Good day, and welcome to the Coca-Cola Enterprises First Quarter 2013 Conference Call. At the request of Coca-Cola Enterprises, this conference is being recorded for instant replay purposes. At this time, I'd like to turn the conference over to Mr. Thor Erickson, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everybody. We appreciate you joining us today to discuss our first quarter 2013 results, along with our outlook for full-year 2013. Before we begin, I'd like to remind you of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook for future periods. These comments should be considered in conjunction with the cautionary language contained in this morning’s release, as well as the detailed cautionary statements found in our most recent annual report on Form 10-K and subsequent SEC filings. 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. Hubert Patricot, President of our European Group, is also with us on this 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'll take follow-up questions as time permits. Now, I'll turn the call over to John Brock.

Thank you, Thor, and thanks to each of you for joining our first quarter conference call and webcast. Let me begin by providing a bit of a background regarding our joint decision with the Coca-Cola Company to allow our right to acquire the German bottling operations to expire. As you know, this right was an element of the October 2010 transaction with the Coca-Cola Company that created our new Coca-Cola Enterprises. Since the transaction, we have worked closely with Muhtar Kent and his team on the potential to acquire the German bottling operations. Throughout this process, we sought to fully understand both the market and how CCE would be able to create value through this acquisition for each stakeholder. As we have discussed with you, we thoroughly evaluate the opportunities created by any potential acquisition based on many dimensions with one primary goal, and that is creating value for our shareowners. After weighing all factors, we have come to a mutual decision with The Coca-Cola Company not to move forward with the transaction at this time. We want to thank Muhtar, Gary Fayard, and everyone involved with this process for their dedication, focus and constructive work. As a result of our decision, we now expect to increase the return to cash to shareowners with the goal of $1 billion in share repurchases this year. Bill will discuss this with you in a more detail in a few minutes. We believe this action, our dividend increase adopted earlier this year and the ongoing strengths of our existing business provide excellent opportunities for sustained, long-term value creation. We will continue to manage our business effectively, and over the long term, generate results that will drive increasing value. It's important to note that this decision does not rule out future acquisitions. We will…

Thanks, John. Good morning, everyone. Today, I want to first discuss the results of the quarter in a bit more detail. I'll then follow that with the review of the decision on Germany and our plans to increase the return of cash to shareowners and wrap up with the outlook for the remainder of 2013. Looking at the quarter on a reported basis, first quarter diluted earnings per share were $0.21, and on a comparable basis were $0.39, up from $0.36 in the same quarter last year. Currency translation had a negative impact of $0.01 per share compared with prior year results. Net sales totaled $1.9 billion, down 1%, while net pricing per case was up 2% and cost of sales per case grew 3%. As John mentioned, volume declined 1.5%, but a sequential improvement from the fourth quarter of last year. Please note that this volume's figure includes an adjustment of 1.5% for 1 fewer selling day in Q1, our financials are not adjusted and are impacted by this decrease in the selling day. In addition to this decrease, our first quarter results were negatively impacted by customer negotiations in France, as well as unseasonably cold and wet weather. Comparable operating income was $180 million, up 3.5% on a currency neutral basis. For the quarter, operating expenses declined 5%. This reflects timing, the volume decline that we mentioned earlier, ongoing cost control efforts and the 1 fewer selling day. Also, year-over-year comparisons benefited from the timing as marketing cost in the first quarter of last year were higher being impacted by our Olympic-related activities. We also continued to move forward with our share repurchase program, completing purchases of approximately $300 million in the quarter. Now let's take a brief look at the decision to allow the right to acquire…

[Operator Instructions] Our first question comes from Judy Hong of Goldman Sachs.

So first, just in terms of the announcement about Germany as well as the buyback. So just given your strong cash generation potential, I'm just curious how you thought about kind of your leverage at the end of this year and not taking it kind of to the mid to high end of that range with the buyback this year versus just doing more of an upfront-loaded buyback.

Bill, can I ask you to comment on that?

Sure. Judy, thanks for the question. We are remaining consistent with what we communicated previously. We think being diligent and taking the range or the leverage up to the bottom end of our range this year is prudent. It continues to give us flexibility if and when any acquisition opportunity present itself. I think it's fair to say if the events, as we see them today status quo, continues into 2014, that it would be logical to assume that we would move up within that 2.5x to 3x range during the course of 2014.

Okay. And then just on the volume side, so, I guess, we've heard the weather challenges in the first quarter, particularly March. So if I think about the second quarter and just relations to, Bill, your comment about the phasing, the second quarter, you do have a very easy comp from a volume perspective, but it doesn't sound like you're expecting much of an improvement just based on your guidance. So can you just help us understand just in terms of your volume outlook, both in GB and France, and it sounds that maybe France is particularly more challenging given the retail environment.

Hubert, could I ask you to take about volume?

Yes. Judy, looking forward, we have a solid operating marketing and promotional plan in place to effectively activate our brand and package. John mentioned some of it like the launch of the 175 in GB, the launch of the 375 in most of our markets and adding Vanilla Coke and Cherry Coke Zero. Not to mention, Share a Coke, which is a never seen operation. So we see a sequential improvement in our volume performance in the quarter and we are planning to have a growth for the totality of the year. If we take one, the good news for GB was that in the quarter -- first quarter, we were already at 1% in volume. And in France, situation has been more difficult to some, I would say not unusually difficult negotiation with the customer, but long delay in listing new SKUs, something like that. Again, we are planning not on our new marketing plans, new SKUs, to improve our volume situation also in France. So net-net, for the rest of the year, we see volume growth operations in Europe.

And just one final comment to that, Judy. Clearly, we do see volume growth for the year, but I think we've been pretty clear in saying the second quarter will be a challenging quarter for a whole variety of reasons, but we anticipated volume growth for the complete 2013 year.

Our next question comes from Steve Powers of Bernstein. Stephen Powers - Sanford C. Bernstein & Co., LLC., Research Division: Just back to Germany, if I could. Could you just, I guess, can I ask you to elaborate further on the decision to let the option expire from your side? Was it really -- has it come down to price or was there something more structural that drove your thinking? And I guess, and part I'm asking whether there's any possibility of you and Coke come to terms down the road even later this year or whether Germany is effectively off the table and a finished conversation for you.

Yes, I think it's important to recognize that the decision, the mutual decision to let the option to expire now was very much a decision for right now. And we've said that, but we'll continue to say it again. It was the right decision, it's a mutual decision and it involved a whole host of parameters that we and Coke studied and discussed. Then it says absolutely nothing about the future. The future is entirely open. And frankly, whether there's some other potential acquisition opportunity out there or whether there's some logic in rediscussing Germany, everything is on the table. So there's nothing to preclude us from having a conversation with The Coca-Cola Company about Germany or for that matter, any other opportunities that might present themselves in the future. Stephen Powers - Sanford C. Bernstein & Co., LLC., Research Division: Okay. So I guess on the one hand, the decision this morning lifts some uncertainty around your story or stock, on the other hand it opens up some new uncertainty in terms of, does the option on Germany reemerge? Is there other M&A, is there continual uptick in leverage towards the buyback? Can you just help us, I guess, handicap those odds just a little bit better as we think about the next couple of years?

Let me ask Bill to comment on that.

Steve, I would say we're really going back to a normal steady-state. I mean, prior to any transaction, you're always looking at opportunities for how to create shareowner value, and we had this official right to look at Germany, which has expired. That right will expire. We're not going to renew that. So if we choose to talk about Germany in the future, it would be in the normal steady-state, ongoing way that we deal with our business and deal with The Coca-Cola Company. So yes, there's some increased uncertainty in the future, yes, but it's the normal uncertainty that any company deals with in managing an ongoing business.

Yes. I think, it's business as usual going forward. Stephen Powers - Sanford C. Bernstein & Co., LLC., Research Division: Fair enough. And then just last, let me switch gears, the volume number in GB up 1%, clearly a positive. Just wondering if you can comment at all about what you are pricing in that market to get that 1% was? What was the cost and the return on that to get to the volume growth? And then have you noticed any broader changes in the competitive environment year-to-date and your expectations for a less competitive 2013 above it all, again, specifically in Great Britain?

Hubert?

Yes. Steve, on pricing in GB. First, as previously discussed this year, we have a more modest approach to pricing given the challenging environment we are in. It's true for GB, is true for most of our country. And second, last year, our products had solid price realization when compared to other in the category. So that's why then the price gap between us and others and created some challenging pricing hurdles in this kind of data. So given these factors, this gap on this quarter has narrowed in scan [ph] data through the first part of this year. And further, we have same which is positive for us to see growth share, improve volume and value in GB. In both NARTD and most specifically, in the Cola segment. So having said that, in GB and through our territories, our focus remains on long term profitable growth, and we see the category as growing and expendable for our customer and consumer. If we look forward to your question, we think we'll continue to experience period of increased promotional activities, but we expect pricing and competitive and customer environment to remain competitive, although more rational over the long term. Stephen Powers - Sanford C. Bernstein & Co., LLC., Research Division: So more competitive through the summer essentially and then more rational long term? Is that what I heard?

We'll see. But for the moment, it's what would be the -- probably the situation, yes.

Our next question comes from Bill Schmitz of Deutsche Bank.

Just sort of talk about the refranchising of Coke, I mean, are you guys wedded to owning your production assets and would you ever revisit maybe going back into the U.S. market at all?

Well, we, obviously, are watching what has transpired in the United States with interest. But I think that's Coke's decision, and we have total confidence, that the kind of moves they're going to make there will create value for them on a long-term basis. We got plenty to focus on right now, honestly, with Europe and any other things that we might want to think about doing that would drive shareowner value. I think in terms of North America, it would probably be inappropriate to make any kind of a comment about North America and CCE. Your specific question about manufacturing, I'd say we're pretty happy with the business model we have in Europe. I think if you look at the way it's worked for the last several years, it works extremely well. We had a pan-European supply chain, and we're one of the first Coke bottlers in fact to put in place a multi-country supply chain. It has served us extremely well, and so I'd say going forward, we'll continue to build on the success as part of our business model.

Okay. Great. And then just in terms of the repurchase, when will you guys start buying back that stock and how is it going to be financed?

Bill, we've been buying back stocks since January 1, as you saw on the release. We repurchased $300 million in Q1, and we will continue repurchasing during the course of the year. We have cash on the balance sheet and I think it's -- and we will be generating incremental free cash flow during the course of the year and as appropriate and as needed, we would go into the commercial markets to raise incremental debt as well.

Got you. Okay, that's helpful. And just in terms of pricing for the year. It's sort of the 2% that you had this quarter, is that probably the right level used for the balance of the year?

I think it's not a bad proxy. Clearly there could be some volatility issue go quarter, quarter-by-quarter versus prior year in promotional activity. But I think, directionally, that's probably a solid round number.

Our next question comes from John Faucher of JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: Just wondering if you could give us a little bit more color in terms of as we look at mapping out the Q2 guidance here in terms of sort of down could be down a little, could be down to sort of more single digits, or just a little bit more color there. And then, it sounds as if the volume environment is difficult. Can you talk about maybe some of the spending cadence with SG&A coming in lighter than expected at least we expected in the first quarter. Are we seeing some of that shift into the second quarter in terms of the investment to really get the category moving over the balance of the year. So just a little more color on the cadence particularly for Q2. Thanks.

John, Bill here. I'll take a shot at that. I think for incremental more color on the operating income, we kind of stepped fairly far beyond our normal level of guidance given the color that we gave. So I think flat to slightly down is what we see and what we communicate from an operating income perspective. From an operating expense perspective, we highlighted particularly in my script talking about all the things that affected the year-over-year impact that allowed us to have operating expense reduction of 5%. I think assuming that we'll be able to maintain and extrapolate that level in Q2, it's not realistic in some of those timing factors, we'll come back into Q2. And feel the headwinds too strong a phrase, but a little bit of a timing issue as we move into Q2. And we will gets most of the benefits from our Business Transformation Programs in 2013 in the back half of the year, so that will really start come into play in Q3 and not so much in Q2. So I think all those things take together even with some modest volume growth which still see operating income flat to potentially slightly down.

Our next question comes from Wendy Nicholson of Citi Research.

My first question has to do with going back to CAGNY when you talked about Aldi and Lidl being important new partners for you, I think in the Netherlands. And some people view that maybe as a precursor to an expanded relationship with them if you were going to buy Germany. But can you talk about how that relationship is progressing and whether the change in strategy or the lack of an outcome in Germany affects your relationship there at all?

Yes, Wendy, the relationship is progressing well. And you will probably remember we entered a deal last year for the first time in France, in Holland and in GB, and we are building on these relationships, of course, this year, increasing our volume with them. We also saw solid program with Lidl and this, I would say this customer are our strong contributor to our growth plan. And the relationship is both central and local, so we deal with the central buying organization in Germany, but it will not be affected by the fact that we will not be present in Germany.

And then just going back to your guidance for the year, sort of the tweaking down of the top line guidance from firmly mid-single digits to now low- to mid-single digits, is it fair to say that's not a market share issue, it's really just a category thing and just with the sort of sluggish volume start to the year that's the cause for the little tweak down?

Yes, I think that's a fair representation. It's the combination of pricing, volume, mix and category. We don't at all see it as a share issue. And again, it's a range there and it's a subtle change but a change that we thought was important to highlight at this juncture.

Our next question comes from Bonnie Herzog of Wells Fargo.

I'm guess on -- or John, you mentioned earlier this year that you expect core Coke brands should see positive growth in 2013, and driven by the double-digit growth you're seeing in Coke Zero with Coke Zero up only 3.5% this quarter and Cocoa brands down 2%, I guess I wanted to hear from you how achievable you think this goal still is? And then what other levers you have to pull to ensure positive growth for core Coke trademark going forward?

I'll ask Hubert to address that.

It's going to be a combination of new packing projections, especially in GB, we have a new package of 175 liter for the convenience channel. We are introducing a 1 liter for the My Coke range in France and we have the big, big never seen before promotion on the PET 500, which is Share a Coke. This will be massively supported by communication -- integrated communication from above the line to U.S. activities. And then regarding Coke Zero, we have a specific program to boost the brand. It goes through massive sampling, new communication campaign and pricing activities. So we are confident that Coke Zero will continue its growth trajectory, and that overall, we will deliver a growth for the my Coke franchise for the year 2013.

Our next question comes from Ian Shackleton of Nomura.

Two questions. Bill was implying that cost of goods sold could be looking a little bit better than you previously thought. I wonder if you could just give a bit more commentary on the moving parts there. And the second question was around GB with that just one on volume, I just wonder how much share you gained in Q1. It was clearly a very strongly outperformance against the market.

I'll give a little bit more color on the COGS. You are correct in your assessment. There has been some softening in commodities, which has been benefited our overall COGS environment. Also, note that at this point in the year, we're well over 75% hedged for the year on commodities, which would be similar to maybe slightly ahead of where we would normally be at this time. Also, remind you and everyone else that we do have a little bit of a negative drag on COGS from our packaging conversion in Norway. So with all that baked in, we now see COGS per case inflation for the full year in a range to 3% to 4%, I believe the last time we said, approximately 3.5% to 4%. And that includes about a 75-basis-point impact from the packaging conversion in Norway.

And then on GB, Hubert?

Ian, total combination of share gains in probably all of -- particularly all the segment of the market, was clearly the best performance on the Cola segment where we grew our share close to 5 points. And this was, in particular, driven by a very, very strong quarter for Coke Zero, by which we had it close to $0.5 million households in our penetration for this brand. Very strong and good activity along our Coke franchise in GB for this quarter.

Our next question comes from Mark Swartzberg of Stifel, Nicolaus. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: Two questions here, one on the commodity side and then also try to better understand the difference between the continent and GB. On the commodity side, Bill, can you talk a little bit about what you're seeing in the beet sugar market and how that might unfold as we move through the year? That was certainly, it has been a source of pressure in COGS this year versus last and different from what we've seen in others sweetener markets around the world. Could you just kind of give us some color on what's going on and I have one on the top line.

Sure. Well, if you look at our commodities and our COGS inflation for '13 and commodities more particularly, the majority of the inflation is being driven by sugar. That hasn't changed and it may be has gotten ever so slightly better but not meaningful. And the point to note is, while we do use beet sugar on the continent and we do use a lot of cane sugar in GB, it's all being managed by the EU common sugar regime. So it does not really a free market. It's got government intervention and the prices, it's kind it is what it is. So we don't really think there is much opportunity for upside versus our current forecast for sugar for 2013 given that regime and how it operates. I know there's a lot of movement in raw sugar. We do use raw sugar in Norway but that's 5% of our business. And the benefited from that there. But really has not impacted our European sugar cost meaningfully at all. And do not expect it to for '13. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: And as you're buying through that EU regime, is that kind of a pay-as-you-go situation or if you're kind of locking in a number at least the large portion of a number towards the end of a given year and then that becomes kind of the base of what you're paying for the following year?

Not to be difficult, Mark, but we really think our procurement practices are somewhat proprietary in a competitive advantage. So I would defer getting in to that level of granularity point. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: And then, Hubert, I don't know if this is a fair assessment because I'm wondering if you could help me understand if it is and talk about it a little bit more. What, I mean, specifically, it seems like these decisions to get a little promotion in GB and now that price gap are working in the sense that the volume and value share churns are starting to improve in that market. And yet, in France, we've seen there, at least on the continent with France being the largest, we've seen the kind of these delays in getting the pricing to the level you might have liked, and it sounds like just from kind of a company-wide perspective, you're saying a little less price growth for the year due to your outlook for the continent. Is it fair to say that you've kind of are looking to undertake on the continent with what's achieved some level of success over the last 3, 6 months in GB?

Well, first we are very pleased with the growth of GB in this first quarter. There are some common factors both in the continent and GB, whether it was one of that. Clearly, the macroeconomic challenge are there, too, probably affecting more clearly away from other segments, cafes or restaurants, but we see more encouraging potential for growth in the grocery and Home Channel. Having said that, in the case of France, the price approach was pretty similar and is pretty similar to GB as we planned already for it. But it's true that the customer negotiation took a bit more of time, were probably a bit more difficult, but we expect more normalized situation moving forward and we expect to be able to put in place our new product initiative and our new promotion calendar including the Share a Coke plan. So we don't see a divergence in our strategy between the continent and GB. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: And trends from a share perspective on the continent, can you give us some flavor for what they've been and where they're going in your view?

France, we have been getting share both in volume and value year-to-date at the end of March. Mark D. Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: On the continent?

Yes. And then it varies per country on the continent, but overall in the continent, we have been gaining share.

Our next question comes from Bryan Spillane of Bank of America.

Just a question about the 6% to 8% long term EBIT growth goal. I guess, when we set that, certainly, that the environment in Europe was different at that time and there was also the prospect of doing more M&A. And so, I guess, I wondered just why that still the right goal and maybe what the process would be to review that goal just in response to some of the changes that occurred since it was set. Any color on that would be helpful.

Bryan, I have to say, our long-term financial targets remain intact. We think 2012 was admittedly a challenging year. It was the wettest, coldest summer in 100 years for our territories. And on top of that, we have the issue of the French excise tax and the challenges that, that prevented, presented that in the marketplace. 2013, certainly from a weather standpoint, hasn't started off well. But the fact is as we look at the balance of 2013 and then ongoing 2014 and beyond, we have and we do revisit our financial targets from time to time, and we remain persuaded that they are intact, that 4% to 6% revenue growth, combined volume pricing in mix, is achievable. And you know candidly, if we get 4% to 6% revenue growth, then the idea of getting 6% to 8% operating income growth is also there. And I think the other piece that as we look to the future, I think, hopefully, there's going to be a little bit more modest increases that we'll see in cost of goods and that obviously helps us a little bit, too. So you put it all together, the bottom line is we remain very much fixed with those targets.

And fair to say, you feel good about is rough as it's been for the last 6 quarters or so, you just made pretty good investments behind you? The investment behind the brand, behind the equities that you have has remained pretty consistent, and so conditions get better that will set you up for improvement as the environment gets better.

Absolutely. We remain very much in sync with The Coca-Cola Company. We think the kind of marketing investments they are making have made them keep making are right. And frankly, we continue to believe we play in a expendable category. We got half of the per capita consumption broadly speaking throughout our territories that we have in the United States. And we continue to see it as a glass half full and very expendable. So, no, we don't see anything, which has caused us to question our value-creation strategy.

Our next question comes from Andrew Holland of SG.

A couple of times you referred to difficult customer negotiations in France. Could you enlarge on that a bit, and in particular, give us an idea of how much of your French business is affected by that. I take it what it means is effectively a delisting, am I right in thinking that or a delay of listing new products? Can you just tell us what exactly is going on, and preferably, with which retailer?

Yes, the fact is that we have now concluded the negotiation with almost all our customers. So it's not backwards and probably more towards 2012, if you talk about the listing. This year, it's more about accelerating the listing of new products and putting in place the right promotional activities a further months to come. So I think the difficult situation I was describing was more related to probably the back end of the year and the beginning of this year but we see a more normalized situations and the rain in the summer, again with the fact that majority of our customer.

Okay. So we can take it to whatever the difficulty was that is now behind you?

Yes, for most of it, the vast majority, yes.

And just coming back to the answer to Ian's question earlier on share in GB, you say you gained Cola share by about 5 percentage points. Can you say what your overall share is running at in the first quarter?

The overall share of the markets, you mean?

Yes, we'll look that up, and I'll try to give that to you either before the call is over or we'll call you up.

Are you hearing something? I can't hear anything.

Andrew?

I can hear you now. I couldn't hear you before.

I said, I'll try and look that up and give it to you before the call is over or either we'll call after the call is over.

Our question comes from Judy Hong of Goldman Sachs.

I just had a question about your energy drink performance in the first quarter. It looks like growth slowed down to about 4%. So just give us a little bit color there. If I look at the European Nielsen data, I think Monster is still growing very nicely, but some of the other brands within the Coke's portfolio seems to be declining. Is that a fair characterization or it's just -- I know it's a small part of your portfolio, but just love some color there.

Judy, as you mentioned, it's only 2% of our overall volume. It's fair to say that the growth is pushed and had been pushed in the last years more by Monster. The category has recently slowed down on the beginning of this quarter but we remained confident. We did have some new product introductions on other brands like burns and Relentless. So we have been shooting for growth in the Energy portfolio, but clearly as you said driven by Monster, which is the fastest growing work brands we are carrying today.

Okay. Thank you, and we'll come back to Bill to address the previous question.

So Andrew and everyone else, just to kind of highlight the question that was being asked, so if you look at Great Britain from an overall NARTD market perspective, our volume share is a little less than 30% and our value share is a little more than 30%. If you then drill down to Sparkling in Great Britain, our volume share would be a little less than 50%. Our value share would be a little more than 50%. And then if you look at Colas, the share goes up meaningfully and will be 70-plus percent. So hope that helps. That's year-to-date 2013 information.

Okay, let me say to all of you, thank you very much for joining us today. We appreciate your time and attention. And we hope you all have a terrific today. Thanks very much.

Ladies and gentlemen, this does conclude today's conference. You may all disconnect, and have a wonderful day.