The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements contained in this report.

Overview

Organization and Basis of Presentation

On October 2, 2010, Coca-Cola Enterprises Inc. (Legacy CCE) completed a merger (the Merger) with The Coca-Cola Company (TCCC) and separated its European operations, Coca-Cola Enterprises (Canada) Bottling Finance Company, and a related portion of its corporate segment into a new legal entity, which was renamed Coca-Cola Enterprises, Inc. ("CCE," "we," "our," or "us") at the time of the Merger. For additional information about the Merger and the Merger Agreement (the Agreement), refer to Note 1 of the Notes to Consolidated Financial Statements.

Concurrently with the Merger, two of our indirect, wholly owned subsidiaries acquired TCCC's bottling operations in Norway and Sweden, pursuant to the Share Purchase Agreement dated March 20, 2010 (the Norway-Sweden SPA), for a purchase price of $872 million, including a $50 million price adjustment related to working capital and EBITDA (as defined by the Norway-Sweden SPA). All amounts outstanding under the Norway-Sweden SPA were settled and paid during 2011. For additional information about the Norway-Sweden SPA, refer to Note 1 of the Notes to Consolidated Financial Statements.

Prior to the Merger, our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles on a "carve-out" basis from Legacy CCE's Consolidated Financial Statements using the historical results of operations, cash flows, assets, and liabilities attributable to the legal entities that comprised CCE at the effective date of the Merger. These legal entities included all that were previously part of Legacy CCE's Europe operating segment, as well as Coca-Cola Enterprises (Canada) Bottling Finance Company. All significant intercompany accounts and transactions between the legal entities that comprised CCE were eliminated.

Also prior to the Merger, our Consolidated Financial Statements included an allocation of certain corporate expenses related to services provided to us by Legacy CCE. These expenses included the cost of executive oversight, information technology, legal, treasury, risk management, human resources, accounting and reporting, investor relations, public relations, internal audit, and certain global restructuring projects. The cost of these services was allocated to us based on specific identification when possible or, when the expenses were determined to be global in nature, based on the percentage of our relative sales volume to total Legacy CCE sales volume for the applicable periods. We believe these allocations are a reasonable representation of the cost incurred for the services provided. However, these allocations are not necessarily indicative of the actual expenses that we would have incurred had we been operating as an independent company prior to the Merger (refer to Note 3 of the Notes to Consolidated Financial Statements).

Following the Merger, our Consolidated Financial Statements include all entities that we control by ownership of a majority voting interest, including the bottling operations in Norway and Sweden beginning with the fourth quarter of 2010. All significant intercompany accounts and transactions are eliminated in consolidation.

Our fiscal year ends on December 31. For interim quarterly reporting convenience, our first three quarters close on the Friday closest to the end of the quarterly calendar period. There was one additional selling day in 2012 versus 2011, and there was one less selling day in 2011 versus 2010 (based upon a standard five-day selling week).
The following table summarizes the number of selling days by quarter for the years ended December 31, 2012, 2011, and 2010 (based on a standard five-day selling week):

       First      Second       Third      Fourth      Full
     Quarter     Quarter     Quarter     Quarter     Year
2012        65          65          65          66      261
2011        65          65          65          65      260
2010        66          65          65          65      261

Business

We are a marketer, producer, and distributor of nonalcoholic beverages. We market, produce, and distribute our products to customers and consumers through licensed territory agreements in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. We operate in the highly competitive beverage industry and face strong competition from other general and specialty beverage companies. Our financial results are affected by a number of factors including, but not limited to, consumer preferences, cost to manufacture and distribute products, foreign currency exchange rates, general economic conditions, local and national laws and regulations, raw material availability, 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. 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, selling days, and weather patterns can impact our results on an annual or quarterly basis.

Relationship with TCCC

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 product licensing agreements. From time to time, the terms and conditions of programs with TCCC are modified. Our financial results are greatly impacted by our transactions 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 3 of the Notes to Consolidated Financial Statements.

Executive Overview

Our primary mission is to create sustained, profitable growth that drives value for our shareowners. Despite the challenging operating conditions and ongoing macroeconomic weakness, we continue to believe that our Company offers significant long-term growth opportunities, illustrated by our highly popular brands, an effective, world-class operating structure, and the benefits of our partnership with TCCC. Demonstrating this belief, we have recently reaffirmed our commitment to our long-term growth objectives, which include the consistent delivery of:
• Four to six percent annual revenue growth;

• Six to eight percent operating income growth;

• High single-digit annual diluted earnings per common share growth; and

• Annual return on invested capital (ROIC) growth of at least 20 basis points.

2012 Review

During 2012, we faced a challenging operating environment and continued macroeconomic weakness, which contributed to operating results that were below our long-term objectives. Despite these operating challenges, we focused on our business plans and day-to-day execution, and with our strong cash flow and flexible balance sheet, we were able to deliver solid diluted earnings per share growth. The following highlights our significant achievements in 2012:
• Successful execution of key initiatives surrounding the 2012 London Olympic Games;

• Continued rating as a leading consumer goods company by our customers, and rated the number one beverage company for environmental, social, and governance performance by a leading financial institution;

• The repurchase of $780 million in shares under our share repurchase programs, bringing the total value of shares repurchased since October 2010 to nearly $1.8 billion;

• The initiation of our business transformation program, which is designed to improve the efficiency and effectiveness of our back office functions and improve the alignment of our operating structure with the conditions we face in the marketplace; and

• An increase in our quarterly dividend from $0.13 per share to $0.16 per share, representing the fifth consecutive year of dividend increases.

Strategic Priorities

Our operating strategies and initiatives are designed to enable us to maximize the value of our brands, provide our customers the highest levels of service, and create enhanced value for our shareowners.

To accomplish this, we continue to focus on three strategic priorities:

1. Be number one or a strong number two in each category in which we compete;

2. Be our customers' most valued supplier; and

3. Build a winning and inclusive culture.

During 2013, we will seek to drive improved operating results in the face of persistent macroeconomic softness. We believe that we have solid operating and marketing plans in place that will enable us to deliver sales and operating income growth in 2013. Our 2013 plans are centered on maximizing the value and popularity of our diversified brand portfolio and enhancing our proven customer value creation model. In addition, we will drive increasing effectiveness and efficiency in our day-to-day execution.

For example, as ongoing marketplace and macroeconomic challenges have eroded customer margins, we are building on initiatives to tailor our go-to-market strategies for each customer and channel. By utilizing shopper insights and matching product and package offerings to customer and consumer preferences, we can grow value. An important element of these customer service efforts is the recently announced business transformation program. This program will improve the alignment of our field sales organization and create a more effective and efficient customer service model. It will also improve the effectiveness and efficiency of our back office functions, which includes the establishment of a new centralized shared services center.

We have strong brand and marketing strategies in place for 2013, which emphasize our core brands of Coca-Cola, Diet Coke/Coca-Cola light, and Coca-Cola Zero. These brands are among the most popular in the world and create a unique platform for growth. Coca-Cola Zero will continue to receive strong support with new on-air and online campaigns. In addition, a new marketing campaign will highlight the 30th anniversary of Diet Coke/Coca-Cola light.

We also continue to improve our brand and packaging mix to better meet consumer wants and customer needs. For example, we will drive value for customers with the launch of smaller 375 milliliter bottles, increase consumer interest and trial with brand extensions such as Coca-Cola Zero Cherry, and meet new consumer preferences with the use of natural sweeteners, such as stevia, with Sprite and glacιau vitaminwater.

All of our efforts are designed to enable us to reach our most important goal:
creating enhanced value for our shareowners. Despite the current macroeconomic challenges, we continue to have confidence in our ability to deliver long-term growth. We believe we have the right operating strategies in place to meet the demands of the changing marketplace.

Our Commitment to Sustainability

A fundamental part of reaching our long-term objectives is our commitment to corporate responsibility and sustainability (CRS). We have embedded CRS in our business strategy as a key pillar of our operating framework, and we continue to invest across our territories to embed our CRS principles into our business. We face rising expectations to be a sustainable company from our customers, our consumers, and the communities where we operate.

We take this responsibility seriously, and our goal is to be the CRS leader within our industry. We want to meet and exceed these expectations, and achieve our sustainability plan: "Deliver for Today, Inspire for Tomorrow." This plan was developed in 2011 with input from key stakeholders, and contains stretching commitments in seven focus areas, including energy and climate change, sustainable packaging and recycling, water stewardship, product portfolio, active healthy living, community, and workplace. The commitments are supported by 37 targets, which we aim to achieve by the year 2020. We will continue to publish progress against this plan in an annual Corporate Responsibility and Sustainability report and on our corporate website, www.cokecce.com.

In 2012, we made substantial progress toward many of our targets and profiled many of our recycling and low carbon activities at the London 2012 Olympic Games, such as our 'Recycle Beat' activation and our low carbon biogas trucks. Other key initiatives included the launch of a joint recycling venture with EcoPlastics in Great Britain and the announcement of a similar joint venture in France. Both of these investments will substantially improve the availability of recycled PET in each market. We continue to drive carbon and water efficiencies across our operations, and entered into a water replenishment partnership with the World Wildlife Fund in Great Britain.

Financial Results

Our net income in 2012 was $677 million, or $2.25 per diluted share, compared to net income in 2011 of $749 million, or $2.29 per diluted share. The following items included in our reported results affect the comparability of our year-over-year financial results (the items listed below are based on defined terms and thresholds and represent all material items management considered for year-over-year comparability):

2012
• Charges totaling $85 million ($61 million net of tax, or $0.21 per diluted share) related to restructuring activities;

• Net mark-to-market losses totaling $4 million ($3 million net of tax, or $0.01 per diluted share) related to non-designated commodity hedges associated with underlying transactions that relate to a different reporting period; and

• A net deferred tax benefit of $62 million ($0.21 per diluted share) due to the enactment of tax rate reductions in the United Kingdom and Sweden, partially offset by the impact of a tax law change in Belgium.

2011
• Charges totaling $19 million ($13 million net of tax, or $0.04 per diluted share) related to restructuring activities;

• Net mark-to-market losses totaling $3 million ($2 million net of tax) related to non-designated commodity hedges associated with underlying transactions that related to a different reporting period;

• Charges totaling $5 million ($4 million net of tax, or $0.01 per diluted share) related to post-Merger changes in certain underlying tax matters covered by our indemnification to TCCC for periods prior to the Merger; and

• A deferred tax benefit of $53 million ($0.16 per diluted share) due to the enactment of tax rate reductions in the United Kingdom.

Financial Summary

Our financial performance during 2012 was impacted by and reflects the following significant factors:
• Challenging operating conditions reflecting the impact of the French excise tax increase, poor weather conditions, particularly during the key summer selling season, and ongoing macroeconomic weakness;

• An overall volume decline of 3.0 percent, largely driven by lower sales of our sparkling beverages;

• Higher cost of sales per case and net pricing per case (currency neutral) driven, in part, by the increased French excise tax (substantially all of the increased cost was borne by our customers in the form of higher prices);

• Unfavorable currency exchange rate changes that decreased operating income by approximately 6.5 percent ($0.16 per diluted share);

• Strong operating expense control; and

• The continuation of our share repurchase programs, which increased diluted earnings per share in 2012 by approximately 8.0 percent ($0.18 per diluted share) compared to 2011.

Revenue and Volume

During 2012, the impact of challenging operating conditions, including the French excise tax increase and poor weather conditions, particularly during the key summer selling season, as well as ongoing macroeconomic weakness, contributed to a decline in volume of 3.0 percent. Our volume performance was primarily driven by a decline in the sale of sparkling beverages, offset partially by volume increases in certain still beverages, particularly our water brands, which benefited from strong activation during the 2012 London Olympic Games. Our bottle and can net price per case, excluding the French excise tax increase, grew 3.0 percent during 2012, reflecting moderate year-over-year rate increases and successful marketplace execution.

We expect the marketplace to remain challenging during 2013; however, we believe we have the appropriate brand and marketing strategies in place to help us navigate the challenging operating environment and deliver growth. These strategies will increase our effectiveness and day-to-day execution, and emphasize our core brands, including a new campaign highlighting the 30th anniversary of Diet Coke/Coca-Cola light, and a strong focus on Coca-Cola Zero.

Cost of Sales

Our 2012 bottle and can ingredient and packaging costs per case, excluding the French excise tax increase, grew 2.5 percent, reflecting the increased cost of certain key raw materials, particularly sugar. Despite some expected moderation, we anticipate our cost of sales to remain volatile in 2013, and we continue to seek opportunities to mitigate our exposure to commodity price volatility through the use of supplier agreements and hedging instruments.

Operating Expenses

Our operating expenses decreased 1.5 percent in 2012 when compared to 2011. This decrease was primarily driven by currency exchange rate changes, volume declines and the related reduction in variable distribution costs, and the benefit of our ongoing expense control initiatives, offset partially by increased restructuring expenses and our planned promotional activities surrounding the 2012 London Olympic Games. During 2013, we expect our restructuring expenses to increase as a result of our continued investment in our business transformation program, which is designed to improve our operating model and to create a platform for driving sustainable future growth.
Operations Review

The following table summarizes our Consolidated Statements of Income as a percentage of net sales for the periods presented:

                                                2012      2011      2010
Net sales                                      100.0 %   100.0 %   100.0 %
Cost of sales                                   64.0      63.4      63.1
Gross profit                                    36.0      36.6      36.9
Selling, delivery, and administrative expenses  24.5      24.1      24.9
Operating income                                11.5      12.5      12.0
Interest expense                                 1.1       1.1       0.9
Income before income taxes                      10.4      11.4      11.1
Income tax expense                               2.0       2.4       1.8
Net income                                       8.4 %     9.0 %     9.3 %

Operating Income

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

                     2012                    2011                    2010
                          Percent                 Percent                Percent
              Amount     of Total     Amount     of Total     Amount    of Total
Europe       $ 1,073      115.5  %   $ 1,195      115.5  %   $  994      122.5  %
Corporate       (145 )    (15.5 )       (162 )    (15.5 )      (184 )    (22.5 )
Consolidated $   928      100.0  %   $ 1,033      100.0  %   $  810      100.0  %

During 2012, our operating income decreased 10.0 percent to $928 million. The following table summarizes the significant components of the change in our operating income for the periods presented (in millions; percentages rounded to the nearest 0.5 percent):

                                                    2012 Versus 2011         2011 Versus 2010
                                                               Change                    Change
                                                               Percent                   Percent
                                                   Amount     of Total      Amount      of Total
Changes in operating income:
Impact of bottle and can price-mix on gross
profit(A)                                        $    434       42.0  %   $    158        19.5  %
Impact of bottle and can cost-mix on gross
profit(A)                                            (311 )    (30.0 )        (145 )     (18.0 )
Impact of bottle and can volume on gross profit       (91 )     (9.0 )          86        10.5
Impact of bottle and can selling day shift on
gross profit                                           11        1.0            (7 )      (1.0 )
Impact of post-mix, non-trade, and other on
gross profit                                          (15 )     (1.5 )           8         1.0
Impact of acquired bottlers in Norway and Sweden      n/a         n/a           69         8.5
Other selling, delivery, and administrative
expenses                                               (4 )        -          (170 )     (21.0 )
Net impact of allocated expenses from Legacy CCE      n/a         n/a          160        20.0
Net mark-to-market gains on non-designated
commodity hedges                                       (1 )        -             5         0.5
Net impact of restructuring charges(B)                (66 )     (6.5 )         (14 )      (1.5 )
Impact of Tax Sharing Agreement indemnification
changes                                                 5        0.5            (5 )      (0.5 )
Net impact of transaction-related costs               n/a         n/a            8         1.0
Currency exchange rate changes                        (69 )     (6.5 )          68         8.0
Other changes                                           2          -             2         0.5

(B) Amounts prior to the Merger include only items related to Legacy CCE's Europe operating segment. Amounts do not include costs recorded by Legacy CCE's corporate segment that were specifically incurred on behalf of Legacy CCE's Europe operating segment or allocated to CCE. Those amounts are included in the "net impact of allocated expenses from Legacy CCE" line in the table above. For additional information about our restructuring activities, refer to Note 14 of the Notes to Consolidated Financial Statements.

Net Sales

Net sales decreased 2.5 percent in 2012 to $8.1 billion from $8.3 billion in 2011. This change included a 2.0 percent increase due to the additional French excise tax beginning January 1, 2012, and a 5.5 percent decrease due to unfavorable currency exchange rate changes. Our revenues reflect the impact of a 3.0 percent volume decline, offset by bottle and can net pricing per case growth of 3.0 percent excluding the impact of the French tax increase. Challenging operating conditions, including the impact of the French excise tax increase, and ongoing macroeconomic weakness were the primary drivers of our 2012 volume performance.

Net sales increased 23.5 percent in 2011 to $8.3 billion from $6.7 billion in 2010. This change included an 11.0 percent increase due to incremental revenues from the bottling operations in Norway and Sweden acquired during the fourth quarter of 2010 (which includes the impact of Norway's excise taxes recorded on a gross basis), and a 6.5 percent increase due to favorable currency exchange rate changes. Our revenues reflected the benefit of 3.5 percent volume growth and pricing per case growth of 2.0 percent. The success of our Coca-Cola trademark products, along with successful marketplace execution and growth in our energy brands and water portfolio, were the primary drivers of our 2011 volume performance.

The following table summarizes the significant components of the change in our net sales per case for the periods presented (rounded to the nearest 0.5 percent and based on wholesale physical case volume):

                                                         2012 Versus 2011     2011 Versus 2010
Changes in net sales per case:
Bottle and can net price per case                                   3.0  %             2.0 %
Impact of acquired bottlers in Norway and Sweden                    n/a                4.0
French excise tax increase                                          2.5                n/a
Bottle and can currency exchange rate changes                      (5.5 )              6.0
Post-mix, non-trade, and other                                        -                0.5
Change in net sales per case                                          -  %            12.5 %

Our bottle and can sales accounted for approximately 94 percent of our total net sales during 2012. Bottle and can net price per case is based on the invoice price charged to customers reduced by promotional allowances, and is impacted by the price charged per package or brand, the volume generated in each package or brand, and the channels in which those packages or brands are sold. To the extent we are able to increase volume in higher-margin packages or brands that are sold through higher-margin channels, our bottle and can net pricing per case will increase without an actual increase in wholesale pricing. During 2012, our bottle and can net price per case reflected moderate rate increases and successful marketplace execution, offset by the impact of channel mix shifts into multi-serve containers. During 2011, our bottle and can net price per case reflected moderate rate increases, partially offset by the impact of package mix shifts into lower-priced cans.

We participate in various programs and arrangements with customers designed to increase the sale of our products by these customers. The costs of all these various programs, included as a reduction in net sales, totaled $1.0 billion in both 2012 and 2011, and $0.9 billion in 2010. These amounts included net customer marketing accrual reductions related to estimates for prior year programs of $34 million, $21 million, and $1 million in 2012, 2011, and 2010, respectively.

French Excise Tax Increase

Effective January 1, 2012, France's Constitutional Council enacted an increased excise tax on beverages with added sweetener (both nutritive and non-nutritive) that equated to a 7.16 euro cents per liter increase from 0.54 euro cents per . . .