Good day, and welcome to the Coca-Cola Enterprises' Fourth Quarter 2013 Conference Call. At the request of Coca-Cola Enterprises, this conference call 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 full year 2013 results and our outlook for 2014. 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 Nik Jhangiani, our CFO. Hubert Patricot, President of our European Group, is also with us on this call this morning. [Operator Instructions] Now I'll turn the call over to John Brock.

Thank you, Thor, and we thank each of you today for joining us on our call today. Before I begin to discuss the specifics of 2013 results, as well as our outlook going forward, I want to emphasize that at Coca-Cola Enterprises, we have one clear objective that drives our work every day: to deliver increasing value for our shareowners by driving consistent, long-term profitable growth. Throughout 2013, we again made significant progress towards that goal, returning more than 10% of our total market cap to shareowners, with the repurchase of approximately $1 billion of our shares and $213 million in total dividends. And we're not done. This week, our Board of Directors authorized the 25% increase in our dividend rate. This is the seventh consecutive year that we have increased this payout. In addition, we plan this year to repurchase approximately $800 million of our shares. Combining dividends and share repurchase, we expect another year of returning approximately 10% of our market cap to our shareowners. While we may choose to adjust these plans, should meaningful, value-building opportunities arise, our direction is clear. We are driven by an unwavering commitment to creating shareowner value. And although we're proud of this commitment, we acknowledge our core growth is not meeting our expectations, and we remain focused on improving our growth outlook. Now let's look at our results for 2013. Our comparable earnings per diluted share of $2.51 represents growth of 11%, including a currency translation benefit of about 2%. Despite the challenges we faced during the year, we also achieved net sales growth of 2% or 0.5% on a currency-neutral basis and comparable operating income growth of 3% or 1.5% on a comparable and currency-neutral basis. Full year volume is up slightly during the year, reflecting a mix of challenging…

Thank you, John. I want to welcome each of you to our call as we discuss our 2013 results and our outlook for 2014. Before I begin my review of the year, I'd like to make a couple of broader comments. Under the leadership of John and Bill, CCE has utilized operating growth, solid free cash flow and a strong balance sheet to consistently build value and return cash to shareowners. In my role as Chief Financial Officer, we will continue to maintain a full commitment to driving sustained value-creating growth. Now let's take a look at our 2013 results. For the fourth quarter, we achieved comparable earnings per diluted share of $0.54. Reported net sales grew 6% or 3.5% on a currency-neutral basis, and volume grew 2.5%. Volume in Continental Europe increased 2% and volume in Great Britain grew 2.5%. This volume increase reflects the benefits of our holiday promotions, solid execution, as well as our cycling soft volume growth in the same quarter a year ago. Fourth quarter net pricing per case declined 0.5%, cycling prior growth of 4%, while cost of sales per case increased 1%, lapping growth of 3.5% in the fourth quarter last year. Operating expenses were down 3%, reflecting the benefits of ongoing expense control. These figures are comparable and currency-neutral. The fourth quarter also benefited from 1 extra selling day when compared to the fourth quarter last year. For the full year, we reported earnings per diluted share of $2.44 or $2.51 on a comparable basis. This include the currency benefit of approximately $0.04 per share. Full year 2013 comparable operating income grew 3% or 1.5% on a comparable and currency-neutral basis. Reported net sales increased 2% or 0.5% on the currency-neutral basis. Net pricing per case for the full year was up…

[Operator Instructions] Our first question is from Caroline Levy of CLSA. Our next question is from Judy Hong of Goldman Sachs.

So obviously, 2013 was a challenging year just from a pricing perspective. So I was wondering if you can talk about the pricing environment in each of your key markets. And as you think about 2014 and focus on getting a little bit better pricing, can you just talk about your confidence level in achieving that and your strategy to really maintain volume while you're able to get that better pricing in your key markets?

Judy, I'll ask Hubert to take that one.

Judy, although the long-term approach in pricing is to expect, to maintain or improve our growth on operating margin -- and as you remember, in 2013, as we planned, we took a more modest approach to pricing in response to certain competitive and marketplace factors. Our comparable and currency-neutral pricing per case was flat for the full year of 2013. And regarding the back end of the year, it's important to note that while we expected some net pricing per case increase in the second half, determination of marketplace conditions, commercial activity and the strong prior year hurdle limited the increase, specifically, in the last quarter. So if we move forward and look at next year, we continue next year to expect our net sales growth to reflect a balanced approach with both volume and pricing growth. Additionally, we expect our pricing to cover cost of goods increase in 2014. We have just, as you know, entered our pricing conversations, first, in GB and France and Sweden this quarter. I'm pleased to report that we have closed deals in GB and Sweden, that's because conversations are never easy. However, as a category leader in each of our category, we are committed to delivering customer value, which, in turn, adds to our healthy category. And again, this is in place -- it was in place at the end of last year in Benelux and in the Netherlands. Again, our reasons to believe in this pricing realization are threefold. First, we can now implement rate increase. We have also new packaging initiatives, like the 1.75 liter replacing the 2 liter in GB. And we are focusing strongly our joint GB can, with a customer through the IC sales moving into 2014, and in particular, by the expansion of Cherry Coke.

Hubert, just following up on that and just a clarification. So on the pricing negotiation with your customers, you said that you've taken pricing in GB and Sweden. So any sort of surprises as you've had the conversations? And have you taken pricing in France yet?

So we took pricing in Sweden and GB, as you mentioned. We are negotiating, right now, in France. We clearly have focused covering our cost with our net price realizations. And as you know, this is generally concluded by the end of first quarter in France.

And any surprises as you've had these conversations with your retailers so far?

No, I would not talk about surprises. I think the good thing for us in this negotiation about value creation is that we have very strong marketing assets and plans this year, being, again, the renewal of Share-a-Coke and the FIFA World Cup. We are also growth in GB and France alone to have new pack like the 1.75 or the 1 liter. So I will not talk about surprise. Again, that the environment, as you know, is pretty tense and -- but so far, no surprise.

Our next question is from John Faucher of JPMorgan. Our next question is from Ian Shackleton of Nomura.

Just going about the Business Transformation Program. I just want to make sure what the excess of $40 million of cost related to, is it an extension of what was originally planned? And also, how should we think about the phasing? I think you have talked about it over 3 years. And I know you've never given this, but if there's any sort of thought about how much of this would actually fall ultimately from bottom line, that will be very useful.

Nik, could you address that?

As you know, we announced this program back in the third quarter of 2012, and it's essentially designed to increase the effectiveness of our operations. Firstly, I think, overall, the program is very much on track in allowing us to continue to invest in our business in areas such as digital, for instance, to improve our platform for long-term sustainable growth. I think as we are halfway through this program and we look through the various initiatives, the increase in our cost to approximately $240 million at this stage is really some of the activities that we had looked at have cost us a little more than what we have previously expected, as well as we probably expanded or enhanced the scope of them. And then accordingly, with that, we've also seen some increases in our benefits from $100 million that we have previously communicated to about $110 million. I think the focus continues to be the same, to be able to generate these savings, to be able to reinvest in the business and ultimately, be able to deliver on our growth targets.

Just to be clear, will all the benefits be through by 2015 now? Or it will be a longer timescale?

It will be through by the end of 2015.

And just one quick follow-up. You're talking about pricing ahead of COGS. Looking back to the call in December, I think you talked about 2% to 2.5% case on COGS, currency-neutral. Is that still the number we should be thinking about?

Yes. I mean, our pricing plans are very much in line to cover COGS, and we had talked about that range of 2% to 2.5% which still holds.

Our next question is from Nik Modi of RBC Capital Markets.

This is for Bill Kirk on behalf of Nick. Can you give us some detail on fourth quarter market share performance in Great Britain. It seems your primary competitor indicated that they gained share within colas. But looking at the numbers, and it looks like you've considerably outperformed them in overall Great Britain Sparkling. So can you give us some details, what's going on there?

Let me start with the overall view from Europe. We grew share both in value and volume, both for this last quarter and for this full year. If we zoom to GB, in the last quarter, we grew share on the colas, sparkling both in value and volume, too. And the same for the full year in GB.

Okay, that's perfect. And separately, you guys gave the full year number. But do you have a 4Q volume growth number for energy drinks and Monster within that?

Our energy portfolio continues to perform extremely well. We don't normally break out our portfolio by brands. I think our energy portfolio, per se, was -- how much -- can we get it?

Again, double-digit growth. The energy continues to be one of the fastest-growing segment in our industry. And while the full year's [indiscernible] shows, our debt growths are slower to beat, it's still enjoys a very healthy performance of 7% in value and 5.6% in volume. And we have outpaced the segment first in value and in volume, both for the full year and for the last quarter.

Our next question is from Bryan Spillane of the Bank of America Merrill Lynch.

Just to -- Nik, I just wanted to go back to, I think, Ian Shackleton's question related to COGS, inflation of 2% to 2.5%. We fielded quite a few questions, I guess, since the December call on that inflations figure and I mean, given especially, where sugar prices have gone and directionally, where they seem to be headed for '14, just still having a little difficulty just trying to understand why inflation would be 2% to 2.5%. Could you provide some perspective on kind of some of the key drivers that gets you to 2% to 2.5%? And maybe to the extent that you can just indicate maybe how flexible or changeable that number may or may not be?

Sure. So I guess, just to provide a little more color, I mean, I think you've got to look at our COGS holistically and not just focus in on the commodity space. And to your point, I think while commodities have pulled back during the year, as you said on sugar and notably, in PET as well, however, the true measure is not really the spot rate. And we do have to look at our prior year hedge position versus our current year hedge positions. And so as you look at that, we've just got to be cognizant of that. I think when you look at the commodities piece, too, half of that is conversion costs and half of that is really raw materials. So there is elements of inflation on the conversion costs as you would expect. I think if you look broader beyond commodities, we do have an incidence pricing model with The Coca-Cola Company, which impacts our COGS as well, along with some non-commodity costs and taxes as well. And then obviously, mix is another element. [indiscernible] plays a role as well. And notably, that has a bit of a negative impact based on the planned packaging change that we had in Norway from refillable to recyclable and nonrefillable. And then, of course, we've also got the approach and timing of our rollout in GB at the 1.75 liter that will impact our COGS, too. So there's various elements there that have an impact. I think we'll continue to manage that COGS number and agree, we'd like to see it come down as well. And we'll continue to keep you posted as we go through the balance of the year.

That's really helpful. Just -- so there -- it is -- there could be -- you could come in with a COGS inflation that's different than what you said. I guess, it's not completely fixed. Is that a way to understand that?

Well, I think if we look at what our coverage levels are, we're probably at about the same level as we were at the same time last year. So there is some open positions yet, that we will continue to look at and hopefully, those will be favorable. But as I said, we will continue to keep a close eye on that and keep you updated.

Okay, and let me just say thanks to all of you for joining us today. We really appreciate and we also know that the weather in New York has been somewhat challenging. So for those of you on the call, thank you very much. Have a good day, and operator, we'll sign off.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation, and have a wonderful day.