Fitch Affirms Coca-Cola Enterprises Inc.'s IDR at 'A'; Outlook Stable

Coca-Cola Enterprises Inc.:

--Long-term IDR 'A';

--Bank credit facility 'A';

--Senior unsecured debt 'A';

--Short-term IDR 'F1';

--Commercial paper (CP) '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';

--CP 'F1'.

Coca-Cola Enterprises (Canada) Bottling Finance Company:

--Long-term IDR 'A';

--Senior unsecured debt 'A'.

The Rating Outlook is Stable. This rating action affects approximately $9.0 billion of debt.

The affirmation reflects CCE's continued importance within the Coca-Cola bottling system, its ongoing debt reduction and its strengthening non-carbonated beverage portfolio. Given the prominence of carbonated soft drinks (CSDs) in CCE's beverage portfolio, the ratings acknowledge the declining CSD volumes in the U.S. and modest CSD growth in CCE's European territories. CCE continues to generate substantial discretionary cash flow, averaging over $575 million in free cash flow annually the past five years.

While CCE is cycling through higher input costs from the heightened commodity cost environment in 2008, the company did report improved margins in the first quarter. The company recorded a 37.2% gross margin in the first quarter of 2009 versus a 36.5% gross margin in the prior year period. CCE also reported cost savings in the first quarter from initiatives undertaken in late 2008. Fitch expects CCE's margins to continue to improve in the latter half of 2009 as hedge contracts from 2008 expire and cost cutting programs continue to yield positive results.

For the 12 months ended April 3, 2009, 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 3.4 times (x) and operating EBITDA-to-gross interest expense was roughly 4.4x. While CCE's credit metrics are weaker than similarly rated food and beverage companies, CCE's ratings are reflective of the credit metrics of the Coca-Cola system and CCE's relative importance in the Coca-Cola system, which comprises The Coca-Cola Company and its significant and/or strategic bottlers.

The Coca-Cola system's credit metrics improved from 2007 to 2008. At Dec. 31, 2008, total debt-to-operating EBITDA was 1.6x for the Coca-Cola system, of which CCE is the largest bottler. The system's Funds Flow from Operations (FFO) fixed charge coverage on an aggregated basis was 7.1x for the year ended Dec. 31, 2008. For the prior year, the system's total debt-to-operating EBITDA was 1.8x, and the system's FFO fixed charge coverage was 6.8x. The modest decrease in leverage is largely attributable to the increase in The Coca-Cola Company's operating EBITDA from 2007 to 2008.

CCE has adequate liquidity to meet its 2009 debt obligations. At Dec. 31, 2008, the company had $2.2 billion available under $2.5 billion its five-year committed revolving credit facility which expires 2012. Additionally, CCE had $498 million in cash at April 3, 2009. CCE has several maturities remaining in 2009, with 175 million pound sterling 5.25% notes due May 19, 2009, $450 million floating rate notes due Aug. 3, 2009, and $131.3 million 7.125% notes due Sept. 30, 2009.

CCE is the Coca-Cola Company's largest bottler, accounting for 18% of the Coca-Cola Company's volume in 2008. CCE's North American bottling territory includes 46 U.S. states, the District of Columbia, the U.S. Virgin Islands, and the 10 provinces of Canada. As of Dec. 31, 2008, the company's bottling agreements covered a population of approximately 270 million people comprising 78% of the population of the U.S. and 98% of Canada. CCE's European bottling agreements govern the following territory: Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands. As of Dec. 31, 2008, CCE's European bottling agreements covered a population of approximately 149 million people. During 2008, North American operations contributed 70% of the company's revenues and European operations accounted for 30%.

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, Chicago 
Wesley E. Moultrie II, CPA, 312-368-3186 
Christopher M. Collins, 312-368-3196 
Carla Norfleet-Taylor, CFA, 312-368-3195 
or 
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