- First-quarter diluted earnings per
share were 29 cents on a reported basis or 41 cents on a comparable
basis, including a negative currency translation impact of 2
cents.
- Net sales were $1.5 billion, down 7
percent on a reported basis or down 3½ percent on a
currency-neutral basis; comparable volume declined 4
percent.
- Reported operating income was $122
million; comparable operating income was $162 million, down 2
percent or up 1½ percent on a currency-neutral basis.
- CCE affirms its full-year guidance
for 2016, including slightly positive comparable and
currency-neutral net sales growth.
Coca-Cola Enterprises, Inc. (NYSE: CCE) (Euronext Paris: CCE)
today reported first-quarter 2016 operating income of $122 million
or $162 million on a comparable basis. In the quarter, diluted
earnings per share were 29 cents on a reported basis or 41 cents on
a comparable basis. Currency translation had a negative impact of 2
cents on comparable diluted earnings per share.
For the first quarter, net sales totaled $1.5 billion, down 7
percent from the same quarter a year ago. On a currency-neutral
basis, net sales declined 3½ percent. This includes the negative
volume impact resulting from temporary supply chain disruptions in
Great Britain related to the implementation of new software
programs and processes. In addition, there was one fewer selling
day in the quarter.
“Throughout our territories, we continue to face an overall soft
consumer environment that has limited category growth,” said John
F. Brock, chairman and chief executive officer. “However, the first
quarter is our smallest, and we remain confident that our
marketplace strategies, innovation initiatives, and
customer-focused effectiveness will sustain our outlook for the
full year.
“We are working diligently to close the transaction to create
Coca-Cola European Partners by the end of the second quarter,” Mr.
Brock said. “This will unite our company with the German and
Iberian bottlers, create new synergies, improve operations through
leveraging best practices, and most importantly, better enable us
to achieve our ultimate goal: continuing to build shareowner
value.”
OPERATING REVIEW
During the first quarter, comparable volume declined 4 percent.
This reflects continued difficult marketplace and macroeconomic
trends across our territories and temporary supply chain
disruptions in Great Britain related to the implementation of new
software programs and processes. Volume in Great Britain declined 5
percent, and volume on the Continent declined 3½ percent.
Total volume results include 1 percent growth in still brands,
driven by double-digit growth in water through increased
availability of smartwater in Great Britain and solid
mid-single-digit growth for Chaudfontaine. Sparkling brands
declined 5 percent, reflecting a 6½ percent decline in Coca-Cola
trademark brands and mid-single-digit growth in energy. Monster
brands grew more than 15 percent through organic growth and
expanded distribution in Norway that began mid last year.
For the first quarter, net pricing per case was flat, and cost
of sales per case declined 2½ percent. Operating expenses increased
1½ percent. These figures are comparable and currency neutral.
“Even as we work to close the transaction to create Coca-Cola
European Partners, our local teams are focused on delivering our
plans for 2016,” said Damian Gammell, chief operating officer. “We
have solid marketing plans in place, including strong initiatives
for the UEFA Euro 2016, which is Europe’s biggest soccer event, and
a renewed focus on immediate consumption, including a variety of
new packaging initiatives. And, we will benefit from initiatives
supporting the ‘Taste the Feeling’ campaign, which will better link
our four core Coca-Cola trademark products.”
FULL-YEAR 2016 OUTLOOK
CCE expects full-year 2016 comparable and currency-neutral net
sales to be up slightly. The company expects full-year 2016 free
cash flow in a range of $500 million to $550 million after expected
CCEP transaction cash costs of $75 million to $100 million. Capital
expenditures are 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 2016 is expected
to be between 26 percent and 28 percent. Given the pending
transaction, CCE does not expect to repurchase shares in 2016.
COCA-COLA EUROPEAN PARTNERS
As announced in the third quarter of 2015, Coca-Cola
Enterprises, Coca-Cola Iberian Partners, S.A.U. (“CCIP”), and
Coca-Cola Erfrischungsgetränke GmbH (“CCEG”), a wholly owned
subsidiary of The Coca-Cola Company (NYSE: KO), have agreed to
combine their businesses into a new company to be called Coca-Cola
European Partners plc ("CCEP"), in a transformational transaction
that will create the world’s largest independent Coca-Cola bottler,
based on net sales.
Pending collective approval by Coca-Cola Enterprises’
shareowners and regulatory agencies, the transaction is expected to
close by the end of the second quarter, 2016.
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. is the leading Western European
marketer, producer, and distributor of nonalcoholic 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. CCE
operates with a local focus and has 17 manufacturing sites across
Europe, where the company manufactures nearly 90 percent of its
products in the markets in which they are consumed. Sustainability
is core to CCE’s business, and the company has been recognized by
leading organizations in North America and Europe for its progress
in water use reduction, carbon footprint reduction, and recycling
initiatives. For more information about CCE, please visit
www.cokecce.com and follow the company on Twitter at @cokecce.
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.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval.
In connection with the proposed transaction, CCEP has filed with
the SEC a registration statement on Form F-4 that includes a
definitive proxy statement/prospectus regarding the proposed
transaction. A definitive proxy statement/prospectus has been
mailed to CCE’s shareowners in connection with the proposed
transaction.
_____________________
A reconciliation of reported (GAAP) to comparable (non-GAAP)
information and other non-GAAP measures used by management in
managing the business are detailed on the following pages of this
news release.
COCA-COLA ENTERPRISES, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (Unaudited; in millions, except per
share data) First Quarter 2016
2015 Net sales $ 1,517 $ 1,631 Cost of sales 957
1,063 Gross profit 560 568 Selling, delivery, and
administrative expenses 438 410 Operating income 122 158
Interest expense, net 30 30 Other nonoperating (expense) income (2
) 2 Income before income taxes 90 130 Income tax expense 24
34 Net income $ 66 $ 96 Basic earnings per share $ 0.29
$ 0.41 Diluted earnings per share $ 0.29 $ 0.40
Dividends declared per share $ 0.30 $ 0.28 Basic weighted
average shares outstanding 228 235 Diluted weighted average
shares outstanding 232 240
COCA-COLA ENTERPRISES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) (Unaudited; in millions)
First Quarter 2016 2015 Net income $ 66
$ 96
Components of other comprehensive income (loss):
Currency translations Pretax activity, net 64 (279 ) Tax effect —
— Currency translations, net of tax 64 (279 ) Net
investment hedges Pretax activity, net (186 ) 152 Tax effect 65
(53 ) Net investment hedges, net of tax (121 ) 99 Cash flow
hedges Pretax activity, net 14 (2 ) Tax effect (2 ) — Cash
flow hedges, net of tax 12 (2 ) Pension plan adjustments Pretax
activity, net 7 7 Tax effect (1 ) (2 ) Pension plan adjustments,
net of tax 6 5 Other comprehensive loss, net of tax
(39 ) (177 ) Comprehensive income (loss) $ 27 $ (81 )
COCA-COLA ENTERPRISES, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited; in millions)
April 1, December 31, 2016 2015
ASSETS Current: Cash and cash equivalents $ 279 $ 170
Trade accounts receivable 1,352 1,314 Amounts receivable from The
Coca-Cola Company 72 56 Inventories 371 336 Other current assets
220 170 Total current assets 2,294 2,046 Property,
plant, and equipment, net 2,000 1,920 Franchise license intangible
assets, net 3,384 3,383 Goodwill 93 88 Other noncurrent assets 235
159 Total assets $ 8,006 $ 7,596
LIABILITIES Current: Accounts payable and accrued
expenses $ 1,766 $ 1,601 Amounts payable to The Coca-Cola Company
107 102 Current portion of debt 577 454 Total current
liabilities 2,450 2,157 Debt, less current portion 3,518 3,392
Other noncurrent liabilities 235 236 Noncurrent deferred income tax
liabilities 866 854 Total liabilities 7,069 6,639
SHAREOWNERS’ EQUITY Common stock 4 4 Additional paid-in
capital 4,053 4,032 Reinvested earnings 2,327 2,329 Accumulated
other comprehensive income (1,036 ) (997 ) Common stock in
treasury, at cost (4,411 ) (4,411 ) Total shareowners’ equity 937
957 Total liabilities and shareowners’ equity $ 8,006
$ 7,596
COCA-COLA ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions) First Quarter
2016 2015 Cash Flows from Operating
Activities:
Net income
$ 66 $ 96 Adjustments to reconcile net income to net cash derived
from operating activities:
Depreciation and amortization
66 71 Share-based compensation expense 9 8 Deferred income tax
benefit (17 ) (9 ) Pension expense less than contributions (3 ) (5
) Net changes in assets and liabilities 2 (3 ) Net cash
derived from operating activities 123 158
Cash
Flows from Investing Activities: Capital asset investments (87
) (98 ) Other investing activities, net — (9 ) Net cash used
in investing activities (87 ) (107 )
Cash Flows from Financing
Activities: Net change in commercial paper 122 (109 ) Issuances
of debt — 527 Payments on debt (1 ) (3 ) Shares repurchased under
share repurchase programs — (313 ) Dividend payments on common
stock (68 ) (65 ) Exercise of employee share options 9 10 Other
financing activities, net 3 — Net cash derived from
financing activities 65 47 Net effect of currency
exchange rate changes on cash and cash equivalents 8 (20 )
Net Change in Cash and Cash Equivalents 109 78
Cash and
Cash Equivalents at Beginning of Period 170 223
Cash and Cash Equivalents at End of Period $ 279 $
301
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-Quarter 2016 Selling,
delivery, and Diluted administrative Operating Income
tax earnings per Cost of sales expenses income
expense Net income share
Reported (GAAP) (b) $957 $438 $122
$24 $66 $0.29 Items Impacting Comparability:
Mark-to-market effects (c) 3 — (3 ) (1 ) (2 ) (0.01 ) Restructuring
charges (d) — (31 ) 31 9 22 0.10 Merger related costs (e) —
(12 ) 12 4 8 0.03
Comparable (non-GAAP) $960 $395
$162 $36 $94
$0.41 Diluted Weighted Average Shares
Outstanding 232
First-Quarter 2015 Selling, delivery, and Diluted
administrative Operating Income tax earnings per Cost of sales
expenses income expense Net
income share
Reported (GAAP) (b)
$1,063 $410 $158 $34 $96
$0.40 Items Impacting Comparability: Mark-to-market effects
(c) — 2 (2 ) — (2 ) (0.01 ) Restructuring charges (d) — (9 )
9 2 7 0.03
Comparable
(non-GAAP) $1,063 $403 $165
$36 $101
$0.42 Diluted Weighted Average Shares
Outstanding 240 ___________________________ (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
nonrecurring restructuring charges. (e) Amounts represent
costs associated with the pending merger with Coca-Cola Iberian
Partners and Coca-Cola Erfrischungsgetränke as announced on August
6, 2015.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT INCOME (a)
(Unaudited; in millions)
First-Quarter 2016 Europe Corporate
Operating income
Reported (GAAP) (b)
$162
$(40
)
$122 Items Impacting Comparability: Mark-to-market
effects (c) — (3 ) (3 ) Restructuring charges (d) 31 — 31 Merger
related costs (e) 1 11 12
Comparable (non-GAAP) $194
$(32
)
$162
First-Quarter 2015 Europe
Corporate Operating income
Reported (GAAP) (b)
$190
$(32
)
$158 Items Impacting Comparability: Mark-to-market effects
(c) — (2 ) (2 ) Restructuring charges (d) 9 —
9
Comparable (non-GAAP) $199
$(34
)
$165 ___________________________ (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
nonrecurring restructuring charges. (e) Amounts represent
costs associated with the pending merger with Coca-Cola Iberian
Partners and Coca-Cola Erfrischungsgetränke as announced on August
6, 2015.
COCA-COLA ENTERPRISES, INC. CURRENCY
IMPACT ON OPERATING MEASURES (a) (Unaudited; percentages
rounded to the nearest 0.5 percent) % Change
vs. Prior Year GAAP (b) non-GAAP (c)
Currency Reported Currency
Comparable impact on currency- impact on currency-
First-Quarter
2016
Reported reported neutral Comparable
comparable neutral Net sales (7.0 )% (3.5 )% (3.5 )% (7.0 )%
(3.5 )% (3.5 )% Selling, delivery, and administrative expenses 7.0
(3.5 ) 10.5 (2.0 ) (3.5 ) 1.5 Operating income (23.0 ) (3.5 ) (19.5
) (2.0 ) (3.5 ) 1.5 Diluted earnings per share (27.5 ) (5.0
) (22.5 ) (2.5 ) (4.0 ) 1.5
First-Quarter
2015
Net sales (13.0 )% (17.0 )% 4.0 % (13.0 )% (17.0 )%
4.0 % Selling, delivery, and administrative expenses (12.0 ) (14.5
) 2.5 (12.0 ) (15.0 ) 3.0 Operating income (14.0 ) (19.5 ) 5.5
(15.0 ) (19.0 ) 4.0 Diluted earnings per share (9.0 ) (20.5
) 11.5 (8.5 ) (23.5 ) 15.0
___________________________
(a) Currency impact is calculated by converting current year
results at prior year exchange rates. (b) Calculated based
on CCE's U.S. GAAP Condensed Consolidated Financial Statements.
(c) 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. See the Reconciliation
of GAAP to non-GAAP tables in this release for a list of all items
impacting comparability.
COCA-COLA ENTERPRISES, INC.
RECONCILIATION OF NON-GAAP MEASURES (Unaudited; in
millions, except percentages which are rounded to the nearest 0.5
percent) First Quarter % Change
vs. Prior Year 2016 2015
Net Sales Per
Case
Change in net sales per case (2.0 )% (18.0 )% Impact of
excluding post mix, non-trade, and other (1.5 ) — Impact of
currency exchange rate changes 3.5 16.0
Currency-Neutral Bottle and Can Net Pricing Per Case (a)
— % (2.0 )%
Cost of Sales Per
Case
Change in cost of sales per case (5.0 )% (18.0
)% Impact of excluding post mix, non-trade, and other (1.0 ) —
Impact of currency exchange rate changes 3.5 16.0
Currency-Neutral Bottle and Can Cost of Sales Per Case
(a) (2.5 )% (2.0 )%
Physical Case
Bottle and Can Volume
Change in volume (5.5 )% 6.5 % Impact of
selling day shift 1.5 (5.5 )
Comparable Bottle and
Can Volume (b) (4.0 )% 1.0 %
First Quarter
Reconciliation of
Free Cash Flow (c)
2016 2015 Net cash derived from operating
activities $ 123 $ 158 Less: capital asset investments (87 ) (98 )
Add: capital asset disposals — —
Free Cash
Flow $ 36 $ 60
April 1, December 31,
Reconciliation of
Net Debt (d)
2016 2015 Current portion of debt $ 577 $ 454
Debt, less current portion 3,518 3,392 Less: cash and cash
equivalents (279 ) (170 )
Net Debt $
3,816 $ 3,676
___________________________ (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 or 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 was one less selling day in the first
quarter of 2016 versus the first quarter of 2015. (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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Coca-Cola Enterprises, Inc.Investor RelationsThor Erickson, +1
(678) 260-3110orU.S. Media RelationsFred Roselli, +1 (678)
260-3421orEuropean Media RelationsRos Hunt, +44 (0) 7528 251
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