Coca-Cola Enterprises Inc. Affirms 2005 Outlook, Provides 2006 Guidance.ATLANTA -- Coca-Cola Enterprises Coca-Cola Enterprises NYSE: CCE is the largest bottler by volume in the Coca-Cola System. It is the anchor bottler for North America and parts of Europe. The company is the bottler of Coca-Cola and its other soft drink products, and in some areas a few other soft drink (NYSE NYSE See: New York Stock Exchange : CCE CCE Cornell Cooperative Extension CCE Corporate and Continuing Education CCE Coca-Cola Enterprises Inc. CCE Commission de Coopération Environnementale CCE Centre for Continuing Education CCE College of Continuing Education CCE Certified Computer Examiner ) --2005 earnings guidance affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. --2006 cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. expected to total more than $700 million --Board of directors approves 50 percent increase in annual dividend to 24 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. Coca-Cola Enterprises (NYSE: CCE) today will host a conference call with analysts and investors to provide its outlook for 2006. Chief Financial Officer Bill Douglas will conduct the call today at 10 a.m. ET. The call will be webcast via CCE's website, www.cokecce.com, and a replay will be available through the site's Investor Relations Investor relations The process by which the corporation communicates with its investors. section. "We have made significant progress in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. this year in building a business that will continue to generate sustained, balanced volume and pricing growth," said Lowry F. Kline, chairman of the board. "In a year characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by significant cost increases, we have remained focused on this objective while successfully managing our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , generating significant pricing improvement and delivering full-year volume growth. "Although Europe's 2005 volume performance is below target, we have worked to preserve our financial results through tight cost controls and disciplined revenue management," said Mr. Kline. "For 2006, we have plans in place that build on our success in North America and work to address the marketplace challenges we face in Europe. We believe North America's continued growth, coupled with modest improvement in Europe, will lead to improved financial performance in 2006." 2005 Outlook Full-year 2005 guidance remains unchanged from previously announced levels with comparable earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in a range of $1.27 to $1.30. The following table provides a reconciliation of reported and comparable EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. :
Full Year
--------------------
2005 2004
Forecast Actual
-------- ------
Reported Earnings per Diluted Common Share $0.93 to $0.96 $1.22
Asset Write-offs (Hurricanes
Katrina & Wilma)(a) 0.04 --
Restructuring Charges 0.10 --
HFCS Litigation Settlement
Proceeds (0.07) --
Net Favorable Tax Items (0.08) --
Gain on Asset Sale (0.01) --
Loss on Equity Securities 0.01 --
Repatriation Tax Expense 0.34 --
Debt Portfolio Restructuring 0.01
Impact of New Concentrate Pricing -- 0.05
Earnings per Diluted Common Share,
Excluding Certain Items (b) $1.27 to $1.30 $1.27
(a) Primary includes asset write-offs and certain facility disruption
and relief effort expenses.
(b) This non-GAAP financial information is provided to assist
investors in evaluating CCE's ongoing operating performance and
business trends. Management uses this information to review
results excluding items that are not necessarily indicative of
CCE's ongoing results.
North America is expected to generate full-year 2005 results that include volume growth of approximately 1 percent and pricing growth of approximately 3 percent as fourth quarter business trends remain positive. Management expects full-year 2005 volume in Europe to decline approximately 2 percent, with pricing growth of approximately 2 percent. Page 7 of this release provides guidance for full-year 2005 volume, pricing, costs and other income statement components. 2005 results will include approximately $80 million of expense primarily related to the previously announced reorganization of CCE's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. business. 2006 results will include the remaining portion of the North American expense as well as expense related to the proposed reorganization of some parts of the operations in Europe. Management currently expects 2006 charges related to both North America and Europe to be in a range of $50 million to $60 million. Repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. Update CCE expects to complete the repatriation of $1.6 billion in the fourth quarter of 2005. The tax cost associated with this transaction is expected to total approximately $160 million. CCE will also incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. approximately $10 million of expense in the fourth quarter to restructure a portion of the company's debt portfolio to accommodate the efficient repayment of debt in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . 2006 Outlook "Our business plans for 2006 enable us to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about improved performance, particularly in North America, where we expect a continued balance of volume and pricing growth throughout our territories," said Mr. Douglas. "In 2006, we believe we will benefit from more moderate cost of goods increases next year, another aggressive calendar of solid brand and package innovation and operating improvements that will strengthen our ability to focus on our customers and the marketplace." Four key areas of emphasis for 2006 include: --Continue brand portfolio development - In both North America and Europe, CCE will bring to market a number of new brands and brand extensions designed to meet changing consumer tastes as we continue to benefit from our innovation calendar in 2005. In North America, product introductions will include Black Cherry black cherry, n See wild cherry. black cherry prunusserotina. Vanilla vanilla, a plant of the genus Vanilla of the family Orchidaceae (orchid family). Vines of hot, damp climates, most are indigenous to Central and South America, especially Mexico, but are now cultivated in other tropical regions. Coca-Cola in both regular and diet; Coke Blak, a premium, coffee flavored beverage; Dasani Sensations, a line of flavored sparkling waters; Vault vault, ceiling over a room, formed in any one of a variety of curved shapes. Nature of Vaults A vault is generally composed of separate units of material, such as bricks, tiles, or blocks of stone, so shaped or cut that when assembled they form a , a new energy soda; and Tab Energy TaB Energy is marketed as a low calorie energy drink named after TaB, Coca Cola's original low-calorie cola brand. While it shares the TaB name, it is not a cola product like the original TaB. , and Full Throttle Full Throttle can refer to:
In Europe, we will continue to target immediate consumption growth and expansion and development of our brand portfolio, including sports drinks sports drink Performance drink Sports medicine A thirst-quenching beverage used in sports-related activities, which may boost energy and/or help build muscle mass; water, sugar, salt, potassium are common to all SDs. See Hydrotherapy, Water. Powerade and Aquarius, energy drinks Burn and the new Sprite 3G, Coke Blak, and Minute Maid Minute Maid is a product line of beverages, usually associated with orange juice, but now extends to soft drinks of many kinds, including Hi-C. Minute Maid was the first company to market orange juice concentrate, allowing it to be distributed nationwide and served juices and juice drinks. We will also continue to focus our marketing efforts on diet and light brands, with brand extensions such as diet Cherry Coke, Coke Light Lime, and Coke Light Sango. In addition, we will launch a range of recyclable re·cy·cle tr.v. re·cy·cled, re·cy·cling, re·cy·cles 1. To put or pass through a cycle again, as for further treatment. 2. To start a different cycle in. 3. a. , non-refillable PET packages in the Netherlands that respond to local market demands. --Achieve continued balance in volume and price - In North America, targeted brand, channel, and package plans, coupled with the benefits of additional innovation and immediate consumption growth, are keys to continued volume and price growth. Volume is expected to grow 1 percent to 2 percent with pricing growth of 2 percent to 3 percent, reflecting a balance of rate and mix. Management expects Europe to achieve volume growth of 1 percent to 2 percent in 2006 as our local operations respond to key market challenges, including growing health and wellness trends and the expansion of hard discounters in the retail sector. Pricing in Europe is expected to increase approximately 2 percent in 2006. --Strengthen our marketplace and customer focus - In 2005, North America completed a reorganization into seven business units that improves administrative efficiency and strengthens the ability of field level operators to focus on local marketplace execution and customer needs. CCE will benefit from this effort fully in 2006 and will begin the process of reorganizing certain segments of our operations in Europe to maximize efficiency and customer focus. --Improve our financial performance - For 2006, management expects currency-neutral, comparable earnings per share to increase to a range of $1.27 to $1.32. This range includes stock option expense. Currency-neutral operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. is expected to grow 4 percent to 5 percent on a comparable basis. Based on current exchange rates, foreign currency translations would negatively impact 2006 operating income by approximately 1 percent to 2 percent and earnings per share by approximately 2 cents to 3 cents. 2005 stock option expense not included in reported results totals approximately $50 million before taxes, or 7 cents per share. Management expects 2006 option expense to be at or below this level. --Uses of free cash flow - Management expects another year of strong free cash flow, with 2006 cash flow from operations less capital spending of more than $700 million. Capital spending is expected in a range of 5 percent to 6 percent of net revenues, or approximately $1 billion. Reflecting the shared confidence of management and the Board of Directors in the company's outlook, CCE will increase its annual dividend by 50 percent to 24 cents per share beginning in 2006. The majority of 2006 free cash flow will continue to be used for debt repayment. Management will evaluate additional opportunities to return cash to shareowners through dividend increases and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. as CCE continues to make progress against its debt reduction goals. "We believe we have strong brand, marketing, and operating plans in place in all of our territories that will seize seize v. To exhibit symptoms of seizure activity, usually with convulsions. opportunities created by a changing retail climate and evolving consumer tastes," said Mr. Douglas. "These plans give us confidence in our direction and, coupled with our commitment to higher levels of execution in the marketplace, will enable us to achieve improved results in 2006." CCE plans to report full-year 2005 earnings the week of February 6, 2006. Coca-Cola Enterprises Inc. is the world's largest marketer, distributor and producer of bottle and can liquid nonalcoholic non·al·co·hol·ic adj. A beverage usually containing less than 0.5 percent alcohol by volume. refreshment. Coca-Cola Enterprises sells approximately 80 percent of The Coca-Cola Company's bottle and can volume in North America and is the sole licensed bottler for products of The Coca-Cola Company in Belgium, continental France, Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. , Luxembourg, Monaco, and the Netherlands. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 the currently available competitive, financial, and economic data along with our operating plans and are subject to future events and uncertainties. The forward-looking statements in this news release should be read in conjunction with the detailed cautionary statements found on page 33 and 34 of our 2004 Annual Report and on pages 31 to 33 of the Company's Third-Quarter 2005 Form 10-Q Form 10-Q See 10-Q. .
Coca-Cola Enterprises
2005 Guidance
(Excluding Nonrecurring Items)
Projection
----------------------------------------------------------------------
Volume Growth Approx. Flat to 1%
North America Approx. 1%
Europe Approx. (2)%
----------------------------------------------------------------------
Pricing Per Case Growth Approx. 2%
(currency neutral, including mix benefit)
North America Approx. 3%
Europe Approx. 1% to 2%
----------------------------------------------------------------------
Cost of Goods Per Case Growth
(currency neutral, including mix impact) Approx. 4%
----------------------------------------------------------------------
Operating Expense $ Growth Approx. 1%
----------------------------------------------------------------------
Operating Income Growth Approx. Flat to 1%
----------------------------------------------------------------------
Capital Expenditures Approx. $950 million
----------------------------------------------------------------------
Interest Expense Approx. $625 to $630 million
----------------------------------------------------------------------
Effective Tax Rate Approx. 28% to 29%
----------------------------------------------------------------------
2005 Diluted EPS (Comparable) $1.27 to $1.30
----------------------------------------------------------------------
Diluted Common Shares Approx. 475 million
----------------------------------------------------------------------
Notes: --Volume growth guidance is based on comparable selling days. --2005 includes two less selling days in the first quarter and full year.
Coca-Cola Enterprises
2006 Guidance
(Currency Neutral, Excluding Nonrecurring Items)
Projection
----------------------------------------------------------------------
Volume Growth Approx. 1% to 2%
North America Approx. 1% to 2%
Europe Approx. 1% to 2%
----------------------------------------------------------------------
Pricing Per Case Growth Approx. 2% to 3%
(currency neutral, including mix benefit)
North America Approx. 2% to 3%
Europe Approx. 2%
----------------------------------------------------------------------
Cost of Goods Per Case Growth Approx. 2% to 3%
(currency neutral, including mix impact)
----------------------------------------------------------------------
Operating Expense $ Growth Approx. 3%
----------------------------------------------------------------------
Operating Income Growth (Comparable)(a) Approx. 4% to 5%
(currency neutral)
----------------------------------------------------------------------
Capital Expenditures Approx. $1 billion
----------------------------------------------------------------------
Interest Expense Approx. $600 to $610 million
----------------------------------------------------------------------
Effective Tax Rate Approx. 31%
----------------------------------------------------------------------
2006 Diluted EPS (Comparable)(a) $1.27 to $1.32
(including stock option expense)
----------------------------------------------------------------------
Diluted Common Shares Approx. 477 million
----------------------------------------------------------------------
(a) All guidance is currency neutral based on current exchange rates.
Foreign currency translations could negatively impact operating
income by approximately 2 percent and EPS by approximately
4 cents.
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