Coca-Cola Enterprises Reports 10 Percent Comparable Cash Operating Profit Growth, 5 Percent Consolidated Volume Growth, and Earnings Per Share of 28 Cents in 1998

Business Wire, Jan 19, 1999

ATLANTA--(BUSINESS WIRE)--Jan. 19, 1999--

-- Cash operating profit exceeded $1.9 billion reflecting a

10 percent comparable increase in 1998.

-- Full-year 1998 consolidated constant territory volume grew

5 percent, with increases of more than 6 percent in North America

and 2 percent in the Company's European operations.

-- Total 1998 volume reached 3.6 billion unit cases on a reported

basis and 3.8 billion unit cases on a pro forma basis.

-- Net income per diluted common share was 28 cents in 1998,

excluding the 1998 United Kingdom tax rate change benefit.

Coca-Cola Enterprises (NYSE:CCE) today reported that 1998 cash operating profit increased to more than $1.9 billion, reflecting 10 percent comparable growth and 19 percent reported growth. Volume increases well ahead of industry rates in both the Company's North American and European markets combined with net revenues per case growth that offset higher cost of sales per case generated the 1998 comparable cash operating profit growth. Fourth-quarter cash operating profit increased to $438 million, up 15 percent on a reported basis and 17 percent after adjusting for common territories and fiscal periods.

"1998 was a challenging year from a competitive perspective. Despite this, we achieved our objective of 10 percent comparable cash operating profit growth through effective management of the volume, revenue, and cost aspects of our business," stated Henry A. Schimberg, president and chief executive officer of Coca-Cola Enterprises. "With the capital and infrastructure investments we made in 1998 and over the last several years, our strong brand portfolio, and our local market capabilities, we expect to accelerate our comparable cash operating profit growth rate to 12 percent in 1999."

In management's opinion, comparable cash operating profit growth represents one of the key indicators for measuring operating performance in the beverage bottling industry. Cash operating profit is defined as earnings before deducting interest, taxes, depreciation, amortization, and other nonoperating items. Comparable, or acquisition-adjusted, 1997 results include all material 1997 acquisitions as if the transactions occurred on January 1, 1997. Comparable 1998 cash operating profit excludes the Coke Southwest acquisition that was completed late in the second quarter of 1998. In addition, comparable fourth-quarter cash operating profit has been adjusted for the 4 fewer selling days in the fourth quarter of 1998. Currency translations did not have a material impact on comparable full-year or fourth-quarter 1998 cash operating profit growth.

In 1998 net income applicable to common share owners was $141 million, or 35 cents per diluted common share, including the third-quarter 1998 one-time United Kingdom tax rate change benefit of $29 million. Excluding the rate change, full-year 1998 net income was 28 cents per diluted common share. The adjusted 1998 results compare to adjusted 1997 results of 29 cents per diluted common share, excluding a 1997 bond redemption charge and a 1997 tax rate change benefit. In the fourth quarter of 1998, the Company reported a net loss per share of 9 cents compared to the reported fourth-quarter 1997 net loss of 5 cents per share. As expected, 1998 net income was below 1997 levels reflecting the short-term dilution from the Company's accelerated capital spending plans and infrastructure investment in underdeveloped acquisition territories.

Operating Results

Full-year 1998 net operating revenues increased 19 percent to more than $13.4 billion on 3.6 billion unit cases (192 oz bottle, can, and fountain cases) reflecting the impact of the Company's significant 1997 and 1998 acquisitions combined with solid growth from existing operations. On a proforma basis, including all 1998 and 1999 acquisitions as if they were completed on January 1, 1998, the Company's volume was approximately 3.8 billion unit cases. Fourth-quarter 1998 net operating revenues of $3.2 billion were 6 percent above fourth-quarter 1997 results as 4 fewer selling days more than offset the impact of 1998 acquisitions. In both fourth-quarter and full-year 1998, North American operations represented 75 percent of total revenues while European territories generated the remaining 25 percent.

In 1998 consolidated physical case bottle and can volume increased 5 percent above constant territory 1997 results. The 1998 consolidated results represented more than 6 percent volume growth from North America and 2 percent volume growth in Europe. Fourth-quarter 1998 constant territory and common fiscal period consolidated physical case bottle and can volume increased 5 percent. Fourth-quarter 1998 consolidated volume growth reflected 7 percent growth in North America with European volume essentially equal to fourth-quarter 1997 levels.

Consolidated 1998 volume growth was led by strong growth from Coca-Cola classic, diet Coke/Coke light, and Sprite, as well as the Company's noncarbonated brands. Sprite demonstrated double-digit growth for the fifth consecutive year. The Company's 1998 European volume performance was affected by the unseasonably cold and rainy weather experienced during most of the key selling months in the spring, summer, and fall. In addition, the decision to de-emphasize certain brands and discontinue certain packages in Great Britain reduced the Company's 1998 volume growth in Europe by approximately 1 percentage point.