(Source: Business Wire)
Coca-Cola Enterprises (NYSE: CCE) today reported second-quarter 2009 net income of $313 million, or 64 cents per diluted common share. These results include restructuring charges of approximately 3 cents per diluted common share. Excluding restructuring charges, second-quarter 2009 net income was $328 million or 67 cents per diluted share. The following table reconciles reported and comparable earnings per common share:
Second Quarter First Six Months 2009 2008 2009 2008 Reported (GAAP) $ 0.64 $ (6.48 ) $ 0.77 $ (6.46 ) Restructuring Charges 0.03 0.02 0.10 0.07 Franchise Impairment Charge - 7.02 - 7.02 Debt Extinguishment Cost - - 0.01 - Net Tax Items - - (0.01 ) 0.01 Comparable Diluted Earnings Per Common Share(a) $ 0.67 $ 0.56 $ 0.87 $ 0.64 ((a)) This non-GAAP financial information is provided to allow investors to more clearly evaluate operating performance and business trends. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results. -------------------------------------------------------------------------------
Second quarter operating results reflect the benefits of price and package initiatives in North America, volume and pricing growth in Europe, and efficiency and effectiveness initiatives. In the quarter, total revenues declined ½ percent. Excluding a negative currency impact of 6½ percent, total revenues increased 6 percent. Consolidated comparable second quarter operating income grew 12 percent. In North America, operating income grew $43 million or 13 percent, and in Europe, operating income grew $20 million, or 7 percent, including a negative currency impact of approximately $57 million. Comparable EPS results include a negative currency impact of approximately 8 cents.
"We have responded to macroeconomic conditions with solid brand and marketplace initiatives, including enhancements to our price/package architecture, and successful execution of efficiency and effectiveness programs," said John F. Brock, chairman and chief executive officer.
"Our continued success will demand diligence in our revenue and brand building efforts, even stronger execution, and an absolute commitment to cost control," Mr. Brock said. "We continue to work closely with The Coca-Cola Company to enhance the synergy of our system and achieve consistent, balanced growth."
For the quarter, consolidated results include a comparable physical case bottle and can volume decline of 1 percent, net pricing per case increase of 8 percent, and 6 percent increase in cost of sales per case. Both pricing and cost of sales results exclude the effects of currency translations. Pages 11 through 15 of this release provide a reconciliation of reported and comparable operating results.
The company also announced an increase of 4 cents per share in its annual dividend and declared a regular quarterly dividend of 8 cents per common share. The quarterly dividend rate is equivalent to an annual dividend of 32 cents per common share. The dividend is payable September 24, 2009 to shareowners of record on September 11, 2009.
"The board's decision to increase our dividend reflects an improving, but cautious, outlook for the future, as well as the strengthening of our balance sheet," said Mr. Brock. "We are pleased to increase returns to shareowners as we continue to generate strong free cash flow and reduce debt."
NORTH AMERICAN RESULTS
In North America, operating results reflect the benefits of price/package architecture initiatives, operating expense controls, and higher cost of sales. Second quarter volume declined 3½ percent. This reflects slightly improved sparkling category trends, including solid growth for Coca-Cola Zero with volume up more than 15 percent, and growth in energy drinks of more than 25 percent with the addition of Monster brands. Pricing per case grew 8½ percent and cost of sales per case increased 7 percent.
"We continue to face important challenges in restoring consistent growth to our operations despite improvement in North American financial results," said Mr. Brock. "Stronger revenue management capabilities, cost control, and greater efficiency are essential in providing the resources to strengthen our brands and seize opportunities for balanced long-term growth."
EUROPEAN RESULTS
Second quarter European volume grew 6½ percent, driven by Coca-Cola trademark growth of 8½ percent, including growth of over 20 percent for Coca-Cola Zero and strong growth for brand Coca-Cola. With the continued development of Coca-Cola Zero, the brand now represents more than 5 percent of total European volume. European net pricing per case was up 4 percent, and cost of sales per case increased 1½ percent.
"Our second quarter results demonstrate the health of our core Coca-Cola trademark brands and our executional capabilities," Mr. Brock said. "These second quarter results in Europe are encouraging, but economic conditions remain challenging and will demand continued execution excellence."
FULL-YEAR 2009 OUTLOOK
Management now expects full-year comparable 2009 earnings per diluted common share to be in the range of $1.44 to $1.49. This range includes an expected negative currency impact of approximately 15 cents per share and excludes nonrecurring items. The company also expects strong free cash flow of approximately $650 million and capital expenditures of approximately $900 million. Free cash flow will continue to be used primarily for debt reduction. The effective tax rate for 2009 is expected to be 26 percent to 27 percent.
In North America, the company expects full-year 2009 revenue to increase in a low to mid single-digit range. Volume will decline and cost of goods per case is expected to increase in a mid to high single-digit range, driven principally by the mix impact of increased sales of purchased finished goods and increased commodities cost. North American operating income will increase approximately 10 percent.
European revenue will grow in a mid single-digit range. Volume will grow in a low single-digit range and cost of goods per case is expected to increase in a low single-digit range, reflecting a continued moderate commodity cost environment. Operating income will grow approximately 10 percent.
Guidance for both North America and Europe are given on a comparable, currency neutral basis.
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 world's largest marketer, distributor, and producer of bottle and can liquid nonalcoholic refreshment. CCE 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, Luxembourg, Monaco, and the Netherlands. 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, including our most recent annual report on Form 10-K and subsequent SEC filings.
COCA-COLA ENTERPRISES INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; In Millions, Except Per Share Data) Second Quarter 2009(a) 2008(b) Change Net Operating Revenues $ 5,909 $ 5,935 (0.5 )% Cost of Sales 3,646 3,731 (2.5 )% Gross Profit 2,263 2,204 2.5 % Selling, Delivery, and Administrative Expenses 1,714 1,708 0.5 % Franchise Impairment Charge - 5,279 Operating Income (Loss) 549 (4,783 ) Interest Expense, Net 145 148 Other Nonoperating Income, Net 4 4 Income (Loss) Before Income Taxes 408 (4,927 ) Income Tax Expense (Benefit) 95 (1,761 ) Net Income (Loss) $ 313 $ (3,166 ) Basic Weighted Average Common Shares Outstanding 487 485 Basic Earnings (Loss) Per Common Share(c) $ 0.64 $ (6.48 ) Diluted Weighted Average Common Shares Outstanding 490 485 Diluted Earnings (Loss) Per Common Share(c) $ 0.64 $ (6.48 ) (a) Second-quarter 2009 net income includes net unfavorable items totaling $15 million, or $0.03 cents per diluted common share.See page 11 of this earnings release for a list of these items. (b) Second-quarter 2008 net loss includes net unfavorable items totaling $3.4 billion, or $7.04 cents per common 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 STATEMENTS OF OPERATIONS (Unaudited; In Millions, Except Per Share Data) First Six Months 2009(a) 2008(b) Change Net Operating Revenues $ 10,959 $ 10,827 1.0 % Cost of Sales 6,819 6,839 (0.5 )% Gross Profit 4,140 3,988 4.0 % Selling, Delivery, and Administrative Expenses 3,350 3,329 0.5 % Franchise Impairment Charge - 5,279 Operating Income (Loss) 790 (4,620 ) Interest Expense, Net 301 290 Other Nonoperating Income, Net 5 3 Income (Loss) Before Income Taxes 494 (4,907 ) Income Tax Expense (Benefit) 120 (1,749 ) Net Income (Loss) $ 374 $ (3,158 ) Basic Weighted Average Common Shares Outstanding 487 485 Basic Earnings (Loss) Per Common Share(c) $ 0.77 $ (6.46 ) Diluted Weighted Average Common Shares Outstanding 489 485 Diluted Earnings (Loss) Per Common Share(c) $ 0.77 $ (6.46 ) (a) First six months of 2009 net income includes net unfavorable items totaling $51 million, or $0.10 cents per diluted common share.
