OVERVIEW

Coca-Cola Enterprises Inc. ("we," "our," or "us") is the world's largest marketer, producer, and distributor of nonalcoholic beverages. We market, produce, and distribute our bottle and can products to customers and consumers through license territories in 46 states in the United States (U.S.), the District of Columbia, the U.S. Virgin Islands and certain other Caribbean islands, and the 10 provinces of Canada (collectively referred to as North America). We are also the sole licensed bottler for products of The Coca-Cola Company (TCCC) in Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands (collectively referred to as Europe). Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying Notes in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2008 (Form 10-K).

We operate in the highly competitive beverage industry and face strong competition from other general and specialty beverage companies. Our financial results, like those of other beverage companies, are affected by a number of factors including, but not limited to, cost to manufacture and distribute products, general economic conditions, consumer preferences, local and national laws and regulations, availability of raw materials, fuel prices, and weather patterns.

Sales of our products tend to be seasonal, with the second and third quarters accounting for higher unit sales of our products than the first and fourth quarters. In a typical year, we earn more than 60 percent of our annual operating income during the second and third quarters of the year. Sales in Europe tend to experience more seasonality than those in North America due, in part, to a higher sensitivity of European consumption to weather conditions. The seasonality of our sales volume combined with the accounting for fixed costs, such as depreciation, amortization, rent, and interest expense, impacts our results on a quarterly basis. Additionally, year-over-year shifts in holidays and selling days can impact our results on a quarterly basis. Accordingly, our results for the second quarter and first six months of 2009 may not necessarily be indicative of the results that may be expected for the full year ending December 31, 2009.

For reporting convenience, our quarters close on the Friday closest to the end of the quarterly calendar period. There were the same number of selling days during the second quarter of 2009 and 2008, and there were three additional selling days during the first six months of 2009 versus the first six months of 2008 (based upon a standard five-day selling week). Year-over-year selling days will be the same in the third quarter, and there will be four fewer selling days in the fourth quarter of 2009 versus the fourth quarter of 2008.

Relationship with The Coca-Cola Company

We are a marketer, producer, and distributor principally of products of TCCC with greater than 90 percent of our sales volume consisting of sales of TCCC products. Our license arrangements with TCCC are governed by licensing territory agreements. TCCC owned approximately 35 percent of our outstanding shares as of July 3, 2009. Our financial results are greatly impacted by our relationship with TCCC. Our collaborative efforts with TCCC are necessary to (1) create and develop new brands and packages; (2) market our products in the most effective manner possible; and (3) find ways to maximize efficiency. For additional information about our transactions with TCCC, refer to Note 5 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q and Note 3 of the Notes to Consolidated Financial Statements in our Form 10-K.

Financial Results

Our net income in the second quarter of 2009 was $313 million, or $0.64 per diluted common share, compared to a net loss of $3.2 billion, or $6.48 per common share, in the second quarter of 2008. The following items that are included in our reported results affect the comparability of our year-over-year second quarter financial results:

Second Quarter 2009

• a $26 million ($15 million net of tax, or $0.03 per diluted common share) charge related to restructuring activities, primarily to streamline and reduce the cost structure of our global back-office functions and to support the integration and optimization of key supply chain initiatives.

Second Quarter 2008

• a $5.3 billion ($3.4 billion net of tax, or $7.02 per common share) noncash impairment charge to reduce the carrying amount of our North American franchise license intangible assets to their estimated fair value at that time;

• an $18 million ($11 million net of tax, or $0.02 per common share) charge related to restructuring activities; and

• a $1 million benefit from various tax rate changes.

Financial Summary

Our financial performance during the second quarter of 2009 was impacted by the following significant factors:

• Improved operating trends in North America highlighted by positive margin expansion driven primarily by price-package architecture initiatives and enhanced operating efficiency;

• Operating expense control efforts related to our Ownership Cost Management (OCM) practices;

• Macroeconomic conditions contributing to persistent weakness in higher-margin products and packages and lower than expected performance for some higher-margin emerging beverage categories;

• Increased input costs in North America due to supply agreements and hedging instruments entered into during 2008 that locked us into higher than market prices;

• Balanced volume and pricing growth in Europe driven by strong Coca-Cola trademark growth, solid marketplace execution, and hurdling a prior year labor disruption volume decline;

• Continued strong performance of Coca-Cola Zero throughout our territories, and the benefit of recent product additions including Monster Energy drinks in all of our territories, vitaminwater 10 in North America, and Schweppes Abbey Well mineral water in Great Britain;

• The benefit of holiday shifts (Easter and Fourth of July) into the second quarter of 2009; and

• Unfavorable currency exchange rate changes that reduced earnings per diluted common share in the second quarter of 2009 by approximately $0.08 versus the second quarter of 2008.

North America Results

In North America, we achieved net pricing per case growth of 8.5 percent primarily through sparkling beverage rate increases implemented in the latter part of 2008 and early 2009 and a slight positive mix shift associated with higher-priced still beverages. Our North American sales volume declined 3.5 percent reflecting the negative impact of higher sales prices, persistent weakness in higher-margin products and packages, a substantial decline in the sale of Dasani multi-serve and single-serve packages, and lower sales of glacéau's vitaminwater versus strong 2008 introductory volume. Our volume benefited from slightly improved sparkling beverage trends including solid growth for Coca-Cola Zero, price-package architecture initiatives such as our 18 and 20-pack can configurations and 14 and 16-ounce bottles, recent product additions including Monster Energy drinks and vitaminwater 10, and holiday shifts. Our bottle and can cost of sales per case increased 7.0 percent during the second quarter of 2009 as a result of (1) higher raw material costs as a result of supply agreements and hedging instruments entered into during 2008 that locked us into higher than market prices; (2) package mix shifts associated with higher cost still beverages purchased as finished goods; and (3) increased cost of sparkling beverage concentrate.

During the remainder of 2009, we expect the current macroeconomic environment to remain volatile and challenging. We will continue to monitor key business indicators, while focusing our efforts on growing value for our sparkling beverages, stimulating demand in single-serve consumption channels, further increasing the availability of Coca-Cola Zero, and executing our operating plans for Monster Energy drinks and glacéau's vitaminwater. We will also continue to focus on our operating effectiveness and managing our operating expenses through our OCM practices. In addition, we expect our cost of sales to moderate during the latter part of 2009 as we begin to realize the benefit of lower cost for several key inputs.

Europe Results

In Europe, our volume grew 6.5 percent during the second quarter of 2009 versus a strike-reduced second quarter of 2008 when a two-week labor disruption in France negatively impacted our volume. Both continental Europe and Great Britain experienced strong growth during the second quarter of 2009, with sales volume increasing 6.0 percent and 7.0 percent, respectively. Solid marketplace execution, increased promotional activity, and the continued success of our "Red, Black, and Silver" three-cola strategy were the primary drivers of our second quarter of 2009 volume performance. Our volume in Europe also benefited from the recent addition of several products, including Monster Energy drinks across all of our European territories and Schweppes Abbey Well mineral water in Great Britain. Net pricing per case increased 4.0 percent and bottle and can costs per case increased 1.5 percent, which led to positive margin expansion year-over-year. Our European results were significantly impacted by negative currency exchange rate changes. During the remainder of 2009, we will continue to monitor key business indicators so that we can react swiftly to any changes in European market conditions that may result from global economic conditions and/or changing consumer buying habits.

                           COCA-COLA ENTERPRISES INC.



OPERATIONS REVIEW

The following table summarizes our Condensed Consolidated Statements of
Operations data as a percentage of net operating revenues for the periods
presented:



                                                       Second Quarter          First Six Months
                                                       2009       2008         2009         2008
Net operating revenues                                 100.0 %    100.0 %       100.0 %     100.0 %
Cost of sales                                           61.7       62.9          62.2        63.2

Gross profit                                            38.3       37.1          37.8        36.8
Selling, delivery, and administrative expenses          29.0       28.8          30.6        30.7
Franchise impairment charge                              0.0       88.9           0.0        48.8

Operating income (loss)                                  9.3      (80.6 )         7.2       (42.7 )
Interest expense, net                                    2.5        2.5           2.7         2.7
Other nonoperating income, net                           0.1        0.1           0.0         0.0

Income (loss) before income taxes                        6.9      (83.0 )         4.5       (45.4 )
Income tax expense (benefit)                             1.6      (29.7 )         1.1       (16.2 )

Net income (loss)                                        5.3 %    (53.3 )%        3.4 %     (29.2 )%

Operating Income (Loss)

The following table summarizes our operating income (loss) by operating segment
for the periods presented (in millions; percentages rounded to the nearest 0.5
percent):



                                                       Second Quarter                                        First Six Months
                                              2009                        2008                       2009                        2008
                                                   Percent                     Percent                    Percent                     Percent
                                      Amount       of Total       Amount       of Total      Amount       of Total       Amount       of Total
North America                         $   375          68.5 %    $    332           7.0 %    $   579          73.5 %    $    438           9.5 %
Europe                                    308          56.0           287           6.0          483          61.0           458          10.0
Corporate                                (134 )       (24.5 )        (123 )        (2.5 )       (272 )       (34.5 )        (237 )        (5.0 )
Franchise impairment charge(A)             -            0.0        (5,279 )      (110.5 )         -            0.0        (5,279 )      (114.5 )

Consolidated                          $   549         100.0 %    $ (4,783 )       100.0 %    $   790         100.0 %    $ (4,620 )       100.0 %

(A) During the second quarter of 2008, we recorded a noncash franchise license impairment charge in our North American operating segment. For additional information about the noncash franchise license impairment charge, refer to Note 2 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.

During the second quarter and first six months of 2009, we had an operating income of $549 million and $790 million, respectively, compared to an operating loss of $4.8 billion and $4.6 billion during the second quarter and first six months of 2008, respectively. The following table summarizes the significant components of the change in our operating income (loss) for the periods presented (in millions; percentages rounded to the nearest 0.5 percent):

                                                Second Quarter 2009          First Six Months 2009
                                                              Change                         Change
                                                             Percent                        Percent
                                               Amount        of Total        Amount         of Total
Changes in operating income (loss):
Impact of bottle and can price, cost, and
mix on gross profit                           $     226           4.5 %    $      384            8.5 %
Impact of bottle and can volume on gross
profit                                              (23 )        (0.5 )           (34 )         (1.0 )
Impact of bottle and can selling day shift
on gross profit                                      -            0.0              65            1.5
Impact of Jumpstart funding on gross profit          (7 )         0.0             (13 )         (0.5 )
Impact of post mix, non-trade, and other on
gross profit                                         11           0.0              26            0.5
Selling, delivery, and administrative
expenses                                            (84 )        (2.0 )          (185 )         (4.0 )
Franchise impairment charge                       5,279         110.5           5,279          114.5
Net impact of restructuring charges                  (8 )         0.0             (22 )         (0.5 )
Currency exchange rate changes                      (59 )        (1.0 )           (93 )         (2.0 )
Other changes                                        (3 )         0.0               3            0.0

Change in operating income (loss)             $   5,332         111.5 %    $    5,410          117.0 %

Net Operating Revenues

Net operating revenues decreased 0.5 percent in the second quarter of 2009 to $5.9 billion and increased 1.0 percent in the first six months of 2009 to $11.0 billion. These changes include currency exchange rate reductions of approximately 6.5 percent and 7.0 percent in the second quarter and first six months of 2009, respectively. The percentage of our second quarter of 2009 net operating revenues derived from North America and Europe was 70 percent and 30 percent, respectively.

During the second quarter of 2009, our net operating revenues in North America benefited from strong pricing growth attributable to the sparkling beverage rate increases implemented in the latter part of 2008 and early 2009 and a slight positive mix shift associated with higher-priced still beverages. North American sales volume declined 3.5 percent reflecting the negative impact of higher sales prices, persistent weakness in certain higher-margin products and packages, and reduced sales of Dasani. These negative factors were offset partially by slightly improved sparkling beverage trends including solid growth for Coca-Cola Zero, price-package architecture initiatives, recent product additions including Monster Energy drinks, and holiday shifts. In Europe, our net operating revenues were negatively impacted by unfavorable currency exchange rate changes, offset partially by balanced volume and pricing growth driven by strong Coca-Cola trademark volume performance, solid marketplace execution, and hurdling a prior year labor disruption volume decline.

Net operating revenues per case increased 0.5 percent in the second quarter and first six months of 2009 versus the second quarter and first six months of 2008. The following table summarizes the significant components of the change in our net operating revenues per case for the periods presented (rounded to the nearest 0.5 percent and based on wholesale physical case volume):