John F.
Brock John F. Brock
Chairman and CEO
Chairman and CEO
September 8, 2010
September 8, 2010
Filed by International CCE Inc. pursuant to
Rule 425 of the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Coca-Cola Enterprises Inc.
Commission
File
No.:
001-
09300 |
Information & Forward-Looking Statements
Information & Forward-Looking Statements
2
FORWARD-LOOKING STATEMENTS
Included in this news release are forward-looking management comments and other
statements that reflect managements 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, including our most recent annual report on
Form 10-K and subsequent SEC filings. IMPORTANT ADDITIONAL TRANSACTION INFORMATION AND WHERE TO FIND IT
This communication may be deemed to be solicitation material in respect of the proposed
transaction. In connection with the proposed transaction and required shareowner
approval, Coca-Cola Enterprises Inc. (Company) will file relevant materials with the Securities and Exchange Commission (the
SEC), including a proxy statement/prospectus contained in a Form S-4
registration statement, which has been mailed to the shareowners of the Company.
Shareowners of the Company are urged to read all relevant documents filed with the SEC,
including the proxy statement/prospectus, because they contain important
information about the proposed transaction. Shareowners may obtain a free copy of the proxy statement/prospectus and other
documents filed by the Company at the SECs website at www.sec.gov.
Copies of the documents filed with the SEC by the Company are available free of charge on the Companys website at www.cokecce.com
under the tab Investor Relations or by contacting the Investor Relations
Department of Coca-Cola Enterprises at 770-989-3246. PARTICIPANTS IN THE SOLICITATION
Coca-Cola Enterprises (Company) and its directors, executive officers
and certain other members of its management and employees may be deemed to be
participants in the solicitation of proxies from its shareowners in connection with the proposed transaction. Information regarding the interests of
such directors and executive officers was included in the Companys Proxy
Statement for its 2010 Annual Meeting of Shareowners filed with the SEC March 5,
2010, a Form 10-K filed on February 12, 2010 and information concerning the participants in the solicitation is included in the proxy
statement/prospectus relating to the proposed transaction. Each of these
documents is available free of charge at the SECs website at www.sec.gov
and from the Company on its website or by contacting the Investor Relations Department
at the telephone number above. |
Agenda
Agenda
New CCE
Overview
2010 Business Update
Key Takeaways
New CCE
Growth Objectives
3 |
new
CCE new CCE
$7.3 billion revenue
$7.3 billion revenue
(pro forma FY 2009)
(pro forma FY 2009)
600 million physical cases
600 million physical cases
550,000 pieces
550,000 pieces
of cold drink equipment
of cold drink equipment
18 manufacturing
18 manufacturing
facilities
facilities
13,000 employees
13,000 employees
Continuity of management
Continuity of management
Source: Internal reports; numbers are rounded
4 |
Solid
Growth Record and Outlook Solid Growth Record and Outlook
Source: CCE annual earnings release. Figures are comparable, represent
CCEs European
operating segment and exclude Norway, Sweden and corporate expenses
Europe
Europe
OI
OI
($
($
millions)
millions)
Over 4 years of solid growth
Over 4 years of solid growth
Attractive and balanced
Attractive and balanced
business model
business model
Talented and experienced
Talented and experienced
management team
management team
Driving improved efficiency &
Driving improved efficiency &
leveraging operational scale
leveraging operational scale
Economic headwinds demand
Economic headwinds demand
continued improvement
continued improvement
5 |
Be the
Best Beverage Sales & Be the Best Beverage Sales &
Customer Service Company
Customer Service Company
VISION
VISION
STRATEGIC PRIORITIES
STRATEGIC PRIORITIES
Our Global Operating Framework
Our Global Operating Framework
Remains Unchanged
Remains Unchanged
#1 or strong #2
#1 or strong #2
Most valued supplier
Most valued supplier
Winning and inclusive culture
Winning and inclusive culture
Drive consistent long-term
Drive consistent long-term
profitable growth
profitable growth
FINANCIAL OBJECTIVE
FINANCIAL OBJECTIVE
6 |
SPARKLING FLAVORS
SPARKLING FLAVORS
Customer and Consumer Preferred
Customer and Consumer Preferred
Brands Across Key Categories
Brands Across Key Categories
ENERGY
ENERGY
RED, BLACK,
RED, BLACK,
SILVER
SILVER
STILL
STILL
WATER
WATER
ISOTONICS / SPORTS
ISOTONICS / SPORTS
7 |
Coca-Cola TM
Spa
Fanta
Pepsi-Cola
Dubbelfriss
Reidel
14%
5%
3%
3%
3%
Coca-Cola TM
Pepsi-Cola
Lerum
Meierienes
Fun Light
22%
12%
6%
5%
5%
Coca-Cola TM
Bob
Ramlosa
Loka
Fanta
18%
5%
5%
5%
4%
NARTD
NARTD
Share -
Share -
Top 5 Brands
Top 5 Brands
Coca-Cola Trademark (TM)
Coca-Cola Trademark (TM)
Leads in All Countries
Leads in All Countries
Source: Canadean
Market Insights 2009
Great Britain
Great Britain
The Netherlands
The Netherlands
Belgium
Belgium
France
France
Norway
Norway
Sweden
Sweden
8 |
TCCC
per Capita Consumption 2009 TCCC per Capita Consumption 2009
Opportunities for Growth -
Opportunities for Growth -
Europe
Europe
Mexico
Mexico
United States
United States
Belgium
Belgium
Great Britain
Great Britain
Netherlands
Netherlands
France
France
Sweden
Sweden
Norway
Norway
New CCE
New CCE
+8
+8
2009
2009
change
change
+6
+6
+3
+3
+7
+7
9
Source: TCCC; based on eight U.S. fluid ounces of a finished TCCC beverage
|
Key CCE
Opportunities Key CCE Opportunities
Opportunities for Growth -
Opportunities for Growth -
Europe
Europe
Recruitment
Recruitment
& Frequency
& Frequency
Energy
Energy
Juice Drinks & Stills
Juice Drinks & Stills
Shopper-centric marketing
Shopper-centric marketing
Segmented revenue management
Segmented revenue management
DSD quality availability & execution
DSD quality availability & execution
10 |
Driving
Growth in Sparkling and Still Driving Growth in Sparkling and Still
Source: NARTD -
Canadean Market Insights 2009; CCE 1H10 volume includes Great Britain, France,
Belgium, and the Netherlands Sparkling Growth is
Sparkling Growth is
Driven by Growing
Driven by Growing
the Category
the Category
Still Growth is Driven
Still Growth is Driven
by Growing Share in
by Growing Share in
Existing Segments
Existing Segments
and Targeting New
and Targeting New
Opportunities
Opportunities
3%
3%
Sparkling
Sparkling
Still
Still
Water
Water
11 |
Growing
Share in Growing Markets Growing Share in Growing Markets
Source: AC Nielsen YTD June 2010; numbers are rounded
Category
Category
Value
Value
Growth
Growth
CCE Value
CCE Value
Share
Share
Growth
Growth
CCE
CCE
Value
Value
Share
Share
6%
6%
~Flat
~Flat
64%
64%
8%
8%
66%
66%
4%
4%
71%
71%
3%
3%
52%
52%
2%
2%
55%
55%
4%
4%
59%
59%
Market
Market
Value
Value
Growth
Growth
CCE Value
CCE Value
Share
Share
Growth
Growth
CCE
CCE
Value
Value
Share
Share
6%
6%
~Flat
~Flat
33%
33%
5%
5%
22%
22%
3%
3%
40%
40%
(1%)
(1%)
21%
21%
3%
3%
36%
36%
2%
2%
26%
26%
Core Sparkling
Core Sparkling
NARTD
NARTD
12 |
Volume
& Share Volume & Share
Gains
Gains
Sparkling Category
Sparkling Category
Red, Black and Silver Driving Category
Red, Black and Silver Driving Category
Growth and Gaining Share
Growth and Gaining Share
MyCoke
Volume
Share
Value
Share
2010 (YTD)
+0.6
+0.8
2009
+0.7
+0.2
2007-9
+1.3
+0.2
Category
Volume
Growth
%
Value
Growth
%
2010 (YTD)
1.2%
5.8%
2009
3.7%
5.3%
2007-9
2.3%
4.7%
Physical Case
Physical Case
Growth
Growth
Growth %
All 3
All 3
Cokes in
Cokes in
Growth
Growth
2010
2010
Source: Category and Share data from AC Nielsen YTD June 2010; Case growth CCE
internal data 13
1H10
+3.5%
2009 vs. 2008
+7.5%
2007-9 CAGR
+5.0% |
Red,
Black, Silver Red, Black, Silver
Expanding Sources of Growth
Expanding Sources of Growth
10%
10%
OTHER SSD
OTHER SSD
& Energy
& Energy
Still & Water
Still & Water
60%
60%
Europe 1H10 Volume Growth Sources
Europe 1H10 Volume Growth Sources
30%
30%
14
Source: CCE internal data, numbers are rounded |
Driving
Growth with TCCC Driving Growth with TCCC
EXPAND availability
EXPAND availability
CONNECT Coca-Cola
CONNECT Coca-Cola
with meals
with meals
LEVERAGE emblematic
LEVERAGE emblematic
properties
properties
RE-CONNECT with
RE-CONNECT with
our roots
our roots
LEAD a positive
LEAD a positive
category dialogue
category dialogue
Coca-Cola
World Cup 2010
15 |
SSD
Category Evolution SSD Category Evolution
(Home Channel)
(Home Channel)
Category Rank
Category Rank
(Home Channel)
(Home Channel)
Increasing Category Importance
Increasing Category Importance
France
France
2002
2002
#6
#6
#2
#2
#1
#1
2008
2008
2009
2009
8.6%
1.1%
1.5%
3.8%
4.3%
2.2%
-0.6%
3.9%
2.0%
1.5%
Retail Sales in EUR
(billion)
YOY
Volume
Growth
Source: Nielson Moving Annual Total through May 2010 for Hypermarkets,
Supermarkets, and Hard Discounters 16 |
Segmented
Segmented
Outlet
Outlet
Execution
Execution
Leveraging Scale to Drive Growth &
Leveraging Scale to Drive Growth &
Improve Customer Service
Improve Customer Service
Flexible
Flexible
Route-to-Market
Route-to-Market
Shopper
Shopper
Centered
Centered
Execution
Execution
~10%
~10%
direct store delivery by CCE
direct store delivery by CCE
~55%
~55%
delivered through customer
delivered through customer
warehouses
warehouses
~35%
~35%
delivered through wholesalers
delivered through wholesalers
and other intermediaries
and other intermediaries
Source: Internal reports for current CCE Europe; numbers are rounded
17 |
Product
Portfolio Product Portfolio
/ Active Lifestyle
/ Active Lifestyle
Water
Water
Stewardship
Stewardship
Packaging & Recycling
Packaging & Recycling
Energy & Climate
Energy & Climate
Corporate Responsibility &
Corporate Responsibility &
Sustainability (CRS)
Sustainability (CRS)
Commitment 2020
Commitment 2020
Diverse &
Diverse &
Inclusive Culture
Inclusive Culture
18 |
Pan
European Operations and a Local Pan European Operations and a Local
Business Led By Skilled Employees
Business Led By Skilled Employees
19 |
Agenda
Agenda
New CCE
Overview
2010 Business Update
Key Takeaways
New CCE
Growth Objectives
20 |
Financial
Priorities Financial Priorities
Financial Framework
Financial Framework
CONSISTENT
CONSISTENT
Long-term
Long-term
profitable growth
profitable growth
MAXIMIZE
MAXIMIZE
Free
Free
cash flow
cash flow
MAINTAIN
MAINTAIN
Financial
Financial
flexibility
flexibility
INCREASE
INCREASE
Return on
Return on
invested capital
invested capital
INVEST IN HIGH
INVEST IN HIGH
RETURN
RETURN
OPPORTUNITIES
OPPORTUNITIES
Organic and Acquisition
Organic and Acquisition
RETURN CASH TO
RETURN CASH TO
SHAREOWNERS
SHAREOWNERS
Dividend and Share
Dividend and Share
Repurchase
Repurchase
21
OPTIMIZE CAPITAL
OPTIMIZE CAPITAL
STRUCTURE
STRUCTURE
Long-term Net Debt to
Long-term Net Debt to
EBITDA ~2.5 to 3.0x
EBITDA ~2.5 to 3.0x |
new CCE Long-Term Growth
new CCE Long-Term Growth
Objectives
Objectives
Note: Objectives are comparable, currency neutral, and are not adjusted for acquisitions
The non-GAAP financial measure return on invested capital (ROIC) is net operating income less
effective taxes divided by average invested capital. Average invested capital is average
annual net debt plus average annual book equity. Net debt is current debt plus long-term debt
minus
cash.
These
measures
are
used
to
more
clearly
evaluate
our
capital
structure
and
leverage.
Near Term, We Expect Share Repurchase
Near Term, We Expect Share Repurchase
to Drive EPS Growth Above Our Long-Term Objective
to Drive EPS Growth Above Our Long-Term Objective
22
Current
new CCE
Revenue Growth
4
5%
4
6%
OI Growth
5
6%
6
8%
EPS Growth
HSD
HSD
ROIC Improvement
>
20
bps/yr
>
20
bps/yr |
Solid
Balanced Revenue Growth Solid Balanced Revenue Growth
Europe Price per case + Volume Growth
Europe Price per case + Volume Growth
Source: CCE earnings release
5.0%
5.0%
3.0%
3.0%
5.0%
5.0%
9.5%
9.5%
5.0%
5.0%
To Consumers
To Consumers
& Customers
& Customers
VALUE
VALUE
To Maintain & Enhance
To Maintain & Enhance
our Margins
our Margins
COMMITMENT
COMMITMENT
On Managing Levers
On Managing Levers
to Grow Value
to Grow Value
FOCUS
FOCUS
23 |
Gross profit is a
Gross profit is a
relatively narrow gap
relatively narrow gap
between channel and
between channel and
package types
package types
After adjusting for
After adjusting for
SD&A, operating profit
SD&A, operating profit
gap narrows
gap narrows
Balanced Profit Portfolio
Balanced Profit Portfolio
By Package
By Package
By Channel
By Channel
Note: CCE internal data, numbers are rounded
24
Europe GP per case Index
Europe GP per case Index |
Historically Stable Cost of Goods
Historically Stable Cost of Goods
Increased package
Increased package
diversity
diversity
Cans are a mix of steel
Cans are a mix of steel
and aluminum v. all
and aluminum v. all
aluminum in NA
aluminum in NA
Glass and other is 16%
Glass and other is 16%
of volume v. 1% in NA
of volume v. 1% in NA
Declining beet sugar
Declining beet sugar
costs as opposed to
costs as opposed to
volatile HFCS costs
volatile HFCS costs
Select Differences
Select Differences
25
COGs
COGs
per case Growth
per case Growth
Source: CCE earnings release |
Price
per case - Price per case -
COGs/per case
COGs/per case
Historically Maintained or Improved
Historically Maintained or Improved
Gross Margins
Gross Margins
Stable cost of goods per
Stable cost of goods per
case
case
Consistent long-term
Consistent long-term
approach to managing
approach to managing
margins
margins
Incidence based
Incidence based
concentrate model
concentrate model
Select Highlights
Select Highlights
26
Source: CCE earnings release |
Expenses
Focused on Sales Expenses Focused on Sales
Europe SD&A per case
Europe SD&A per case
Indexed to North America
Indexed to North America
Source: CCE internal reports. Figures are comparable: CCEs European
operating segment excludes Norway, Sweden and corporate expenses; figures
are rounded to nearest 5% SD&A As % Sales
SD&A As % Sales
NA OI Margin
NA OI Margin
~10%
~10%
Europe OI Margin
Europe OI Margin
~15%
~15%
27 |
Increased
Financial Flexibility Increased Financial Flexibility
Net Debt (in Billions)
Net Debt to EBITDA
Net Debt to EBITDA
$12.0
$12.0
$11.6
$11.6
$11.0
$11.0
$10.0
$10.0
$9.8
$9.8
$9.2
$9.2
$8.3
$8.3
$7.7
$7.7
~$2.0
~$2.0
Note: Net Debt is total debt less cash; EBITDA figures are on a comparable
basis 28 |
Agenda
Agenda
New CCE
Overview
2010 Business Update
Key Takeaways
New CCE
Growth Objectives
29 |
2010 CCE
Business Outlook 2010 CCE Business Outlook
current CCE 2010 Outlook
current CCE 2010 Outlook
Revenue Growth
Revenue Growth
Low Single-Digit
Low Single-Digit
(North America Flat )
(North America Flat )
(Europe MSD)
(Europe MSD)
OI Growth
OI Growth
12% to 14%
12% to 14%
(North America MSD to HSD )
(North America MSD to HSD )
(Europe HSD to LDD )
(Europe HSD to LDD )
EPS Growth
EPS Growth
$1.78 to $1.82
$1.78 to $1.82
(includes ~7 cent negative currency at recent rates)
(includes ~7 cent negative currency at recent rates)
30
Note: Revenue and OI outlook is comparable and currency neutral;
EPS outlook is comparable |
Income
Statement Income Statement
FY10 Illustrative pro forma new CCE
FY10 Illustrative pro forma new CCE
new CCE
new CCE
pro forma FY09
pro forma FY09
new CCE FY10
new CCE FY10
pro forma Estimate
pro forma Estimate
Net Operating Revenues
Net Operating Revenues
$7,263
$7,263
Cost of Goods Sold
Cost of Goods Sold
4,534
4,534
Gross Profit
Gross Profit
2,729
2,729
SD&A
SD&A
1,886
1,886
Operating
Operating
Income
Income
(EBIT)
(EBIT)
(assuming
(assuming
~10%
~10%
currency
currency
neutral
neutral
growth
growth
offset
offset
by
by
~4%
~4%
negative
negative
Fx
Fx
translation)
translation)
843
843
~$890
~$890
Interest
Interest
(assuming
(assuming
~4.5%
~4.5%
on
on
~$2.4B)
~$2.4B)
(110)
(110)
Income Before Taxes
Income Before Taxes
780
780
Income
Income
Tax
Tax
Expense
Expense
(assuming
(assuming
~29%
~29%
effective rate)
effective rate)
(230)
(230)
Net Income
Net Income
$550
$550
EPS
EPS
(assuming ~350 million diluted Shares)
(assuming ~350 million diluted Shares)
~$1.57
~$1.57
EBITDA
EBITDA
(assumes
(assumes
depreciation
depreciation
and
and
amortization
amortization
of
of
$0.3
$0.3
billion)
billion)
~$1.2B
~$1.2B
31
Note: Estimates are rounded
For 2011, earnings per share will likely exceed our long-term growth objective
as a For 2011, earnings per share will likely exceed our long-term
growth objective as a result of share repurchase activity
result of share repurchase activity
additional details to be provided in December
additional details to be provided in December |
Capital
Structure & Transaction Highlights Capital Structure & Transaction
Highlights Fully diluted
Fully diluted
Shares Outstanding
Shares Outstanding
350 Million
350 Million
2011 Effective
2011 Effective
Tax Rate ~28% to
Tax Rate ~28% to
30%
30%
U.S. Domiciled,
U.S. Domiciled,
NYSE listed
NYSE listed
Net Debt at close expected to be ~$2 billion
Net Debt at close expected to be ~$2 billion
~$2.4 billion in gross debt and ~$0.4 billion in cash
~$2.4 billion in gross debt and ~$0.4 billion in cash
Source
Source
Use
Use
$10 per share distribution
$10 per share distribution
Norway & Sweden Acquisition
Norway & Sweden Acquisition
Balance Sheet
Balance Sheet
Cash from Operations
Cash from Operations
Exercise of Options
Exercise of Options
New Debt
New Debt
Other
Other
Expected Sources & Uses of Cash
Expected Sources & Uses of Cash
Transaction
Transaction
Expectations
Expectations
32 |
Transaction
Transaction
Is On Track
Is On Track
to Close in
to Close in
the Fourth
the Fourth
Quarter
Quarter
Transaction Progress
Transaction Progress
On Track
On Track
European Commission approval received
European Commission approval received
Favorable IRS private letter ruling received
Favorable IRS private letter ruling received
Shareholder meeting scheduled for October 1
Shareholder meeting scheduled for October 1
Norway and Sweden integration preparation
Norway and Sweden integration preparation
Key Steps
Key Steps
Remaining
Remaining
Include
Include
U.S. Antitrust Approval
U.S. Antitrust Approval
Canadian Antitrust Approval
Canadian Antitrust Approval
Shareowner Approval
Shareowner Approval
33 |
Agenda
Agenda
New CCE
Overview
2010 Business Update
Key Takeaways
New CCE
Growth Objectives
34 |
Key
Takeaways Key Takeaways
Our business in Europe has a history of solid growth
Our business in Europe has a history of solid growth
Our financial priorities are on driving long-term growth
Our financial priorities are on driving long-term growth
Our long-term growth targets for new CCE
Our long-term growth targets for new CCE
exceed our current targets
exceed our current targets
CCE is focused on delivering 2010 and now expects 2010
CCE is focused on delivering 2010 and now expects 2010
EPS
EPS
to
to
be
be
in
in
a
a
range
range
of
of
$1.78
$1.78
to
to
$1.82
$1.82
on
on
a
a
comparable
comparable
basis
basis
including a negative currency impact of ~7 cents at current levels
including a negative currency impact of ~7 cents at current levels
Transaction with TCCC is on track to close in the fourth
Transaction with TCCC is on track to close in the fourth
quarter
quarter
35 |
John F.
Brock John F. Brock
Chairman and CEO
Chairman and CEO
September 8, 2010
September 8, 2010 |
Important
Additional Information and Where to Find It 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
and
required
shareowner
approval,
Coca-Cola
Enterprises
Inc.
(the
Company)
will
file
relevant
materials
with
the Securities and Exchange Commission (the SEC), including a proxy
statement/prospectus contained in a registration statement on Form S-4, which
has been mailed to the shareowners of the Company. The registration statement became
effective August 25, 2010. SHAREOWNERS OF THE COMPANY ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Shareowners
may
obtain
a
free
copy
of
the
proxy
statement/prospectus
and
other
documents
filed
by
the
Company
at
the
SECs
web
site
at
www.sec.gov.
Copies
of
the
documents
filed
with
the
SEC
by
the
Company
are
available
free
of
charge
on
the
Companys
website
at
www.cokecce.com
under the tab Investor Relations
or by contacting the Investor Relations Department of Coca-Cola Enterprises at
770-989-3246. Participants in the Solicitation
The Company and its directors, executive officers and certain other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its shareowners in connection with the proposed transaction. Information regarding the interests of such directors and
executive officers was included in the Companys Proxy Statement for its 2010
Annual Meeting of Shareowners filed with the SEC March 5, 2010, its Form
10-K filed on February 12, 2010 and information concerning the participants in the solicitation is included in the proxy statement/prospectus relating
to
the
proposed
transaction.
Each
of
these
documents
is
available
free
of
charge
at
the
SECs
website
at
www.sec.gov
and
from
the
Company
on
its
website or by contacting the Investor Relations Department at the telephone number
above. 37 |