Thor Erickson - John Franklin Brock - Chairman, Chief Executive Officer, Member of Executive Committee and Member of Corporate Responsibility & Sustainability Committee Manik H. Jhangiani - Chief Financial Officer and Senior Vice President Hubert Patricot - Executive Vice President and President of the European Group William W. Douglas - Executive Vice President of Supply Chain

John A. Faucher - JP Morgan Chase & Co, Research Division Bonnie Herzog - Wells Fargo Securities, LLC, Research Division Ian Shackleton - Nomura Securities Co. Ltd., Research Division Bryan D. Spillane - BofA Merrill Lynch, Research Division Nik Modi - RBC Capital Markets, LLC, Research Division William Schmitz - Deutsche Bank AG, Research Division Judy E. Hong - Goldman Sachs Group Inc., Research Division Stephen Powers - UBS Investment Bank, Research Division Caroline S. Levy - CLSA Limited, Research Division Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division Mark D. Swartzberg - Stifel, Nicolaus & Company, Incorporated, Research Division Robert E. Ottenstein - ISI Group Inc., Research Division Kevin M. Grundy - Jefferies LLC, Research Division

Good day, and welcome to the Coca-Cola Enterprises Second Quarter 2014 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. We appreciate you joining us today to discuss our second quarter 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 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'll turn the call over to John Brock.

Thanks, Thor. And we thank each of you for joining us. We are in our London office, today, following our board meeting earlier this week. As you've seen in our news release this morning, our results reflect volume growth of 3.5%, including 2% growth in Great Britain. However, our business continues to face the ongoing effects of challenging operating conditions, including macroeconomic weakness, competitive and marketplace pressures in a dynamic customer landscape. Clarity of the impact of these factors has not abated, and we continue to manage each segment of our business and adapt our plans to drive value. Our future growth requires continued diligence and flexibility, for example, we are adapting our 2014 plans to counter the challenging business environment and to take advantage of lower than expected commodity cost. Given these operating conditions, the results of our second quarter, and our outlook for the remainder of the year, we have affirmed our full year 2014 guidance. To succeed, it is essential that we realize the benefits of our solid marketing calendar, our new packages and products and our ongoing initiatives to operate more effectively and efficiently. Through our proven ability to manage each lever of our business, and with the commitment of our people to succeed in the marketplace, we will continue to focus on driving increasing shareowner value. Now let's look at our most recent results. Second quarter comparable earnings per share totaled $0.90, including a currency benefit of $0.06. Net sales increased 2.5% and operating income grew 2%, both on a comparable and currency-neutral basis. Our total volume for the quarter increased 3.5%. On a territory basis, volume in Great Britain grew 2%, and volume in continental Europe increased 4%. It's also important to note that, while our net pricing per case was flat, cost of…

Thank you, John. And we appreciate each of you taking the time to be with us. Today, as I discuss the results of the quarter and our outlook for the remainder of 2014. On a reported basis, second quarter earnings per diluted share were $0.78 or $0.90 on a comparable basis, up from $0.77 in the same quarter a year ago. Currency translation had a beneficial impact of $0.06 per share compared to prior year results. Net sales were $2.3 billion, an increase of 2.5% on a currency-neutral basis. This reflects, flat net pricing per case with volume growth of 3.5%. Also we benefited from a decline of 1% in our cost per sales per case. For the quarter, comparable and currency-neutral operating expenses increased 6%, reflecting the operational impact of our volume growth and the timing of current and prior expenses, driven in part, by planned promotional activity. Comparable operating income was $341 million, up 2% on a currency-neutral basis. Now let's take a look at our overall 2014 full year guidance. We continue to expect growth in earnings per diluted share of approximately 10%, net sales in a low single-digit range, and operating income in a mid single-digit range. This guidance is comparable and currency-neutral. Based on recent rates, currency translation would benefit full year 2014 earnings per share by slightly more than 5%. We continue to expect 2014 free cash flow of approximately $650 million, with capital expenditures of approximately $350 million. Weighted average cost of debt is expected to be approximately 3%, and the comparable effective tax rate for 2014 is expected to be in a range of 26% to 28%. So, let me add a couple of more detailed comments about this outlook for 2014. First, let's look at our cost for sales and pricing.…

[Operator Instructions] Our first question is from John Faucher of JP Morgan. John A. Faucher - JP Morgan Chase & Co, Research Division: I want to talk a little bit about the promotional environment in GB, and the transition over to the smaller package. Are you capable of hitting the absolute lower price points that you wanted to hit on that package? Were the retailers cooperating with that strategy? And then, what's the response you're seeing on the competitor standpoint? Have you've seen that sort of less than a little bit, as your volume trends have come back, has that been a sort of a more rational environment in GB?

Okay. Hubert, would you like to answer that one?

Yes, John. As you know during the first quarter in GB, we transitioned from the 2-liter straight forward to the 1.75-liter contour package. So this we kind of trademark brands, and this new size and shape is part of a larger plan to offer a larger repertoire of easy packs in GB, encompassing the 1-liter, the 1.25-liter and the multipack 1.5-liter. We think this is a good point of differentiation from competitions. And it provides to your question more opportunity within our, overall, price pack architecture. So the package has been priced the way we wanted to be on shelf at 1.85 in GB and it, again, gives us some opportunity to be in promotional activities at 2 for 2, or 3 for 3. So we've been quite in line with what we wanted by competition, at the time of releasing of this multipack. So I see the phase of transition, in some of shopper behaviors. And as we said in Q1, it has also been the case in Q2. We've seen some heightened promotional activity from competition this quarter. And in addition, the challenging operational conditions affecting our customer remains, which creates some marketplace pressure to stretch both customer margin and consumer spending. But we know that we have the right repertoire of pack, and we have, again, building on the more favorable cost of goods. We were able to reinforce our promotional activity of contour. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. So if I can just follow-up on that very quickly then, so it sounds as though, the retailers, if there is a problem, it's not a retailer problem. It is more competitive, and then consumer is getting used to the new choice, the retailers are on board with the strategy?

The retailers, as you know, are very competitive right now in GB. You see some events affecting this retailers, but yes.

Our next question is from Bonnie Herzog of Wells Fargo.

I just had a little bit of a follow-on question regarding, John's. Just maybe, could you give us a little more color on your mix versus price in the quarter, given your flat net pricing per case. And then as it relates to the smaller packages that you were just talking about in Great Britain, and I'm trying to think through the impact that could have had on your net pricing per case. I guess, I thought maybe it could be a little bit better, so could you touch on that. And then may be more color on your net pricing during the quarter, in your various markets, that would be very helpful?

Okay, Hubert?

Yes. As we said at the beginning of the year, our plan is to cover our cost of goods with pricing, which we are doing, and we continue to do. On your more specific question of price and mix, they are very different variables playing in there. You know also that we're launching and this year here into smaller packs, which are a bit dilutive in term of margin like the 250ml pack, something like that. But overall, depends some on the customer mix, the mix we're slightly negative, so against the rate on this quarter.

Do you want to comment on the other markets? And your...

And it's a bit general phenomena, I would say in Europe on this quarter.

Our next question is from Ian Shackleton of Nomura.

My question was directly on the Coca-Cola, Coca-Cola Light product. And just, really, a few questions. First, why GB in Sweden not the other markets? And secondly, what's going to be the formulation of the product? And thirdly, even how do you see that reacting in the market? I mean, what is the competition for that? Is the risk of cannibalization within your own portfolio?

Well, in terms of market that's been a jointly agreed plan with The Coca-Cola Company. Our teams have been hard at work doing consumer research. I would have taken a look at what happened in the first markets in South America. We have reformulated the product. And I -- we think it's a much stronger product to be in the market. And it was a joint decision on the part of our teams that Great Britain and Sweden were the right and most appropriate places for the initial launch of Coca-Cola Life in Europe. The product we think is a particularly good one, exciting one, it offers the taste of Coke, regular Coke with 1/3 fewer calories and is naturally sweetened with sugar, as well as with stevia. And we think it'll appeal to those people, who want the taste of a Coca-Cola with 1/3 fewer calories. So that's basically the premise. It's based on outstanding consumer research, and again a joint decision on the part of us and the Coca-Cola Company.

Thanks, John. And again...

And Ian, regarding the cannibalization, we're looking under the same assumption that Argentina and Chile at, which will -- there will be some cannibalization first for Diet Coke and consumer and coke, but net-net, it will be a positive for our business.

And just going back, John, you talked about the initial launch in GB and Sweden that seems -- suggests that you do plan to roll that -- across the other markets at some stage?

We haven't said anything about that, but I think that's a reasonable assumption. At some point, we'd do that, yes.

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

Just 2 questions related to the volume. First, just a clarification, when you report the volumes, is it equivalent case volumes, I mean, I guess, what I was driving at with the smaller pack sizes, even though you had volume growth, would it have been greater on an equivalent basis, or like the number of units shipped, or are you reporting volume is just units shipped?

We always report, Bryan, volume in terms of physical cases, PCE cases, and so we do not calculate equivalent cases.

Okay. And then, just -- I guess, a more broader question just in terms of how volumes have come back nicely in the quarter and any read on how much of that improvement in volume was just that you've got more competitive price points in the market, and how much of it is been the result of just you're merchandising some of the new product activity. And just kind of driving at, some more of the sustainability of those -- of the volume, do you feel like, it was more of the merchandising and product, or do you think the price points were the main driver?

I'd ask Hubert to give a little more color on it, but I'll tell you, when we have volume growth like we did this quarter, which we're obviously pleased with, it is a combination of everything working. We have a lot of levers in the business that we can choose to play. And when we see this kind of volume growth, again, which is very encouraging, it's because we have a whole host of things working right for us, but would you like to add a little commentary there?

Obviously, we're pleased with the growth of 3.5, but remember, we're cycling a minus 2 points of last year, so it was a easier count. The growth has been a combination of activities in the market, and we have the World Cup, as you remember. And John mentioned that most of our team have done well. So basically, till the end of the World Cup, we have been active in placing stalls. And we know it's one of the best, it's not the best asset we now in some of marketing activation. And then to your point, yes, as we said, leveraging the better cost of goods, recycling, reinforcing in order to use our promotional activities coming with the right price point to generate growth.

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

So just 2 quick questions for me, curious on the Diet U.S. portfolio, and how it's faired in -- just kind of get at any of the concerns on artificial sweeteners happening in the U.S. has broadly leaked into Europe? And then the second question is, from a consumer perspective, as you have done work on Coke Life, it doesn't look like stevia, sweetener products have really carried so well. So I'm just curious, from your consumer look, what's that telling you why this particular product could be a little bit different?

Bill, do you want to talk about our Diet portfolio?

I think your first question was about the impact of artificial sweeteners and some reservations. We don't see that again in this quarter. So a no calorie portfolio rule this quarter, close to 5%, strongly driven again by Coke Zero at 14%. So this is still a good growth engine for us. I think your second question was about Coke Life. As we said, it's a different formulae that no wonder was used in Argentina and Chile. This product has been tested and tested remarkably well with British consumer, that's why we are pretty encouraged. And this has been very well welcomed, also by our customer in GB. And we have relatively good expectations for the launch. It will hit the market for back-to-school, early September in GB.

Our next question is from Bill Schmitz of Deutsche Bank.

Can you talk about the sustainability of the gross margin upside, so obviously, a lot of it's modestly inflationary to which means private label, public it's a little bit more bold and it looks like you guys are going to respond, so maybe how much FX helped on the gross margin side, and then, if you still think that there's gross margin upside into the back half of the year, and then I have a follow-up?

Again, I'll ask Nik to address that.

Yes, So I think as we kind of said, if we look at some of our margin expansion at the gross profit level, you clearly can see that we had a favorable COGS environment, where -- guiding towards more of a flat cost for the full year. So I wouldn't expect margin expansion at that rate for the full year, but you will see some margin expansion as we have indicated that our price per case will be ahead of our COGS per case. So you will see some expansion there at the gross level, but not at the level of what we've seen for Q2. And then, if you look at the operating margin perspective, keep in mind, we have indicated that some of the growth is more back half related, some of the timing of our expenses, et cetera, and some of also the benefits from our renewed program. So I think, from that perspective, you'd expect that to kind of even out through the course of the year. So hopefully that helps.

Yes, very helpful. And then, just a question, there is a lot of hand-wringing right now about the incident rate, and it seems like without much pricing the incidence rate should be hugely dramatic. So can you maybe comment about why your incident rate won't go up as it has gone up for some of the other bottlers in your region, and then maybe what your kind of outlook is on that metric?

Well, we have an agreement, which was memorialized at the time of the transaction, some 4 years ago, with distillers in place and is working just fine. So we don't anticipate any changes to it. We recognize that it does expire at the end of 2015, and we in the Coca-Cola Company will -- I'm sure have appropriate discussions at the right time to make sure that we get something put in place for the future.

Our next question is from Judy Hong of Goldman Sachs.

First, just in terms of your volume performance, your sparkling beverage volume was very strong, but if I look at the still portfolio, it was a little bit softer, as well as your energy portfolio. So maybe, if you could just comment on the performance within your still portfolio and within energy kind of footprint versus Monster, what's happening with the category, and some of the brand performance?

Okay. Hubert?

Yes. There are some valuations in our sweet portfolio. We carry quite a few brands there. Whatever we're at in our portfolio, as is a segment of water, we had some fading in our juice still drinks, which negatively impacted the quarter. But overall, we're -- we think we're on track with our plans. Regarding energy, energy continues to be one of the fastest-growing segment within the category. And year-to-date, June the category is up in value and volume close to 7%. Within the category, we continued to grow share as we outpace the segment, both in value, we were up 9.5% end volume. Having said that, the quarter was only up to 3%, this was driven by some factors, including, mainly, some promotional timing this quarter, and in front still the impact was a loading we had with our major customer in advance of the tax increase. Looking forward, we still see the energy category as an important growth category, able to grow double-digit, and we're -- and we'll activate our multi-brand portfolio, in which Monster is a key player for us.

And Judy, just one other point I would add, if you look at our stills, we did exit the Ocean Spray business in GB this quarter. So you'll ask me from a comparability perspective, you'd see that impact us for the next 3 quarters, and then we will get back, hopefully, actually as of this quarter next year, back on track from a comparability factor.

Okay. And then, next just -- in terms of the capital allocations, so the buyback, pace of the buyback this year seems to be coming in at a faster pace than the $800 million run rate for the full year that you've guided to. So I'm just curious, if this is -- if there is any thought to, perhaps, levering up the balance sheet a little bit more than your targeted range to be more aggressive in buyback, or just looking at maybe your other opportunities, whether it's M&A or other use of cash?

So Judy, definitely not looking to lever up faster than what we have communicated. So still -- we're still targeting to get towards the 2.75, but nothing faster. And we -- I would say there's nothing in the pipe that we would talk about in terms of M&A or anything else. But -- and then, typically, we don't really get into more details around the timing, but we remain committed to doing the $800 million for this year, and again, getting to our mid-point target leverage ratio of 2.75x.

Our next question is from Steve Powers of UBS.

Maybe just pushing a little bit on that same theme, you're about -- As you say, you're about 2/3 of the way through the buyback plan for 2014, you've exited Q2 with a pretty healthy cash balance, it seems like the vast majority of free cash flow is going to come in the second half. So what's held you and the board back from just being a little bit more aggressive with cash return as you look out over the balance of '14, is there plan net debt repayment is just conservatism, any other factor we should be -- just thinking how does we think about, how you are deploying that capital?

No. I mean, honestly, there is, really, nothing else to think about. And I would just say, we've always indicated steady as she goes, we have given some guidance around the $800 million. Yes, it's a little more front weighted. But I wouldn't read anything into it. We're still trying to get towards our target ratio. We've always talked about the fact that the free cash flow will continue to improve and will convert more of that free cash flow -- more of our net income to free cash flow. So that's what you're starting to see and that's a great thing, and we're pleased with that.

Okay. Was there any reason why receivable and payable days were up significantly in this Q2 versus similar points in past years, just -- is it just timing, or is there anything specific there?

Just timing, I would say to you on the receivable side, keep in mind, we had a strong volume number. And if you look at it from an angle of what's driving that, a lot of it came through because of some of the World Cup activations, as well. And then, from a payables side, we've talked a little bit around some of the work that we're doing on a working capital perspective, in terms of getting some of our payment terms aligned, et cetera. So hopefully, you'll continue to see some improvements there and receivable-wise best timing.

Okay, great. If I could just squeeze one little other housekeeping one, and on the higher SG&A, this quarter Nik, you cited the volume growth and the higher AMP as the main drivers, and that makes sense. Is there just -- I'm just curious is the OpEx trend absent of those 2 factors, was there anything else contributing to...

No, it's literally just those 2, and you will see that being a little less weighted in the second half, but key on the promotional side.

Our next question is from Caroline Levy of CLSA.

Just a question about on-premise versus off-premise, if you could describe, whether there has been any improvement on on-premise around Europe and the U.K.?

Yes, Caroline. It's fair to say that, also it's too premature to say that the situation has strongly improved, but we see some improvement in most of our markets, with some bucket of growth is now back on the on-premise activities, which is good news, clearly, for us and for the industry.

On a more number specific question, can you just clarify, did you say that operating income growth to operating margins would be stronger in the second than the first half?

Operating income growth would be stronger in the second half, as we indicated that would be more back half weighted. From a margins perspective, we actually guided towards saying from a gross margin perspective, you would expect that to moderate some for the second half of the year.

And is that guidance ex currency?

Correct. Yes, that's currency-neutral.

Okay. And then, just on the waterside, the smartwater launch, what determined the timing of that, and if you could just talk about your water portfolio, in general, and how that's doing?

Well, our water portfolio, as you know, is fairly modest. We do Schweppes Abbey Well, which is focused on immediate consumption. In GB and then we have an excellent brand in Belgium called Chaudfontaine. We've been very careful about our strategy for waters because as you well know, it's a very significant part of the total NARTD business in Europe, but it's profitability is pretty limited. So we've been careful about what we've done in water. And again, it's been a very clear and thoughtful decision that we and the Coca-Cola Company have made around the launch of smartwater. We are facing it very much on, first of all, the very strong results that we've had with that brand in the United States. And then, secondly, the consumer research that been done here, which indicates that British consumers understand it, they appreciate it and are excited about it. We've also presented it to our customers and even though the water category in Great Britain has lots of entries. They're very excited about it too. So -- and that's really, what it's all about. The whole concept here is to enter the category with a strong brand, which has got some proven success behind it, and which clearly doesn't play in the commodity end of the business, but it is in the higher end of the business, particularly, where again, it's mainly focused on immediate consumption.

And John, just the fact that...

And it is a Springwater here in the GB.

I get, Nik, made a point here, obviously, in the GB here, it is a -- it uses the technology, which we use in the United States, but importantly, for GB and the approach that makes the most sense here, it is a spring water.

Okay, that was -- that's what I was wondering about given the last issue. And then, just finally, I'm sorry about that fire alarm here, but on Coke Life it is interesting that you're launching it in Europe, it's not being launched in the U.S. where the diets are really having the biggest problems. So what made you decide, despite the Diet portfolio being good, if you wanted to add Coke Life?

As I said earlier, it was a joint decision between us and the Coca-Cola Company. We felt like it was an appropriate time and place to consider it. We did the consumer research. It's gone over extremely well. We've introduced it with customers. It's gone extremely well there. Frankly, they all think it taste like regular coke, which is phenomenal. That's the whole concept. And so it was a joint decision, but we're not in a position, I think to comment on the United States, obviously, that's a separate decision.

I'm sorry, just a follow-up on that last one, is that -- my understanding is the U.K. parliament; is looking at limiting the amount of sweetener or sugar that can be added to various packaged beverages and food products, was that behind the decision at all, are you aware of anything going on there?

We certainly remain very vigilant and carefully aware of everything that's going on in the regulatory arena throughout Europe. And we're certainly aware of some of the things that are taking place in Great Britain. And obviously, we're concerned about -- we and the Coca-Cola Company are concerned about some of the misinformation, and some of the misdirection that is out there around sugar and very singularly some people singling out the soft drink category as culprits, which is completely inappropriate. So we are -- and Hubert is, of course, the President of UNESDA, where we have a very concerted effort around that. You might want to add a little bit of perspective to it?

Yes. I think, Caroline, it's fair to say that it's part also of our efforts to be a good citizen in the world of food and beverage. It is enlarging our portfolio with a new product, which has 1/3 less calories, naturally sweetened, and it's a bit like what we're doing with the small cans, offering more choice to the customer and to the shopper. And this has been, frankly, well received. The news about Coke Life has been well received by the British authorities as a testament of our -- I would say, yes, we're again, lots of choices for the customer in GB. And as we speak, we're also acting very strongly in active lifestyle, today there is a joint celebration with the Mayor of London, about the -- activating the park in the City of London. So yes, we're acting in this area.

Our next question is from Ali Dibadj of Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Just a couple of things. One is given the solid volume number you saw this quarter, would you offer us a better sense of the price versus volume growth for the remainder of the year, given the heavy promos and World Cup that we're seeing so far, both overall, and for the U.K., and especially, I guess, given the tougher volume comps?

Yes, I think what we can say is, as we look for the balance of the year that what we've said, which is -- we basically affirmed our guidance. You're absolutely, right. That -- we had some really spectacular results in July of last year, the weather was outstanding. And so we know we've got some challenging comps to go up against. But we think, we also have the right programs in place, promotional programs and particularly, Share-a-Coke, which is really breaking just as World Cup winds down Share-a-Coke is rolling in. And so we've got some -- we think very solid programs in place. So I think that's probably, about as much as we could say, on how that goes. It's very difficult, I think as you heard us say, to talk about how we fine tune the levers between pricing, volume and mix, they all contribute to our revenue growth. And we have to be in a position to fine tune those, as we go along, and you can assume we'll do that in the second half of the year. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So you can't give us a sense of more price less volume contributing to the back half?

No. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Then so separate question, longer-term, the 1.75ml pack size shift, trying to get the right package architecture, where are you on that journey? So are you almost there, I mean, I don't know if a baseball analogy is appropriate, but are you -- what inning are you in, or how much further do you have to go to get to where you think you have the right pack sizes for your strategy going forward? Are you at Mexico levels, or U.S. levels, just gives us a sense of that and, perhaps also, as that roles through overtime, what the impact might be conceptually, on margin mix and price mix?

I think for the introduction of the 1.75ml, we are there. The package has been listed, where we wanted it to be. In term of repertoire is still work-in-progress. So as we say, we want use the 1-liter for recruitment, we want to use the 1.25 cold for what we call imminent consumption. And then we want, which is not a given in GB compared to the Continent, as more purchase and more transactions with multi packs, which again is something very common in Belgium and France, but having to purchase the multi pack is more new news in GB. So and this is still work-in-progress, both with the customer, in terms of promoting more multi pack as opposed to single bottle pricing, as well as a shopper in GB. So that's why, I would say, yes, we have not done the transition towards the 1.75ml, but if you look at globality, which is clearly the name of the game of our package repertoire in GB. It's still work-in-progress. And clearly, to you point of sales, the idea at the end of the day is to build more value for our customers, responding to more consumer need, being small baskets, as well as lot of shoppers with large quantities.

Our next question is from Mark Swartzberg of Stifel, Nicolaus. Mark D. Swartzberg - Stifel, Nicolaus & Company, Incorporated, Research Division: I guess a couple of questions on the environment, generally from a consumer macro perspective. And the first is, when you look at Great Britain, it seems like, both you and your largest competitor had a sequentially better quarter. And as Mike said, that might imply the environment really is getting better, and there is an opportunity to get a little more discipline around pricing there than we've seen, is that a fair interpretation, what do you think on that about that line of thinking? And then, the second question is, just when you look at Great Britain and then compare it to France, obviously, links but different, nonetheless, could you just give us a little flavor for what you think are kind of important differences in those consumer environments?

Let me make a macro comment, because you talked about the environment. I think in Great Britain, it is fair to say on a macroeconomic environment basis, things are looking a little better, although, I think, shopper behavior and consumer apprehension remains pretty strong. And all you have to do is look at some of the challenges, some of our major customers were having, and I think you can get some sense of some of the marketplace challenges that are going on in Great Britain. So we're kind of guardedly optimistic on a really macro basis here, as we look to the future. Because of the modestly improving, overall, set of macroeconomics. We'd like to think that's going to translate into some improving consumer behavior overtime. I would say in terms of France, there's not much hope, so far on the improvement in macroeconomics. It remains very much -- at pretty much status quo situation. In terms of the -- our own individual category dynamics and marketplace environment, Hubert you can comment on that.

Yes, As John said -- especially, in GB, the economic perspectives are much better. However, it's sad to say that, it has not completed yet in improvement -- significant improvement in consumer spending. The arbitrage is not so much in favor on food and beverage so far. But still, we can be with you, and be more optimistic for the months to come. Having said that, some of the behaviors acquired by the shoppers during the recession are, probably, here to stay. The growth of digital, we think it's a fact. And for most of our customers, we're investing now a lot of their resource in digital shopping, and we want also to lead in this area, and we think it is here to stay. The good news that we found is that the people are shopping, both in store and on Internet, are buying more of our product. So this is a positive trend. And this is true, it's not very significantly different from France and in GB. Talking about France, as John said, we're really pleased with, where we are today, which is that we have resumed our joint value creation trajectory with the retailers in France, despite the very difficult -- still very difficult economic environment. So yes, there are some proof of improvements, but so far, we really need to, also be investing in promotional activities in innovations to capture the interest of other shoppers. Mark D. Swartzberg - Stifel, Nicolaus & Company, Incorporated, Research Division: That's great. Can I make a quick follow-up on France because that -- it's a little early to be talking about the plan for '15 for France, but you're kind of back on track, if you will, in terms of working with your retail partners in France to drive category growth, and drive your own share performance. Do you get the sense that regardless of the macro environment -- in the absence of the macro environment improving in that particular country, that, that kind of behavior, them giving you more space, more attention, more promotion, the things that cause velocity to go up, do you get the sense or that's really in place to work beyond the balance of the year?

Well, as you know, France has been, historically, our growth engine. And we are with the excess pack derail a bit -- our relationship as we put it, we are back on track in a tough environment. So yes, we're clearly more optimistic moving in the months to come. However, knowing quite well, the French trade too, negotiation -- yearly negotiations are always a tricky point. But overall, I think we're very encouraged by what we see in the market, they have better margin with our category. They see the potential for growth for our category. They're pleased with the new product launch, we had this year, which is Finley. But we see all the conditions out there, to perpetuate or to continue on this positive trend, that has trend, but as you see it's a fragile environment.

Our next question is from Robert Ottenstein of ISI Group.

I know this is a little bit tricky, but if you take into account the impact of the World Cup, timing of holidays, weather comps, I mean, what do you feel you're kind of real volume growth was in the quarter?

Really, very tricky to answer, because again, and keep in mind, as you better said, we're also cycling much easier comp this quarter. We did have the impact of World Cup and that is always a very big property for us. So very difficult to really break that down. The good news is obviously, we saw a solid growth, we're pleased with that. And we've guided and reaffirmed guidance for the full year.

But in general, is it fair to say, most of the impact would have been on the positive side, and so a more ongoing, volume was more like a 1% to 2%, is that fair?

I don't think there is any way we can dissect it that well. I mean, as you know we in the Coca-Cola Company are all about big event marketing. And as you heard us say the World Cup was significant, but and the Olympics is significant, the Euro Cup will be significant, but it's impossible to break those apart. And again I think the other thing is, certainly the weather, a year ago, in the second quarter was really, really miserable. It was the worst weather quarter we've had in some time and, of course, the next quarter was better. So I think it's difficult to break it apart. We're just pleased. We had a solid quarter, but I don't know of any way to, really, say what the run rate is. We're just pleased with the results we had.

No, no. I appreciate that. Can you give us any more color on France, in terms of your volume trends and the general competitive activity and environment in France, now?

As France was in line with what we've said about the continent, but saw 12% volume growth. So it's really satisfactory for us. Competition activity is, yes. But nothing really to report, I mean, we have pretty rational pricing in the French market in term of competitions with some low and highs, but nothing really particular to report. So again, and the category is growing both in volume and value.

Okay. Operator, we have time for one more question.

Our last question is from Kevin Grundy of Jefferies.

Just quickly back to capital allocation, your business throws off a ton of cash, you guys have done a tremendous job of returning cash to shareholders, but now you're also increasing the dividend by a rate higher than net earnings growth. I'm just trying to get a sense of where that potentially goes over time, as we're thinking about modeling the buyback and understanding these are board decisions and so forth? What would potentially be the pace of the increase in dividend, where does the payout ratio go overtime with the group probably, about in the 45% range, and if my math is right, you guys probably land somewhere in the 33% range or so this year, so any commentary there would help from a modeling perspective?

Sure, I mean, you're right. We're sort of looking at about a 34%, 35% current rate. And I mean, if you look at FMCG companies, you're looking at something as you rightfully said, mid-point 45%, so that 40% to 50% rate. I think our aspiration, again, would be overtime to get to the more competitive levels and to get within that band. So we'll doing that, again, steadily with again a combination continuing on using share repurchase and dividend in balance, maintaining our leverage, absent anything else, in terms of M&A activity as we've guided towards, and continuing to strongly focus on free cash flow generation. We talked about that a little bit, in terms of focusing on getting that conversion rate higher, and the things that we're doing to manage through that. Parts of that are also helping, in terms of the timing of some of our cash taxes versus our book taxes, as well as some of the timing of restructurings, et cetera, and our focus on working capital improvements too. But again, steady as she goes and nothing really changing in terms of what we articulated as our capital strategy.

Okay. Well, let me add my thanks to all of you for joining our call today. We really appreciate your interest, and we wish you all a very, very good day. Thanks and goodbye.

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