COCA-COLA EUROPEAN PARTNERS US, LLC - FORM 8-K - EX-99.1 - EXHIBIT - October 23, 2014

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

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



COCA-COLA ENTERPRISES, INC. REPORTS THIRD-QUARTER 2014 RESULTS AND FULL-YEAR EARNINGS OUTLOOK

•
Third-quarter earnings per diluted share totaled 96 cents on a reported basis, or 92 cents on a comparable basis, including a currency benefit of approximately 3 cents.

•
Net sales totaled $2.1 billion, down 1½ percent on a reported basis, or down 3½ percent on a currency-neutral basis; volume declined 4 percent.

•
Operating income totaled $345 million on a reported basis, or $338 million on a comparable basis. Operating income grew 10 percent on a reported basis, 5½ percent on a comparable basis, or 2½ percent on a currency-neutral basis.

•
For 2014, CCE expects comparable and currency-neutral earnings per diluted share growth of approximately 10 percent. Currency translation would be a benefit of approximately 3 percent based on recent rates.

ATLANTA, October 23, 2014 - Coca-Cola Enterprises, Inc. (NYSE/Euronext Paris: CCE) today reported third-quarter operating income of $345 million on a reported basis, or $338 million on a comparable basis. In the quarter, reported earnings per diluted share totaled 96 cents, or 92 cents on a comparable basis. Currency translation had a positive impact of approximately 3 cents on comparable earnings per diluted share compared to the same quarter a year ago. Items affecting comparability are detailed on pages 10 through 13 of this release.

    


Page 2 of 13
    
Net sales totaled $2.1 billion in the quarter, down 1½ percent on a reported basis versus the same quarter a year ago, or down 3½ percent on a currency-neutral basis.
“We continue to face operating challenges, including sustained macroeconomic softness, a difficult retail environment, and poor weather early in the quarter,” said John F. Brock, chairman and chief executive officer.
“We expect most of these operating conditions will persist, and as we have done in the past, we will manage each element of our business to position our company to achieve our primary objective - delivering shareowner value,” Mr. Brock said. “At every level of our company, we are committed to the operating excellence necessary to reach this goal.”
Operating Review
Third-quarter volume declined 4 percent, reflecting the impact of weather, particularly in France, prior-year hurdles, ongoing macroeconomic trends, and marketplace pressures. Both sparkling and still brands declined 4 percent. Coca-Cola trademark brands declined 3½ percent. Energy grew 5½ percent. Volume in Great Britain declined 2½ percent, and volume in continental Europe (including Norway and Sweden) declined 5 percent.
Net pricing per case in the third quarter was flat, while cost of sales per case declined 1 percent. Operating expenses declined 3 percent. These figures are comparable and currency-neutral.
“Continuing to provide world-class service to our customers, solid support for our industry-leading brand portfolio, and the highest levels of execution is essential,” said Hubert Patricot, executive vice president and president, European Group. “With new




Page 3 of 13
    
brand and product initiatives such as Coca-Cola Life and smartwater, impactful promotions, and a range of package innovations, we remain confident in our ability to execute and deliver value to customers and consumers.”
Full-Year 2014 Outlook
For 2014, CCE expects comparable and currency-neutral earnings per diluted share growth of approximately 10 percent. Based on recent rates, currency translation would benefit full-year 2014 earnings per diluted share by approximately 3 percent.
Net sales for 2014 are now expected to be essentially flat and operating income is now expected to grow in a low single-digit range, both on a comparable and currency-neutral basis. This guidance is driven by the impact of ongoing challenging macroeconomic, customer, and consumer conditions.
The company continues to expect 2014 free cash flow of approximately $650 million. Capital expenditures are now expected to be approximately $325 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 approximately 27 percent.
Through the third quarter of 2014, the company has repurchased approximately $800 million of its shares, reaching the previously disclosed full-year target. Share repurchase plans may be adjusted depending on economic, operating, or other factors, including acquisition opportunities.
“While our revised operating outlook is below our original expectations for the year, we remain focused on seeking ways to improve growth, generate cash from operations, optimize our balance sheet, and importantly, use cash to create shareowner value,” said Nik Jhangiani, senior vice president and chief financial officer.


Page 4 of 13

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 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)


 
Third Quarter
 
First Nine Months
 
2014
 
2013
 
2014
 
2013
Net sales
$
2,136

 
$
2,174

 
$
6,339

 
$
6,180

Cost of sales
1,328

 
1,387

 
4,035

 
4,006

Gross profit
808

 
787

 
2,304

 
2,174

Selling, delivery, and administrative expenses
463

 
473

 
1,480

 
1,477

Operating income
345

 
314

 
824

 
697

Interest expense, net
31

 
26

 
89

 
75

Other nonoperating income (expense)
—

 
1

 
—

 
(3
)
Income before income taxes
314

 
289

 
735

 
619

Income tax expense
76

 
—

 
184

 
87

Net income
$
238

 
$
289

 
$
551

 
$
532

Basic earnings per share
$
0.97

 
$
1.09

 
$
2.21

 
$
1.96

Diluted earnings per share
$
0.96

 
$
1.07

 
$
2.17

 
$
1.92

Dividends declared per share
$
0.25

 
$
0.20

 
$
0.75

 
$
0.60

Basic weighted average shares outstanding
244

 
264

 
249

 
271

Diluted weighted average shares outstanding
248

 
269

 
254

 
277






Page 7 of 13

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


 
 
Third Quarter
 
First Nine Months
 
 
2014
 
2013
 
2014
 
2013
Net income
 
$
238

 
$
289

 
$
551

 
$
532

Components of other comprehensive income:
 
 
 
 
 
 
 
 
Currency translations
 
 
 
 
 
 
 
 
    Pretax activity, net
 
(279
)
 
204

 
(255
)
 
14

    Tax effect
 
—

 
—

 
—

 
—

Currency translations, net of tax
 
(279
)
 
204

 
(255
)
 
14

Net investment hedges
 
 
 
 
 
 
 
 
    Pretax activity, net
 
153

 
(52
)
 
169

 
(34
)
    Tax effect
 
(54
)
 
18

 
(59
)
 
12

Net investment hedges, net of tax
 
99

 
(34
)
 
110

 
(22
)
Cash flow hedges
 
 
 
 
 
 
 
 
    Pretax activity, net
 
(9
)
 
(10
)
 
(15
)
 
18

    Tax effect
 
2

 
3

 
3

 
(5
)
Cash flow hedges, net of tax
 
(7
)
 
(7
)
 
(12
)
 
13

Pension plan adjustments
 
 
 
 
 
 
 
 
    Pretax activity, net
 
7

 
8

 
20

 
20

    Tax effect
 
(1
)
 
(2
)
 
(4
)
 
(4
)
Pension plan adjustments, net of tax
 
6

 
6

 
16

 
16

Other comprehensive (loss) income, net of tax
 
(181
)
 
169

 
(141
)
 
21

Comprehensive income
 
$
57

 
$
458

 
$
410

 
$
553






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


 
September 26,
2014
 
December 31,
2013
ASSETS
 
 
 
Current:
 
 
 
Cash and cash equivalents
$
218

 
$
343

Trade accounts receivable
1,800

 
1,515

Amounts receivable from The Coca-Cola Company
95

 
89

Inventories
410

 
452

Other current assets
305

 
169

Total current assets
2,828

 
2,568

Property, plant, and equipment, net
2,167

 
2,353

Franchise license intangible assets, net
3,824

 
4,004

Goodwill
115

 
124

Other noncurrent assets
352

 
476

Total assets
$
9,286

 
$
9,525

LIABILITIES
 
 
 
Current:
 
 
 
Accounts payable and accrued expenses
$
1,994

 
$
1,939

Amounts payable to The Coca-Cola Company
124

 
145

Current portion of debt
729

 
111

Total current liabilities
2,847

 
2,195

Debt, less current portion
3,419

 
3,726

Other noncurrent liabilities
183

 
221

Noncurrent deferred income tax liabilities
1,107

 
1,103

Total liabilities
7,556

 
7,245

SHAREOWNERS’ EQUITY
 
 
 
Common stock
4

 
3

Additional paid-in capital
3,940

 
3,899

Reinvested earnings
1,940

 
1,577

Accumulated other comprehensive loss
(472
)
 
(331
)
Common stock in treasury, at cost
(3,682
)
 
(2,868
)
Total shareowners’ equity
1,730

 
2,280

Total liabilities and shareowners’ equity
$
9,286

 
$
9,525







Page 9 of 13

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


 
First Nine Months
 
2014
 
2013
Cash Flows from Operating Activities:
 
 
 
Net income
$
551

 
$
532

Adjustments to reconcile net income to net cash derived from operating activities:
 
 
 
Depreciation and amortization
231

 
231

Share-based compensation expense
21

 
24

Deferred income tax expense (benefit)
60

 
(66
)
Pension expense less than contributions
(5
)
 
(3
)
Net changes in assets and liabilities
(267
)
 
(121
)
Net cash derived from operating activities
591

 
597

Cash Flows from Investing Activities:
 
 
 
Capital asset investments
(239
)
 
(220
)
Capital asset disposals
27

 
—

Settlement of net investment hedges
21

 
—

Net cash used in investing activities
(191
)
 
(220
)
Cash Flows from Financing Activities:
 
 
 
Net change in commercial paper
242

 
182

Issuances of debt
347

 
459

Payments on debt
(111
)
 
(220
)
Shares repurchased under share repurchase programs
(800
)
 
(888
)
Dividend payments on common stock
(185
)
 
(161
)
Other financing activities, net
(1
)
 
8

Net cash used in financing activities
(508
)
 
(620
)
Net effect of currency exchange rate changes on cash and cash equivalents
(17
)
 
10

Net Change in Cash and Cash Equivalents
(125
)
 
(233
)
Cash and Cash Equivalents at Beginning of Period
343

 
721

Cash and Cash Equivalents at End of Period
$
218

 
$
488







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)

 
 
Third-Quarter 2014
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
1,328

463

345

76

$
238

$
0.96


Items Impacting Comparability:
 
 
 
 
 
 

Mark-to-Market Effects (c)
8

—

(8
)
(2
)
(6
)
(0.02
)

Restructuring Charges (d)
—

(1
)
1

—

1

—


Net Tax Items (e)
—

—

—

6

(6
)
(0.02
)
Comparable (non-GAAP)
$
1,336

462

338

80

$
227

$
0.92

 
 
 
 Diluted Weighted Average Shares Outstanding
 
248

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third-Quarter 2013
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
1,387

473

314

—

$
289

$
1.07


Items Impacting Comparability:
 
 
 
 
 
 

Mark-to-Market Effects (c)
1

—

(1
)
—

(1
)
—


Restructuring Charges (d)
—

(7
)
7

3

4

0.01


Net Tax Items (e)
—

—

—

71

(71
)
(0.26
)
Comparable (non-GAAP)
$
1,388

466

320

74

$
221

$
0.82

 
 
 
 Diluted Weighted Average Shares Outstanding
 
269



(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.
 
 
 
 
(e) Amounts represent the tax impact of both changes in underlying rates and cumulative nonrecurring items on the quarter.







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 Nine Months 2014
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
4,035

1,480

824

184

$
551

$
2.17

 
Items Impacting Comparability:






 
Mark-to-Market Effects (c)
14

—

(14
)
(4
)
(10
)
(0.04
)
 
Restructuring Charges (d)
—

(63
)
63

21

42

0.16

 
Net Tax Items
—

—

—

6

(6
)
(0.02
)
Comparable (non-GAAP)
$
4,049

1,417

873

207

$
577

$
2.27

 
 
 
 Diluted Weighted Average Shares Outstanding
 
254

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Nine Months 2013
 
 
Cost of Sales
Selling, Delivery, and Administrative Expenses
Operating Income
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$
4,006

1,477

697

87

$
532

$
1.92

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

8

2

6

0.02

 
Restructuring Charges (d)
(4
)
(105
)
109

31

78

0.29

 
Net Tax Items (e)
—

—

—

71

(71
)
(0.26
)
Comparable (non-GAAP)
$
3,994

1,372

814

191

$
545

$
1.97

 
 

 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.
 
 
 
 
(e) Amounts represent the tax impact of both changes in underlying rates and cumulative nonrecurring items on the quarter.


















Page 12 of 13

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

 
 
Third-Quarter 2014
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
366

$
(21
)
$
345

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

(8
)
(8
)
 
Restructuring Charges (d)
1

—

1

Comparable (non-GAAP)
$
367

$
(29
)
$
338

 
 
 
 
 
 
 
Third-Quarter 2013
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
350

$
(36
)
$
314

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

(1
)
(1
)
 
Restructuring Charges (d)
7

—

7

Comparable (non-GAAP)
$
357

$
(37
)
$
320

 
 
 
 
 
 
 
 
 
 
 
 
First Nine Months 2014
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
911

$
(87
)
$
824

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

(14
)
(14
)
 
Restructuring Charges (d)
63

—

63

Comparable (non-GAAP)
$
974

$
(101
)
$
873

 
 
 
 
 
 
 
First Nine Months 2013
 
 
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
804

$
(107
)
$
697

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

8

8

 
Restructuring Charges (d)
109

—

109

Comparable (non-GAAP)
$
913

$
(99
)
$
814



(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)

 
 
 
Third-Quarter 2014 Change Versus Third-Quarter 2013
First Nine Months 2014 Change Versus First Nine Months 2013
Net Sales Per Case
 
 
Change in Net Sales per Case
2.5%
3.5%
 
Impact of Excluding Post Mix, Non-Trade, and Other
(0.5)%
0.5%
Bottle and Can Net Pricing Per Case
2.0%
4.0%
 
Impact of Currency Exchange Rate Changes
(2.0)%
(4.0)%
Currency-Neutral Bottle and Can
 
 
 
Net Pricing Per Case (a)
—%
—%
 
 
 
 
 
Cost of Sales Per Case
 
 
Change in Cost of Sales per Case
(0.5)%
2.0%
 
Impact of Excluding Post Mix, Non-Trade, and Other
1.0%
1.0%
Bottle and Can Cost of Sales Per Case
0.5%
3.0%
 
Impact of Currency Exchange Rate Changes
(1.5)%
(3.5)%
Currency-Neutral Bottle and Can
 
 
 
Cost of Sales Per Case (a)
(1.0)%
(0.5)%
 
 
 
 
 
Physical Case Bottle and Can Volume
 
 
Change in Volume
 
(4.0)%
(1.0)%
 
Impact of Selling Day Shift
—%
0.5%
Comparable Bottle and Can Volume (b)
(4.0)%
(0.5)%
 
 
 
 
 
 
 
 
 
 
 
 
 
First Nine Months
Reconciliation of Free Cash Flow (c)
2014
2013
Net Cash Derived From Operating Activities
$
591

$
597

Less: Capital Asset Investments
(239
)
(220
)
Add: Capital Asset Disposals
27

—

Free Cash Flow
 
$
379

$
377

 
 
 
 
 
 
 
 
September 26,
December 31,
Reconciliation of Net Debt (d)
2014
2013
Current Portion of Debt
$
729

$
111

Debt, Less Current Portion
3,419

3,726

Less: Cash and Cash Equivalents
(218
)
(343
)
Net Debt
 
$
3,930

$
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 third quarter of 2014 versus the third quarter of 2013. There was one less selling day in the first nine months of 2014 versus the first nine 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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