Coca-Cola Enterprises Inc. Reports Fourth Quarter and Full-Year 2005 Results

-- North America finishes 2005 with strong fourth quarter net pricing growth of 4 percent and volume growth of 2 1/2 percent.

-- Fourth-quarter 2005 reported loss of 12 cents includes net expense items of 27 cents, resulting in comparable earnings of 15 cents per diluted share.

-- Full-year EPS totaled $1.08, including net expense items of 21 cents.

-- 2005 cash flow from operations less capital spending totaled $717 million.

Coca-Cola Enterprises (NYSE: CCE) today reported 2005 net incomeof $514 million, or $1.08 per diluted share. The comparability ofthese results to 2004 net income is affected by net expense itemstotaling 21 cents per diluted share. These items include tax expenseassociated with the repatriation of foreign earnings, restructuringcosts, and asset write-offs associated with property damage from threemajor hurricanes. The following table provides detail on these items,as well as other items impacting reported earnings:
Fourth Quarter Full Year
-------------- --------------
2005 2004 2005 2004
---- ---- ---- ----

Reported Earnings per Diluted
Common Share $(0.12) $ 0.17 $ 1.08 $ 1.26
Hurricane Asset Write-offs(a) -- -- 0.03 --
Restructuring Charges 0.06 -- 0.11 --
HFCS Litigation Settlement
Proceeds (0.01) -- (0.07) (0.04)
Net Favorable Tax Items (0.06) (0.04) (0.14) --
Repatriation Tax Expense 0.27 -- 0.27 --
Debt Extinguishment Costs 0.01 -- 0.01 --
Gain on Asset Sale -- -- (0.01) --
Loss on Equity Securities -- -- 0.01 --
Impact of New Concentrate Pricing -- -- -- 0.05
------- ------- ------- -------

Earnings per Diluted Common Share,
Excluding Certain Items(b) $ 0.15 $ 0.13 $ 1.29 $ 1.27
======= ======= ======= =======

(a) Includes asset write-offs totaling $25 million (pre-tax) 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.

Reported 2005 operating income totaled $1.4 billion, which wasflat versus prior year. Adjusted for the operating items shown in theabove table, full-year 2005 operating income was also flat whencompared to 2004. A reconciliation of reported versus comparableoperating income is shown on page 11 of this release.

"While we are not satisfied with our overall 2005 results, we areencouraged by the balanced volume and pricing growth in NorthAmerica," said Lowry F. Kline, chairman of the board and chiefexecutive officer. "These results demonstrate substantial progress inimproving our North American business model to drive consistentoperating results. We will combine this progress in 2006 with anoutstanding calendar of brand extensions and new products and the fullyear benefit of our new North American operating framework.

"Our success in controlling the growth of our 2005 operatingexpenses also strengthens our confidence about our futureperformance," Mr. Kline said. "Our cost control efforts, which limitedcomparable 2005 operating expense growth to only 1 percent, gave usneeded flexibility in dealing with the challenging operating dynamicsof last year.

"Though our work to generate pricing growth and achieve operatingexpense savings was also effective in Europe, our overall performancethere remains below our targets as we work to overcome consumer andmarket trends impacting our business, including weak retail trends insome markets, health and wellness concerns and the continued growth ofdeep discount retailers," Mr. Kline said. "For 2006, we have a numberof operating and sales initiatives in place to meet the needs ofconsumers and our customers, including new marketing approaches forhard discounters, country-specific brand and product innovation plans,and organizational initiatives that will strengthen both ourefficiency and our ability to serve our customers."

Consolidated bottle and can physical case volume increased 1 percent in the fourth quarter and 1/2 percent for the full year.Fourth quarter volume in North America was up 2 1/2 percent withfull-year volume growth of 1 percent. Immediate consumption volume inNorth America increased 3 1/2 percent in the fourth quarter and 2 percent for the year as Dasani flavored waters, Powerade, FullThrottle and Rockstar energy drinks continue to generate strong salesincreases.

Fourth quarter volume in Europe was down 4 percent with volume forthe full year down 2 percent. European sales were characterized bydeclines of regular soft drinks, while sales of diet soft drinks,juice drinks and sports drinks remained strong.

Consolidated net pricing per case increased 2 1/2 percent in thefourth quarter and 2 percent for the full year. Net pricing per casein North America increased 4 percent for the fourth quarter and 3 percent for the full year. European pricing was up 1/2 percent inthe fourth quarter and increased 1 percent for the full year.

Consolidated cost of sales per case increased 4 1/2 percent forthe fourth quarter and 3 1/2 percent for full-year 2005. All netpricing and cost of sales per case comparisons are presented excludingthe effects of currency translations. The attached key operatinginformation schedule provides a reconciliation of the reported andcomparable operating statistics used in this earnings release. Stock Option Expense

CCE will begin expensing stock options in 2006. 2005 stock optionexpense not included in reported results totaled approximately $52 million before taxes, or 7 cents per diluted share. Restructuring Charge

2005 reported results include $80 million of the total $130 million to $140 million of expenses CCE expects to spend on thereorganization of the company's North American business and localproposed restructuring initiatives in Europe. CCE expects to recordthe remaining expense of $50 million to $60 million throughout 2006. Repatriation of Foreign Earnings

CCE repatriated approximately $1.6 billion of non-U.S. earnings inthe fourth quarter of 2005. The tax charge associated with therepatriation totaled $128 million, or 27 cents per diluted share. CCEalso incurred a pre-tax charge, included in interest expense, ofapproximately $8 million, or 1 cent per diluted share, to restructurea portion of company's debt portfolio to accommodate the efficientrepayment of debt in the United States. 2006 Outlook

CCE expects 2006 earnings per diluted share in a range of $1.27 to$1.32, excluding foreign currency translations and expenses related tothe restructurings in North America and Europe. This range includesstock option expense. Currency-neutral, comparable operating income isexpected to increase 4 percent to 5 percent. CCE expects 2006 cashflow from operations less capital spending to total approximately $700 million. Capital spending is expected to total approximately $1 billion in 2006.

Based on current exchange rates, foreign currency translationscould negatively impact operating income by 1 percent to 2 percent andearnings per diluted share by 2 cents to 3 cents. Conference Call

CCE will host a conference call with analysts and investors todayat 10 a.m. ET. The call can be accessed through the company's web siteat www.cokecce.com.

Coca-Cola Enterprises Inc. is the world's largest marketer,distributor, and producer of bottle and can liquid nonalcoholicrefreshment. Coca-Cola Enterprises sells approximately 80 percent ofThe Coca-Cola Company's bottle and can volume in North America and isthe sole licensed bottler for products of The Coca-Cola Company inBelgium, continental France, Great Britain, Luxembourg, Monaco, andthe Netherlands. Forward-Looking Statements

Included in this news release are forward-looking managementcomments and other statements that reflect management's currentoutlook for future periods. As always, these expectations are based onthe currently available competitive, financial, and economic dataalong with our operating plans and are subject to future events anduncertainties. The forward-looking statements in this news releaseshould be read in conjunction with the detailed cautionary statementsfound on pages 33 and 34 of our 2004 Annual Report and on pages 31through 33 of the Company's Third-Quarter 2005 Form 10-Q.
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; In Millions, Except Per Share Data)


Fourth Quarter
-------------------------
2005(a) 2004(b) Change
-------- -------- -----
Net Operating Revenues $ 4,487 $ 4,404 2 %
Cost of Sales 2,727 2,666 2 %
-------- --------
Gross Profit 1,760 1,738 1 %
Selling, Delivery, and
Administrative Expenses 1,554 1,506 3 %
-------- --------
Operating Income 206 232 (11)%
Interest Expense, Net 163 154
Other Nonoperating Income (Expense), Net 2 (2)
-------- --------
Income Before Income Taxes 45 76
Income Tax Expense (Benefit) 102 (6)
-------- --------
Net (Loss) Income $ (57) $ 82
======== ========
Basic Weighted Average Common Shares
Outstanding 473 469
======== ========
Basic Net (Loss) Income Per Share (c) $ (0.12) $ 0.17
======== ========
Diluted Weighted Average Common Shares
Outstanding 473 473
======== ========
Diluted Net (Loss) Income Per Share (c) $ (0.12) $ 0.17
======== ========

(a) 2005 net income includes net expense items totaling $129 million,
or 27 cents per diluted share. See page 11 of this earnings
release for a list of these items.

(b) 2004 net income includes favorable tax items of $19 million, or
4 cents per diluted share.

(c) Per share data calculated prior to rounding to millions.

COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; In Millions, Except Per Share Data)


Full Year
-----------------------
2005(a) 2004(b) Change
------- ------- ------
Net Operating Revenues $ 18,706 $ 18,158 3 %
Cost of Sales 11,185 10,771 4 %
-------- --------
Gross Profit 7,521 7,387 2 %
Selling, Delivery, and
Administrative Expenses 6,090 5,951 2 %
-------- --------
Operating Income 1,431 1,436 Flat
Interest Expense, Net 633 619
Other Nonoperating (Expense) Income, Net (8) 1
-------- --------
Income Before Income Taxes 790 818
Income Tax Expense 276 222
-------- --------
Net Income $ 514 $ 596
======== ========
Basic Weighted Average Common Shares
Outstanding 471 465
======== ========
Basic Net Income Per Share (c) $ 1.09 $ 1.28
======== ========
Diluted Weighted Average Common Shares
Outstanding 476 473
======== ========
Diluted Net Income Per Share (c) $ 1.08 $ 1.26
======== ========

(a) 2005 net income includes net expense items totaling $99 million,
or 21 cents per diluted share. See page 11 of this earnings
release for a list of these items.

(b) 2004 net income includes net expense items totaling $6 million, or
1 cent per diluted share. See page 11 of this earnings release for
a list of these items.

(c) Per share data calculated prior to rounding to millions.

COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; In Millions)

December 31,
---------------
2005 2004
------- -------
ASSETS
Current:
Cash and cash equivalents $ 107 $ 155
Trade accounts receivable, net 1,802 1,884
Inventories 786 763
Current deferred income tax assets 313 196
Prepaid expenses and other current assets 387 373
------- -------
Total Current Assets 3,395 3,371
Property, plant, and equipment, net 6,560 6,913
Goodwill 578 578
Franchise license intangible assets, net 13,832 14,517
Customer distribution rights and other
noncurrent assets, net 992 1,082
------- -------
$25,357 $26,461
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
Current:
Accounts payable and accrued expenses $ 2,654 $ 2,708
Amounts payable to The Coca-Cola Company, net 138 91
Deferred cash receipts from The Coca-Cola Company 83 45
Current portion of debt 944 607
------- -------
Total Current Liabilities 3,819 3,451
Debt, less current portion 9,165 10,523
Retirement and insurance programs and
other long-term obligations 1,309 1,406
Deferred cash receipts from The Coca-Cola Company,
less current 246 331
Long-term deferred income tax liabilities 5,133 5,338
Long-term amounts payable to The Coca-Cola Company,
net 42 34
Shareowners' equity 5,643 5,378
------- -------
$25,357 $26,461
======= =======
COCA-COLA ENTERPRISES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, In Millions)

December 31,
---------------
2005 2004
------- -------
Cash Flows From Operating Activities
------------------------------------
Net income $ 514 $ 596
Adjustments to reconcile net income to net cash
derived from operating activities:
Depreciation and amortization 1,044 1,068
Net change in customer distribution rights 29 18
Stock-based compensation expense 30 23
Deferred funding income from The Coca-Cola Company (47) (50)
Deferred income tax expense 106 124
Pension expense less than retirement plan
contributions (74) (111)
Changes in assets and liabilities 29 (53)
------- -------
Net cash derived from operating activities 1,631 1,615
------- -------

Cash Flows From Investing Activities
------------------------------------
Capital asset investments (914) (946)
Capital asset disposals 48 24
------- -------
Net cash used in investing activities (866) (922)
------- -------

Cash Flows From Financing Activities
------------------------------------
(Decrease) Increase in commercial paper, net (599) 172
Issuances of debt 1,541 386
Payments of debt (1,756) (1,295)
Dividend payments on common stock (76) (76)
Exercise of employee stock options 40 181
Interest rate swap settlement 46 -
------- -------
Net cash used in financing activities (804) (632)
------- -------

Net effect of exchange rate changes on cash
and cash equivalents (9) 14
------- -------

Net Change In Cash and Cash Equivalents (48) 75
Cash and Cash Equivalents at Beginning of Year 155 80
------- -------
Cash and Cash Equivalents at End of Year $ 107 $ 155
======= =======
Coca-Cola Enterprises Inc.
Key Financial Information
(Unaudited; In Millions)

Fourth Quarter Full Year
--------------- ---------------
2005 2004 2005 2004
------- ------- ------- -------
Operating Income Reconciliation
-------------------------------

Reported Operating Income $ 206 $ 232 $ 1,431 $ 1,436
Hurricane Asset Write-offs (a) 4 - 28 -
Restructuring Charges 48 - 80 -
HFCS Litigation Settlement Proceeds (5) - (53) -
Gain on Sale of Asset (1) - (8) -
Impact of New Concentrate Pricing - - - 41
------- ------- ------- -------
Comparable Operating Income(b) $ 252 $ 232 $ 1,478 $ 1,477
======= ======= ======= =======

Net Income Reconciliation
-------------------------

Reported Net Income $ (57)$ 82 $ 514 $ 596
Hurricane Asset Write-offs (a) 2 - 17 -
Restructuring Charges 30 - 50 -
HFCS Litigation Settlement Proceeds (3) - (33) -
Net Favorable Tax Items (32) (19) (67) (20)
Repatriation Tax Expense 128 - 128 -
Debt Extinguishment Costs 5 - 5 -
Gain on Asset Sale (1) - (5) -
Loss on Equity Securities - - 4 -
Impact of New Concentrate Pricing - - - 26
------- ------- ------- -------
Comparable Net Income (b) $ 72 $ 63 $ 613 $ 602
======= ======= ======= =======

Diluted Earnings Per Share Reconciliation
-----------------------------------------

Reported Net Income Per Diluted
Common Share $ (0.12)$ 0.17 $ 1.08 $ 1.26
Hurricane Asset Write-offs (a) - - 0.03 -
Restructuring Charges 0.06 - 0.11 -
HFCS Litigation Settlement Proceeds (0.01) - (0.07) -
Net Favorable Tax Items (0.06) (0.04) (0.14) (0.04)
Repatriation Tax Expense 0.27 - 0.27 -
Debt Extinguishment Costs 0.01 - 0.01 -
Gain on Asset Sale - - (0.01) -
Loss on Equity Securities - - 0.01 -
Impact of New Concentrate Pricing - - - 0.05
------- ------- ------- -------
Comparable Net Income Per Diluted
Common Share (b) $ 0.15 $ 0.13 $ 1.29 $ 1.27
======= ======= ======= =======

Operating Expense Reconciliation
--------------------------------
Reported Operating Expenses $ 1,554 $ 1,506 $ 6,090 $ 5,951
Hurricane Asset Write-offs (a) (2) - (26) -
Restructuring Charges (48) - (80) -
Gain on Asset Sale 1 - 8 -
------- ------- ------- -------
Comparable Operating Expenses (b) $ 1,505 $ 1,506 $ 5,992 $ 5,951
======= ======= ======= =======


Full Year
---------------
Free Cash Flow (c) 2005 2004
------------------ ------- -------
Net Cash Derived From Operating
Activities $ 1,631 $ 1,615
Less: Capital Asset Investments 914 946
------- -------
Free Cash Flow $ 717 $ 669
======= =======


Dec. 31, Dec. 31,
Net Debt(d) 2005 2004
----------- -------- --------
Current Portion of Debt $ 944 $ 607
Debt, Less Current Portion 9,165 10,523
Less: Cash and Cash Equivalents 107 155
------- -------
Net Debt $10,002 $10,975
======= =======


(a) Includes asset write-offs totaling $25 million (pretax) and
certain facility disruption and relief effort expenses.

(b) 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 our ongoing results.

(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.
Key Operating Information

4th Quarter 2005 Change Full Year 2005 Change
--------------------------- ---------------------------
North North
Consolidated America Europe Consolidated America Europe
------------ ------- ------ ------------ ------- ------
Net Revenues
Per Case
---------------
Change in Net
Revenues per
Case 1.0 % 5.0 % (8.5)% 3.0 % 4.0 % 2.0 %
Impact of
Belgium
Excise Tax
Change 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % (0.5)%
Impact of
Customer
Marketing
and Other
Promotional
Adjustments (0.5)% 0.0 % (1.0)% 0.0 % 0.5 % (0.5)%
Impact of
Excluding
Post Mix
Sales,
Agency
Sales
and Other
Revenue 0.0 % (0.5)% 2.0 % (0.5)% (1.0)% 0.0 %
------- ------- ------- -------- ------- -------
Bottle and Can
Net Pricing
Per Case(a) 0.5 % 4.5 % (7.5)% 2.5 % 3.5 % 1.0 %
Impact of
Currency
Exchange
Rate
Changes 2.0 % (0.5)% 8.0 % (0.5)% (0.5)% 0.0 %
------- ------- ------- -------- ------- -------
Currency-
Neutral Bottle
and Can
Net Pricing
per Case(c) 2.5 % 4.0 % 0.5 % 2.0 % 3.0 % 1.0 %

Cost of Sales Per Case
----------------------
Change in Cost
of Sales per
Case 1.0 % 7.5 % (11.0)% 4.0 % 5.5 % 1.5 %
Impact of
Belgium
Excise Tax
Change 0.0 % 0.0 % 0.5 % 0.0 % 0.0 % (0.5)%
Impact of
HFCS
Litigation
Settlement
Proceeds in
2005 0.0 % 0.5 % 0.0 % 0.5 % 0.5 % 0.0 %
Impact of
New
Concentrate
Pricing
Structure
in 2004 0.0 % 0.0 % 0.0 % 0.0 % 0.5 % 0.0 %
Impact of
Excluding
Bottle and
Can
Marketing
Credits
and
Jumpstart
Funding 1.0 % 1.0 % 0.5 % 0.5 % 0.5 % 0.5 %
Impact of
Excluding
Post Mix
Sales,
Agency
Sales
and Other
Revenue 0.0 % (2.0)% 3.5 % (1.0)% (1.5)% (0.5)%
------- ------- ------- -------- ------- -------
Bottle and Can
Cost of Sales
Per Case(b) 2.0 % 7.0 % (6.5)% 4.0 % 5.5 % 1.0 %
Impact of
Currency
Exchange
Rate
Changes 2.5 % (0.5)% 8.0 % (0.5)% (0.5)% 0.5 %
------- ------- ------- -------- ------- -------
Currency-
Neutral Bottle
and Can
Cost of Sales
per Case(c) 4.5 % 6.5 % 1.5 % 3.5 % 5.0 % 1.5 %

Physical Case
Bottle and Can Volume
----------------------
Change in
Volume 1.0 % 2.5 % (4.0)% 0.0 % 0.5 % (2.5)%
Impact of
Selling Day
Shift 0.0 % 0.0 % 0.0 % 0.5 % 0.5 % 0.5 %
------- ------- ------- -------- ------- -------
Comparable
Bottle and Can
Volume(d) 1.0 % 2.5 % (4.0)% 0.5 % 1.0 % (2.0)%

Fountain Gallon Volume
----------------------
Change in
Volume (1.0)% (1.5)% 0.5 % (2.5)% (3.5)% 2.5 %
Impact of
Selling Day
Shift 0.0 % 0.0 % 0.0 % 0.5 % 0.5 % 0.5 %
------- ------- ------- -------- ------- -------
Comparable
Fountain
Gallon
Volume(d) (1.0)% (1.5)% 0.5 % (2.0)% (3.0)% 3.0 %


(a) The non-GAAP financial measure "Bottle and Can Net Pricing per
Case" is used to more clearly evaluate bottle and can pricing
trends in the marketplace. The measure excludes the impact of
fountain gallon volume and other items that are not directly
associated with bottle and can pricing in the retail environment.
Our bottle and can sales accounted for approximately 90 percent of
our net revenue during 2005.

(b) The non-GAAP financial measure "Bottle and Can Cost of Sales per
Case" is used to more clearly evaluate cost trends for bottle and
can products. The measure excludes the impact of fountain
ingredient costs as well as marketing credits and Jumpstart
funding, and is used to gain an understanding of the change in
bottle and can ingredient and packaging costs.

(c) 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 separate the impact of currency
exchange rate changes on our operations.

(d) "Comparable Volume" excludes the impact of changes in the number
of selling days between periods. The measure is used to analyze
the performance of our business on a constant period and territory
basis. There were two fewer selling days in 2005 as compared to
2004.


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 1 percent to 2 percent and EPS by 2 cents to 3 cents.