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

Caroline S. Levy - CLSA Limited, Research Division Ian Shackleton - Nomura Securities Co.

Ltd., Research Division Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division Nicolas Ceron - Societe Generale Cross Asset Research Judy E.

Hong - Goldman Sachs Group Inc., Research Division William Schmitz - Deutsche Bank AG, Research Division John A. Faucher - JP Morgan Chase & Co, Research Division Bryan D.

Spillane - BofA Merrill Lynch, Research Division Brett Cooper - Consumer Edge Research, LLC

Thank you, and good morning, everybody. We appreciate you joining us today to discuss our third quarter 2013 results, along with our outlook for the full year 2013.

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 Bill Douglas, our CFO. Hubert Patricot, President of our European Group, is also with us on this 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.

Thank you, Thor, and we thank each of you for joining us as we review our most recent results, as well as our outlook for the remainder of the year. Looking at the third quarter, we returned to growth as a 2.5% increase in volume led the growth of 2.5% in net sales and 2% in operating income, both on a comparable and currency neutral basis.

This growth benefited from our seasonal marketing activities, including the Share-a-Coke campaign, ongoing operating initiatives and improved weather. While we were pleased with this volume growth, it is important to understand some of the sequencing within the quarter.

Specifically, volume growth in July was very positive. August was flat, and there was a decline in September.

This detail is important for 2 reasons: First, July's strong results support our belief that persistent poor weather has been a key headwind, and with good summer weather comes good volume growth. Second, returns that we saw in September and their outlook also indicate that some of the other underlying headwinds continue.

We are keenly focused on restoring sustained growth to our business on a long-term basis. However, we're also realistic about the current environment and the operating and marketplace challenges we face.

Sustained macroeconomic conditions continue to affect our customers and our consumers, and the competitive environment remains challenging. So though we did restore growth these past quarters, these factors are impacting our expectations for the rest of the year.

Accordingly, we've revised our net sales and operating income growth outlook for 2013. Moreover, we believe these factors will continue and are affecting our expectations about when we believe we can return to growth more in line with our long-term objectives.

As always, we will continue to manage each aspect of our business as we work to achieve our ultimate goal, which is growth in shareholder value. Now as we look at the third quarter in more detail, the benefits of improved weather and solid execution of our summer marketing programs created an increase in volume of 2.5%.

On the territory basis, volume in Great Britain grew 3%, and Continental European volume increased 2.5%. Volume growth was driven primarily by increases in Sparkling drinks, which grew 4%.

The bulk of this growth came from our Coca-Cola trademark portfolio, with regular Coca-Cola up 4% and Coca-Cola Zero up 23%. Trademark Coca-Cola flavors, including Vanilla Coke and Coca-Cola Cherry Zero increased almost 10%.

A key contributor in this growth included our Share-a-Coke program, which generated extremely high levels of engagement with consumers. In addition, our ongoing Coke with Meals initiative continues to have a positive marketplace impact.

Beyond colas, our portfolio of energy brands grew 15%, driven by 25% growth in Monster and 15% growth in Relentless. Still beverages declined 5%, cycling double-digit growth in Stills for the same quarter 1 year ago.

Before I move on to our outlook for the remainder of the year, I would like to highlight some key successes in our businesses in Norway and Sweden. First, we have substantially completed our project to restructure our business in Norway, successfully moving to a system of indirect delivery and the packaging that is recyclable and nonrefillable.

We are encouraged by the initial results of this transformation. It is clear that the hard work and dedication of our people were central to the success of this project.

Second, our team in Sweden was recently ranked #1 among 17 national suppliers in a key survey for customer satisfaction and logistics. In fact, our Swedish team finished first in 12 of the survey's 16 categories, and we applaud them for their success.

Now let's look at our outlook for the remainder of the year. As you saw in our news release this morning, we have maintained our full year EPS guidance in the upper half of our range of $2.45 to $2.50.

However, we have adjusted our outlook for currency translation, net sales and operating income. Net sales and operating income are now expected to grow in a low single-digit range versus prior year on a comparable basis, including the impact of an expected favorable currency translation at recent rates.

We will repurchase at least $1 billion of our shares this year. And importantly, we remain dedicated to optimizing our capital structure and continuing to create shareholder growth.

Key to our long-term success in creating value for our shareowners is restoring sustained growth to our business, even in the face of difficult market conditions. To accomplish this, we must continue to find ways to strengthen our business, grow volume and importantly, grow operating income.

Innovation is expected to be an important area of focus, and already, we're taking action. Recently, we introduced successfully a new slimline 250 ml can that we believe will help drive sales by providing a lower price point and bringing more consumers into the category.

Initially introduced in the Netherlands, it's also in the market in Great Britain and Sweden, and we are expanding distribution through our other territories now. This impact reflects our company-wide effort to find innovative ways to bring our products to market, to drive growth profitably and to enhance our brand.

We look forward to providing you with more details on our efforts of the coming quarters. Before closing, I must note that this is Bill's final conference as our Chief Financial Officer.

Since my first day at CCE, Bill has been an invaluable partner as we worked together to move this company forward. And he's had a crucial role in every element of our success.

I want to thank him for his dedication, his wisdom and his friendship. And we look forward to his continued leadership as head of our supply chain.

Effective November 1, Nik Jhangiani will succeed Bill. And we are so pleased to have such a talented, skilled leader step into this key role.

Nik has more than 25 years of experience in global finance, including 5 years as CFO of Coca-Cola Hellenic. Now let me share some closing thoughts.

Although we continue to face challenges, we have important assets that create a solid foundation for future success. First, we sell some of the world's greatest brands that are preferred and desired by both our customers and our consumers.

In addition, we have a strong partnership with the Coca-Cola Company to continue to develop and grow these brands throughout our territories. Second, we operate in highly developed consumer-oriented markets that, despite the issues we continue to face, offer excellent growth opportunities.

Third, we have a proven history of managing each element of our business to generate profitable growth. And finally, we have a solid balance sheet and the strong free cash flow necessary to continue to provide the cash to opportunistically pursue mergers or acquisitions and to continue returning cash to shareholders.

Together, we will utilize each of our assets to accomplish our #1 objective: creating value for our shareowners. And we believe that our strategies, brands and people will enable us to reach this goal.

Now I will turn the call over to Bill for more detail on our financial results, as well as our full year outlook.

Thanks, John, and good morning, everyone. As John mentioned, we've returned to growth in the third quarter as we benefited throughout our territories from solid marketing activity and good weather early in the quarter.

For the third quarter, net sales totaled $2.2 billion, up 5% on a reported basis, or 2.5% on a currency neutral basis. Operating income totaled $314 million on a reported basis, or $320 million on a comparable basis.

Comparable operating income grew 4.5% or 2% on a currency neutral basis, importantly with the volume growth for the quarter of 2.5%. Net pricing per case was up 0.5% on a combination of modestly increased pricing, somewhat offset by slight negative mix impact.

This negative mix was driven in part by mid single-digit growth in multi-serve packages, while single-serve sales showed a slight decline. Notably, Sparkling drinks grew in both single-serve and multi-serve packaging.

Cost of sales per case increased 1.5% as we benefited from moderated costs, notably on PET and noncore commodities. Operating expenses declined 1.5%.

These figures are comparable and currency neutral. Our third quarter results reflect 2 key factors.

One, the positive impact that favorable weather can have on our business; and two, the sustained negative impact of the operating challenges that we continue to face. While this third quarter return to growth is encouraging, we have revised our full year outlook.

We now expect comparable net sales and operating income to grow in a low single-digit range, including the impact of currency translation at recent rates. Though we remain keenly focused on returning to growth, we believe current marketplace and economic conditions will continue to be headwinds and are updating our expectations about when we believe we can return to growth more in line with our long-term objectives.

For 2013, we continue to expect earnings per diluted share at the high end of the range of $2.45 to $2.50. This reflects a currency translation benefit of approximately 1.5% based on recent rates.

It also includes modest tax favorability, the impact of our share repurchase program and the revised operating income outlook. We continue to expect free cash flow of approximately $500 million, including a year-over-year increase in our cash restructuring cost of between $100 million and $125 million.

CapEx will be in the range of $300 million to $325 million. Our weighted average cost of debt continues to be approximately 3%.

And the effective tax rate is now expected to be in a range of 26% to 27%. We are currently developing our full business plan for next year with a clear focus on restoring growth and continuing to build our business for the long term.

We will give you specific updates and guidance for 2014 on our outlook call in December. Longer term, we continue to believe opportunities for consistent growth remain.

And we will continue to move our business forward with strategies and initiatives to improve service, effectiveness and efficiency, drive net sales growth, expand margins over time and build our brands and business for the future. Importantly, we also remain committed to our ultimate objective: delivering and growing shareowner value.

Our free cash flow remains strong, totaling approximately 5% of our market cap in 2013. And importantly, we expect that to increase in 2014 as we benefit from lower cash expenditures related to both restructuring and taxes.

Our balance sheet remains solid with a weighted average cost of debt of approximately 3% and ongoing flexibility. We remain focused on growing shareholder value and continue returning cash through a combination of dividends and share repurchase.

We will repurchase at least $1 billion of our shares by the end of this year. Year-to-date, to the third quarter, we have repurchased approximately $900 million of our stock.

This focus, despite challenging operating conditions, had allowed us to return cash per share of equal to more than 10% of our market cap in each year from 2011 through this year 2013. This is meaningful progress that reflects our commitment to growing shareholder value.

Before I close, I would like to add a quick personal note. As John mentioned, today is my last call as CFO, as Nik will be moving into this role effective November 1.

First, I want to express my appreciation to John for the privilege of working so closely with him over these past years to create significant value for our shareowners. It's been a great experience, and importantly, I continue to look forward to my relationship as leader of our supply chain.

Second, I have complete confidence in Nik to provide CCE with the highest levels of financial leadership. I've known and worked alongside Nik for many years.

He is highly capable, and we are fortunate to have him moving into this leadership role. CCE is a great company with many skills and dedicated associates.

I look forward to working with them to continue to build our heritage of growth in Europe and continuing to build shareowner value. Thanks for joining us, and we'll be happy to open the line up for calls.

So just to talk a little bit more about what happened in September, and you're calling out the customers feeling under pressure, as well as the consumers. Can you give us a little more depth as to if it's by particular country?

And if September's trends are what you think is going to continue, are you implying a down quarter before the -- into the volume before the extra day?

Hubert, would you like to comment a little bit on September and kind of the first quarter?

Yes. Caroline, the weather which was pulling the first part of the year was exceptional in July.

It returned to a more normal pattern in August and September. And year-to-date, it has been a headwind for us.

Beyond this, what we continue to see is persistent macroeconomic headwind. And you mentioned September.

The back-to-school period was clearly difficult, and I would say in most of our countries, it shows a challenging consumer and customer environment. And at the same time, and in particular in the away from home channels, the traffic is continuing to decline, a dynamic competitive sales.

And these are things that affect our entire category and sector. But we view the category in our business that's recession-resistant, not recession-proof.

And we are continuing to monitor this area closely for the future, and we will update you as appropriate.

Thank you. Let me add to that, Caroline.

In terms of the second half of this year, I would say, we do remain cautiously optimistic with the solid volume growth that we are just reporting here for the third quarter, that our second half growth will at least offset what we obviously had -- which were challenging results from the first half and that we began this year with volume performance in the range of somewhere between flat to modestly positive.

Okay. That's very helpful.

And just to clarify, is all your debt -- the 3%, is that dollar-denominated? Or is this some in Europe?

Bill?

It's not quite 50-50, but it's roughly that range of dollar and euro debt. The vast majority of it is fixed, but we do have a modest amount floating in a little CP outstanding.

But it's a balance of currency exposure.

Yes, so you would be seeing slightly higher interest expense because of higher currency?

Not really. I mean, if you look at the preparation of our detailed cost of debt over the last 18 months, it's ticked down ever so slightly.

So we have not had any upward pressure.

Let's give an update on the Business Transformation Program and particularly thinking about the phasing benefits coming through the next couple of years since 2015?

Okay. Ian, let me ask Bill to do that.

If you look at where we are in the Business Transformation Program from an executional perspective, we're 2/3 through that. We've got a few projects that are still underway.

As we announced initially with the program, we said that the total benefit of that was going to be $100 million ongoing, with that full benefit occurring in 2015. And 1/3 of that would be in calendar year '13, approximately 2/3 of the benefit will be in '14 and then full benefit in '15.

That trajectory has proven to be accurate, and we're on track and feel good about where we have executed projects to date. And the last remaining projects that are still being executed are on track, and we feel good about the benefits.

We are - we literally get continuous updates on that as you can imagine, and it's tracked very consistently with our initial projections month in and month out at the last year plus.

I know you haven't really given us too much guidance about how much of the $100 million will fall to the bottom line. But I wonder if you could give some thoughts around sort of the phasing.

Is the more spend that may include in the early years that we get more benefit later on or is it fairly even across the 3 years?

If you're talking about spend, the spend is front loaded. We have -- we'll have detailed update done on the queue, which will be filed tonight after the market closes.

But clearly, the spend is going to be front loaded. And as I mentioned in my remarks, we're going to benefit in 2014 because the restructuring spend will step down in '14 from the level that we had in '13.

And the spend will be completed by the end of calendar year '14.

And just one final follow-up, just on the pricing mix. I mean, you've got to move positive in the quarter.

But I get a sense on the comments that John made earlier that you got a slightly disappointed the mix had moved negative. Could you just give, I mean, a little bit more granularity around the different markets to clear out price mix in the quarter?

Hubert?

Yes. So the third quarter pricing was up 0.5%.

There are a couple of factors to consider when looking at this figure. First, we continue to cycle a steady low to mid single-digit price increase from last year.

Second, as we have communicated, we have taken a more modest approach to pricing in 2013. And finally, looking at the details, core rate would have been up approximately 1% when excluding other factors such as mix.

And as Bill say, both multi-serve and single-serve have grown this quarter, but multi-serve have grown faster. And this pricing though modest is a sequential improvement of the second quarter.

And, Ian, as a thought, the country details, this is not something we don't provide.

Ian, the one thing I would mention is we talked about consistently starting with our outlook callback in December of '12, that we were going in of the year recognizing where we are going to quite cover costs. Having said that, while we're not going to give a lot of outlook yet for '14, we are going to do that in December, we are confident and committed to covering our costs with pricing in 2014.

I look forward to Bill's successes in supply chain. Wanted to ask a little bit more about the headwinds you're facing because, I guess, you alluded to commodities being a little bit better, taxes clearly a little bit better, FX better, competition looks a little bit improved at least in the U.K., weather is more normal, but OI is worse.

I'm trying to really understand exactly why. And how much of that has anything to do with Coke's earnings report of an 8% positive pricing in Europe?

Two-ish, maybe 3-ish points from concentrating Europe, probably more Northern focus. So are you feeling any of that in terms of the concentrate pricing?

Or what's really the gap that I'm missing? Because it sounds like a lot of things are going better?

Well, I think the head ones, Ali, is if you look at the P&L and operating income, clearly, the reason our operating income was not better is because we had the GAAP in net sales per case versus cost of sales per case. If you just dissect the P&L, that's the issue.

Operating expenses were actually held in check. I'll turn it over to Hubert for some of the marketplace perspectives, but just in response to your other point, I think our concentrate hasn't changed throughout the year, so I wouldn't read anything too directly into the Coke earnings.

And if I'm correct, I think, part of the change there was because they fully consolidated their investment. And in a sense, I don't think that will be comparable number.

I think that 8% included the Coke mix impact from consolidating in effect, but I'll defer, talk on that one on the follow-up call.

Yes, I'm Hubert. The challenging macroeconomic context we are facing remained a bit the same.

It's true that we see some GDP improvement probably moving into 2014, but unemployment remains pretty high in all our markets, 8% to 9%, and it does not change. And as I was just sharing before, the traffic and the foothold to work the away from home, the cafes or restaurants, remains extremely soft.

And this is impacting the totality of the category. Clearly, more impacting IC packs, and this is something we could see quite clearly at the back-to-school period.

And then we find different reasons, increasing the income tax in some countries; our consumer sentiment in other. But this is something we have to reflect on.

Okay, okay. And yes, Bill, you're right.

The 8 includes about 5 or 6, that's what we can tell of innocent, but the rest is concentrate. So that's why I've asked that question.

On the latest changes competitively, can you give us a better sense of that? I mean, Britvic sounds like a little bit more benign.

Anything that you've seen, whether you can anticipate from Suntory and GSK, particularly in Continental Europe, with their own [indiscernible] of business there. Can you give us a sense of that as well, particularly as you mentioned about in this difficult macro environment?

Hubert?

Yes. Just to give you a perspective, we have been gaining share both in volume and value overall in Europe year-to-date, but it's true that the environment remains evolving and quite dynamic.

If we look into GB and to your question on Britvic, based on that analysis, Britvic appears to have benefited in part from an incremental IC distribution and favorable prior year hurdles, notably the impact of the foot shoot we call last year. But fair to say, they continue to be a solid competitor in GB.

But again, we are facing good competition in Europe. It's too early to tell what the Suntory acquisition will do.

It has not been completed yet. But clearly, this is something we are looking at, but at the same time, our focus is more to grow the category in our country.

Could you talk about your water performance in the quarter? I know it's not a big business for you, but it was down significantly.

And given the good weather, I thought it would have been positive. Could you just expand a bit what happened in the water?

Okay. Hubert?

Yes. I think it's quite a specific case.

The bulk of the decrease is driven by our water in GB. And we were not able to cycle the big sales we had, either on the Olympic site or outside the Olympic site last year with the London Olympics.

Other than that, the water business would have been flat.

Okay. And maybe coming back just on Britvic.

Britvic cited that their carbs business is growing stronger than yours in volumes and having a good positive pricing. Could you explain why you're losing so much share against Britvic in carbonates?

Well, we have to look on the mid-term perspective. So year-to-date, we are gaining share on carbonates, but what happened is, generally, you have some variations per quarter, and this quarter they performed.

But we are quite confident that on a full year basis, we will continue to gain share on the carbonates and on the cola segments, both in volume and value.

First, just going back, I guess, the September performance. I think a lot of the underlying headwinds that you've called out are not really new per se; they've persisted for some time now.

So I'm a little bit surprised by the magnitude of your concern in the near term. So in your view, do you think that there was anything else just beyond some of the macro headwinds.

Clearly, in the U.S, we've seen the Diets decline, with the concern about the artificial sweetener. Do you think the category and the CSC consumption in Europe is also being affected by increased concern over the health and wellness?

Or you really just think that this is kind of what we've been seeing and that is likely to persist in the near term?

Let me add a little color to that, and then Hubert can add some further detail. Several answers to note, Judy.

I think that when we look at the business in all of our territories, we don't think that there is anything new or different, going on beyond what we have talked about. Yes, there are some significant macroeconomic headwinds, then there are all the other things that we've talked about.

But frankly, we continue to think that it is an expandable category. We have a great brand group, a terrific set of products and a portfolio.

And so, no, the simple answer to your question is I don't think and we don’t think that there is anything over and above what we've talked about in the past. It's more of a continuing kind of challenging situation and one that we think we're going to be able to deal with, but it is real.

Macro economics and other things out there are very real. I think the good news we don't anticipate new taxes other than the fact that France is debating on energy tax, and we'll see where that goes, but nothing beyond that.

So again, that's one other piece of data that we think is broadly encouraging. Hubert?

Yes. And Judy, on your question about the Diet drinks, we don’t see that and if anything, the Diet portfolio has outperformed the regular portfolio on the last quarter.

And, of course, they really continue to grow very fast. So it's not the explanation.

Okay. And then just wanted to clarify Bill's comment about your expectation that you don't think that you can get to the long-term targets, or you're visiting the timeline of when you get there, which -- I mean, clearly, the 2013 is a year where the underlying operating income growth is not going to be within your long-term target.

But you alluded to 2014 where you're confident that pricing is going to cover inflation. So any kind of early read on how we should think about 2014?

Do you think there are the levers in terms of your ability to kind of get to that long-term growth for 2014?

Judy, I think it's probably better for us to come back and talk as we always do in our December call about our outlook for 2014. We're obviously hard at work in putting together our plans and programs for '14.

We've already been pretty clear in saying that we think that we will be able to maintain -- minimally maintain margins in '14 as we look at our pricing strategy and we look at our cost of goods situation. But I think that giving you more color on it at this stage will probably be a little bit early.

We'll give you quite a bit of detail on it in our outlook call in December.

Okay. But just to clarify, the comment about visiting the timeline in which you get to that target, doesn't -- we shouldn't interpret that as 2014 not being there?

I wouldn't interpret it as anything, frankly, at this stage of the game. I think we were telegraphing in that comment that we will let you know as we go down the road what that all looks like and when we will be able to achieve the kind of results that are more in line with our long-term targets.

We clearly have every intention of doing that, and all we wanted to do is signal that we will have to be a little clear with you in the future about when that's exactly going to happen.

The first question is, can you just talk about the big increase in the corporate expense year-over-year? I think even after excluding the mark-to-market effects, it's up roughly $10 million?

Sure. It's quite simple.

And the reason that last year, when we got into the third quarter, the outlook changed for the full year. And quite frankly, we accrue our incentive compensation based on our outlook for the full year, and we had a reversal of some of that incentive compensation based on a reduced full year outlook last year.

And so it's a little bit in terms of the total company OpEx loss, small numbers. But year-over-year, that we didn't have do that in the third quarter of 2013, which is good news, caused the majority of that variability.

Great. That's an easy one.

And then Bill decides a boyhood passion for supply chain. Can you talk a little bit more about why you're kind of moving from the CFO job to supply chain job?

Sure. I've been in the Coke system for over 25 years upheld, but the general management and finance positions and the opportunity presented itself.

John and I have actually talked about this off and on for a number of years. And having Nik onboard, it created the succession plan we needed in finance.

So up for new and different challenges.

Got it. Great.

And then I'm little bit perplexed by kind of what's going on in GB, specifically, but pretty broadly across Europe. It seems like your private label market shares are declining at least in the direct channels that Nielsen follows.

So it really doesn't seem like it’s an affordability issue, but you still have pretty sluggish growth. So I don't know how you guys sort of think about things and how it's going to progress going forward.

Hubert, do you want to talk a little bit more about GB?

Yes, Bill. We grew 3% in GB, which we will consider to be a good growth, and 2.5% in the continent.

Referring on private label, 2 things: In our core market, our core segment, they are not growing. They are, in fact, as you stated, declining.

It's a different story in the Still markets, juices and water. And then there are some segments of the discounters where we are not present, like you take Lidl in Poland, for example, or ID in Belgium and then the private label here are performing.

But we are not playing in these stores.

Got you. And just a follow-up on that, on water.

How does water fit in the portfolio broadly? Because it seems like water grows when volume is kind of soft elsewhere, so it's kind of like a volume absorber.

When things are a little bit tough, and then when things start to get better, if the margin drags, you kind of move more to the business. Or am I looking at that sort of too cynically?

Water is still a small part of our portfolio. Its 3% of our sales.

And we are not really playing in a future consumption water portfolio, whether it's very low margin and very low profitability. So it's not core to our growth, so we offer water to our customers that I will not view very differently than that for CC in Europe.

John, I wanted to follow up on your comment about getting volume positive for the year because if I look at the tables at the back, you're down 50 basis points year-over-year. So that would imply, I don't know, something north of 2% volume growth for the quarter.

And then I understand the comps easy, but if you're doing 2% plus volume growth in the quarter, that doesn't seem to jive with the tone that you and Hubert have had on the call. So can you sort of help me with that math?

No, you've got the math about right. So I think that is right.

As I said, we anticipate -- I'd call it guardedly optimistic that we will have volume growth for the year, which I think if we do the math, we'd come up with a set of numbers that are broadly in sync with what you just said.

Okay. And I guess, is it -- then I guess if I look at that, that volume number to me doesn't seem all that bad and sort of commensurate with the tone.

Is it just the 2-year run rate that you're looking at and saying what considering the bounce back on the easy comparison? It should be better than that?

Yes. Let me ask Bill to talk.

I think if you look at the 2-year run rate, John, that's a factor when we look at the analytics. Quite frankly, I think we would have hoped earlier in the year as we got into the back half of the year to have this kind of volume performance and a little bit better pricing performance.

So I think that's the tone that you are hearing in our comments. It's not -- it's a combination of the 2, and ultimately the revenue, not just a volume in itself.

Okay, okay. So it's not just the number themselves; it's also sort of a feel -- in terms of the feel you have in the market.

Is that a fair statement?

Yes, that's a fair statement.

Okay. And then looking at the SD&A, you guys had talked a little bit earlier in the year about how you're running really tight on the SD&A line.

That's continued. And I guess as we look at that, what's driving that continued strong performance on SD&A, and how comfortable are you that you can continue to run that tight, given your -- it seems like you guys had expressed a little bit of concern earlier in the year about maintaining this type of pace.

Well, clearly, John, is if you lap that year after year, the opportunity for incremental reductions get much more difficult. I think what you're seeing is the benefits of our Business Transformation Programs on the one hand and very aggressive OpEx management on the other across the board.

The one unique opportunity that we're kind of layering in for '14 and beyond is we are completing the rollout of our indirect procurement process, which is kind of the last initiative that we have coming online. And that is going to give us some incremental benefit.

But going forward, at this reduced rate, maintaining OpEx on a per case basis, I think is a pretty good [indiscernible] that we strive for. Because again, to your comments about expectations, given the timing and everything else, wouldn't necessarily translate continued reduction in OpEx in 4Q.

We did have some timing issues there. But I think from a full year perspective, OpEx management is still going to look pretty good.

So I guess, the question I had was just that I believe it goes back to an earlier question about just operating leverage in the quarter. Can you just talk through a little bit, just the dynamics that would be factored into gross margins in the third quarter because I think we certainly -- relative to the way that we had modeled it, I think we were pretty close on revenues, and it was just a little bit -- we expected maybe a little better gross margin improvement.

So to the extent that maybe mix is -- was a bit of a drag or just some of the other factors that sort of continued to drag gross margins would be helpful.

Sure. I'll start out, Bryan.

I think if you go back from a cost per case perspective, that came in, in line that even as mentioned better than we had expected and hoped at the beginning of the year, with the cost inflation of 1.5% for the quarter. Pricing for case, as we said, came in at 0.5%.

I probably wouldn't over index on mix. It was a modest drag, but not material.

But at the end of the day, from a gross margin perspective, it was all about the price realization in the marketplace, and that was in several countries. I think it's indicative of what some of the headwinds we've been seeing about -- with the consumer, et cetera.

But Hubert, I'll let you add a little bit to that.

Yes. Again, it's always finding the right balance between our promotional investment to pull the consumer demand and the pricing realization.

And again, this was made probably more difficult by the fact that we continued to see a clear softness in the away-from-home channels in most of our countries, impacting the growth of our icy pack more than probably what we had anticipated.

I was hoping you can just update on where we are with French retailers in their investment in the category. I know that was a big effort on your part coming into the years.

I hope you can update on that.

Sure. Very good question.

Hubert, do you want to update us on that?

Yes. The French business environment are improving.

As you know, historically, France has been one of our growth engines in Europe, and under midterm and long term we continue to be optimistic. You just recall we had in 2012 the significant excise tax increase.

This has challenged the category, the customer and us. Today, our customer relationship, and more specifically the category, are both improved.

And both the category and ourself, we have grown in the last quarter. But I would say that the environment remains dynamic and still evolving, but we are encouraged again by this recent trend of the category.

Okay. Well, let me just say to all of you who joined us today, thank you for your time.

We always appreciate having the opportunity to talk with you about our business, and have a great day. So long.