Coca-Cola Enterprises Inc. Long-Term Financing Policy

Introduction

In 2004, due to difficult market conditions in both North America and Europe, Coca-Cola Enterprises, Inc. was left with a full-years performance below their initial forecasts. Earning per common share on a similar basis reached $1.27, which was down 5 cents from the previous year, while comparable operating income was slightly down compared to the preceding year. However, they were able to achieve a free cash flow from operations less capital spending, of $669 million. These available funds were used primarily to reduce debt, thereby facilitating their goal of strengthening their balance sheet through continued debt reduction (Coca-Cola Enterprises Annual Report 2004, p. 2). Coca-Cola Enterprises Inc, (CCE), markets, distributes and produces bottled and canned beverage products for The Coca-Cola Company. According to CCE annual report as of 2005 for the 9 months that ended on 10/1/04, "revenues increased 6% to $13.75B and net income to Common decreased 6% to $514M. Revenues reflect improved North American & European pricing growth, innovations in brand extensions and new packaging. Higher interest expenses offset increased earnings."

Table A

Key Ratios & Statistics

Price & Volume

Recent Price $ 20.76

52 Week High $ 29.34

52 Week Low $ 18.45

Avg Daily Vol (Mil) 24.931

Beta 0.03

Share Related Items

Mkt. Cap. (Mil) $ 9,741.136

Shares Out (Mil) 469.226

Float (Mil) 239.400

Dividend Information

Yield % .77

Annual Dividend .16

Payout Ratio (TTM) % 11.53

Financial Strength

Quick Ratio (MRQ) .58

Current Ratio (MRQ) .99

LT Debt/Equity (MRQ) 2.07

Total Debt/Equity (MRQ) 2.19

Valuation Ratios

Price/Earnings (TTM) 15.20

Price/Sales (TTM) .54

Price/Book (MRQ) 1.92

Price/Cash Flow (TTM) N/A

Per Share Data

Earnings (TTM) $ 1.37

Sales (TTM) $ 38.44

Book Value (MRQ) $ 10.82

Cash Flow (TTM) $ 3.76

Cash (MRQ) $ .28

Mgmt Effectiveness

Return on Equity (TTM) 2.93

Return on Assets (TTM) 2.51

Return on Investment (TTM) 2.93

Profitability

Gross Margin (TTM) % 41.03

Operating Margin (TTM) % 8.59

Profit Margin (TTM) % 3.56

Mil = Millions MRQ = Most Recent Quarter

TTM = Trailing Twelve Months

Asterisk (*) indicates numbers are derived from Earnings Announcements

Pricing and volume data as of 01/20/2005

The following table provides a summary of Coca-Cola Enterprises, Inc. debt and credit facilities as of December 31, 2004 and 2003 (in millions):

At December 31,

2004

2003

Amounts available for borrowing:

Amounts available under committed domestic and international credit facilities $ 2,863 $ 3,302

Amounts available under public debt facilities: (A)

Shelf registration statement with the U.S. Securities and Exchange Commission 3,221 3,221

Euro medium-term note program 2,135 2,135

Canadian medium-term note program 1,664 1,542

Total amounts available under public debit facilities 7,020 6,898

Total amounts available $ 9,883 $ 10,200

(A) Amounts available under each of these public debt facilities and the related costs to borrow are subject to market conditions at the time of borrowing.

At December 31, 2004 and 2003, CCE had $209 million and $45 million, respectively, of short-term borrowings outstanding under these credit facilities. In August 2004, they established a $2.5 billion revolving credit facility with a syndicate of 24 banks. The facility combined four previously separate credit facilities into a single facility that matures in 2009. The facility serves as a backstop to their various commercial paper programs and for general corporate borrowing purposes. There were no borrowings outstanding under the facility as of December 31, 2004.

Coca-Cola Enterprises, Inc. satisfied seasonal working capital