Fitch: Coca-Cola Enterprises' Ratings Unaffected by $5.3B Non-Cash Charge

The impairment charge was due to a re-assessment of the fair value of the North American franchise license assets as the company experiences near-term declines in operating income. While this is the second impairment charge for these intangible assets in the past two years and further impairments may become necessary should the business deteriorate more than anticipated, Fitch believes the longer term cash flow generating ability of the company remains strong.

While CCE's credit statistics will be modestly weaker as a result of the difficulties experienced by its U.S. operations, the company's ratings are considered within the context of the credit profile of the Coca-Cola system, which comprises The Coca-Cola Company and its significant and/or strategic bottlers, of which CCE is the largest. CCE's ratings reflect its continued importance within the Coca-Cola bottling system, its ongoing debt reduction and its strengthening non-carbonated beverage line-up.

The company's current ratings incorporate expectations of near term operating pressures from the inflationary commodity cost environment and weaker consumer demand. Despite the challenging environment, which is negatively impacting the company's margins, CCE continues to generate substantial discretionary cash flow. The company anticipates generating $675 million in free cash flow in 2008, in line with Fitch's expectations.

For the last twelve months ended June 27, 2008, the company's credit statistics were in line with Fitch's expectations. Total debt-to-operating earnings before interest, taxes, depreciation and amortization (EBITDA) was approximately 3.9 times (x) and operating EBITDA-to-gross interest expense was roughly 4.1x.

For the year ended Dec. 31, 2007, total debt-to-operating EBITDA on an aggregated basis was 1.8x for the Coca-Cola system. The system's FFO fixed charge coverage on an aggregated basis was 6.8x.

Fitch rates CCE and its subsidiaries as follows:

Coca-Cola Enterprises Inc.:

--Long-term Issuer Default Rating (IDR) 'A';

--Bank credit facility 'A';

--Senior unsecured debt 'A';

--Short-term IDR 'F1';

--Commercial Paper 'F1'.

Coca-Cola Enterprises Finance LT 1 Commandite S.C.A.:

--Long-term IDR 'A';

--Senior unsecured debt 'A'.

Bottling Holdings (Luxembourg) Commandite S.C.A.:

--Short-term IDR 'F1';

--Commercial Paper 'F1'.

The Ratings Outlook is Stable.

For further information review Fitch's press release 'Fitch Rates Coca-Cola Enterprises, Inc.'s $275MM Floating-Rate Notes 'A'; Outlook Stable' dated May 7, 2008 and available on the Fitch Ratings web site www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

Fitch Ratings Wesley E. Moultrie II, CPA, +1-312-368-3186 (Chicago) Christopher M. Collins, +1-312-368-3196 (Chicago) Carla Norfleet Taylor, CFA, +1-312-368-3195 (Chicago) Media Relations: Brian Bertsch, +1-212-908-0549 (New York)