Second-quarter diluted earnings per share totaled 67 cents on a
reported basis or 73 cents on a comparable basis.
Net sales were $2.2 billion, down 8½ percent on a reported basis,
flat on a currency neutral basis, and down 2 percent on a currency
neutral basis excluding the impact of the French excise tax increase.
Operating income was $301 million on a reported basis and $328
million on a comparable basis; comparable operating income was down 11
percent, and down 2 percent on a currency neutral basis.
Second-quarter volume declined 6 percent reflecting the impact of
unfavorable weather, the French excise tax increase, and prior year
growth hurdles.
CCE
Coca-Cola Enterprises, Inc. (NYSE: CCE) (Euronext Paris: CCE)today reported second-quarter 2012 diluted earnings per share of 67
cents on a reported basis and 73 cents on a comparable basis. Reported
operating income for the quarter totaled $301 million; comparable
operating income totaled $328 million, down 11 percent on a comparable
basis and down 2 percent on a comparable and currency neutral basis
versus second-quarter 2011 results. Currency translation negatively
affected second-quarter 2012 earnings per diluted share by 8 cents, or
10½ percent. Items affecting comparability and other pro forma
adjustments are detailed on pages 11 through 15 of this release.
Second-quarter net sales totaled $2.2 billion, a decline of 8½ percent
from the same quarter a year ago, flat on a currency neutral basis, and
down 2 percent on a currency neutral basis excluding the impact of the
French excise tax increase.
"As we face a unique combination of unfavorable weather and ongoing
marketplace challenges, we continue to closely manage each element of
the business to drive results and deliver against our objectives," said
John F. Brock, chairman and chief executive officer. "By executing
against our strong sales and operating plans, controlling costs, and
leveraging our strong balance sheet, we remain confident in our ability
to create increasing value for our customers, and importantly, for our
shareowners."
OPERATING REVIEW
Total second-quarter volume declined 6 percent, reflecting unfavorable
weather, the impact of the French excise tax increase, and prior year
hurdles. Despite unfavorable weather throughout the second quarter,
there was sequential improvement in volume growth late in the quarter.
Declines were consistent in both the sparkling and still categories.
Energy continued to achieve growth, up 16 percent, and Coke Zero grew 2½
percent. Total volume in Great Britain declined 4½ percent, while volume
in continental Europe (including Norway and Sweden) declined 7 percent.
Second-quarter net pricing per case grew 6½ percent and cost of sales
per case grew 6½ percent, both including the impact of the French excise
tax increase. Excluding the impact of the French excise tax increase,
net pricing per case increased 4 percent, and cost of sales per case
increased 3 percent. Operating expenses were essentially flat,
reflecting timing of market initiatives offset by continued expense
control and volume declines. These figures are comparable and currency
neutral.
"The challenges of the second quarter demonstrate the importance of our
commitment to outstanding day-to-day execution, exceptional customer
service, and sustained cost control efforts," said Hubert Patricot,
executive vice president and president, European Group. "Maximizing
these strengths is essential as we work to deliver our full-year
objectives.
"Looking ahead, we will work to successfully execute our initiatives in
support of the London Olympics and Paralympics, which remain a unique
multi-year opportunity for CCE to build brands, enhance relationships
with our customers, and demonstrate our world-class capabilities," Mr.
Patricot said. "We believe our support of the Olympics and Paralympics
will prove an enduring, long-term benefit to our company and I am
confident that everyone at CCE is fully prepared to make our Olympic
effort a success."
SHARE REPURCHASE
As previously announced, CCE began a new $1 billion share repurchase
program in January 2012. During the second quarter, CCE repurchased $225
million of its shares and has repurchased $375 million year to date.
The current share repurchase program allows for a total repurchase of $1
billion, and as previously disclosed, is capped at a total of 65 million
shares, including the prior repurchase program completed in 2011.
Through the second-quarter 2012, CCE has repurchased 51.5 million shares
under both programs. CCE now expects to repurchase at least $600 million
of its shares by the end of 2012 subject to the cumulative share cap of
65 million shares. These plans may be adjusted depending on economic,
operating, or other factors, including acquisition opportunities.
FULL-YEAR 2012 OUTLOOK
For 2012, CCE expects comparable earnings per diluted share in a range
of $2.18 to $2.24, including the negative impact of currency
translation. Based on recent rates, currency translation would decrease
full-year and third-quarter earnings per diluted share approximately 10
percent and 12 percent, respectively. Net sales are expected to grow in
a mid-single-digit range, with operating income growth in a
mid-single-digit range. Our outlook for earnings per diluted share, net
sales, and operating income include the impact of the French excise tax
increase and is comparable. Net sales and operating income guidance is
also currency neutral.
Based on recent currency rates, the company now expects 2012 free cash
flow in a range of $475 million to $500 million, with capital
expenditures in a range of $375 million to $400 million. Weighted
average cost of debt is expected to be approximately 3 percent and the
effective tax rate for 2012 is expected to be in a range of 26 percent
to 28 percent.
CONFERENCE CALL
CCE will host a conference call with investors and analysts today at 10
a.m. ET. The call can be accessed through our website at www.cokecce.com.
Coca-Cola Enterprises, Inc. is the leading Western European marketer,
distributor, and producer of bottle and can liquid nonalcoholic
refreshment 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. For more information about
our company, please visit our website at www.cokecce.com.
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 Form 10-K for the year
ended December 31, 2011, and other SEC filings.
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; In Millions, Except Per Share Data)
Second Quarter
2012
2011
Net Sales
$
2,208
$
2,407
Cost of Sales
1,401
1,513
Gross Profit
807
894
Selling, Delivery, and Administrative Expenses
506
535
Operating Income
301
359
Interest Expense
23
20
Other Nonoperating Income (Expense)
2
(2
)
Income Before Income Taxes
280
337
Income Tax Expense
75
91
Net Income
$
205
$
246
Basic Earnings Per Share
$
0.68
$
0.76
Diluted Earnings Per Share
$
0.67
$
0.74
Dividends Declared Per Share
$
0.16
$
0.13
Basic Weighted Average Shares Outstanding
298
323
Diluted Weighted Average Shares Outstanding
305
331
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; In Millions, Except Per Share Data)
First Six Months
2012
2011
Net Sales
$
4,076
$
4,251
Cost of Sales
2,613
2,696
Gross Profit
1,463
1,555
Selling, Delivery, and Administrative Expenses
991
1,032
Operating Income
472
523
Interest Expense
46
39
Other Nonoperating Income (Expense)
3
(3
)
Income Before Income Taxes
429
481
Income Tax Expense
115
129
Net Income
$
314
$
352
Basic Earnings Per Share
$
1.04
$
1.08
Diluted Earnings Per Share
$
1.02
$
1.05
Dividends Declared Per Share
$
0.32
$
0.25
Basic Weighted Average Shares Outstanding
300
326
Diluted Weighted Average Shares Outstanding
308
335
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; In Millions)
Second Quarter
First Six Months
2012
2011
2012
2011
Net Income
$
205
$
246
$
314
$
352
Components of Other Comprehensive (Loss) Income:
Currency Translations
(130
)
20
(8
)
195
Net Investment Hedges, Net of Tax
13
(4
)
8
(6
)
Cash Flow Hedges, Net of Tax
(2
)
7
(3
)
24
Pension Plan Liability Adjustments, Net of Tax
4
2
7
3
Other Comprehensive (Loss) Income
(115
)
25
4
216
Comprehensive Income
$
90
$
271
$
318
$
568
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; In Millions)
June 29,
December 31,
2012
2011
ASSETS
Current:
Cash and cash equivalents
$
422
$
684
Trade accounts receivable, net
1,688
1,387
Amounts receivable from The Coca-Cola Company
66
64
Inventories
455
403
Other current assets
194
148
Total Current Assets
2,825
2,686
Property, plant, and equipment, net
2,163
2,230
Franchise license intangible assets, net
3,770
3,771
Goodwill
124
124
Other noncurrent assets
352
283
Total Assets
$
9,234
$
9,094
LIABILITIES
Current:
Accounts payable and accrued expenses
$
1,821
$
1,716
Amounts payable to The Coca-Cola Company
132
116
Current portion of debt
396
16
Total Current Liabilities
2,349
1,848
Debt, less current portion
2,761
2,996
Other noncurrent liabilities
165
160
Noncurrent deferred income tax liabilities
1,195
1,191
Total Liabilities
6,470
6,195
SHAREOWNERS' EQUITY
Common stock
3
3
Additional paid-in capital
3,797
3,745
Reinvested earnings
855
638
Accumulated other comprehensive loss
(469
)
(473
)
Common stock in treasury, at cost
(1,422
)
(1,014
)
Total Shareowners' Equity
2,764
2,899
Total Liabilities and Shareowners' Equity
$
9,234
$
9,094
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In Millions)
First Six Months
2012
2011
Cash Flows From Operating Activities:
Net income
$
314
$
352
Adjustments to reconcile net income to net cash derived from
operating activities:
Depreciation and amortization
170
161
Share-based compensation expense
20
23
Deferred income tax benefit
(22
)
(37
)
Pension expense less than contributions
(46
)
(5
)
Net change in assets and liabilities
(206
)
(238
)
Net cash derived from operating activities
230
256
Cash Flows From Investing Activities:
Capital asset investments
(183
)
(181
)
Capital asset disposals
13
-
Net cash used in investing activities
(170
)
(181
)
Cash Flows From Financing Activities:
Net change in commercial paper
166
24
Issuances of debt
-
400
Payments on debt
(10
)
(7
)
Shares repurchased under share repurchase program
(375
)
(400
)
Dividend payments on common stock
(95
)
(81
)
Net cash received from The Coca-Cola Company for
transaction-related items
-
48
Other financing activities
(8
)
8
Net cash used in financing activities
(322
)
(8
)
Net effect of currency exchange rate changes on cash and cash
equivalents
-
16
Net Change In Cash and Cash Equivalents
(262
)
83
Cash and Cash Equivalents at Beginning of Period
684
321
Cash and Cash Equivalents at End of Period
$
422
$
404
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME (a)
(Unaudited; In Millions, Except Per Share Data which is
calculated prior to rounding)
Second-Quarter 2012
Net Sales
Cost of Sales
Gross Profit
Selling, Delivery, and Administrative Expenses
Operating Income
Interest Expense
Other Nonoperating Income
Income Before Income Tax
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$2,208
1,401
807
506
301
23
2
280
75
$ 205
$ 0.67
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
(7)
7
(6)
13
-
-
13
4
9
0.03
Restructuring Charges (d)
-
-
-
(14)
14
-
-
14
4
10
0.03
Comparable (non-GAAP)
$2,208
1,394
814
486
328
23
2
307
83
$ 224
$ 0.73
Diluted Weighted Average Shares Outstanding
305
Second-Quarter 2011
Net Sales
Cost of Sales
Gross Profit
Selling, Delivery, and Administrative Expenses
Operating Income
Interest Expense
Other Nonoperating Expense
Income Before Income Tax
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$2,407
1,513
894
535
359
20
(2)
337
91
$ 246
$ 0.74
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
1
(1)
(4)
3
-
-
3
1
2
0.01
Restructuring Charges (d)
-
-
-
(1)
1
-
-
1
-
1
-
Tax Indemnification Charges (e)
-
-
-
(5)
5
-
-
5
1
4
0.01
Comparable (non-GAAP)
$2,407
1,514
893
525
368
20
(2)
346
93
$ 253
$ 0.76
Diluted Weighted Average Shares Outstanding
331
(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.
(e) Amounts represent post-Merger changes to certain underlying tax
matters covered by our indemnification to TCCC for periods prior to
the Merger.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME (a)
(Unaudited; In Millions, Except Per Share Data which is
calculated prior to rounding)
First Six Months 2012
Net Sales
Cost of Sales
Gross Profit
Selling, Delivery, and Administrative Expenses
Operating Income
Interest Expense
Other Nonoperating Income
Income Before Income Tax
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$ 4,076
2,613
1,463
991
472
46
3
429
115
$ 314
$ 1.02
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
(5)
5
(4)
9
-
-
9
3
6
0.02
Restructuring Charges (d)
-
-
-
(22)
22
-
-
22
6
16
0.05
Comparable (non-GAAP)
$ 4,076
2,608
1,468
965
503
46
3
460
124
$ 336
$ 1.09
Diluted Weighted Average Shares Outstanding
308
First Six Months 2011
Net Sales
Cost of Sales
Gross Profit
Selling, Delivery, and Administrative Expenses
Operating Income
Interest Expense
Other Nonoperating Expense
Income Before Income Tax
Income Tax Expense
Net Income
Diluted Earnings Per Share
Reported (GAAP) (b)
$ 4,251
2,696
1,555
1,032
523
39
(3)
481
129
$ 352
$ 1.05
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
1
(1)
1
(2)
-
-
(2)
-
(2)
-
Restructuring Charges (d)
-
-
-
(15)
15
-
-
15
4
11
0.03
Tax Indemnification Charges (e)
-
-
-
(5)
5
-
-
5
1
4
0.01
Comparable (non-GAAP)
$ 4,251
2,697
1,554
1,013
541
39
(3)
499
134
$ 365
$ 1.09
Diluted Weighted Average Shares Outstanding
335
(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.
(e) Amounts represent post-Merger changes to certain underlying tax
matters covered by our indemnification to TCCC for periods prior to
the Merger.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT INCOME (a)
(Unaudited; In Millions)
Second-Quarter 2012
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
350
(49
)
$
301
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
13
13
Restructuring Charges (d)
14
-
14
Comparable (non-GAAP)
$
364
(36
)
$
328
Second-Quarter 2011
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
408
(49
)
$
359
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
3
3
Restructuring Charges (d)
1
-
1
Tax Indemnification Charges (e)
-
5
5
Comparable (non-GAAP)
$
409
(41
)
$
368
(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.
(e) Amounts represent post-Merger changes to certain underlying tax
matters covered by our indemnification to TCCC for periods prior to
the Merger.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT INCOME (a)
(Unaudited; In Millions)
First Six Months 2012
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
557
(85
)
$
472
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
9
9
Restructuring Charges (d)
22
-
22
Comparable (non-GAAP)
$
579
(76
)
$
503
First Six Months 2011
Europe
Corporate
Operating Income
Reported (GAAP) (b)
$
608
(85
)
$
523
Items Impacting Comparability:
Mark-to-Market Effects (c)
-
(2
)
(2
)
Restructuring Charges (d)
15
-
15
Tax Indemnification Charges (e)
-
5
5
Comparable (non-GAAP)
$
623
(82
)
$
541
(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.
(e) Amounts represent post-Merger changes to certain underlying tax
matters covered by our indemnification to TCCC for periods prior to
the Merger.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited; In Millions, Except Percentages)
Second-Quarter 2012 Change Versus Second-Quarter
2011
First Six Months 2012 Change Versus First
Six Months 2011
Net Sales Per Case
Change in Net Sales per Case
(2.5
)%
(0.5
)%
Impact of Excluding Post Mix, Non-Trade, and Other
0.0
%
(0.5
)%
Impact of Currency Exchange Rate Changes
9.0
%
6.5
%
Bottle and Can Net Pricing Per Case
Including French Excise Tax Increase
6.5
%
5.5
%
Impact of French Excise Tax Increase
(2.5
)%
(2.5
)%
Comparable Currency-Neutral Bottle and Can
Net Pricing Per Case(a)
4.0
%
3.0
%
Cost of Sales Per Case
Change in Cost of Sales per Case
(2.5
)%
0.0
%
Impact of Excluding Post Mix, Non-Trade, and Other
0.0
%
(0.5
)%
Impact of Currency Exchange Rate Changes
9.0
%
6.5
%
Bottle and Can Cost of Sales Per Case
Including French Excise Tax Increase
6.5
%
6.0
%
Impact of French Excise Tax Increase
(3.5
)%
(3.5
)%
Comparable Currency-Neutral Bottle and Can
Cost of Sales Per Case(a)
3.0
%
2.5
%
Physical Case Bottle and Can Volume
Comparable Bottle and Can Volume(b)
(6.0
)%
(3.5
)%
First Six Months
Reconciliation of Free Cash Flow(c)
2012
2011
Net Cash Derived From Operating Activities
$
230
$
256
Less: Capital Asset Investments
(183
)
(181
)
Add: Capital Asset Disposals
13
-
Free Cash Flow
$
60
$
75
June 29,
December 31,
Reconciliation of Net Debt(d)
2012
2011
Current Portion of Third Party Debt
$
396
$
16
Debt, Less Current Portion
2,761
2,996
Less: Cash and Cash Equivalents
(422
)
(684
)
Net Debt
$
2,735
$
2,328
(a)
The non-GAAP financial measures "Comparable Currency-Neutral
Bottle and Can Net Pricing Per Case" and "Comparable
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: (1) items not directly
related to bottle and can pricing or cost; (2) currency exchange
rate changes; and (3) the impact of the French excise tax increase
effective January 1, 2012.
(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 both the second
quarter and first six months of 2012 and 2011.
(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.
Coca-Cola Enterprises, Inc. Investor Relations Thor
Erickson, +1 (678) 260-3110 or Media Relations Fred
Roselli, +1 (678) 260-3421 or European Media
Relations Lauren Sayeski, +44 (0) 7976 113 674
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