Hello and welcome to the Coca-Cola Enterprises first quarter 2008 earnings conference. At the request of Coca-Cola Enterprises, this conference is being recorded for instant replay purposes. At this time, I would like to turn the conference over to Mr. Thor Erickson, Director, Investor Relations. Sir, you may begin.

Thank you and good morning, everybody. We appreciate you joining us this morning to discuss our first quarter 2008 results and our 2008 outlook. Before we begin, I would like to remind you all of our cautionary statement. This call will contain forward-looking management comments and other statements reflecting our outlook for 2008, as well as future periods. These comments should be considered in conjunction with the cautionary language contained in this morning’s earnings release, as well as the detailed cautionary statements found in our most recent 10-K and 10-Q. Our earnings release also contains a reconciliation of the non-GAAP comparable figures referenced during this call. A copy of this information is available on our website at www.cokecce.com. This morning’s prepared remarks will be made by John Brock, our CEO, and Bill Douglas, our CFO. Terry Marks, President of our North American Group, and Steve Cahillane, President of our European Group, are also with us on the call this morning. Following the prepared remarks, we will open the call for your questions. Now, I will turn the call over to John Brock.

Thanks, Thor and we thank each of you for joining us this morning. As you have seen in our news release today, we reported comparable earnings of $0.08 per share, $0.01 below prior year. Total revenues grew 7% and consolidated comparable operating income declined 10.5%. The primary factors in our performance were slower economic trends in North America, which limited our results in key higher margin packages and channels, offset by continued strong top line improvement in Europe. These factors combined to create consolidated earnings below our expectations for the first quarter. We have had a challenging start and we anticipate continuing challenges ahead in North America. As we look at the remainder of 2008, we are refining our guidance and we now expect full-year comparable EPS in a range between $1.50 and $1.55 per share. This guidance reflects several factors, including persistent weak economic conditions in North America, the favorable outlook for our European business, a moderating tax rate, and favorable currency rates. Bill will discuss this guidance with you in more detail in a few minutes. There are several reasons for our confidence in these earning levels. First, while North American economic trends created softness in North American cold drink channels, we are working diligently with the Coca-Cola Company to mount a solid response to these economic trends. We are developing and will be rolling out targeted initiatives that will enable us to achieve improvement over the course of the year. Second, we are encouraged by the continuation of strong positive trends in Europe. As I’ll discuss in more detail in a minute, we believe there are elements in our first quarter European performance that demonstrate positive opportunities for the balance of the year. And third, we continue to make progress in implementing our restructuring program. Our efforts…

Thanks, John. In the first quarter, we achieved reported earnings per share of $0.02, which includes $0.06 for items affecting comparability. These items were $0.04 for our restructuring and $0.02 for net favorable tax items. Comparable results also include a currency benefit of approximately $0.01 for the quarter. This level of performance, $0.08 per share on a comparable basis, was below our expectations for the quarter. However as John mentioned, we are taking steps to counter the factors that negatively affected our first quarter results. A key factor in these results was the impact of soft economic conditions in North America, which affected sales of single serve packages in the cold channel. In contrast, we again achieved solid volume growth in Europe and also continued to realize the benefits of our restructuring and operating expense initiatives. With these factors, total revenues grew 7%, first quarter comparable cost of goods sold increased 10.5%, in line with our expectations, and consolidated volume grew 1.5%. As we look at each territory’s results, North American volume was flat. Mix had a significant impact as multi-serve packages grew a half a percent and single-serve packages declined 1.5%, below our expectations of mid single-digit growth. Key components of these results were weakness in single-serve sparkling beverages and Dasani, coupled with planned declines in our full service volume. North America net revenue per case was up 4.5%, including the impact of Glaceau and other new products. Total revenue increased 3.5%, with a 9% increase in cost of goods sold per case and a currency neutral increase in operating expenses of 1.5%. In Europe, volume grew 7%, with net revenue per case growth of 1%, reflecting the impact of marketplace promotional activity, including Easter. As John mentioned, strong growth in our sparkling beverage portfolio was at the core…

(Operator Instructions) Kaumil Gajrawala of UBS, you may ask your question.

Thank you. Maybe first if you can give us an update on how April trends are shaping up, it looks like many other companies are reporting some improvements, particularly in C stores, so if you could give us an update on April.

Terry, do you want to comment on that in terms of North America, and then Steve, you can do a brief update on Europe.

I think with respect to North America, it’s -- we are seeing a little bit of improvement in trend from the first quarter in our C store business and our small store business in general, which is a pretty good proxy for our single serve business. I think it’s far too early to put a stake in the ground and declare this a fundamental change in trend in North America, but the answer with respect to April narrowly is there is some modest improvement in trend.

In Europe, we’re not seeing anything that leads us to believe the trends are changing. We are recycling in April the best month that Europe saw in terms of weather, so we significantly outperformed last year but going into May and June, we are very confident that the trends are going to remain stable.

All right, thank you. And then just quickly on your energy strategy, I think if you look at some of the scanner data in the U.S., it looks like trends have gone negative in energy, so if you could give us an update on your plans there for ’08.

Well, I’d be happy to answer that with respect to North America -- our energy business is growing. It continues to grow. We gained share in energy in the first quarter and we don’t see any reason to believe that our energy business will -- that that change will trend, will change fundamentally in the near future. So we are still bullish on the category. We do recognize that the category rate of growth has slowed down but we are still seeing growth and we are still seeing growth within our brands.

Thank you.

Marc Greenberg, Deutsche Bank.

Thanks. Good morning. I just wanted to dig into vitamin water a little bit. I was hoping you might talk a little bit, Terry, about how the growth in the brand is impacting the rest of the -- whatever you want to call it, hydration beverage category -- Powerade, water. I think the water weakness was a bit of a surprise there on single serve. So any kind of insights you can offer in terms of cannibalization and also what kind of mix impact this has on your portfolio in terms of profitability.

Great question. I think that what we have seen in the hydration category in the first quarter is the result of a number of variables and I don’t think we can fairly isolate it down simply to the vitamin water impact. We saw a mid single-digit decline in our Dasani business and we saw a significantly -- about a double that rate of decline in our Dasani single-serve business in the first quarter. In our Powerade business, we saw a mid single-digit decline as well but there are a whole host of factors we believe that affected the performance of Dasani and Powerade. With respect to vitamin water itself, the performance of vitamin water is very much in line with expectations. As to the question is it cannibalizing our hydration single serve business, I actually think it’s a little bit too early to say with a high degree of certainty. I will say this -- that we have increased penetration levels of vitamin water in small stores, which is where you are going to have the cannibalization effect, from about 50% to 80%, so we’ve seen about a 60% increase in penetration since we took over with the brand. Now clearly that gives consumers more alternatives when they walk into outlets because that brand is now available where heretofore it hadn’t been, so it is reasonable to assume that some of that volume is going to come out of the base hydration business. That said, we strongly believe that there are steps that we can take to improve our single serve hydration business and still grow the vitamin water business at a very healthy clip. And as to the mix impact of it, when a vitamin water 20-ounce bottle is purchased in lieu of, for example, a Dasani 20-ounce bottle, it’s a very material trade-down in margin. But again, I think it’s a little bit too early to declare that there is a significant cannibalization effect going on, although as I said a moment ago we are clearly realizing much higher penetration levels of vitamin water that had existed under the previous distributorships.

Thanks, Terry. Bill, can I just -- a quick follow-up on your operating profit outlook; the first quarter decline was more than expected. I’m wondering, is there any kind of Q1 timing issues in that shortfall? And how much improvement in high margin channel single serve results are you guys embedding in your full year guidance for operating profit?

Good morning, Marc. The one most significant item in the Q1 would be we have one less selling day in ’08 Q1 than we had in ’07. I’m not attributing a huge amount to that but that’s the only item that I would mention. And I think the second part of your question I’ll defer to Terry, but I think we are baking in a modest improvement as we roll through the remainder of the year but clearly there is some improvement baked in to our forecast with respect to single server in North America.

I think that’s fair to say. We are banking on some modest but consistent levels of improvement in immediate consumption, and there are a number of factors for that and I’ll just briefly highlight a couple of them. In the first quarter, we reset about 70,000 small stores, which is a much higher number of resets than we would normally do. That was driven principally by the addition of the new brands that we talked about a moment ago. We believe that those resets are going to pay dividends as the year goes on, as sort of an annuity. They don’t -- they come throughout the course of the first quarter and you realize the benefit of them throughout the remainder of the year. Additionally, and this is a very important step, we -- in an environment such as we are in now, where growing the business within the four walls of any outlet is challenging given consumer behavior in the current macroeconomic environment, but one of the ways to grow your business, or the most important steps one can take to grow their business is then to go get more customers and try to grow the business more horizontally. And we have several hundred business development managers that have been recently hired that are currently in training that will be on the streets in their new roles midway through the second quarter and there responsibility is solely the acquisition of new business, small outlets. So for those two reasons, we feel very confident that we will see some improving trends in immediate consumption to the balance of the year. Again, I’ll qualify it one more time by saying though that this is a very volatile environment and we are seeing markedly different consumer behavior than we’ve seen in the past and I think you’ve heard that from convenience store operators and other resellers as well, but we are cautiously optimistic.

Bill Pecoriello of Morgan Stanley.

Good morning. Yesterday PBG had talked about upping their rate guidance in the U.S. from 3% to 4%. Your last guidance on the rate component was around 2% to 2.5%. Will you follow those increases? Are you also taking higher rate? I know your overall with mix you talked about mid high single digit. And also we saw the Pepsi system funding coupon activity around Easter, so I wanted to try to get your view on heading into the peak summer season how you see that playing out. Thanks.

We saw -- our rate performance in the first quarter on sparkling was around 3%. We do -- we are watching the marketplace very carefully as we go into the second quarter. We certainly are not going to allow ourselves to be in an uncompetitive position as we go forward. But having said that, we do believe that there is an opportunity for pricing improvement later in the year and we are planning on taking a sparkling rate increase post Labor Day, so into third quarter in the low to mid single digit range. So we believe that the market will yield it at that point in time and that is incremental to the guidance that we had given earlier regarding pricing for the full year.

Great and then if I could just follow-up, a couple of times in your prepared comments, you talked about new initiatives with the Coca-Cola Company to improve that single serve volume over the summer. Does that go beyond what you just talked about in terms of the feet on the street new initiatives with Coke in that segment?

It does, Bill. I’d really rather not get into the details of those on the call today but there are a few initiatives that we are engaged in with the company that are above and beyond the initiatives that I mentioned a moment ago.

Thanks.

Lauren Torres of HSBC.

Good morning. I was hoping you could just talk a little bit more about the strength you are seeing in Europe. Is it more market driven or are you implementing certain initiatives or approaching your business differently that’s helping stimulate the growth in the quarter?

Steve.

The volume in Europe was driven by strong performance in our core sparkling beverages but also in our still beverages as well, and throughout the territories. So we are happy about that. Great Britain benefited from strong field execution, solid core sparkling performance and marketing initiatives which led to 11% growth in Great Britain. We also saw 4% growth in the continent, so marketing initiatives but also small share gains. We gained a half a point of share in NARTDs and almost a full point in sparkling.

So would you attribute that growth more to initiatives you have in place or are you just seeing a general market improvement in these regions?

I’d say both but more towards what we are doing, so we are confident going forward that we can continue this performance.

Okay. And if I can also ask, what is your expectation with respect to currency on your earnings this year?

Our current guidance is based on favorable impact year over year of about $0.04 to $0.05 EPS. However, that is not necessarily keeping the rates at the current spot rate for the full year.

Okay. Thank you.

Judy Hong of Goldman Sachs.

Good morning. Firstly, in looking at the total LRB category trend in the first quarter, clearly I think some of the negative economic conditions and weak weather probably affected the category performance but if you could just talk about whether those are really the only factors that you think have impacted the overall LRB category, or do you think that if you look at some of the non-carb segments that have seen pretty strong growth slow down more recently, are those categories becoming now more mature that the total LRB category is seeing some slowdown?

I’ll speak with respect to North America. I mean, we clearly saw some slowing down of the non-carbonated category in the first quarter and we saw total non-alcoholic ready-to-drink beverage in Nielsen measure channels, all measure channels combined actually decline in cases, not dollars but decline in unit cases for the first time in our memory. So I think you have a number of factors at play. There is no question that some of these categories that have experienced such robust growth, case pack water being first and foremost, have begun to slow down significantly. We saw growth in that category in the mid single digit range, which is much lower than we’ve seen in the past. And the bulk of that growth was driven actually by private label water as consumers -- I think we began to see a change in consumer behavior affected by the economy there. And other non-carbonated categories, the rate of growth was significantly slower than we’ve seen in the past as well. The sports drink category was up less than a point in all measured channels in the first quarter. So I think there are a number of factors at play. Certainly the weather in certain parts of the country was very difficult. It was a very late spring in the upper Midwest and the early part of the quarter was very wet on the west coast, cycling some pretty good weather from a year ago. So yeah, that came into play. I think the macroeconomic environment very much came into play in the first quarter and I think you just -- you are simply seeing some of these categories that have experienced such robust growth, that rate of growth, it is very difficult to keep piling double-digit increases on top of double-digit increases.

Okay, and then Bill, if I look at North America specifically, just looking at the net pricing per case, strip out vitamin water and what net pricing per case would have been in the first quarter and how much of that was rate versus mix?

The sparkling rate per case was approximately 3% in the first quarter.

Okay, so if I look at your number, 4.5% --

The 4.5%, so if you’ve got sparkling rate of 3, you’ve got the incremental benefit from the Glaceau and the other brands, and then you’ve got some drag on mix, would get you back to the total.

Okay. Thank you.

Mark Swatzberg, Stifel Nicolaus.

Thanks. Good morning, guys. Either Terry or John, as we look at this North America issue and these benefits you are expecting to see unfold moving through the year, can you -- you know, you’ve given us some good detail on single serve. Is there anything else you can share with us, whether it’s Coke related or in your own efforts, that you think is important to highlight here as you seek to improve trends in North America? And then a calendarization question, also on North America -- Terry, I guess the profit comparison is a little easier in the second quarter than in the third quarter, but there is obviously some spending and stuff going on in the second quarter, so as you think about the evolution of profits there, how are you thinking about it in light of those compares?

Thanks. Let me talk briefly about trends for the balance of the year and I can tell you that the single most important thing that we can do is to improve the performance of our immediate consumption business. So you look in the aggregate at an immediate consumption business that when you strip out the planned reductions and full service was up maybe a point, but the mix of that was overwhelmingly skewed to vitamin water and the performance of our base 20-ounce water and sparkling was below our projections. So that is -- that will be the focal point of what we do going forward and that’s why we are investing what we have in the resets as well as the incremental business development managers. When you look at the rest of the business, it was a plus/minus where we expected. Our future consumption sparkling business was marginally ahead of what we had projected in the first quarter and our hydration business was in line. Our juice business was also in line. And our operating expenses were very much in line with a modest increase of less than 2%. So we are very clear on where the opportunity and where the challenges exist within the business and it is within that immediate consumption arena. So that’s where we are going to be focusing our efforts and we want to be laser-like focused on that. We don’t really see the rest of the business or any other part of the business being materially off-track or off-track at all. I am not sure I completely understood the second part of your question. Maybe if you could repeat that.

Sure. If we think about the profit growth you experienced in North America as you moved through ’07, I believe it was down a bit in the second quarter and up mid single-digits in the third quarter. But it seems right to also think that what you are looking for is an acceleration as you move through the second or third quarter. So the question is simply those compares are going to create some adjustment, if you will. How are you thinking about the evolution and profit growth of that business as you move through these next two quarters?

I think I’ll take a shot at that. Given what you said and given our current plans and calendarization for ’08, we would see modest operating income progression over ’07 in both Q2 and Q3 at this juncture -- sorry, over ’08.

Great. Thanks, Bill. Thanks, Terry.

Bryan Spillane of Banc of America Securities.

Good morning, guys. Just two questions; one, Bill, how much did the restructuring savings benefit in the first quarter? What was the incremental benefit on cost savings?

We’re not disclosing that level of detail, Bryan, but it was in line with expectations. But it was a modest but meaningful benefit.

Okay, and then your expectations for the whole program of roughly -- haven’t changed much in terms of the total amount of savings you are expecting by the end of the program?

Correct, we experienced about a $30 million restructuring charge in Q108, so to date since the program has been in place, our restructuring charge cumulatively is $150 million and then we will continue experiencing charges of $20 odd million per quarter ratably over the remainder of ’08 and ’09, getting us to the cumulative target of $300 million. And then we continue to see the ongoing benefits of the program in the $250 odd million range.

And the timing of pulling those savings in hasn’t changed at all -- so you haven’t pulled anything forward to incorporate into your guidance at this point?

No. Our guidance with respect to the operating expense initiatives has not changed from what we said in December or in February.

Okay, and then for Terry, just circling back to the plans for a price increase I guess post Labor Day, just two points; one, is the motivation to raise prices in the face of demand that is still somewhat sluggish, is that more designed to cover anticipated cost inflation ’09, so to be proactive about trying to cover cost inflation going out beyond where you are hedged? Or is it more a function of you think that the consumer can accept more pricing, despite the volume weakness?

We actually think both. Bryan, if you look back at our margins in the sparkling category over the preceding few years, we’ve seen fairly consistent margin contraction and admittedly, it is -- we are seeing slack demand from the consumer in general, although in the first quarter we experienced about a 3% price increase in sparkling and our performance was in line or slightly ahead of our expectations. As we go through the balance of the year, we have to keep in mind not only is it -- are we seeing a soft demand environment or a soft consumer environment. We are also seeing a continuation of historically high commodity inflation and we have to deal with that. So the answer is yeah, the pricing that we’d be taking post Labor Day would be designed to position us for 2009, although I don’t know that I am prepared to say that that would be adequate to lap, to get us all the way through 2009 but it would certainly position us better for the first part of the year. But it would also be to help with earnings in 2008 and deal with the cost environment we are seeing in 2008 and to help offset some of the other challenges that we’ve already described with respect to the consumer shifting out of impulse items, like immediate consumption, and more to lower margin future consumption items. So for all of those reasons, we think that a sensible increase is appropriate post Labor Day and that the market can bear it.

Okay, and then just finally in terms of that, on that same theme, is there room to improve or raise prices in single serve channel still or is that, given where the economy is and where the consumer is, is that sort of shut down for now?

Great question. I think you know this -- historically single serve packages are much less elastic than future consumption packages and that’s fairly intuitive given the nature of the transaction and the immediacy of consumption. But that said, given the challenges that we are facing, we are very focused on increasing our customer base and growing immediate consumption within the four walls of our existing customers. And that current plan does not call for any material movement in pricing on immediate consumption. We don’t think that’s the right time, especially when one considers so much of our business is tied up in consumers who are filling their tanks with gasoline at historically high prices and then walking in through the front door of a convenience store. We don’t want to do anything to dissuade that shopper from buying one of our products. So it’s not in the mix now. It doesn’t mean it won’t be in the future but it is not in the mix in 2008 for sure.

Great. Thanks, Terry.

John Faucher of J. P. Morgan.

Yes, good morning, everybody. You’ve spoken a couple of times about the negative margin impact from the Glaceau business. Can you talk a little bit about the penny profit implications and how that is coming in relative to your expectations? And because of that, assuming that it’s a higher penny profit per case, is that coming in basically where you thought it was, how additive is that in the quarter, and how should we expect to model that in over the next couple of quarters? Thanks.

By the way, I guess, John, the first thing I would say is the vitamin water business is, to the extent it’s a challenge, it’s a high class challenge. This is a great business for us. It is growing robustly in line with expectations and we are very bullish about it. But to the extent that one compares unit margin of vitamin water with unit margin of immediate consumption, sparkling, or Dasani, from a penny profit standpoint it’s actually materially lower than it is on Dasani and Sparkling, roughly 50%. So there is a meaningful difference in unit margin. Our challenge, and we believe --

Terry, I apologize to interrupt here, but that’s just -- that’s on immediate consumption basis?

That’s correct.

Okay, thanks.

That’s on an immediate consumption basis, correct. The other thing I would add there, John, is if you look at vitamin water in future consumption, the profitability is pretty similar to what is it in immediate consumption, so it would be accretive in that channel.

Okay, great. Thank you very much.

Christine Farkas of Merrill Lynch.

Thank you very much. Good morning. I’m going over my notes here and forgive me if I’ve missed this, but did you indicate how much Glaceau added to your North American volume?

It added about two points to our total North American volume, a little over two points.

Okay, great. And then, this is kind of maybe an odd question, given the big volume that’s coming into your system but based on the economic challenges and the pressure on single serve, is there a way to measure, or even anecdotally from those who have seen the brand year over year, is there any pressure on this brand, on the Glaceau brand in the immediate consumption?

We are certainly not seeing it. Our Glaceau business is very healthy and we are not seeing any pressure on it at all. So the pressure that we are seeing is in the aggregate, our total immediate consumption business. But narrowly within the context of Glaceau, no, none.

I mean, it sounds like the year-over-year growth there is very solid, even accelerating a little bit.

It’s very solid, yes.

Great. And then just a last question and this was sort of asked a little bit earlier -- your SG&A leverage was really impressive in the quarter. I’m just trying to understand if that kind of leverage, 150 basis points year over year, is sustainable as we go throughout ’08.

We gave some outlook on the full year guidance, so there’s some timing issues within SG&A in Q1 but that level would not be sustainable for the full year.

All right. That’s all I have. Thank you.

Operator, I think we have time for one more question.

Thank you. Anthony [Buccalo] of Credit Suisse.

The question is for Steve -- on these solid European volumes, how much of this is velocity increases? Is there any new distribution in that number? And is there any opportunity for Glaceau this summer to start getting into your system there?

It’s almost all velocity so there is very little new distribution in there. You know, Coke Zero, we’re now lapping all those numbers in all of our territories, so it’s all about accelerated volume based on the marketing programs we have in place. And the second part of the question if I heard right was Glaceau in Europe?

Yeah, do you have the opportunity to launch that this summer?

Yes. We have announced that we are launching in Great Britain in a few short weeks, so actually the middle of May we’ll be launching starting in the London area and the Southeast of England. But we are going to evaluate obviously the rest of our territories based on that.

Will that have the sort of similar mix impact in Europe that it would have in, that it’s having in the U.S.?

No, it won’t. Actually, it will be more favorable to us but obviously, just as Terry has spoken, we have to focus on 100% incremental volume where we put it in place.

Thank you.

Okay. Thanks to all of you for joining us today. We appreciate you listening and talking and the interchange. Have a good day. Goodbye.