ended April 2,
2004 and March 28, 2003 and long-lived assets as of April 2, 2004 and December
31, 2003 by geographic territory (in millions):

2004 2003
---------------------------- ----------------------------
Net Long- Net Long-
Operating Lived Operating Lived
Revenues Assets Revenues Assets
------------- ------------- -------------- ------------
North American....... $ 3,051 $ 16,957 $ 2,725 $ 17,180
European(A).......... 1,189 5,638 942 5,520
----------- ----------- ------------ ----------
Consolidated......... $ 4,240 $ 22,595 $ 3,667 $ 22,700
=========== =========== ============ ==========

(A) Great Britain contributed approximately 44% and 48% of European net
operating revenues for the first quarters of 2004 and 2003, respectively,
and at April 2, 2004 and December 31, 2003, represented approximately 63%
of European long-lived assets.

We have no material amounts of sales or transfers between our North American and
European territories and no significant United States export sales.

Note H - Income Taxes

Our effective tax rates for the first quarters of 2004 and 2003 were 30% and
33%, respectively. A reconciliation of the income tax provisions at the
statutory federal rate to our actual income tax provisions follows (in
millions):

Quarter ended
-------------------------
April 2, March 28,
2004 2003
---------- -----------
U.S. federal statutory expense....................... $ 52 $ 15
State expense, net of federal benefit................ 2 1
Impact of lower taxes on European and
Canadian operations, net.......................... (10) (3)
Nondeductible items.................................. 2 1
Other, net........................................... (1) -
----- -----
$ 45 $ 14
===== =====

-11-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note I - Long-Term Debt

Total long-term debt balances summarized below are adjusted for the effects of
interest rate and currency swap agreements (in millions):

April 2, 2004 December 31, 2003
------------------- -------------------
Interest Interest
Balance Rates(A) Balance Rates(A)
-------- ---------- -------- ----------
U.S. commercial paper....................$ 657 1.0 % $ 655 1.1 %
Euro commercial paper.................... 281 2.0 208 2.1
Canadian dollar commercial paper......... 221 2.3 148 2.8
U.S. dollar notes due 2004-2037.......... 4,508 3.5 4,510 3.5
Euro and pound sterling notes due 2004-
2021.................................... 1,577 5.9 1,560 5.9
Canadian dollar notes due 2004-2009(B)... 160 4.9 432 5.4
U.S. dollar debentures due 2012-2098..... 3,783 7.4 3,783 7.4
U.S. dollar zero coupon notes due 2020... 167 8.4 164 8.4
Various foreign currency debt............ 305 - 129 -
Additional debt.......................... 49 - 57 -
-------- --------
Long-term debt...........................$ 11,708 $ 11,646
======= =======

(A) Weighted average interest rates on balances outstanding.

(B) Canadian Medium Term Note of 350 million CAD (266 million USD) matured on
March 17, 2004.

The credit facilities and outstanding notes and debentures contain various
provisions that, among other things, require us to maintain a defined leverage
ratio and limit the incurrence of certain liens or encumbrances in excess of
defined amounts. These requirements currently are not, and it is not anticipated
they will become, restrictive to our liquidity or capital resources.

-12-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note I - Long-Term Debt (continued)

The following table provides additional information on debt facilities (in
billions):

April 2, December 31,
2004 2003
----------- ------------
Borrowings due in the next 12 months, including
commercial paper, classified as long-term due to our
intent and our ability through our credit facilities
to refinance on a long-term basis...................... $ 1.1 $ 1.3
======= ===========
Amounts Available for Borrowing:
Amounts available under domestic and international
credit facilities (A)................................ $ 2.8 $ 3.3
Amounts available under public debt facilities which
could be used for long-term financing, refinancing
of debt maturities, and refinancing of commercial
paper:
Registration statement with the Securities and
Exchange Commission................................ 3.2 3.2
Euro medium-term note program....................... 2.1 2.1
Canadian medium-term note program (B)............... 1.5 1.5
------- -----------
Total amounts available under public debt facilities.. 6.8 6.8
------- -----------
Total Amounts Available................................. $ 9.6 $ 10.1
======= ===========

(A) At April 2, 2004 and December 31, 2003, we had $230 million and $45
million, respectively, of short-term borrowings outstanding under these
facilities.

(B) In Canadian dollars, amounts available under the Canadian medium-term note
program totaled $2.0 billion at April 2, 2004 and December 31, 2003.

Note J - Stock-Based Compensation Plans

We granted approximately 6.3 million service-vesting stock options to certain
executive and management level employees during the first quarter of 2004. These
options vest over a period of 3 years and expire 10 years from the date of
grant. All of the options were granted at an exercise price equal to the fair
market value of the stock on the grant date.

We also granted 1.0 million shares of restricted stock and 120,500 restricted
stock units to certain employees during the first quarter of 2004. These awards
vest upon continued employment for a period of at least 5 years and the
attainment of certain performance targets.

An aggregate of 4.3 million shares of common stock were issued during the first
quarter of 2004 from the exercise of stock options.

-13-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note J - Stock-Based Compensation Plans (continued)

We apply APB Opinion No. 25 and related interpretations in accounting for our
stock-based compensation plans. FAS 123, if fully adopted, would change the
method for cost recognition on our stock-based compensation plans.

The following table illustrates the effect of stock-based employee compensation
costs on reported net income applicable to common shareowners and also
illustrates the effect on reported net income applicable to common shareowners
and earnings per share as if compensation cost for our grants under stock-based
compensation plans had been determined under FAS 123 for the quarters ended
April 2, 2004 and March 28, 2003 (in millions, except per share data):

Quarter ended
---------------------
April 2, March 28,
2004 2003
----------- ---------

Net income applicable to common shareowners before effects
of stock-based employee compensation costs included in net
income, net of tax........................................ $ 107 $ 29
Deduct: Total stock-based employee compensation expense,
net of tax, included in net income applicable to common
shareowners............................................... (3) (2)
------- -------
Net income applicable to common shareowners, as reported 104 27
Deduct: Incremental stock-based employee compensation
expense determined under fair value based method for all
awards, net of tax........................................ (12) (14)
------- -------
Pro forma net income applicable to common shareowners...... $ 92 $ 13
======= =======

Net income per share applicable to common shareowners:
Basic - as reported....................................... $ 0.23 $ 0.06
======= =======
Basic - pro forma......................................... $ 0.20 $ 0.03
======= =======
Diluted - as reported..................................... $ 0.22 $ 0.06
======= =======
Diluted - pro forma....................................... $ 0.20 $ 0.03
======= =======

-14-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note K - Pensions and Other Postretirement Benefits

As provided by FAS 87, we revalue pension liabilities annually. Pension expense
for the current year is based on the prior year-end valuation of liabilities and
the expected average value of pension assets. Net periodic benefit costs for the
quarters ended consisted of the following (in millions):

Other Postretirement
Pension Plans Plans
------------------- --------------------
April 2, March 28, April 2, March 28,
2004 2003 2004 2003
--------- --------- ---------- ---------
Components of net periodic benefit
costs:
Service cost............................ $ 27 $ 21 $ 3 $ 3
Interest cost........................... 33 28 5 6
Expected return on plan assets.......... (34) (29) - -
Recognized actuarial (gain)/loss........ 12 2 1 -
Amortization of prior service cost...... - - (3) (2)
------ ------ ------ ------
Net periodic benefit cost............... $ 38 $ 22 $ 6 $ 7
====== ====== ====== ======

Contributions to pension and other postretirement benefit plans of the Company
were $12 million and $9 million for the quarters ended April 2, 2004 and March
28, 2003, respectively. Projected contributions for 2004 and contributions for
2003 are as follows:

Pension and Postretirement
Plans
-----------------------------
Projected Actual
2004 2003
-------------- --------------
Contributions:
U. S. - Pension........................ $ 225 $ 168
European - Pension..................... 33 29
North America - Postretirement......... 22 20
---------- ----------
$ 280 $ 217
========== ==========

Our policy is to fund the U.S. pension plans at a level to maintain, within
established guidelines, the IRS defined 90% Current Liability Funded status. The
Pension Funding Equity Act of 2004, signed by President Bush on April 10, 2004,
established new benchmark interest rates for the determination of that status.
While we believe that the rates to be used for the January 1, 2004 valuation
will allow us to contribute less than our previous estimate of $225 million to
U.S. plans during 2004, we do not plan to change our projected contributions at
this time. At January 1, 2003, the date of the most recent determination, all
U.S. funded defined benefit pension plans had a Current Liability Funded status
equal to or greater than 90%. (In accordance with calculation guidelines, the
January 1, 2003 Current Liability Funded status reflects the third quarter 2003
contribution as a receivable.)

-15-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note K - Pensions and Other Postretirement Benefits (continued)

On December 8, 2003, President Bush signed the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 ("the Act") into law. The Act expanded
Medicare to include, for the first time, coverage for prescription drugs. We
expect that this legislation may reduce our costs for some of these programs. At
this point, our investigation into our response to the legislation is
preliminary, as we await guidance from various governmental and regulatory
agencies concerning the requirements that must be met to obtain these cost
reductions as well as the manner in which such savings should be measured. Based
on this preliminary analysis, it appears that some of our retiree medical plans
will need to be changed to qualify for beneficial treatment under the Act, while
other plans may continue unchanged.

Because of various uncertainties related to our response to this legislation and
the appropriate accounting methodology to be applied for this event, we elected
to defer financial recognition of this legislation until the Financial
Accounting Standards Board issues final accounting guidance. When issued, that
final guidance could require us to change previously reported information.
However, since we have already taken steps to limit our postretirement medical
benefits, any reductions in postretirement benefit costs resulting from the Act
are not expected to be material.

Note L - Hedging Financial Instruments

We use certain risk management instruments to manage our interest rate and
foreign exchange exposures. These instruments are accounted for as fair value
and cash flow hedges, as appropriate, under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended.

At April 2, 2004, a net of tax loss of approximately $3 million related to cash
flow hedges of forecasted international raw materials purchases was included in
accumulated other comprehensive income. We expect these adjustments to be
reclassified into income within the next 12 months.

We enter into certain nonfunctional currency borrowings to hedge net investments
in international subsidiaries. During the first quarter of 2004, the net amount
recorded in comprehensive income related to these borrowings was a gain of
approximately $13 million.

-16-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note M - Commitments and Contingencies

We guarantee debt and other obligations of certain third parties. In North
America, we guarantee repayment of indebtedness owed by a PET (plastic) bottle
manufacturing cooperative. We also guarantee repayment of indebtedness owed by a
vending partnership in which we have a limited partnership interest.

The following table presents amounts owed by third parties that we guarantee and
amounts outstanding on these guarantees as of April 2, 2004 and December 31,
2003 (in millions):

Amounts Guaranteed Amounts Outstanding
------------------------ -------------------------
April 2, December 31, April 2, December 31,
Category Expiration 2004 2003 2004 2003
- ------------- ------------- ---------- ------------- ----------- -------------
Manufacturing Various
cooperatives..through 2015 $ 236 $ 236 $ 182 $ 176
Vending
partnership... Nov 2006 25 25 19 19
Other.......... May 2004 1 1 1 1
------ ------ ------ ------
$ 262 $ 262 $ 202 $ 196
====== ====== ====== ======

We hold no assets as collateral against these guarantees and no contractual
recourse provisions exist under the guarantees that would enable us to recover
amounts we guarantee, in the event of an occurrence of a triggering event under
these guarantees. These guarantees arose as a result of our ongoing business
relationships. No amounts are recorded for our obligations under these
guarantees as we consider the risk of default associated with these guarantees
to be remote.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation
of Variable Interest Entities," revised December 2003. FIN 46 requires variable
interest entities to be consolidated by the primary beneficiary of the entity in
certain instances. FIN 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. For variable interest entities
created or acquired prior to February 1, 2003, the provisions of FIN 46 are to
be applied by us in first quarter 2004. Our adoption of FIN 46 did not have an
impact on our financial position, cash flows, and results of operations.

In addition, we have issued letters of credit as collateral for claims incurred
under self-insurance programs for workers' compensation and large deductible
casualty insurance programs aggregating $364 million and letters of credit
provided for operating activities aggregating $5 million.

-17-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note M - Commitments and Contingencies (continued)

Our business practices are being reviewed in various jurisdictions by the
European Commission for alleged abuses of an alleged dominant position under
Article 82 of the EU Treaty. We do not believe we have a dominant position in
the relevant markets, or that our current or past commercial practices violate
EU law. Nonetheless, the Commission has considerable discretion in reaching
conclusions and levying fines, which are subject to judicial review. The
Commission has not notified us when it might reach any conclusions.

We are also the subject of investigations by Belgian and French competition law
authorities for our compliance with respect to competition laws. We intend to
continue to vigorously defend against an unfavorable outcome, although it is not
possible for us to determine the ultimate outcome of these matters at this time.

In 2000, CCE and TCCC were found by a Texas jury to be jointly liable in a
combined amount of $15.2 million to five plaintiffs, each a distributor of
competing beverage products. These distributors sued alleging that CCE and TCCC
engaged in anticompetitive marketing practices. The trial court's verdict was
upheld by the Texas Court of Appeals in July 2003; we and TCCC have applied to
the Texas Supreme Court for leave to appeal to that court. We believe our
accruals are adequate to cover the damages awarded by the trial court if its
judgment is allowed to stand. The claims of the three remaining plaintiffs in
this case remain to be tried and one additional competitor has filed a similar
claim against us. We have not provided for any potential awards under these
additional claims and we intend to vigorously defend against these claims.

Our California subsidiary has been sued by several current and former employees
over alleged violations of state wage and hour rules. In one case, the parties
have accepted a mediator's proposed settlement in Juarez et al. v. BCI Coca-Cola
Bottling Company of Los Angeles, Coca-Cola Enterprises Inc. and Does 1-50. The
terms of the release are still the subject of negotiation, and any settlement,
which is not expected to have a material effect on our financial condition, is
subject to final approval by the trial court having jurisdiction over the
lawsuit. Our subsidiary is vigorously defending against the other claims, but it
is not possible to predict the outcome at this time.

Under the Jumpstart programs with TCCC, we received payments from TCCC for a
portion of the cost of developing the infrastructure necessary to support
accelerated placements of cold drink equipment. We recognize the payments
primarily as cold drink equipment is placed, through 2008, and over the period
we have the potential requirement to move the equipment, through 2020. We are
currently in discussions with TCCC to amend our North American Jumpstart
agreements reducing our cold drink equipment purchase and placement requirements
for 2004 and 2005. Should TCCC not agree to the amendment and we fail to
purchase and place the equipment that is required by the current agreements, we
may be considered in breach of the contracts. Should we not satisfy the
provisions of the programs for this or any other reason, the agreement provides
for the parties to meet to work out mutually agreeable solutions. Should the
parties be unable to agree on alternative solutions, TCCC would be entitled to
seek a partial refund of amounts previously paid. No refunds have ever been paid
under these programs and we believe the probability of a partial refund of
amounts previously paid under these programs is remote. We believe we would in
all cases resolve any matters that might arise with TCCC.

-18-

COCA-COLA ENTERPRISES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note M - Commitments and Contingencies (continued)

Under our current SGI agreement with TCCC, we are eligible to receive up to $165
million of volume growth funding in 2004, $41 million of which was recognized in
the first quarter of 2004, which is to be earned by attaining mutually
established sales volume growth targets for brands owned by The Coca-Cola
Company. The annual and quarterly target minimums are established for each
program year through mutual agreements with TCCC based on expected sales volume.
Sales volume growth is determined through a formula with adjustments for brand
conversions, brand acquisitions, new brand introductions, and performance in
excess of the previous year's performance. If these minimum targets are not met,
the SGI agreement provides for penalties of $1 per equivalent case that are
offset against the Volume Growth Funding of $165 million available under the
program. Under the SGI agreement, quarterly funding commitments are advanced at
the beginning of each quarter less penalties from any year-to-date shortfall to
targets. As previously noted, we are currently in discussions with TCCC about
terminating the SGI agreement in connection with changing the way concentrate is
priced in the United States.

Our tax filings are routinely subjected to audit by tax authorities in most
jurisdictions where we conduct business. These audits may result in assessments
of additional taxes that are subsequently resolved with the authorities or
potentially through the courts. Currently, there are assessments or audits which
may lead to assessments involving certain of our subsidiaries, including our
subsidiary in Canada, that may not be resolved in the foreseeable future. We
believe we have substantial defenses to the questions being raised and intend to
pursue all legal remedies available if we are unable to reach a resolution with
the authorities. We believe we have adequately provided for any ultimate amounts
that would result from these proceedings, however, it is too early to predict a
final outcome in these matters.

We are a defendant in various other matters of litigation generally arising out
of the normal course of business. Although it is difficult to predict the
ultimate outcome of these cases or the other cases discussed above, management
believes, based on discussions with counsel, that any ultimate liability would
not materially affect our financial position, results of operations, or
liquidity.

-19-

Part I. Financial Information

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

BUSINESS SUMMARY AND OBJECTIVES

Coca-Cola Enterprises Inc. (CCE) is the world's largest marketer, producer, and
distributor of products of The Coca-Cola Company (TCCC). We also distribute
other beverage brands in select territories. We operate in 46 states in the
United States, the District of Columbia, all 10 provinces of Canada, and in
portions of Europe, including Belgium, continental France, Great Britain,
Luxembourg, Monaco, and the Netherlands.

Forward-Looking Statements

Certain expectations and projections regarding the future performance of
Coca-Cola Enterprises Inc. ("CCE," "we," "our," "us," or "the Company")
referenced in this report are forward-looking statements. Officers may also make
verbal statements to analysts, investors, the media, and others that are
"forward-looking." Forward-looking statements include, but are not limited to:

o Projections of revenues, income, earnings per share, capital expenditures,
dividends, capital structure or other financial measures;

o Descriptions of anticipated plans or objectives of our management for
operations, products or services;

o Proposed amendments to existing funding arrangements with TCCC;

o Forecasts of performance; and

o Assumptions regarding any of the foregoing.

Forward-looking statements involve matters which are not historical facts.
Because these statements involve anticipated events or conditions,
forward-looking statements often include words such as "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "project," "target," "can," "could,"
"may," "should," "will," "would" or similar expressions. Do not unduly rely on
forward-looking statements. They represent our expectations about the future and
are not guarantees. Forward-looking statements are only as of the date they are
made and they might not be updated to reflect changes as they occur after the
forward-looking statements are made.

-20-

Outlook

Our plans for 2004 are categorized into four key areas of emphasis we have
identified as essential to improve our business performance.

o First, we are working to strengthen our brands. We must constantly focus on
building brand equity and creating demand for our brands. Continuous brand
innovation is also imperative to satisfy the ever-changing demands of
consumers. In the first quarter of 2004, we introduced diet Coke with Lime,
a brand extension of diet Coke, and we will be introducing Coca-Cola C2, a
mid-calorie cola, in June of 2004. These products were developed in
response to the growing number of consumers seeking products that are lower
in calories with the same refreshing good taste of our other products.

o Second, we will improve revenue management, a function of price, brand
equity, innovation, and the value we create. Positive results in the first
quarter of 2004 reflect strong net revenue per case growth in North America
and improved volume performance in both North America and Europe. This
performance reflects our dedication to revenue management. We will continue
to focus on rate increases, package mix, volume growth, and brand equity
growth during 2004.

o Third, we will improve our customer management capabilities. We will strive
to become an even better partner to our customers, both in terms of service
and profitability, and help them grow their businesses as we grow ours.

o Finally, we will become even more efficient and cost effective. The
creation of Coca-Cola Bottlers' Sales and Services Company (CCBSS), our
goals under Project Pinnacle, and the creation of our Shared Services
Center have contributed to this initiative in the past. We are continuing
to develop efficiencies through the use of our Shared Services Center.

We recently participated in a strategic planning project with TCCC to more
closely align our businesses. As a result of the project, we are pursuing
various initiatives to simplify our relationship with TCCC. During 2004, we will
continue to identify ways to become more efficient and cost effective.

-21-

We expect operating income for the year in a range of $1.61 billion to $1.63
billion compared to $1.58 billion for 2003 which included net insurance proceeds
of $68 million, settlement of pre-acquisition contingencies of $14 million, and
a gain on the sale of our hot-fill facility in Truesdale, Missouri to TCCC of $8
million. This projection includes the impact of a significant increase in
pension expense and difficult growth comparisons in our European territory which
will negatively impact 2004 growth. The projection excludes a non-cash increase
in cost of sales in 2004 resulting from the implementation of a new concentrate
pricing model in the United States, discussed below. We expect earnings per
diluted common share to grow to a range of $1.48 to $1.52 as compared to 2003
reported earnings per diluted common share of $1.46. Our full-year expectations
incorporate higher expectations for operating income growth in North America,
partially offset by lower non-cash funding due to a proposed change in our
Jumpstart agreement with TCCC.

We are working with TCCC to simplify our financial relationship. Effective May
1, 2004, we moved to a new pricing structure in the United States under which a
significant portion of the annual funding received from TCCC has been netted
against the price we pay for concentrate. While the implementation of this new
pricing structure will be cash neutral to both companies, we will incur
approximately $45 million in higher non-cash cost of sales over the remainder of
2004 as a new, lower cost of concentrate is reflected in our inventory values.

We expect to achieve volume growth in North America of approximately 1 1/2
percent, with enhanced revenue management strategies producing North American
net price per case growth of approximately 2 1/2 percent. We expect European
operations to achieve volume growth of approximately 1 1/2 percent and net price
per case growth of approximately 2 percent for the year.

Project Pinnacle, our multi-year effort to redesign business processes and
implement the SAP software platform, continues to progress. Complete roll-out of
financial systems and processes in North America is projected to occur in the
third quarter of 2004. We anticipate our implementation will be executed over
multiple years. Including the costs of our internal resources assigned to the
project, we project we will spend approximately $112 million in 2004. The
estimated capital costs of this project total approximately $215 million, of
which $100 million will be spent in 2004 and after to complete the project.

Management's Discussion and Analysis should be read in conjunction with our
accompanying unaudited condensed consolidated financial statements and the
accompanying footnotes along with the cautionary statements at the end of this
section.

-22-

OPERATING RESULTS

Overview

The following table presents consolidated income statement data as a percentage
of net operating revenues for the periods presented:

Quarter ended
----------------------
April 2, March 28,
2004 2003
---------- -----------
Net operating revenues....................... 100.0 % 100.0 %
Cost of sales................................ 58.0 58.6
---------- -----------
Gross profit................................. 42.0 41.4
Selling, delivery, and administrative
expenses.................................... 34.8 36.6
---------- -----------
Operating income............................. 7.2 4.8
Interest expense, net........................ 3.7 3.8
Other nonoperating income, net............... 0.0 0.1
---------- -----------
Income before income taxes................... 3.5 1.1
Income tax expense........................... 1.1 0.4
---------- -----------
Net income applicable to common shareowners.. 2.4 % 0.7 %
========== ===========

Our operating results in the first quarter of 2004 reflect strong year-over-year
growth due to strong net revenue per case growth in North America and improved
volume performance in both North America and Europe. First quarter 2004
currency-neutral bottle and can net price per case increased 4 percent in North
America and 2 percent in Europe. Physical case bottle and can volume increased
1/2 percent in North America and 1 1/2 percent in Europe over volume in the
first quarter of 2003.

For the first quarter of 2004, net income applicable to common shareowners
increased to $104 million, or $0.22 per diluted common share, compared to net
income applicable to common shareowners of $27 million, or $0.06 per diluted
common share, for the first quarter of 2003. Operating income increased 71
percent over first quarter 2003 results to $304 million for the first quarter of
2004. These results demonstrate our dedication to revenue management through a
combination of rate increases, focus on package mix, volume growth, and the
benefit of 4 additional selling days in the first quarter of 2004. The fourth
quarter of 2004 will be negatively impacted by 3 fewer selling days than the
prior year.

-23-

In March 2004, we recalled the recently launched Dasani water brand in Great
Britain due to problems affecting the quality of Dasani products. The level of
bromate in the Dasani finished product was in excess of British regulatory
standards. We are reevaluating our water strategy in Europe.

We expensed approximately $35.9 million of costs associated with the Dasani
recall in Great Britain, and paid amounts in the first quarter of 2004, as
follows (in millions):

Introduction Recall Cancellation
Costs Costs Costs Total
------------ --------- ------------- ---------

Costs expensed............ $ 3.9 $ 16.8 $ 15.2 $ 35.9
Amounts paid.............. (3.9) (6.5) (3.2) (13.6)
---------- ------- -------- -------
Balance, April 2, 2004.... $ - $ 10.5 $ 12.0 $ 22.3
========== ======= ======== =======

Introduction costs include non-recoverable costs of Dasani introduction in Great
Britain. Recall costs are costs of removing the product from the trade, customer
claim costs, and finished product and raw material destruction costs.
Cancellation costs are costs of the decision to postpone the launch of Dasani in
Great Britain and France including fair value write-downs on equipment,
penalties on leased equipment, and marketing costs.

We recognized the reimbursement due from TCCC of $32 million as an offset to the
related costs. This amount has been netted in the amounts due to TCCC in our
condensed consolidated balance sheet as of April 2, 2004. There may be
adjustments to the amounts reimbursed by TCCC over 2004 as we validate our
costs.

-24-

Net Operating Revenues

Our first quarter 2004 net operating revenues increased 15 1/2 percent to $4.2
billion, on a consolidated basis, from the first quarter of 2003. First quarter
net operating revenues increased 12% in North America and 27% in Europe from
2003 to 2004. The following table outlines the significant components of the
increase in net operating revenues:

First-Quarter 2004 Change
------------------------------
North
Total America Europe
-------- -------- ---------
Change to Net Operating Revenues:
Net price per case growth................. 3.5 % 4.0 % 2.0 %
Incremental net operating revenues from
increased volume......................... 7.0 6.5 8.5
Impact of currency exchange rate changes.. 5.0 1.5 16.5
------ ------ -------
Total Percentage Increase in Net Operating
Revenues................................... 15.5 % 12.0 % 27.0 %
===== ===== ======

A large portion of the increases in volume were attributable to the impact of an
additional four selling days in the first quarter of 2004 as compared to the
first quarter of 2003. For the first quarter of 2004, the percentage of
consolidated net operating revenues derived from our North American and European
groups was 72% and 28%, respectively. In the first quarter of 2004, Great
Britain contributed approximately 44% of European revenues.

We earn revenues from products when the product is delivered or when we collect
cash from vending machines. We earn funding from licensors as performance
measures are met. We earn service revenues for equipment maintenance and
production when services are performed.

"Bottle and Can Net Pricing per Case" and "Currency-Neutral Bottle and Can Net
Pricing per Case" are provided to assist in evaluation of bottle and can pricing
trends in the marketplace and to distinguish the impact of foreign currency
exchange rate changes to our operations. Bottle and can net price per case is
based on the invoice price charged to customers reduced by promotional
allowances. Our bottle and can sales accounted for 91% of our net revenue for
the first quarter of 2004. The following table presents the reconciliation of
these measures to the change in net revenues per case for the first quarter of
2004. All per case percentage changes are rounded to the nearest 1/2% and are
based on wholesale physical case volume.

First-Quarter 2004 Change
---------------------------
North
Total America Europe
-------- -------- ---------
Change in Net Revenues per Case............. 8.0 % 4.5 % 17.0 %
Impact of excluding post-mix and agency
sales.................................... 0.5 0.5 0.5
------ ------ -------
Bottle and Can Net Pricing per Case......... 8.5 5.0 17.5
Impact of currency exchange rate changes.. (5.0) (1.0) (15.5)
------ ------ -------
Currency-Neutral Bottle and Can Net Pricing
per Case................................... 3.5 % 4.0 % 2.0 %
===== ===== ======

-25-

Net pricing per case is impacted by the price charged per package, the volume
generated in each package, and the channels in which those packages are sold.
Increases in volume in higher margin packages or in higher margin channels may
increase net pricing per case without an actual increase in wholesale pricing.
The increases in pricing in the first quarter of 2004 reflect our continued
commitment to our revenue management initiative which focuses on price, brand
equity, innovation, and the value we create.

We participate in various programs with customers to promote the sale of our
products. Among our programs with customers are arrangements under which
allowances may be earned by the customer for attaining agreed upon sales levels
and/or for participating in specific marketing programs. We also participate in
contractual arrangements providing us with pouring or vending rights in athletic
venues, school districts, or similar venues. Coupon programs and under-the-cap
promotions are also developed in various territories for the purpose of
increasing sales by all customers. The cost of these programs, included as
deductions in net operating revenues, totaled approximately $460 million and
$397 million for the quarters ended April 2, 2004 and March 28, 2003,
respectively. The increase in the cost of these programs is primarily due to
volume increases and the impact of foreign currency translation in the first
quarter of 2004.

Cost of Sales

Cost of sales for the first quarter of 2004 increased approximately 14 1/2
percent from the first quarter of 2003 to $2.5 billion. "Bottle and Can Cost of
Sales per Case" and "Currency-Neutral Bottle and Can Cost of Sales per Case" are
provided to assist in evaluating cost trends for bottle and can products and to
distinguish the impact of foreign currency exchange rate changes to our
operations. These measures exclude the impact of fountain ingredient costs, as
well as marketing credits and Jumpstart funding in order to isolate the change
in bottle and can ingredient and packaging costs. The following table presents
the reconciliation between these measures and change in cost of sales per case
for the first quarter of 2004. All per case percentage changes are rounded to
the nearest 1/2% and are based on wholesale physical case volume.

First-Quarter 2004 Change
---------------------------
North
Total America Europe
-------- -------- ---------
Change in Cost of Sales per Case............ 6.5 % 3.0 % 16.0 %
Impact of excluding bottle and can
marketing credits and Jumpstart funding.. 0.0 0.0 0.0
Impact of excluding cost of post-mix and
agency sales............................. 0.0 (0.5) 0.0
----- ----- ------
Bottle and Can Cost of Sales per Case....... 6.5 2.5 16.0
Impact of currency exchange rate changes.. (5.5) (1.5) (15.5)
------ ------ -------
Currency-Neutral Bottle and Can Cost of
Sales per Case............................. 1.0 % 1.0 % 0.5 %
===== ===== ======

The moderate increase in our cost of sales per case in the first quarter of 2004
can be attributed to our efforts to refine our procurement operations through
the Coca-Cola Bottlers' Sales and Services Company and continued focus on
material yields and efficiency of operations

-26-

Volume

Comparable volume results, as adjusted for 4 more selling days in the first
quarter of 2004 and the acquisition of Chaudfontaine in the second quarter of
2003, are reconciled to volume changes for the first quarter of 2004 in the
following table:

First-Quarter 2004 Change
--------------------------------------
North
Total America Europe
---------- ---------- ----------
Change in Volume................... 7.0 % 6.5 % 8.5 %
Impact of acquisitions........... (0.5) 0.0 (1.5)
Impact of selling days shift..... (5.5) (6.0) (5.5)
------- ------- -------
Comparable Bottle and Can Volume... 1.0 % 0.5 % 1.5 %
======= ======= =======

Comparable volume results are presented below for the first quarter of 2004 by
major brand category:

Change % of Total
------------- ------------
North America:
My Coke Portfolio.............. (1/2) % 62 %
Flavors........................ (1/2) 25
Juices, Isotonics, and Other... 4 1/2 8
Water.......................... 17 1/2 5
-------- -------
Total.......................... 1/2 % 100 %
-------- -------
Europe:
My Coke Portfolio.............. 4 % 68 1/2 %
Flavors........................ (3 1/2) 20 1/2
Juices, Isotonics, and Other... 3 1/2 8 1/2
Water.......................... (25) 2 1/2
-------- -------
Total.......................... 1 1/2 % 100 %
-------- -------
Consolidated:
My Coke Portfolio.............. 1/2 % 63 1/2 %
Flavors........................ (1) 24
Juices, Isotonics, and Other... 4 8
Water.......................... 9 1/2 4 1/2
-------- -------
Total.......................... 1 % 100 %
-------- -------

On a physical case basis, North American operations comprised 76 percent of our
volume for the first quarters of 2004 and 2003. In North America, our volume
increase for the first quarter was mostly attributable to a 5 percent increase
in our 20-ounce PET volume and a substantial increase in our 24-ounce PET volume
reflecting the establishment of this new package during 2003. In Europe, most of
the first quarter volume increase was attributable to a 3 percent increase in
can volume.

-27-

The performance of our My Coke Portfolio brands (which includes all regular and
diet Coca-Cola trademark products) in the first quarter of 2004 reflects a
consumer preference for lower-calorie refreshment. Our diet My Coke Portfolio
volume increased approximately 7 1/2 percent on a consolidated basis, with an 8
percent increase in North America and a 5 1/2 percent increase in Europe.

In North America, the increase in diet Coke volume and the introduction of diet
Coke with Lime were offset by decreases in Coke Classic, diet Coke with Lemon,
Vanilla Coke, and diet Vanilla Coke volume. In Europe, the increase in diet
Coke/Coke light volume, combined with a 2 1/2 percent increase in Coke Classic
volume, contributed to a 4 percent increase in Europe's My Coke Portfolio.

On a consolidated basis, the decrease in flavors volume was attributable to
significant decreases in Minute Maid soda volume in North America and softness
in Fanta volume in Europe.

In North America, the increase in juices, juice drinks, isotonics, and other
volume is mostly attributable to increases in Powerade and Minute Maid
Refreshment volume, offset by the discontinuance of Fruitopia. In Europe, the
increase in juices, juice drinks, isotonics, and other volume is mostly
attributable to increases in Minute Maid Juices To Go and Oasis volume.

The consolidated increase in water volume is attributable to strong sales of
Dasani in North America. The decrease in water volume in Europe is mostly due to
the significant decrease in sales of water under the brands of Nestle in Great
Britain.

Selling, Delivery, and Administrative Expenses

The following table presents selling, delivery, and administrative expenses as a
percentage of net operating revenues for the periods presented (in millions):

Quarter ended
----------------------------
April 2, March 28,
2004 2003
------------- -------------

Selling, Delivery, and Administrative Expenses...... $ 1,476 $ 1,341

Net Operating Revenues.............................. $ 4,240 $ 3,667

Selling, Delivery, and Administrative Expenses as
a percentage of Net Operating Revenues............. 34.8 % 36.6 %

The decrease as a percentage of net operating revenues from the first quarter of
2003 results from a combination of our strong net revenue per case growth, our
increase in volume, our focus on logistics efficiency, and the four additional
selling days in the first quarter of 2004 as compared to the first quarter of
2003. Certain costs such as selling and delivery expenses included in SD&A
expenses vary with the number of selling days while others such as depreciation
expense and salaries of salaried employees remain constant for the quarter
regardless of the number of selling days. These fixed costs prevent SD&A
expenses from varying directly with the number of selling days in the quarter.

-28-

Selling, delivery, and administrative (SD&A) expenses increased 10 percent from
$1,341 million for the first quarter of 2003 to $1,476 million for the first
quarter of 2004 on a consolidated basis. The following table presents the impact
of currency exchange rate changes on the change in selling, delivery, and
administrative expenses from the prior year:

First-Quarter 2004 Change
---------------------------
North
Total America Europe
-------- -------- ---------
Reported change in Selling, Delivery, and
Administrative Expenses.................... 10.0 % 7.0 % 24.0 %
Impact of currency exchange rate changes.. (4.0 ) (1.0 ) (17.0 )
------ ------ -------
Currency-Neutral Change in Selling,
Delivery, and Administrative Expenses...... 6.0 % 6.0 % 7.0 %
===== ===== ======

Interest Expense

Net interest expense for the first quarter of 2004 increased 11% from the same
period of 2003 to $156 million. This increase is mostly attributable to the
difference in the number of days in the quarter compared to 2003. There were 87
interest days in the first quarter of 2003 and 93 interest days in the first
quarter of 2004. In addition, the weighted average interest rate increased from
5.0% for the first quarter of 2003 to 5.3% for the first quarter of 2004.

Income Taxes

Our effective tax rate was 30% for the first quarter of 2004 and 33% for the
first quarter of 2003. Our effective tax rate for full-year 2004 is projected to
be 31%. Our effective tax rate for the remainder of 2004 will be dependent upon
actual operating results and may change if the results for the year are
different from current expectations.

Per Share Data

Our reported net income applicable to common shareowners was $104 million, or
$0.22 per diluted common share, for the first quarter of 2004. For the first
quarter of 2003, reported net income was $27 million, or $0.06 per diluted
common share, and included (i) a cost recovery from the sale of a manufacturing
facility to TCCC of $8 million ($0.01 per diluted common share), (ii) a
reduction in interest expense of $8 million from a retroactive adjustment on
certain interest rate swap agreements from declining interest rates ($0.01 per
diluted common share), and (iii) a gain of $3 million from the sale of an
investment.

-29-

Transactions with The Coca-Cola Company

The following table presents transactions with The Coca-Cola Company (TCCC) and
the income statement impact of those transactions in millions for the periods
presented (in millions):

Quarter ended
--------------------------
April 2, March 28,
2004 2003
----------- -----------
Amounts from TCCC to CCE:
Marketing support funding earned.................... $ 222 $ 193
Fountain syrup and packaged product sales........... 118 101
Cold drink equipment placement funding earned....... 15 17
Dispensing equipment repair services................ 14 12
Operating expense cost reimbursements............... 6 9
Cost recovery from sale of hot-fill production
facility (proceeds of $58 million)................. - 8
Other transactions.................................. 2 4
--------- ---------
$ 377 $ 344
========= =========
Amounts from CCE to TCCC:
Purchases from TCCC:
Syrup and concentrate............................. $ 1,151 $ 959
Sweetener......................................... 76 72
Finished products................................. 148 119
--------- ---------
1,375 1,150
Marketing program payments.......................... 12 -
Operating expense cost reimbursements............... - 4
--------- ---------
$ 1,387 $ 1,154
========= =========

We are continuing to work with TCCC to simplify our financial relationship. As
part of our strategic planning project with TCCC, we have agreed that an
increase in the level of spending in the areas of brand building and innovation
is necessary to promote our objective of building value. In support of this
strategy, we paid TCCC $12 million for the first quarter of 2004 for
participating in marketing activities. This amount is shown as marketing program
payments in the table above.

-30-

During the first quarter of 2004, TCCC revised our base special marketing funds
(SMF) funding rate to include reimbursements between the companies for expenses
related to the transfer of customer marketing group efforts to us from TCCC and
the transfer of local media activities from us to TCCC in prior years. These
amounts are included in marketing support funding earned in 2004 in the table
above. The amount shown above as reimbursement to us from TCCC for the first
quarter of 2004 relates to the staffing costs transferred to us under another
agreement with TCCC.

During the first quarter of 2004, we recognized approximately $41 million of the
2004 volume growth funding available to us under the Strategic Growth Initiative
(SGI) Program. This amount is included in marketing support funding earned in
the table above. While this agreement provided us with the opportunity to earn
up to $165 million of volume growth funding in 2004, we and TCCC are currently
developing a different funding approach as described in the following paragraph.

We have agreed with TCCC that, prospectively, a significant portion of our
funding from TCCC will be netted against the price we pay TCCC for concentrate.
The result will be a lower price to us for concentrate. The reduction in price
will represent the amount of funding that would have otherwise been paid to us.
Effective May 1, 2004, a new concentrate price was established for our United
States territories based on the expectation that the funding under the SMF and
SGI programs will be discontinued and the amounts netted against the concentrate
price. We are also discussing other changes in our relationship with TCCC to
further streamline transactions between the two companies.

While implementation of this new pricing structure will be cash neutral to both
companies, our cost of sales will increase approximately $45 million in the
second quarter of 2004. As inventory on hand at May 1 is sold, marketing funding
related to the inventory will not be paid, increasing our cost of goods for the
second quarter. Effective May 1, the concentrate cost has been lowered which
will reduce our investment in inventory by a similar amount. The net result of
these changes is neutral to our net cash derived from operations.

We participate in cooperative trade marketing arrangements (CTM) in the United
States administered by TCCC. Beginning in 2002, we became responsible for all
costs of the program in our territories, other than costs related to a limited
number of specified customers. We transfer amounts to TCCC under the program for
payment to customers. Pursuant to these arrangements, amounts paid or payable to
TCCC for the quarters ended April 2, 2004 and March 28, 2003 totaled
approximately $56 million and $58 million, respectively, recognized as a
reduction of net operating revenues.

-31-

Deferred cash payments from TCCC include amounts deferred under Jumpstart and
other miscellaneous programs. Under our Jumpstart agreements with TCCC, we are
required to purchase and place targeted amounts of cold drink equipment through
2008. Due to our success in increasing equipment penetration in our North
American territories and the slower sales growth environment that exists in many
of the cold drink channels in these territories, we are in discussions with TCCC
to amend our Jumpstart agreements. The proposed amendment to the Jumpstart
agreements for the United States and Canada would reduce the cold drink
equipment purchase and placement requirements by 70,000 units per year for 2004
and 2005 and extend our North American purchase and placement requirements into
2010.

As we amend the North American Jumpstart agreements in the manner described, we
expect to recognize approximately $50 million of non-cash funding in 2004 and
2005 as we place the cold drink equipment. This is approximately $35 million
less than we would recognize in each of those years under the current Jumpstart
agreements. Support funding recognized under the Jumpstart programs with TCCC is
shown as cold drink equipment placement funding in the table above.

In March 2004, we recalled the recently launched Dasani water brand in Great
Britain as we became aware of bromate levels in the product that exceeded
British regulatory standards. We recognized $32 million as a reimbursement due
from TCCC as of April 2, 2004 as an offset to the related costs. This amount has
been netted in the amounts due to TCCC in our condensed consolidated balance
sheet as of April 2, 2004. There may be adjustments to the amounts recovered
from TCCC over the balance of the year as we refine and validate our initial
estimate of costs.

Pensions and Other Postretirement Benefits

As provided by FAS 87, we revalue pension liabilities annually. Pension expense
for the current year is based on the prior year-end valuation of liabilities and
the expected average value of pension assets. The following tables outline
significant assumptions used in the determination of pension obligations and
expense:

Weighted-average assumptions used to determine benefit obligations at December
31:

Pension Benefits Other Benefits
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Discount Rate........................... 6.0% 6.8% 6.1% 7.0%
Rate of compensation increase........... 4.6% 4.6% - -

Weighted-average assumptions used to determine net cost for years ended December
31:

Pension Benefits Other Benefits
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Discount Rate........................... 6.0% 6.8% 6.1% 7.0%
Expected return on plan assets.......... 8.3% 8.3% - -
Rate of compensation increase........... 4.6% 4.6% - -

-32-

Net periodic benefit costs for the quarters ended consisted of the following (in
millions):
Other Postretirement
Pension Plans Plans
------------------------------------------
April 2, March 28, April 2, March 28,
2004 2003 2004 2003
--------- ---------- --------- -----------
Components of net periodic
benefit costs:
Service cost......................... $ 27 $ 21 $ 3 $ 3
Interest cost........................ 33 28 5 6
Expected return on plan assets....... (34) (29) - -
Recognized actuarial (gain)/loss..... 12 2 1 -
Amortization of prior service cost... - - (3) (2)
-------- --------- -------- ---------
Net periodic benefit cost............ $ 38 $ 22 $ 6 $ 7
======== ========= ======== =========

Pension assets of the North American and UK plans represent approximately 96% of
pension plan assets. Below is a summary of targeted pension plan asset
allocation, actual allocation of those assets at the end of the first quarter of
2004 and 2003 along with expected long-term rate of return by asset category.

Weighted
Average Weighted-
Target Average
Asset Category Allocation % of Plan Assets Expected
- ------------------------- ------------ ------------------------- Long-Term
December 31, April 2, March 28, Rate of
2003 2004 2003 Return
------------ ------------ ------------ ------------
Equity Securities........ 65 % 72 % 62 % 8.7 %
Fixed Income Securities.. 20 20 27 5.7
Real Estate.............. 5 3 4 9.6
Other.................... 10 5 7 10.4
-------- -------- -------- --------
Total.................... 100 % 100 % 100 % 8.3 %
======== ======== ======== ========

The April 2, 2004 overweight in Equity Securities is largely driven by the U.S.
where efforts are underway to bring Real Estate and Private Equity closer to
their respective target allocations. This reallocation will take place during
the next 6 to 18 months. On an interim basis, funds that will ultimately be
redirected to Real Estate and Private Equity are being invested in Equities.

Our Fixed Income Securities portfolio is invested primarily in commingled funds
and managed in terms of overall return expectations rather than matching
duration against plan liabilities, therefore debt maturities are not significant
to the plan performance.

-33-

Contributions to pension and other postretirement benefit plans of the Company
were $12 million and $9 million for the quarters ended April 2, 2004 and March
28, 2003, respectively. Projected contributions for 2004 and contributions for
2003 are as follows:

Pension and Postretirement
Plans
-----------------------------
Projected Actual
2004 2003
------------- ---------------
Contributions
U. S. - Pension........................ $ 225 $ 168
European - Pension..................... 33 29
North America - Postretirement......... 22 20
---------- ----------
$ 280 $ 217
========== ==========

Our policy is to fund the U.S. pension plans at a level to maintain, within
established guidelines, the IRS defined 90% Current Liability Funded status. The
Pension Funding Equity Act of 2004, signed by President Bush on April 10, 2004,
established new benchmark interest rates for the determination of that status.
While we believe that the rates to be used for the January 1, 2004 valuation
will allow us to contribute less than our previous estimate of $225 million to
U.S. plans during 2004, we do not plan to change our projected contributions at
this time. At January 1, 2003, the date of the most recent determination, all
U.S. funded defined benefit pension plans had a Current Liability Funded status
equal to or greater than 90%. (In accordance with calculation guidelines, the
January 1, 2003 Current Liability Funded status reflects the third quarter 2003
contribution as a receivable.)

On December 8, 2003, President Bush signed the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 ("the Act") into law. The Act expanded
Medicare to include, for the first time, coverage for prescription drugs. We
expect that this legislation may reduce our costs for some of these programs. At
this point, our investigation into our response to the legislation is
preliminary, as we await guidance from various governmental and regulatory
agencies concerning the requirements that must be met to obtain these cost
reductions as well as the manner in which such savings should be measured. Based
on this preliminary analysis, it appears that some of our retiree medical plans
will need to be changed to qualify for beneficial treatment under the Act, while
other plans may continue unchanged.

Because of various uncertainties related to our response to this legislation and
the appropriate accounting methodology to be applied for this event, we elected
to defer financial recognition of this legislation until the Financial
Accounting Standards Board issues final accounting guidance. When issued, that
final guidance could require us to change previously reported information.
However, since we have already taken steps to limit our postretirement medical
benefits, any reductions in postretirement benefit costs resulting from the Act
are not expected to be material.

-34-

CASH FLOW AND LIQUIDITY REVIEW

Capital Resources

Our sources of capital include, but are not limited to, cash flows from
operations, the issuance of public or private placement debt, bank borrowings,
and the issuance of equity securities. We believe that available short-term and
long-term capital resources are sufficient to fund our capital expenditure and
working capital requirements, scheduled debt payments, interest and income tax
obligations, dividends to our shareowners, acquisitions, and share repurchases.

The following table provides additional information on debt facilities (in
billions):

April 2, December 31,
2004 2003
----------- ------------
Amounts Available for Borrowing:
Amounts available under domestic and international
credit facilities (A)............................... $ 2.8 $ 3.3
Amounts available under public debt facilities which
could be used for long-term financing, refinancing
of debt maturities, and refinancing of commercial
paper:..............................................
Registration statements with the Securities and
Exchange Commission.............................. 3.2 3.2
Euro medium-term note program..................... 2.1 2.1
Canadian medium-term note program (B)............. 1.5 1.5
------- ---------
Total amounts available under public debt facilities. 6.8 6.8
------- ---------
Total Amounts Available................................ $ 9.6 $ 10.1
======= =========

(A) At April 2, 2004 and December 31, 2003, we had $230 million and $45
million, respectively, of short-term borrowings outstanding under these
facilities.

(B) In Canadian dollars, amounts available under the Canadian medium-term note
program totaled $2.0 billion at April 2, 2004 and December 31, 2003.

In addition, we satisfy seasonal working capital needs and other financing
requirements with short-term borrowings under our commercial paper programs,
bank borrowings, and various lines of credit in the countries in which we
operate. At April 2, 2004, we had approximately $1.2 billion outstanding in
commercial paper and approximately $2.8 billion available as a back-up to
commercial paper under working capital lines of credit. We intend to continue
refinancing borrowings under our commercial paper programs and our short-term
credit facilities with longer-term fixed and floating rate financings. At the
end of the first quarter, our debt portfolio contained 71% fixed rate debt and
29% floating rate debt.

Summary of Cash Activities

Cash and cash investments decreased $11 million during the first quarter of 2004
from net cash transactions. Our primary sources of cash for the first quarter of
2004 were operations, which provided $60 million, and proceeds from the issuance
of debt aggregating $331 million. Our primary uses of cash were debt repayments
totaling $284 million and capital expenditures totaling $158 million.

-35-

Operating Activities: Operating activities resulted in $60 million of net cash
provided during the first quarter of 2004 compared to $229 million used in
operating activities for the same period in 2003. This increase is a result of
an increase in net income and changes in operating assets and liabilities.

Investing Activities: Net cash used in investing activities resulted primarily
from our continued capital investments of $158 million in the first quarter of
2004. We expect full-year 2004 capital expenditures to total approximately $1.1
billion.

Financing Activities: The following table presents issuances of long-term debt
and payments on long-term debt as noted in our condensed consolidated statements
of cash flows for the quarters ended (in millions):

April 2, March 28,
Maturity Rate 2004 2003
---------- --------- ---------- ---------
Issuances of Long-Term Debt:
French revolving credit facilities.... $ 124 $ 9
Other issuances....................... 51 282
-------- --------
Total................................. $ 175 $ 291
======== ========

Payments on Long-Term Debt:
$350 million Canadian dollar note..... Mar 2004 5.65 % $ 266 $ -
French franc notes.................... Jan 2003 5.00 - 27
Eurobonds............................. Feb 2003 5.00 - 160
$100 million Canadian dollar note..... Mar 2003 5.31 - 66
Other payments........................ 18 39
-------- --------
Total................................. $ 284 $ 292
======== ========

Net Increase in Commercial Paper...... $ 156 $ 320
======== ========

We continue to refinance portions of our short-term borrowings as they mature
with short-term and long-term fixed and floating rate debt. Exchange rate
changes during the first quarter of 2004 resulted in an increase in long-term
debt of $6 million.

-36-

FINANCIAL CONDITION

Inventory increased approximately 17% from December 31, 2003 to April 2, 2004.
This increase is primarily due to the seasonality of our business in preparation
for higher sales anticipated in the second quarter.

The current portion of deferred cash payments from TCCC decreased significantly
from December 31, 2003 in anticipation of an amendment to our Jumpstart
agreement with TCCC. This proposed amendment would reduce the cold drink
equipment purchase and placement requirements for 2004 and 2005 and extend
placement requirements into 2010. As we amend the North American Jumpstart
agreements in the manner described, we expect to recognize approximately $50
million of non-cash funding in 2004 and 2005 as we place the cold drink
equipment. This is approximately $35 million less than we would recognize in
each of those years under the current Jumpstart agreements.

KNOWN TRENDS AND UNCERTAINTIES

Contingencies

Our business practices are being reviewed in various jurisdictions by the
European Commission for alleged abuses of an alleged dominant position under
Article 82 of the EU Treaty. We do not believe we have a dominant position in
the relevant markets, or that our current or past commercial practices violate
EU law. Nonetheless, the Commission has considerable discretion in reaching
conclusions and levying fines, which are subject to judicial review. The
Commission has not notified us when it might reach any conclusions.

We are also the subject of investigations by Belgian and French competition law
authorities for our compliance with respect to competition laws. We intend to
continue to vigorously defend against an unfavorable outcome, although it is not
possible for us to determine the ultimate outcome of these matters at this time.

In 2000, CCE and TCCC were found by a Texas jury to be jointly liable in a
combined amount of $15.2 million to five plaintiffs, each a distributor of
competing beverage products. These distributors sued alleging that CCE and TCCC
engaged in anticompetitive marketing practices. The trial court's verdict was
upheld by the Texas Court of Appeals in July 2003; we and TCCC have applied to
the Texas Supreme Court for leave to appeal to that court. We believe our
accruals are adequate to cover the damages awarded by the trial court if its
judgment is allowed to stand. The claims of the three remaining plaintiffs in
this case remain to be tried and one additional competitor has filed a similar
claim against us. We have not provided for any potential awards under these
additional claims and we intend to vigorously defend against these claims.

-37-

Our California subsidiary has been sued by several current and former employees
over alleged violations of state wage and hour rules. In one case, the parties
have accepted a mediator's proposed settlement in Juarez et al. v. BCI Coca-Cola
Bottling Company of Los Angeles, Coca-Cola Enterprises Inc. and Does 1-50. The
terms of the release are still the subject of negotiation, and any settlement,
which is not expected to have a material effect on our financial condition, is
subject to final approval by the trial court having jurisdiction over the
lawsuit. Our subsidiary is vigorously defending against the other claims, but it
is not possible to predict the outcome at this time.

Under the Jumpstart programs with TCCC, we received payments from TCCC for a
portion of the cost of developing the infrastructure necessary to support
accelerated placements of cold drink equipment. We recognize the payments
primarily as cold drink equipment is placed, through 2008, and over the period
we have the potential requirement to move the equipment, through 2020. We are
currently in discussions with TCCC to amend our North American Jumpstart
agreements reducing our cold drink equipment purchase and placement requirements
for 2004 and 2005. Should TCCC not agree to the amendment and we fail to
purchase and place the equipment that is required by the current agreements, we
may be considered in breach of the contracts. Should we not satisfy the
provisions of the programs for this or any other reason, the agreement provides
for the parties to meet to work out mutually agreeable solutions. Should the
parties be unable to agree on alternative solutions, TCCC would be entitled to
seek a partial refund of amounts previously paid. No refunds have ever been paid
under these programs and we believe the probability of a partial refund of
amounts previously paid under these programs is remote. We believe we would in
all cases resolve any matters that might arise with TCCC.

Under our current SGI agreement with TCCC, we are eligible to receive up to $165
million of volume growth funding in 2004 $41 million of which was recognized in
the first quarter of 2004, which is to be earned by attaining mutually
established sales volume growth targets for brands owned by The Coca-Cola
Company. The annual and quarterly target minimums are established for each
program year through mutual agreements with TCCC based on expected sales volume.
Sales volume growth is determined through a formula with adjustments for brand
conversions, brand acquisitions, new brand introductions, and performance in
excess of the previous year's performance. If these minimum targets are not met,
the SGI agreement provides for penalties of $1 per equivalent case that are
offset against the Volume Growth Funding of $165 million available under the
program. Under the SGI agreement, quarterly funding commitments are advanced at
the beginning of each quarter less penalties from any year-to-date shortfall to
targets. As previously noted, we are currently in discussions with TCCC about
terminating the SGI agreement in connection with changing the way concentrate is
priced in the United States.

-38-

Our tax filings are routinely subjected to audit by tax authorities in most
jurisdictions where we conduct business. These audits may result in assessments
of additional taxes that are subsequently resolved with the authorities or
potentially through the courts. Currently, there are assessments or audits which
may lead to assessments involving certain of our subsidiaries, including our
subsidiary in Canada, that may not be resolved in the foreseeable future. We
believe we have substantial defenses to the questions being raised and intend to
pursue all legal remedies available if we are unable to reach a resolution with
the authorities. We believe we have adequately provided for any ultimate amounts
that would result from these proceedings, however, it is too early to predict a
final outcome in these matters.

We are a defendant in various other matters of litigation generally arising out
of the normal course of business. Although it is difficult to predict the
ultimate outcome of these cases or the other cases discussed above, management
believes, based on discussions with counsel, that any ultimate liability would
not materially affect our financial position, results of operations, or
liquidity.

Accounting Developments

We currently apply APB Opinion No. 25 and related interpretations in accounting
for our stock-based compensation plans. In March 2004, the FASB issued the
Exposure Draft, Share-Based Payment - an amendment of Statements No. 123 and 95
(Proposed Statement of Financial Accounting Standards). The Exposure Draft would
replace existing requirements under FAS 123, Accounting for Stock-Based
Compensation, and APB Opinion No. 25, Accounting for Stock Issued to Employees.
Under the Exposure Draft, all equity-based awards to employees would be required
to be recognized in the income statement based on their fair value. The Exposure
Draft is expected to be finalized in late 2004 and would be effective for us
beginning in 2005.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation
of Variable Interest Entities," revised December 2003. FIN 46 requires variable
interest entities to be consolidated by the primary beneficiary of the entity in
certain instances. FIN 46 is effective for all new variable interest entities
created or acquired after January 31, 2003. For variable interest entities
created or acquired prior to February 1, 2003, the provisions of FIN 46 are to
be applied by us in first quarter 2004. Our adoption of FIN 46 did not have an
impact on our financial position, cash flows, and results of operations.

CAUTIONARY STATEMENTS

There are several factors - many beyond our control - that could cause results
to differ significantly from our expectations. Our expectations are based on
then currently available competitive, financial, and economic data along with
our operating plans and are subject to future events and uncertainties. We
caution readers that in addition to the important factors described elsewhere in
this report, the following factors, among others, could cause our business,
results of operations and/or financial condition in 2004 and thereafter to
differ significantly from those expressed in any forward-looking statements.
There are also other factors not described in this report that could cause
results to differ from our expectations.

-39-

Marketplace: The Company's response to continued and increased customer and
competitor consolidations and marketplace competition may result in lower than
expected net pricing of our products. In addition, competitive pressures may
cause channel and product mix to shift from more profitable cold drink channels
and packages and adversely affect our overall pricing. Efforts to improve
pricing in the future consumption channels of our business may result in lower
than expected volume. In addition, weather conditions, particularly in Europe,
may have a significant impact on our sales volume. Net pricing, volume, and
costs of sales are the primary determinants of net earnings.

Cost Participation Payments from The Coca-Cola Company (TCCC): We are working
with TCCC to simplify our financial relationship. Material changes in levels of
payments historically provided under various programs with TCCC, or our
inability to meet the performance requirements for the anticipated levels of
such support payments, could adversely affect future earnings. TCCC is under no
obligation to participate in future programs or continue past levels of payments
into the future. We are unable to determine at this point the ultimate impact of
anticipated changes in arrangements with TCCC.

The amount of infrastructure funding from TCCC recognized as an offset to cost
of sales in a given year is dependent upon the actual number of units placed in
service. Actual results may differ materially from projections should placement
levels be significantly different than program requirements. For example, we are
currently in discussions with TCCC to amend our North American Jumpstart
agreements reducing our cold drink equipment purchase and placement requirements
for 2004 and 2005. Should TCCC not agree to the amendment and we fail to
purchase and place the equipment that is required by the current agreements, we
may be considered in breach of the contracts. Should we not satisfy the
provisions of the infrastructure funding programs for this or any other reason,
and we are unable to agree with TCCC on an alternative solution, TCCC would be
entitled to seek partial refund of amounts previously paid.

Raw Materials: Our forecasts assume no unplanned increases in the costs of raw
materials, ingredients, packaging materials, or supplies. If such increases
occur, and we are unable to achieve an increase in pricing to customers by
comparable amounts, earnings could be adversely affected.

Infrastructure Investment: Projected capacity levels of our infrastructure
investments may differ from actual if our volume growth is not as anticipated.
Significant changes from our expected timing of returns on cold drink equipment
and employee, fleet, and plant infrastructure investments could adversely impact
our net income.

Financing Considerations: Changes from our expectations for interest and
currency exchange rates can have a material impact on our forecasts. We may not
be able to completely mitigate the effect of significant interest rate or
currency exchange rate changes. Changes in our debt rating can have a material
adverse effect on interest costs and our financing sources.

-40-

Legal Contingencies: Changes from expectations for the resolution of outstanding
legal claims and assessments, including the investigation by the European
Commission, could have a material impact on our forecasts and financial
condition.

Legislative Risk: Our business model is dependent on the availability of our
products in multiple channels and locations to better satisfy our customers'
needs. Laws that restrict our ability to distribute products in schools and
other venues or materially impact our cash flows could negatively impact our
revenue and profit.

Tax Contingencies: An assessment of additional taxes resulting from audits
conducted by the Canadian tax authorities could have a material impact on our
earnings and financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have no material changes to the disclosure on this matter made in
"Management's Financial Review - Interest Rate and Currency Risk Management" on
Pages 76 and 77 of our Annual Report to Shareowners for the year ended December
31, 2003.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the participation
of management, evaluated the effectiveness of our "disclosure controls and
procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the Exchange Act)) as of the end of the period covered by this report.
Based on that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that our disclosure controls and procedures are effective in
timely making known to them material information required to be disclosed in our
reports filed or submitted under the Exchange Act. There has been no change in
our internal control over financial reporting during the quarter ended April 2,
2004 that has materially affected, or is reasonably likely to affect, our
internal control over financial reporting.

-41-

Part II. Other Information

Item 1. Legal Proceedings

Our California subsidiary has been sued by several current and former employees
over alleged violations of state wage and hour rules. The parties have accepted
a mediator's proposed settlement in Juarez et al. v. BCI Coca-Cola Bottling
Company of Los Angeles, Coca-Cola Enterprises Inc. and Does 1-50. The terms of
the release are still the subject of negotiation, and any settlement, which is
not expected to have a material effect on our financial condition, is subject to
final approval by the trial court having jurisdiction over the lawsuit.

Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of shareowners was held on Friday, April 30, 2004 in
Wilmington, Delaware at which the following matters were submitted to a vote of
the shareowners of the Company:

(a) Votes cast for or withheld regarding the election of Directors for terms
expiring in 2007:

For Withheld
------------------- ------------------

John R. Alm 392,703,507 18,266,673
J. Trevor Eyton 383,632,136 27,338,044
Gary P. Fayard 392,418,340 18,551,840
L. Phillip Humann 371,150,583 39,819,597
Paula G. Rosput 382,124,916 28,845,264

Additional Directors, whose terms of office as Directors continued after the
meeting, are as follows:

Term expiring in 2005 Term expiring in 2006
- ------------------------------------- ------------------------------------

John L. Clendenin Calvin Darden
James E. Copeland, Jr. Marvin J. Herb
John E. Jacob Steven J. Heyer
Summerfield K. Johnston, Jr. Jean-Claude Killy
Deval L. Patrick Lowry F. Kline

-42-

(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
- --------------------------- ----------------------------------------------------
Approval of the 2004
Executive Management
Incentive Plan 388,091,877 18,979,250 3,899,053 -
Approval of the 2004 Stock
Award Plan 310,853,718 72,796,312 3,777,386 23,542,764
Approval of the Deferred
Compensation Plan for
Nonemployee Directors 365,863,942 17,277,880 4,285,602 23,542,756
Approval of the UK Employee
Share Plan 357,424,773 25,361,619 4,641,038 23,542,750
Approval of the Stock
Savings Plan (Belgium) 358,617,884 24,431,761 4,377,786 23,542,749
Ratification of the Audit
Committee Appointment of
independent auditors 398,007,895 9,156,460 3,805,825 -
Shareowner proposal
relating to shareowner
approval of certain
severance agreements 116,680,651 264,891,933 5,855,549 23,542,047
Shareowner proposal
requesting adoption of
publicly stated goals for
enhanced rate of beverage
container recovery in the
United States 21,106,987 340,875,668 25,444,767 23,542,758

-43-

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibit (numbered in accordance with Item 601 of Regulation S-K):

Exhibit Incorporated by Reference
Number Description or Filed Herewith
- ------- ---------------------------------------------- -------------------------

Earnings to Combined Fixed Charges and Filed herewith.
12 Preferred Stock Dividends.
Certificate of John R. Alm, filed pursuant to Filed herewith.
Section 302 of the Sarbanes-Oxley Act of
31.1 2002.
Certificate of Patrick J. Mannelly, filed Filed herewith.
pursuant to Section 302 of the Sarbanes-Oxley
31.2 Act of 2002.
Certificate of John R. Alm, furnished pursuant Furnished herewith.
to Section 906 of the Sarbanes-Oxley Act of
32.1 2002.
Certificate of Patrick J. Mannelly, furnished Furnished herewith.
pursuant to Section 906 of the Sarbanes-Oxley
32.2 Act of 2002.

(b) Reports on Form 8-K:

During the first quarter of 2004, we filed the following current reports on Form
8-K:

Date of Report Description
- ------------------------- -----------------------------------------------------
January 21, 2004 Press release announcing webcast to analysts and
investors on January 29, 2004 (Item 9). Filed
January 21, 2004.
January 29, 2004 Press releases announcing management changes and the
Company's fourth quarter and full year 2003 results
(Items 5, 7, and 12). Filed January 29, 2004.
February 17, 2004 Press releases announcing election of G. David Van
Houten as executive vice president and Chief
Operating Officer and new officers (Items 5 and 7).
Filed February 18, 2004.
March 23, 2004 Press release announcing webcasts of two analyst
conference presentations on March 31, 2004 (Item 9).
Filed March 25, 2004.
March 31, 2004 Press release announcing that the Company affirms
2004 financial targets (Item 9). Filed April 2,
2004.

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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 12, 2004 /s/ Patrick J. Mannelly
-------------------------------------------------
Patrick J. Mannelly
Senior Vice President and Chief Financial Officer

Date: May 12, 2004 /s/ Rick L. Engum
-------------------------------------------------
Rick L. Engum
Vice President, Controller and
Principal Accounting Officer

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