Welcome to the Coca-Cola Enterprises fourth quarter 2008 earnings conference call. 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 Thor Erickson, Director of Investor Relations. Please go ahead, sir.

Thank you and good morning everybody. We appreciate you joining us this morning to discuss our fourth quarter 2008 results and our 2009 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 2009 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 annual report on Form 10-K and subsequent SEC filings. 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. Steve Cahillane, President of our North American Group and Hubert Patricot, President of our European Group are also with us on the call this morning. Following prepared remarks, we will open the call for your questions. In order to give as many people as possible the opportunity to ask questions, please limit yourself to one question and we will take follow-up questions as time permits. Now, I will turn the call over to John Brock.

Thanks Thor. Good morning everyone. Thanks for taking the time to join us today. We welcome the opportunity to discuss with you our results for 2008 and the progress of our work to strengthen our North American performance and return to growth in 2009 and beyond. As you read in our news release this morning we achieved comparable fourth quarter earnings per diluted share of $0.22 with full year comps per share of $1.32, full year revenue growth of 4% and a decline in comparable operating income of 6.5%. On a reported basis we recorded a loss of $1.5 billion for the fourth quarter due to a $2.3 billion non-cash impairment charge relating to the value of our North American franchise licenses. This impairment charge was driven primarily by non-operating factors, not by any material changes in the outlook for our North American business. Bill will discuss this charge with you in more detail in a few minutes but I think it is important to note that there should not be any impact from the non-cash charge on our day-to-day business. Now let’s turn to our comparable 2008 results of $1.32 per diluted share which exceeded the guidance range of $1.28 to $1.31 that we discussed with you in December. This slight improvement was primarily the result of strong [execution] in North America as we implemented our September price increase and continuing solid results in Europe. While any improvement however slight is a positive development these results are below the levels which our business is capable of achieving and below the levels that we are committed to deliver. In North America fourth quarter volume declined 7% while net price per case grew 9.5% reflecting our September price increase and the mix impact of increased sales in purchased finished goods. Cost…

Thank you John. As you read this morning on a comparable basis fourth quarter earnings per diluted share was $0.22 and full year diluted earnings per share was $1.32. For the full year comparable income was $647 million and free cash flow was $655 million. Currency had a positive impact of less than $0.01 on full year results and a negative impact of approximately $0.03 for the fourth quarter. On a reported basis we reported a loss in the fourth quarter of $2.99 per diluted share. This includes restructuring charges of $0.09 per share and the impact of a pre-tax $2.3 billion non-cash franchise license impairment charge that was the result of our annual intangible asset impairment review. This non-cash charge was primarily driven by financial market conditions that caused a dramatic increase in the implied cost of capital as of October 24 measurement date as well as the significant decline of the funded status of our defined pension plans. This non-cash charge was driven by non-operating factors and does not represent a change in the long-term outlook for our North American business. Also this charge does not trigger any default covenants on our debt, nor should it affect our access to capital, our underlying operations or our dividend policy. CCE remains a profitable business generating substantial free cash flow that has allowed us to reduce net debt to the lowest level in more than 10 years from $9.2 billion as of 12/31/07 to $8.3 billion as of 12/31/08. We remain committed to achieving our long-term growth objectives of 4-5% revenue growth, 5-6% operating income growth and high single digit earnings per share growth. Now let’s take a closer look at our 2008 comparable operating results. For the full year total revenues grew 4% with a fourth quarter decline of…

(Operator Instructions) The first question comes from the line of John Faucher - J. P. Morgan.

If you could talk a little bit about your gross margin performance in the quarter, obviously having enough pricing and you talked about pricing being above cost of goods sold per case that is helping here. As we look out over the next year your cost of goods sold guidance seems pretty aggressive yet you have enough pricing. What will it take to get to a positive gross margin as we look out to 2009 and do you think there is any chance of that happening in the back half of the year?

I think the answer to that is yes. Clearly as we look at commodities they have declined significantly as we went through the back half of 2008. We do have commodity coverage in place for the majority of our corn exposure and aluminum exposure in 2009. We will continue to layer in incremental coverage for the remaining unexposed position over the next couple of months. We are also looking at covering our fuel exposure and other items in which we can hedge. I would hope that as we go through the year our outlook on commodities could improve modestly with the pricing actions in place. We took a 2% approximate price increase in North America early in the first quarter. Our pricing initiatives are in place in Europe. So if things continue as they are we would hope minimally to maintain gross margin given those dynamics and optimally increase our gross margins as we move through the year.

Is that maintain for the full year or as you go through the year? You get to more of a maintenance mode?

My comments were on a full year average basis. Clearly as we move through the year if commodities stay at these levels they will be declining sequentially quarter-by-quarter given the coverage that we put in place.

Given your comments on the pricing we continue to hear that the retailers are pushing back aggressively on pricing. Can you talk to the retailer response given the additional 2% you took in February?

Obviously it is a challenging environment for taking price in this marketplace right now but we have been successful in doing it. Principally because we are focused on every way that we can add value for the retailer through new packages, innovative promotions to help growth the volume and revenue for the customer. For us it is going back to the days of selling it as cheaply as possible versus competition are long past and I am very encouraged by the above the line activities from the concentrate companies right now because I think the battle should be fought from a brand standpoint and not from a pricing standpoint. I think all those things together coupled with retailer acceptance give us encouragement that on a long-term basis we can look to grow the sparkling category in the future.

The next question comes from Kaumil Gajrawala - UBS Warburg.

Can you talk a little bit how much volumes were down in 2008 and expectations for volumes to decline again in 2009? Can you talk a little bit about where your cap utilization is and if you feel there is a need to cut back capacity?

Let me make just a broad stroke comment which is we are giving guidance and managing our business on a revenue growth approach as opposed to specific volumes because frankly that is the way we are running the business and managing the business. It is a combination obviously from a revenue standpoint of volume, price and mix and as we have said in our outlook we believe that we are going to have a mid single digit growth in revenue both in Europe and North America in 2009. So, that is our view. Long-term obviously as Steve has already indicated we want to get volume growth back on track in North America and we want to maintain it in Europe because we had a good year volume wise in Europe and we anticipate doing that again.

I guess I just think from a profit growth standpoint though managing I guess the right amount of capacity…

The second part of your question was around our whole capacity situation. All I would say there is we constantly look at what our right footprint is and what we believe we need in the way of operations. We have announced the closure of two of our facilities in North America and we will continue to make sure particularly as we put in place this new organization with the Coca-Cola Company called Coca-Cola Supply that team clearly has as part of its remit to look at our total footprint in North America and I think you can assume we will continue to look for ways of balancing our capacity with our needs.

On Coca-Cola Supply, would that also include potentially moving some hot fill capacity into Coca-Cola Supply and maybe away from the Coca-Cola Company?

That is very much part of what we are looking at. In fact we are in the process right now of installing a hot fill production in our Bellevue, Washington facility. Historically that would have gone to a Coke North America facility but through Coca-Cola Supply we are looking for ways to optimize where we put lines and as John said our overall footprint and this is an early win I think for this system.

The next question comes from Judy Hong - Goldman Sachs.

I was hoping to get some more perspective on some of your long-term margin outlook because you have a lot of initiatives in place to improve the profitability of the business but over the last few years you have seen margin decline and your long-term targets assume that you get some margin improvement but I’m just wondering if there is a period in time where you are expecting sort of a step up to the margins we have seen in early 2000 and then also that you are expecting kind of the long-term growth algorithms materialize.

I’ll make one comment on that and then ask Bill if he would like to add any color to it. I think he has already indicated we have a pretty clear plan going forward which is everything we are doing is aimed at minimally maintaining margins and where we can do so expanding margins. Obviously we are continuing to plan in a fairly challenging environment and I think it is a little difficult to predict what the future is going to hold but again when you look at the commodity situation and you look at the kind of pricing action we have taken and how we plan to manage revenues I think it is not unreasonable to think over time there will be what I would call evolutionary growth in margins. Whether they will return or when they will return perhaps to the level of 6-8 years ago I think that is a little hard to say right now but certainly our view is that by managing the whole price side of the equation on one hand and then carefully controlling costs on the other one could assume there would be some continuing growth in margins.

That conversation really is focused on gross margins. The couple of comments I would add to that are if you look at the portfolio we are managing today we are continuing to have more and more finished beverages which does have some impact on the overall reported margins. The comments we are referring to are really on the core sparkling margins. It is gross margins. Secondly, we have had an intense focus on operating expenses for the past couple of years and operating expenses or SG&A as a percentage of revenue has gone down. We will continue to focus on that so that the focus on gross margins as well as operating expenses will obviously have a compounded impact on operating income margins as we get the business growing in the future.

Somewhat related to that I guess in terms of your efforts to maintain or improve margins also depends obviously on the competitive situation. If you think about the competitive environment now and then as we move through 2009 with commodity environment potentially getting better do you think the industry as a whole is committed to sort of holding off on pricing and how does the recent growth of the private labels play into that equation?

Let me ask Steve to address that from a North American standpoint particularly the comments around private label which we obviously watch carefully.

Right now we have seen obviously a lot of pricing being taken in the fourth quarter and taking us into 2009 and we are seeing what I call a rational pricing environment hold. There has been a lot of work that has gone into that. My expectation would be that it stays rational throughout 2009 even as commodity prices come down. As I said, the battle if you will gets fought from a value added perspective and not a price perspective. Then private label, we look at very closely and if you look at even over the long haul the last 15 years private label share has been between 10-12%. On a weighted average basis it has been right in the middle at 11%. Right now we are seeing private label at their historical norm. That is not discounting for the last three months they have been in an upsurge which is really no surprise given the economic environment, 2/3 of that being driven by the two liter package. So consumers are looking for value. Retailers are giving them value. So there has been growth in private label over the course of the last three months but only getting them to their historical norms. Having said all that we don’t discount the last three months. We watch it closely and we will look for every way we can add value to our consumers through our retailers so we maintain our competitive position.

Lastly, you talk about shipping Monster in Europe. Is there any way you can quantify how much volume that could add to your business?

Hubert would you like to talk a little bit about Monster and our plans for Europe?

The energy category is still very undeveloped in our portfolio in Europe. We have two brands, one which is Relentless in GB and one which is Burn in the continent. With Monster being launched as we speak right now both in France and GB we plan to have something like 50% growth to this category in the coming months. We plan to be in more than 60,000 outlets all over Europe so it is a critical addition to our portfolio and it is still a fast growing, high value category for us in Europe.

The next question comes from Lauren Torres – HSBC.

A follow-up to a comment you made earlier, I think you said a majority of your costs are hedged for this year. Can you give us a number as far as percentage of costs hedged?

I was specifically talking about aluminum where we have roughly 2/3 to ¾ of our aluminum hedged at this point in time and a similar amount of corn is hedged, about 75% of our corn is hedged. So those are the two specific commodities I was referring to. We do have a little bit of fuel hedge but we typically are unable to hedge our PET exposure which is a very significant part of our overall commodity mix.

If I could ask about performance in the fourth quarter by channel in North America, obviously we have seen tougher numbers come out of your single serve business. That seems to obviously be taking a hit. I’m just curious if you could give us a little color with respect to trends in each channel and how you think you are progressing on a channel by channel basis.

The headline in the fourth quarter was obviously the price increase. So you saw grocery retail having the toughest time with kind of high single digit decline to 10 or 11. The club stores and the mass merchants have held up very well. We actually from an on premise standpoint and an immediate consumption standpoint saw no worsening of the trends in the fourth quarter. All in we saw exactly what we expected to see. Future consumption taking a heavier hit because of the price increase.

Any color for this year as far as how you think that playing out?

Obviously it is very, very early in the year and when you look at January as a month we have Super Bowl in January of this year where the volume was really in February last year because it was a bit earlier but having said that we are encouraged by the start we are off to. We feel very good about it. From an all channel standpoint actually it has been a very balanced performance through the channels and we are off to the kind of start we hope to get off to.

The next question comes from Mark Greenberg – Deutsche Bank. Mark Greenberg – Deutsche Bank : Given the obvious, I appreciate your comments John about pricing but given the obvious volume impact that it is having now for it looks like the third year in a row I wonder if you might talk about concerns that you might have with regards to permanent impairment to the long-term health of the soft drink category and how lower volume structurally over a long period of time may change a retailer view of the category?

I would suggest that we have a number of programs and plans to get our basic sparkling business back on track. Red, Black and Silver as a program is working and certainly Coke Zero is a huge success. We have a number of other price package moves we are making and while we believe the kind of pricing moves we have taken were absolutely essentially to cover our cost of goods we retain very much positive attitude on the sparkling category in the medium to long-term. We are working very carefully and closely with the Coca-Cola Company on a number of major initiatives. As Steve has said it is all about bringing value and programs both to customers and to consumers and while clearly there has been some pricing activity we believe that the retail trade out there both in Europe and North America still very much look at sparkling drinks as a major category and a category they want to promote and display and advertise. We, again, believe over the medium to long-term will return to growth. Obviously it is something we are going to have to follow very carefully but I guess let me be very clear in saying we don’t think the pricing moves we have taken so far are such that they are going to impact the long-term ability we are going to have along with Coca-Cola to grow our business. Mark Greenberg – Deutsche Bank : Just to bring it into 2009 if we can largely agree that the volume impacts are probably greater than any of us would have liked in the last couple of years, how important is getting closer to positive in the coming year or 12-18 months and would you be willing to start increasing promotion if 2009 turned out to be lower than expected volume year?

As I indicated earlier, we are really managing our business on a revenue basis as opposed to a specific focus on volume. We believe that profitable volume growth is absolutely essential and the way to get there is through the right combination of volume growth, pricing growth and mix. In the medium to long-term we believe that volume growth per se will come back. Obviously in this environment though it is a revenue management game we believe we are going to play and we are going to play it very well. It is hard to say frankly what the specific volume result is going to be either by category, what the industry is going to be, or where we are going to be specifically within that in 2009. I can say we certainly plan to gain share. We gained share overall in our North American business and in our European business in 2008 and we see no reason why that shouldn’t continue in 2009. I guess my bottom line there is we believe we will get back to volume growth in this category in the medium to long-term and in the shorter term we are going to manage from a revenue standpoint which we think is the right way to do it. Mark Greenberg – Deutsche Bank : If I could just briefly follow-up, Bill your comments on the impairment charge were helpful. Rounding out 2008 it is over $7 billion or about $10.00 a share in non-cash impairments. I was kind of hoping to get some perspective from you on how, if at all, this affects your long-term business. You said this doesn’t affect your day-to-day and any perspective you or John could offer about whether or not that kind of an impairment is an issue for shareholders?

Our position is no. We have communicated with our other constituents, our banks and lenders and our debt covenants are fine and we do not expect it to have any impact on our access to debt in the commercial markets. It is not going to change our dividend policy and it will not affect our capital investments for 2009 and going forward. So we do not see it having any impact on the short or long-term ability to manage our business.

The next question comes from Mark Swartzberg - Stifel Nicolaus.

Steve a couple of questions on the single serve topic. It seems from what we are hearing that Monster is off to a good start. You have had a couple three months now in many markets in the U.S. Can you give us a sense of how you think it is doing and more importantly how you think the net effect is working out in retailers where you see Monster? Then also on single serve, can you give us an idea of how you see that business evolving over the year and including the significance of these $0.99 products as a measure to improve volume trends in single serve?

In terms of Monster we are obviously delighted to have Monster as part of our portfolio. Monster in the first couple of months that we have had it is right on plan for us so it is achieving everything that it would achieve in spite of the category having slowed. Monster is on track and we have a lot of optimistic plans for Monster in 2009. In terms of the single serve obviously it was a major story in 2008, the slowing of immediate consumption. We do believe there is a strong play in bringing value to the consumers at the immediate consumption points of purchase so we put in the $0.99 strategy with 14 oz PET, 16 oz PET and 16 oz can in various parts of the country and it is off to a very good start. We will continue to offer the 20 oz which is obviously a very big and important package for us. We will supplement that with a value offering in $0.99 so you can think about small, big, and bigger in terms of a 16 oz, a 20 oz and a one liter so we will be offering consumers a variety of choices at the immediate consumption point of purchase. As I said it is off to a good start, very good customer acceptance of it. Early read is very good consumer acceptance of it. We are optimistic we have the right programs in place for 2009.

On the incidence based model early days here but how is that new model working for you and you described this as a transition year. Are the new mechanics in terms of what you are paying and the back and forth if you will between you and Coke, are the new mechanics fully in place in the month of January?

I would say they are getting in place and are almost entirely in place. We put together a plan with the Coca-Cola Company for 2009 from end-to-end basis and are pleased with the plan and are encouraged by the start we are having. Going forward the incidence based model I think will really help around what we are trying to achieve in the marketplace. It is not just about volume. It is not just about price. It is about striking that right balance and having the incidence based model will allow us to have more aligned objectives. The first couple of meetings we have had around end of year performance and 2009 start have been very encouraging because I do think this is only one component part of it but I do think companies are thinking on a much more similar language and we are going after the same things in order to get our business back into a long-term growth.

I’ll just add a quick comment on the actual mechanics. It did result in what we talked about in December of a netting of over $100 million in funding into the concentrate price effective January 1, 2009 and that will result in an all-in approximately 2% increase in the average price of concentrate in 2009 versus the average price of concentrate we paid in 2008. Those physical mechanics were in as of January 1 of this year.

The next question comes from Carlos Laboy - Credit Suisse.

Bill I just want to clarify. The impairments were all for North America?

That is correct. It was our North American franchise rights which were fully impaired and now have a zero value. We do have a modest amount of North American goodwill of about $600 million and we have approximately a little over $3 billion of European franchise rights left on our balance sheet but those have a significant amount of head room.

Steve, I was hoping you would comment on your next year of management. You mentioned a few months ago you were going to be beefing up your next year management. How has the change gone in terms of core competencies and size and have you had fresh blood come in and how have you modified compensation schemes, if at all? You are trying to drive the business differently so how do you promote this change with compensation?

Great question. When we went from six business units to four business units obviously that means we have a surplus of people so it gave us an opportunity from an inside perspective to look and choose the very best people for our company to take us forward. So we were very diligent in those efforts and I think we came out much stronger for it. In terms of external hires we have brought quite a number of people in externally to bring fresh blood, new thinking and we focused on people with excellent track records, some of whom I think you know. So all-in from bringing talent in and choosing the right talent I would say I feel very good about where we are right now. In terms of compensation we will have as a company we are continuing to work to have more paper performance, more skin in the game for all of our people down to the lower levels of the organization. That is something we are working on and we are headed where we were in 2008 in terms of getting the right compensation plans in place for our people. So I think I would say we are encouraged by that as well.

If I could just add to that I think Steve answered that question just fine. Obviously across the board in both North America and Europe we have continued to focus hard on getting the best people in the right job with the right objectives and I think we have a talented team now that is truly in place and ready to go out and make some pretty significant things happen. As Steve said we have got a good combination of people who have experience at Coca-Cola Enterprises but we have also supplemented it significantly with people from outside. One of Steve’s four business units is being run by someone we brought in from the beer business and for example our largest business unit in Europe, Great Britain, Hubert has brought in someone from Cadbury Schweppes. So we have got a talented team of people in place ready to make things happen. In terms of compensation we are going to keep it really simple this year. Everybody has one basic objective and it is called operating income. Nothing else. Operating income. We have, I think the hearts and minds and emotions of everybody pretty well captured because they know what 2009 success is all about. It is profit.

The next question comes from Christine Farkas – Merrill Lynch. Christine Farkas – Merrill Lynch : Specifically in Europe could you maybe contrast or compare the performance in the U.K. and on the continent if there were differences in either volume or pricing and trends and did Glaceau make a contribution in the quarter? How is that going based on the economy there and the level of pricing on that brand?

Hubert do you want to talk a little bit about GB versus the continent as well as Glaceau?

I don’t think there are big differences so far between GB and the continent. We are basically from a well balanced growth combining the core business; I would say Coca-Cola and the Diet Coke or Coke Zero. On both side I would say we are gaining share and growing our business. No difference between GB and the continent except this is a new trend for GB because last year, 2007, was not so good. Also in both areas we are investing in the cold drink outlets, what we call the Boost Zone. We have one Boost zone in GB, one Boost zone in France and we will have 40 Boost zones in [inaudible]. In each of these zones we are pushing for [inaudible] through development, through companies offer, and it is the same strategy in both areas and it is delivering in both areas. The last element is we are taking some new initiatives in the still drink segment which is a key volume driver and both on the continent and in GB last year we had positive reaction to the launch of Fanta Still and basically we did close to 2 million cases, one million in GB and one million in France. Having said that we launched Glaceau last year in GB. If you remember we launched Glaceau first in central London just in the beginning of December and then based on the very substantial reaction of the consumer we were present in 2,500 outlets. We have now expanded Glaceau in eleven other British cities. However, it is best to say the volume is still limited. It is a long term plan and it did not really impact our quarter four results in GB. Christine Farkas – Merrill Lynch : If I can just follow-up with a check, I just want to understand if particularly North American volumes were to remain this negative is there a point where the fixed cost leverage or lack of leverage impacts what you can improve given the cost savings? Is there a point where we don’t see the leverage come through on reported SG&A?

In theory the answer is yes but I don’t think we see the volume continuing to perform at the levels that we saw in the fourth quarter of 2008.

I think that is right. Again it is very difficult to predict what the categories, as I said earlier, are going to be and therefore what our volumes are going to be. Certainly our view is that things will not be as negative as they were in the fourth quarter 2008 and certainly the start to the year would indicate that is in fact what is happening. Operator we are at the point where we will take one more question.

The next question comes from Celso Sanchez – Citigroup. Celso Sanchez – Citigroup : I just wanted to ask a little bit about the business model change that you have put through the price pack initiatives, all of which are very encouraging. You talked a little bit about the compensation realigning to focus on the right objectives now. Can I just ask how confident are you that you have the right IT infrastructure to manage this process? Obviously you are going to have more complex SKU approach which I think is a good thing. Is it going to be a problem or do you foresee any problems within the barriers of place you needed to ensure that when you have the $0.99 single serve offering the price differential with 20 oz the execution of that is pretty consistent or do you think that you have some more work still to do on the IT side?

We are actually very confident we have the right IT systems and we have made very good strides in that regard. We have a number of programs in place. One we call Red Right Execution Daily so we have a very good view of exactly what the stores look like and where the 16 oz and 14 oz are being placed in the cooler, where the 16 oz can is being placed in the cooler. So on a very real time basis we know exactly what we are achieving based on what our goals and expectations are. From an IT standpoint I would say we are very enabled to get our programs executed. Celso Sanchez – Citigroup : Can you help us understand with a little bit of color the pricing relationship one might see if one went and saw 16 oz at $0.99 what the 20 oz would be or would it not even be in that particular outlet? How should we think about that?

They would be in the same outlet. 20 oz will be everywhere and you can think about a four price point differential. So if you have a 20 oz at $1.39 you would have the 16 oz at $0.99. Equally you would also have in a different market the 14 oz at $0.99 and it is based on what consumers and customers are telling us they want. So you won’t have the 14 oz and 16 oz in the same markets. That is an either or. But you will have the 20 oz in every single marketplace. Celso Sanchez – Citigroup : If I could just follow-up a bit you had mentioned before some updates on the fountain business. Can you just remind us and provide a little more color how things have changed? Are you working together more closely? Is one person in charge of a given territory now whereas before there was one from CCE and one from Coke on the service side? Do you have just one price list? How is that working?

Good question. As John mentioned there are about 20 markets where we have a dual approach so there will be a Coke fountain representative and service technician and there will be a CCE team doing the same thing. So it is very early days but we have a plan in place in one and ultimately going to more markets where we will have a unified approach so there will be one person from the system representing both bottle and can and fountain from a sales and customer service perspective. Obviously there is a lot to optimize there both from a price package architecture standpoint as well as a customer service standpoint. We would hope that this project is successful. We plan on it being successful and then obviously that gives us an opportunity to optimize consumer value and customer value in these very important on-premise channels.

Thanks to all of you for joining us today. We appreciate your time and attention. Have a good day.

Ladies and gentlemen that will conclude today’s conference call. Thank you very much for joining us.