COCA-COLA EUROPEAN PARTNERS US, LLC - FORM 8-K - EX-99.1 - EXHIBIT - July 24, 2014

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CONTACT: Thor Erickson - Investor Relations            
+1 (678) 260-3110

Fred Roselli - Media Relations
+1 (678) 260-3421

Lauren Sayeski - European Media Relations
+ 44 (0) 1895 844 300


COCA-COLA ENTERPRISES, INC. REPORTS SECOND-QUARTER 2014 RESULTS, AFFIRMS FULL-YEAR EARNINGS OUTLOOK

•
Second-quarter earnings per diluted share totaled 78 cents on a reported basis, or 90 cents on a comparable basis, including a currency benefit of approximately 6 cents.

•
Net sales totaled $2.3 billion, up 8 percent on a reported basis, or up 2½ percent on a currency-neutral basis; volume increased 3½ percent.

•
Operating income totaled $295 million on a reported basis, or $341 million on a comparable basis. Comparable operating income increased 8½ percent, or 2 percent on a currency-neutral basis.

•
CCE affirms 2014 full-year guidance, including comparable and currency-neutral earnings per diluted share growth of approximately 10 percent, low single-digit net sales growth, and mid-single-digit operating income growth.

ATLANTA, July 24, 2014 - Coca-Cola Enterprises, Inc. (NYSE/Euronext Paris: CCE) today reported second-quarter operating income of $295 million on a reported basis, or $341 million on a comparable basis. In the quarter, reported earnings per diluted share totaled 78 cents, or 90 cents on a comparable basis. Currency translation had a positive impact of approximately 6 cents on comparable earnings per diluted share. Items affecting comparability are detailed on pages 10 through 13 of this release.
    
Page 2 of 13


For the second quarter, net sales totaled $2.3 billion, an increase of 8 percent from the same quarter in 2013 on a reported basis, or 2½ percent on a currency-neutral basis.
“While we are encouraged by a return to volume growth, we continue to face ongoing macroeconomic weakness, competitive and marketplace pressures, and a dynamic customer landscape, particularly in Great Britain,” said John F. Brock, chairman and chief executive officer. “These challenges demand that we continue to work diligently to build on the strengths of our solid marketing programs, provide outstanding service to our customers, and maximize the effectiveness of our operations.
“Ultimately, we remain focused on our primary objective - delivering growth in shareowner value - and we continue to utilize all business levers to reach this goal.”
Operating Review
Total second-quarter volume grew 3½ percent, with growth in sparkling drinks of 3½ percent. Coca-Cola trademark brands grew 4 percent as Coca-Cola Zero achieved growth of more than 14 percent and Coca-Cola grew 4½ percent. CCE’s portfolio of energy brands grew 3 percent. Still beverages increased 2 percent with growth in water, Oasis, Capri Sun, and Nestea. Volume in Great Britain grew 2 percent, and volume in continental Europe (including Norway and Sweden) grew 4 percent.
Net pricing per case in the second quarter was flat, while cost of sales per case declined 1 percent. Operating expenses increased 6 percent, reflecting volume growth and timing of current year and prior year promotional expenses. These figures are comparable and currency-neutral.
“To grow we will continue to execute against the strong combination of marketing, brand, packaging, and operating initiatives we have in place. These initiatives include brand innovations, new take-home and immediate consumption packaging, and efficiency and effectiveness programs,” said Hubert Patricot, executive vice president and president, European Group.
Page 3 of 13


“Although we operate in a highly competitive marketplace, with dynamic consumer, customer and economic challenges, we remain focused on delivering sustained profitable growth.”
Full-Year 2014 Outlook
CCE affirms its guidance for full-year 2014. It continues to expect 2014 earnings per diluted share growth of approximately 10 percent, net sales growth in a low single-digit range, and operating income growth in a mid-single-digit range. This guidance is comparable and currency-neutral. Based on recent rates, currency translation would benefit full-year 2014 earnings per diluted share by slightly more than 5 percent.
The company continues to expect 2014 free cash flow of approximately $650 million. Capital expenditures are expected to be approximately $350 million. Weighted-average cost of debt is expected to be approximately 3 percent and the comparable effective tax rate for 2014 is expected to be in a range of 26 percent to 28 percent.
Share Repurchase
In December 2013, our Board of Directors approved a $1 billion share repurchase program - the fourth program since the creation of new CCE. Through the second quarter of the year, the company has repurchased approximately $600 million of its shares, and continues to expect to repurchase approximately $800 million of its shares by the end of 2014. These plans may be adjusted depending on economic, operating, or other factors, including acquisition opportunities.
Conference Call
CCE will host a conference call with investors and analysts today at 10 a.m. EDT. The call can be accessed through the company’s website at www.cokecce.com.
ABOUT CCE
    Coca-Cola Enterprises, Inc. (CCE) is the leading Western European marketer, producer, and distributor of non-alcoholic ready-to-drink beverages and one of the world’s largest
Page 4 of 13


independent Coca-Cola bottlers. CCE is the sole licensed bottler for products of The Coca-Cola Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. We operate with a local focus and have 17 manufacturing sites across Europe, where we manufacture nearly 90 percent of our products in the markets in which they are consumed. Corporate responsibility and sustainability is core to our business, and we have been recognized by leading organizations in North America and Europe for our progress in water use reduction, carbon footprint reduction, and recycling initiatives. For more information about our company, please visit our website at www.cokecce.com and follow us on twitter at @cokecce.




















Page 5 of 13



# # #

Forward-Looking Statements

Included in this news release are forward-looking management comments and other statements that reflect management’s current outlook for future periods. As always, these expectations are based on currently available competitive, financial, and economic data along with our current operating plans and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. The forward-looking statements in this news release should be read in conjunction with the risks and uncertainties discussed in our filings with the Securities and Exchange Commission (“SEC”), including our most recent Form 10-K and other SEC filings.




Page 6 of 13

COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in millions, except per share data)


 
Second Quarter
 
First Six Months
 
2014
 
2013
 
2014
 
2013
Net sales
$
2,333

 
$
2,156

 
$
4,203

 
$
4,006

Cost of sales
1,487

 
1,403

 
2,707

 
2,619

Gross profit
846

 
753

 
1,496

 
1,387

Selling, delivery, and administrative expenses
551

 
481

 
1,017

 
1,004

Operating income
295

 
272

 
479

 
383

Interest expense, net
30

 
24

 
58

 
49

Other nonoperating income (expense)
1

 
(2
)
 
—

 
(4
)
Income before income taxes
266

 
246

 
421

 
330

Income tax expense
68

 
64

 
108

 
87

Net income
$
198

 
$
182

 
$
313

 
$
243

Basic earnings per share
$
0.80

 
$
0.67

 
$
1.24

 
$
0.89

Diluted earnings per share
$
0.78

 
$
0.66

 
$
1.22

 
$
0.87

Dividends declared per share
$
0.25

 
$
0.20

 
$
0.50

 
$
0.40

Basic weighted average shares outstanding
249

 
271

 
252

 
275

Diluted weighted average shares outstanding
254

 
277

 
257

 
281






Page 7 of 13

COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in millions)


 
 
Second Quarter
 
First Six Months
 
 
2014
 
2013
 
2014
 
2013
Net income
 
$
198

 
$
182

 
$
313

 
$
243

Components of other comprehensive income (loss):
 
 
 
 
 
 
 
 
Currency translations
 
 
 
 
 
 
 
 
    Pretax activity, net
 
13

 
(10
)
 
24

 
(190
)
    Tax effect
 
—

 
—

 
—

 
—

Currency translations, net of tax
 
13

 
(10
)
 
24

 
(190
)
Net investment hedges
 
 
 
 
 
 
 
 
    Pretax activity, net
 
18

 
(9
)
 
17

 
18

    Tax effect
 
(6
)
 
3

 
(6
)
 
(6
)
Net investment hedges, net of tax
 
12

 
(6
)
 
11

 
12

Cash flow hedges
 
 
 
 
 
 
 
 
    Pretax activity, net
 
(3
)
 
13

 
(6
)
 
28

    Tax effect
 
—

 
(4
)
 
1

 
(8
)
Cash flow hedges, net of tax
 
(3
)
 
9

 
(5
)
 
20

Pension plan adjustments
 
 
 
 
 
 
 
 
    Pretax activity, net
 
7

 
6

 
13

 
12

    Tax effect
 
(2
)
 
(1
)
 
(3
)
 
(2
)
Pension plan adjustments, net of tax
 
5

 
5

 
10

 
10

Other comprehensive income (loss), net of tax
 
27

 
(2
)
 
40

 
(148
)
Comprehensive income
 
$
225

 
$
180

 
$
353

 
$
95






Page 8 of 13
    
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)


 
June 27,
2014
 
December 31,
2013
ASSETS
 
 
 
Current:
 
 
 
Cash and cash equivalents
$
356

 
$
343

Trade accounts receivable
2,136

 
1,515

Amounts receivable from The Coca-Cola Company
63

 
89

Inventories
488

 
452

Other current assets
252

 
169

Total current assets
3,295

 
2,568

Property, plant, and equipment, net
2,304

 
2,353

Franchise license intangible assets, net
4,048

 
4,004

Goodwill
122

 
124

Other noncurrent assets
399

 
476

Total assets
$
10,168

 
$
9,525

LIABILITIES
 
 
 
Current:
 
 
 
Accounts payable and accrued expenses
$
2,292

 
$
1,939

Amounts payable to The Coca-Cola Company
151

 
145

Current portion of debt
423

 
111

Total current liabilities
2,866

 
2,195

Debt, less current portion
4,053

 
3,726

Other noncurrent liabilities
226

 
221

Noncurrent deferred income tax liabilities
1,113

 
1,103

Total liabilities
8,258

 
7,245

SHAREOWNERS’ EQUITY
 
 
 
Common stock
4

 
3

Additional paid-in capital
3,916

 
3,899

Reinvested earnings
1,763

 
1,577

Accumulated other comprehensive loss
(291
)
 
(331
)
Common stock in treasury, at cost
(3,482
)
 
(2,868
)
Total shareowners’ equity
1,910

 
2,280

Total liabilities and shareowners’ equity
$
10,168

 
$
9,525







Page 9 of 13

COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)


 
First Six Months
 
2014
 
2013
Cash Flows from Operating Activities:
 
 
 
Net income
$
313

 
$
243

Adjustments to reconcile net income to net cash derived from operating activities:
 
 
 
Depreciation and amortization
153

 
159

Share-based compensation expense
15

 
16

Deferred income tax expense (benefit)
13

 
(15
)
Pension expense less than contributions
(4
)
 
(4
)
Net changes in assets and liabilities
(277
)
 
(252
)
Net cash derived from operating activities
213

 
147

Cash Flows from Investing Activities:
 
 
 
Capital asset investments
(156
)
 
(149
)
Capital asset disposals
26

 
—

Net cash used in investing activities
(130
)
 
(149
)
Cash Flows from Financing Activities:
 
 
 
Net change in commercial paper
412

 
16

Issuances of debt
347

 
459

Payments on debt
(108
)
 
(217
)
Shares repurchased under share repurchase programs
(588
)
 
(588
)
Dividend payments on common stock
(125
)
 
(109
)
Other financing activities, net
(7
)
 
5

Net cash used in financing activities
(69
)
 
(434
)
Net effect of currency exchange rate changes on cash and cash equivalents
(1
)
 
(8
)
Net Change in Cash and Cash Equivalents
13

 
(444
)
Cash and Cash Equivalents at Beginning of Period
343

 
721

Cash and Cash Equivalents at End of Period
$
356

 
$
277







Page 10 of 13

COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP (a)
(Unaudited; in millions, except per share data which is calculated prior to rounding)

 
 
Second-Quarter 2014
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
1,487

551

295

68

$
198

$
0.78

 
Items Impacting Comparability:
 
 
 
 
 
 
 
Mark-to-Market Effects (c)
7

1

(8
)
(3
)
(5
)
(0.02
)
 
Restructuring Charges (d)
—

(54
)
54

18

36

0.14

Comparable (non-GAAP)
$
1,494

498

341

83

$
229

$
0.90

 
 
 
 Diluted Weighted Average Shares Outstanding
 
254

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second-Quarter 2013
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
1,403

481

272

64

$
182

$
0.66

 
Items Impacting Comparability:
 
 
 
 
 
 
 
Mark-to-Market Effects (c)
(6
)
(2
)
8

2

6

0.02

 
Restructuring Charges (d)
(1
)
(33
)
34

9

25

0.09

Comparable (non-GAAP)
$
1,396

446

314

75

$
213

$
0.77

 
 
 
 Diluted Weighted Average Shares Outstanding
 
277



(a) These non-GAAP measures are provided to allow investors to more clearly evaluate our operating performance and business trends. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results. The adjusting items are based on established defined terms and thresholds and represent all material items management considered for year-over-year comparability.
(b) As reflected in CCE's U.S. GAAP Condensed Consolidated Financial Statements.
 
 
(c) Amounts represent the net out of period mark-to-market impact of non-designated commodity hedges.
 
(d) Amounts represent non-recurring restructuring charges.
 
 
 
 







Page 11 of 13

COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP (a)
(Unaudited; in millions, except per share data which is calculated prior to rounding)

 
 
First Six Months 2014
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
2,707

1,017

479

108

$
313

$
1.22

 
Items Impacting Comparability:






 
Mark-to-Market Effects (c)
6

—

(6
)
(2
)
(4
)
(0.02
)
 
Restructuring Charges (d)
—

(62
)
62

21

41

0.16

Comparable (non-GAAP)
$
2,713

955

535

127

$
350

$
1.36

 
 
 
 Diluted Weighted Average Shares Outstanding
 
257

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Six Months 2013
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
2,619

1,004

383

87

$
243

$
0.87

 
Items Impacting Comparability:
 
 
 
 
 
 
 
Mark-to-Market Effects (c)
(9
)
—

9

2

7

0.02

 
Restructuring Charges (d)
(4
)
(98
)
102

28

74

0.27

Comparable (non-GAAP)
$
2,606

906

494

117

$
324

$
1.16

 
 

 Diluted Weighted Average Shares Outstanding
 
281



(a) These non-GAAP measures are provided to allow investors to more clearly evaluate our operating performance and business trends. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results. The adjusting items are based on established defined terms and thresholds and represent all material items management considered for year-over-year comparability.
(b) As reflected in CCE's U.S. GAAP Condensed Consolidated Financial Statements.
 
 
(c) Amounts represent the net out of period mark-to-market impact of non-designated commodity hedges.
 
(d) Amounts represent non-recurring restructuring charges.
 
 
 
 


















Page 12 of 13

COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT INCOME (a)
(Unaudited; in millions)

 
 
Second-Quarter 2014
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
321

$
(26
)
$
295

 
Items Impacting Comparability:
 
 
 
 
Mark-to-Market Effects (c)
—

(8
)
(8
)
 
Restructuring Charges (d)
54

—

54

Comparable (non-GAAP)
$
375

$
(34
)
$
341

 
 
 
 
 
 
 
Second-Quarter 2013
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
309

$
(37
)
$
272

 
Items Impacting Comparability:
 
 
 
 
Mark-to-Market Effects (c)
—

8

8

 
Restructuring Charges (d)
34

—

34

Comparable (non-GAAP)
$
343

$
(29
)
$
314

 
 
 
 
 
 
 
 
 
 
 
 
First Six Months 2014
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
545

$
(66
)
$
479

 
Items Impacting Comparability:
 
 
 
 
Mark-to-Market Effects (c)
—

(6
)
(6
)
 
Restructuring Charges (d)
62

—

62

Comparable (non-GAAP)
$
607

$
(72
)
$
535

 
 
 
 
 
 
 
First Six Months 2013
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
454

$
(71
)
$
383

 
Items Impacting Comparability:
 
 
 
 
Mark-to-Market Effects (c)
—

9

9

 
Restructuring Charges (d)
102

—

102

Comparable (non-GAAP)
$
556

$
(62
)
$
494



(a) These non-GAAP measures are provided to allow investors to more clearly evaluate our operating performance and business trends. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results. The adjusting items are based on established defined terms and thresholds and represent all material items management considered for year-over-year comparability.
(b) As reflected in CCE's U.S. GAAP Condensed Consolidated Financial Statements.
 
(c) Amounts represent the net out of period mark-to-market impact of non-designated commodity hedges.
(d) Amounts represent non-recurring restructuring charges.
 
 




Page 13 of 13

COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited; in millions, except percentages)

 
 
 
Second-Quarter 2014 Change Versus Second-Quarter 2013
First Six Months 2014 Change Versus First Six Months 2013
Net Sales Per Case
 
 
Change in Net Sales per Case
4.5%
4.5%
 
Impact of Excluding Post Mix, Non-Trade, and Other
1.0%
0.5%
Bottle and Can Net Pricing Per Case
5.5%
5.0%
 
Impact of Currency Exchange Rate Changes
(5.5)%
(4.5)%
Currency-Neutral Bottle and Can
 
 
 
Net Pricing Per Case (a)
—%
0.5%
 
 
 
 
 
Cost of Sales Per Case
 
 
Change in Cost of Sales per Case
2.5%
3.0%
 
Impact of Excluding Post Mix, Non-Trade, and Other
1.5%
1.0%
Bottle and Can Cost of Sales Per Case
4.0%
4.0%
 
Impact of Currency Exchange Rate Changes
(5.0)%
(4.5)%
Currency-Neutral Bottle and Can
 
 
 
Cost of Sales Per Case (a)
(1.0)%
(0.5)%
 
 
 
 
 
Physical Case Bottle and Can Volume
 
 
Change in Volume
 
3.5%
0.5%
 
Impact of Selling Day Shift
—%
0.5%
Comparable Bottle and Can Volume (b)
3.5%
1.0%
 
 
 
 
 
 
 
 
 
 
 
 
 
First Six Months
Reconciliation of Free Cash Flow (c)
2014
2013
Net Cash Derived From Operating Activities
$
213

$
147

Less: Capital Asset Investments
(156
)
(149
)
Add: Capital Asset Disposals
26

—

Free Cash Flow
 
$
83

$
(2
)
 
 
 
 
 
 
 
 
June 27,
December 31,
Reconciliation of Net Debt (d)
2014
2013
Current Portion of Debt
$
423

$
111

Debt, Less Current Portion
4,053

3,726

Less: Cash and Cash Equivalents
(356
)
(343
)
Net Debt
 
$
4,120

$
3,494



(a) The non-GAAP financial measures "Currency-Neutral Bottle and Can Net Pricing Per Case" and "Currency-Neutral Bottle and Can Cost of Sales per Case" are used to more clearly evaluate bottle and can pricing and cost trends in the marketplace. These measures exclude items not directly related to bottle and can pricing or cost and currency exchange rate changes.
(b) The non-GAAP measure "Comparable Bottle and Can Volume" is used to analyze the performance of our business on a constant period basis. There were the same number of selling days in the second quarter of 2014 versus the second quarter of 2013. There was one less selling day in the first six months of 2014 versus the first six months of 2013.
(c) The non-GAAP measure "Free Cash Flow" is provided to focus management and investors on the cash available for debt reduction, dividend distributions, share repurchase, and acquisition opportunities.
(d) The non-GAAP measure "Net Debt" is used to more clearly evaluate our capital structure and leverage.


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